Court of Queen’s Bench Justice Chris Martin delivered his written judgment Tuesday in Winnipeg, clearing the way for a judge to hear the allegations on behalf of an estimated 70,000 or so western Canadian farmers who delivered grain to the wheat board’s pool accounts in 2010-11 and 2011-12.

“I think it is good news for the farmers who felt they weren’t dealt with fairly when (Agriculture Minister Gerry) Ritz and (Prime Minister Stephen) Harper were privatizing the wheat board,” Stewart Wells, a Swift Current, Sask., farmer and member of the Friends of the Canadian Wheat Board, said in an interview Thursday. “The wheels of justice grind slowly but they’re still grinding.

“It’s the first major progress since the case was launched in 2012 and it’s certified so this is going to be heard in court. It’s just not going to be swept under the rug somewhere. So that’s a pretty major advancement.”

However, Wells didn’t rule out the possibility that the government and G3 will appeal Justice Martin’s decision.

An out-of-court settlement is also possible.

The Harper government government removed the CWB as the sole marketer of western Canadian wheat and barley destined for export or domestic human consumption Aug. 1, 2012.

In 2015, G3 (Global Grain Group), newly formed to subsume the CWB, agreed to invest $250.5 million and in return received the CWB’s assets from the federal government.

G3 is a joint venture firm majority-owned by the state-owned Saudi Agricultural Livestock Investment Co. (SALIC) and Bunge.

The lawsuit brought by Brookdale, Man., farmer Andrew Dennis alleges Ritz acted unlawfully by taking $150.9 million of farmers’ money from the CWB’s pool accounts to help privatize the wheat board.

One hundred and forty-five million dollars was used to triple the wheat board’s contingency fund and $5.9 million went to cover some of the transition costs.

Under the Canadian Wheat Board Act, all money collected in the CWB’s pool accounts earned from marketing farmers’ grain was required to be paid to farmers, less board operating expenses.

“What’s alleged is that Gerry Ritz… was acting illegally and not in good faith — the legal phrase is misfeasance while in public office — when he directed money to the contingency fund that we argue ought to have been paid to farmers instead,” Wells said.

“We argue that he was morally and legally wrong to be hiving off money that should have gone to the pooling accounts and been paid to farmers but instead he was trying to build up the Canadian Wheat Board as an entity so he could later on give it away to Saudi Arabia and Bunge.”

The CWB’s board of directors unanimously passed a resolution calling on the government to cover the cost of privatizing the board instead of farmers, Wells said.

“And then Ritz said in public that he would pick up all the cost, but when the (CWB’s) final annual report came out it showed that they had taken $5.9 million out of the pooling account to cover restructuring costs,” he said. “It makes no sense. It just loops back to the notion that farmers weren’t being treated fairly.”

The suit also asks for $10 million, plus interest since 2012, in damages, bringing the total compensation sought to $160.9 million, excluding interest.

“It’s not that much per individual farmer (if the suit is won),” Wells said. “It totally depends how many tonnes they (farmers) delivered to the pools in those two years, but that’s one of the reasons class actions were invented. It wouldn’t make sense for one or a very small group of farmers to take this sort of action, but it certainly makes sense to launch it as a class.”

Farmers who delivered to the pools in 2010-11 and 2011-12 are automatically part of the class action lawsuit unless they opt out, Wells said.

More information for affected farmers will be posted on a website, he added.

Wells doesn’t know when the case will be heard, but doesn’t rule out it taking another three to five years to resolve.

“They (federal government and G3) have been deliberately trying to delay this process all the way along for the last 10 years… but this is a very significant step toward getting the action certified having the representative plaintiff Andrew Dennis named in the action so he can carry it forward on behalf of all these farmers,” Wells said. “It’s a really crucial step. Without this the case couldn’t have gone anywhere.”

Wells declined to disclose how much money has been spent litigating the case so far.

“We have said all along that we are very grateful to all of the farmers that supported us when we started fundraising for this action back in very, very late 2011 and then in 2012, 2013 and 2014,” he added. ‘We wouldn’t have gotten anywhere without the support of those farmers there’s no question about that. This is truly the farmers’ action. Everybody is looking forward to the result.”

While the case is about the alleged misuse of farmers’ money, it’s also about holding government to account, Wells said.

“Cabinet, through orders-in-council, can change some things but they can never override the existing legislation,” he said. “And that’s what we are arguing happened here — that Ritz was overriding the original legislation with his orders-in-council, which in turn makes his actions illegal.

“Whether they (farmers) agreed with the wheat board being a (mandatory) marketing agency or not they still didn’t deserve to have money taken from the pooling accounts and just given to the King of Saudi Arabia and Bunge.”

After taking over the CWB, the new G3, renamed G3 Canada Ltd., was 50.1 per cent owned by SALIC and Bunge and up to 49.9 per cent potentially owned by farmers, depending on how much grain they delivered to the new firm.

Farmers were to earn $5 of G3 equity for every tonne.

G3 Canada had two shareholders — G3 Global Grain Group and the farmers’ equity trust. Farmers who deliver to CWB own units in the trust and the trust owns shares in G3 Canada Limited.

After the farmers’ equity is fully allocated, or in seven years (2022), G3 Canada Ltd. can buy the equity, but isn’t obliged to.

In 2016 Reuters reported SALIC’s ownership within G3 Global Grain Group jumped to 75 per cent from 49 per cent, according to an April 28, 2016 Bunge filing.

— Allan Dawson is a reporter for the Manitoba Co-operator at Miami, Man.

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The grain sector was abuzz with speculation last week given the grain company that acquired the Canadian Wheat Board’s assets in 2015 is a partnership between the state-owned Saudi Agricultural and Livestock Investment Co. (SALIC) and U.S. grain company Bunge.

The topic came up August 9 here during the Keystone Agricultural Producers’ advisory council meeting.

“Would you deliver grain (to G3)?” KAP president Bill Campbell asked farmers at the meeting. “Would you sign a contract for March delivery with a company that no longer wants to do business in Canada?”

A G3 official declined to comment on what, if any, impact Saudi Arabia’s actions will have on G3. However, he did confirm, as reported last week by Reuters, “it’s business as usual,” for the Canadian-based grain company, which is building a state-of-the art grain terminal in Vancouver and is still opening new inland terminals in Western Canada.

G3 vice-president Brett Malkoske told Reuters G3 has no plans to change or reduce its purchases of Canadian crops.

However, it’s unlikely G3 will be exporting any of that grain to Saudi Arabia.

“I’m pretty sure that it won’t be,” Cereals Canada Cam Dahl said in an interview August 8. “I think the direction not to buy from Canada is universal.”

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From non-profit community groups to major corporations, the numbers don’t lie. If funds have been misallocated or things aren’t quite on the level, it can’t truly be hidden.

No matter how hard someone tries to cover it up, there’s always a loose end, a number that doesn’t quite add up, and a fresh set of eyes will cause that to jump out off the ledger and reveal the truth.

Some companies even force key financial staff to take vacations just to ensure some oversight.

It’s for this reason the federal government’s steadfast refusal — spanning two successive federal governments of two distinct political stripes — to provide a full and open accounting of the Canadian Wheat Board’s final year is so troubling.

In December 2014 the Globe and Mail newspaper noted the latest fulsome financial report it could find on the CWB’s website dated from 2011-12.

It noted the company was clearly up for sale, had been on a buying and building spree and was “allegedly” prosperous, but noted the choice of that word was necessary because there was no hard proof one way or the other.

Just four months later, in April of 2015, the sale of the CWB to a joint venture of Bunge Canada and Saudi Agricultural and Livestock Investment Company (SALIC) Canada was announced. That entity paid $250 million for 50.1 per cent of the CWB, and rebranded it G3 Global Grain Group.

The remaining 49.9 would “… eventually be acquired by producer patrons of the CWB, who will receive $5 of equity for every tonne of grain sold to the CWB,” according to Martin Cash of the Winnipeg Free Press.

• Read more: [Editorial] The farmers’ (equity) trust in the CWB

Since then there’s been, from some quarters, claims that the deal was sweetened, with money owed to farmers, in an attempt to kill off the CWB once and for all.

There’s little doubt then agriculture minister Gerry Ritz wanted a deal done. It’s impossible to say for sure why, but it’s also impossible to ignore that, politically, it was an expedient solution for him.

So long as the organization remained more or less intact, it would always be a rallying point for those who sought to have the single sales desk reinstated.

Recreated as a privately controlled subsidiary of two global organizations, no such residual sway would linger.

One might think the current Liberal government would be anxious to shine a spotlight on such skulduggery. Instead it seems set on all but ignoring the issue, when not actively blocking efforts to have the numbers reviewed.

• Read more: CWB sale to be scrutinized by new Liberal government

Despite repeated requests from some groups — notably the National Farmers Union and the Canadian Wheat Board Alliance — the government has been steadfast in its reluctance to open the books.

In no small part that’s probably because if there was any wrongdoing, legal or moral, it’s going to be an expensive mistake to fix, measured in hundreds of millions of dollars.

No doubt the current government has other things it would like to spend that kind of cash on, rather than redressing something that happened under a previous government.

Slowly, however, there seems to be some movement towards a final accounting. Most recently the Manitoba Court of Queen’s Bench ruled against Ottawa, which was requesting the court strike the statement of claim.

• Read more: CWB class action suit takes step forward

It doesn’t necessarily mean the lawsuit will go ahead, but it is one key hurdle cleared.

The allegations in that as-yet-unproven statement of claim are interesting to all farmers who sold wheat and barley through the organization.

In simple terms, the plaintiffs allege the feds funnelled a total of $151 million to the ultimate buyers of the organization. They say $145.2 million was placed in an expanded “contingency fund” and $5.9 million was taken from pool accounts.

“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,” the statement of claim alleges.

What has been curious is the deafening silence by most farmers and farm groups on this topic. Back in the days of the single desk one could hardly go 10 days without a press release alleging wasteful mismanagement in some form. Not so today.

It’s likely most don’t want to get stuck in the quagmire of the CWB debate again, and that’s understandable. But asking for a full accounting of what went on is a far cry from going back in time.

The numbers really add up, and shouldn’t be ignored. If the numbers in the lawsuit are accurate, for each of the 70,000 farmers the CWB did business with, that equals $21,571.

Wouldn’t you like to know if that should be in your pocket?

The post Editorial: Follow the dollars appeared first on Manitoba Co-operator.

G3 Canada’s CEO Karl Gerrand left the grain company Tuesday and has been replaced by Don Chapman, the Manitoba Co-operator has learned.

G3 in 2015 purchased 50.1 per cent of the Canadian Wheat Board from the federal government and brought in Gerrand, then the managing director of Bunge Canada, as its first CEO.

Information obtained by the Co-operator says Gerrand and the company’s board of directors agreed a change in leadership was necessary.

Chapman brings more than 20 years of international grain experience to G3, according to the information received by the Co-operator.

Chapman was executive vice-president, international, for the Lansing Trade Group. He has also worked for the Vitol Group, Viterra and Toepfer International.

G3 did not immediately respond to an email seeking more information about the management change.

G3 Canada is a joint venture firm majority-owned by multinational, publicly-traded Bunge, the world’s third largest grain and food company, and by state-owned Saudi Agricultural Livestock Investment Company (SALIC).

While G3 ostensibly paid $250 million to buy CWB, the money wasn’t paid to the government and instead remained in the new company, giving the firm a book value of $500 million, the federal government said at the time.

The remaining 49.9 per cent of G3 shares were set aside as equity to be earned by farmers who deliver grain to the company. Under terms of the deal, farmers have no say in how G3 operates.

G3 has been building a number of high-throughput country elevators in Western Canada and is building an export terminal at Vancouver, expected to be the most efficient in Canada.

— Allan Dawson is a reporter for the Manitoba Co-operator at Miami, Man. Follow him at @AllanReporter on Twitter.

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SALIC, an arm of the country’s Public Investment Fund (PIF), said it was also looking to expand its investments in the Black Sea region, which already includes almost 114,000 acres of land in western Ukraine.

“We are considering many opportunities and Iraq is definitely on the list,” newly appointed managing director Khaled al-Aboodi told Reuters.

Iraq on Wednesday received pledges of US$30 billion, mostly in credit facilities and investment from allies after a major donor conference in Kuwait.

Amongst the opportunities on display for investors during the event were four million dunums (about 988,000 acres) of agricultural land, Iraqi agriculture ministry spokesman Hameed al-Nayef said.

“Agricultural land that will be offered is across Iraq and investors should choose what crops to grow but we are giving priority to strategic crops like wheat, barley, corn, sesame and rice,” he said.

The mechanism for investment in Iraqi farmland and terms will be up for negotiations with interested firms.

Aboodi said SALIC was not at the Kuwait conference but that, “as time goes by we will look more closely,” at Iraqi farmland.

Saudi Arabia began scaling back its domestic wheat-growing program in 2008, planning to rely completely on imports by 2016 to save water.

SALIC’s agricultural investments include farmland, grain silos and terminals, as part of Saudi Arabia’s food security drive. Its holdings in Canada include a joint-venture stake with Bunge in grain handler G3, the former Canadian Wheat Board.

Iraq, itself a major wheat and rice importer, has seen its most fertile province, Nineveh, lose production of strategic crops after Islamic State took over.

Iraq declared victory over Islamic State in December, having taken back all territory the militants captured in 2014 and 2015.

Industry sources said there were investment opportunities in Mosul and some western areas close to the Euphrates and Tigris rivers.

SALIC also said it was looking to grow its investments in the Black Sea region. “The Black Sea is a strategic place to look at given the attractive farming conditions and proximity to Saudi,” Aboodi said.

In October, SALIC set up a five-billion riyal (C$1.67 billion) joint venture with UAE agricultural firm Al Dahra to invest in the 10 countries across the Black Sea region.

— Reporting for Reuters by Maha El Dahan; additional reporting by Moayed Kenany in Baghdad.

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The Winnipeg-based partnership of Saudi Arabian agriculture company SALIC and U.S. grain handler Bunge Ltd/ had been considering the project, which will cost more than $500 million, since last year.

Some in the industry worry the new terminal may worsen congestion at the port.

G3 Global, which acquired the Canadian Wheat Board and Bunge’s Canadian grain operations in 2015, is a small player in a Canadian industry dominated by Richardson International and Glencore’s grain unit Viterra.

The terminal, capable of handling eight million tonnes of crops annually on the north shore of Burrard Inlet, would be the first new grain facility in nearly 50 years at the port, Canada’s busiest. Canada, a major canola and wheat shipper, has recently produced some of its largest harvests ever.

The north shore is home to grain terminals owned by Richardson and Cargill as well as Neptune Terminals, which handles potash and coal. It is served only by Canadian National Railway (CN) track.

Adding G3’s terminal, which will store up to 180,000 tonnes of crops, and Kinder Morgan’s planned oil pipeline expansion, may “significantly exacerbate” congestion, said Wade Sobkowich, executive director of the Western Grain Elevator Association, whose members include Richardson and Viterra.

Without major government spending to ease bottlenecks and improvements through federal railway legislation, terminal investments may not produce net gains for the industry, he said.

G3’s terminal will include a unique loop track, allowing three 134-car trains to unload without stopping, however.

“We think we are the solution, not the problem,” G3 CEO Karl Gerrand said in an interview, adding that he expects “very competitive” jostling among shippers for rail cars.

CN spokesman Jim Feeny said the railroad, port and shippers were working with Ottawa on long-term solutions to the north shore’s congestion.

To feed the terminal, G3 plans to build eight to 10 more country elevators in Alberta and Saskatchewan to collect grain from farmers, Gerrand said.

Elevators cost up to $45 million each to build, but G3 has no plans to go public to raise funds, he said.

The company has seven elevators across Saskatchewan and Manitoba, along with port terminals in Ontario and Quebec.

Peter Kiewit Infrastructure Co. is the design-build contractor, with construction starting in March.

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg.

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G3 Global Holdings, the joint venture of U.S. agribusiness Bunge and Saudi Agricultural and Livestock Investment Co. (SALIC), bought 50.1 per cent of the former Canadian Wheat Board in 2015 for $250 million . It was renamed G3 Canada, with farmers accounting for 49.9 per cent of equity.

In two steps this year, SALIC, an arm of the state-owned Public Investment Fund, grew its stake in the joint venture to 75 per cent from 49 per cent, according to an April 28 Bunge filing.

“Any ownership changes that have happened within our company have not had any material impact on the organization itself, the operations or how we run the company,” G3 CEO Karl Gerrand said in an interview.

SALIC has “done a really nice job of allowing our team to operate as an independent Canadian organization,” he said. “For the most part, it’s been hands-off.”

He declined to comment on reasons for the ownership change.

SALIC converted $106 million in promissory notes into additional shares in the joint venture with Bunge on Feb. 1. This took its stake in the majority investor of Winnipeg-based G3 to 65 per cent from 49 per cent, and reduced Bunge’s share to 35 per cent.

Bunge then exercised an option on March 30 to sell shares to SALIC for $37 million, bumping up SALIC’s ownership of G3 Global Holdings to 75 per cent.

SALIC could not be reached. Bunge spokeswoman Deb Seidel declined to comment.

Saudi has been phasing out crop farming due to its intense water usage in the desert kingdom. SALIC has targeted investments in beef and eight key crops, including wheat. Canada is a major wheat exporter.

Farmers’ equity accounts for the same number of shares in G3, however its percentage of ownership has dropped because of recent investments by the SALIC-Bunge joint venture into the company, Gerrand said. He declined to give a current percentage.

Keith Degenhardt, a farmer and first vice-president of the Alberta Federation of Agriculture, was disappointed when foreign investors bought the former Wheat Board, but said any dilution of farmer equity is “not top of the mind.”

G3 is a small Canadian player compared to competitors Richardson International, Viterra and Cargill.

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg. Additional reporting for Reuters by Maha El Dahan in Dubai.

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Glencore, whose ag unit includes Canada’s top grain handler, Regina-based Viterra, declined to comment.

Bidders include a different Canadian pension fund, state-backed Saudi Agricultural and Livestock Investment Co. (SALIC) and Qatar’s sovereign wealth fund, the sources said.

SALIC — which already owns a stake in Canadian grain handler G3 Canada, the former Canadian Wheat Board — and Qatar’s sovereign wealth fund were not immediately available to comment.

Last month, CPPIB agreed to buy a 40 per cent stake in the unit for $2.5 billion, placing the equity value of the business at $6.25 billion (all figures US$). Including inventories and debt, the unit is valued at closer to $10 billion.

The 9.9 per cent stake is valued at around $625 million.

Glencore had been aiming to close the deals at the same time in the second half of 2016, the sources said.

“Negotiations are ongoing… people who lost out are still trying to get on board, but Glencore will struggle to get more money for it,” one said.

The London-listed company announced its intention to sell a minority stake in its agricultural unit in September, after shareholder pressure to see it cut debt prompted a slew of measures including asset sales, reducing capital expenditure, suspending dividend payments and raising $2.5 billion of new equity capital.

The group said it aimed to cut net debt to between $17 billion and $18 billion by the end of 2016, down from a peak of $30 billion last year.

One sticking point to the deal is whether the smaller stake holder will have voting rights, as CPPIB does, the sources said.

The agriculture business allows Glencore to trade grains, oilseeds, rice, sugar and cotton.

It generated core earnings of $524 million in 2015 and had gross assets of more than $10 billion.

— Reporting for Reuters by Clara Denina and Sarah McFarlane in London, England.

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The firms are presenting final bids for the unit this month and Glencore is open to selling stakes to more than one party, Bloomberg reported, citing people with knowledge of the matter.

Glencore aims to slash net debt to $17-$18 billion by the end of 2016, $1 billion more than previously planned, by offloading more assets amid a prolonged commodities rout.

Glencore declined to comment. Canada Pension Plan Investment Board and Saudi Agricultural and Livestock Investment Co were not immediately available for comment.

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He was speaking the day after the company announced it had signed an agreement to buy a 19.95 per cent stake in Brazilian beef exporter Minerva Foods for $188.4 million (all figures US$).

Saudi has been phasing out growth of crops due to their intense water usage which was depleting reserves in the desert kingdom. A cabinet statement this month said cultivation of green fodder would be stopped in the next three years.

To support this and to maintain food supplies for its young and increasingly affluent population, Saudi Arabia embarked on a program last year to build agricultural operations abroad.

“The place we are studying seriously is Sudan. It’s a great place for growing fodder, due to the availability of water and dry weather,” Aldubaikhi was quoted as saying.

“It’s considered a strategic place and we are looking for the best opportunities.”

SALIC has targeted investments in beef and eight key crops, including wheat, barley, corn and soybeans. The Minerva deal follows its decision in April to team up with U.S. grain trader Bunge to create G3, which bought 50.1 per cent of Canadian grain handler CWB for $180.3 million.

Brazil

The plunge in the Brazilian real against the U.S. dollar “came to the advantage of SALIC” when considering the Minerva transaction but talks had begun prior to this, Aldubaikhi said.

“We are still targeting Brazil as it’s the most important country when it comes to the production of meat today.”

The kingdom lifted a three-year embargo on beef imports from Brazil last month, imposed after a case of bovine spongiform encephalopathy (BSE) was diagnosed. Prior to the ban, Saudi had been one of Brazil’s most important markets for beef.

SALIC is looking to create a company that distributes meat, and this was among the main reasons behind the Minerva transaction, Aldubaikhi said.

“The movement of meat requires specific care and temperature from its slaughter in Brazil until it reaches the consumer, which is what led us to come to this deal.”

SALIC’s purchase came as part of a capital increase approved by the Minerva board to sell up to $396 million of new stock, in a stock sale plan valuing Minerva at $15.60 a share.

— Reporting for Reuters by Hadeel Al Sayegh in Dubai.

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