It was time for Bay Street to take the witness stand, and the testimony was disturbing. Last week two powerful leaders of the Toronto financial community—Thomas Kierans, president of the investment firm McLeod Young Weir Ltd., and Trevor Eyton, chief executive officer of Bronfman-controlled Brascan Ltd.—made appearances before the judicial inquiry
into the affairs of former federal industry minister Sinclair Stevens. Kierans surprised the inquiry when he said that at a meeting with Stevens in July, 1985, the minister asked him to meet with his wife and business partner, Noreen, about an investment problem. And Eyton was questioned about a letter he received from an investment dealer. Acting on instructions from Stevens, the dealer had asked Eyton to discuss a plan to raise money for York Centre Corp., the former minister’s troubled holding company.
The testimony fom the two executives came during the 13th week of the inquiry, which is investigating allegations that Stevens violated federal conflict-of-interest guidelines while he was in Prime Minister Brian Mulroney’s cabinet. Since last month, the inquiry’s lawyers have begun examining connections between private-sector
executives who were involved in the industry department’s affairs and attempts to refinance York Centre. And last week’s events highlighted the often delicate nature of associations between businessmen and elected officials. Kierans told Maclean ’s in an interview last week, “The interrelationship between politicians and the business community is very much on trial.”
When Stevens joined the cabinet in September, 1984, he followed federal conflict-of-interest guidelines by putting his interest in York Centre into a blind trust managed by his wife. But denying allegations in Parliament that he had breached the guidelines, Stevens resigned from cabinet last May 12 and called for an inquiry.
Kierans told the inquiry last week about a meeting he had with Stevens on July 31, 1985, in the Toronto offices of the Canada Development Investment Corp. (CDIC), a federal holding company that reported to Stevens. For most of the hour-long meeting the two men talked about ways of raising money through government agencies—including the CDIC—for the Atlantic Development Fund. But toward the end of the meeting, Kierans testified, Stevens asked him to meet with Noreen about problems she was having with a
bond portfolio worth between $14 million and $17 million.
Two days later, on Friday, Aug. 2, Noreen called Kierans’s office and made an appointment for the following Tuesday, Aug. 6, at 10 a.m. But on the intervening Sunday, Kierans said, he received a call from Stevens asking whether he was interested in the job of deputy minister in the department of regional industrial expansion. The two men arranged a noon meeting for Aug. 6.
Kierans told the inquiry that at his meeting with Noreen, they talked about selling a portfolio of strip bonds—securities for which the interest coupons and the bond itself are sold separately. Kierans testified that he “had the impression that it was strip bonds related to family holdings.” Then, at his meeting later that day with Sinclair Stevens, Kierans turned down the deputy minister position. He added in his testimony that no business matters were discussed.
For his part, Brascan’s Eyton was questioned about a letter he had received dated Oct. 29, 1984, three days after his appointment to the board of the _ CDIC. The letter, from James ¡ Davies, vice-president for corz porate finance with the invest's ment firm Richardson Greenshields Canada Ltd., began, “At the suggestion of the Hon. Sinclair Stevens, PC, MP, I was attempting to contact you last week in connection with a proposed private placement of unsecured floating rate notes of York Centre Corp.”
Over the next 10 months, Eyton said, he tried on several occasions—but without success—to interest several investment dealers in helping the troubled York Centre with its financing plan. Declared Eyton, who said that he was sympathetic to Stevens’s business problems: “I could provide some help in a circumstance where the minister could not help [himself].” And as the Stevens inquiry continues, the type of help that businessmen can offer politicians will come under increasing scrutiny.
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