No wrongdoing in BC Rail indemnity decisions, Auditor-General finds

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An auditor appears to have written the final chapter in a corruption case that shook the government of British Columbia and dragged on through the courts for years.

In a report released Wednesday, B.C. Auditor-General Russ Jones concluded there was no political interference when the government decided to pay $6-million in legal fees for Dave Basi and Bob Virk, two former ministerial aides who cut short what promised to be a sensational trial when they pleaded guilty to breach-of-trust charges in 2010.

"Based on our interviews and file reviews, we found no evidence of any political involvement in the decisions to grant or administer the indemnities to Mr. Basi and Mr. Virk," the report stated. "The audit team found consistent evidence that decisions were made by public servants, independent of elected officials, and that ministers were informed of decisions only after the decisions were made and implemented."

The two men were sentenced to house arrest after they admitted that in return for bribes they leaked cabinet information about the sale of BC Rail.

For more than five years in pre-trial motions, the accused maintained their innocence and said the trial would show they had only been following orders. When the defence suddenly collapsed, questions were raised about the government's indemnity policy, which normally doesn't pay the legal fees of employees who have been found guilty of crimes.

But Mr. Jones, whose audit team interviewed government officials and examined 10,000 pages of documents in a broad examination of the indemnity policy, said there was no political meddling in the decision.

"In the case of Mr. Basi's and Mr. Virk's indemnities, senior public servants deliberately did not consult with ministers or the Premier prior to making these indemnity decisions because they did not want to risk compromising the administration with political influence," Mr. Jones stated in a press conference."Overall, we found that the government's indemnities practice wasn't perfect, but it was principled."

Mr. Jones, whose office went to court at one point in a failed attempt to get files covered by solicitor-client privilege, said a full and complete audit was done despite restricted access to some material.

The audit looked widely at indemnities, but the case of Mr. Basi and Mr. Virk – which cost the government $18-million in total – was singled out as a case study.

Mr. Jones said the requirement for guilty parties to pay their own legal fees was waived for Mr. Basi and Mr. Virk in order to end a complex case that was costing the government $15,000 a day in lawyer's fees alone.

The two men pleaded guilty only after the government waived the repayment requirement, but Mr. Jones said the waiver and the plea bargain were handled separately.

He said the special Crown prosecutor who negotiated the plea bargain had nothing to do with the waiver, which "was made by public servants, separate from the trial."

Mr. Jones said government officials agreed to the waiver simply to save money, because otherwise the trial could have continued for another year.

"In order to avoid the future cost of a lengthy trial, government [officials] did a cost-benefit analysis and chose to give up the potential to collect on Mr. Basi's and Mr. Virk's personal assets to save the future cost of what was anticipated to be a fairly lengthy and expensive trial," he stated.

Under the deal, the government not only forgave the $6-million in legal fees, initially advanced as a loan, but also gave up any claim to the personal assets of the accused, valued at $400,000 and agreed to release 25 per cent of defence fees that had been held back.