Defence alleges BC Liberal insider Patrick Kinsella paid over $175,000 by BC Rail without any invoices; Kinsella lawyer wants records blocked

UPDATE 12 p.m. Friday

The Province's Keith Fraser reports that Justice Elizabeth Bennett has ruled this morning that about half of the BC Rail documents connected to Patrick Kinsella are relevant to the defence and ordered them released, in particularl emails describing meetings being set up between Kinsella and BC Rail shortly after the election.

“Given that B.C. Rail was put on the market in 2002, and the charges come from that event, these documents are likely relevant. Mr. Kinsella does not have a privacy interest on the documents,” Bennett stated in court.

UPDATED 6 p.m. with new info from afternoon court session

The defence in the Basi-Virk case today alleged that BC Liberal Party insider Patrick Kinsella was paid over $175,000 in consulting fees without submitting any invoices for his work.

And Kinsella's lawyer James Sullivan argued in BC Supreme Court that about 108 BC Rail records, documents and emails connected to Kinsella should not be disclosed to the defence, saying they are either private and harmful to Kinsella's business or not relevant to the case.

In court Kevin McCullough, representing former BC Liberal ministerial assistant Bob Virk, alleged Kinsella played a key role in the $1 billion privatization of BC Rail and that he had significant communications with successful bidder CN Rail when the deal got into trouble after the sale was announced.

McCullough blasted the lack of invoices from Kinsella and his company the Progressive Group to BC Rail for what he said amounted to more than $175,000 of the $297,000 the former BC Liberal Party co-chair in 2001 and 2005 charged the Crown corporation for "business advice."

"The fact that we only have invoices commencing in July 2004 for all the Progressive Group when we know in excess of $175,000 was paid from 2002 to 2004 alone is significant to what Mr. Kinsella was doing for B.C. Rail," McCullough told Bennett in arguing for disclosure of the documents.


But B.C. Rail lawyer Robert Deane said this afternoon that there was “an explanation and it’s not sinister.”

Deane said CN Rail had taken over B.C. Rail documents in July 2004, so they were not in B.C. Rail’s possession.

Deane said an affidavit filed in June of 2009 explained that when the transfer of B.C. Rail to CN was completed in about July 2004, recoreds were transferred to the control of CN.

Outside court Deane declined to answer questions about why B.C. Rail still retained some records related to Kinsella but not others or whether B.C. Rail knows if the invoices exist and are in CN's control.

Sullivan said outside court he has no information on the invoices.

But earlier in court McCullough launched a blistering attack on Kinsella and his role at B.C. Rail.

"What did he do for $175,000 between 2002 and July 2004? We know he was campaign chair for Mr. Campbell in 2001. We know that CN was communicating with him directly....A reasonable inference can be drawn that something's not right," McCullough alleged, telling Bennett that Kinsella was retained by B.C. Rail chair John McLernan, a provincial political appointee.

"If Mr. McLernan hired a backroom Liberal lobbyist guy, that's highly relevant," McCullough said. McCullough at one point repeated the term "McLernan-hired, Liberal backroom lobbyist" four times in a row.

In court Sullivan argued that the B.C. Rail records connected to Kinsella should not be disclosed to the defence.

"Mr. Kinsella asserts that documents from B.C. Rail cannot possibly be relevant and also asserts privacy rights. Many of these B.C. Rail documents fall outside the time period where they would be likely relevant," Sullivan said.

And Sullivan told Bennett that release of the documents could be harmful to Kinsella's business.

"Mr. Kinsella is not a government official or a public figure. He's a private citizen who relies upon his good reputation for his business," Sullivan said. "Mr. Kinsella, it must be stressed, is not a party to these proceedings."

Sullivan said that if Bennett rules any documents related to Kinsella should be released, he would want to review them and make submissions on redacting some of the content.


NEW: Tempers flare on all sides in testy battles between lawyers and between lawyers and Justice Elizabeth Bennett

The afternoon session saw some of the testiest arguments yet seen in court in over three years, with McCullough at one point seeming close to being ejected by an obviously angry Justice Elizabeth Bennett.

And Bennett repeatedly ordered Sullivan to sit down and stop interjecting, at one point warning him his actions could potentially result in grounds for an appeal in the case by the defence.

An exasperated McCullough attempted to make additional arguments in response to statements by Special Prosecutor Janet Winteringham in support of Sullivan's position on disclosure of the Kinsella documents and after Sullivan accused the defence of going on a "fishing expedition".

"I have issues to reply to," McCullough said to Bennett despite being told not to rise. "You raised the CN-Kinsella relationship. There is evidence....

"No there isn't," Bennett cut in.

McCullough continued despite Bennett's indication to sit down.

"Can you stop talking please?" an irritated Bennett told McCullough.

When McCullough still continued, Bennett cut him off: "We're going to take a break - 15 minutes!" and then walked quickly out of court.

Earlier in the afternoon Michael Bolton, representing former ministerial aide David Basi, had also alleged that Kinsella played a critical role in the sale of B.C. Rail and that his records are therefore essential to the defence.

"At a political level, he's the man the government couldn't do this deal without," Bolton said of Kinsella's role as a paid consultant at B.C. Rail. "It's a matter of having a key political fixer on the payroll."

And Bolton had little sympathy for Sullivan's arguments to protect Kinsella's privacy.

"Mr. Sullivan argues correctly that his client isn't a public figure - that's true - he's a backroom guy, he's a political figure. It's a power broker role," Bolton said of Kinsella. "There's no doubt Mr. Kinsella would like to remain in the backroom but these documents are critical to the defence."

Winteringham appeared to argue against the defence and for Sullivan's position on the Kinsella documents, saying that defence lawyers had not made a case for extending the time frame for documents or proving likely relevance.

"If the defence is advocating the court consider that 'the fix is in' or "something is not right" the defence must establish that this defence exists at lawy and is of relevance," Winteringham said.

"The defence must move beyond speeches from the floor about likely relevance," she added.

But it was Sullivan's reply to the defence position that raised the most hackles.

"There were documents that were completely irrelevant and yet the defence has come to court and not only argued that they were likely relevant but that they were highly relevant," Sullivan said.

Referring to documents that connected Kinsella to political advice to B.C. Rail regarding the Waste Management Amendment Act of 2002, Sullivan said that despite it having no connection to the case, the defence argued it was relevant.

"The Waste Management Act has absolutely nothing to do with B.C. Rail except that it is a property owner," affected by the amendments, Sullivan said. "Frankly, that's absurd."

After terming the defence arguments a "fishing expedition" Sullivan said that Kinsella's privacy interest is "significant" and his connection to the accused was "remote".

Eventually Bennett allowed McCullough to reply but Sullivan repeatedly tried to object.

"Mr. Sullivan - criminal case - the accused's liberty is at stake - I'm going to let him speak," Bennett said.

When Sullivan later rose again, Bennett warned him strongly: "It doesn't help me if you object. Not letting the defence argue for disclosure is a clear grounds for appeal."

McCullough returned to Kinsella's alleged connection to CN.

McCullough said the Crown's own disclosure of a document seized from Pilothouse Public Affairs in which lobbyists Erik Bornmann and Brian Kieran - who alleged bribed Basi and Virk but are now key Crown witnesses - is where Kinsella link to CN came out.

"This document talks of Mr. Kinsella being CN's political advisor. The Crown relies on these two witnesses - they say Mr. Kinsella was CN's political advisor," McCullough alleged. "According to Mr. Bornmann and Mr. Kieran, Mr. Kinsella is CN's chief political advisor."

The defence has previously alleged that Kinsella may have also been working for CN as well as B.C. Rail but today Bennett said that: "There is no evidence that Mr. Kinsella worked for CN Rail."

McCullough also discounted Deane's explanation of the lack of invoices from Kinsella being in B.C. Rail's possession.

"Whether or not those documents existed and whether they were shipped to CN is another matter," he argued.

McCullough also said B.C. Rail-Kinsella documents related to the Waste Management Amendment Act were indeed relevant.

"The Waste Management Act was going to affect the cost to the buyer - that's why Kinsella was getting it from B.C. Rail," McCullough argued. This Act is going to impact the operating costs - it's obvious."

Bennett said she will rule at 8:30 a.m. Friday on which documents will be examined for likely relevance.

The pre-trial hearing will then be adjourned until August 17, when she is expected to rule on whether she will stay on as the trial judge despite her promotion to the Appeal Court of BC or not.

The court will also hear from BC government lawyer George Copley whether backup email tapes of cabinet ministers and staff that were sent to EDS Advance Solutions for destruction in early May still exist or not.

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