STEVIE CAMERON October 31 1994


STEVIE CAMERON October 31 1994




WHEN BRIAN MULRONEY LEFT OFFICE IN JUNE, 1993, HIS popularity was the lowest of any Canadian prime minister since pollsters began measuring that in the mid-1950s. For many Canadians, it was the persistent reports of scandal, patronage and lavish spending during Mulroney’s nine years in power that soured them on the prime minister and his party. In her new book published this week by Macfarlane Walter & Ross, On The Take, veteran investigative reporter Stevie Cameron says that the Mulroney years were marred by scandals and a pattern of

political corruption that led directly to the Tories’ crushing defeat on Oct. 25,1993. Cameron, a contributing editor of Maclean’s, has reported for The Ottawa Citizen, The Globe and Mail and CBC’s the 5th estate. In her first book, Ottawa Inside Out (1989), Cameron took readers behind the scenes in the political back rooms and social salons of the national capital. In the following article adapted from On The Take, she reports on the high-flying lifestyle enjoyed by Brian and Mila Mulroney:

During Brian Mulroney’s leadership of the federal Progressive Conservative party, no issue was more sensitive or more carefully guarded than the source of his personal wealth. While Montreal lawyer David Angus, one of his oldest friends, maintains that the former prime minister was a “substantial millionaire” before he entered politics, others just as close to Mulroney say he was always well paid but was not a wealthy man.

Today, however, there is no doubt. By anyone’s standards, he is a millionaire, with a newly renovated house worth more than $2.2 million in Montreal’s affluent Westmount district; a partnership at Ogilvy Renault, one of the city’s leading law firms, which is reckoned to bring in an annual income of at least $300,000; and well-paid directorships on three boards, two of which, Horsham Corp. and American Barrick Resources Corp., pay him generously for his consulting advice and have granted him stock options worth $1.5 million. The third, on the board of U.S. food-processing giant Archer-Daniels-Midland Co., can pay up to $100,000 a year. Speeches booked through a Washington speakers’ bureau at $60,000 each could bring in even more.

Then, according to well-placed sources in Montreal, there is a generous retirement fund worth approximately $4 million, which was put together about the time Mulroney left office last year by a small group of Montreal-based businessmen to help ease him back into private life. Two of the businessmen are said to have put $1 million each into the pot; the other group pooled resources to gather the rest. Although Montreal still hums with stories about a trust fund put together for him by the Tory party (similar to several financial arrangements made for other political leaders by their parties), his friends say Mulroney vetoed the idea. “He doesn’t need it,” said former Senate speaker Guy Charbonneau, one of Mulroney’s most trusted advisers for many years.

That his personal fortune is an issue at all is due to the flamboyant and lavish lifestyle he and his wife, Mila, enjoyed during their years in Ottawa, a lifestyle that could not be supported by a prime ministerial salary nor even by the generous perquisites of office, which included two splendid official residences, limousines, first-class travel, free food and 12 servants. Mila Mulroney once explained away their appearance of wealth by telling her biographer, Toronto editor Sally Armstrong, that they were able to enjoy the extras in life thanks to successful investments made by her husband when he was the president of the Iron Ore Co. of Canada between 1977 and 1983. But close friends, including the very wealthy Toronto construction magnate George Vari and his wife, Helen, say the Mulroneys were not as well-off as they appeared. In an interview, George Vari said that although as president of Iron Ore Mulroney “had been in good financial shape,” he was not a wealthy man. ‘They had no real money,” added one woman who was among their most intimate friends in Montreal. “He always lived up to the hilt.”

How friends and the party helped the Mulroneys maintain their lavish lifestyle

An examination of Iron Ore’s filing to the Securities and Exchange Commission in Washington, for example, shows that he received only 600 shares of the stock of the firm’s parent company, Hanna Mining, and this was in 1983, his last year with Iron Ore. While the company paid him generously, no extraordinary bonuses or benefits are recorded for Mulroney in these filings.

Despite published allegations that the Tory party supplemented their income, a spokesman for the Mulroneys denied that they had received any money from the party, other than for expenses incurred on PC business. On July 19, 1991, however, just before the Conservatives’ annual convention, party president Gerry St. Germain told reporters that the party “does give assistance to the leader of the party, and what the prime minister declares as income is his business. I haven’t got any information as to amounts.” St. Germain was responding to a Toronto Sun story by Bob Fife, which cited an unnamed Revenue Canada source as saying that Mulroney had filed T-4 slips for more than $300,000 in 1990, almost twice his $164,200 income as prime minister. The extra money, the source told Fife, came from the Conservative party. Within hours of his comments to reporters, a flustered St. Germain had to recant, saying his remarks had been distorted. “The PC party of Canada does not supplement the income of the leader,” he stated.

A close examination of the years in power and interviews with several old friends, former staff members and party officials tell a different story. (The Mulroneys themselves did not respond to written requests for interviews on that and other points.) Without significant contributions from both the Conservative party and many individual benefactors during Mulroney’s years in power, as well as from Canadian taxpayers, the couple’s jet-setting lifestyle would not have been possible. They also moved in a glittering circle of close and powerful friends who looked after each other’s interests. Despite the wide unpopularity of his last few years in office, Mulroney evoked fierce loyalty from his party caucus, as well as from those who were close to him.

Few were more loyal than David Angus, a fund-raiser for Mulroney before being appointed in 1983 as chairman of the PC Canada Fund, which raises money for the party. In an interview in his Montreal office in July, 1994, Angus said that based on an agreement with Mulroney, he invoiced the prime minister for expenses paid for by the party that Angus believed to be of a personal nature. And Mulroney paid these bills. But then Angus also admitted that he sat down with the Mulroneys every year to work out a schedule of monthly payments from the PC Canada Fund’s annual budget to cover some of their expenses. “We evened out the cash flow so they would have monies available to them to pay these expenses on a regular, even, sort of ongoing basis,” Angus said. He obtained a ruling from Revenue Canada on this income, Angus added, but he refused to provide a copy of the ruling or say what the payments amounted to— except to describe them as “modest.”

Angus also confirmed that during the years he ran the PC Canada Fund he had a bank account in Montreal from which he could dispense party money, and that he used it to defray some of the Mulroneys’ expenses. As an example, the account, number 72-1112, at the CIBC’s main branch on Boul. René-Lévesque, was once used to pay $5,494.14 for several items including eight antique chairs and several

lamps purchased by the Mulroneys for 24 Sussex Drive soon after they moved in. But Toronto merchant banker Robert Foster, who succeeded Angus as the party’s chief fund-raiser in 1993, insisted that the PC Canada Fund had only one bank account, number 0105015, and that was in the CIBC’s main branch in Ottawa where all party cheques needed two signatures. Asked about the second account in Montreal, a surprised Foster said he knew nothing about it and that it was most definitely not party policy to have two accounts.

During the Tories’ years in power, the PC Canada Fund spent $10 million a year although it always raised more; Foster said he did not know how much of that went to support the prime minister. (Foster was appointed chairman of the fund by former PC leader Kim Campbell, but when Jean Charest took over as interim leader last January, he gave the job to businessman Donald McDougall.)

Angus offered the explanation of the monthly payments only when he was asked about household staff members being sent on a regular

basis to the Prime Minister’s Office (PMO) to pick up thousands of dollars in cash for Mila Mulroney’s use. “Cash came in like it was falling from the sky,” said former chef François Martin, one of four or five trusted staff members who were often asked to pick up the money for Mila from senior aide Fred Doucet at the PMO. After a friendly word or two about the weather or some social event at the residence, Doucet would hand the money over in a thick unsealed brown envelope. In-

side, said Martin, would be several $1,000 and $100 bills. Martin also did occasional banking for Mila, taking thousands of dollars in cash from her late at night for deposit the following morning in her account at the Bank of Montreal on Wellington Street in Ottawa.

Mila’s aide Bonnie Brownlee was also expected to help handle cash for Mila, said Martin; on one occasion, he explained, Brownlee was upset because Mila needed about $13,000 for one of her regular shopping trips to New York City and on this occasion Brownlee was having difficulty obtaining the money. Brownlee said she does not recall this particular incident, although she agreed that the money Martin said he picked up could have been the money Angus provided. She added that the Mulroneys’ finances were handled by Doucet or later, by chief of staff Derek Burney or

deputy chief Marjory LeBreton. Angus said the monthly cheques he signed were made out in trust to the chief of staff but that during Doucet’s tenure in the PMO, which lasted from 1984 to 1987, Doucet, rather than then-chief of staff Bernard Roy, would have handled them. After Doucet’s départture from the PMO to take a job as head of international summit planning, household staff members no longer

went to the PMO to collect cash, Martin explained. Instead, after a small wall safe hidden behind a picture in the upstairs hallway at 24 Sussex Drive was deemed insecure, another safe was moved into the chefs basement office at 24 Sussex, containing cash in manila envelopes. Mulroney’s executive assistant, Rick Morgan, appeared to be responsible for the money in the new safe, said Martin, although he observed Mulroney himself removing cash from it on two occasions.

Not surprisingly, PMO staff were always extremely careful not to tell reporters how the Mulroneys paid their bills. Nor do government records tell the story. For example, all records from the department of public works for expenditures from 1984 to 1987 on the official residence are now missing, yet these are the years during which well over $1.5 million was spent maintaining, furnishing and decorating 24 Sussex Drive and Harrington Lake, the two houses used by the Mulroneys. But there are grocery bills and ledgers, along with official responses from the Privy Council Office, which show how much was spent on food and wine in the Mulroneys’ official residences. They show that the costs for food and wine for both the Mulroney family’s personal consumption and for official functions escalated from a low of $3,742 a month in early 1985 to $7,000 a month, or nearly $84,000 a year, by the time Martin resigned as chef in 1989. By 1990, the food and liquor bills had soared to $105,476 annually and by 1993 they were up to $153,128 for the year. Among the costs were scented Rigaud candles, which perfumed the Mulroney dinner parties at $3,000 a case. Liquor bills were at least $2,000 a month. Mila Mulroney herself drank only wine and that very sparingly; her husband did not drink at all, although the chef and the butler were required to lay in cases of NyQuil for him. (NyQuil, a popular over-the-counter cold remedy, is 18.9-per-cent alcohol, according to an authoritative guide to pharmaceuticals. That is about the same strength as fortified

wines such as port and sherry.)

Mulroney always trumpeted the fact that he paid for his own groceries, and he did indeed send the government a cheque twice a year for food. It was calculated at a rate of about $684 a month, based on the consumer price index for a family of six. In all, during the nine years in power, he reimbursed the government a total of $74,598.75 for his family’s food.

Few Canadians had the opportunity to observe the Mulroneys at home, but they certainly watched carefully when the couple travelled abroad and over the years the couple generated plenty of heat over the opulence of their overseas travel. No trip caused as big a flap as the $520,000 extravaganza to Paris in 1986 for the Francophone Summit when a few persistent reporters, led by The Globe and Mail’s Richard Cléroux, demanded a breakdown of costs from officials at External Affairs under federal access to information law. (The French government picked up most of the Mulroney’s expenses as well as those of five other members of the 52-person delegation.) Not only did the officials strike a special two-month task force to deal with Cléroux’s requests, they were required to clear everything they released with Fred Doucet first, a situation that went against federal access-to-information regulations, creating an atmosphere of paranoia and distrust that continued throughout the Mulroney years. “The relationship between the government of Brian Mulroney and the access law was anything but comfortable,” wrote John Grace, the federal access-to-information commissioner in his 1993 annual report. Grace added: “The then-Prime Minister was personally wounded when records of what appeared to some as extravagant financial costs were released. The chill was made more frigid by a letter that came to be known as the ‘check with Fred’ letter. It was

sent by the Clerk of the Privy Council [Paul Tellier] to two deputy ministers instructing them to check with the Prime Minister’s Office before releasing information relating to the Prime Minister. In no time at all, it seemed, the government lost patience with access legislation.”

Of particular concern to the PMO were the bills for the Mulroney’s six-day stay at the Plaza Athénée hotel in Paris. The Mulroney’s suite cost $29,697 for the six nights, an amount that included more than $1,300 a day in “incidentals.” Hotel records showed that Mila’s brother, John Pivnicki, and Mulroney’s brother-in-law, Dick Elliott, who is married to his sister, Olive, and is close to the former prime minister, were part of the official Canadian delegation and were enjoying $350-anight rooms in the Plaza Athénée on the Canadian taxpayer. After the access requests were received, Canadian officials worked with officials from the French foreign ministry to recreate the hotel bills on official

‘Cash came in like it was falling from the sky’

hotel letterhead. The doctored bills removed any reference to Pivnicki and Elliott. But External’s access-to-information co-ordinator, Simon Wade, warned Doucet that the originals would eventually have to be released to Cléroux, as indeed they were—with the names of Pivnicki and Elliott intact. Because of these access requests, External asked the Mulroneys and several other members of their entourage to repay parts of their bills; in the Mulroneys’ case, the PC Canada Fund reimbursed the government for personal extras charged to their suite—as it continued to do on other occasions, especially after access requests came in from reporters.

The prime minister and his wife were fortunate in having many friends who were happy to make their lives more comfortable. Two of the most generous were George and Helen Vari. George Vari’s compa-

ny, Sefri Constructional International, had built more than 40 hotels around the world as well as his landmark building, the Montparnasse Tower in Paris. Vari, a Hungarianborn engineer who came to Canada after the 1956 revolution in his homeland, has properties in Paris, St-Paul-de-Vence in the French Riviera, Switzerland and London as well as in Toronto and Cobourg, Ont., and it was the villa in St-Paul-de-Vence that the Mulroneys used for their holidays when they left Ottawa in June, 1993.

One of the ways the Varis were able to help began back in the 1986 Francophone Summit when Mila met British Columbia artist Joe Plaskett, now 76, at a reception at the Canadian Embassy in Paris and startled him with a comment that she would like him to paint her portrait. When Helen Vari contacted him later to make the arrangements, said Plaskett, she asked him what his fee would be. “When my price was named (I suggested $8,000),” explained Plaskett, “I was told that this was too high, that the Mulroneys did not have much money and I was finally persuaded to do it for $4,500.” The artist was further nonplussed when he discovered he was supposed to paint it in the Varis’ Paris apartment near the Eiffel Tower, instead of in his own studio across the city in the historic Marais quarter. Vari, said Plaskett, “wanted a more central place than mine.”

Mila was always late for the sitting, but she was a good model, said Plaskett. Still, when he was finished, he was not satisfied with the resuits. “As the portrait progressed, I had the strange sensation that after a certain point I could penetrate no deeper,” he wrote in a letter describing the experience. “The face had become a mask. Perhaps I found her too pretty. Her beauty may well have had hidden depths, which I was not able to penetrate. I think I produced an acceptable likeness, but cannot claim to have made a great portrait.”

Mulroney could not resist a final jaunt through European capitals

Mila had no such reservations. She was thrilled with the picture and brought it back to Canada rolled in a tube to be framed and presented to the prime minister as a surprise birthday present In an interview and in a letter, Plaskett said Vari made all the arrangements and paid him, but he did not know if

the Mulroneys had paid her back. Today, George and Helen Vari maintain that they did not pay for the painting “directly or indirectly.”

When asked about clothes that staff said the Varis gave Mila, Helen Vari’s emotional response was that they were “gifts from loving friends.” One staff member said he would carry Louis Vuitton suitcases upstairs when Helen Vari came to visit at 24 Sussex Drive. She would then watch while Mila unpacked dozens of outfits brought to her by her friend. “But the odd thing was that Madame Vari never took the suitcases away when she left,” the staff member said. Again, the Varis said that while they used Vuitton luggage, they did not leave it behind as gifts for Mila. It might just have been that it was inconvenient to take it away on one or two occasions, they said. Vuitton luggage is among the most expensive in the world; a simple cosmetic case costs $2,600.

One privilege allowed the wife of the prime minister was the ability to spend up to $1,000 choosing presents for visiting foreign dignitaries. On one occasion, for example, she bought a gift for about $250 and used up the rest of the allotment to buy some yellow-patterned Ginori china, apparently for use at the prime minister’s Harrington Lake residence. The merchant was told to send the bill for both purchases to External Affairs. When a journalist questioned this practice with access-to-information requests, the response was succinct: the extra $750 for Ginori china had been repaid; in another case, the request was denied with a standard explanation that the matter could jeopardize Canada’s relations with a foreign nation.

Over the years, jewelry, clothes, rare wines, cosmetics and many other gifts poured into 24 Sussex Drive from friends and well-wishers and visiting dignitaries. One head of state gave Mila a piece of jewelry fashioned around his initial, which was the letter H, and set with dia-

monds and rubies. Mila had her Montreal jeweller, Lou Goldberg, melt the brooch down and remade into less ostentatious pieces. Other gifts included a grand piano, paintings, china and silver. As the wife of a public office holder, Mila was not required to declare the gifts nor to leave them behind in Ottawa when she moved back to Montreal. (Gifts to Mulroney valued at more than $200 were declared —the list runs to 19 pages—and once their value has been decided some may remain in the care of the National Archives as a donation from the former prime minister.)

By Christmas, 1992, Mulroney started to plan his departure from public life. It was at this time that the quiet canvass went on to assist them in their return to Montreal, and by February they were able to start looking at Westmount houses. By mid-March, they had bought a 1950s-era four-bedroom stone house at 47 Förden Cres, from Ivan and Lisa Phillips, old friends who had divorced. The price was $1.67 million, and after obtaining a collateral mortgage of $1,258,000 the Mulroneys started making plans to gut and renovate the property. Westmount residents were impressed by the $600,000 building permit the Mulroneys took out with the local municipal offices for the renovations; Montreal Gazette homes editor Annabelle King gave them even more to gossip about when she reported that the furnishing and decorating would add a further $300,000 to $400,000 to the costs. When the Dumpsters and workmen’s trucks began cluttering up the block, the Mulroneys bused their neighbors to a get-acquainted cocktail party at 24 Sussex Drive—a goodwill gesture that most of the community appreciated.

Before Mulroney left office, he could not resist one last trip on the taxpayer—a move reminiscent of Pierre Trudeau’s extensive travel at the end of his reign in 1984. In May, 1993, Mulroney and his wife and an entourage of 17 people departed on a $600,000 farewell tour of European capitals including Moscow, London, Bonn and Paris. It was the Moscow stop that proved fatal to the success of the tour; this was when a well-meaning Russian photographer released a picture of gun-toting Brian Mulroney and President Boris Yeltsin with a pair of dead boars at their feet, a picture that both amused and disgusted many Canadians. The trip back to Ottawa was not the triumphant return of a statesman but the mortified slink of a despised politician. He was through. And he couldn’t leave soon enough for most Canadians. Mulroney’s last few weeks were spent tidying up unfinished business, which included finding jobs for his friends. On June 10, 1993, he appointed David Angus to the Senate along with other associates; on June 24, his last day in office, Helen Vari was appointed to the board of the Canada Council. George Vari had already won his appointment a few months earlier, when Mulroney named him to the board of the Security Intelligence Review Committee. The position comes with the designation of privy councillor and the title “Honorable.”

Brian and Mila Mulroney left Ottawa for good on Monday, June 28, 1993. After the holiday with the Varis in France and a visit with French President François Mitterrand, they went back to Montreal to begin new lives as private citizens. When their good friend Guy Charbonneau was asked in an interview why he had not reined in the Mulroneys when it was clear that their jet-setting lifestyle was offensive to Canadians, the senator could only laugh at the futility of the suggestion. “You don’t tell Brian Mulroney that!” he exclaimed. “He goes his own way.” □