Tuesday, June 01, 2010

 

RailGate Tax Credits ... It's The Indemnity, Stupid

.
RailGate Tax Credits....It's The Indemnity, Stupid.

By RossK

Pacific Gazetteer - June 1, 2010
Reprinted here by kind permission.

After Will McMartin's latest in The Tyee, which demonstrated that BC Rail was not a financial albatross around our necks, a lot of folks started asking just how much we, the people of British Columbia actually got for BC Rail.

The answer, as best I can figure it is.....

Nobody knows, yet.

Why?

Well, according to Vaughn Palmer, writing this time last year, in addition to offering $750 million for the assets, CN Rail originally bid 'aggressively' on the tax credits they would receive for 'buying' BC Rail's so-called 'debts'.

Unfortunately, in the final days before the deal went down Premier Gordon Campbell started making noises about how it wasn't a 'sale', but instead was a 'lease'.

Which could have, potentially, nullified the tax credit given that if CN wasn't 'buying' the railway's assets it also wasn't buying its 'debts'.

Thus, at the very last minute we made CN Rail an indemnification offer they couldn't refuse.

Which, in Wall Street parlance might, be called a:

"Tax Credit Default Swap"


Because, essentially we agreed to insure the tax credits, year-over-year.....At nine percent interest.

Yes, you read that right.

Nine freaking percent.

Compounded annually.

Thus, by 2009 the thing had ballooned so enormously that we 'potentially' owed CN, according to our own provincial government record of public accounts...Hold onto your hat......

$550 million dollars!
(large pdf file here; small google cache listing here)


And I am not making this stuff up (just click on the google cache link above and you will get both the 2008 and the 2009 numbers straight-up; alternatively, go to pg 71 of the massive pdf file).

Now, to the best of my knowledge this issue has not yet been resolved in 2010 (please someone, correct me if I'm wrong, but I have heard/read/seen nothing, and I pay pretty good attention).

Thus, we currently, by my calculations, [are] on the hook for almost $600 million.

I'll leave it the accountants amongst us to figure out when, if this is not resolved, we will actually start paying CN Rail for them  making money off our Railbeds.

OK?


_______
And who, we can only wonder, might have helped grease the wheels to get that indemnity deal rolling on down the tracks at the last minute?......Hmmmmmm......Let's see....Who, precisely, was 'working' for BC Rail in the spring of 2004?.....

.

1 comments:






Gary E said...
Ross Not being a bean crusher using any fancy accounting, early last year I figured that we PAID CN $235 Million to take our railway from us.I also mentioned that this was done by a government that was "best qualified to manage our economy" I even tried to generate some comment on it and provoked the government to prove me wrong. Your math is probably better than mine. But either way this gang of crooks in Victoria not only paid someone to take our railway they effectively dried up monies that were to go to health and education. Until my dying day I will never figure out how the people of BC allowed this to happen and then were lulled into re-electing these thieves TWICE MORE. Oh, and if the people are wondering why these thieves want the HST I think they are looking for money to replace what they have already given away. Simple math. Fork out 1.6 billion to take our railway. Get 1.6 billion from the feds to further screw the electorate.

Comments:
From Vaughn Palmer's column:

SNIP

"Source: Blair Lekstrom, now a Liberal cabinet minister. "Did we break that promise?" he asked on the eve of the last provincial election. "Yes, we did, plain and simple."

Once the Liberal promise-breakers got into the swing of the selling game, they became quite creative, particularly in the way they made use of the railway's estimated $2 billion worth of accumulated losses over the years.

The losses didn't have any value so long as the railway was publicly owned and thus not obliged to pay taxes. But the Liberals realized that if the business were acquired by a private operator, the losses could be mobilized as write offs against corporate and other taxes, and over a number of years.

Only CN, among four initial contenders for the BCR, was prepared to bid on the value of the losses and did so "aggressively.""

SNIP
 
Cryptic messages would not be in violation of the ban would it?
 
Anon-Above--

And what kind of 'information' do you think might have led to such 'agressive' bidding by only one bidder?


_____
Eva - Were you, too, also in the courtroom?

Email discussions, cryptic or otherwise, are not, to the best of my knowledge 'publications'.

If you are willing to share your impressions, my address is:

pacific gazette at yahoo dot ca

______
Mary et al.....

I had an interesting visit from a PAB Bot this morning that has led to a bit of an update to the post cited.

It can all be found here.

.
 
After CN Rail bought BC Rail we had huge accidents including the death of a longterm employee and a record penalty regarding a train accident in the Chekamous.

Looks like the Federal Government has finally acted...

_

Railways to face tougher financial and legal penalties for safety violations

The Canadian Press

VANCOUVER - A steep increase in rail accidents in the last decade has forced the federal government to bring in tough new penalties for railways caught breaking safety rules.

Rob Merrifield, the Minister of State for Transport, says new legislation will be brought in that includes greater financial and legal penalties.

He says the legislation will beef up safety requirements and protect whistleblowers who raise safety concerns.

The changes are the result of a 2008 Commons Committee report that concluded there was a lack of accountability around safety both from Transport Canada and the country's railways.

The committee made 56 recommendations for change after several devastating rail accidents in British Columbia, Alberta, Ontario and Quebec.
 
Thank you, Anon 10:28.

May I just say that there were two (2) former BCRail trainmen killed on that runaway CN engine near Lytton, BC.

One was Don Faulkner from Savonna, who had frequently warned of the dangerous short-cuts being implemented by CN. I'll look up the name of the other man killed ... Tom ...
.
 
Tom Dodd and Don Faulkner remembered ...

www.utubc.com/services_july2006/index.htm
 
Anybody click on that URL for Don Faulkner and Tom Dodd?

What did you think when you saw that message?
 
Quote: Rob Merrifield, the Minister of State for Transport, says new legislation will be brought in that includes greater financial and legal penalties.

But, will they really act? (When is this supposed legislation going to get legislated? This sitting?) Are the loopholes plugged? And, do we believe the Feds? The timing?

Suspicious? Yes.
 
"But, will they really act? (When is this supposed legislation going to get legislated? This sitting?)"

Whoa there Curt, passing legislation, their beloved anti-crime legislation, the elimination of the long gun registry and anything else is secondary to really important stuff like prorogation or calling an election if there is the slightest chance for Harper to pick up a seat.
 
On a hunch today I decided to search for "Mark Jiles" and "Progressive", and what did I find from a year ago today, okay, tomorrow:

http://www.langmichener.ca/index.cfm?fuseaction=content.contentDetail&ID=10720&tID=244 - Karl E. Gustafson, Q.C.

June 2, 2009

"In B.C., the Lobbyists Registration Act has been in effect since 2001. With the enactment of lobbying legislation in Alberta and Manitoba, only three provinces – Saskatchewan, New Brunswick and Prince Edward Island – will remain without legislation to regulate lobbying. Federally, recent amendments were made to the Lobbying Act (Canada) (formerly the Lobbyists Registration Act). The effect of all this legislative focus has been to widen the net of activities that are considered to be “lobbying” and to impose new registration and reporting requirements coupled with more severe penalties for failure to comply.

As Premier Gordon Campbell’s former deputy minister Ken Dobell found out the hard way, failing to register as a lobbyist can lead to serious consequences. Dobell suffered through much negative coverage in the news media as he pled guilty to charges of failing to register as a lobbyist. Similarly, longtime Liberal insiders Patrick Kinsella and Mark Jiles have been the subjects of calls for an investigation into whether they were lobbying without being registered. However, the enhanced new laws to regulate lobbying are not restricted to public personalities. Corporations, corporate executives and their employees and consultants should also be aware of these laws if they wish to avoid a similar fate."

SNIPPed

Fate? Fate is called being grilled by the defense lawyers for Basi/Virk/Basi in an Open and Transparent Court room.
 
"As Premier Gordon Campbell’s former deputy minister Ken Dobell found out the hard way, failing to register as a lobbyist can lead to serious consequences. Dobell suffered through much negative coverage in the news media as he pled guilty to charges of failing to register as a lobbyist.

Maybe I'm going senile, or am confused but the above so full of errors that it must have been written by a Canned Waste journalist (sic).

Ken Dobell plead guilty to nothing as the "oh so" Special Prosecutor in the case decided that though charges were warranted, to pursue them WOULD NOT BE IN THE PUBLIC INTEREST (for public, read Campbell). I think Dobell may have been asked to write an essay to educate future lobbyists about regulations and ethics that Dobell and Kinsella etc. either are unaware of or ignore.

Now as I said, maybe I have Dobell's case confused with Kinsella or somebody else's - it is difficult to keep track of the Amazon of Sleaze that spews out of Victoria these days and it all tends to run together in one big tsunami of corruption. One definitely needs a program to keep track of the crooks and their crimes against the people of BC.

Saying Dobell "suffered" is like saying poor Brian Mulroney for being accused of "inappropriate" behaviour - I'm sure he is laughing all the way to the bank to visit his safety deposit box full of envelopes and bags of cash!
 
"...I'm sure he is laughing all the way to the bank to visit his safety deposit box full of envelopes and bags of cash!"

To say nothing of the $2.1 million he received in his lawsuit against the Canadian government. If there is any justice at all, he should be forced to pay that back...along with due interest.
 
Post a Comment

Links to this post:

Create a Link



<< Home