CN hiding derailments, falsifying stats, employees allege
Company denies coverups and rejects fraud allegations in U.S. suit
A CBC News investigation has unearthed allegations that suggest CN Rail has routinely under-reported minor derailments and misrepresented its yard efficiency measurements across Canada and the U.S.
The CBC probe was prompted by a whistleblower lawsuit launched in the U.S. by former CN employee Tim Wallender who claims in court documents that CN covered up derailments and cooked up statistics at its Memphis, Tenn. yard to bolster the company’s efficiency ratings.
CBC has since talked to numerous CN employees, past and present, from Canada and the U.S. who claim managers ordered minor derailments not be reported, and that employees were told to fudge internal company records tracking train speeds and “dwell time" -- the industry measure for how long cargo is parked in the yard.
CN spokesman Mark Hallman told CBC News the company rejects the allegations. “The notion that CN would condone any misreporting in that context is untenable," he wrote.
Hallman played down the suggestion that "internal measures" have any bearing on the company’s market value noting, “operating metrics such as yard dwell are performance indicators that are not included in any part of CN’s audited financial reports that are sent to shareholders and securities regulators.”
Stats allegedly altered across North America
Adrian Telizyn of Fort St. John, B.C. said when he learned of Wallender’s suit he said “Eureka! He speaks the truth.”
The former yardmaster and train conductor told CBC News that, when he worked at CN, yard employees routinely pulled locomotives across the scanner, which time-stamps arrivals and departures, to make it appear the train had left the yard.
“We had it drummed into our heads if trains aren’t running on time, somebody would want to know why and it could mean our jobs,” said Telizyn, who was based in northern B.C. for CN. “The screen would show the train left my terminal on time when in fact it travelled across the scanner and stopped ... and then we tied it down and locked the doors, got off.”
He said customers should care because when they log on to CN's system to find their container, it will show that it’s on its way to market when, in fact, it is parked just outside the yard.
A current CN worker in the Toronto region, who asked to remain anonymous for fear of losing his job, said the company is so obsessed with dwell times it will spend small fortunes on taxis to pick up crews in southern Ontario that move trains short distances to park them outside of yards. He also said employees will shuttle trains back and forth between yards so they aren’t recorded on CN computers as sitting still.
“There is no doubt that the senior management, superintendents know that this is going on,” he alleged to CBC. “Their bonuses are based on the dwell time and the train speed.”
In a February 2012 letter, then CN executive Keith Creel wrote to mid-management staff to express disappointment at "questionable reporting practices” he deemed intolerable.
Hallman this week rejected allegations CN sanctions improper reporting, but refused to answer questions about which terminals were misreporting dwell time, or how widespread the practice is.
Claims that minor derailments ‘covered-up’
The various employees allege CN managers are also ordering staff to cover up or suppress information about minor derailments, to manipulate CN’s safety statistics.
“As a member of a train crew, I would report a derailment to the train dispatcher and then everyone and their dog heard it,” said Telizyn. He said, more often than not, a process kicked into gear to cover it up.
The danger, he says, in glossing over minor derailments is that the wheels of a rail car can be damaged when they hit the ground, and should be thoroughly inspected.
“There were lots of times where the ‘shotgun, shovel and shut up’ approach was used in the yard -- just rerail the car, let the car men inspect it, get ‘er on the train and get ‘er out of here,” said Telizyn.
Wallender told CBC News that his CN manager in Memphis ordered employees “not to report derailments and collisions” even though they should be reported to the Federal Railroad Administration.
His lawsuit cites emails about an in-yard collision which his manager recorded as “no incident.” In another email about a derailment, the same manager told Wallender not to call it in. "I will handle," wrote the manager.
Toby Lehman, a former CN yardmaster in Memphis, says employees are required to fill out a report on minor derailments inside the yard, but claims that local management would later tell them: “It didn't happen -- just fill in the report and don't turn it in.”
“At the very minimum half of them were not reported and just disappeared, swept under the rug,” Lehman told CBC News. “Now you're dealing with safety issues," because the FRA doesn't have accurate stats on which to make recommendations.
CN told CBC News Wednesday that its derailment records are based on reporting criteria established by the authorities on both sides of the border. "These CN reports are subject to both internal and external audits. CN rejects allegations of manipulation of such data," said Hallman.
A five-year investigation into CN
Private investigator Derrick Snowdy says he’s concluded CN Rail has cultivated a culture of fear among front-line employees who are terrified of losing their jobs. In 2008 he says he was commissioned by a New York City lawyer to seek out employees who had information regarding derailments, accidents and chemical spills.
Snowdy told CBC News many minor derailments are not reported because, “for every incident that happens, investigations slow down the rails, they’re less profitable, less money in their pockets, less bonuses, less stock options. So, in reality, the reason to avoid reporting derailments is to make money.”
As well, he claims he has also found various tricks used in rail yards in Ontario, Quebec, and British Columbia “to dramatically under-report the actual dwell times.
“And this skews the reported operating ratio which is a huge component in the railway’s apparent business activities."
Snowdy said he has asked federal politicians and the Ontario Securities Commission, to investigate, but said no one has had the will, let alone the authority, to take a closer look.
With files from Jeremy McDonald, Brigitte Noel