Thursday, October 14, 2010

RailGate Rewound....Codswallop Our Premier Sold Us...


The image above was taken on Nov 25th, 2003 by Chuck Stoody of the Canadian Press and was included in the photo stream that ran with Mark Hume's piece in the Globe yesterday (Photo #2, here).

It shows Premier Gordon Campbell announcing the thousand year lease (minus ten) of BC Rail to CN's Claude Mangeau and E. Hunter Harrison (seated) and a couple of huge TeeVee screens behind them.

Let's focus on the numbered statements on the left screens for a moment (because the blather on the right screen really is pure propaganda repeated over and over and over and over again -feel free to click on image to enlarge it just in case you have a chicken bone stuck in your throat and you would like to initiate the gag reflex).



Here we go......

#1 Continued Public Ownership.

Every single member of the British Columbia public alive today will be dead when this deal 'expires' in the year 2993. Heckfire, even the 3,465th incarnation of the Hal-9000 will be junk by then.

#2: No More Public Debt

There never was any significant public debt. The concerted and repeated efforts of cabinet ministers and other quislings to wurlitzer a story of financial armageddon were all based on a bogus accounting exercise designed to provide both cover and leverage to foist this deal on the members of the public that are still very much alive.

#3: 600 New Rail Cars
Dumber Than Dumb.

Say what? Did Kevin Mahoney and Brian Kenning et al. actually buy us (ie. the public) a passel of shiny new rail cars while they were sitting in luxury boxes at Canucks games, working on their golf swings, and/or collecting hundreds of thousands of the public's hard-earned dollars for doing essentially nothing (for years!) AFTER they made sure the deal went down as planned in the fall of 2003?

#4: Lower Rates And Costs
A Phantom Menace.

Just ask the shippers.

#5: Improved Access To Markets
Says Who?

Is there any hard evidence that CN has laid even one single centimeter of new track that has improved access to anything.

And finally let's consider that really big whopper at the very top of the screen.....

$1 Billion

Show us the money Mr. Campbell.

And when you do, prove to us that the 'indemnification' of the tax credit default swap that you have hanging over the (still very much alive) public's collective head is, right now (ie. at this very minute in time in 2010, not 2993), is NOT more than $900 million*.


*And prove to us also, Mr. Premier, that the idemmity is NOT growing, thanks, we can only presume, to some fantastic 'strategic advice' received by Mr. Mahoney et al. way back when, at the rate of approximately $4 million every single month.
Many thanks
to North Van Grumps who alerted us to the 'picture' and reminded us that it really is all about 'The Indemnity, Stupid!"



kootcoot said...

It is sure good to have you back in harness Ross - today's piece and picture are PRICELESS!

I've always wondered where the picture of Gordo with the oversize Billion Dollar cheque has been hiding all these years.................

I hear Gordo/Colon are sending out scary letters to all the poor people in BC (ie. most people not personal friends of Capo Campbell) threatening to take away their HST bribe/pittance if we all say the HST is wonderful!

Gary E said...

Good rewind Ross

I want to focus on item #3 here. 600 New railcars.
That number was later inflated to 1500 of which we got none. I have further information that a company that repairs cars insisted that some cars which were slated for destruction were in fact repairable at a huge cost savings.
That companies contract was not renewed and somebody else contracted to scrap perfectly repairable cars.

North Van's Grumps said...

I seem to remember, from my days as being a Trustee, that the brochures that the layperson reads were more binding legally than the contracts signed between two parties (those elected to act on our behalf and those who provide a service). The logic was that the brochures were the only thing that the membership would read, they wouldn't have access to the contracts, therefore the brochures had to be an accurate reflection of the contract.

We've been told over and over again, eg just look at the photo, of the promises that were guaranteed to the citizens of British Columbia when CN Rail took over BC Rail from the BC Liberal Government. No where was it written, for the public to see, that the contract ended up being a 990 year lease. No where was it written in a brochure that there would be an indemnity clause that would eventually put us on the hook for more money than what CN Rail paid.

Here's a link to the Government Bills for 2003

Line item 64 has Minister of Transportation, Judith Reid, introducing an Amendment on May 14th where she is wants to change the Railway Act while her government is going through the process of selling BC Rail off:


1. The name of the company is the "......................... Railway Company".
2. The registered office of the company will be located in the City of ........................., in British Columbia.
3. The object for which the company is incorporated is to establish a railway undertaking, and to construct or acquire a railway from ......................... to ........................., in British Columbia.
4. The authorized share capital of the company is as follows: ..........................................................................................

5. We, the several persons whose names and addresses are subscribed, want to be formed into a company under this Memorandum of Association.

Dated .........................[month-day-year]"Snip

Was the government considering the outright sale of BC Rail to .......?

RossK said...


Well you know what Abe Lincoln said about being able to 'scare some of the people all of the time'....




RossK said...


Thanks for the info....

Be happy to follow up on the rail car issue if you send me along the details.


RossK said...


My best guess is....'Yes'.

Remember the Indemnification Monster only reared it's allegedly 'progressive' head in earnest when things started to go sideways in the Spring of 2003 when the Premier suddenly began making noises about how it was only a 'lease' not a 'sale'.

Anonymous said...

Additional highlights of the partnership include:

· Establishing an Open Gateway Rate and Service Commitment to maintain access for shippers to competing railroad alternatives at Vancouver.

· CN assumes responsibility for maintenance of the infrastructure and cars, which currently costs BC Rail $40 million a year, representing $3.6 billion in avoided costs for the BC Railway Company in today’s dollars over 90 years.

RossK said...

Why, thank-you very much 'Anon'....

Those archived news releases really are a gift that keeps on giving, eh.

Would you like me to take those two 'selling points' apart as well?


BC Mary said...

Thanks, RossK and NVG, for words and photos which can still make our eyes blink after all these years.

North Van's Grumps said...

Contrary to what Brian G. Kenning was testifying on the subject of fully loaded rail cars loaded with lumber was coming down from northern BC, the problem, he said, was that the rail cars were going north without anything on them...... however in this article.....

"......The synergies related to the entire operation being run on one floor lead to huge gains in productivity. For example, empty online cycle times for lumber equipment improved over 40 percent between 2001 and 2003 and continued to improve in 2004 prior to the sale. Profitability at BC Rail made huge gains even with the loss of coal traffic and the business sense of the sale was debated furiously. It has been speculated that what should have been THE success story in North American railroading for 2003 and 2004 had to be hidden from the press in order to complete the sale. Some have said that BC Rail's centralized yard operations strategy could have been a model for North American railroads plagued with inefficiencies and congested yards. Others have speculated that BC Rail needed to be sold before they proved again that a government owned business could in fact turn a significant profit. snip




Anonymous said...

I remember listeninng to Pat Bell on Ben Miesner's radio show and he was busy assuring us it was a lease only and that we would forever own all the land and rail lines have they not been maddly selling even all that? and kevin Falcon on some radio show scoffing at real concerns from the public saying that we knew nothing of selling railroads.. but he did of course, the former mayor of prince george telling us all the deal was great and he was going to be cn's worst nightmare if we didnt get any passenger rail service to vancouver.. ah such words such stellar deals these goons have made for us, yea like i said stellar deals, no passenger rail service in p.g. to vancouver as of 2010,
then im sure it was 2 solid years after the sale that we read about derailments every day Im worried about the trial continuing, but also aware that even if found guilty what will their punishment be.. nothing i'm sure

RossK said...

Anon-Directly Above--

I believe there just may be 'evidence' in the documents that we are not allowed to talk about that demonstrates, quite clearly, how mayors up and down the line were 'turned' into as you termed them 'goons' .

Thing is, it wasnt' Little Rabbit FuFu that did the turning.

Thanks again NVG (and Mary!)

Still waiting for the Anon-Way-Above to let us know if he/she would like us to shred the rest of that pathetic (and in my opinion patently false) press release....


lynx said...

In regard to NVG's find on Bill 64, amendments to The Railway Act, there is a very interesting response to this act by Paul Nettleton and recorded in hansard, May 27, 2003 pm. It is interesting from beginning to end in many regards. It is especially so here:

"P. Nettleton: For example, the legislation ends a requirement of ministerial approval for a railway company to change its location. Does that mean B.C. Rail could be head-quartered in Montreal or El Paso? How would that benefit industry in this province? The legislation ends ministerial approval for the location of new stations on a railway as well, I will just mention."

"But that's only a minor quibble compared to the next one when it comes to government accountability
for B.C. Rail. The legislation appears to end any requirement for railway companies to produce financial and other information to the minister. Beyond an an-
nual report, British Columbians will have little window into the operation, the service, the future of rail in this province. There will no longer be ministerial oversight of B.C. Rail. The railway is supposed to be for British
Columbia, but British Columbia will be out of the picture officially. What about the safety of a private operation? Not much talk about that around here. Further,the legislation ends a requirement that employees of railway companies be paid wages similar to or current
with similar industries. I see this as a government giving the new operator the leeway for the job cuts that will surely come. This one's got the government scurry-
ing as we speak, in fact, with reference to 1,200-plus jobs currently at risk."

Here is the link... just scroll down, just past the beginning of section 1510:

North Van's Grumps said...

I went down to the Vancouver Public Library today to look at some newspaper Microfiches.

This is what was reported in the Vancouver Province on May 15, 2003 under the heading of "B.C. briefing."

"Legislature churns out new laws - 16 so far this week.

The B.C. government tabled three more pieces of legislation yesterday, bringing to 16 the number unveiled this week - the second-last week of this legislation session.
The Community Services Relations Act sets up as single association ..........sector. The Transportation Statutes Amendment Act aims to cut red tape by removing 162 regulations from the Railway Act. And the Miscellaneous Statutes Act amends 22 different laws already on the books in B.C."

It looks like I have to go back and have another look at:

I scanned six pages, 40 cents a sheet, from the micro-fiche, but as I was leaving I saw a newer, a more modern micro-fiche machine where the copying costs is ZERO. Why? All you need is to provide your own "stick" to record the digitized microfiche onto, and away you go! No wasting of paper.

RossK said...

Thanks Lynx and NVG--

It really is vital that material like this does NOT disappear down the rabbit hole, especially when one is dealing with the screamers and ostrich's that insist that folks that want to get to the bottom of this mess are nothing but left wing loons.

A specific example of a single statute change that was critical to the financial success of the eventual benefactors of the largesse of Mess'rs Mahoney, Kenning, Campbell and Collins et al. was the one that removed the need for passenger rail service of the railway to serve remote areas. While clearly against the public interest, this change opened the door to the fullest private exploitation by the benefactors.

My take on that one, with an assist from Will McMartin, is here and here.


lynx said...

"It really is vital that material like this does NOT disappear down the rabbit hole..."

Very much agree, Ross.

These numerous statute changes, that were shrugged off as mere and irritating red tape, were really an extensive process of deregulation that had very real and significant consequences in helping to more smoothly facilitate, as you note here, the certainty of 'private' benefit trumping public interest.

At the very least, Bill 64 certainly helps to reveal what I would define as 'intent'.

Gary E said...

NVG has pointed out an old post of mine which in part has the following

'CN will purchase 600 new centrebeam cars to increase capacity for forest shippers, and upgrade 1,500 boxcars, to help ensure customers have access to rail cars when and where they need them. Faster transit time will also improve car availability by 800 cars."

So I stand corrected NVG. But it is the 1500 Boxcars that I want you to know about. These cars were slated for repair by a company. The when the company was to commence repairing these units, they were told to destroy them. The company apparently advised that it would be less expensive to repair and subsequently were replaced by another company.

My source for this has moved but I think I know where they are and will try to get more info. hopefully before the end of the year.

RossK said...



Intent is a critical issue here. I have debated Paul Willcocks on this issue before. And while I will concede that it is immaterial when a clearly articulated policy change is behind the 'intent' (even if I disagree vehemently with that change, given that this is the way our system is supposed to work), I will never agree that it is not an important issue must be rooted out and laid bare for all to see when personal benefit, rather than public policy, is the major driver.


RossK said...

Thanks very much Gary--

Look forward to your update. Please send me an Email to ensure that I don't miss something in the comments.


North Van's Grumps said... source of Gary E's blog:

"CN will purchase 600 new centrebeam cars to increase capacity for forest shippers, and upgrade 1,500 boxcars, to help ensure customers have access to rail cars when and where they need them. Faster transit time will also improve car availability by 800 cars."

And from the lips of the man who wants to be the next BC Liberal Premier of British Columbia, I give you Rich Coleman, on the topic of the sale of BC Rail, duly recorded by Hansard: on December 1, 2003

"... So what do we get as a result of this, in addition to a billion dollars and paying off the debt? CN is actually going to go out and purchase 600 more centre-beam cars. Now, what the value of that is that we knew, when we had our people go — we put in a professional board and good management who had a look at B.C. Rail — that our shippers were saying to us: "You know what? We don't mind using this railroad, but we never know whether we can get a car on time. We never know when we want to ship our product whether the cars are going to be there with the capacity to move our product to the marketplace."


"We knew that we would have to make an investment in additional railcars. Oh, that would be more debt in addition to the $500 million we already had. Now we have a partner that is going to go out, in addition to the billion dollars it's giving us for the right to run the railway, and make the investment in the cars. That's going to increase the capacity for our forest shippers in particular, because this is where the majority of forest products in British Columbia come from — along this corridor and in this area. The 1,500 boxcars will help ensure that customers have access to railcars where and when they need them, and faster transit times will also improve the availability of the cars by 800 cars."

And what's this:

The value of the $1B selling price is misleading as CN is receiving $800 M in tax
credits, and $151 M in the pension plan
; also federal approval needed to approve
write-off of previous BC Rail expenditures as deductions;


Anonymous said...

could it be that the indemnity was a guarantee that the kickback wouldn't go higher than 800 million. here we are, from starting out at 250 million in 2003 and are currently sitting at 600 million dollars based on an overly high 9% compounding number, twice as high as the going interest rate in 2003.

RossK said...


$600 million is the 'old' number.

Even Vaughn Palmer has now used the soon to arrive $900 million number.

Here's the real thing....Like the German Ferry tariff giveaway that was used to cow our unionized shipbuilders, even if the fine folks from CN don't get the indemnity, it means that it was essentially a tax shift from the Gordconians to the Harpoons...Of course, that is purely in name only....No matter which way it plays out, we, the people, pay.

And remember this, we will be paying out, at a minimum, $250 million on mostly 'bogus' debt.