Who’s Your (Sugar) Daddy?
Contract awarded to firm that once employed sons of
CN Rail chairman and Premier Campbell
May 16, 2005
Marred in controversy since day one, the sale of BC Rail to Canadian National in 2003 has been a political anvil for the Liberals.  And why
wouldn’t it be?

RCMP raids on the legislature, allegations of influence peddling, money laundering, and drug-dealing stain Gordon Campbell’s
government, and there’s not enough blush in the world to cover up the bruise on the party’s cheek.

This much is true: the sale, or investment partnership as the government is quick to point out, was contrary to the Liberals 2001 platform
promising not to sell off the company.

Not only did they sell it, but they sold it to a Liberal-friendly company. CN chairman David McLean was involved in Campbell’s 1993
Liberal leadership bid, as reported by Richard Warnica in The Tyee on Monday, and signed Liberal donation cheques totaling over
$36,000 under the CN banner in 2002 alone.

McLean, appointed to CN in the mid-nineties by former Prime Minister Jean Chrétien when it was operating in the red, was in charge of
privatising the company. McLean was also part of a business delegation that accompanied Gordon Campbell to the World Economic
Forum in 2002, and was on the board for the Vancouver Olympic bid corporation.

But the appearance of cronyism doesn’t stop with McLean’s enrichment through the deal—the BC Rail pie has many slices. CN is
mainly in charge of freight service, while the Great Canadian Railtour Company, which also operates Rocky Mountaineer Vacations, was
awarded a contract by CN last September to provide passenger rail services along a line from North Vancouver to Whistler, beginning
May 2006. The passenger service was discontinued in 2002 after consistently losing money.

Great Canadian Railtour founder Peter Armstrong has donated over $60,000 to the Liberals, both personally and through his companies,
since 2002 according to reports filed with Elections BC.

Armstrong told a North Vancouver Chamber of Commerce meeting in April, “For the longest time we tried to get on this route and couldn’
t, but now with the sale of BC Rail to CN, this opportunity was provided to us.”

Following his presentation, Armstrong told the North Shore News, “We’ve been given a phenomenal opportunity by Gordon Campbell
through the privatisation of BC Rail that private passenger rail service can come back on this route.”

Armstrong’s connections to CN are well established in Paul Grescoe’s book: Trip of a Lifetime: The Making of the Rocky Mountaineer.

The book raises further questions about Armstrong’s dealings as it details his struggle in starting up his companies, and his
longstanding battle with his publicly subsidised competitor—VIA Rail.

A list of past and present Armstrong employees pops up throughout Grescoe’s book. Notable among the names is Nicholas Campbell,
the premier’s son, and also Sacha McLean, now serving as president and chief operating officer to his father David’s company, the
McLean Group and Vancouver Film Studios.

CN chairman David McLean is quoted saying: “[CN] always looked upon him [Armstrong] with favour because he was an entrepreneur,
somebody who we always felt could do something with passenger service.”

“He had a problem with VIA, which wanted to go into competition with him,” McLean said.

While Gordon Campbell was handing out phenomenal opportunities to Liberal-friendly companies, another company short-listed for its
bid on the service was counting its losses. Whistler Railtours CEO, real-estate developer John Haibeck, told Terminal City that the
selection process for the private-sector passenger service was questionable.

“We put in a bid, we were told a lot of things that never happened, and we were told by certain people we had the best bid,” said Haibeck
in a phone interview. “In my opinion we got screwed.”

Haibeck is also featured in the book talking about his experience with the bid process. In the book, he says former VIA Rail president
Marc LeFrancois informed him that a deal had already been made between Armstrong and CN about the passenger service. When he
went to Victoria to garner support for his company’s bid, he made a peculiar observation after meeting with several cabinet ministers.

“Everywhere that I went in Victoria I would see Peter’s little train sets [presentation models of the Rocky Mountaineer],” he said.

Haibeck said he was initially told that CN and the provincial government would make the selection jointly, but later found out that CN was
in charge. The fact that CN made the decision raised concerns not only for Haibeck, but also for Scott Nelson, then the acting mayor of
Williams Lake.

“We want to reactivate passenger rail service in our communities, but we really haven’t had a chance to discuss it with CN. So how they’
re making their decisions is beyond most of us,” Nelson told the Vancouver Sun in February 2004. “Do you think someone who lives in
Montreal is going to know anything about Williams Lake?”

But transport minister Kevin Falcon dismissed Nelson’s concerns.

Another problem for Haibeck was the criteria for proposals called for a company with a proven track record of running successful
passenger trains. Whistler Railtours planned to operate the line in partnership with now scandal-embroiled VIA Rail, which Haibeck said
has a proven track record.

“Our partner was VIA Rail, the biggest passenger rail operator in Canada, they carry four million passengers [annually].  Peter Armstrong
carries 80,000 - to me that was just bullshit,” he said.

He said his company’s proposal was superior to Armstrong’s because his plan called for a year-round service that would stop in several
communities, but he was told that he lost because Armstrong’s proposal promised CN more revenue.

“I find that really hard to believe because we were going year round, he was only going from May to the end of September,” Haibeck said.
“It’s simple math.”

But Graham Gilley, vice president of marketing and communications with Rocky Mountaineer Vacations, said a fairness commissioner
oversaw the process, and his company was chosen on the basis of its track record. He said donations to the Liberal party had nothing to
do with the decision, and the fact that a fairness commissioner was involved is indicative of an open process.

“It wasn’t because of any relationship, it was because we had a proven track record,” he said. “[And] to sort of draw the conclusion that
this is an easy thing to make money at, and therefore it was handed to one party is somewhat ridiculous.”

BC Rail spokesman Graham Dallas echoed Gilley’s contention that the deal was fair.

“It was an open process, there was a fairness commissioner appointed by the BC government,” he said. “[Rocky Mountain Vacations
has] the reputation as the most successful privately held passenger tour train operation anywhere in North America”

Haibeck argues that the fairness commissioner did nothing.

“I was the guy that got her appointed back when the RCMP was carrying boxes out of the legislature because I was very concerned about
this relationship that existed between Peter [Armstrong] and CN and the premier,” he said. “I went to Victoria and I met with the premier’s
people…I made some threats, I said some things that maybe were threatening and that’s when they decided that they would appoint
[fairness commissioner] Gillian Wallace.”

Wallace’s report, sent to transportation minister Kevin Falcon last September states; “the process was conducted in a fair and impartial

However, although Wallace was present at the meetings regarding the deal, Haibeck says he’s never seen her report.

“Gillian Wallace never said a word in any of these meetings; she just took notes,” he said. “It wouldn’t have mattered anyway because
the government had already given CN the authority to make the deal.”

Another concern for Haibeck was the company that was handling the proposals, InterVistas Consulting Inc., he alleges wrote a report
“damning VIA Rail” in the past.

“That report was paid for by Peter Armstrong,” he claims. “I got into a big dust up with [InterVistas]…You can understand my paranoia
when these guys are sitting in a very strategic position to look at material and they had written this report for Armstrong damning my
partner VIA Rail.”

Paul Ouimet, senior vice-president of business and strategic planning with InterVistas, said the process was fair, given Wallace’s report.

“She had nothing but rave reviews about how fair and objective the process was."
on Act reflect the Government of Canada’s commitment to address the need to preserve the natural environment for current and future

Source:  Terminalcity.ca  (by Darryl Greer)
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