Feds quietly paid $75M settlement for Lac-Mgantic victims and to avoid lawsuits

The federal government quietly spent $75 million to settlewith victims and creditors affected by the Lac-Mgantic rail disaster a contribution that also shielded it from lawsuits related to thedeadly crash.

Former transport minister Lisa Raitt said the deal, which involved 24other defendants who settled, was under negotiationbefore herConservatives lost the October election to the Liberals.

• Ottawa won't say how much it paid to protect government from Lac-Mgantic lawsuits
• Denis Coderre presses feds for tougher rail safety measures

The Liberals have refused to reveal how much the government gave tothe $460million settlement fund, even though at least two partiesaccused of wrongdoing in the deadly Quebec derailment disclosed theircontributions.

But in a recent interview Raitt said the amount was public.

She said it was included in Transport Canada's supplementary estimatesas well as in its quarterly financial report under "out-of-courtsettlement."The amount listed is $75 million.

Last week, Transport Minister Marc Garneau said the figure was "classified'' when asked how much taxpayer money the government setaside for the settlement.

Ottawa denies legal responsibility

Garneau also reiterated Ottawa's denial under both the Liberals andthe Tories that it had any legal responsibility for the 2013oil-train accident that killed 47 people and levelled part ofLac-Mgantic.

• Lac-Mgantic settlement fund payment contested

"We don't acknowledge that we had any responsibility; however, we didwant to make a contribution because of the impact of this terribletragedy in Lac-Mgantic,"Garneau said last week.

Raitt agreed that the government's main goal behind the settlement wasto speed up the process.

"The motivation was simple: this was an opportunity to get money tothe victims for wrongful death in a shorter period of time through theU.S. bankruptcy proceedings as opposed to a long, drawn-out, litigiouscourt case,"Raitt said in a recent interview.

Avoiding a lawsuit

The government's decision to settle may have also been made to avoidthe cost of fighting the allegations in court. It would have facednumerous lawsuits related to the derailment on both sides of theborder, said Robert Keach, the U.S.-based bankruptcy trustee for the company at thecentre of the crash,Montreal, Maine & Atlantic Railway.

Keachhas also said that, contractually speaking, thearrangement explicitly stated the settling parties were not
acknowledging any liability with their contributions.

The Transportation Safety Board's 2014 report on the crash saidTransport Canada failed to recognize that the railway had urgentsafety problems and was not following the rules. It also said thedepartment failed to audit safety procedures at MM&A and didn'tconduct enough inspections.

Raitt responded to the TSB report at the time by saying thegovernment's role was to put the rules in place. The companies, theConservative minister added, were expected to follow those regulations something she said MM&A did not do.

In the recent interview, Raitt reiterated the position that the rulesweren't respected.

"We don't believe we are liable and it's not an admission ofliability,'' said Raitt, who added she would have publicly disclosedthe government's settlement contribution.

Irving Oil has announced it had contributed $75 million to the fund.The train was transporting crude oil to Irving's refinery in SaintJohn, N.B.

World Fuel Services Corp., the U.S. company that owned the oil aboardthe train, announced a few months later that it provided US$110million toward the settlement.