CANADA

Turner’s private trusts

ROSS LAVER,BRUCE WALLACE September 12 1988
CANADA

Turner’s private trusts

ROSS LAVER,BRUCE WALLACE September 12 1988

Turner’s private trusts

CANADA

Senator Leo Kolber was enraged. As chief fund raiser for the federal Liberal party in 1986, Kolber had embarked on a frustrating—and ultimately unsuccessful—mission to erase the party’s crushing debt, which then exceeded $4 million. The cornerstone of his campaign was called Project 200: a personal attempt to coax more than 200 wealthy executives into donating $25,000 each to the party, strapped for cash since the 1984 Conservative landslide. One of Kolber’s targets was John Addison, a former Liberal MP and owner of a successful General MoQ| tors dealership in downtown Toronto. But Macli lean's has learned that at a meeting with Addison to try to raise money for the party, Kolber discovered the existence of a parallel effort to raise private funds for Turner.

Moreover, that was not the first time Turner’s supporters had engaged in private fund-raising separate from efforts to raise money for the party. Maclean's has learned that in 1984, money was raised for Turner’s personal use despite his dismissal of suggestions to that effect. That 1984 trust fund was legal in every respect and in line with similar accounts set up for John Diefenbaker and other leading Canadian politicians. But traditionally, trusts have been secret, at least while the politician involved was still active. Turner himself declined to be interviewed on the subject.

But a reconstruction of the fundraising indicates that the first real storm clouds arose when Kolber and Herb Metcalfe, his assistant, dropped by to see Addison in an office behind his Bay Street showroom in August, 1986. Addison gave them an unpleasant surprise. According to Metcalfe, Addison said that he would not contribute to the party because he was raising money independently for a trust fund to help Turner defend his

leadership at a party convention to be held that November. Recalled Metcalfe: “Raising money for the Liberal party was the most frustrating job I ever had in my life, and finding out about the Addison fund was the last straw.

Leo and I lost interest after that.” With Addison’s financial support, Turner went on to win endorsement from 76.3 per cent of the delegates to the November, 1986, convention in Ottawa. But two months later, Kolber

and Metcalfe resigned from their fund-raising jobs, in part—Metcalfe says—because of annoyance over the Addison fund. To the handful of senior Liberals who knew about his activities, Addison’s fund-raising on behalf of Turner had a familiar ring.

The 1984 trust fund was set up by Turner supporters with money raised—but not spent —during his successful run for the party leadership. At the time,

Turner denied that such a fund had been created, and last week, Turner’s staff refused to comment when questioned by Maclean's. However,

James Ross, an Ottawabased accountant with Price Waterhouse said that he —Ross —knew about the 1984 fund because he was retained to close it when all the money was spent. Said Ross, who has since retired but remains active in the Liberal party: “The money was all collected privately, and there were no receipts. Basically, it was a private trust fund set up for Mr. Turner when he came back into politics, to look after extraneous expenses.”

Warren Chippindale, the accountant who chaired Turner’s fund-raising committee during the 1984 leadership race, also told Maclean 's that money left over from the campaign went into a special fund for the Liberal leader. Chippindale, who at the time

was chairman of the Toronto accounting firm Coopers and Lybrand, said that the surplus funds were used to cover Turner’s personal expenses in the months following his convention victory.

According to Chippindale, who said he

is not a member of any political party, Turner’s supporters raised “not quite $2.2 million” for the leadership race. After the convention, Turner filed documents with the party’s national headquarters stating that his forces had

spent $1.53 million on the campaign, just below the $1.6-million spending limit imposed by the party executive. But Chippindale said that the difference between the amount raised and the amount spent was no more than $300,000.

That money, he said, was deposited in an account used to help cover Turner’s living expenses in the succeeding months. Declared Chippindale: “A lot of the people we raised money from were not Liberals, and we had to promise them that none of the surplus would go to the Liberal party. It had to go to Turner.”

Still, Chippindale said that, with Turner’s consent, he took steps to ensure that the trust fund was not directly under the leader’s control. “We felt that we would be open to criticism if we just handed the money over to him.” Moreover, he said that Turner’s supporters wanted to ensure that the existence of the fund “did not create a tax problem” for the Liberal leader.

As a result, Chippindale set up a board of five trustees, including himself, who were responsible for approving requests from Turner for money. “It was a matter of judgment about what was a legitimate transitional cost,” said Chippindale. “But that included living expenses for Turner.” Chippindale declined to provide

details about Turner’s spending. He also refused to identify the four other trustees.

Chippindale’s recollection of the first trust fund appeared to contradict remarks by Turner during the 1984 election campaign, which he set in motion after he won the leadership and succeeded Pierre Trudeau as prime minister. At the time, there were reports that wealthy Liberals planned to set up an account to help Turner make the financial transition from his Bay Street practice to politics. But Turner told The Toronto Star that he was not aware of any such fund and, if it did exist, he would refuse to accept money from it. Last week, Turner’s communications director, Raymond Heard, said that the opposition leader did not wish to discuss the matter. After aides conferred with the Liberal leader, Heard said: “Mr. Turner will have no comment on this. But I don’t think you should read anything into that.”

At the same time, former advisers to the Liberal leader told Maclean’s that Turner and his wife, Geills, sometimes spoke to friends about the drop in income he would experience by re-entering politics after an eight-year absence. As a partner in MacMillan Binch, Turner earned between $200,000 and $300,000 a year, other lawyers estimated. In addition, Turner sat on the boards of nine corporations, including Canadian Pacific Ltd., the Seagram Co. Ltd., and MacMillan Bloedel Ltd.

Each directorship paid him about $12,000 a year and up to $800 a day in expenses for each meeting. Said one former Turner aide: “Mrs.

Turner made it clear to all of us that this was a very great sacrifice the Turner family was making and that they were not about to suffer as a result.”

Turner’s friends say that he was determined to avoid any suggestion of impropriety. “He felt strongly that there should not be any taint or suggestion that he had done anything out of the ordinary,” a Turner confidant recalled. At one

point, a close friend of Turner’s sent letters to well-heeled supporters asking for donations to establish a separate trust fund for the education of Turner’s four children, Elizabeth, now 24, Michael, 22, David, 20, and Andrew, 16. But an adviser to Turner told Maclean’s last week that the idea was abandoned and the letters recalled.

Meanwhile, even some of those who helped raise money for Turner in 1984 said that they were never certain about the purposes to which the money would be put. William Somerville, president of Toronto-based National Victoria and Grey Trustco Ltd., was a member of Turner’s Ontario fund-raising committee during the leadership campaign.

He said that he worked closely with Addison, another longtime Turner friend. Declared Somerville: “I know Addison came to me and asked me to join his team but I forget what the devil it was all about. Everyone was vague, but I remember a meeting in the back of Addison’s car dealership and I remember that I raised a fair amount of money. But I have no idea what the money was for.”

Addison refused to discuss his activities or name the contributors to the 1984 and 1986 funds. But a onetime senior Turner aide told Maclean’s that Addison was the principal fund raiser

behind Turner’s defence of his beleaguered leadership in 1986. Said the aide: “We were faced with a dilemma. If we used the leader’s office budget we might have been subjected to bad publicity. So Mr. Turner decided to get the money from outside.”

Senior Liberals contacted by Maclean’s disagreed on how much money Addison raised for the second fund before the 1986 convention. A key Turner organizer said that the Turner g forces spent between $75,000 and $100,000 at z the convention. Other I Liberals contended that I Addison raised at least § three times that amount. 8 Unlike the regulations for the leadership convention, the party established no limits on how much money could be spent wooing delegates for the general meeting, and Turner was not obligated to name contributors to his campaign. Said David Collenette, thensecretary general of the party and the top organizer of the November convention: “We were into a quasi-leadership convention without any rules.”

The money raised by Addison in 1986 was used to fund a well-organized band of Turner supporters equipped with computers, walkie-talkies and convention paraphernalia. It also paid for private polls, hospitality suites and travel by Turner loyalists to win over undecided delegates. Douglas Richardson, Turner’s then-principal secretary, was responsible for allocating the funds.

He delivered the receipts for each expenditure to Ross, who, as a veteran Ottawa-area Liberal and old friend of Turner’s, kept the books for the Addison fund. But although Ross acknowledged his role in administering funds for Turner over the years, he declined to discuss his part in the 1986 fund-raising. Still, it was the Addison fund, not the 1984 account, that had damaging repercussions for the Liberal party. Said Metcalfe: “Kolber was the guy mandated by Turner to be in charge of all fund-raising operations, and suddenly he learns by accident about a parallel campaign. Needless to say, we struck Addison’s Toronto crowd from our list of potential donors since they would already have been tapped for money.” Apparently, raising money for political ends is not necessarily a way to win friends.

-ROSS LAVER and BRUCE WALLACE in

Ottawa