Thursday April 24, 2014

No rules broken in paying court costs, AG finds

Report leaves questions unanswered about sale of B.C. Rail

Russ Jones

B.C.’s auditor general found no political interference in a government decision to pay the legal bills of former ministerial aides who later pleaded guilty to fraud-related charges.

Russ Jones said the government acted legally in 2009 when it paid $6.4 million to David Basi and Bobby Virk through a process known as special indemnities.

The pair was charged with fraud and breach of trust in connection with the $1-billion privatization sale of B.C. Rail in early 2003, culminating in a police raid on the legislature in December that year amid allegations the men leaked government information to one of three bidders.

The case dragged on for seven years until it abruptly ended in 2010 when Basi and Virk made surprise guilty pleas and the government announced their legal fees had been paid.

While the report makes clear that government adhered to the rules, it doesn’t provide answers to unresolved questions about how fraud was involved in the sale of a Crown asset or why the taxpayers should have had to cover the legal costs of guilty parties.

At the time, the $6-million payout triggered public outrage. The NDP demanded a public inquiry into the B.C. Rail affair and John Doyle, Jones’ predecessor, went after court documents that might shed light on the case.

“Definitely there were a lot of concerns expressed about the fact that the government was not really transparent and open at the time,” said Tom Friedman, a former NDP candidate. “Certainly their actions left a great deal of suspicion in the minds of voters and the public.”

Special indemnities are agreements under which the government pays an individual’s private legal costs for circumstances not covered under the terms and conditions of his or her employment.

Jones said the Basi/Virk indemnities were made to forestall a lengthier trial that already cost $18 million, but he could not explain how senior public servants could have anticipated that. The payments were among 26 made between 2006 and 2011 involving 100 individuals that were probed in the review.

“We found no evidence of political interference in their administration,” Jones said in a media teleconference on Wednesday, noting that his office did more than due diligence. “We mainly reviewed over 10,000 documents.”

Jones said senior administrators purposely did not consult with the premier on the payments made to Virk and Basi.

“Overall we found the special indemnity wasn’t perfect, but it was principled.”

But the auditor general’s investigation did not have the mandate to examine circumstances beyond the indemnity payments. With that limitation — and a judge’s dismissal earlier this year of an auditor general’s application made for court documents in the case — the public may never know precisely what transpired.

Basi’s and Virk’s guilty pleas ended court proceedings and prevented further disclosure of what fraudulent acts were committed and how they were involved in the sale of B.C. Rail, a Crown corporation, to CN.

“British Columbians expected government to really come forward with the full facts at the time and this just festered over a period of years,” Friedman said. “There were a lot of suspicions that they were manipulated by government.”

Whether or not there was a conspiracy, there should have been full disclosure, which would have settled the matter years ago, he added.

“Government has a responsibility to keep the public informed about its actions. At the time, people were kept in the dark about the actions that had taken place. There’s so much left undisclosed about the whole B.C. Rail deal.”

In his report, Jones makes 10 recommendations, including improving how indemnity reports are administered by government and reported publicly.

He also said solicitor-client privilege provisions prevent him from auditing the legal bills associated with government-funded defence costs of criminal cases that include serial killer Willie Pickton and the current Surrey Six murder trial.

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