Saturday, May 05, 2012

The Six Million Dollar Railgate Deal...

...Why Did The 'Cabinet Cut-Out' Question Disappear In The Fall Of 2010?


Update: Busted/disappeared historical links in old post below now fixed - thanks to the help of NVG.


Many folks in the Bloggodome, including Rafe Mair, asked Mr. Van Dongen's questions, the ones that caused all the kerfuffle in the Ledge this week, way back in the Fall of 2010 when the deal went down. 

Which were ....Why was cabinet cut-out of the deal?

And... Was that legal?

And then, suddenly, the story just went 'poof' and disappeared.


Well, it is my opinion that a big part of the reason for the disappearing, at least from a proMedia point of view, is that everyone was educated by The Dean who sniffed around in response to a request from a reader and then gave us an explanation (sans named source, by the way) that the Six Million Dollars was only a 'contingent liability'  rather than a real one. Therefore, it did not need to go to Cabinet or Treasury Board.

Thus, all decisions were instead made by two Deputy Ministers, in a neat and tidy (and, as we soon learned from one of them, a super-secret, cone-of-silence) manner.

Of course, one of those Deputy Ministers (the one who informed us about the super-secret cone-of-silence) resigned yesterday for, as a government spokesthingy apparently put it according to CKNW, reasons unrelated to Railgate.

Below is the post we wrote about this matter at the time.

Saturday, October 23, 2010

Cutting The Cabinet Out Of RailGate's Six Million Dollar Straw Man


According to Vaughn Palmer, Rafe Mair is wrong.


Well, apparently due to (another!) pre-planned indemnity double-down, Gordon Campbell and his cabinet are off the hook because they did not have to directly approve the six million dollars required to buy-off to Mr. Basi and Mr. Virk (and their lawyers).

Here is Mr. Palmer's explanation:

"...But the more problematic part of the deal for the Liberals was the second line of decision-making, namely to forgo any attempt to recover the $6 million advanced by the Crown to cover the cost of Basi's and Virk's legal defence.

The special prosecutor had nothing to do with that part of the deal. It was made in Victoria by deputy minister of finance Graham Whitmarsh in concert with deputy attorney-general David Loukidelis.....

{snippety doo-dah}

The deputy duo acted under the authority of the Financial Administration Act, de Jong added, which brought a provocative e-mail from a reader.

On what authority? he asked, noting that the act explicitly states that only the cabinet can forgive "a debt or obligation to the government if the amount forgiven is $100,000 or more."

The amount forgiven here exceeded that threshold by a factor of 60. But no cabinet order was forthcoming because the amount was not, technically, a debt. It could have been, if the accused had been convicted and the Crown had proceeded to try to recover the legal fees.

But when the decision was made, the outstanding legal bills were only a contingent liability, advanced by way of indemnity, and cancellable by the deputy minister of finance under his standing authority under the act. Whitmarsh, acting on the recommendation of Loukidelis, signed off on all the paper work.

The cabinet was thus out of the loop, which is surely preferable to having ministers make the call on any aspect of the deal to end this case....."

How convenient.

But here's the thing.

Mr Whitmarsh is Mr. Campbell's and, dare I suggest, Mr. Martyn Brown's man over at Finance.


Has anyone asked the good Mr. Whitmarsh if he ever spoke to Mr. Campbell or Mr. Brown about this matter, regarding the details when the deal went down, or, and this is very important, when indemnity technicality was worked out BEFORE the deal itself was even conceived of?

Oh......And it was good to see that Les Leyne is finally starting to keep up......What the heckfire am I talking about?.....Well, the other day Mr. Leyne didn't even mention Mr. Whitmarsh as being part of the dynamic duo when he was on the Ceeb with the the Puffmaster Flash.....But in his column today he at least acknowledge Mr. Whitmarsh's involvement...No discussion, of course, of the implications however......
And for the was very nice to see Mr. Palmer follow-up on something that has been discussed, in considerable detail, by the 'Wingnuts/Cultists in the Blogosphere'...Credit where credit is due, and all that....Unless, of course, Mr. Palmer's E-mail correspondent was named 'Anonymous'....



North Van's Grumps said...

what is with all of your broken links ... of Page not Found?

But in his column today he at least acknowledge Mr. Whitmarsh's involvement...No discussion, of course, of the implications

Parzone said...

Hi Ross,

Yourself, Ian and Paul deserve huge kudos for your intellectual analysis on this matter. The lies (big, bigger and biggest) are so intertwined that the sheer weight of these lies must be making it hard to breathe…. I’ll bet.

Slogging up this grade has been a grueling/ repulsive climb but is that the crest just beyond?

Keep up the great work.

Anonymous said...

Hear hear for Parzone!

One thing to remember about Graham Whitmarsh ~

Whitmarsh worked at Harmony Airlines from 1991 to 2004 and got a job in Finance ministry, replacing Paul Taylor, former CEO of ICBC, who moved on to Chief of Staff in Premier's office.

When Gary Collins quit cabinet, where did he go? Harmony Airlines.

Who was going to be the next witness if the deal made by Whitmarsh and Loukidelis didn't stop the trial? Mr. Gary Collins.

There's that tangled web again ~

RossK said...


Broken links are the great disappearing...

Which is why I'm linking to my own posts where I've pulled quotes/passages.

Thanks Parzone.

Lots of other folks have been chasing this too.

Most of them just haven't been proMedia types.

Thing is - you don't need anybody to leak top-secret, never-before-seen-or-heard info to you to keep track of this one. It's all in the public record....Which is one of the maddening things given that it has 'suddenly' become news that the proMedia cares about just because one rogue MLA raised it in the Ledge 18 months after the fact.

Wonder how Mr. Doyle's making out getting the docs he needs....



North Van's Grumps said...

You did get my two emails this morning on the disappearing files, eh......

Lew said...

Ross, I was the reader who caused The Dean to go sniffing around, and here is my response to his contention regarding the contingent liability excuse.

"The contingent liability argument doesn’t stand up. There was no need to amend the indemnification agreements prior to the trial conclusion. The deputy’s authority would have been undiminished no matter what the outcome, and he could have acted then, if necessary. But he decided to change the liability provisions before the trial conclusion. What I am having difficulty with is how a liability can be deemed contingent when it arises solely from the deliberate act of choice of the same individual who can then immediately authorize its payment. In addition to the logic for deeming it a contingent liability, it would seem contrary to sound financial control to allow the same individual to unilaterally both create a government liability and then immediately pay it off."

He didn't have an answer.

RossK said...

On my to get 'em...

Thanks NVG.


Dave said...

Excellent work!

BTW. You are aware that "contingent liability" is a WAC Bennett term. That's how he described BC Ferries.

RossK said...

Thanks Dave--


Well, at least the 'contingent' part of the Ferries, one can only assume, was not borne out of a plea bargain, induced or otherwise.


Don F. said...

Ross, one thing we all seem to overlook in this matter is what was the actual 'debt'.
No breakdown has ever been provided to my knowledge of where this six million went and in what amounts.
The finance act is written in very specific terms and 'debt' means just that. What if this actual 'debt'could be proven to be say two million, then the paynment could not have been authorized using this act. The remainig four million would have to be found as incentive and that is illegal.
The point I'm trying to make is only if every penny can be seen AS DEBT, would that act be considered valid.
I doubt the auditor general will find that to be the case!

lynx said...

Well done, Ross.

It's certainly a familiar tactic by the present crew when it comes to the approval 'process'...or perhaps it would be better worded 'lack of process':

From March 3, 2004....Joy MacPhail, in the legislature, valiantly trying to find out who approved the BC Rail deal and when it was approved. Was it cabinet? No answer forthcoming. The Treasury Board? No answer forthcoming.

"J. MacPhail: Well, I don't think decisions out of Treasury
Board are confidential. Call me wrong. I can't get an answer from
anybody in government about when the decision was made to accept the
deal around B.C. Rail. The Minister of Finance couldn't tell me. He
could not tell me whether it had even been to Treasury Board. I have
evidence from the former Minister of Transportation that the final
deal didn't go to cabinet before the announcement was made."

cherylb said...

Funny how people always disappear from this government just before we get to ask them the interesting questions, isn't it?

RossK said...

Don and lynx--

They are saying it as 'contingent liability' rather than a real one....Thus, they didn't even have to go to Treasury.



Me thinks some folks may have a question or two for Deputy's replacement before he is even appointed on June 16th...