Alberta Social Services Minister Constance (Connie) Osterman was under heavy fire. For four days, lawyers interrogated the former consumer and corporate affairs minister about her role in the failure of two investment companies in the now-defunct Principal Group Ltd. empire of Edmonton. The 52-year-old minister, at times visibly irritated at the pointed questioning, finally conceded that she may have blocked an investigation by her departmental regulators into the failing companies First Investors Corp. (FIC) and Associated Investors of Canada Ltd. (AIC). In reply to Robert White, the lawyer representing investors who are owed $290 million, Osterman said that she may have refused to permit her staff to seek outside appraisals of the companies. And later, the minister told reporters that she has no regrets about not closing the troubled Principal subsidiaries.
Osterman’s testimony before inquiry investigator William Code contradicted her earlier statement that it was up to her regulatory officials to initiate such appraisals. Previously, her former assistant deputy minister, James Darwish, had testified that Osterman threatened him with early retirement after he sent her a memo in 1984, stating that FIC and AIC were guilty “of the most flagrant abuse I have ever seen perpetrated.” Osterman denied ever reading Darwish’s memo. But she later said that she had received similar information from her department.
Osterman, a former farmer, had few documents to support her view of events during the 1984-1986 period in which she was chairman of a special cabinet task force that monitored Alberta’s financial institutions. Despite advice from senior officials, the Alberta government did not withdraw licences for FIC and AIC until June, 1987. And later, in September, after the companies became insolvent, cabinet administrators destroyed several thousand files—including Osterman’s private papers. “I was upset,” testified Osterman. “I wanted to know who the hell had done it.”
But for Osterman, the main problem is whether she will be held responsible for permitting FIC and AIC to operate while an Alberta cabinet committee was fully aware that they were losing millions of dollars.
The story you want is part of the Maclean’s Archives. To access it, log in here or sign up for your free 30-day trial.
Experience anything and everything Maclean's has ever published — over 3,500 issues and 150,000 articles, images and advertisements — since 1905. Browse on your own, or explore our curated collections and timely recommendations.WATCH THIS VIDEO for highlights of everything the Maclean's Archives has to offer.