Monday, September 20, 2010


BC Rail Political Corruption Trial: The Afternoon in Courtroom 54

By Robin Mathews
September 20, 2010

The afternoon had a simple direction.  First, Mr. McCullough, for the Defence, wanted to establish the fact that the tax loss matter in relation to BC Rail could be, in effect, charged to BC Rail if CNR discovers that the Canadian Revenue Agency will not grant it – as a benefit – to that corporation.  He wanted to establish what the Chairman and director of BC Rail, chair of the Evaluation [preparation for sale] Committee and chair of the audit committee knew of the matter: that is, what Mr. Brian Kenning knew.  Mr. McCullough pointed out that at the expiry date involving that money, the BC government could be charged with 900 million dollars – principle and interest at the high 9%.

In short, did Mr. Kenning know that the people of B.C. might be on the hook for almost the complete amount that B.C. Rail was said to be “sold” for – that might have to be paid by British Columbians to CNR?  Did he know that the agreement involved a  percentage of interest almost double the going rate at the time?

Mr. Kenning’s answers were sad, weak, depressing – and, finally, to this observer – completely unbelieveable.

His answers, in effect, added up to the claim that the Board made a recommendation to the government to sell B.C. Rail.  The Board was not a party to the decision; the Board did not make it. The “company” said sell to CN (apparently), government negotiated the deal.  There was no detailed discussion among the members of the Board.  “We made our decision on the information we had”,  Mr. Kenning said – or words to that effect.  Tax experts said the chances of CN not being allowed to use the tax loss as benefit were very very low.  But, no, we did not ask the federal government/CRA for a ruling, nor did the Board recommend the BC government to do so.

Mr. Kenning suggested to do that would take … months. (?) He didn’t, of course, know why CNR was given such an extravagant interest in the agreement of sale.

Mr. McCullough introduced the term “stalking horse”, a term pretty commonly used to mean a corporation bid used to push up other bids even though the stalking horse bidder doesn’t intend to win the auction.  He wondered if Omnitrax was such an entity.  He wondered, too, if the BC Rail sellers wanted CPR and Omnitrax to stay in the bidding for the Roberts Bank spurline.

That line of questioning brought out every Alice-in-Wonderland answer that exists. And while mildly amusing, perhaps, to some listeners, it foreshadowed months to come of stalling, back-tracking, forgetting, failing to understand, shifting, restarting ….

Mr. Kenning made a few things clear.  Sellers want bidders in.  Sellers don’t want to cut off bidders even when they believe they have a buyer of choice – in case things go wrong with the deal.  All reasonable.  But Mr. Kenning’s shadow-boxing to avoid saying the Board of Directors wanted CP Rail and Omnitrax to stay in the bidding for the Roberts Bank spurline went on, and on, and on….

In the process Mr. Kenning revealed he had forgotten major matters relating to the sale, who “partnered” with Omnitrax, whether Burlington Northern and Santa Fe wrote to government about their displeasure at the bidding, that Omnitrax intended to drop out, that Omnitrax increased its bid after the Second Bid deadline … etcetera.  And, of course, any conversations Mr. Kenning may have had with members of the Evaluation Committee about almost anything of importance relating to the transfer of BC Rail had faded from his memory.  Such conversations may have happened, but he couldn’t recall them.

Mr. McCullough and the other Defence lawyers are working to build a case that the accusations against their clients are false, or imperfect, or impossible to prove, or something else that will negate them. That is the task of the Defence lawyers.  In the process they are testing the integrity of the transfer of BC Rail to CNR.  With each day and each confrontation with prosecution witnesses, major people involved seem (to this observer) to have an enormous amount to hide from the people of British Columbia.

This trial, and these cross-examination will go on, and on, and on – and they will be marked by stalling, forgetting, shifting, misunderstanding, strategies of avoidance, strategies of obfuscation … and more.  I think they will be seen – to more and more British Columbians - as sad, weak, depressing, and – finally – completely unbelievable.  How they will strike the jury which has not been told that Mr. Berardino, Special Prosecutor, was wrongly appointed … we can only wait to see.

 "In the process [the Defense lawyers] are testing the integrity of the transfer of BC Rail to CNR."  Beautiful.

Government still on hook for $600-million in BC Rail sale, corruption trial told

By Neal Hall
Vancouver Sun - September 20, 2010

VANCOUVER - A jury hearing evidence against three former government aides at a corruption trial Monday heard a suggestion from a defence lawyer that an indemnity agreement with CN Rail over tax write-offs could reach $900 million before it's resolved ...

Read Neal Hall's complete article HERE.

and HERE.


Ex-BC Rail board rep. unable to recall $4-million bid hike

By Keith Fraser
The Province - Sept. 20, 2010

One of the bidders for B.C. Rail’s Roberts Bank subdivision may have raised its second round bid by $4 million, a former board member of the Crown corporation admitted yesterday.

The admission came out while Kevin McCullough, a defence lawyer in the Basi-Virk trial, was questioning Brian Kenning during his fourth day of cross-examination.

McCullough asked Kenning whether he could recall if Denver-based OmniTRAX, a railway at the centre of the allegations against three former government officials, had raised its bid after the second round for the subdivision in February 2004.

“It may have happened,” said Kenning. “I don’t recall ...

Keith Fraser's report in full is HERE.


Thanks for the report Mr Mathews.
You mentioned in another article about difficulty hearing the court.I find most court rooms very poor in acoustics,additionally my poor hearing doesn't help. I purchased for myself a small amplifier for my ear, it helps considerably in hearing the court.
Possibly you may wish to try something simular to assist you in the court room.
Prof. Mathews, I have been in court where the judge, a BC Supreme Court justice, deliberately kept his voice so low for the entire proceeding that the lawyers could barely hear him, and the gallery not at all. It was a farce.

This proceeding was also a miscarriage of justice, and is now the subject of a complaint to the Canadian Judicial Council, for different reasons, of course.

Acoustics are not to blame.

This is simply another tactic, like witnesses experiencing catastrophic memory loss, like the legal profession apologizing for errors, when in fact they knew exactly what they were doing and it was no mistake.

These tactics are designed and used to escape any meaningful accountability so that their objectives can be achieved, no matter what. The people of BC have had their rights stolen from right in front of their eyes. It's the ultimate magician's trick.
Thank you for Mr Mathews' report as well as linkage to Vancouver Sun and Province articles. Great reportage all round!
One heck of a defence lawyer!! Yes, the integrity of the sale of BC Rail to CN is being tested at long last!!!!
I agree. Great job by all involved... - the courts and liberals!!! I cannot wait until the other proponents in the bidding file suit against the soup nazi for the crooked deal and the millions they wasted on the so-called bid.

BCR Piglet
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