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  • authored by Robin Mathews
  • published Thu, Jan 22, 2004

The Theft of B.C. Ferries, David Hahn, Globalization, and Corporate Crime

The theft of B.C. Ferries from the people of British Columbia is in its first painful, traumatic stages. The theft points to very much worse things to come if British Columbians don't fight hard, now. "Theft", you may say, "is a strong word." But the destruction and looting of the B.C. ferry system as it has been known, used, and owned by the people of B.C. fit into an ugly global activity that needs the plainest language to be understood. We will look at the dirty dogfight to steal B.C. Ferries. But, first, a look at the wider context will make clear that things said about the B.C. Ferries case are not in any way excessive or extravagant.

As I have written earlier the ferries struggle is a part of "globalization" and is not unrelated, for instance, to the attempt by the U.S. to steal a huge portion of the Iraq economy. (After conquest, the U.S. set up a "stooge" Governing Council and has had it pass laws to make all of Iraq's publicly-owned companies - 50% of the economy - for sale without restriction of ownership or removal of profits.)

"Globalization" is three simple things. (1) It is a program to seize (by conquest, "legalized crime", or other means) the "common wealth" - water, air, natural resources; transportation, medical, energy, and educational systems; and all other activities capable of generating profit and to deliver them to a few irresponsible, wealthy owners. (2) "Globalization is (as part of the U.S. imperial system) a program to place as much of the seized common wealth as possible into the hands of U.S. owners or owners subservient to the U.S.A. (3) "Globalization is (less visibly to average people) a program to transform society in such a way that voters and their Parliaments have less and less power to shape the communities in which they live as large private corporations increasingly 'legislate' the pauperization of the population.

"What", you will ask, "is "legalized crime"" and how does it work?" It is, briefly, the use of laws to further immoral acts, the use of political and other pressure and power to have immoral acts passed (like the new B.C. "Coastal Ferry Act", Bill 18), or to prevent moral laws from being passed and - in the case of governments like the Gordon Campbell Liberal government in B.C. - it is the active practice of breach of trust outside of any of the laws that presently can be invoked that cover breach of trust.

Plainly, Gordon Campbell promised not to privatize B.C. Rail, and he has done so, and sold it to CN. (Headline, Vancouver Sun, Nov. 18, 2003: "Sale of B.C. Rail operations will carry few benefits for taxpayers of B.C.") The majority of British Columbians did not want B.C. Rail sold. [Remember CN was quietly privatized, stripped as a Canadian service, and sold to mostly U.S. owners, and is now run - in fact - from Texas. Globalization.] The sale of B.C. Rail was a breach of trust outside of any breach of trust laws. Gordon Campbell promised not to privatize B.C. Hydro, has begun the process, and will complete the action as soon as he can. He promised, moreover, in his general language at election time to preserve the publicly owned structures in B.C. - like the B.C. Ferry Corporation. He is in the process of privatizing B.C. Ferries. All that, in plain language, is breach of trust. And in plain language it is, therefore, "legalized criminality".

The new Coastal Ferry Act (Bill 18) is so openly an attack on the people of B.C. that it takes ones breath away. It privatizes B.C. Ferries. It sets up the routes of B.C. Ferries to be taken over by contracting operators who can cut and chop and change. Through the Act, the Campbell government asserts that it is not subject (Sect. 25, 1) to the B.C. Labour Relations Code, that government may not be held responsible for anything done by appointed ferry operators (sect. 34, 1) and that government does not have any "duty to instruct or supervise a ferry operator". In addition, the Act exempts the company from the Ombudsman Act, Freedom of Information law, and oversight by the Auditor General.

In plain terms the passing of the Act is a breach of trust with the people of British Columbia. But much more than that: it may fairly be construed as the passage of a law that permits immoral actions. It is to generate a Commissioner (in fact appointed by the government). Ferry operators will be appointed by the new Commissioner (who will be a government clone though declared independent). Ferry operators will be free to abuse, oppress, and exploit employees in ways that are not permitted under the Labour Relations Code. The independence of the contracted ferry operators is so protected by the Act that travellers, as well, may be subjected to wholly unreasonable fares and conditions - which the government can claim it cannot prevent because of the terms of the Act which it has passed in a breach of trust with the people. As will become clear to readers, the Coastal Ferry Act (Bill 18) could only be conceived and passed because of a serious failure of Canadian law-makers to build barriers against commercial crime.

During the strike in early December, 2003, Gordon Campbell announced the Labour Minister Graham Bruce would make an announcement. An hour later (Dec. 9) Bruce declared a ruling under the authority of the Railway and Ferries Bargaining Assistance Amendment Act of 1974, as amended November 27, 2003 by Bill 95, that the ferry workers must begin an 80-day cooling-off period. But as argument and investigation continued, it was discovered that the 1974 Act is not included in the Revised Statutes of B.C. The government/company lawyers, however, bulldozed on. At the Labour Relations Board (I quote Island Tides, Dec. 18, 2003, p. 4) "the day's proceedings fizzled. The LRB adjudicator 'suspended judgement' on the validity of the adjusted RFBA Act. The word was that the 1974 Act had in fact been repealed long ago...." If the basic legislation was not in the Revised Statutes of B.C., and if it had been repealed long ago, how competent was the Campbell government/ferry management in attempting to use it? Another way of asking the question is to ask how innocent the Campbell government was in brandishing a non-existent law to threaten and harass B.C. Ferry workers?

"Legalized criminality" was in full operation in the recent Enron/Anderson Consulting scandal which robbed thousands of people in a huge, fraudulent corporate operation (involving several Canadian banks). To begin, simple laws to prevent the fraud were not (and still are not) in place, largely because of corporate interests blocking legislation. (Two officers of the Anderson Consulting operation are now directors of a portion of the divided B.C. Hydro enterprise. Why?) In addition, the looseness and imprecision of laws in effect mean that among wrong-doers in the Enron/Anderson scandal, pitifully few will receive any kind of punishment or discipline.

Any observer may note the endless parade of corporate executives daily headlined as suspects of "commercial crime" or commercial wrong-doing. They spread from the Enron/Anderson Consulting fiasco (U.S.), to Parmalat global foods (Europe), to Canada's own Lord (Conrad) Black of Doublecross Harbour. The headlines don't tell the story that the legislatures of the West are heavily controlled by Corporations to the extent that law against commercial crime is woefully inadequate or non-existent. Reviewing new commercial legislation to 'liberate' corporations internationally, the lawyer Chair of the International Commission on Globalization and Fundamental Human Rights asks what has been created in all the activity to deal with corporate crime. His answer is short: "Nothing". "Crimes committed by transnational corporations," he writes, "remain largely beyond legal reach". [Le Monde Diplomatique, Dec. 2003, p. 3]

What, then, is going on with B.C. Ferries besides a major theft of a billion dollar organization belonging to British Columbians? Is the change intended to improve ferry service for travellers? No. To provide better conditions for employees? No. Labour peace in B.C.? No. Benefits for the B.C. taxpayer? No.

In fact the scenario set out in The Coastal Ferry Act is for disruptions in service, unsynchronized scheduling, continuing fights over fares and profits, guaranteed management/labour battles, and finally, opportunities for "legalized criminality" in the operation of the system fragmented and dissected into disorganization and vaguely connected to government - but with barriers preventing any real oversight of operations.

The situation is so insane it suggests that some very dirty deal is in the plans for the long term.

In order to see what that might be, we must consider the person the Campbell government brought in as CEO of B.C. Ferries with the new Coastal Ferry Act. His name is David L. Hahn. Not a Canadian, of course. >From the U.S. on a work visa! Not long ago he was running Ogden Aviation of the Ogden Corporation. It changed itself into Covanta Energy Corporation about 1999, and he is said to have been vice-president for the last four years. (That last piece of information comes from Terry Glavin in the Georgia Straight, Dec. 18, 2003)

The web tells us that "Covanta Energy is the former Ogden Corp., which ran 130 arenas and sports facilities around the world [as well as Aviation services, etc.] before changing its business plan and its name in 1999". With its new name, it became very interested in the core globalization interests - water, energy, power generation, and building itself into a multinational corporation involved in anything - high tech and biomedical as well - that makes profit. Are you beginning to see the future yet? Why would a vice-president of a huge multinational corporation leave the U.S. and come to B.C. to run something he's never had anything to do with - a ferry corporation - for a mere $335,000 contract? And why would the Gordon Campbell government want someone who was a high officer in a bankrupt company in the U.S. to come to B.C.?

The story of Covanta Energy seems to be quite simple. Leaping into the energy game, probably seeing the huge bundles Enron-style companies were making (illicitly we all know now), the Covanta bankruptcy was a fall-out from the Enron melt-down. In short, on April 1, 2002, Covanta declared bankruptcy and asked for Chapter Eleven protection - a way in which bankrupt U.S. companies can try to re-coup or at least have plenty of time to sell for something that protects top officers. It left - it is claimed - an investor loss of 250 million. (Sound like Enron?) The only people (as in Covanta's Philippine operation) who get hurt in such activity are shareholders, creditors, and users of the service - in the Philippines, electrical users had galloping costs. (Sound like Enron?) The Philippines meltdown was said to be a fiasco in the billions of dollars.

On December 2, 2003 the Danielson Holding Corporation announced it was buying Covanta's energy and water businesses. Other Covanta's assets were going elsewhere. It may be that David L. Hahn was hung out to dry. Or it may be that he has interesting connections both to the parts of Covanta in Danielson and to the other parts passing into other hands. He was, in fact (Glavin again), drawing a $30,000 a month consultant fee from Covanta a few days before arriving at B.C. Ferries in April until, at least, the end of October. It may be in Covanta/Danielson's interest to keep him on the payroll still. (Or, one might ask, for whom is he really working?) The least that can be said is that he is a familiar with many of the U.S. people trying to take over energy and water control internationally.

To a government in the business of wrecking and selling off the Ferry Corporation, he can be useful. To a government that intends to smash B.C. Hydro [and has ex-Enron/Anderson Consulting officers on a B.C. Hydro Board], and then suck it into something like U.S. Danielson Holding, David Hahn looks usefuller and usefuller. Does David L. Hahn care about the employees of B.C. Ferries? About the travelling public? About the people of British Columbia? About energy ownership by the people of B.C.? Does Gordon Campbell? To ask the questions is to laugh! If things get too hot, Hahn - at least - can dart back across the border.

To return to B.C. Ferries. Apparently a nearly half-billion dollar debenture note is held on B.C. Ferry assets, and the newly formed, vague, messy, privatized B.C. Ferry Services has shareholder equity of $75 million. Who holds the shares and "the mortgage"? Who are those people and how did they appear? Are they Canadian? Ironically, the mortgage money goes to the Campbell government, without obligation. The debt goes to B.C. Ferry Services Inc. Sound strange? In the world of "legalized criminality" it makes perfect sense. Especially when, as Terry Glavin points out, 24 of the 26 ferry routes can't make money and are subsidized.

"Makes perfect sense?"

B.C. Ferries Services Inc. is set up to fail. The new Commissioner may become David L. Hahn. (That's not of primary importance.) The Commissioner will be the appointee who sees to the contracts for operators of the ferry system. Even with a radically shredded ferry system, probably only the two main routes can make money. Even the Campbell government can't suspend service to the other 24 routes. So what is in the cards? Could it be a Commissioner who hands off the assets of B.C. Ferries to a spin-off of Enron/Anderson Consulting? Or a clone of Ogden Aviation? Or Danielson Holding Corp.? Or, who knows, even Blackball Ferries? If that happened, the theft of B.C. Ferries would perfectly fit the definition given here of "globalization". Except it would be very hard for any of those enterprises to make a really paying operation out of what B.C. governments, sensibly, in the past have seen as "an extension of the B.C. highways system". So we end with a puzzle.

Better, let's end with a parable, one that has a lot to do with what we now accept as wide-ranging, unpunished corporate crime in our time.

Let us look at a common malpractice among the community that practices "legalized crime". Let's say that such a group of people erects a company largely by going into debt to produce a product "in the public sphere" that is too expensive to buy. Let's say such a group creates a company said to be worth a billion dollars - much of its value really based on loans and share capital. Going into operation, the company very soon proves it can't make enough revenue to stay in business, pay debts, interest, and running costs. So it either has a compliant government subsidize it heavily, and becomes a private company sucking its profit from the taxpayer through special subsidies. Or it declares bankruptcy. Creditors get little, shareholders less (unless they have made a secret deal at the start). The "owners" of the company can then sell the assets to a buyer (long set up) for peanuts. The buyer can then - protected from government surveillance by special legislation, perhaps - build the operation afresh and make money after getting someone else's expensive assets for a song. Having sucked every profit cent out of the operation, the buyer can then abandon it or make a pitch to government that because the enterprise is necessary to the society the company must be paid by the taxpayer to keep the business in operation and making a healthy profit. Ah yes. Or, perhaps, it can sell the operation to the government at a very high price; after all, the taxpayers will foot the bill. Ah yes. All of that is perfectly legal in the world of "legalized criminality".

Whatever the story that will be told about B.C. Ferries in the future, in the near term the Gordon Campbell government has created a monster that will do inestimable damage to the people of British Columbia and the excellent employees of B.C. Ferries. And the Gordon Campbell government has brought in a loose cannon with David L. Hahn who may appear in a dark role very soon in a "smash and grab" at B.C. Hydro. Something must be done to stop the destruction - every right-thinking British Columbian agrees to that. But what? Well, I've decided a new education/action organization has to be built, now. It has to have a single goal - to end the privatization of B.C. Ferries. It has to be tough, determined, imaginative, angry, and committed. It must be democratic, and it must be willing to be do things unthought of before in fighting "legalized crime" in B.C. Wanta join? Contact me. We'll start building. No triflers need apply (as the ads in the "romantic partner wanted" columns say).

Reproduced with permission of the author. Orignally published at www.vivelecanada.ca

Robin Mathews publishes on culture, politics, the arts, and Canadian Intellectual history. He lives in Vancouver with his wife, a potter. His column appears regularly on Vive le Canada.

Comments: rmathews@sfu.ca

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