Feds to pay AbitibiBowater $130M over expropriation

Daniel
Daniel MacEachern
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Abitibi Bowater has settled with the federal government for $130 million.

The former AbitibiBowater mill in Grand Falls-Windsor

The insolvent pulp and paper company launched a $500-million lawsuit in February under the North American Free Trade Agreement after the province of Newfoundland and Labrador expropriated its assets in central Newfoundland in 2008, which the company claimed was arbitrary, discriminatory and illegal.

With the settlement, the company agrees to withdraw its claim.

A statement released by Foreign Affairs and International Trade Canada Tuesday praised the settlement, which it said represents “fair market value” for the assets.

“The Government of Canada has resolved this dispute for the benefit of Canada’s long-term economic interests. In reaching this agreement, the Government of Canada is avoiding potentially long and costly legal proceedings,” said the statement.

Department spokesman Steve Outhouse said the department is glad the case has been resolved.

“Every time there’s action launched, you have to look at the potential benefits and costs to taxpayers, and certainly that’s a main factor that’s looked at when you’re negotiating and trying to reach a resolution,” he said. “In this case, that’s what we think has happened here. We’ve reached an agreement that brings it to a close and is affordable for taxpayers.”

The settlement is conditional upon AbitibiBowater obtaining the approval of its terms by courts in both Quebec and the U.S. It will also require court approval of the restructuring.

Lorraine Michael, leader of the provincial NDP, said the settlement came as a bit of a surprise, but her initial reaction is that it’s good for the province because Abitibi settled with the federal government.

“However, having said that, I wonder what’s going to happen down the road. Is the federal government going to find a way to have the province pay for this, considering the fact that it was brought on by the provincial government, not by the federal government,” she said, adding she would find it “hard to believe” that the federal government won’t find a way to get restitution.

Michael said Newfoundlanders still don’t know if the provincial government moved too quickly in seizing Abitibi’s assets.

“That’s the $64-million question, you know.” she said. “Was it hasty? It was hastily done; does that mean it shouldn’t have been done? I don’t know. I really and truly don’t know the answer to that question yet. At the moment, it seemed like it was something that needed to be done. It cost $130 million, but it didn’t cost the province. Does that make it right or wrong? I don’t have the answer to that question at the moment.”

Premier Danny Williams, according to a statement released by his director of communications, Elizabeth Matthews, said, “We are pleased that the matter has been concluded and we appreciate the work of the federal government in resolving the issue.”

In May, Williams said the province is now likely on the hook for environmental liabilities at Abitibi's former Newfoundland properties, costs could reach into the tens or even hundreds of millions.

dmaceachern@thetelegram.com

Organizations: AbitibiBowater, Foreign Affairs and International Trade Canada, NDP

Geographic location: Newfoundland and Labrador, Canada, Abitibi Quebec U.S.

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Recent comments

  • Bonnie
    August 25, 2010 - 16:35

    Chalk another bit of damage up for Mr.(superego)Williams.He's like a youngster with temper tantrums.I wouldn't hold your breath for any money from Ottawa anytime soon.

  • Graham
    August 25, 2010 - 12:46

    The biggest boondoggle would be Joey's Upper Churchill - worth billions and still counting.

  • Newman
    August 25, 2010 - 12:35

    The cost of the site cleanup will be in the HUNDREDS of millions and the Williams government now owns the mess due to the expropriation mistake. It is both unfortunate and ironic that this $130 million being paid to Abitibi could have redeveloped the Grand Falls and Stephenville facilities that were lost under the Williams government. What a waste of money.

  • Pierre Neary
    August 25, 2010 - 08:30

    This is the worst financial boondoggle in the history of the province (Sprung was only 18 million). This will resinate through generations to come. This is proof that a larger opposition is desperately needed. It was only a matter of time that the Premier’s arrogance was going to cost us big time. Time for the voters of this province to give this Premier a wakeup call in the next election How many debacles and scandals is it going to take?? All this while NALCOR is looking for 375 million from the feds. ABC ain't lookin to good now is it??

  • Politically Incorrect
    August 25, 2010 - 07:23

    Expect an avalanche of anti-Quebec hysteria. This is missing the point; it's not about Newfoundland v. Quebec, it’s corporate society v. civil society. The real question is why aren't we focusing on the real culprit here: Chapter 11 of the NAFTA agreement that allows corporate interests to supersede the interests of an elected government.