The Irving family has long been among the most powerful in Canada, running a multitude of businesses with interests in forest products, energy, media and shipbuilding. But the empire built by K.C. Irving is now fraying amid dissension among the third and fourth generations. In this excerpt from Irving vs. Irving, author Jacques Poitras describes the moment K.C.'s grandson Kenneth Irving left the family business after falling out with his father, Arthur Irving.
In a rare public speech in 2006, Kenneth Irving alluded to the average CEO of a publicly traded energy company holding the position for about five years; he lightheartedly thanked his father, who was in the audience, for keeping him around as long as he had.
But in mid-July 2010, a decade after Arthur had handed him the top job, Kenneth's time was suddenly up. In a memo e-mailed to employees, Arthur told Irving Oil employees his son was taking a leave of absence for "personal reasons." A week later, Kenneth himself announced by e-mail that he was departing for good. He thanked everyone for their concern. "I appreciate the thoughtfulness and would like everyone to know I am doing well and expect to fully recover from my health setback." There were no details of his illness, but there was a thank-you to "my father and the board for their support and understanding while I continue to recover."
Kenneth was succeeded by Mike Ashar, a Mumbai-born chemical engineer and former Suncor executive who came to Irving Oil in 2008. Kenneth, meanwhile, relocated to New Hampshire, near his wife's native Vermont, and later became a director of Kinross Gold Corp., a Toronto-based mining company. He would not be heard from in public again. [I requested an interview with Kenneth Irving through a Kinross spokesperson. I was told that while he appreciated the offer, "it has not been his practice to entertain such requests."].
For many in Saint John, the story of Kenneth's illness didn't add up. In the popular imagination, bloodlines were paramount for the Irvings, the departure of a key family member unthinkable. One Telegraph-Journal reporter had seen Kenneth address a meeting of Atlantic premiers and New England governors a few months before, where he seemed healthy, at ease, and in command. "I don't think he even had a note." The prevailing theory was that Arthur fired Kenneth over Irving Oil's various setbacks. Arthur was said to consider the gas station deal a mistake that damaged the brand and deprived Irving Oil of reliable cash flow. Arthur once explained to author John DeMont how little things – larger napkins, clean washrooms – gave the Irving gas stations and restaurants their pristine reputations. Under Couche-Tard, says one Irving-watcher, "the standard of service declined. The washrooms weren't quite as clean as they were before." And Arthur knew it.
In fact, Kenneth left because of a fight over money, sparked by the family split. In 2009, the trustees of K.C. Irving's will, including his widow, Winnifred, filed an application to a court in Bermuda. The file is sealed, but it's believed they sought to dissolve the trust established by K.C.'s will and to distribute its assets as part of the corporate breakup – a process that generated legal bills "in the region of $100-million," according to a subsequent court ruling. Arthur would use his share, worth $1-billion or "roughly one-third of the global estate" left by K.C., to set up his own trust, with Irving Oil its principal asset.
A problem arose when Arthur declared he would give his five children equal shares in the trust. A 2012 ruling by Chief Justice Ian Kawaley of the Supreme Court of Bermuda reveals that Kenneth expected "his unique contribution to the value of the Onshore Operating Company" – Irving Oil – "which he worked for at a senior level for several years should be recognized" with a greater share of his father's wealth. "When he discovered that his father intended to treat [him] and his siblings equally, his relationship with his father broke down," Kawaley wrote. Kenneth "suffered a mental breakdown and his relationship with both the Company and his family was severed." So Arthur hadn't fired his son after all: Kenneth's original explanation, a "health setback," was somewhat closer to the truth – but was still far from the whole story.
The falling-out between father and son belies, of course, what Irving company spokespeople told the Telegraph-Journal in 2007: that succession planning was normal and that it was "business as usual" for the companies. Instead, the split between K.C.'s three boys – and the ambitions and emotions it roused – had cost the energy company its CEO, and Arthur Irving his relationship with his son. And its blight was spreading. On July 22, 2010, just hours after Kenneth announced his departure from his father's company, Arthur's brother Jack Irving died – a sad event that would also bring some of the same family divisions to the surface.
"When Jack was dying and [his brother J.K.] went into the hospital to see Jack, he was refused" by Jack's family, Joan Carlisle Irving says. J.K. "was turned away at the door, which I thought was appalling." The day before his funeral, hundreds of people lined up in the summer heat at the Gothic-style stone Trinity Church, built in 1784, for the viewing. People waited ninety minutes to get in; among them was J.K., "standing in line to give his condolences with everyone else," according to another mourner. J.K., in his eighties now, was "standing out in the sun," Joan Carlisle Irving says, "standing in line for an hour and a half to go in and see his brother's body, his brother who he'd taken care of as a little boy." At the funeral the next day, J.K. and his family were seated several rows back from Jack's and Arthur's families.
Joan Carlisle Irving says despite her contentious divorce from Arthur decades ago, she remained friends with J.K. and his wife, Jean. During a visit with them in Bouctouche in 2012, she remembers, they hashed over "this horrible wrenching apart of the empire." She says Jean pointed, as an explanation, to "the way their father treated them." There's Joan's story of K.C. leaving a misbehaving, five-year-old Arthur on the side of the road on that drive to Nova Scotia, and her theory that it marked Arthur for life. Joan also remembers K.C.'s childhood friend Leigh Stevenson recounting a conversation with the industrialist: "Why don't you just split it up, let them go their own way, cut them loose and let each of the boys run their own?" Stevenson asked.
"No, no, no, it has to stay together," K.C. reportedly answered. "It's the only way it will work. It has to stay together." Hence the tangled ownership structure that forced them to work in unison.
Now the very qualities that allowed K.C. Irving to construct his empire – ruthlessness, determination, an unwillingness to ever surrender – were, in his progeny, causing the whole edifice to come apart.
"This terrible business of succession," Joan says, "seems to have devastating effects."