Van Dongen's got the goods

A bombshell in the British Columbia Legislature on March 11!

Abbotsford South independent MLA John van Dongen said in Question Period that he has obtained a copy of the $6 million indemnity agreement from October 2010 for Dave Basi and Bob Virk. The ex-Liberal aides maintained their innocence in connection with the BC Rail privatization scandal... until a plea bargain that included the taxpayer-funded absolution of their legal bills, contrary to government policy. 

Van Dongen was an intervenor in Auditor General John Doyle's failed legal bid to get a copy of the agreement. Here is van Dongen's exchange with Attorney General Shirley Bond, in its entirety. 

van Dongen

PAYMENT OF LEGAL FEES IN B.C. RAIL COURT CASE 

J. van Dongen: For the last 2½ years the government has disclosed as little as possible in order to hide the facts about the controversial decision to forgive and forget $6 million legally owing to the province by Dave Basi and Bob Virk. 

The $6 million write-off actually happened during this term of government. I now have a copy of the Basi and Virk indemnity agreement signedlegally owing to the province by Dave Basi and Bob Virk. The $6 million write-off actually happened during this term of government.Mr. Speaker, I now have a copy of the Basi and Virk indemnity agreement signed by the Tamara Vrooman, Deputy Minister of Finance. Paragraph 9 says that every advance of public funds to the defence lawyers "constitutes a loan to the indemnified person." A loan. The funds advanced were in the form of a loan. Now, when someone gets a loan from a credit union or bank, that sets up a debt. That sets up a liability. That establishes a legal obligation from the borrower to the financial institution. So starting in 2005 this government advanced public funds by way of two loans to two political staff, and by October 2010 Basi and Virk had accumulated a debt to the province of $6 million — a $6 million loan. Section 18(3) of the Financial Administration Act states: "A debt or obligation to the government may not be forgiven without the approval of the Lieutenant Governor in Council if the amount forgiven is $100 000 or more." 

Mr. Speaker, I am asking the Minister of Finance to explain to this House how Deputy Minister Graham Whitmarsh magically wiped out two loans, two debts totalling millions of dollars, without actually executing the transaction under section 18 as intended by this Legislature. 

Hon. S. Bond: The member opposite continues to bring this issue to the Legislature, and I continue to provide exactly the same answers to him every single time he asks the question.As the member opposite well knows, in fact, recently there was a court case in which the member was an intervener in that process. In fact, what was the outcome of that? That in fact the judge made it very clear that the government of British Columbia had met all of the commitments that it said that it would in terms of release of information. He was very clear about the fact we said we were going to provide documents, and we did exactly that. 

When it comes to the issue of the decision made, we have said over and over in this House that the Deputy Attorney General provided a statement at that time in which he said: "No one outside the legal services branch, myself and the Deputy Minister of Finance had any knowledge…or involvement. For clarity, neither the special prosecutor nor the Attorney General had any knowledge of the matter or involvement in this."Since the time that the indemnity was altered, we have gone to Stephen Toope at the University of British Columbia. He has provided us with a number of recommendations to ensure that this process does not occur again. We have accepted those recommendations and made those changes. 

Mr. Speaker: The member has a supplemental. 

J. van Dongen: I'm disappointed in the minister's answer, and I'm also disappointed the Minister of Finance didn't answer because he was the Attorney General at the time the deal was done.The government has two storylines on this issue, both of which they are attempting to keep well hidden. There is the real story. And for the real story, I ask the Attorney General to read the actual indemnity agreements signed in 2005. I ask her to read the October 14, 2010, Basi and Virk agreement signed by then Assistant Deputy Minister Richard Fyfe and, third, the October 2010 public statement that the minister referenced, emphasizing three times Basi and Virk's legal liability to repay. 

The second storyline, which I call the fictional storyline of this government, can be viewed by the Attorney General by reading the following documents: the April 19, 2011, letter to Mr. Edwardson, also signed by Assistant Deputy Minister Richard Fyfe; the e-mail of May 4, 2012, to certain members of the press gallery that no one in the Justice Ministry wanted their name attached to; and the Attorney General might even be able to find the so-called modified indemnity agreement signed by Graham Whitmarsh… 

Mr. Speaker: Could the member pose the question, please? Could you pose the question? 

J. van Dongen: …as claimed by the government.I'm asking the Attorney General to examine the glaring inconsistencies between these two sets of documents. My question to the Attorney General is: how is it that the Deputy Minister of Finance, Graham Whitmarsh to examine the glaring inconsistencies between these two sets of documents. My question to the Attorney General is: how is it that the Deputy Minister of Finance, Graham Whitmarsh, acting alone, was able to magically and illegally vaporize $6 million of loans to Basi and Virk in direct contravention of section 18 of the Financial Administration Act? 

Hon. S. Bond: While I fully respect the member's opportunities to stand in this Legislature and ask questions, today I ask the member opposite to step out into the hallway if he is going to make the kinds of allegations he is making about senior public servants who are widely respected. To suggest that the Deputy Attorney General or the Deputy Minister of Finance made any illegal behaviour in terms of this, the member opposite needs to shed the immunity of this place, step out into the hallway, provide evidence and stand up to the courage of his convictions to make those accusations in the hallway.

Van Dongen charged Premier Christy Clark with being in conflict of interest in connection with the 2003 tendering. Northwest Territories conflict of interest commissioner Gerald Gerrand is investigating. Gerrand, coincidentally, is connected to donations to the Liberal Party of Canada. Though separate from the BC Liberals, Clark is a loyal federal Liberal. 

Wondering why the big fuss about BC Rail and why you should care? Listen to the CKNW AM 980 documentary from The Investigators for the lowdown on B.C.'s scandal of the century.  

#LiquorLeaks wonders why Christy met Rich on a Saturday?

Below is Premier Christy Clark's agenda for December 2011.

There is only one entry on Dec. 3 for an hour-long Saturday meeting with Rich Coleman.

There is no clue about the reason for the meeting. The location was censored. We don't know if anyone else attended.

Politicians often appear at weekend community festivals and parades and fundraising banquets. But I have read enough agendas of politicians over the years to know that a weekend meeting among senior members of a provincial cabinet is out of the ordinary. Frankly, it is unusual. Especially for Clark, who has a hockey-playing son that deserves her attention on weekends.

Why is Dec. 3, 2011 an interesting date? A Cabinet Concept Paper dated Dec. 1 is about "Liquor Retail and Distribution Model Options." Then-liquor minister Shirley Bond signed the report on Dec. 5. Bond had met on Aug. 25, 2011 with Exel vice-president Scott Lyons and lobbyists, including Mark Jiles and Rob Madore, after previously telling Exel the government wasn't interested in privatization. 


The liquor portfolio has never really strayed far from Coleman, who enjoys his whiskey. It keeps finding its way back to his desk. Coleman regained the responsibility on Feb. 8, 2012. 


Then, 13 days later, the liquor logistics privatization was announced in the Feb. 21, 2012 budget. 


Almost three months after he met with Clark on the first Saturday in December, Coleman met with Dennis Chrismas of ContainerWorld and his lobbyist, Mike Bailey on the first Friday of March. ContainerWorld is the only B.C.-headquartered and owned company among the six seeking the LDB monopoly, yet it has an interesting association with Exel.


Learn more about Exel's Long March to Control B.C.'s Liquor Distribution here, from The Tyee.

Premier Christy Clark's Agenda Dec. 2011

#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