Paper and Other Absolute Truths Providing Analysis and Perspective Uncommon in Mainstream Media

Danny Williams claims that his government did not intend to confiscate AbitibiBowater’s mill property in Grand Falls Newfoundland. Williams indicated that the province had only intended to take from its rightful owner everything that had value, not the mill itself. The CBC reports here that…

[Government officials claim that] In its rush, the surveys were botched and the area that the government claimed [took from AbitibiBowater] mistakenly included the land on which the mill sits.

Outside the legislature, Premier Danny Williams told reporters he’s embarrassed by the turn of events, but he can live with them.

“It was something I wasn’t happy with when it happened, but it was an innocent mistake that was made by an official in the department,” Williams said. “As simple as that.”

In February, the government announced in a statement that it had assumed “custody and management” of the mill, but did not reveal how that came to happen.

“When drafting Bill 75, we erred on the side of caution to ensure that the hydroelectric facility attached to the mill was included in the expropriation,” Dunderdale said in a news release at the time.

“By not including descriptive language to specifically exempt these other properties, the province assumed legal ownership of them.”

Williams said the environmental costs could be enormous but no bureaucrats will be disciplined and no politicians will be punished for the error.

It was apparently just a geographical error made by a nameless bureaucrat. It will cost the province many, many millions of dollars, but hey, Williams “can live with that”. Apparently one loose cannon, without supervision, can cost the taxpayers a lot of money; and that is certainly true in this case. But the loose cannon was not a nameless bureaucrat; it was the provincial premier.

This “geographic” error was interesting, however, because something similar happened to Premier Williams on his way to the hospital for heart surgery recently. He plugged “St. John’s” into his auto navigation device, intending to have his heart surgery done in the provincial capital. Next thing he knew, he had driven 1200 miles and ended up at St John’s Memorial in Boston or New York or wherever. While he was there he thought he might as well have his heart surgery. In was just an innocent geographical error, of course. I mean, if he had intended to have his surgery done in the U.S., he would have certainly told his constituents that, rather than leave them searching hospitals in St John’s, Newfoundland and St. John, New Brunswick, and every other St. John in Canada.

Was the confiscation of the mill site in Grand Falls really a mistake? I could not find any reports that specifically indicated that only power assets and wood rights would be expropriated. That may be the case, however, and if Williams made that comment at the time the bill was passed, please pass the information along, and I will acknowledge it here.

Absent such evidence, there are reasons to question that the takeover of non-power assets was accidental. We will offer a little historical background, and then point out specifically why we wonder if “it was all a big mistake”.

Stephenville, Newfoundland 2005 – As the newsprint market continued to deteriorate, Abitibi-Consolidated indicated that it might have to close its mill in Stephenville, Newfoundland. The company lobbied for assistance from other stakeholders, but Premier Williams undermined those efforts. According to Williams, there was no need to compromise; he arrogantly promised the union and the people of Stephenville that the mill “would not close on his watch”.

But of course, Williams didn’t have a clue. He was wrong about everything. Abitibi was not kidding about its financial difficulties. The leverage he thought he had over the company was non-existent. He could not prevent the mill from closing. When this became clear, he threatened expropriation. See the story here, from which the next two paragraphs are taken.

Expropriation is still an option for the provincial government if it finds another operator for Abitibi-Consolidated’s soon-to-be-shuttered paper mill in Stephenville, Premier Danny Williams says.

“There are two clear options for us – we can go in under the Expropriation Act, or we could just bring in separate legislation to deal with those Abitibi assets,” Williams told The Telegram in an interview.

Grand Falls Newfoundland in 2008 – AbitibiBowater had one other newsprint mill in the province. Demand for newsprint was still in decline, however, and other high cost facilities in North America had to be closed. Which facilities would survive? Isn’t it obvious? Those that were willing to help lower operating costs had the best chance of surviving. AbitibiBowater asked Grand Falls employees to allow it to close the small machine at Grand Falls and reduce headcount. The union vote was overwhelmingly negative. This refusal to cooperate sealed the fate of the mill.

Williams responded to the closure by confiscating AbitibiBowater’s Grand falls assets. Four key points lead us to believe that Williams intended to take all the AbitibiBowater property.

1. Based on comments Williams made regarding the expropriation of the Stephenville assets, it is obvious that he has this “Chavezanistic” philosophy. Why would he not follow through at Grand Falls what he threatened to do at Stephenville? In other words, this is completely in character.

Williams is a slow learner. He always assumed that corporate greed was the problem with the Abitibi mills. Based on the Stephenville expropriation comments, he probably thought he could find some entity to operate the mill – maybe the CEP, for example. But now that he owns a mill and understands the newsprint business better, he knows what a mistake he has made. No one wants the mill site. Williams can’t even pay someone to take it.

2. Point two is a question for anyone who might know the answer. Were there any AbitibiBowater assets that were not expropriated? Did the province take everything the company owned? If that is the case, then the province did not accidentally take too much. Obviously, if only the power assets were to be taken, something had to be left behind.

3. If we want to give Williams the benefit of doubt, one could imagine that the mill site, with power assets intertwined, could be mistakenly added to the list of “items” on the Christmas list. Answer this question, however. How could the plant manager’s residence and the stately historic lodge be accidentally included in the items to be expropriated? These structures are miles from the mill site and miles from any power facility. The following two paragraphs are from a February 8 Forestweb report.

The Newfoundland provincial government recently assumed custody and management of AbitibiBowater Inc.’s former pulp and paper mill and property and other assets in Grand Falls-Windsor, Newfoundland, The Telegram reported Feb. 5.[2010]

The company formally notified the provincial government on Feb. 2 that it was vacating the buildings, and the province then took custody, including Grand Falls House and the former mill manager’s house.

The lodge is a beautiful property. I have had the pleasure of spending a few nights there. It will be a great place for Danny and the boys to hang out and do a little fishing; but it has nothing to do with power assets.

4. The bill enacted to expropriate the AbitibiBowater property (humorously titled The Abitibi-Consolidated Rights and Assets Act) was pushed through the legislature with great speed and no debate. A good review of the process can be found here, from which several passages are taken.

With that done, let’s establish that Bill 75 was introduced with great haste.  While there was some indication government was considering an expropriation, there was no warning of this measure until it appeared in the legislature. The premier himself conducted a hastily arranged briefing for the opposition.  He obtained their consent to move the bill through all stages in a single afternoon with scarcely any substantive discussion in public.

Expropriation is usually a last resort.  In this instance, it was - in effect – the first resort…It may prove to be a weak measure…The cost to the public of bare-headed public policy sometimes isn’t clear until long after the fact and at the outset it is usually hidden with histrionics.  That was the case in water rights, the offshore ownership and even with NALCO, the energy corporation’s namesake.

It’s likely going to be the case with Abitibi as well.

Mr. Premier, what was the hurry? It is clear that Williams wanted to get this bill passed before anyone could investigate it very carefully. Why, maybe it was the inclusion of that vacation home that made him a little anxious.

POSTSCRIPT

After a previous post, David Coles, the CEP president, offered the following comment.

Allow me a few words to set the record straight on this issue. To my knowledge, the Premier of Newfoundland and Labrador did not assure Grand Falls-Windsor workers that AbitibiBowater mills would never close. Our members voted against the company’s proposals that they judged to be unacceptable and the Company decided to close the mill. Then Mr. Williams took action and revoked AbitibiBowater’s water and timber rights and expropriated its hydroelectric assets. He did not expropriate the mill, and this mill along with the land still belongs to the company.

It is also worth pointing out that the water and timber rights granted by Newfoundland and Labrador’s to the Grand Falls-Windsor mill owners back in 1905 (originally the Anglo-Newfoundland Development company) were conditional to the operation a mill in the province.

Section 3 of the 1905 Charter Lease states, “The Lessee shall be entitled (so far as the Government can, consistently with any grants heretofore made and actually subsisting grant the same) to have, use and enjoy for its milling and logging business all streams, lakes, watercourses, springs or water in, upon under or intersecting the demised premises, and all water power or powers in and upon Exploits River down to and excluding Bishops Falls and particularly, but not by way of limitation, the entire water power of Grand Falls on said Exploits River….”

These were revoked when the mill no longer was operating “a milling and logging business”. AbitibiBowater is eligible for compensation on its hydroelectric assets and can dispose of the mill and the land it owns the way it sees fit.

To simply state that Danny Williams “stole all the AbitibiBowater property” without qualifying this statement with the province’s rationale is simply wrong.

Dave Coles, President
Communications, Energy and Paperworkers Union of Canada

In response to Mr. Coles comment, Danny Williams did, as I indicate in this post, guarantee that paper mills in Newfoundland would “not close on his watch”. It is true that he was referring primarily to the Stephenville mill at the time, but the sentiment certainly included Grand Falls. It would have been one thing if, after realizing that the force of his personality would not keep paper mills running in Newfoundland, Williams changed his attitude, and began to encourage the unions and municipalities to work aggressively with AbitibiBowater, warning that neither he nor the province could save their jobs. But that was not his attitude. He, and the CEP, continued to encourage union employees to stand up to the greedy corporations, and fight the good fight. Well, they did, and now they are out of work.

In regard to Mr. Cole’s assertion that the province did not expropriate the mill site and other non-power assets, I am sure Mr. Cole now understands that he was wrong about this.

Mr. Cole says that Williams and the province did not “steal” the AbitibiBowater property, as I previously suggested. Well, I have two responses to that. First, if the power assets belonged to the province, then why would the province be volunteering to pay (a price it determines unilaterally) AbitibiBowater for the property it took. Second, you can call it what you want, but when property that belongs to a person or a business entity is taken without consent, I call it theft.