Month: March 2016

In October 2015, the Commissioner approved $173 million for the project but, as evidenced by the confidential order three months later, increased the approved amount by $46 million to $219 million. Instead of five times cost of the last refits, the 2016 multiplier is eight.

So, whether it is $140, $173, $219 millions or an even higher cost subsequently revealed, whether the contract is completed by 2018, 2019 or later, I predict the refits will be advertised as completed on-time, on-budget. That tag is applied to all BC Liberal projects, no matter how many times the budget or completion date must be altered.
* * * * * * * * * *The following was first published March 26, 2016:

When BC Ferries added a newly built ferry to its fleet in the 20th century, the vessel was constructed in BC shipyards. During the mid-nineties, two Spirit Class ships, currently the company’s finest, largest and most efficient per unit of traffic, were built in lower mainland and Vancouver Island yards for about $134 million each. In 2005 and 2006, $27 million was spent on refits and upgrades of the two ferries, with the work also done in BC.

With proven and efficient designs in hand, the BC Government surprised observers when it decided that three large ferries were to be built in Europe. The vessels cost about $190 million each but have fewer amenities and almost 25% less passenger and vehicle capacity than Spirit Class. Ferry corporation VP Mike Corrigan, its current CEO, claimed in 2004 that BC shipyards were only qualified to build small open-deck boats for short routes. That claim had already been proven false by Spirit Class vessels and by the subsequent federal decision to award BC shipbuilders an $8-billion contract for seven non-combat ships, an average of $1.15 billion each.

Critics argued that ferry construction in BC, even if contracted at higher prices, would have provided net benefits to the local economy. Economists credit the multiplier effect, which says:

An injection of extra income leads to more spending, which creates more income, and so on. The multiplier effect refers to the increase in final income arising from any new injection of spending.

The shipbuilding industry has a significant multiplier. A European economic study reports:

Shipbuilding is labor intensive and therefore provides jobs for a large number of people. …Moreover, it is technologically demanding and …also employs a large number of other industries and therefore results in many spillovers…

When contracts for the Super-C ferries were awarded to an overseas builder, people in the labour movement blamed the anti-union attitude held by the Campbell government and its appointees. However, my own conclusion about the motivation remained uncertain. The move seemed to make no sense, particularly since BC Ferries would have a continuing demand because its entire fleet needed renewal. Washington State, where the ferry system has slightly less traffic, has long required that all government-owned ferries be built in-state because of “the benefits to the state of a stable shipyard work force and economic benefits of in-state jobs.”

So, capability of building large ferries was not at issue, and benefits of domestic construction to the broad provincial economy were clear. So, why did Liberals decide to go abroad? They spent $700 million (in today’s dollars) on Super-C ferries, another $170 million for intermediate ferries built by Poland’s Remontowa Shipbuilding and now will spend yet more millions at the same yard for maintenance costing five times what refitting the same ships cost in BC ten years ago.

B.C. ferries will head to Poland for refits, Andrew Duffy, Victoria Times Colonist, March 25, 2016

A Polish shipyard has won a $140-million contract from B.C. Ferries to conduct the mid-life upgrades of the two Spirit-class vessels.

Gdansk-based Remontowa, the largest ship-repair yard in Poland, won the contract…

B.C. Ferries spokeswoman Deborah Marshall confirmed it is the first time the corporation has sent a vessel offshore for refit.

My audit training many years ago taught that if a situation cannot be explained by the ordinary, you must consider the extraordinary. As with BC Hydro, LNG and gas producer deals, I am left with gnawing suspicions; concerns not allayed by news that broke today.

Polish Remontowa shipbuilder management promised €1.2 million bribe, The Baltic Course, March 25, 2016

Polish shipbuilding company Remontowa Shipbuilding president Andrzej Wojtkiewicz and board member Jan Paszkowski transferred about 800,000 euros to the former management of the Estonian state-owned port company Port of Tallinn, while the total bribe was supposed to be 1.2 million euros… ($1.8 million CAN)

“Two people in management positions with the Polish shipbuilding company have been declared suspects in bribe-giving on a large scale. At the end of October employees of a Polish law enforcement agency questioned the men as suspects at the request of the Estonian Prosecutor General’s Office, an official of the Estonian Internal Security Service was present during the conduct of procedural acts,” Public Prosecutor Laura Feldmanis told BNS on Tuesday.

There are troubling patterns of BC government agencies contracting with companies outside the province that have ethical deficits, subjects even of accusations that bribery gained contracts. SNC-Lavalin is one, Kiewit and Malaysian Government owned Petronas are others. Ethical questions have been raised also about Site C contractors.

When BC Liberals destroy communications and fail to document government business, they are either involved in or setting the stage for illegal activities. Christy Clark runs a government that lacks moral principle.

ADDENDUM:

This is an extract from the application to the British Columbia Ferries Commissioner for Spirit Class Vessels Mid-Life Upgrades. It demonstrates the degree of transparency that keeps Liberals comfortable.

About four years ago, before the last election, Premier Clark was touting the capabilities of BC shipyards, shaking hands of workers and taking credit for promised federal contracts. However, it was photo-op time so her words were not meant to be believed.

That was then, this is now.

ADDENDUM

Prosecutor expands Port of Tallinn inquiry to cover purchase of icebreaker, The Baltic Course Magazine, March 3, 2016
“Hence the Internal Security Service and the prosecutor’s office are checking over the circumstances related to the purchase of the icebreaker Botnica in the framework of the already ongoing criminal procedure,” he added….

Officers of the Internal Security Service (ISS) detained Port of Tallinn CEO Ain Kaljurand and board member Allan Kiil as suspects in bribe-taking on Aug. 26 last year. They were released at the beginning of January and placed under electronic surveillance.

The former Port of Tallinn top executives are suspected of accepting bribes on a large scale over a period of several years at least since 2009. The Public Prosecutor’s Office has said the placement of orders for the construction of two new ferries at a shipyard in Gdansk, Poland is a central point of the investigation.