The British Columbia government was accused last November by Canadian Pacific Railway of leaking confidential competitive information to a rival railway during a fierce bidding war for ownership of BC Rail, The Vancouver Sun has reported.

A letter obtained from Premier Gordon Campbell's office through a Freedom of Information request shows CPR officials feared the government's handling of the BC Rail sale was "extremely prejudiced" and would lead to higher prices for shippers in the BC Rail service area. The letter was written on Nov. 21, 2003, four days before Mr. Campbell introduced the acknowledged front-runner, Canadian National Railway, as the successful bidder in a $1-billion deal to privatize BC Rail.

The sale of BC Rail was identified as a key element in last December's RCMP raid on the provincial legislature, according to a summary of search warrant materials also released Monday by the Associate Chief Justice of the Supreme Court of British Columbia.

That document, which suggests the $1-billion sale of BC Rail may be tainted by influence-peddling, fraud and corruption, is a five-page summary of the police investigation into breach-of-trust allegations and seven searches on Dec. 28 at the B.C. legislature and the homes and offices of people with ties to the provincial or federal Liberals.

The summary suggests two officials at the legislature may have been offered promotion or employment opportunities in
exchange for sharing confidential government information. "The primary focus of the RCMP investigation is whether official 1 and official 2 were offered and/or accepted personal benefits as consideration for their co-operation, assistance or exercise of influence in connection with government business, including BC Rail," says the document prepared by the special prosecutor in the case.

Mr. Campbell admitted Monday's confirmation that government officials are being investigated for corruption and breach of trust related to the BC Rail deal are troubling, but he said the allegations do not taint the $1-billion privatization of BC Rail.

The letter obtained by The Vancouver Sun suggests the bidding process for BC Rail was not carried out in a fair manner. It was written by Neil Marshall, a lawyer at Vancouver law firm Lawson Lundell, to Allan Wallace, the CIBC consultant who was managing the BC Rail sale on behalf of the provincial government.

Mr. Marshall says Canadian Pacific was aware rival Canadian National had been in "direct contact" with BC Rail customers even while the bidding was still underway. By contrast, Canadian Pacific notes it was forbidden to contact those same BC Rail customers as a condition of the bidding process. "By allowing CN access to BC Rail's customers at a time when CPR was prohibited by its confidentiality agreement from contacting such customers, the province has, whether intentionally or not, provided CN with an unfair competitive advantage," the letter says.

Most of the details in the search warrant materials released yesterday had previously been reported in The Vancouver Sun, although the newspaper relied on confidential sources for its information. This document is the first on-the-record legal confirmation of the alleged connection between BC Rail and specific influence-peddling accusations and the legislature raids.

The document does not refer to the organized crime/drug investigation, which is linked to the breach-of-trust case and also resulted in raids on the legislature on Dec. 28. A summary of that case may be released on April 1.

Monday's document does not identify targets of the Dec. 28 search warrants, but says seven warrants connected to the
breach-of-trust investigation were issued: at the office of an official at the legislature and that person's home (official 1); the office of a second official at the legislature (official 2); the offices of a Victoria lobbying firm; the Vancouver home office of a lobby firm employee (L1); the government's computer server system; and the home office of a consulting company.

The document says the RCMP is investigating whether L1 offered "promotion prospects or employment opportunities" to officials 1 and 2.

The Sun, based on interviews and information from sources, has previously reported that the search warrants targeted the office of Dave Basi, the former ministerial assistant to Finance Minister Gary Collins, as well as his home; the office of Bob Virk, the former ministerial assistant to former Transportation Minister Judith Reid; the Victoria office of lobbying firm Pilothouse and the Vancouver office of employee Erik Bornman, who represented a failed bidder, OmniTRAX, in the BC Rail deal; and the Vancouver home office of Bruce Clark, a chief fundraiser and key insider of the federal Liberal party.