Corporate offers for publicly owned BC Rail fluctuated wildly between the first and second rounds of bidding, the political corruption trial stemming from the controversial sale heard Monday.
With a second-round bid of $1-billion, Canadian National Railway won the right to take over the main BCR line, but that was more than $200-million higher than CN's initial offer, former BCR board member Brian Kenning testified in B.C. Supreme Court.
At the same time, CN's chief rival, Canadian Pacific, dropped its preliminary bid of $950-million "down to around $700-million" for its final offer, according to Mr. Kenning.
"That's one of the things that really stood out for me," said the business executive, one of four members on a BCR evaluation committee that handled the sale.
Mr. Kenning was not asked for an explanation of the large bid changes, but CP eventually pulled out of the bidding, charging that the provincial Liberal government had unduly favoured CN in the process.
A third bidder, OmniTRAX, headquartered in Denver, offered $710-million for BCR.
The government announced the provincial railway's sale to CN on Nov. 25, 2003. That was just a month before the RCMP raided the legislature looking for material connected to the sale that ultimately resulted in corruption charges against three former ministerial aides.
The long-delayed trial of David Basi, Bob Virk and Aneal Basi resumed Monday after a two-month summer break.
Mr. Basi and Mr. Virk are accused of accepting benefits for passing on confidential information to OmniTRAX, which continued to bid against CN and CP for rights to BC Rail's spur line to the coal super port at Robert Banks. Mr. Aneal is charged with money laundering.
Answering questions from prosecutor William Berardino, Mr. Kenning said that Mr. Virk regularly attended private meetings of BC Rail's sale evaluation committee, although he was not a member.
Mr. Virk sat in on the sessions as a representative of then-B.C. transportation minister Judith Reid, for whom he was an executive assistant, Mr. Kenning said.
He said all members of the committee signed confidentiality agreements, pledging not to release any information from their meetings to "those who shouldn't have it."
Late in the day, he was asked a series of pointed questions by Mr. Berardino. Referring to a number of specific committee documents, he sought Mr. Kenning's comments about what he would think if any of the documents had been in the possession of a bidder for BC Rail or a representative.
"This should not have been in the hands of any of the bidders," said Mr. Kenning of one of the documents.
"It contaminates the process, and potentially, it destroys its integrity. … It taints the process, because these documents were meant for our eyes only," he testified.
"Any information we release should go to all of the bidders at the same time."
Earlier, Mr. Kenning disclosed that the BC Rail board had recommended to the government as early as the fall of 2002 that the publicly owned railway should be sold.
He said directors felt there was not a long-term prospect of profitably for the railway, given the declining forest industry and high debt it was carrying.
During the 2001 election, the Liberals promised not to sell off BC Rail, a commitment reiterated by Ms. Reid, the transportation minister, well into 2002.
Mr. Kenning will be back in the witness box Tuesday for cross-examination by lawyers for the three defendants.