"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

Exclusive: Tell us, why Brown petered out of PavCo?

The mystery continues over why Peter Brown suddenly resigned from the B.C. Pavilion Corporation board of directors on Feb. 13.


All signs point to the Howe Street wheeler-dealer being frustrated over B.C. Liberal cabinet members overturning the PavCo recommendation for Telus to be the 20-year, $35 million to $40 million naming rights sponsor of B.C. Place Stadium. But the government wants to sweep it under the rug.


Brown's departure didn't become public knowledge until March 9, a week after Premier Christy Clark was a no-show at a Telus news conference where NDP leader Adrian Dix mugged for photos with the Vancouver-based, Liberal-friendly telecommunications giant's boss Darren Entwistle. 


The Liberals promised that some of the costs of the $563 million, taxpayer-funded renovation would be  paid by sponsorship. When they went into damage control mode, Clark, Finance minister Kevin Falcon and PavCo minister Pat Bell laughably said the deal was not in the best interest of taxpayers and claimed the B.C. Place name was "iconic." Such feeble excuses.


I received, via Freedom of Information, a copy of correspondence between Brown and Falcon, including Brown's Feb. 13 letter of immediate resignation from PavCo.


A key paragraph was censored, under section 13 of the FOI act, which broadly covers "advice or recommendations" for a public body. 


The missing section comes after a line that says: "In almost every case, the government dealt with us and third parties professionally, respectfully and in good faith." It appears Brown was setting up a paragraph in which he was going to give the government a piece of his mind. 


Evidently, the Liberal government is embarrassed to show you and me why one of the party's biggest donors and one of the province's best-known businessmen skedaddled from the Crown corporation.


The official explanation from Brown and Podmore after the news broke in March was that Brown wanted to lessen his busy schedule and that PavCo was transitioning from a construction phase to a marketing phase. Podmore has been in no apparent rush to fill Brown's empty spot at the board table. Nor is he in any rush to tell taxpayers the final price tag for the most-expensive stadium renovation in Canadian history.

Brown's letter was an immediate notice of resignation and, based on the tone of the third paragraph, it indicates that Brown had more on his mind than a desire to lessen his schedule or assist PavCo in evolving from construction to marketing functions. Within the documents below, you might also notice how Brown mentioned he was going to visit the High Commissioner in London? That would be a certain Gordon Campbell, the former Premier of B.C. who appointed Brown to the PavCo board. 


Neither Brown nor Podmore responded to my requests for comment. When will the government come clean, and just tell us the truth?


(The B.C. Lions' season opener at B.C. Place on June 29 against the Winnipeg Blue Bombers. The rematch of the 2011 Grey Cup is sponsored by Telus. Could that be the night the consolation prize, the exclusive telecommunications supply deal for Telus, is announced?)
PeterBrownFOI Mackin

Will the Gendarmes guzzle in Green Timbers?

The RCMP wants a liquor licence for its new billion-dollar-plus regional headquarters at 14200 Green Timbers Way in Surrey.

That's the grand edifice being built under a private/public partnership scheme by a giant French concern. Municipalities already under pressure to sign a 20-year deal to continue RCMP service are fearing the bill for Green Timbers. Burnaby, for example, estimates it could be dinged $1.5 million-a-year for the Surrey HQ. (Read my story in The Tyee here and my story from Business in Vancouver here)

This is the same RCMP whose Sgt. Don Ray got into trouble for drinking on the job. And it's the same RCMP whose Cpl. Benjamin "Monty" Robinson got in trouble for drinking off the job. Both are still employed by the force. Robinson was convicted March 23 of obstructing justice and the RCMP's top B.C. cop, Craig Callens, says he's trying his darnedest to fire Robinson. Ray was found to have had "nooners" in the lie detector suite and enjoyed wobbly pops on the job. His discipline included transfer from Alberta to B.C. He may even get to work in Surrey at the new headquarters.

"The intent of the proposed liquor primary license is to provide liquor service only to Commissioned Officers, Non-Commissioned Officers, civilian members, public service employees (RCMP personnel), and their adult guests," the City of Surrey planning and development report says. "The proposed liquor primary license will operate like a private club for RCMP personnel. There will be approximately 2,700 employees at this location."

If the licence is granted as-is, hours would be 11 a.m. to midnight, Sundays through Thursdays, and 11 a.m. to 2 a.m. Fridays and Saturdays, and the maximum permitted capacity would be just shy of 1,200.

The report says E Division already has a liquor primary licence at its officers' mess in the existing headquarters in Vancouver. The nearest off-campus bar in Surrey is Amber Jack's Taphouse, 1.2 kilometres away at 9850 King George Blvd.

"It should be noted that the person capacity requested on the Liquor Control and Licensing Branch application is 1,198 people, and that the seating capacity proposed is 561 seats. As the building is currently under construction, the total person capacity of 1,198 people is subject to final approval of the floor plans," says the report.

An unidentified area resident called Surrey city hall to express concern "about recent media publications of allegations of officers driving drunk, causing crashes and injuring civilians. This caller was concerned about providing a liquor establishment for the specific use of officers."

The report says RCMP mess establishments are insured and those who've had one-too-many can be supplied taxi chits.

Surrey city council decided June 25 not to hold a public hearing. Mayor Dianne Watts said she is not opposed to liquor being served at special occasions, such as formal regimental dinners, but not on a daily basis. So now the matter is referred to the Liquor Control and Licensing Branch, whose general manager is Karen Ayers. Her boss is liquor minister Rich Coleman, who just so happens to be an ex-RCMP officer. He was profiled in Vancouver Magazine in 2009, which included photos of Coleman in RCMP red serge and under a stetson.

What do you think? Should the City of Surrey allow the RCMP to have what would essentially be a sanctioned beer hall? Should the long arm of the law be allowed to bend an elbow at the workplace? You can let Ayers and Coleman know your thoughts.

For the time being, share your comments below.

RCMP Green Timbers liquor licence application

#LiquorLeaks reveals the "Ask Jay" memo

Ten days before he announced his resignation, British Columbia Liquor Distribution Branch general manager Jay Chambers told employees in a memo that he would guide them through the coming months of uncertainty while private companies jockey to take over the taxpayer-owned company's warehousing and distribution.

Chambers even launched an email address to which curious employees could send him questions about the privatization.

Sources have told me post-privatization retirement was on Chambers's mind. (Chambers has not responded to several of my interview requests.) Now he is instead counting the days until his July 6 departure from LDB to start a new job as president of the Motor Vehicle Sales Authority of B.C., a B.C. Liberal-friendly, industry self-regulator.

The full memo is below. (The italicized emphasis is mine.)

Two items of note:

• The list of key dates at the end of the memo shows the negotiated request for proposals' release date as March 30. It was actually published April 30. 
• The body of Chambers's memo says that three companies would be shortlisted by July 20. In the timeline, it says "up to three." The NRFP documents says "up to the top three." On April 30, liquor minister Rich Coleman told reporters at the Legislature that the shortlist could be as short as one company. On May 8, I revealed in Business in Vancouver that one company, Exel Logistics, may have an advantage over the rest because of its intriguing connections to Coleman and the ruling B.C. Liberals.

Without further ado...

June 4, 2012  

Good afternoon,

As you know, the Provincial Government announced in its Budget speech that it would privatize the warehousing and distribution of beverage alcohol in British Columbia.  

Since this announcement, there has been extensive and ongoing media coverage about the government’s privatization plans. I appreciate that you will have many questions about how this decision may impact you and your colleagues.

We have a proud history of serving British Columbians for over 90 years and I often have opportunities to share stories about the long term dedication and commitment of LDB employees.  I am aware that uncertainty is stressful, so in the coming months, I will provide you with regular information updates about these privatization plans. 

Below you will find the timeline of the Request for Proposal (RFP) process. Some of these milestones have already passed. The next significant date is June 29 which is the RFP submission deadline. 

Currently, there are eight parties that have expressed an interest in submitting proposals for this  RFP — Centric Retail Logistics Inc., ContainerWorld Forwarding Services Inc., Dimex Distribution Corp., Exel Canada Ltd., GL Distribution, Green Light Distribution Services Inc., Kuehne + Nagel Ltd. and Schenker of Canada. The three shortlisted parties will be announced on or about July 20. 

It is not known how many of these interested parties will submit a formal proposal by the deadline. Once the RFP submissions are received, they will be reviewed by the RFP team and narrowed to a list of up to three qualified proponents by late July.  

I am sure you will have many questions as we move through this process. During this challenging time, I would like to invite you to send your questions to me at askjay@bcldb.com. These questions and their answers will be shared with all LDB employees on a regular basis.

Jay  

Key Dates  Request for Proposal (RFP) Process

February 21   Provincial government announces distribution privatization plans

February 27   First meeting of RFP team

March 21        BCGEU signs Memorandum of Agreement with the government for post-privatization job security 

March 27        Victoria lawyer, economist and consultant George Macauley is appointed "Fairness Monitor" to oversee the procurement and evaluation process  

March 30        RFP is issued and posted on BC Bid website (http://www.bcbid.gov.bc.ca/open.dll/showDisplayDocument?sessionID=27492391&disID=22111058&docType=Tender&dis_version_nos=3&doc_search_by=Tend&docTypeQual=TN) 

May 9               Industry information session 

May 10             LDB’s RFP information session and warehouse tour of Vancouver Distribution Centre

June 29           Deadline for RFP submissions 

July 20            The provincial government announces RFP shortlist (up to three potential candidates) 

October 16     Announcement of successful proponent 

March 1/13     Agreement negotiated and signed with successful Proponent by March 1, 2013.

P.S.: As usual, I remind kind and loyal readers that I gladly accept envelopes containing credible documents 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

Booze Barn Boss Bolts!

Amid the most controversial privatization in British Columbia since BC Rail was sold to CN Rail in 2003, Jay Chambers, the $200,000-a-year general manager of the Liquor Distribution Branch, dropped a bombshell on June 14 by announcing his resignation.

Here is the memo to staff, obtained by #LiquorLeaks:

"I am writing to advise you of my decision to resign from the Liquor Distribution Branch effective July 6, 2012.

"It is with very mixed emotions that I have made this decision. Words cannot properly describe just how much I have enjoyed being the General Manager of the LDB. However, I have been in this job for over 15 years and I feel that it is time for a change, both for me and the LDB.

"I have accepted an offer to be the President of the Motor Vehicle Sales Authority of BC. In this role I will continue to have the opportunity to work with government, stakeholder associations and consumers. These are the areas I have learned so much about during my time at the LDB and I look forward to being involved in them at the VSA.

"Upon my departure, Roger Bissoondatt, our Chief Financial Officer, will be acting as the General Manager of the LDB until the process of finding a permanent replacement has been completed.

"On a personal note, what I will miss most about working at the LDB is you, the great employees. It has been a pleasure and privilege to work with you. The LDB was a very well-run business when I joined the company and I am very proud to say that, because of your efforts, it continues to be a very well-run business. This is a reflection of the quality of staff that work at the LDB – no individual or single department has been responsible for your success – it is a team effort."

Jay

A source told me there was an employee breakfast at the LDB headquarters in Vancouver where Chambers was serving flapjacks with a smile to workers on the morning of June 14. Workers were flabbergasted when, about an hour later, they received the resignation memo from Chambers.

There you have it. The general manager of the province's liquor retail authority isn't sticking around to complete the taxpayer-owned company's biggest strategic move in its history. He is instead going to oversee the retail of automobiles and trucks. From the drinking industry to the driving industry, in a legal fashion.

Driving away

The Motor Vehicle Sales Authority was established in 2004 as a non-profit, industry self-regulator during Premier Gordon Campbell's first term. MVSA regulates and licences 1,600 dealers and 7,000 salespeople and now reports to Justice Minister Shirley Bond. Former Nanaimo mayor Graeme Roberts is the chairman of an 11-member board. Directors include Langley lawyer and onetime Liberal nominee Rebecca Darnell and Richmond chiropractor Dr. Don Nixdorf, also a Liberal donor. Darnell, according to the Elections B.C. database, donated $14,475 to the BC Liberals since 2005. Nixdorf donated $1,170 since 2006. The most-prominent director is the province's biggest car dealer, Moray Keith of Dueck GM.

Keith is also chairman of the new B.C. Sport Agency, director of B.C. Lottery Corporation, co-founder of the B.C. Lions Waterboys and chairman the 2011 Grey Cup Festival. His Chiefs Development Corporation built the Langley Events Centre. One of the tenants is liquor minister Rich Coleman's constituency office.

Keith donated $95,000 to the BC Liberals via Dueck, $3,825 through the B.C. Automobile Dealers Association and New Car Dealers Association of B.C. The latter entity is a client of lobbyist Mark Jiles, who is also a lobbyist for Exel Logistics, the German-owned, leading bidder for the LDB logistics contract. Exel boasted in an internal memo that it had a close relationship with Coleman and pondered influencing the writing of the request for proposals.

It's a small province, after all.

Doug Longhurst, MVSA's Director of Finance and Operations and Director of Learning and Communications, told me previous president Ken Smith announced his retirement last fall “as his contract required six months notice” after serving eight-plus years.

“The recruiting and advertising was handled by (corporate headhunter) Pinton Forrest Madden," Longhurst said. "The process was directed by a three-member committee of the board beginning in the fall. The process included the normal process of development of the position description for the posting, a long list, a short list and final selection. The position was on the PFM site for two months (plus or minus).”



Coleman did not respond to yet another one of my interview requests. (Yes, "Mr. Coleman Country," I'm like a broken record.) Neither did Chambers reply to repeated requests.

In a statement provided by Coleman's office, the liquor minister claimed the Chambers shuffle is unrelated to the LDB privatization and his departure won't affect the process. NDP critic Shane Simpson is, understandably, in disbelief. Chambers is the key bureaucrat on the file, heading a committee of LDB executives charged with sifting through the bids and picking the best one.

Bids are due June 29 and the shortlist of one to three companies is expected July 20. The winner is expected by October and the contract to be executed by March 2013 -- right before the May 2013 provincial election.

In the summer of 2006, then-liquor minister John Les was pondering a corporate shakeup, including hiring a new GM, at LDB. That never came to fruition. My sources tell me Chambers was planning on retiring from LDB after the logistics privatization was complete.

You can hear his voice in the audio below recorded May 9, 2012 at an industry information session at the LDB Vancouver headquarters about the privatization.

Boost your volume. It's especially entertaining at the 3:30 mark after the first of several pointed questions by Spirits Canada executive vice-president C.J. Helie, who opposes the set-up of an Alberta-style, private monopoly to store and move booze in B.C.

#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