February 24, 1983

GOVERNMENT ORDERS

BUSINESS OF SUPPLY


Hon. Edward Broadbent (Oshawa), seconded by Mr. Nielsen, moved: That the entire question of compliance with the Government's Conflict of Interest Guidelines of April 28, 1980, as they concern all matters relating to the Scotia Coal Synfuels Project and the conduct of the Prime Minister, the Deputy Prime Minister, the present Minister of Finance, the Minister of State (Mines), Mr. Alastair Gillespie, or any other official of the Government of Canada or of its Crown Corporations with respect to the Scotia Coal Synfuels Project, be referred to the Assistant Deputy Registrar General, who is responsible for the administration of the Conflict of Interest Guidelines, with the instruction that he examine all of the materials relating to the Scotia Coal Synfuels Project with the power to call for such papers, materials or information as may be required to adequately complete his enquiries and, with the instruction that a report be made to the House within two (2) weeks of this date, failing which this House has lost confidence in this Government because of its lack of moral standards. He said: Mr. Speaker, the fact that the motion that is before the House today is not only in my name but has been seconded by the Leader of the Official Opposition (Mr. Nielsen) indicates the seriousness with which Members, at least on this side of the House, view this very important matter. In parliamentary Government, there are two broad principles imposing limits on ministerial behaviour. On the one hand, there is the Criminal Code with its sanctions enforced by the courts of our land. On the other hand, with equal if not greater importance in a democracy, there are the moral rules, ancient and modern, by which a nation's leaders set standards of good conduct in public affairs. These rules are not enforced by law. They are enforced only by conscientious men or women wielding power who have a sense of propriety. They depend for their continuity on the good character of those in office. They depend ultimately on integrity, respect for the ordinary people of the land and a deep acceptance of the need for a parliamentary moral tradition. They are beyond cynicism. Today we are dealing not with law but with morality. Today Ministers of the Crown and the Prime Minister (Mr. Trudeau) himself are being judged according to the moral requirements of our parliamentary democracy. The issue is no less serious than that. In my comments I want to be as precise in my reasoning and as careful in the selection of words as I can be, because the accusations that are going to be made should only be made in a parliamentary democracy after the most careful thought, after the most careful marshalling of evidence. I am going to attempt to do that, and I hope that those who are replying on the Government side will follow this approach themselves. When they hear the arguments, I hope they will meet them head on. I am, of course, convinced, as will be evident in what I have to say, that they will be wrong; but I do hope they will deal with the substance of the matter because that is exactly what I intend to do. The guidelines established by the Prime Minister on April 28, 1980 established a code of conduct for Ministers and former Ministers. Under the guidelines for former Ministers, it was made clear that for a two-year period after they left office they were forbidden to seek beneficial relations with Departments over which they formerly exercised authority. 1 want to quote part of that specific guideline at this point. It reads: Within a period of two years of leaving office, Ministers should not: c) lobby for or on behalf of any person or commercial corporation before any department or agency for which they were responsible on an ongoing basis during the last two years of their participation in the ministry. Very clear indeed is that guideline. Under the guidelines for present Ministers, there are no time limits whatsoever. I will quote briefly from that one. It reads as follows: In any official dealings with former office holders, Ministers must ensure that they do not provide grounds or the appearance of grounds for allegations of improper influence, privileged access or preferential treatment. While these guidelines are not legally binding, they establish a code of conduct which is essential to the functioning of our parliamentary system. While Ministers who violate the guidelines are not, therefore, violating law, they are in violation of the moral code according to which our parliamentary Government must function. It is my contention that in the matters pertaining to the Scotia Coal Synfuels Projects, there was clear and palpable violation of these guidelines. I want to take them case by case now and I want to discuss the situation involving the former Minister of Energy, Mines and Resources, Mr. Alastair Gillespie, specifically his involvement in the Scotia Coal Synfuels Project. I want to say to Your Honour and Members of the House that I want to take everyone through this step by step, and I hope Government Members will note the arguments and deal with them if they can. On March 31, 1977 Mr. Gillespie, as Minister of Energy, signed an agreement with the Hon. J. William Gillis, the then Minister of Mines for Nova Scotia, entitled "Canada-Nova



February 24, 1983 Supply Scotia Agreement on Oil Substitution and Conservation". Under this agreement the federal Government provided $9.2 million for the reduction of Nova Scotia's dependence on imported oil. A number of projects have already been supported under this fund. Funds for it are administered by a federal-provincial management committee. The next significant date is June 4, 1979 when Mr. Gillespie resigned as a Minister in the Government of Canada. In October, 1980 Mr. Gillespie initiates co-operation in a joint coal liquefaction venture among the following: Cape Breton Development Corp; Gulf Canada Products Co.; Nova, an Alberta Corporation; Nova Scotia Resources Ltd; and Petro-Canada. On December 6, 1980 Mr. Gillespie writes to Marshall Cohen, then Deputy Minister of Energy, informing Mr. Cohen of the formation of the consortium and requesting guidance as to the form of application that should be used to obtain financial assistance in such a project. On December 6, 1980, in his "Dear Mr. Cohen" letter-or "Dear Mickey" letter more correctly-Mr. Gillespie asks for help from Mr. Cohen, his former Deputy Minister. He informs Cohen that he has become chairman of the executive board of the consortium. Mr. Gillespie, writing to his former Deputy Minister, concludes with these words: -we need your assistance and support, and we need your guidance on how we should formalize our relationship with you. On December 16, 1980 a letter is sent from Mr. Cohen to Mr. Gillespie advising that a proposal should be submitted to the Management Committee for the Oil Substitution Agreement. On January 7, 1981, still within the two-year period, a letter from Mr. Gillespie is sent to Mr. P. J. Read, federal cochairman of the Oil Substitution Agreement, requesting a grant of $1 million for purposes of a feasibility study on coal liquefaction. About a week later, on January 13, 1981, Dr. Read replies to Mr. Gillespie that the Oil Substitution Management Committee was prepared to enter into negotiations leading to a contribution from the fund of up to $1 million. In March of the same year, at the official level, consideration was given to whether the Gillespie project fitted into the Oil Substitution Agreement. There was some concern expressed that the two did not quite mesh. It was decided that it was not clear whether coal liquefaction was covered by the Oil Substitution Agreement. Therefore, an agreement subsidiary to the Oil Substitution Agreement was found to be advisable as between Canada, Nova Scotia and the consortium. Changes were made to accommodate Mr. Gillespie. On April 4, 1981, Mr. Gillespie appears at Port Hawkes-bury with the Deputy Prime Minister of Canada (Mr. Mac-Eachen) and Premier Buchanan to announce the formation of the consortium. Gillespie, at this point in his life, is clearly a very happy man. Now I would like to turn to the involvement of a man who at this point in his life has his career at stake. I do not do this lightly. The present Minister of Finance (Mr. Lalonde) in my view has been a man all along who has gone into politics to do what he thought ought to be done, not to get personal gain, either in terms of finances or in terms of other personal benefits. I say that and I mean it. The present Minister of Finance is a man with whom I have disagreed profoundly in debate, but he is a man whose capacity to work and to act in what he regarded in the past as the best interests of the country I have never doubted at all. It is for this kind of reason that the argument I will now make is not one that pleases me to make. On January 15, 1981 a copy of a memorandum respecting the Scotia Coal Synfuels Project is addressed to the Minister of Finance, signed by the Senior Assistant Deputy Minister on behalf of the Deputy Minister. In the memo addressed to him, the Minister of Finance is explicitly informed of Mr. Gillespie's involvement in the project. This memo reads as follows: There were a number of meetings between Mr. Gillespie and his associates and departmental officials during the past few weeks to help frame the technical and time dimensions of this project. Mr. Gillespie's participation is made abundantly clear back in January, 1981. It is clear that the present Minister of Finance saw the memo, since it sought his guidance on one issue and was followed up by a handwritten note from a woman, named Maureen to Energy, Mines and Resources, to a person named Mike, which read as follows: Could you please call John Walsh directly . .. or me ... with Minister's comments. The "Minister" is the present Minister of Finance. As of this date there can be no doubt whatsoever that the Minister of Finance knew about the project and about Mr. Gillespie's involvement in it. On April 3, 1981 the present Minister of Finance, the then Minister of Energy, signs a Treasury Board submission. It is sent, not that day but on April 13, and then is very quickly withdrawn. Attached to this Treasury Board submission is an annex to a schedule, and it is a document which specifically notes that Alastair Gillespie and Associates is a party to the consortium. [DOT] (U20) On September 3, 1981 the Minister of Finance, then the Minister of Energy, signed a Treasury Board submission seeking approval of the tripartite agreement involving the Government of Canada, the Government of Nova Scotia and the consortium headed by Mr. Gillespie. This was approved on September 14, 1981 by the Treasury Board. It is interesting to raise at this time the question as to whom was present at that Treasury Board meeting, and which Ministers were involved in the decision at that time. On September 25, 1981 signatures to the agreement were attached. The agreement was deemed to be effective retroactively as of June 30, 1981. February 24, 1983



On February 17, 1983, following questions in the House, the Minister of Finance wrote to the Prime Minister saying that to the best of his knowledge he was not informed at any time of discussions concerning the Scotia Coal Synfuels Project. On February 23, 1983, in a further letter to the Prime Minister, the Minister of Finance retracts what he said in the earlier letter and admits that on April 3, 1981 he had indeed signed a Treasury Board submission in connection with this project. 1 want now to say something more specific about the deal itself. On December 6, 1980, in his letter to Mickey Cohen, Deputy Minister, Mr. Gillespie made it clear that the consortium under discussion would not proceed unless there was, and I quote: -a grant of $1,000,000 from the oil substitution fund- Some six weeks after, on January 23, 1981, in a letter to Mr. Gillespie, Dr. P. J. Read, federal co-chairman of the Oil Substitution Agreement, urged the advantage to be obtained in having the co-signature of the Minister of Energy himself to the draft. This was because the fund was not set up for the purpose of Mr. Gillespie's project. The Minister's signature, it was argued, would obtain the following benefit: It would indicate a ministerial directive to the Oil Substitution Agreement Management Committee to interpret the scope of that Agreement as including coal liquefaction studies whereas, up to now, the Management Committee has interpreted the Agreement as being directed exclusively to electricity generation. The meaning of this is clear. It means the original proposal was changed by the Minister to meet Mr. Gillespie's requirements. On January 3, 1981, Dr. P. J. Read wrote to Mr. Gillespie stating that the Management Committee had agreed in principle to the project to a maximum of $1 million. A memorandum to the Minister of Energy, looking back on this at a later point, made it clear that this was federal money being passed through the Canada-Nova Scotia Committee. On April 13, 1981, there is a very interesting piece of correspondence. Dr. J. H. Walsh, Senior Adviser, Coal, Department of Energy, Mines and Resources, wrote a memorandum to Dr. K. Whitham, Assistant Deputy Minister, Conservation and Non-Petroleum. The memo directly raised the issue of Mr. Gillespie's possible violation of the guidelines. I would like to quote at length as follows: The role of Mr. Gillespie: Concerns were expressed regarding the retaining and daily consultant fee ($600) to be paid to Mr. Gillespie, and about the terms under which the Consortium partners have the right to buy out his interest. There is also a question of whether Mr. Gillespie's participation is in variance with conflict of interest guidelines. I replied regarding the financial arrangements between Mr. Gillespie and the Consortium members- And note this, Mr. Speaker: -that this matter was wholly transparent and that Ministers could approve or disapprove in their wisdom. The memo continues: Supply With regard to conflict of interest matters, I noted that Mr. Gillespie's term as Minister ended June 4, 1979, when Mr. Hnatyshyn was appointed. It is very clear what is being said.


LIB

Roderick Blaker (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Blaker):

I am sorry to interrupt the Hon. Member for Oshawa but I have to advise him that his time has expired. Perhaps he would like to seek unanimous consent of the House to continue.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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?

Some Hon. Members:

Agreed.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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?

Some Hon. Members:

No.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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LIB

Roderick Blaker (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Blaker):

There is not unanimous consent.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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?

Some Hon. Members:

Shame.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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NDP

Ian Gardiner Waddell

New Democratic Party

Mr. Waddell:

Dictators.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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NDP

John Edward Broadbent

New Democratic Party

Mr. Broadbent:

That is as low as you can get, Lalonde.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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LIB

Philip Derek Lewis

Liberal

Mr. Lewis:

Mr. Speaker, I rise on a point of order. I would like the record to show that the Progressive Conservative Party was in favour of extending the time for the Leader of the New Democratic Party (Mr. Broadbent).

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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NDP

Raymond John Skelly

New Democratic Party

Mr. Skelly:

Mr. Speaker, I rise on a point of order to suggest to the House that the particular issue before us is so important today in terms of reflecting on the credibility of all of us-the credibility of the Government, the senior Ministers and the Prime Minister.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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LIB

Roderick Blaker (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Blaker):

Order.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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NDP

Raymond John Skelly

New Democratic Party

Mr. Skelly:

I would seek unanimous consent to change the rules to allow-

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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LIB

Roderick Blaker (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Blaker):

Order. I ask the Hon. Member to come to his point of order.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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NDP

Raymond John Skelly

New Democratic Party

Mr. Skelly:

I request the Chair to seek unanimous consent of the House to agree to a question period after the first round of Members' speeches, in the interest of providing adequate information on this very serious matter. It is in the interest of the Government to clarify the issue.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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LIB

Roderick Blaker (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Blaker):

Order. What the Hon. Member is proposing is a ten-minute question and answer period following the speech of each and every Hon. Member in the House. I must tell him that that is the Chair's interpretation of the Standing Orders, so it is not necessary to seek unanimous consent.

I see the President of the Privy Council (Mr. Pinard) rising, perhaps on a point of order. When the points of order are complete, I will indicate that the time has come for the ten-minute question and answer period.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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PC

Ramon John Hnatyshyn

Progressive Conservative

Mr. Hnatyshyn:

I have a question.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY S.O. 62-NON-CONFIDENCE MOTION-CONFLICT OF INTEREST GUIDELINES
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February 24, 1983