The controversy over Prime Minister Paul Martin and his former CSL (Canada Steamship Lines) Group is in fact several controversies.
The first is that he is in a bind over Stelco, the steel company that has filed for protection from its creditors. When Mr. Martin was finance minister, he removed himself from discussions concerning CSL and the shipping company's clients, such as Stelco. He did so even though he had placed CSL and his other holdings in a semi-blind trust. (It was later revealed that he received periodic strategic briefings from Howard Wilson, Mr. Chrétien's ethics counsellor.) Now that he has transferred ownership of CSL to his sons, there is no need for a blind trust. However, since the transaction was not arm's-length, he may still be perceived to have an interest in a family-owned company, and therefore a potential conflict when Stelco comes asking for federal assistance. He has to continue to remove himself from such discussions, and even then to make it clear to his subordinates that they must act independently on the files, and not try to imagine what he might have done.
To complicate matters, the man Stelco has hired to press its case in Ottawa is John Duffy, who has been a member of Mr. Martin's transition team. Howard Wilson made this dual role possible by his extraordinary ruling that the strategists who helped shaped the inner governing circles on Mr. Martin's behalf may return to being lobbyists a day after leaving that team -- unlike, say, ministers' political aides, who must observe a cooling-off period of a year before becoming lobbyists. Parliament urgently needs the independent ethics commissioner Mr. Martin has promised to ask it to appoint.
A second controversy is whether, as a result of Mr. Martin's position as finance minister, CSL was given contracts improperly. The government says CSL was given $82-million in contracts in the first 10 months of 1993, when the Tories were in power, $46-million while Mr. Martin was finance minister, and $33-million in the 15 months after he left -- a total of $161-million. On the face of it, the fact of a Liberal government did not enhance CSL's position. To remove any doubt, Mr. Martin has rightly asked Auditor-General Sheila Fraser to review a decade's worth of CSL's government contracts.
A third controversy arose during a televised encounter last Wednesday. Mr. Martin was asked how CSL could justify paying ridiculously low taxes when small business owners pay tax rates of 40 per cent. Although CSL faces the same rates as other Canadians on taxes it pays in this country, its international affiliates, registered in the tax haven of Barbados, pay almost no tax on their profits. They can then send the money to Canada as tax-free dividends, thanks to tax arrangements confirmed while Mr. Martin was finance minister. (Mr. Martin has argued that at least he shut down Liberia as a tax haven, in 1995. That's when CSL reflagged seven ships from Liberia to Barbados.)
There is nothing illegal in any of this. Many international companies use similar strategies to avoid paying higher Canadian taxes. However, given that the Prime Minister may wish to encourage Canadians to pay their fair share of taxes to sustain social programs and services in this country, CSL's ingenuity is not something he will be keen to address on the hustings.
A fourth controversy may prove particularly awkward for Mr. Martin. On Oct. 10, 2002, Alliance MP James Rajotte asked the Chrétien government for the total amount the federal government had paid in contracts to CSL and Mr. Martin's other companies over the past decade. On Feb. 14, 2003, the government replied that the amount was $137,000.
It was a ridiculously low sum, whose inaccuracy has since been attributed to clerical bungling. Anyone familiar with CSL would have known the figure was wrong. Certainly researchers with the Alliance realized something was wrong, and spent months gathering evidence that enabled Alliance MPs to question the sum in the Commons last October. Only then did the government scramble to find a more plausible number, which it announced last month and which, as mentioned above, was $161-million.
Mr. Martin said last Tuesday in Question Period that he had been too busy with the Liberal leadership race last year to notice the release of the $137,000 figure. "[T]ere is no doubt that I was otherwise involved on a particular issue," he said. On Wednesday, he said, "I think I probably learned about it, oh, probably a month or two after that number came out."
Yet did he raise the matter during the leadership race? No. He left any rush to correct the record until after he became Prime Minister. Interim Conservative Leader Grant Hill had a devastating characterization of that delay: Mr. Martin "didn't come clean with the truth." Mr. Martin will have to give a more convincing answer to that charge than he has so far.
It would be naive to think that a man with the interests, contacts and friendships Mr. Martin has had would not run into troubles of this sort. That's why Parliament desperately needs an independent ethics commissioner to separate the frivolous objections from the substantive ones. It needs a commissioner who will do more than Mr. Wilson has done to ride herd on the lobbyists with whom Mr. Martin has had so close a link, and to guide Mr. Martin past the CSL-related shoals.
But on such questions as why he didn't immediately help set the record straight on the mistaken CSL figure, and why magnates should benefit from exemptions for tax havens such as Barbados, he will be all alone on the campaign trail.