CANADA

TAINTED FUNDS

SIMMERING SCANDALS DOG THE PREMIER

BRIAN BERGMAN August 27 1990
CANADA

TAINTED FUNDS

SIMMERING SCANDALS DOG THE PREMIER

BRIAN BERGMAN August 27 1990

TAINTED FUNDS

SIMMERING SCANDALS DOG THE PREMIER

CANADA

It was one potential political minefield that Ontario Premier David Peterson clearly hoped to avoid. Last summer, allegations that former Liberal party fund raiser Patricia Starr had illegally directed charity money into political campaigns led to the resignation of a top Peterson aide and the dismissal of five cabinet members linked to the case. Starr now faces a total of 45 charges arising from the affair. Related charges are also pending against a number of former and present Ontario Liberal party officials. But, by calling a provincial election for Sept. 6, Peterson ensured that the vote would take place before any potentially damaging testimony could emerge from any trial. A preliminary court hearing of the charges against Starr is scheduled to open only as the campaign closes. Still, Peterson’s rivals remained determined to keep the affair, which opposition NDP Leader Bob Rae described as the “soft underbelly” of the Liberal government, firmly on the public mind.

The Starr affair surfaced in February, 1989, after media reports that the Toronto section of a charitable foundation, the National Council of Jewish Women, of which Starr then was president, had made political donations— thereby contravening tax rules that govern charities.

The controversy escalated in June of last year, when media reports and a Toronto law firm hired by the council claimed that Starr had donated more than $82,000 of charity money—from a fund financed largely by provincial sales tax rebates on a residence for seniors—to the campaigns of various provincial and federal politicians. Among them was Toronto-area MP James Peterson, the premier’s brother. The MP said that he was unaware that any donations had come from the charity. But that same month, the premier’s executive director, Gordon Ashworth, resigned his $100,000-a-year job, acknowledging that he had not received invoices and had not

paid for a refrigerator and a house-painting job arranged through Starr. Peterson ordered a judicial inquiry into the affair. But, on April 5, the Supreme Court of Canada struck down the inquiry after it had already held 27 days of televised hearings, declaring that it amounted to a criminal investigation.

Since the inquiry folded, Metro Toronto police have charged Starr with 11 counts of criminal fraud. The provincial Commission on Election Finances has also laid a total of 76 charges of violating the Election Finances Act against Starr, the charity she once headed, campaign officials for seven Liberal and two Tory MPPs, the Ontario Liberal party and two of its officials in the 1987 provincial election.

Peterson was embarrassed at the outset of his latest campaign when commission chairman Donald MacDonald claimed that he felt pressure from the Ontario Liberal party not to lay charges against the party and some of its officials. According to published accounts, MacDonald had complained to the Ontario Provincial Police that a Liberal member of the commission had passed information to former Ontario Liberal party president Kathryn Robinson about pending charges six I weeks before they were laid, á Peterson later told reporters I that the OPP had investigated ^ the complaints and said that 8 Robinson had no advance notice of the charges.

For her part, Starr has filed her own civil lawsuit against Peterson and his government—claiming damages for negligence, defamation, malicious prosecution and abuse of power. At the same time, some Liberal insiders say that Peterson is privately alarmed by the expanding impact of the investigation. Meanwhile, a police statement, announcing the most recent charges against Starr earlier this month, noted that the investigation into the affair is continuing.

BRIAN BERGMAN