Irving Oil: Tax Break with $250 Million in Profits

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Irving Oil: Tax Break with $250 Million in Profits

Irving Empire Revelations Continue.< /p>

Irving Oil posted quarter-billion-dollar profits the year it got tax relief .

Irving Oil made a quarter of a billion dollars in profit in 2005, the same year it persuaded Saint John city council and the New Brunswick government to give it a 25-year tax break , according to leaked documents.

The company made a profit of $250.7 million in 2005, year in which Saint-Jean capped the property tax bill for the Canaport LNG project, led by Irving and its partner, Repsol, at half a million dollars.

The cost to the City has been estimated at $112 million over a quarter century.

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This tax relief required legislative changes, which the Progressive Conservative government of Bernard Lord passed in 2005.

The company's profits were not publicly known. Kenneth Irving, the CEO of Irving Oil at the time, argued that this tax relief was decisive for the Canaport LNG project. Companies invest a lot of money at risk, he told the Telegraph-Journal in 2005.

The Canaport LNG terminal in Saint John, New Brunswick.

This tax break was repealed in 2016, and Irving Oil sold its stake in the terminal to its partner, Spanish energy company Repsol, last year.

Irving's confidential financial records show that the oil company was so lucrative from 2005 to 2009 that it managed to turn a profit even during the darkest days of the global economic crisis in 2008.

This company has demonstrated its ability to maintain attractive margins and profitability despite the cyclical nature of refining and marketing activities, wrote British tax lawyer Andrew Hine in a 2010 affidavit filed in a Bermuda court, which was disclosed.

During the 2008 crisis, major US banks collapsed and the price per barrel of oil fell from $140 in June 2008 to less than $40 in December of the same year.

Even so, Irving Oil posted profits of $111.2 million. Its debt-to-total capitalization ratio – which measures what the company owes relative to the value of what it owns – also continued to improve during the financial turmoil of 2008. p>

These figures come from a confidential private placement memorandum that the company used to borrow $150 million in the capital markets in 2009. It includes five years of detailed financial data on the company.

Lawyer Andrew Hine used this document in a 2010 assessment of Irving Oil's financial outlook during legal proceedings to split up the century-old Irving empire by K.C. Irving.

Irving Oil CEO Arthur Irving

A solicitor for UK law firm Taylor Wessing, Andrew Hine has been appointed by a court in Bermuda to represent the non-adult grandchildren of Arthur Irving. The affidavit and private placement note are among millions of pages of documents leaked to German newspaper Süddeutsche Zeitungand shared with the International Consortium of Investigative Journalists.

Many of the documents, known as the Paradise Papers, come from Appleby, a firm of ;global offshore services lawyer based in Bermuda that counted Irving Oil among its clients.

The oil company was a well-run and successful business with an impressive track record of revenue growth, Andrew Hine said in the confidential affidavit. According to him, even in the worst-case scenario, Irving Oil would be able to pay its debts and future obligations, making it a reliable source of income for Arthur Irving's grandchildren.

< p class="e-p">Under the Irving empire's three-way split, Arthur's family would get two-thirds ownership of Irving Oil, while his brother Jack Irving's family would get one-third. Both brothers would relinquish their interests in other Irving companies controlled by Brother J.K. Irving and his family.

A confidential private placement memorandum contains five years of financial data on the performance of Irving Oil.

It was feared that J. K. Irving's family would gain control of a diverse portfolio of businesses in several industries, including forestry, trucking, food and shipbuilding, and that Arthur Irving's family depended solely on oil.

The Bermuda court overseeing the division appointed Andrew Hine to assess whether it was in the best interests of Arthur Irving's grandchildren. Andrew Hine used confidential financial statements and the private placement memorandum, which contains detailed data for the years 2005 through 2009.

The memo showed that Irving Oil had assets worth $4.5 billion in June 2009 and revenues of $4.6 billion in the first six months of 2009.

The company suffered net losses only twice, in 1977 and 1978. Attorney Andrew Hine says in his affidavit that the company attributes [these losses] to exceptionally poor market conditions and the impact of a refinery expansion.

Irving biographer John DeMont wrote in his 1991 book Citizens Irving< /em>that refinery capacity in eastern Canada exceeded gasoline demand by 70% in 1977, which reduced industry profits.

In 2018, Irving Oil announced that the Arthur Irving Family Trust had purchased a third-party stake in the oil company, which was owned by Jack Irving's family branch.

The Irving Oil refinery in Saint John is the largest in Canada: it refines 300,000 barrels of crude oil per day, or about 15% of the country's total capacity in 2009, according to the memo. In the first six months of 2009, the refinery brought in $136.7 million in revenue, or 45% of Irving Oil's total revenue, according to the documents.

The company did not respond to a request for comment on Hine's valuation, including earnings-related data.

Saint John Havre MLA Gerry Lowe (left) speaks with Andrew Carson of Irving Oil during the New Brunswick Legislative Assembly Law Amendments Committee hearings on a proposal to to extend property assessments and taxes to cover business machinery and equipment.

In 2019, Irving Oil executive Andrew Carson told the New Brunswick Legislative Assembly Law Amendments Committee that it was a myth that the company x27;got off easily when it came to paying taxes. Gerry Lowe, who was the Liberal MP for Saint-Jean Havre at the time, asked Andrew Carson about the company's profits and the income from its various products.

It varies throughout the year, in all honesty. There are usually times of the year when certain products are in higher demand, Andrew Carson replied.

In 2015, it was revealed in an independent federal tax case in Alberta that Irving was charging its partner and co-investor in the Canaport LNG terminal, Repsol, $12 million a year in rent for the facilities. This, along with a guaranteed profit for Irving Oil in their deal, allowed the company to remain profitable, terminal-wise, even while Repsol was losing money.


With information from Jacques Poitras and Frédéric Zalac

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