Federal government has no authority over CN Rail's private police force

By Kenneth Jackson
APTN National News
The RCMP is refusing to investigate the Canadian National Railway on allegations the company’s private police force lied under oath to obtain warrants against a former employee who was fired and ultimately charged with fraud by CN police.

And, as it turns out, the federal government has no authority over CN police even though they have the same powers of arrest as any other police service in Canada.

CN’s police force falls under the Railway Safety Act and its jurisdiction is with the Ministry of Transport.

“Under the Act, the Minister of Transport does not have the powers of review or for investigation of a police constable or ‘police force’ appointed with respect to a railway company,” wrote former federal Transport Minister Denis Lebel in a Mar. 8, 2012 letter.

The letter was written to former CN supervisor Scott Holmes who wrote the minister asking for an investigation into CN police based on its criminal probe into him beginning in July 2008, about a month before CN fired him for fraud.

Holmes also asked London and Peel police to investigate CN, but they have declined as well.

According to Lebel, a Superior Court judge can strip the powers of a CN police officer. Lebel also said the railway company also has that power too.

He’s since gone to the Ontario Provincial Police with allegations CN Rail improperly billed GO Transit, a Crown corporation, tens of millions of dollars.

CN has denied and any wrong-doing in statements to APTN that first revealed the allegations Tuesday. The next day Metrolinx, which oversees GO, said it launched an internal audit of its financial records.

The OPP’s corruption section of the anti-rackets unit has met with Holmes five times, but won’t confirm or deny it is investigating.

The OPP’s evidence management unit has made copies of documents Holmes has provided them, including hundreds of internal emails and invoices.

CN has said in statements to APTN, “it is not aware of any investigation by the Ontario Provincial Police into such allegations. Again, CN strongly rejects any suggestion of impropriety in its management of GO rail projects.”

CN also sued Holmes for fraud and Holmes countersued. The matter is still before the courts and hasn’t reached trial.

It turns out the only person with authority of CN police is the company’s chief of police, employed by CN, a publicly-traded company.

Holmes tried this past summer to have a court order the RCMP to investigate CN police, but Justice Canada lawyers were successful in arguing against it.

Graydon Sheppard is Holmes’ civil lawyer and said they have filed for an appeal to be heard by a panel of three judges in November.

“They concocted phony criminal charges against Scott and his wife on two occasions. Both times those charges were withdrawn from the Crown after the evidence came out but during the course of those hearings they gave evidence under oath that they had broken the law. They had given false evidence to obtain arrests warrants, production orders, search warrants and so on. It’s all there in black and white,” said Sheppard.

CN stated that, “Mr. Holmes has made repeated spurious allegations against CN in recent months. But, as this matter remains before the courts, CN has no further comment.”

The judge who dismissed Holmes’ motion for a private investigation ruled that no probe into CN was required because Holmes nor his wife were harmed. Justice Canada lawyers never filed evidence.

Holmes was arrested on Nov. 6, 2009 when he said CN police “dragged” him and his wife from his vehicle in front of his daughter in Simcoe, Ont.

Holmes and his wife were kept in jail over the weekend as they were arrested on a Friday. Holmes’ wife suffered a “medical” problem while in custody. Holmes said much more happened, but wouldn’t get into details.

Holmes said he had a signed agreement with CN that he wouldn’t be arrested and if they wanted to charge him, Holmes would turn himself in.

Criminal charges against Holmes had already been stayed once before by a Crown attorney.

Up until that point Holmes didn’t have much knowledge of how CN police had been handling its investigation into him.

He did request, in the beginning, that an independent police force, rather than CN’s police force, be the ones to conduct a criminal investigation.

That was denied.

Then in August 2010 Michael Lacy, Holmes’ criminal lawyer at the time, said he persuaded the Crown to hold a preliminary hearing focusing only on the conduct of CN police.

At that hearing it also came out that the corporate side of CN was directing CN police on how to conduct their investigation. CN police officers testified it was a “joint venture” between CN head office and CN police.

“It’s clear to who ever reads the transcript the Crown’s case would have been completely decimated at trial,” said Lacy. “(CN Police) acted in a biased way. They had no regard for their role as police officers and they were really just acting as tools for the CN management for the complete purpose of assisting the CN corporation with their civil claim. In terms of my career one of the most egregious examples of abuse of power by police, if not the most egregious because it wasn’t one or two renegade police officers it was abuse of power at an institutional level with no real oversight by anyone. The internal structure of CN police is they report to CN.”

The charges were stayed once again with an undertaking they wouldn’t be reinstated.

Lacy wrote federal cabinet ministers in 2011 asking them to hold an independent investigation into CN police, but none would.

Former Public Safety Minister Vic Toews said CN police didn’t fall under his jurisdiction.

In that 62-page letter Lacy quoted portions of CN’s officer’s testimony.

It was confirmed, on the record, that CN police would prepare investigative summaries to determine their next steps and they were shared with CN’s in-house lawyer Nizam Hasham and other members of CN’s executive.

Lead officer on the Holmes file was Const. Robert Zawerbny and he told the court he was contacted by CN’s legal department on July 8, 2008, prior to Holmes being fired.

“It may have been a phone call at, at the beginning. Like I said I was getting stuff from the law department, Nizam, (sic) information and in a way I guess we were working with them in relations to a civil action a suit,” testified Zawerbny Aug. 18, 2010. “Obviously, management was involved and the law department was involved from the beginning.”

Zawrbny said he would get emails from CN corporate directing him how to do his police investigation into Holmes.

“That would concern me today and it concerned me when this investigation was going on,” he said, adding it was the first time he’d ever been directed by CN head office on how do an investigation.

CN police also misled justices of the peace to obtain search warrants and production orders.

That includes production orders to obtain banking records, the continuation of production orders said Lacy beginning on page 46 of his 2011 letter.

Holmes had all his assets frozen and sold, except the home he lives in as a result. CN police also raided his home and took all documents he had, including his computer.

“It’s been pretty tough, when you’re fighting a big corporation that supposedly has their own police force, that will think nothing of to what extent that they want to get information to their company to work with,” Holmes told APTN.

Holmes said all he has left is the home he lives in.

“But I’m not giving up. I’ll never give up. I want my day in court,” said Holmes.

Sheppard said CN’s heavy-handed approach was done in an attempt to keep Holmes quiet about what he knew of CN’s financial records.

“Scott has a great deal of information about wrongdoing, financial wrongdoing within CN and he started to raise objections to what CN was doing as far as its charges to its customers were concerned. That’s why he was kicked out, that why he was fired and sued to shut him up,” said Sheppard.

Holmes has provided the OPP with hundreds of invoices, emails and other internal emails he says prove CN was improperly billing the province.

“CN has strict accounting procedures and controls, which require mistaken invoicing to be corrected. Mistakes, if any, are identified and corrected,” CN said in in their statement.

CN police were first granted policing power in 1923.

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Investigative Reporter

Kenneth Jackson is an investigative reporter in Ottawa, Ont. with more than two decades in the business. He got his start in community newspapers before joining the Ottawa Sun in 2007 where he worked the police beat.

In 2011, Jackson joined APTN to break the Bruce Carson scandal that sparked three federal investigations into the former senior advisor to then Prime Minister Stephen Harper. Carson was later charged with fraud sparking a court battle all the way to the Supreme Court of Canada. The conviction was upheld and was based entirely on APTN’s investigation.

Jackson has focused, almost exclusively, on the child welfare system in Ontario over the last five years. The work has earned multiple awards, including the 2020 Michener Award.

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