Trudeau government forgives $7.4 million loan for multi-billion-dollar Irving family
The Canadian government closed a file on two multi-million-dollar loans for the highly affluent Irving family after they discovered that the Irving family simply has no intention of paying their debts.
According to CBC, “The two loans were part of a $55 million federal program launched in 2003 to cushion the economic impact of J.D. Irving Ltd. closing its shipyard in the city. Ottawa established the program after Irving centralized its shipbuilding business in Halifax.”
The Irving family has repaid some of this significant $55 million figure, but it is not certain how much they had promised to pay or what amount of this figure the Canadian government has got back, reports CBC.
All we know is that they still owe taxpayers $7.4 million under “conditionally repayable contribution agreements” made under ACOA’s Saint John Shipyard Adjustment Initiative and it has been decided this amount is no longer worth pursuing.
Kent Estabrooks, ACOA’s vice-president, said the company “has fulfilled their obligation to repay according to terms of their contribution agreements,” although “the contributions will never be fully repaid,” according to a March 27 memo attained by CBC. This decision was then signed off by agency president Francis McGuire.
While $7.4 million is a significant debt, such a figure should be nothing for a family like the Irvings to pay back.
Their current combined net worth sits somewhere between $7 billion and $9 billion, depending on which source you go by, with total assets spread out over multiple companies equalling an estimated $10 billion.
They are so rich that Canadian Business had them listed as #8 on Canada’s top 100 richest families list in 2017.
As Canadian Business writes, “One of Canada’s most dynastic companies, the Irving group got its start back in the 1920s, when [Kenneth C. Irving] opened a small service station in Bouctouche, N.B. Nearly 100 years on, the family controls more than 250 enterprises scattered across Canada and the northeastern United States. Together, the companies, spanning oil and gas, shipping and transportation, retail and media sectors, are worth an estimated $10 billion.”
This is not the first time the government has granted significant loans to the Irving family only to have the family simply decide not to pay the full amount back.
In 2018, it was revealed that the government had given J.D. Irving Ltd. Over $40 million in funding to subsidize their drywall company, Atlantic Wallboard LP.
Much like this most recent grant, this subsidiary was granted with “conditionally repayable contribution,” reports Global News. Again, this essentially means the company only needs to pay back a certain amount of their total debt, but not all of it; and in some instances, possibly none of the loan technically needs to be repaid.
According to Global News, “Records obtained by The Canadian Press through an access-to-information request show that the company, which makes gypsum wallboard products commonly called drywall, has not been required to repay at least $35 million.
“In all, Atlantic Wallboard has repaid just over half a million dollars – or 1.3 percent of the total loans.”
As of 2018, only $540,000 of the principal loan is known to have been paid, “but it’s unclear if any more was paid, because the final repayment amounts have been redacted from the memo.”
The company later said the reason they didn’t pay their loans back was because they didn’t achieve certain targets. In other words, the subsidiary failed, and the Irvings don’t want to cover their own losses.
“The government made available a shipyard redevelopment fund if we committed to permanently close the shipyard and agreed not to build ships at the site for at least 15 years,” said Irving spokeswoman Mary Keith. “The Atlantic Wallboard business was developed as a result of the closing of Saint John Shipbuilding and the federal government making available the shipyard redevelopment fund.”
She went on to say that the conditions of their repayment for these loans were that the company matches dollar-for-dollar investments.
“An economics expert says the federal agency used “murky language” by calling the money conditionally repayable to describe what is effectively a subsidy,” regarding the use of conditionally repayable contribution agreements,” reports the Financial Post.
“It’s what I might call deliberate obscurity to try to not break the rules,” said Ian McAllister, a retired Dalhousie University economics professor and former head of the federal Finance Department. “ACOA and the Irvings may not want clarity because it then puts them in a confrontational situation with the U.S. government.”