CANADA

‘Wrong by any measure’

MICHAEL ROSE December 14 1987
CANADA

‘Wrong by any measure’

MICHAEL ROSE December 14 1987

‘Wrong by any measure’

CANADA

During the 18 months he spent investigating conflict-of-inter-

est allegations against former Conservative cabinet minister Sinclair Stevens, Ontario Supreme Court Justice William Parker conducted one of the most exhaustive examinations of the conduct of a federal politician in Canadian history. Appropriately, his long-awaited findings, released last week in a 461-page report, were at once thorough and dramatic. Parker ruled that Stevens had violated federal conflict-of-interest guidelines on 14 separate occasions, demonstrating “a complete disregard” for the required standards of ethical conduct.

Parker’s damning conclusions drew a terse and prompt response from Prime Minister Brian Mulroney, who had insisted previously that Stevens’s name would be cleared. Accepting the commission’s verdict, Mulroney issued a 12line statement saying, in part, “The very high standards that Canadians have a right to expect from ministers of the Crown were not observed in this case.”

The Prime Minister pledged to act quickly on Parker’s recommendation that existing conflict-of-interest rules be substantially tightened and, for the first time, made legally binding. But Mulroney could not distance himself entirely from Stevens’s actions as minister for regional industrial expansion between September, 1984, and May, 1986. When the Prime Minister unveiled a new set of conflict rules in September, 1985, Mulroney said that it would be his government that would ultimately “stand accountable before Parliament” should they be breached. Accordingly, the opposition parties shifted their attack last week from Stevens to the Prime Minister himself, saying that Mulroney should shoulder the blame.

Parker’s report is an eloquent summary of thousands of pages of testimony and documents gathered at a cost of

$3 million from 93 witnesses in 83 days of televised hearings between July, 1986, and February, 1987. At its heart lies an indictment of the way Stevens conducted himself as a member of the Mulroney cabinet. Branding the veteran Tory MP as “glib and evasive” in his testimony, Parker confirmed virtually all of the allegations that led to Stevens’s resignation from cabinet on May 12, 1986. Among Parker’s findings:

• Blind trust: Although his business interests were in a blind trust arrangement required of cabinet ministers, Stevens knew of attempts by his wife and business partner, Noreen Stevens, to negotiate a $2.6-million loan from Anton Czapka for their financially troubled family holding company, York Centre Corp. Czapka was the co-founder of Magna International Inc., the giant auto-parts manufacturer based in Markham, Ont., that was negotiating more than $15 million in assistance from Stevens’s department at the same time.

• Conflicts: Stevens “mingled his private interest with his public duties” on at least five other occasions and discussed “freely and openly” with his wife matters that should have been kept from him in the blind trust arrangement. Conflicts of interest arose in

meetings with Chase Manhattan Bank executives in New York, officials of the Hanil Bank in Seoul, South Korea, and McLeod Young Weir president Thomas Kierans, among others.

• Influence: Stevens further breached

the guidelines by appointing prominent members of the Toronto financial community-including Brascan Ltd. president Trevor Eyton—to the board of the Canada Development Investment Corp. at the same time as Noreen Stevens was approaching these individuals to help the family company. And Stevens’s department granted consulting contracts to Dominion Securities Inc., Burns Fry Ltd. and Gordon Capital Corp. just

when Mrs. Stevens was approaching them concerning business problems.

Parker dismissed as “without foundation” only one of the major allegations against Stevens. He ruled that there was no evidence that a minor corporate

link between Hyundai Corp., the South Korean automaker, and the Hanil Bank of Korea—whose Canadian branch held loans to Stevens’s companies—had influenced a decision by Stevens’s department to assist Hyundai to build a plant in Bromont, Que. But in general, the Parker commission found that Stevens frequently failed to separate his work as a cabinet minister from the operations of his private companies and used his

position as a minister to introduce Noreen Stevens to powerful people who could assist York Centre. Observed Parker: “This conduct was part of a pattern that became increasingly evident during the course of this inquiry.”

For his part, Stevens, a graduate of London’s University of Western Ontario

and Toronto’s Osgoode Hall Law School, was unrepentant. After the release of the report last week he continued to insist that he had done nothing wrong. He rejected Parker’s repeated suggestion that his testimony was not credible, and he attacked chief commission counsel David Scott and the national news media for their performance during the inquiry. Said the 60-year-old Stevens: “I am a victim of the atmosphere that developed—a hysteria.” And although he stopped short of promising that he would run in the next federal election, he said that he did not intend to resign his seat, York-Peel, in Parliament. Indeed, Stevens and his lawyer, John Sopinka, told reporters that they were considering appealing Parker’s findings to the Federal Court of Canada. Their contention: Parker’s definition of conflict of interest was too stringent.

The issue of what constitutes a real conflict of interest for cabinet ministers was central to the hearings. Because the existing conflict code contains no explicit definition—and no sanctions—Parker defined it in his report as “a situation in which a minister of the Crown has knowledge of a private economic interest that is sufficient to influence the exercise of his or her public duties or responsibilities.” But Stevens’s lawyer argued during the hearings that the definition should be restricted to instances where a minister actually made a decision that conferred a benefit on an individual or a corporation. Declared Sopinka last week: “If [Parker’s] definition is accepted, it will virtually rule out any businessman from serving as a minister of the Crown.” Some Canadian businessmen clearly agreed. Said Toronto multimillionaire Hal Jackman, chairman of Victoria and Grey Trustco: “If you take Parker literally, no businessman can go into politics. It is beyond comprehension that anyone could own a business and not know how it is doing.”

Parker contended that while a better conflict definition was important, most public-office holders who are concerned about ethical questions already have a workable, “common-sense” notion of conflict of interest. “The mingling of public and private business, for example,” Parker wrote, “clearly involves a conflict of interest and is wrong by any measure.” Parker called for major changes in the existing rules for disclosure and divestment of ministers’ business holdings. The present rules, he found, are confusing and inadequate, and blind-trust arrangements have not been effective. His proposed new rules would eliminate blind trusts, require full disclosure of a minister’s financial interests—and have full status as law with “penal sanction” for violators. Finding a solution to the potential for conflicts of interest has eluded a succes-

sion of Canadian prime ministers. In the early 1960s ministers were expected to resign directorships but did not have to put their holdings into trusts. In 1973 Pierre Trudeau required his ministers to make public declarations or trust arrangements. In 1979 then-prime minister Joe Clark widened the guidelines to include activities of spouses and dependent children of ministers, but in 1980 Trudeau, back in power, relaxed the spousal rules again.

Despite Mulroney’s attempt to distance himself from the Parker report, he was unable to escape a 45-minute grilling in Friday’s Question Period. Among the opposition’s questions: how could Mulroney say he had not failed to ensure that the conflict code was adhered to? On the defensive, Mulroney insisted that he had discharged his responsibilities by interviewing Stevens after the first allegations surfaced and by checking with officials about whether Stevens had complied with the code. Insisted the Prime Minister: “I take back not a word of what I said.”

Stevens, an early and ardent supporter of Mulroney’s 1983 bid for the Conservative leadership, revealed that the Prime Minister had called him shortly after the report’s release to say “he feels sad about what has happened.” Said Stevens: “In no way has the PM abandoned me.” Mulroney himself described the conversation as “a call on behalf of my wife and myself to another human being to express the sadness that any member of Parliament would feel at the plight in which he found himself.” But the Prime Minister pointedly added, “This in no way detracted from the statement that I issued wherein we accepted fully the recommendations and the judgments issued by Chief Justice Parker.”

The government’s problem now is how and when to respond to Parker’s recommendations. A Parker commission official told Maclean’s that it is unlikely any legislative proposals will be brought forward before February or March. More seriously, perhaps, Conservative insiders acknowledged that Parker’s rebuke to Stevens will damage the government’s attempts to refurbish its image in time for the next election. While the main impact on public opinion came when the original allegations were made 18 months ago, last week’s report, as one official conceded, “is obviously not helpful. It’s a pretty well-documented case.” Indeed, it seemed likely that the fallout from Stevens’s tangled web of political and business activity would be felt for months to come.

MICHAEL ROSE

SHERRI AIKENHEAD

PAUL GESSELL

HILARY MACKENZIE