TheOneThatMattersVille
Last week we made a bit of a fuss about this tax credit 'indemnification' business.
What the heckfire am I talking about?
Well.
Remember how the total amount of money we allegedly received from CN Rail for the sale/not sale/990 year lease of a big whack of BC Rail assets was $745 million.
But.....
Hang on!.....
(You are likely saying to yourself....)
Hang on!.....
(You are likely saying to yourself....)
Didn't Gordon Campbell and his Merry Minions tell us that we got $1 billion?
Well, yes.
They did, indeed.
Except it is important to recall that the last $255 million of that billion was actually paid out for BC Rail's alleged liabilities, not its hard assets.
But why would David McLean and CN Rail want our 'liabilities'?
So that that they could be used by CN Rail for 'tax credits', of course.
But here's the weird thing....
Back at the time when this was all going down, back in March of 2004, it's not clear who actually OK'd the deal.
By way of example, the following is just part of an exchange between then Opposition Leader Joy McPhail and then-but-not-now Finance Minister Gary Collins on the floor of the Legislature from that time:
J. MacPhail: When was the last time the B.C. Rail deal, either the spur line to Roberts Bank or the completion of the sale of the rail line in the north, was brought to Treasury Board?
Hon. G. Collins: I'm trying to recall if and when that would have happened. B.C. Rail was, as I mentioned, a stand-alone transaction that was being led by Mr. Trumpy — and, obviously, led through the Ministry of Transportation. There were analysts, and expertise was sought from both the public and private sectors as part of that. All those issues were presented to the review committee, which was specifically designed to deal with this transaction, and then went to cabinet.
The people and analysts who would have analyzed this as it came through Treasury Board would have been similar people who worked on the file. The comptroller general would obviously have been consulted. The Deputy Minister of Finance would have been involved and any other people within the ministry or Treasury Board staff that the team thought was appropriate......
{....snippety doo-dah....}
J. MacPhail: It didn't go to cabinet for final approval before the big frou-frou public announcement by the Premier. The cabinet meeting occurred — because I went through these Hansard debates yesterday — before CP Rail made its accusations of unfairness on the bid. The minister doesn't know if there was a Treasury Board minute. Where is the decision point on this deal, and when was it?
Hon. G. Collins: I've described the process to the best of my knowledge, as well as the role of Treasury Board and the staff that might have been in the Ministry of Finance. I know the member had that discussion with the Minister of Transportation in the fall. If she wants to pursue that discussion further, she should take it up with the Minister of Transportation in his estimates.
J. MacPhail: No, no. That's not my question. Where is the decision to spend money? Where is that decision point?
Hon. G. Collins: We're actually making a billion dollars on this transaction.....
{....snippety doodle-dandy....}
J. MacPhail: If I want to know who made the decision to cut a $750 million deal with B.C. Rail, with CN…. It ain't one billion, Mr. Chair. It's $745 million, actually, and the taxpayers are on the hook for the other $255 million in indemnity — $745 million. I'm to ask the Minister of Transportation what went on at Treasury Board, what went on at cabinet. Did the Minister of Transportation sit on Treasury Board at that time?
Hon. G. Collins: It wasn't a he; it was a she. No, she didn't.
J. MacPhail: The current one.
Hon. G. Collins: The current Minister of Transportation did at the time. I don't know whether he attended all the meetings. In fact, I know he probably hasn't attended all the Treasury Board meetings. I've already described for the member, to the best of my knowledge, how this transaction took place. If she wants to pursue it further, she should take it up with the Minister of Transportation. I've also said that the ultimate decision-maker was cabinet. It's always cabinet.
J. MacPhail: Yeah. Well, I assert that cabinet didn't make any decision about this deal before the deal was announced — none whatsoever. I also assert that cabinet didn't deal with CP Rail's accusations and neither did the fairness commissioner.
Now.
To the best of my knowledge, Ms. McPhail's assertion has never been convincingly disproven.
And why does that matter, as we sit here on a late spring evening more than six years later and wonder, really, seriously if the Railgate Trial will expire for good on Monday (see my discussion with the Rev. Paperboy from late last week here)?
Well......
Because, as we also established last week, the 'indemnity' clause which Ms. McPhail spoke of, which was essentially a 'tax credit default swap' that had to be added to keep CN Rail happy after Gordon Campbell started saying the deal was a 'lease' not a 'sale' is now up to $600 million dollars.
Yes that's right.
We could, as of this very moment, actually owe CN Rail $600 million dollars.
(and that amount, as our colleague Norman Farrell established recently, goes up by approximately $4 million with every passing month)
Just so that they can make a big whack of money off of our Railway.
Does that seem right to you?
_____
We thank the Anon-O-Dub, very much, for bringing that passage from Hansard, quoted above to our attention....
And, if you need a program to keep up with the players in this game, Bill Tieleman has assembled a fine one here....
.
14 comments:
Let's not forget the disposition of the Rolling Stock.
And part of that, the fact that a company lost it's contract because it argued that cars could be repaired when CN ordered them destroyed. Lots of things here that make the fact that we "paid" CN more than $235 Million to take the railway
Martyn Brown has been on the stand and from the lips of Gordon Muir Campbell, in a Scrum, [second paragraph] from January 2004:
"Premier Scrambles to 'Restore Trust'
"Gordon Campbell's dance with the media yesterday at one point defied credulity, and left all the big questions unanswered.
By Barbara McLintock, 8 Jan 2004, TheTyee.ca"
Snip
".....Coleman (Solicitor General) told him (Gordon Campbell) of the specific search warrants involving the legislative buildings only on the Sunday morning as the police were removing boxes of documents and computer hard drives from the offices of Basi and Virk.
However, Campbell said, Coleman had also given Brown some type of briefing on the issue, even though Brown is not an elected official and was in fact, Basi's and Virk's boss in government, as much or more as their individual ministers."
Source: http://thetyee.ca/News/2004/01/08/Premier_Scrambles_to_Restore_Trust/
And then another article:
Raid Warrants Crack Pandora's Box
Speculation is now fact, portending persistent trouble for the B.C. Rail deal, Finance Minister Collins and the Liberals.
By Barbara McLintock, 2 Mar 2004, TheTyee.ca
Snip "Those hints are strong enough Finance Minister Gary Collins, for one, must surely be hoping he'll be somewhere far from the B.C. legislature when the Pandora's Box is finally opened.The carefully edited document made public by Special Prosecutor Bill Berardino did not tell British Columbians who have followed the case carefully much that they did not already know. What it did do, however, was to lend official credibility to what has previously been a measured series of leaks, rumours and speculation. The rumours have swirled around the legislature and various media outlets since the search warrants were executed by a combined team of RCMP and Victoria City Police officers on Dec. 28 .The official confirmation means that government officials can no longer defend their actions - or their lack of actions - on the grounds that it would be unreasonable to act solely on the basis of "speculation." Although there are many areas still wide open for speculation, on many of the key issues that door has now been firmly shut" Snip
The whole of this article is well worth reading for it comes from a source that no longer participates in the speculation of the past six years, that is thoughts being tainted by revelations, "bombshells", of pre-trial disclosures made the the Defense lawyers.
Source: http://thetyee.ca/News/2004/03/02/Raid_Warrants_Crack_Pandoras_Box/
Is Coleman the key to the BC Rail trial, and is this why he has been languishing in the Housing Portfolio for so many dark years as we approach the trial on the Raid of the Legislature?
RossK,
Ah, Coleman. As Solicitor General he was briefed on the investigation prior to the raid. He, not the AG,flew to Kamloops and briefed Richmond.
But more importantly what were his opportunities to influence the track of the investigation? For example was he aware of the RCMP sting attempt at the Lupo meeting between Collins and Omnitrax in early Dec. 2003? Did he have any opportunity to convey concerns in particular directions? How loose could he have played? Inquiring minds need to know.
RossK,
Ah, Coleman. As Solicitor General he was briefed on the investigation prior to the raid. He, not the AG,flew to Kamloops and briefed Richmond.
But more importantly what were his opportunities to influence the track of the investigation? For example was he aware of the RCMP sting attempt at the Lupo meeting between Collins and Omnitrax in early Dec. 2003? Did he have any opportunity to convey concerns in particular directions? How loose could he have played? Inquiring minds need to know.
GaryE--
How the heck did you know?
Because rolling stock was on my list for next weekend!
(assuming, of course, that we will still have lots to talk about DURING the week)
However....
I know for a fact that you have a way better handle on the thing, right up-front.
Thus, I'd be very, very happy if you were to write the story and post it at your place.
....Then I'll link to it like a madman (and that's a promise!).
OK?
.
NVG and Ian--
First, those in the know don't call Mr. Coleman Darth Vader for nothing...
However, I'd missed/forgotten* the bit about the early briefing for Mr. Brown.
Thanks for that!
_____
*I say 'forgotten' because I've gone back and re-read those old B.Mclintock/Tyee pieces many, many times....They really are excellent, especially compared to anything that can be found in the CorpMediaCache from that time (although to be fair there were still a heck of a lot of subscription wailing walls up at time)....Regardless, what's really, really great about McLintock's stuff now is the fact that it pre-dates the pre-trial hearings, which means they are wide open for discussion.
You can find her stuff on the Ledge Raids, and one super interesting tangent, archived, here.
.
Since the contingent liability has grown substantially (now near double), we can assume that CN has not cashed in the tax advantages they bought. It may be safe to assume the contingent liability moves toward becoming tangible.
Are original documents available so that we can determine the terms of the deal? When might we have to pay the $600 million to CN? do they plan to let it ride, collecting interest, until a new government comes to town? What a great welcoming present for Ms. James.
Norman--
Unless I am mistaken, those documents, like so much else regarding the nitty-gritty of this 'deal' to sell-off a public railway, are NOT available to the public.
In this case, I believe the argument to keep things secret had (and still has???) something to do with 'solicitor-client privilege' which in the case of the BC Rail deal has often been trotted out in an effort to protect, bizarrely in my view, bankers!
.
Put two, more than two, reporters in a courtroom, and at least two reporters have two different stories on whether or not the Rolling Stock was leased or Sold.
Gary E brought about this response from RossK:
"How the heck did you know?
Because rolling stock was on my list for next weekend!" - RossK
````````````````````````````````````
Next week will be Rolling Stock??????
Can't we talk about it now?
"the rolling stock had been leased, the rail bed right-of-way retained and the government has the option to buy it back, at fair market price, when the contract expires."
- Martyn Brown which came from Mark Hume's Column Globe and Mail
In context of what Martyn Brown stated in Court:
"......And Mr. Brown disputed that the railway had in fact been sold – it went to CN Rail for $1-billion in 2003 – saying the rolling stock had been leased, the rail bed right-of-way retained and the government has the option to buy it back, at fair market price, when the contract expires."
Source: http://www.theglobeandmail.com/news/national/british-columbia/premiers-chief-of-staff-denies-province-set-up-bc-rail-to-fail/article1575126/
Can anyone confirm that Mr. Brown said this in court or is it just in Mark Hume's writings of what transpired in Court room #54?
The National Post has a different story, same moment in history:
"The only assets that were sold were B.C. Rail’s rolling stock, he added. He agreed, however, that in the public’s mind, B.C. Rail had effectively been sold."
- Brian Hutchinson, National Post · Wednesday, May 19, 2010
Source:http://www.nationalpost.com/story.html?id=3049127
NVG--
Oh Boy....
In my mind it's the Hutchinson way....
Gonna have to look into that discrepancy.
.
I'd like to know which way the jurors heard it, seeing as how they are all British Columbians who were told that the BC Rail was not sold, but leased.
Rolling stock bc rail ..... is a good item to search on.
I came up with this report, Higher Speed Passenger Rail, Vancouver to Whistler, dated November, complete with times required to make it a feasible investment, again, complete with a tunnel between downtown Vancouver and the north shore......
Source: http://www.th.gov.bc.ca/publications/reports_and_studies/Sea-to-Sky_Reports/High-Speed_Passenger_Rail.pdf
Who did the study for the newly minted BC Liberal Government? Something called CANAC Railway Services.
Who owns (owned) CANAC Railway Services you might ask: CN Rail.
"CANAC was founded as the international railway consulting arm of Canadian National Railway Company (CNR), and is currently a wholly owned subsidiary of SAVAGE Companies."
Source: http://www.canac.com/index.php?page=about_us
***********************************
"CN sells CANAC Inc. subsidiary to Savage Companies; CN retains ownership of BELTPACK technology
(Canadian National issued the following news release on April 27.)
MONTREAL -- CN announced today the sale of 100 per cent of the stock of its St. Laurent, Que.-based CANAC Inc. subsidiary to Savage Companies of Salt Lake City, Utah. The transaction, which is expected to close by April 30, 2004, will include CANAC's industrial rail operations in Canada and the United States, its planning and infrastructure engineering services, as well as railway training and international services."
Source: http://www.ble-t.org/pr/news/headline.asp?id=10236
Again, just to make it clear here, the BC Liberal government hires CN Rail to do a study on the BC Rail line...... on how to make it more profitable.... AND THE WINNING BIDDER IS cn rail.
"In my mind it's the Hutchinson way....
Gonna have to look into that discrepancy."
You should have gone with Mark Hume's version, I emailed him and got a reply.
http://docs.google.com/viewer?a=v&q=cache:7zvoHc9L8wQJ:bcrco.com/2004fia.pdf+did+cibc+world+markets+supply+cn+rail+with+a+billion+dollars+to+purchase+bc+rail&hl=en&pid=bl&srcid=ADGEESgQcXTGIxz9OabiN-4Ubix8icaVynM4JdZL6ghtKmmElGKQqK54-Z_1HoBWELA7D5Do1zEEXI-wdWUQNUNQRwRq5e6aEfPnhLyIIVIYUalKTpkLM8D1o5LwjkjlJB8GBnhL0HDp&sig=AHIEtbSZMOwGiCyaCXD5QEwiBBM6RHgNfA
It seems the longer the link line the greater the importance of hiding the facts from the public.
The link above is to the BC Rail Company financial statements for December 31, 2004
The indemnity is for $366 million. Did it actually go up by $111 million from March to December?
Post a Comment