Those following the BC criminal trial of Dave Basi, Bobby Virk and Aneal Basi might not have been surprised to hear that Special Prosecutor William Bernardino worked out a plea deal that brought an end to the criminal proceedings arising from Basi and Virk’s alleged breach of trust concerning the sale of BC Rail. That the deal came before the trial was set to resume with testimony from key political insiders, including former finance minister Gary Collins and Premier Gordon Campbell, was necessarily shrugged off as coincidence. The timing of the deal, coming just before Premier Campbell was set to hit the airwaves with a televised full-throated defence of the HST — and his government’s decision to implement the tax despite having unequivocally promised not to during the previous election campaign — was pure happenstance. After all, Bernardino’s integrity is above reproach. That’s why we have special prosecutors that are fully independent from government and all of its political wants and needs.
But can the same really be said of the Government’s decision to waive its entitlement to recover at least some of Dave Basi’s estimated $3 million in legal defence fees? The government lent its credit card to Messrs. Basi and Virk when charges were laid years ago, but only on condition that the fees be paid back. So clever was the government in securing its rights that the Province took a mortgage interest in Dave Basi’s home. Granted, it was a second mortgage, but a mortgage nonetheless.
You’ll forgive us for being absolutely perplexed by the AG’s explanation that it would have been too costly to attempt recovery of the legal fees owed by Basi. The AG’s spokesperson has been quoted as saying that, at best, the Province would only have recovered a “miniscule” amount. The property was last assessed at $518,000. Given that 2010 property tax assessments in BC were somewhat deflated, we would expect the property to fetch even more than that. (The Globe and Mail recently published an estimate of $857,000). It’s nearly impossible to tell from public documents how much Basi owed on his first mortgage, but assuming it hasn’t been refinanced since the Province secured its charge in 2005 — when the value of Basi’s home was $300,000 less than the most recently assessed value, it stands to reason that there would have been well over $300,000 in untapped equity for the Province to draw on.
Enforcing a mortgage security interest in neither rocket science nor exceptionally expensive. If Basi defaulted on the “loan”, the Province would have been entitled to seek a court order for sale of the property. The first mortgagee would take its cut, and the Province could pull the remainder. There would be a handful of contested court applications to deal with, but, fortunately, the Province has a crack team of litigators to deal with those. Sure, it would have only been a fraction of the $3 million in legal fees owed by Basi, but it would have appropriately allocated at least a portion of the burden of Basi’s legal fees where it belongs.
From a cost-benefit perspective, enforcing the loan would have made sense to us. But even if you’re extremely conservative with the numbers, there was nothing preventing the Province from sitting on its rights for a few more years while letting Basi pick up some further equity in the property and swooping in later to take its cut.
Reports indicate that the Province waived its right to recover Basi’s legal fees as part of the plea deal. While the decision to extend the plea deal was Mr. Bernardino’s alone, the decision to waive the legal fees fell to the Deputy AG and Deputy Minister of Finance. Given that the obvious alternative to reaching a deal was an embarrassingly public airing of the BC Liberals’ dirty laundry in open court, we can’t help but wonder whether waiving Basi’s legal fees was a politically driven call. It certainly wasn’t an economically or principle-driven one.
