‘Boondoggle’: Financial Woes May Jeopardize Proposed Alaska-Canada Railroad Project
An ambitious plan to build a 1,600-mile railroad that would link the Alaskan and Canadian rail systems is on hold and appears to be in jeopardy.
A year ago, former Alaska Lt. Gov. Mead Treadwell and other state leaders were gushing with enthusiasm over the Alaska to Alberta Railway’s plan to build a 1,600-mile railroad from northern Alberta to the eastern Interior of Alaska to transport raw materials like minerals or bitumen for export.
“We’re hoping to begin formal permitting with the Environmental Impact Statement process sometime either late this year or early next,” Treadwell said in an interview last September.
But now it’s hard to find any of that initial enthusiasm. Treadwell, the project’s vice chair, isn’t talking publicly about the $17 billion project. Also, the chairman of the Calgary-based railway company has left, along with other top executives, after being accused of financial improprieties.
Meanwhile, those still with the company are seeking to protect it from creditors to avoid liquidation while they try to sell it or refinance the project. And the main lender for the proposed railway is in court-ordered receivership while authorities investigate it over allegations of financial wrongdoing.
All of which has left Alaska Railroad President and CEO Bill O’Leary wondering about the future of the project.
“It certainly appears to be a tough situation at this point,” he said, “and I think most of their efforts are going towards trying to figure out what their next steps are.”
O’Leary said in a recent interview that he’s still supports the idea of an Alaska-Canada railway that would link up with the Alaska Railroad. It’s a concept that’s been proposed several times over the years, and he says the Alaska to Alberta Railway’s proposal is the most promising he’s seen. Now, however, he’s uncertain about its future.
“But, at this point, I’m not sure I have any – I know I have no – inside information on how this is going to all play out,” he said.
Fairbanks Economic Development Corporation President and CEO Jim Dodson also strongly supports of the project. But he says he, too, is now worried whether it’ll come to fruition.
“Quite a boondoggle over the financing of the project,” he said. “Whether the guy that owns it is in financial trouble, or it’s an institution that’s in financial trouble ...”
The guy who owns it is Winnipeg businessman Sean McCoshen. And evidence uncovered by investigators suggests he and the lender, Bridging Finance, both are indeed in trouble. The CBC reports that an investigation by the Ontario Securities Commission has found many financial “irregularities” between McCoshen and Bridging Finance. And according to the Toronto Globe and Mail, millions of dollars from the lender intended for the rail project have instead been transferred into McCoshen’s personal bank account. His name now no longer appears on the A2A company website, and the Globe and Mail says he hasn’t been seen for more than two months now.
“I honestly don’t know if we should still be hopeful,” Dodson said.
He says he’s trying to reserve judgement about the company and its ability to build the A2A Railway. But he adds that it’s hard to remain enthusiastic, especially because the company has failed to provide any information about the project since it sent out a news release three weeks ago announcing its bankruptcy and the lender’s receivership.
“There’s been no additional clarity offered, that I know of,” Dodson said.
Some clarity may come from an Alberta judge’s decision on Monday to appoint an interim receiver and authorize it to take control of the Alaska to Alberta Railway and manage its operations and assets.
A person who’s knowledgeable about the issue who spoke on background says the judge’s action should clear the way for selling the company or refinancing the project.