A review of the corporate structure of Paper Excellence — ÎÚÑ»´«Ã½’s largest forestry company — found it shares no current “relationship of control” with a Sino-Indonesian pulp and paper giant alleged to have carried out widespread deforestation.
The findings come after Greenpeace ÎÚÑ»´«Ã½ and Indonesian group Auriga Nusantara filed a complaint with the Forest Stewardship Council (FSC) in November 2023 calling on the green credentials body to revoke sustainability certificates from Paper Excellence. That complaint cited “strong evidence” that the ostensibly Canadian entity is a “sister company” of Asia Pulp and Paper (APP), which lost its green FSC credentials in 2007 as a result of “destructive forestry practices.”
In a statement Friday, the FSC said it had hired the Canadian law firm McMillan LLP to carry out an “independent third-party” review of any potential linkages and that it confirmed there was no corporate control between Paper Excellence and Asia Pulp and Paper. To come to its conclusion, the statement said the law firm spoke to executives and examined corporate records and documents from governments, boards, commissions and tribunals.
“The investigations found that Mr. Jackson Wijaya Limantara is the sole direct or indirect legal owner of the Paper Excellence Group Entities and holds the sole and exclusive right to control them,” said the FSC in its statement.
A spokesperson for Paper Excellence said it has “numerous sites certified” under the FSC and has “done nothing to warrant removal from the program.”
“We are pleased that, again, FSC, like other stakeholders and regulators, have concluded that we are separate entities,” said the spokesperson.
In its statement, the FSC said it could not share information on the corporate structure, corporate authority, or names of directors and shareholders “due to the confidential nature of the source documents examined in this exercise.”
Greenpeace and Auriga immediately raised questions over the FSC's choice to hire McMillan as an independent third party. They noted the law firm has held Paper Excellence as a client for several years, facilitating multibillion-dollar acquisitions and appearing to represent the company to the Canadian federal government on “anti-trust issues where its relationship with APP was being examined.”
Paper Excellence did not give a response when asked if McMillan is currently on retainer as its legal counsel.
“We are shocked that the FSC would hire McMillan LLP, Paper Excellence’s lawyers, to conduct an investigation of Paper Excellence,” Shawn-Patrick Stensil, Greenpeace ÎÚÑ»´«Ã½’s program director, said in a statement.
Timer Manurung, chairman of the Indonesian NGO Auriga, said the FSC should “rescind its decision, provide more transparency on the process, and conduct a genuinely independent investigation.”
“We urge the FSC to remember its mission and to improve its approach towards Paper Excellence, which has tremendous implications for both Indonesia’s and ÎÚÑ»´«Ã½'s forests,” said Manurung.
No answers on whether review attempted to verify ICIJ investigation
The NGOs' complaint to the FSC came eight months after several media outlets — including CBC News, Radio France Le Monde, Glacier Media and the Halifax Examiner — worked as partners under the International Consortium of Investigative Journalists to examine relationships between the two companies.
That reporting included a review of documents and interviews with former company insiders. Together, they suggested Paper Excellence’s day-to-day management was run out of APP’s offices in Shanghai.
Sources and records also suggested that at some points in the past both companies had coordinated and shared resources on everything from hiring and market analysis to legal advice, financing and strategy. The ICIJ partners found at least a dozen executives, directors, managers, or other officials who held positions in both corporate groups, and in a few cases, at the same time.
​It’s not clear how McMillan’s review could have tested ICIJ’s findings — including potential resource and staff sharing — while only relying on public records and high-level Paper Excellence officials.
Greenpeace said a credible investigation would require reaching out to whistleblowers who spoke to and provided documents to the international team of journalists.
A spokesperson for the FSC did not answer any questions from ICIJ media partners. A statement from McMillan’s CEO Tim Murphy said the firm does “not speak publicly about clients or their affairs as doing so would breach our confidentiality obligations.”
Law firm facilitated Paper Excellence acquisitions worth billions of dollars
Paper Excellence has massively expanded its footprint in recent years. In 2021, it acquired the forestry giant Domtar Corporation for US$3 billion, and in 2023, Resolute Forest Products was bought for US$2.7 billion.
Paper Excellence now controls 42 pulp, paper and saw mills with FSC certifications in ÎÚÑ»´«Ã½, the U.S. and France. It also manages 22 million hectares of forest land in ÎÚÑ»´«Ã½, of which 7.3 million hectares are certified by the FSC, according to Greenpeace.
McMillan advised Paper Excellence on the and acquisitions. It also provided services to Paper Excellence in an earlier purchase of the chain of mills in ÎÚÑ»´«Ã½, and in another case, one of the firm's lawyers represented Paper Excellence at a Canadian Transportation Agency tribunal in a dispute between the company's Meadow Lake mill and CN Rail.
In an email to McMillan, ICIJ media partners asked whether the firm felt it had placed itself in a conflict of interest by holding Paper Excellence as a long-term client, only to turn around and investigate their corporate ties as a supposed “independent third party.”
“McMillan observes the rules of professional conduct at all times but we can say that there is no conflict. We are not able to respond to your request as a result,” said McMillan’s CEO.
When asked similar questions, a spokesperson for the FSC highlighted a section of their statement that reads: “Prior to engaging McMillan LLP, FSC conducted a conflict of interest check and found none.”
'Whole thing seems to smell'
Allan Hutchinson, a law professor at York University’s Osgoode Hall law school, said on the surface, there appear to be “a number of conflicts of interest” and it’s not clear why McMillan or the FSC would choose to work together.
In an interview with CBC News, Hutchinson said conflicts of interest could arise on McMillan’s side because it likely has confidential information on Paper Excellence it can’t share with the FSC. The certification body, on the other hand, will have hired a firm it knows already works with the target of a corporate review.
“The whole thing seems to smell,” he said.
A sophisticated firm like McMillan could put up internal firewalls and legally “cure” the conflict of interest, agreed Hutchinson and Cristie Ford, a professor at the University of British Columbia’s Peter A. Allard School of Law.
Ford, who has worked with U.S. securities regulators in New York, now researches the role of independent third-parties tasked with investigating corporate relationships.
Even without a legal conflict of interest, Cristie said that when independent third parties investigate a client they have had for years, the relationship can apply pressure to “provide value for money.”
“There's some subtle pressure on the independent third party to not cost more than necessary, not to disrupt business more than necessary, to end up coming up with a report that is, you know, as positive as possible or that limits recommended changes as much as possible because they understand who's paying them,” Cristie said.
She said the McMillan review appeared to be “limited” in scope because it was largely paper-based and didn’t have access to anyone below the level of Paper Excellence’s senior management. That should matter to the public and anyone buying FSC-certified products, she said.
“If it turns out that the FSC’s review of the relationship between Paper Excellence and APP is a relatively superficial, paper-based one that only looks at legal control and not how the two companies operate together, especially overseas,” said Cristie, “then people might be misled by the FSC logo on those products.”
