Saturday, March 07, 2009





Documents released this week by a judge in a political corruption trial trace the government's route from staunch denial to talks with bidders and then a media strategy on how to sell privatization to the public

VANCOUVER -- When Gordon Campbell swept to office in 2001 with a stunning victory that gave him all but two seats in the provincial legislature, his Liberal Party had a clear mandate to remake British Columbia just about any way it wanted.

And it didn't take the Premier long to start making big changes, as he announced a 25-per-cent tax cut on his first day in office, dramatically underlining his message that B.C. was "open for business."

Privatization of Crown assets and a revitalization of B.C.'s aging transportation system were both high on Mr. Campbell's action agenda, and within months he was thinking about selling BC Rail. But offloading the iconic, debt-ridden railway owned by the province since 1918 would prove to be one of the most troubling deals his government has ever made.

Thousands of pages of partly censored internal documents were released last week by the Supreme Court of British Columbia in response to an NDP motion in a political corruption trial involving Dave Basi and Bobby Virk, former ministerial aides charged with fraud, breach of trust and accepting bribes in relation to the sale of BC Rail. The documents are shedding new light on how the government strategized on the controversial $1-billion deal, which continues to haunt Mr. Campbell even as he seeks a third term in the May 12 vote.

Within months of taking office, Mr. Campbell was being advised that a key part of his transportation plan should be selling BC Rail. "Let the market drive public policy, for so goes the economy of the province," states one internal government note that, like many of them, has the sender's identity blanked out.

By fall the government had a task force examining privatization opportunities, and by the following spring a note urges Mr. Campbell to sell BC Rail quickly.

"The BCR Group of Companies is a $1-billion dollar public asset, that is currently losing 10 per cent per year or more, due to changing times. As a crown corporation it has peaked, stalled and rolled over the top onto a downhill slide. ... Now is the time, to maximize the corporate return from the BCR Group of Companies, to reduce the deficit!" it states.

The files do not reveal Mr. Campbell's response. But throughout 2002, he repeated his "New Era" campaign promise not to sell BC Rail.

In an Aug. 19, 2002, e-mail to a BC Rail employee, name blanked out, Mr. Campbell couldn't state it more clearly: "I assure you that the government is not looking at the privatization of BC Rail as part of our transportation strategy."

By that fall, however, Mr. Campbell was meeting with officials from other railways, including Matthew Rose, president of Burlington Northern Santa Fe Corp., which would later become a bidder along with another U.S. company, OmniTRAX.

And while publicly denying BC Rail was for sale, the government began secretly preparing to announce the deal. A file marked "confidential" shows that by November, 2002, the government had a media plan drafted.

"The communications strategy presented in this document has been prepared to provide guidance for planning and implementing an announcement regarding a decision to sell the industrial freight division of BC Rail," it says.

It notes the "New Era campaign promise 'not to sell or privatize BC Rail' " will cause problems, but tells ministers to focus on the demand of BC Rail customers for better service, and on the "serious financial risk to BC taxpayers" posed by the railway's $639-million debt.

It says supporters should be lined up in advance.

"The key spokesperson(s) will be media trained prior to the announcement using key messages and master Q & A document. ... In advance of the announcement a select group of customers and supporters will be provided with relevant factual information and messages to support the sale announcement and respond to media enquiries," it states.

And the strategy sought to have officials "make calls to select business media" to help guide coverage. "The decision to sell would be positioned in terms of a response to overwhelming evidence against retaining the freight railway in government hands," it says.

After issuing a request for proposals for BC Rail's freight division, in May, 2003, the government studied bids from CN, CP and a combined offer from OmniTRAX-Burlington Northern Santa Fe.

The files include minutes that show Mr. Virk, the ministerial aide who would later be charged with accepting bribes for allegedly leaking information in exchange for money and gifts, was involved with the committee evaluating the bids.

"Virk to work with [deputy minister Chris] Trumpy and the Office of the Premier to finalize letters of invitation ...Virk to confirm with [Transportation] Minister [Judith] Reid the relationship between BC Rail, the Northern Transportation Strategy discussed at the fall session. ...Virk to ensure Minister Reid confirms outcome," state various entries.

On Nov. 25, 2003, the government announced a deal that gave CN the right to operate on BC Rail's roadbed under a 60-year lease renewable for up to 990 years.

But behind the scenes it hadn't gone smoothly. CP and the U.S. bidders complained because CN alone had been given an opportunity to meet with BC Rail shippers, gaining valuable knowledge about rates that other bidders didn't have.

"Our dismay arises because of the lack of fairness in which the process has been conducted so far, the apparent favoritism of certain bidders, and the lack of timely information," Peter Rickershauser, vice-president of Burlington Northern, wrote on Nov. 18.

CP raised similar concerns a week earlier - and dropped out of the bidding.

But while the complaints were unsettling to the government, which insisted it had run a fair process, far worse was to come.

On Dec. 28, 2003, police raided the legislature and hauled away files from the offices of Mr. Basi, who was a ministerial aide to then-finance-minister Gary Collins, and Mr. Virk, an aide to Ms. Reid.

The government didn't let the raids stop the BC Rail deal, which closed in July, 2004, but a second privatization offer, for a BC Rail port subdivision at Robert's Bank, was cancelled when police told officials confidential information had been leaked.

The joint case against Mr. Basi and Mr. Virk remains in pretrial hearings. Many more documents are expected to emerge at trial.

What's in the files

The information contained in the 8,000 pages of documents includes:

Heavily edited cabinet minutes where even the subject headings are blanked out.

Media strategies that call for reporters to be "hand picked" for inside scoops and the presentation of groomed "supporters" to validate the government's message.

A 2003 letter to Martyn Brown, then Premier Gordon Campbell's chief of staff, that contains a job application from Bobby Virk, saying he was referred by Mr. Campbell and Lara Dauphinee, the executive assistant to the Premier.

An audit that shows op-ed pieces submitted by Mr. Campbell, and run by many newspapers including The Globe and Mail, "have been written for the Premier by IGRS [Intergovernmental Relations Secretariat]."

Heavily redacted correspondence tracking notes from Mr. Campbell's office that contain heads such as "RCMP raid on the Legislature" and "Basi/Virk cases rel'd to BC Rail partnership." Notes indicate material was blanked out under various sections of the Privacy Act.

Documents online

The New Democratic Party posted on the Web yesterday digital copies of thousands of pages of internal government documents released recently by the Supreme Court of British Columbia. The NDP got access to the material by filing a motion for material that defence lawyers in a political corruption trial had earlier obtained under the Freedom of Information Act. The documents are related to the $1-billion sale of BC Rail by the government in 2003. "These documents shed some light on the B.C. Rail corruption scandal, and the public deserves to have access to this information," NDP attorney-general critic Leonard Krog said in releasing the material.

The documents are posted at:


It has always been difficult to "snip" paragraphs (to avoid copyright infringement) from Mark Hume's reports, because he packs each line with solid information in a smooth-flowing narrative. This March 7, 2009 column -- at such a critical time in B.C. history -- is especially valuable. So I am hoping that Mark Hume and The Globe and Mail will forgive me for posting the column in its entirety. I hope they will see it as a sign of respect for its value to the public. It is reprinted here, with appreciation. - BC Mary.


In the Charles River Associates Fairness Report they have provided a timeline of the process (page 6) that went in to the selling of BC Rail. The dates are marked along the top and those special interest groups (SIG) that were privy to the process are listed down the left side, just like in a good old spreadsheet.

In the Vancouver Sun today there is a hard date on when CN Rail was sold. "Documents reveal date CN Rail won BC Rail bid" - "Liberal cabinet's controversial decison on $1 billion privatization sale made on Oct. 1 2003 - 55 days before the public was notified." - Neal Hall.

In "fairness" to CRA perhaps either they should be invited to create a new timeline that accurately places just "when" "who" knew "what" or its up to our blogs, because of the manner in which 223 employees in the Public Affairs Bureau, housed in the Premier's office, have been given too free of a hand in writing what appears to be more fantasy into the BC Liberal Government Press Releases than the real goods obtained via FOI requests.
Go back to the Globe and read the comments on this story. There is interest
North Van's Grumps:

Wow, another boost to our understanding of what happened to our railway and when it happened and who is left with egg all over his face. Their faces.

So Vancouver Sun came through with Neal Hall writing up this excellent revelation!

Good for Neal. Good for Vancouver Sun.

But let's not forget who made those 8,000 pages accessible ... Leonard Krog, who is giving new meaning to his title as Opposition Critic for the Attorney-General.

One big fat bouquet for Krogery!

And double-thanks to you, NVG.

Anon 8:49:

Thanks for the reminder!

Talk about the one-armed paper-hanger, he's got nuthin' on me, these days. Was immersed in posting that wonderful comment from northern BC and had forgetten to check back on the Mark Hume thread.

There's always a dimwit parroting the "You must be NDP" and "NDP evil" thing ... but I guess that's what we've paid the Public Affairs Bureau to do for us, i.e., to teach us their technique:

"When you have nothing to say, then ATTACK, ATTACK!"

Anyway, I left a comment at The Globe and Mail telling about Krog's Wonderful Idea.

No, it wasn't an ATTACK ... it's the simple truth ... and people need/deserve credit when they've done a good thing.

Just like you deserve credit for keeping this story alive through so many frustrating and difficult times BC Mary. Maybe you, Sean Holman, and other integrity driven people (newly unemployed) who have an interest in telling the actual truth could get together and start a new BC media operation of some kind where you would be paid for all the work you do. Having long ago stopped my subscription to the irritatingly useless Times Colonist, I have missed newspapers. I'd definitely pay to read yours, or to watch your video/TV reports. Perhaps more easily said than done, but worth dreaming about.
“Privatization of Crown assets and a revitalization of B.C.'s aging transportation system were both high on Mr. Campbell's action agenda, and within months he was thinking about selling BC Rail. But offloading the iconic, debt-ridden railway owned by the province since 1918 would prove to be one of the most troubling deals his government has ever made.”
“Offloading” ………….. “Debt-ridden railway”
This comment from Mark Hume is nothing more than sticking to the line that Gordon Campbell put forth, as truth, in order to con the public into thinking that this sale was necessary and in the publics best intrest. Almost six years after the sale and reporters are still pushing the untruths of Gordon Campbell.
I watched Will McMartin on the Voice of BC program a few years ago and there was a short conversation (always short except for one show) on the BC Rail deal and if BC Rail lost money the way Gordon Campbell had potrayed. Will McMartin said something to the effect that if anyone is saying that BC Rail was losing money then they cannot read a spreadsheet!!
I would believe Will McMartin over Gordon Campbell and the reporters that just follow his lead on purpose or for any other reason.
Will went on to say….. the debt that was there was an operations debt, that is common in all companies and that for the most part (except one year in the mid- nineties) that BC Rail had made money for the people of BC.
I think that was the last time I seen Will McMartin as a guest on that program.
Now that the BC Rail scandal is bubbling back to the surface, it would be wonderful to see a story in The Tyee with Will McMartin looking into the truth about the money making railroad and how much profit BC Rail could have realize if it had not been sold.
This would be a huge help for the BC public in understanding the truth around BC Rail but more so for the journalists that just can’t seem to come around to the truth.
Anon 11:04,

Yes [hangs head, scuffs toe], I did note Mark's lapses into those emotional terms ...

and yes, I wanted to leap across them to the good parts of what he was saying.

It shows, doesn't it, the impact of having 223 salaried staff members and a $28million budget to run a Public Affairs Bureau to teach us things like this ... things we don't need to know.

I remember reading -- but have forgotten the details -- of how certain financial safeguards were removed from BCRail which led to its shrinking profit margin.

Sometimes there just aren't enough hours in the day to search out all this information

So grateful thanks for your reminder. That goes for everybody who contributes these comments: Thanks!

Hi Mary,

My last post reminds me that, Mary, you and your readers may not be aware of this little fact.

Gordon Campbell was on the Voice of BC late last year (08) and Vaughn Palmer brought up the subject of BC Rail by way of letting the viewing public know that a show on the subject of legislature raid that was produced earlier in the year was going to be rebroadcast over the Christmas break.

Vaughn then asked Campbell if he and his government were doing all it could to help the trial move forward?

Campbell responded with…. I don’t know how we could do any more then what were already doing and when on to say how independent all of this was from him…bla bla bla. (Of course we know better)

Then there was another question put to Campbell (which I can not recall but be reassured that Campbell’s knees were not shaking) then Campbell pretended not to be able to remember when (what year) the raid had taken place and Vaughn had to remind him.

Always the professional Vaughn didn’t even bust a smerk, letting Campbell just slither through another interview.

What ever happened to the art of the follow up question or even a tough question, in BC that concept seems to be long over.

I wrote to Carole James and asked if the NDP could spend the next few months before the election reminding Gordon Campbell and the public just when that raid was, so that we don’t ever have to go through another nauseating scene like that.


With the resent release of some of the documents related to the BC Rail scandal and the apparent close participation of the press/media with Gordon Campbell and his objectives, it may be that the press/media are not following the BC Rail scandal not only to protect their investment into the BC Liberal Party but also to protect their involvement through their employees and who knows what else.

I would dare say that when the NDP win the next election and all of this scandal and more comes out, there will be a huge backlash at the Campbell government and the companies and individuals that help them con the good people of British Columbia.

The east coast may be looking for some worn out hacks.
I too regretted those inaccuracies in Hume's stories but just kept going, happy that some truth was being told. It always pays, I guess to go back and read things over and then comment accordingly. I can see how it all gets to be too much for you to keep on top of Mary. Maybe if you were making the big bucks you deserve.....
I applaud Mary on her hard work here.

Not so much Mr. Hume.

It's really shameful and telling that after all these years "reporters" are still buying into the main lie "intentionally devised" about BC Rail: that it was not profitable

This was simply not true.

But it had to be painted that way in order to privatize it.

BC Rail paid a total of $137.7 million in dividends to the public - dividends that could have been used towards valuable social-infrastructure, towards health and education, and helping the homeless.

All railways carry an operating debt and BC Rail had one of the lowest in all of North America. The taxpayers were also not on the hook for that debt servicing. It was paid for out of BC Rail revenues.
Thanks, 1:15:

The really awful part is that we sorta halfway accept that guff, it's been going on so long ...

W.A.C. Bennett raised the alarm when he warned that the 1972(?) election was an emergency: "the Socialist hordes are at the gate" he said ... topic for endless rounds of laughter but deep-down, it's never funny. Dave Barrett was some "threat" all right. We should have more "threats" like Dave Barrett. Me, I never liked being called a horde.

Remember the era of the Newfie jokes? Everything stupid was spun into something called a "Newfie" joke ... with the underlying intent of putting down the people of Newfoundland (where I love to visit because people call me "M'darlin'").

Then there were prairie jokes. And married jokes. And gay jokes. Elderly jokes. Toronto jokes. Farmer jokes. Rabbi jokes. Etc. Always told (imo) with a purpose. Pathetic. It's like asking us to hate ourselves instead of promoting ourselves.

We know that the New Democrats, Lefties, the tolerant, the peacemongers get the same treatment in spades. Why do we let it happen? Not because it's true. I think it's because most of us hate squabbling.

How does it happen? Well, the incentive seems to be that it gives 1/2 the people an advantage over the other 1/2. Especially if the "winners" can work the system to pay for 223 people in a Public Affairs Bureau who will work fulltime against the socialist hordes, or the farmers, or the elderly, etc.

Well ... in a quietly socialist-horde-like way ...

I thought Leonard Krog gave a stunning example of a civil society on Friday when he called all Media to an Open House to provide access to government information.

Friday was a very good day for British Columbians. I hope it continues.

So who's gonna write to Mark? (just kidding.)

Here's exactly what I meant (above):

Cabinet advice reveals BC Liberals plan to say Carole James not up to being premier ... and you can see all the old cliches and stereotypes hauled out again ...

What are we, anyway ... Pravda on the Fraser?

The BC Rail sale "history" with the secrecy, favored partner, media campaign, back room deals, & even the motto "open for business" is duplicated in TEXAS with the 4th "amigo" Gov. Rick Perry's relentless push to force the privatization of our state transportation assets despite massive citizen opposition.

We are now attempting to prevent the use of federal stimulus funds from being used for the P3 TX Toll Roads. The state legislature is in session & most of the real remedies lie with the passage of laws which do NOT force privatization as the "favored" funding method for building & operating roadways. Educating the Texas citizenry & legislators has been a slow process & overcoming the influence of massive corporate money is challenging. Some success has resulted, but it is a daily battle.
After research & hearings by the Texas Sunset Advisory Commission Staff in 2008 (the interim period between legislative sessions) before select members of the TX Senate & House, the professional staff recommended that the Texas Department of Transportation be ABOLISHED due to it's demonstrated incompetence & refusal to comply with Texas Code. It remains to legislators to act upon the recommendations or legislate their own in this session.
I have followed the CANADIAN citizens' struggles against privatization & global corporate domination for some years & wish you well. We have seen the rise of a corporate global oligarchy which ALL of us should be battling! It is the greed of many of those oligarchs responsible for preventing regulation of the banking, insurance, & investment sectors which has fueled the global meltdown. At least your Canadian banking & mortgage sector reflect sound principles in comparison.
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