Tied with Knott

Clark Wilson LLP partner Lyall Knott wears many hats. He's a prominent lawyer, one of the provincial Liberal's best known fundraisers and now, it seems, a mailman of sorts for the liquor industry. According to records obtained by Public Eye via a freedom of information request, on November 21, 2006, Mr. Knott sent the following note to Solicitor General John Les's executive assistant Don Smukowich: "I enclose herewith a copy of a letter that I have been asked to forward on to the Minister. The letter comes from one of the groups that attended the Dinner. Kindly pass this note along." The letter, whose signatories have been blanked out, suggests a number of "changes to current liquor policies regarding private sector retailing in British Columbia" - including increasing the discount private liquor stores receive when they purchase booze from the government.

But Mr. Knott's note was sent a little too late. Just a day before, Les told an industry conference he would be making just such a change - costing taxpayers up to $31.1 million in lost revenue. Mr. Knott hasn't responded to requests for comment placed via phone and email. The following is a complete copy of the aforementioned note.

***

November 21, 2006

Don Smukowich
Executive Assistant
Ministry of Public Safety and Solicitor General
Minister's Office
PO Box 9053 Stn Prov Govt
Victoria, BC V8W 9E2

Dear Don:

I enclose herewith a copy of a letter that I have been asked to forward on to the Minister. The letter comes from one of the groups that attended the Dinner.

Kindly pass this note along. Thanks.

Yours truly,

CLARK WILSON LLP

Lyall D. Knott, Q.C.

LDK/lmf

Encl.

***

November 15, 2006

Dear Sir:

Re: Proposal for changes to existing Liquor Distribution Branch and Liquor Control and Licensing Branch Policies regarding Licensee Retail Liquor Stores and Wine Stores

The following are suggested changes to current liquor policies regarding private sector retailing in British Columbia which are submitted for your consideration.

O/S

3. LDB price discount to wine stores

The owners of private wine stores have for years enjoyed a 30% discount on wine purchased from the LDB. It is suggested that this decision not be changed and if any changes are made to the discount, it be given to the LRS operators, which currently only have a 13% discount.

Over two years ago, the previous Minister moved the LRS discount from 10% to 12% and then 13% with the promise to the industry of further increase, which have not happened to date.

It is suggested that the wine store discount remain as it is and that the LRS discount be increased over time.

O/S

The foregoing four points are advanced for your consideration. It is submitted that they would result in increasing the stability and predominating the industry yet maintain government relations where required ie the public interest and public safety which is the primary focus of regulating liquor.

If more information is required, please do not hesitate to contact us.

Yours truly,

16 Comments

I am shocked!

Rather a Knotty note for a party bagman to pen.

Why is it again, that we need private liquor stores and more minimum-wage jobs, when our BC Liquor Stores have always generated strong revenues for the province, provided good, sustainable wages rates in communities and still offers products at better prices than the profiteers do?

Oh yes, it's that old typing class exercise: "now is the time for all good men to come to the aid of the par.."

Personally I don't see why one class of private stores, the wine sellers, ought to receive a more favourable discount that ohter private shops. What rational justification can there be for that differential treatment?

The real issue from the consumers point of view, as I have said all along, is the overall level of pricing, not just on wine but on all classes of liquor, as between B.C. and close neighbour Washington State. The other issues are convenience and the marketing image of liquor in society, in other words, why isn't beer and wine available in supermarkets as it is in America? Or in gas stations for convenience, as it is with some BC "agency" stores?

"The other issues are convenience and the marketing image of liquor in society, in other words, why isn't beer and wine available in supermarkets as it is in America? Or in gas stations for convenience, as it is with some BC "agency" stores?"

What's the need Budd? The Liquor store is just down the street.

Go there.

Do we always have to do what the Americans do?

Do we always have to do what the Americans do?

Your sophomoric faux patriotism is a bit threadbare, Blueboy. The object of liquor policy should not be to establish arbitrary differences in marketing from that which prevails in any other Western nation, and it certainly should not be to fleece the consumer to an unconscionable degree. However, these two goals are indeed the intent of liquor policy in Canada, with the possible exception of Quebec.

Perhaps Budd, you'd like to have the US medical system operating in Canada as well.

Call if "faux patriotism" if you will, but it certainly seems to make much sense that, like medicine, alcohol is controlled through one agency and profit is not the only factor.

And if it isn't some form of patriotism then what keeps you on this side of the 49th suffering through all these high Canadian prices.

Perhaps what you really object to is the fact that a few pennies of the price of the bottle you buy in a BC store goes toward the homeless, healthcare, education and other things we Canadians see as priorities.

Frankly, I'd prefer to be "fleeced" for that than to help finance some whacko war.

Part of the problem I feel is that some people now define themselves as "consumers" who get what they pay for in the great dog-eat-dog.

I tend to put a bit more meat on my people and see them as citizens first.

This work by Sean as well as the earlier discoveries on the liquor issue and now the information on Collins and Kinsella raise issues other then price. If you take a few minutes and read the entire series, what is disclosed is the nature of the incestuous relationship amongst the government, the Libera Party and the private liquor interests.

Thank you, Sean, for your digging and disclosures.

Frankly, bleedingheart I find your ideological propaganda boring and silly. It's offensive that pap like that passes for "progressive commentary" in Canada.

Exhorbidant taxes and liqour store profits are not needed to support medicare or any other government program. No one has produced any evidence to justify them on either cost recovery or health grounds. As even the most simple minded person knows, the situation as between alcohol and tobacco is starkle different, since moderate alcohol consumption is healthy.

The exhorbidant prices Canadians pay are ridiculed by American neighbours and relatives. When people have it pushed in their face that they are being aggressively and unreasonably screwed, then tend to react. These levels of prices are an unnecessary irritant and bring the entire welfare state into disrepute. That people like yourself simply cannot figure the either policy or political odds is a very good reason why the NDP is stuck in third place nationally and is trailing the BC Liberals in recent polls. People here opinions like your's and conclude that voting NDP means high taxes across the board, and no relief in sight from teasing by Americans about what suckers we are to pay $12 for a bottle of wine they can get for $4 at Costco.

I am with you Budd, but here is the part I don’t get. The Booze monopoly enjoyed by government; as you have rightfully pointed out; generates a shitload of surplus revenue due to the massively inflated prices (i.e. taxes) but here is the problem. It costs money to flog booze and the fact is even if you paid the private LRS a 15% commission (or discount if that is your flavor) across the board; that is still way cheaper than operating Government Liquor Stores where Joe Taxpayer get’s to pay for triple net leases, leasehold improvements, and of course BCGEU wages and benefits.

Any first year business student can you tell that and I can see why Carole James and the NDP have a hard time taking a position on the subject as a result. Tough to reach out to the business community when you try to make an argument that makes no business sense.

The only real benefit to Government Liquor Stores accrues to a relatively small amount of unskilled BCGEU Union staffers. Let’s not forget that the Liberals originally planned on closing ALL of the Government Liquor stores; only when the BCGEU caved and cut a deal were the majority of stores spared. Even the BCGEU knew store closures would be imminent as they agreed to it. And with the expansion of private stores where the taxpayer actually nets more money; the profits have been hugely expanding. I seem to recall that the LDB forecasts something like close to 4 billion in net profits into general revenues over the next 3-4 years.

That money could cover at least 2-3 of overspending by the Health Authorities at the current rates.

Budd, you are rather pathetic. I'll give a damn about what your American friends or relatives say when I hear them insisting that universal and equal, health care be offered in the U.S.

Then, perhaps about 20 percent of the people in that country who don't have any coverage might actually feel they live in an advanced society.

You, a privilaged senior, who has done quite well thanks to the growth and wealth of this province and country, bemoaning those benefits to others because you have to pay back a wee bit on a non-essential item.

Inspiring, man.

So your constant whine about wine prices is, at best miserly but certainly not unexpected. You're old enough to understand what a broken record is.

Frankly, if people like yourself are who Carole James is marching hand in hand with, then I fully expect opposition would be again the highwater mark in 2009.

My read of the present realities of your party is invisibility, other than at strawberry socials where, of course, the faithfully converted show up to gobble the sweets, socialize and then listen once again to what might be a good speech for a recruitment drive had any new recruits shown up.

There already is a political party doing what you would like done with booze in BC, Budd. It's led by Gordon Campbell.

Kevin Larsen, your first year business student might realize that those huge profits BC Govt. Liquor stores provide to government, and thus we taxpayers, is after expenses have been paid.

Otherwise, those profits would be called income.

The profits you speak of coming from the private liquor store industry may be substantial. They ought to be to counter the economic loss to the community of good, middle class incomes being replaced by minimum wage survivor packages.

The ripple effect of losses in excess of 50 percent of income from that group of staff through manufactured wage collapse is huge, millions a year in consumer dollars lost in communities like Kamloops alone.

Oh, and guess what? People, on average are paying more for booze in BC than ever before thanks to the profiteering in the private sector.

So there you have it, low wages and less local consumer spending, yet massive profits and open access to government friends whether they be backroom hacks or party stars.

Larsen is wrong as usual- the Liberals caved when the people of BC told them loud and clear "Hands off the LDB" ... which is why, after the failure to privatize the Coquihalla, they were so desperate to privatize SOMETHING, ANYTHING, that they rammed thru the fraudulent sale of BC Rail.
And by the way, Gordo had also promised not to privatize the LDB.
I look forward to seeing Gordo in another mug shot.

I agree that the Liberals caved on the Coquihalla, but not with the LBD’s. The true fact is the agreement with the BCGEU was significantly modified after the BCGEU cut a deal. The deal resulted in lower wages and benefits for all new employees. It also allowed for more part timers and agreed there would be fewer Government Liquor stores across BC. Those are the facts.

As for the so called people of BC, the only people I saw outside of any closing liquor store were actually all of the typical public sector Union brothers and sisters with their rather professionally prepared anti-Campbell bill boards and whatever else. It’s standard Union 101 dogma; any time some public sector jobs are being taken out of the taxpayer gravy train the brothers and sisters all come out kicking and screaming. Same ol’ same ol’ what is really funny is when Jimmy Sinclair orders some lacky NDP MLA to participate in the charade as well.

I can't let this go unanswered, Larsen. First, there is the blackmail that passes as collective bargaining when these Liberals are involved. Take concessions, or we'll use our power to give our friends the entire liquor business is hardly good labour relations.

Secondly, I can't imagine you would know a "typical public sector Union brother and sister" if you fell over one. What they have two heads? You visited every closing of every store in B.C.?

Finally, implicit in your statement is that B.C.ers generally favour private liquor. I have seen no groundswell of support for less selection and higher prices.

Kevin Larsen, if your ability to provide accurate facts and figures was anywhere near as reliable as your tendency to swim in pools of bloated rhetoric, you might be taken seriously.

Please, what is "standard Union 101 dogma"?

Is it anything like that first year business student strawman you threw up in your previous post, the one who hasn't quite grasped the need to deduct expenses from income to calculate profit?

From my perspective, the only charade played out on this issue was the suggestion the Liberals were changing liquor policy to benefit the public.

As I stated last posting, the public is now paying more for booze in BC than ever before and the only reason for that is the private beer and wine retail sector, which charges inflated prices while pays it's workers peanuts.

Just as in the farmed fish industry in BC, Liberal cabinet ministers, party brass and backroomers are all linked together with the private booze industry.

And as we saw with the secret dropping of fines and penalties against unsafe fish farmers, the private booze purveyors are now being handed gifts of cost cuts dreamed up during backroom meetings.

Munroe,

Nope, can’t say I made a point of visiting all of the closing stores, but of the very few I did come across I was pressured by clerk who tired to make me sign a petition (I refused of course), and outside I ran into “protestors”, some were still in the HEU hospital attire, others the CUPE Janitor attire, a few with either BCGEU or CUPE t-shirts or collared shirts with the logo. There was professionally prepared anti-Campbell propaganda. As much as you might believe otherwise; the average BC’er doesn’t carry this type of stuff around. Yes, these were all brothers and sisters. And we all know the locals circulate emails and workplace notices to get the brothers and sisters to come out and put on the show at these types of events; hence my Union 101 comment. Do you seriously deny this practice occurs?

I am not suggesting that BC’ers support private liquor stores; I am suggesting that as long as they can find a booze outlet that is close to where they live; be it public or private; they could care less.

Bleedingheart. Yep. I get that expenses need to be deducted from income before profit enters into play. That is the point. Paying a direct commission (discount) to the reseller is far,far cheaper than paying triple net leases, lease hold improvements and BCGEU wages and benefits. When you sell your house do you open up your own real estate office; hire staff and get them to sell you house or do you simply hire someone and pay them a commission? We all know what is cheaper and the same applies here. The only people who benefit from the Government liquor stores are the BCGEU people who work there, as everyone here has acknowledged they will be paid more, and of course the landlord who scores a desirable government tenant.

Nice try, Larsen, but your broad brush missed a few spots. There have been many petitions in many communities with many signatures showing significant support for stopping the closures of public community liquor stores. There has also been many resolutions at many city councils on the same issues. The one's who have been deaf have all been Liberal MLAs.

As for who benefits from public community stores, you glossed over a rather significant group - the consumers who now face decreased selection at higher prices.

What is truly amazing is that somehow you seem to think it is a really good thing if workers receive less wages. less job protections and fewer, if any, benefits. Only a Liberal could elevate that to a principle.

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