B.C. Rail selloff report riles NDP

by Carlito Pablo on March 11th, 2009 at 3:04 PM

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The Opposition critic for the attorney general is raising questions about the impartiality of an independent report that attested to the fairness of the privatization process for B.C. Rail in 2003.

NDP Nanaimo MLA Leonard Krog has even suggested that the report rendered by the Boston-based Charles River Associates may have been modified by the government.

“You’re doing a report to tell the world that the government is fair, and then you give it to them to look at, to potentially change it,” Krog told the Georgia Straight, referring to two e-mails between CRA and government staff prior to the release of the fairness report.

The e-mails are among the thousands of pages of recently disclosed documents related to the corruption case filed against two former ministerial aides in connection with the $1 billion sale of B.C. Rail.

In one e-mail dated December 2, 2003, a CRA staffer, Ammon Matsuda, provided government staffer Yvette Wells the “latest draft of the final report, along with two confidential appendices for the Province’s eyes only”.

“We will continue to revise and edit the report as appropriate, and we appreciate any feedback from you and other involved individuals,” Matsuda told Wells, then one of the advisers to a committee evaluating the restructuring of B.C. Rail.

Wells responded on December 5, 2003, telling Matsuda that she would call the next Monday, noting that it was “much too late in your day to deal with comments now”.

“I realize you are missing two key components of info to finish anyway (transaction documents and the chronology of events),” she also wrote. “These should be to you Monday also.”

CRA was retained by the B.C. Liberal government to provide, according to the company’s final report dated December 11, 2003, “an independent commentary on the fairness of the process and the reasonableness of the results” of the B.C. Rail transaction.

The CRA report was officially made public about a week later, on December 17, 2003, through a Ministry of Transportation news release.

In a phone interview, Krog noted that neither the draft report nor the confidential appendices mentioned in the CRA staffer’s e-mail were among the documents that were ordered released by the B.C. Supreme Court.

“We can’t say for sure,” Krog said when asked what could have been in these papers. “Our belief is”¦that the report was a whitewash, that the report was designed to say the government had conducted a fair process when the majority of participants said quite bluntly that it wasn’t a fair process.”

CRA spokesperson Andrea Goodman told the Straight that the company does not have a comment, noting that staff who authored the report are no longer working for the firm.

CRA had put out an interim report dated November 14, 2003, concluding that “the Province and its advisors designed and managed the B.C. Rail restructuring process in a manner consistent in all material respects with current best practices usually followed in similar transactions”.

This view wasn’t shared by bidders. After reviewing the CRA interim report, the Burlington Northern and Santa Fe Railway Company, which supported the bid of OmniTRAX, withdrew from the process, as indicated in a BNSF letter dated November 19, 2003.

In a November 17, 2003, letter to Ken Dobell, then deputy minister to Premier Gordon Campbell, Canadian Pacific Railway expressed strong concerns over the “lack of fairness” in the bid process.

On November 25, 2003, the provincial government announced that Canadian National Railway Co. had been chosen as the successful bidder.

Krog took up the matter of the CRA fairness report during question period at the legislature on March 3 this year.

“How can British Columbians have any trust in this government when the so-called independent fairness adviser was taking orders from the minister’s office and the very committee responsible for the unfair process?” Krog asked. Attorney General Wally Oppal responded: “The member continues to rely on”¦documents that are before the Supreme Court of British Columbia. It is improper for him to ask that question.”

B.C. Rail privatization timeline

> May 15, 2003: B.C. government issues requests for proposals

> Early June: Qualification of proponents

> June 30: Receipt of first-round proposals

> July 14: Evaluation committee shortlists four proponents

> September 15: Receipt of second-round proposals

> October: Charles Rivers Associates retained as government’s fairness adviser

> November 14: Date of CRA’s interim report

> November 19: Bidder Canadian Pacific Railway withdraws

> November 25: Canadian National Railway Co. announced as successful bidder

Sources: Charles Rivers Associates, Ministry of Transportation, court documents

Will the B.C. Rail issue push the B.C. Liberals off track in this year's election?

Phil Hochstein
President, Independent Contractors and Businesses Association

“At the end of the day, we need to have the courts decide. It depends what comes out. Until we find out exactly what happened and why it happened and who it happened to, I think everybody will suspend judgment. The most crucial issue for British Columbians is the economy of the province and not issues like B.C. Rail. It’s the only issue people talk about in restaurants and among their friends. It will be a deciding issue in the election.”

Vicki Huntington
Independent candidate, Delta South

“I think that as the documents are researched by media, academics, and the opposition parties”¦they’ll start to see a lot more activity on the part of Liberal supporters than we had perhaps thought there might be. It goes into the heart of how the Liberals have disposed of Crown properties and the manner in which they have been disposed. It involves the secrecy of cabinet deliberations; it involves questionable individuals working questionable deals. It just doesn’t smell right.”

Jane Sterk
Leader, Green party of B.C.

“It’s really unfortunate that it has taken so long for this case to wind its way through the courts. I personally think that it is now distracting us from the really major issues that this election should be about, which are climate change, the disintegration of our social safety net, and our communities and the things that really matter to people. There’s all kinds of things that we should be concerned about in our resource sector, and those mean transforming industries like forestry and mining.”

Dennis Pilon
Professor of political science, University of Victoria

“What’s interesting about the Railgate is that it’s a scandal that doesn’t appear to have had the scandal effect. It really depends on whether or not it gets the coverage and it sticks with voters. Though a lot of British Columbians were unhappy about the privatization of B.C. Rail, it doesn’t appear to be enough of an issue for people to switch their votes. I just don’t get a sense that people are unhappy enough with the Liberals for this to end in a change of government.”