$6.2 million inducement ended BCR corruption trial

With various accusations of BC Liberal corruption being discussed, it is worth repeating how the first major one came to a highly unsatisfactory conclusion for taxpayers and anyone interested in honest administration of justice. The following was first published in 2014.

A study¹ in the Journal of Criminal Law and Criminology examined plea bargaining and innocence. It revealed,

“…that more than half of the innocent participants were willing to falsely admit guilt in return for a benefit. These research findings bring significant new insights to the long-standing debate regarding the extent of plea bargaining’s innocence problem.”

A widely accepted standard of law requires that guilty pleas shall not result from improper inducement, such as bribery. A publication by the Public Prosecution Service of Canada states,

“It is important to note that prosecution agencies and law societies across Canada, as well as the Criminal Code, provide some relevant guidance to lawyers working in the criminal justice system. For example, in the Deskbook of the Public Prosecution Service of Canada, the chapter concerning plea and sentence discussions and issue resolution indicates that Crown counsel’s approach to resolution discussions must be based on important principles, including fairness, openness and accuracy…”

In the BC Rail political corruption case, we are expected to believe that two separate plea negotiations involved Basi and Virk but that only one needed review by the trial judge. $6.2 million was paid by the Liberal Government to defendants, a move that ended the BC Rail trial “on the eve of what was expected to be explosive testimony by former finance minister Gary Collins.”

clark harperIf Justice Anne MacKenzie did not know about the $6.2 M inducement, the test of fairness and openness was not met. If the judge did know that a substantial payment for the benefit of defendants was a vital element of the plea agreements, it should have been rejected, in accordance with Supreme Court of Canada directions. I believe MacKenzie chose to ignore the cash inducement and accept very lenient terms of sentencing so that the trial could end. Soon after, she was elevated to the B.C. Court of Appeal.

That Basi and Virk walked with a minimum of inconvenience is not particularly bothersome since they were in court as sacrificial lambs following corruption that extended broadly. However, it is entirely inappropriate that their political masters paid no price and now Liberals use control of the legislature to ensure a continued lack of transparency.

This week, NDP MLA Kathy Corrigan, a member of the Public Accounts Committee, made a motion,

That Mr. David Loukidelis and Mr. Graham Whitmarsh be requested to appear before the committee with respect to additional questions relating to the committee’s continued consideration of the Auditor General’s report titled An Audit of Special Indemnities.

The vote, with NDP MLA Bruce Ralston in the Chair, was predictable, with BC Liberals against and others in favour:

  • – LIB, Maple Ridge-Mission
  • – LIB, Shuswap
  • – LIB, Prince George-Mackenzie
  • – LIB, Port Moody-Coquitlam
  • – LIB, Vancouver-False Creek
  • – LIB, Chilliwack-Hope
  • – LIB, Richmond-Steveston
  • – NDP, Burnaby-Deer Lake
  • – NDP, Vancouver-Point Grey
  • – NDP, Coquitlam-Maillardville
  • – NDP, Vancouver-Hastings
  • – IND, Delta South

Ms. Huntington, a thoughtful and effective independent MLA, said this to the committee,

Undoubtedly, the Auditor General’s office did an enormous amount of work. It was with a narrow question in mind, however. It did not pursue the relationship between the plea bargaining and the lifting of the indemnity — or the indemnity. Thus, it leaves open the questions that are being pursued right now.

All that being said and my discomfort that this committee would be pursuing it in this manner, I do think there are issues here that have never been explained to the public, which the public is deeply concerned about — always have been and still bring it up if the issue arises in any way, shape or form, at least to me.

I think there is an issue of transparency here that if we can resolve would be to the benefit of the public. As difficult as the decision has been to me, I will support it — the motion — because I believe the public deserves the transparency that this discussion might provide them.

Lew, a reader and occasional commenter, has been following this issue closely and expressing himself to members of the Legislature. I think his recent correspondence is worth repeating:

This is written in regard to the September 30, 2014 proceedings of the Select Standing Committee on Public Accounts considering the Auditor General Report: An Audit of Special Indemnities. You have all been previously copied on my January 20, 2014 letter to the Auditor General, and I wrote you on July 07, 2014 with further observations and questions, so I will not repeat them here.

When I wrote him with questions on his report, the Auditor General responded that he was not at liberty to provide any answers except to the Select Standing Committee on Public Accounts, within the scope of the audit or his mandate. I therefore forwarded my questions to the Committee with a request that my questions be asked. To this date the questions have not been asked of him, nor of any other persons before the Committee. In addition, several members of the Committee have expressed that they have outstanding questions. This is obviously a very unsatisfactory situation given the public’s right to know.

This morning [9/30] a motion was moved to take steps to assist in that regard but it was voted down by the BC Liberal members of the Committee.

To members Corrigan, Huntington, Eby, Simpson, and Robinson, I extend my appreciation for your efforts to date, and a hope that you do not consider this matter over.

To members Morris, Sullivan, Dalton, Kyllo, Throness, Yap, and Reimer, I would like to say that you have earned my contempt for your actions. My feelings would not be as strong if there were any of you who had answers the questions I have asked. But you do not and none of you appear interested in obtaining or sharing them in any event. That is contrary to your duty both as an MLA and as a Committee member.

There were two plea deals negotiated in this case.

  • One between defence counsel and the special prosecutor involving pleas and sentencing recommendations, disclosed to the court through a joint submission and a Statement of Facts.
  • And another between defence counsel and the government represented by the Assistant Deputy Attorney General (ADAG) dated October 14, 2010 involving guilty pleas in exchange for release of financial liability, which was not disclosed to either the special prosecutor or the court.

The Auditor General says in his report auditors were told that the guilty pleas negotiated between defence counsel and the special prosecutor would never have been entered by the defendants but for the prior plea deal (October 14, 2010) between the ADAG and the defendants.

MLA Morris says, “I think, to David Eby, that assumptions are made that this $6 million was used as an inducement to plead guilty. We don’t know the discussions that took place between counsel and the special prosecutor in this case, and they’re the ones that negotiated the guilty plea. We will never know what those discussions were all about. As a former police officer, I’ve been intimately involved in plea bargaining in the past.”

The discussions between the special prosecutor and defence counsel are not the issue here. The issue is the October 14, 2010 plea deal between the defendants and the ADAG to extinguish the special indemnity agreements by way of an Agreement to Release in exchange for guilty pleas and how that affected the course of justice. And we do in fact know quite a bit about that agreement and the surrounding discussions from the Auditor General’s report.

Notwithstanding MLA Morris’ reference to the wrong discussions, he has tendered to the Committee his expertise as a police officer with intimate knowledge of plea bargains. Perhaps he would be prepared to assist the Committee’s understanding of how these work in practice by advising:

  • how many plea bargains he witnessed or was a part of that involved securing guilty pleas through cash payments by the Crown to the defendants;
  • the amount of the highest cash payment;
  • whether the court was advised of these payments made in exchange for guilty pleas; and
  • what action he took as a police officer regarding these payments.

In the event MLA Morris has no plea bargains of this nature to report in his experience, perhaps he could advise the Committee why that would be, whether one of that nature would be illegal, and what the duty of the Committee would be if it discovered through its deliberations on the Basi/Virk indemnities that government officials may have been party to such a plea bargain.

¹Lucian E. Dervan and Vanessa A. Edkins Ph.D., The Innocent Defendant’ s Dilemma: An Innovative Empirical Study of Plea Bargaining’ s Innocence Problem, 103 J . Crim. L. & Criminology 1 (2013).

From the platform document “A New Era for British Columbia”
Where BC. Liberals’ ethical code is written.

Categories: Basi/Virk, BC Rail, Ethics, Justice

22 replies »

  1. According to the MLA's bio for Mike Morris:

    Before being elected to the British Columbia Legislature, Mike had a 32-year career in the RCMP, retiring in 2005 as the Superintendent for the North District. Mike has also been an adjudicator and mediator with the Health Professions Review Board, has served on the Drug Benefit Council for BC since 2009, and is the Past President of the BC Trappers Association.


  2. A little off topic bit I found it interesting that Hunter Harrison, the president of CP Rail claims that a 7 mile long unused railway track is worth 400 million bucks, but bought BC rail which was a1000 mile long operating railroad with over 1300 employees and tens of thousands of box cars, hundreds of locomotives for 700 million when you factor in the tax write off that came with the sale, oops I mean lease when he was president of of CN Rail, as far as im concerned this is the best description of the screwing the citizens of BC got from Gordon Campbell and the Liberal party of BC with the broken promise about not selling BC Rail!


  3. Worthy of mention is the 'removal' of Judge Bennett who was 'seized' by this case but when her rulings 'seemed' to lean toward the defence calling certain witnesses, she was 'promoted' to a higher court position (perhaps against her principles) by pm harper on the recommendation of BC senior prosecutor berardino.

    This most unusual happenstance of judge swapping also occurred in the Alberta trial of Ernst vs Encana when matters were not going Encana's way.

    Also worthy of note is judge McKenzie's predilection of being more than lenient on high profile members of Hell's Angel's drug kingpins.


  4. Thank you Norm for not letting this issue die. The whole scandal surrounding the sale of the BCR and the subsequent cover-up is BC's version of Watergate, except here in BC Nixon would have been re-elected. Same dirty tricks, but no Woodward and Bernstein employed by media like the Washington Post, willing to expose the corrupt in power. Instead, the media here licked boots for advertising handouts and access – and still do. God help us.

    Warren White
    Gordon Head, Victoria.


  5. This is not a trivial matter. If the judge in the BC Rail criminal trial knew about the written offer by the Attorney General’s ministry to release Mr. Basi and Mr. Virk from any and all liability relative to their conduct on the BC Rail matters, including liability for over $6 million ONLY IF they pleaded guilty and kept quiet about it, she was required by section 606 of the Criminal Code of Canada to reject the guilty pleas, because there is no way by legal definition the pleas could be deemed voluntary under those terms. If she did not know, it was because there were actions and a conspiracy including officials of the Attorney General’s ministry to ensure she did not learn of it. Those actions might well rise to obstruction of the natural course of justice.

    The Auditor General’s report clearly lays out all the elements required for what former Attorney General Geoff Plant has publically written could not happen as a matter of law. Mr. Plant says there could be no legal agreement tying the waiver of the $6 million to the guilty pleas. But the Auditor General says there was. His report also clearly establishes the fact that the Assistant Deputy Attorney General made the offer to the defendants in writing through their counsel and stipulated that the Agreement to Release was conditional on the guilty pleas and would not be signed until after the pleas were delivered.

    So, with all the elements of an improper (if not illegal) inducement present through the use of the indemnities reviewed by the Auditor General as currency, what do the BC Liberal members of the committee established to examine the report do? They quash a motion to interview the individuals involved in the deal. That action constitutes a clear dereliction of the Committee’s duty to properly examine the Auditor General’s report. How can the Committee possibly present the Auditor General’s audit report to the Legislature with scores of unanswered questions arising from the report unanswered?

    Despite writing directly to the Auditor General, the Clerk of the Legislature, and every member of the Select Standing Committee on Public Accounts individually, none of the questions I have regarding the Auditor General’s audit of the special indemnities relative to Mr. Basi or Mr. Virk were asked of any witness before the Committee, and none of the members of the Committee can or will answer the questions.

    Since reporting to the Legislature means reporting to the citizens of British Columbia, the Committee’s report had better include the fact it is incomplete in the extreme, and the fact that legitimate questions from the public to the Committee were disregarded. Anything less will expose the report as a sham.


  6. BC Liberals and their friends love to bring up the Fast Ferries as an example of the NDP's incompetence — while ignoring their own budgetary excesses on the Port Mann bridge, the Trade and Convention Centre and BC Place (to name a few.)

    Mismanaging tax dollars is bad… but the BC Rail sale/lease and the scandal surrounding it is far worse. It cannot be allowed to just go away — and the sooner it is dealt with, the better, as memories and documents have a habit of fading away over time.


  7. I wrote to all the members of the committee this morning. It's simple, either this is a perversion of justice, or the BCLib members would be anxious to call Whitmarsh and Loukidelis to tell us why it isn't perversion of justice. I have no expectation of any openness or accountability on this file ever. It's over for this one.
    But the actions by the BCLib members of the Pub Acc Committee this week should not be forgotten.

    Thanks Norm for shining a last waning light on it. — Merv Adey


  8. From a Canada Revenue Agency tax bulletin: “¶ 32. Where personal legal expenses of an employee (or of his or her family) are paid or reimbursed by the employer, the amount paid is a taxable benefit to the employee. “

    Payments of Basi's & Virk's legal expenses should have resulted in millions of dollars of taxable income. Did the Province of British Columbia also agree to pay income taxes for the two.

    Or, did the Province of British Columbia act in any other way to relieve the income tax burdens arising from the plea agreements?

    Given that Basi and Virk were guided by excellent lawyers, it is a certainty that potential income tax liabilities were dealt with specifically.

    It may be that payment of $6.2 million turned into nearly $9 million in ultimate liability. Either that, or the CRA agreed to special treatment of taxes due.

    Government withholds details of financial matters related to the plea agreement for obvious reasons.


  9. David Michael Michaels was determined to be guilty of committing $65M investment fraud after he took advantage of elderly Vancouver Island residents.

    Suppose Michaels paid someone else millions of dollars to take responsibility for the fraud, so that he could walk free and clear.

    Is there any doubt that police and prosecutors would be all over his arrangement, trying to ensure that the real guilty party was punished?

    Why does the justice industry – police, lawyers. judges, Attorney General – abdicate ethical responsibility when offenders are from their own ranks.


  10. I believe it was closer to 2400 miles/kilometers long (makes no difference – its a colossal screwing! A point well made about the disparity between BC Rail and the Arbutus line! Maybe $400 would be a more realistic figure). Thanks (I think) Norm, for bringing this up, although Ive long since given up hope of seeing any justice. Maybe it will grate a little on the perpetrators nerves, just a little, to know there are still some of this that remember the scant details of this horrendous affair.


  11. I’ve been thinking about how disconcerting it must be for David Loukidelis and Graham Whitmarsh to have the BC Liberal members of the Select Standing Committee on Public Accounts quash a motion that would have given them the opportunity to clear up the issues that affect their reputations.

    After all, as chair of the Law Enforcement Board of Alberta, Mr. Loukidelis must be vexed that someone as legally astute as former Attorney General Geoff Plant is of the opinion that an agreement tying the guilty pleas in the BC Rail trial to the waiver of liability for over $6 million in legal fees would be illegal. And yet the Auditor General says that is precisely what happened under Mr. Loukidelis’ watch. Surely he must be chomping at the bit to clear the air.

    Mr. Whitmarsh must also be anxious to explain his role in signing the backdated Agreement to Release that wiped out the indemnities containing the liability provisions, because that constituted the government’s obligation under the deal that Mr. Plant says could not exist as a matter of law.

    The BC Liberal members of the Committee have done both men a great disservice and I plan to write both with my commiserations and a copy of my questions to the Auditor General and the Committee to see if they wish to clarify the issues. Hopefully many of you will afford them the same opportunity. It’s the least we can do.

    David Loukidelis is currently Chair at the Law Enforcement Board of Alberta. His address is:
    Chair,Law Enforcement Review Board
    Justice and Solicitor General
    1502 Oxford Tower
    10025 – 102A Avenue
    Edmonton, AB T5J 2Z2

    Graham Whitmarsh is currently principal at Tangram 1, and his e-mail is

    According to its website, Tangram Strategies is an independent group of action oriented, outcome focused, problem solvers with deep experience in the major issues facing healthcare, information technology and risk management; an agile team of senior executives who bring exceptional business, crown agency and governmental expertise to solve the most difficult problems, recover critical projects and address the defining challenges of today.

    Of interest are two of his team members. Lynda Cranston, who resigned as CEO of Provincial Health Services Authority, because she approved 118 wage increases that contravened government policy, according to the chairman of the board that employed her. And Jon Schubert, who according to the Globe and Mail announced his resignation as CEO of ICBC after a scathing government audit raised concerns about excessive compensation for managers and Finance Minister Kevin Falcon called the situation at ICBC “unacceptable”.


  12. I suppose that would be the same Whitmarsh who signed the letter firing Roderick MacIsaac, leading to his suicide, and who is $400,000 better off thanks to a very generous severance package paid for by the BC taxpayers.


  13. Separate from the issue of inducement, there is the question of authority to consummate the secret plea deal hidden from the court.

    The release from liability for $6.4 million in accumulated legal fees signed by Deputy Finance Minister Whitmarsh on October 20, 2010 was the government’s consideration in exchange for the guilty pleas as required by the terms of the government’s secret October 14, 2010 agreement with the defendants Basi and Virk.

    But did the Deputy Minister of Finance have authority to sign the release? His authority to forgive a debt or obligation to the Crown was limited to $100K.

    The original indemnity agreements stipulated that any monies advanced for legal fees constituted a loan. The indemnities contained loan repayment provisions based upon the eventual outcome of the trial. If the defendant was convicted, and remained convicted after his appeal rights were exhausted, the loan was immediately due and payable. If the defendant was acquitted and remained acquitted after the Crown’s appeal rights were exhausted, he was indemnified by the Crown regarding the funds advanced.

    All parties to the indemnity agreements clearly intended that the funds were to be advanced as loans, specific loan clauses were incorporated into the agreements to that effect, the agreements were authorized on behalf of the Crown by the Deputy Minister of Finance, who possessed the prime designated authority under the Financial Administration Act (FAA) to issue loans on behalf of the Crown, and according to the Acting Auditor General, it was the establishment of the loan that enabled the Crown to demand security from the defendants against any liability created under the terms of the indemnity.

    The only legal instrument in place to advance the funds was the indemnity, and once the funds were advanced as loans under that instrument, the government had the option of waiting for the terms of the indemnity to determine liability for the accumulated amounts at the conclusion of proceedings, or intervening using whatever available delegated authority existed to arbitrarily assign liability. Once the accumulation reached $100K the Deputy Minister of Finance ceased to have that authority, and at the time he signed the Agreements to Release, he was forgiving approximately $6.4 million. He did not possess that authority.

    There are at least two other reasons he did not have authority based on the way the agreements were constructed, but I’ve already taken liberties with space on this forum.


    • Lew, your arguments are always factual and fair and, if subjects of your comments feel uncomfortable, so be it. Improved policies and performances are the objective of political commentary. It is a necessity.

      Any contribution from you is alway welcome and there is always space.


  14. Hello Norm:
    I’m certain that Christy Clark is at this moment trying to clear her mind of all negative thoughts. When she is a the legislative building she is held to account and must dodge the questions as much as possible. It is likely the reason she avoids Vancouver Island.

    Clark will repeat the same mantra over and over convincing herself that if it is said often, it will come true. She only lies when she is smiling. She is the cause of all the current BC unrest, debt and corruption.
    She will confess if cornered by the media with microphones and cameras.

    She excels in “false knowledge”. Example: Site C Dam is good as it creates electricity and creates jobs. (Ignore all debt facts, environment and protests)

    LNG & Kinder Morgan pipelines: selling resources, jobs. (Ignore oil spills, fishing, tourism, First Nations)

    Oil Spill Response: World Class. (Ignore underfunding … response doesn’t exist)

    MSP, ICBC, BC Ferry increases let’s the public know it is expensive. (Ignore the critics on dividend skimming and debts.)

    She needs to ride in the reality rig.
    Like: East Vancouver police car at midnight, special education classroom, Emergency Room -Saturday night, Grizzly Bear Hunt, Welfare Office Monday mornings, Paramedics on the Malahat, fracking near family water wells.

    Of course, she does not let these negatives thoughts enter so she dwells in her dream world of False Knowledge.


  15. BC Rail is the epitome of corruption with the BC Liberals. It still deserves a judicial inquiry.

    Not well tutored in the BC Rail fiasco, one thing stands out like the proverbial sore thumb: Political friends of Gordon Campbell and the BC Liberals profited by this sale; the corruption involved happened at the higher echelons of the BC Liberals and: the two accused were bribed by a $6 million bailout to plead guilty before those in the upper echelons of the BC Liberals were called to account.

    It now seems that the ooze of the BC Rail corruption has entered the BC Liberal Party by the “donations” scandal, where the current Premier was paid an annual stipend, paid in full by those donating to the party.

    Definition of graft.

    Graft (Noun): the acquisition of gain (as money) in dishonest or questionable ways; also : illegal or unfair gain.


    • I too am somewhat short on details of this ‘epitome of corruption’ known as BC Rail. I don’t know what the final ‘sale’ price was. Some say one billion$, other sources say it was $250 million less due to some tax shenanigans. Whether it was $750 million or $1,000 million, it seems a relative bargain compared to Site C. Imagine, 10 to 15 BC Rails, complete with 10 – 15 times the rolling stock, infrastructure and whatever else (land, head offices AND a viable business, times 10, for the price of ONE Site C!
      I think someone was short changed, and I think it was US!


  16. This “travesty” cannot be simply swept under the rug. This scandal is one of the worst, in this province and indeed Canada’s history. Yes a political corruption inquiryal into this issue alone, would show the people in B.C. and elsewhere that indeed the politics of the province are ‘truly” corrupt and that members of the political and judiciary, at the time, have much to answer for.
    Not only can a case be made for prosecution of these people for graft, but also political corruption, breach of trust, and possibly a host of other offence’s, both federal and provincial, related to corruption within governance.
    I have followed this scandal, for quite a few years, learning much from Lew, Barry G, yourself Norm and a host of others.
    This issue must be dealt with, regardless of the fallout, or ruined careers, that it will undoubtedly do.

    Liked by 1 person

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