CANADA

Government under siege

MARY JANIGAN,Anthony Wilson-Smith February 16 1987
CANADA

Government under siege

MARY JANIGAN,Anthony Wilson-Smith February 16 1987

Government under siege

CANADA

The charges were devastating. In Drummondville, Que., the Royal Canadian Mounted Police (RCMP) conducted a criminal investigation into an influence-peddling case involving Quebec Conservatives. In Ottawa, Prime Minister Brian Mulroney faced allegations that he intervened on behalf of Fred Doucet, his senior adviser, in an attempt to influence a $300,000 legal action. And in Vancouver, Liberal justice critic Robert Kaplan called for a public inquiry into allegations that some Conservatives were tollgating— demanding kickbacks from companies seeking contracts with the federal government. As the charges mounted, Liberal MP John Nunziata told the Commons, “This government has lost its moral right to govern.”

Last week’s new series of scandals was a sharp and potentially crippling blow to the Mulroney government. For three weeks Conservatives have been stung by revelations that a major defence contractor, Oerlikon Aerospace Inc., had paid an inflated price for land in former cabinet minister André Bissonnette’s Quebec riding (page 14). The disclosures had forced Bissonnette’s resignation. Attempting to rally his party, the Prime Minister gave a spirited 40-minute pep talk to the Wednesday meeting of his caucus, insisting that the government’s fortunes could be salvaged. Then, one after another, the new charges erupted.

To add to Conservative problems, Maclean's has learned that Transport Minister John Crosbie submitted his resignation last week in protest over the fishing agreement concluded with France last month. Officials in the Prime Minister’s Office later persuaded him to withdraw that resignation.

The government’s problems caused despair among some Conservatives. Many are sharply aware that the federal Liberals are actively investigating new complaints of Tory corruption. In fact, leading Liberals have told Maclean’s that they have documented what they describe as another major scandal—and will reveal details shortly.

Last week there were growing signs of unrest in Tory ranks. While Mulroney and other ministers downplayed the impact of the new charges, several senior Conservatives said that the

Prime Minister must now conduct a thorough housecleaning, purging ministers and staff members with dubious track records or unsavory political connections from the ranks. A dis-

tressed senior Conservative told Maclean's that if Mulroney does not clean house, “I think you will see caucus solidarity break down. It will degenerate to chaos—but not revolution.” And in a telling sign of how disgruntled some Conservatives have become, another senior Tory said he consulted widely with fellow party members last week, and “the consensus is that Mulroney will not last six months.”

Aware of that unease, the Prime Minister acknowledged at week’s end that his government is under intense pressure. “We are not going through easy times,” he told reporters Satur-

day, after a meeting of the Conservative caucus in Laval, Que. At the same time, he said, the caucus remains united. The previous night Mulroney admitted that his government’s credibil-

ity is on the line. In a 13-minute speech to 1,000 Conservatives in Laval, he pledged to take “every step” to restore faith in his administration’s morality. “If it is not arrested,” he said, “our credibility risks being seriously undermined.” But he vowed, “You are going to see Brian Mulroney and the Conservative team waltz to a new victory in the next election.”

That prediction came just hours after charges that Mulroney personally intervened in a $300,000 lawsuit filed by millionaire businessman Walter Wolf. In 1985 Wolf sued Mulroney’s senior adviser, J. Alfred (Fred) Doucet,

Doucet’s brother Gerald and their troubled company, East Coast Energy Ltd. In his suit, Wolf alleged that Fred Doucet, the firm’s former chief executive officer, had misrepresented the value of East Coast as an investment. Wolf poured $500,000 into the company before it went bankrupt in June, 1985. (Mulroney himself invested $15,000.)

Last week Ontario Supreme Court documents revealed that during a March, 1986, legal proceeding, Wolf claimed that Mulroney had called the entrepreneur’s lawyer, Michel Cogger, named to the Senate last May by Mulroney, to complain about the suit. As

Wolf recounted: “The Prime Minister called Mr. Cogger and gave him shitjust after I took legal action against him [Doucet]. He [Mulroney] phoned him [Cogger] in Paris and complained.”

Moreover, Liberal MP Sheila Copps said that during a private meeting with Wolf last year the Austrian-born businessman claimed that Mulroney had advised Cogger to get Wolf to drop the suit against Doucet. If not, Wolf would never win another federal contract. Said Copps: “The allegations are very serious—that the Prime Minister was using his power as Prime Minister

to influence contract proceedings.” Confronted with those charges, Deputy Prime Minister Don Mazankowski—Mulroney himself was absent from the Commons during Friday’s Question Period—did not deny that Mulroney had spoken to Cogger, a longtime friend. Instead, while Conservative backbenchers slumped behind him, Mazankowski said that “if there was any such conversation, I would suggest it was a private matter.”

For his part, Cogger told Maclean's that, contrary to Wolf’s claim, he had called the Prime Minister from a Paris hotel in 1985 as a courtesy, to advise

him about the suit. “During the conversation, Mulroney said it was too bad the thing had to go to court,” Cogger said, adding that his wife was present in the hotel room during the call. Added the senator: “But he certainly never proferred any threats.” On Saturday, the Prime Minister himself said the charge that he intervened in the case amounted to “speculation, unfounded rumor, unproven allegations.”

At the same time, Mr. Justice Eugene Ewaschuk of the Ontario Supreme Court last week issued a decision in another suit that was sharply

critical of several prominent Tories, including Cogger. The civil suit revolved around Cogger’s contention that in 1983, on behalf of Wolf, he had sold 33,088 shares in East Coast to McLeod Young Weir (MYW) for $198,528—or $6 apiece. MYW president Thomas Kierans maintained that the transaction was in fact a loan, with the company holding the stock—then valued at $12 to $14 a share—as collateral.

During the week-long trial Kierans testified that when MYW was raising money for East Coast in 1983, Doucet made frequent references to his status as Mulroney’s friend and adviser. After Doucet resigned from East Coast in the summer of 1983 to become Mulroney’s chief of staff, Kierans said that Doucet continued to pressure him to raise funds for East Coast—in which Doucet retained stock. “He was always flaunting his chief-of-staff status,” Kierans testified. “We told him it didn’t matter.” Kierans later told Maclean's that Doucet “gave the appearance of a man with the certainty that he can avoid serious financial problems because of his existing and pending political clout. His behavior was really almost laughable—it was more immature than reprehensible.”

In his judgment upholding the MYW claim, Ewaschuk noted that Kierans, a prominent Ontario Tory, appeared to loan the money because “help to Cogger would build up McLeod’s goodwill with the federal Progressive Conservatives.” Ewaschuk also ruled that Cogger, named as a codefendant, was not liable for damages. But, he said, Cogger “understood Kierans’s explanation” of the loan. Said Ewaschuk: “A reasonably intelligent person would also have understood the true nature of the transaction.” Wolf, he ruled, must repay the loan with interest and court costs to MYW.

But MYW may have difficulty collecting the money. The flamboyant Wolf, who no longer maintains a residence in Canada, has liquidated most of his Canadian assets, largely energy exploration companies. Wolf has also experienced financial difficulties because of the decline in world oil prices. Late last year he put his sumptuous villa in Mexico, valued at more than $1.3 million, up for sale.

Meanwhile, the Conservatives were rocked by the disclosure of an RCMP investigation into an explosive influence-peddling case. In June, 1986, Montreal businessman Pierre Blouin pleaded guilty in a Drummondville courtroom to using his influence to help local businessmen acquire a $1million contract to rent a building to the federal government. According to documents filed with the Drummondville District Court, Blouin told local

businessman André Hamel that if he wanted Ottawa to renew a five-year lease in Hamel’s building, he would have to donate $50,000 to the Conservative Party. In return, Blouin said that Hamel could raise the federal government’s monthly rent from $165 to $180 per square metre. Hamel complied—but later complained to the RCMP. As a result of that investigation, Blouin, a former election campaign tour organizer for Mulroney, was fined $3,000 and placed on a one-year probation. He died last month of a heart attack.

But last week Supply and Services Minister Monique Vézina confirmed that the RCMP is investigating another unnamed Conservative in connection with that scandal. According to court documents, the unidentified Tory claimed that “he was responsible for the election of about 50 Conservative MPs in Quebec during the last election.” The documents also contain allegations that the unknown Tory Mazankowski; offered to help businessman Hamel renew his lease for a sixper-cent commission.

In the Commons last week Liberal MP Jean Lapierre added to the controversy when he demanded to know details of the involvement of Mulroney’s principal secretary, Bernard Roy, in the Drummondville affair. Pressed by reporters outside the Commons, Lapierre offered no proof that Roy was involved. Lapierre later claimed that three other PMO staffers also knew about the affair—but again, he offered no proof. As well, Lapierre distributed a letter from the Montreal law firm Ogilvy, Renault to Hamel’s lawyer, Paul Biron. The letter, dated Jan. 6, 1986, is a bill for legal services including “meetings and telephone conversations with the office of the Prime Minister.”

Lapierre said that Hamel’s company, Hama Inc., had consulted Ogilvy, Renault because it had lost the rental contract to Les Immeubles Brodilaf, a real estate investment group. Lapierre said that Hama considered the bidding unfair—and wanted Ogilvy, Renault to get an injunction to stop it. Said Lapierre: “I find it very strange that the PMO would be involved at all in a little contract in Drummondville.”

While those troubles simmered, Newfoundland’s Brian Peckford was rallying fellow premiers to a meeting

in Toronto this week to oppose the Canada-France fishing agreement signed on Jan. 24. Under that accord, France agreed to allow an international court to rule on its disputed claim to an area of ocean south of the French islands of St-Pierre-Miquelon. In return, Canada undertook to allow

French fishermen additional catches of northern cod between 1988 and 1991 in prime fishing grounds outside the disputed area. The pact—and Ottawa’s failure to consult Peckford during the final negotiations—sparked bitter protests in St. John’s.

Peckford’s case was buttressed last week by an unlikely ally, French Prime Minister Jacques Chirac, who maintained that the agreement was also a bad deal for France. Federal officials told Maclean’s that Chirac had personally approved the agreement at a late-night meeting on Jan. 23. But outside the Commons, Mazankowski said that renegotiating the agreement is now possible.

That concession did little to assuage Newfoundland’s sole representative in the federal cabinet, John Crosbie — a direct target of Peckford’s anger. Federal officials maintain that before the agreement was signed, provincial and industry officials— and Crosbie —had a clear idea of the general proposals. But nei-

ther Crosbie nor Peckford paid close attention to the draft agreement, partly because they expected to be consulted before the final accord was initialled.

As a Newfoundlander, Crosbie was clearly stung by Peckford’s attacks and insulted by the lack of consultation with the province. Although Crosbie’s aides and the PMO denied it, senior Tories told Maclean’s that Crosbie tendered his resignation last Wednesday. He then withdrew it at the urging of PMO officials. But those Tories said that Crosbie will likely resubmit his resignation if Peckford calls a provincial election over the issue, because he would be torn between his loyalties to the federal government and to Newfoundland.

Still, most Conservative MPs said that the Ë government was only I the victim of bad press s and worse luck. Said I Saskatchewan Tory MP John Gormley: “The Prime Minister has stumbled, and he is having a rough go of it. But at the election, people will look back and say things are better.” But few Conservative insiders shared that optimism. Indeed, some senior Tories told Maclean’s that Mulroney must dismiss all ministers and staff members who may create further scandals. Then, they said, he should introduce tougher conflict-of-interest guidelines and legislation to control the activities of lobbyists. They also recommended that he bring new advisers into his office and new ministers into the cabinet—and stop treating the media and the federal bureaucracy as enemies. Said one senior Tory: “Can he do all that? Sure. The question is, will he? How do I feel about all this? Sick.” It was a sentiment that many Conservatives understood—and shared.

-MARY JANIGAN and ANTHONY WILSON-SMITH in Toronto with HILARY MACKENZIE, PAUL GESSELL and MADELAINE DROHAN in OTTAWA and DAN BURKE in Montreal

HILARY MACKENZIE

PAUL GESSELL

MADELAINE DROHAN

DAN BURKE