U.S. firm investigated for clean-up at old Canadian mill site

A U.S. company that bought three abandoned paper mills in Canada with the promise of attracting hundreds of green-based jobs is under investigation for failing to properly clean up one of the sites and owes nearly a million dollars in taxes at another, a CBC News investigation has revealed.

“It seems to me that the intention is to simply cannibalize the sites rather than to turn them into attractive businesses,” says environmental lawyer Michael Hebert. “The track record, I think, speaks for itself.”

The company in question, Green Investment Group Inc. (GIGI), bought two former Smurfit-Stone paper mills in Quebec and one in Bathurst, N.B., in 2010.

When they were purchased, the company promised to clean up the sites and bring hundreds of new jobs to the depressed areas.

GIGI demolished the sites worth millions of dollars in scrap metal, but failed to complete the environmental clean-up at all three sites, according to the environment departments in Quebec and New Brunswick.

“Infractions to the Regulation Respecting Pulp and Paper Mills persist and are the subject of an investigation aimed at penal action,” Quebec’s Department of Environment said in a statement to CBC News, referring to one of the sites.

“The site rehabilitation report and decontamination notice have not been submitted to the Ministère, which is currently evaluating its available recourse.”

Raymond Stilwell, an Illinois-based lawyer and the president of GIGI, says he is an unaware of an environmental investigation at the sites in Quebec.

He also disputes any suggestion that GIGI is more interested in profiting from scrap metal than cleaning up the sites and bringing new jobs.

“I would disagree with that very strongly,” he told CBC News in an interview. “We really are working pretty diligently on some neat projects, and the key, of course, is usually raising capital for projects that are relatively new technologies.”

Green-based business

GIGI bought a number of abandoned paper mills in Canada and the U.S., with the goal of cleaning up the sites and enticing green-based businesses to set up shop.

For example, GIGI convinced a company that builds towers for wind turbines to relocate to one of its sites in Quebec and another that makes wood pellets from sawmill waste to burn as an alternative fuel.

In 2010, GIGI bought the Smurfit-Stone paper mill near Portage-du-Fort, Que. A year and a half after GIGI bought the property, it announced it would locate its Canadian headquarters there and breathe new life into the area by cleaning up the site and attracting new tenants and jobs.

“To date, GIGI’s redevelopment efforts at the site have resulted in more than 200 new jobs for the region,” boasted a company press release 2011, a year after it purchased the site.

“The company anticipates in the next six months recovering nearly all of the jobs lost when the plant closed its doors in October 2008,” which was 500 jobs.

But CBC News has learned only four out of a promised 11 companies ended up locating at the site. Those four companies employ a combined 48 people during peak times.

Pieschke Construction is one of the four companies that set up at the new industrial park near Portage-du-Fort, Que. The company leased one of the buildings left at the site after the demolition to use as a warehouse and as potential office space.

Three years later, Pieschke’s warehouse stands like an island in a sea of concrete rubble and twisted metal that stretches out almost as far as the eye can see.

“Would you want to build a house on something like this, or a building? I wouldn't,” says Clétus Pieschke, a former Quebec mill worker and owner of Pieschke Construction.

Speaking about GIGI, Pieschke says, “The sorry part about all of this, you know, you come in, you take all the steels and the stainless and the coppers out and you make money with that. And you leave basically World War II here to look at.”

Provincial ‘charges’ considered

GIGI’s two other Canadian sites have also been controversial.

While the company has had better success bringing new companies to the former mill site in New Richmond, Que., and created nearly 200 jobs, the Quebec government says there are still “numerous infractions” related to the environmental clean-up.

GIGI has since sold that site, but the ministry says it’s still holding the company partially responsible for the problems.

After nearly five years, not a single company has relocated to the site in Bathurst, N.B., nor has a single long-term job been created. GIGI is also nearly $1 million behind in its taxes in Bathurst.

Yet, an estimate obtained by CBC News put the value of the scrap metal at the site at millions of dollars.  

“They came to New Brunswick and said they would clean up and create jobs. Instead, [company president] Ray [Stillwell] and his company took all the scrap metal and left a mess,” Brian Kenny, the MLA for the Bathurst area, told CBC News’ senior investigative correspondent Diana Swain in October.

Kenny, who is now the provincial environment minister, refused CBC’s request for a follow-up interview, but did provide a statement confirming the clean-up in Bathurst remains incomplete.

“I am personally working directly with the City of Bathurst and my colleague the Minister of Natural Resources to look at all possible options for the proper remediation of this site,” he said in a statement.

‘Red flags’

CBC News has learned the company has a history of failing to deliver new green-based jobs to abandoned mill sites in the U.S., has had at least one affiliate file for bankruptcy, and also owes taxes stateside.

GIGI purchased five sites in the U.S., and has since sold one of them. All of them are former paper mills previously owned by Smurfit-Stone.

In Carthage, Ind., after five years, not a single job has been created and not a single company has located to the site.

The same is true In Alton, Ill., and a company set up by GIGI to build an ethanol plant there has filed for bankruptcy. It also owes more than $150,000 in taxes in Alton.

At the company’s largest site, in Missoula, Mo., controversy over environmental concerns has been raging for years.

“There was a lot of red flags that went up for me from the outset about this whole arrangement,” says Peter Neilsen, environmental health supervisor for Missoula County.

GIGI owes nearly $500,000 in taxes and there is concern that contamination from the site could end up in a nearby river.

A process is now under way to hold the company and the previous owners responsible for finishing the environmental clean-up.

GIGI disputes allegations

GIGI’s Stillwell says his company focuses on developing alternative fuel projects, which take time and investment to get up and running.

As for the controversies at particular sites, he says he can explain most of them.

In Bathurst, N.B., he says cleanup is 95 per cent complete and a sale to a developer, who wants to build condos, is in the works. As part of the deal, he says that developer will pay the outstanding taxes. He says the property in New Richmond, Que., has been sold and nearly 200 people are employed at the site.

Stillwell says he is unaware of an environmental investigation at the site near Portage-du-Fort, and says he’s currently talking to a new alternative fuel company about locating at the site.

“It's a very current liquid fuels type of technology,” he says, which he claims will bring 35 new jobs to the sites in Illinois, Montana and near Portage-du-Fort, Que.

“It will be something that each one of those communities would be very proud to have there. It creates employment. It is an investment in each community of a little less than $50 million, and it's a carbon-negative, very green type of project.”

In Montana, he says the controversy has been mostly caused by “environmental groups” and that his company has had “great cooperation” from the state and federal governments.

As for the unpaid taxes, he admits they’ve “gotten a little bit behind” at some sites.

He says the business is one in which “you make money in chunks, and you don't get it every month. So, when you have the money, you pay the bills.”

Ultimately, Stillwell is optimistic about the future.

“This is not easy work,” he says. “I think we'll see a number of good things happen at all three of those sites well before the end of 2015.”

In January of this year, GIGI walked away from a deal to buy an abandoned mill site in western Ontario, after the Ontario government insisted the company post the clean-up money up front.