WATER WARS
Colin Beach has been called many things over the course of his 20- year legal battle with the B. C. government and former premier William Vander Zalm.
A lawyer for the province once complained in court that the 66- year- old West Vancouver resident is “just stubborn.” A B. C. Supreme Court judge later overruled him.
Beach isn’t stubborn, said Justice Peter Leask, he’s “persistent.”
Persistent enough to have spent two decades pursuing a civil claim he filed against the province, Vander Zalm, several former B.C. cabinet ministers and bureaucrats, and an erstwhile business rival, a mysterious Vancouver woman named Margaret Annett.
Beach claimed that Annett and her now- defunct company, Western Canada Water Enterprises Inc. ( WCW), were given preferential treatment by Vander Zalm and his Social Credit government, when the grinning gardener and theme- park impresario was B.C. premier in the late 1980s and early 1990s.
Despite the fact he has no formal legal training, Beach spent years building his case before hiring lawyers to represent him in court. He worked with private investigators, filed access to information requests, searched through boxes filled with musty documents and interviewed potential witnesses. He even put Vander Zalm through an intense interrogation process known as a discovery.
Beach says his efforts were slowed by procedural delays and the late disclosure of relevant materials. He refused to let things rest. “I just kept putting bricks in the wall,” he says.
Nor did he mind working alone through much of the process. “I’m a self- starter. Rarely have I enjoyed working with other people.”
His persistence appears to have paid off. Last month, after two decades of on-again, off- again proceedings, Justice Leask ruled in his favour, finding that the province, Vander Zalm and several other co- defendants intentionally — and unlawfully — assisted Annett’s company, by making exclusive arrangements with it and conducting dubious lobbying efforts on its behalf, mainly in the U.S.
Justice Leask found the provincial government and Vander Zalm guilty of misfeasance in public office. Misfeasance is defined to include the deliberate disregard of official duty, coupled with knowledge that the misconduct is likely to injure.
Misfeasance in public office is an exceedingly rare finding, and the first against a premier or former premier since 1959, when Quebec strongman Maurice Duplessis was found to have overstepped his authority in cancelling a provincial liquor licence.
At issue in the Beach case was fresh B.C. water, prized around the world for its purity and abundance. In the mid-1980s, several local entrepreneurs, including Beach and Annett, hatched plans to capture millions of gallons of surface water — from lakes, streams and waterfalls — then ship the commodity in bulk to the United States and other countries.
What the entrepreneurs needed were licences and agreements from the province. Under suspicious circumstances, Beach eventually struck out. Annett and WCW did not.
Vander Zalm and his government’s “strange” and “unlawful” actions were against the public interest and were made at t he expense of WCW’s competitors, including a company owned by Beach, Justice Leask wrote in his judgment.
Remarkably, neither Vander Zalm nor his fellow defendants were called by the province’s lawyers to testify at trial, a “failure” from which the j udge says he drew “an adverse inference.”
Margaret Annett did not testify either; however, her son William Annett did. While Justice Leask said he found him “self- contradictory,” “untruthful” and not credible, Annett insists he was open and completely honest with the court. ( The National Post was unable to find Margaret Annett for comment. Her son refused to say whether or not she is still living.)
Vander Zalm, now 82, professes bewilderment at the judge’s findings. Reached at his home outside Vancouver, he says he has only “glanced” at the lengthy judgment, adding t hat he “doesn’t know a whole lot about it.”
Why did he, his cabinet colleagues and provincial bureaucrats go out of their way to unlawfully assist WCW, a fledgling, Vancouver-based penny stock outfit, in its efforts to secure and then sell a public commodity outside Canada?
While last month’s judgment doesn’t address that, Vander Zalm says he merely lent some “public relations” muscle to WCW, as any premier would have done for a local company asking for help.
But case documents filed in B.C. Supreme Court suggest that other factors may have been at work, including alleged scenarios involving Vander Zalm, his former environment minister, John Reynolds, political considerations and money.
Margaret Annett had a certain style, recalls her former communications and marketing consultant, Gerard Lenoski. A diminutive woman who favoured Chanel suits, she “could be quite charming, but she definitely exhibited a good dose of ruthlessness,” he says.
Annett f ounded WCW with her son William in 1985. William was designated its chief executive officer, and his mother the president. But she seemed to run the show, says Lenoski, while the soft- spoken William stayed in the background.
The Annetts managed to list their company on the Vancouver Stock Exchange, and later on the Toronto Stock Exchange and the NASDAQ in New York. In- vestors included political strategist and pollster Alan Gregg, members of the Black family that once controlled a national chain of camera and photography supply stores, and a few London, England- based investment firms.
According to various press accounts, the company raised about $ 25 million. Lenoski says the Annetts spent lavishly. They threw celebrity studded parties to promote the water company, including a $ 400,000 extravaganza at a famous Manhattan restaurant. Canadianborn TV actor Alan Thicke was f l own in f r om Los Angeles to host the event, Lenoski recalls. Chefs from Annett’s favourite restaurant outside Vancouver were also flown to the party, to prepare meals for hundreds of guests.
Another of Annett’s grand affairs — the opening of a water- bottling plant near Vancouver — was attended by t hen- premier Vander Zalm himself. He delivered a speech praising WCW and its efforts to sell fresh B.C. water abroad.
According to Justice Leask, the B.C. government was working behind the scenes to give WCW favourable treatment over its competitors, including Colin Beach.
Beach was a young man when he first approached the province with a plan to export fresh B. C. water in bulk. That was in 1983, two years before WCW was incorporated. He had found what seemed like an endless supply of fresh water, from a source just north of Vancouver, On behalf of a company he formed, Coast Mountain Aquasource Ltd., he applied for provincial licences that would allow him to export the commodity.
In 1984, Beach was given conditional approval to develop the foreshore at his selected site, an important first phase in his water export plan. Meanwhile, negotiations continued over the price he would pay the prov- ince for pulling water from the source.
WCW entered the scene and managed to quickly secure an attractive and lucrative supply of fresh water from a lake further up the coast. The source was a former Crown asset, which the province dealt to WCW with “no proper public process providing for expressions of public interest,” according to Justice Leask.
WCW was not required to apply for a provincial water licence, nor was it asked to meet other requirements imposed on Beach and other hopeful water magnates, men and women who wanted to compete in the bulk water export business.
“Aside from the favourable terms in the agreements between the province and WCW, there is evidence of other acts by provincial authorities favouring WCW,” Justice Leask wrote in his judgment. These included, he noted, assistance in 1991 from Vander Zalm, in letters of support he wrote on behalf of WCW to public officials in California.
At the time, the company was, attempting to arrange bulk water sales to California, which was experiencing a drought. Beach’s company and another company were also trying to land contracts there.
B. C.’s then- environment minister, John Reynolds, a career politician who would later become a Reform party and Canadian Alliance party MP, also wrote letters of support for WCW. According to the judgment, while he was environment minister, Reynolds wrote 10 letters to officials in Santa Barbara, Calif.
The letters “were drafted for the minister’s signature by Mrs. Annett,” Justice Leask found. At the bottom of her draft copy was a note in her handwriting. “John, thanks for going to bat for us again ...”
WCW also encouraged Vander Zalm to write letters of support on its behalf, and he obliged, the court found. A water resources official in one drought- stricken California district testified that she received a letter from the then- premier, promoting WCW. At the time, the district was negotiating with several potential suppliers of water, including Beach.
The California official told the court that the lobbying effort made her feel “very uneasy ... I did not find it appropriate for Premier Vander Zalm to insert himself in the process.”
The district decided to go with a local water company, which had supply contracts with Beach’s company, Aquasource, and another Canadian outfit called Snowcap. This did not sit well with Margaret Annett. She wrote to Vander Zalm again, complaining that Aquasource and Snowcap “are, in effect, ‘ fronts’ for a purely American operation put in place to avoid British Columbia’s restriction on transferring water licences to non- Canadians.”
Almost immediately, the B. C. government declared a moratorium on new bulk water export permits. The moratorium did not apply to WCW, which already had an agreement with the province to export water, but it effectively killed Beach’s dream of shipping the commodity to thirsty ports around the world.
Former WCW consultant Lenoski claims in a sworn affidavit filed in court that an official in the Vander Zalm government told him the water export moratorium “had been drafted intentionally so as to stop new licences from being issued to potential competitors of WCW, while not restricting WCW’s rights to ship (water).”
Last month’s court decision does not refer to Lenoski’s affidavit or his allegations. But Justice Leask did find the government had imposed the moratorium with an intention of assisting WCW.
Lenoski also claimed in his affidavit that Vander Zalm and his Social Credit government showed “recurrent and blatant favouritism to WCW,” explained in part “by Annett’s self- professed cultivation of familiar relationships with both Vander Zalm and Reynolds, and her financial and other political support of their Social Credit party.”
In another sworn affidavit filed in B.C. Supreme Court for this case, a former assistant to Margaret Annett claims that Reynolds used to telephone her boss “every couple of weeks” and that he occasionally visited Annett in her downtown Vancouver office after regular business hours.
Dianne McBride, now deceased, also claimed in her affidavit that more than once, “Margaret Annett handed an envelope to me, which she asked me to courier to John Reynolds at his office on the north shore of Vancouver ... The envelope contained cheques. I knew there were cheques inside the envelope because they (sic) were not sealed.”
McBride added that she “did not know if the cheques were made payable to John Reynolds or to the Social Credit party.” In his judgment, Justice Leask makes no reference to the McBride allegations.
Reynolds was not a defendant in Beach’s lawsuit and was not called as a witness at trial. He is not accused of any wrongdoing.
He is now special strategic adviser for McMillan LLP, a Canadian law firm. Reached at his office in Vancouver this week, he denied acting inappropriately. He said that writing letters of support for local constituents and businesses “isn’t unusual at all,” and he said he never personally received any cheques from Annett or WCW.
His party could have received cheques from Annett and WCW, he added, but he can’t recall if that ever happened.
“My staff looked after that stuff,” Reynolds said, adding that he’s aware of last month’s court decision, and that he’s happy for Colin Beach. “When someone has something taken away from them, they deserve restitution.”
Beach says it’s “very good of Mr. Reynolds to take that position.” But he’s still looking forward to a court assessment of damages for his lost income, which could be in the tens of millions of dollars.
The assessment may be some time coming; Beach’s lonely legal odyssey isn’t over yet. Last week, the B.C. government, Vander Zalm and a former senior government bureaucrat served notice they will appeal the guilty verdict.
VANDER ZALM SAYS HE MERELY LENT ‘PR’ MUSCLE TO WCW.