The owner of Paper Excellence Group, the privately held pulp and paper maker that controls a commanding share of Canada’s forest products sector, is assuming ownership of his father’s controversial Indonesia-based business in a development that’s reviving concerns about his intentions in Canada.
Jackson Widjaja will gain sole control of Asia Pulp and Paper Group from his father, Oei Tjie Goan, according to a “proposed concentration” notice filed Nov. 15 with the European Commission. Mr. Widjaja will acquire four holding companies that together control all of the companies within the APP Group, the notice said.
The ownership transfer, confirmed by Paper Excellence, means Mr. Widjaja will have control over two of the world’s biggest pulp and paper companies operating on a total of four continents. Richmond, B.C.-based Paper Excellence, which adopted Domtar as its corporate name last month, is active in North America, Europe and South America, while Jakarta, Indonesia-based APP does business primarily in Asia.
The two companies will operate independently, but the move has increased concerns by environmental groups who point to the record of the family’s APP holdings, which have faced intense criticism for forestry practices in Indonesia that environmentalists say have caused widespread devastation to rainforests.
The Forest Stewardship Council (FSC), an international non-profit that certifies forest management practices, said Wednesday it would begin a review to determine the implications of the two companies being owned by one individual. Prior to the recent consolidation, Domtar has had FSC certification since 2008, while the council broke ties with APP in 2007 over what it considered destructive forestry practices.
Certification by the FSC is important in part because many retailers say they only use FSC-certified or recycled wood. After a Greenpeace campaign in the early 2010s, APP was ditched as a supplier by multiple customers, including Kraft Foods Group Inc., Unilever PLC and Staples Inc. Staples at the time described the Indonesian company as a “great peril” to its brand.
“Greenpeace Canada has been sounding the alarm about the relationship between Paper Excellence and Asia Pulp and Paper for years now,” said Priyanka Vittal, legal counsel for the environmental group. “Our forests are in crisis and now we’ve handed over ownership of them to a notoriously private family whose past environmental record leaves us deeply concerned about the future.”
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Mr. Widjaja’s receipt of APP shares giving him control of the company is the result of “normal course succession planning” by his father, which is particularly prevalent among families of Indonesian entrepreneurs like the Widjajas, Domtar chairman John Williams said in a statement to The Globe and Mail.
Mr. Widjaja will not hold any leadership position within APP and that Domtar and APP will continue to operate as distinct entities with no overlap of their management teams and governance structures, Mr. Williams said.
Domtar is engaging directly with the FSC to ensure that its certification is unaffected, Mr. Williams said. He said he’s confident that the stock transfer, which he characterized as an “inheritance,” will have no impact on the company.
Paper Excellence has consolidated a big piece of Canada’s forest products sector in short order. It bought British Columbia’s Catalyst Paper Corp. in 2019, then Montreal-based Domtar Corp. in 2021 and finally Resolute Forest Products Inc. in a deal that closed last year. The quick growth has sparked warnings from environmental groups and others who say the company’s documented ties to the Widjaja family’s other holdings, specifically APP and its parent, Sinar Mas, bodes ill for Canada because of APP’s poor environmental record.
Others, such as New Democratic Party MP Charlie Angus, have warned of the dangers posed by a foreign company controlling such a vast swath of Canada’s pulp and paper sector. An investigative report published by the International Consortium of Investigative Journalists last year cited an unnamed whistle-blower who called the rapid North American expansion of Paper Excellence a “fibre grab” to feed demand in China.
In approving the Paper Excellence takeovers, the government has left a significant portion of Canada’s natural resources and mill towns exposed to “a feudal relationship with a family that has a very dubious track record,” Mr. Angus said in an interview Wednesday. He called again on Mr. Widjaja to come to Canada and outline his plans for his business to Parliament, something the executive has so far declined to do since the acquisitions.
Mr. Williams and other Paper Excellence executives have previously acknowledged that Mr. Widjaja received logistical and administrative assistance from other family businesses for his company in its early days, but said that help has stopped and that it’s completely independent now. They said the concern that the company is simply a conduit for Canadian wood fibre going to China is wrong.
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