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Are the Irvings destroying NB? .pdf



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Title: Are the Irvings destroying New Brunswick? | National Observer
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Are the Irvings
destroying New
Brunswick?
By Bruce Livesey in News, Energy | March 8th 2016

First article from the Special Report:
House of Irving

James (J.K.) Irving (left). Arthur Irving (right). Photo from Canadian Press.

Part one of a six-part series on the Irvings
Gordon Dalzell is an unlikely dissident.

I first met Dalzell at a lonely Tim Hortons on the edge of Saint
John, New Brunswick, with the only other denizens being some
middle-aged trucker types nursing their coffees. I’d just flown into
New Brunswick’s largest city from Toronto and we agreed to chat
before I headed to my hotel.
In person, Dalzell is a friendly, rumpled 70-year-old who was
working as a case manager at Veterans Affairs Canada, before he
retired in February. Wearing a brown leather jacket, polite and selfeffacing, Dalzell and I discuss why I was there – researching the
Irvings, Canada’s fourth richest family, a clan Dalzell has crossed
swords with for years. Which makes him rare, given the fear they
inspire in this region. “You have to remember in Saint John nobody
criticizes the Irvings,” he explains. “Not many people have the
fortitude to do this kind of work. Because so many families,
neighbors and cousins are intertwined with this organization and
they don't want to be punished. Remember, we’re dealing with an
oligarchy basically – like in Russia.”

Gordon Dalzell. Photo by Bruce Livesey.

To outsiders, that might sound alarmist. But New Brunswick is
unlike anywhere else in Canada. Despite being viewed as a
charming Maritime province tucked away on the east coast,
renowned for its forests, lakes and the Bay of Fundy’s stunning
coastline, in reality it’s a “company province” dominated by one
very rich and powerful family. “You have a corporation that has
completely captured the province… which is absolutely Third
Worldish,” says Don Bowser, an internationally-renowned anticorruption consultant who lives in Nova Scotia but has worked in
the former Soviet Union, hot spots like Iraq and Afghanistan and is
currently advising the Ukrainian parliament. “This whole province-

living-in-fear stuff is just absolutely crazy. Nobody can imagine in
Canada that this sort of stuff goes on.”
Gordon Dalzell has knocked up against the Irvings in his role as
head of the Saint John Citizens Coalition for Clean Air. This
industrial port city of 70,000 is famous for is its foul-smelling air,
largely caused by the Irving-owned oil refinery that stands on the
edge of town – the largest refinery in Canada, processing up to
320,000 barrels a day. As well, there’s the Irving-owned pulp and
paper mill parked in the heart of the city, spewing out a steady
plume of sulfur-laced smoke.

Irving oil refinery photo by Bruce Livesey

Together, these and other Irving-owned facilities emit a witch’s
brew of carcinogens. In 2009, the Conservation Council of New
Brunswick produced a study which found that rates of lung cancer
was 40 per cent to 50 per cent higher in Saint John than in
Fredericton and Moncton – New Brunswick’s other major cities. “It
doesn't come as any surprise to people like me or even the
common person on the street,” says Dalzell, “when you have all of
these various pollutants in a concentrated area in this city.”
Yet it’s difficult for Dalzell to get his message out about such
hazards. That's because all of the province’s daily newspapers are
owned by the Irvings, including the Telegraph-Journal, Saint John’s
local paper. Consequently, Dalzell often sends his findings about
the Irvings to reporters in the US to get media coverage.

In fact, in 2014, Dalzell was turfed off Irving Oil’s community liaison
committee after he passed on information about problems at the
company’s refinery to the Reuters news agency. Dalzell says they
claimed he broke confidentiality terms of being on the committee.
“But there was no confidentiality agreement,” he says. “I'm a
member of the public. I can speak to anyone I wish to... I don't think
the Irvings ever minded me talking to the local press…But anyone
who speaks to the media internationally they don't really
appreciate that at all.”

Irvings whipping up controversies
The Irvings wield such power because they dominate the
province’s economy: the Irving group is made up of between 174
and 250 companies, collectively valued at an estimated $10-billion.
They’re responsible for one out of every 12 jobs, and more than
half the province’s exports.
The group is split into three separate corporate entities – J.D.
Irving Ltd., which focuses on forestry and shipbuilding, the energy
company Irving Oil Ltd., and a construction/real estate wing. It’s
mostly controlled by two octogenarian brothers, James (JK) Irving,
aged 87, and Arthur Irving, 86, along with their nephew, John F.
Irving. JK and Arthur are perennials in the top ten of Canada’s
richest people, worth (US) $5.9-billion and (US) $5.4-billion
respectively, according to Forbes. The Irvings rarely give media
interviews, and requests by this reporter have been turned down.
The Irvings are also notorious for throwing their weight around.
“The Irving company is an aggressive corporation,” explains Bill
Parenteau, an historian at the University of New Brunswick in
Fredericton, who’s felt their lash. “A lot of things they do are kind of
beyond the pale.”
Now the Irvings are being pulled into the limelight more than ever.
One reason is their central role in trying to get the $15.7-billion
Energy East pipeline built. The longest pipeline in North America if
it goes forward, it’s designed to carry 1.1 million barrels of oil 4,600
kilometres from Alberta to Saint John every day, where some of it
will be refined at Irving Oil’s refinery before loaded onto ships and
exported to world markets.

Energy East map

With other pipelines mired in controversy, Alberta’s oil patch is
hoping Energy East will solve their problems of getting their
bitumen to tidewater. “What I can say about the Irvings is that that
refinery in Saint John is a really important piece of energy
infrastructure in Canada,” says Tim Duboyce, a spokesperson for
TransCanada Corp., which will be building Energy East if it’s
approved.
And then there is the $26-billion shipbuilding deal that J.D. Irving’s
shipyard in Halifax was promised during the Harper years to build
a new fleet of warships. That contract is being reviewed by the
Trudeau government over concerns over how it was awarded (part
of it was never tendered) and cost overruns – concerns stirred
afresh after the CBC reported in January that Irving-built patrol
ships used by the Canadian Coast Guard were the cause of
numerous complaints, including faulty wiring and pipes, premature
corrosion and polluted water tanks (J.D. Irving defended the ships’
quality and said the CBC stories were “misleading”).
The Irvings’ influence in Ottawa is also a topic du jour. After last
October’s election, J.D. Irving lobbied cabinet ministers in the
Trudeau government to delay a controversial $700-million ship
renovation contract awarded by the Harper government to a Lévis,
Que.-based shipyard. The Liberals briefly froze the deal before
deciding it could proceed.
Then it was discovered that Liberal house leader Dominic LeBlanc
is a “friend” of Jim Irving’s – son of JK and co-CEO of JD Irving – as
well as Jim’s son Jamie, who runs the family’s media holdings in
New Brunswick. In February, LeBlanc was accused by opposition
MPs of helping arrange a meeting between Jim Irving and
Navdeep Bains, the Innovation, Science and Economic
Development Minister while they were both traveling through
Moncton. This prompted federal ethics commissioner Mary
Dawson to forbid LeBlanc from having any more dealings with the
Irvings and their companies.
But then Tory MP Blaine Calkins pointed out that LeBlanc’s new
senior adviser was Kevin Fram, who Calkins said was personally
lobbied by the Irvings soon after he took over his new post. It was
also noted that Fram was a guest at an Irving-owned fishing camp
in New Brunswick years ago (in 2003 Fram told the media he has a

close personal relationship with the Irvings). “The cozy ties
between the government House leader and the Irving family run
very deep,” said Calkins in the House of Commons in February.
“When it comes to dealing with the Irving family, it is clear to
everyone that the government House leader's so-called ethical
screen is full of holes.”
Back in New Brunswick, the Irvings are at centre of a host of
scandals – including the firing of the province’s chief medical
officer, possible shale gas development, tax concessions wrung
from the city of Saint John and a controversial forestry
management agreement. Rob Moir, an economist at the University
of New Brunswick in Saint John, says some “talk about the
Stockholm syndrome” when it comes to the relationship with the
Irvings and the province. “Others even go farther and talk about
the captured state. I don't think you're far-off when you talk about a
fiefdom… We are at the center of corporatism in Canada: We are
corporatism run amok.”

KC Irving builds a unique
conglomerate
The Irving empire was founded by Kenneth Colin (K.C.) Irving, son
of a sawmill owner in Bouctouche, NB, a small village on the east
coast of the province. Born in 1899, K.C.’s family roots go back to
Scotland and its severe Presbyterian ethic.

Photo of K.C. Irving from Irving Oil Commercial website

K.C. was a talented entrepreneur. Starting in the 1920s he began
selling oil and cars to the locals. In time he developed a business
model based on vertical integration, whereby he tried to own all

aspects of a business supply chain. “So you start off with a gas
station and you end up with the refinery,” says Moir, “and you end
up with the all the heavy manufacturing that supplies the refinery.”
From these humble origins, Irving built a unique conglomerate.
Privately held, its internal financial situation is shrouded in mystery.
And instead of focusing on one product, like the McCain family
does with frozen food, the Irvings grew their company organically
in New Brunswick, trying to dominate all aspects of the economy,
before expanding into neighboring provinces and northeastern
United States. “They have this kind of oozing out into the nearby
territories and controlling not only power in one economic area,
like oil, but in several,” says Lance Tapley, a Maine-based journalist
who’s investigated the Irvings. “It’s just a really different economic
model.”
Today, the Irving companies cover an immense range of industries,
with the mainstays being oil (where they own more than 900
service stations, the largest refinery in Canada and part of an oil
terminal) and forestry, whereby they own or lease 5.7 million acres
of land, along with shipbuilding, trucking, bussing, railway,
construction, real estate, food processing and even a security
company. They once even owned a fleet of ships.

An Irving Oil gas station. Photo courtesy Irving Oil.

More troubling is their grip on New Brunswick’s media, owning its
three daily newspapers, 18 of the province’s 25 English and French
community weeklies, and three radio stations. A 2006 Senate
report on the Canadian media concentration referred to this
situation as an “industrial-media complex.”

The Irvings has also expanded into the US, and are the fifth largest
landowner in North America, provide 60 percent of the oil to the
Boston area, supply almost one fifth of US oil product imports, and
have so much power in Maine they’re able to influence its political
system (they are the largest private landowner in that state). “It’s an
industrial oligarchy in a way,” says Parenteau.
Indeed, as his company grew, K.C. began to run roughshod over
municipal, provincial and even federal governments. During the
1960s, he went to war with New Brunswick Liberal premier Louis
Robichaud, who was attempting to modernize the province’s
infrastructure and tax code and encourage more competition in the
economy (decades later the Irving family admitted they were
wrong in their criticisms of Robichaud). K.C. used his newspapers
to attack Robichaud, and backed his Tory rival in the 1970 election,
helping oust Robichaud from power.

Photo of J.D. Irving paper mill by Wikimedia Commons

Since then, the province’s premiers have learned not to challenge
the Irvings. Recent premiers such as Frank McKenna, Bernard Lord,
David Alward, along with the current government of Brian Gallant,
refuse to be interviewed about the Irvings. “What you have is a
classic captured state situation, in which a corporation essentially
takes over making policy for government,” says Bowser. “We saw
this across Eastern Europe.”

Internally, K.C. developed an almost cult-like corporate culture –
employees are expected to be hard-working and clean-living and
fiercely loyal. In his 2007 book “Twenty-First-Century Irvings”,
author Harvey Sawler refers to the perfect Irving employee as
being an “Irvingite”. He writes: “Those who are able to tough it out
in the Irving culture (and it’s not for everyone) tend to morph into
otherworldly beings…The bottom line is, either you fit within the
Irving culture or you don’t. It’s really that simple, that black and
white.”

The Irvings create a monopoly
The Irvings’ focus on relentless expansionism has meant they’ve
been effective at driving out competitors. Bowser recalls talking to
a Swiss investor in 2006. “He said that the most corrupt place he’d
ever been in, even worse than in Africa, was New Brunswick,” says
Bowser. “He came in with a very large investment in solar and wind
(power) and he was driven out of the province by Irving. (They)
ganged up with the government to do these things.”
Ken Langdon saw these methods firsthand. He used to run a
weekly newspaper in Woodstock, New Brunswick, for the Irvings
back in the late ‘90s. There were two other papers in the area, but
Langdon says the Irvings eventually drove them out of business,
buying their assets and merging them into one paper. “Originally
there were 44 people working in newspapers in Carleton County,”
he says. “When I left there was 17 producing the same number of
papers.”
Langdon left the Irvings' employ in 2007, and started his own
newspaper, the Carleton Free Press. It lasted only a year during
which the Irvings took him to court (and lost), sent accountants to
raid his home and cut advertising rates dramatically in their own
papers to undermine him. “They cut subscriptions prices by fifty
percent,” says Langdon. “They offered free color to their
advertisers. A spot we were selling for $200 they were giving
away for free… They got very aggressive."
In the late ‘90s, a company running gas stations in central Maine
launched an anti-trust action against Irving Oil. The suit said Irving
Oil was undercutting their competitors by providing oil to its Irving
gas stations from Irving’s refinery at a below-market price –
thereby giving them an unfair competitive advantage. The lawsuit


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