RCMP Sank Cruise Ship Deal

Globe and Mail, Tuesday, December 2, 2008
The Canadian Press

The unit in charge of security for the 2010 Winter Olympics is being accused of sinking a deal for cruise ships by fudging the terms of the contract in order to take advantage of the global economic downturn and secure a better price.

Cruise Connections Charter Management, a North Carolina-based company, had signed a $55-million contract with the Integrated Security Unit (ISU) in August to provide three ships for use as accommodation vessels for security personnel during the Games.

But in November, the RCMP-led ISU terminated the deal and has since reissued its call for ships.

The ISU wouldn't say why the deal collapsed but in court documents filed by Cruise Connections, they are alleged to have engaged in an "intentional, bad faith breach of contract in order to seek lower bids from Cruise Connection's competitors, believing it could obtain more favourable pricing given the current world-wide economic downturn and other financial pressures."

In the documents, dated Nov. 26 and filed in a District of Columbia court, Cruise Connections alleges that the RCMP backtracked on a promise to pay the taxes associated with the contract and suddenly required the company to provide a letter of credit.

The company alleges that the change led to the Royal Bank of Canada withholding the financing for the deal.
"At this point, the RCMP, knowing its statements were false and unsupported by the express terms of the contract and the dealings between the parties, claimed that Cruise Connections had breached its obligations under the contract by failing to timely secure financing," the documents state.

"In reliance on that pretence, the RCMP unilaterally declared the contract terminated."

No comment from RCMP

Neither a lawyer for Cruise Connections nor the RCMP would discuss the case.

None of the statements have been proven in court.

The company is suing for the entire cost of the contract, plus damages.

According to the original contract, a copy of which was included with the court documents, Cruise Connections had agreed to provide 5,037 berths aboard three cruise ships — two owned by Carnival Cruise Lines and one by Holland America.

The rate was $298 per day, per bed, which included meals, non-alcoholic beverages and waste removal.

Alcoholic beverages, however, could be served on the ship but security personnel would have to pay for it themselves.
The RCMP had agreed to pay all taxes, a fact that the company alleges was reinforced in a series of e-mails between the force and the company.

But the court documents suggest a change in the RCMP personnel overseeing the file led to the unit also changing its position on the taxes and unexpectedly asking Cruise Connections to provide a 90 per cent letter of credit, "even though the RCMP had expressly removed that provision from the contract."