Thread by @ottawacarl

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How did Canada pay for the Trans Mountain pipeline? How was it integrated into the government once bought? Are taxpayers on the hook?

Get ready to be confused! I present to you: the corporate structure of Canada's pipeline, complete with org chart!

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The story starts with a little-known Crown corp called the Canada Development Investment Corp, or CDEV. For years it has managed 2 entities: 1) Canada's 8.5% interest in the Hibernia offshore oil project, 2) liabilities + retiree benefits related to a decommissioned uranium mine.

CDEV’s world changed forever on Aug. 31 when it acquired the entities that constitute the pipeline. 2 weeks earlier, 1 of its subsidiaries, “Project Deliver II” changed its name to Trans Mountain Corp. It bought the pipeline system entities from Kinder Morgan for $4.427 billion.

How did TMC pay for it? Another CDEV subsidiary, “Project Deliver I” — which also changed its name, to Canada TMP Finance — borrowed $5.2 billion from the Canada Account, a federal fund managed by Export Development Canada, another Crown corporation. (Are you lost yet?)

Here’s what you need to know about the Canada Account: it’s run by EDC, but the federal government assumes the risks on the loans. They are transactions the feds consider to be in the national interest. Fun fact: it was used in the past to support GM during the 2009 auto bailout.

Canada backs the loans through its Consolidated Revenue Fund, the main national account where taxes + revenue are deposited. So yes, that means that ultimately, when TMP Finance borrowed money to finance Trans Mountain, it was backed by a fund that's also filled with your tax $$$

If you visit EDC’s Canada Account site, you see that loan to ​“Project Deliver I,” aka the CDEV subsidiary. When I was digging into this in June, EDC told me they disclose these in “ranges” to account for the loan + interest. It’s listed as “1 billion plus” — one hell of a range!

(There is a 2nd pipeline item listed in the Canada Account: a guarantee with ​Royal Bank and TD Bank. I reported on this deal with the banks in June, soon after the feds ordered EDC to “perform any activity" to help further the expansion project: bit.ly/2KhpTr3 )

Here’s where it gets really interesting: The pipeline is now being operated by a NETWORK of government corporations under CDEV. Trans Mountain Corp. controls 3 just on its own: 2 Alberta corps, one for pipeline employees, another that's a ULC, and a third for operating the system

All these government corporate entities, by the way, have very distinct and not at all confusing names:

- Trans Mountain Corp
- Trans Mountain Canada Inc.
- Trans Mountain Pipeline Limited Partnership
- Trans Mountain Pipeline ULC

You get the picture…

All of this and more is covered in my recent story. I also get into the interest expenses being charged on the loans, and how much that is projected to represent, compared with what the government says the pipeline is earning. Please read and share:

bit.ly/2KXFkpn

Finally: If you like this thread and the work that I do, please consider subscribing to @NatObserver at bit.ly/2zDDnsm or gifting a subscription. We are an independent, reader-funded investigative news outlet. We need your support to do more stories like this. Thanks 🙌