Auditors probing allegations of financial irregularities in CN Rail's dealings with Ontario-owned transit company

By Delaney Windigo and Kenneth Jackson
APTN National News
An Ontario-owned transit company has launched an internal audit after allegations surfaced that Canadian National Railway billed the company for work it never did.

Ontario Transport Minister Glen Murray said GO Transit and Metrolinx are taking the allegations “seriously” and are reviewing their books.

“I understand they have a team of auditors looking into it. These are just allegations right now; nothing has been proven,” said Murray, in a statement sent to APTN National News. “Go Transit is doing its due diligence. I want to know the facts before I comment further.”

Go Transit merged with Metrolinx in 2009.

Metrolinx said in a statement it was investigating the allegations.

“As soon as GO Transit heard about the allegations an audit was initiated as we consider the allegations serious. We will be able to respond more fully once we have more information in front of us,” said a Metrolinx spokesperson.

Former CN supervisor Scott Holmes claims to have evidence to suggest CN billed the transit company for work it never did as revealed by APTN Tuesday.

He’s taken this evidence to the Ontario Provincial Police and he met with two detectives from the corruption section of the OPP’s anti-rackets unit in February and multiple times afterwards.

The documents Holmes gave the OPP include invoices and internal CN emails. They were provided by CN in the criminal disclosure package provided to Holmes by the Crown in CN’s failed pursuit of a criminal conviction.

APTN wasn’t able to independently verify all of the claims he’s made to the OPP.

In a statement provided to APTN, CN said it adamantly denies any suggestion of impropriety in its management and involvements relating to GO rail projects

The OPP said in an emailed statement that the police force wouldn’t confirm or deny whether it has launched an investigation.

“Generally, investigations involving possible corruption can be very sensitive due to the complexity and thoroughness required to ensure that the evidence is followed,” said Sgt. Pierre Chamberland in the email. “Because of the nature of these complaints, it may not be readily apparent what investigative actions are being pursued by police in order to effectively investigate and maintain the integrity and objectivity of the investigation.”

CN said it wasn’t aware of any OPP investigation.

“CN is not aware of any investigation by the Ontario Provincial Police into such allegations,” said spokesman Mark Hallman in an emailed statement. “CN strongly rejects any suggestion of impropriety in its management of GO rail projects.”

The statement also said that CN was continuing to pursue Holmes in court for fraud. Holmes has countersued CN.

In its statement, CN said it employs strict accounting procedures and controls.

“Mistakes, if any, are identified and corrected. As the work performed by CN on behalf of GO on a fixed-price basis with the work approved in advance and reviewed after completion, there was no risk of GO being overcharged due to any miscoding,” said Hallman.

APTN’s story also raised allegations that CN was using partially worn material on GO projects to save cost. A GO source said they would have paid for new material.

CN said it’s a common railway practice to use partially worn material it would be “transparent” with GO on projects.

More to come.

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