MLA questions disappearance of $ 6- million loan to two ex- staffers
John van Dongen produces new documents in BC Rail corruption case
With time running out on the legislature session and maybe this government as well, independent MLA John van Dongen was on his feet in question period this week, still seeking an explanation for one of the great mysteries of the era.
How, precisely, did the Liberals contrive to waive repayment of $ 6 million in legal fees incurred by Dave Basi and Bob Virk, the two ex- staffers who pleaded guilty in the BC Rail case?
The fees were advanced under an agreement that required repayment in the event of a conviction. Instead, when the duo pleaded guilty, and were thus convicted of corruption, they were excused from having to repay any part of the advance.
The waiver was concocted by two senior public servants, the then deputy attorney general and deputy minister of finance. But ever since the deal was done in October 2010, van Dongen has been asking on what legal authority they did it.
He went at it in the house last spring, citing a section of the main provincial budget law, the Financial Administration Act: “A debt or obligation to the government may not be forgiven without the approval of the Lieutenantgovernor in Council” — the cabinet — “if the amount forgiven is $ 100,000 or more.”
No cabinet order was forthcoming to authorize the $ 6- million waiver, thereby allowing members of cabinet to say they’d played no part in letting the duo off the hook.
But as van Dongen noted, no one — not the deputy minister of finance, nor the deputy attorney general, nor anyone else — had the authority to forgive a debt or obligation of that size without a cabinet order.
His challenge brought non- answers from Attorney General Shirley Bond.
But after news reports noted the feebleness of the response, her ministry weighed in with an official explanation for what happened.
“The agreement to remove the repayment conditions was made before Basi and Virk pleaded guilty or were convicted,” it said. “At that time, their convictions, which could give rise to liability had not yet occurred. At that time there was no existing legal liability to repay.” Thus, the section of the law quoted by van Dongen, the one about forgiveness of debts and obligations, did not apply. Instead the waiver was executed under another section of the act, one that allows the government to grant indemnities and guarantees, including many such agreements to pay legal bills in cases involving staffers and civil servants.
“That authority includes the setting of terms and conditions for indemnities ( and) also the legal authority to change or remove conditions,” said the May 5, 2012 statement from Bond’s ministry. “It thus provided the legal authority to modify the Basi and Virk indemnities by removing the repayment conditions.”
As happened with a stroke of the pen from the deputy minister of finance Graham Whitmarsh, who acted on legal advice from the deputy attorney general David Loukidelis.
The answer didn’t satisfy van Dongen, who continued to beaver away for the actual paperwork connected to the decision, seeking to discover if it supported the official version of events.
And there he was in question period Monday, citing a document that appeared to challenge the official story. The MLA had obtained, through his intervention in one of the courtroom proceedings arising out of BC Rail, a copy of one of the actual legal indemnity agreements, concluded on July 22, 2005 and signed by the then deputy minister of finance Tamara Vrooman.
It committed the province to pay all of the legal bills for the accused but it also flatly stated that “each amount paid constitutes a loan to the indemnified person.”
Van Dongen: “The funds advanced were in the form of a loan. Now, when someone gets a loan from a credit union or bank, that sets up a debt. That sets up a liability. That establishes a legal obligation from the borrower to the financial institution.
“So starting in 2005 this government advanced public funds by way of two loans to two political staff, and by October 2010 Basi and Virk had accumulated a debt to the province of $ 6 million — a $ 6- million loan.”
His point being that the money advanced to Basi and Virk for their legal bills was recognized in writing as a debt or obligation to the government from the outset, not just once they pleaded guilty.
Could the government explain how “two loans, two debts totalling $ 6 million” were “magically wiped out” without the necessary cabinet order?
Replying, Attorney General Bond was no more forthcoming than last year.
“The member continues to bring this issue to the legislature, and I continue to provide exactly the same answers to him every single time he asks the question.”
Yes she does. Even when new documentation challenges last year’s version of events.
But maybe her ministry will follow up as it did last year, and put out a statement clarifying how the government managed to forgive the $ 6- million “loan” to Basi and Virk without activating the apparent legal requirement for a cabinet order.
Perhaps, as van Dongen joked Tuesday, the Liberals took a leaf from a certain notorious memo to file, rewrote the 2005 agreement to strike out the word “loan,” then backdated the whole thing as if the debt or obligation had never existed in the first place.