As the Canadian Wheat Board wound down farmers were wrongly shortchanged by a decisions that helped fund its transition into a privately-held company, legal documents allege.
The former Conservative government wrongly allowed the transfer of $151 million that should have gone to farmers who delivered CWB grains during the 2010-11 and 2011-12 crop years, Brookdale, Man., farmer Andrew Dennis alleges in a statement of claim seeking certification of a class action lawsuit.
The claim, filed in Court of Queens Bench in Winnipeg April 24, names the Government of Canada, G3 Global Grain Group (a joint venture between American and Saudi-Arabian agri-food companies) and G3 Limited as defendants.
G3 is the private entity which acquired 50.1 per cent of the CWB following a July 31, 2015, transaction.
Of the $151 million Dennis claims should’ve gone to farmers who delivered to the CWB, he alleges $145.2 ended up in the CWB’s contingency fund and $5.9 million was withdrawn from the CWB’s pool accounts. The allegations have not been tested in court.
The CWB set up a contingency fund to cover losses that occurred when farmers opted to price grain sales outside the CWB’s pools. It was funded when transactions earned more than the price farmers sold at. The fund was meant to break even over time.
“In order to fund the transformation of the board to a privately held entity, the defendants engaged in a course of conduct intended to reduce payments to farmers who had sold and delivered grain to the board during the class period and to increase the monies in the contingency fund,” Dennis’ statement of claim alleges.
The CWB act didn’t allow the wheat board to use money earned from its pool accounts for anything other than covering its operating expenses. Gerry Ritz, who was federal agriculture minister at the time, said the government would cover the costs of transitioning the CWB to an entity that could be sold to a private company.
“Nevertheless, the board improperly charged $5.9 million in transition costs to the pool accounts, which reduced the amount that was available to producers upon payment of their contracts during the 2011-2012 crop year,” the statement of claim alleges.
“The plaintiff (Dennis) pleads that the board breached its duty of good faith to the Class (farmers who delivered to the CWB) by ignoring its obligations to the producers, and by allocating money to the Contingency Fund that otherwise would have been paid to the pool account contract holders.”
The lawsuit is backed by the Friends of the Canadian Wheat Board (FCWB), which opposed the Conservative government ending the CWB’s single desk marketing authority Aug. 1, 2013.
“This claim is about establishing accountability for the disposition of the Canadian Wheat Board, allocating financial responsibility to the appropriate parties, and ultimately getting any funds recovered back to prairie farmers,” FCWB chair Stewart Wells said in a news release.
In addition to the $151 million the suit says is owed to farmers, it seeks $10 million in punitive damages, pre and post-judgment interest, legal costs and other relief the court might award.
Andres Bruun, one of the lawyers representing Dennis, said a decision on whether the class action can proceed could be made in six months.
“We have a strong case for the class action and on the merit of the claims,” he said in an interview.