Consider, if you will, the power of the Irving family.

Their holdings in their home province of New Brunswick form what Canadian Senate investigators have called “an industrial-media complex that dominates the province” to a degree that is “unique in the Western world.”

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A statue of Irving Oil founder K.C. Irving stands in Wolastoq Park in Saint John, New Brunswick. Born in Bouctouche, New Brusnwick, Irving started his entrepreneurial endeavors with a small family business that expanded into a multibillion-dollar empire. Reuters photos

They control somewhere between 200 and 300 companies – because they are privately held, nobody really knows the exact number – from behemoths like the forestry products conglomerate J.D. Irving to Irving Oil, with its chain of 800 gas stations, a liquefied natural gas terminal and a Saint John oil refinery that provides the majority of petroleum products sold in New England. Together they produce two-thirds of New Brunswick’s exports and employ an estimated one in 12 of the province’s workers.

They are the largest landowner here in Maine, with 1.2 million acres, making them the fifth-largest private landholder in the United States and – together with over 2 million acres in Canada – the 10th largest on Earth, excluding monarchs like Queen Elizabeth, who notionally owns much of the United Kingdom and its former empire.

When J.D. Irving announced an interest in mining Maine’s Bald Mountain, near Fort Kent, state officials hired a mining industry consultant to rewrite the state’s mining laws. Two years ago, the Maine Forest Service signed a controversial five-year agreement with JD Irving that exempts its holdings from clear-cutting regulations so long as they meet other standards.

In New Brunswick, the family companies regularly negotiate special tax exemptions for their industrial facilities. Their $750 million LNG terminal pays far less annual property tax than the hospital in Moncton, valued at half as much, Reuters recently reported. A proposed end run around the Keystone pipeline – a $10.8 billion, 2,900-mile all-Canada pipeline linking Alberta oil sands with the Irvings’ refinery and tankers at Saint John – was endorsed by the provincial parliament eight months before it was officially unveiled.

Yet the family operates its sprawling empire in relative secrecy. Its firms are privately held. They almost never give interviews and their spokespeople rarely respond to media inquiries, including one for this article. In New Brunswick, they own all of the province’s English-language daily newspapers, most of the weeklies and three radio stations. Jamie Irving, grandson of J.D. Irving head James Irving, is vice president of its media holding company, whose reporters don’t scrutinize the family’s companies.

One of the biggest players in our region – an important and homegrown economic force – has operated largely out of sight.

Now New Brunswick author and journalist Jacques Poitras has lifted the curtain a bit, revealing how the Irvings have influenced the political and media environment in which they operate, even as they themselves have succumbed to infighting that has divided a once integrated family empire.

Poitras’ new book, “Irving Vs. Irving: Canada’s Feuding Billionaires and the Stories They Won’t Tell” (Penguin Canada), is an exploration of how power works in the Irvings’ province, which is about the same physical size as Maine, but with only 750,000 people. It’s a place where one impressive and disciplined family has been able to build an empire so pervasive, so essential to the economic and social fabric of the province, that they have been able to persuasively argue that their private interests and that of New Brunswick are one in the same.

“They say that they are not that big because they are thinking in terms of the scale of the markets they compete in nationally and globally – and in wood products and energy it’s true that they aren’t that big,” Poitras, a Fredericton-based reporter for the Canadian Broadcasting Corp., told me. “But we’re a small province without a lot of private sector wealth, and they are big and powerful here and they’re able to get governments to give them what they want to survive and thrive.

“Their presence is so strong, in fact, it probably deters other investments from coming here.”

THROWBACKS TO A BYGONE ERA

In our globalized, corporatized 21st-century world, where multinationals do battle with one another on a planet-spanning battlefield, often with little loyalty to their hometown or country, the Irvings are an anachronism, their empire a throwback to the late 19th century, when self-made industrial tycoons like Andrew Carnegie and John D. Rockefeller controlled closely held, vertically integrated conglomerates and made and moved things across the continent.

Like Carnegie, founder James Durgavel Irving was the son of Scottish immigrants, and in 1882 he opened a sawmill and general store in his hometown of Bouctouche, in eastern New Brunswick. His son, Kenneth C. Irving – a frugal teetotaler who knew his businesses from the shop floor up – built these into a multibillion-dollar empire through disciplined, vertical integration. The general store begat a gas station, which led to a car dealership, which spawned a service station, then two, then 20, which were in turn built by K.C. Irving’s construction company.

When the Depression cut back on car sales, K.C. bought several local bus companies and merged them into the province’s largest bus and freight operation, SMT Eastern. Another subsidiary built the buses, the supplies purchased from K.C.’s hardware store and wood veneer business, which later supplied the Royal Air Force and became, by the end of World War II, the largest aircraft veneer supplier on the planet.

The veneer company required lumber, which led to the purchase of timberlands, which led to buying a pulp mill, which begat a steel construction firm to meet its building needs, and the acquisition of newspapers to buy its paper and railroad lines – including one in Maine – to move it around. His expanding set of gas stations prompted K.C. to build his own refinery in Saint John in 1960, and a fleet of oil tankers – Kent Lines – to deliver the product, which meant he needed a shipyard to build the tankers.

The motive, K.C.’s daughter-in-law Joan Carlisle Irving told Poitras, was “the integration of everything.”

With K.C.’s death in 1992, control passed to his three sons, who divided operations between themselves, but were yoked together by a trust arrangement their father had established in Bermuda to avoid taxes and keep the family empire intact. Two of the sons – Arthur and James – are still alive, the former controlling Irving Oil, the latter, J.D. Irving and the newspapers, but the two branches of the family are increasingly at odds with one another.

LEVERAGING POWER INTO INFLUENCE

Much of this has been told before, but Poitras brings fresh details of how the family has leveraged their economic power into political influence. The playbook has remained remarkably constant over the generations. Special concessions are requested from elected officials and, if they resist, a subtle threat is made that the companies might relocate operations out of their economically moribund province.

A case in point: In 1965, the provincial government attempted to reduce the unevenness of public services by taking over the assessment and levying of tax assessments from county officials. K.C. Irving appeared before the legislature “trembling with rage” and claimed his pulp mill would not survive without locally approved tax breaks. “Surely the province doesn’t expect to attract new industry, or even retain existing industry, under such terms,” he said. The implicit threat, Poitras writes, caused legislators to back down.

The most spectacular recent instance was the March 2005 decision by the Saint John city council to give Irving Oil a staggering property tax concession for their new LNG terminal: They would pay only $500,000 a year rather than several million for the next quarter-century. The city’s mayor, Norm McFarlane, had secretly negotiated with the Irvings for months, Poitras writes, but delivered the proposal to councilors for approval within hours of receiving it because the Irvings claimed their foreign investment partner would otherwise abandon the deal.

NEWSPAPERS’ NEAR MONOPOLY

Poitras gives particular focus to the family’s newspapers, one of which he once worked for. While there were shortlived episodes of editorial independence, the overall picture is a disturbing one: a chain of papers with a near-monopoly on investigative news-gathering capacity in the province that has implicit instructions not to challenge the existing order. At one time or another, former editors and reporters recounted to Poitras, Irving family members had told editors that “we’re not interested in fellas raising hell” or in an editor being “a cowboy.”

The book also paints a picture of a family of industrialists who have little understanding of the journalism world, and who have repeatedly claimed to be holding onto the newspapers simply to prevent them from falling into the hands of people from away. This latter family assertion doesn’t entirely square with the Irvings having considered buying the Portland Press Herald and its sister papers when they were for sale in 2008, but the former is born out by the fact that reporters at the Irving papers are currently judged by how many words they produce.

“Reporters were required to file fifteen hundred words a day – and managers were counting,” Poitras writes. “Quality didn’t matter as long as they hit the quota; if they didn’t, they were called in for a chat. The newspaper’s most unique commodity – news – was being treated like wood pulp, just another product.”

Poitras also takes the papers to task for not reporting perhaps the most important business story in the Maritimes: the acrimonious breakup of the Irving empire.

The story – as reported by The (Toronto) Globe and Mail and The Wall Street Journal – is that K.C. Irving’s grandchildren have been taking the reins, but lack the familial unity of their parents. Over the past decade, tensions between family members have led to major rifts, including the sudden 2010 departure of Irving Oil CEO Kenneth Irving – Arthur’s son – over a dispute over the divvying up of trust assets among family members. Kenneth told The Wall Street Journal recently that his father hasn’t spoken to him or his daughter in years.

By this time, Arthur’s family had left the board of J.D. Irving, and J.K.’s family, in turn, departed from Irving Oil’s board. (A third brother, John, died in 2010.) They now reportedly rarely speak to one another.

“There were more and more areas where the companies interests were at cross-purposes,” Poitras said, such as when the province considered selling its public utility to Quebec; J.D. Irving’s mills could use the cheap power, while Irving Oil saw an encroachment on its energy sector aspirations. “So the brothers felt it was simpler to split it up and put it into silos.”

“Saint John is no longer a one-company town, but a two-company one,” he said. “It’s just that they both happen to be called Irving.”

Colin Woodard, the Portland Press Herald/Maine Sunday Telegram’s state and national affairs writer, covered Atlantic Canada regularly while a foreign correspondent for The Christian Science Monitor and the San Francisco Chronicle. He can be contacted at 791-6317 or at:

cwoodard@pressherald.com

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