Alternative Facts: Prairie Dipper edition #nlpoli #cdnpoli

Erin Weir is the New Democrat member of parliament for Regina - Lewvan.

In the House of Commons on Monday,  Weir used alternative facts - i.e. stuff that is utterly false - in a speech on the European free trade implementation bill:

There was the AbitibiBowater case where that company shut down its last pulp and paper mill in the province of Newfoundland and Labrador. The provincial government reclaimed water rights that it had given to AbitibiBowater to operate the mills, but then the company challenged Canada under NAFTA for the loss of its water rights, which it was no longer even using for the purpose they were intended. Well, the previous Conservative government paid AbitibiBowater $130 million to withdraw that NAFTA chapter 11 claim.

Not true.

Trash, Give-aways, and Conservative Policy #nlpoli

Friday is trash day in the world of political communications. It’s the day when you slip out stuff that is unpleasant in the hopes people will miss it.

If you can slide in another story, like say the completely unnecessary appointment of a finance minister who will have the job for a mere two weeks or so, it’s possible you can bury one load of trash under another.

That’s what happened last Friday in St. John’s.

The Pattern Proved #nlpoli

Consider the latest failure of a lawsuit launched by the Greatest Legal Mind and Premier Ever in light of another case, Henley v. Cable Atlantic, a post that originally appeared in August 2006.

“Forgive us for believing NalCor, Premier,” about the Abitibi expropriation former Liberal leader Yvonne Jones pleads on Twitter, in the wake of the latest court decision against a Williams scheme.

“No!” comes the reply shouted from every rooftop in the province.

It’s not like the good reasons to doubt Williams and Nalcor weren’t right in front of our faces in December 2008.

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Province settles expropriation with Enel, Sun Life and others

Compensating a group of companies involved in the Star Lake affected by the Abitibi expropriation will wind up costing the taxpayers of this province more than the original project cost to build a decade ago.

Natural resources minister Shawn Skinner announced on Monday that provincial government will pay $32.8 million to Enel while Nalcor will assume responsibility for a $40 million loan from Sun Life and other companies.

That’s $72.8 million for a project that originally cost $51 million to build in 1998 according to Enel’s website:

The Star Lake Hydroelectric Project is an 18 MW remotely operated hydroelectric facility with a 173 million cubic meter capacity storage reservoir. The project provides electricity to Newfoundland’s integrated grid, which is sold to Newfoundland & Labrador Hydro.

Construction of Star Lake began in May 1997 and was completed in October 1998 for a total cost of $51 million (CAN).

From the earliest stages of the project, environmental considerations were considered in its development and have been instrumental in the technical design. The facility was conceived using environmentally friendly materials and equipment such as biodegradable hydraulic oil for its intake gate system and an oil-free hydrostatic bearing for the turbine unit. An underground penstock was also designed and implemented in order to avoid obstructing migration routes of the Buchans Plateau caribou herd.

An artificial brook trout incubation and rearing facility is also onsite. It is designed to produce up to 100,000 fingerlings (young fish). These fingerlings are intended for annual introduction to Star Lake to ensure that the lake's brook trout population is maintained.

Skinner is quoted in the news release as saying that this is a “a fair settlement and the most appropriate action for the province to take.”

The provincial government is still in talks with Fortis on compensation for that company on another project affected by the 2008 expropriation bill.

Nalcor has already assumed responsibility for a $59 million loan related to Fortis’ former hydro interests.

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AbitibiBowater, Democracy and the Public Interest

There’s a new commentary from an Ottawa-based think tank on the AbitibiBowater expropriation.  The commentary is basically Brian Lee Crowley’s presentation to the Commons standing committee on international trade.

You can read the full text here. and below are four highlighted points:

“1.  The Chapter 11 provisions of NAFTA provide no bar whatsoever to Canadian
governments acting in the public interest through law and regulation, but they
properly require that the government pay the legitimate costs associated with
their decisions, including compensating parties whose property is confiscated or
nationalized.

2.  Paying compensation for expropriation is a matter of basic fairness and is a
fundamental principle in Canadian law, not just NAFTA.

3.  As a country with huge investments in other jurisdictions, we benefit enormously from such investor protections in other countries, and failure to apply
such protections domestically would damage our credibility and harm Canadian
investors

4.  The AbitibiBowater case points up a damaging inconsistency in Canada’s constitutional and legal framework whereby Canada has the treaty-making power
and, therefore, is responsible to ensure that we meet our treaty obligations; but
provinces are not bound to respect the NAFTA provisions. A mechanism can and
should be found to oblige provinces to take responsibility for their decisions and
prevent them from passing the costs of provincial decisions on to the federal taxpayer.”

There’s also a version of the presentation in a Troymedia piece called “Provinces behaving badly and what can be done about it”:

Governments in Canada have the right to take your house, farm, or factory, but the requirements of fairness and the Canadian democratic tradition normally subject that power to limits. Governments must compensate you if they take your property. Moreover they don’t get to set the price unilaterally; it must be done by an arm’s length agency and be subject to judicial review.

It was Newfoundland and Labrador’s decision to ignore these rules of decent behaviour that created the damage that federal taxpayers must now clean up.

If there is any kind of a democratic deficit in the AbitibiBowater decision, surely it is here: in a genuine democracy, voters should have to face the true costs of their decisions so that they can make a balanced assessment of the pros and cons. The current arrangements force innocent federal taxpayers, who have no hand in choosing provincial governments in other provinces, to nonetheless pay the tab for those governments’ bad behaviour. And that is practically the textbook definition of a perverse incentive.

 

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AbitibiBowater properties up for sale

An advertisement appearing in the Telegram on Wednesday put the Stephenville and Botwood properties still owned by AbitibiBowater up for sale.

The receivers are inviting bids for six parcels, four of them associated with the former Stephenville mill and two for land, buildings and a deep-water dock facility at Botwood.

The ad was placed by Samson Belair/Deloitte and Touche, receivers for a numbered Newfoundland and Labrador company created during the recent restructuring of AbitibiBowater.

Any environmental liabilities would pass to the new owners with any sale of the properties in the same way that provincial taxpayers are now liable for the entire Grand Falls mistakenly expropriated in 2008 by the Williams administration.

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Dunderdale confirms Bond story on Fortis and Enel

As you read here on Friday, the provincial government is handing back property seized in December 2008 to Fortis and Enel.

NTV ran the story on Sunday complete with a quote from Premier Kathy Dunderdale.

Dunderdale’s comments give some credence to the idea this expropriation wasn’t about any supposed broken promises by AbitibiBowater.

Maybe it was all about a spurned bid for Abitibi shares in Star Lake.

Maybe it was something else.

Slowly but surely the whole story is emerging.

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Conservatives to give back seized hydro assets

Natural resources minister Shawn Skinner gave notice on Thursday of a bill that is part of the compensation for two companies caught in the crossfire of the Williams administration’s expropriation bill in 2008.

In giving notice of motion, Skinner only gave the title of the bill - An Act To Amend The Abitibi Consolidated Rights and Assets Act – but Bond Papers has learned that the bill will restore assets seized from Fortis and ENEL two years ago.

Last spring, then natural resources minister Kathy Dunderdale said that Fortis and Enel would have their power purchase agreements restored as part of the settlement. In August, Danny Williams said the companies would receive cash compensation, a long-term power purchase agreement or some other combination of arrangements as compensation for the government’s action.  The only reason to amend the expropriation bill would be to restore to the two companies the assets the provincial government seized under the December 2008 law. 

With the assets restored, the provincial government’s energy company – Nalcor - could then also make a new long-term power purchase agreement with ENEL and Fortis to supply power to the island grid.  There’s no indication at this time whether or not Nalcor will retain any interest in the hydro-electric generation operations or simply act as a customer for the power.

There’s also no word on what other compensation the companies might be receiving from taxpayers for Williams’ blunder.

The provincial government is already paying a $60 million loan for Fortis that the company defaulted on as a result of the seizure.

In December 2008, Danny Williams’ Conservative administration introduced legislation in the House of Assembly that seized hydro-electric assets from three companies -  AbitibiBowater, Fortis and ENEL – supposedly because AbitibiBowater reneged on a 1909 commitment.

The legislation also quashed a court case Abitibi brought against the provincial government over an earlier dispute and stripped the company any right to compensation.

The expropriation bill also set the provincial cabinet as sole arbiter of any compensation to be paid. 

While the bill was met with cheering at home, it met with condemnation across the country. Bond Papers was one of the few voices in the province that questioned the bills’ purpose, its motivation and its assault on the rule of law.

AbitibiBowater sued the Government Canada under the North American Free Trade Agreement.  The company reached a settlement with the federal government in August 2010.

Earlier this year, the people of Newfoundland and Labrador learned that the provincial government had accidentally expropriated  the former Abitibi paper mill at Grand Falls along with all the environmental liabilities associated with it.

Premier Kathy Dunderdale, the minister responsible for natural resources at the time, learned of the massive error several months after the expropriation but failed to disclose the mistake to the public.

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AbitibiBowater announces pensions agreement

Issued by AbitibiBowater on Friday, November 19:

“MONTREAL, Nov. 19 /CNW Telbec/ - AbitibiBowater announced today that, as part of its restructuring process, it had entered into agreements with the Government of Ontario related to funding relief in respect of the material aggregate solvency deficits in the registered pension plans the Company sponsors in Ontario and Quebec. The agreements will enable the Company to seek the waiver of the conditions, as detailed in its restructuring plans, regarding the adoption of funding relief regulations. On September 14, the Government of Quebec announced an agreement between the Company and the Régie des rentes du Québec for similar relief measures. The agreements finalized with the provinces of Ontario and Quebec provide, among other things, that the Company will meet its future pension obligations in full to the beneficiaries. 

"The best way to ensure pension benefits continue to be paid out is to ensure a company stays in business. We are pleased that AbitibiBowater will continue to operate, that thousands of Ontarians will continue to be employed, and that existing pensioners will continue to receive their benefits," stated Dwight Duncan, Ontario Minister of Finance.

In addition, an agreement for the next five years has been entered into by the Government of Ontario and what will become one of AbitibiBowater's Canadian subsidiaries post emergence, AbiBow Canada, regarding its pulp and paper operations in the province. AbiBow Canada has agreed to apply specific measures regarding its governance and investment levels as well as the sustainability of its operations in Ontario.

"The agreement affects thousands of workers, retirees and families in Ontario and allows the Company to move towards the finalization of its emergence from creditor protection. We are all very pleased to see AbitibiBowater get back on its feet, and I am especially appreciative of the support of my colleague at the Ministry of Finance, Minister Dwight Duncan, for making this happen," said Michael Gravelle, Ontario Minister of Northern Development, Mines and Forestry.

This agreement will become effective as of the time of AbitibiBowater's emergence from creditor protection. Moreover, the parties have agreed to re-evaluate the covenants of the agreement at the end of the initial five-year term in light of the Company's situation, the conditions affecting the pulp and paper industry as a whole and the solvency of its pension plans.

"We have signed today an agreement that is a significant step toward our emergence. We are convinced we have obtained the best deal possible for all our employees and retirees in Canada, and we would like to thank the Government of Ontario for its ongoing support," stated David J. Paterson, President and Chief Executive Officer of AbitibiBowater.

The Company directly employs approximately 8,500 workers and has in the order of 20,000 pensioners in Ontario and Quebec. These agreements are subject to AbitibiBowater's and its subsidiaries' emergence from creditor protection, which is expected to occur this fall, and is subject to confirmation of its U.S. plan of reorganization.

AbitibiBowater produces a wide range of newsprint, commercial printing and packaging papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 19 pulp and paper facilities and 24 wood products facilities located in the United States, Canada and South Korea. Marketing its products in more than 70 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has third-party certified 100% of its managed woodlands to sustainable forest management standards. AbitibiBowater's shares trade over-the-counter on the Pink Sheets and on the OTC Bulletin Board under the stock symbol ABWTQ.

For further information:

Investors       
Duane Owens 
Vice President, Finance   
864 282-9488
Media and Others
Pierre Choquette
Director, Public Affairs - Canada
514 394-2178
pierre.choquette@abitibibowater.com

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AB fishing camp mystery solved

As it turns out, the numbered company registered in Alberta that is buying a fishing camp in Labrador from AbitibiBowater for $1.4 million is connected to Chris Verbiski, one of the co-discoverers of the massive nickel and copper find at Voisey’s Bay.

1512513 Alberta Ltd. lists its business address at the same downtown St. John’s office suite occupied by Verbiski’s Coordinates Capital Corporation. The office outside the province in the corporate register (above) is for a Calgary law firm.

A 2009 news release on Verbiski’s appointment to the board of International Royalty describes Coordinates Capital as a “private natural resource investment firm.”  The entry in the Newfoundland Labrador companies register lists Verbiski as the only director. 

The companies registry in Newfoundland and Labrador lists the same address for the numbered Alberta company and Coordinates Capital but gives a different contact name for the numbered company.

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Mystery company looking to buy AB fishing camp

A numbered mineral exploration company registered in Alberta but headquartered in Newfoundland and Labrador is looking to buy a fishing camp owned by AbitibiBowater.

Hunt River Lodge, located about 40 miles north of Hopedale, is listed by Sotheby’s International Realty at an estimated value of $3.5 million.  The mystery company is reportedly paying $1.4 million plus applicable taxes for the property.  AbitibiBowater must get the courts permission to sell the asset.

The main lodge plus two smaller outlying camps are on land leased from the provincial government for $500 annually.  The provincial government did not include the camp in the 2008 seizure of AbitibiBowater assets in the province.

The provincial government did, however, mistakenly expropriate the mill itself and all the associated environmental clean-up costs.

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Creditors approve AbitibiBowater restructuring plan

The AbitibiBowater news release:

ABWTQ (OTC)

MONTREAL, Sept. 21 /CNW Telbec/ - AbitibiBowater is pleased to announce that the Company has received the necessary creditor approval for its plan of reorganization under chapter 11 of the U.S. Bankruptcy Code, except with respect to Bowater Canada Finance Corporation (BCFC), a special purpose company subsidiary with no operating assets, which has been excluded from the chapter 11 plan. The chapter 11 plan of reorganization received overwhelming support from creditors, both in dollar amount of claims and in number of claim holders who voted on the plan.

Having obtained the requisite votes from creditors, except with respect to BCFC, the Company and its subsidiaries will exclude BCFC from the process and proceed with plan confirmation. The Company does not believe that the exclusion of BCFC will affect the timing of its confirmation hearing that is scheduled to start on September 24, 2010, in the U.S. Bankruptcy Court in Delaware.

"We are pleased to have received approval by the vast majority of creditors under the U.S. Bankruptcy Code for our chapter 11 plan of reorganization," stated David J. Paterson, President and Chief Executive Officer. "We appreciate the support for our plans of reorganization as we work to create a more sustainable and competitive organization."

As previously announced, on September 14, 2010, the Company received approval for its plan of reorganization from affected creditors under the Canadian Companies' Creditors Arrangement Act in Canada, except with respect to BCFC.

Subject to the satisfaction of certain conditions provided for in the plans of reorganization, AbitibiBowater continues to expect emergence from creditor protection this fall.

Details of the voting results under the chapter 11 plan of reorganization, including votes on a class-by-class basis, will be available through www.abitibibowater.com/restructuring.

AbitibiBowater produces a wide range of newsprint, commercial printing and packaging papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 19 pulp and paper facilities and 24 wood products facilities located in the United States, Canada and South Korea. Marketing its products in more than 70 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has third-party certified 100% of its managed woodlands to sustainable forest management standards. AbitibiBowater's shares trade over-the-counter on the Pink Sheets and on the OTC Bulletin Board under the stock symbol ABWTQ.

For further information: Investors: Duane Owens, Vice President, Finance, 864 282-9488; Media and Others: Seth Kursman, Vice President, Public Affairs, Sustainability & Environment, 514 394-2398, seth.kursman@abitibibowater.com

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Unsecured creditors accept AbitibiBowater restructuring plan

News release issued by AbitibiBowater:

BWTQ (OTC)

MONTREAL, Sept. 14 /CNW Telbec/ - AbitibiBowater is pleased to announce that the Company has received approval for its plan of reorganization from unsecured creditors under the Companies' Creditors Arrangement Act (CCAA) in Canada. The plan of reorganization received overwhelming support from its unsecured creditors both in dollar amount of claims and in number of claim holders who voted on the plan. Having obtained the requisite votes in each class, except with respect to Bowater Canada Finance Corporation (BCFC), a special purpose company subsidiary with no operating assets, AbitibiBowater will seek a sanction order in respect of its CCAA plan other than in respect of BCFC, which is excluded from the CCAA plan. The Company does not believe that the exclusion of BCFC will affect the timing of the Company's sanction hearing by the Canadian Court nor does the Company expect it will materially delay AbitibiBowater's emergence from creditor protection slated for this fall.

Voting tabulations on the plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code are expected on September 20, 2010. The Company will provide further information when the results become available.

"We appreciate the support given by the significant majority of our creditors under the CCAA process for our plan of reorganization," stated David J. Paterson, President and Chief Executive Officer. "We are confident our restructuring efforts have created a stronger foundation for a more sustainable and competitive company. We look forward to completing the restructuring process and emerging from creditor protection this fall."

Details of the voting results including votes on a class-by-class basis will be available at www.abitibibowater.com/restructuring.

The sanction hearing under the CCAA process is scheduled to occur on September 20, 2010 in the Quebec Superior Court and the confirmation hearing under the Chapter 11 process is scheduled to start on September 24, 2010 in the U.S. Bankruptcy Court in Delaware.

AbitibiBowater produces a wide range of newsprint, commercial printing and packaging papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 19 pulp and paper facilities and 24 wood products facilities located in the United States, Canada and South Korea. Marketing its products in more than 70 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has third-party certified 100% of its managed woodlands to sustainable forest management standards. AbitibiBowater's shares trade over-the-counter on the Pink Sheets and on the OTC Bulletin Board under the stock symbol ABWTQ.

For further information: Investors: Duane Owens, Vice President, Finance, 864 282-9488; Media and Others: Seth Kursman, Vice President, Public Affairs, Sustainability & Environment, 514 394-2398, seth.kursman@abitibibowater.com

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Danny Williams and the National Post: Fact Check

No surprise Danny’s miffed at the National Post. 

Nor is it any surprise that the most thin-skinned person on the planet  - short of someone actually without an epidermis at all - claims that it isn’t about him.

And it’s really absolutely not the least bit of a shock that between the two of them -Danny Williams and the National Post -  readers will wind up being about as in  touch with reality in Newfoundland and Labrador as people who get everything they know about the universe from Glenn Beck.

Rather than go through the errors and nose-pullers in detail let’s just take the biggest whopper for each of them:

For the Old Man, it would be the contention that “Abitibi operated in our province for 100 years”.

Sure 65% of the province’s population may have trouble with numbers, math, logic and reasoning but few likely would have listed the province’s best-known Rhodes scholar among the innumerate.

Those that did can go to the head of the line.

The Anglo-Newfoundland Development Company opened the Grand Falls paper mill in 1909.  Abitibi started operations in 1912 but not in Newfoundland and Labrador.

This is 2010.

Right off the bat, anyone with that information would know that it is absolutely utterly and totally impossible for a company that is 98 years old to have been in operation more than two years before it existed.

I am my own grandpa indeed.

But then you have to consider that Abitibi didn’t arrive in Newfoundland and Labrador until 1969, a fact noted in some of the AbitibiBowater bankruptcy proceedings and a point that has curiously escaped every single reporter in this province for the 18 months or so the Premier has been saying this complete bit of nonsense.

Even a Rhodes scholar ought to know that 100 is not 41.

As a result of his repeated numerical blunder, one must wonder if Danny actually reads anything laid in front of him, whether his high-priced help are really that incompetent, whether he cares about facts at all, or if what we see here is some combination of all three.

Now for the Post stuff:

Well, the name of the province is Newfoundland and Labrador but that’s really the smallest part of the problem with the Post editorial.

The rest of it is a litany of things that never happened, as Williams easily pointed out.  Most of his comments in reply were just the usual self-serving blather but there’s no denying that the  magnitude of the factual errors in the editorial would stun a herd of the hardest-headed mountain goats in British Columbia.

The easiest thing to do is take the biggest error:  “… time and again, Ottawa graciously bails Mr. Williams out from his blundering anyway.”

The idea that Canadians have paid for all Williams’ blunders is just foolish.

Sure he managed to score a couple of billion extra from the feds in 2005 but for the most part, the major blunders of his administration haven’t cost all taxpayers in the country a penny.

Only provincial taxpayers will bear the load – way more than $130 million – from the expropriation fiasco.  They’ll also be taking their proportionate chunk of the NAFTA settlement as well.

Only the taxpayers in Newfoundland and Labrador will be coping with the huge cash deficits Williams’ administration is racking up.  They’ll be the only ones dealing with the fall-out from a record of wild public spending even his own cabinet ministers agree is unsustainable.

His huge gift to Big Oil  - section 5.1 of the Hebron financial agreement - won’t affect Ottawa a tiny bit even if it makes the provincial government nothing more than a vassal of the oil companies on some issues.

In the end, though, the Post is still the Post.

But word is Danny is looking for a post-politics gig.

Maybe Kory should give him a call.

If the guy can handle a piece of chalk, there’s the makings of a new star in the Reform-based Conservative Party news heavens.

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And the NAFTA/expropriation winner is…

In their offices in the Sun Life Building in the heart of Montreal’s financial quarter, the boys at AbitibiBowater are likely making toasts using the finest single malt scotch they save for just these special business occasions.

There haven’t been too many of them for the managers at the financially troubled company lately but this week, they can crack open the bottle and enjoy themselves.

And while they are at it they can make two toasts.

Their first one should be to Danny Williams. 

Were it not for the Premier’s unshakeable  - and entirely unfounded - belief in his own infallibility, AbitibiBowater could not have achieved its monumental success in Newfoundland and Labrador. 

Not only did Danny Williams’ astonishing business and legal prowess relieve them of the huge liability for environmental cleanup in Newfoundland and Labrador, he voluntarily took their financial liabilities to some of their former employees and handed them all to taxpayers in his own province.

On top of all that, AbitibiBowater will get a nice cheque from the federal government for their troubles. That money will easily cover the minor costs for remediation at the couple of properties they still own in this province and leave pretty much all of Stephen Harper’s $130 million intact.

Sweet. 

And if all that were not good enough, they still get to watch their lawyers humiliate the provincial government in its own courts over those environmental orders cooked up during the NAFTA war. Lay money on judge after judge stuffing the orders up Danny’s nose for as many appeals as he may want to make.

AbitibiBowater could use more enemies like Danny Williams. If he wants to practice corporate law after he retires, AbitibiBowater would hire him in an instant to go to work for their competitors. He’s just that good.  

The other toast would be to the biggest losers in the expropriation, namely the people of Newfoundland and Labrador.  The five hundred odd thousand people of the island – and Labrador -  are stuck with the bill for all this. The environmental messes, the legal bills to Toronto and Montreal firms, the severance and all the rest of it.

But supposedly the raggedy arsed artillery of Newfoundland and Labrador have mighty assets now, according to Danny Williams, to cover those liabilities.  These assets would have been sold to unnamed others had Williams not struck with his expropriation sword.  Of course, he fails to mention that the liabilities go with the assets such that who ever owns them cannot get one without the other. But then again  Williams the Great Lawyer knows this already even if he does not share his knowledge with his clients.

That is really part of Williams’ brilliance as a lawyer, however and why companies like AbitibiBowater will want him to work for their competitors once he leaves politics.  Only a truly amazing talent could shag his own clients so completely and yet have them lust for the rogering like a pubescent suicide bomber eager to get down with the 72 virgins he’s been promised.

Both are in for a rude shock, of course.

But unlike the child-fanatic, the people of Newfoundland and Labrador have a good clue that these very expensive assets are far less valuable than they’ve been made out to be.

One of the three companies interested in the timber – and one very seriously considered for a while – was a bankrupt German paper maker looking for massive government hand-outs.

Another even less appealing prospect wanted to turn prime logs to sawdust in order to make wood pellets out of them. To appreciate just exactly how lame is that idea, one need only realise that wood pellets are most often cited as a way of using the scraps left over from making major wood products like furniture or paper. Anything else is a waste of a very valuable log.

Yet to be tallied into the cost of this expropriation fiasco are the payments the taxpayers in Newfoundland and Labrador will have to make to a bunch of companies who are essentially collateral damage in Danny Williams war against – or is it on behalf of? – AbitibiBowater.

Settling fairly with these companies was a condition of the federal government’s payment to AbitibiBowater, according to Danny Williams. Undoubtedly the rather obvious preferential treatment given to these other companies compared to AbitibiBowater, not to mention Williams’ own comments attacking AbitibiBowater, coloured the expropriation bill to the point where the lawsuit could have cost the federal government much more dearly than the $130 million it did.

As it is, Fortis, ENEL, Clarica, Sun Life Assurance, Mutual Life Assurance, Standard Life Assurance, and Industrial Life Assurance will all be restored to their former financial position, according to the Premier during his scrum with local reporters.  Talks are still going on, but according to the Premier, they will get cash or a power purchase agreement or some other arrangement. Fortis is already getting cash: the provincial government assumed responsibility last year for a $60 million loan Fortis and AbitibiBowater had for their hydroelectric partnership. Keep an eye on those talks.  Their outcome could be most interesting indeed.

Whatever the conventional media may be saying about the latest part of the expropriation saga, the winners and losers are not as they initially appear, nor is the magnitude of the loss yet known.

The saga’s last chapter has yet to be written.

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AbitibiBowater reaches expropriation settlement

The Government of Canada and AbitibiBowater announced a settlement today of AbitibiBowater’s NAFTA challenge of the 2008 seizure of its property and assets by the House of Assembly.

There is no word on any settlement with other companies also affected by the seizure. Government seized hydroelectric assets belonging to Fortis and Enel.  Other companies affected by the seizure included Clarica, Sun Life Assurance, Mutual Life Assurance, Standard Life Assurance, and Industrial Life Assurance.

AbitibiBowater initially sought much higher damages in its claim under the North American Free Trade Agreement.

The expropriation will still hit provincial taxpayers in their collective bank accounts. Premier Danny Williams confirmed that in May.

A gigantic legal error in the wording of the expropriation legislation means that the provincial government seized not only assets but also most of AbitibiBowater’s substantial environmental liabilities.

On top of that, the expropriation bill for taxpayers also includes millions spent on futile legal arguments.

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Government of Canada news release:

“The Government of Canada and AbitibiBowater have reached an agreement regarding the expropriation of assets in Newfoundland and Labrador.

“The Government of Canada has agreed to make a payment of $130 million to AbitibiBowater upon the company’s restructuring. This payment represents the fair market value of the company’s expropriated assets.

“AbitibiBowater has agreed to irrevocably and permanently withdraw its claim against Canada.

“The Government of Canada has resolved this dispute for the benefit of Canada’s long-term economic interests. In reaching this agreement, we are avoiding potentially long and costly legal proceedings.

“This approach reaffirms the Government of Canada’s commitment to maintaining a rules-based business environment that facilitates free trade and encourages investment.

“The Government of Canada is moving forward on an ambitious free trade and investment agenda—a cornerstone of Canada’s strong economic position and future growth. We will continue to stand up for Canadian businesses at home and abroad by securing greater access to the North American marketplace.”

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Trade Media Relations Office
Foreign Affairs and International Trade Canada
613-996-2000

AbitibiBowater news release:

AbitibiBowater Announces Intention to Withdraw NAFTA Notice of Arbitration - Settlement Agreement Reached with the Government of Canada for C$130 Million

MONTREAL, Aug 24, 2010 /PRNewswire via COMTEX/ --

ABWTQ (OTC)

AbitibiBowater today announced a formal settlement agreement with the Government of Canada with regards to its assets and rights in Newfoundland and Labrador, Canada, expropriated by the provincial government under Bill 75 in December 2008. The Government of Canada will pay AbitibiBowater C$130 million, representing not more than the fair market value of those rights and assets, following the Company's emergence from creditor protection.

As part of the settlement agreement AbitibiBowater will waive its legal actions and claims against the Government of Canada under the North American Free Trade Agreement (NAFTA).

"We believe this is an acceptable settlement for our Company, stakeholders and creditors, given the set of circumstances faced by the Company at this particular time as well as the inherent uncertainty of any judicial process," stated David J. Paterson, President and Chief Executive Officer. "We are now able to move forward and focus on finalizing our restructuring process and plans to emerge from creditor protection in the fall 2010."

"AbitibiBowater would like to thank the Government of Canada for its efforts to reach this settlement and avoid a protracted and expensive NAFTA case. We look forward to continuing our strong working relationships with Canada and contributing to the country's economic, social and sustainable development," concluded Paterson.

The settlement agreement is conditional upon AbitibiBowater obtaining the approval of its terms by the Superior Court of Quebec in the CCAA proceedings and by the U.S. court in the chapter 11 bankruptcy proceedings as well as court approvals in the U.S. and Canada of AbitibiBowater's restructuring plans. Following emergence, the settlement payment will be paid to the new Canadian entity.

AbitibiBowater produces a wide range of newsprint, commercial printing and packaging papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 19 pulp and paper facilities and 24 wood products facilities located in the United States, Canada and South Korea. Marketing its products in more than 70 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has third-party certified 100% of its managed woodlands to sustainable forest management standards. AbitibiBowater's shares trade over-the-counter on the Pink Sheets and on the OTC Bulletin Board under the stock symbol ABWTQ.

SOURCE ABITIBIBOWATER INC. - ENGLISH

The Expropriation Fiasco drags on

Danny Williams hasty, ill-considered and thus far unexplained expropriation of AbitibiBowater assets may well end up costing the people of Newfoundland and Labrador untold millions of dollars.

A healthy chunk of their loss will go to a raft of expensive Montreal lawyers Danny Williams is using to pursue legal action in Quebec courts.

Now that the Quebec appeal court refused to hear the government’s appeal of lower court decisions, the only place left is the Supreme Court of Canada.  Odds are against that court hearing the case simply because the provincial legal arguments are week and they have already been thoroughly demolished at the lower court level.

One must wonder why Williams persists.  His track record in court isn’t good.  Take Henley v. Cable Atlantic or Ruelokke v. Newfoundland and Labrador and the preposterous privative clause argument as good cases in point. 

You can then add the AbitibiBowater cases to the list. Anyone who takes the time to read the record of government’s actions in the whole bankruptcy can only shake their heads in disbelief at the amateurish actions.

Many of its actions has been as astonishingly lame as the government’s performance in that other Quebec legal action, the Regie appeals. One would scarcely believe that government’s lawyers did not call a single expert witness to support its case or refute Hydro-Quebec’s assertions but that is exactly what happened.

According to the Globe and Mail, [link above] the provincial government contends there are three issues that need the attention of the nine wise old owls in Ottawa.

Newfoundland said the case raises three specific issues: – ensuring consistency across the country by resolving a conflict between provincial environmental law and federal bankruptcy and insolvency law; – who should bear the cleanup costs when a company is attempting to restructure; – does the CCAA give a court power to remove all hurdles under provincial law that impair a company's ability to restructure.

Now your humble e-scribbler isn’t a lawyer but the answers to these questions seem fairly obvious.  They are obvious because AB is still on the hook.

The answers are in the Quebec court decisions: at no point has the company been relieved of any of its liabilities for clean-up of its properties in this province.  When AbitibiBowater set up the remaining properties in a holding company, the provincial government’s lawyers did not raise a single objection in court.  AB is still on the hook.  The liabilities have not been extinguished.

The Quebec court decisions are there in black and white.  The language is not complicated. One can only wonder why Williams persists in pursuing what is essentially a lost cause.

Perhaps, he carries on because of the intense embarrassment, the ignominy of such a massive mistake as the expropriation turned out to be.  As the Globe out it:

The province wants to force Abitibi to clean up five sites it ran between 1905 and 2008.

Unfortunately for Williams, he and his lawyers screwed up the expropriation. The provincial government now owns some of the most contaminated of the sites. His clever little scheme – seize the assets and leave the company with all the liabilities – blew up in his face.

And what must be especially galling is that Williams knows  the law is absolutely clear on this as well:  the liability flows to the new owners.  When Williams seized the property, he seized the pollution and the responsibility for cleaning it up.

If things go as they are likely to go, the SCC won’t waste time hearing the appeal. Unfortunately for the people of Newfoundland and Labrador, though, a quick end to the legal action only limits a small portion of the costs that will flow from Williams’ monumental shag-up. The final tally for that mess has yet to be calculated

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AbitibiBowater creditors meeting

10:00 AM Eastern Time, September 14, 2010 at the Hilton Montreal Bonaventure.

Big ad in the business section of the Monday Globe and Mail.

Will the provincial government be there?

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Sins of omission

“Five key bridges in the western portion of the T’Railway Provincial Park that closed in 2008 are now re-opened to park users. … [The five bridges are being ] replaced as a result of a $3.6 million allocation in Budget 2010: The Right Investments – For Our Children and Our Future.”

That’s part of the first paragraph of a happy-news release from the province’s environment.  It’s one of dozens issued every week in July as part of the happy-news offensive mounted by the provincial government in the run up to August’s scheduled polling by the provincial government pollster.

The release leaves out much relevant detail.

Not surprisingly, that detail is embarrassing to the provincial government and especially to the ever-embarrassing minister, Charlene Johnson.

For starters, the bridges in questions were all former railway bridges inherited by the provincial government in 1988 when the railway closed.  The provincial government took responsibility for the bridges but until 2008 – apparently  - did nothing with them.

No maintenance.

No repairs.

No inspections either, apparently.

At all.

That is until the federal government inspected a few that crossed over federally-monitored waterways.  They found a raft of them in what appeared to be perilous states of disrepair. 

In one case, one of the bridges had vanished entirely.  When inspectors showed up to take a lookee-look, they couldn’t find anything except the footings on either shore.

So basically this splendiferous investment of more than three and a half millions could have been avoided or at least spread out over time if someone – anyone – at any point along the way had decided to do some regular maintenance on the bridges.

Or even taken a peek at them once in a while.

Even an auditor general’s report in 2003 on inadequate inspection of road bridges seems to have prompted any action on the former railway bridges, the ones now used by pedestrians, snowmobilers and ATV operators.

None of this, by the by, stopped Johnson from claiming that her department prized public safety. As your humble e-scribbler noted at the time:

We understand the inconvenience of the closure of these structures; however, public safety has to be our number one priority," said Minister Johnson.

But...

Environment Minister Charlene Johnson said today the province does not conduct routine safety assessments of structures on the T’Railway, which is a provincial park.

“There’s no regular inspections, no,” Johnson said in response to questions from reporters.

That sort of bumbling is why some people find it odd that Charlene has adopted a tone of haughty arrogance when dealing with issues like the Abitibi expropriation fiasco or offshore oil.

That sort of bumbling is also likely why Charlene’s publicists decided to torque this release without any reference  whatsoever - an omission in other words - to the mess that started it all.

But all of it doesn’t explain the real sin of omission here:  namely the explanation of why the Premier keeps this minister in a job for which she is clearly unqualified and at which she has clearly been a disaster of BP proportions.

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Calamity Kathy’s story doesn’t add up

From a cbc.ca/nl story posted on Wednesday June 30, here’s natural resources minister and deputy premier Kathy Dunderdale after the people of the province learned that a company she said had been interested in the Grand Falls-Windsor mill was insolvent and after the investor backed away from the deal:

Dunderdale said she was aware of the company's troubled financial past.

"We knew that there were financial issues, but we knew that their investment wasn't coming from Lott Paper," said Dunderdale.

But here’s what Dunderdale said about the troubled financial past of the company before Saturday, June 26 when Bond Papers posted the news that the company Dunderdale identified as the interested party was insolvent yet again:

Speaking with reporters outside the legislature on June 24, Dunderdale was unequivocal about the name of the company:

The minister revealed that the company, later identified as Lott Paper, is in the process of submitting a business plan. [The Advertiser]

or…

Responding to questions in the legislature, Dunderdale said Lott Paper is working with the government in hopes of acquiring the Grand Falls-Windsor mill that closed in February 2009. [CBC version]

None of this gets better in her scrum on June 30.  During the scrum [posted to cbc.ca/nl] Dunderdale claims that the individual who visited the Grand Falls-Windsor mill site explained to her that the investment would be coming from Motion Invest.  So why then did she claim it was from Lott when she ought to have clearly known the difference, that is if she’d actually met the chap, had his business card and understood clearly in may who was putting up the cash?

She was also pretty clear about what the company did on May 26:

"It's a pulp and paper company that sees some opportunity because Abitibi is withdrawing from its markets in Europe," Dunderdale later told reporters.

"It's a very credible company, but it's very early days."

And as for the caution Dunderdale now claims she had all along – the “reservation” to use her own word -  let’s just say that Calamity Kathy has a very short memory. 

On May 25, New Democratic Party leader Lorraine Michael asked a simple question:

Since that is so important - I agree it is - I am asking the Premier: Are they out looking for that major industrial customer to make that happen [to drive industrial development in central Newfoundland]? That is the question I am asking.

Dunderdale did not reply with a general answer that the government was actively seeking expressions of interest, would continue to do so and would announce anything when there was concrete news to report.

No.

She did not do that.

Instead she said:

While we have not had the results that we are looking for particularly from that Expression of Interest, Mr. Speaker; I am happy to say that we have had an Expression of Interest from Germany last week, principals in, looking at what we have to offer in Central Newfoundland. We are very hopeful about that prospect, Mr. Speaker.

We are very hopeful about that prospect, Mr. Speaker.

She avoided a general answer that would have certainly prevented anyone from having any false expectations or hopes.  She decided not to give a non-committal answer, one that would be prudent given that  - as any experienced negotiator knows – there is a long way between the first contact and the final deal.

Instead, she said the government had an expression of interest and that “we” – the provincial government – were full of hope about it.

Not cautiously optimistic.

Not wary.

Not concerned, lest people get too excited too early.

Hopeful.

Her caution, such as it was in both May and a month later, seemed to be more about ensuring the public didn’t expect something to happen very suddenly.  Her claim on Wednesday that she had reservations all along just isn’t backed up by her own public statements. 

Dunderdale only developed any serious reservations about the company once Bond Papers and others revealed the financial problems with the company.  And if those concerns weren’t enough, CBC did a fine job of digging out greater detail on the potential investors themselves.  All this information was readily available to anyone doing some fairly simple checks. it isn’t rocket science.

All of this checking ought to have been done from the outset.  Instead, if one listens to Dunderdale’s scrum from Wednesday,  it is clear that neither she nor her staff did anything to check into the company.  Dunderdale states at one point well into the questioning that her staff would only do the necessary analysis -doing “due diligence”  as Dunderdale puts it in her cliche-ridden way of speaking – once the company sent along a detailed business plan.

Nor is all of this confusion on Dunderdale’s part the only sort of problems there are with this most recent of her cock-ups.  Take a good listen to the scrum.  What she claimed on June 24 was a letter of intent with a great amount of detail has morphed – now that the problems with the company are in public – into something that wasn’t sufficiently detailed enough for anyone to make a decision on. On June 24 she described the letter – now with insufficient information – as being a business plan.

All of this goes back to an episode much like the current one.  It dates from the days when Dunderdale was in charge of the business development portfolio.  Then as now, Dunderdale was long on meaningless jargon - “due diligence piece” and very short on either comprehension or details.

As Bond Papers put it in 2005:

She also said this information turned up by reporters wouldn't have "negatively impacted" on government's decision, had it been known.

The problem, Kath is not that you might have acted differently if you knew. The point is you just didn't have all relevant information in front of you when you opened my chequebook to hand some American company some of my cash.

The problem is that we out here among the toiling masses don't know what else it is that you don't know before you make a decision.

Five years later and with considerably more public money up for grabs here, Kathy Dunderdale’s old problem – making decisions without having adequate information – remains the same.  So too does her apparent inability to understand what it is that she actually does have in the first place.

Dunderdale has considerably more power now than she did in 2005. 

The public still cannot be assured, however, of what she doesn’t know – or care to know – before she’s prepared to carry forward with a project involving potentially tens of millions of dollars of public money.

This is no way to run a provincial government and it is astonishing that the Premier, as capable a businessman as he supposedly is, would allow this situation to continue for five years.

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Addendum: From an exchange in the comments section, here are a string of questions coming out of this latest fiasco that need answers. 

The answers are important not merely to get to the bottom of this particular episode;  they are important because the public should be assured of exactly what the provincial government policy is on using public money to subsidize private businesses.  The answers are important because they can give the public some assurance that those in charge of handing out public cash are capable of doing the job of protecting the public interest they get paid to do.

1. If Dunderdale knew the difference between Lott and Motion Invest, when did she know it?

2. Was it before or after she claimed that Lott was the company that would be investing?

3. If she had concerns about the company's financial state, did she have them before or after Lott's bankrupt status was made public (not by Dunderdale)?

4. If she had any doubts at all about this company and its interest, then why did she even mention the whole affair on May 25 and therefore set up the circumstance on June 24 [in which she was asked a follow-on question]?

5. Since she is a cabinet minister with knowledge (presumably), why does she elect to blame someone for merely asking a question?

6. Is the whole thing on or off? According to her comments in the scrum, it's only nearly almost dead. According to the excellent reporting at [the Telegram], the deal is dead.

7. Therefore, what exactly did she say to Roche and what did he say to her in their telephone conversations on Wednesday that could lead to two diametrically opposed comments? [Update:  According to Dunderdale in the scrum, she never spoke to Roche:  her unidentified CEO did.  That raises another question: which CEO was it -  Ed Martin or the agrifoods boss?  This sort of thing should be going through Ross Wiseman’s department.]

8. And since we are asking, why did she make several calls on Wednesday given that she basically pissed all over the company and their proposal publicly the night before?

9. What is the difference between a letter of intent and a business plan?'

10. Did Kathy actually read the letter from Roche (or whoever sent it)?

11. Will the government pour cash and other subsidies into any venture or will they stand by her earlier comment that there was no cash available?

12. If there is no cash, why didn't she just tell Roche that $52 million was nonsense instead of considering the proposal?

13. If there is cash, then how much is government willing to pour into a venture?

14. Would the government cash be in an equity stake or would it be - as with others - basically like a set of free steak knives for playing the game?