Jump to content
  • NRCP executives announce brave new policy for old-growth forests

     

  • Lies, guitars and a few facts about the Fairy Creek Rainforest blockades


    As arrests at Fairy Creek Rainforest begin, arm yourself with some truth about what's actually happening. The injunction was obtained by inaccurate, self-serving descriptions of the impact of the blockades by the company.

     

    IF THERE’S ONE SITUATION in which you would expect a company’s accountant to be accurate about the numbers, it would be in a sworn affidavit in which the company is seeking a high-profile injunction from the BC Supreme Court. Right?

    Not these days.

    Teal Cedar Products Ltd filed such an application in mid-February, asking for injunctive relief, enforceable by the RCMP, in response to ongoing blockades of some of its logging operations in TFL 46 on southern Vancouver Island. On April 1, Justice Fritz E Verhoeven ruled in favour of Teal’s application. Verhoeven accepted information in affidavits provided by Teal CFO Gerrie Kotze concerning the impact of the blockades on Teal. Some of the information was grossly inaccurate, and Verhoeven based his decision on that information.

    I wrote recently about the fact that Teal’s cut in TFL 46 rose dramatically above the previous two years’ logging in spite of the blockades. In 2018, when there were no blockades in place, Teal took 255,975 cubic metres of timber out of TFL 46. In 2019, again with no blockades in sight, the company removed 282,096 cubic metres. In 2020, the year in which the blockade started (in August), Teal trucked 437,982 cubic metres of logs out of the TFL. That’s an increase of  71 percent over 2018 and 55 percent over 2019.

     

    828298017_CaycuseClearcutreduced.thumb.jpg.f11a79239d9d41f18f4236d45f8aac58.jpg

    Teal Cedar Products Ltd is clearcutting old-growth forests, like this former forest in the Caycuse River Valley (Photo by TJ Watt)

     

    Yet Teal stated in its application that the company had suffered “irreparable harm” as a result of the blockades, and Verhoeven agreed. A finding of irreparable harm was a legally necessary condition for allowing Teal’s application for injunctive relief and civil damages.

    Not only did Teal apparently misstate the impact that the blockades had on its operations, but other details, including information in affidavits provided by Kotze, appear to seriously underestimate the value of the logs the company removed from TFL 46 and the value of the products manufactured from those logs. Verhoeven accepted this information, analysed it in his judgment and concluded that Teal had suffered irreparable harm.

    I find the details of this case particularly compelling because they demonstrate how, in the face of industrial destruction of Earth’s life support systems, institutions that are needed to support the public interest—like government and the courts—are failing the public. The evidence of this is deep in the details of this case. C’mon in.

    In a section of Teal’s injunction application covering “Impact of the Blockades,” the document stated: “Teal Cedar estimates that the value of the products manufactured from timber sourced from TFL 46 to be about $19.4 million, which is an incremental value-added over the value of the logs of approximately $9 million.” This statement cites “Kotze Affidavit #1” as the source of that information. Again, Kotze is Teal’s chief financial officer, and his numbers are not credible.

    The market value of the 437,982 cubic metres of raw logs removed from TFL 46 in 2020 was close to $60 million, based on the volume and the ministry of forests’ average log price that year. According to the ministry of forests’ Harvest Billing System, Teal paid $10,580,295.06 in stumpage to the Province for those logs, the most stumpage it has ever paid for its logging in TFL 46.

    The value of the wood products manufactured from the logs Teal removed from TFL 46 in 2020 was likely around $220 million, not $19.4 million. (FOCUS estimated this number by using information provided in Western Forest Products’ 2020 financial statement, and the volume Western Forest Products harvested from its coastal operations, as determined by the ministry of forests’ Harvest Billing System. Western Forest Products has TFLs on Vancouver Island, one of which is beside Teal’s TFL 46.)

    It’s evident that Teal grossly underestimated the value of the wood that it had removed in 2020. Yet that inaccurate information was then used by Justice Verhoeven to determine whether to grant Teal an injunction. Did Teal intentionally construct numbers that would lead Verhoeven to find in its favour?

    In the “Irreparable Harm” section of Verhoeven’s decision, the judge stated, “Teal employs approximately 450 people within its processing and manufacturing facilities. If Teal is unable to log within the area of TFL 46, it will not have an adequate timber supply for its mills. It may be forced to shut down its mills, resulting in layoffs of employees, and Teal’s inability to supply its customers. Teal estimates that the end product value of the products that it will produce from the timber sourced from TFL 46 is approximately $20 million. Teal stands to lose market share, and to suffer damage to its reputation as a reliable supplier of its products.”

    Two points stand out:

    First, Verhoeven’s speculation about Teal being “unable to log within the area of TFL 46,” suggests he had little understanding of the situation on the ground. According to the ministry of forests, there is plenty of second growth the company could have logged. It isn’t being defended by blockades. I will come back to this point later.

    Second, Verhoeven took the information Kotze supplied, added $600,000 for unknown reasons—rounding?—and used this updated total of “approximately $20 million” to find that Teal had suffered “irreparable harm.” As mentioned above, irreparable harm was a necessary condition for Verhoeven to award injunctive relief.

    Our estimate of $220 million for the value of products manufactured from logs removed from TFL 46 was only part of Teal’s revenue in 2020. In its application for an injunction, the company stated, “Teal Cedar relies on its own timber licences to supply approximately 50 percent of its fibre needs for the three mills, mostly from TFL46.”

    If TFL 46 supplied most of that 50 percent, then Teal’s total sales for all the volume it processed in 2020 would be roughly twice the $220 million we estimated for TFL 46, or $440 million.

    In its injunction application, Teal especially highlighted a decline in production of its Tonewood Division, which supplies old-growth Red Cedar to guitar manufacturers. For that division, Teal claimed a loss of $250,000. Based on our estimate of total sales of over $400 million in 2020, the Tonewood decline would represent a loss in sales of just five-tenths of one percent. To put that decline in perspective, Verhoeven’s careless rounding error in restating the “value of the products” produced by Teal amounted to $600,000.

    Teal didn’t provide any additional numbers that would have summarized how the value of its products—like lumber—declined, because they didn’t. They went up over sales in 2019. Way up. 

    Keep in mind that the blockades are aimed only at Teal’s logging of old-growth forest. The company has plenty of second-growth forest available for logging in TFL 46. Verhoeven did not seem to understand this when he speculated that Teal would be “unable to log within the area of TFL 46.” The most recent (2011) review of the TFL by the ministry of forests set the allowable annual cut (AAC) for the TFL at 403,000 cubic metres, well under what the company took out in 2020. The 2011 review assumed that “at least 180,000 cubic metres per year” would come from second-growth stands. Over the past 11 years, Teal’s cut has averaged 392,172 cubic metres per year and the stumpage assessed by the ministry of forests has averaged $8.20 per cubic metre. Teal has been cutting close to the AAC and, until recently, paying very low stumpage rates. In 2011, it paid just 56¢ per cubic metre for 401,567 cubic metres of wood.

     

    1994894408_Tealcut2010-2020small.jpg.77e0175ad5a6c713301557d616fd0b12.jpg

    Summary of Teal Cedars cut in TFL 46, 2010 to 2020. The average stumpage paid over those 11 years was $8.20 per cubic metre. Source: Ministry of forests Harvest Billing System

     

    Neither Teal’s application for an injunction nor Verhoeven’s judgment granting the injunction even mention the words “second growth.” Yet that is where Teal was expected, by the terms of its 2011 TFL review, to get nearly half its wood for its mills. The next review, which is past due, will need to increase the proportion of second growth in its cut because TFL 46 now has about 2.5 million cubic metres less old-growth forest than it had in 2011. This is a fact, and the blockades are a public response to this fact. Loss of old-growth forest and the impact that has on risk of biodiversity loss and loss of forest carbon are critical public interest issues that neither the justice system nor the provincial government seem to know how to address. These two institutions, apparently, are only able to assess the monetary value of old-growth forests for companies like Teal. As Teal’s easy manipulations of the numbers show, the court isn’t very good at doing even that.

    Teal is privately-owned, but Business in Vancouver provides information about the company on its website. According to that publication, Teal is the sixth largest forestry company in BC and employed 1000 people in BC in 2020, the same as in 2019. It also has a mill in Washington. Business in Vancouver estimates Teal had 1350 employees “worldwide” in 2019 and 1485 in 2020.

    Business in Vancouver’s information about Teal for 2012-2013 shows that back then the company had about 970 BC employees and estimated revenues of $200 million.

    FOCUS asked Teal and the lawyer who prepared its injunction application why the application had grossly underestimated the value of wood products manufactured and the volume of logs Teal removed from TFL 46 in 2020. We received no response. (If Teal responds after initial publication of this story, FOCUS will provide its response.)

    A private company might feel compelled to publicly underestimate revenue if it had inaccurately reported that revenue to Revenue Canada. In Teal’s case, however, when CFO Kotze testified to the court that the value of wood products sourced from TFL 46 was “$19.4 million,” it could be that Teal was simply trying to make it more likely that it would be awarded an injunction. The company’s injunction application stated: “Teal Cedar estimates the value of the timber rendered inaccessible by the Blockades to be approximately $10 million.” Verhoeven, taking Teal’s various numbers at face value, would have to conclude that the blockades had made $10 million worth of timber inaccessible. Then he would have compared that with the “$9 million” which Teal said it had been able to remove to make products valued at “$19.4 million.” In other words, Teal told Verhoeven that more than half of its timber had been made inaccessible by the blockades. And Verhoeven’s judgment, repeated over and over again by various media, would have the effect of spreading Teal’s misinformation as though it were the truth.

     Teal’s 2020 bumper harvest ought to be considered in context. In September 2019, Tom Fletcher and Lauren Collins reported for Black Press that 500 employees of Teal-Jones Group had lost their jobs after earlier layoffs in May of that year. At the time, Kotze told the reporters, “Current high stumpage rates remain high relative to lumber prices, and harvesting costs have been adversely impacted by new regulations to bring out more residual waste fibre…These negative factors have made it impossible for the company to continue its forest licences economically.” The reporters also quoted a long-time Teal employee, Bill Fulk, about the future: “There’s going to be ghost towns because it’s hard to find an employee to come [into] the wood industry because people are seeing that it’s going down and down and down,” said Fulk, adding that it’s becoming very difficult to find employees ‘that trust that the wood industry will continue on.’”

    Somehow, though, in spite of the existential challenges faced by the company—at least as described by the company, Justice Verhoeven and Black Press—2020 saw Teal’s third largest harvest in the last ten years. As a consequence, money rained down on the company as the blockaders took up position to defend what little remains of coastal old-growth forest.

    David Broadland hopes that as arrests of Fairy Creek Rainforest blockaders mount, the public will look beyond the inaccurate, self-serving, self-descriptions of the forest industry and its institutional allies and look for the truth.

    This story has been edited: The original version incorrectly stated Teal’s average yearly cut over the last eleven years. The average is 392,172 cubic metres, not 431,389 as originally stated. 

     

    Teal Cedar Products Ltd application for injunction: 2021-02-18 Notice of Application.pdf

    Justice Verhoeven’s judgment


    User Feedback

    Recommended Comments

    Thank you for this information. This is what investigative reporting should look like. I hope much of this information will be used in an appeal of the injunction order.

    Link to comment
    Share on other sites

    Didn't anyone intervene in the injunction application to argue against it. If not, why not? If they did, did they not present the information found in this article to support their opposition to the injunction? If not, why not?

    Link to comment
    Share on other sites

    Great job in digging deep into any available resources to sift through the numbers to find the facts. I also appreciate how you are very open to Teal Jones responding and updating your findings if more credible information is given from Teal Jones. The silence of Teal Jones to meaningfully respond to your breakthrough findings further illustrates how they have lied and manipulated the facts. Thank you!

    Link to comment
    Share on other sites

    Thanks so much, David, for exposing the the shameful Teal Jones/Frits Verhoeven example of the enduring collusion between the BC Justice system and Big Logging which has reduced BC's magnificent botanical splendours to ruins. In this case, the weaseling of numbers that this corporate-lackey Judge took verbatim from the Teal Jones account is, at best, a picture of Verhoeven's slack-ass laziness, and at worst, outright corruption. And as the Judge pronounced his verdict, awarding Teal Jones a court injunction to guarrantee the company's unimpeded access to level the very vestiges of Vancouver Island's, nay BC's, nay Canada's final primaeval forest, he had the audacity to waggle his finger at the Fairy Creek blockaders and call them, quite insultingly, "misguided." If Frits Verhoeven had not been such a grovelling lackey, he could have easily found a recent legal precedent which would have enabled him to avoid the tedious work of copying out Teal Jones' accountings and then granting Teal Jones their injunction. Back in 2005, when the Gordon Campbell regime applied for a court injunction to remove the "Cathedral Grove Treesit," which was blockading his government's attempt to punch a 150-slot Winnebozo parking lot into the heart of the Grove, the late BC Justice Georgina Quijano declined, ruling that existing laws provided all the means for the government to remove the treesit, and a court injunction was not a proper use of the judiciary. Apparently facing the treesitters in court, where they could properly make their case against all the corporate depradations on the forest that had resulted in the pathetic remaining 135 hectare tract being all that remained of the once-magnificent primaeval Coastal Douglas fir biogeoclimatic zone, was unpalatable to the Gordo-regime, and they preferred to dilly-dally for two years and finally gave up on their parking lot scheme and capitulated to the treesitters.

    Link to comment
    Share on other sites

    This shows that someone with very little understanding of the forest industry can take a few selected facts and create any kind of story they want out of it.   Talk about the pot calling the kettle black... 

    Link to comment
    Share on other sites

    On page 12 of the application para.33 - it says value of the timber affected by the blockade is $10 million. And then it goes on to insinuate that if all TFL46 is at risk than Teal is at huge risk. As usual lawyers have twisted the reality either by carelessness or deliberately. And the judge was either lazy or complicit.  

    Link to comment
    Share on other sites

    excellent research here. thank you. 

    Fairy Creek is as much about keeping the little remaining old growth province wide.  Especially productive sites which grow big trees.

    Trees hold up our world--on multiple levels.  From carbon storage, to oxygen production, to soils, to water purity.  And perhaps most importantly as spiritual refugia.

    Link to comment
    Share on other sites
    Guest Irrelevant argument

    Posted

    This is what happens when a "journalist"  tries to write on a legal ruling but is ignorant of the law.  "Irreparable harm" has a distinct and unique legal definition for injunctive relief.  It need not be quantified.  

    Broadland ought to leave the criticisms of legal rulings to lawyers.  

    Link to comment
    Share on other sites
    20 hours ago, Guest Irrelevant argument said:

    This is what happens when a "journalist"  tries to write on a legal ruling but is ignorant of the law.  "Irreparable harm" has a distinct and unique legal definition for injunctive relief.  It need not be quantified.  

    Broadland ought to leave the criticisms of legal rulings to lawyers.  

    Thanks for your comment.

    Readers may want to review Verhoeven's judgment, which I reviewed here. In his consideration of whether Teal had suffered "Irreparable Harm," Verhoeven restated the economic arguments that had been presented to him in affidavits prepared by Teal's legal team.

    While the above commenter would have readers believe the law is too mysterious for anybody but lawyers to understand, there is no mystery about how Verhoeven arrived at his decision that irreparable harm had been done—its in his judgment. But the numbers he uses in his consideration, which were provided by Teal and not questioned in court by either Verhoeven or the defendants' legal team, are deeply flawed. Any journalist could have found the factual information that the lawyers didn't. That's the service journalism is meant to provide.

    Link to comment
    Share on other sites


    Guest
    Add a comment...

    ×   Pasted as rich text.   Paste as plain text instead

      Only 75 emoji are allowed.

    ×   Your link has been automatically embedded.   Display as a link instead

    ×   Your previous content has been restored.   Clear editor

    ×   You cannot paste images directly. Upload or insert images from URL.


  • The NDP's old-growth logging deferrals

    The map below shows FLNRORD's mapping of the 9 areas where logging deferrals were announced in September 2020. It also shows the intended deferral in the Central Walbran Valley, which has not been publicly announced. The mapping below shows that very little actual old-growth forest was included in the 9 deferrals that were announced. The Clayoquot deferrals includes a large part of Strathcona Park, as well as several parks in the Sound area, none of which were in any danger of being logged. Read more about this issue here.



×
×
  • Create New...