Steelworkers to BMO Board: Why Are You Bankrolling an Attack on Workers?

TORONTO, Jan. 27, 2012 /CNW/ - The United Steelworkers (USW) is holding the Bank of Montreal's (BMO: TSX) board of directors responsible for a questionable loan the union says is prolonging a historic strike in Toronto.

Members of USW Local 526 have been on the picket line for more than two years at Toronto manufacturer Infinity Rubber. The dispute is one of the longest strikes in the city's history.

In a strongly worded letter sent to all BMO directors, USW National Director Ken Neumann questions the bank's decision to offer new financing to a group that had recently gone through a bankruptcy and was embroiled in a continuing labour dispute.

The Steelworkers originally contacted BMO with its concerns over the loan to the Infinity Rubber group in October 2011. The bank responded with a terse statement that it could not discuss financial services provided to a customer without their consent, and that commercial lending transactions were evaluated "according to clearly defined credit and risk guidelines."

In his letter sent to the BMO board on January 16, Ken Neumann expresses significant concerns about the rigour of these guidelines, asking the board, "Are we to conclude that the bank's guidelines don't take labour relations or past bankruptcies into account?"

"BMO has also told us it respects the right of people to join unions and participate in the collective bargaining process," Neumann stated.  "Then why are they suppressing those rights by funding an employer that's determined to get rid of the union?  Especially when that operation has such a bad financial history - it's unacceptable. The members of BMO's Board of Directors have to realize they are actually bankrolling an attack on workers."

Workers at Etobicoke-based Infinity Rubber have been on strike since December 2009, when their employer demanded they take a 25% cut in wages and a 50% reduction in benefits.  These cuts would have been in addition to significant wage reductions the workers had already agreed to in 2008 to help their employer through the recession.

Infinity Rubber is the successor to Biltrite Industries, a company that sought protection from its creditors under the Companies' Creditors Arrangement Act (CCAA) in 2009 and eventually declared bankruptcy.

Biltrite's managers, led by CEO James Chung, purchased the Toronto plant during the CCAA process for less than one-third of its book value and started running it as Infinity Rubber.  The initial acquisition was financed with a high-interest mortgage from Callidus Capital Corporation, a company specializing in high-risk loans for those who can't get bank credit.

Infinity Rubber subsequently transferred the land on which the plant operates to BRI Holdings Inc. - a holding company incorporated by Infinity Rubber's top managers - and refinanced the operation with a new mortgage at a much better rate from the Bank of Montreal.

"The impact of this strike has been devastating on our members. Workers have lost homes and cars. It's a terrible situation," says Ken Neumann.  "BMO can't just hide behind the veil of client confidentiality.  The mortgage they gave to the Infinity Rubber group is listed for anyone to see in the Land Registry.  They have to face responsibility for what they are doing and we are going to make sure people know about the bank's role in prolonging this tragedy."

For more information about the strike at Infinity Rubber and to see a video telling the workers' stories and BMO's role in this dispute, go to usw.ca/BMObankrollsInfinityRubber.

SOURCE United Steelworkers (USW)

For further information:

Ken Neumann, USW National Director for Canada, 416-550-5950, kneumann@usw.ca
Alexandra Eshelman, USW Strategic Campaigns, 416-544-5968, aeshelman@usw.ca


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