In-Sights: What’s good for the BC Liberals may not be good for BC Hydro

An article by Dermod Travis of Integrity BC. First published February 15, 2016, repeated here with permission.

One of the last things anyone would ever imagine the B.C. government doing is adopting an old NDP program, but that’s exactly what Energy and Mines Minister Bill Bennett did this month when he announced a five-year, $300 million hydro bill deferment plan for 13 mines owned by six companies.

Never mind that B.C. Hydro is already grappling with its own deferral problems to the tune of $5 billion.

Make no mistake, there’s a price to pay when B.C. Hydro becomes a political arm of government. The intertwining of self-interests gets complicated, while the interests of ratepayers can take a backseat to political interests.

Three of the six companies in Bennett’s deal were highlighted in a December Financial Post article, “Debt risks mount as Canada’s base metal miners sink deep in the hole.”

One could argue that the headline alone justifies Bennett’s move, except there’s no guarantee – other than a hope and a prayer – that B.C. Hydro will be repaid.

The issue of what happens if metal prices don’t rebound wasn’t addressed in Bennett’s news release.

Consider the “dire financial position” of one of the companies: Colorado-based Thompson Creek Metals.

Last year, Deutsche Bank analyst Jorge Beristain said the company is “quickly approaching an end-game” with debts of $832 million US.

According to the Financial Post, Teck Resources “has more than $3.5 billion US of debt coming due between 2017 and 2023 and lost its investment-grade credit rating last year.”

Taseko Mines, “has more than $260 million of senior notes coming due in 2019, while a $30-million US secured loan matures this May.”

It seems like only yesterday that the company sent Bennett off to lobby Ottawa on its behalf.

In January 2014, Bennett spent a day on Parliament Hill meeting with Natural Resources minister Joe Oliver and Industry minister James Moore to make Taseko’s case for its controversial New Prosperity copper and gold project.

By then copper prices had already fallen 27.5 per cent off their 2011 high.

Taseko is also in the midst of a messy proxy fight with Chicago-based Raging River Capital over $26 million in management fees Taseko has paid Hunter Dickinson Inc. Taseko and Hunter Dickinson share three directors in common.

Imperial Metals owns three of the 13 mines in Bennett’s deal, including Mount Polley, Red Chris and Huckleberry. In 2004, the government quietly forgave $3 million in liabilities owed it by Huckleberry Mine.

Imperial Metals’s controlling shareholder – Murray Edwards – has a net worth of $2.69 billion.

The B.C. Liberal party has done well from them.

From 2005 to 2014, the six companies donated $2.8 million to the party. Key executives kicked-in another $380,000.

Three of the six companies donated $97,010 to the NDP, $75,300 of it in 2013.

B.C. Hydro’s contractual obligations with private power producers have ballooned from $22.25 billion in 2009 for “2010 and beyond” to $56.2 billion for “2016 and beyond.”

It’s the gift that keeps on giving for everyone involved, except ratepayers.

In a 2008 call for independent power projects, 75 proponents registered with B.C. Hydro.

Forty-three submitted proposals and, in 2010, B.C. Hydro signed purchase agreements with 18 of the proponents.

From July 1, 2008 to September 30, 2010 – when B.C. Hydro was making its decisions – 14 proponents donated $268,461 to the Liberals. One donated $1,000 to the NDP.

Ten of the 14 signed purchase agreements with B.C. Hydro. One of the 14 who didn’t, never donated again.

Their before and after donations are interesting too.

For the 10 successful proponents, their donations more than doubled from $112,801 (January 2005 to June 2008) to $229,471.
After the deals were done, they settled back again. Seven donated $112,345 to the Liberals and five gave $16,225 to the NDP (2010 to 2014).

In 2008, the Mining Association of B.C. received a $295,188 grant from the Northern Development Initiative Trust (NDIT) to make the business case for the Northwest Transmission Line.

In turn, the association hired Australia-based Macquarie Bank to “determine the threshold of economic activity that would be required to make the construction of the (line) an economically viable infrastructure project.”

NDIT’s Highway 37 Power Line Coalition has 22 private sector partners.

Excluding the six companies in Bennett’s deferral program, independent power producers and those identified by B.C. Hydro as “potential future mines” for the transmission line, three trade associations and ten of the companies donated $962,220 to the Liberals and $10,320 to the NDP.

Macquarie has donated $17,050 to the Liberals.

The $404 million transmission line overshot its budget by more than $300 million, with a final price tag of $716 million. But who counts bills among friends?

There are the nine “potential future mines” that B.C. Hydro hopes will one day connect to the line.

With the downturn in metal prices, B.C. Hydro shouldn’t hold its breath in anticipation.

Excluding donations from Imperial Metals and Teck, who have interests in three of the mines, the most generous companies were Goldcorp at $795,700, the Lundin Group of Companies ($112,145) and Copper Fox Metals ($93,130).

One of the founding directors of Copper Fox Metals is Hector MacKay-Dunn, who co-chaired the B.C. Liberal’s 2009 election preparation efforts.

MacKay-Dunn is affectionately known in some party circles as Hector the Collector for his prowess at political fundraising.
The nine companies behind the potential mines have donated $1 million to the Liberals and $18,050 to the NDP ($10,000 of it from Copper Fox in 2013).

And at the same time the government was imposing hydro rate increases on schools and hospitals in 2014, Bennett announced a $100 million B.C. Hydro initiative for pulp and paper producers to “support investments in more energy efficient equipment.”
The forest industry has donated more than $4.2 million to the Liberals and $294,905 to the NDP.

Tidy haul.

Add it all up: more than $9.8 million in donations from interested parties to the Liberals and $417,185 to the NDP, not including their 2015 donations.

Guess who gets saddled with the bill?

Including operating and capital development agreements that have tripled to $3.3 billion since 2010, B.C. Hydro’s contractual obligations now stand at $59.7 billion, not including their debt which has grown from $6.8 billion in 2004 to $16.7 billion last year.

They’ve had to borrow $3.2 billion just to turn around and give it to the B.C. government as so-called dividends.

Meanwhile, Hydro-Quebec cut a dividend cheque of $2.5 billion for the Quebec government in 2014.

They didn’t have to borrow money to cover the cheque and still had $700 million in profits left over.

In 2014, it’s rates were nearly two cents per kWh lower than B.C. From 2007 to 2015, its cumulative rate increase was 17.1 per cent. In B.C., it was 63.2 per cent.

Total donations from all of Hydro-Quebec’s suppliers and contractors to the Parti Quebecois and the Quebec Liberal party in the last 30-years? Zero.

Quebec bans corporate and union donations. The maximum any Quebec resident can give to a political party is $100 annually.

Dermod Travis is the executive director of IntegrityBC. www.integritybc.ca

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In-Sights: "A strong message…"

Canadian bank fined $1.1M for failing to report suspicious dealings, CTV News, April 5, 2016 The federal anti-money laundering agency has levied a $1.1-million penalty against an unnamed Canadian bank for failing to report a suspicious transaction and various money transfers. It is the first time the Ottawa-based Financial Transactions

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In-Sights: "A strong message…"

Canadian bank fined $1.1M for failing to report suspicious dealings, CTV News, April 5, 2016

The federal anti-money laundering agency has levied a $1.1-million penalty against an unnamed Canadian bank for failing to report a suspicious transaction and various money transfers.

It is the first time the Ottawa-based Financial Transactions and Reports Analysis Centre of Canada, known as Fintrac, has penalized a bank. The centre identifies cash linked to terrorism, money laundering and other crimes…

Fintrac spokesman Darren Gibb says he cannot legally discuss details of the bank’s infraction, and the agency is exercising its discretion to withhold the financial institution’s identity.

But Fintrac wants to send a strong message that it will take whatever measures are needed to encourage compliance with the law…

A strong message, really? Instead, Fintrac’s action demonstrates that oligarchs and influential institutions are not subject to laws that apply to others. I see a parallel to management of the Panama Papers that writer Craig Murray describes.

Corporate Media Gatekeepers Protect Western 1 Percent From Panama Leak, Truthdig, April 4, 2016

The filtering of this Mossack Fonseca information by the corporate media follows a direct western governmental agenda. There is no mention at all of use of Mossack Fonseca by massive western corporations or western billionaires—the main customers. And the Guardian is quick to reassure that “much of the leaked material will remain private.”

…Do not expect a genuine expose of western capitalism. The dirty secrets of western corporations will remain unpublished.

While the $1.1 million penalty assessed a Canadian organization may seem substantial, we should evaluate its severity by considering ability to pay. Canada’s two largest banks are Royal Bank and TD Bank. The first has assets of $1.20 trillion and the other has $1.17 trillion. For either, a $1.1 million penalty is equivalent to 9¢ for an individual with $100,000 in assets. For CIBC, the smallest of Canada’s big-five banks, the equivalency is 23¢.

Keeping the wrongdoer’s name secret is another benefit for plutocrats. Bank executives may want to avoid dealing with shame at the country club but there is a widely accepted tenet of justice that calls for punishment to be in public view for deterrence and denunciation. However, in Canada, under Harper Conservatives and now the Trudeau Liberals, favoured groups are exempted from meaningful punishment.

Perhaps because controlling shareholder Murray Edwards arranged millions for BC Liberals, Imperial Mines was not charged for the catastrophic failure of the tailings dam at its Mount Polley gold and copper mine. Several communities experienced a state of emergency and drinking water bans. Meanwhile, this year in North Vancouver provincial court, homeowners were fined $100,000 when their landscaping project led to a sediment dump into a small creek that affected the water supplies of no communities.

Landslide on ground they made unstable put homeowners in court. They didn’t donate millions to #BCLiberals. #bcpoli https://t.co/fvPooA0Lbk

— Norm Farrell (@Norm_Farrell) April 3, 2016

The National Observer is publishing Secrets of Government, a series of special reports describing what happens in the back rooms of power. We’ve seen secret no-penalty, no-prosecution deals CRA gave high-net-worth Canadians, continuation of huge subsidies to fossil fuel industries, regulators co-operating with businesses they allegedly regulate, political appointees waiving fines assessed by inspectors against pipeline operators and countless other examples. However, if an ordinary citizen seeks accommodations from government, the likelihood of receiving it is remote. One CRA program was supposed to ensure fair treatment but it has been so understaffed that the initial response to an individual’s application could take more than a year. Because stalled fairness applications weren’t fair, CRA made a change:

The Taxpayer Relief service standard is being deleted due to an inability to report reliable results.

Returning to the subject of Fintrac’s “strong” message, I wonder if the bankers’ reaction to the agency’s warning was something like Churchill’s in the 1941 Canadian Parliament when he offered this famed riposte to French Generals:

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