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  • Writer's picturerryancleary

DFO has likely dropped the ball on illegal controlling agreements that give processors power over inshore boats/quotas (and is too embarrassed to say)

Six months after La Scie fisherman Jimmy Lee Foss confessed to DFO to being in an illegal controlling agreement with Quinlan Brothers Ltd., and the formal investigation appears to have all but shut down after the department dropped the ball and released the fishing licenses at the centre of the controversy. 

La Scie fisherman Jimmy Lee Foss has been asking DFO for weeks for an update on his case, with no response. (CBC photo.) In a Facebook post this week Foss wrote: "I know I may be liable as well, but I was willing to risk it to help future harvesters."



If Foss' case is closed without charges laid, the broader question would then be whether controlling agreements are even illegal (despite a 2017 federal court ruling that they are). 


Foss would likely have a case to sue the arse off DFO (and so he should) for breaking its own regulations.


(Foss' case may also not be the only one that's dropped.)


Bottom line, it’s time for DFO to come clean.


BACKROUND

In April 2022, Foss purchased the Ocean Surfer II and suite of commercial licences (including snow crab and shrimp) with a $3.8-million loan from the CIBC.


According to Foss, the deal was arranged and co-signed by local fish processor Robin Quinlan of Quinlan Brothers Ltd.


However, Foss found himself in financial trouble by 2023 with the dramatic drop in the price of snow crab, and a receiver, BDO Canada Ltd., was appointed in mid-January of this year.


At about the same time Foss confessed that he had been in a controlling agreement with Quinlan's, and a DFO officer read him his rights. A formal investigation was launched, and at least one search warrant was executed.


Controlling agreements are illegal, and occur when a corporation (usually a processing company) loans money to a fisherman to purchase an enterprise, licences, or gear, and, through the agreement, controls the catch.


WHERE THINGS STAND

Foss last heard from DFO's Conservation and Protection division on June 12th when he was told that the Public Prosecution Service of Canada (PPS) had been asked for a legal opinion involving issues related to his case.


DFO said the PPS had forwarded an opinion, and the department was reviewing it.


There's been no word since.


That legal opinion may have to do with a decision by DFO's licensing division earlier this spring to break its own regulations in Newfoundland and Labrador by allowing for the transfer of Foss' licenses at the centre of the active investigation.


Atlantic Fishery Regulations (Section 19.3) cleary state that commercial fishing licences are not to be reissued if in a controlling agreement.


Despite the regulations, Foss' licences were transferred to the receiver for the CIBC, and his fear was that they would end up back in the hands of the processor.


Meantime, Paul Didham with DFO Conservation and Protection told Foss from the get-go he would request that the commercial licences be frozen until an investigation was complete.


Foss was in also in news in early March when the receiver for the bank gave him a deadline to either retract a declaration to DFO that he was in an illegal controlling agreement, or risk losing his home.


In February, Foss filed a complaint with the Law Society of Newfoundland and Labrador over the fact that the St. John's lawyer who represented him in his 2021 purchase of the enterprise also represented Robin Quinlan of Quinlan Brothers Ltd.


What's clear is that controlling agreements increase the stranglehold that processing companies have over the inshore fleet, and by allowing them to continue Ottawa is complicit.


There are just over 3,000 licensed inshore fishing enterprises in Newfoundland and Labrador, and it’s believed a majority are tied to processors through financial agreements that include the right-of-first refusal on all landings.


Controlling agreements undermine the independence of inshore enterprise owners, and often prevent them from getting a fair price for their fish.


In December, the House of Commons Standing Committee on Fisheries and Oceans released a report on corporate concentration and foreign ownership into fishing licences and quota — recommending the creation of an independent fishery financing agency (similar to Farm Credit Canada) within five years.


The report recommended the financing agency have “sufficient risk tolerance to finance and mentor new entrants to acquire licenses and quota and to refinance existing licence holders to become independent of illegal trust and supply agreements with fish processors.”


In May the province unexpectedly announced a new $15-million harvesters enterprise loan program, a spit in the bucket compared to the hundreds of millions the international cartel (Royal Greenland gives it the "international" flavour) has invested in inshore boats/quotas/gear.


A political baby step when, to survive, the inshore must advance by leaps and bounds.


Ryan cleary is a former journalist, Member of Parliament, union leader, and long-time inshore fisheries advocate who’s currently helping to organize a co-operative (fpcnl.ca) for inshore enterprise owners. The opinions expressed in this blog are his own. Contact him at fpc-nl@outlook.com or call/text 709 682 4862.

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