Friday, June 8, 2012

#LiquorLeaks and the Chambers of Secrets

Thanks to #LiquorLeaks, you know more about the ambitious plan by Exel Logistics to privatize the B.C. Liquor Distribution Branch's warehousing and distribution than the government is willing to tell you about why it is in such a rush to sell a key part of a profitable public asset.

In case this is your first time here, Exel is the world's largest third-party logistics company and an arm of German giant Deutsche Post DHL, one of the biggest corporations in the world and a Formula 1 auto racing sponsor. Exel gained the Alberta liquor warehousing and distribution monopoly in 1994. Expansion to B.C. is part of a strategy to gain dominance in liquor logistics throughout Canada and the U.S.

Back in 2005, Exel hired BC Liberal insiders Mark Jiles and Patrick Kinsella to pressure the government to let it take over the province's liquor warehousing and distribution. In a 2009 internal memo (called Project Last Spike), Exel pondered using its close relationship with liquor minister Rich Coleman to influence the writing of the request for proposals. Read the basics here in Business in Vancouver and here in The Tyee. 

Since Feb. 23 -- two days after the privatization was announced by Finance Minister Kevin Falcon in the latest provincial budget -- I have diligently sought any and all of the government's business cases and cost-benefit analyses justifying the privatization. I have requested interviews with Coleman and his predecessors Shirley Bond and John Les. Les was in charge of the liquor file from 2005 to 2008. He was not only a target of heavy lobbying by Jiles, but I know for a fact that he also offered Jiles confidential advice on several occasions.   

My repeated interview requests have been denied. My Freedom of Information requests have been an adventure, to say the least. Join me as I recount the roller-coaster journey that is far from over. 

My Feb. 23  request to LDB for the business cases and cost-benefit analyses became a hot potato for LDB, which transferred the matter to Victoria for the Justice and Attorney General Ministry to handle, according to this April 2 reply from LDB.

My simultaneous attempt to access the full benchmarking study that is mentioned on page 18 of the latest LDB service plan was kiboshed entirely; LDB cited section 12, claiming it's a cabinet document in this April 12 FOI denial and deferral letter.

Jay Chambers (right) starstruck by Arnold Schwarzenegger.
In the meantime, I also sought a copy of LDB general manager Jay Chambers's agenda and diary. Lo and behold, on March 1 he convened a meeting for 90 minutes to discuss my Feb. 23 request, according to this April 27 FOI release. This wasn't a chit-chat in the corridor over coffee or watercooler small-talk. Chambers spent a whole hour-and-a-half conferring on the vat of information to keep inside and what drips, if any, might be allowed to trickle out. Chambers is the top executive of a corporation that grosses $2.6 billion a year, so his time is supposed to be valuable. 

My curiosity was piqued, so I sought the notes from that meeting. And I finally got them on June 5. Although the records are undated and unsigned, it appears to be a list of reports dating back to 2001. The titles and topics of the reports listed evidently fall under the umbrella of a "business case" or "cost-benefit analysis." 

There were several reports commissioned in the 2001 to 2004 period, the first three years of the BC Liberal party's mandate when it controlled the Legislature under Premier Gordon Campbell. Then the trail went dead. The privatization concept was resurrected in 2011, shortly after Christy Clark became Liberal leader and premier. She took control of the party thanks to Kinsella, who was registered as a lobbyist for Exel until March 30 -- exactly a month before the negotiated request for proposals was published. 

The Alliance of Beverage Licensees and Craft Brewers Guild have gone public with their opposition to the privatization. Same with Spirits Canada, the trade association for Canadian distillers. Their theme is the same. The industry has not and will not be consulted. Costs will increase, and that will mean higher prices for consumers. There is no business plan. 

At least, there is no business plan that the BC Liberal government wants to show you or me. The government's response via FOI was a rather underwhelming pair of heavily censored December 2011 and January 2012 reports to cabinet. The only information visible is copied from publicly available LDB annual reports and service plans. However, one chart looks eerily similar to a diagram included in the Last Spike memo. 

In a budget estimates committee hearing on May 29, NDP critic Shane Simpson asked Coleman this:

"Is there any form of business case that was developed by the LDB or through government which motivated the decision to go out and not explore the issue, but advance an RFP to actually make the change? Was there such a business case? Does it exist? If so, why is the government not prepared to make it available?"

Replied Coleman: 

"First of all, it wouldn't have been developed by the LDB. This came through the budget process and the budget speech. Then after the budget speech and the process, they said: "We're going to go out and look at an RFP for privatization." The direction is then passed through to the ministry or minister who's responsible…"The business case is actually a bit reversed on some of this stuff when you do it. If the RFP comes back with savings for the consumer, has more efficiency for the government and if it save us money and actually provides some money to us for the fiscal plan, then that is the business case. Until we actually get the bids, we won't know what the total case is."

So, Mr. Chambers and Mr. Coleman, what's the truth? Is there really no business plan or cost-benefit analysis? Was the list of reports that was disclosed to me bogus? Or are you hiding inconvenient truths from the public? 

While I press the LDB FOI office to respect the Freedom of Information and Protection of Privacy Act, especially Section 6 (Duty to Assist "openly, accurately and completely"), I await a reasonable response from the Justice and Attorney General Ministry. I am seeking, at the earliest convenience, a two-hour, supervised viewing of the records in the historical list compiled from the pivotal March 2 meeting hosted by Chambers. 

That is, if the records exist at all. 

When an arm of the government is for sale in a process of questionable integrity, the government owes it to citizens to be transparent. Especially when it's a government that should have learned its lesson from the bungled and corrupt BC Rail sale of 2003.

P.S.: I also remind all readers out there that I gladly accept envelopes containing credible documents (hint, hint) addressed to me at the following addresses: 

102 4th Ave. E. 
Vancouver, B.C. V5T 1G2

The Tyee
PO Box 88484
Vancouver, B.C. V6A 4A7

June 5 FOI records from LDB


krank! said...

Thanx for your work on this file. Sounds as if the certainty of Minister Coleman re this project is diminishing by the day. Interesting to see Coleman's responsibility for horse racing in the province in today's Globe ( Rod Mickleburgh). What with Kinsella's known interest in same, the opportunity to discuss similar interests out of public view at the track is perfect. Still waiting to hear Jeff Fox's views on this deal.

GeeBee007 said...

you've turned up the heat so much Bob - - - I wonder if Kinsella has become too hot?

With Baldrey and Palmer finally starting to come out of the LIEberals closet - a sale signed, sealed and delivered by Kinsella would get a lot of attention.

Wouldnt put it past the greedy sob's though.

You are doing great work.

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