CANADA

WILSON’S TRIALS

THE OPPOSITION ATTACKED THE FINANCE MINISTER FOR KEEPING SILENT ABOUT A SECOND BUDGET LEAK

THERESA TEDESCO June 5 1989
CANADA

WILSON’S TRIALS

THE OPPOSITION ATTACKED THE FINANCE MINISTER FOR KEEPING SILENT ABOUT A SECOND BUDGET LEAK

THERESA TEDESCO June 5 1989

WILSON’S TRIALS

CANADA

THE OPPOSITION ATTACKED THE FINANCE MINISTER FOR KEEPING SILENT ABOUT A SECOND BUDGET LEAK

The dinner was to have been a celebration, but Michael Wilson was not in a party mood. On the evening of May 24, about a dozen Conservative MPs gathered at Ottawa’s exclusive Rideau Club to mark the 10th anniversary of the election that first brought them to the House of Commons. Among the veterans being honored by their host, John McDermid, minister of state for privatization and regulatory affairs, were MPs James Hawkes and Walter McLean—and Finance Minister Wilson. But the day before, what had seemed to be a subsiding furor over the April 26 leak of Wilson’s budget to Global TV had erupted afresh with renewed passion. And even though the House of Commons had passed the budget itself on May 11, Wilson had been forced to acknowledge that another, and perhaps more damaging, leak had preceded the one to Global. During the afternoon before the dinner, the embattled minister had risen repeatedly to his feet in the Commons to fend off opposition demands for his resignation. And as McDermid stood to toast his colleagues as the “toughest group of survivors in politics,” Wilson, drawn and tired-looking, could only hope that he was tough enough to weather the fiercest battle of his political career.

The finance minister’s latest crisis began when Jack Masterman, president of Waterloo, Ont.-based Mutual Life Assurance Co. of Canada, announced on May 23 that some of his employees had seen a summary of the budget at least two days before it was tabled in the House of Commons on April 27. Masterman also said that he had informed both the RCMP and Wilson’s office of that breach in budget security at 1:30 p.m. on the 27th. But during several statements to the House later that day, Wilson made no mention of the Mutual leak. In fact, Wilson told the House during Question Period, about 45 minutes after Masterman had

called his office, that the leak to Global had been a “single, isolated incident.” Last week, he insisted that during that period his officials had not relayed the news of the second leak. Wilson also maintained that even after learning about Masterman’s call later on the afternoon of the 27th, he did not raise the matter during a subsequent appearance in the House early in the evening because he thought that could compromise the RCMP investigation into how the supposedly secret budget documents were leaked in the first place.

But Wilson’s explanations did not satisfy the opposition. Liberal Leader John Turner, for

one, called the minister’s explanation of events “incredible.” And both Turner and NDP Leader Ed Broadbent returned again and again to charges that the government had breached Prime Minister Brian Mulroney’s assurance during the same April 27 Question Period that his ministers would inform the House of any new details about the budget leak. By week’s end, rumors that Wilson would resign in the face of the opposition’s attacks had contributed to a temporary drop in the value of the Canadian dollar (page 26). The controversy also overshadowed the Prime Minister’s trip to the third francophone summit in Dakar, Senegal

(page 15). In Dakar, Mulroney at first refused to answer reporters’ questions about his government’s handling of the second budget leak. But on Friday, he finally defended Wilson’s actions and said that all relevant information about the second budget leak had been turned over to the RCMP. As for his own statements to the House on April 27, Mulroney answered carefully, saying, “What I told the House was consistent with what I knew at the time.”

For its part, the federal police force has been investigating how the leaks occurred and whether anyone could have profited from them.

By week’s end, Crown prosecutors were considering whether to lay charges against an individual suspected of setting the series of leaks in motion. But as for the profiteering investigation, Maclean’s has learned that the RCMP, while asking Canadian stock exchanges to review records of stock trades that might have been made on the basis of budget leaks, did not even inform them of the second leak. As a result, spokesmen for the exchanges said that they may have missed evidence of profitmaking by specific individuals or companies.

The original storm over the budget began on April 26 when Global’s Ottawa bureau chief,

Doug Small, produced a copy of Budget in Brief, a 28-page summary of the budget, during the evening newscast and revealed some details of the budget. About three hours after Small’s report, Wilson called a hasty news conference to announce the budget’s highlights officially—to minimize, he said, the chances of anyone being able to profit from knowledge of budget details that others did not have. Then Wilson formally tabled the document in the Commons, as planned, at 5:40 p.m. the next day.

But by then, as it became clear last week, both the government and the RCMP were aware that the Global leak was not an isolated incident. As one senior official in Finance put it, by late that afternoon “everyone in the Centre [civil-service slang for the Prime Minister’s Office] and the minister of finance knew about the second leak.” And Mutual’s Masterman confirmed last Tuesday that, by the time the budget documents were officially placed in the

hands of the Commons clerk, copies of Budget in Brief had been circulating among staff members at several of the company’s offices for two days. The source of the copies floating around Mutual, Masterman said, was George McFarlane, a 55-year-old Mutual sales agent from Nepean, on Ottawa’s western outskirts.

McFarlane, Masterman added, received the budget summary from his 31-year-old son Robert, a sales representative for Ottawa-based Time Alarms Inc., a vendor of security systems. But Robert Houston, a lawyer acting for the McFarlanes, sketched a chain of connections that led directly back to the National Printing Bureau, the 34-year-old, three-storey building in Hull, Que., where roughly one million copies of budget-related documents were printed. According to Houston, Robert had been given his copy of Budget in Brief on April 24 in an east-end Ottawa bar by an acquaintance employed in the bindery section of the printing bureau.

At the same time, Houston confirmed that George McFarlane discussed details of the budget brief with another son, John, 35, a civilian employee with the department of national defence. John McFarlane, in

After leaving the bar, McFarlane apparently went to his parents’ home and gave the document to his father. George McFarlane, in turn, took the budget summary to his office the next day and showed it to several fellow employees. By April 26, the day before the budget was to have been released, Mutual’s head office in Waterloo and the firm’s Toronto office had received photocopies of that summary.

turn, spoke about those details with at least five fellow workers before April 27. Robert McFarlane, meanwhile, took the budget summary to work at Time Alarms, where he and a group of others discussed its contents as well. By the time Wilson released the compromised budget on the evening of April 26, about 13 Mutual employees were in possession of the budget summary and at least a dozen more people knew about the contents.

The McFarlanes, Houston said, had not been aware that their copy of Budget in Brief had been circulated to other Mutual offices. But, he told Maclean’s, the family belatedly told the

RCMP about their copy of the summary on April 27—the same day that Masterman made his calls to the force and to Wilson’s office. Houston added that the RCMP had administered a lie-detector test to Robert McFarlane.

Meanwhile, RCMP officers were also investigating whether anyone profited from prior knowledge of budget details. As part of that inquiry, they asked the country’s four stock exchanges—Vancouver, Alberta, Montreal and Toronto—to conduct internal investigations into whether there was unusual trading activity in certain stocks in the days before the budget’s release. But, until last week, those investigations took place without knowledge of the leak to Mutual.

Said Neil Winchester, manager of market surveillance at the Toronto Stock Exchange: “We found out when everyone else did—through the media.”

Winchester added that in the wake of Masterman’s announcement, members of the TSE’s market surveillance group went back to its records to check if any investors involved in trades on April 25 and 26 were Mutual employees. So far, Winchester said at week’s end, the

exchange had uncovered no irregularities.

In Calgary, Ian Brown, vice-president of the Alberta Stock Exchange, said that the RCMP had not told officials of that exchange of the second leak. Brown said that an initial review

had uncovered no unusual market activity in Alberta, but, he added, reports of the second budget leak may force the exchange to conduct a second inquiry. And one provincial securities commission director who asked not to be named called the RCMP’s decision not to tell stock exchanges about the second leak ques-

tionable, saying, “It is very unusual and it borders on unethical for the RCMP not to have mentioned the second leak.” For its part, the RCMP refused formal comment on its role, but one senior officer acknowledged to Maclean ’s that the exchanges “were only told what they had to be told.” Said the officer: “You do not reveal all your hand.”

At week’s end, the strain was beginning to show as the government attempted to weather the storm of charges and controversy. When faced in Senegal with a barrage of questions about Wilson’s actions, the Prime Minister snapped at reporters, “A little class, for God’s sake.” But there were no signs that Wilson, whose integrity has been unquestioned in almost five years as finance minister, was contemplating 5 resignation. Said one Tory ad“ viser close to Mulroney: “I can tell you, it is not in the cards.” Still, the dispute over the budget leaks was clearly forcing Wilson to use all the toughness that he has acquired during his decade at the centre of politics.

THERESA TEDESCO

LISA VAN DUSEN

MARC CLARK

PAUL KAIHLA