Wabamun a blip on CN's bullish screen

The Edmonton Sun
Friday, April 21, 2006

By NEIL WAUGH, EDMONTON SUN

Later today E. Hunter Harrison will hold court in the Venetian Room of the Peabody Hotel on Union Ave. in that great centre of Canadian railroading - Memphis, Tennessee.

Which is about as far away as you can get from the angry villagers and Paul Band First Nation of Lake Wabamun.

Just a lucky coincidence for our national symbol, which is now run by Hunter, who calls Burr Ridge, Illinois, home after the marriage of convenience between Canadian National and the Illinois Central Railroad eight years back.

'SPECTACULAR'

E. Hunter, if he holds to his script filed with the United States Securities and Exchange Commission, will describe his corporate performance as "nothing short of spectacular."

He will go on to declare it as a "great run."

In his shareholders message, Harrison went on to outline his five principles: deliver a great service, control costs, use assets, develop people and above all "don't get anybody hurt."

This is particularly significant when Harrison gave shareholders his "sobering reminder" that five CN railroaders met their deaths last year getting E. Hunter's trains down the line.

"Over the years, CN has consistently been one of the safest railroads in North America," Harrison insisted. "Safety has always been a top priority."

He emphasized how "we've taken steps to enhance CN's emergency response plan."

And he said the new deal also includes "a more comprehensive community communications plan." You see, the one that CN deployed (if that's the right word) last August was a total shambles.

When the Alberta Tories initially failed to show up and compel CN to protect residents' property and the already-threatened Lake Wabamun habitat, angry cottagers had to camp out on the rails. That forced Harrison to halt his trains.

Tempers only got hotter when it was revealed that one of the tank cars which derailed and spilled oily loads also contained a highly toxic liquid for treating poles.

"The derailment at Wabamun Lake caused environmental damage," Harrison admitted. "We moved quickly after the incident to work with public authorities and local residents, to begin a compensation process to contain and remediate the environmental impact of the spill."

But that wasn't the only incident in what Harrison described as a year that "humbled" him.

CN also dumped caustic soda in B.C.'s Cheakamus River where "harm was done to the fish population."

Unlike the timid Alberta PCs, B.C. politicians are apparently made of sterner stuff. Now CN has committed to a $1.25 million, five-year program to hopefully recover salmon stocks to this vital West Coast river.

Curiously missing from the documents filed with the American securities authorities was any reference to the search warrants executed by Alberta Environment investigators on CN's Edmonton Walker Yards nerve centre last winter in reference to the Wabamun wreck. Surely it's something CN shareholders should be told about.

But even more curious is how the probe has gone dead after it was moved from the environment department to Alberta Justice - home of the infamous Gang that Couldn't Shoot Straight.

CN financial statements reveal $28 million has been set aside for Wabamun. Although the auditor's note also admits "ultimate liability for clear-up costs could differ."

$775M LAWSUIT

There's already a $775-million lawsuit before the courts from the Paul Band claiming damages and economic loss by CN and the Alberta and federal governments. Plus a $750-million class-action suit filed on behalf of folks who lived within five kilometres of the lake at the time of the spill.

But it wasn't all bad news. Harrison jacked up CN's 2005 total revenues by 11% to $7.2 billion, allowing railway brass to "further reward our shareholders." Those rewards include the "tenth consecutive" dividend increase, a two-for-one stock split and a massive 16-million share buy-back.

Harrison took home a handy $13.4 million salary and compensation package last year. Up from $8.2 million two years ago, according to SEC documents. And his base salary has already been bumped another $1.5 million in 2006.

Long distance information, get me Memphis, Tennessee.

© The Edmonton Sun 2006