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Looking for answers

A former Buchanan Group employee says he doesn’t understand why he couldn’t get a severance when the company he worked for has received millions of dollars from the province.
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Darryl Stewart looks through some documents on July 17, 2012. (Jeff Labine, tbnewswatch.com)

A former Buchanan Group employee says he doesn’t understand why he couldn’t get a severance when the company he worked for has received millions of dollars from the province.

Darryl Stewart, 43, worked at the Buchanan Northern Hardwoods at the plant in Rosslyn for seven years before he and more than 155 employees lost their jobs The workers didn’t receive a severance package because the company filed for bankruptcy protection.

The employees instead received a Wage Earner Protection Fund that covered about 10 per cent of their severance.

Stewart took it upon himself to look into Buchanan’s finances. After two years, he successfully filed a Freedom of Information Act and found that the company owed $28.8 million in stumpage fees to the province, but more than $16 million had been relieved.

Stewart added that when the company filed for bankruptcy they defaulted on the $28.8 million.

He said he believes the government appeared completely inactive on the situation and only seemed to care about Terrace Bay.

“That’s about $44 million in trees being taken off the Crown floor that were processed, sold and not paid for and yet no one made any money and they couldn’t pay the employees a severance,” Stewart said.

“I found out that the Buchanan Group also received an additional $4.27 million in grants from the government of Ontario. You look at things now and there’s another $25 million that the taxpayers have handed over. That comes to about $73 million so my question is who got paid? The employees didn’t get paid.”

Stewart also wants to know why the province seemingly continues to support the company.

The province recently forgave a loan of more than $24 million in an effort to get people back to work in Terrace Bay.

Ontario’s Superior Court will decide Monday if Terrace Bay Pulp will be sold to India-based Aditya Birla Group. The move is recommended by Ernst & Young, the company’s court-appointed monitor.

Before that loan forgiveness was announced, the mill owed more than $42 million to creditors, the largest at the time being the province with the $24 million.

Aditya Burla’s $250 million plan means 630 jobs between the mill and woodland operations as the company uses the mill to make dissolving pulp, used in textile production.

While that sounds like good news for Terrace Bay, Stewart said it seems like the government has forgotten about the other mills in the region.

“They have been left holding the bag,” he said.

“That’s just unacceptable. It’s hard to believe that a company can hold that kind of debt over all its mills. If Lucky Star Holdings is so well protected from the financial responsibilities of the Buchanan Group of companies, why is this government continuing to throw money at this company.”

Ontario's Minister of Natural Resources Michael Gravelle clarified that Ontario hasn’t forgiven the stumpage fees. Gravelle also said that every time the government has made a decision it is to try to make sure operations continue in order to keep people employed.

Gravelle said he understands the frustrations, but at the same time it’s important to keep in mind that positive changes are happening and some companies are doing well because of assistance from the province.

“We’ve tried to be flexible for companies based on that they are providing products, continue to employ people and that’s better than a company that’s not running,” he said.

“This is a very tough spot and a tough situation but as always when we have provided support to a company there is due diligence. You make difficult decisions each time based on the information you have while working with people who understand the industry both within our ministry and not in our ministry.”

He added companies need to be accountable for the employees they have and need to be accountable for any obligations they take on such as loans.

Rene Lindquist, a national representative for the Communications, Energy and Paper workers Union of Canada, said he placed the blame regarding Buchanan on the shoulders of the province.

He said it was a situation where the right hand didn’t know what the left hand was doing.

He praised Buchanan as a good businessman because the umbrella company, Luck Stars, is protected even if the smaller companies go under. The companies act independently and can lend money to each other so if they go bankrupt, Buchanan can seize his own assets, he said.

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“The structure is legal,” Lindquist admitted. “The government needs to look at that and they need to do an investigation into that and see if that’s right. They need to change some laws in this country to prohibit that kind of stuff.”

Lindquist said he agreed with what Stewart was doing, but doesn’t believe the former employee will ever get the severance he’s after.
Officials with Buchanan Group were contacted but could not provide comment by press time.

 

 



 

 





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