Saturday, July 14, 2012

The Sh*t Has Hit the Fan

The shit really hit the fan Thursday, splattering all over the BC Liberals and their plans to fast-track the sale of the LDB warehouses and warehouse distribution system.

NDP MLA, and my favourite BC politician at the moment, Shane Simpson, flung the poop when he dropped a bombshell, producing 39 pages of documents that show that the BC Liberals, as far along as June 2011, had no plans to privatize liquor distribution, yet weeks later, after then Solicitor General Shirley Bond was approached by Exel Logistics VP Scott Lyons, the government had a change of heart and forged ahead with the privatization plan, despite having no business case.

After Simpson released the documents, accessed through Freedom of Information, there was a media frenzy. I especially enjoyed Vaughn Palmer's grilling of Labour Minister Margaret MacDiarmid on CKNW shortly after Simpson's announcement. MacDiarmid's comment that, "governments do change their minds" is ridiculous under the circumstances when you consider that in June/11 LDB privatization was not on the table, yet after the meeting with Lyons August 25th/11, the privatization proposal was alive and moving forward. It reeks of the BC Liberal claims that the HST "was not on their radar" prior to the 2011 election, yet weeks after being voted back into government, Gordon Campbell and his Liberal Government were ramming the hated tax down tax payers throats. 

At least one respected political pundit, retired political journalist, Havery Overfeld, believes that current government cabinet ministers could be charged criminally if they go through with the sale and privatization.  

Do the Liberal government really think the general public are that stupid?

Reporter Bob Mackin has been exposing the whole sordid LDB privatization mess with his series of blog posts hash tagged #liquorleaks on his blog 2010 Gold Rush. In a post from May, Mackin released a document that shows that although the BC Provincial Government did not have a plan to privatize the LDB, Exel Logistics did and they were actively trying to sell it to the Campbell era Liberals in 2010. There is now proof that the lobbying of the Liberals by Exel goes back as far as 2005 and that Exel were attempting to help shape the government's Request For Proposals (RFP), using Progressive Group lobbyists Patrick Kinsella and Mark Jiles, both of whom have strong Liberal connections, so that Exel would have an advantage.

I can't keep track of all that is happening now as the story is so convoluted but here is a good summing up from Vancouver Sun reporter Jeff Lee. There are just too many of the same characters showing up with the same connections for this whole affair to be on the up-and-up.

Here are some of the major players and how they are connected:

  1. Exel Logistics VP Scott Lyons, who approached the BC Liberals to present this privatization plan is the same Scott Lyons who was high up in the food chain in The Beer Store organization, a chain of beer retail outlets that dominates the Ontario beer market with an 85% share and who are owned by Labbat Brewing Company, Molson Coors Canada and Sleemans Breweries.
  2. The Beer Store funneled well over 100,000 in political contributions into BC Liberal coffers since 2005, despite having no retail outlets here in BC, which you can read about here and here.
  3. Exel Logistics hired the Progressive Group to help lobby the government in regards to privatization of the LDB.
  4. Progressive Group is owned by Pat Kinsella, who has strong Liberal connections having been an adviser to Christie Clark during her successful bid to become premier last year. Kinsella was also former Premier Gordon Campbell's campaign manager during the 2001 and 2005 elections and who was involved in the whole BC Rail debacle .
  5. Mark Jiles, a Progressive Group consultant, registered in 2010, along with Kinsella, to lobby Liberal cabinet ministers including Rich Coleman, Shirley Bond and Pat Bell, on behalf of Exel Logistics, "to develop a new liquor distribution system for the Province of BC".   
  6. Mark Jiles, according to his LinkIn profile was a sales consultant for Labbat Breweries of BC. Mr Jiles is also no stranger to controversy when it comes to suspicious lobbying.
  7. Exel Logistics has run Alberta's liquor distribution since 1994. A recent post on highlights many problems associated with having a private monopoly running a provincial distribution system.

I hope that these latest developments peaks the public ire and motivates the people of BC to demand a halt to this process until the Liberals can produce evidence they are not just selling off public assets to appease big business and reward long-time supporters and friends. If they can produce a business case and a cost-benefit analysis that supports that this move is in the best interest of British Colombians, then I say let them put those forth for the public and private sectors to assess and then hold a referendum during the next election so that we have an actual say in what goes on in this province.

Until that time, I hope the likes of Shane Simpson and Bob Mackin keep putting Liberal feet to the fire.

You would think that after the HST disaster, the Liberals would have learned. 


  1. Clear example of the "goldrush mentality." Everyone involved with the CDO/mortgage/international banking meltdown had it as well. You know that the party is about to end, so you figure "screw everyone else, I gotta get mine!" Just like the one percent trashed international markets, the liberals and their friends are out to make sure they all have theirs befor the NDP get in. I suspect that the NDP will be in worse shape next year, than Obama was in 2008 when he inherited a stripped out shell of an economy.

    1. That is why I believe this process needs to be stopped, looked at and then made an election issue next March.
      It seems obvious to many that the Liberals are trying to ram this through before being punted from office

  2. I think I wouldn't mind the converting of public assets to private corporations if it wasn't always a matter of handing a government monopoly over to a corporate monopoly. There is no free market competition when at the end of the day we're still in a one store town. If the government wants to remove the stink of Socialism with a liberal application of the Spirit of Free Enterprise, then open it up to true competition.

    Take the entire thing apart and let anyone who can raise the funds, run a liquor warehouse/distribution centre in BC. Let the current private liquor stores act as their own importers and sell off the current government liquor stores to consortiums of employees or whoever can come up with the right price. Sure a company like Exel would be the big player but there would be nothing stopping the current smaller operators from setting up shop too and actually competing with the giants.

    As a government agency, theoretically there is an obligation to listen to the public. As a free market system, the consumer can vote with their feet and their dollars. With a private corporation holding the monopoly, we are, um, what's the word? Oh right...fucked.

  3. Great post. And I agree with lmoe. The government either needs to stay the course as a monopoly, or open it up into a free market. Everytime they sell a crown corp (ie. BC Tel, BC Gas) it becomes a corporate monopoly and the consumer (taxpayers) suffer.

    The LDB is one of the few branches of governement that actually MAKES money. I was told that this is why it's under a new Ministry virtually every year, to offset the books.

    As was pointed out by Harvey Oberfield, 9 months from an election is not a responsible time to be selling government assets.

  4. @lmoe Your Free Market system is a fantasy. It doesn't exist in real life. You completely open the market up with no regulation, those with political and financial advantage will eventually dominate. Then, you have oligarchy, or worse, fascism. Those who ignore history are doomed to repeat it.

  5. The LDB is not only poorly run but has a severe conflict of interests being the wholesaler, distributor, and retailer and frequently abuses that position by ring-fencing products at times of demand, preventing the private liquor stores from buying them, as well as moving products already on order for private liquor stores away from their back-orders and moving them into their own stores when it suits them.
    On the other hand we do not want a private monopoly either - why can`t those douches in the BC Liberal party realise that a private monopoly is just as bad as a public one?

    as @imoe suggests we need multiple wholesalers and distributors competing for the business of importers as is the case in much of the western world. Retailers should also be able to have bonded warehouses for elements of their own distribution and importing for their own stores (as it is in most of Europe and works just fine!)

    Monopolies do not work whether public or private.