news story / By Heidi Walters

Pulp Friction

Fleischer, reached at his home in Colorado, agreed to talk. He laid out what it was like back in January 2005 when the pulp mill was wavering.

“When I took over [in February 2004], we owed $30 million [to PPM], plus we owed $4 million to our suppliers,” he said. He had been brought in to alter this bleak scenario. “I’m the turnaround guy. But from August 2004 on, it was obvious that [SPE] was not economically viable. The company had no capital at all — and this is a $100 million a year operation, and somehow we were down to $10,000 in the bank.”

He was faced with three options: close the mill, fix the company so it was profitable or sell it. Come January, it was clear Lee & Man would be buying the company. “But a week before the sale, we had a water main break,” said Fleischer. “And Lee & Man did not want to put any money into it. So I closed the mill and laid off all the employees of the mill, and in laying them off I paid all of the legal obligations to them: back pay, regular pay, vacation pay, accrued overtime. We also paid off almost all of the unsecured creditors,” except for half a million dollars owed the Humboldt Bay Municipal Water District.

He said he, Uhren and Lindgren were entitled to the same compensation. “I was owed roughly six months pay, and I paid myself — or, rather, I had the corporation pay me,” Fleischer said. “I asked Human Resources to compute it. They then paid that money to me, and gave me a pay stub.”

Fleischer didn’t mention numbers, but his employment contract, attached as evidence in the case file, said he was to be paid $30,000 a month. So, his six months pay is close to the amount Evergreen alleges was paid him — the “unjust enrichment” — from the Utah account. But Fleischer said if his employment contract was valid, “then the money wasn’t stolen.”

So why use the Utah account? Fleischer, disputing Evergreen’s implication of secrecy, said the Utah account wasn’t brand new but had been “set up in August 2004 to protect the company. We owed $30 million to PPM, and they had the right to go into our standard accounts and take out money at any time.” By January 2005, he said, things had grown worse. “We were selling the pulp mill to Lee & Man, we were selling the chip mill to Simpson. It was a frantic time. I honestly don’t remember why we used that account.”

Later, after talking with Uhren, Fleischer offered a different explanation: Any payment (beyond regular pay) made to a corporate officer had to “have the authorized signature of another officer.” And the Utah account was the only one Uhren was authorized to sign on.

This past September, Evergreen dismissed its allegations against Lindgren. Jeff Herm, general counsel to Evergreen, declined to say why. According to Fleischer, Lindgren and the paper company have settled.

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