Long-sought deal between U.S. Steel, Ottawa little help now: critics
John Rieti | CBC News | Posted: October 8, 2014 11:42 PM | Last Updated: October 9, 2014
U.S. Steel Canada plans to sell the Hamilton and Nanticoke plants by next October
Critics of a 2011 agreement between the federal government and U.S. Steel say the release of a document detailing the deal is long overdue but ultimately of little use now that a bankruptcy protection plan is in place.
Industry Canada confirmed Wednesday it will provide the undertaking, which has never been seen by the public, to the Ontario court handling U.S. Steel Canada’s bankruptcy. Superior Court Justice Herman Wilton-Siegel has already approved a $185 million debtor-in-possession loan for U.S. Steel Canada from its American parent company, after a week of negotiations.
Hamilton Mayor Bob Bratina, who was at court on Monday and Wednesday this week, said the city wanted to know what was in the ICA to "level the playing field," during the negotiations, which did not happen.
The approval of the loan, as part of the overall approval of U.S. Steel Canada's bankruptcy protection plan, means it is now the document governing the company's operations for the next 14 months.
It will be up to the court whether or not to make the document public, Industry Canada said.
The province of Ontario, however, says the release of the document to the court will have some value.
The document contains "important information" that will be used in the restructuring process, said Susie Heath, spokeswoman for Ontario Finance Minister Charles Sousa..
"As to specific outcomes, it would be premature to comment at this time."
NDP MPP Paul Miller said the document should have been released years ago, and wants it made public now, while the leader of a Hamilton steelworkers union said unless the information is out in the open its of little use to U.S. Steel employees.
If the government dropped the ball, and I know they did, then they should be held responsible. - Paul Miller, NDP MPP
The document outlines a settlement the company made with Ottawa after the federal government launched legal action under the Investment Canada Act (ICA) against the company in 2009 after it shut most of its Canadian operations two years after purchasing Stelco Inc.
In the settlement, U.S. Steel, among other commitments, agreed to operate its Hamilton and Nanticoke, Ont., plants until at least 2015 and spend at least $50 million on capital improvements at the Canadian facilities.
But Miller said since then the federal government has "sat on its hands" when it comes to dealing with U.S. Steel Canada, which he said has failed to live up to its commitments in terms of maintaining a level of production and keeping employees.
Now, under the company’s current restructuring plan, both plants are set to be sold by next October.
"If the government dropped the ball, and I know they did, then they should be held responsible," Miller told CBC Hamilton.
"They should be on the hook to support the pensioners because they’ve let them down dramatically."
'Totally unacceptable'
Ottawa didn't file an objection to the company's restructuring plans, but a spokesman for Industry Minister James Moore said the government is monitoring the situation closely.
Several U.S. Steel Canada stakeholders, including the City of Hamilton, asked for disclosure of the 2011 settlement, which came after the government launched legal action against the company in 2009 when it shut down its operations in 2009.
Even now, Miller said, it’s likely the documents will only be seen by those connected with the bankruptcy-protection case.
"That is totally unacceptable. The people have a right to know what their government is doing, because they elect the government."
Rolf Gerstenberger, President of Hamilton’s Steelworkers' Local 1005, said his union has made several attempts to get this document in the past.
"This isn’t a private affair. These agreements affect at least 10,000 families in Hamilton that could be negatively impacted," Gerstenberger said.
Many private company dealings are not made public due to worries the business may lose its competitive advantage, but Gerstenberger dismissed that idea as "BS."
"It was all under the guise of 'this is going to be a net benefit to Canada,' well then you should know what the settlement is," he said.
"Obviously, in hindsight, there’s nothing here that’s been of net benefit to Canada."
'This isn’t abstract'
MP Peggy Nash, the NDP’s industry critic, said the U.S. Steel case points out glaring problems with the Investment Canada Act.
"Up until now we’ve been kept in the dark about U.S. Steel’s commitments made to the government over Stelco," Nash said.
"It’s a situation that cries out for transparency and accountability."
Nash said her party has been pushing for more transparency in the ICA since at least 2010, when then leader Jack Layton spoke out against the act. Specifically, Nash said, the people often most affected by ICA — employees — need to be aware of the government’s deals with companies.
"When a company goes bankrupt, people are left in the lurch … this isn’t abstract," Nash said.
She said companies also complain about the ICA’s lack of predictability.
"What we’ve heard time and time again is that companies don’t like the 'changing landscape' of the ICA," Nash said.
It's unclear when the documents will be presented to court. In court on Wednesday, the bankruptcy case’s monitor from Ernst & Young said talks were underway with Industry Canada to get access to the agreement.
"We’re in discussions to get the undertaking on a confidential basis," Alex Morrison told the judge.
Many other key documents related to U.S. Steel Canada's restructuring plans are available on the court monitor's website.
If you want to get in touch with John Rieti you can reach him by email at john.rieti@cbc.ca or 905-536-8795