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Frank Magazine Issue 578.pdf - Besthostingplanever.com

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TRENTONWORKS<br />

TRUSTEE TALK<br />

BY RAY L. RHODES<br />

I AM HEARING CONFLICTING REPORTS OF<br />

RECENT ACTIVITY ON THE TRENTONWORKS<br />

FRONT.<br />

A well-placed source tells me the Dexter<br />

government replaced financial consultants<br />

Ernst & Young and appointed an NDP-sympathetic<br />

lawyer as the trustee in bankruptcy<br />

for the idle Trentonworks plant.<br />

I understand insiders perceived the rumoured<br />

Dexter changeover as politically motivated,<br />

and not a reflection on Ernst & Young’s<br />

performance.<br />

But Ernst & Young exec George Kinsman<br />

dismissed the scuttlebutt on January 28, telling<br />

me categorically, “It is not the case. We’re<br />

continuing to act as the trustee in bankruptcy<br />

for Trentonworks. Ok?”<br />

According to another source, who is<br />

uniquely knowledgable on the subject, word<br />

began circulating just before Christmas that<br />

Dexter was about to orchestrate the trustee<br />

changeover and put another firm in charge of<br />

the idle railcar manufacturer.<br />

Despite talk of backroom intrigue, the official<br />

line on January 15 from a spokesthingy<br />

with the provincial Economic Development<br />

office has status quo the order the day.<br />

“No change has been made on the file,”<br />

according to Vicki Roberts.<br />

U.S. owner Greenbrier abandoned<br />

Trentonworks in May 2007 for Mexico, leaving<br />

about 300 Pictou County workers without<br />

jobs, without severance, and staring into<br />

a void made up of a multi-million dollar pension<br />

shortfall.<br />

Greenbrier hired former Sysco trustee Ernst<br />

& Young to sell the plant; in March 2008, after<br />

a buyer could not be found, E&Y became<br />

the court-appointed trustee, and Trentonworks<br />

filed for bankruptcy, citing $6.5 million in liabilities<br />

and $4.9 million in assets. The province,<br />

ahem, the taxpayer, is the largest creditor.<br />

Via the Economic Development office, in<br />

October 2008 the ruling Tory government<br />

handed trustee Ernst & Young $2.6 million to<br />

maintain the historic plant’s facilities and<br />

equipment.<br />

Last July, the Dexter government wrote off<br />

$5 million in bad debt associated with<br />

Trentonworks.<br />

Currently, I hear negotiations are ongoing<br />

with an unidentified offshore <strong>com</strong>pany interested<br />

in purchasing the plant.<br />

Stay tuned.<br />

Does <strong>Frank</strong> Know?<br />

atlanticfrank@eastlink.ca<br />

THE USUAL SUSPECTS<br />

BAG THE CASH<br />

BY MEG A. BUCKS<br />

TIME AND TIME AGAIN, ECONOMIC<br />

DEVELOPMENT CASH THAT IS SUPPOSEDLY<br />

INTENDED TO SERVE THE GREATER GOOD OF<br />

THE PROVINCE IS INSTEAD FUNNELLED INTO<br />

THE COFFERS OF A FEW FAVOURITE<br />

COMPANIES.<br />

The January 25 announcement that ACOA<br />

has earmarked millions from its Atlantic Innovation<br />

Fund for a trio of private Nova<br />

Scotia <strong>com</strong>panies — Dartmouth-based<br />

Ocean Nutrition, Composites Atlantic Ltd.<br />

in Lunenburg, and topical cream manufacturer<br />

Origin BioMed — is but the latest example<br />

in a long, long, line of them.<br />

In 2008 I calculated that Ocean Nutrition,<br />

founded by Clearwater fish baron John<br />

Risley in 1997, had received more than $50<br />

million in government loans (all interest-free,<br />

some <strong>com</strong>pletely risk free), payroll rebates,<br />

loan guarantees, gifts and more. As of last<br />

week, that total sits in the neighbourhood of<br />

$53 million, give or take.<br />

Composites Atlantic makes <strong>com</strong>ponents for<br />

aircrafts, space shuttles and the like. Founded<br />

by Maurice Guitton in 1988, its newest influx<br />

of government funding, about $1.9 million, is<br />

to be used to develop a cost-efficient hollow<br />

core, all-<strong>com</strong>posite strut for the airline industry.<br />

It’s the third time the <strong>com</strong>pany has received<br />

funding from the Atlantic Innovation<br />

Fund, for a total of $4.4 million in provisionally<br />

repayable loans. The loans are provisionally<br />

repayable because if the particular project<br />

being funded doesn’t make any money, the<br />

government loses its investment.<br />

Since 1996, Composites has received an<br />

additional $3.3 million from other ACOA pots,<br />

and $9 million from the province, which has<br />

a 50 per cent ownership stake in the <strong>com</strong>pany.<br />

The other half is owned by French aerospace<br />

giant EADS.<br />

It’s the first time Origin BioMed, which<br />

makes over-the-counter remedies to relieve<br />

diabetic pain and cold sores, has received<br />

cash from this particular fund. It’s getting $3<br />

million spread over three years to develop<br />

new topical treatments for other ailments. Just<br />

like Composites Atlantic, the province of Nova<br />

Scotia is heavily invested in Origin, to the tune<br />

of $3.7 million. How much equity in the <strong>com</strong>pany<br />

that dollar amount represents for the<br />

taxpayers of Nova Scotia, I cannot say. But it<br />

is significant.<br />

To date, ACOA has also provided Origin with<br />

another $1.8 million in tax-free loans.<br />

ACOA mouthpuppet David Harrigan says<br />

these <strong>com</strong>panies, and others like them, get<br />

repeat business from ACOA because they<br />

represent the cream of the crop, “the best<br />

possible projects.”<br />

David says that every application submitted<br />

for consideration for AIF funding is vetted<br />

by an arms length board for quality and <strong>com</strong>mercial<br />

potential alone. Not a moment’s<br />

thought is wasted on whether the applicant<br />

has received funding before.<br />

“There’s no way we would penalize a <strong>com</strong>pany<br />

simply because it has submitted a successful<br />

application before,” he says.<br />

Alright, try this one on for size. Say there<br />

are two great projects. One’s from Ocean<br />

Nutrition, which has benefited from an obscene<br />

amount of government largesse, and<br />

one <strong>com</strong>es from a little guy without the proverbial<br />

pot, window, etc.<br />

What then?<br />

“We rely on the re<strong>com</strong>mendations of the<br />

advisory board ... nobody’s penalized ... every<br />

project is based on its own merits,” he says.<br />

‘Already repaying’<br />

A <strong>com</strong>pany’s past repayment history doesn’t<br />

enter into it, either, because research and development<br />

is so time consuming that there’s a<br />

chance money given out eight years ago hasn’t<br />

yet yielded a profitable product. But, he helpfully<br />

points out that Ocean Nutrition is “already<br />

repaying” some of its past contributions.<br />

Considering a chunk of every paycheque<br />

I’ve earned since high school has made its<br />

way to Risley&Orr Inc. — not to mention the<br />

fact that Ocean Nutrition’s Omega-3 food<br />

additive can currently be found in orange juice,<br />

salad dressing, breakfast cereal, frozen yogurt,<br />

brownies and bagels the world over — I<br />

would bloody well HOPE that Ocean Nutrition<br />

is already repaying its debt to the Canadian<br />

taxpayer.<br />

In an interesting bit of timing, a Canadian<br />

Press story concerning ACOA’s tendency to<br />

keep doling out its cash to the same cast of<br />

characters appeared just nine days before the<br />

latest AIF announcement. In the story, scribe<br />

Michael Tutton reveals that six <strong>com</strong>panies<br />

and one university-affiliated corporation have<br />

received cash from ACOA every year, like<br />

clockwork, since 1989.<br />

The most notable local <strong>com</strong>pany in this pack<br />

is John Bragg’s Oxford Frozen Foods,<br />

which has received $12.4 million in that time<br />

period. Perhaps more disturbing is that a staggering<br />

82 other <strong>com</strong>panies have received<br />

cash in at least 10 of the last 20 years, for a<br />

total of $203 million.<br />

CONTINUED ON NEXT PAGE<br />

FEBRUARY 16, 2010 ATLANTIC CANADA FRANK 19

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