fresh Ridley article....Terence Corcoran: Harper’s Ridley terminators
By backing Big Coal, Ottawa reinforces the idea that there’s a free lunch for big business
By Terence Corcoran
S
core a victory for Big Coal interests in British Columbia andAlberta, but keep an eye out for the interests of taxpayers. After ayear of backroom lobbying and some unseemly political power gambits, ahandful of coal companies, mostly controlled by far-flungmultinationals, succeeded last Friday in getting Transport Minister RobMerrifield and the federal Cabinet to fire Daniel Veniez as chairman ofRidley Terminals Inc. (RTI), a bulk commodity shipment facility inPrince Rupert, B.C.
It’s not a big deal in the grand scheme ofcorporate Canada, but it does look like Mr. Veniez is the victim ofwhat is emerging as part of the corporate culture in Ottawa. If bigbusiness interests want a free lunch, burgers, fries and cash are beingserved up daily in Ottawa. The list keeps getting longer. Last week,the Canadian forest industry received $1-billion in subsidies toparticipate in a trade war with U.S. forest firms over the use of acertain kind of diesel fuel.
In Mr. Veniez’s case, heappears to have been “terminated immediately” for having the good senseto operate Ridley Terminals, a government-owned coal transfer station,on a commercial basis and not as a taxpayer-subsidized giveaway to theCanadian coal industry. Indeed, as Mr. Veniez tells it, he was hired bythe Harper government to operate Ridley on commercial standards.
IfMr. Veniez failed to fulfill his commercial duties as chairman ofRidley, there’s not much in the public record to demonstrate thatfailure. What is emerging for all to see is a heavy-duty lobbyingcampaign by hired guns of the coal industry to discredit Mr. Veniez.Leading the campaign was Global Public Affairs (GPA), a lobby outfitbased in Ottawa.
As we noted here earlier this month,GPA has been active on behalf of an outfit called Ridley Terminal UsersGroup, essentially a cabal of the Alberta-B.C. coal industry — HuskyEnergy, Suncor Energy, Tech Coal and Coal Valley Resources. But itturns out GPA has a lot of hot coal clients, including the NorthernCoal Coalition, International Commodities Export Corporation and PeaceRiver Coal Inc. Among other activities, GPA staff have been meetingwith Mr. Merrifield and other cabinet ministers on the Ridley issue.
Itproved to be a successful lobbying effort for GPA. Mr. Merrifield, in aletter last Friday, passed on the news to Mr. Veniez that he had beenterminated “effective immediately” by Order in Council. How many Crowncorporation chairmen have been terminated by Order in Council, for nopublic reason? Not many, and it does not bode well for taxpayers andpublic policy.
Mr. Merrifield, in addition to receiving GPA lobbystaff, also happens to be MP for the Alberta riding where theprovince’s coal industry is located. Another Tory cabinet minister,House Leader Jay Hill, is MP for a B.C. riding that is home to coalinterests.
An exchange of letters between Mr. Veniez and Mr.Merrifield, distributed by Mr. Veniez, shows a minister playing coyhardball with Mr. Veniez over issues and substance. Mr. Merrifield isall issues and no substance, preferring to stick to his conclusions andpaying no attention to Mr. Veniez’s substance-filled responses.
There’sno room here to review all the background, but it seems clear thatRidley Terminals (annual revenue: $25-million) is a valuable asset forwhich the coal industry does not pay full freight on the coal it shipsout of Canada. One of the companies, Peace River Coal, whose largestshareholder is global giant Anglo-American Coal, withheld payment on$2.5-million in fees. By not paying its fees, Peace River triggered aloss of operating funds at Ridley, which had to turn to Treasury Boardfor cash.
Mr. Veniez also says — in a letter to Mr. Merrifieldshortly before he was canned — that he has received “unsolicitedexpressions of interest from world-class terminal operators who wish toinvest in RTI’s potential.” He names The Jim Pattison Group and KinderMorgan as having sent in “detailed written proposals.” One, from KRTTerminals, included an offer of $131-million conditional on duediligence and agreeable terms with the Prince Rupert Port Authority.“We believe that if a well-managed process were to occur, moreinterested and serious parties would emerge and the government wouldhave an enhanced basket of alternatives from which to create value forthe taxpayer and secure RTI’s future.”
The question becomes whetherRidley is to be a commercial operation or a subsidy — built in 1982 ata cost of $550-million — for coal shippers. To cover its expensestoday, Ridley needs about $10-million a year in new money and facesdeficits. “These deficits can be overcome by customers paying thereasonable and fair rates proposed by RTI,” Mr. Veniez told theTransport Minister. Ridley’s proposed prices “are in line with new portcosts in Maputo, Gladstone and South Africa. If the government wishesto provide them with a direct subsidy, our Board would have, of course,complied with that directive. It was, as you know, never part of ourmandate.”
Mr. Merrifield showed no interest in such discussions.Then he fired Mr. Veniez. We’ll see what happens next in the battle forcontrol of Ridley Terminals.