Who's behind Canada's new pulp-and-paper powerhouse, and where's the money coming from?
Paper Excellence is Canada's biggest pulp producer and one of its biggest lumber suppliers
After 15 years of buying up Canadian pulp, paper and lumber mills, Paper Excellence is now the largest producer of paper pulp in the country, with about 20 per cent of all mill capacity — 50 per cent bigger than its closest rival, Canfor, according to data from pulp-market analysts TTOBMA.
But for such a major player, Paper Excellence is remarkably quiet about the inner workings of its business.
Who exactly runs the company? Who is Jackson Wijaya, the elusive founder and CEO? How did it come into the billions of dollars to fund its acquisitions, and what does it plan to do with nearly 22 million hectares of Canadian forest it now manages — an area four times the size of Nova Scotia?
The answers are hugely important for one of Canada's most iconic natural resources, its immense tracts of forest.
For Paper Excellence, the story is straightforward.
"Jackson Wijaya established Paper Excellence … with a dream to build a strong business in the pulp and paper industry in the Americas and Europe," the company said in a statement to CBC and five other media outlets last week. "His goal has been, and is, to create and develop a healthy and sustainable business."
But a months-long investigation by CBC News, in collaboration with Canadian and international media partners as part of a wider look at the global forestry industry by 40 media outlets under the umbrella of the Washington-based International Consortium of Investigative Journalists, has found that the reality and the rhetoric often don't align.
The people behind or associated with Paper Excellence appear to have a pattern of using thickets of corporations, including in tax havens, effectively shielding transactions and assets from public and government scrutiny.
The company won't open up about its past financing, some of which was facilitated by the China Development Bank, which is owned by the Chinese government.
CBC's investigation also found leaked records and insider accounts that show that Paper Excellence, at least until a few years ago, appears to have been closely — and secretly — co-ordinating business and strategy decisions with Asia Pulp & Paper, one of the world's biggest pulp-and-paper players, which has a track record of environmental destruction.
"It's not normal for a company that has such a huge impact on such a vast area of forests, which goes to the heart of Canadian identity in so many ways … that a company with such impact wouldn't have transparency," said Shane Moffatt, head of the nature and food campaign with Greenpeace Canada.
Deforestation concerns
Ask Greenpeace or any of a dozen environmental groups why they're concerned about Paper Excellence, and they link it immediately to a conglomerate called Sinar Mas. Owned and run by a billionaire Indonesian family of Chinese origin — the Wijayas — the family has interests in palm oil, real estate, financial services and a controlling stake in Asia Pulp & Paper (APP).
Sinar Mas and its subsidiaries have been the target of environmental advocacy groups for years. There have been reports of tropical rainforest clearing, peatland destruction and "extensive ties" to companies linked to fires and deforestation in Indonesia.
In 2007, APP lost its sustainability certification from the Forest Stewardship Council "because of substantial, publicly available information that APP was involved in destructive forestry practices," the FSC said. It has never regained it.
Stacks
of timber are shown during an aerial tour of the Sumatran Forest with
Greenpeace and South Sumatra Gov. Alex Noerdin in this 2010 file photo.
The land is owned by PT.Rimba Hutani Mas, part of the Sinar Mas Group
that owns Asia Pulp & Paper Co. (Ulet Ifansasti/Getty Images)
And that's where it gets tricky. Paper Excellence's official founder and CEO, Jackson Wijaya, is the grandson of the tycoon who created Sinar Mas in the 1960s. Over his life, Wijaya has held numerous positions with Sinar Mas, including as a director of an APP China holding company and of offshore corporations set up in the tax haven of Barbados.
In return, he's benefited from his family's wealth and financial connections.
The first Canadian mill acquired, in Meadow Lake, Sask., in 2007, operated under the Sinar Mas banner for several years; the mill's website said it had been purchased by an Indonesia-based company. In 2008, Paper Excellence was incorporated in the Netherlands. The next year, it was still a fledgling company, yet it received a $17-million US loan at near-zero interest from family-owned Bank International Ningbo.
Now, 16 years later, Paper Excellence insists there are no ties between the two sides.
"Paper Excellence is owned solely by Jackson Wijaya and is completely independent from Asia Pulp & Paper," it said in a statement to CBC and its media partners last week. "Nobody other than Jackson has ever been or is the ultimate owner or controller of any of the companies in Paper Excellence."
Jackson Wijaya, right, is seen with Brazilian politician Eduardo Bolsonaro in this image sent out via Twitter on July 30, 2019. (BolsonaroSP/Twitter)
That air of independence is important to its business. Most of Paper Excellence's operations have some kind of FSC certification, which enables a pulp-and-paper company to command higher prices for its output and attract environmentally conscious brands as clients. But if it were shown to be a branch of the disqualified APP, Paper Excellence could put its certification at risk.
The company's claims of independence are also impossible to verify. Paper Excellence is a private corporation, and despite saying it's Canadian-based, its ownership chain actually traces through companies set up in the Netherlands, Malaysia, the Malaysian offshore jurisdiction of Labuan and two shell companies in the British Virgin Islands.
CBC and its media partners — including Glacier Media in B.C., the Halifax Examiner, Radio France and the French newspaper Le Monde — twice asked Paper Excellence to provide some kind of proof of who really owns it. The company did not.
Leaked records show close collaboration
Behind the scenes, though, there is evidence that Paper Excellence and Asia Pulp & Paper have worked cheek-by-jowl on everything from regulatory submissions to supply and pricing, at least until a few years ago.
Emails and internal company documents first obtained by the Halifax Examiner show there was close co-operation between APP staff in China and Paper Excellence personnel. The emails span a relatively short time in the late 2010s and are not necessarily indicative of Paper Excellence's or APP's practices today.
In 2017, for instance, Paper Excellence's Vancouver-based sales executive Edwin Widjaja emailed a vice-president at APP in China, asking for info on how much he should charge a potential client for a kind of wood pulp known as unbleached kraft, or UKP.
The reply came quickly, in the form of a directive. "Right now, don't sell any UKP to non-sister mills," the APP executive wrote. "Keep them in your warehouse first while we decide in a couple of days on what to do.… As for 2018, please don't commit to any long-term contracts till we get our UKP study done."
The next year, a sales executive for Paper Excellence's two mills in France had an email exchange with the same APP vice-president in China, also about unbleached kraft. The VP asked for a monthly breakdown of how much one of the French mills was going to produce, and "then we can plan ahead of time how to introduce this new pulp to our customers."
The exchanges blur the line between corporate entities that are supposedly independent — a red flag, according to Ottawa-based competition expert Keldon Bester.
"That kind of language is red meat for antitrust enforcers," he said. "What are you really not supposed to talk to your competitors about? Pricing, quantity and distribution."
Cedar
planks are stacked at a lumber yard in Montreal in this 2017 file
photo. On March 1, Paper Excellence closed its latest acquisition: The
$2.7-billion US purchase of Quebec-based Resolute Forest Products. (Paul Chiasson/The Canadian Press)
The leaked records were provided to the Halifax Examiner, and later to CBC, by a source who said that Paper Excellence's real nerve centre wasn't in Richmond, B.C., but in Shanghai, in the same offices as APP. The source said that, in fact, Paper Excellence's entire back office at the time — the teams handling legal, accounting, finance and market analysis — was run by APP and there were no boundaries between staff working for one or the other company.
"APP staff is PE staff. There is no difference there," the source said.
CBC agreed to protect the source's identity out of concerns for their safety.
The source said, for example, that the sales manager for Paper Excellence's subsidiary in France attended strategy meetings at APP's Shanghai offices, with other APP teams from Asia and Europe.
"It's extremely nebulous. You never know who's working for who," another former executive at that French subsidiary told CBC's reporting partner Le Monde, on condition of confidentiality because he still works in the industry.
"I had a direct relationship with the owners of APP. My boss at the time was based in China and our monthly videoconference meetings were held with Teguh Wijaya" — that is, Jackson Wijaya's father and the chairman of APP.
Teguh
Ganda Wijaya, chairman of Asia Pulp & Paper, speaks during a
ceremony in Jakarta in this 2013 file photo. Paper Excellence is owned
by Wijaya's son, Jackson. (Adek Berry/AFP via Getty Images)
But an employee who worked for APP for nearly a decade said that didn't reflect his experience, which was that APP and Paper Excellence were "pretty well siloed."
However, records show APP employees seem to have handled important Paper Excellence business outright. APP's outside lawyers and in-house legal department stickhandled submissions to Chinese antitrust authorities when Paper Excellence wanted to buy the Eldorado pulp mill in south central Brazil; ironically, the drafts even went so far as to list APP as a Paper Excellence competitor.
Paper Excellence did not respond to our inquiries about the above allegations.
APP said any suggestion its staff have worked on behalf of or alongside Paper Excellence is wrong. "APP has not shared confidential information with Paper Excellence. Nor have its employees engaged in any work with Paper Excellence," the company said in response to questions from CBC and its media partners.
Paper Excellence continued its buying spree and swallowed B.C.-based Catalyst Paper in 2019 for an undisclosed price. That was followed by the purchase of the Quebec-American company Domtar in 2021 for $3 billion US. The most recent acquisition is the $2.7-billion US purchase of Quebec-based Resolute Forest Products, completed on March 1. Canada's Competition Bureau for the most part granted its blessing.
Bester said the Competition Bureau's process doesn't provide much opportunity for the public to know what a company did — or didn't — disclose.
"If the bureau has been misled or things have been omitted that are relevant to the competition analysis, the bureau would be extremely interested in that. So we can't say for sure because we don't know what they were and were not provided with."
Mystery of money from China
It takes billions of dollars to build a new, world-class pulp mill. Paper Excellence's expansion in Canada deliberately took a different tack. Its earliest acquisitions — initially under the Sinar Mas banner, and later in its own name — were older, often shuttered or insolvent mills in B.C. and Saskatchewan.
But then there were costs for upgrades and repairs. Employees had to be hired. And the company's ambitions grew.
By 2012, Paper Excellence sought big financing. And it came in the form of credit — $1.25 billion US worth — through a Chinese government-owned bank.
CBC's investigation has revealed that the China Development Bank had mortgages with a debenture for that amount on three Canadian pulp mills owned by Paper Excellence starting in August 2012 as part of the security for financing that was repayable on demand.
Paper Excellence would not answer questions about how much of that credit it drew on, nor why it sought financing through a Chinese government-owned bank.
The flags for the China Development Bank are flown outside a subsidiary branch office of the bank in Beijing on Jan. 8, 2021. (Ng Han Guan/The Associated Press)
The loan was typical of many of the bank's investments at the time, said Rebecca Ray, a senior academic researcher at Boston University's Global Development Policy Center who studies development finance, including the China Development Bank.
"The kind of very large-scale financing that you were talking about in 2012 for raw commodity production, that comes as no surprise to me in that that's exactly the same kind of financing in those years that we see to major commodity producers around the world … as China is establishing the supply chains that it needs to support its new cities."
The discharge of the loan also corresponds to a time frame when the China Development Bank was pulling back from large loans to natural resource companies in favour of the government's new policy of smaller, more strategic lending, she said.
The mortgages on the Meadow Lake, Mackenzie and Howe Sound mills were discharged over the course of 2020 and replaced with loans from two Indonesian government-owned banks, Bank Mandiri and Bank Negara Indonesia, who now hold those amounts also repayable on demand.
The financing to Paper Excellence is the only time the China Development Bank or the Indonesian banks have registered any mortgages in British Columbia, the province's land records show.
The company didn't directly answer why it chose to finance in this way. "Paper Excellence constantly reviews market conditions and market circumstances in determining its financing strategies/options," the company said last week.
"To see that one of the biggest forestry players on Crown land in eastern Canada is an Indonesian giant, formerly financed by China, is not reassuring to us. We do not want to plunder our forests here in Quebec," said Daniel Cloutier, executive director of the Unifor local that represents unionized workers at Resolute and Domtar.
The Domtar paper mill in Espanola, Ont. Paper Excellence purchased the Quebec-American company Domtar in 2021 for $3 billion US. (Erik White/CBC )
Lumber and forestry have long been of interest to China, and the China Development Bank often plays a key role in advancing the country's goals, says Margaret McCuaig-Johnston, a former top official in the federal government's Industry and Natural Resources departments, and an expert on China.
"It's often one of the first organizations in the door when China wants to enter a market and acquire resources in another country," McCuaig-Johnston said.
"So, in the form of a loan, that doesn't seem too difficult or too threatening to a government. But very often, that will then morph into other arrangements. And so it's where you actually get control by a Chinese company or Chinese interests that you really run into problems."
McCuaig-Johnston said companies owned by foreign interests with Chinese partners could decide to export its production to China and Indonesia.
"The reason Canadians should care is that we have seen in China's behaviour in other resource companies that they will often export all of the product to China for China's own use," she said. "Canada needs its own products from its own natural resources and we need to be assured that we will have access to that."
That's a sentiment echoed by Cloutier.
"China has a voracious appetite for kraft pulp and in Quebec we're barely self-sufficient. What are they up to? Is their goal to get their supply from us? What impact is this going to have on our own needs?"
Elizabeth Thompson can be reached at elizabeth.thompson@cbc.ca. Zach Dubinsky can be reached at zach.dubinsky@cbc.ca.
With files from Kate Zieman, Olivier Bourque and Stephanie Matteis
Find 1(one) false claim or statement or illegal act from P Ex and presto...all deals are off.
With the right judge.
Nobody buys the very expensive 'made in Canada' furniture.
They buy the cheap stuff from China.
We've done this to ourselves, and continue to do so with every purchase.
Parliament needs to rewrite our competition laws, and the elected government needs to fire everyone involved in executive management at the Competition Bureau and make it crystal clear to their replacements that their jobs are to protect Canadians from companies and their leaders who want to engage in anti-competitive behaviour to enhance either profits or control over Canada's natural resources.
It wouldn't be hard to police every deal that gets made in corporate hands. Instead we maintain some form of corporate right to secrecy so that the large money finds our state appealing. Soon this sacrifice will cost something we all don't want it to.
Canada, home to a massive boreal forest, lobbied to limit U.S., EU anti-deforestation bills
Canada's boreal forest covers 270 million hectares, spanning from Yukon through to N.L.
Jennifer Skene, natural climate solutions policy manager for the Washington-based Natural Resources Defense Council (NRDC), accuses the Canadian government of a "very aggressive" lobbying campaign against the inclusion of the boreal forest in New York and California deforestation-free procurement bills.
In the original drafts, the bills would have prevented those states from buying products that are tied to deforestation or forest degradation from boreal or tropical forests directly or through their supply chains.
But Skene said, "Canada has been trying to remove itself from those same sustainability thresholds."
Canada's boreal forest stretches from Newfoundland and Labrador to northeastern British Columbia and the Yukon, and covers 270 million hectares. It is a major carbon sink and provides important habitat for tens of millions of migratory birds and endangered species, such as caribou and grizzly bears.
A section of boreal forest is shown near Whitecourt, Alta. (David Bajer/CBC)
Elijah Reichlin-Melnick, a former New York state senator and co-sponsor of the New York Deforestation-Free Procurement Act, says he was lobbied by Canadian officials who argued that Canada's forestry is sustainable and Canada should not be included in the bill.
He remembers hearing repeatedly from the federal and provincial governments, who felt the bill "was targeting Canada and targeting the lumber industry there and, you know, that they were already sustainable enough and so there was no need for it."
Reichlin-Melnick disagrees.
CBC News obtained letters from the Alberta premier at the time, Jason Kenney, and Alberta Minister of Agriculture and Forestry Devin Dreeshen indicating the type of lobbying Reichlin-Melnick describes.
For example, in a letter dated May 20, 2022, Kenney wrote the governor of New York with "deep concern" that if the bill passed, it would create "an unjustified, non-tariff barrier to Canadian forest products and forest risk commodities, and threaten jobs and supply chains of sustainably sourced products."
Kenney noted Canada has "world-leading sustainable forest management practices" with a "framework that prevents forest degradation and deforestation, as defined by the United Nations."
Alberta Premier Jason Kenney's letter to N.Y. Gov. Kathy Hochul (PDF 594KB)
Alberta Premier Jason Kenney's letter to N.Y. Gov. Kathy Hochul (Text 594KB)CBC is not responsible for 3rd party content
According to the journal Science Advances, published in 2017, Canada ranks third globally for intact forest loss, behind only Russia and Brazil.
Skene says Canada clear cuts hundreds of thousands of hectares of boreal annually.
"Much of this is in irreplaceable, uniquely carbon-rich and biodiverse primary forests — forests that, once they're clear cut, can never be replaced," she said. "Canada is selling off its forests to the highest logging bidder."
Jennifer Skene is the natural climate solutions policy manager for the Washington-based Natural Resources Defense Council. (CBC)
It is notable that Canada is engaging in this way, she said, "even as it's calling for countries like Brazil and Indonesia to implement these same safeguards against deforestation and forest degradation."
"Canada has been positioning itself as a world leader on sustainability, and that's really very much been a green veneer on top of what is really devastating practices on the ground."
What did the governments write?
On March 23, 2021, New York State Sen. Liz Krueger and Assembly Member Kenneth Zebrowski introduced the New York Deforestation-Free Procurement Act.
In a letter dated April 21, 2021, former Ontario minister of Natural Resources and Forestry John Yakabuski wrote Reichlin-Melnick, chairman of the committee of procurement and contracts, asking for an amendment to the bill to remove references to boreal forests.
Yakabuski wrote that the bill "does not consider Ontario's world-class sustainable forest management practices, which specifically prevent forest degradation or deforestation of the boreal forest."
Freshly
cut logs are shown in a tract of boreal forest near Chapleau, Ont.
According to research from 2017, Canada ranks third globally for intact
forest loss, behind only Russia and Brazil. (Sylvène Gilchrist/CBC)
Khawar Nasim, then-acting consul general of Canada to New York, wrote on April 25, 2022: "New York is including its most responsible and reliable supplier of forest products in a bill best directed at others."
"Canada has exceptional forest management and shares New York's commitment to a green, sustainable future. We are concerned that the inclusion of Canada in these bills is misguided and a risk to our shared prosperity."
When it was reintroduced into the New York Senate on Feb. 15, 2023, the bill was renamed the New York Tropical Deforestation-Free Procurement Act and made no mention of boreal forests.
New York State Sen. Jeremy Cooney, a co-sponsor of the bill, told CBC News that there was a significant lobbying effort from the Canadian government directly.
"When we learned that almost 1.6 billion in Canadian dollars was derived and generated from sales of wood, pulp and paper just in New York state alone, it really opened my eyes to say this is a significant change or would be a significant change in that trading relationship."
New York State Sen. Jeremy Cooney says there was a significant lobbying effort from the Canadian government. (CBC)
Reichlin-Melnick says the only reason boreal would have been taken out of the bill was lobbying efforts by Canadian officials. He says they didn't hear from other countries, like Russia, Sweden, Norway or Finland, which also have boreal forests.
No 'viable path' forward: U.S. senator
Reichlin-Melnick says Canada wouldn't have been affected by the bill if Canada was logging sustainably.
The provincial and federal governments "really did feel that it was targeting Canada in some way and that … we should limit it specifically to tropical rainforest, which was where the bad actors were, in the Third World," he said.
State Sen. Liz Krueger, who re-introduced the bill as the New York Tropical Deforestation-Free Procurement Act, told CBC News in a statement: "The science is clear that forest degradation through ongoing clear cutting of primary boreal forest is a significant contributor to the dual global crises of climate change and biodiversity loss."
But she couldn't find a "viable path forward for this legislation to include boreal forests" and that focusing on tropical deforestation was a way of addressing supply chain issues and "will help catalyze more global action and accountability on the loss of climate-critical forests."
Cut logs are seen about 40 kilometres north of the Chapleau Cree band office. (Sylvène Gilchrist/CBC)
Dropping boreal forest from the bill was a missed opportunity, says Reichlin-Melnick. He says New York is one of the 10 largest economies in the world, and with that kind of economic leverage, this bill could help tackle climate change and stop deforestation.
He says boreal forests were included in the bill because they are one of the largest intact forests in the world.
Chief Keith Corston, of Chapleau Cree First Nation, says the boreal in northern Ontario is at a tipping point, and if steps aren't taken, there will be no boreal forest left within 30 years. He disagreed that Canada has world-class sustainable forest management practices.
"They are basically raping and plundering the resources on the land. They use words like 'sustainable forest.' It's not sustainable."
The case of California
Skene says Canada did something similar with the California Deforestation-Free Procurement Act in 2021.
At the time, Yves Beaulieu was the consul at the Consulate General of Canada in San Francisco. In a letter to the chair of the California Assembly accountability and administrative review committee, Beaulieu pointed out that "Canada and California have long-standing forest sector supply chains and other links that support jobs and economic security on both sides of the border."
A version of the California Deforestation-Free Procurement Act with the word boreal in it passed the California assembly on April 28, 2021.
On June 15, 2021, the governments of Quebec, Ontario, Alberta and B.C. wrote to Bill Dodd, the chair of the Senate standing committee on governmental organization, asking that the bill be amended to remove references to boreal.
On July 6, 2021, boreal was removed from the bill, which then only referred to tropical forests.
It passed the Senate, but Gov. Gavin Newsom vetoed it on Oct. 5, 2021.
Skene says Canada industrially logs the boreal and undermines policies to protect the forest, while it continues to brand itself as a leader on natural climate solutions. She points to the government's two billion tree program on forest restoration as an example.
"All of that is sort of a distraction from what is the most immediate and sweeping issue, which is the fact that they are eroding some of the world's last primary forests; they're liquidating them and turning them into products like toilet paper and biomass."
WATCH | The international push to stop Canadian boreal deforestation:
Skene says Canada also lobbied to weaken a European Union regulation that bans the sale of products in the EU that are linked to forest degradation and deforestation.
In a letter obtained by CBC News, Canada's Ambassador to the European Union, Dr. Ailish Campbell, wrote to European policymakers, urging them to delay a key provision of the regulation, arguing that there was no accepted definition of degradation.
The regulation was approved on Dec. 21, 2022, and requires the traceability of products from seven commodities to ensure sustainability: palm oil, soy, coffee, beef, rubber, cocoa and wood.
In a statement to CBC News, the Forest Products Association of Canada (FPAC) says that attempts to target products sourced from the boreal are misguided, and should be aimed at tropical forests.
Canada is selling off its forests to the highest logging bidder.
- Jennifer Skene, with the Natural Resources Defense Council
"While well intentioned, the New York bill was misguided in falsely equating Canada's rigorous forest management laws with jurisdictions where there is much less scrutiny over forest operations. During the last 30 years, 90 per cent of global deforestation occurred in the tropics, so it makes sense that procurement policies aimed at preventing deforestation would focus on tropical forests."
The FPAC also wrote that the changes made in the bills reflected concerns raised by both Canadian and U.S. businesses.
Suing the province
On Sept. 30, 2022, Chapleau Cree, Missanabie Cree and Brunswick House First Nations launched legal action against the province of Ontario to stop degradation of the boreal forest in their traditional territories within Treaty 9, and to protect their way of life, livelihoods and well-being.
The lawsuit claims that the "cumulative impacts from a range of provincially authorized uses including forestry, mining, agriculture, energy, transportation and settlement in their traditional territories has had significant adverse impacts on the health of the boreal as well as on their treaty and aboriginal rights."
Chief Corston was raised in the middle of the boreal — a green ribbon of jack pine, black and white spruce, balsam fir, white birch, trembling aspen, balsam and poplar — that covers two-thirds of Ontario.
Chief
Keith Corston, of Chapleau Cree First Nation, says Canada's boreal is
at a tipping point, and if steps aren’t taken, there will be no boreal
forest left within 30 years. (CBC)
He says logging companies clear cut up to 10,000 hectares, and then replant with only the species the industry wants, like jack pine and spruce. The land is then sprayed with glyphosate herbicide, to prevent leafy trees from growing.
He says this is converting the boreal into fibre farms. "They don't want a sustainable forest, they don't want the boreal as much as they say they do. They want a tree farm."
Corston says clear cutting and spraying creates a monoculture.
"There's no more grey jays, whiskey jacks. You'll hear nothing. Soundless. Not a bird. You might hear the odd raven. You know, that's it. You go into a natural forest here — chirp, chirp, chirp. There's all kinds of noise, but that part is dead."
Corston says fur-bearing animals like fisher and marten are suffering and the moose population has declined by 50 per cent in the last decade. He says the logging industry wants to get rid of all the leafy trees, like poplar, that moose rely on as a food source.
"It is incidental to [the forestry industry]. I have a problem with that. It's not incidental. You must remember that the boreal forest is made up of many species. That's why it's a boreal forest and everything relies on the other."
Corston also says the industry only thinks about short-term gain.
"We're trying to think seven generations ahead. I think about my kids, my grandkids. If we don't do something about this, there will be nothing. Our way of life will be gone."
ABOUT THE AUTHOR
With files from Jonathon Gatehouse
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