Nunatsiaq Online
NEWS: Around the Arctic September 22, 2016 - 10:00 am

In wake of Nunavut’s Jericho mine fiasco, terminated workers still unpaid

Defunct company’s former executives refuse to make severance payments

THOMAS ROHNER
Those were the days. Peter Gillen, then the CEO of Tahera Diamond Corp., with Prime Minister Stephen Harper and ex-INAC minister Jim Prentice at the highly-publicized opening of the Jericho diamond mine in the summer of 2006. From that point, the mine's fortunes headed straight downhill. The business went into bankruptcy protection in 2008. Shear Minerals Ltd., led by Pamela Strand, then a darling of the Nunavut-NWT mining industry, bought the asset in 2010 and, with her successor, Julie Lassonde, developed a scheme to get the operation running again. But the mine went belly-up for good in September 2012 after the company's bosses abandoned it. (FILE PHOTO)
Those were the days. Peter Gillen, then the CEO of Tahera Diamond Corp., with Prime Minister Stephen Harper and ex-INAC minister Jim Prentice at the highly-publicized opening of the Jericho diamond mine in the summer of 2006. From that point, the mine's fortunes headed straight downhill. The business went into bankruptcy protection in 2008. Shear Minerals Ltd., led by Pamela Strand, then a darling of the Nunavut-NWT mining industry, bought the asset in 2010 and, with her successor, Julie Lassonde, developed a scheme to get the operation running again. But the mine went belly-up for good in September 2012 after the company's bosses abandoned it. (FILE PHOTO)

We shouldn’t be on the hook for severance pay owed to workers at Shear Diamonds Ltd. who in 2012 abruptly lost their jobs when the Jericho diamond mine went belly-up, the company’s ex-bosses said in Nunavut court earlier this month.

Shear Diamonds Ltd., under CEO Pamela Strand, bought the insolvent Jericho Mine, located south of Kugluktuk near Contwoyto Lake, for $6 million in 2010 after it went into bankruptcy protection, hoping to extract diamonds from piles of unprocessed ore lying around the mothballed site.

But under new CEO Julie Lassonde-Grey, who took over as CEO in May 2011, the scheme turned sour and the company abandoned the project in September 2012 after operating for less than six months. Until March 2012, Strand stayed on as a director and as president.

The company’s managers disappeared from view, the mine imploded into a financial black hole, and in 2014 the federal government declared that the mine is now deemed “abandoned.”

But Shear’s former executive managers and directors now insist they shouldn’t have to pay severance to about two dozen former employees who were tossed out of their jobs when the mine closed on Sept. 3, 2012.

An undated letter they received from Julie Lassonde-Grey soon after the mine’s demise announced the termination of their jobs but promised they would each receive two weeks base salary in severance plus vacation pay on those amounts by Oct. 15, 2012.

But a lawyer for six former executives, including the two former CEOs, argued in an Iqaluit courtroom this past Sept. 7 that a decision by the Nunavut Labour Standards Board ordering the executives to make those payments should be quashed.

That’s all according to a lengthy, complicated civil file at the Nunavut Court of Justice recently accessed by Nunatsiaq News. 

According to that file, at least 23 former mine workers were temporarily laid off in early September 2012 because the mine, about 250 kilometres outside Kugluktuk, wasn’t making enough money.

Later, the employees were told they would not go back to work but would receive two weeks base salary plus vacation pay by Oct. 15, 2012, according to the letter from Lassonde-Grey.

But when the company failed to follow through on that promise, the 23 workers filed complaints with the Nunavut Labour Standards Board, the court record shows. 

The board found in favour of the employees and eventually, in February 2014, handed the company and the former executives a final bill for more than $126,000.

In April 2014, the board ruled against an appeal filed by the executives against that decision, court documents show. But they didn’t stop fighting.

The former executives alleged in written submissions to the court that the board’s process “was flawed at so many levels and in so many ways,” that the Nunavut court “has no choice but to allow the appeal and set aside the board’s decision.”

The Jericho mine, under the ownership of Tahera Diamond Corp., began operations in 2006 as Nunavut’s first and only diamond mine after a highly publicized opening ceremony attended by Prime Minister Stephen Harper and ex-Northern Affairs minister Jim Prentice.

But in 2008, Tahera, plagued by falling diamond prices, problems at its processing plant and an ice road that melted early, put the distressed asset into bankruptcy protection.

Shear bought the property in 2010, and in 2011, after striking a $5 million financing deal with Taché Company N.V. of Antwerp, Belgium, a diamond brokerage, Shear began churning out diamonds in April 2012.

But by September 2012, Shear had gone belly-up and eventually, the federal government took over most of its assets.

Most of the 23 former employees named in the civil case currently before the court wrote in their complaints that they worked 84-hour weeks.

“Within a few days we were all informed of [the] layoff and sent home,” one former worker wrote in a complaint.

Another worker wrote that such short notice was given that he was unable to retrieve his personal belongings, such as books and clothing, before the company sent him home.

In siding with the former employees, the labour board ordered Shear, and by extension its directors, to pay between $3,300 and $11,300 to each of the employees, depending on the particular employee’s salary.

The court record shows hundreds of pages of legal arguments between the labour board and the former executives about whether the board followed proper and fair procedure.

Glenn Tait, the lawyer representing all six of the former executives, said in his written submission to the court that his clients settled with four of the former employees.

But the case file shows the names of all 23 former employees who filed complaints with the labour board, including the four employees named by Tait.

Justice Sue Cooper said Sept. 8 that she will reserve her decision for a later date, yet to be set.

Documents on the court record contain the following names and information of the six former Shear business executives involved in the civil case:

• Pamela Strand, former president and CEO, whose total compensation with Shear increased from $102,000 in 2010 to $413,000 in 2011, and who sat as a director with five other mining companies in 2011. Strand now works as director of mineral resources for the Government of the Northwest Territories in Yellowknife;

• Julie Lassonde-Grey, former president and CEO, who earned $421,000 with Shear in salary and stock options and sat as director on one other mining company in 2011. The daughter of highly respected mining executive Pierre Lassonde, Julie Lassonde has been a director on the boards of several junior mining companies in Canada and is a director of the Canadian Engineering Memorial Foundation board, a member of the board of the fundraising committee for the Queen’s University’s Engineering Campaign and a member of the Advisory Board for Civil Engineering. Her wealthy family also maintains a charitable fund called the Lassonde Family Foundation;

• Greg Missal, former director, who earned $108,000 and held $75,000 in unexercised security options with Shear in 2011 while also being a vice president with Baffinland Iron Mines Corp., a job from which he has since departed;

• Greg Rieveley, former director, who earned $53,000 and held $75,000 in unexercised security options with Shear in 2011 while also serving as chief financial officer for Norton Resources Ltd.;

• David Prince, former director, who earned $53,000 and held $75,000 in unexercised security options with Shears in 2011 while also being president and founder of Harbinger Capital Markets Inc.; and,

• Manuel Rappaport, former director, for whom the court record does not include the same level of detail of financial history. Rappaport, a Belgian, was a financial and operational consultant for Shear’s biggest creditor: Taché Company.

  Shear Letter to Employees by NunatsiaqNews on Scribd

  Shear Financials by NunatsiaqNews on Scribd

 

 

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