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February 05. 2013 10:14PM

Exel ran into controversy in Canada

Exel Inc. is no stranger to controversy surrounding the bidding process for lucrative contracts from government-operated liquor commissions.

The governing Liberal Party of British Columbia announced in September that it was scrapping plans to privatize the liquor warehousing and distribution business in the western Canadian province, following a controversial bidding process involving Exel, the Ohio-based company that recently won a warehouse and distribution contract in New Hampshire.

The provincial government announced its decision to privatize the province's liquor distribution system early in 2012 and by July had short-listed four companies in the bidding: ContainerWorld Forwarding Services Inc., Exel Canada Ltd., Kuehne + Nagel Ltd. and Metro Supply Chain Group Inc.

In the ensuing months, the relationships between Exel and government officials came under intense scrutiny by the provincial media and the opposition New Democratic Party.

Soon after the privatization announcement, the Vancouver Sun reported on government documents obtained by the NDP through a Freedom of Information request, describing several meetings that occurred between Exel executives, company lobbyists and highly placed government officials.

"The documents released by the NDP show that it was only at Exel's urging that the government began to consider privatizing its liquor distribution system," the Sun reported. "The documents show that Exel as far back as 2010 was hoping to influence the procurement process, going so far as to offer criteria it thought should be used in the selection of a new partner."

The political opposition in British Columbia said the documents supported its contention that the government was pushing ahead with a plan "driven solely by a single company's overwhelming desire to control a monopoly."

While the opposition party was pursuing its FOI requests, Business Vancouver magazine obtained an internal 2009 memo from Exel Vice President Scott Lyons to President Jim Gehr, titled "Project Last Spike," a reference to the historic last spike for the trans-Canada railroad in British Columbia.

Lyons outlines several options for acquiring the liquor business in B.C., which he estimated would be worth $55 million to $95 million a year.

"This pursuit is consistent with Exel's desire to grow its alcohol beverage distribution business within Canadian provinces and the U.S. states where the importation and distribution of beverage alcohol is controlled," the memo said.

Exel spokesman Lynn Anderson said the B.C. situation was "politically contentious."

Regarding the "Project Last Spike memo," she said, "Those documents were internal company documents that were leaked, for lack of a better word. They were a couple of years old. They were speculative and created prior to any of the process for the RFP."

An NDP member of parliament said in July, "To this date, there is not one shred of evidence to suggest there is any motivation for this (privatization) other than appeasing Exel Logistics. They (the government) either have to show there is evidence they have some reason to proceed or in our view they need to halt this process right now."

In September, the privatization process was abruptly halted, with no advance warning to the bidders, as part of a new labor contract between the B.C. government and the Government and Services Employees Union.

dsolomon@unionleader.com


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