Each day now, the witnesses parade before the judge that was appointed to look into this mess with their spectacular tales of mismanagement, political interference, incompetence and the squandering of countless millions of taxpayers' money.
No, the scandal in question is not the federal sponsorship fiasco, although the same ends-justify-the-means ethos that embodied the Liberal program to win votes in Quebec is at the heart of the matter.
Since Oct. 19, retired Quebec Superior Court judge Robert Lesage has been hearing testimony in postcard-perfect Percé in order to get to the bottom of what went wrong at the Gaspésia paper mill in nearby Chandler.
What is emerging is a chilling tale of a bailout gone terribly bad. Today, Gaspésia is under court protection from its creditors and about $300-million has gone down the drain. It is a story governments everywhere should study carefully before jumping in to rescue dying businesses. Should, but won't.
The transformation of Gaspésia from an antiquated newsprint operation, mothballed in 1999 by former owner Abitibi-Consolidated, into a high-tech coated paper mill owned by a group of Quebec Inc. heavyweights was supposed to cost $465-million when the rescue plan was unveiled in late 2001 by the former Parti Québécois government.
The latter had understandable, if undeniably self-interested, reasons for seeking to save the mill. So did the federal Liberals. The ridings on the Gaspé Peninsula, where the unemployment rate hovers at about 20 per cent, usually swing to the highest bidder. Voters flirt with both the Péquistes and Liberals provincially and with the Liberals and Bloc Québécois federally. So saving Gaspésia meant earning political capital for the parties in power.
At what price? The Quebec government, under Bernard Landry, came up with $203-million in grants, loans and training money. It also arm-twisted the provincially owned Société générale de financement -- then headed by Claude Blanchet, husband of former PQ cabinet minister Pauline Marois -- into investing $35-million. The government persuaded Tembec Inc. to pour in $35-million by forgiving an equal-sized debt owed by the forest products company.
Fonds de solidarité, the venture capital arm of the Fédération des travailleurs du Québec (FTQ) labour union central, put in another $70-million, while Ottawa pumped in $80-million in interest-free loans.
Work on the mill conversion began in the spring of 2002. From the beginning, the project -- established as a limited partnership 50 per cent owned by the Fonds de solidarité with the SGF and Tembec each holding 25-per-cent stakes -- was plagued by delays and mismanagement. The FTQ was accused of blocking workers affiliated with other unions from getting construction jobs on the site. Contractors complained that workers were paid for eight-hour days, but put in only three hours of productive labour.
By the beginning of this year, the estimated cost of converting the mill had ballooned to more than $758-million -- almost $300-million more than originally forecast. Tembec bailed out of the project, realizing there was no way Gaspésia could operate profitably. Construction work was halted and Gaspésia sought court protection under the Companies' Creditors Arrangement Act. Subcontractors have gone unpaid.
Liberal Premier Jean Charest appointed Mr. Lesage to perform the autopsy. His report is expected early next year.
Unfortunately, Mr. Lesage's mandate focuses too much on figuring out why the projected cost of the project soared from $465-million to $758-million rather than getting to the nub of the real issue at hand: Why the bailout was approved at all.
In its heyday in the 1960s and 1970s, when Gaspésia was jointly owned by Abitibi and New York Times Co., the mill employed as many as 1,500 workers. By the time Abitibi closed it in 1999, the payroll was down to 550 workers.
The new-and-improved Gaspésia would have created barely 250 full-time jobs. At $465-million, that works out to about $1.86-million for each job. At $758-million, it's more than $3-million a job. Either way, it's too much.
What's more, operating in the coated paper market is no licence to print money. Coated paper, often used in magazines, has probably got better margins and growth prospects than newsprint (what doesn't?) and Gaspésia could have counted on a process that uses highly efficient thermomechanical pulp. But competition is fierce. And Gaspésia, as a small operator in a market controlled by multinational forest companies, would have been at a disadvantage in that environment.
Still, politics being politics, Mr. Charest says job one is now finding a new buyer for the mill. Of course, the only way that is possible is by promising ever more public money.
In either language, quel dommage.
Konrad Yakabuski