"Stee-rike" 1 at Liquor Distribution Branch

The British Columbia Government and Service Employees' Union is rightfully on the warpath during its 70th anniversary year.

After six months of negotiations with the B.C. government, the gloves are coming off and it could be a long, hot summer. The BCGEU wants a 3.5% increase for its 29,000 members across government for the first year of a new contract and a cost of living increase in the second. The government has offered only 3.5% over two years and Finance minister Kevin Falcon has drawn a line in the sand.

"The world economy is actually getting worse, it's not getting better," Falcon told CKNW on June 29. "I think the unionized workers really need to understand that our offer will come off the table, and I'd sure like to see them return to the table before that offer's removed for good. It is not going to get any better."

The first salvo fired by the BCGEU is to strike at three important Liquor Distribution Branch locations. The Vancouver headquarters, which includes offices, the main warehouse and the flagship store, will be behind pickets from 11:30 p.m. July 2 to 11:30 p.m. July 3. Similar strikes are scheduled for July 3 at the LDB's Kamloops warehouse (5:30 p.m. to 10:30 p.m.) and Victoria wholesale customer centre (6 a.m. to 5 p.m.). The disruptions are bound to cause a hiccup in the supply chain and the government will feel a pinch. But it will not be anything like the 1970s and 1980s when a summertime strike at government liquor stores in B.C. created chaos.

This is an intriguing strategic move. LDB is one of the province's biggest, most profitable retailers and the 3,500 BCGEU members who work in it are important collectors of provincial tax revenue. During the 2010-2011 fiscal year, LDB delivered an $890.4 million profit to government on $2.82 billion gross sales.

The government is amid a controversial program to privatize LDB's warehousing and distribution -- without a business plan and without formal industry consultation but with evidence that such a move is being done primarily to benefit BC Liberal party insiders. Evidence is contained in Exel Logistics' "Project Last Spike" internal memo from Oct. 6, 2009 that even suggests the BCGEU was an ally in its privatization push. UPDATE JULY 3: Exel and ContainerWorld are among the six companies that submitted bids by the June 29 deadline. The others were Hillebrand Westlink, Kuehne + Nagel, Metro Supply Chain Group and Schenker of Canada. A shortlist of as many as three companies is expected by July 20. On April 30, liquor minister Rich Coleman said the shortlist could be as small as one company. Companies related to Exel, Schenker and K+N were found to be involved in a price-fixing conspiracy and disciplined by the European Commission. Additionally, Exel has an intriguing connection with ContainerWorld, the biggest existing liquor warehouse in B.C.

BCGEU is now publicly opposing the privatization, after signing a March 21 memorandum of agreement for post-privatization job protection and early retirements. The June 29 news release announcing the three strikes said another reason to picket the LDB work sites is "to back our proposal for Sunday liquor store openings province-wide to generate more than $100 million in annual revenue."

That's odd. BCGEU president Darryl Walker (right) told me in a May 3 interview that the proposal was dead. Killed, in fact, by the government in negotiations leading to the March 21 agreement. The Sunday openings proposal was considered a deal breaker by the government, Walker said. Below is an excerpt from my interview with Walker.

Mackin: If BCGEU is opposed to the privatization of this asset, then why would it have made the deal, made the memorandum of agreement to get the job protection for the workers, for the members? Wouldn't it be better if the BCGEU went out on principle and said 'no, we're not going to agree to this, we're going to, on principle, oppose this entirely' and rip up the MOA? 

Walker: "Part of the reason that we sat down with the government and put the MOA together is to protect our members, and that is our primary responsibility as you probably know under our certificates with the Labour Relations Board. We're held highly accountable for the rights of our members and when you see an opportunity to protect the members, the first piece is to get that done. That's why we sat down and worked with the government.  

"You might also know that of course we had a proposal on the table to open stores on Sundays, thereby increasing revenues by, well, as much as $120 million to $140 million to $150 million annually. We were told by the employer that if we didn't take that off the table we would be unable to provide or get the protection in the MOA for our members. So we were in a position first off to protect our members and that's what we knew we needed to do.  

"Once that was done and we had those in place we then understood we were able to do the second piece, which is to oppose this on principle. Principle is one thing, quite frankly British Columbia needs revenues now and we need to be able to say to B.C. that we can show the government methods of providing and enhancing those revenues. We needed to be able to do that but we needed to be able to protect our members first. That was our primary responsibility. We saw it as a bit of a two-step, and we realized that one had to go first if we were to protect our members."

There may be reasons to limit Sunday openings. Chief medical officer Dr. Perry Kendall reported in 2008 that a government monopoly on the retail of alcohol and restrictions on hours and days of sale are among the 10 "best practices policies for managing the health and social harms of alcohol." Kendall told me the government did not consult him on the potential health or social implications of the privatization of LDB warehousing and distribution.

There are also 1,400 liquor retail outlets in B.C., of which only 197 are government-owned. The majority are licensee retail stores (672) and rural agency stores (221) owned and operated privately by companies that were granted Sunday opening privileges by the Liquor Control and Licensing Branch and their host municipalities. The licensee retail stores would obviously not be amused if they had to suddenly compete with the government for customers. (They are represented by the Alliance of Beverage Licensees of B.C., which opposes the privatization.)

There is no evidence, however, that government has recently studied any of the commercial or health implications of anything to do with the wildly lucrative and socially risky business of booze. If it has any, the government doesn't want to share any business plans or cost-benefit analyses with you or me.

I have made numerous requests to interview Coleman. He has not sat down for an interview with me.

Does fairness monitor equal fancy monicker?

As the old proverb goes, all is fair in love and war. But is it fair in British Columbia government privatization?

The last week of June began spectacularly with the shocking Alex Tsakumis revelation of a 2003 Dave Basi memo-to-file that alleged Christy Clark (then Deputy Premier, now Premier) breached her oath of confidentiality. Yet another reason why a public inquiry into the BC Rail privatization scandal is a must.

The week ended with the British Columbia Government and Service Employees' Union announcing a brief strike at three LDB sites, including headquarters in Vancouver. The BCGEU hit an impasse with the government on talks for a new government-wide contract and it says it is fighting back against LDB privatization. Meanwhile, there are serious questions about two ex-BCGEU executives who were lobbied by LDB privatization frontrunner Exel Logistics, but refused to do interviews.

The BCGEU strike notice was made June 29, the same day that bidding closed for the Distribution of Liquor Project. That's the fancy name given the controversial privatization of the LDB warehousing and distribution.

NDP critic Shane Simpson complained in a June 22 letter to George Macauley, the so-called fairness monitor who has a $74,900 contract to oversee the process. Simpson wanted Macauley to recommend the government postpone tendering until a business case is released, industry consulted and a replacement hired for LDB general manager Jay Chambers. Chambers drives away from his job as the head drink retailer in B.C. on July 6 to preside over the Motor Vehicle Sales Authority of B.C. Roger Bissoondatt will act as g.m. until a replacement is hired.

Simpson, who cited my May 8 story in Business in Vancouver during Question Period, already called the privatization "tainted" because of the cozy relationship between Exel Logistics, B.C. Liberal lobbyists Mark Jiles and Patrick Kinsella and the liquor minister, Rich Coleman.

Simpson got his answer from Macauley on June 25. In a nutshell: the Victoria lawyer and economist says he has no power to intervene, because of the terms of his contract that were set by the government. He is watching the process and making sure bidders follow the RFP requirements. He will submit a report next March, after the contract has been awarded. He can't do anything else.

This seems to contravene Coleman's answer to Simpson during the May 29 budget estimates committee hearing:

Simpson: (Does the fairness monitor) have any other authority to be able to direct the RFP process in any way if they have a concern during the process that they think…? You know, maybe it isn't anything major, but they have a concern, and they want to recommend or direct an adjustment in the process to keep it more balanced based on their view. Do they have authority or an ability to do that, and if so, how?
Coleman: Through the process, he has the ability to raise concerns, keep the balance, make recommendations — all of those things as the fairness monitor with regards to the process, if he has concerns.
Simpson: Who would he make those recommendations to? Would he make them to Mr. Chambers? Would he make them to the minister? Where would those recommendations go? Would they be expected to be of a private nature, or would it be of a more public nature?
Coleman: It's probably the project team or the two deputies that are responsible, which is probably the same thing.

A fairness monitor not empowered to ensure fairness is like a referee not allowed to blow a whistle or a linesman prohibited from raising a flag. Yet another reason to question the integrity of an already controversial process.

Coleman, the minister responsible, has not responded to any of my interview requests.

Read my story here in BIV and see Simpson's letter and Macauley's reply below.

NDP critic complains about integrity of LDB privatization

Response to Shane Simpson 2012-JUN-25

#LiquorLeaks reveals LDB wingding for Jay-C

Could there be whisky?
Mighty they have gin?
Could there be three or four six-packs?
I don't know...
Will there be a party?

With apologies to the Irish Rovers, there's a staff-only get-together at the Liquor Distribution Branch's Vancouver headquarters on June 27 in honour of departing general manager Jay Chambers. (Coffee and cake are advertised, but, ahem, the LDB has more than a few wobbly pops and bottles of hooch in storage.)

Remember him? Ten days before the resignation became public on June 14, Chambers sent staff this memo that implied he would be around for months to guide the taxpayer-owned company through the privatization. But he's driving away July 6 for a new job as president of the Motor Vehicle Sales Authority of B.C., and he still hasn't responded to my numerous interview requests. 


Here's the invitation for the June 27 event:

Jay Chambers is leaving the Liquor Distribution Branch (LDB) after more than 18 years. Jay has been the General Manager of the LDB since January 1997. He joined the LDB in January 1994 as the Director of Store Operations, and in March 1994 he became the Executive Director of Retail Services.  He will be missed!  

Come celebrate Jay’s many dedicated years of service at the LDB!! Wednesday, June 27, 2012 Coffee and cake will be served at 2:00 p.m. in the Atrium at 2625 Rupert 

To sign the card & donate towards a departure gift for Jay please come by the Communications area (on Peter Martin’s desk).

Almost a month earlier, on May 30, it was Chambers treating staff for lunch. He dropped $443.93 at Joey Burnaby for eight workers. For the record, no alcoholic beverages appear on the bill, which was obtained via Freedom of Information.

Jay Chambers and the Joey Lunch

Open letter to Premier Christy Clark: answers, please!

Madame Premier, some unsettling information was published by Alex G. Tsakumis on his blog on June 25.

Namely, an Oct. 8, 2003 lawyer-witnessed, memo-to-file by Dave Basi, a ministerial assistant who suddenly admitted guilt in the B.C. Rail corruption trial on Oct. 18, 2010. Remember that ugly chapter in British Columbia history? It surprised all of us citizens when police raided offices at the Legislature at Christmastime 2003. Bill Tieleman's feature is a worthy primer.

Basi and co-accused Bob Virk had their legal bills paid by taxpayers under an extraordinary and potentially illegal $6 million settlement deal in October 2010. The deal included a gag order. The people of the province aren't supposed to pay legal bills for guilty public employees. Auditor-General John Doyle is trying to investigate, but he has been met with resistance from your government. Your ex-caucus mate John van Dongen is an intervenor in the case. He cited this deal as a primary reason for quitting your caucus on March 26 in this speech. (That was the same day you had a mysterious phone call with ex-Premier Gordon Campbell.)

But you know all about the bungled B.C. Rail sale. A privatization that your party promised would not happen. You had a front-row seat. You were Deputy Premier. So I'll cut to the chase.

Below are questions that the people of British Columbia need answered. Much is at stake. It is about democracy and the integrity of the government, an institution that will outlast you.

A) Do you remember taking the oath of confidentiality when you were sworn-in on June 5, 2001 as a member of Premier Gordon Campbell's cabinet?

The oaths of allegiance, office and confidentiality, as delivered by Lt. Gov. Garde Gardom, are below for your reference. So is the news release that lists you as Deputy Premier and Minister of Education.

B) Is the Oct. 8, 2003 memo to file by Dave Basi accurate? Yes or no. Did you provide confidential cabinet information to a person other than a member of the Executive Council? Yes or no. 

C) If yes, were you authorized or required to do so?

D) Who gave you the authority or issued the requirement?

E) Or, were you acting on your own volition?

F) How often did you do so?

G) Your supporter, Harry Bloy, resigned from cabinet on March 15 after breaching the oath of confidentiality. Will you respect the honour and traditions of the Legislature of B.C. and resign from cabinet?

The people of British Columbia eagerly await your answers. The people of British Columbia deserve a public inquiry, to prevent a repeat of the B.C. Rail scandal.


British Columbia Oaths of Allegiance, Office, Confidentiality


THE EXECUTIVE COUNCIL OF THE GOVERNMENT OF BRITISH COLUMBIA JUNE 5, 2001

#LiquorLeaks: Curious about George

During the Distribution of Liquor Project -- the fancy name given the process to privatize the warehousing and distribution of B.C.'s profitable Liquor Distribution Branch -- liquor minister Rich Coleman has defended the process by heralding the hiring of a "fairness monitor." Coleman has also called the job "fairness auditor" and "fairness commissioner." More fancy words from the cabinet minister who has bucked all of my requests for interviews since the privatization was announced in the Feb. 21 budget. If the privatization is such a good idea, why does Coleman refuse to sit down with me to answer my questions and defend it?

The fairness monitor is George Macauley, a Victoria lawyer and economist who has extensive experience working on contract with the provincial government. Macauley and Associates has been paid $1.3 million for contracts over the last decade. Macauley's resume indicates that his primary work and specialty is government contracts.

Records requested and obtained by me via Freedom of Information (below) indicate Macauley was among six people invited to bid on March 12 and he was awarded the contract on March 26. Doug Benson, Alistair Duncan, Owen Pawson, Jane Shackell and John Singleton were the unsuccessful bidders. The contract is worth $74,900, which is $100 shy of the $75,000 threshold that triggers a public advertisement, and runs March 27, 2012-March 31, 2013. The contract states Macauley must:

a) Review the procurement documentation so as to understand the negotiated request for proposal process that will be used on the distribution of liquor project;
b) Monitor the procurement process for adherence to the terms of the NRFP, including participating at the proponents meeting, site visits (if any), providing advice related to fairness in the NRFP, oversight during evaluation of submissions and subsequent proposal refinement process as well as final selection of the selected proponent; and
c) prepare a written fairness summary report based on observations made during delivery of the procurement process.
...provide a draft written fairness summary report to the Province on the NRFP process within two weeks of notification to proponents, by the Province, of the identification of the selected proponent. A final written fairness summary document will be provided to the Province at a date to be stipulated by the Province and to take place no later than two weeks prior to the end of the Term of this Agreement. This report will be made publicly available by the Province.
The contractor may be required to provide verbal reports as required by the Province to the executive procurement steering committee, vendors, cabinet, public or media. 

Macauley's bid to the government shows that he had a hand in the oversight of some of the biggest government contracts awarded to private companies during the post-2001 BC Liberal era, such as:

• $572 million, 10-year revenue management contract with EDS Advanced Solutions;
• $324 million, 10-year health benefits operations with Maximus BC;
• $300 million, 10-year workstation services and IT contract with IBM Canada, and 
• $1 billion, 10-year telecommunications services contract with Telus. 

That's almost $2.2 billion of taxpayer-funded contracts!

NDP liquor critic Shane Simpson wrote a complaint to Macauley on June 22, seeking him to intervene and recommend the government postpone the tendering while various issues of integrity are resolved. Here's my story on BIV.com. See Simpson's letter at the bottom of this post.

Macauley politely declined my request for an interview and would not comment on Simpson's letter or provide me his response.

"My previous engagements with the projects you identified were different from the current DLP engagement.  My role then was of an ongoing advisory nature to provide advice and course correction if I identified any fairness issues as the process proceeded. I was not asked to provide a written report or documentation, and such reports and documentation were accordingly not created. In the present project, as you know, I will be preparing and providing a written fairness summary report in addition to providing ongoing advice and course correction on fairness matters."

Macauley was one of many people involved in those processes listed above, which were ultimately decided by cabinet. But the contracts were targets of criticism. The B.C. Government and Service Employees' Union drew attention to how a company related to Maximus was accused of fraud in the United States. The government battled to keep the Maximus contract secret. The government spent more than $125,000 to keep the whole IBM contract secret since 2004, but a B.C. Supreme Court judge ruled in June 2012 that it should be published. The omnibus telecommunications contract for Telus raised the ire of competitors Rogers, Shaw and Bell, who accused the government of breaking interprovincial trade accords and running an unfair procurement process.

And now there is the Distribution of Liquor Project, which is happening without a business plan or formal industry consultation. Frontrunner Exel Logistics, I revealed, considered how it could use its BC Liberal-connected lobbyists and close relationship with Coleman to influence the writing of the RFP and get the 10-year contract -- which it estimated in October 2009 was worth at least $55 million a year.

All that and more in the #LiquorLeaks files.

More to come...

Macauley Fairnessmonitor Mackin

NDP critic complains about integrity of LDB privatization