Tuesday, January 13, 2004

Auditor should answer real questions about BC Rail deal
By Paul Willcocks
VICTORIA - Judith Reid is right. The legislature raids don't mean the BC Rail sale should be stopped.
But taxpayers should still ask for an independent review by the province's auditor general.
Deal opponents got a boost when police raided the legislature offices of Reid's aide Bob Virk and Finance Minister Gary Collins' powerful assistant Dave Basi. Police also searched the office of Erik Bornman, a federal Liberal wheel and a lobbyist who worked for OmniTrax, one of the unsuccessful BC Rail bidders. Virk was heavily involved in the sale. Basi worked closely with Collins, who co-chaired the sale steering committee with Reid. Bornman's company lobbied both ministers.
That's all we know. And it's not enough to suggest wrongdoing, or any reason for delay.
But there are still questions about the deal, separate from the investigation. And given the likelihood of more asset sales, it makes sense to make sure this one was done right.
Premier Gordon Campbell points to a review of the sale by a U.S.-based consultant and says it provides all the answers. That review, by Charles River Associates, found the process was fair and the price paid for the railroad was toward the top of the range you would expect. It is, overall, a positive report.
But it also raised questions suggesting that the way the sale was handled could have been unfair and cost taxpayers' money.
And with all respect to the company, it was paid $300,000 for the review, and likely hopes for more work. Its expertise is unquestioned - the consultants have helped governments around the world auction off assets and establish markets. It's reputation is important. But it was still paid by the government.
The consultants' report raised several questions.
They found that the $750 million CN Rail paid for the company was at the top of the expected range - good news for taxpayers. But Charles River didn't do any in-depth review of the fairness of the $250 million CN Rail paid to acquire the past tax losses of CN. Taxpayers don't know if fair value was delivered.
The consultant also found significant leaks. One of the finalists leaked information in violation of confidentiality agreements.
Another public leak revealed BC Rail management's forecast of the effects of the sale on the company and communities. That politically embarrassing leak sparked a big internal review, complete with forensic auditors, to find the source.
And in a third leak, the consultant said, information was sent to someone who shouldn't have had it. The report is irritatingly unclear about details. It says only that the lawyers involved promised the documents were returned or shredded. But were they forgotten? Were they important? The consultant says no, but doesn't give enough facts to support the conclusion.
Finally, the consultant raises concerns about the basics of the deal. The Liberals said they would evaluate proposals based on price and a range of other factors, from economic development to job preservation to benefits for First Nations.
But the fairness review says it was really all about the money. CP Rail and Omnitrax - unsuccessful bidders - complained that they couldn't get a handle on what the government really wanted. They put more emphasis on the entire package. After the decision, they realized the auction really focused on price. If they had better information, they might have offered more money.
These are all real concerns. And to make sure the mistakes aren't repeated - and to determine if taxpayers got a fair price for the tax losses - the auditor general should be provided with the funding needed to review the deal.
That's a problem. The government has foolishly chopped the auditor general's funding, despite warnings that critical reviews would be sacrificed. (The Alberta auditor receives almost twice as much money.)
Restore the funding. Support the review. We need the information.
Footnote: It was Gordon Campbell's birthday this week. Here's his horoscope. "Stop trying to be perfect and start being yourself. That, in a nutshell is the message of the stars on your birthday, and if you heed it the next year could be one of the best of your life. Once you stop comparing yourself to others you will find the happiness you seek."

Liberals vulnerable for chopping crime-fighting
By Paul Willcocks
VICTORIA - NDP leader Carole James has picked a political winner in challenging the Liberals on organized crime.
James launched her attack on the weekend, calling on Premier Gordon Campbell to spend more on crime-fighting and demanding a public inquiry into our enforcement efforts. The move was opportunistic, reminding the public of the current mysterious scandal swirling around the federal and provincial Liberals.
But it's also a good issue for the NDP. The gap between the Liberals' get-tough rhetoric and their actions is wide, and criminals are getting a break from Liberal budget cuts.
The NDP can't be accused of fear-mongering. Solicitor General Rich Coleman has warned repeatedly of the growing threat from organized crime. And after the raids on the legislature offices of top Liberal aides and senior federal Liberals, the RCMP warned that orgainzed crime's tentacles were reaching into every corner of the province.
James pointed out that the gobenrment's tough talk hasn't been backed up with action. Specificially, she called on the Liberals to lift a three-year funding freeze imposed on the Organized Crime Agency. The agency is the main police weapon against gangs and organized crime.
But its budget has been frozen by the Liberals since the election. The agency warned in its last annual report that the freeze has left it unable to do its job.
The Liberals have also failed to deliver - so far - on an election promise to give municipalities 75 per cent of the revenue from traffic fines. That would be a $50-million boost for their policing efforts. (Premier Gordon Campbell said the Liberals only promised the change during their first term, and they will deliver before the 2005 election.)
James also called on the government to abandon plans to cut the solicitor general's budget, which is slated for a 19-per-cent reduction in next month's budget . That includes $20 million from the budget for public safety.
It's a good issue for the NDP.
The Liberals have said crime - particularly organized crime - is a serious problem. They've called on Ottawa to come up with more money and tougher laws. So it's hard for them to come up with a logical defence of why they are cutting or freezing budgets for the people who are on the front line. Even those who don't agree that more enforcement is the best solution have to wonder about the Liberals' lack of consistency.
James also called for a public inquiry into organized crime, by someone like Justice Wally Oppal. She thinks we could examine our current efforts, look at what people are doing in other places and come up with a new plan in time for the 2005 budget.
There is a need for some sort of review of our response to organized crime, but it needs to be broader and more informal than a public inquiry, and move us way beyond the usual responses.
Take drugs. The marijuana trade is considered a key driver of the current crime world. Our solution tends to be more police, more raids and a wish for tougher sentences.
But a study in the Canadian Medical Association Journal last year suggests we waste most of the $465 million we spend on drug enforcement in Canada. Big arrests or seizures make headlines. But they change nothing for the producers or consumers. Back in 2000 police claimed a major victory in the war on heroin when Vancouver police seized 99 kilograms of heroin and Toronto police grabbed another 57 kilos. Some six million doses snatched from the supply chain.
And nothing happened on the street. The supply stayed the same. Heroin prices actually fell slightly. Users didn't cut back. Crime didn't go down. Attacking the supply - as the U.S. has shown - isn't the answer.
It's past time for a major rethink.
But meanwhile, James has shown a deft touch with a damaging issue for the Liberals.
Footnote: The problem for the Liberals - again - is that their tax cuts and balanced budget deadline have left them unable to respond. There is no room to come up with significant money for policing or victim support or the Organized Crime Agency, without offsetting cuts in other areas of the government already facing their own belt-tightening woes.

Nice tan, but few answers from the premier
By Paul Willcocks
VICTORIA - Premier Gordon Campbell landed after his flight from Maui, traded his travel jeans for a dark suit, crisp white shirt and bright tie, and headed to his Victoria office to face reporters.
It didn't go well.
Not that anything terrible came out about the police raids on the legislature.
But crowded in with about 30 reporters and cameramen, I was left mostly puzzled by what the premier did or didn't know and why he chose to act as he did.
You couldn't expect him to be entirely forthcoming. As he pointed out, the worst thing that could happen would be a careless comment by a politician that somehow wrecked a 20-month police investigation.
But his answers on some critical questions were confusing, and close to contradictory.
Reporters were interested in the different treatment for two ministerial aides whose legislature offices were searched by police. Dave Basi, a key aide to Finance Minister Gary Collins, was fired within hours of the raids. Bob Virk, aide to Transportation Minister Judith Reid, is suspended with pay. The decision was made by Martyn Brown, the premier's top advisor, and approved by Campbell from Hawaii as police carried boxes from the legislature.
Campbell said Basi's job was more sensitive. That's true. Basi took a major role in scheduling legislation, working with other cabinet ministers, MLAs and the opposition. He was a much bigger player in the government than Virk.
So why not move him, or suspend him with pay like Virk until the facts are in?
"In view of the information we have, we acted appropriately," Campbell said repeatedly.
What information? No answer from the premier.
Not that he had to answer. He could have said he wasn't prepared to reveal what he knew that the public didn't.
Except that he had taken pains to plead ignorance through much of the press conference. "I don't think I know more than anybody else does," he said. "I can't tell you what's involved in the search warrants."
And that would mean Basi was fired because his office was searched, before he had actually been found to have done anything at all wrong.
It looks odd. (And, as one reporter noted, it suggests a double standard. The premier faced criminal charges this time last year, but rightly rejected calls for his resignation. But now he whacks an aide for no reason beyond a search of his office.)
It also looked odd that Campbell said he hasn't tried to get any answers to the obvious questions about this case, or asked for a review. Again, no one wants the politicians asking questions that could compromise the case, or be seen as interference.
But there's nothing wrong with asking Education Minister Christy Clark what documents police sought when they visited the home office of her husband, a key federal Liberal organizer. (Campbell doesn't have to share the information with the public.)
Campbell also said he know nothing more about the search warrants than the public. But while the information supporting the warrants is still sealed, the warrants - with information on the specific documents or objects they cover and the alleged offences involved - had to be shown to government officials before police entered the building. Campbell has every right to ask what the documents said.
Campbell said he also didn't know Basi and Virk were active in federal Liberal politics. The only party political appointees are supposed to work for is the BC Liberals, Campbell said, and he's made that clear to them all.
But their activities on behalf of Paul Martin were no secret.
The press conference was likely an indication of how difficult this is all going to be for the Liberals. The information is sketchy; the process extremely slow; and the cloud over the government will cast a shadow for the next year.
Not a great way to start this long election campaign.
Footnote: If the premier wants to make a good start at clearing the air, he could restore the budget cuts to the office of the province's auditor general. That would allow, among other projects, an independent review of the BC Rail deal. And that, under the current circumstances, would be money well-spent.