Metrolinx says Ontario Transportation Minister wrong about audit clearing CN from GO allegations

By Kenneth Jackson
APTN National News
Metrolinx says they are not aware of any other audit into CN Rail and GO Transit that would have cleared any wrongdoing despite a claim by Ontario Transportation Minister Glen Murray that, in fact, a thorough investigation had already been completed.

Murray made the surprise remark during Question Period at Queen’s Park Wednesday.

“As the member opposite of me knows we just went through an investigation where similar allegations (were) raised with CN. They turned out, after a very thorough investigation, that there was no validity to it. That the deals between CN and GO were not only above the board, but very valid and very fair,” said Murray to PC MPP Frank Klees who raised recent allegations about CN overbilling GO by tens of millions between 2004 to 2008 as part of GO’s expansion.

However, when asked, Metrolinx didn’t know what Murray was talking about.

“No, I am not aware of any other audit,” said Anne Marie Aikins, manager of media relations with Metrolinx that oversees GO, a provincial transit company.

Metrolinx is conducting its own audit after APTN National News first revealed allegations Tuesday of CN’s alleged financial mismanagement.

Murray’s office tried to clarify the comment late Wednesday when contacted by APTN. It was just a week ago Murray said he was taking the allegations seriously.

“Actually, the Minister misspoke. It was CN that had completed its internal audit and found no discrepancies,” said spokesman Patrick Searle referring to a press release CN issued Tuesday morning outlining its denials.

But nowhere in the release does it say that CN completed an audit of its own since the allegations surfaced.

When asked for clarification Searle repeated Murray misspoke.

“Yes – the Minister misspoke. He heard that an audit had been completed and thought it was GO Transit’s. He had read the CN news release and the two audits merged in his thoughts,” said Searle.

Searle was reminded nowhere in the CN release does it say an audit was complete.

“The CN release refers to a rigorous review that was completed by CN. The Minister can only speak to the facts he knows, and that is that GO Transit is conducting an audit that is expected to be completed in the coming months,” he said.

The release says CN is doing a review.

“A verification of GO Transit-related project expenses has been started by CN. The review is on-going, but there is no indication of any financial improprieties,” said Sean Finn, executive vice-president. “CN categorically rejects allegations that it in any way defrauded the agency.”

CN has not responded to requests for an interview with APTN.

As for Klees, he believes senior GO Transit officials must have been complicit in an alleged invoice tampering strategy between GO and CN Rail and presented a “confidential” email to Queen’s Park Wednesday.

Klees, quoting from the internal CN email, said the railway company allegedly used a plan to pad invoices to recover nearly $300,000 in over-expenditures from GO.

“Mr. Daryl Barnett, who was CN’s Divisional Manager for Ontario at the time, set out in great detail how CN would recover some $385,000 of ‘overexpenditures’ from GO Transit,” said Klees. “The plan included including using partially worn tie plates and padding invoices. In the end, the email reads: ‘Total Exposure: Reduced from $385 to $78k.'”

The 2004 email ends with “Please do not print or circulate” and was first published by APTN Sept. 24.

Read email here.

Klees demanded Murray answer who at GO was involved.

Murray didn’t directly answer and later wrongly mentioned an investigation had already been completed.

Barnett left CN in 2008 and soon landed a job at GO as the director of railway corridor infrastructure. He still holds that position today.

Metrolinx has refused to divulge whether Barnett is facing disciplinary actions citing privacy concerns.

Klees said something doesn’t pass the smell test.

He wants the government to call in the Auditor General and Ontario Provincial Police.

The OPP have refused to confirm or deny they are investigating fraud allegations, but APTN has reported detectives from the corruption section of the anti-rackets unit first met with a former CN supervisor earlier this year.

At that meeting in Simcoe, Scott Holmes gave a video statement and then provided hundreds of documents to the OPP, including internal emails and invoices.

Those documents were copied and stored by the OPP’s evidence management unit.

One detective kept coming back to Holmes in person and, also by email, wanting more information.

Holmes said he was told by a detective the OPP’s fear was “there was a lack of oversight at Metrolinx.”

Holmes said he told the OPP he was ordered to charge GO “millions” improperly.

APTN contacted Barnett in early September and brought up the email in question.

“I’ll be honest with you, I left CN five years ago. This stuff goes way back. I really don’t have any comment on that. That goes way, way back. If there is an issue with CN you’d be better to go with CN on that,” he said.

When pressed about some of the details of the email Barnett said he understood the questions.

“It’s passe,” he said. “That’s an old job and if there is any issues from that issue you gotta deal with CN formally.”

The contents of the email discusses work on the expansion of GO’s Lakeshore West corridor, particularly a three-mile stretch between Hamilton and Burlington that taxpayers paid $72 million to build, including federal money.

CN kept ownership of the track and GO pays an access fee to use the additional track and, in fact, it’s not a designated GO track.

The project also included massive upgrades to CN’s own freight lines.

CN and Holmes are embattled in bitter legal action. CN fired Holmes in 2008 believing he defrauded the company of millions. Twice, criminal fraud charges were stayed by the Crown.

CN has also sued Holmes and he countersued CN and their private police force. It’s yet to reach trial after five years.

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