Friday, May 28, 2010

RailGate Writedown....It's The Passengers Stupid



Early Saturday, Double (notso)Secret Probation, Update: Weekend Wurlitzer Wind-Up piece titled 'RailBiz Relativity....We Are Family' is now up, here.


Late Friday Update: Weekend Wurlitzer Wind-Up is coming....Promise....Just going to be delayed a little due to circumstances beyond my control....In the meantime, there is an interesting conversation going on in the comment thread....

In his most recent Tyee column wherein he lays waste to the myth that BC Rail was a money-sucking albatross hanging from our collective necks, Will McMartin explains how the first edition of the Gordon Campbell/Martyn Brown government rapidly ran up faux debts in the hundreds of millions that no honest man could possibly pay.

Essentially it was a three-pronged strategy that involved:

#1 - Suddenly announcing massive write downs on failed mega-extensions long-ago initiated by Bennett the Elder and one of his Wild Kelowna Boys.

#2 - Imposing unexplained, and unexplainable, 'special charges' for 'restructuring'

#3 - Gutting programs that generated revenue, including passenger rail service.


In yesterday's post we mentioned how, in the Fall of 2002, the Campbell/Brown government removed the longstanding legal requirement for BC Rail to provide passenger service by changing a 90 year old statute under the stealthy subheading titled 'Miscellaneous'.

But, of course, to make it all publically palatable the Campbell/Brown surrogates had to get out there and start making stuff up about how much money BC Rail's passenger programs were losing, as is demonstrated in the following excerpt from Will McMartin's Tyee piece mentioned above:

.....(Judith) Reid, the (pre-RailGate) transportation minister, now claimed that BC Rail's passenger operations were losing "approximately $10 million a year," and added: "The cars that operate the service require refurbishment or replacement at a cost of approximately $30 million.".....

{snippety doo-dah}

....Dave Chutter, (Campell/Brown government) MLA for Yale-Lillooet, attempted to buttress Reid's claim that passenger-rail was a money-loser, but his figures were much different than those from the minister. "The Cariboo Prospector [BC Rail's passenger service] has lost $4 million in each of the last three years," he exclaimed. "It has had a cumulative loss over the past five years of $21.66 million and has incurred an operating loss in every year since 1964."

(Those numbers are nowhere to be found in any of the company's annual reports.)....

Here is another report, from a PR/Biz fluff-piece from the time that helped paved the way for the privatization of the rail service along the 'allegedly' not-lucrative NorthVan to Whistler run:

.....BC Rail began its passenger service between Vancouver and Prince George, a lumber town in the central part of the province, in the early 1950s. But in recent years the route, which stops in Whistler, has been a money loser, said Alan Dever, a spokesman for the company, a Crown corporation.

The Cariboo Prospector, the main service, lost nearly $5-million in 2001, Mr. Dever said. A more expensive service catering specifically to tourists called Whistler Northwind, which only began operating in 2001, lost $2-million that year. BC Rail ended both services late last year after deciding the revenue they were bringing in did not justify the losses. According to Mr. Dever, regularly scheduled passenger trains anywhere in North America rarely make money.....


After the door was first opened, by Campbell/Brown government fiat, in 2002, to run private passenger rail on BC Rail's tracks, who, ultimately, ended up with the rights to move folks to Whistler and back, culminating in the shuttling of the pseudo-rich-and-famous up and down the line during the recent five-ringed Circus?

Why, that would be an outfit called the Rocky Mountaineer Railtours.

And who owns that outfit?

Why, that would be none other than Peter Armstrong, a fine fellow who Darryl Greer, writing in the Tyee in May of 2005, said:

....donated more than $60,000 to the Liberals, both personally and through his companies, since 2002 according to reports filed with Elections BC.....

Which got us to wondering just how much Mr. Armstrong and his 'Armstrong Group' of companies has given the Campbell/Brown party since then.


Here are the 2005 to 2010 numbers straight from the Elections BC Website:

If you click to enlarge the image above, you'll see that the total is $197,170 since 2005. Which, believe it or not, is even more than David McLean and CN Rail gave to the BC Liberal Party over the same period.

In addition, there is an interesting tangential Railgate connection between the Armstrong, McLean and the Campbell clans that involves more than just money.

And we'll tell you all about that later, if needed, in our Weekend Wurlitzer Wind-Up to come.

Stay tuned.....

Please note: No pre-trial publication bans of any kind were harmed in the writing of this post.



BC Mary said...


Thank you, thank you, thank you ...

sorry to rush away like this but I gotta tell folks at my place about this new posting of yours ...

thanks more.

RossK said...

You're most welcome Mary.

And just you know, you're Anon-O-Mice have pretty much told this story, and more....



Zweisystem said...

Under the same principle the Liberal used to get rid of BC Rail's passenger service, the same government should also get rid of SkyTrain!

Annual subsidy to support SkyTrain - $230 million+.

Annual subsidy to the Canada Line - $25 million.

Sorta makes the BC Rail passenger rail service subsidy pale by comparison.

North Van's Grumps said...

"Timelines of Major BC Crown Corporations - Legislative Library"


The information in this paper only goes up to 2004, but interestingly there is a note at the top of the page:

Background Paper 2007: 01
April 2007

"Paper updated May 2008
Prepared by Emily Yearwood-Lee
Reference Librarian
Legislative Library of British Columbia"

Here we are into 2010, would it be too much to ask for an update on an update, or would the answer be NO COMMENT, there's a trial going on.

North Van's Grumps said...

It should be noted that the Librarian's "Source" was from newspapers reporting on the BC Liberal Press Releases!!!!!!!

"2000 – Wyng Chow, “BC Rail ready to peddle 18 investment properties,” Vancouver Sun, June 17, 2000, p. C1.
2002 – “Morning Briefing; Last Passenger Train Leaves Prince George,” Times-Colonist, Nov. 1, 2002, p. A18; BCR Group of Companies, “BCR Group of Companies to Sell Marine Division,” [press release dated March 28, 2002], [Vancouver]: BCR, 2002; Alan Daniels, “BC Rail set to unload marine divisions”, Vancouver Sun, March 29, 2002, p. F1.

2003 – British Columbia Railway Company, 2003 Annual Report, [Vancouver]: The Company, 2003, p. 8; “Electric engines go south,” BCRail Inside Track Vol 2, Iss.1, February/March 2004, p. 1; Don Whitely, “BC Rail era ends with last coal train,” Vancouver Sun, April 20, 2003, p. D05; British Columbia, Ministry of Transportation, “Private-sector investor sought to revitalize BC Rail,” [press release dated May 15, 2003], Victoria: The Ministry, 2003; Barbara McLintock, “Province selling off B.C. Rail to top bidder,” Province, May 16, 2003, p. A6.

2004 – Petti Fong, Chad Skelton, “B.C. Rail sale clears regulator,” Times-Colonist, July 3, 2004, p. B1; BC Rail, British Columbia Railway Company Annual Service Plan, 2007-2009, [n.p.]: BC Railway, 2007, p. i."

G West said...

And, just to push this little argument along the 'rails' a bit further...isn't that the same Peter Armstrong who has a very nice private retreat on a certain island in the Strait of Georgia?

A certain Island which has provided a meeting place, from time to time, for certain individuals and their friends.

Laila Yuile said...

I'm absolutely loving where this one is going....Hit me up if you need help with the details on that island retreat aspect, RossK.

And remember, the losing bidder on that Whistler line was screaming foul when he heard Armstrong got the bid instead of him, because he had been told that he was the best bidder.

Gary E said...

I happened to read Wednesdays edition of the Province at a restaurant this morning. Three pages on how Armstrong and his tour company are doing so well. What with all his awards and all. But wait, there's no mention of how much he gave to the Liberals. Just makes that a puff piece to me.

G West said...
This comment has been removed by the author.
G West said...

Comment deleted was moi.

I tried to put up a google cache link that fizzled out like a candle in a rainstorm.

I can now report that the interesting stuff that purports to lead a little futher down that rail siding is over at Mary's the comment supposedly written by a 'resident' of that little island - It's dated April 14, 2009 - in the TLR archives for anyone who's interested.

And - as far as I know - no publication bans will have been violated by anyone who heads over there to have a look.

Cheers Ross - did you see the Hook story about the TI group at UBC?

Anonymous said...

Here's BC Mary's April Archives for 2009:

Now what are we supposed to be looking at G West?

G West said...

There's an anonymous comment, part way down, from someone who signs with 'Miss Mary' as his greeting.

He, or she, purports to be a 'resident' of Savary Island....

G West said...

April 14 2009 doesn't appear in the April archives...which is kinda strange...

Try this:

Anonymous said...

April 15, 2009 3:54 PM

Hello, Miss Mary.

I read your comment/questions regarding Savarys 8th myth and laughed out loud!
I have heard this story for years on island,but no one one wants to talk about it because of the great Peter Armstrong. He does own a place on the island, in fact hes bought up the whole end of it and had a bloody barbed fence put up so no one can go and look at the view up there. He's someething else, for sure , and now theres rumblings about him making a resort or boutique hotel or something else on that point.

Anyways , to get back to this meeting you alluded to. And forgive me my ineptitudes at typing and some mistakes.

This is the story I have heard about the BC rail meeting on Savary, and I think you have your times wrong. This happened in 2003.
A large group of people came on island,in the off time, so it stood out to the people that remained there. Helicopters brought in a bunch of men,as well as the food, the chefs, everything was brought in for this,nothing was done locally.

I emailed some other residents last night and was told that the house where the actual meeting happened belongs to John O'Neill, of Westin Whistler, and that it was during something called a Young Presidents meeting at his house.

Some of the people stayed at Peters house, some at Johns,and I hear that one of the chefs brought in did talk to an islander and said it was all about BC Rail. Then, some other staff said that the helicopter occupants were BC Rail bigwigs. You can imagine there is a lot of gossip on an island like this, and word spreads pretty fast. But like I said too, no one wants trouble with this Peter Armstrong, so its a big secret/rumour.

I also did some figging last night, because you got my radar up. I found this news item on an old issue of Canada By Rail News:
"November 11, 2003

Passenger rail service proposed to Whistler
Rocky Mountaineer tours would need new access to BC Rail line

Bruce Constantineau
Vancouver Sun


G West said...

Or, try this:

Anonymous said...

November 11, 2003

Passenger rail service proposed to Whistler
Rocky Mountaineer tours would need new access to BC Rail line

Bruce Constantineau
Vancouver Sun

The owners of the Rocky Mountaineer have announced a proposal to operate services along the BC Rail route -- from Vancouver to Whistler and from Whistler to Jasper. The plan would require Vancouver-based Great Canadian Railtour Company to negotiate a successful track access agreement with the winning bidder for BC Rail's assets. Great Canadian Railtour president Peter Armstrong said his company was close to a track access deal with BC Rail before the province decided to sell the railway's freight operations and it has already talked with the potential buyers about a new tourism rail service along the Vancouver-Whistler-Prince George corridor. Three potential buyers remain in the bidding for BC Rail in a process that's expected to last several more weeks. They include Canadian National, Canadian Pacific and a partnership between OmniTRAX and Burlington Northern."We are very fortunate because we operate over CN and CP tracks so we have had a long relationship with both those railways," Armstrong said in an interview. "We have also met with Burlington Northern/OmniTRAX so whoever the government chooses, we hope to conclude something with the successful proponent." He envisions a high-end service between Vancouver and Whistler -- to be called the Whistler Mountaineer -- and a service from Whistler to Prince George that would use BC Rail and CN lines to connect to Jasper. Armstrong said that if the necessary approvals are obtained before the end of this year, he could start the new services by the spring of 2005. "This is part of a much bigger plan and we think there is a lot of potential in moving people through Prince George, Jasper and maybe intermediary points along the route," he said. "We have already started a shore-excursion program for cruise ships in Prince Rupert and in time, we'd like to see if we could connect Prince George with Prince Rupert." BC Rail shut down its tourism and passenger rail services last year because the operations lost money. The closures involved the Pacific Starlight Dinner Train and Whistler Northwind tourism operations and the Cariboo Prospector, a passenger rail service that lost an estimated $5 million in its last year. Armstrong said there are not enough passengers along the route to make a passenger service viable. "It's what has happened with rail and tourism all over the world," he said. "Over long distances, you're not going to get enough locals using the service on a regular basis. They might use it once in a while but that won't be enough to pay the freight." Armstrong said his company would invest millions of dollars on new equipment for the proposed rail services as it is anxious to expand its operations throughout B.C. He noted Great Canadian Railtour will conduct a trial run next spring to test the feasibility of a Kootenay service linking Golden, Cranbrook, Creston, Trail, Castlegar and Nelson. "We think rail tourism has a real potential in this province and we'd like to see how far we can take it," he said. A new Vancouver-to-Whistler rail service has also been proposed by Vancouver-based Whistler Rail Tours and Via Rail. Whistler Rail would provide the rail cars while Via would operate and maintain the service.


Anonymous said...

August 1 2003


In other rail news, the Liberals, who recently backed away from privatization of the Coquihalla Highway, are being reminded of additional public opposition to the sale or privatization of BC Rail. The Council of Trade Unions and the B.C. Federation of Labour commissioned a poll in Prince George which they say shows an overwhelming 83 per cent of residents think Premier Gordon Campbell and his government are breaking an election promise not to sell or privatize BC Rail. They said the poll of 400 people showed 70.3 are opposed entirely to allowing a private company to operate BC Rail. "Communities already hurt by government cut-backs and the softwood lumber dispute are looking at an even bleaker economic future" predicted Lance Yearley, vice-president of the Council.BC Rail Unions are scheduled to take a strike vote Thursday August 7, saying job action might represent the last chance to keep the company in public hands.

Source: Same as above

Zweisystem said...

God, doesn't anyone in the government know that the Rocky Mountaineer and its clones are a hotel train and not a passenger service.

RossK said...

Oh Boy,

I get stuck with the science-geeks for a few hours and all heck breaks loose.....

That piece by B. Constaintaneau is a keeper, eh.



Oh, I'm sure they know it alright.

Which makes what they did, with malice aforethought, all the more egregious.



Anonymous said...

I am the anonymous person in question who left the Savary comment for Mary, and I personally can't believe this entire angle has not been more thoroughly investigated.

I'm told that the chef in question who was brought in for this meeting stayed at the historic Savary Lodge B&B. Allegedly some people close to Armstrong and O'Neill claim the gathering was a celebratory one, AFTER the deal was done, but either way, it speaks to the connections of Armstrong to Campbell and the entire deal.

Savary is the perfect place should one wish to conduct such a meeting. Quiet, off the grid, off the beaten track, desolate in the late fall, winter and spring, and the front row people( Armstrong, O'neill and others...) have it all to themselves. It is a Liberal retreat of kinds, even Marc Jaccquard has a place there.

It is a small island, with not a huge year round population. There are definately more than a few people who know all the details to that helicoptered, catered, stealthy meeting. One only has to track down and chat with the right people...

RossK said...

Thanks for the clarification Anon-Above--


Are you suggesting that this big celebration came before, or after, Nov 25, 2003 (which is the 'official' day the deal went down)?


Anonymous said...

Anonymous said...

There is some dispute as to the date of the meeting,depending on what "side" is asked -although it could be said those with a vested interest would be least inclined to share the true date.

Those who are inclined to find the truth, have found indications of it being prior to the date of the sale. There are only a few people other than those who attended the meeting who could confirm this.

The chef.

The helicopter pilot/flight plan- some of which are often falsely filed as " Powell river" destination since no flights other than water landings and emergancy medical helicopter are technically allowed on Savary since the airstrip was closed years ago.

The lodge owner.

and two other people, who worked for Armstrong at that time.

Anonymous said...

Hmmmmmm "Young Presidents" Hector MacKay-Dunn, Q.C. Senior Partner, Farris, Vaughan, Wills & Murphy LLP


AND BC Liberal ties

RossK said...



I'm off to see the Google....


Skookum1 said...

BC Rail began its passenger service between Vancouver and Prince George, a lumber town in the central part of the province, in the early 1950s.

Badly half-baked history is a too common trait in Canadian journalism, likewise in p.r. armies like the PAB; wherever this came from it skirts around the truth, which is that passenger service was first opened in 1914, even before the original Squamish-to-Clinton line was fully open, as the Pemberton-to-Lillooet stretch was in operation by the time the Newport (Squamish) connection was open. Not sure of the exact date, but by 1916 passenger service from Squamish northwards was packed, especially on weekend, and from the 1920s onwards in relation to the Bridge River mines as well as the inception of the Bridge River power project.....passenger service began between Vancouver and Prince George only in the 1950s because that's when the line got extended. It's not like there wasn't passenger service along the line, that was vital to those communities, for a long time before the 1950s......

RossK said...

Point taken Skook--

Which is why that 1912 provincial statute that the Campbell/Brown government abolished in 2002 was so important....

And don't forget way back then it was the time of Teddy Roosevelt and the busting of the trusts/making the monopolists do the right thing.

Which, given that it was 100 years ago, kinda makes you go hmmmmmmmm.....


Skookum1 said...

Well, in the same light as my observation elsewhere about the film industry tax credits being an NDP/Socred invention, it's worth noting that the government in 1912 was that of Richard McBride of the Conservative Party. Now, it's true that Liberals of the day were often ardently pro-railway (e.g. George Murray) they also were less into accountability and propriety than their Conservative counterparts (and in early early BC "a liberal policy" meant untrammeled laissez-faire capitalism). It's also true that the Conservatives brought party politics into BC as a way to organize patronage and pork-barrel politics, which had been haphazard and without, er, security of investment for those contributing to get Premiers elected (or so beset with scandal that they resigned...or died as was sometimes the case).

Despite the very different nature of modern Conservatives vs Conservatives of that area, and likewise the Liberals, it's interesting to me that both parties evidently are in the business of "washing" biographies of party people in those eras and since (i.e. in Wikipedia). But what's more interesting to consider is that, perhaps, the Pacific Great Eastern was considered an affront to the Auld Liberal Cabal, simply by dint of being a Conservative invention....or, well, really the Conservatives bailed out the Howe Sound and Northern by buying it out, rather than letting its corrupt (Liberal) ownership come knocking on the public door for more cash yet again. How and why what became the BCR was established and became publicly owned is too complicated to get into here...but suffice to say that there seem to be some old, rusty axes still kicking around the barnyard....

By 1916, the McBride government was hoary with corruption and imploded of its own weight, and by the public's wartime desire for change (including that most men were away and women had just won the vote...). Its Liberal successor governments continued to operate the line; and in those days the regions it serviced were more economically important than they are today, or are remembered to be give up the line, or sell it off, would have been political suicide.

As things proved in the long run to be true, the only way for it to be sold off was to lie about not selling it off in order to get the power to sell it off.

This is what should be in court; the overt lie told by politicians, and arranged by their largest single donor, to hand over the largest public asset in the return for some tax indemnities, some nice dinners, a barbeque on Savary, some paper bags full of cash (figurative if not otherwise)...and apparently a whole lotta trips to New York.....

It seems odd to say, but I kinda miss the Socreds.....

RossK said...

Fantastic stuff, Skook - thanks.

(and I've archived it for later use!)