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Politics Ottawa alerts Irving Shipbuilding over reporters’ queries about contract

The federal government alerted New Brunswick’s Irving family that The Globe and Mail was seeking information from public servants about whether the family’s shipbuilding company had claimed an Alberta French fry plant as an industrial benefit of a contract to build warships for the Canadian navy.

The Department of Innovation, Science and Economic Development said late Wednesday that Ottawa is obligated to get the consent of Irving Shipbuilding before providing any information to the media about industrial and regional benefits [IRB] agreements it has with the federal government – an arrangement a government spokesman called “common practice” in keeping with contractual wording.

However, the standard contract wording that the government cited only contains a broad reference to co-ordinating public communications.

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The obligation on the part of the Canadian government to alert Irving Shipbuilding when reporters ask questions about its shipbuilding contract comes to light only weeks after the conclusion of a political drama and court case in Ottawa over allegations that secrets were leaked to shipbuilders. And it surfaces only days after Innovation Minister Navdeep Bains unveiled a wide review of federal privacy laws and promised more stringent enforcement against companies that violate the privacy of Canadians.

On Monday, The Globe sent an e-mail to media relations at Department of Innovation asking whether Irving Shipbuilding or holding company J.D. Irving Ltd. had claimed the Cavendish Farms frozen potato processing plant in Lethbridge as an investment to fulfill its obligations under the Arctic and offshore patrol ships contract.

Under Canada’s IRB policy – later renamed the industrial and technological benefits policy – the federal government requires prime contractors of defence procurements to undertake business activity in Canada equal to 100 per cent of the value of the contracts they are awarded. Key objectives of this policy are to support the sustainability and growth of Canada’s defence sector and boost innovation through research and development.

A second e-mail was sent to the Innovation Department’s media-relations account Tuesday after the department failed to respond. Later that day, a lawyer representing J.D. Irving e-mailed to say: “We understand that you and The Globe are about to publish a story regarding the Industrial Technological Benefits [ITB) and Cavendish Farms and the Irving companies.”

Jonathan Lisus of the Toronto law firm Lax O’Sullivan Lisus Gottlieb LLP threatened to take legal action if the story contained allegations of improper conduct.

Sources who were granted anonymity to speak about the matter said Mr. Bains’s office had tipped off Irving Shipbuilding about The Globe investigation – not the first time the federal government has provided journalists’ questions to the company.

A federal spokesman acknowledged Wednesday that the Innovation Department had contacted the company after receiving detailed questions from The Globe but said this was a requirement of the arrangement it has with the shipbuilder. Hans Parmar denied that the department revealed it was The Globe making inquiries.

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“As IRB investments are arrangements involving two commercial entities and require [that] we seek agreement of these third parties before release, given the commercially sensitive nature of this information,” Mr. Parmar told The Globe in an e-mail, “our common practice is to seek agreement of the prime contractor to release details of any investment with the prime contractor. Accordingly, in this case, and without providing any details about the source of the media inquiry, we advised the prime [contractor] that we had received a media inquiry for details about one of their IRB transactions.”

A senior federal official who was also granted anonymity said he could not explain why J.D. Irving threatened to sue The Globe.

But J.D. Irving has already turned to courts to assert control over the flow of its information, a company source said.

A J.D. Irving source said the family “got exercised” about The Globe’s questions to the government because, they alleged, sensitive information about the company has been previously forged and disseminated to “cause mischief." The source provided no further details but added that J.D. Irving has a court order against Toronto private investigator Derrick Snowdy.

On Wednesday, when The Globe asked J.D. Irving about the Lethbridge French fry plant, the company said it had received some IRB credits from this investment.

Mary Keith, vice-president of communications for J.D. Irving, said Irving Shipbuilding did not receive full credit for the entire $425-million investment in the Cavendish Farms facility. She said the shipbuilder received a credit of approximately $40-million toward its IRB obligations under the Arctic vessel contract.

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“Irving Shipbuilding has claimed the use of a select few Canadian companies that will provide innovative technology towards the facility that are helping to create one of the most modern plants of its kind,” Ms. Keith said.

“All of the eligibility criteria of the Government of Canada have been met.”

In March, Postmedia reporter David Pugliese sent information requests to the Department of National Defence and to Public Services and Procurement Canada that were leaked to J.D. Irving.

He had received a tip about alleged welding problems aboard HMCS Harry DeWolf, the first of the Royal Canadian Navy’s new Arctic patrol warships.

Within two hours of submitting questions to the two federal departments, Irving Shipbuilding president Kevin McCoy contacted Mr. Pugliese and threatened to sue if “anything false about [Irving’s] reputation is published.”

Irving’s lawyers would be “making sure you understand that if you write something false about our reputation we will pursue it,” Mr. McCoy was quoted as saying.

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Mr. Pugliese has written that this was the third time information about Postmedia investigations, as well as a reporter’s personal information, had been shared with the defence industry. He said it was the second time specific inquiries regarding government shipbuilding had been communicated to J.D. Irving.

His questions to the government departments regarding the Arctic patrol ships were unrelated to industrial benefits.

Irving Shipbuilding was recently at the centre of a criminal case involving Vice-Admiral Mark Norman, who was vindicated this month after Crown prosecutors stayed a breach of trust charge against him.

Shortly after the Liberals formed government in the fall of 2015, Irving Shipbuilding complained to then-Treasury Board President Scott Brison that the company hadn’t been given due consideration to build a naval supply ship awarded to Davie shipyards in Quebec City.

Cabinet decided to review the contract, but the decision was leaked to the media, which resulted in political backlash in Quebec. The government eventually decided to proceed with the Davie contract.

Sources have told The Globe that Prime Minister Justin Trudeau was furious at the leak and that this led to the RCMP being called in to investigate, which eventually led to the breach of trust charge against Vice-Adm. Norman, who had championed the Davie contract.

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According to the Innovation Department’s website, Irving Shipbuilding has more than $3-billion of IRB obligations arising from the Arctic and offshore patrol vessel contract. The same “breakdown of current obligations by project” published by the department shows that the company has fulfilled more than $1.4-billion of these obligations and has more than $353-million “in progress,” with another $1.3-billion yet to be identified.

The Globe asked the department to confirm that these numbers are the latest available, but the government was unable to respond immediately.

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