The reclusive Chinese businessman at the centre of the legal dispute over Prince Rupert’s former Skeena Cellulose pulp mill on Watson Island resurfaced this month, vowing to continue to fight to regain ownership of the site after the city’s 2009 decision to expropriate the land.
Ni Ritao, the main stakeholder of Sun Wave Forest Products, said his experience of what he considers “negotiations in bad faith” by municipalities like Prince Rupert could severely damage the reputations of B.C. and the rest of Canada as destinations for overseas business investment, which would hamper the province’s economic growth in a globalized marketplace.
“I want to tell others of my experiences doing business in Canada,” said Ni from his home in China. “If the treatment I’ve seen is the treatment that foreign investors get – that they welcome your money at first, then confiscate everything once you actually invest – then I find it hard to believe anyone would want to invest here.”
Officials from the City of Prince Rupert did not respond to a media request to speak with Business in Vancouver about the case, and representatives of rural economic development group Community Futures British Columbia declined to comment, citing ongoing litigation between Ni and the municipality.
Ni, a former paper industry magnate, has been at the centre of a web of legal wrangling in B.C. and China for more than a decade. Prince Rupert became a part of the story after Ni bought the Skeena Cellulose mill in 2006 for roughly $9 million. The mill, a key economic driver for the city, had been shuttered since 2001.
According to court documents, Prince Rupert and Sun Wave reached a “partnership agreement” that exempted the company from municipal taxes for an extended period of time (Ni said the agreed period was 25 years). The agreement also called for the factory to be restarted at full operational capacity by December 31, 2007. When that failed to materialize, the city moved to terminate the agreement and collect the taxes that were previously exempt.
Ni said the delay in getting the mill started was caused by several factors out of his control, including the fractured state of the mill operations, which prevented Sun Wave from readily getting the raw materials and the labour needed to quickly restart, and the two-year period required to legally get investment funding out of China and into Canada.
He said municipal officials were “extremely friendly” at the start of Ni’s involvement in 2005, but by 2007 they appeared to have changed their minds about the partnership.
“On the surface, they said they felt I was taking too long to start the mill,” Ni said. “But when I offered to start it in 2007, they said it was too late. So did they believe it themselves that the mill can be restarted quickly? I don’t know the answer to that question.”
Court documents noted that, when no taxes were paid on the site by September 2008, the municipality moved to sell the land before taking over the property in 2009 and selling off assets to recover the tax revenue.
“Sun Wave can continue its petition, as noted by the city, seeking a declaration that the city acted without statutory authority in making the retroactive tax assessment,” said Justice J. Miriam Gropper in a 2013 BC Supreme Court ruling. “It may seek an order quashing the retroactive tax assessment and an order remitting to the city the amount of taxes owing on the termination of the partnering agreement. It cannot, I have found, seek a declaration that the tax sale is a nullity.”
Since then, Sun Wave has launched challenges to the expropriation, although the city said a confidential settlement agreement in 2013 allowed Prince Rupert to start decommissioning the former pulp mill and pursue new opportunities – a development that Ni denounced as a rogue action by “unauthorized” Sun Wave representatives who acted independently of Ni.
In 2015, Prince Rupert officials said the representatives had documented authorization “to execute and deliver on behalf of Sun Wave all documents in relation to the settlement agreement.”
Ni, however, said he is now also suing the representatives in question.
Further complicating the issue are Ni’s legal troubles back in China. He was held in custody by Chinese authorities from 2012 to 2015, preventing him from travelling to Canada or communicating with Canadian associates. The businessman had been caught up in Beijing’s anti-corruption investigations, accused of attempting to secure a large loan for Sun Wave’s Skeena mill purchase even though another one of Ni’s companies had already bought the site, meaning Ni would have been given a loan to buy something that he already owned.
Media reports said Ni was possibly convicted of unrelated charges of bribery in the investigation, although the paper magnate himself said he has been “fully exonerated.”
The situation is further complicated by the fact that Ni was held in custody under the Chinese investigation mechanism of “shuanggui,” or “double-regulated” – used by the ruling Communist Party of China to pursue potential wrongdoing by party members outside of the state’s official judicial system.
Because of his three years in custody, Ni said, not only was he unable to travel or keep in touch with the court proceedings in B.C., but he was also denied entry at Vancouver International Airport and forced to return to Hong Kong when he attempted to travel to Vancouver in 2015 after his release. Ni added he is still applying for a new visa to enter Canada and participate in person at ongoing court proceedings.
As for the Watson Island site, Prince Rupert officials said last year that up to 80% of it is decommissioned, and the city is ready to proceed with initiatives at the property that would supplement Prince Rupert’s economy and help generate revenue for building roads, securing the water supply and creating other community infrastructure.
Last November, Pembina Pipeline Corp. (TSX:PPL) said it will proceed with a propane export terminal project on Watson Island slated to be operating by 2020. The project is part of an initiative led by Prince Rupert Mayor Lee Brain in which much of the site would become a city-owned import-export “logistics park.”
“For 15 years, [the mill] was a massive challenge for this community to move forward due to financial and environmental constraints,” Brain said in a video on the municipal government’s website.
“We are opening the door for new commercial opportunities, as well as moving very quickly through our legal challenges. We are hoping to build a new future for this community by having new commercial operations that will bring in new revenue for everybody in this community to benefit.”
Ni said he would be willing to work with the city on the site’s redevelopment, but insists that the land was taken from him illegally and that municipal officials “unilaterally led and accelerated the disposal and sale” of his Prince Rupert assets.
“I believe that the government’s credibility, commitment and creation of a good investment environment are the basis for attracting foreign investment,” Ni said, calling for government and business associations to take a closer look at the issue of accommodating overseas investors.
“If the unfortunate experience of my investment in Canada ends up being an unfair, unjust and unreasonable one, it will certainly lead to a daunting future for potential investors.” •