(The following story by Francois Shalom appeared on the Montreal Gazette website on March 24.)
MONTREAL — Via Rail Canada’s 2002 deficit of $153.7 million will balloon to $184 million for 2003, The Gazette has learned, and some rail-transport insiders are pointing the finger at the inefficiency of its recently bought Renaissance trains and the federal sponsorship scandal.
Two sources told The Gazette the passenger rail operator will try to pin all the blame for the $30.3-million increase in the deficit on SARS and the outbreak of mad cow disease, which hit transport operators hard.
But nearly half of that amount can be attributed to the Renaissance rolling stock and to Via’s role in the sponsorship scandal, they claimed.
The Renaissance trains were designed to revive rail travel in Canada, buffeted by airlines, buses and personal transportation.
The controversial purchase of 139 Renaissance train cars from Alstom was plagued by problems and glitches from the start, including washrooms that did not accommodate disabled travellers and buffer-wagons of freight that had to be hitched at either end of the trains because the passenger wagons did not meet crash specifications. The added cars contributed a large part of the increased deficit, said the sources.
Via Rail’s annual deficit – it always incurs one – has been decreasing steadily since the early 1990s, and the 2002 shortfall was the lowest since then. The 1990 deficit was $410 million.
But the sources, who did not want to be named, said they feared the company would try to camouflage the losses incurred by the Renaissance equipment and the sponsorship programs by rolling them into the overall figures, which they would blame on SARS and mad cow disease.
The two latter issues probably account for half of the increased deficit, they both estimated.
Via Rail spokesperson Malcolm Andrews said he couldn’t verify the $30.3-million figure, adding: “Wow, that’s quite a big number. But I don’t know if it’s true.”
Via Rail executives were reportedly working on the figures as late as last week, said one source. But Andrews said the crown corporation’s report has been sent to the printers, and will be sent to Transport Minister Tony Valeri on March 31, as stipulated.
By law, the minister then has “10 or 15 (House of Commons) sitting days to table the report. Once that happens, it becomes a parliamentary process.”
People connected to Via also wondered why the recent firings hit only the chairperson and president, Jean Pelletier and Marc LeFrançois, respectively, while others involved in the sponsorship scandal were left unscathed, naming three executives specifically.
Canada’s auditor-general, Sheila Fraser, found that Via Rail, among other crown corporations, had been used to fund projects, on occasion using phony invoices to pay them back.
LeFrançois was fired when he failed to convince the minister that he had played no role in the scandal.
Pelletier was fired for comments he made about Olympic champion Myriam Bédard, who said that during her year’s employment at Via Rail, she questioned bills from Groupaction, a Montreal ad firm at the heart of the scandal.
One insider said that “they are going to invoke the two things (SARS and mad cow) so they don’t have to talk about the other issues – Renaissance and the contracts.”
“The ordinary guy won’t be able to unravel all that.”
Via should publish “the real operating losses from Renaissance,” to gauge the impact of the decision to buy the trains from one of Alstom’s British plants in 2000.
The cost of refurbishing the wagons also soared $110 million, from $125 million to $235 million.
Last October, departing transport minister David Collenette also announced Via Rail would receive $700 million in funds, added to the $401 million announced in 2000.
But the incoming administration warned Via not to spend the money quite yet, before the issue could be reviewed by Prime Minister Paul Martin’s Liberal government.
Yesterday, the government made good on that warning, cancelling Via’s capital-expansion program in its budget.
Via executives “are walking on eggs, everyone’s tippy-toeing and peeking around corners around (Via) these days,” said one source.
“The Renaissance is meant to breathe new life into rail travel, but I think it will have the opposite effect,” said one source.
Both said they favoured Bombardier’s JetTrain or its Acela high-speed train used by Amtrak in the U.S. for the Quebec City-Windsor corridor, the most travelled route in Canada.
But they insisted they did not speak on behalf of Bombardier, or had any interest in pushing its high-speed trains.