Former senior CN Rail supervisor meets with OPP detectives to discuss alleged financial irregularities within the railway company

By Kenneth Jackson
APTN National News
On the surface Ron Plain and Scott Holmes don’t have much in common. In fact they’ve never met.

One is an Ojibway man from Sarnia, who blocked a railway, the other a Caucasian who used to build the very same tracks that run through his community.

But both are locked in a fight with the same company – Canadian National Railway.

Plain, was part of a rail blockade in Aamjiwnaang that halted CN freight cars during the height of the Idle No More movement at the turn of the current calendar year.

Holmes, says he’s a whistleblower exposing what he believes to be financial irregularities within CN.

And both have felt the full legal might of the largest railway company in North America.

Plain was brought before a judge and wound up on the losing end after the court ruled he had to pay CN $16,000 in damages.

He didn’t have the money and feared he was going to lose his home.

“That was the fear and that’s why we had to borrow the money to pay it,” said Plain who this past summer was found in contempt for disobeying a court injunction to shut down the blockade that lasted 13 days and, according to CN, caused hundreds of thousands of dollars in damages.

Holmes was fired from a job he had since 1981 with CN. He told APTN that he lost just about everything he owned except the house he lives in. That includes coffee shops, construction businesses and a home in Florida. He puts the personal loss at approximately $10 million.

He was also charged with fraud and CN sued him for millions.

But twice, criminal charges against him were stayed by the Crown, once for lack of evidence and other based on the conduct of CN Police who admitted to lying to obtain warrants and being directed by CN corporate during their police investigation.

“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’s why he was fired and sued — to shut him up,” said Holmes’ lawyer Graydon Sheppard in a taped interview with APTN National News.

APTN has been investigating the Holmes vs. CN case for several months, interviewing sources and collecting documents.

Holmes said CN has fought to keep what he claims to know about CN’s relationship with GO Transit from the public eye.

GO is a public transit authority operated by the province of Ontario. It moves millions of commuters every day in the greater Toronto area.

Holmes claims to have evidence to suggest CN billed the transit company for work it never did.

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.

After that meeting one detective kept coming back – Det. Bev Mackey.

She was given thousands of financial documents that allegedly back up what Holmes says.

APTN has learned Mackey has compiled a report for her superiors who are considering launching a full investigation.

The documents Holmes gave the OPP includes 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. More to follow.

Holmes said one CN capital project had run over budget by about $93,000 and he was asked to rework an internal billing scheme where that CN work would be charged to GO.

Holmes gave the OPP an email that shows his superiors directing him to him to look into the matter.

He said after he got the email a supervisor called him.

“So they called me and we worked it out so GO couldn’t really figure it out. I was instructed to do that,” said Holmes in a taped interview with APTN. “[At CN] you do whatever someone asks.”

Holmes said this was known at CN as “journaling” which is a way to move money from one account to another.

Another allegation is the use of partially worn material (PW) on new GO projects. APTN was given three emails where the person in charge of GO projects instructs staff to find the PW material to save cost for GO projects CN was in charge of.

One of the emails obtained by APTN is labeled “confidential” and talks about a three mile track from Hamilton to Burlington East that CN built for $72 million for GO in 2007.

The 2004 email was sent by CN’s former divisional engineer for Ontario, Daryl Barnett who left CN in 2008 and got a job with GO as their director of railway corridors where he remains to this day.

The email goes on about other ways to save money.

“When we estimate the North side bridge we will build into this estimate some buffer to reclaim the Geotech/surveys/flagging/locates. Exposure reduced to $30k,” wrote Barnett while telling staff in writing not to ‘print or circulate’ the email.

The email continues: “We will charge another $30k for the additional grading on the North side and absorb the balance into the project. Exposure reduced to $40k,” wrote Barnett.

In total, if all was done as directed by Barnett, CN would have recovered more than $300,000 Barnett said in the email.

Barnett wouldn’t talk about it when reached by APTN. CN did not address this issue in their emailed statement to APTN and did not respond to follow up questions on the issue.

APTN also spoke to a senior official at GO who asked not to be identified so they could talk more freely. The source said it wouldn’t be acceptable to use PWs and GO paid for new material.

The GO official, however, defended CN’s work and said they’ve done spot audits on CN and compared prices.

“We’ve looked at prices we get from CN and compare them to the open marketplace but at the end of the day CN, because they own the corridor, they can potentially charge us whatever they want to charge us and our choice is to say ‘well then we don’t want the work done,'” they said.

But that would mean they don’t get the trains through, the source said.

“That is the reality of a monopolistic situation,” they said. “They are a private company and trying to make a profit. We’re a public agency trying to provide a service provided they don’t try to gouge us.”

The source said it is common business to subsidize CN’s own freight lines in GO projects that CN is in charge of building.

“In order for us to run the service CN comes in and they might have to improve their existing freight service as well in order for the GO trains to come through. So it’s not unreasonable to assume improvements to all the tracks in the given corridor are required,” said the source, adding there is no dedicated GO track even after they pay to build it.

While Holmes and Plain may be miles apart one man saw the similarities.

Private investigator Derrick Snowdy had already been investigating CN when he heard of Plain and the blockade he represented.

Snowdy thought Plain could be an asset to his investigation and befriended the man.

He told Plain about some of his work and knowledge he had about CN that included Justice David Brown who issued the first court injunction against Plain on Dec. 24, 2012. The injunction ordered Plain and the rest of the people on the Aamjiwnaang off the spur line that serviced mainly propane companies.

Brown was unknown to Plain but Snowdy had seen his name before and gave Plain a public court document where Brown presided over a motion hearing involving another man he had never heard of – Scott Holmes.

It was a motion hearing regarding Holmes’ counter lawsuit against CN.

Brown himself said in the document he had acted as a former lawyer for CN before being called to the bench in 2006 by Prime Minister Stephen Harper. Brown also said he was a witness for CN in some regulatory matters for the company in the United States as APTN reported.

Brown played a small part in Holmes’ case that is still before courts five years later having never gone to trial.

“I want my day in court,” said Holmes.

None of these allegations have yet been proven in court.

[email protected]

Twitter: @afixedaddress

Producer Nation to Nation / Ottawa

Kenneth is a journalist with nearly two decades of reporting experience who focuses on crime and social issues, including child welfare and wrongful convictions. He has worked out of APTN’s Ottawa bureau since October 2012.