#LiquorLeaks salutes a New Champion (in name only)

Q: What's the easiest way to become a champion when it looks like you're the captain a losing team?

A: Go to an event where it's on the marquee and bring home the T-shirt!

Premier Christy Clark is returning to China, this time for the World Economic Forum's Annual Meeting of the New Champions 2012 in Tianjin, China, to speak on a natural resources panel and host a wine-and-cheese party on Sept. 11.

There are two natural resources-related panels on Sept. 11 (The Future of Energy and The Future of the Resource Industry), but neither the speakers nor the times are listed on the program. The day's climax is a speech by Chinese Premier Wen Jiabao, whose Communist Party governs a country with an atrocious human rights record, where many of the citizens view the one-party, authoritarian state as a bullying force.

WEF in Tianjin is nicknamed "the Summer Davos" in reference to the Swiss town where the World Economic Forum meets every January. In 1992, NDP Premier Mike Harcourt and Finance Minister Glen Clark (the future premier who is unrelated to the current one), attended WEF in Davos. WEF even has a Centre for Public-Private Partnerships. Here is the WEF FAQ, which includes the following nutshell explanation for its activities:

"The World Economic Forum brings together leaders in business, politics and society for reflection and connection to generate ideas and proposals, bridging countries and cultures to address the issues affecting our world. We also bring the very best minds and experts to provide the necessary insight to allow leaders to make decisions that can bring about change for the better. Conferences like the Annual Meeting in Davos and regional summits are an occasion for leaders to outline major challenges and define strategies to address them.

WEF is not to be confused with the Bilderberg Group, which is cloaked in secrecy and does nothing to discourage millions of skeptics that reasonably wonder if executives of large corporations are lobbying invited government leaders behind closed-doors to change public policy and influence the awarding of contracts. You may remember Gordon Campbell attended the 2010 Bilderberg meeting in Spain during what was his last spring as Premier of B.C. The conclusions of the Conflict of Interest commissioner left many in B.C. shaking their heads.

But there are a few common elements. The WEF website's media guidelines say the Plenary Hall, Davos and Lugano rooms are open to press and on the record, one-on-one sessions are open on a reservation basis, but "all other sessions are off the record... members of the reporting press are not allowed in these sessions."

Some of the world's biggest corporations are involved as partners of the WEF. Participation in the WEF allows the 100 "strategic partners" to gain business intelligence and promote their goods and services to potential new customers, including governments. Or, as the WEF website says: 

"They believe in the power of multistakeholder interaction to drive positive change and work closely with the Forum to help shape the industry, regional and global agendas... Strategic Partners make a tangible impact on global issues and society by contributing to better policy-making, informing business decisions, sharing best practices and engaging stakeholders beyond commercial objectives."

In January 2011, the Sunlight Foundation blog noted how the annual WEF in Davos is a haven for high-powered lobbying. 

"Davos isn't just a place where the wealthy, influential, and powerful get together to swap ideas. It's also a place for the heads of business to lobby the most influential policy makers and regulators in a confined atmosphere."

Don't forget, the Tianjin version of WEF is called "the Summer Davos" by its promoters.

Some of the WEF partners are magnets for controversy:

Adecco Group, whose Norwegian arm was involved in a major scandal uncovered by domestic media.

Bain & Co., which has a deep connection to U.S. Presidential candidate Mitt Romney.

Barclays, the British banking giant involved in the massive LIBOR interest rate-rigging scandal.

Booz & Co., which offers consultation services to the global aerospace and defence industry.

BP Plc., whose Deepwater Horizon oil disaster in the Gulf of Mexico is costing $38 billion.

Deloitte, the accounting firm which is alleged to have had a bit part in the Standard Chartered money-laundering scandal.

Ernst & Young, which is being sued by Hong Kong's securities regulator for failing to disclose documents. 

Goldman Sachs, called "Government Sachs" and "Premier Theme Park of Finance" by the New York Post. 

HSBC, under fire in the U.S. for allegedly helping launder billions of Mexican drug cartel dollars. 

Standard Chartered, which is in trouble for hiding billions of dollars of transactions with Iran.

Dow Chemical Co., which was criticized for sponsoring the London Olympics by the London Assembly. 

Clark will be familiar with WEF partner Accenture, which took over part of BC Hydro in a privatization deal brokered almost a decade ago by her 2011 BC Liberal leadership campaign backer and lobbyist Patrick Kinsella.

And then there's Deutsche Post DHL. 

Perhaps you've heard of them? This WEF partner is the German parent company of Liquor Distribution Branch suitor Exel Logistics and also the parent company of Giorgio Gori. Gori is an Italian company that has a tight business relationship with ContainerWorld that, according to Exel's own internal documents, includes an option to buy the giant Richmond warehouse. ContainerWorld is also seeking the LDB contract. Until March 30, Clark's queenmaker Kinsella was registered as a lobbyist for Exel.

Various arms of Deutsche Post DHL, including Exel, were involved in price-fixing cartels, but the European Commission didn't levy the company fines because it cooperated.

Here is Deutsche Post DHL's profile on the WEF website:

Deutsche Post DHL is the world’'s leading mail and logistics services group. The Deutsche Post and DHL corporate brands represent a one-of-a-kind portfolio of logistics (DHL) and communications (Deutsche Post) services. The group provides its customers with easy-to-use standardized products as well as innovative and tailored solutions ranging from dialog marketing to industrial supply chains. About 470,000 employees in more than 220 countries and territories form a global network focused on service, quality and sustainability. With programmes in the areas of climate protection, disaster relief and education, the group is committed to social responsibility. In 2011, Deutsche Post DHL generated revenues of 53 billion euros. The postal service for Germany. The logistics company for the world.

Don't be surprised if Deutsche Post DHL's big-wigs and heavy-hitters are in Tianjin at WEF on Sept. 11, coinciding with Clark's visit. The company announced in July an aggressive expansion in China and wants to derive a third of its business from China by 2017. 

#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 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: 

Business in Vancouver

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

#LiquorLeaks -- the influence of Rich

Minister of Energy and Mines Rich Coleman, the Fort Langley-Aldergrove member, is in his fourth term. The B.C. Liberals' house leader's resume includes stints as Solicitor General, Minister of Social Development and Minister of Forests and Range. 


But they keep bringing him back into the liquor and gambling portfolio.
His latest tenure began Feb. 8 -- just 13 days before the government announced the privatization of the B.C. Liquor Distribution Branch's logistics in the Feb. 21 budget. 


Coleman also had the liquor duties in October 2009 when Exel Logistics vice-president Scott Lyons penned the Project Last Spike internal memo that serves as the playbook for the company's plan to privatize B.C. liquor distribution and warehousing. The memo discusses using Exel's relationship with Coleman to influence the writing of the request for proposals in Exel's favour. Exel concedes that ContainerWorld might try the same tactic to further its goals or to act as an ally of Exel's. (Note: I have made repeated requests to interview Coleman, but I have been denied every time.)

In this edition of #LiquorLeaks you will see the entry about Coleman from the list of "key contacts" targeted by the Exel pursuit team.

ContainerWorld -- a private bonded warehouse on contract to LDB -- is listed as a "competitor," but the Exel memo also says it has a longstanding relationship with Italian alcohol logistics company Giorgio Gori whereby Gori would someday purchase ContainerWorld. Gori is conveniently owned by Deutsche Post DHL, the same parent company as Exel. Therefore Gori and Exel are sister companies!


In the memo, Exel also ponders buying Richmond-based ContainerWorld for $24 million and concludes "an acquisition approach is overall economically viable" to eventually take over the LDB contract. 

Key Contacts (from Exel's Project Last Spike memo, Oct. 6, 2009)

Name:  

Rich Coleman

Title:  

Minister of Housing and Minister Responsible for Liquor and Gaming 

Who owns relationship?:  

Mark Jiles

Coach/Influencer/Decision Maker/Gatekeeper: 

Decision Maker

Past Experience?:  

Strong cabinet minister. Premier looks to Rich, and takes on toughest portfolios -- softwood lumber, housing

Key concern?  

-Desire to transform system. Likes Alberta system, wants less government control 

-He is long in the tooth. He does not want to stick head out too far 

-Wants to understand why it is good for consumer, government, and union-Will sell it, but needs the bullets 

-Public perception 

Any relationship with competitor (Y/N)? 

Yes - Dennis Christmas (sic) of ContainerWorld is a contributor

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