LDB, BCR and the Fairness Advisor problem

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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6 Responses to LDB, BCR and the Fairness Advisor problem

  1. RossK says:

    Wow, Ian.

    This is a lot to think about that goes way deeper than the passage in the initial ‘interim’ report (ie. the version that was used to do all the waving away of any and all ‘concerns’ expressed by CPR and BNSF) that was quickly released right before the deal went down just before US Thanksgiving that year (ie. November 14, 2003) that I focussed on in my recent post.

    That passage in the ‘interim’ report reads thusly:

    “Note: At the time at which this report was submitted, the transaction process was not yet complete. Thus, our observations and findings are based only on the steps that have occurred to date. Also, we have not interviewed the three finalist proponents so their comments and views are not represented in this document.”

    I leave it to others (maybe NVG?) to do the fisking of the final report that is ‘dated’ December 11, 2003 to see if one of the things the good Mr. Shugart did after the very fine Mr. Morhart got him up off the 2003 Thanksgiving tee-vee football-watching couch was to remove it.

    Remove the passage which, in my opinion, clearly demonstrates the whitewash at work, I mean.

    (btw, I have both ‘versions’ of the report because preserving paper trails is what ‘cultists’ do….If anyone wants ’em, feel free to send me an Email )


  2. Howard Grant says:

    As Canada’s first Fairness Advisor from 1997 it saddens me that governments at all levels are engaging fairness advisors too often to rubber stamp bad processes. A number of clients dont want an “independent third party”. They either dont want to or do not want to understand the real value a good fairness advisor can add to a procurement process.
    Everyone wins ( bidders, buyers and citizens ) when you conduct open, fair and transparent processes free of favoratism and bias.

  3. RS says:

    Excellent reportage gentlemen!
    How does that old idiom go – All’s fair in love and war – and nepotism? Or is it …love and war – and lobbying? …love war – and corrupt government???

  4. RossK says:

    Mr. Grant–

    You make a (perhaps the?) vital point.

    Thanks very much.


  5. e.a.f. says:

    it all stinks on ice. fairness, is in the eye of the beholder & the lieberals most likely are of the open as long as it benefits them & their friends its fair. Now as to the taxpayers & citizens, the politicians don’t care. They voted them back into office time & again. It might be nice if there was some fairness but it might be nice if B.C. didn’t rank no. 1 in child poverty for 8 consecutive years. I don’t expect anything to change in either category until there is a change in government & attitudes.

  6. cfvua says:

    Certainly is interesting how when the deal really started to stink that voila CRA was able to sweeten it up. Did anybody ever get to see the real report?
    And the deal did stink right from the first minute. Reeks worse than ever now.
    Thank you Mr. Reid.

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