Wednesday, December 22, 2010

Twenty questions for Vancouver 2010

An open letter to the Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games:

As you fade away, after claiming a balanced $1.884 billion budget, I thought I would mark the occasion with 20 questions. This is not a game, but a last-ditch attempt to get answers. You see, the more you've tried to stonewall me and lead me astray over the years, the more determined I get. VANOC has proven time and again that its priority is to protect information, rather than share it. It doesn't have to be this way and it's not too late to be informative.

So, I have 20 more questions after the Dec. 17, 2010 news conference at the BC Hydro Customer Centre (right). Please answer to the best of your ability (and I know you are able):

1 - Why did it take so long to publish this 28-page financial report? Salt Lake 2002 organizers did their first report two months after their Games ($40 million profit). Expo 86 finances were released just over a month after the Fair ended ($349 million deficit).

2 - Why were no quarterly reports issued between Dec. 21, 2009 and Dec 17, 2010, after the organization dutifully adhered to the pledge of quarterly disclosures in the 2002 Multiparty Agreement and the May 2007 promise to citizens that the organization would be transparent?

3 - Why all the shoddy editing? Sponsor Millennium Development is referred to as "Millenium." B.C. Lottery Corporation is called "B.C. Lotteries Corporation." Jet Set Sports is called “JetSet Sports.” Certainly the correct spellings of those companies would have been boldly printed on the cheques they sent you for their sponsorship fees and ticket purchases. Assuming, of course, Millennium sent cheques and they were honoured.

4 - Why are the names of directors and senior managers missing from the report? It’s standard for an annual report to include at least the names of the board chairman and chief executive. The VANOC report doesn’t even mention Rusty Goepel or John Furlong.

Your sponsors make sure their shareholders know who is making the decisions. For example: Teck, who provided the metal for the Olympic and Paralympic medals, has a group photo of its directors on page 26 of its 2009 report, followed by brief bios.

Bombardier, who made the Olympic and Paralympic torches, lists directors, committee rosters and senior management on page 207 of its 2009-2010 annual report. The directors’ photos and short bios are on pages 20 and 21. Vancouver International Airport Authority’s board roster is on page 66 of its 2009 report, but it also does a Governance Report. Hey, there’s a certain director-at-large named Ruston Goepel whose term expires in 2010.

Those are just three examples. By not listing your names, you only breed suspicion. But if the Olympics were as successful as you’d like us to believe, they’d have certainly been there, right?

5 - Before noon on April 4, 2010, there was a paper-shredding truck number 533 from Shred-It in your parking lot, next to the low-rise building's entrance. Click the photo to the right to enlarge. What records were being picked up for shredding? VANOC, we know, was not subject to Freedom of Information or Document Retention statutes.

6 - After the B.C. Place Stadium opening and closing ceremonies, the attendance provided reporters who asked was 55,000 to 60,000. Why then only 87,769 total tickets sold for the shows?

7 - You sold 642,223 hockey tickets for $111.9 million. You scored! How many of those were in luxury suites? Because of the recession, you had a hard time selling what you thought would be an easy sell and there were bargains. A box that holds 20 people was going for $2,800 and up. You even published the price list.

8 - Salt Lake 2002 organizers disclosed the full attendance sport-by-sport. The grand total was 1,525,118 tickets sold. Will you kindly tell us how many tickets were sold for each sport or at each venue? We know hockey, but you haven’t told us about figure skating, short-track speedskating, long-track speedskating, curling, snowboarding, freestyle skiing, alpine skiing, ski jumping, cross-country skiing, nordic combined, bobsled, skeleton and luge.

9 - The British Columbia and federal governments gave $187.8 million to VANOC operations. When the business plan was published May 8, 2007, John Furlong said clearly: "The $1.63 billion Games operating budget is funded entirely by the private sector, it is not funded by the taxpayers... and although we're projecting a balanced budget I think we all hope that we will leave a positive financial legacy." Relive the moments Furlong said that in the video below.

There is no "positive financial legacy" - aka "profit - but do tell us when the government bailout began. You really did need it because the May 2007 business plan incorrectly assumed "the Canadian economy will remain relatively strong, with no recession, through Games time."

What is the full and complete tally for all payments made by all government partners, including tickets, advertising, etc.? There were five municipal, nine provincial and three territorial partners.

10 - The $50 million increase in the transportation budget to $173.5 million was poorly blamed on changes in accounting. Yet I see the same language in the May 2007 business plan that I see now in the final report. Bus systems cost $92.6 million after a lengthy dispute with Gameday Management Group was finally resolved in mediation in early November. Was the cost of transportation underestimated in 2007?

11 - The Sustainability Report tells us that the posting of the ethics commissioner's final report to the VANOC website didn't happen because the website is no longer being updated. Could you send a news release via Canada Newswire, post one on 2010 Legacies Now or inform the media on your list about this report?

12 - The Sustainability Report says on page 33: “VANOC required that all directors file, at least annually, a Declaration of Interest by Directors. Senior managers were also required to file such documentation, only once, in 2008, though with a requirement that they proactively update their original filing if their circumstances changed.”

On page 35 it says: “Survey of senior management regarding compliance completed in Q4 2009 for report to audit committee on December 14, 2009. On May 31, 2010, final survey completed with remaining senior managers for report to audit committee at its meeting in early June 2010.

"Declarations of Interest by Directors completed in 2009; exceptions included two directors, whose declarations were received in 2010. VANOC’s procurement team was provided with updates about entities in which directors declared an interest.”

Could you please tell us about the directors, management and the entities in which they have interest? The London 2012 Olympic Delivery Authority, which fulfills a function similar to VANOC, posts what's called a "register of interests" on its website below the biography of each director.

13 - The Sustainability Report stops at April 30, 2010, yet major environmental works were continuing at venues into the summer. The Paralympics, you must remember, ended on March 21. Remediation at Hillcrest, UBC, Cypress, Creekside and the Callaghan Valley was still active. Giant piles of straw existed at Cypress in late May. Biologists you hired to trap mice seen escaping from delivery trucks in February were applying to the provincial government for permits in June. Why, if work was not finished, is this Sustainability Report the last? The previous sustainability report spanned Aug. 1, 2008 to July 31, 2009.

14 - Previous Sustainability Reports included information (though never enough to be satisfactory) from Intertek Group regarding the offshore manufacture of souvenir goods. Page 93 of the previous report even shows 79 factories -- including 57 in China -- were used to make Vancouver 2010 items. You even mentioned on a few occasions that factories had not been in compliance, but were given a second chance. Why, then, is the final report missing this information?

15 - The Sustainability Report is 138 pages. The Games final financial report -- which covers Sept. 30, 2003 to July 31, 2010 -- is just 28 pages. Why is one so fat and the other so thin? By comparison, the report for the fiscal year that ended July 31, 2009 was 31 pages.

16 - There was a $2 million loss because criminals used stolen credit card numbers to buy thousands of tickets on the Fan-to-Fan Marketplace. VANOC was the first organizing committee-to sanction a ticket scalping website. Each transaction was subject to a 20 percent fee (10 percent charged the buyer and 10 percent charged the seller). What was the total net revenue for this site and how many tickets were sold via this channel?

17 - These Games were supposed to be a step forward for Canadian aboriginals. The Four Host First Nations were instrumental in the success. You paid $3.5 million for their pavilion, yet the number of aboriginals on staff seems rather low. The report says only 1 percent of people on staff "self-identified" as being aboriginal. Could you convert that percentage to a number? We already know there was no full-blooded aboriginal athlete competing for Team Canada.

18 - The Olympic Truce was a delicate issue for VANOC, because the Canadian government is spending billions to put our men and women in harm's way in Afghanistan. There have been 154 deaths, including 24-year-old Cpl. Joshua Caleb Baker of Edmonton, who died at a weapons training range near Kandahar on Feb. 12, 2010, opening day of the Games. When VANOC did its part for the Olympic truce, it decided to send sports equipment in so-called spirit boxes to communities in the Canadian Arctic. What became of that program? That information is not reflected in the report.

19 - Certain expensive works were undertaken at B.C. Place Stadium that were never contemplated in the bid stage. The Sustainability Report laughingly claims there were “limited modifications to an existing facility.” In fact, the bid book said no extra money would be spent on capital upgrades there. Things changed when the roof ripped and collapsed on Jan. 5, 2007.

A new roof-heating system by Genivar was installed and in the weeks before the Games, technicians from Riggit were situated on top of the roof around the clock. Oh, there was that time less than a month before the Games when they went for a coffee break and the roof nearly collapsed under rain because the lighting and sound equipment pulled the roof. Then, after the Games, the roof was taken off for replacement. The material isn't biodegradable. Another roof replacement took place at Canada Place. Same material.

Certainly those weren't VANOC construction projects, but VANOC was the most important tenant in both buildings since 1986. Why do those not warrant mention in the Sustainability Report?

20 - Two words: Executive compensation. Four words: Who made how much? I also wonder how many people were working for each executive and how many were given extended leaves for illness or pregnancy.

I kindly look forward to a reply with complete answers to the above questions at the earliest convenience. Do take some time and enjoy the egg nog and yule logs while you ponder the answers. Of course, I do gladly accept plain, brown envelopes without return addresses (Mine is 554 E. 15th Ave., Vancouver, B.C. V5T 2R5).

Merry Christmas and Happy New Year!

--Bob Mackin

Tuesday, December 21, 2010

WikiLeaks rewinds to the 1-year countdown to Vancouver 2010

Just 25 minutes after the precise moment the one-year countdown to the Vancouver 2010 Winter Olympics passed, a memo was sent from the United States Consulate in Vancouver providing an overview of preparations for the Games. The Guardian published the memo on Dec. 21.

The key passage in Consul General Phillip Chicola's memo deals with information that the RCMP was struggling to balance its Olympic security duties with the responsibility of enforcing drug laws. The memo specifically mentions marijuana investigations, but Metro Vancouver is the setting for a battle among gangs to control cocaine and crystal meth trafficking. Late 2008 and early 2009 was an especially deadly period.

The RCMP denies the Olympics compromised drug investigations, but it isn't denying that officers were seconded to the Vancouver 2010 Integrated Security Unit.

Thursday, 12 February 2009, 18:25
EO 12958 DECL: 2/11/2019
CLASSIFIED BY: G. Kathleen Hill, Political/Economic Chief, US Consulate Vancouver, State. REASON: 1.4 (b), (d)

US diplomats discuss the financial strain the 2010 Winter Olympics put on its host city. It says there are signs the Vancouver security strategy is feeling the pinch of "economic and personnel shortages", but the Canadians are "sensitive to the issues of sovereignty".

Read related story
1. (U) Summary: The global economic crisis and modern demands of post 9/11 security are proving to be huge challenges for the organizers of the 2010 Winter Olympics in Vancouver. The competition and special events venues are complete and already hosting test events, but the financial crisis surrounding the Olympic Village has consumed local politicians and media (and was probably the determining factor in the recent Vancouver Mayoral election). Finances are also looming large over the Games' security. Original estimates of C$175 million have now ballooned to a figure somewhere between C$400 million and C$1 billion. While the Province and the Government of Canada (GOC) continue to negotiate who pays what, other costs, in the form of police and military resources, are beginning to be born across the region. The impact may reach far beyond the Games, with significant reductions in policing activity and investigations nationwide. Because of the economic downturn, the Vancouver Olympics Committee (VANOC) has already announced modest changes to save money, but is still promising to stage spectacular Games - within available financial resources. End Summary.

Ready to Compete, But Not to Sleep

2. (U) Vancouver is set to host the Winter Olympics in February 2010. Optimism over the event remains strong, as evidenced by the recent phase one ticket sales for Canadians only, which sold out completely in just a few hours and left many subscribers with only a small portion of requested tickets. However the global economic crisis is creating headaches not envisioned when the city bid and won the right to host the Games. Controversies abound over the "true" costs of the Games. The Olympics were used by Vancouver and British Columbia to jump start planned but expensive infrastructure projects such as the C$600 million upgrade of the Sea-to-Sky Highway between Vancouver and Whistler and the new C$2 billion Canada Line rapid transit system. Critics like to lump these costs in with the more direct Olympics costs, emphasizing an overwhelming burden placed on the BC">BC and Canadian taxpayer.

3. (U) Amidst the criticism, VANOC has shown remarkable financial astuteness, beginning serious revisions of the Games' operating budget in spring 2008, well before the serious specter of a global financial crisis became evident. All competition venues, one of the main areas of responsibility for VANOC, are completed or will be completed on time and within budget. VANOC recently announced a revision to the budget, increasing the final price tag on operating the Games by C$127 million to a total of C$1.76 billion. According to VANOC's Executive Vice President, David Guscott, the Organizing Committee has obtained enough corporate sponsorship and ticket and souvenir sales to bring it within sight of this budget, lacking only about C$30 million to reach its goal. But it has had to make sacrifices to keep on target, such as decreasing hiring and making changes in operational plans, including eliminating a nightly medal awards ceremony in downtown Whistler that has that community's residents feeling betrayed. Despite the financial challenges, VANOC's revenue from ticket sales and corporate sponsorship remains on target and the organization appears weQ placed to meet its obligations.

4. (U) The same cannot be said for the C$700 million-plus Olympic Village, a key element of the Games and a major responsibility of the City of Vancouver. The Village is being developed by a private corporation on prime waterfront land provided by the city. It's slated to become a mixed use residential/commercial area after the Games with high, middle and low-income housing. The developer ran into problems in September, when more than C$100 million in cost overruns threatened to stop the project. Then Mayor Sam Sullivan and the City Council held a series of closed door meetings where they developed a plan for the city to provide guarantees so a loan could be obtained to cover the increases. The secretiveness of the financial arrangements became a major factor in the December city elections, which saw Sullivan's coalition lose the mayoral seat and all but one city council position. In addition, the controversy caused the city manager, a senior deputy and the chief financial officer to lose their jobs. In December, just after the elections, the primary financial backer of the project, U.S. company Fortress Investment Group, announced it would not deliver the final C$458 million in capital to complete the project due to financial losses from the sub-prime mortgage crisis. The new mayor, Gregor Robertson, found himself in the same hot seat, dealing with the possible collapse of the project. In the end, he sought, and was granted, special provincial legislative authority for the city to seek loans to cover completion of the project. Olympic critics have had a field day with the problems, promoting stories of taxpayer losses in the billions, and a combination of substantive factors led Moody's and Standard & Poor to place the City of Vancouver on credit-watch status. Real estate analysts have been more optimistic, asserting that the city could make a considerable profit on the deal down the road and highlighting the fact that it is the last undeveloped piece of waterfront property in downtown and very desirable. The city paid only C$50 million for the land through its Property Endowment Fund, a longterm investment fund estimated to be worth almost C$3 billion. Even if the development makes only half of the originally estimated profit, the fund could cover the immediate loss without affecting the city operation's budget and, as a longterm investment, it could still be a win for the city. VANOC's Guscott was confident the city would meet its part of the deal, presenting a completed, functioning Village on time. In VANOC's view the project has been caught in an unfortunate cross between municipal elections and the downturn in the economy, with the financial problems severely overblown.

Security - But at What Price?

5. (U) Perhaps the biggest loss will be taken by the province of British Columbia and the Government of Canada (GOC) which will bear the brunt of cost overruns in the security of the games. The Integrated Security Unit (ISU) was set up to manage the Games' security. It is headed by the RCMP, with representative from all major police, intelligence and defense entities. Original estimates on Olympics security were in the C$175 million range. But now no one is willing to give a number. The provincial Finance Minister, Colin Hansen, will only say it's somewhere between C$400 million and C$1 billion. Hansen admits he was surprised at the estimates coming out of Ottawa for overall security. A special committee was established early on to determine B.C.'s and the GOC's shares of incremental costs above basic policing. The ballooning nature of the security structure and programs has left the committee bogged down in "endless line-by-line micro-analysis," according to Hansen. Consequently the Province offered up a final, comprehensive plan on who pays what which is in Ottawa for approval. Realistically, as the ISU tests and refines its plans, the costs continue to be fluid and the final numbers will not be known until after the Games are completed. BC">BC originally estimated its overall Games' costs, including infrastructure, venues and security, at approximately C$600 million. Minister Hansen announced on February 9 that the new security numbers will force the province well over that mark. With 2009 a provincial election year in BC">BC, the cost of Games' security is becoming a major issue for the ruling BC">BC Liberals, who are hoping a reasonable agreement with the GOC will soften the financial blow.

6. (C) Beyond monetary costs, the Olympics are beginning to create critical resource costs. Law enforcement representatives working at the U.S. Consulate in Vancouver are reporting that more and more of their contacts are being pulled to work on Olympics security issues. A DEA agent was told by one of his RCMP counterparts that by September all regional drug agents could be working on Olympics, with no investigations ongoing until March 2010. Already the RCMP has all but stopped marijuana-related investigations. RCMP is also undergoing severe belt tightening with new, stricter enforcement of overtime rules. To highlight the Canadian constraints, an RCMP officer told us that the Italians put 30,000 Carabinieri in Turin for the 2006 Winter Games and the RCMP has less than 30,000 officers in all of Canada.

Big Business, But no Room at the Inn

7. (U) The 2010 Olympics are presenting significant financial opportunities for area residents and businesses. In addition to the massive infrastructure and construction projects, VANOC is procuring millions of dollars in services and support for the Games. And Canadians are not the only recipients of these contracts. U.S. firms have managed to win several major contracts thus far to provide everything from tents and portable toilets to tickeQprinting, dining services and flags for the games.

8. (U) One big concern for many in the tourist industry, and for those of us working the Games for the USG, is the question of accommodations. The International Olympics Committee requires a host city to provide between 20,000 and 25,000 rooms for just the Olympic "family" alone (sponsors, officials, etc). This leaves little room for the spectators who come to watch the Games and the visiting dignitaries. IOC rules give only five rooms to the National Olympic Committees (NOCs) for official delegations from participating countries. If delegations, and their support and security, are more than five people, it is incumbent on the delegation to find its own additional accommodations. Consulate General Vancouver has already secured accommodations for the agencies participating in the Olympics Coordination Office and the Joint Operations Center but would like to make an urgent plea for notification as soon as possible of the composition of the official delegations to the Opening and Closing Ceremonies of the Olympic Games. (The Paralympics are much smaller and accommodations will be more readily available.) Accommodations are scarce to non-existent now and the sooner we know the make-up of delegations, the more likely we will be able to provide suitable rooms within reasonable distance of the major venues.

9. (SBU) Comment: It should be noted that in every meeting we have with Olympics officials the first question is "Who is heading your Opening Ceremonies delegation?" Although the official invitation comes from the NOC, in this case the U.S. Olympic Committee, to the VIP, most Canadians involved are hoping that President Obama and his family will attend the Games. The President is immensely popular in Canada and given the Games' proximity to the U.S. there are high expectations that the President and his family will make an appearance.

10. (C) Proximity is also on our minds as we look at overall Olympic security. With the Olympics being held within 30 miles of the U.S. border there are already numerous areas where security is a shared responsibility, such as our pre-existing shared responsibilities over airspace through Northcom. The Canadians are doing an excellent job in developing their security strategy, but we are starting to see some small signs that they are feeling the pinch of economic and personnel shortages. They are sensitive to the issues of sovereignty and we have been reminded repeatedly that they are responsible for the overall security of the Games. Our Olympics Coordination Office and Olympics Security Coordinator are working very closely with VANOC and the ISU and closely monitoring developments with an eye toward any possible further assistance we can provide should the needs arise. End Comment.


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