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Trial Turns Spotlight on Pension Funds’ TimberWest Purchase, Rich Coleman’s Role and a Hells Angels’ Connection

Court case on contractor’s claim it was forced into bankruptcy starts this week in Nanaimo.

By Andrew MacLeod 21 Jan 2019 | TheTyee.ca

Andrew MacLeod is The Tyee’s Legislative Bureau Chief in Victoria and the author of All Together Healthy (Douglas & McIntyre, 2018). Find him on Twitter or reach him at

A lawsuit involving a logging contractor, a major forestry company, two public sector pension funds, former forests minister Rich Coleman and the Hells Angels is scheduled to get underway in Nanaimo this week.

At its core, the suit filed in the BC Supreme Court alleges that the defendants — TimberWest Forest Corp., two associated companies and three senior TimberWest officials including former CEO Paul McElligott — deliberately drove Ted LeRoy Trucking Ltd., a major contractor for TimberWest, into bankruptcy.

“The Plaintiffs’ claims are based in conspiracy and fraud,” a Dec. 31 court filing says. “Specifically, the Plaintiffs assert that the Defendants engaged in a pre-orchestrated plan to drive TLT [Ted LeRoy Trucking] into bankruptcy, which ultimately happened in September 2008, and/or obtained TLT’s principal asset through unlawful means for a fraction of its value.”

In 2007 Ted LeRoy Trucking employed about 530 people, had assets worth more than $80 million and revenues of about $70 million a year.

Some 72 per cent of its revenue was from work it did for TimberWest, a company with which it held what’s known as a Bill 13 contract under 1991 legislation. The aim of the contracts was to provide stability for contractors working for companies that held licences to harvest timber on public land in the province. The legislation made it harder for licence holders to replace contractors or demand they accept lower rates.

The lawsuit alleges that forcing the contractor out of business was part of a plan to reduce costs and raise the value of TimberWest, according to court documents. None of the allegations have been heard or proven in court.

The defendants’ response filed in court denies all the claims.

“The Defendants deny each of the allegations therein, and specifically deny all allegations of conspiracy, fraud, fraudulent misrepresentation, fraudulent representations, breach of contract, defamation, slander, fraudulent interferences and deceit. At all times, the Defendants acted in accordance with their contractual and common law obligations and in good faith.”

The Rich Coleman connection

Coleman comes into the case because documents suggest he helped TimberWest, which was then publicly traded and having financial trouble, find a buyer.

A May 8, 2008 email that Coleman wrote to then TimberWest CEO McElligott said: “Have a green light. Need to meet on implementation. Made the sale, not sure they understand what they bought but they did. The roll out will be critical. Also have a reluctant partner in the east. They will play when pushed.”

TimberWest — a company whose donations to the BC Liberals included $44,685 in 2007, $14,738 in 2008 and $60,988 in 2009 — was eventually sold to two funds that manage pension money for public sector employees.

One was the BC Investment Management Corp., a provincial government agency that manages $135.5 billion for some 569,000 current and former public sector employees, accord to its website. It is supposed to operate free from political interference. It is now known as BCI.

The other buyer was the Public Sector Pension Investment Board, now known as PSP Investments, which manages pension money for members of the federal public service, the RCMP and the Canadian Armed Forces.

Dwight Harbottle, the lawyer representing the LeRoys, argued last June that Coleman would have knowledge that could be important for the case.

“I personally think they were having difficulty selling this business and they needed a purchaser, and he’s going to have something to say about that, what he was told,” Harbottle said. “He’ll have knowledge as to why this company felt they had to go to a minister to assist in achieving a sale.”

Despite objections from government lawyers acting for Coleman, Harbottle won the right to examine the former minister under oath.

Coleman has now been subpoenaed and may have to appear in court as a witness during the trial.

Pension plan involvement

Former and current BCI officials involved in the sale were also examined under oath about what they know about the sale of TimberWest and have now been subpoenaed.

The current CEO and chief investment officer at BCI, Gordon Fyfe, came to the job in 2014 after working for 11 years as the president and CEO of PSPIB, the other partner in the TimberWest purchase.

A spokesperson for BCI said “BCI will not be providing a statement as the matter will be shortly before the courts, other than to note that the litigation makes no demand for relief or remedy against BCI.”

The BCI has previously provided a statement saying it made its decision to invest in TimberWest independently of the government and cabinet.

The Hells Angels connection

Ted LeRoy Trucking was one of three large contractors working for TimberWest when the events unfolded.

One of the others, a company known as Munns Lumber, went bankrupt in 2008. In an earlier court case related to that bankruptcy, the company won a judgment against TimberWest for negotiating in bad faith. (Munns’ owner Geoff Courtnall is better known for his time playing in the National Hockey League, including five seasons with the Vancouver Canucks in the early 1990s.)

The third TimberWest contractor was, as a filing in the LeRoy case puts it, “an operation run by Mr. Lyle Newton, a person previously banned from working for TimberWest because he was a member or former member of the Hells Angels.”

Newton’s company accepted lower rates and continued contracting for TimberWest.

B.C.’s anti-gang unit has linked the Hells Angels to violence, drug trafficking and other crimes.

Email messages filed as part of the LeRoy case show that BCI was aware in 2011, thanks to inquiries from a Vancouver Sun reporter, that there could be concern among RCMP and municipal police that their pension funds were associated with a current or former member of the Hells Angels.

“The Sun indicated that there are court records that show an involvement with the Hells Angels and although [Newton] claimed he was no longer involved with the Hells Angels, the police apparently are not convinced,” one of the messages said.

At the request of then BCI CEO Doug Pearce a briefing note was prepared that could go to the pension fund’s board and others if the Sun published a story on the connection, something BCI officials believed would only happen “if there was any traction.”

It’s unclear if the story was ever published, but Pearce wrote at the time, “I think it is unlikely we’ll need to send this out.”

What’s next?

The LeRoy case is scheduled for 40 days in court starting Tuesday.

There is always, of course, the possibility that the parties may wish to settle before the matter — with all its interesting side stories — gets to court.  [Tyee]

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