Surrey Pretrial facility – first P3 in the province
“Studies on U.S. privatized prisons show that it doesn’t work.” ~ Mayor Dan Ashton
The above statement was Penticton Mayor Dan Ashton’s answer to a question concerning the possibility of the new Okanagan correctional facility being privatized. Ashton indicated that this was an irrelevant concern due to Canada’s stance on private prisons.
Dan Ashton advised us as citizens to make decisions about the facility “based on fact, not hyperbole”.
Summary
Mayor Dan Ashton asserts that the Okanagan Correctional Facility will not be privatized
In 2004 the BC government handed over management of Corrections to Brookfield LePage Johnson Controls (BLJC) – a private company. Contract was for $90 million dollars + $40-$70 million for upgrades to properties over contract term.
BCGEU employees contracts are now with Brookfield LePage Johnson Controls, not Provincial government
Brookfield Asset Management – global asset management company with $150 billion worth of assets.
Bruce Flatt – CEO of Brookfield has shareholder interests as top priority.
Contentious Brookfield Energy Project in South America is backed by Canada Pension Plan (public sector employees), British Columbia Investment Management Corp and Brookfield.
Brookfield Asset Management owns 50% of Island Timberlands on Vancouver Island.
Brookfield purchases land pulled from Tree Farm Licenses on Vancouver Island, logs them and sells them as high value real estate resulting in loss of forests and associated forestry jobs.
Brookfield registers Vancouver Island company in Bermuda; exempt from certain Canadian taxes and civil judgements.
BC Corrections P3 (private) contract for Surrey Pretrial Expansion won by Brookfield Partnerships under Rich Coleman, Solicitor General for BC.
High probability of new Okanagan Correctional facility being a private partnership.
Unions across the country opposed to P3 contracts.
Some facts:
April 1 2004 – A private company, Brookfield LePage Johnson Controls (BLJC) took over property management services of the real estate wing of the provincial government, BC Building Corp, which included ten correctional facilities in the portfolio of properties. The management service would operate under the name BLJC – Workplace Solutions Inc. (WSI).
In 2004 the Solicitor General in BC was Rich Coleman. At the time Coleman was quoted as saying “privatization is not even being discussed in government circles”.
The image below is from the cover of the collective agreement between BLJC-WSI and BCGEU for the dates of May 2008 – April 2012, that defines all aspects of employment, union bargaining and so on. Collective Agreement
Responsible for “cleaning and changing lightbulbs”
The press release concerning the 2004 contract with BLJC-WSI quotes Kathleen Elliott, spokesperson for BC Building Corp:
“The contract covers general building maintenance such as cleaning and changing lightbulbs but also extends to specialized equipment [monitoring systems and alarms] in correctional facilities among others.”
The contract also provided for the transfer of 300+ BCBC property management employees. Their collective agreement through the B.C. Government Employees Union was also transferred to WSI. The union represented 2,100 people in the correctional and sheriffs services. (The contract does not change who guards inmates.)
Brookfield LePage Johnson Controls valued the deal at $90 million annually with an additional $40 – $70 million in potential earnings from repairs, upgrades etc over the course of the contract.
The initial term of the contract was five years with the option to automatically renew for two additional renewal terms of up to five years at the Province’s discretion, for a contract term of up to 15 years in total. One of the terms of the agreement is as follows: “BLJC‐WSI is accountable for the performance of staff and subcontractors” Agreement and terms
Sources confirm that this is privatization. But it wasn’t the first time: BC Corrections Food Services had been privatized prior to the new agreement with Brookfield.
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Profile of Brookfield
Bruce Flatt CEO Brookfield since 1995
Bruce Flatt described by Business Without Borders News as “The Perfect Predator”
The BLJC partnership that won the Corrections BC contract was set up by Brookfield Properties Corporation (owned by Brookfield Asset Management) through a partnership with LePage Johnson Controls for the purpose of conducting office and residential property operations.
Brookfield Asset Management (formerly Brascan), is a global asset management company focused on property, power and other infrastructure assets. Brookfield is run by CEO Bruce Flatt who manages $150 billion worth of real estate, utilities and infrastructure across the planet. Brookfield is now one the world’s largest owners of prime office space and its 165 power plants constitute one of the largest hydroelectric portfolios. Brookfield Infrastructure Annual Report 2010, Brookfield Asset Management Annual Report 2010
The Toughest SOBs in Business
The Globe listed Bruce Flatt as one of the top eight picks for toughest SOBs in business. Globe and Mail
Fraser Paper Pensioners Occupy Brookfield Office
On January 2010, forest union leader Gaétan Ménard and Fraser Papers’ pensioners occupied Brookfield Asset Management’s head office in Toronto, in an effort to save their pensions as Brookfield had just taken over the company. ”As the controlling shareholder of Fraser Papers, with $649 million in profits in 2008, Brookfield Asset Management is planning to purchase Fraser Papers,” says Mr. Ménard. “However, it is using the bankruptcy process to get out of its pension obligations.” Bloomberg
According to the CEP Union, in the end they were told that CEO Bruce Flatt was “not concerned” that pensioners could lose 40% of their pensions as a result of the company’s restructuring plan.
Brookfield Deals
A few examples of Brookfield projects:
Brookfield’s Energy Project – HidroAysen dam, Chile, South America
One of Brookfield’s energy developments is the highly contentious Transelec $4 billion dollar project which includes dams, a super-highway and 2300 kilometres of transmission lines in Chile, South America. (Brookfield acquired Transelec – the largest electricity transmission company in Chile, from Hydro-Quebec International Inc. in 2006 for US$1.55 billion.)
Investors in the deal include the Canada Pension Plan Investment Board, the British Columbia Investment Management Corp. (BCMIC) and Brookfield Asset Management Inc. The project would require the world’s longest clear-cut through the heart of Patagonia’s untouched temperate forests. Source Globe and Mail, Probe International and Brookfield Asset Management
The Brookfield investors for the Chilean project include a B.C. government owned Crown corporation that invests money on behalf of every nurse, post-secondary instructor, and municipal and provincial employee, as well as firefighters, police officers, transit operators, and ICBC and BC Hydro workers. In other words, the pension funds of most public-sector workers in BC are backing a company that is–in the words of its critics–involved in the destruction of one of the planet’s greatest environmental treasures.
BBC News May 9, 2011 – Chile officials approve HidroAysen electric dam project
BBC News May 20, 2011 – 74% of Chileans are against project
Brookfield’s Forestry Company – Island Timberlands on Vancouver Island
Brookfield Asset Management owns 50% of one of Vancouver Island’s largest forest companies, Island Timberlands. Another 25% is owned by the government’s British Columbia Investment Management Corp. (BCIMC), whose directors are from the pension funds.
Island Timberlands was formed March 23, 2005 for the purpose of carrying on the business of investment in, and management, operation, and disposition of timberlands in British Columbia, Canada and other such locales. Source Brookfield Infrastructure 2008 Annual Report
From Brookfield’s 2005 Annual Report:
“We established the Island Timberlands Fund in 2005 with the purchase of 635,000 acres of high quality private timberlands on the west coast of Canada. We own 50% of the fund with the balance owned by institutional investors. The acquisition was funded in part by a $410 million 19-year average 6% term financing, completed during the year.” Source Brookfield Asset Management 2005 Annual Report
Island Timberlands, loss of forests and forestry jobs
In 2008 Scott Fraser, Port Alberni/Qualicum MLA, took the Provincial government to task over the removal of Tree Farm Licenses (TFLs) on Vancouver Island. Victoria Times Columnist.
Fraser said that in 2004 the provincial government “handed over the assets that created Island Timberlands” when it removed some 70,000 hectares of forestland from TFL 44 surrounding Port Alberni. Critics say that decision has detrimentally affected the local forest sector, increasing raw log exports and greatly reducing the supply of sustainable timber in the region.
Since then, Western Forest Products (WFP) accelerated logging and then sold off thousands of hectares of previously protected forestland to real estate developers. The result was significant job losses in logging as well as the destruction of the forests.
In 2007 WFP, whose major shareholder was Brookfield Asset Management, were given approval by the Minister of Forests to pull it’s private forestland out of it’s Tree Farm Licences. The Minister of Forests responsible for this decision was Rich Coleman. His brother Stan Coleman was manager of strategic planning for WFP.
“Island Timberlands was created largely from that government largesse,” Fraser said. “Now three and a half years later, the control of those forests which were once under public control are now going to be controlled by an off-shore company in Bermuda.”
The offshore company in Hamilton, Bermuda is owned by Brookfield through their Vancouver Island timber company; Island Timberlands.
“Being based in Bermuda, the new company will have an international board of directors and is expected to be exempt from certain Canadian taxes and the enforcement of Canadian civil judgments.” Source Vancouver Sun
B.C. Auditor General John Doyle wrote a hard-hitting report concluding that Forest Minister Rich Coleman’s decision to pull private forestland out of the TFL’s was made “without sufficient regard for the public interest.” “When private lands are bundled with public lands in Tree Farm Licenses, all lands are to be managed on a sustainable basis as forestlands. Because private forestlands within TFLs are designated as “managed forestlands” they cannot be sold for other purposes and are assessed at low tax rates.”
Doyle’s report also noted the following: Western Forest Products contributed $60,470 to the B.C. Liberal party between 2005 and 2007. In 2007 WFP’s major shareholder, Brookfield Asset Management contributed $50,000 to the B.C. Liberal party.
On Dec 26, 2008 WFP and the Association of British Columbia Landowners won a legal challenge against regional bylaws limiting their activities on private land.
Brookfield, BC Corrections and the Surrey Pretrial Centre
Under Rich Coleman who left the post of Minister of Forests and Range in June 2008, to later become Minister of Public Safety and Solicitor General for BC, one of the contracts to arise out of the Province’s mandate to build more correctional facilities was the extension to the Surrey Pretrial Services Centre. At $185 million, it is part of the largest capital expansion in BC for correctional facilities in it’s history.
In the request for qualifications for the Surrey facility, it states that the Province is seeking to enter into a contract with a qualified entity to design, build, finance and maintain the pretrial facility. A spokeswoman for Corrections is quoted: ‘The project will be considered as a P3 (private-public partnership) candidate and will be evaluated under government guidelines for P3 projects. The facility will be the first P3 correctional facility in the province.
Brookfield Partnerships wins Surrey pretrial contract
March 30, 2011 – Brookfield Partnerships Surrey becomes the proponent for the Surrey Pretrial Services Expansion, Surrey, BC. The partnership includes Brookfield Financial (lead); PCL Constructors Westcoast Inc. (constructor); DGBK Architects (lead design architect); Honeywell Limited (facilities maintenance); JUG Island Consulting (corrections consultant). The partnership will enter into negotiations with the provincial government to design, build, finance and maintain the project. Source
Okanagan Correctional Centre
2011 – Representatives from the Ministry of Public Safety/ Solicitor General’s office have held meetings in the Okanagan with various councils and the public in order to find a location for another new correctional facility. This remand centre and two years less a day facility will be the largest prison in BC Corrections history.
One of the main concerns of the ‘No Prison’ group is that considering the recent trend to privatize public services – the Okanagan facility will also be privatized. However, Mayor Dan Ashton has said that will not happen and assures us that he asked an “awful lot of questions” on the Council’s trip to the Lower Mainland prisons:
“We had an opportunity to ask any questions we wanted to and we asked an awful lot of questions. We were doing our due diligence, which I think is important and very worthwhile.” Ashton said he would now follow up the tour by consulting with Lower Mainland mayors to get their thoughts on having the correctional centres in their communities. “I want to make sure I get all the facts,” he added. ~ Mayor Dan Ashton Source
Another concern for the No Prison’ group is that the questions being asked may only have scratched the surface and did little to uncover the reality behind this multi-billion dollar private business.
Penticton Council’s revised fact sheet Q + A concerning the purchase of the land and utility services.
In the Q+A from the May 26 fact sheet, the word ‘proponent’ is used rather then ‘the Province’, indicating that the government has already deemed the new facility to be a private venture. This is unsettling considering that as the first P3 in BC, the Surrey Pretrial expansion is not yet completed therefore there is no history concerning this type of facility.
From the revised May 26, 2011 ‘fact sheet’ concerning the Penticton facility:
Q. Who pays for the land and any utility service extensions or upgrades necessary to service a proposed Correctional Centre facility?
A: The proponent would pay for the land as either a straight purchase or a long-term lease arrangement. Upgrades to services would be paid for by the proponent – as is the case for any development within the City. Source
The ‘proponent’ in the Surrey expansion is Brookfield. What is the likelihood that the OCC will not also be a P3 facility, and that the proponent is not also Brookfield?
Ramifications of P3 facilities
As the winner of the contract for the first P3 corrections facility in the province (Surrey Pretrial), Brookfield will handle all aspects of designing, building, financing and maintaining the facility. A few examples as to why that might be a problem:
– “profit to shareholders” has been stated as being the top priority of the ‘proponent’
– cost cutting to increase profits is the mandate of the ‘proponent’
– it is in the best financial interests of the ‘proponent’ to ensure the facility operates at capacity
– ‘proponent’ doesn’t answer to the taxpayer
– long term leases with the ‘proponent’ cost taxpayers more than if the Province borrows the funds at its preferential rate
– hidden costs taxing the taxpayer unnecessarily
NUPGE’S (National Union of Public and General Employees) stand on P3′s
“We’re opposed to P3’s. The governments form a consortium with the organizations and they build the property and the Province basically rents it back. There are not a lot of P3’s in Canada. They tend to be mind-bogglingly complex. Part of the appeal for the private company is the real estate. They develop the property for the facility and they also own the property in the surrounding area, which they then commercialize. There are more P3’s in Europe and USA than in Canada.
One of the main criticisms of P3’s is that the province could borrow the money at a much cheaper rate. It would appear as an upfront cost instead of amortizing it over the period of the contract with the private partner. Over the length of time they spend more money and they manage to hide the figures in a way.”
