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LDB, BCR and the Fairness Advisor problem
The Real Story - 8/13/2012

The Real Story, July 26, 2012

Link to story.

RossK over at the Gazetteer has an interesting post on the similarities between the privatization of the distribution arm of the Liquor Distribution Branch and the BC Rail deal.

The focus of the piece is the “fairness” monitor, aka “the cover”.

In the BC Rail case the cover was “Charles River Associates” of Boston and their guy handling the file was Larry Shugart with assistance from Ian Munro.

CRA – as they were referred to by all the insiders – had a dual purpose. In the public eye they were the ‘independent from government’ observers and if need be, critics of the process.

Privately, FOI documents give the appearance that CRA were more partners in the enterprise.

So much so that when CIBC used some of their fees from the deal to rent out the Museum of Anthropology to put on a private party to celebrate the deal’s completion the boys from Charles Rivers were on the highly selective guest list along with the Premier, Kevin Falcon, Judith Reid and the folks from BC Rail.

The relationship with the politicos in the government was close enough that in the middle of the deal the Ministry of Finance felt good about offering up Charles Rivers for an intimate lunch in NYC with Premier Gordon Campbell, Partnerships BC head Larry Blain and potential P3 investors.

Was it Larry Shugart’s job to tell those investors that they’d be watched carefully to protect taxpayer interests? Not likely.

But the really troubling issue is the part CRA played in the issue management nightmare that began with the leak in mid November 2003 of letters from CPR and BSNF railways highly critical of the privatization process.

In the latest release of records relating to the BC Rail scandal, I received the Premier’s and Minister’s talking points for media and opposition questions. Time after time the suggested response begins… “The issue was carefully reviewed by the Fairness Commissioner…”

But how carefully?

Following the CPR and BNSF letters CRA agreed to release an early and incomplete draft of its report on the process to give the appearance that the process was proceeding as it should.

Then the going got sticky. On November 23rd David Morhart asked Larry Shugart to speed up the release of the final report (“pulled him away from a college football game on TV”).

Shugart agreed to have the report to the government “for Dec. 3 at the latest.”

So in just ten days at the most, CRA miraculously fully investigated and cleared up the problems raised by CPR and BNSF.

Or maybe they didn’t because after December 3 the government began its editing process which was still underway December 15, as new facts and figures came in.

That’s not all that’s wrong with the BC Rail fairness report.

Sometime before October 29, 2003, Omnitrax asked Finance Minister Gary Collins for a meeting. Collins informed Chris Trumpy who consulted Charles Rivers Associates on the appropriatness of such a meeting. The Fairness advisors told Trumpy such a meeting would be “inappropriate from several perspectives.”

As we know from RCMP disclosures, Collins went ahead and met with Omnitrax in early December, just as the Fairness Report was being put to bed. Obviously Collins did not let the Fairness Advisor know that he went against their advice.

Would that have changed the report or would CRA have found a way to disregard its former opinion?

And the final problem with the Fairness advisor?

The BC Liberals, right up to the conclusion to the trial in the fall of 2010 continued to rely on the CRA report to support the conclusion that the BC Rail sale was conducted fairly.

But if that is the case, why did the government hide the fact that CRA was part of the criminal investigation? Undisclosed until now is the fact that in June 2004 as the deal was being completed, the RCMP asked Charles River Associates to participate in an interview “in support of an on-going police investigation.”

In a letter from David Morhart to CRA the government waived confidentiality requirements in their contract in order to facilitate the RCMP’s request.

Recordings and transcripts of that interview must be part of the evidence made unavailable through the plea bargain. Something else for the public inquiry.

What does this all have to do with Liquor privatization?

It tells me that the taxpayers needs their own fairness advisor to assess the work of the government’s Fairness Advisor.

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