The Legislature Raids

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Morning in Courtroom 54.  The BC Rail Scandal Trial

By Robin Mathews
Sept. 23, 2010

Without Mr. Berardino in the courtroom this morning, matters forged ahead.  Two subjects occupied the core of cross-examination by Kevin McCullough, first, and then Michael Bolton – who will occupy the rest of the day.

The two subjects may be stated simply as, first, the question of Mr. Brian Kenning’s accuracy in testimony (former director, Chair of the Evaluation [preparation for sale] Committee and Chair of the audit committee).

 And second, the matter of “payoffs”, or “greasing the palms” of insider Liberals or even – perhaps – cronies of Gordon Campbell … and others getting favours.  Citizen Reporter 54 reported on September 22 to BC Mary’s site, the following.

 “We have heard how BC Rail paid BC Liberal insiders Randy Wood. Patrick Kinsella, Nancy Spooner and Judy Kirk hundreds of thousands of dollars.  We have heard that the BC Government approved huge salary increases for the members of BC Rail board.  All evidence that points to a railway run as a political tool for the friends of Gordon Campbell to play with.”

 Mr. McCullough and Mr. Kenning fell into stern disagreement about the profitability of BC Rail – and the reporting of profitability by Mr. Kenning to the jury.  Mr. McCullough stated on the basis of reports that BC Rail was in much better condition that Mr. Kenning had suggested to the jury.  Indeed, Mr. McCullough used the word “bogus” when referring to operating ratios as presented by Mr. Kenning.

Mr. McCullough asked repeatedly if management told the directors that BC Rail did great in 2002 and would do well in 2003 – and that Kenning and government were told BC Rail could manage with no new debt, no debt forgiveness, and no new subsidies.  Did Kevin Mahoney vice-president of BC Rail tell you that? Mr. McCullough asked.

Mr. Kenning couldn’t recall if that had been the case. But he assured Mr. McCullough that much work had been done by management and the statement would be germane if government decided not to take the Board’s recommendation and sell BC Rail.

 Mr. McCullough told Mr. Kenning that he had told the jury that BC Rail couldn’t manage and that it couldn’t meet its debt obligations.  Mr. Kenning denied both statements.  He said the future depended upon what happened to the business.

 Mr. McCullough asked why CN has told investors it is making “a ton of money” off the operations of what was previously BC rail?

 Mr. Kenning said he doesn’t know.

Mr. McCullough asked Mr. Kenning if he knew that Brian Kierans , lobbyist for Omnitrax lived next door to Paul Taylor, deputy minister of finance on Pender Island (2003-03),  that KPMG was doing an investigation of Mr. Taylor and Mr. Kierans in 2006-07, and that an e-mail among Eric Bornmann, Jamie Elmhirst, and Brian Kierans (all of Pilothouse lobby group working for Omnitrax around 2002-03) referred to “a blabbing deputy minister”?

 Mr. Kenning did not know, nor did he know if Mr. Taylor had access to confidential information.

 On the question of leaks, Mr. Kenning said that the Evaluation Committee never recommended an investigation into the sources, though it discussed the matter from time to time.

 Though the Board of Directors and the Evaluation Committee intervened in no way in the “sale”, stayed at arm’s length from negotiations, and seemed not to know what government was doing in bidding and such like, according to Mr. Kenning - repeatedly - yet they recommended the hiring of ‘fairness evaluation’ entity (about which Mr. Kenning knew nothing when it was appointed). And then when the bid from CN came in, they recommended that CIBC tell CN its bid was far below the leading bidder. The Board of Directors appears to have stayed at armslength from all aspects of the transfer of BC Rail to CNR (and knew nothing about any of the details) – except when that wasn’t the case.

 A humorous exchange – though deeply serious in fact – was conducted on the times and the relevance of Mr. Kenning accepting a place in the CIBC hockey box.  Mr. Kenning couldn’t remember if he had accepted a seat before or during CIBC contracting with BC Rail, nor could he remember who else had sat in the box on those occasions.  When Mr. McCullough remarked that those boxes are pretty nice, the judge, first, and then prosecution intervened.

 As an introduction to Mr. Bolton’s cross-examination Mr. McCullough had Mr. Kenning recall that he was appointed to the Board of Directors of BC Rail on September 11, 2001.  It may not be without relevance that Gordon Campbell set up new directors, soon to recommend the sale of BC Rail.

 Mr. Bolton drew from Mr. Kenning the fact that Patrick Kinsella, who was co-chair of the Liberal campaign in the 2001 election of Gordon Campbell, was appointed “to assist” BC Rail.  He drew from him, too, that Mr. Kinsella was hired to assist in advising how to deal with government.  Since BC Rail had easy access to the premier’s office, the appointment seemed somewhat redundant.

 Mr. Bolton pointed out that Mr. Kinsella wrote offering to sell some “savvy” to BC Rail about the government.  Mr. Kenning replied that since the Board (fairly new) didn’t have background on the Liberal government, that might have been a good idea.

 Then Mr. Bolton pointed out that over a few years Mr. Kinsella and his company were paid $200,000.00 for assisting BC Rail.  Mr. Bolton remarked that it is a large sum paid to a man who ran Campbell’s election campaign – especially when the government owned BC Rail and may not have needed “savvy” either way.

Where were you as head of the Audit Committee seeing such a payment, Mr. Bolton asked?  Did you know Mr. Kinsella had apparently been advising CN?  Did you know that Mr. Kinsella was obviously a political link?  On all those questions and matters Mr. Kenning had absolutely no knowledge, was not involved, knew nothing about what happened, knew nothing about conversations, and so on.