Government meddling hastened FPI's demise: Risley

The principal shareholder of Fishery Products International blames interference and manipulation from the Newfoundland and Labrador government for causing the breakup of the company.

John Risley, who led a hostile takeover of the St. John's-based company in 2001 and who has been the target of enmity from politicians, labour leaders and much of the FPI workforce since, said provincial legislation and not anything the company's board did led to the pending sell-off of most FPI assets.

"We're in this situation essentially because of the FPI Act," Risley told CBC News on Monday, after the Newfoundland and Labrador government gave its blessing to FPI's plans to sell most of its plants, vessels and quotas to two competitors: St. John's-based Ocean Choice International and Nova Scotia's High Liner Foods.

Risley said his original plan to merge FPI with his own, Nova Scotia-based company, Clearwater Fine Foods would have turned FPI into a powerhouse.

The plan was blocked by the then-Liberal government and the Risley-led board has had strained relations with the governing Progressive Conservatives since they took office in 2003.

"FPI would have become one of the premier seafood companies in the world instead of now effectively ceasing to exist," Risley said.

"And all I can say is, what a shame."

The FPI Act, created to govern the former provincial Crown corporation, has been a bane in Risley's side for years. Among other things, it sets limits on ownership and some operations and gives the provincial government a veto on major company changes.

FPI is still a major economic force in Newfoundland and Labrador, although it is a fraction of its former size. The company was formed in 1984 by the federal and provincial governments and the Bank of Nova Scotia from the ruins of a string of failing seafood companies.

FPI was privatized in 1987 and flourished for several years until groundfish collapses in the early 1990s caused FPI to cut production dramatically.

Problem after problem

Risley promised a more dynamic company after a shareholder takeover pushed out the former leadership. Instead, FPI rolled from one problem to the next.

The company tried unsuccessfully to turn its profitable U.S. marketing division into an income trust in a debate that all but paralyzed the house of assembly in 2005.

Troubles cited by the company in recent years include high wages paid to its unionized workers, unfavourable currency exchange and cheap labour from emerging seafood powerhouses in China.

During the Risley era, FPI called for changes to the FPI Act, which among other things sets limits on ownership and requires that the company's quotas be landed in Newfoundland.

The spectre of Risley's influence hung over the negotiations to sell the company to the end.

Premier Danny Williams told reporters on Monday that ceding control to Risley and other FPI shareholders was the key reason why the Newfoundland and Labrador government insisted on strict rules that will forbid Ocean Choice and High Liner from selling their assets for five years.

"What we've tried to do is make sure that there wasn't a quick flip on this, and that this wasn't perceived or was a sham for some takeover by John Risley or anybody else, at the end of the day," Williams said.

Those assets include FPI's offshore scallop and shrimp quotas. While FPI was looking for potential suitors earlier this year, many people in the seafood industry believed that Risley had intended to obtain those quotas for Clearwater, which specializes in the shellfish market.

Criticism brushed off

Contacted by CBC News in the United Kingdom, Risley brushed off the criticism.

"Frankly, I don't understand the paranoia around our interest," Risley said.

"But obviously it's something that we've agreed to, and we didn't have any intention of doing anything in that respect, so it wasn't a problem for us to agree to it."

Ocean Choice has a tentative deal to buy five fish processing plants and an offloading facility.

High Liner Foods is buying the U.S. marketing arm, as well as a secondary processing plant in Burin that supplies the foodservice industry.

High Liner president Henry Demone told CBC News on Tuesday that he does not view the FPI Act in the same light as Risley.

He said the provincial government "acted very prudently on behalf of the people of Newfoundland and Labrador."

The new arrangement, he said, will make the provincial seafood industry "more competitive internationally, and also put some safeguards in place" for communities that rely on FPI plants.

'Important for the province'

Martin Sullivan, Ocean Choice's president, would not comment on whether he believes the provincial government has been heavy-handed with its threats of multimillion-dollar fines should Ocean Choice breach a vow to maintain employment levels, keep plants open and land catches locally.

"We know this is important for the province," said Sullivan. Ocean Choice is planning to spend millions of dollars upgrading the plants it is purchasing.

"We were prepared to make those commitments and be comfortable with those commitments, and we intend to live up to those commitments."

Earle McCurdy, president of the Fish, Food and Allied Workers union and one of Risley's strongest critics over the last six years, said the approval of the sale of FPI assets marks a turning point for his members.

"Put it this way:there's more security today than there was prior to this," McCurdy said.

"It does provide an opportunity for a fresh start, which is badly needed. The constant turmoil was not good for the company, the workers or anybody else, and it was just time to move on."

Ocean Choice and High Liner have not disclosed what they are paying for the FPI assets.

The tentative deals are expected to close in the next few weeks.