TUESDAY,FEBRUARY18,2020 | THEGLOBEANDMAILO NEWS | A
It was never going to work, the
source said. The Globe is not
identifying the person and oth-
ers who spoke for this story be-
cause they were not authorized
to speak publicly.
Bombardier soon launched a
strategic review and started
weighing the options for both its
train and plane businesses.
There were serious back-and-
forth talks with U.S. aerospace gi-
ant Textron Inc. that yielded a
firm offer and discussions with
Japan’s Hitachi Ltd., two sources
said. Bombardier also turned to
France’s Alstom SA seeking a
deal, entering into several weeks
of negotiations that derailed sev-
eral times.
Alstom officials disagreed
with Bombardier on what its
trains business was worth. And
there were other hitches to a
deal, too, such as allegations by
the World Bank that Bombardier
allegedly used corruption and
collusion to win a contract in
Azerbaijan, one of the sources
said.
In the end, Alstom decided it
might not get this chance to bulk
up again. And Bombardier ce-
mented its hoped-for fix. After a
decades-long expansion building
one of the world’s largest aero-
space and train businesses, the
Montreal-based company is now
shrinking by half.
Under a deal announced Mon-
day, Bombardier will sell its rail
business, known as Bombardier
Transportation (BT), to Alstom
for about €7.5-billion (US$8.1-bil-
lion) including debt.
Bombardier said that its net
proceeds from the sale, after ad-
justing for certain liabilities, such
as pension obligations and pay-
ing the Caisse de dépôt et place-
ment du Québec for its equity
position in BT, will be US$4.2-bil-
lion to US$4.5-billion. Some
US$550-million of that will be
paid to Bombardier in Alstom
shares.
This one deal will allow Bom-
bardier to slash its US$9.3-billion
debt by half. When added to pro-
ceeds from other asset sales still
pending, the company calculates
it will emerge with US$2.5-billion
of net debt going forward.
“[This] is a transformation
deal for Bombardier. It marks
the end of our turnaround and
the beginning of a new and
bright chapter for the company,”
Mr. Bellemare said on a call with
investors. “It really changes the
game for us.”
The wholesale retreat from
building everything from high-
speed trains in China to street-
cars for Toronto means that
Bombardier will exist only as a
maker of private business jets.
But BT isn’t giving up all of its
Canadian roots: The Caisse,
which owns 32.5 per cent of BT,
has agreed to become a signif-
icant shareholder in the enlarged
Alstom. That helped facilitate a
deal because Alstom was wary of
levering up its balance sheet, one
source said.
Mr. Bellemare would not dis-
cuss the company’s backup plan
if the Alstom tie-up fails to winregulatory approval, but he said
the business jets unit is no long-
er for sale. Bombardier sees op-
portunities for both sales growth
and profit margin expansion in
that business, which sells planes
under brand names Learjet,
Challenger and Global Express.
Bombardier’s business jet unit
employs 18,000 people and last
year tallied revenue of US$7-bil-
lion.
It faces enormous develop-
ment costs as competition heats
up with big-name rivals such as
Gulfstream Aerospace and Das-
sault Aviation, and analysts say
Bombardier will have to spend
big to refresh its Challenger
models in particular.
Alstom is paying for Bombar-
dier’s train unit through a mix of
cash and new Alstom shares. The
Caisse will sell its stake in BT to
Alstom for about €2-billion and
invest the proceeds, plus an ad-
ditional €700-million, for an 18-
per-cent stake in the new Al-
stom, making it the French com-pany’s single largest shareholder.
Caisse chief executive Charles
Émond said the pension fund’s
desire to invest in rail has in-
creased over time. He said Al-
stom has proven over the past
five years that it is a solid oper-
ator.
“It’s running like a Swiss
clock,” Mr. Emond said of the
company on which the Caisse
now has two board seats. “We’re
getting into an even stronger
[corporate] entity in a sector for
which we have a lot of convic-
tion.”
Alstom, for its part, called the
BT purchase a “step-change” ac-
quisition. Alstom had been try-
ing for some time to strike a big
deal, in good part to compete
with the new breed of Chinese
train giants that are trying to
crack the European and North
American markets, where its
presence is scant.
But its attempt to merge the
train business of rival Siemens of
Germany failed last year, when
the European Union’s competi-
tion regulator, Margrethe Vestag-
er, said the deal would make Al-
stom-Siemens overly dominant
in high-speed trains and signall-
ing.
In an interview, Alstom chair-
man and CEO Henri Poupart-La-
farge, 50, said he expected an
easier ride with European regu-
lators this time around.
“The deal is well launched and
I don’t see any significant obsta-
cles,” he told The Globe. “BT is
relatively small in signalling and
high-speed trains in Europe.”
The French government threw
its support behind the Alstom-
BT merger. “This deal will allow
Alstom to prepare for the future,
against the backdrop of increas-
ingly intense international com-
petition,” Finance Minister Bru-
no Le Maire said in a statement.
If the deal is completed, the
new Alstom will have an order
backlog of €75-billion and will
nearly double its current annual
revenue to €15.5-billion. With BT
at its side, Alstom will be a big
player in virtually every train-
product market.Bombardier:Saleofraildivisionmeanscompanywillnowonlyproducebusinessjets
Twotrainsmanufactured
byBombardier’srail
unitareseenata
stationinParisin2018.
TheMontreal-based
companyisselling
itsrailbusinessto
France-basedAlstom
foraboutUS$8.1-billion
includingdebt,ina
dealthatwillallow
Bombardiertocut
itsUS$9.3-billion
debtinhalf.
LUDOVICMARIN/
AFPVIAGETTYIMAGESFROMA“Regardless of what François
thinks re. judicial consults, we
should be able to see the specific
caucus feedback,” PMO staffer
Cameron Wilson wrote in an e-
mail to Laura Berger, another
aide in Ms. Wilson-Raybould’s of-
fice who worked on judicial ap-
pointments.
Judges at the federal level are
appointed by the prime minister
on the advice of cabinet after a
recommendation from the jus-
tice minister. The Liberals say
changes they made – including
giving more independence to
arm’s-length judicial advisory
committees that create pools of
eligible candidates – ensure the
process is transparent and merit-
based.
The e-mails do not offer evi-
dence thegovernment is break-
ing any rules, but show steps in
the appointment process that are
not laid out publicly on any gov-
ernment website.
In a statement, PMO spokes-
woman Chantal Gagnon said the
Liberalgovernment reformed the
process “after years of patronage
by the Conservative govern-
ment.”
“It would be irresponsible not
to consult a wide range of people
including elected members of
Parliament, when considering
such an important life-long ap-
pointment. Thegovernment con-
sults with Chief Justices, Regional
Justices, senior members of the
bench, bar associations, the law
society and our elected officials
on the recommendations made
by the judicial advisory commit-
tee,” she said.
The e-mails obtained by The
Globe show the extent to which
Liberals consult outside of gov-
ernment on judicial appoint-
ments.
MANOEUVRESINMANITOBA
The e-mails reveal that Colleen
Suche, who is a judge on the Ma-
nitoba Court of Queen’s Bench,
and her husband, former minis-
ter and current MP Jim Carr, sup-
ported identical lists of candi-
dates in separate communica-
tions with the office of Ms. Wil-
son-Raybould in 2018.
“His ranking aligns 100% with
the feedback provided by his
wife,” Ms. Berger told Ms. Wilson-
Raybould in an e-mail.
Ms. Wilson-Raybould and Mr.
Carr, who was minister of natural
resources and then international
trade during the first Liberal
mandate, clashed over candi-
dates for judicial appointments
in Manitoba.
“Carr is calling me – all upset I
suspect,” Ms. Wilson-Raybould
wrote to her staff in February,
2018, asking for an update on can-
didates whose appointments
were set for cabinet approval.
In relation to an appointment
to the Manitoba Court of Queen’s
Bench, an e-mail says Justice
Suche informed Ms. Wilson-Ray-
bould’s office of her hope that
Ken Champagne would not be
given a “leadership position”
such as associate chief justice. Ms.
Berger said in an e-mail that the
plan had always been to appoint
Justice Champagne to a regular
position on the court.“He’s Métis and has strong ex-
perience as a Crown and provin-
cial court judge in all parts of the
province. His application was
thoughtful, beautifully written,
and showed sensitivity to the
reality of litigants,” Ms. Berger
wrote.
He was named to the Court of
Queen’s Bench in April, 2018.
In a separate round of appoint-
ments later that year, Mr. Carr’s
office contacted Ms. Wilson-Ray-
bould’s office over two candi-
dates who were not on the list
supported by Mr. Carr and Justice
Suche.
“His office now informs us that
Min. Carr has ‘strong objec-
tions,’ ” Mr. Giroux wrote to Ms.
Wilson-Raybould.
The PMO’s director of appoint-
ments, Hilary Leftick, told Mr. Gi-
roux that both ministers needed
to come to an agreement at the
risk of delaying appointments in
Manitoba.
“She suggested that you touch
base with Min. Carr prior to to-
morrow’s [caucus meeting]. If
this matter has not been sorted
out ... she will ask that the two
names be pulled from the list for
the time being,” Mr. Giroux add-
ed.
When new judges were an-nounced in the province the fol-
lowing month, the list included
three names: Ms. Wilson-Ray-
bould’s two choices – Annette
Horst and Jeffrey Harris – as well
as Connie Petersen, who was the
top choice of Mr. Carr and Justice
Suche. Mr. Carr and Justice
Suche’s next choice, Shauna
McCarthy, was appointed to the
same court in 2019.
A spokesman said Mr. Carr –
who is undergoing cancer treat-
ments – was not available on
Monday, while Justice Suche
could not be reached for com-
ment. The PMO did not respond
to questions on the role played by
Mr. Carr and Justice Suche in the
appointment process.LIBERALCONNECTIONS
E-mails between ministerial staff
members are usually not accessi-
ble to the public because they do
not fall under the purview of the
Access to Information Act. The e-
mails obtained by The Globe
show that at least one ministerial
assistant went further and asked
to use encrypted applications on
BlackBerrys to discuss potential
appointments.
“Can I have your PIN? Easier to
send the recommendations,” Ke-
vin Lavigne, who was New Brun-
swick Minister Dominic LeBlanc’s
director of operations at Fisher-
ies, asked in a 2018 e-mail to Ms.
Berger.
In an e-mail six days later to
Ms. Berger, Mr. Lavigne wrote that
he had had “a good chat with my
boss” and asked Ms. Berger
whether they could speak on the
phone.
Mr. Lavigne could not be
reached for comment on Mon-
day, while Ms. Gagnon said the
government “follows all record
keeping laws and guidelines.”
Another e-mail involved a Lib-
eral supporter who advocated on
behalf of two possible candidates.
In 2018, Jessica Prince, then-chief
of staff to Ms. Wilson-Raybould,
relayed information to Ms. Berger
and Mr. Giroux from Mitch Frazer,
whom she described as a “Liberal
connected lawyer.”
In the e-mail, she pointed out
Mr. Frazer had previously orga-
nized a fundraiser for Ms. Wilson-
Raybould and was an acquaint-
ance of Finance Minister Bill Mor-
neau, “so, you get a sense of
where this is coming from.”
“Got a call from Mitch Frazer ...
He wanted to flag two judicial
candidates that he wanted us to
know he supports,” Ms. Prince
wrote about lawyer Jana Steeleand Justice Julie Thorburn.
Ms. Steele remains in private
practice. While Justice Thorburn
had been appointed to the Onta-
rio Superior Court by the previ-
ous government of Stephen Har-
per, Mr. Frazer informed Ms. Wil-
son-Raybould’s office that she “is
not a Conservative” and is “philo-
sophically aligned with the PM
and thisgovernment.”
Justice Thorburn was promot-
ed to the Court of Appeal by Da-
vid Lametti, who became Justice
Minister in January, 2019.
In an interview, Mr. Frazer said
he avoided speaking with Ms.
Wilson-Raybould about judicial
appointments because he had
hosted her fundraiser. A partner
at Torys LLP in Toronto, he addedhe has been regularly consulted
over the years on appointments
by officials working for Liberal
and Conservativegovernments
in Ottawa and Toronto.
Ms. Gagnon of the PMO said
that “political activity or dona-
tions have no impact on a per-
son’s candidacy or the selection
process ... We believe Canadians
have the right to engage in the
democratic process and we en-
courage them to exercise these
rights regardless of political
stripe.”AREVISEDPROCESS
The e-mails also show that Math-
ieu Bouchard – a lawyer and for-
mer senior adviser in the PMO –
kept a close watch on judicial ap-
pointments, especially in Que-
bec. In his communications with
Ms. Wilson-Raybould’s office, he
sought regular updates on which
lawyers had applied, the status of
their applications in front of judi-
cial advisory committees and of-
fered his insight on potential can-
didates and applicants.
Mr. Bouchard wrote in one e-
mail that he had received com-
ments on eight potential judges
in Quebec from two unidentified
contacts in the legal community,who “themselves consulted other
people” on the candidates.
In another, he said he would
consult “a tax litigator friend of
mine” on candidates to the Tax
Court. In that same e-mail chain,
Ms. Berger said that she had con-
sulted with “folks we trust in the
tax law world” on the same candi-
dates.
When Ms. Wilson-Raybould
was minister of justice, she was
encouraged by the PMO to in-
crease the role of Liberal caucus
members in the appointment
process, according to the e-mails.
In October, 2018, she organized a
“pizza night” with MPs to show
how their input was valued.
As part of the planning for the
event, Ms. Wilson-Raybould’s of-
fice compiled a list of MPs who
have been pro-active in promot-
ing candidates for judicial ap-
pointments, which included
Chris Bittle, Nathaniel Erskine-
Smith, Anthony Housefather, Mr.
Lametti, James Maloney, Geoff
Regan and Nick Whalen.
The Liberals modified the
process under which the federal
government appoints judges to
superior and federal courts in
2016, giving greater independ-
ence to the seven-member advi-
sory committees that evaluate
the candidates for appointments.
The 17 committees – which re-
view applications on a regional
basis – are made up of members
appointed by thegovernment to
represent the general public and
members who are appointed by
the provinces and the legal com-
munity. The committees are
asked to rank candidates who
make the cut as either being “rec-
ommended” or “highly recom-
mended,” which is designed to fa-
vour “truly outstanding candi-
dates.”
However, there is no public
disclosure of the percentage of
new judges who were “highly rec-
ommended” compared with
those who were simply “recom-
mended” under the current gov-
ernment. The PMO said that ad-
visory committees have received
1,569 applications since 2016, and
that there have been 239 judicial
appointments among the 295
highly recommended and 259
recommended candidates.
The Globe reported last year
that the PMO also vets potential
candidates with a private Liberal
Party database called Liberalist to
see whether they had given mon-
ey to the party in recent years,
participated in party activities
and even put up Liberal election
signs.Judges:E-mailspointtoextentofLiberals’judicialconsultingoutsideofgovernment
FROMAThee-mailsdonot
offerevidencethe
governmentisbreaking
anyrules,butshow
stepsinthe
appointmentprocess
thatarenotlaidout
publiclyonany
governmentwebsite.E-mailsbetween
ministerialstaff
membersareusually
notaccessibleto
thepublicbecause
theydonotfallunder
thepurviewof
theAccessto
InformationAct.