Laila Yuile's Work

While Laila Yuile works on restoring her material to the web, I will post a few of her old pieces that I've saved on my own devices or have recovered from an Internet cache. Mostly, they will be pieces that I've been rereading for my own research.

Bald Eagles Break Injunction build Nest in the Path of Site C Clearing

100 Reasons the BC Liberals Must Go

BC Hydro Says Halting Site C Would Cost Taxpayers 500 Million Not Building It at All Will Save Us Ove

An Open Letter to Carole Taylor on BC Hydro and SiteC

The Case to Stop Site C Construction Links News

Will BC Hydro Still Argue That the Energy From Site C Will Flow to BritishColumbians

Site C Consortium Member Petrowest Has Waiver Extended by Lenders Until March 312016

Clark Vows to Get Site C Past the Point of No Return During Memorial

Longtime Peace River Politician and Site C Opponent Arthur Hadland Arrested at Site C Demonstrationto

The Macquarie Connection, January 7, 2011 / Updated January 12, 2011

While not evident in researching this post, it has been brought to my attention that Macquarie's interest in the Casino was reduced in a debt reduction transaction that took place in August of last year, which received very little press. The majority ownership now belongs to Catalyst Capital, a Toronto based investment firm, which was , in layman’s terms,an exchange of payment of debt for shares. Macquarie's investment was reduced to approximately 2%. I do research my stories to the best of my ability, and had confirmed the below information with not one, but two source’s. However, since New World Gaming is still listed as an owner, the minimal portion of that nature was not widely known. The fact remains that Macquarie did own the casinos until just a few months ago, and one wonders why, if there is so much debt accumulation in these casinos - this transaction was a cash injection, Catalyst was a major creditor and this was a debt paydown - why the casinos are still operating ? Why keep a money pit open?

Those of you who have been readers for a while may have picked up on a couple of emerging themes over the last year. One surrounds the in depth features on some of BC’s P3 projects, and the other swirls around the Macquarie group of companies. You will know by now that Macquarie has had a big interest in British Columbia for several years now, seemingly since the Liberals came into power and began the process of really pushing P3’s as the best model of building new infrastructure province wide.

To be certain, Macquarie, through a number of its fund and subsidiaries, has a hand in a number of projects, and until later last year had been quietly making money off of another venture that has most recently attracted attention of the press, yet again, for money laundering and organized crime – gaming, specifically casinos.

In 2007, Macquarie Group Ltd. entered into a joint venture partnership with Crown Ltd. to buy out Gateway Casinos, through the new company named New World Gaming Partners Ltd. The acquisition meant that they now owned the Grand Villa Casino in Burnaby, the Starlight Casino in New Westminster, Cascades Casino in Langley, Lake City casinos in the Okanagan, and two casinos in Edmonton.

It is interesting to note that even though Macquarie is not a majority shareholder, that when I went to the Gateway casinos main website, there is a lot of nothing to read. Want to know about the company, its history ? Nope, under construction. Want to know about past press? Nothing, again under construction.

Some of the suspected money laundering incidents reported occurred at one of this company's properties, the Starlight Casino in New Westminster. To be certain, in the media reports it is always BCLC that is mentioned, but I find it interesting that none of the former or current casino owners appear to have been interviewed, since this excerpt from the CBC story shows it is hard to get the casinos to operate within regulations:
According to Ed Rampone, who was B.C.’s manager of casino investigations until 2009, gangsters can use casinos using so-called loan sharks — people who make high-interest, short-term private loans and will resort to violence to collect debts.

Rampone says gangsters lend large amounts of cash, mostly in $20 bills, to loan sharks. The loan sharks then act as middlemen, lending to high-stakes gamblers.

The gamblers typically repay the loans in the form of casino chips.

The gangsters cash them in and the money then appears to come from casino winnings, not illegal activities.

The practice is becoming more prevalent, said Rampone, who added that it was “an uphill battle” getting casinos to co-operate with regulations.

“I would agree that things have gotten worse,” he told CBC News. “There definitely has to be a willingness to stop it and much, much more participation from all the stakeholders in the industry.”

Read more: Suspicious BC Casino Dealings 'Raise Questions'
Since Maquarie seems to be divesting itself of investments on a global scale, I am hoping we may be soon to see the last of Macquarie in this province, with their recent sale of the 100% stake they had in the Sea to Sky highway. Business has been bad for them overseas, as their model of financing has proven worldwide to be inadequate and risky at best. Enron style number manipulations and skewed calculations leave projects and governments at risk when things appear to be better than they actually are.

No one knows why Macquarie sold that stake in the Sea to Sky, but I find it interesting to note that entire transaction fed a lot of money into BC from Macquarie investments and holdings… and they just made a tidy little profit and left.

I’m far from being the first to question this companies methods and holdings. Macquarie’s worldwide holdings include many, many offshore companies. Blog Borg Collective posted a list of their holdings worldwide, and it is substantial, although it is likely to read differently now.

“ Who’s afraid of Macquarie Bank? – The story of the Millionaires Factory” is an eye-opening article into the company that has taken such an interest in BC while the Liberals have been in power.
Macquarie developed a taste for and an aptitude in handling big infrastructure assets, while its executive director, Nicholas Moore, also identified a secular shift. Governments were not just stinting on infrastructure but exiting what they had: there was money to be made in the shift of public-sector assets into private hands, and in the provision of amenities and facilities on behalf of the state. Over the last decade, this initial jeu d’esprit has evolved into the ‘Macquarie Model’: the closest thing in Australian finance to a perpetual-motion machine.

The ‘Macquarie Model’ is begun when the bank buys all or part of a business, whether it be road or bridge, airport or utility. After a period of ingestion, the investment is passed on to one or more of its specialist funds, crystallizing a profit, usually modest. But these funds not only pay Macquarie for management; they also pay fees for advice, underwriting and refinancing, as well as bonuses for out performance of market indicators. In conjunction with rapid growth, Macquarie’s fee structure sometimes produces bizarre excesses: in the three years from June 2002, for example, the rake-off from the Macquarie Infrastructure Group was 54% of cash flow.

In theory, it would be possible for investors to find a cheaper manager. In practice, to unseat Macquarie from one of its funds is almost as inconceivable as Westfield Holdings being booted out of Westfield Trust. So it goes – and when you are clipping per cents off $131 billion of infrastructure assets, there is soon plenty to go round. As Scoop Jackson observed, “A billion here, a billion there, and pretty soon you’re talking about real money.”
Of course, we – and that includes the premier, and the auditor general – know now that the Macquarie Model of financing is the worst thing a government can get into, via P3’s or IPP’s. My colleague Erik Anderson and I have chatted about this, and the best thing you can read to understand how bad this companies methods are , is to read this article, titles Macquarie model blow torched.
New York- based corporate governance service RiskMetrics Group has delivered a stinging rebuke to Australia’s infrastructure sector, and in particular the “Macquarie Model” which has been mimicked by Babcock & Brown, and has spawned a generation of toll-roads, airports, telecommunications and power generation stocks.”

“In the most detailed independent research of Macquarie’s Group and Babcock satellites to be published, RiskMetrics critiques the financially engineered infrastructure model for its high debt levels, high fees, paying distributions out of capital rather than cashflow, overpaying for assets, related-part transactions, booking profits from revaluations, poor disclosure, myriad conflicts of interest, auditor conflicts and other poor corporate governance.”

“Although the report has not put a figure on it, fees in the billions above normal public-private partnership (PPP) rates of return have gone to the investment banks.”
But back to the Millionaires Factory…. Another excerpt to make you wonder why our government likes to do so much business with companies like these…
The risks attached to Macquarie aren’t only financial. It is not just another big company making a tonne of money; it is a company increasingly standing in for the state, and not just in Australia. Two of its biggest recent purchases have been British assets of the most public kind: the venerable utility Thames Water, acquired by a Macquarie-led syndicate last October for £8 billion, and the emergency-services communications network Airwave, for which £1.9 billion was paid in April. Thames looks like the bank’s gamest bet yet: massively profitable, but with pipes so decrepit that almost a third of the water that flows through them seeps into the ground. London’s mayor, Ken Livingstone, has derided it as “the unacceptable, unsustainable and irresponsible face of privatisation”.

In the public eye, Macquarie can look squeamish. Stan Correy from Background Briefing describes attending a financial industry conference to hear Nicholas Moore speak. When Moore heard that the ABC was present, he demanded that recording equipment be switched off. “I was just reading that Macquarie is investing in regional newspapers in the US,” Correy says. “Which has got to be ironic, considering they absolutely hate journalists writing anything about them.”

Its reputation, moreover, is for being prickly, even hostile, when criticised. When Business Review Weekly was preparing a cover story on Macquarie three years ago, the bank started issuing complaints to the magazine’s proprietor, John Fairfax Group, even before publication. Two years ago, transport academic Dr John Goldberg published a paper casting doubt on the viability of the M2 Motorway and the Lane Cove and Cross City tunnels; the bank not only complained to the University of Sydney, where he was an honorary associate, but demanded the university disassociate itself from his comments. Whatever the rights and wrongs of Goldberg’s critique, it seemed needlessly heavy-handed. Likewise the response to the Wilson HTM analyst Brett Le Mesurier, who was told recently that he was being denied access to management because he had the temerity to write a note to clients comparing Macquarie to its smaller rival Babcock & Brown. “Of course,” says the puckish Le Mesurier, “that just encourages me.”

An investment bank undertaking roles previously performed by government is anything but a like-for-like swap. A government is elected on the basis of what it may giveth; an investment bank is chiefly interested in what it can taketh away.
Considering that last statement, there is no doubt our government’s ideologies are badly skewed, when they continually encourage and promote business investments that will ultimately not only bankrupt our province, but our citizens of faith and trust in the process.

Question the Macquarie connections when you see them, past or present, not only for what they represent, but for what that connection means for the future of our province.

Sea to Sky highway changes hands as Macquaries Essential Asset Partnerships sells 100% of their stake in the project, December 22, 2010:

In an interesting development which is relevant to the sea to sky news I posted today, I received inside information from an overseas source early this evening that Macquarie Bank has shut down Transtoll, which is a subsidiary of Macquarie Atlas Roads. I was also told that Deloitte is the receiver handling the wind-down, and that in some cases phones have been turned off and employee’s let go.

This financial news has not been made public by Macquarie worldwide, however it was confirmed to me this evening, via email with a senior manager of corporate communications and investor relations in Australia, that Macquarie is shutting down the Transtoll business line, due to a lack of business activity( not weakening financial markets) and it has been wound down over a period of time.

The company is currently servicing a number of contracts in Australia and transition arrangements will be put into place as part of the administration process. The contract on the sea to sky highway I reported earlier a couple of weeks ago has been completed.
You may recall Transtoll was one of the original bidders for the failed P3 project of the Port Mann bridge construction.Considering current events with Macquarie and Transtoll’s business line closure, one wonders if there is a more serious economic issue with the Australian based conglomerate with holdings all over the globe.

I am awaiting further comment from Australia this evening with regards to the sale written about below and will post as it comes in. ~ L. Y.

This latest news passed onto me via email last night, by my good friend at Blog Borg Collective, just confirms why P3 projects (Public Private Partnerships) and those contentious shadow tolls are such lucrative ventures for investment corporations and funds - they provide a long and secure form of income for companies like Fiera Axiom Infrastructure and the Nova Scotia Pension Agency, who are both part of the investment consortium that will be the new beneficiaries of your tax dollars, courtesy of their purchase of 100% of Macquarie's stake in the sea to sky highway.

Fiera Axium Infrastructure Inc., by their own definition, is “an independent portfolio management firm dedicated to generating attractive, long-term investment returns through investing in core infrastructure assets.”

From the news release:
A consortium of Canadian investors led by Fiera Axium Infrastructure Inc. and composed of Fiera Axium Infrastructure Canada L.P., Régime de rentes du Mouvement Desjardins and Nova Scotia Pension Agency (the “Consortium”) today announced it has acquired 100% of the economic interests in the design-build-finance-operate (“DBFO”) concession rights associated with the Sea-to-Sky Highway Improvement Project (“S2S”) and Anthony Henday Drive Southeast Leg Ring Road (“AHDS”) from Macquarie Essential Assets Partnership (“MEAP”). S2S, which serves the Vancouver-Whistler corridor, and AHDS, which forms part of the ring road serving the City of Edmonton, are successful public-private partnerships (“P3s”) with the Provinces of British Columbia and Alberta, respectively. MEAP, a private unlisted fund established in 2003, is nearing the end of its mandate and is divesting of its interests in S2S and AHDS in accordance with the fund’s terms.


“S2S and AHDS are exceptional transportation infrastructure assets with an established operating history, a strong contractual framework and an attractive long-term profile, which aligns perfectly with our investment mandate,” said Stéphane Mailhot, Vice President and Senior Investment Director of Fiera Axium Infrastructure Inc., manager of Fiera Axium Infrastructure Canada L.P. “We look forward to partnering with the Provinces of British Columbia and Alberta, existing subcontractors and local communities to ensure the continuing success of these projects.”

The Province of British Columbia owns the Sea-to-Sky Highway. The S2S concession is a DBFO P3 procured by Partnerships BC to support future economic development within the Vancouver-Whistler corridor as well as transportation requirements for the 2010 Winter Olympic Games. The C$600 million project, completed in 2010, consisted of capacity and safety improvements to 100 kilometres of roadway between Horseshoe Bay and Whistler. The S2S concession also includes the continuing operations, maintenance and rehabilitation of the highway until 2030.
So how much did the consortium pay Macquarie for their stake in the Sea to Sky highway? No one knows. The company has declined to give a dollar value of the deal, the terms of which remains undisclosed, however the new investment lead Fiera states that they intend to keep the current day to day management and operating teams. This means that for now, users of the road should notice no difference.

To my knowledge, this is the first time such a large stake in a government asset has been sold in this manner, and bolsters the argument that P3 projects are only a good deal for the private partners who invest in them, since the terms of the concession agreements are long, and income from the project is nearly a guaranteed prospect.

The Sea to Sky highway deal has been the subject of much speculation and discussion since I revealed confidential documents from the concessionaire Macquarie, which indicated shadow toll payments were part of the deal. Called Vehicle Usage Payments, also known as Traffic Volume or Traffic usage payments, are in addition to the normal maintenance and availability payments made to the operator, and are based on the number of vehicles that travel the highway, the size of those vehicles and the distance they travel. Payments are made monthly from the BC government to the sea to sky operator and although they are capped at some point, the addition of these shadow toll payments beyond the regular maintenance and operation payments ensures a good return on the initial investment of the concessionaire and is an incentive to companies who wish to bid on projects like this one, or to consortiums like the one who now own that stake in the sea to sky.

In this case, the deal goes to 2030 and so Fieria, the Nova Scotia Pension Plan and the third member, Regimes de Rentes du Mouvement Desjardins( 9th largest private pension plan in Canada) stand to benefit from a stable and growing income for their funds over the next 20 years – on the backs of your hard-earned dollars.

This likely explains why Transtoll was awarded a contract earlier this year to ensure the traffic counting mechanisms and the contract, in preparation for this deal. Anyone interested in purchasing a 100% stake would require absolute assurance everything is in order and that the amount of income generated from traffic volume on the highway would meet investment requirements. Mark Hume of the Globe and Mail picked up this story and did an excellent job of covering it in the Globe and Mail.

With this development, the lucrative nature of P3’s as an investment for private companies and consortiums has never been more glaringly apparent. The question is, when they have continually been proved to cost the government, and thus, the taxpayers more than a publicly funded project, why are the BC liberals( Kevin Falcon) still pushing them as good policy? If the return on the investment is so good that pension plans are buying into it, clearly the governments rate of payment on a shadow toll is far higher than one would think makes good,fiscal sense. Will the opposition start asking questions now,

Read the entire history of the Sea to Sky series below, links that include confidential documents and never before revealed details of the deal the government tried to keep most of hidden from the people of BC, as well of the first written record of proceeds from the sale of BC rail being used to pay for the first phase of the Sea to Sky highway.

And since Macquarie has a hand in several other BC projects and seems to be the BC liberal governments pet financier/advisor/profiteer, you might be interested to see exactly what the extent of their holdings are… and ask yourself why so many are in offshore, safe haven tax free confidential countries…? My partner in crime over at Blog Borg Collective is posting a stellar A-list shortly. Check it out.

The Sea to Sky Shadow Toll series:

1. Breaking news: BC liberals inked ‘hidden toll’ into Sea to Sky highway deal – and we all pay for the next 25 years

2. Shadow tolls on Sea to ‘Sly’ highway, the William R. Bennett Bridge,and the BC Rail connection

3. At last! The ministry of transportation responds to my questions…

4. “The B.C. government’s secretiveness is not confined to ‘shadow tolls’. And there is genuine concern they have a lot to hide…”

5. Sea to Sky operator awards Transtoll technical advisory contract to ensure accurate shadow toll vehicle counts on the Sea to Sky highway – despite the government making repeated, public denials that shadow tolls even exist

6.When is an “independent fairness advisor” …not?
Recommend this post

No comments:

Post a Comment


This is an archive only of items published before April 22, 2016. These and newer articles are available at:

If you read an article at this blogger site, you can comment on it at the new site.

Note: Only a member of this blog may post a comment.