BC Ferries

No news is likely bad news

With the first quarter of British Columbia’s current fiscal year ending, public agencies and crown corporations will soon release annual reports and audited financials for the year ended March 31, 2012.

A vast quantity of money is wasted, filling these PR publications with purple prose and graphics that few persons read, beyond the creators. Serious analysts pay attention to audited financial statements but rather little else is of interest in documents of management self-justification.

After the Fukushima nuclear disaster, I bet the annual report of the Tokyo Electric Power Company talked not of disaster but of unprecedented opportunities to modernize and renew operations.

Like other armchair auditors, I aim for a better understanding of public spending through review of annual reports. Unfortunately, most content is not designed to inform, it’s intended to promote the subject organizations and ensure that analysis is difficult. Publications are issued almost exclusively as pdf images, files that hamper data extraction. Additionally, reports tend not to be consistent from year to year nor from one agency to another. Nor do they routinely match other government data purporting to explain the same operations. I’ve often encountered this situation in reviewing executive remuneration.

Probably worst of all is that material amounts and situations are often given no more weight than comparatively minor issues, particularly if inconvenient. For example, BC Hydro’s last financial statements commit only five sentences to “Liquidity Risk”, the possibility that BC Hydro will encounter difficulty in meeting obligations associated with financial liabilities. Commitments under BC Hydro’s energy purchase agreements increased from $17 billion to $43 billion in fiscal 2011 alone yet the Annual Report provides almost no explanation and no trend expectations. It covers that amazing change with this statement:

“BC Hydro does not believe that it will encounter difficulty in meeting its obligations associated with financial liabilities.”

In British Columbia, it’s easy to be cynical but I see signs the Liberals are headed for rough times as detailed financial matters are revealed. The strongest indicator is delay. When corporations or agencies drag their feet issuing financials, arguments may be raging between external auditors and the spin doctors. When news is awkward, the PR staff must work on excuses and refined presentations. That results in delay. Last year, BC Hydro’s audited financial statements were dated May 18, 2011; the year before, May 10, 2010. Here it is mid-June and we’re still waiting for BC Hydro’s 2012 financials.

Hydro’s third quarter statement suggested BC consumers should be concerned. While the quantity of energy purchased was down by 1.5% compared to the same period a year before, the cost of energy was up by 33%. Notes to the unaudited quarterly financial statements fail to disclose Hydro’s energy purchase commitments although it repeats the relatively insignificant contingency arising from California pricing disputes in 2000 and 2001. This, I’m afraid, is the standard for financial disclosure in British Columbia. They’ll report harmless information and withhold the meaningful.

The Clark Liberals claim a commitment to open government and boast about granting citizen access to a broad range of datasets, such as birth rates, carbon emissions statistics and information on schools. Just don’t expect anything that reveals their incompetence.

Between 2005 and 2010, the average date Pavco’s financials were complete was May 12. This year, we have no financials but we have lawsuits and a spate of resignations, including that of CEO Warren Buckley and directors Peter Brown and Derek Brindle. Along with executive turnover, Pavco’s delay in issuing financials and its failure to report on the final costs of rebuilding BC Place suggest the real news, when we get it, will not be good news.

Financials of the British Columbia Investment Management Corporation have historically been dated May 13 but as of June 17, the 2012 financials statements are not issued.

Until 2010, BC Ferries annual financial statements were dated, on average, May 12. As of June 17, 2012, they are still not available to the public although financial information was released to media late last week. Given the delay, not surprisingly, the company is reporting its worst ever operating loss. Spinmaster and CEO Mike Corrigan claims the result is actually good news since they had budgeted for an even larger loss.

Yeah, right. More good news like that we don’t need.

Further reading:
The Profiligate BC Hydro, Erik Andersen, The Common Sense Canadian, June 18, 2012

8 replies »

  1. With the BC Liberals I'm sure if they can find a way they will withold any and all financial reports through to the next election if possible.
    Even if they do report it will be with highly suspect evasion and manipulation of the truth as you have shown Norm with their statement of BC Hydro.
    Grant at 'The Straight Goods' has a post up now about some interesting liberal shuffling of funds through BC Ferries and the truth about their debt. and how it has come to be.
    As with John Doyle we may have to go through the courts to get even a smidgeon of truth on all their dealings.
    Meanwhile they are busily selling off what little income generating assets we still retain. Shamefull!!


  2. Norm: We live on Vancouver Island and are beholden to BC Hydro for heat (baseboard), hot water and all other electrical needs. Our bills during the winter have risen to the $700 range for 2 months. We decided to invest in a ductless heat pump system in an attempt to reduce some of Hydro's ever increasing costs. Part of the incentive was a grant of $500 from the Feds and $1500 from the Province through their “LiveSmartBC” program. The project was completed on December 21 and all appropriate paperwork was completed and forwarded to the two agencies. When we arrived home from a trip down south, a $500 cheque from the Feds was waiting for us. As nothing was sent out from the Province, I thought I should check in case some paperwork was incomplete or had gone astray. Somewhere around mid-April I phoned LiveSmartBC and a recorded message said that they had some “software” problems which were being resolved and all cheques should be sent out by the end of April. Well, nothing came, April went, then May. Decided to call again. Another recorded message that they were having software problems but they were being resolved and they expected cheques would be issued by the end of July, starting with the earliest to latest submissions. As I worked for years in several financial positions with the BC Government, I know that these financial obligations should be committed against the Fiscal 12 Year (ending March 31), but I have a sneaking hunch that they do not know what their FY12 financial position is, that is one heck of a mess, and have probably run out of money but don't know how to tell us.


  3. But, they have money for things that matter to the politicians and senior bureaucrats. For example, BC Ferries had $24.5 million to lend the developer (Jawl family) of their new head office in Victoria. That almost equals the $25 million equity contribution the province made to BCF on March 31, 2012.

    The BC Investment Management Corporation is also a tenant of the Jawls in another Victoria building. In the last four years, rent paid by BCIMC rose 52% and senior executive salaries increased 82%. Assets managed were up only 5%.

    I'll be writing more on these subjects soon.


  4. I think I now understand, why people riot.

    The entire country is a, cesspool of Corruption. However, BC rivals the most corrupt country's in the world. AND, just imagine, a lovely post in England, for being the most corrupt politician, in the recorded history of Canada?

    Who says crime doesn't pay? They should eat their words, when it comes to this country and this province.



    Every freaking day, you, Alex and Ian find ways to probe even deeper into this rotten machine we call the Provincial government (kudos on your hard work for that).

    I can't wait until 2013…I want The Dummy and her band of thieves out NOW before they can do any more damage, like sell off the LDB!!!


  6. Re; Gloria, June 18th, 4:30 pm.

    Methods to prevent this nonsense, do exist in other jurisdictions. Perhaps a better question for all of
    us should be, “How do other countries and jurisdictions, deal with this overt criminal behavior?”
    Read up on the Austrialian Crime Commission, and the former Hong Kong Independent Commission against Corruption.

    Our answers as taxpayers, are out there. Our politicians in the future, need to implement the same measures, to save what's left of democratic integrity, and ensure this “crap” does not happen again.

    This current “regime” really needs to spend some collective time, behind bars!


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