CANADA

An embarrassing motel

CHRIS WOOD August 26 1985
CANADA

An embarrassing motel

CHRIS WOOD August 26 1985

An embarrassing motel

The grey-shingled motel stands at the north end of the Strait of Canso causeway linking Cape Breton Island with mainland Nova Scotia. The 70-unit motel is owned now by Halifax-based Keddy’s Motor Inns Ltd. But until June it belonged first to W. J. (Billy Joe) MacLean, minister of culture, recreation and fitness in the Conservative cabinet of Nova Scotia Premier John Buchanan, and then to MacLean’s brother Bernard, a physician who was an unsuccessful Tory candidate in the 1978 provincial election. Between 1970 and 1984 the motel received loans totalling more than $1 million from Tory governments. Then, this spring the business collapsed. The government at first declined to call in $305,000 of outstanding debt guaranteed by Bernard (Dr. Bernie) MacLean. But after critics levelled charges of political favoritism, the cabinet decided on Aug. 8 to hold the Tory doctor to his guarantee.

Still, criticism of the Buchanan government continued last week. For one thing, Bernard MacLean, 50, a popular figure in West Cape Breton, said that he faces financial ruin if he is forced to repay the loan. For another, the motel affair was only one of several politically embarrassing episodes in the province. At the same time, the provincial economic outlook is worse than at any time since 1980.

The government’s initial reluctance to demand repayment from MacLean fit the political pattern surrounding the motel affair. It was the Conservative administration of Premier George Smith in 1970 that provided a $700,000 business-development loan to Billy Joe

MacLean to build the motel. By the time it opened as the Scheiling Motel in 1972, power in Halifax had changed hands. To buy furnishings Billy Joe borrowed $400,000 from brothers Bernard and James, who is also a doctor and has been the Tory MLA for Inverness North since last November. By 1979 Billy Joe MacLean owed $1,095,562 to the Nova Scotia Resources Development Board, and a further $200,000 to Bernard. But, with business slow in the motel, he was unable to meet payments on either loan. In February, 1980, the provincial board foreclosed.

Both Billy Joe and Bernard blame their later problems on the 1980 entanglements. Provincial agents, unable to find a buyer at the motel’s assessed value of about $400,000, turned it over to a sheriff’s auction in April, 1980. But a board representative forced the bidding to $700,000 (“We wanted to get our original loan back,” board chairman Joseph Zatzman told Maclean's last week).The business was finally sold to Bernard MacLean for $701,000—backed by a cabinet-approved loan board mortgage for the full amount—after Bernard personally guaranteed $400,000 of the total.

It proved to be a poor investment. With debt charges of $12,900 a month, mortgage payments fell behind by last October. As Bernard recalled, “It never made

money even one year.” On April 11 the loan board foreclosed again, and in early June it sold the motel to Keddy’s—the 13th in that company’s chain—for $375,000. The transaction left the loan board short by $305,000.

But while the family business was failing, the political career of Billy Joe MacLean, 48, flourished. First elected to the legislature in 1981 in the new riding of Inverness South, Billy Joe joined Buchanan’s cabinet in 1983 and returned in last November’s Tory election landslide. Late last month, when the loan board recommended that the government waive its right to recover the motel debt, the opposition claimed that it detected a partisan motive. Liberal Leader Vincent MacLean (no relation) contrasted the decision to a government campaign to collect overdue student loans and he added that, for the Tory government, “It is one set of rules for one group of people, and another set for people who have influence.” On Aug. 8 the cabinet decided to order the loan board to try again to collect its money. Despite Bernard MacLean’s protests that losses on the motel have drained his savings, Zatzman said last week, “If he wants to stonewall it, we’ll recommend that we sue him.”

Provincial New Democratic Party Leader Alexa McDonough said that the whole affair was a reflection of “the sleaze factor.” She added that an air of impropriety and political favoritism has surrounded the Buchanan government since last fall. Among the embarrassments that McDonough and other critics referred to: in the November election Tory Malcolm MacKay lost his Sackville seat after allegations—later confirmed by the provincial auditor general’s office—that he had improperly claimed $34,454 in travel expenses. MacKay has still not replied to a request that he repay $7,024 and an RCMP investigation into his actions is “still active,” according to an officer in charge. As well, the Tories were embarrassed by revelations that rural Conservative MLAs had discretionary access to road repair funds worth more than $6 million.

While lawyers for the loan board and Bernard MacLean exchanged telephone calls last week, one political aide close to the cabinet summed up the government’s outlook: “We’ve slipped. But we realize it and we’re dealing with it. We’ve just got to bring the wagons a little closer together.”

CHRIS WOOD

ANN SHERRINGTON