Premier Photo Op and the $185,000 charter bills

Clark

Blackcomb Aviation corporate jet at YVR

On CKNW AM 980, during The Investigators segment on the Oct. 22 edition of the Bill Good Show, I revealed that Premier Christy Clark has spent $185,027.86 on 25 trips from March 18, 2011 through Aug. 1, 2012 on a charter airline owned by a prominent BC Liberal bagman.

It's important for politicians to get out and meet the people and know the land they govern. But, wondered NDP house leader John Horgan, is this just Premier Photo-Op on her permanent campaign?

“Ms. Clark has been campaigning since she started her run for the Liberal leadership, and she's continued to campaign for the last year and a half. What we'd prefer to see is good government. Most citizens would prefer to see good government. Most citizens would rather have their premier focusing on the systemic challenges with our fiscal situation, addressing child poverty, addressing problems in communities right across B.C., that's not necessarily best done on charter flights in and out to raise funds or to raise political awareness. What we need is a government that will roll up its sleeves and address the challenges of the day and that does not require charter jets.”

Clark has flown 29,000 kilometres around B.C., as far north as Yellowknife and as far east as Regina on the taxpayer dime since the fourth day of her Premiership. I learned this through a series of Freedom of Information requests.

You won't find information about Clark's charter flights in the Public Accounts. But you'll find all the relevant documents below.

McLean

Clark often travels with a communications aide and another staffer. Sometimes a minister or deputy minister. Almost always a bodyguard is aboard. She even brought a lobbyist aboard a Dec. 1, 2011 flight to Kitimat that turned back to Vancouver because of nasty weather.

Blackcomb Aviation is owned by David McLean, the CN chair who was a well-known friend of ex-Premier Gordon Campbell. BC Rail was sold to CN in 2003 in a controversial deal that has yet to be fully explained to the citizens of B.C. (Learn all about it on this Investigators documentary.)

McLean has donated more than $250,000 to the Liberals since 2005. Blackcomb Aviation gave Clark $23,000 worth of flights during the 2011 leadership campaign.

Cabinet members are allowed to take charter flights if they're on government business, their destination is not adequately served by scheduled service and/or if their schedule dictates they cannot wait for a scheduled flight.

Clark apparently tested the limits of what government business is. On May 26, 2011, she went on a one-day trip to a town hall meeting in Cranbrook. This was during her honeymoon spring and she was planning for a fall election, which was eventually scuttled. Kootenay-Columbia Conservative Member of Parliament David Wilks attended the town hall meeting. So did Doug Clovechok, who was hoping to run for the Liberals in that election.

He was finally, officially nominated on July 31 at a party meeting in Golden. That was the middle day of Clark's three-day area tour. She was there and posed for photos with Clovechok. Blackcomb's bill was $7,741.99.

Clark made four trips in three weeks for $38,600 on Blackcomb Aviation during July 2012, including a one-day, $15,470.07 trip on July 19 to Regina and Edmonton. She met Saskatchewan Premier Brad Wall during the first stop and Alison Redford, the Alberta premier, on the second. The meeting with Redford was called the "Secret Summit," because Clark was whisked in and out of the Alberta Legislature with no notice or fanfare. Along for the ride were deputy minister Neil Sweeney, aide Gabe Garfinkel and the bodyguard.

Such is life aboard charter jets, which use a private terminal on the south side of Vancouver International Airport.  

#LiquorLeaks examines Clark's "liquor cabinet"

When Premier Christy Clark shuffled her cabinet on Sept. 5, she also refreshed her "liquor cabinet." 

Several cabinet ministers and MLAs are involved in one of the government’s biggest, most controversial priorities of 2012: to sell the warehousing and distribution operations of the Liquor Distribution Branch to a private operator. 

No business plan has been published by the government to justify the Feb. 21-announced breakup of LDB, which made a $911.1 million profit for government coffers on $2.89 billion of sales last year. 

Much has been written about Exel Logistics, which operates Alberta’s private since 1994 system and hired high-powered BC Liberal insiders Patrick Kinsella and Mark Jiles to lobby for the B.C. gig since 2005. No other company that submitted bids by the June 29 deadline has been as aggressive as Exel, which originally wanted to do a private-public partnership and skip a public tendering process altogether.

Clark is head of cabinet and, what I call, the liquor cabinet. Kinsella was co-chairman of her successful 2011 leadership campaign, a guest at her swearing-in on March 14, 2011 and a guest at the B.C. Place Suite for the Sept. 30, 2011 reopening of B.C. Place Stadium. Kinsella ended his lobbying registration for Exel on March 30, a month before the request for proposals was published.

Rich Coleman (upper right) is the minister responsible for the Liquor Distribution Branch and Liquor Control and Licensing Branch. His business card became more crowded in the shuffle with the designation of Deputy Premier. Coleman's name is mentioned in the Exel "Project Last Spike" internal memo: company vice-president Scott Lyons told his superiors that the company's relationship with Coleman could be used to influence the writing of the RFP. 

Mike de Jong (middle right) replaced the resigned Kevin Falcon as Finance Minister and was given the responsibility to “lead the work on the possible asset sale,” according to a Finance Ministry representative on condition of anonymity. De Jong was the waffling Attorney-General when Dave Basi and Bob Virk made surprise guilty pleas on Oct. 18, 2010 after the ex-Liberal ministerial aides accepted $6 million of taxpayers' money to pay their legal bills. A still-secret transaction that the Auditor-General John Doyle and intervenor/ex-Liberal MLA John van Dongen are seeking a court order to bring to daylight. (Hear more about the controversial sale of BC Rail to CN in The Investigators documentary here.)

Ben Stewart (lower right) replaced Margaret MacDiarmid as the Citizens’ Services Minister. Stewart is responsible for government-wide buying and contracting and it is the staff of his ministry who are handling the LDB tendering process. Three executives of the Coleman-overseen LDB (including acting general manager Roger Bissoondatt) and four executives from the Stewart-overseen Citizens' Services are on the evaluation committee, weighing the bids from four companies (Exel, ContainerWorld, Kuehne + Nagel and Metro Supply Chain Group).

“They will continue in their current roles in the procurement process,” said the Finance Ministry representative.

”Given Minister's Stewart's previous involvement in the industry, out of an abundance of caution and to ensure no perception of conflict, responsibility for this project was transferred to the Minister of Finance.”

Let’s not pussyfoot around the issue, eh? Stewart is both a client of B.C.’s LDB and Exel’s Alberta monopoly, Connect Logistics, through his family company Quails’ Gate Estate Winery of Kelowna. He was also lobbied by Lyons. Stewart advocates private distribution and said in the Legislature on May 7, the day before my story exposing Exel’s "Project Last Spike" broke and NDP critic Shane Simpson stood up in the Legislature during Question Period to demand answers from Coleman. 

Coincidentally, I spoke with Stewart on Sept. 4, the night before he was sworn into cabinet. (Stewart gave no hint about his imminent job promotion). Here's what he said about Exel's push to privatize: 

“We probably only have a very very tiny piece of the utilization of that, we've been working with LDB successfully almost 25 years and this new model is probably comparable a little bit to the Alberta model... 
“Sometimes it takes the initiative of some catalyst to make sometimes these things to happen. I think that Exel may have asked the question. Is the province willing to consider it. They knew that there was other competitors. There's people that house and store wine for imported wines and other products here int he province. The LDB doesn't have the capacity or the interest to be becoming a warehousing depot is what I think Exel is probably more their field of expertise.
“My only point of contact is I knew the distribution systems around the country and other parts of the world because of my background. That's the only reason I probably talked to Scott at any point and was supportive of the concept that if they thought they could do it better, we should look at an open process.” 

Stewart told me he had spoken with Lyons over a year ago. Lyons, we found out in July, had also spoken with Stewart’s brother, Tony Stewart. 

“I think Scott mentioned that he had met with my brother, my brother is responsible as CEO of our company to essentially maintain and do what's necessary to run our business.
“When I chose to go into politics I completely moved everything into a blind trust and have a friend that actually is the trustee, I have no contact at all with the winery. I don't know what my brother is doing in terms of whatever discussions. On a personal note we see each other for Christmas and family events, but it's not about the business. I have the trust in the trustee and him and the board of directors I put in place beforehand to make certain these things were done in a proper manner before I considered giving up a business that I'd spent 35 years creating.” 

Meanwhile, De Jong chairs Treasury Board, the 10-member committee that will approve the winning bidder in mid-October. Coleman and Stewart are also on Treasury Board. Same goes for Jobs and Tourism Minister Pat Bell, Ex-Finance Minister (and co-father of the Harmonized Sales Tax) Colin Hansen and John Les, who was liquor minister in 2005. Exel lobbyist Mark Jiles held several meetings with Les from 2005 to 2007, at which Les apparently expressed his encouragement. De Jong's vice-chair on Treasury Board is Justice Minister Shirley Bond, who was lobbied on Aug. 25, 2011 by Lyons in a meeting at the Premier's Vancouver Office and signed reports to Treasury Board and Cabinet supporting the Exel proposal to privatize LDB's logistics. Earlier that summer, Lyons had lobbied another Treasury Board member, Ida Chong, who helped connect Lyons with Tony Stewart. 

#LiquorLeaks seeks more from Les

How’s this for a coincidence? 

Treasury Board is the 10-member cabinet committee that will receive the recommendation this fall from the joint Liquor Distribution Branch and Citizens’ Services Ministry committee deciding which private company will take over warehousing and hauling of liquor in B.C.

In the last week of August, no fewer than three members of Treasury Board announced they will not run for the ruling BC Liberals in the scheduled May 14, 2013 provincial election. Kevin Falcon quit as finance minister. Children and Family Development Minister Mary McNeil and John Les, Parliamentary Secretary to Premier Christy Clark, also said this was their last term in office. If Randy Hawes follows around Sept. 10, that would make four lame ducks on the committee that decides provincial spending, unless Clark makes wholesale changes with her next cabinet shuffle. The free enterprisers are fleeing the enterprise, with all signs pointing to a Liberal defeat and NDP victory. 

While Energy and Mines Minister Rich Coleman (below left) is the one currently holding the booze portfolio (and a seat on Treasury Board), Les (below right) was more involved in the early days of secret talks with Exel than he appears. Far more involved. 

From 2005 to 2007, in fact, then-unregistered lobbyist Mark Jiles met on several occasions with Les to promote the virtues of his $5,000-a-month client Exel. Les was a supporter of B.C. moving to an Alberta-style system. And it just so happened that the operator of the Alberta monopoly was a private company (and still is) called Connect Logistics, which is owned by Exel. 

Les played the role of a passive matchmaker, suggesting that Jiles and Rob Madore, the former Connect Logistics general manager, forge an alliance with the B.C. Government and Service Employees’ Union. George Heyman was then president and Jeff Fox a director. Without workers agreeing to a private warehouser, nothing would happen.

Les was warm to the idea of Exel taking over, but opposed outright the privatization of LDB’s retail chain. LDB general manager Jay Chambers initially opposed selling off the logistics end of the business. Les was no fan of Chambers and thought it might be a good idea to replace him. Chambers stayed put until his surprising June 6 resignation, which was kept secret for eight days. 

When Chambers finally did an interview after joining the Motor Vehicle Sales Authority of B.C. in July, he claimed the career move was unrelated to the LDB privatization.

LDB privatization never really gained traction under former Premier Gordon Campbell. But when Christy Clark came to power in 2011, the game changed. The HST was defeated, the government was in a budget bind and it certainly didn't hurt Exel that its lobbyist Patrick Kinsella was Clark's key Liberal leadership campaign strategist.

What about Les? After numerous interview requests since May, he finally responded to me the day he announced his resignation. I know Les knows a lot about this file, but he doesn’t want to answer any questions. Following is our Aug. 30 email exchange. 

From: Bob Mackin  10:19 AM 

To: Les.MLA, John; Les, John 

Subject: media request 

Hello Mr. Les,
Would you be available for an interview today or tomorrow to discuss your time on the LDB file, particularly 2005 to 2007 when you were being lobbied by Mark Jiles on behalf of Exel? I know that you met regularly with Mr. Jiles on this matter during that period of time. 
Sincerely,
Bob Mackin
Business in Vancouver

From: Les, John
Date: August 30, 2012 10:20:30 AM PDT
To: Bob Mackin
Subject: RE: media request 

No, sorry. The current Ministers responsible speak for government on this issue.

From: Bob Mackin
Sent: August-30-12 10:23 AM
To: Les, John
Subject: Re: media request 

Thank-you for the reply, but the questions I have are specific to your time on the file and those questions are ones that only you would be able to answer. 

From: Les, John
Date: August 30, 2012 10:30:51 AM PDT
To: Bob Mackin
Subject: RE: media request 

Sorry. Same answer.

By the way, a delegation from Exel toured the LDB’s headquarters and warehouse on Wednesday with Citizens’ Services official Pelle Agerup and fairness monitor George Macauley. LDB provided me lists of attendees of the May 9 industry information meeting, the May 10 proponents' meeting and tours of the Kamloops LDB warehouse. Citizens' Services provided the list of bureaucrats who decided the shortlist of four and are deciding the recommendation to Treasury Board. Citizens' Services, however, wants to keep the list of the Aug. 29 Exel tour group secret, citing a laughable wish to guard the "integrity" of the process.

Remember, folks, this is a process in which no business plan has been published. It is a process that appears to be driven by the Liberal-connected lobbyists for a unit of one of the world's largest corporations. A process in which the leading bidder speculated internally that it could use its connection to the minister responsible to influence the writing of the request for proposals in its favour or buy-out a related competitor to achieve the same outcome. It is a process that the NDP has likened to the scandalous BC Rail privatization of 2003. 

#LiquorLeaks reveals Exel expansion strategy

Marrying British Columbia's liquor logistics monopoly with Alberta's, where Exel's Connect Logistics has operated since 1994, is not the only reason why an arm of the world's biggest third-party logistics corporation hired B.C. Liberal insiders Mark Jiles and Patrick Kinsella to lobby the B.C. government since 2005. It is not the only reason why Exel considered using its relationship with liquor minister Rich Coleman to try and influence the tendering process.

Exel and its parent, Deutsche Post DHL, have bigger ambitions. They are thirsty to become the major player in the movement of beverage alcohol products around North America and privatizing B.C.'s warehousing and distribution is key. 

In the U.S., beer, wine and liquor stores brought in $44 billion revenue and employed 171,892 at 41,373 businesses, according to IbisWorld market research. Statistics Canada figures for 2009 show the retail booze industry was worth $17.4 billion north of the border. The wholesale and distribution side of the Canadian industry was worth $3.9 billion in 2009, according to StatsCan.


The latest instalment in the #LiquorLeaks series, excerpted from the Exel Logistics Oct. 6, 2009 Project Last Spike internal memo, is the Exel expansion strategy in a nutshell. 

Strategic Rationale 

The LDB is a provincial agency responsible for the importation, distribution and retailing of beverage alcohol in the province of BC. Exel serves the Alberta Gaming and Liquor Commission (AGLC) through its member company Connect Logistics. This pursuit is consistent with Exel's desire to grow its alcohol beverage distribution business within Canadian provinces and US states where the importation and distribution of beverage alcohol is controlled. 

In April 2008, the Canadian operations of DHL Express, DHL Global Forwarding, Exel, and ETS conducted a CIP (Bob note: capital improvement plan) workshop. The workshop developed strategies to pursue opportunities that leverage the capabilities of the DHL Deutsch Post companies. One strategy formulated was the Importing of Beverage Alcohol Finished Goods into Canada. Expanding the LDB mandate to offer importing and consolidation services for products destined to other provinces in Canada is a major step in executing this strategy. It combines the service offerings of DHL Global Forwarding, Exel, and ETS.

Exel's Ohio-based Americas division boasts $4.1 billion in revenue, 42,100 workers at 456 facilities encompassing 111 million square feet. That's equal to 1,031 hectares; imagine one big warehouse, two-and-a-half times the size of Vancouver's Stanley Park. In 2011, it sold ETS to Hub for $83 million, but industry observers say its liquor industry strategy remains otherwise the same. 


A company this big isn't infallible. Exel Inc. was fined $283,000 by the U.S. Department of Labor for workplace health and safety violations in Pennsylvania. Exel is appealing. Various Exel-affiliated companies were named in a massive European Commission antitrust investigation. The DHL and Exel companies escaped fines because they cooperated with investigators. Closer to home, there was the February 2011 closure of a Burnaby, B.C., warehouse operated by Exel-owned Summit Logistics on contract to Canada Safeway. One person died in the decommissioning, almost 400 people were laid-off and their pensions were much less than what the workers expected.  

Full coverage in Business in Vancouver

Logistics giant targets lucrative LDB contract

NDP blasts liquor privatization process

Alberta’s experience: product diversity booms, costs balloon

Industry irked over Liberals' push for liquor privatization