Allegations of Canadian National Railway Criminal Conduct, Financial Mismanagement and Other Irregularities

For the past several months, APTN National News has been investigating a number of serious allegations against Canadian National Railway by previous employees. Stories by APTN (1, 2, 3, 4, 5) describe allegations of: criminal conduct by defrauding shareholders, manipulating data to boost CN’s efficiency and share price, retaliation against whistleblowers who work for CN, not reporting derailments and collisions, billing a transit company for work CN never did, using partly worn material on new projects to save cost, CN Police lying under oath and unduly influenced by CN corporate, and moving money from one account to another. These allegations have yet to be proven in court.

Timothy Wallender, a former trainmaster employed by wholly-owned subsidiaries of CN, filed a complaint in August with the U.S. federal court’s Western District of Tennessee alleging “…he was fired in September 2012 by CN for blowing the whistle on widespread fraud committed by the century-old Canadian railway company. Wallender alleges that the fraud was committed under the direction of CN’s former executive vice-president and chief operating officer Keith Creel, who is now with Canadian Pacific (as CP’s President and Chief Operating Officer)”

APTN continues, “Wallender’s allegations centre around the alleged manipulation of the ‘terminal dwell time’ of rail cars in the Harrison Yard (Memphis Tennessee). Terminal dwell time is based on the amount of time a rail car spends in the yard before it’s hooked into another train for transport. The times are key indicators to a rail company’s performance and impact its share price…CN’s CEO Claude Mongeau said in the company’s 2011 report to shareholders that ‘we work hard to run more efficient trains, reduce dwell time at our terminals and improve overall work velocity,’…Canadian National’s supposedly favorable statistics on terminal dwell time at Harrison Yard are based on persistent and pervasive fraud, according to Wallender’s complaint.” Wallender claims his supervisor “told employees at the Harrison Yard that he had a green light and carte blanche from (Keith) Creel to implement his schemes for using false records to show lower than actual dwell times at the yard”.

Wallender also claims his supervisor “…ordered CN employees to not report derailments and collisions to the Federal Railroad Administration”. Both of these statistics are important indicators of a rail company’s safety record.

Wallender believes “…he was fired as a result of CN’s ‘unwritten anti-whistleblower policy’ because he tried to complain about ‘mail, wire and securities fraud’ along with ‘violations of SEC rules on regulations and violations of federal laws relating to fraud against shareholders’.”

Here in Canada, former CN supervisor Scott Holmes “…claims to have evidence (based on 40,000 documents) to suggest CN billed the transit company (Ontario Go Transit and Metrolinx)…tens of millions of dollars… for work it never did. He’s taken this evidence to the Ontario Provincial Police and he met with two detectives from the corruption section of the OPP’s ant-rackets unit in February and multiple times afterwards.” A GO source said, “…it’s common business to subsidize CN’s own freight lines in GO projects that CN is in charge of building”.

Holmes says CN is suing him and trying to get him before a judge to “…’shut me up’ for providing the Ontario Provincial Police with documents he claims show financial irregularities in the company’…They say I broke a rule by giving the OPP documents.”

“Holmes was fired from a job he had since 1981 with CN. He told APTN that he lost just about everything he owned except the house he lives in…He was also charged with fraud and CN sued him for millions. But twice, criminal charges against him were stayed by the Crown, once for lack of evidence and the other based on the conduct of CN Police who admitted to lying to obtain… arrest warrants, production orders, search warrants and so on… and being directed by CN corporate during their police investigation.” At a hearing in August 2010, it was revealed “…that the corporate side of CN was directing CN police on how to conduct their investigation (of Holmes). CN officers testified it was a ‘joint venture’ between CN head office and CN police”. The lead CN police officer on the Holmes file said, “…he would get emails from CN corporate directing him how to do his police investigation into Holmes”.

APTN indicates, “The RCMP is refusing to investigate the Canadian National Railway on allegations the company’s private police force lied under oath to obtain warrants against a former employee who was fired and ultimately charged with fraud by CN police. And as it turns out, the federal government has no authority over CN police even though they have the same powers of arrest as any other police service in Canada”, and “CN’s police force falls under the Railway Safety Act and its jurisdiction is with the Ministry of Transport”.

APTN also describes “…allegations that CN was using partially worn material on GO projects to save cost. A GO source said they would have paid for new material. CN said it’s common practice to use partially worn material…” on GO projects.

Holmes says, “I want my day in court” so he can prove his allegations against CN are accurate and that CN’s allegations against him are not.

Railroaded will continue to follow stories on the claims against Canadian National Railway by former employees Timothy Wallender and Scott Holmes.

 

~ by railroaded on September 29, 2013.