Part two: The taxpayer's foreman
By Dermod Travis
According to B.C. Supreme court documents, the Transportation Investment Corporation (TIC) retained accounting firm KPMG in mid-2009 “to review a contractor’s invoicing process on a major British Columbia highway project.”
The project was the Port Mann and the contractor was Kiewit/Flatiron General Partnership.
See Part One: Haste, politics and intrigue: The perfect BC storm.
The matter before the courts included allegations of conspiracy, a cover up and misuse of funds, but details are protected by a gag order sought by TIC and KPMG.
Gary Webster – a partner at KPMG – was charged with overseeing that review, which is odd given that only a few weeks before he had been largely responsible for setting up and approving those very same processes, as a senior vice-president at CH2M Hill.
Webster had been retained by TIC as its representative on the Port Mann. He was the taxpayer’s foreman.
His power was clearly defined in the Kiewit/Flatiron contract: “The Constructor and the Design Build Contractor are entitled to treat any act of the Authority’s Representative…as being expressly authorized by the
Authority, and shall not be required to determine whether any express authority has in fact been given.”
For Webster to oversee KPMG’s review into what were many of his own decisions or decisions he had agreed to – and as a freshly-minted partner no less – might raise a few eyebrows in some circles.
According to his resumé, he was also the representative on the Sea-to-Sky highway project and the procurement director for the entire Gateway program.
One word not found in the resumé is overrun, as in cost. Sometimes a letter isn’t always as important for who signed it, or who it was addressed to, as it is for who was carbon-copied in it.
Such is the case with an October 9, 2007 letter from Garry Dawson, Project Director, Port Mann / Highway 1 project to Environment Canada.
Webster was carbon-copied, which means he was very much on the job when the government publicly recommitted to its $3 billion Gateway estimate – including a $300 million contingency fund – only four days before.
KPMG was still using the figure eight-years later, although it had been amended to read “over $3 billion.” Ever so slightly over.
The latest Gateway price tag totals $4.77 billion, nearly 63 per cent over the government’s first estimate.
The Port Mann alone was $3.3 billion, more than double its original estimate, enough to pay for nearly two Coquihalla Highways in 2016 dollars.
It wasn’t TIC’s only miscue.
In 2009, TIC’s board was comprised of then-deputy health minister John Dyble, then-deputy transportation and infrastructure minister Peter Milburn and then-Partnerships B.C. (PBC) president and CEO Larry Blain.
At the time, TIC placed one of the most costly bets in recent B.C. political history.
From its financial statements for the fiscal year ending March 31, 2010: “TI Corp entered into a number of hedging transactions during the year, through advanced rate setting (ARS), also known as bond forwards and forward starting swap instruments.”
It wasn’t until August 2013 that the magnitude of the wager was driven home.
TIC had lost $265 million.
Also missing from its website is the government’s 2012 letter of expectations sent by then-transportation and infrastructure minister Blair Lekstrom to TIC, and signed by its then-chair Grant Main.
In it the government stated: “TIC is to be in a positive net income position by 2017/18, four years after toll revenue collection commences.”
Not by a long shot.
In fact, one would be hard-pressed to find a single government forecast for the Sea-to-Sky highway project, the Port Mann or the South Fraser Perimeter Road that has been met.
Many of the same Port Mann players are now part of the Massey Tunnel replacement project.
TIC has been seconded by government to oversee it.
KPMG is the commercial advisor, Macquarie Group is “participating in a team as developer and financial advisor” and MMM Group is the government’s engineer.
All three worked on Sea-to-Sky and Port Mann.
Two of the four key TIC players back in 2009 – Webster and Blain – now work at KPMG.
The B.C. Liberal party hasn’t done too badly either with more than $500,000 in donations from the companies, including a cheque for $50,000 from Kiewit & Sons three days after the 2009 election.
Dermod Travis is the executive director of IntegrityBC.
