The taxpayers' foreman

By Dermod Travis

Part 2 of 2

According to B.C. Supreme court documents, the Transportation Investment Corporation retained accounting firm KPMG in mid-2009 “to review a contractor’s invoicing process on a major British Columbia highway project.”

That project was the Port Mann Bridge, and the contractor was Kiewit/Flatiron General Partnership.

The matter before the courts included allegations of conspiracy, a cover up and misuse of funds.

Gary Webster – a partner at KPMG – was charged with overseeing that review, which is odd given that only a few weeks before he had been largely responsible for setting up and approving those very same processes, as a senior vice-president at CH2M Hill.

Webster had been retained by TIC as its representative on the Port Mann. He was the taxpayer's foreman.

His power was clearly defined in the Kiewit/Flatiron contract: “The Constructor and the Design Build Contractor are entitled to treat any act of the Authority's Representative ... as being expressly authorized by the Authority, and shall not be required to determine whether any express authority has in fact been given.”

According to his resume, Webster was also the representative on the Sea-to-Sky highway project and the procurement director for the entire Gateway program. 

Sometimes a letter isn't as important for who signed it, or who it was addressed to, as it is for who was cc'd. Such is the case with an Oct. 9, 2007, letter from Garry Dawson, project director, Port Mann-Highway 1 project to Environment Canada.

Webster was cc'd, which means he was very much on the job when the government publicly recommitted to its $3 billion Gateway estimate – including a $300 million contingency fund – only four days before.

KPMG was still using the figure eight-years later, although it had been amended to read “over $3 billion.” The latest Gateway price tag totals $4.77 billion, nearly 63 per cent over the government's first estimate.

It wasn't TIC's only miscue.

In 2009, TIC's board was comprised of then-deputy health minister John Dyble, then-deputy transportation and infrastructure minister Peter Milburn and then-Partnerships B.C. president and CEO Larry Blain. 

At the time, TIC placed one of the most costly bets in recent B.C. political history.

From its financial statements for the fiscal year ending March 31, 2010: “TI Corp entered into a number of hedging transactions during the year, through advanced rate setting.”

It wasn't until August 2013 that the magnitude of the wager was driven home. TIC had lost $265 million.

In a 2012 letter of expectations, then-transportation minister Blair Lekstrom stated: “TIC is to be in a positive net income position by 2017-18, four years after toll revenue collection commences.”

Not by a long shot. 

In fact, one would be hard-pressed to find a single government forecast for the Sea-to-Sky highway project, the Port Mann or the South Fraser Perimeter Road that has been met. 

Many of the same Port Mann players are now part of the Massey Tunnel replacement project. TIC has been seconded by government to oversee it.

KPMG is the commercial advisor, Macquarie Group is “participating in a team as developer and financial advisor” and MMM Group is the government's engineer. All three worked on Sea-to-Sky and Port Mann. 

Two of the four key TIC players back in 2009 – Webster and Blain – now work at KPMG. 

The B.C. Liberal party hasn't done too badly either with more than $500,000 in donations from the companies, including a cheque for $50,000 from Kiewit & Sons three days after the 2009 election.

– Dermod Travis is the executive director of IntegrityBC.