Saturday, May 22, 2010
A tip o'the tuque to Vancouver Sun for this backgrounder on BC Rail negotiations
BC Mary comment: Copyright law protects intellectual property as belonging to its originators. Copyright law is a good law, confirming that benefits arising from the sale of an intellectual property, such as a published story, accrues to the one(s) who wrote it. As a former publisher, I wholeheartedly agree with that position.
Occasionally, a story will surface which holds an enormous benefit to the public at large. And in this particular case, this information is almost 6 years old, and may be largely forgotten. It is also Exhibit 1 in the most significant trial in B.C. history. I want to present these views again so that the public, at this critical time of the BC Rail Corruption Trial, may benefit from the understanding it provides.
Exhibit 1 in the BC Rail trial ..
An issue in the trial is whether the accused violated their oaths of office by leaking information.
As the column was published after the raid (when one of the accused was fired and the other suspended), McCullough presumably wants to make the point that confidential information was leaking from other sources as well.
CN, Liberals finally pry BC Rail okay out of competition bureauVancouver Sun
Tue Jul 6 2004
Byline: Vaughn Palmer
Column: Vaughn Palmer
Source: Vancouver Sun
VICTORIA - When the B.C. Liberals announced CN Rail would take over the government-owned BC Rail last November, they had no idea it would take more than half a year to secure the necessary go-ahead from the federal competition bureau. The government planned and budgeted on a scenario that had the $1-billion deal signed, sealed and delivered inside of four months. CN had in mind a similar timetable. By late spring the U.S.-based railway was bristling at the delay and hinting it might walk away if approval were not forthcoming forthwith.
Nevertheless the bureau took its time scrutinizing the deal, agreeing to go along with it only late last week after a lengthy give-and-take with the railway, the government, shippers and other interest groups.
The holdup was owing to it being "a very complex transaction," according to the bureau, which by law conducts its affairs almost entirely in confidence.
But behind the closed doors of that seven-month long process, I gather there was a major struggle to rectify concerns that the CNR-BCR merger would place B.C.-based shippers at the mercy of a monopoly carrier.
The bureau, mind, does not concern itself with monopolies per se. BC Rail is already the only railway in some communities, CN the sole carrier in others. The merger would not affect the competitive situation (or lack thereof) in those communities.
However the bureau did highlight two ways in which competition could be significantly reduced by the CN takeover of BC Rail operations.
The most obvious involved grain shipments from the Peace River country. Currently shippers can choose either railway and they are able to play one against the other. After the merger, they would be in a take-it-or-leave-it situation with CN.
The bureau's remedy was to insist that CN provide written guarantees against over-charging as well as from subtler forms of discrimination, such as manipulation of schedules and/or the supply of grain-carrying hopper cars.
The second area of concern involved shipment of lumber beyond B.C.'s borders. Currently shipments that start out on the BC Rail network can complete their journey to U.S. markets via any one of four carriers -- CN, Canadian Pacific, Burlington Northern or Union Pacific.
There was a concern that once CN got control of the BCR, it would discriminate against the other three.
The B.C. Liberals, as part of their negotiations with CN, insisted on an "open gateway" for goods (forest products, overwhelmingly) arriving in Vancouver on the BC Rail network. CN would have to guarantee fixed and fair rates for competing carriers through to the U.S.
The competition bureau seized on the open gateway agreement as a starting point, then added additional protection. CN will not only have to maintain an open rates, it will have to guarantee travel times in hours for all goods moving along the network.
If it fails to keep to the delivery schedule, it will be subject to financial penalties, to be paid into a trust fund for future upgrading of the BC Rail line. As with the grain cars, CN will also have to demonstrate on a regular basis that it is not discriminating in the availability of rail cars for transporting forest products.
CN, needless to say, was not keen to adopt those provisions. Neither did it want to court outright rejection, because the entire deal with the government was contingent on getting a green light from the bureau.
The bureau, for its part, prefers to obtain consent for any remedies it proposes.
The alternative is to send the whole thing to a formal public hearing before the separate competition tribunal, a lengthy and expensive process where the bureau's view does not always prevail.
So on that basis, there was some give and take. The bureau pursued what it regarded as the most important safeguards and met the concern of shippers only halfway on others.
The government was also monitoring the process and at one point made a significant concession to help the deal along.
B.C. has agreed to underwrite the additional cost of one of the protections for grain shippers. The measure, a reduced rate for volume shipments, may not be invoked. It is contingent on the continuance of similar incentives elsewhere in Western Canada. But if it does kick in, then the province would be on the hook for up to $3 million as a payback to CN.
In the end, all of the aforementioned safeguards were written into a formal consent agreement with CN.
The bureau then filed the agreement with the competition tribunal as a formal demonstration that it had obtained remedies to its concerns about the potential reduction in competition.
Next step is the handover, probably in the next couple of weeks.
The province gets its $1 billion. CN gets the railway.
And then the two sides get on with delivering the reputed benefits of the deal, preferably, as the Liberals would have it, before the coming provincial election.
Read the complete post at http://communities.canada.com/vancouversun/blogs/viewfromtheledge/archive/2010/05/21/exhibit-1-in-the-bc-rail-trial.aspx
This is it! This is Vancouver Sun's commentary for today -- Exhibit 1 in the BC Rail Corruption Trial -- and I think it's a valuable one ... eh?
You have state that your July 2004 column was:
"....(e)ntered into the court record by defence lawyer Kevin McCullough to show that it contains "highly confidential information...."
Which cannot be argued with.
However, it is also important to remember that you also wrote the following in that 2004 column:
".... behind the closed doors of that seven-month long process (ie. in 2003/4), I gather there was a major struggle to rectify concerns that the CNR-BCR merger would place B.C.-based shippers at the mercy of a monopoly carrier..."
Now, during the time of that 'major struggle' between BC Rail and CN Rail, a certain former BC Liberal Party campaign co-chair was, it turns out, working in the employ of BC Rail. That person, through his company the Progressive Group, subsequently described his duties thusly:
"....Mr. Kinsella was engaged by BC Rail to assist in understanding and interpreting the Core Review Process as to its potential impact on the Corporation. BC Rail sought counsel on what implications, if any, might affect the Crown Corporation's operations and their strategic plan going forward...."
So, given all that, and keeping the header atop your original column in mind, one can only wonder if, perhaps, the defence team also wanted to enter your column into the record so that they can later return to the "major struggle", which included a period in the late spring of 2004 when, as you put it, CNR was "bristling at the delay and hinting it might walk away", in an effort to determine if any person, or persons at BNR and/or from the BC Liberal party worked closely with CNR to help keep that walk-away from happening?
Finally, just to be very clear, absolutely no pre-trial publication bans were harmed in writing this comment. The entire statement from the 'Progressive Group' was issued on Mar 12, 2009, and it was first revealed, not in a courtroom, but rather on TV by John Daly of Global BC. The statement can be read, in its entirety, at Sean Holman's website, here
I've kept up w/BCRgate (2003-today) through BC Mary's very informative and passionate blog!
I've waited 7yrs for May 17, 2010 to start baring fruit!
"What Goes Round Comes Round"
Thank you very much indeed for that huge compliment.
And sometimes, The Legislature Raids also stands a little taller because we could publish RossK's excellent comment which apparently was "killed" (as the Big Guys say) ... i.e., rejected
rejected by Vancouver Sun at Vaughn Palmers very blog. Figure that one out, eh?