Ottawa folds its cards and apologizes to Mulroney
Teddy Kennedy was one of the first to call Brian Mulroney at home last Monday morning with congratulations. The U.S. senator’s message, Mulroney later told friends, included the observation that Mulroney “proved that a citizen can take on city hall, and win.” Or, in this case, the combined resources of the federal government and the country’s national police force. During a week that saw one of Canada’s most historic and remarkable legal battles end with an apology and full payment of legal costs to Mulroney by the federal government, he also received similar calls from Margaret Thatcher, George and Barbara Bush, and former French prime minister Laurent Fabius. At the office of Mulroney’s lawyer, Gérald Tremblay, there was a telephone call from another political leader: Quebec Premier Lucien Bouchard, expressing his delight about the outcome for his estranged, onetime close friend Mulroney. The flamboyant Tremblay, who himself received a standing ovation that day when he entered a Montreal restaurant favored by lawyers, later said: “It felt like the sun shining again after a long period of darkness.”
Not so in Ottawa, where the immediate forecast included thick clouds of gloom, punctuated by bursts of accusations, recriminations and excuses. For Mulroney and his friends, a time to crow; for the Liberals, a time to eat crow—and small wonder. On the eve of the beginning of the former prime minister’s $50-million libel suit against Ottawa, the government folded its cards—bringing to an end a public saga that began in November, 1995, when news broke that the justice department, on behalf of the RCMP, had sent a letter to Swiss authorities asking for their help in an ongoing investigation of “criminal activity” on Mulroney’s part “to defraud the Canadian government.” Last week, Ottawa was forced to acknowledge that its allegations—that Mulroney accepted bribes connected to Air Canada’s 1988 purchase of Airbus Industrie jets—could not be substantiated. “Any conclusions of wrongdoing by the former prime minister,” said the apology, “were—and are—unjustified.”
Now, it was the Liberals’ turn to scramble to try to defend the spreading stain against them. Justice Minister Allan Rock, who appeared irritable and churlish in the initial news conference explaining the government’s decision to abandon its case, later in the week
expressed his personal sympathy and regret to Mulroney and his family. Chrétien, meanwhile, who left early last week to lead a 10day Team Canada trade mission to Asia, said that “the government has apologized and it was the right thing to do.” And Sgt. Fraser Fiegenwald, the officer who admitted leaking information about the case to a journalist—a move that helped kill the federal case—is facing an internal RCMP inquiry that could, ultimately, result in either his dismissal, the laying of criminal charges, or both. Even if he continues with the force, Fiegenwald, said one fellow officer, “is finished” in the eyes of many colleagues. Although some sympathize and regard him as the convenient scapegoat of politicians, others blame him for endangering an investigation by prematurely leaking details to the media. Nonetheless, the RCMP investigation of the Airbus affair continues (page 22).
(page 22). Later in the week, Rock also sent letters of apology to two other men mentioned in the infamous letter to the Swiss: former Newfoundland premier Frank Moores and German-Canadian businessman Karlheinz Schreiber. Both men, through their lawyers, indicated they are not satisfied with the extent of the apologies, and will press for further settlement. As if all that was not enough, the apology to Mulroney was made to a man that Chrétien appears to dislike more than any other in politics. In private and in meetings with his caucus, he is often openly contemptuous of Mulroney, blaming him for the rise of Quebec nationalism in the 1980s by “playing footsie with the separatists.” The feeling is clearly mutual: Mulroney is equally scathing about Chrétien, noting to friends that the Liberals have continued many of his own policies. And comparing himself to Chrétien, he recently told a friend: “I governed with a young wife, four young kids, and I wore nice shoes. A lot of people didn’t like that. A lot of people like a prime minister, frankly, who can speak neither language, and who bumbles and blames things on his ministers and refuses to stand up to take any responsibility.”
The federal defence against Mulroney’s suit collapsed with stunning speed in the final week before the trial was to begin. The basis for Mulroney’s suit was the government’s contention, stated in its Sept. 29,1995, letter to Swiss authorities, that Mulroney, while prime minister, encouraged Air Canada to purchase 34 Airbus A-320 aircraft in 1988 at a cost of $1.8 billion. According to the letter, an informant alleged that Mulroney was to receive $5 million (U.S.) in “commissions” as a result. Ottawa had not intended to base its defence against Mulroney’s libel suit on the actual issue of whether he committed such a crime. Rather, it intended to rely on the principle that no one on the federal side acted with malice towards Mulroney—because the government could have had no way of knowing that the letter would become public.
'Conclusions of wrongdoing were—and are—unjustified'
In fact, the government was prepared to argue that the justice department writes, on average, about 100 such letters a year to foreign authorities—and that such a leak has never before occurred. In this case, government lawyers intended to suggest that Mulroney, or someone close to him, deliberately leaked a copy of the letter to The Financial Post—which broke the story on Nov. 18, 1995—as a way of stalling the investigation. Mulroney flatly denied that implication. But Ottawa’s resolve to hang tough crumbled in the final week of December as a succession of people on the government’s own side began expressing concerns about both the apparent flimsiness of the federal case, and its awkward timing. After 13 months of investigating, the RCMP did not appear to have found any evidence incriminating Mulroney. And with an election expected this year, the Liberals were reluctant to proceed with a case that was expected to drag on for more than three months—with potentially explosive implications.
The long road to a federal apology
JULY, 1988: Air Canada announces a $1.8-billion deal to buy 34 Airbus A-320 passenger jets from Airbus Industrie, a consortium of French, German, British and Spanish interests.
AUGUST-SEPTEMBER, 1988: Shutout U.S. competitor Boeing Co. complains of irregularities in awarding the contract, sparking an RCMP investigation. The case is soon put on hold for lack of evidence.
MARCH, 1995: CBC TV’s the fifth estate and the German magazine Der Spiegel suggest that Airbus may have paid secret commissions to Canadians. The reports allege that German-born businessman Karlheinz Schreiber and lobbyist Frank Moores, a former Newfoundland premier, opened Swiss bank accounts—and refer to an unnamed Canadian politician. Although all parties deny the allegations, the RCMP reopens the case.
OCTOBER-NOVEMBER, 1995: A Sept. 29 justice department letter is couriered to Swiss officials ir early October, asking for help in the investigation In early November, Mulroney learns that he is named in the document. On Nov. 16, having learned of the existence of the letter, Maclean’s sends Mulroney a fax, asking for his comments. Two days later, The Financial Post breaks the story that Mulroney has been named as a suspec in the RCMP’s criminal investigation—and quotes from a leaked version of the letter. On Nov. 20, Mulroney launches a $50-million libel suit against the RCMP and Ottawa.
JANUARY, 1996: Schreiber launches a $35million libel action against the CBC. Moores later follows suit, seeking $35 million in damages from the CBC for accusing him of “dishonest, corrupt and illegal” conduct in the Airbus purchase.
APRIL-MAY, 1996: In pretrial hearings, Mulroney testifies that he learned of the justice departmer letter from Schreiber and angrily denies that he leaked its contents to the media—a key part of the government’s defence. Later, Mulroney wins the right not to answer questions about his financial affairs.
JANUARY, 1997: On Jan. 2, the federal government learns that an RCMP investigator may have confirmed to unnamed reporters that Mulroney was mentioned in the letter. The next day, the Federal Court refuses a government request to limit the examination of RCMP investigators by Mulroney’s lawyers. Persuaded that those two events have crippled its defence, the governmen settles the suit on Jan. 5 by apologizing to Mulroney and agreeing to pay his legal bills.
It reserves the right, however, to continue the investigation. Within days, the government also apologizes to Moores and Schreiber.
The first indication to Mulroney’s side that Ottawa was preparing to back off came in a telephone call to Tremblay on Dec. 27 from Montreal lawyer Bruno Pateras. Pateras, Tremblay said, told him that he had been given “written authority” by the federal government to negotiate a settlement. Although Ottawa had occasionally sent out feelers in previous months, Tremblay said such steps had never been “quite as formal and that the federal side always refused to discuss an issue crucial to Mulroney: payment of his estimated $1.5 million in legal costs. As a result, Tremblay said, he told Pateras “there is no point in talking unless absolutely everything is on the table.” After Pateras agreed, both men—mindful that passions were running high in the case—agreed that a neutral facilitator would be in order, and just as quickly agreed on the choice of retired Quebec Superior Court Judge Alan Gold.
Over the next four days, the two sides met secretly but regularly, usually at Tremblay’s fifth-floor office at the firm of McCarthy Tétrault in downtown Montreal. The federal side suggested that Ottawa was ready to issue an apology to Mulroney—but talks continued to stall over the question of payment of Mulroney’s costs. On New Year’s Eve, the negotiations finally broke down over that issue, and Tremblay and Mulroney, who were meeting and talking on the telephone up to a dozen times a day, agreed that an out-of-court settlement now appeared unlikely. “Screw them,” Mulroney told one friend. “Let’s see ’em all in court.”
But behind the federal scenes, Ottawa received a stunning blow over the next two days. During talks held the previous week, Rock had drawn the line at paying Mulroney any money from public funds. “I’d rather go to trial,” he told his legal team, according to an insider, “based on what I know of our defences and on my hunch of how hard it would be to sell a settlement which included money.” But that changed in an instant on Jan. 2 when Rock was informed
that Fiegenwald, the man most active in the RCMP investigation, had just divulged during pretrial preparation that he had spoken about the case at the outset with the media. (One Justice official told Maclean’s last week that about eight months previously, Fiegenwald insisted under questioning by justice department officials that he had not given any information about the case to anyone.)
Ottawa's resolve to hang tough quickly crumbled
That bombshell shattered the heart of Ottawa’s defence: the government’s contention that no one had acted “with malice” towards Mulroney, as well as the assertion that the federal side had not been responsible for any leaks. Once it became clear that a federal representative had given Mulroney’s name to a reporter, lawyers felt it would be almost impossible to argue that no malice was intended by the act. A furious Rock then called his deputy minister, George Thomson, to discuss Ottawa’s diminished options. On Friday, Jan. 2, Rock roused his executive assistant, Cyrus Reporter, and told him that everyone associated with the case should come immediately to the justice department. Then, he sat impatiently in his office as federal lawyers huddled with RCMP Commissioner Philip Murray, discussing legal ramifications, and exactly what had been disclosed. Later that morning, Rock telephoned Chrétien, and the two men agreed on the next steps. Rock asked a representative, Montreal lawyer Vince O’Donnell, to call Tremblay and, without divulging the new information, set up another round of negotiations. “We’d better take a kick at settling,” he told his team, “even if it means paying money.” One associate said that although Chrétien had been “almost viscerally opposed” to paying any money, he now agreed.
With Gold again called in as facilitator, federal negotiators, including O’Donnell and Harvey Strosberg, a normally gregarious Windsor lawyer and longtime Rock friend who was a late addition to the federal legal team, started talks with Tremblay in Montreal on that Saturday. For the first time, they dangled the prospect that Ottawa was willing to talk about money. With his long experience as a mediator, the 79-year-old Gold decided that the two sides were best kept in separate rooms, while he acted as a go-between. Both sides later agreed that the settlement would probably not have been reached without Gold’s deft handling. In typical fashion, the veteran conciliator said little afterward. “Once a thing is over,” he told Maclean’s, “I burn my files and I keep my mouth shut.”
Along with the money, there also were other face-saving issues for both sides. “The items became valuable in the sense of how they could help us sell this as a win,” said one senior federal official. Even so, the agreement to pay Mulroney’s legal fees and court disburse-
ments was only settled between 3 and 4 p.m. on Sunday, Jan. 4—less than 18 hours before the trial was to begin. Mulroney’s team, after agreeing it would no longer push for other damages, now argued that he would settle for reimbursement of all his expenses—including an estimated $200,000 in public relations costs and fees. Even as some federal members ground their teeth in frustration, they gave in. But, significantly, the document specifies that the money will be paid directly by the RCMP—a clear sign of where the government has decided to affix most of the blame for the fiasco.
Of the 13 clauses in the three-page settlement agreement, all but three caused problems. As with most agreements, every word was crucial. At the Montreal news conference, Mulroney’s lawyers argued that the former prime minister was “totally vindicated,” based largely on the acknowledgment in the agreement that “any conclusions of wrongdoing” that the RCMP might have made were unjustified. During the settlement negotiations, Mulroney’s team demanded that the word “conclusions” be replaced with “suggestions.” The federal side refused to make the change. “If it said any ‘suggestion,’ they would be saying it was unjustified to have him under investigation, said a federal source. “There’s a big difference.” In fact, Mulroney s side initially sought a full public apology on the same unequivocal terms given by the Federal Bureau of Investigation to Richard Jewell, who was originally named as a suspect in a bombing during the Olympic Games in Atlanta last July.
Federal sources also said that Mulroney’s team fought to take out a seemingly innocuous clause saying that “both parties have always acknowledged that the RCMP must continue investigating any allegations of illegality or wrongdoing brought to its attention.” But Tremblay, who would not discuss the content of negotiations, insisted that “Brian has always said the RCMP is free to investigate who they want whenever they want—that has never been an issue.”
What is at issue is who, on the federal side, knew what—and when. Last week, Government House Leader and Solicitor General Herb Gray, who is responsible for the RCMP, acknowledged that a senior officer briefed him on the investigation eight months before the news became public—but that he did not tell Chrétien. Gray said he stayed silent about the issue because he had previously been advised that, as solicitor general, it was inappropriate for him to be involved in any way in an investigation with political implications. It is less clear when such key figures as Rock, the RCMP’s Murray and Chrétien first learned about the RCMP investigation, and the justice department letter to Switzerland, which was signed by departmental lawyer Kimberley Prost. Murray—who, ironically, oversaw personal security for Mulroney when he first became prime minister in 1984—initially said at the Jan. 6 news conference that he had approved the contents of the letter, which was based on information gathered by the RCMP, before it was sent. But later that day, Murray issued a statement declaring that he never saw the letter—even though it was published in many of the country’s newspapers—until he began to prepare for the trial, because he wanted to stay above and beyond the investigation. Similarly, Rock has said stay that, initially, he was not aware of the existence of the letter until it became public. But even though Rock said he did not see Prost’s letter, a line under her signature notes that she is acting “for the minister of justice.” And Murray, as head of the RCMP, is, at least nominally, supposed to be responsible for all investigations.
An even bigger question is who around Chrétien was informed of the investigation—and how early. Norman Spector, a former senior aide to Mulroney, revealed last week that, in the fall of 1995, he was visited by RCMP investigators who were looking into allegations against Mulroney. Although they asked Spector not to publicly discuss their visit, he told Maclean’s that on about Oct. 11—some two weeks later—he decided to report the event to Jocelyne Bourgon, the clerk of the Privy Council and the most senior federal civil servant. At the time, Spector, who now works in the private sector, was still employed by the federal government as a deputy minister in charge of the Atlantic Canada Opportunity Agency. He told Maclean’s that “it was clear as soon as I opened my mouth that Ms. Bourgon had no knowledge of the investigation, so I gave her a complete report. She was startled that Mulroney was under investigation.” Spector added that he, in turn, was just as startled that she did not know that. By everything that I understand about common practice at the highest level of our government, it seemed inconceivable that she should not have been given this information when the person in question was a former prime minister.” Spector also said that she told him she would contact Murray “immediately” for more information.
Bourgon, in a statement she issued last week in response, acknowledged meeting Spector, but was much more vague about the tone of their meeting. She said she did not conclude from his information that Mulroney was the target of the investigation, and added specifically that she chose not to pass the information on to Chrétien because it concerned a previous government. And the Privy
Council Office pointedly issued a copy of a March, 1996, letter, written by Spector to the CTV network, in which he said, in response to a reporter’s query, that he “has never discussed with the RCMP the Airbus transaction.” At the same time, other advisers to Chrétien have repeatedly insisted that they had no hint of the investigation of Mulroney until it became public. “There was no prior knowledge,” said Peter Donoio, Chretien’s director of communications.
What is at issue is who knew what—and when
But some people are openly skeptical of such claims. “I simply cannot accept that no elected official knew there was an investigation like this proceeding,” says former Conservative justice minister John Crosbie. “It runs completely contrary to the way the system works.” As an example, Crosbie says that when the justice department was preparing to charge then-New Brunswick Premier Richard Hatfield with marijuana possession in 1984, Crosbie, as justice minister, was informed by his deputy minister of the circumstances in advance of the case being made public. Crosbie, who was scheduled to appear as a witness on Mulroney’s behalf, is scathing about Rock’s insistence that he did not know of the investigation. Says Crosbie: “If he was not told, his officials were unbelievably negligent. If he told them not to tell him about anything involving other politicians, he is the one being unbelievably negligent.”
Whether or not that is true in Rock’s case, sloppiness and negligence seem to have abounded on the federal side. The letter by Prost to Swiss authorities contains, according to Mulroney’s lawyers, 21 “demonstrably false” items presented as fact, including wrong dates, appointments and descriptions of key people. Curiously, many of the people who held decision-making positions at the time of the Airbus purchase were never even contacted by the RCMP or Justice officials. They include Crosbie, who was transport minister at the time; Claude Taylor, then chairman of the board for Air Canada; and Charles Simpson, the chief pilot for Air Canada who oversaw a series of tests that concluded the Airbus was the best available aircraft for the airline. None ever spoke to federal officials; all were to be called as witnesses by Mulroney’s side.
Similarly, the letter written by Prost went through as many as seven drafts—most of which resulted in tougher language—even though that toughening does not appear to have been accompanied by any new evidence. Again, Tremblay planned during the trial to present several different drafts of the letter to illustrate that point—and accuse the government of exaggerating the severity of its allegations.
As it was, the collapse of the federal case left some legal observers shaking their heads. Some experts maintain that a dangerous precedent has been set: if the government can no longer make allegations of criminal action in private correspondence to other governments, its ability to investigate could be severely impaired. But Ottawa’s apology includes an admission by Mulroney that
the principle of such investigations is legitimate— and most experts agree that the government lost its case because of its own ineptitude. “The good ship democracy occasionally runs aground, and in this instance, it’s just ridiculous,” former Supreme Court judge Willard Estey told Maclean’s. “The minister of justice says he’s not responsible for a letter going out from his department, which is by agreement defamatory of a past prime minister of the country, and that the minister doesn’t have to know about these things. And having learned about them, doesn’t have to do anything about them because that’s part of the prosecutorial system which
is not under the direct surveillance of the elected representative. If democracy can swallow that, it can swallow anything.”
For now, most of the hard swallowing is being done in Ottawa, where the search for scapegoats continues. In the week of the collapse of the government case, opposition parties have called for the resignation of everyone from Rock to Murray to Chrétien, and demanded the establishment of a royal commission. Rock and Chrétien both shrugged off those demands, but Liberal sources suggest that Murray will now face what one Chrétien adviser called “unrelenting scrutiny” in the immediate future—with no guarantees that his job is safe.
In the short term, almost everyone involved with the controversy emerges with some bruises. In spite of Mulroney’s victory, it is not clear whether that will make him any more popular with the millions of Canadians who turned on his party with a vengeance in the October, 1993, election. With recent polls last year showing that 71 per cent of respondents were prepared to believe there was “at least some basis of fact” in the allegations againstfhis client, Tremblay acknowledges that “there will always be some people who continue to believe anything about him.” But some of Mulroney’s close friends believe the media should now do some self-examination of the way it reported on the case. There was, suggested one Mulroney friend, “an almost palpable wish in some of the reports that the allegations turn out to be true.”
At the same time, many questions remain. Among the most tantalizing: how The Financial Post obtained a copy of the justice department letter. At week’s end, political circles in Ottawa and elsewhere were still rife with speculation about that issue. But most of the hard questioning in Ottawa will
centre on the fact that Chrétien’s Liberals have spent the past three years making much of their selfdeclared integrity and competence. Now, they find themselves in a situation where doubts are being raised about both of those qualities. “Unlike Mulroney, I have never had a minister resign because of scandal,” Chrétien said in early 1996. Perhaps—although since then, he has seen defence minister David Collenette step down because of a breach of cabinet ethics. In the end, said an adviser to the Prime Minister, “we think people will still understand that we always brought good intentions to this throughout.” In response, Mulroney can
now say that his government never allowed anything remotely resembling the treatment he has endured. Speaking to a friend last week, he briefly let his feelings show. The Liberals, he said, “have no grace. From Chrétien on down, they are a malicious bunch of bastards.” But in addition to his legal win, Mulroney can take other consolation. Chrétien’s popularity has been based, in part, on his efforts to distance himself from Mulroney. Last week, as he watched in not-sosilent satisfaction, it was Brian Mulroney’s turn to chastise Chrétien.
E. KAYE FULTON