Incentives Matter: Canadian Biodiesel Train Fraud Edition

cn-railIncentives matter, always. But I’m sure this is an isolated incident. (pic via autoblog)

Why did a biodiesel train cross US-Canada border over and over again?: Biodiesel appears to be a tough business to enter, whether you’re talking lawsuits over federal mandates or crackdowns on fraud. CBC News in Canada has investigated a cross-border mystery over biodiesel that thickens the plot.

Allegedly, two years ago, biodiesel train shipments (not pictured) were sent back and forth several times between Canada and the US by CN Rail but were never unloaded. The shipping company appeared to make $2.6 million in Canadian dollars for the effort. While it seems odd that CN Rail would repeatedly transport goods but not unload them, the company claims it followed its legal obligations. “CN met its obligations as a common carrier and we have no further comment,” CN spokesman Mark Hallman told CBC.

It seems that a lot was going on behind the scenes for these rail shipments that were made between June 15 and 28, 2010. According to a railway worker who spoke to CBC News anonymously due to fear of being fired, “In 25 years, I’d never done anything like it. The clerk told me it was some kind of money grab. We just did what we were told.”

CBC News alleges it gained access to internal CN records that indicate fraud. Train 503 shipped biodiesel to Port Huron, MI, from Sarnia, Ont., and Train 504 brought them back. Sometimes rail cars were added and removed – between 68 and 89 cars would go at a time – and as soon as the paperwork and car shuffling were completed, the biodiesel made the return trip.