Friday, September 17, 2010


Sleaze, Amnesia, and Strange Policies in the BC Rail Scandal. Second Witness in the Basi, Virk, Basi Trial.

By Robin Mathews
September 2010.

Some observers in Courtroom 54 (not allied to the big corporations and the big corporate press and media) felt a sinking feeling over the last two days. The BC Rail Scandal trial of three Order in Council appointees proceeded in its alarming fashion – verbal shadow-boxing and strategies of avoidance seeming (to some) to occupy the prosecution witness, Brian Kenning.

    Mr. McCullough, for the Defence, was (and will be) cross-examining Brian Kenning, longtime director and chairman of BC Rail board and Chairman of the BC Rail (preparation for sale) Evaluation Committee and chairman of the BC Rail audit committee. (He was those things until 2010 when the sliver company remaining after the sale of all major assets, BC Rail, was absorbed into the Transportation Ministry.)

    We observers sat through the incredible days of the cross-examination of Martyn Brown, first witness called in the Basi, Virk, and Basi trial (involving accusations of breach of trust, fraud, and money laundering related to the transfer of BC Rail to the CNR). We watched with astonishment as Mr. Brown, longtime Chief of Staff in the Campbell government, exposed an amnesiac propensity of astonishing proportions.  It would not be an exaggeration to say he seemed unable to remember anything ... of consequence....

    Almost as strange - to a few of us, at least - was that Associate Chief Justice Anne MacKenzie didn't seem to find Mr. Brown's eradication of memory surprising.  She never asked him once, as far as I can remember, if he didn't think his memory loss would be considered irresponsible, unconvincing ... even reprehensible... or even think to ask if he really did forget that much?

     The second witness is Brian Kenning.  There may well be 25 or 30 more.  We observers tremble to think that we may sit for months as witnesses play variations on the Martyn Brown theme.

     The 'sleaze factor' has filled the Mainstream Press and Media in relation to Brian Kenning's cross-examination. That will doubtless go on ... after he is gone.  The big press, however, seems to stop after churning out the headline stuff.

      They have recorded Mr. Kenning's "take" (about $550,000) for sitting on BC Rail and BC Ferries boards.  They recorded he went on making large annual earnings as a director - more than $30,000 a year - when most of BC Rail was disposed of, and there were few employees.  They recorded the pulse of donations by Kenning-related corporations into the Liberal Party.  They have reported that even when BC Rail was a shadow operation with almost no assets left, it paid (meaning British Columbians paid) more than $150,000 for Lions Football and Canuck Hockey "expenditures", and for a golf club membership for Kevin Mahoney, president, for four years after BC Rail was "sold".

        They recorded that after BC Rail was "sold" (and remained a sliver company) Kevin Mahoney, its president was paid $797,000 in 2004.  He was paid $421,000 and $38,000 in expenses in 2005.  He was paid $622,000 and $24,000 in expenses in 2006; $676,000.00 and $48,000 in expenses in 2007; $488,000 and $52,000 in expenses in 2008 (in numbers rounded out).  Presumably, he continued receiving such lavish emoluments until (and after - by severance payment) the sliver of BC Rail was absorbed into the Transportation Ministry.

        The "sleaze factor" doesn't end there.  Mr. Kenning appears to believe that "the business model" common to private corporate life should be maintained in public corporations owned by the people. Whenever questioned about golf club or lunch club fees being paid - and such like things - Mr. Kenning claimed that such was the practice in the corporate world.  Private corporate sleaze, apparently, sets the style for sleaze in public service.

        As Neal Hall writes in his Sept. 17 article: "Mahoney's compensation package was decided by a committee that looked at comparable industry salaries, and was approved by the BC Rail Board" (of which Mr. Kenning was chair). No "comparable" corporation existed at that time, of course, but why should we quibble over trivial details?

        The sleaze factor is one of the most visible ways the public gets an insight into the way corporate "experts" swill at the public trough.  But the sleaze factor - bad as it is - is only a portion of the story.  Mr. Kenning's cross-examination, thus far, has revealed that important strategies of behaviour and response under questioning may suggest deeper violations of public trust and strategies (amnesia again, and perverse analyses of facts) to avoid full frankness about the realities of the transfer of BC Rail to CNR.

        As readers may know, Mr. Virk is one of the accused.  Mr. Virk sat on the Evaluation Committee representing the minister of transportation. Mr. Virk participated in the matters engaging the attention of the committee.  He spoke fairly often to Mr. Kenning, it would seem. Apparently, he cautioned Mr. Kenning that the contract to CIBC World Markets to be financial advisor in the sale of the BC Rail Freight Division should go to tender because of CIBC’s wounded reputation in the ENRON scandal. He also, it seems, spoke to Mr. Kenning about a legal claim against BC Rail, and about Mr. Kenning  carrying a briefcase bearing the logo of a company involved in the CN bidding and sale. In addition, he apparently spoke to Mr. Kenning about the damage being done by various kinds of leaks that favoured CN Rail. He also, it seems, discussed the use of National Public Relations, a public relations firm (paid $273,000 in 2003) with Mr. Kenning, saying it was doing almost nothing and should not be employed.  Mr. Kenning didn’t recall that or any other conversation … with Mr. Virk.

       Mr. Kenning remembers nothing in relation to Mr. Virk.  And I think it is fair to predict that he never will remember anything.

      His memory lapses are stunning.  He frequently reports no recollection of conversations with key people on key issues or knowledge of key facts.

      As I noted during testimony, he doesn’t know if Patrick Kinsella was employed by CN. He didn’t know until 2003 BC Rail was being sold. He didn’t remember if he got a legal opinion on contracting with CIBC World Markets without a tender.  He didn’t remember exactly if Rocky Mountaineer had partnered with CNR in the bidding process. He didn’t remember if Kevin Mahoney’s “perks” were terminated because of publicity around his luxurious remuneration. He didn’t recall if Mr. Mahoney had his vehicle paid for by BC Rail. He didn’t recall how many meetings of BC Rail Board he attended before recommending sale of the Crown Corporation.

     Mr. Kenning didn’t remember that fired Mark Mudie, manager, claimed he was terminated because he wouldn’t support the Campbell “failure strategy” for BC Rail.  He didn’t recall what was said in the one visit by “government” to the Board of BC Rail.  He didn’t remember asking Chris Trumpey about government energy policies (Kenning having energy interests). Mr. Kenning couldn’t remember. When Mr. McCullough reported Virk’s assertion that Kenning did ask Trumpey questions, Mr. Kenning said: “Okay”.

    Mr. Kenning didn’t know that Gary Collins met Pat Broe, president of Omnitrax on December 12, 2003, didn’t recall knowing until 2004.  Though confidentiality was key to the BC Rail transfer process, Mr. Kenning didn’t know who signed a confidentiality agreement. He didn’t remember talking to fellow committee members about confidentiality.  He didn’t recall the details that CPR complained that CNR was given information about the deal which wasn’t fair. He didn’t recall that CN was said to be getting special treatment.  He didn’t recall if cabinet ministers were told not to speak directly to bidders.  He didn’t recall whether Gary Collins spoke to him directly about the meeting with Pat Broe, president of Omnitrax.

    He didn’t seem to remember key matters concerning the bidding for BC Rail spurline to Roberts Bank.  If he had conversations at the time, he forgot them.

When the BC Rail analysis of the CN bid for the freight division was leaked, Kenning was asked if they tried to find the source of the leak.  Kenning didn’t recall specifically.  Asked if other bidders complained, he didn’t remember. Chris Trumpey was on the Evaluation Committee and he was Chair of the BC Investment Management Corporation which might have interests in CNR and create a conflict of interest. Did Trumpey, Kenning was asked, ever have to “step down” during sale discussions?  Mr. Kenning didn’t recall.

    Later, a CIBC spokesperson publicly stated that CN would be the most logical candidate to get BC Rail.  Then after that Pierre Mongeau, CEO of CNR told a conference in Montreal the same thing. CPR had complained that CN was getting special treatment. Nonetheless, Mr. Kenning insisted the bidding process was not flawed (information about BC Rail, of course, was unsullied).

    Except when challenged by Mr. McCullough, he had admitted to two completely conflicting pieces of information (in testimony) about the efficiency of BC Rail on two successive days – the latter being one Kenning had not offered, information that the freight division in 2003 was doing significantly better than “first class carriers”.

      Indeed, in my recollection Mr. Kenning only insisted he knew, categorically, three things: that the bidding process wasn’t flawed; that there was no “failure strategy” in the sale of BC Rail, and that neither the BC Rail Board nor the Evaluation Committee had “marching orders” to sell BC Rail.

     Sitting through the long days of Mr. Kenning’s testimony made me recollect a very brief exchange Mr. McCullough had with Mr. Kenning fairly early in the cross-examination process.  As I recall Mr McCullough asked if there can be some kind of liability when directors act against the interest of shareholders. [In the case of BC Rail the province/the people of B.C. are the shareholders in BC Rail.]  Mr. Kenning, I remember, said there could be.  Mr. McCullough asked then if “you at BC Rail” got “indemnity”, and Mr. Kenning said they did.  The dictionary gives one definition of “indemnity” as “legal immunity from the penalties or liabilities resulting from an action, granted to public officials”.


BC Mary digression: Note for citizens who say they won't write any more Letters-to-the-Editor because their letters are never published ... 

More and more, Big Media are begging readers to send in their opinions, thoughts, photos, with a view to publication. Why not give them another chance? Here's a good example. It's brief, accurate, civil, focused:

Too many untruths to believe Liberals

The Liberals made the claim that the HST couldn't be undone, because it is now in the hands of the federal government. Apparently that claim wasn't true, for Gordon Campbell now says the tax can be extinguished.

What the Liberals announce today will change tomorrow.

When they announced they wouldn't tear up any public-sector contracts, it wasn't true. When they announced they wouldn't sell B.C. Rail, it wasn't true. When they assured us, in the face of all evidence to the contrary, that the budget deficit would be held to $495 million, it wasn't true. When they said they had no plans to bring in the HST, it wasn't true.

When they now say they will get rid of the HST, that isn't true.

Neil Kemp

Read more HERE
Another digression: Horrifying detail from Kim Bolan, today's Vancouver Sun:

... He said B.C. jails are at more than double their capacity and with increasing numbers of rival gangsters imprisoned, the situation is volatile.

At normal capacity, there are about 18 inmates per staff member, Purdy said.

“Now the ratio is as high as one to 40.”
For Bolan's complete column, click  HERE.


Yes Mr. Mathews you and other observers will be sitting and yawning through 25-30 more amnesics for the next three years!
Iam just disgusted at the lack of accountability and unfairness, the criminal aspects, the cover ups and blantant disreguard for everything that is right and good!
Plus the lack of power that the Federal dept.of Justice has shown by not intercepting with the abuse of process and the pergeries allowed by BC Judges.
They can't remember anything, then why bother?!
What about what Sgt.Ward said "organised crime has crept into very corner of BC". This has to do with terrorism or at the least, South East Asian crime and police coruption! This trial is way off track and nobody wants to step up and blow the whistle. Lets just sit back and see what gets raped next. I really can't understand how so many people can sleep at night, and the next morning go to the coffee shops and talk like BC is the best place to live on earth!
Did Campbell write that catch phrase?
For heavens sake, the truth IS coming out one way or another, and the longer it is prolonged will only cause to be a bigger embarassment, a shameful diservice not only in BC, but all of Canada!
I want the American bidder,Omni Track and their lobbyist to be called to testify!
Thank you Robin for this insightful recap of recent testimony.
Clearly, Mr. Kenning has been bought and paid for.
Thanks to you, Bill Tieleman and a very-limited few other media sites I have been able to keep up with Basigate while playing observer in the madness that is US mid-term elections (federal, state & municipal) in California & Nevada.

One Tea Party/GOP goof for the Senate wants to make masturbation a criminal act!!!

Yet watching the Basigate glacier melt since December 28, 2003 and now the entire Anti-HST campaign unfold reminds me of why I call BC . . . THE MOST CORRUPT PLACE ON EARTH. (all things proportional)

Compared to the current social-anarchy down here we are quite the little northern bananna republic.

In order of say 10X, a BC the size of California would pose quite a threat to western civilization.

A noticed for example that Yap, the "elected" Campbellite fart-catcher from Richmond wants a 4th term for Gordon.

A 4th term for our "beloved greatest leader" would put us on the road to a real California mess.

Calfornia has passed from being ill in a BC way and has moved over to a true melt down entity.

Since 1980 the RIGHT here have clamoured for cutting taxs, "privatizing all utilities and services" while the CENTRE and LEFT have worried about soft and fuzzy issues. (along the same lines as Vancouver's Mayor Happy Planet and that useless Carole woman)

California is in deep social, political and economic anarchy,and is a place where the big-buck private sector exists in cutting edge splendor while the entire state public sector infrastructure has imploded.

Everything government here is dangerously falling apart . . . roads and bridges for example are actually deadly to travel on, yet they continue to be used daily because there are no longer any fall back options.

North of 49th, the BC Liberals, seem to be following the same game plan the traditional wing of the Republican Party have played here for the last thirty years.

If you want to see where BC is headed under Campbell and Company just look at the last three decades of California politics.

Great Satan,

I believe you are a serious student of history ...

so think back ... way, way back

to Wm Randolf Hearst (and his castle, of course).

Didn't he own a whole lotta lotta newspapers?

And didn't he use his newspaper empire to do a nasty number on Cuba?

and a war: the Spanish-American War, right?

Just askin' ...

and also, where would we look for the facts on the last 30 years of California politics -- if their current news media is anything like ours?

Nice to see you back.

History puts "us" all on the path of the 1930s with lots of local and big-league crooks, madmen and dictators calling all the shots.

These incompetent Left, Right and Centre bosses now rule in a state of corrupt-anarchy via control of government and the courts . . . with the aid of an ON THE TAKE media.

Last week I told a younger Nevada Democratic Party operative that . . . IN TWENTY FIVE YEARS I WILL BE DEAD, AND YOU WILL BE WISHING YOU WERE!

We face a world of institutional madness.

The Great Satan makes an excellent point. The parallels between California politics/economics and B.C. is eerily uncanny. I've always referred to Kelowna as Orange County North, and that isn't because I think it is wonderful.

The polarization in California is very similar to BC. Californians in general are more progressive and left leaning than most Americans, BUT the ultra rich ReThuglican Reich-Wing buys the government they want and when they can't own and control the government, they can at least mire in gridlock the government so it can't make progress in a direction that isn't to their liking.

The ReThug candidate for governor this fall is extreme whacko reich wing, but she's rich enough that she will probably succeed in buying the Statehouse - though why anyone would want to be guv of the Golden State is beyond me - Arnie the Hummer Fleet operator certainly found out being guv isn't fun.
OK guys, forget the Spanish-merican War. For the moment.

Question for you both: what is the connecting political corruption link between California and British Columbia??
Is it a "what" link? Or a "who" link?
Campbell's corrupt sale of the BC Rail trial, is nothing but a farce. The corrupt trial is being tried, in a corrupt court, by a corrupt judge. They should get a real kangaroo, to be the judge, rather than her. I can't get over, all the brain dead witnesses. Is the judge brain dead as well? Is everyone willing to sell their souls for, a corrupt, deceitful and evil Premier? Good grief, we already know, what the outcome will be. The BC Railroad, belonged to the BC people. Campbell had no right, to put his dirty hands on it. The minute, Campbell fraudulently sold the BCR, he should have gone to prison, right then and there.
Water? Dutch organized crime?

A hint would be nice, there are so many to choose from.
Prediction: When Campbell finally leave politics, he will be named a BOARD OF DIRECTOR of a major railway, and will be paid handsomely as all BODs are, for safeguarding shareholder assets.

(i pee myself laughing as I think of the "safeguarding" bit)
"what is the connecting political corruption link between California and British Columbia??"

Is it Me?
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