Something Stinks in Vancouver: Follow the Money Trail for Olympic Venues

Well, well, well, it's not too often we get such a tasty little bit of
scandal dropping on us just days before we go to the ballot box
in a civic election, but that's exactly what has happened in
Vancouver. It's a complicated mess, but one well worth following.

What's It All About

The Olympic Athlete's Village is a P3, Public (Vancouver city)
-Private (Millenium) "Partnership." Research around the world has
established that these neo-Conservative plans virtually always end up
costing taxpayers much more, as the ideology behind them is to transfer
the risk of the project onto the backs of taxpayers vs. the corporations
who receive the bids. Taxpayers have little control, or even awareness,
of how the funds are being spent. When the money trails are followed,
they are often the work of lobbyists and political connections.

First off, credit should go to brilliant Betty Krawczyk. On February 3rd 2008, she wrote a story on her blog, For the Love of the Olympics, in which she detailed key information regarding the building of the Olympic Village. She also highlighted the tangled web of connections and linkages that are seeing Vancouver taxpayers having their money shoveled into the hungry mouths of shadowy transnational corporations.

To nut shell it, here is what we know right now:

- The Millennium Development Corporation received the contract
to build the Olympic Athlete's Village.
- Millenium is a subsidiary of the Armeco Group of Companies. When you hit on Amerco, it goes directly to the same link as Millenium. They are a transnational that reaches into several countries, with offices situated in France.

From The NPA may be in deep over the Olympic Village.

"Millenium is the development arm of the Armeco Group.
The NPA council picked Armeco's Millenium for the massive
(Olympic Village) deal, and Paul Barbeau was the President
of the NPA and the President of Armeco Construction Limited
in the years prior to the award."

- Millenium would kick in $193 million, $30 million as a down payment.
- The city of Vancouver has already advanced close to $30-million to
Millennium's lender, Fortress Investment Group.
- Millennium would also receive over $82 million for building the units.
- Vancouver would do the site fixing at another $153 million.
- There would be 1100 condos, 250 would "belong" to the City after
the games. The price of the condos would be between $500,000 and
$6 million and would be pre-sold. With the real estate market tanking,
it's not going to happen. Period.
- The City of Vancouver already signed on to a $190-million loan guarantee
to Fortress Investment Group, which provided a $683-million loan to Millennium.
- Two directors of Armeco Construction Ltd., Shahram and Sharokh
Malekyazdi, relatives of the founder of the company, partnered with Armeco
Group of Companies.
- The Malekyazdi's allegedly don't hold board meetings, have issued no shares to their company and have reportedly not filed the required annual financial papers (as of early November 2008) with the provincial Ministry of Finance.
- The only current director of Armeco Construction Ltd. is Paul Barbeau,
who was a recent head of the Vancouver civic NPA party.
From Barbeau's LinkedIn page:

President - Vancouver Civic Non-Partisan Association 2004 to 2006

Another curiosity, did Mr. Barbeau's law firm receive any corporate and commercial legal contracts from the city of Vancouver and the province,
involving Fortress, Millenium and Intrawest? What linkages does the Barbeau
firm have to Gordon Campbell and the BC Liberals?

See also, Lawyer denies he's in conflict over Olympic contract
February 14, 2007

Conflict of interest alleged in 2010 bid

Vancouver Mayor Sam Sullivan said he was "not aware that
Paul Barbeau is a director of a company that may be related
to Millennium Properties."

"Council's unanimous decision to select Millennium was based
entirely on the merits of the proposal," he said in a statement.

Millennium was incorporated on June 14 last year, two months
after city staff recommended its bid be chosen to build 1,000
condos for the Olympic Village. The bidding process was
undertaken by an independent committee and lasted eight months.

Barbeau was listed on B.C.'s corporate registry as a director of
Armeco in a Nov. 19, 2005, report."

So, what the NPA would have us believe is:

1. They didn't know their own president had a corporate contract
and was a director of Armeco, which was bidding on this multi-
million dollar contract.
2. That an unincorporated company, with no established record
of financial and project management of this scope, was the most
credible and appropriate bid selection for Vancouver taxpayers
funds.
3. That there was no conflict of interest for Barbeau and his
positioning in this whole mess.
4. That Vancouver taxpayers and citizens do not have a right to
know how the NPA awarded these contracts.

- The two lenders involved in this project are Fortress Credit Corporation,
& the taxpayers of Vancouver.

When looking into Fortress CC a bit more, it's interesting there is no
information available identifying the Board of Directors, or any executives.
Seems pretty shadowy to this curious george. Is there something to hide?
This is what one overview reports, sounds like Disaster Capitalists to me:

Company Overview
Fortress Credit Corporation engages in originating, structuring, and providing
financing solutions to corporate, real estate, and asset-based borrowers.
The company focuses on lending opportunities arising from the cyclicality
of the credit markets, industry specific trauma, out-of-favor classes, and
industries and asset dispositions. It offers bridge loans to borrowers, flexible
acquisition facilities for acquirers of opportunistic assets, and mezzanine or
last-out secured loans to companies.

Gary Mason of the Globe & Mail broke the story about the October 14th
secret and private meeting in which Vancouver city councilors voted
unanimously to provide an additional $100 million loan to the doomed
Millenium group building the Olympic Village.

An interesting note, the project is reported to be over by $60 million,
but the generous Vancouver city council is going into debt to offer Millenium
up to $100 million AND is going to spend up to $450,000 on a management
to bring in a third party to oversee management of the project. A project
the NPA dominated board pushed through giving an unincorporated and
untested company command of millions of taxpayer dollars with no track
record, but solid NPA connections.

His story goes on to say:

"Details of the city's involvement in bailing out the project's
cash-strapped developer have until now been kept secret.
Councillors are under a publication ban and have been told
they face serious repercussions if they discuss publicly the
decisions taken at the in camera meeting."

The questions being, who the hell put a publication ban on this information,
that is clearly in the public interest? Who told councillors there would be
"serious repercussions" for informing the public and taxpayers and just
what "repercussions" are we talking about? That sounds like some pretty
heavy alleged Criminal Code violations, namely intimidation, coercion and
secret commissions to this non-lawyer.

From a CBC story: Vancouver council stands by decision to bail
out Olympic Village

At a news conference before the zoning meeting on Friday evening,
Ladner said he would not release any details of the $100-million loan
when negotiations have not finished and would do whatever necessary
to ensure the completion of the Olympic Village.

"If necessary, I am prepared to lose this election to save this project
and protect the city's taxpayers." [Peter Ladner's statement]

************************
I am sincerely glad Ladner is willing to die by his own sword.
Because that is exactly what is going to happen. This is the
nail in the NPA's coffin. Ladner's continuing assertion that
taxpayers do not have a right to know about any of this is a
clear signal he is no different than Sullivan, that he will err on
the side of protecting the NPA from accountability and that
he does not have the moral integrity, nor judgement to run
Vancouver.

It is so repugnant and vile of Ladner to blame Vision, COPE and
taxpayers for wanting to know the full details of these crooked dealings
and suggesting that this transparency is jeopardizing negotiations with
these inept and possibly fraudulent clowns it suggests not only is the
NPA over. Ladner's political career is over because of the
position he has taken on this issue. I know morality isn't a
popular thing to bring up in politics, but there has been a
profound breach of the public trust in this situation and if
Ladner doesn't see it, and isn't willing to address what his
party has possibly done and how taxpayers and citizens have
been harmed and used, then he is unfit to sit in Vancouver
city hall in any capacity ever again.

I think it's important to look at the Vision councillor's roles in this too.
These aren't stupid people, well, not usually. However, they chose,
in camera, to vote unanimously with the NPA on shovelling increasing
amounts of taxpayers funds into the coffers of a shaky, creaky seive.
Several of them have known about different pieces of this for some time.
I think they better give their conduct some serious consideration. Their
political careers are hanging on their involvement in this too.

In addition, the question of the day is were the councillors aware
that Estelle Lo, the Chief Financial Officer (CFO) of Vancouver City
thought this project was too high-risk for taxpayers? There are
all sorts of rumours flying around about whether she tendered her
resignation, whether she was fired, or whether she's still an
employee of the City. Inquiring minds want to know, but I suppose
she's keeping quiet, since whistleblowing is rarely a wise career move.

Let's look at it all logically:

Fortress Investment Group bought Intrawest, which runs Whistler-
Blackcomb in 2005 for $2.8 million. I'm not even going to get into
some of the questions surrounding how Intrawest was initially financed,
but if you want to read some more speculation read this story and the comments
on the Hook.

Intrawest was unable to meet it's debt re-payment, likely do to it's losses
in the money it gambled away in the markets. So it bellied up to the trough
again and had to re-negotiate.

Their subsidiary, Fortress Credit Corporation, has a $750 million mortgage
on the Olympic Village in Vancouver. That project is now more than
$60 million over-budget, as managed by Millenium.

What we also know about Millenium is that the funding for other projects is
in jeopardy. The Port of Nanaimo project and another project have been put
on hold. In the game of dominos, once one tile goes down, nothing stops the
rest. There is nothing to suggest that giving Millenium more money is
going to fix this and like Ms. Lo quite likely told the NPA dominated council,
this is too high-risk for taxpayers.

With all of this information being linked together, I think there is enough
for a formal complaint to the Commercial Crimes division of the RCMP, since
this is a multi-jurisdictional issue, involving several corporations and
municipalities. Make no mistake, following the money trail is going to take
us to VanOC and the BC Liberal party. This has their stench all over it.
Many of us know, it may have been the NDP who put the plan together
to bring the Olympics to BC, but it was the BC Liberals and their insiders
who are cashing in and bankrupting our entire province for generations
to come. It's time to start unravelling the tangled ball of yarn that will
show how it was all done.

The way I see it, savvy players in the game have an opportunity to expose
one of the biggest scandals in the Vancouver's and BC's history. People have
to decide where they want to be sitting when the dung hits the fan. And they
better make that decision fast, with intelligence and conviction. Careers,
reputations and ambitions hang in the balance. That is a personal promise.

An interesting new development. The Office of the Information &
Privacy Commissioner has now removed the ability of the public to
look up the names of lobbyists. The question must be asked, whose interests
is this supposedly Independent office now serving? What we know is that
these kinds of projects aren't awarded without well connected lobbyists,
in BC, that's usually those who are connected to Gordon Campbell and co.
Vancouver doesn't even have a lobby registry and the Vancouver Charter
would have to be changed by the province to get one. I think it's worth
some Freedom of Information requests to examine Sam Sullivan's
day timers for some select years, say 2004 to 2007 to see just who he was
meeting with and connecting the dots on the outcomes of project bids.

Have a look on the public report page here.

As Betty sagely put it:

OH, FOR THE LOVE OF THE OLYMPICS! Love? Oh, no.
It’s actually money. For everybody but us Vancouverites who
have to shell out for this huge province wide construction party
masquerading as a civic celebration (oh, all right, everybody in
the province pays).

The Big Boys weren't counting on the global economy tanking so fast
and they've all lost a LOT of other people's money and they're back at the
trough for more. We've seen that everywhere.

We have to seriously connect the dots to the largest transfer of tax payer
funds and wealth to private and unnaccountable transnational corporations
in the history of our world. To read more about that see this article.
This is happening right under our noses and Ladner and his ilk are sitting
there justifying this as though we, the taxpayers, are in the wrong for
wanting to know where the hell our money is going. For that reason alone,
on November 15 2008, the NPA must be voted out.

When the new city council is in, the first order of business must be an
unanimous motion to conduct an Independent Inquiry and
Forensic Audit into the awarding of contruction and legal
contracts and the transfer of Vancouver tax payer's money into
the coffers of transnational corporations for the Olympics.
Nothing less will do to restore some integrity and accountability at Vancouver
City Hall.

I hope Vision & COPE heed this message well - your integrity,
opportunity and capacity to run and manage Vancouver will be
made, or broken on this. Choose well.