CANADA

Private funds and the parties

BRUCE WALLACE,ROSS LAVER September 12 1988
CANADA

Private funds and the parties

BRUCE WALLACE,ROSS LAVER September 12 1988

Private funds and the parties

They are a closely guarded source of power and influence. And whether they are intended for the benefit of individual politicians or to finance the activities of a political party, private trust funds have long been a feature of Canadian political life. Said Adam Zimmerman, vice-chairman of Noranda Inc. and chairman of MacMillan Bloedel Ltd.: “Historically, there have been people funded so that their families would have a degree of security that they were giving up by going into politics. It is just understood and it is part of what people like me are willing

to support on a no-names, no-identification basis.”

But the very assurance of anonymity means that trust funds—while not illegal-will always remain controversial. During the 1976 Tory leadership race, Brian Mulroney’s camp leaked details of a secret $300,000 trust fund established for rival candidate Claude Wagner. In the ensuing political furor, Wagner lost to Joe Clark at that convention. And supporters of Pierre Trudeau raised some $275,000 from private donors to pay for a swimming pool at the prime minister’s official residence in Ottawa. The names of the donors have never been disclosed.

Although the exposure of a secret trust fund can prove embarrassing for its beneficiaries, such funds remain a favorite tool of backroom political or-

ganizers. Said Gordon Dryden, treasurer of the federal Liberals from 1968 to 1986: “Those who control the trusts are a law unto themselves and answer only to God. The money gives them enormous political heft and clout.”

In the 1960s and 1970s, Maclean’s has learned, one of the Liberal party’s most lucrative and influential funds was an election war chest for MPs from the Ottawa area. Former Ottawa MP George Mcllraith, who controlled the fund, used the money to help candidates in as many as 13 eastern Ontario ridings. When Mcllraith was named to the Senate in 1972, John Turner, then finance minister, took over responsibility for the fund. It is now administered by Ottawa accountant James Ross. According to Ross, some of the money is used for elections. But, he

said, “a certain amount is credited to each of the riding associations, and they can spend it at their discretion.” Many of the existing trusts trace their origins to the period before the 1974 Election Expenses Act, when there were fewer limitations on election spending and no individual tax credits for political donations. Said Dryden: “Funds were built up in trust in each region. If C. D. Howe [Liberal cabinet minister from 1936 to 1957] called a senator and said we needed $40,000, the cheque would be there in the morning.” In the wake of the 1984 election, senior Liberals tried unsuccessfully to tap into some of those trusts in order to reduce the party’s debt, which currently stands at $6.2 million. At one point, Senator Leo Kolber, the former chief Liberal party fund raiser, visited Nova

Scotia senators Irvine Barrow and Henry Hicks, who together controlled three trusts that are worth, according to Hicks, at least $3 million. But Hicks told Maclean's that the money in the funds was solely for the use of the provincial Liberal party. He added, “Senator Kolber came down and asked us to give the federal party $1 million or $2 million, but I said no.”

Later, Kolber considered launching a lawsuit to get at the money. “We wanted to smash the trusts open, but five tons of TNT would not shake the money loose,” said Herb Metcalfe, Kolber’s assistant. At any rate, he added, political outsiders only tamper with such trust funds at their peril.

-BRUCE WALLACE and ROSS LAVER in Ottawa