Auditor General

Pretend capitalists loot and pillage BC

I’ve been examining audited financial statements of two favourite public enterprises: BC Hydro and PAVCO. I completed preliminary examination but a paucity of meaningful data makes that a difficult task for an outsider. I’ll write more about these subjects in weeks that follow.

After assuming leadership of BC Liberals, Christy Clark promised voters “enhanced stewardship of assets” but she has been no better than Gordon Campbell. Instead, she has managed a decline in stewardship as looters fill their pockets with a quickening pace. They know that voters will soon end the trickery.

Auditor General John Doyle reported the province’s deficit is understated and he criticized P3 projects, lax IT controls, uncontrolled spending and improper accounting of Legislature expenses. He also reported that BC Liberals have lost track of British Columbia’s forest resource and are failing to protect the future of provincial forests. He says they have not defined objectives and cannot ensure that management practices are effective.

In response, BC Liberals heap disdain on Auditor General Doyle and force him to seek Supreme Court orders to gain access to hidden documents.

Hiding documents from public view is one strategy to subvert open and accountable government. The most recent annual report of BC Hydro is 100 pages long, most of it expensive puffery of zero importance to analysts. One single paragraph provides news that should shock every taxpayer and consumer of electricity. That paragraph reports BC Hydro’s commitment for long-term energy purchase agreements had grown to $55.6 BILLION, as of last March.

In the first eight years of Liberal rule, BC Hydro’s energy purchase commitment averaged $13.6 billion. Since then it has quadrupled and if the rate of growth continues, the total will exceed $100 billion in little more than two years from now.

Remember that I said document hiding is one method enabling misinformation. Were you and I to seek details of the huge sums that BC Hydro owes to private power producers, we would get nowhere. The details are hidden by claims that disclosure would harm private business interests. Well, no one can argue with that statement. If the truth were known, we’d have to build new courthouses and new prisons.

Another method of subverting the public interest is to issue an avalanche of information – so much material that meaningful data is lost in drifts of useless and tedious bumf. The private power industry knows how to play that game, a fact proven by 18,000 pages of material put on display at a recent open house allegedly held to inform the public about the Narrows Inlet projects near Sechelt. These add more unneeded private power to the public utility system. Remember Hydro CEO Dave Cobb stating,

“If it doesn’t change, it would be hundreds of millions of dollars per year that we would be spending of our ratepayers’ money with no value in return.”

I wrote this a year ago in BC Hydro – ultimate comfort station for pretend capitalists, a rant warning of the extent of financial misconduct that is crushing BC Hydro:

“Providers of private power generation face no marketing, revenue or cost risks. They will have no unsold product, no price uncertainty and no selling costs. BC Hydro has become the ultimate comfort station for pretend capitalists.

“Something happened with the Campbell government a few years ago. The Premier, his associates and beneficiaries simply lost the ability to constrain their own greed. Philosophically, many Liberal supporters agreed with privatization but they expected it would happen honestly. Instead, the public assets of British Columbia were treated like those of the former Soviet republics.

“BCR’s railway assets went into hands of the Premier’s friends but its fabulous land bank was eased into private hands almost without notice. Because the carried value for land on BCR books was far below its market value, the extent of the fourberie was not apparent. The corruption of this dishonest privatization may yet bring down the Campbell/Clark government but, in comparative terms, BC Hydro is even more egregious.”

13 replies »

  1. Gordon Campbell began, grand larceny BC. Christy kept up Campbell's corruption, especially Campbell's theft and corrupt sale of the BCR. That was Campbell's first election lie.

    Campbell's second election lie, the HST wasn't on his radar? BC people are still paying that scam and theft, to Campbell's partner in crime Harper. BC citizens will never forget Harper and Campbell's treachery, one that one either. The dirtiest tactics in the book were used, to steal our money, to give big business. Both of them knew they couldn't win elections honestly, so they cheated.

    Harper and Campbell have been a litany of, lies, deceit, corruption, thefts, dirty tactics, dirty politics and cheating to win. Neither one of them, have any morals or ethics, what-so-ever.


  2. I must confess I'm torn between Dix's steady-as-she-goes policy ( it seems to be working and we certainly don't want to spoil, even in the slightest, our opportunity to whip the corrupt BC Liberals next May) and what I also consider essential: a warning shot straight across the bow of this disgraced government and their privateering buddies to make them think twice before gorging themselves with public booty as they head out the door. I still feel the BC Liberal government and their parasitical pals need to be publicly warned of certain prosecution of any and all misappropriations of public money, including featherbedding, kickbacks, collusions, insider wheeling and dealing and any other breaches of public trust; but I'm afraid such a statement falls into the category of negative politics Dix has (so far) eschewed. Notwithstanding semantics, I, for one, do not consider such a statement to be partisan mudslinging, but rather a responsible, prudent warning to protect the public interest. Hopefully the favoured invitees to our smorg will look up from their gluttony and realize they better get the hell outta here before their breathing hole freezes over.

    Last thing we want to do is suggest there's a cut-off date before which prosecutions won't be pursued; that would preclude investigating the corrupt sale of BC Rail and the corruption of the corruption trial, the sudden and suspicious suspension and the $6 million taxpayer-funded hush money paid to the only two BC Liberals convicted in the scandal so far. Goodness knows there are plenty of other candidates for investigation but the decade old BC Rail scandal remains the most infamous, if not the most expensive: that would be the power purchase contracts forced upon public-owned BC Hydro (they say those could total $100 billion dollars but, given the BC Liberal propensity to lie, it could be much more, like their 2009 deficit which turned out to be six fold bigger than forecast, over $2 billion…these numbers boggle the mind but have to become the concern of all British Columbians.)

    Another reason why a warning statement is warranted now revolves around the axiomatic salvage of BC Hydro by tearing up these purchase commitments. Inasmuch as this will precipitate lawsuits ( a threat designed to entrench privateer parasitism,) it seems to me the sooner the warning is given, the better the legal argument that buyers or traders of subsequent IPP contracts knew, or should have known, the security was not thereafter guaranteed pending investigation into breach of public trust and that compensation may be minimal or nominal.

    Easy for me to say; I'm not leading a political party or running for election. The political and legal factors involved are much more complex than a simple guy like me knows about. Yet, we will all have to pay for the forensic unravelling of this intentionally byzantine and booby trapped maze of intertwined and incremental sabotage of the public weal, spawn of neo-right ideology that facilitates BC Liberal licence to lie and cheat. While we might eventually need a legal glossary as we see justice being done, for today, we need to keep it simple and clear: pillagers will pay.


  3. Value for your taxpayer dollar? I sincerely doubt that. The forensic audits for this crap will cost an enormous amount of money. I suggest you adopt a measure of the “proceeds of crime” legislation, and criminal corruption investigation(s)into one all encompassing form of prosecution. Testify or jail, and follow the money…tried and true methods of dealing with malfeasance in other parts of the world. We have our own “home grown version” of corruption right here in B.C. The Quebec government has been turned on its ear, by its own anti-corruption enquiry, I'll bet we can do one better. In what can only be described as a “haven for malfeasance and kleptocratic behavior”, it is time the taxpayers in this province, received
    full compensation, and justice, for the past 11 years of political manipulation.


  4. Fifty-five point six billion dollars! A lot of bread. That would purchase 55.6 BC Rails, if indeed we did receive 1 billion dollars for the asset. I believe it was more like $750 million which would equate to 74 BC Rails. Heck, for that amount of money we could 4 lane the trans Canada from Kamloops to the Alberta border 85 times! (Christy just announced she'd ante up $650 million to do the job! Fat chance – it cost $8 million to do the 3 km from Monte Creek to the First Nation's burial site.)
    These disgusting opportunists SHOULD be faced with something more than disgraceful dismissal come May. And to think that they'll receive a LIFE TIME, INDEXED PENSION for this corrupt behavior.
    Only in Quebec, you say? Apparently not.
    John's Aghast


  5. Pay attention to the trend line. It may already be too late to put the brakes on and by the time the new government takes control, the debt owing to private power producers will be over $100 billion. This is the single largest financial scandal in BC history but many in the media would rather talk about bike lanes.


  6. If it takes 18,000 pages to tell me it is good for me, something is wrong.

    No business savvy private enterprise would undertake the cost of 18,000 pages of submission without a reasonable expectation they will succeed. There are three scenarios….the EAO has already been told this project will go ahead and have relayed said information to the proponent(requires an unethical government)….or, the private enterprise is not business savvy at all….or, the private enterprise does not have to be business savvy because the rewards are so lucrative they can't go wrong.

    Scotty on Denman posted an excellent comment. I understand the “steady as she goes” policy but lean towards a very, very low shot across the bow…the EAO must be forced to pay attention to the part of their mandate that truthfully evaluates socio-economic benefits…or lack thereof. If that shot isn't taken now, how do we know they will take any in the future? Any costs incurred by revocation of EPA's for high risk projects at this evaluations stage pale in comparison to costs many years down the road after we have relinquished control. Save the exponentially higher cost of forensic analysis later.


  7. easy solution kiddies!……nationalize (provincialize?) all the private power producers in the province.HEHEHE……that would teach the poopheads!


  8. There was much good discussion about IPPs at this summer — but all of the posts were wiped out when the Sun and Province went to the Facebook requirement.

    Now I can't check back to see the name of the IPP defender, who was quite convincing… though still left a bad smell in the air. His main points, if I recall correctly: 1.) After 20(?) years of operation, a project is turned over to the government. 2.) Hydro could not have built such projects anywhere near as economically. 3.) The IPP guys pay royalties on the water used to make the power… and significantly more than Hydro pays.

    Especially if 1 and 3 are true, these values need to be considered into the calculation of how much we are overpaying these guys for power. It's a voluminous piece of work and I wish you well on it, Norm.


  9. Considering the BC population numbers a scant 4.5 million, the hydro “obligation” to the govt. licensed thieves is the very definition of unsustainability.
    I'm with Scotty on this one and maybe lenin's ghost has a point.
    I'm not looking forward to another round of the NDP any more than I have enjoyed Cambell/Clark's kleptocracy. Maybe Mr. Dix has good reason to keep his powder dry…maybe not.


  10. Scott Simpson's article in the Vancouver Sun may be accurate for what it contains but the article misleads because of what it does not report. He writes,
    “Hydro’s debt, which ratepayers will eventually have to pay, is set to keep growing — to $13.3 billion compared with $7.5 billion in 2006 — and $18 billion by 2015.”

    Why does Simpson not let his readers know this:
    Hydro's commitment (excluding Powerex) to private power producers grew from $7.899 billion in 2006 to $53.109 billion in 2012? That $45 billion increase in debt since 2006, because of arcane financial reporting methods, is not readily apparent on BC Hydro financial statements.

    The Vancouver Sun chooses not to make this an issue because their reporting is biased.


  11. Simpson reports that Hydro's debt may grow to $18 billion by 2015 but, if accuracy were the aim, he would have included the debt to private power operations.

    He should have written: “Hydro's direct debt and its contractual obligations to private power, which ratepayers will eventually have to pay, may exceed $100 billion even before 2015.”


  12. I chose to ignore the trend line. I cannot stomach the current mess, much less project it into the future. Perhaps we'll be struck by an asteroid! This is much too much to comprehend. I'm pretty fortunate, being well beyond my 3 score & ten, but I (try not to) worry about my progeny. Perhaps my forefathers did for me as well, but the current situation seems to be accelerating at warp speed. WHAT A FRICKEN MESS!
    John's Aghast


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