CN Rail committing fraud?

[StylinRed]

CBC has a developing investigation where it would seem that CN and others have created fake companies purchasing biodiesel which gets shipped around, as if they're being delivered but product is never off loaded, to take advantage of govt. subsidies

CN's $2.6M mystery U.S. trips never unloaded biodiesel
'CN met its obligations as a common carrier and we have no further comment,' spokesman tells CBC




A CBC News investigation has uncovered a cross-border mystery involving unexplained shipments of biodiesel tanker cars that were sent back and forth numerous times between Canada and the U.S. by CN Rail but were never unloaded.

According to leaked internal CN documents, the rail company stood to make $2.6 million for the effort.

“CN received shipping directions from the customer, which, under law, it has an obligation to meet,” CN Rail spokesman Mark Hallman said last week. “CN discharged its obligations with respect to those movements in strict compliance with its obligations as a common carrier, and was compensated accordingly.”

When asked whether CN wasn’t helping to do something strange, Hallman responded: “CN met its obligations as a common carrier and we have no further comment.”

CN employees, although guarded, were more candid.

“In 25 years, I’d never done anything like it,” one railway worker told CBC News on the condition he not be named for fear he might be fired. “The clerk told me it was some kind of money grab. We just did what we were told.”

It all took place between June 15 and 28, 2010.

According to internal CN records, Train 503 shipped the biodiesel to Port Huron, Mich., from Sarnia, Ont.; Train 504 brought them back. The number of cars on the train would remain mostly the same, but cars were added and removed, between 68 and 89 cars at a time. As soon as the paperwork and car shuffling was completed, the trains made the return trip.

“This unit train will move at least once daily to Port Huron starting on Tuesday, June 18,” said an email written by Teresa Edwards, CN’s manager of transportation for Port Huron/Sarnia.

It will “clear customs and return to Sarnia. If we can get in more flips back and forth we will attempt to do so. Each move per car across the border is revenue generated for Sarnia/Port Huron.

“It will be the same cars flipping back and forth and the product will stay on the car.”

The email ends with a reminder that the move “has the potential to make a lot of money for CN so need everyone’s assistance to maximize the number of trips that we make and ensure that it all moves smooth.”

Edwards did not return calls to CBC.

CN internal documents obtained by CBC News show that the company had agreed to flip the shipments back and forth across the border using its rail lines and tunnels 24 times without unloading any cargo. This garnered CN $2.6 million.

Each shipment generated bills of lading, customs import and export forms that suggest total biodiesel shipments of 1,984 cars — which, taken together, would be valued in the hundreds of millions.

The U.S. biodiesel companies listed as customers were HeroBX and Northern Biodiesel. Northern Biodiesel did not answer calls, and it is unclear whether it is still operating as a business. CBC News called HeroBX repeatedly, but it has refused to respond.

Firm that arranged deal probed by CBSA
CN records say the Canadian company that arranged the deal is Bioversel Trading Inc., which is being investigated by the Canada Border Services Agency on allegations it made false statements to avoid duties in shipping biodiesel to Romania and Italy.

Bioversel Trading Inc. is part of the Bioversel family of companies that share offices and officers with Einer Canada. The CBC interviewed Einer Canada’s Arie Mazur, who made a lengthy defence of Bioversel Trading’s fight with the European Union’s Anti-Fraud office, and maintained the company has not broken any Canadian laws.

On the matter of the Sarnia-Port Huron mystery train, Mazur offered some theories, but was advised by his lawyer, who was present during the interview, to research it and get back to the CBC.

The lawyer, Nicholas Karnis, sent an email to the CBC suggesting the corporation was being used “to support a witch hunt perpetrated by our business competitors,” and declined to comment further about the mystery train.

On Friday, the CBC contacted Iulian Cirlan, whose name appeared on the CN documents as a Bioversel employee. He said he did some contract work for Bioversel, and had been working there a month when he was told to handle the logistics for Train 503 and 504. He said the biodiesel came from several companies, and railcars from Buffalo and Winnipeg were added to the train.

Claims of mislabelling products
“My job is not to ask what and why,” said Cirlan, whose job involved supervising the movements, and paying the terminals and the trucking companies. “If you ask me to move product 100 times, I’d be glad to help.”

The Bioversel fight against the CBSA’s search warrant of its Bloor Street offices in Toronto on May 30, 2012, was heard in court Wednesday in Quebec City. Court documents show European authorities had contacted the CBSA alleging Bioversel and another company mislabelled their merchandise and its origin. Officials are now investigating claims the companies were routing American-made biodiesel through Canada and falsifying its origin to avoid paying tens of millions of dollars in European anti-dumping duties.

The company denied the allegations in Quebec City, and is attempting to quash the warrants. Bioversel's lawyers accused CBSA officials of abusing their powers and executing the search on behalf of the European Anti-Fraud Office, saying the company has not broken any Canadian laws. The matter has been adjourned pending further deliberation.

The company has refused to explain why it paid CN to haul the same train shipment back and forth between Canada and the U.S.

Customs officials on both sides of the border declined to comment on the mystery, since the Toronto company is under investigation.

Natural Resources Canada, which runs a $1.5-billion biodiesel incentive program, was contacted numerous times by the CBC, and it has said it will look into the matter.

Send tips to dave.seglins@cbc.ca and john.nicol@cbc.ca

CN's $2.6M mystery U.S. trips never unloaded biodiesel - Canada - CBC News

[CharlesInCharge]

So the article first says the company was falsifying diesel loads... but why would it get incentives anyway? and if it polluted the land in a crash, wouldnt our tax money pay for the clean up rather then the now private rail company?

Then it says diesel from the states was transported instead, not paying tariffs Im guessing?

A country this rich, why sell our rail system away in the first place...

If our tax monies are being defrauded, we should hire dog the bounty hunter to bring these crooks in and have our Surrey thugs teach them a lesson so it wont happen again.

[Graeme S]

The article seems to be talking about Biodiesel. I'm guessing it's an incentive program for the cartage companies to encourage them to ship more renewable/eco-fuels as opposed to conventional fossil fuels. They would most likely have gotten large tax discounts or subsidies based on the number of tanks and distance hauled. Assuming the loads were large enough, and assuming the costs were low enough, the companies could make quite a bit of money if they simply sold the tanks around between shell companies.

Company A owns companies B and C. Companies B and C are in the business of selling biodiesel. Company B sells tanks to company C. Company A hauls them to company C. Company C sells them back to company B. Company A again hauls them back to company B. Company A is paying itself to move the tanks around, and because of subsidies, actually makes money for doing lots of nothing.



Hardly a new scam, but the old ones often last because they work so well.

[zx7rrrr]

Not suprised. Corruption plagues every country.
Posted via RS Mobile

[Gridlock]

Also not surprised...we'll bend over backwards to support anything remotely "green" with incentives and subsidies.

In the US, Obama made a big deal out of a few big ticket(relatively) supports for US based green manufacturers/suppliers...and they bombed. But don't worry! The only ones that lost their shirts were the tax payers and the employees.

Doesn't surprise me at all that in Canada, we'd have a bureaucrat create a system that can be gamed, and then have someone game it. Find the guys and fire them-but we'll never see the 2.6 m back...

[MindBomber]

Originally Posted by Gridlock

Also not surprised...we'll bend over backwards to support anything remotely "green" with incentives and subsidies.

In the US, Obama made a big deal out of a few big ticket(relatively) supports for US based green manufacturers/suppliers...and they bombed. But don't worry! The only ones that lost their shirts were the tax payers and the employees.

Doesn't surprise me at all that in Canada, we'd have a bureaucrat create a system that can be gamed, and then have someone game it. Find the guys and fire them-but we'll never see the 2.6 m back...

No, that's not accurate at all.

Only two of the companies that received stimulus money declared bankruptcy, and the renewable energy industry has expanded substantially in America. Given the unavoidable risk of failure in business, there's been a good rate of success. The American right-wing media made a story where there was none, and you fell for it....

Oh, and.... oil companies receive a couple billion in subsidies annually in Canada. What's good for the goose is good for the gander? At least subsidies for green initiatives help create an industry, instead of throwing free money at a company already thriving and making massive profits.

[MoBettah]

Why would they commit fraud for such a pitiful amount. Something is not adding up.

[Gridlock]

Not at all offensive MB

I said that Obama made a big deal out of a few of the companies that he supported...and they bombed. I didn't actually say "all". I don't "fall for" right wing propaganda as much as I don't fall for that on the left.

I'm sure there are others that are doing well. I don't like that green energy gets subsidies any more than oil companies. I don't think that is free market economic principles at work...at all. I support a subsidy on the cost of the energy if its felt that would even the playing field, direct to consumer, but that's not what is happening. Any time you hand cash over to people, you open the risk of people gaming the system. Golden parachutes stateside, or ghost shipments in Canada. Hell..you want to "help" a smaller company, then defer or eliminate tax payments, or property tax or something...but don't write a check.

If governments want to "help"(the worst words to ever hear) than they can minimize useless regulation, create regulation that imposes the public costs on the companies that engage in environmentally damaging activities(ie. air pollution that is 'free' for a company to generate, but harms everyone else) that makes a greener form of energy "cheaper" to create and let the free market go.

It's an easy system. It's the one our countries have been based on. Don't pick favorites. It works for green energy...it works for banking, and it works for everything in between. Remain impartial, and create a regulatory framework that evens the playing field for all involved. Then let the companies work within that framework. If an oil company can do something that works within that framework, then they should be applicable to the same system that provides rewards to green energy. BUT..they pick a Solyndra and demonize a "Shell". I disagree with that.

[Gridlock]

To this end, this is why, surprisingly, I'm actually not against a carbon tax/offset system. It's using the free market to its advantage. You can either clean up your business, or buy offsets from others. Either way, its pollution not being generated. We don't need massive bureaucrats to monitor it. The free market handles it on money. All you need is the same people you already have to make sure a company isn't dumping more than allowed.

That to me is a capitalist system working beautifully in play. Small government and profit in the same system.

BUT...this is way off topic.

[MindBomber]

I have no intention of offending, Grid.

When you say, "Obama made a big deal out of a few big ticket supports for US based green manufacturers/suppliers...and they bombed," it sounds very close to writing off the entire initiative as a failure, which is one of the falsehoods Republicans chant.

I agree with your points in the follow up post.

Sadly, what you suggest, is the opposite of the Harper government approach.

Originally Posted by MoBettah

Why would they commit fraud for such a pitiful amount. Something is not adding up.

Based on the wording of the article, I would assume the intent was to continue indefinitely, but something prevented that.

Over the course of two years, if operated continuously, the return would have been around $150 million.

[Drow]

came into thread
saw it was cbc
left satisfied

[sexyaccord]

I can confirm, I was train 304

[UFO]

There's a pretty fine line between fraud and legally taking advantage of loopholes in the system. Reading that article, based on my limited understanding, seems more like the latter. The communication and paper trail seems too open and casual for somebody intent on committing fraud.