Millions in taxpayer dollars spent over decades couldn’t save The Pas sawmill

August 25, 2016

By: CBC News

Since the very beginning, the biggest employer in The Pas, Man., has had difficulty turning a profit.

But the latest blow could be the final strike that fells the sawmill for good.

On Monday, Tolko Industries officials said after spending 19 years trying to make money in The Pas, the Vernon, B.C.-based company will close the mill in December.

The Manitoba mill has hummed along for more than 40 years, producing heavy-duty kraft paper and lumber — often with help from government.

This time, the federal and provincial governments are notably silent on whether any more public money will be spent trying to keep the mill alive.

The Pas’s sawmill was born out of a desire to tap the resources of Manitoba’s boreal forest. Strong, healthy trees surround The Pas and their pulp makes excellent paper products.

What started as a desire to spur the economy in northern Manitoba led to the disappearance of millions of dollars disappearing into a company that didn’t deliver on its promises, with the provincial government pursuing an Austrian businessman behind the deal for years in an attempt to recoup its funds.

The plan to build a sawmill in The Pas was conceived during Duff Roblin’s time as premier.

Under pressure to attract industry to the province, the Conservative government struck a deal with Austrian businessman Alexander Kasser to create Churchill Forest Industries, the company that built the mill in 1966.

The arrangement operated with little oversight and about $93 million flowed from the government into CFI accounts.

The Manitoba government pursued Kasser in an attempt to recoup around $30 million that he had taken from the company, but eventually settled in 1983, with Kasser pleading guilty to theft over $200 and paying $1 million in fines. The province dropped 34 related charges.

NDP premier Ed Schreyer called the affair the “blackest moment in Manitoba’s economic history.”

CFI was the subject of a commission of inquiry that found a number of cabinet ministers, civil servants, lawyers and economic consultants failed to recognize and stop Kasser’s fraud.

An October 1974 edition of the Montreal Gazette called it a “lesson in government folly.”

In response to the fraud investigation, Manitoba took over the mill in 1973.

It was managed by Crown corporation Manfor from 1973 to 1988. During this time, Manfor lost $300 million, according to the Winnipeg Free Press.

Tolko’s predecessor, Repap Enterprises, bought the facility in 1989 for $132 million. Less than 10 years later, it sold the mill for $47 million.

In 2006, Tolko threatened to close. Gary Doer’s NDP government responded by providing millions in aid through the Financial Stabilization Plan to help keep the mill running.

Four years later in 2010, when the mill was facing slumping demand for Canadian lumber in the U.S., the federal government gave Tolko Industries $2.26 million to improve its energy efficiency under the pulp and paper green transformation program.

Tolko remains the largest employer in The Pas, but in December, all 332 employees will be laid off.

 

By: CBC News

Your comments.

Your #1 source for forestry and forest industry news.

Built by Sofa Communications