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The federal government has created a subsidiary of VIA Rial and appointed Robert Prichard, current chair of Torys LLP and a director of Onex Corporation, as the first chair of the subsidiary's board of directors.J.P. MOCZULSKI/The Globe and Mail

The federal government is creating an arm’s-length subsidiary of VIA Rail to work with private partners on a planned high-frequency rail megaproject that would build and operate dedicated passenger lines between Quebec City and Toronto.

Robert Prichard, current chair of Torys LLP and a director of Onex Corporation, will be the first chair of the subsidiary’s new board of directors. Two other board members were also announced Thursday: Marie-José Nadeau, a director of several other companies, will be vice-chair. Former federal deputy minister Rob Fonberg is the third board member.

Mr. Prichard has been described as the “poster boy for corporate Canada” given that he sits on a large number of boards. He was mentioned in the 2019 federal ethics commissioner’s report into the government’s controversial handling of the SNC-Lavalin affair, but was not accused of wrongdoing.

The commissioner’s report concluded that Prime Minister Justin Trudeau had breached ethics laws by putting pressure on then-attorney-general Jody Wilson-Raybould to overrule the director of public prosecution’s decision not to invite SNC-Lavalin to enter a deferred prosecution agreement in relation to criminal charges the company was facing.

The report said Mr. Prichard, while acting as legal counsel for SNC-Lavalin, spoke with several senior officials, including then-Treasury Board president Scott Brison and senior political aides in the Prime Minister’s Office, about the company’s desire for a deferred prosecution.

Mr. Prichard said in an e-mail Thursday that he is serving on the new board in his personal capacity. “As a director, I cannot and will not provide legal advice to any party dealing with HFR,” he said.

Transport Minister Omar Alghabra announced the board appointments Thursday, calling it a “key milestone” in the project’s development.

High-frequency rail has been studied by the Liberal government for years. It has received interim funding to continue the planning phases, but Ottawa has not made a final decision to approve construction. The pace of planning activity has picked up in recent months. On Oct. 31, the government announced the results of its expressions of interest process, saying more than 50 industry participants made submissions.

The next stage is a two-month request for qualifications starting in January, 2023, followed by a request for proposals in late spring that is scheduled to last nine months. A “co-development” phase would follow, estimated at 3½ years. Near the end of that phase, the federal government would make a final investment decision and construction would begin.

The government has not provided a recent cost estimate for the project. Mr. Alghabra told reporters last year that it could cost between $6-billion and $12-billion. The minister has said the dedicated line from Quebec City to Toronto could be followed by a second phase that continues to Windsor.

In a November presentation to the Canadian Council for Public-Private Partnerships, the project is described by the government as a dedicated rail line that would be more than 1,000 kilometres in length, mostly electrified and would eventually target operating speeds of up to 200 kilometres an hour.

While those speeds are slower than fully high-speed trains, proponents of the project say the line would considerably improve intercity travel times because passenger trains would no longer be delayed by sharing rail lines with freight.

The creation of an arm’s length entity to oversee the project had been signalled in previous planning documents. The government is seeking a consortium of private partners to build and operate the new passenger rail service.

Federal planning documents propose a deal structure in which the Canadian government would provide “downside protection” in the event that revenues are significantly lower than forecast. The deal would also include upside revenue to “ensure that Canadians benefit financially from a high level of project success.” The documents reference the need for a “transition strategy” related to VIA’s existing work force, which the government says would be done “in consultation with unions and respect collective bargaining.”

That plan is strongly opposed by Unifor, the union representing VIA Rail workers, as effectively privatizing the existing publicly owned rail company.

Unifor national president Lana Payne said there is no reason why the project can’t remain within VIA’s current structure.

“Today’s announcement is concerning, as we believe it continues the process of privatizing Canada’s national passenger rail service,” she said in a statement. “Like many Canadians, we believe that VIA Rail must remain a public entity.”

Ms. Payne said the Windsor-Quebec City corridor accounts for nearly 75 per cent of VIA’s revenue and 90 per cent of the entire system’s passengers.

“Once corridor service becomes separated, it will leave VIA Rail with very few routes in Western and Atlantic Canada,” she said. “The lack of revenues will only further deteriorate service levels in the rest of Canada and jeopardize VIA’s future.”

Editor’s note: A previous version of this article attributed Unifor national president Lana Payne's remarks to spokesperson Hamid Osman. This version has been updated.