Proceedings of the Special Senate Committee on the
Pearson Airport Agreements
Evidence
Ottawa, Wednesday, August 2, 1995
[English]
The Special Senate Committee on the Pearson Airport Agreements met this day at 9:00 a.m, to continue to examine and report upon all matters concerning the policies and negotiations leading up to, and including, the agreements respecting the redevelopment and operation of Terminals 1 and 2 at Lester B. Pearson International Airport and the circumstances relating to the cancellation thereof.
Senator Finlay MacDonald (Chairman) in the Chair.
The Chairman: Let's come to order, please. Today we continue the questioning and the testimony of Mr. Hession. And, as we adjourned last evening, Senator Bryden was questioning the witness and will continue to do so.
Mr. Hession, you requested to make an opening statement before we begin to clarify certain issues.
(Raymond Hession, Previously Sworn:)
Mr. Raymond V. Hession, Hession, Neville & Associates: Yes, Mr. Chairman.
The Chairman: Please proceed.
Mr. Hession: Thank you very much. It relates to the documents that were handed to me yesterday, you'll recall, Mr. Chairman, by Senator Bryden, and my comment when he said that these are documents that I'd given the committee. I said at the time that I didn't think so. I was mistaken, Mr. Chairman, and wanted to clarify that with you.
The fact of the matter is, back now several weeks ago - I think probably more in the order of five to six weeks ago - I was asked to provide counsel with as much information as I could to assist the committee as it began to formulate its plans for this inquiry. And so, I did so. I basically provided counsel with all of the documents available to me and did so very much in the spirit, as I said in my opening remarks yesterday, of openness and transparency that has been for now six years of Paxport's life - my personal as well as the company's policy.
These documents that the senator gave me were not in the package of documents that I received through the clerk of this committee two days ago and so it was for that reason that I'd just forgotten that they existed, frankly, because I was so focused on the documents that were given to me by the clerk.
That said, I note that in these documents there are a considerable number that have expurgated paragraphs on some of the same subject matter that's contained in the documents that I gave to the committee unexpurgated. And, I'm frankly, as a witness and as a participant in this inquiry, I'm fundamentally concerned about the apparent two standards of documentation that are being presented here: One being completely open and transparent; the other having selective expurgation. I worry, too, when I hear - and I do hear - that there are a battery of lawyers and forensic accountants pouring over government documents cleansing them, I understand, of what I don't know except I see the expurgated paragraphs and I ask myself quite frankly, Mr. Chairman: Who are these people? And why are they doing this? And what is their terms of reference? And have they been sworn to an oath to tell the truth and the whole truth? I don't know. All I know is I get these expurgated documents and I'm puzzled, frankly, about: What are the rules of expurgation?
For example, this committee's looking for the truth as, indeed, are we. Are the rules of expurgation, for example, to remove from these documents things that might conflict with the Nixon report? I don't know. But it's fundamentally a concern to me, Mr. Chairman, and I dare say it must be to the committee as well.
Mr. John Nelligan Q.C., Counsel to the Committee: Perhaps, Mr. Hession, I should explain to you what we know about these expurgations. There's been an ongoing dialogue with the Department of Justice, who advise us that they are concerned that in releasing documents for public scrutiny, they should not violate any of the provisions of the Freedom of Information Act or all of the other rules relating to cabinet or ministerial confidences.
I realize that there are a number of documents which we have received from different sources which would suggest that in some cases the examiners have been over zealous in what they've expurgated. I have been assured by the Department of Justice that their motivation is simply the protection of confidential information and is not motivated by any partisan bias. However, I realize your apprehension and there is some concern on our part that as much information in those documents as possible be made available.
If at any time you refer to such an expurgated document and you feel that the additional paragraphs are important or may be of assistance to you, please note it because we will then take up further discussions with the department to see that we can't get as much information to you as you reasonably require.
Mr. Hession: Yes. Thank you, counsel. There's a great deal of expurgation, as I'm sure you've observed. But let's just look at one specific example because it relates to a document that Senator Bryden presented to me, one of my documents, that dated the 16th of April, 1991, reporting on the meeting of April 15th with a number of government officials. The purpose of the meeting was, you may recall, to discuss the ways and means of the forthcoming proposal call.
I looked at the same meeting report internal to the government and there's a big, fat, expurgated paragraph in there. And you can see that I faithfully reported, within our group, all the details of what I thought happened in that meeting. I was in the meeting. Well, why would it be expurgated? What is it that happened in that meeting that I didn't hear, didn't understand, and all of a sudden it's not valid for public consumption and yet my memo is?
Mr. Nelligan: Could you give me the document number of the Department of Justice copy, please?
Senator Kirby: It's at the bottom.
Mr. Hession: Yes. It's 001114, I think. It's a little bit fuzzy. But just so you understand my concern, it says:
Following a discussion of the results of these meetings by AK, AKZ and IKP, it was agreed that:
Expurgated. Gone, as though it never happened, or something. I'm not quite sure. My report is faithful to what I thought went on in the meeting, detailed and tabled in this meeting by one of the senators. Along comes the government and tables a report on the same meeting: Expurgated. It strikes me as rather odd, Mr. Chairman.
Mr. Nelligan: We'll take up your query with the department.
Mr. Hession: Thank you.
The Chairman: Is that-
Mr. Hession: Well, that's the point of principal that I'm attempting to make, Mr. Chairman. If, indeed, we - all of us - seek to get at the truth, I still remain fundamentally concerned that there are outside people contracted by the government who, as far as I know, have not taken an oath to tell the truth and the whole truth and they're being asked to expurgate these documents that are being presented here. That strikes me as a peculiar process.
The Chairman: Are you ready for questioning, Mr. Hession?
Mr. Hession: I am, indeed.
The Chairman: Senator Bryden, do you wish to continue?
Senator Bryden: Yes, Mr. Chairman. You will note it's now 9:10, if you have your stop watch with you.
The Chairman: I have my stop watch.
Senator Bryden: Mr. Hession, picking up where you left off last night, Mr. Pascoe, who was hired by you to lobby the provincial government and the municipalities in the Toronto area, had been a member of the Minister of Transport staff involved in this file less than a year before you hired him, right?
Mr. Hession: He wasn't hired to lobby, if I understand your question, senator. He was hired to organize a set of meetings at which I attended and I presented Paxport's case directly. He was doing more administrative, organizational work, I would say.
Senator Bryden: But I noticed in your organization chart under "Government relations" that we talked about last night that he was in the same list with the others.
Mr. Hession: Yes. That is true. But you asked me, you'll recall yesterday, specifically what were his duties. And I answered your question, and those were his duties.
Senator Bryden: Mr. Hession, I appreciate you being so open because last night when I gave you the documents, I also gave you my copy of a newspaper clipping and you were kind enough to bring it back this morning and provide me with my copy back. And you have a copy of it before you. For the reporters, it's a copy of a newspaper clipping from the Globe and Mail stamped June 18, 1993. And it deals with - The headlines are: "Campbell arrives alone at the top" and "Campbell studies prospects".
I have highlighted - you can read the whole thing, if you wish, but I've highlighted a paragraph. Would you read that into the record, please?
Mr. Hession: The paragraph that's been highlighted, you say?
Senator Bryden: Yes, please.
Mr. Hession: I might prefer to read the entire document because I found, in reviewing yesterday's testimony and reading selected paragraphs into the record, that there was a risk of certain matters being taken out of context. That would take a long time to read that whole thing.
Senator Bryden: Mr. Hession, as I've told the chairman before, we are not in a hurry. If you wish to read the whole thing, you're welcome to do that. I only wanted to make a point other than-
Mr. Hession: No, I understand the point you want to make but I think for the benefit of everyone, context is important.
Prime Minister-designate Kim Campbell's arrival at 24 Sussex Dr. this week to discuss Brian Mulroney's handing over of power was highly symbolic.
She arrived alone.
Unaccompanied by briefcase toting aids or leadership campaign chief of staff Raymond Castelli, the new Conservative Leader made a striking entrance as her driver dropped her off at the door. But its real meaning was unclear.
Was it a declaration that she is very much her own person and handles high-level challenges head on?
Or, more likely, a demonstration that Ms. Campbell doesn't yet know who should help and guide her?
Unlike Mr. Mulroney, Ms. Campbell has reached the pinnacle of power without a decade of Tory party networking and an entourage of cronies and friends to immediately place around her as chief advisers, private counsellors and public spokespersons.
The crowd of cabinet ministers, party activists and Ottawa lobbyists who flocked to Ms. Campbell's leadership campaign came not because they knew her well, but because they saw the dynamic, young, West Coast MP as a likely winner. Nor did she know them.
Ms. Campbell's oft-quoted remark about the sometimes unspeakable loneliness of Ottawa reflects the remoteness of her friends in Vancouver.
She enjoys neither soaring public popularity nor a year to achieve it, as did her predecessor.
`She must build her office quickly,' says one of the few advisers close to her. `There's no honeymoon, no hundred days. We're five minutes from election time.'
By the time she arrives at Government House next Friday for the formal transition, Ms. Campbell has to be accompanied by a cabinet and senior advisers who can stand for substantial change from the Mulroney era but deliver reassuring government in the face of emerging hot spots. There is no opportunity to revise; the election will be the first and final judgment.
Since Monday's meeting at 24 Sussex, Ms. Campbell has spent most of the week in her 16th floor suite at the Hilton Hotel in downtown Ottawa poring over lists of potential advisers and ministers, and considering how to achieve a smaller cabinet.
Led by veteran Ottawa insider and lobbyist William Neville - who handled the job for both Joe Clark and Brian Mulroney in their ascensions to power in 1979 and 1984 - Ms. Campbell's transition team has shuttled back and the forth from the Westin Hotel with lists of names.
The lists are still short and constantly changing, according to several sources, as issues such as second-place finisher Jean Charest's real role must be settled first. There is a major question mark about who should be chief of staff.
Mr. Charest does not yet have a lock on both the deputy prime ministership and the Quebec lieutenant's job. The lieutenant's post may be entirely eliminated.
By Monday, Ms Campbell is expected to settle on the size of her reduced cabinet and two or three key advisers. The rest of the week will be spent putting specific ministers' names to posts which balance English-French tensions, regional bias and abilities.
If the preferred choice for chief of staff, Ottawa lobbyist Jodi White, will not come on board for family and personal reasons, then a two-person team is likely. Ms. White is the strategist who ran Mr. Charest's come-from-behind campaign, has been chief for Joe Clark when he was external affairs minister, and she has worked for the party head office.
Citing the almost chaotic climate of the final weeks of her campaign, some advisers argue that Ms. Campbell desperately needs a highly organized chief who will play gatekeeper and disciplinarian. Others, however, say her guide should be purely political.
If Ms. White is unavailable, a senior bureaucrat such as deputy cabinet secretary Alain Gourd may be appointed chief of staff to handle the bureaucracy while a more politically attuned principal secretary and two assistants are appointed to mesh the government and the party toward the election campaign. No single name has emerged.
Working with Mr. Neville are Communications Minister Perrin Beatty-
Now, I note, president of the CBC -
...Treasury Board President Gilles Loiselle, and Senator Lowell Murray. Mr. Castelli, Newfoundland MP Ross Reid, Vancouver political strategist Patrick Kinsella and Vancouver lawyer David Camp are not running for the chief of staff job.
The Chairman: Mr. Hession.
Mr. Hession: Yes, Mr. Chairman.
The Chairman: I just stopped you at the points that were highlighted so that you can accede to Senator Bryden's request but I fail to understand why you are asked to read a Globe and Mail story-
Senator LeBreton: By Ross Howard.
The Chairman: By Mr. Howard, a distinguished journalist. You didn't write it and I fail to see why you are asked to comment on a newspaper story of June 18, 1993.
Senator Bryden: Mr. Chairman, I didn't ask the witness to read the story. I asked him to refer to the paragraph that is highlighted.
The Chairman: Yes, but -
Senator Tkachuk: You asked him to read the paragraph into the record is what you asked him to do.
The Chairman: But, Senator Bryden, I just don't understand. Would you ask a witness to comment on every newspaper story?
Senator Bryden: No, just the relevant ones. And the only relevant part as, I think, Mr. Hession indicated, is the paragraph that was highlighted, which indicated that on June the 18th, 1993, while this matter before us was still being negotiated and before the contract was signed, that Mr. Neville, who had been employed by him, by Paxport, throughout as his chief lobbyist, has moved from - I assume he has moved from the employ of Paxport; he's no longer employed by Paxport at that point.
Mr. Hession: That's correct. He'd been off the payroll for some time at that stage.
Senator Bryden: At what- How long?
Mr. Hession: Well, frankly, I'd have to go back and check, but it was several months.
Senator Bryden: The only point I was making - and I'll ask the witness the question - that it was a two-way street. That is, not only did Paxport hire lobbyists who were former employees of cabinet ministers, but your chief lobbyist then ended up heading the transition team of the new Prime Minister, is that correct?
Mr. Hession: Well that's - Yes. I mean - I, by the way, don't specifically know that that was his role. But that's what this -
Senator Bryden: That's what the paper says.
Mr. Hession: That's what the paper says.
The Chairman: Well, I think we should be a little bit cautious about running the committee on newspaper stories.
All of the people involved here are testifying as witnesses before us and the information, which is very interesting and certainly known to - anybody who's got an interest in politics knows these facts.
Senator Bryden: I guess it was just from the point of getting the dates right, and so on. I could have just asked you the question. But at least we have the dates correct. And believe me, Mr. Chairman, with your admonition, I won't refer to newspaper clippings - at least with this witness - any more today.
Senator Tkachuk: Would that mean, Mr. Chairman, that if we - It seems to me that yesterday, in a memo that was written by Hession to Matthews about Neville, about Everson, about Lewis, about P and P, that he mentioned that maybe Mr. Everson should appear at the committee. When we refer to newspaper stories, should we have, perhaps, Mr. Howard appear at committee to see whether what he's saying here -
Senator Bryden: I have no objection.
Senator Tkachuk: Because it would be a great opportunity for us to talk to some of the reporters about not only the stories over the last number of years but, perhaps, the stories over the last number of weeks.
Senator Bryden: I have no objection, Mr. Chairman, and perhaps I could address myself to counsel.
Senator Tkachuk: Then we'd find out if this is third party, hearsay stuff.
Senator Bryden: There's no question, Mr. Chairman, that if we were following all of the rules of evidence in court in a very strict fashion that if I were going to introduce this as an exhibit in a court of law, I would have called the reporter, showed him the story, asked him if he wrote it, and I would have taken it to the chairman, have it identified and then, once it was proven, introduced in evidence. Now, it has been my understanding that in the interests of some sort of brevity that you don't expect that.
I'm also prepared - because I have some other documents, all of which are on file some where because they didn't come out of the air. They're all in the hands of the committee in its library, either from Mr. Hession or documents that were supplied by government. Now, if it is the wish of this committee, I'm absolutely prepared to take each individual document that Mr. Hession has signed, take it to him, bring it back, have him identify it, bring it back to you and file it, but it was my understanding that that was a misuse of our time.
It is my intention to proceed in the same manner as I did last night, and that is supply the witness with an identified set of documents comparable to the ones that I have so that he has the documents to refer to. Most of them he either has signed, or were written to him, or, indeed, are reports of meetings that he attended.
Mr. Nelligan: May I just say a word?
Senator Bryden: Yes.
Mr. Nelligan: I don't think there's any problem about referring to these documents. I had understood the committee was quite agreed that the documents filed by various parties would be available for examination without formal filing.
Senator Bryden: Okay.
Mr. Nelligan: I think the suggestion here, though - I'm not aware of that Globe and Mail story being part of that record. But I think I would alert the Senate to the danger of filing newspaper stories as part of the official record. From experience, it's a very dangerous practice.
On the other hand, I see nothing wrong to refresh a witness' memory ask him to read a story and ask him if it refreshes his memory and then, without referring to the story at all, asking the witness: Does he now recall, for instance that Mr. Neville, or did he know that Mr. Neville was engaged by Ms Campbell at a particular time. But I would urge the committee to avoid newspaper clippings as much as possible as part of the official record.
The Chairman: And I hasten to tell you that it's not a misuse of our time at all, Senator Bryden. You have documents which have been provided by Mr. Hession and you certainly have a right to question him on anything that he has written, or assigned, or has knowledge of, or anything of that nature at all - any document at all - and, particularly, the documents that Mr. Hession has been responsible for providing to the committee.
Senator Bryden: Thank you. And I could have and probably should have simply proceeded to ask him the question because he probably could remember, although I don't know about the exact date.
Mr. Nelligan: May I just add a word of caution - and this, maybe, has nothing to do with this witness. I am aware of the fact that a great number of the documents we've received through the officers of the Department of Justice are unsigned, unidentified drafts of memos. I don't know how significant they are, but I'm sure Senator Bryden will agree with me that they are very dangerous documents because - and I would again urge the committee to deal with such unsigned, unidentified documents delicately. And I simply put that as a word of caution now.
Senator Jessiman: Mr. Chairman, to facilitate it for everyone on both sides, would it not be to the advantage to all of us - although we have stacks of binders now with all of these documents; we probably have the documents that you've chosen to examine on today but for us - you'll give us a name, a date and a number, and I'll have to go back to my office and look through it. Would it not be better, if we're going to use documents in examining witnesses, that those that are going to do the examining make copies so each of us - We could have just the copies of the ones Mr. Bryden's going to have while he's examining the witness so we can follow it. It would seem to me - and if I'm going to use documents later, before I do - even though you may have copies somewhere else, but for the convenience of the committee so that we can get on with this , that we all have copies of those that you're dealing with in that particular time. I don't think that should be a very big problem getting those documents. We could have them while you're examining him.
Mr. Nelligan: We have a great problem with documents. There are four volumes which were delivered with respect to Mr. Hession from justice. They are very cumbersome to get through.
In regard to the volumes which are delivered for a specific witness, rather than have any one make extra copies of them - because we're up to our ears in paper now - even the senators may consider giving a note of the numbers to which they're going to refer so the other senators can then perhaps have their particular volume available. It's a matter of convenience you should work out amongst yourselves.
Senator Jessiman: That's another way to do it, of course. If you're going to examine him, I know which ones I'm going to have. If I have 10 documents, I make 10 copies, or I make five copies, or six copies, or whatever, of what I'm going to use and hand them out. Of course, it's going to duplicate, but the way counsel's suggesting now we're going to get numbers at night; we're going to have somebody at our office and it's going to be all our offices do the same thing whereas you know what you're going to examine him on. You have the documents, we don't. We know they're there, but-
Senator Bryden: Mr. Chairman, in fairness, I know that I get knocked around here a lot - and I don't mind - but, if you knew the number of hours that it took me, with very little but competent, helpful assistance, to go through these myriad of documents to develop my line of questioning. I've been called a lot of things but I really have never been called stupid and it's highly unfair for me then to turn over my examination documents the night before - or a list of them - the night before-
Senator Jessiman: Not even the night before.
Senator Bryden: - so that the parties who are going to - and I hate to use the word; no, I won't use the word - follow up on my questioning, have their homework all done for them.
So, I hope you know. I mean, it takes hours and hours and hours to do this and, as you know, we don't have any hours unless we take them out of sleep hours. So, at this stage I'm not prepared just to volunteer to do that. I'm not saying that it can't be done. I thought I was being as quick and as cooperative as I could to provide at least copies for the witness and he's familiar with the documents anyway and my own so that we could move through. And, of course, once that is done, then presumably - if you want - at that stage I can give you my copies and you can quickly make photo copies for this afternoon, or whatever.
Mr. Nelligan: I think the problem, senator, is not that they should have their homework done for them but when you and the witness are discussing a document it's merely helpful, I think, to the other senators to be able to follow the text. And so I think all I'm suggesting - as you or I would do in court -
Senator Bryden: Yes.
Mr. Nelligan: - when a witness is referring to a document, all counsel in the courtroom are following it at their desks. And that was all I was directing my suggestions to so that they can find the pieces of paper as you're actually dealing with it in this hearing.
Senator Jessiman: And I'm not suggesting you give it to us the night before or any other except just before you examine, you hand us a document. If you want to give us one at a time, that's all right with me. That's all it takes.
Senator Bryden: Well, as you know I'm trying to be as cooperative as I can in the interests of trying to protect my own line of questioning and that one I don't mind. I'm used to doing that. I'm also used to doing long examinations for discovery in advance of going into court, too. But to be able to provide the documents that I'm actually speaking to the witness about at the time, I would prefer not to provide in advance of my getting to the document this stack, which I am going to give to the witness. Otherwise, we will be here on this witness until Friday.
Mr. Nelligan: See, I've got five binders here beside me. If they're in the binders and you give a number, then we can pull out the number and we can all look, or whatever it is. I think the difficulty was there was no binder prepared for Mr. Hession's actual documents and I think that threw the other senators off because they didn't have them right in front of them.
Senator Bryden: Okay. And I don't know why. I'm not in charge of preparing binders.
Mr. Nelligan: No, no, no, no. Nobody prepared binders on that. You got that directly, yes.
Senator Bryden: Okay. Mr. Chairman, you'll note the clock, please?
Mr. Hession, just to cover one, just to clarify one point, in checking the lobbyists' registry it shows that Mr. Neville was still employed by Paxport until October 4, 1993. Now I don't expect you to confirm that but -
Mr. Hession: No, but if I may, senator, I think what you mean is he deregistered on that date.
Senator Bryden: Probably.
Mr. Hession: My answer had to do with when he came off - when his retainer, in effect, ended. And my recollection, which is fairly clear in my mind, was that it was quite early in that calendar year. Certainly before the leadership convention for Ms Campbell.
Senator Bryden: Sure. No, I understand that and I don't want to make a big thing over that.
Mr. Hession: Yes.
Senator Bryden: Mr. Hession, just to go back to what I refer to as your mission statement that you had said to the House of Commons that "the shareholders of Paxport" - and I'm doing this just to be quick - "believed I could help them be successful in acquiring the rights to develop and manage Terminal 1 and 2 at Pearson airport". And that's at least part of what you were undertaking to do.
Mr. Hession: I think rather than a statement of mission, it was certainly their expectation.
Senator Bryden: Okay. Now, Mr. Hession, you worked diligently and exclusively to accomplish that or fulfil that expectation until you were successful and Transport Canada awarded the RFP to Paxport on December - I believe the announcement was made on December 7, 1992.
Mr. Hession: Yes. Understanding senator - because I want to answer your precise question precisely - that I devoted my full time by about the fall of 1989. So there were some months at the beginning when I wasn't quite full time. But for sure I was dedicated thereafter, for sure.
Senator Bryden: Okay. And you continued that active involvement until March of 1993.
Mr. Hession: No. I continued my involvement - I'll drop the word "active" - my involvement until September 17th, 1993.
Senator Bryden: Okay.
Mr. Hession: Yeah.
Senator Bryden: But was it a tapering-type of involvement - you were more active -
Mr. Hession: Yes and no; yes and no. I, for example, having worked diligently for three and one-half years on this rather demanding task, and it being my thirtieth wedding anniversary, my wife and I went off on a six-week cruise which I'd never done before in my life and I can commend it to you if you have the time.
Senator Bryden: And the money.
Mr. Hession: But, yes, I think it's fair to say that in my role as an adviser I reacted when called upon, whereas until that time I was very much in the lead.
Senator Bryden: Yes. Okay let's just leave that. Paxport paid you for your effort?
Mr. Hession: Oh, indeed, oh indeed. I mean, I was the president, an employee of the company - and, again, I think we began our own payroll in the fall of 1989 and that continued until the day I left the company.
Senator Bryden: And they paid you about $200,000 a year?
Mr. Hession: No. I was paid that amount effective January 1st, 1993. Up until that time - this is exclusive of bonuses and other considerations - I was paid $150,000 a year.
Senator Bryden: Okay. That's fine. Now, on December the 3rd, 1992, four days before the government announced that Paxport's offer had been accepted, Paxport and you signed an agreement in which Paxport promised to pay you a special bonus of $120,000 on signing of the agreement with the government and a post employment package in which they promised to pay now $83,750 each year for the rest of your life, correct?
Mr. Hession: That's true. That is true.
Senator Bryden: And if you were to die before your wife, she was to receive half of that amount.
Mr. Hession: That is also true.
Senator Bryden: That would be $41,875.
Mr. Hession: I won't check your math; I'll take your word for it.
Senator Bryden: Then -
Mr. Hession: I, by the way, should add that relative to what I see published regularly in the Globe and Mail in terms of the salaries paid to senior executives managing businesses and projects as complex as this one, I was woefully underpaid.
Senator Bryden: This is just a comment. I don't disagree with that, that you, for the effort that you put in-
Mr. Hession: By the way, my wife agrees with that idea, too.
Senator Bryden: Then on about December 7, 1992, about the time of the success of the Paxport proposal or some time thereafter, you were fired as president of Paxport and replaced by Jack Matthews, is that correct?
Mr. Hession: In the parlance of the legal fraternity, I was constructively terminated.
Senator Bryden: Okay. I won't ask you to define that.
Mr. Hession: This whole matter, I might say, Mr. Chairman, is the subject of a law suit and is before the court, so I'm reluctant to carry the discussion much further without offending any one. Believe me, I don't want to do that. But it is before the courts.
Senator Bryden: Okay. But in any event, the reason it's before the courts is because shortly thereafter Paxport welched on their deal with you, right? They broke that agreement.
Mr. Hession: My claim is that the contract was breached, yes.
Senator Bryden: Do you know where the money to pay your $83,750 pension for the rest of your life was going to come from?
Mr. Hession: Technically, I don't know.
Senator Bryden: Well, do you have an opinion? In making the deal you must have had some idea.
Mr. Hession: The undertaking was from each of the shareholders of the company, that much I do know. But how they intended - but each of the shareholders, I want to emphasize.
Senator Bryden: I can understand why.
Mr. Hession: Yes.
Senator Bryden: But the contract that you had was with Paxport?
Mr. Hession: Yes. That's correct.
Senator Bryden: And would it be fair to say that if the contract which was awarded, because it was awarded - it was late. It clearly was. I mean, there's some statement that it was only going to be in effect if in fact it was awarded. Well, the fact is it was awarded.
Mr. Hession: Yes
Senator Bryden: You had done your job.
Mr. Hession: Yes.
Senator Bryden: The new government came along and cancelled it, but as far as your agreement was concerned, the contract had been awarded.
Mr. Hession: Yes.
Senator Bryden: Right?
Mr. Hession: Yes?
Senator Bryden: Is it fair to say that if that contract had not been cancelled and in fact Paxport had their 57-year deal on T-1 and T-2 that one of the sources that could have been used to pay your pension could have been the cash flow from Paxport's involvement in T-1 and T-2?
Mr. Hession: I don't know. I don't know.
Senator Bryden: Now, Mr. Neville, he was paid for his - I think you've indicated approximately four years of service on behalf of Paxport?
Mr. Hession: Oh, it was somewhat less, somewhat less. I think less than three. Again, I'd have to check the particulars, but I think it's less than three.
Senator Bryden: Okay. Now I was going to say in advance, but I was so rushed last night-
Mr. Hession: Yes.
Senator Bryden: I will try. There will be no trick questions and I clearly - even if I thought I could - will not try to entrap you. I mean that very sincerely.
Mr. Hession: Senator, that's the furthest thing from my mind.
Senator Bryden: Well, the reason I say that now is because in front of the House of Commons committee you indicated that Paxport, over the four years, had paid three lobbyists: Neville, Riopelle - is that his name?
Mr. Hession: Yes.
Senator Bryden: And John Legate $200,000.
Mr. Hession: That's about right. But your question was Mr. Neville in particular, as I understood it.
Senator Bryden: But you said "I believe".
Mr. Hession: I said the sum of, over that period - which was the four years that I was involved - was that amount of money. Within that four years, there were contracts with different lobbyists of differing durations. I believe - and if you wish, I'll check in detail - Mr. Neville, within the four-year period that I was involved, was involved for about three, I think slightly less than three.
Senator Bryden: Okay. And, so, let me understand clearly. And Mr. Neville's fees came out of the $200,000?
Mr. Hession: Yes.
Senator Bryden: So that if we say that, for just easy math, that over that period of time - because some of them were there earlier and Mr. Neville came in for three - that if they all received about equal amounts there would have been a payment - each of them would have got about $16,600 a year for their efforts on behalf of Paxport?
Mr. Hession: Yes, but that easy math is not at all reflective of reality, although I appreciate how you arrived at that number.
Senator Bryden: So some people got paid -
Mr. Hession: Oh, much less.
Senator Bryden: A lot less?
Mr. Hession: Yeah, but for a shorter period of time, I think is the point. Mr. Neville was there, as I say, for by far the longest period relative to the other lobbyists.
Senator Bryden: But - and I don't want to belabour this, but -
Mr. Hession: Sure.
Senator Bryden: So in your estimation, Mr. Neville would have received about how much?
Mr. Hession: Well I'd have to go back and check, to be candid.
Senator Bryden: Would he have received half of the $200,000; three-quarters?
Mr. Hession: I'd really have to check. I'd really have to check.
Senator Bryden: But anyway, Bill -
Mr. Hession: I can tell you this: If we're talking about relative terms, I mean, you've head me say it's $200,000 over - again, I characterize it as the four years of my involvement - four plus or minus a month or two - within which there were a number of variable periods where different lobbyists were engaged that that whole expense was on the order of $200,000. And I don't know how familiar you are with lobby fees for registered lobbyists in this town, but that's relatively a paltry sum. I think that's - without appearing too categorical - the truth. It's a paltry sum.
Senator Bryden: So you were able to get Bill Neville, who was at the same time on retainer to Air Canada, for $120,000 per year for - and I'm referring to the transcript from the transport committee - Air Canada paid him "$120,000 a year for general advice, monitoring and guidance". And you were able to get him for a paltry sum.
Mr. Hession: Well, the paltry sum I'm talking about is the $200,000 for the how ever many lobbyists there were over a four-year period. I mean, you know, I don't argue with Mr. Neville if he's prepared to do services for me at a fee we can agree to. I'm talking about the overall costs of lobbying for this project over its entire life.
Senator Bryden: Okay; and I don't disagree with it. But Mr. Neville was your lead lobbyist?
Mr. Hession: He was, and I'm very thankful for it. He's a very capable fellow.
Senator Bryden: Is it possible, Mr. Hession, that Mr. Neville, too, had an agreement for a bonus or a pension, or a contingency payment, depending on completion?
Mr. Hession: He did not.
Senator Bryden: You know that?
Mr. Hession: Senator, I just said, he did not.
Senator Bryden: Mr. Neville will be, perhaps, before us. Now, Mr. Pascoe, he was paid for his lobbyist efforts?
Mr. Hession: He was not -
Senator Bryden: Or whatever he was doing.
Mr. Hession: Yeah, he was doing administrative and public affairs work for me in the municipal-provincial context. He was not registered as a lobbyist in Ottawa, for that purpose at least.
Senator Bryden: So you don't know - as far as you know, he had no contingency arrangement, based on the success of the project?
Mr. Hession: He did not.
Senator Bryden: And just to complete, John Legate and Hugh Riopelle, who were on the job as lobbyists for you - or for Paxport, not for you. To the best of your knowledge, they had no contingency fee or pension or bonus payment arrangement?
Mr. Hession: I stand to be corrected; I will check the record again. But I think, in both cases, there was a very modest - like, less than $20,000. It is not a contingency fee. It was deferred fees that were simply, up until the point of the award, unpaid, and they were expected to be paid at that time. They were deferred fees. But they were a very modest amount, less than $20,000, I believe.
Senator Bryden: Now, Mr. Hession, to go to another point, last night, in your volunteered evidence which you brought in your statement, you quoted Stevie Cameron that, "Hession was having lunch with Shortliffe every day."
Mr. Hession: Yeah.
Senator Bryden: Now, Mr. Chairman and counsel, for the benefit of the reporters, he was quoting from page 374 of a book, and the title of that book is On the Take - Crime, Corruption and Greed in the Mulroney Years, and it was published by McFarlane, Walter & Ross, Toronto, and it is copyright 1994.
Now, Mr. Hession, there is more than one quote in this piece of evidence that you introduced last night, and I'd like to read to you another quote and ask you if you know anything about it. And I am reading from page 372.
In late 1991 and early 1992, a cabinet committee made up of Deputy Prime Minister Don Mazankowski as chairman as well as Transport Minister Jean Corbeil, Treasury Board President Gilles Loiselle, and two Toronto-area ministers, Michael Wilson and Otto Jelinek, met several times to decide whether to go ahead with a request for proposals from interested bidders. Hugh Segal, Mulroney's chief of staff, attended the meetings. During one wrangle, he piped up with a reality check that still rings in the heads of those who heard it: "Gentlemen, the prime minister wants this to happen."
Do you know Mr. Segal?
Mr. Hession: Yes, I know Hugh Segal, yeah.
Senator Jessiman: What page?
Senator Bryden: Page 372. You don't want me to read the whole page?
Senator Tkachuk: Just for clarification, does Ms Cameron say where she got that from?
Senator Bryden: No.
Senator Tkachuk: Well, did she make this up?
Mr. Hession: She probably got it from the same people that said I had lunch with Glen Shortliffe every day.
Senator Tkachuk: Is she quoting Mr. Segal, or is she quoting the planning and priorities committee, or is she quoting a member?
Senator Bryden: I assume, and once again, I am using up my time, that if what is included in this book is so erroneous - and indeed, I have heard others say libelous - it amazes me that Ms Cameron has not been sued. The only conclusion I can come to, that in a suit for libel -
Senator Tkachuk: Mr. Chairman, that book's there for the camera.
Senator Bryden: - that the truth -
Mr. Nelligan: Just a moment, senator.
Senator Bryden: - the truth is a complete defence.
Mr. Nelligan: I'm very concerned from a straight point of putting evidence on the record. If Ms Cameron makes a reference to this witness, or any other witness, I'm sure that the witness can then be asked about the statement she makes.
My understanding was that Mr. Hession was dealing directly with an allegation relating to his conduct, and I would assume other witnesses may want the same clarification. My concern about this other statement is that it appears to have nothing to do with this witness. And I would urge the senators not to attempt to read excerpts from books in, unless the witness him or herself can actually deal with the allegation. I think we are on very dangerous ground, and whether or not Ms Cameron is or is not sued, I don't think is a matter for this committee.
I think, senator, you realize the dangers here.
Senator Bryden: Sure, but, counsel and Mr. Chairman, this document - and it is a document, it's a big document - was introduced and referred to by the witness. It was not initially introduced or referred to by me.
And in any normal proceeding, in any normal proceeding, I would have the right to examine that document and question the witness on anything that is relative to the proceeding before the body, whoever is hearing it. And there is no question that what I read - give it whatever weight you want, if you were in the court, but what I have read is relevant to the proceeding that is before this committee.
Mr. Nelligan: But it is not relevant to this witness, and it has to be proved by a reputable witness. If Ms Cameron comes in, we can ask her. But I think, senator, you are on very dangerous ground if you attempt to put in - the whole book could go in at this point and receive the Senate's confirmation, but I don't think that's what this hearing is about.
I feel that any witness should be able to comment on rumours or gossip which are going around about them, but to try to put in meetings that he knows anything about, I don't think is a proper evidentiary point, even for a Senate committee. It is for the Senate to decide.
Senator Bryden: That's fine. Counsel, did I understand you, did you want me to introduce the whole book?
Mr. Nelligan: No. I say the book is not admissible.
Senator Bryden: Oh, okay.
Now, Mr. Hession, I'd like to explore with you, yours and Paxport's relationship with Air Canada throughout the relevant period leading up to the selection of Paxport. And that leads me to these documents and I wonder if the clerk -
Senator Tkachuk: Are you finished with the book, Senator Bryden?
Senator Bryden: Why?
Senator Tkachuk: Are you finished with the book?
Senator Bryden: Perhaps.
Senator Tkachuk: Is it perhaps blocking the view of the camera here? Maybe we should display all the evidence for the camera. Are you getting a cut from Stevie Cameron? Is she making a few bucks here?
Senator Bryden: It would beat the bucks I'm getting paid extra for this, I'll tell you.
Senator Tkachuk: I understand that. You can leave whatever you want, but, you know, we talked a little bit about how we're going to conduct ourselves here. And, you know, I always hear the old - I admit that I'm not non-partisan, but I think what I am trying - this is more important than politics, what happened here.
Senator Bryden: Mr. Chairman, if Senator Tkachuk -
Senator Tkachuk: And I am offended by that book. Now, that's fine with me.
Senator Bryden: If you find it offensive, I will -
Senator Tkachuk: I do find it offensive.
Senator Bryden: - put it away.
Senator Tkachuk: Thank you, senator.
Senator LeBreton: Mr. Chairman, may I just say something? You know, going back to when this whole issue was before the Senate, our side called for an independent inquiry because we feared -
Senator Bryden: Mr. Chairman, is this coming out of my opportunity to question? Are we going to get a recitation of all this stuff?
Senator LeBreton: No, no, I'm just -
Senator Bryden: We've heard it over and over.
Senator LeBreton: No, you haven't.
Senator Bryden: It's your inquiry. You called for the inquiry.
Senator LeBreton: We called for an independent, judicial inquiry -
Senator Bryden: Your majority is what brought us here and off the golf course -
Senator LeBreton: Excuse me. Now, just because you're a so-called country bumpkin lawyer -
Senator Bryden: - and off the family scenes for the summer.
Senator LeBreton: - I'm allowed to have my say. We called for an independent, judicial inquiry. I don't fear the truth. I fear the distortion of the truth. We called for an independent judicial inquiry. The government turned us down. And we then said we would have a Senate inquiry because a Senate inquiry is more preferable than no inquiry at all. And the actions that you're taking this morning proves that we were right in calling for an independent, judicial inquiry. That's my point, senators.
Senator Bryden: As someone once said, the facts, ma'am, I'm just interested in the facts.
Senator LeBreton: So are we, and we're interested in the truth.
Senator Bryden: Now, Mr. Hession, to come back and see if we can create some orderly progress here, I refer you to a document from you; it is dated April 24, 1990. It is from Ray Hession to Don Matthews - there is always a list. Counsel, should I read the whole list?
Mr. Nelligan: As long as the reporter can identify it, there is no problem.
Senator Bryden: Don Matthews, Jack Matthews, Peter Goring, Howard - how do you pronounce "Iu"?
Mr. Hession: "You".
Senator Bryden: Trevor Carnahoff and Gord Hamilton. You wrote this memo?
Mr. Hession: Yes.
Senator Bryden: And once again, you're absolutely entitled to read the whole thing. I'm interested in three paragraphs: the first paragraph, the first part of the second paragraph, and the penultimate paragraph on the second page.
Would you please read the first paragraph?
Mr. Hession: Yes, senator. If I may, before doing so, a number of times you've read out the names of the addressees of certain of my memoranda. One point that needs to be clarified for you and for your colleagues is that Mr. Goring, in particular, and there are other people that will be named in other memoranda, was, at the time, the executive vice-president of Bramalea. And it is generally not known - not understood that, for a significant portion of the early days of Paxport, it was a joint venture company, 50 per cent owned by Matthews, 50 per cent by Bramalea.
Those were its original roots. And I just wanted to make that clear so you can appreciate some of the dynamics that I will speak to later on.
You would have me read the first two -
Senator Bryden: Just to follow on your point, I have noticed that the players change, I think, as the players change. What I propose to do, when you address Donald Matthews, I will use two names, the first two names, and then "et cetera". I think that will be enough for the reporters to identify the documents. And I am prepared to give the tabbed copies to you.
Mr. Nelligan: To give the number, reporter, it is document 432.
Senator Bryden: Yes, would you please read the first paragraph?
Mr. Hession: If I may just conclude on the point, because, if we're going to be reading names, people have to understand the context. Until November of 1990 - I believe it was November, the company having effectively begun its operations in the fall, late summer, fall of 1989, Bramalea was a 50 per cent partner in this venture.
I am reading now, senator, at your request, "Doug Port called late yesterday -"
Senator Bryden: Can I just stop you there? This is the first introduction of his name. Who is Doug Port?
Mr. Hession: Doug Port at the time was - his job title, frankly, escapes me. He became a vice-president in due course, but at this time, he was responsible for the planning and development of Terminal 2 at Pearson on behalf of Air Canada.
Doug Port called late yesterday afternoon to report on the Air Canada executive committee meeting that took place for three and a half hours that morning.
Shall I carry on?
Senator Bryden: Yes.
Mr. Hession:
The meeting was called as a result of our presentation last Thursday. It was devoted to the subject of Pearson development solely.
Senator Bryden: And if you would read the first sentence, and then I want to ask you a question on that.
Mr. Hession: Yeah.
Air Canada management has concluded that it needs independent confirmation of the political assessment that I gave them last week (presentation copy attached).
Is it attached, by the way?
Senator Bryden: No. That's the question I wanted to ask you.
Mr. Hession: I see.
Senator Bryden: The presentation of your political assessment was not attached to the documents that I have.
Mr. Hession: No, no.
Senator Bryden: Do you have that presentation?
Mr. Hession: I regret to say, beyond the documents I supplied to you through the counsel, at the time I left Paxport in the fall of 1993, all the documentation I had was moved from my office here in Ottawa to Toronto. So I don't have access to that documentation, included in which would be this presentation, I assume.
Senator Bryden: As an aside, perhaps I could ask the clerk - the clerk is gone - could I ask the clerk to approach Air Canada to obtain a copy of that document?
Do you recall, Mr. Hession, what was in it?
Mr. Hession: I recall generally what was in it, yes.
Senator Bryden: Could you just give us a brief statement?
Mr. Hession: Well, frankly, most of it, most of the assessment, so to speak, I iterated for the committee in my opening remarks, when I listed a whole range of factors that were bearing on Pearson when we got this venture going in 1989. But some of the main points, not to repeat myself too much, was an absolute urgency felt by Air Canada to fix Terminal 2, so that when Terminal 3 opened, they'd have a half-decent chance at maintaining their market share at Pearson. It was a major threat to them at that time, understood, I might add, at this end, this end being generally in the transport community here in Ottawa.
But there seemed to be a whole series of intractable bureaucratic problems confronting Air Canada. They could not get on with getting their terminal fixed. The points that I made included those, plus the stark reality that the department had no money. It was $1.5 billion short. The vast majority of that amount of money ought to have been available to Pearson for runways, for terminal redevelopment, for fixing the apron, and so on, but it wasn't there.
Senator Bryden: So it was a bit of a political reality check for Air Canada.
Mr. Hession: Well, it was pointing out the fundamentals.
Senator Bryden: Could you go to the next page and what is the middle paragraph? Would you read that for us?
Mr. Hession: Yeah. That's the penultimate paragraph.
Senator Bryden: There you go.
Mr. Hession:
Doug asked again that we provide him with a copy of our business plan for Pearson as soon as possible. The plan must assure Air Canada that our management operating plan will work; that our plan for financing the capital and operations of the terminal complex is sound and defensible; and, that our construction program will succeed in bringing the desired improvements in, on time and on budget.
Senator Bryden: So that, at this time, and perhaps throughout, you kept Air Canada well informed of your proposal?
Mr. Hession: Oh, very well informed. We had a very active relationship during that period.
Senator Bryden: Yes, thank you.
Now, I would refer you - here they are - to document "K", which is the next one in your stack of documents.
Mr. Hession: Yes, yeah.
Senator Bryden: Once again, it is dated May 29. The number is 440. It is dated May 29, 1990. It is to Don Matthews, Jack Matthews and Peter Goring, and it is from you and it is entitled "Air Canada/Paxport Proposal".
Mr. Hession: Yes.
Senator Bryden: Would you read the first paragraph?
Mr. Hession: Yes. Just the first paragraph?
Senator Bryden: Yes.
Mr. Hession:
Yesterday, Air Canada management agreed to submit a proposal to Transport Canada with PAXPORT named as the developer. This proposal will go forward on Monday, June 4, 1990.
Senator Bryden: And did you do that?
Mr. Hession: I can't remember if it happened on June 4, 1990, but, yes. The answer is yes.
Senator Bryden: So Air Canada and Paxport submitted a combined proposal, is that right?
Mr. Hession: Yes, although my recollection is that, more precisely, the president of Air Canada, Pierre Jeanniot at the time, conveyed Paxport's business plan, its proposal in that sense, to the minister, endorsing it. I think that's a more precise description of what happened.
Senator Bryden: Okay, so I understand, was this either the plan that you had sent to Mr. Lewis, or a revision of it? Is it -
Mr. Hession: I had not sent a plan to Mr. Lewis.
Senator Bryden: Oh, at that point?
Mr. Hession: No. The only document that had gone forth to Transport up to that stage was the unsolicited proposal submitted in September of 1989.
Senator Bryden: Okay. Is that comparable?
Mr. Hession: No.
Senator Bryden: Now, document "L", which is the next one, and this, once again, is addressed - this one is addressed to Doug Port, and you have told us who he is.
Mr. Hession: Yes.
Senator Bryden: And it is from Ray Hession. There is no number on this one. The date is July 30, 1990, and it is referred to as the Pearson action plan. That's the subject.
Mr. Hession: Yes.
Senator Bryden: Now, would you read the first paragraph, please?
Mr. Hession: Yes.
I hope you have had a relaxed and enjoyable vacation. Just before your departure, I promised that I would provide you with certain briefing material intended to influence government ministers and officials to come our way. Some of the expected material is attached.
Senator Bryden: And there is list of the materials which you don't need to do. There isn't a number on it. The date of the memo is July 30, 1990.
Would you read the second paragraph, because I want to ask you some questions on that?
Mr. Hession: Yes. The balance which includes -
Senator Bryden: No, I'm sorry, the next one.
Mr. Hession: Oh.
We also discussed a possible meeting in Montreal between PAXPORT (Messrs. Matthews, Gorring, Hession, et cetera) and Air Canada (Messrs. Jeanniot, Desrochers, Tennant, Lindsay and Port) during the week of August 13, 1990. Its proposed purpose would be to achieve agreement to a game plan which targets relevant Ministers and officials, cites the issues to be resolved with each, and identifies the Air Canada or PAXPORT person who will carry the brief. The game plan would be executed in a coordinated and unified way between August 20 and September 7, 1990, assuming the Cabinet Committee meetings at which Doug Lewis will present his proposals occur during the week of September 10, 1990.
Senator Bryden: Who did you expect to be at the cabinet committee meeting?
Mr. Hession: I frankly don't know. If it was the cabinet, then it would be the whole cabinet and I frankly can't recall the names of all the members. It was quite a large cabinet.
Senator Bryden: No, but you referred to the cabinet committee, so it -
Mr. Hession: Well, the cabinet committee in this example, I don't frankly know. I can't remember.
Senator Bryden: And you don't know which committee it was?
Mr. Hession: No. I mean, I - no. I could put my mind to it and try and recall, but, as we sit here, I can't recall.
Senator Bryden: How did you know which ministers' deputies and which ministers' staff to lobby?
Mr. Hession: Oh, it's transparent. It is known to all and sundry who have any knowledge of the transport business and the decision-making processes here in town.
Senator Bryden: And who would that be? Which ministries, without naming the people?
Mr. Hession: Who would be party to such a decision?
Senator Bryden: Yeah. I'm trying to find out how did you know which minister -
Mr. Hession: That is a very hard question to answer, senator, and I'm not trying to be evasive, but there are portfolio responsibilities significant here, transport being the most. But then there are regional interests as well. I mean, we're talking here about the principal airport for southern Ontario and, indeed, the nexus of the national airport system.
So a lot of ministers - a lot? Some ministers who may not be immediately obvious by their portfolios may have an interest in this file.
Senator Bryden: So, once again, I'm not trying to be difficult -
Mr. Hession: No, I know you're not.
Senator Bryden: - but you mentioned the Minister of Transport.
Mr. Hession: Sure, he'd be - I mean, he'd, in fact, be the proponent.
Senator Bryden: Treasury Board?
Mr. Hession: Probably. Finance, probably. There was a huge amount of fiscal implication involved here, so Finance would likely be involved, yeah.
Senator Bryden: The PCO?
Mr. Hession: Well, PCO, strictly speaking, although it does have a president, doesn't represent itself through a minister, except the Prime Minister from time to time, and he was not involved in this, to the best of my recollection.
Senator Bryden: Now, did you make the game plan, and was it executed?
Mr. Hession: Make it?
Senator Bryden: Well, it says here, "We will achieve agreement to a game plan."
Mr. Hession: There was a game plan. There is no doubt there was a game plan. Did we execute it as prescribed?
Senator Bryden: Yes.
Mr. Hession: No.
Senator Bryden: Why?
Mr. Hession: All of the details of which I can't recall here, but I do remember that the degree to which we aspired to execute it wasn't fulfilled. Some people weren't available to do what I'd hoped they might do.
Senator Bryden: Was that game plan on paper?
Mr. Hession: I believe so. Most of my game plans were. But again, I -
Senator Bryden: It wasn't in the documents. That's why I'm doing this questioning. You said that -
Mr. Hession: I've already explained that there was a very large office-full of documents that got shipped down to Toronto when I left the company. By the way, if I had the document, I want to assure you I would give it to you without expurgating anything.
Senator Bryden: Good. What happened to Paxport's deal with Air Canada, to proceed with - that went to Transport?
Mr. Hession: Let me go back to the beginning here. Air Canada, bearing in mind this was now mid 1990, was best desperate to the point of apoplexy on the issue of the coming onstream of Terminal 3 and the threat to its market share at Pearson because of the modern facilities available to Canadian Airlines International, their principal competitor.
They very much wanted Terminal 2 fixed. They seemed to encounter - over a period of years, I might add - they seemed to encounter a degree of apathy, it seemed, in Transport Canada, to respond to their requirements, until a deal got done where Air Canada said, "Look, we'll put our money in, you put your money in, and at least we can fix the domestic end", which you've now seen to be quite a modern and attractive part of Terminal 2, unlike the trans-border or international. But that's how it happened.
Unknown to us, I might add - and this is a critical, critical consideration. Unknown to us was, as a result of that deal, there was a side deal cut between Transport and Air Canada, the so-called guiding principles that got spoken about yesterday, which ultimately became what I referred to and what, regrettably, Transport Canada officials referred to as the "Air Canada sandwich". Let me explain what that is.
The Air Canada sandwich is putting Paxport here - sorry, Transport Canada here saying, "You, Paxport, you go off and cut a deal with Air Canada. We're not going to tell you the rules of the game; they're in the guiding principles." Air Canada knows the rules of the game. And guess what the sandwich is, and guess who the ham in the sandwich is? It is Paxport. And that caused no end of delay, very bad bargaining practices for us -
Senator Bryden: But we're way down the line in the process at this stage.
Mr. Hession: Oh, but it is highly relevant and very connected. Highly relevant and very connected.
Senator Bryden: I virtually promised the chairman that I would try to go through as close to chronologically as possible.
Mr. Hession: Very good.
Senator Bryden: That is all that I - but to answer my question -
Mr. Hession: The minister - yes, I was just going to attempt to do that. If your question was, what happened to the proposal, it was tabled by Mr. Jeanniot; read, I presume, by the minister and his officials; and rejected.
Senator Bryden: Now, I refer you to the next document, "M", and that one is -
Mr. Hession: You said "M" or "N"?
Senator Bryden: It should be the next one in your -
Mr. Hession: Yes, very good.
Senator Bryden: "M" as in Mary.
Mr. Hession: Yes, thank you.
Senator Jessiman: And the date?
Senator Bryden: And it has a number, 594, and the date is March 6, 1991, to Don and Jack Matthews with copies to Bill Neville, Paul LaBarge and Trevor Carnahoff, from Ray Hession, and the subject is Air Canada. And I wonder - just check and see how much - I wonder if you could just read that into the record?
Mr. Hession: The entire - ?
Senator Bryden: Yes, it is very brief.
Mr. Hession:
I spoke this morning with Doug Port who informed me that, by April 1, 1991, Air Canada is obliged to submit its statement of requirements to Transport Canada for possible inclusion in the forthcoming proposal call.
Transport Canada cautioned Air Canada not to use this opportunity to act on behalf of any third party's interests [in particular] (PAXPORT). To keep its skirts clean, Air Canada will be sending me a letter in the next few days severing our special relationship. A copy of this letter will be given to Transport Canada.
Informally, Doug and I have agreed to maintain our dialogue but Doug emphasized his obvious need to look after Air Canada's interests first.
This situation is not unexpected. In any case, our relationship with Air Canada is well established.
Senator Bryden: So at that stage, you had a very good relationship with Air Canada? Or maybe at all stages, I don't know.
Mr. Hession: No, no. I remember those circumstances rather vividly. Up to the point of the proposal in June, we had a working relationship driven by the compelling need to fix that terminal. The proposal was made; it was rejected.
The government then, you will recall from other witnesses, began moving towards a September decision which led to an announcement in October that they were going to call proposals. In the run-up to that, Air Canada was told, quite correctly, quite properly, you can no longer have any special relationship with any developer that might bid on that proposal call. And so we, in effect, severed the relationship.
Now, to the extent we talked from time to time in the future, it was solely and entirely a potential developer talking to the lead tenant in a facility that that developer was looking to eventually redevelop. It was purely an arm's-length, "Let's talk to the lead tenant" relationship.
Senator Bryden: I refer you now to document "N", N as in Nancy, or Norman. Better use Norman. And it is dated March 21, and once again, the number is cut off by the fax machine. March 21, 1991 and it is to Don -
Mr. Nelligan: Five-ninety-nine is the document number.
Senator Bryden: And it is from you to Don Matthews, Jack Matthews, "Air Canada Requirements". Could you put that - well, you can put it all on, or you could put just the last paragraph, whichever.
Mr. Hession: Let me read the whole thing for myself first. Yes.
I met on Monday, May [sic] 18...with Doug Port of Air Canada.
Our relationship continues to be strong and productive.
Doug confirmed that, by the end of this month, Air Canada will be putting its requirements for Terminal 2 to Transport Canada.
This again is in the context of requirements that could be included to some extent in the forthcoming proposal call.
I urged him to keep open the option of eventually redeploying the Air Canada trans border sector to the T1 satellite in his discussion with Transport Canada. He appeared to agree.
Doug also pointed out again that, if Air Canada is not satisfied with the outcome of the forthcoming proposal call, it may choose not to cooperate with Transport Canada and the chosen developer using its existing lease at T2 as its lever.
Senator Bryden: What does that mean -
Mr. Hession: I don't know.
Senator Bryden: - using the existing lease at Terminal 2 as its lever?
Mr. Hession: I don't know. I don't know. I can only surmise what it means, but I don't know what it means.
Senator Bryden: The lease at Terminal 2, as far as you knew, at this stage, was what, with Air Canada?
Mr. Hession: It was a lease that we believed, at the time, would expire in 1997, as I recall. But it was a standard lease. "Standard", by the way, is a bit of an exaggeration in the case of leases at Pearson, particularly the Transport Canada lease. It was very complex and had no end of amendments to it. Very difficult to read. And as I recall, also, the amendments were stacked one on top of the other; that, among other things, led to a significant non-payment of rents by Air Canada along the way.
Senator Bryden: But there would be nothing in what is, even in Transport's view, or size of document, a rent to 1997, that would be a lever?
Mr. Hession: Sure, could be.
Senator Bryden: What?
Mr. Hession: Well, I don't know. Again, I'm surmising here because I don't have the details of the lease. I've already explained, it is very copious and complex. But if a tenant has terms and conditions in his lease that says, "I have the last say in any refurbishment to my space", that's a lever.
Senator Bryden: Did you inquire what Doug meant by the lever?
Mr. Hession: No.
Senator Bryden: You didn't?
Mr. Hession: I did not.
Senator Bryden: At no point - you didn't know what they were referring to as its lever, and you made no inquiry -
Mr. Hession: I just explained to you the surmise that I applied to that point. But I did not know of the details of that lease, did not see the lease, until much later, when we went into the data room, when the proposal call was called, and there were all the leases.
Senator Bryden: And this reference to "its lever" did not twig your curiosity enough to go back and say, "What do you mean by that?"
Mr. Hession: I just explained, senator, that a tenant -
Senator Bryden: You thought you knew.
Mr. Hession: Well, I surmised. What I meant, I didn't know in detail. And, frankly, at that point, I was more focused on the upcoming proposal call.
Senator Bryden: Sure. Okay. Now, I go to document "O" which, once again, is to Don and Jack Matthews. The number is 649. It is from you, dated July 12, 1991, and it is Air Canada. And I am particularly interested in the third full paragraph, not the list of bullets where you talk about runways, de-icing and terminals.
Mr. Hession: Interested, meaning -?
Senator Bryden: In you reading the third paragraph. If you want to read more, you may.
Mr. Hession: May I just familiarize myself, refresh myself as it were?
Senator Bryden: Absolutely.
Mr. Hession: Yeah. I think I'll read the whole memo in this example, just so the context is clear.
I met this morning with Jean-Jacques Bourgeault, Vice-President, Airport Services and Julien DeSchutter, Director, Airports Development.
Bourgeault has responsibility for all aspects of airports - marketing, operations, development. DeSchutter has taken over from Doug Port.
It became clear early in the meeting that we are held in high regard by Air Canada. They both made it clear that, if there is to be a private developer for T1/T2, they continue to want us. They also said that they do not now nor intend in the future to have discussions or dealings with any other developer. Apart from making the new acquaintance, -
That being Mr. Bourgeault.
- reviewing past history and sharing intelligence on future prospects, we talked about:
Runways - [Here] Air Canada is deeply concerned with their future costs in light of Transport Canada's ambitions.
We talked about:
De-icing - Air Canada is looking for ways of getting a system-wide solution, starting with Pearson, that a third party might own and operate. They are interested in working with us in this respect. I explained that we had looked at the possible approach but need more data from them which they will provide.
Finally, we talked about:
Terminals - They want to proceed with T2 improvements. They expect to recoup some of their investments in T2 in the event of a private developer assuming control. They have no particular model in mind for recoupment. They like PAXPORT's overall development concept from our original proposal but would like to proceed "at their own pace" which reflects their cost control program.
They have agreed to work with us, if asked, as we prepare our response to Transport Canada's proposal call.
Senator Bryden: I go back to the third paragraph - and I take the sentence that you've read into the record.
They also said that they do not now nor intend in the future to have discussions or dealings with any other developer.
And then the final paragraph that you read, said, "They have agreed to work with us," that's Paxport, to prepare your proposal.
Mr. Hession: No to prepare it, no. I didn't say that.
Senator Bryden: In your preparation. As we prepare it.
Mr. Hession: Yeah, that's correct.
Senator Bryden: At least as far as Air Canada is concerned, where is the level playing field for the other competitors, if they have - because they say there, not now nor in the future, going to talk to them except to be polite, but they will work with you in developing your proposal.
Mr. Hession: They were - to answer your question on level playing fields, they were providing to Transport Canada their requirements. That statement of requirements would be available to all proponents. And indeed, that is what happened. So the playing field was completely level.
Up to the point of the proposal call, they were continuing to work with us, as we were diligently - and I mean very diligently - getting into every modicum of detail about what it was they would like to see in their Terminal 2 if somebody, sometime, somewhere, gave a damn about the future of that terminal.
Up until then, it would appear that they were constantly frustrated. We were not frustrating them. They liked us. We were trying to solve their problem.
Senator Bryden: Can I ask you, the proposal call was March - was it in -
Mr. Hession: March of 1992.
Senator Bryden: March of 1992. So up until that time was when they were working with you.
Mr. Hession: No, no. I think it was right around this time that the relationship began to effectively wane in terms of the frequency of meetings and the like.
One other thing I should point out, just so that senators - and you, particularly, Senator Bryden - understand some of the practical issues here, and I don't want to get into a long list of issues - Air Canada, like any major carrier, has both a short-term view, in terms of satisfying immediate service requirements, and a long-term development view.
They had engaged at that time a company called NORR, spelled N-O-R-R, Airport Planning Associates, a very well-respected airport planning and architecture firm. In fact, they are a wholly-owned subsidiary of NORR, the architectural and engineering firm. That had been a longstanding relationship with Air Canada. More to the point, NORR for more than 20 years now has been the designer-planner-architect for most of the terminal facilities that exist, save Terminal 3, at Pearson. They are, in fact, the people who, in their earlier manifestation, who built Terminal 3 - "built" meaning they designed it and oversaw its construction.
They were Air Canada's architects. So you can understand the intimacy of the relationship at the level of what problems are there, how to solve those problems.
The same architect was serving Air Canada's requirements in that regard, as was the architect satisfying Paxport's proposal requirements.
Senator Bryden: So if I understood your answer in the beginning, it was that, up until the - once the proposal call went out, Air Canada provided their requirements to everybody. But this -
Mr. Hession: No, no. Excuse me, senator. They provided it to Transport Canada who inculcated those requirements into the proposal call.
Senator Bryden: In the RFP, right. But up until -
Mr. Hession: Absolute level playing field.
Senator Bryden: Absolutely. From the time the RFP was called and the 90 days started to tick. But up until -
Mr. Hession: Sorry, senator, I didn't understand your last qualification. I think it's an important qualification. Would you explain to me what you meant by that?
Senator Bryden: Yes. You said that they provided their requirements to Transport. Transport incorporated it into the RFP. And from that time on, it was an absolutely level playing field. And I guess, a little editorial comment, I said, from that time on, that is the period when the 90 days or the 95 days, clock, started to tick.
Mr. Hession: But the only relevance of the concept of a level playing field arises when and if there is a proposal call. And at that point, it was completely, unassailably level. So what happened prior to that, it strikes me, is irrelevant.
Senator Bryden: Okay, I don't think it is irrelevant, so bear with me. Up until that time, Air Canada had said they will deal with you and assist you in preparing your proposal call, and they also said they do not now or intend in the future to have discussion or dealing with any or other developer.
Mr. Hession: Well, will let me -
Senator Bryden: Would that have given you a jump-start, is really what I'm getting at.
Mr. Hession: Well, let's not hypothesize. Let's get down to practical cases because, while that may have been said - it seemed to have been a fateful report of what was said - what actually happened is something quite different. I understand - and you're going to have to ask Air Canada this question, quite obviously.
I understand that, as the dynamics of the proposal call began to unfold, Air Canada did indeed begin talking to other developers and looked at quite different concepts, not so much in terms of the physical development. Bear in mind, that's where we were principally focused. We wanted to provide for Air Canada, the passengers in Terminal 2, the Canadians who use Terminal 2, the best solution possible. So it was a physical design, planning, et cetera, solution.
I understand that Air Canada was talking to a other developers in a different context around financial relationships and the like. So, while that may have been the sentiment at the moment, that's not what happened.
But again, I would encourage you, as I know I don't have to, to ask Air Canada.
Senator Bryden: I certainly will. I can only go from the information that I had in -
Mr. Hession: Well, I'm trying to help you by embellishing on that information.
Senator Bryden: Absolutely. And you are being very helpful, too. The next document is "P".
Mr. Hession: As in?
Senator Bryden: Patricia, that's my daughter's name.
Mr. Hession: Thank you. We are on a roll here, senator.
Senator Bryden: It's got a Transport number on it, 001342, and it is from Victor Barbeau to Paxport Management, and it is to your attention.
Mr. Hession: Yes.
Senator Bryden: And it is dated, stamped at least, December 7, 1992. And that's the letter in which you were informed that, in fact, Paxport had been successfully chosen in reply to the RFP.
Mr. Hession: Yeah.
Senator Bryden: In it, also, you were asked to prove that your proposal is financeable.
Mr. Hession: Yes.
Senator Bryden: How did you set about trying to meet - and you were to do that by February 15?
Mr. Hession: Yeah.
Senator Bryden: How did you set about trying to meet that February 15 deadline?
Mr. Hession: Let me go back to an earlier statement you made. Actually, it was a citation of events.
The day following this announcement of the award to Paxport - or if, indeed, it wasn't the day following, the very day - there was a changing of the guard in Paxport, as I had earlier described.
Up to that date, I was president and responsible for the exercise to the point of award. After that date, Jack Matthews assumed the responsibility.
The issue of financeability, in particular, was a shareholder issue. And I, in my new role as an advisor on matters of operations, personnel, industrial benefits, and so on, was not a central player in responding to that issue, although, from time to time, when asked, I gave advice. So I would suggest, on that point, to get a full answer to your question, you really should be talking to someone like Jack Matthews.
Senator Bryden: I don't know if it is in your stack of documents, but in one of the documents that was provided to me, there was a note.
Paxport had a negotiating team and you were included as a member of the negotiating team.
Mr. Hession: That's true.
Senator Bryden: And how long did you continue as part of the negotiating team?
And the negotiating team, remember, we are talking about after the award.
Mr. Hession: Yeah. Effectively, to and including the 7th of May, 1993, which was the date Louise and I departed on our cruise.
Up until that point, just so you understand, senator, in terms of the intensity of my involvement, I was leading Paxport's - at that time, Mergeco's response to the personnel transfer issue and to the industrial benefits issue, those two in particular, and they were consuming the bulk of my time.
Senator Bryden: Just a point, and you may have already answered this but I need to cover it because I have it in my notes. Discipline.
Up until December 1992, as I went through your documents, there is a pretty clear coverage of what transpired in the documents. But from December 1992, until March 1993, which - and you continued in some capacity in 1993, there are none.
Mr. Hession: None?
Senator Bryden: There aren't any documents covering that period -
Mr. Hession: Senator, there are documents that would fill half this room between that period. And they are the product, if I may, of the very negotiations - they weren't negotiations so much as informal discussions in anticipation of negotiations in which I was involved on personnel transfer, very ticklish issues, and industrial benefits. And we produced a lot of documentation. And I think that's probably available. I assume it is.
Senator Bryden: But not available through you.
Mr. Hession: No, certainly not. These are documents that are in Transport Canada's hands - expurgated to some degree, I frankly don't know.
Senator Bryden: Mr. Hession, throughout your engagement by Paxport to lobby for this project -
Mr. Hession: Excuse me, senator, I am not a lobbyist when it comes to Paxport. I ran the company. I was president of the company. I would please ask you to desist from referring to me as a lobbyist in that context.
Senator Bryden: I did not refer to you as a lobbyist.
Mr. Hession: You just did.
Senator Bryden: No, I did not. I said, "Throughout your engagement by Paxport to lobby for this project", and those are terms from the transcript of the hearings before the transport committee, that that is what you were engaged to do and here is how I'm going to - I'm going to lobby this department, this minister, the Prime Minister. You're going to lobby everybody. So I'm using your terms. I'm not in any way implying that you were a lobbyist at this time. You were lobbying. That's what you said.
Mr. Hession: Let me, with respect, senator, just let the point stand. I was not a lobbyist, you and I agree on that. I was president of the company. I was running the company. At one time, we had up to 60 people that I was managing on the way to the proposal. I was an executive on salary for that company.
Senator Bryden: Okay. Anyway, the point is, in whatever capacity you were in, did you keep, during that period of time, a diary or diaries and appointment books? And if you did, would you be prepared to supply copies of those diaries and appointment books to this committee and - just let me finish. You could vet those in strict confidence with the committee counsel so that any personal references or irrelevant references would be deleted.
Mr. Hession: Yes, and they are right there. Right there, 1989 to 1993. I'd be happy to do that, Mr. Chairman.
Senator Bryden: So they will be filed with the clerk or with the counsel? Thank you.
Okay, we will go to - we are getting through this pretty good - document "Q" which is number 891, December 24, 1992.
Mr. Hession: This is document - may I ask you again?
Senator Bryden: Document "Q" as in quail, Dan or the bird, doesn't matter to me. December 24, 1992 to the Honourable Jean Corbeil. Can you tell me - there is a reference in there, what was discussed at - on the financeability?
Mr. Hession: Would you be more specific by way of reference, senator, to the particular words?
Senator Bryden: I will just read it for you.
Jack Matthews and I are grateful for the opportunity to have met you on December 21, 1992. We again want to thank you for your decision...
And so on. Let me be more fair in my question. Was there anything discussed, to your recollection, with Mr. Corbeil about the financeability of your proposal at that meeting?
Mr. Hession: No. I think the force of the discussion at that time had to do with our concern that there be a definitive plan that all parties to the negotiations or discussions at that time could agree to, included in which would be periodic progress reporting, which is a normal procedure when someone is trying to manage to a milestone, for example, and that there be a reporting discipline which would in effect be known to us and known to the government, including the minister, and we would all of us work diligently within that plan.
That, as I recall, was the central point of discussion.
Mr. Nelligan: That was document 891.
Senator Tkachuk: Chairman, this letter is unique from the others in that it isn't being read into the record.
Senator Bryden: I don't mind it being read in. Read it all in.
Senator Tkachuk: I'm just want to know - the letter describes what the meeting was about, I believe.
Mr. Hession: I believe it does, with the embellishment that I've given it. Shall I -
Senator Bryden: Read it in.
Mr. Hession: Mr. Chairman, do you instruct me to read it into the - very good.
Dear Mr. Minister:
Jack Matthews and I are grateful for the opportunity to have met you on December 21, 1992. We again want to thank you for your decision to select us as the best overall acceptable proponent to develop and manage Terminals 1 and 2 at Pearson International Airport.
Both from your announcement on December 7, 1992 and your comments to us earlier this week, we are profoundly impressed by the importance of the job creation and other economic benefits that your government seeks to derive from this project beginning in the spring of 1993.
We want to assure you of our full and unqualified commitment to this end. We firmly believe that the outcome that we both seek in this regard will be most assured when Transport Canada and PAXPORT mutually agree to an appropriate plan and schedule including milestones suited to periodic progress reporting to you and your colleagues. We are working to achieve such a mutual agreement as evidenced by the enclosed exchange of correspondence.
And the rest is a gratuitous Happy New Year.
Senator Bryden: Thank you. The only point I wanted to raise is whether financeability was discussed, and you've already answered that.
The next document is not in sync, and I apologize for that because I just came onto it this morning. I'm confused about your role and the changing roles. Document "R" is number 872, and it is entitled, "Announcement", and there is a date at the bottom, saying, "All of the above will become effective September 1, 1992."
Would you please read that one?
Mr. Hession: The announcement, yeah.
Senator Bryden: And then tell us - because I don't understand how that fits with what happened in December, is my problem.
Mr. Hession: What happened in December meaning -?
Senator Bryden: If we read the document, then we can discuss it.
Mr. Hession: Very good. This is an announcement by the Matthews Group, and it reads as follows:
Three years ago, Matthews Group Limited established Paxport with a view to organizing all of the skills required in connection with airport design, development and management. This has been accomplished. Paxport is now viewed as a world-class organization capable of competing anywhere.
Matthews Group Limited wants Paxport to expand and grow. Jack Matthews as Chief Executive Officer of Paxport will direct his energies to this end.
To allow this, Donald J. Matthews will become Chairman & President of Matthews Group Limited.
All of the above will become effective September 1, 1992.
Senator Bryden: I just want - for clarification, as I read this memo, and what was stated here, and also in the meetings before the transport committee, you were never chief executive officer of Paxport. Is that correct?
Mr. Hession: That is correct.
Senator Bryden: So in December, what occurred was the existing chief executive officer of Paxport was also named president? Is that right? You were removed as president?
Mr. Hession: No, I was not.
Senator Bryden: You weren't?
Mr. Hession: No.
Senator Bryden: When were you removed as president?
Mr. Hession: No, I was not removed as president, no. I remained as president, the meaning of which is another matter. I remained as president until I departed the company.
Senator Bryden: So you didn't simply become an advisor. You remained -
Mr. Hession: Oh, no, I became an advisor. Those were my terms of reference, absolutely.
Senator Bryden: But your business card said "president"?
Mr. Hession: I believe it did, yeah.
Senator Bryden: And your letterhead?
Mr. Hession: Yes.
Senator Bryden: I've heard of shell companies; I've never heard of a shell president.
Mr. Hession: Well, let's discuss that a little further.
You're putting an interpretation on this which is erroneous. Let me explain. I told you, following the announcement, December 7, my role changed, which it did. My role became that essentially of an advisor. That's a generic term. My title didn't change. My role changed.
There was a chief executive officer. He was given responsibility to negotiate with the Government of Canada toward a contract.
In the meantime, as president of the company - and by the way, there is one other point that needs to be made here which I will come to in a moment - I took responsibility to ensure that the transfer plan critical to the inculcation of the Transport Canada staff into the company, and the industrial benefits plan, and I drove those two negotiations to the best of my ability as president.
In the meantime, on the 1st of January, 1993, I became chairman and chief executive officer of Paxport International, as per the contract document from which you were reading earlier.
My job, that stage, having brought the Paxport Pearson project to that point of maturation, was to then focus my attention - once we got through the particular duties that I was performing, focus our attention on the international market.
Yesterday, you will recall, I pointed out that, through all of the period from 1990 until 1993, I spent a great deal of my time developing international project opportunities.
Let me explain a little further. We had actually done a deal in Punta del Este, Uruguay. We were on our way to a deal, and it was virtually done, were it not for the interruptions that occurred subsequently, in Prague. I was busy in Austin, Texas. I was busy in Detroit. I was busy in a lot of places in the world including having led, at the request of External Affairs, now Foreign Affairs, a significant Canadian trade mission through the whole of southeast Asia.
To this day, I happy to report, one project that we identified in Indonesia at the time may finally turn out to be a winner for Canada.
After that, we went to Malaysia. After that, we went to Thailand and so on. We did an awful lot of work. And so, naturally, I became chairman and chief executive of the international company.
So that's in fact the full story of what transpired after December 7.
Senator Jessiman: Mr. Chairman, just so we can clarify, aren't you the president of Paxport Management Inc.? That's what your letterhead says.
Mr. Hession: Well, yes.
Senator Jessiman: And it's not Matthews Group Limited? It isn't the same company, is it?
Mr. Hession: No. No, it is not.
Senator Jessiman: So the chairman, Don Matthews, chairman and president, is not taking your place from Paxport?
Mr. Hession: No, he is not. He was chairman and president of Matthews Group. He was, in effect, stepping into the shoes of Jack Matthews who was moving out of the Matthews Group into Paxport.
Senator Bryden: I'm very pleased for you to have clarified that, because I was under the erroneous impression that when your role changed, that your official position or title had also changed.
Mr. Hession: No, and if I somehow failed to make that clear, I hope it is now clear.
Senator Bryden: This Paxport International, was it a separate corporation?
Mr. Hession: Yes.
Senator Bryden: And you - at what point did you become president and chief executive officer of that?
Mr. Hession: I was chairman.
Senator Bryden: I'm sorry, chairman and?
Mr. Hession: Chief executive. And it was January 1st, 1993.
Senator Bryden: Was it before or after that, that you did all the travels around the world?
Mr. Hession: Both before and after. I mean I've been busy - during this very protracted hiatus, which I think most senators have identified, between the 1989 unsolicited proposal and the eventual proposal call and response of 1993, we were busy building, we thought, an absolute winner for Canada in terms of airport development internationally.
And it was for that reason that I ran up against, and I did repeatedly, the foreign competitors who were in the same markets internationally that we were into. They were also looking, as you'll recall from earlier testimony, to become involved in Pearson. So I was very concerned that Canada had its own indigenous strength to compete with those foreign competitors. It is a once-in-a-lifetime opportunity to use our flagship airport to create a Canadian capability. And I was determined, as much as one could ever say that as a private sector proponent, to see that that's what happened.
And I thought, and I still think to this day, that's what's good for the long-term economic benefit of Canada.
Senator Bryden: In the interests of brevity, I'm going to skip the next document, even although, because - anyway, it is a little difficult. I think you would have knowledge of it, but it is a little difficult to really establish that you do.
But I would go to document "T", which is a Transport document. It's got a number on it that I can't quite read. Three-six-six are the last numbers.
Mr. Nelligan: Its date?
Senator Bryden: Notes from a meeting of December 15, 1992, 2:30 p.m. to 7 p.m.
Mr. Hession: Yeah.
Senator Bryden: You have it?
Mr. Hession: I'm looking right at it, yes.
Senator Bryden: Anyway, the only thing that I wanted to relate to is the date, December 15, of the meeting, and the statement in there - the meeting was with you or your group because, on page 2, and it's paragraph - well, it says, Messrs. Hession and Matthews noted that - and there is a whole - one, two, three.
The only one I'm interested in is the fourth one; they, meaning you and Mr. Matthews, remain confident that the redevelopment project was financeable as of December 15.
Mr. Hession: Yes. Senator, if I may, and I'm not sure of the full significance of your question, but here is another example, this being the meeting on the 15th of December at which I and Jack Matthews were present.
The first time we met with the officials following the announcement on the 7th. Eight days later, I might add, something that was urgent in the minister's mind, let's get on with it. Eight days later, we finally meet. This was the meeting in which, I reported yesterday, when I asked, "What is it you need or want in terms of evidence of financeability?", and I was told, flatly, "We're not going to tell you", which struck me as a rather peculiar response. Struck Mr. Matthews that way, too, I think.
It took almost eight weeks later before the financial advisor was finally brought on board, brought up to speed with the complex file, that he began to report on what he thought the rules of the game should be.
I also want to point out, for the purposes of my earlier comment to the Chair and to the committee, here we are again with an expurgated paragraph in what looks to me - what should be, I think, a completely transparent and open communication. What is it that Mr. Barbeau noted in anticipation of our meeting on the 15th of December? Why is it expurgated?
There are no documents, none in here from my company, that have one modicum of expurgation. What is it that's been taken out here and why? I'd really like to know. What did he say? What the hell is he trying to hide?
Senator Bryden: I think you've made that point, and I think counsel is going to do whatever he can to reduce that.
So the only point that I want to make, that as of December 15, you and Mr. Matthews believed your proposal was financeable, right?
Mr. Hession: Yes, we did. That is correct.
Senator Bryden: Less than a month later, a deal was struck between - to form something that ultimately became, at one stage, Mergeco.
Mr. Hession: Correct.
Senator Bryden: And I refer you to document "U" which is the letter agreement between the owners and operators of Terminal 3 -
Senator Jessiman: Date?
Senator Bryden: The date is January 14, 1993. It is T3LPCO Investment Inc. letterhead in Montreal, and it's to Paxport Inc., attention Jack Matthews.
And believe me, I'm not going to ask you to read this.
Mr. Hession: No.
Senator Bryden: But maybe you could just indicate to me that this is a letter of agreement between the two competing developers for the RFP, that they would proceed to work together.
Mr. Hession: Characterized, I think, as a binding agreement.
Senator Bryden: Okay, but other than leaving the binding out, that's correct?
Mr. Hession: I believe it is.
Senator Bryden: So this happened within a month of you believing it was financeable.
Mr. Hession: Yes.
Senator Bryden: What happened to Paxport's own ability to finance it?
Mr. Hession: Well, the two aren't necessarily connected. And I would caution against making that connection. I think I explained, or if I didn't, let me try to as succinctly as I can. Through the entire period in the run-up to the proposal call, there were two bodies of thought at Pearson, both at the airport and in the headquarters, that on the one hand, there were merits in having one operator run all three terminals. On the other hand, there were merits in having two competing operators. And those arguments were put forward forcefully by the different camps, as it were.
Senator Bryden: And you were in the latter camp?
Mr. Hession: I was very much in the latter camp, for obvious reasons. That was the only scenario that worked for me. And by the way, its merits, from my point of view, were argued with complete intellectual honesty, just as I felt the arguments on the other side were being argued.
But at the end of the day, someone had to decide what they're going to do. And I believe, I believe very firmly, that it wasn't the financeability of Paxport that drove the issue. It was the question of having the synergies of a unified operation and unified management of the three terminals that drove the issue. Because I can tell you, senator, plump and plain, that was the motivation for talking to Claridge at all. There was no underlying motive vis-à-vis financeability at the time those discussions began.
Senator Bryden: Who approached who? Did Paxport approach Claridge, or did Claridge approach Paxport?
Mr. Hession: No. Neither. Neither. A senior official from Transport Canada approached me and suggested that we should explore the synergies with the Terminal 3 owners. I mean, regardless of the fact that there were two competitors, the competition was now over. It didn't change the reality that there was in being, on the ground, in operation a real terminal called Terminal 3. And there had to be some rationalization between the parties if the thing was going to work efficiently in the minds of those who believed one manager should manage all three. And that was the motive.
Senator Bryden: Last night, indeed, last night -
Senator Tkachuk: Who was that senior official you mentioned?
Mr. Hession: I would have to again beg the indulgence of the Chair and perhaps seek advice from counsel, but I have a personal pledge not to disclose the name of that person to that person.
I was told, look, this is a conversation, it is one of those that doesn't happen. And so I said, fine, I will not disclose.
Senator Bryden: Would that be, if it had been in writing, whited out?
Mr. Hession: You'll have to ask the people who do that. I mean I'm not in the business of whiting things out.
Senator Bryden: No, just not divulging certain information because you have a personal commitment -
Mr. Hession: I pledged. I pledged on my honour not to do that.
Senator Bryden: Absolutely, and these people are bound on their honour and the best of their ability to live up to their oaths and not divulge information that is between them and their ministers, and so on.
Mr. Hession: Senator, if I may -
Senator Bryden: The only point that I'm making is, you have made a great deal this morning out of - there's a paragraph whited out of this document.
Mr. Hession: Yes, that's correct.
Senator Bryden: Now, you are taking, in fact, the same position and saying, "I would rather not answer that question because I have a personal commitment that I will not divulge that person's name", and I respect that.
Mr. Hession: And I, with respect to you, senator, draw a fundamental distinction between the two issues. I make the point that, as I understand it - I stand to be corrected on this, but as I understand it, there are people working today who are not government officials, under contract, lawyers and forensic accountants who are cleansing these documents. And I simply don't know. You made reference to an oath. I don't know that they are under oath. I don't know that they've sworn to tell the truth and the whole truth. All I know is that they are going around expurgating documents.
Now you say it is under the aegis of the Access to Information. I don't know that. I'm worried very much when I see documents of meetings which I attended that I've reported on, that you've made reference to, unexpurgated, they are for some reason expurgated in the government's documents.
Senator Bryden: Okay, I don't want to chase rabbit tracks here. But a number of times you have said, "It is my understanding that all of this is happening." Would you tell the committee what you base that understanding on, what information, who, what documents? Would you please?
What is the basis of your understanding that all of these people are doing this stuff?
Mr. Hession: Well, I've been told that.
Senator Bryden: By who?
Mr. Hession: Specifically, by Mr. Broadbent.
Senator Bryden: By Mr. Broadbent?
Mr. Hession: Yeah.
Senator Bryden: Mr. Broadbent will be here this afternoon.
Mr. Hession: Yes, he will, yeah.
Senator Bryden: Anybody else?
Mr. Hession: No.
Senator Bryden: So your basis for this statement comes from Mr. Broadbent, and we will be able to talk to him this afternoon. Now, to get back -
Senator Jessiman: This is rather important. Can we ask you, without giving us the name at this time, is that senior person still in Transport Canada as a senior bureaucrat?
Mr. Hession: Again, again, Mr. Chairman, I seek your guidance on this. I wouldn't want to begin introducing characterizations of whether this person is or is not somewhere. It may lead to disclosure of who it is, having already pointed out that I'm obliged by my undertaking not to disclose the name. And believe me, it is nothing more than that. If I didn't have this undertaking, I would be quick to disclose the name.
Senator Bryden: Mr. Hession - are you finished, senator?
Senator Jessiman: I'm not quite. If it is very important, and the other side seems to think it is so important -
Senator Bryden: No, it is not, that he divulge his name. No.
Senator Jessiman: So you are not concerned -
Senator Tkachuk: I was the one who asked the question. I'm not too worried about the sources. I mean, we've got Stevie Cameron being used here. How the question of people expunging documents are concerned, I'm sure we have just as good as sources we have been using in the past. Let's just continue on with your line of questioning. It is interesting.
Senator Bryden: Yes, and if I can -
Senator Tkachuk: I don't want to take away from your time, you know. I'm sorry about that.
Senator Jessiman: I think we should reserve on whether or not the committee wants to exercise the power it might have to disclose the name, but I don't at the moment -
Senator Bryden: Certainly, it is not me pressing for that. I want that very clear. I respect a man giving his word, or a woman.
The Chairman: Mr. Hession, as a matter of personal pledge, do you think the forthcoming answer to that question would prejudice the other person, regardless of your own - regardless of the personal pledge you made?
Mr. Hession: I believe so, Mr. Chairman, but again, I would want to seek advice on that. But I believe so, as a layperson, yes.
The Chairman: I see.
Senator Jessiman: I wonder, Mr. Chairman, if he might discuss with that person whether that person has any objection at this time to disclose or not to disclose.
Senator Bryden: Whoever that person was, to try to get back to the question that you answered, that you were advised or the parties - you were advised by neither - it was neither Paxport nor Claridge, but someone in government said the parties should get together?
Mr. Hession: A senior official in Transport Canada is what I said.
Senator Bryden: And about when did that happen?
Mr. Hession: Oh, within two or three days of the announcement of the award.
I think later that week is my recollection.
Senator Bryden: It is interesting, and I believe you were in the room for the last of Dr. Labelle's testimony last night.
Because last night, Dr. Labelle said that, around Christmastime, the Clerk of the PCO - and I believe at that time it was Mr. Shortliffe - called her and said that it was likely these two companies would come together, meaning Paxport and Claridge. That was her evidence last night. Okay.
Mr. Hession: That was at what time, did you say, senator?
Senator Bryden: She didn't give a date. It's last night and we'll check the transcript. Said that around Christmastime.
Senator LeBreton: What page of the transcript are you looking at?
Senator Bryden: I don't have - I'm sorry. I just wrote it down as she said it. I may have it not exactly right, but I'm sure that the import of it is correct.
Now, I'm almost finished. Can I ask you if you were involved in the discussions - you may have answered this - in the discussions to put the two together?
Mr. Hession: Very tangentially. Very tangentially. I was asked for advice, I recall, in very early January with respect to that, whether I thought, in principle, that such a merger should happen and, broadly speaking, under what conditions.
Senator Bryden: Were you aware that the letter of agreement between, for shorthand, Paxport and Claridge was held in strictest confidence between the two parties and the only other party being Transport, I believe? Or whoever was working with Transport. Were you part of the loop? Or were you out of the confidence group at this stage?
Mr. Hession: Well, I'm not sure that I understand your question fully.
Senator Bryden: Can I just -
Mr. Hession: You say there was a small group of people who knew of this merger. Is that your point?
Senator Bryden: No, my point is and I can go through and prove it - the documents do prove it -
Mr. Hession: Yeah, I'm sure they do.
Senator Bryden: - that when this agreement was made, one of the terms either in it or around it, was that this letter of agreement would be held in strict confidence between Paxport and Claridge and Transport Canada.
Now, my question to you is, if they had shared - and maybe they did - if they had shared this agreement with you and discussed this agreement with you, and the subsequent discussions coming out of it, would that have been a breach of the confidence?
Mr. Hession: The confidence to which you refer is?
Senator Bryden: The confidence - if they had talked to me about it, it would have been a breach of the confidence.
Mr. Hession: As set out in the agreement you mean?
Senator Bryden: Yes.
Mr. Hession: That confidence?
Senator Bryden: Yes.
Mr. Hession: Yeah.
Senator Bryden: Would it have been a breach of their undertaking to keep this agreement in confidence between the three parties, for them to have discussed it and involved you in all of the discussions around it?
Mr. Hession: Involved me personally?
Senator Bryden: Yes.
Mr. Hession: I don't know. I'd have to look at the terms of the agreement to be perfectly candid. I have a general vague recollection of what you're talking about, but I'd have to look at it.
Senator Bryden: I think I must be getting old. I'm not making myself clear. The terms of the confidentiality between Transport and the two parties, they could not then discuss that with any other party outside of the people who were the senior management, let's say, of the companies involved, probably the senior officials of Transport, kept at a very high level. My question is, would you have been included in that group?
Mr. Hession: I think the question - the answer to the question should be found in the specification in the agreement as to who could or could not see it. But I must say, I'm not trying to be obtuse here, senator, but I'm not sure what you're driving at. I was, among other things, a director of the company. So to the extent that agreements were approved by the board, I would have been party to that approval as a director of the company.
Senator Bryden: And this agreement which was made on January 4 had been in some sort of discussion stage, at least according to Dr. Labelle from around Christmas, and you indicated probably earlier. Were you part of those discussions leading up to this letter of agreement?
Mr. Hession: Only, again, to the extent that I gave advice, when asked, internal to Paxport.
Senator Bryden: You may not know this, and if you don't, then I know you will say so. And I need to provide a little background for my question so that it doesn't sound as unfair or as far out in left field as it might sound.
The two parties competed on an RFP. You were successful and, as I understand it, Claridge's proposal remained open and remained on the table for quite a long time.
Within, in your indication, days of the awarding of the contract to Paxport, negotiations were going on with somebody to put the two parties together.
Now, my question is, was that a secret arrangement between Claridge and Paxport, or Paxport's principals and Claridge's principals right from the beginning? That they had to have - well, answer the question if you know.
Mr. Hession: Again my sole knowledge, which focuses on the day or the few days following the announcement, was a suggestion by a senior official at Transport Canada to open conversations with the owners of Terminal 3 to discern the synergies that may be there to the benefit of the parties, obviously to the benefit of the airport as a whole. That's it. That's all I know.
The Chairman: Mr. Hession, somebody took you into their confidence, and you pledged not to reveal that information of the impending marriage -
Mr. Hession: Excuse me, Mr. Chairman, what I pledged not to disclose was the conversation, in other words, the person with whom I had the conversation.
The Chairman: Yes.
Mr. Hession: The conversation, you understand what it was about from my earlier comments.
The Chairman: I see. And that pledge was to last forever?
Mr. Hession: Well, I didn't get into a long recitation of what were the terms and conditions. I said I wouldn't disclose.
Senator Bryden: But a reasonable person would assume that, once the marriage had been consummated, that the need for secrecy would no longer be necessary, unless, in some years later, before a Senate examination, the release of that information might be damaging to that person, and for what reason, we don't know.
Mr. Hession: No. I explained I would seek advice with respect to your question vis-à-vis prejudice. My lay assessment is it could be, and I would be somewhat disquieted by that prospect.
Senator Bryden: This is my last question or little group of questions, Mr. Chairman, and I really appreciate you allowing me to complete.
The question that comes to my mind is, when you look at the result, when you look at the result that was arrived at, where you have the two competitors together, negotiating and making the final agreement that was called Mergeco at one stage and then got the name changed. If you were to look at the result or ask, "Give me a history of how we got there", looking at it, I would say it was a sole-source contract. It looks, in the end, like it was a sole-source contract. And what was used - what I think, in a document I referred to you last night, of staff Mr. Everson, that the "efficient competitive process", which your document heading quotes, may simply have been a sham to allow this to happen? Do you have an opinion on that?
Mr. Hession: Oh, I have a very strong opinion on that.
Senator Bryden: Would you please -
Mr. Hession: That is about as significant a stretch of logic that I have ever heard, and I don't mean any disrespect to you, Chairman - or, excuse me, to you, senator, through the Chairman.
The facts are: There is in situ, in operation, real life, a terminal called Terminal 3. And it is for sure that there are people, an awful lot of people at Transport who believed that the most efficient management and operations of a three-terminal airport would be accomplished under one operator. And it was solely that synergistic motive, I believe - and I can only go by the events as I understand them, and you've heard me recite them, that that was the motive right there.
And by the way, if you talk to the airlines and talk to the other persons who have a stake in the airport vis-à-vis those three terminals, they would agree with that. They don't like the idea, airlines for sure don't like the idea, of splitting operations between terminals. They don't like the idea of having, in effect, to worry about which terminal they're going to be residing in, in the course of the next few years. They want to have a degree of permanence, predictability and operational efficiency. That gets achieved, the argument goes on the other side, by having one manager of all three facilities. That's the motive.
Senator Bryden: That's the motive in your opinion.
Mr. Hession: It is the motive in my opinion, but it is compelling when you consider that it is an unalterable truth that Terminal 3 exists. And if you wanted - if you were Transport Canada and you wanted that synergy and that single operation, what options do you have? The answer is, you don't have any options.
Senator Bryden: I put it to you this way, though, if you want that synergy and you also want Paxport to be part of it when it comes to an end, this process that was followed accomplished that purpose.
Mr. Hession: Well, yes, senator, obviously it accomplished that purpose, if that's what you wanted.
But you have to qualify - and again, I'm saying this with all due respect. You have to qualify what you mean when you say, if you want Paxport to be party to it. I've spent a considerable amount of time in response to your questions, explaining the importance that Paxport attached to providing facilities that were efficient and modern to the airlines starting with Air Canada. We did nothing short of a cracker-jack job at that.
What was wanted the development plan that Paxport had put forward. It was embraced. It was honoured by every party to this proposal. This was a first-class facility. That's what they wanted.
Now you want to say - and I'm not trying to put words in your mouth, and I do respect that there is a different view here. You want to say it had something to do with some other consideration. I don't think so.
I think it had to do with synergy, operationally, and a very fine terminal facility on the other hand. Let's put the two together. Let's get the best outcome for the airlines, the passengers, Canadians, taxpayers. That's what I believe the evaluation team in the summer of '92 said was the right thing to do.
Senator Bryden: I'm almost finished. Were you a shareholder of Paxport?
Mr. Hession: No.
Senator Bryden: So you would have no reason to know whether the principal shareholders of Paxport and the principal shareholders of the operators of Terminal 3 were talking together while you were beavering away, and whoever else for the other side was beavering away doing their proposals, to see whether we can't put this thing together in the end? You don't know?
Mr. Hession: Oh, I think I do. I think I was, up to the point of the award, the individual most closely tied to the day-to-day detailed activities of that company. I don't think there's any question about that. And I can tell you, this was, in my long experience, some of which you've heard about - I've been a deputy minister responsible for procurement. I've seen competition along the way that would make your head spin. I've been an executive at IBM where I was competing viciously with some of the toughest companies you can imagine in a very tough industry.
I tell you, senator, this was a fierce competition. There was absolutely no possibility in my mind that there was any discussions of any kind between the competitive forces at work. We were determined absolutely as a team to win on our merits, fair and square up, against the proposal-call document that we were given. And we did that.
Senator Bryden: And presumably the other proponents were doing the same thing.
Mr. Hession: You'll have to ask them.
Senator Bryden: That's all, Mr. Chairman.
Mr. Hession, I thank you for your openness and your clarity and your patience.
And I certainly thank the Chairman.
Mr. Hession: Mr. Chairman, if I may reciprocate, thank you, senator, and again with all respect.
The Chairman: Before Senator Jessiman, there's just a few points of clarification from counsel.
Mr. Nelligan: There were a few points raised by both the senator and the witness, and I thought we should put them on the record now in case anyone else wanted to ask questions.
First of all, there was the question of the applicability of the compliance measures for former public officers to Mr. Pascoe. Mr. Pascoe was technically a public officeholder, but there is an exclusion which says that it only includes every member of ministerial exempt staff designated by their minister to be subject to this part. We do not know on the record at this point, if, in fact, the minister had designated Mr. Pascoe as being within the strictures of public officeholder.
The second difficulty is that, if he is a public officeholder, I think the senator was right, that he would seem to fall within the strictures of section 59. However, section 61 goes farther and says that the designated authority may reduce the limitation period of unemployment under section 60. So that, first of all, you would have to inquire whether he was designated to come within the compliance of those provisions and what the limitation period was put on his restriction.
And finally, the really great difficulty that everyone has always had with this is that the penalty for failure to comply is, where applicable, discharge or termination of employment.
So I don't think very many charges could be laid, whatever the merits of the matter were.
Senator Bryden: No. Counsel, I appreciate you investigating that.
Mr. Nelligan: The second point, and this is to assist the witness, he was complaining with regard to matters which appeared to be deleted from various documents. And the first document was a covering letter relating to the meeting with Paxport management on the 15th of April, 1991.
The deleted sections are purported to be deleted under the provisions of section 69.1(g) re (a) of the Freedom of Information Act - or Access to Information Act; and that identifies as one of the matters which would normally not be released under Access to Information as "memoranda the purpose of which is to present proposals or recommendations to Council."
I would point out to the witness that, while the covering memo notes that it followed a meeting with the developers, it says at the bottom, following a discussion of the results of these meetings by - and then there are code names for the particular officers - it was agreed that...
And one can only assume that this was a meeting of staff officers following the meeting with the developers whereby they made certain decisions regarding proposals or recommendations to the Queen's Privy Council. That's the assumption, and in that context, that could very well be.
I have more difficulty with the document which is document 00366, notes from a meeting of December 15, 1992. And I may say, I have already raised this particular matter with a representative of the Department of Justice. It also purports to delete some information under the same general section, only in this particular case, it is supposed to be "...records the purpose of which is to brief ministers of the Crown in relation to matters that are...brought before, Council...".
What I cannot understand there, and I still don't have an answer on it, is that this is a statement apparently made by Mr. Barbeau in the course of a meeting with the developers, so that it would be on the public record at the time it was made and would not normally be excluded. I would like to think, however, that since it was publicly disclosed at that time that either Mr. Hession or Mr. Matthews would remember it if it was of any importance. If I get a further answer, I will let the committee know.
I just thought I should put those two matters on the record before any other senator began their examination.
The Chairman: Senator Jessiman.
Senator Jessiman: Thank you, Mr. Chairman. I only have a couple of questions. One of the objections that Mr. Nixon had to the request for proposals was that it was too general. I want to read just one part of it. It really has to do with 1.2, the objectives, on page 2, then you go on to page 3, and I'm just going to read the last paragraph here. It reads as follows:
The Government is providing the Developer with a considerable degree of latitude to propose the form, extent and timing of development, as well as the management strategies and pricing policies that will determine the operational and financial viability of the Project. The full extent of the development and commercial opportunities will be determined by the experience, creativity and initiative of the Developer.
Now, what Mr. Nixon said to that, it said:
...the RFP did not set out many of the fundamental aspects of the proposed development, but left these to bidders to define for themselves. For example, projected passenger volumes for the airport (fundamental to the pace and size of the redevelopment) were left to proponents to estimate.
And so I want you to comment on whether or not you - what you thought of what the government was asking you. Was it reasonable from the point of the taxpayers of Canada and the customers of the airlines?
Mr. Hession: Yes. Thank you, senator. Let me begin by making a statement about this proposal call, relative to the great number of proposal calls which I have either participated in writing or participated in responding to.
Now, this may sound, in the minds of some, self-serving. The fact of the matter is, for a development of this nature, of this scale, this is the best proposal call I have ever seen in my 30 years of responding or writing such proposal calls.
Why is that so? There was an era, and it was certainly predominant in the war and post-war period, when government officials would come to market with highly prescriptive statements of requirements, highly prescriptive, so much so that you had to comply absolutely to what it was the officials were asking for. Moreover, typically, you had to do so with lowest price and that's what meant success.
That's deep history now. You will find in the Government of Canada, thankfully, most proposals are quite open-ended. They actually promote, they seek, they desire private sector innovation and, similarly, private sector ideas that are presumed to be somewhat in advance of what, historically, the public servant who has been sitting - and I'm not being pejorative when I say this - who is sitting in his or her job for 20 years, can ever expect to understand what technologies are out there, what advancements in methods are out there, what management practices are out there.
So we look to what I describe generally as enabling characteristics in these proposal calls.
This one is very clear on the statement of objectives, very clear on the evaluation criteria, very clear on the problems to be solved. And what it is saying is, "Private sector, innovate! Show us what you can do. Come at us with the best you've got." And that's exactly what was wanted, in the interests of the Canadian taxpayer and certainly in the interests of the users of that airport.
This is a first-class proposal call and, at the time, I should tell you, I made a point of congratulating the officials. They did an excellent job in designing this, an excellent job in managing the process in my opinion. And that is a considered opinion with a lot of experience behind it.
The Chairman: Mr. Hession, you agreed to make that diary available to us under the -
Mr. Hession: I did.
The Chairman: - understanding that any references that aren't relevant may be excluded. May we see the diary now?
Mr. Hession: If I may, there were certain specifications as I heard Counsel describe - I think it was Counsel who described what it was he sought. I'm wanting to understand what those specifications were.
My inclination, just so your clear, Mr. Chairman, is to simply give you my calendar, my diaries, as is; but I want to hear again the counsel tell me what specifications he had in mind.
The Chairman: Subject to your right to delete personal information, et cetera.
Mr. Hession: I'm disinclined to do that, but I want to, if I may, discuss it with counsel and, very quickly, I will deposit these calendars with the clerk. Is that an appropriate procedure from your perspective?
The Chairman: Yes. All right.
Senator Jessiman: Mr. Hession, under Paxport's proposal, the government was going to receive, in the first number of years, about three times the amount of money that the - and I'm going to use the word Claridge; it is not Claridge, it is a limited partnership, but I'm going to use Claridge - that their proposal was going provide the government.
Now, as a result of the combination of the two, how did it go? Did we combine you two and the government only get what Claridge was offering in the way of dollars back to the government?
Mr. Hession: I understand what you're asking, senator.
Senator Jessiman: Or did we get closer to what Paxport was offering?
Mr. Hession: There are two dimensions to the answer, I believe. If there were those differences as you've reported them, and you are, I take it, responding to what government officials are telling you, I have not seen at any time the Claridge proposal, for example. So I accept that there was a higher number. That higher number survived, if that's your question.
More than that, the officials who negotiated - and the record will show this, and I encourage you to ask the negotiators how successful they thought they were in making it even better than our proposal said it would be. That's the outcome.
I commented on the efficacy of the evaluators and the proposal managers. The people who negotiated on behalf of the government did an exemplary job, and the people of Canada, under the scrutiny of the facts, will discover they did damn well by the Transport Canada negotiators.
Senator Jessiman: That's all. Thank you. Thank you, Mr. Hession.
The Chairman: Senator LeBreton.
Senator LeBreton: Thank you, Mr. Chairman.
Mr. Hession, back to some basic questions about Pearson airport. According to testimony earlier, Pearson airport currently handles approximately 21 million passengers. What is your evaluation of how Pearson handles these passengers today, in terms of safety, comfort and convenience, knowing what we all know, of course, about Terminal 1? But just overall, what is the situation today, in your estimation?
Mr. Hession: I think, to understand my answer, we should go back to comments made by other witnesses. I noted, particularly, the comments of the local airport authority proponents from Toronto who said that there is a 30-million passenger capacity at Pearson.
That sounds, on the face of it, to suggest that if you've only got 21 million, everything is hunky-dory.
The fact of the matter is, in an airport that has three distinct terminal buildings, you cannot achieve the optimum allocation of those passengers because you have to split the airlines between the three buildings.
So right away, it isn't really 30 million anymore; it's a lower number, depending again on how you allocate the airlines. That's point one.
More significantly, it must be understood by senators that Pearson airport is the hubbing airport for Canada. It is also the principal international and trans-border gateway for Canada. So you have to split the airport into three terminals, and then you have to split it into three sectors, one sector for domestic, one for trans-border, and one for international.
Again, you're looking to a further sub-optimization of that 30 million-passenger capacity.
For example, I flew in, must be now almost two months ago - it's three months ago - from Fort Lauderdale, and I'm arriving in Toronto, and I'm waiting on the apron for half an hour for a gate.
Well, if there is so much capacity in the airport, why am I sitting there waiting for a gate? And the answer is, I'm a trans-border incoming flight waiting for a trans-border gate. I can't go to an domestic gate and I can't go to an international gate. I have to go to a trans-border gate.
So you can see from that, that the management of the resources becomes critical to the outcome. And it is a question of optimizing that outcome. The 30 million in that context is a fictitious number. It's very much a question of the three terminals and the three sectors.
Then I would add - this is a critical consideration for senators. If you look at a day in the life of an airport, you will see that there are two very significant peaks in that day. And from long experience, I'm sure you've had it yourself, in the morning when you're taking off to wherever you're going, there is an awful lot of activity in the airport. Similarly, in the evening, everybody is coming home or hubbing off to wherever they're going.
Those peak periods exacerbate the points I've just made very significantly. So when you design an airport, you design first to optimize the sectors; second, to optimize the peaks within those sectors; and then you can make comments about the overall capacity of the airport and only then. So it is a seal; it is naive to say that it is a 30-million capacity without answering those other questions.
So I don't know if that's answered your question, senator, but that's sort of a quick lesson that I, by the way, went through ad nauseam over the last several years in understanding the design considerations of airports.
Senator LeBreton: Actually, in your answer, you sort of answered my question about - I was going to get you to react to the statements made by the local airport - the still-disorganized, unorganized local airport authority.
Mr. Hession: To be candid, if I may, Mr. Chairman, I was very disappointed by that comment. I mean, this is 1995. If somebody would take a minute and go talk to Air Canada, who, after all those years and all those pleadings, had said, "For God's sake, will you help us fix our terminal", they are in deep, deep trouble in their trans-border facilities.
I sat there as one individual - maybe you senators have had their own experience - for half an hour waiting for a gate in the trans-border. So I don't want to hear about the overall capacity. Tell me how I can get trans-border facilities.
By the way, noteworthy, where is the growth in Pearson taking place? Very important question. It's not domestic. It's trans-border. And it's is all because of Open Skies and all because of the north-south economic activity. And right now, we are slowing progress by not facilitating, in a timely way, capacity to serve that growing requirement. It is, by the way, equally a problem, perhaps not as severe, on the international side.
Senator LeBreton: I can attest because I had occasion to fly into Terminal 1 in February - I think I'd mentioned it earlier - where I literally saw a chunk of concrete fall out and almost hit some people.
Had the Pearson development project gone ahead, Mr. Hession, how would the members of the travelling public have to pay for the improvements to the terminal buildings you propose?
I think it's important that we clarify this because of questions that were asked and insinuations of previous testimony about the whole question. Would there have been a passenger fee or user fee for passengers under your proposal?
Mr. Hession: Yes, I understand your question. Let's for a moment conceptualize: What is the problem at Pearson? The problem at Pearson is inadequate runway capacity as the department looks forward in terms of future demands. It's inadequate terminal facilities in terms of both efficiency and down stream capacity.
The total dollar cost to solve those two problems is probably today on the order of $1.5 billion at Pearson.
Senator LeBreton: $1.5 billion?
Mr. Hession: Yes, yes, as you look to the terminal or ground side requirements and air side requirements. By the way, you can very quickly reduce that number if you choose mediocrity, which is right now the situation we've got. You don't have to spend $1.5 billion - God knows it hasn't been spent for the longest time, which is what's brought us to this point. So I'm saying, if you want to do it right, if you want Canadian users of that airport and international flyers into that airport to have a decent impression of Canada and efficient facilities, that's probably the order of magnitude of what you're looking at.
So the question, in answer to yours - or the answer, I should say, to your question, is: Let's start with the $1.5 billion problem over a period probably in the order of ten years to actually solve it. How a local airport authority is going to solve that is, I think, a compelling question. Ask yourself this: What other airport authority in this country has anything remotely close to that size of problem? Vancouver probably comes closest. They're building a new runway and they're adding some capacity to the existing terminal. What's the result of that? A $10 per passenger and planing fee. That, by the way, is for domestic passengers.
So, I would suggest that to finance that level of investment in Pearson will be at least double that amount on a per passenger basis. It could go as high as $30. Again, I want to repeat: That's if you share the ambition to have a decent outcome in that airport. You can, if you wish, perpetuate mediocrity and charge less. But I cannot imagine how that airport's going to get financed for anything less than about double the kind of charges you're seeing in Vancouver, and it could go as high as $30. Now coming back, I think, to your other question -
Senator LeBreton: About your proposal.
Mr. Hession: What would have been the outcome of our proposal? In my statement yesterday, I said, "We worked very hard to bring our proposal in at an average per passenger cost at less than the North American average. I said we had no plan - none whatsoever. In fact, the contract documents prevented us from charging a so-called passenger facility charge. We had no plans to charge that.
So, what does that mean? One might say, well, it means all of the cost is going on the airlines. Well, that's true, the airlines and other lessees in the building. But what is that? If you ask an airline: What is the percentage of your costs attached to an airport, in this case Pearson, it's, I think - please check this with Air Canada, for example - it's less than 1 per cent of their total costs. So a modest increase, if we can call it that - in this case it's still below, again, the average North American per passenger cost - an average increase to the airlines in Pearson, Air Canada in particular, would be barely perceptible in terms of costs passed through to the average passenger; whereas a $20, maybe up to $30 charge is very perceptible to a passenger if that's indeed the way the local airport authority proceeds and I, frankly, don't see an alternative.
Senator LeBreton: Thank you, Mr. Hession.
Now, given that it appears likely that this LAA in Toronto gets a general manager, takes control of the airport and the terminals - and you've mentioned the costs - how long will it be? You know, if everything in the perfect world - if they got all of their staff together, arranged the financing, dealt with their leases and everything and they were starting today as opposed to when they say they're going to start in 1996, how long will it take to get Pearson to where it would have been today if this had gone through?
Mr. Hession: Today, or if the -
Senator LeBreton: Actually, I guess I've got two questions. What would the situation be today at Pearson had this proposal gone through; and what do you envisage will be - when will it be, when everything was perfect, that the local airport authority will actually have Pearson up and running?
Mr. Hession: All right - and I'm not wanting to play on words here. Pearson is up and running, and you and I both know that. But at a stage that we can accept is an optimization in terms of efficiencies on both the air side, meaning the runways; and the ground side, meaning efficient terminals. That's essentially what I think you have in mind and certainly that's what we were seeking to achieve.
Today, had the proposal been approved and had we proceeded with the degree of expeditious plan that we had in mind and that the government embraced, the transborder problem that I spoke about for Air Canada would be fixed. It would be gone. There wouldn't be the kind of delay that we're now experiencing.
By the way, economists have quite sophisticated ways of measuring the cost of delay. You get a wide-bodied aircraft sitting out there with 342 people on it sitting, cooling their heels waiting for a gate for 20 minutes, 30 minutes - something like that - and that's very real. What would you suggest might be the hourly cost for the executives and other people on that aircraft? Generally, I think it's on the order of $200 in terms of the economic conventions. That's a lot of money. And you add that up aircraft after aircraft, delay after delay.
Senator LeBreton: Two hundred dollars per person?
Mr. Hession: Per person, ad infinitum. This is setting aside the fact that the airplane's sitting out there with its engines going and it's burning gas totally unproductively. So the cost of airlines go up. By the way, all of these costs, when you add them up, far exceed the implications of the increase in the rents that we talked about earlier to the airlines. So that's the real issue. These are serious, productivity-related issues for our economy let alone for the individual airlines.
Senator LeBreton: And the second part of that question is, you know - if you had a crystal ball and everything's being all perfect with an LAA - when could we expect, then, to have this?
Mr. Hession: I don't need a crystal ball - and, again, I'm not being sort of off the mark on this. I've thought about it long and hard. I want this airport fixed. I mean, quite apart from the fact that the government's fully in its rights to cancel the deal that was done. That airport needs fixing. And I became - and still am to this day and will, I suppose, to the day I die - a proponent of seeing Canada's efficiency, airports and other, fixed. I very much want to see that happen.
So, in thinking about it, I've assessed as best I can, based on the four previous local airport authorities and based on the dynamics as I understand them, that it will probably be in the second half of next year that the transfer to the local airport authority will occur. There has to be a full development plan done, a master plan if you like, something along those lines. That has to be then taken to market and financed.
Those processes all by themselves are complicated by the very point I was trying to make with Senator Bryden. It's all very nice to look to financing Terminals 1 and 2, but what about Terminal 3? It's sitting there. It exists. Real people are using that facility. You say, "Well, we're going to do 1 and 2 and we will charge a passenger facility charge of, say, $20, $25." Well, what are you going to charge at Terminal 3? The same? For what? So now you've got differential pricing on the same airport. Do you think people are going to be pleased by that? Do you think the competition between the carriers in Terminal 3 and those in Terminals 1 and 2 are going to be happy? Not at all. It's a very poor model. So some other complex means of financing is going to have to be found.
My assessment? The financing negotiations all by themselves will take a couple of years after a development plan is put together. Now, that development planning exercise all by itself is complex and lengthy. I've been through it. I can assure you it's complex and lengthy, with all of the other approvals and other considerations.
I'd like to come back, by the way, to a couple of other points that are I guess implied by your questions - and even if they aren't, I'm going to answer them - because there's another fundamental set of issues and nobody seems to want to talk about it: Terminal 1 is falling apart as we speak.
Senator LeBreton: I know. I saw it with my own eyes.
Mr. Hession: The sprinkler system doesn't work. Can you imagine what the Fire Marshall in Mississauga would say if he had access and power over that place? He'd say, "Close it!" Just like that. It's not safe. It's so far below the health and safety standards that we had in mind a $30 million expenditure very quickly just to bring it up to the health and safety standards. So, this is not trivial. These are not matters to be sort of overlooked and ignored. They're very real. My point in all of this is, I think between the transfer, the development plan, the financing, the earliest you can expect the beginning of serious development at Pearson is 1998. Then you can start to add probably seven to nine years before it's all done - "all done" meaning in the first program, if you like. After that, there'll be a second and third program. And you're looking at the year 2005, 2006.
Senator LeBreton: Quite some time down the road.
Mr. Hession: The absolute crime in all of this is that the best airports in the world, starting with Schiphol airport and Changi airport - they are the best in the world as acknowledged by all of the carriers that matter, all of the travel analysts that matter, for one fundamental reason: The facilities required to provide service to the airlines and passengers exists in advance of demand - a fundamental concept that I very much wanted transferred into our business at Pearson with the help of Schiphol airport, the number one airport in the world. You must have facilities in advance of demand. In the absence of those, guess what happens? Carriers want to come into Toronto? Whoops, not enough gate capacity. See you later. We're going to Pittsburgh. You've just lost a carrier. People want to fly to Hong Kong. Am I going to hub through Toronto? Not on your life. I land into a trans-border gate here; I've got a 60 minute wait between the apron and through the inefficient facilities. I've got to schlep my bags all over to Terminal 3, et cetera, et cetera. That's where Canada's going to lose and lose badly because we are not delivering facilities in advance of the requirements, in advance of demand.
Let's fix that. It's not too late. That's my plea. That was my plea for the six years I've been proselytizing on this issue.
Senator LeBreton: Thank you, Mr. Hession. Yesterday in your remarks, of course, you mentioned Amsterdam's Schiphol Airport and you mentioned statements made by Mr. Victor Hoordzy (sic) about the process you were going through here. Could you just elaborate on those? Of course, I had some particular questions about Mr. Barbeau yesterday and his role in this. Could you just elaborate on what you meant in your statements when you talked about-
Mr. Hession: Regarding Karel Noordzy?
Senator LeBreton: Yes, it was Noordzy. I'm sorry. I wrote the name down wrong.
Mr. Hession: Yes. Karel Noordzy is a gentlemen whom I met went I first went to Amsterdam to open the discussions around a possible meeting of the minds on joining forces. And the "joining forces"in my terms was: I need what you've got and what you've got is a lot of know how and technology. What they were looking for - because they're such a competent group of people with a track record to prove it, they were looking for work outside of Amsterdam. So we did a long term five-year consultancy deal that involved them transferring one of their key people to our company for the period. Not in a position of control, with no share holdings but, rather, as a consultant helping us do the technology transfer and helping us modernize in terms of operations.
Parenthetically, why is Amsterdam so successful? They've got perhaps the best track record of anybody in terms of their retail concessions.
You may recall I commented on the Edlund report yesterday where some rather pejorative statements were made about our expectations for concessions. Well, I didn't dream those up. That was the result of some very judicious decision making on policies derived from the real experience of Schiphol airport. And we were using those policies and those plans and those ideas of merchandising to help us succeed. By the way, there were other inputs to that but Schiphol was an important influence on that. I digress.
Mr. Noordzy, a former McKinsey & Company consultant, was helping Schiphol move to its next level of achievement in his role as managing director. And he in that role was involved in promoting Schiphol's activities outside of Amsterdam, like Toronto. So that's why we meet. A very engaging and very delightful person. Part of his promotion activities had him attend at a whole serious of international airport conferences at most of which, if I can say that - certainly there were a number - Victor Barbeau was also present. And it was during those encounters that questions about Toronto and how they were going to proceed, and policy frameworks, and all that sort of thing, took place. It was a very good exchange between two serious people. And that's what I was reporting on.
I don't have in my mind any sense of vindictiveness on this. I became deeply concerned when an official of government, particularly in that position, would come along and say, "I think that's a bad idea." I mean, that doesn't have to be explained to me because I've been in the public service. That can often lead to what's known in the trade as maximum administrative delay, which is MAD for short. That was my concern. It was a very genuine concern. I was hoping against hope that it wouldn't happen. Then I began to see it happen, which is why I said what I said yesterday.
Senator LeBreton: Thank you very much, Mr. Hession.
Mr. Hession: Thank you very much.
The Chairman: Mr. Hession, I have a twisted curiosity about secret pledges, which I accept, but it caused me now to go back to the memorandum you wrote to Doug Port with regard to the "Pearson Action Plan" of July 30th, 1990 - and all that's marked here is "D".
Mr. Hession: Do you want me to make reference to the document, Mr. Chairman?
The Chairman: No, just answerer my question. You're obviously advocating the case for Paxport and in your conclusion you say:
Competition between terminal operators at Pearson International will benefit both air carriers and their passengers. Competition between terminal operators will enable the airport to compete as a gateway to North America and as a major hub for continental travel. A monopoly controlling the passenger terminals at Pearson will lead inevitably to a debilitating price structure and lost competitiveness especially harmful to our two major Canadian flag carriers.
You are obviously making the case for Paxport as opposed to ATDG or Claridge-Bronfman.
Mr. Hession: That's correct.
The Chairman: Then we have those two famous dates where, on the 7th of December '92, the government announces that Paxport has been the winner. And then on the 15th of January, Paxport and Claridge, let's say, sign a letter of intent to get into a partnership. Well, now, this is less than, it's just a little bit over a month, with Christmas and New Year's intervening and the need for shareholders to get together. Somebody arranges a marriage. Somebody does. And on the road to Damascus, what you referred to in '90 as the competition between terminal operators as being beneficial you now refer to its "synergy". So "synergy" replaces "competition". Now that's not a contradiction it's, I say, it's the road to Damascus. You've changed your mind. Now you're making the case for -
Mr. Hession: Sorry, Mr. Chairman, you're saying I'm making the case?
The Chairman: Well, you're defending the case.
Mr. Hession: I can tell you at the time I was not party to making that case. I'd made the case I made. But apparently my views didn't prevail.
Now that we're faced with the reality that we're faced with, obviously I'm going to do all that I can to optimize that reality, and that's been done.
The Chairman: Yes, well, you're putting a positive side on this, are you not?
Mr. Hession: No, I'm telling you exactly the sequence of events that occurred. I didn't get up one morning and say to myself, "It's synergy time." I didn't do that. I did not do that. I got a phone call, "You should explore that." I said, "Fine." I spoke to my principles as now adviser to them. They chose to open the dialogue, and the rest is history. But I don't want anybody suggesting that I necessarily changed my mind. I didn't change my mind.
The Chairman: Okay. All right, all right. It's just the almost indecent short length of time between Paxport becoming a winner and a merger taking place. It's incredibly short and somebody must have caused that to be done. And, as you say, it wasn't a case of "financeability" as much as it was the synergy.
Mr. Hession: That's my belief based on the facts as I've exposed them to this committee and to you, Mr. Chairman.
The Chairman: Yes.
Mr. Hession: I want to repeat the dead obvious fact, the reality. Terminal 3 existed. And the notion in the minds of those who were long time proponents of a unified management of all three terminals, that point of view prevailed. Don't ask me all of the people who held that point of view. I don't know who they all are; I just know that the arguments were persistent, just as I was persistent in arguing, in my own defence the, competitiveness scenario, that synergy; just as I explained to an earlier question on the business of, "How's the local airport authority going to proceed?". It is probably an anathema at the end of the day operationally to not have the three terminals working together - anathema in the sense that if you're going to start getting into significant differential pricing between these different terminals, you're going to create a serious problem for the passengers and the airlines.
Now, the arguments have been made. They're well documented - my arguments. The arguments are what they are, as I've now tried to articulate them. But I didn't change my mind. The other side won the argument as far as I'm concerned.
The Chairman: Well, under the present plan, the Greater Toronto Local Airport Authority, or whatever it's going to be called, the synergy argument is lost; it's no longer applicable.
Mr. Hession: Why do you say that, Mr. Chairman?
The Chairman: Well, it's the LAAs versus Terminal 3.
Mr. Hession: Well, but that's the point I tried to make earlier. There's going to have to be some accommodation there. I mean, it would be bizarre, it would seem to me, for passenger to go into Terminal 2 and get nailed with a $20 passenger facility charge and not have that impediment to his or her access to Terminal 3. It would strike me as a rather difficult situation for the carriers in Terminal 2, it would seem to me. So something's going to have to be done about that. And that's a tough one. That's a tough one.
The Chairman: Well, I'd dearly love to find out who was the intermediary between December and January of '93.
Mr. Hession: Let me, because you said what you said - and I realize time is closing in on us here, Mr. Chairman. You talked about the time between the original call and the deal that got done - what did you say, mid-January as being quite brief?
The Chairman: Well, the 7th of December.
Mr. Hession: Yes, but you characterized it. I forget your exact words, but you characterized it as being very quick.
The Chairman: Excuse me for a second.
Mr. Hession: Yes, sure.
The Chairman: Yes, it's the 7th of December '92 to the 15th of January 1993 - five weeks.
Mr. Hession: Yes, and I'm not debating that it appears to be a short time but what I wanted to make to you - and for any of the other senators who have been involved in putting business deals together, bear in mind these two parties had just come through a very lengthy, highly focused competition. So they each had very full appreciation separately, one from the other, of what they planned to do. So there was a specification, if you like, on the Paxport side that was particularly detailed going into the negotiation. We knew what development we were going to do; we knew the design of the development; we knew all the financials of that development, as did Claridge from its perspective. Those are just about ideal circumstances, from experience, going into a negotiation. Because when you don't have that level of detail, you've got to go into these very lengthy due diligence exercises, and so on and so forth, which take a lot of time. That work had, to a very large extent, been done - not because of the negotiation, but only because of the proposal call that they'd just come out of.
So there was a pretty ready set of circumstances there if you wanted to enter into a negotiation and get it done quickly. That's a practical comment on the circumstances.
The Chairman: Yes. Someone had to light the match.
Mr. Hession: Oh, I don't disagree with that. I don't disagree with that.
The Chairman: Well now, we have - sorry, Senator Tkachuk. We only have three minutes and Mr. Nelligan wants to ask. Would you let Mr. Nelligan go first?
Senator Tkachuk: Oh sure. Go right ahead.
Mr. Nelligan: I just have my standard question. Were you interviewed by Mr. Nixon?
Mr. Hession: I was not.
Mr. Nelligan: No? With regard to your diary, sir, may I meet with you later and then we can discuss any parts that are relevant to this proceeding which I can cover and then I'll make excerpts available to the committee?
Mr. Hession: Indeed.
Mr. Nelligan: Thank you.
The Chairman: David?
Senator Tkachuk: What time are we ending up here? At 12 o'clock?
The Chairman: In about three minutes.
Senator Tkachuk: Is it possible to have the witness come back after lunch for about 20 minutes, or?
Senator Kirby: In that case, I'm quite agreeable to make it easier for David, let him do his questioning as a lump sum. So why don't we break now at three minutes to twelve?
Senator Jessiman: I just have one question.
Senator Kirby: I'm just trying not to interrupt his train of thought.
Senator Tkachuk: Which is easily interruptible.
The Chairman: Yes.
Senator Kirby: I don't mind not interrupting you before you get started, David. It's only after you get into argument there that I would.
Senator Jessiman: I just have one question; two minutes.
The Chairman: All right.
Senator Jessiman: To competitions, there's competitions within the airports, and that's the one you were making as between. But there's also - which is probably more important to Canada and to the airport - the competition of Pearson itself as against a Pittsburgh, a New York, a Chicago. And so that the argument on the other side is that you have one party that has control of these three terminals, they can better compete in the world.
Mr. Hession: Yes. Let's call it the gateway competition, your second model.
Senator Jessiman: Yes.
Mr. Hession: That's the predominant consideration. No question. The whole cost structure of the airport will affect that outcome.
I should point out the obvious, talking about competition. The Competition Bureau, as you heard earlier, fully reviewed both our own proposal on its merits and the Mergeco proposal and it passed mustard. So the question of competition in those terms, the public policy terms, has been satisfied to the best of my knowledge.
Senator Jessiman: Thanks.
The Chairman: Now, Senator Tkachuk, we have a very important witness this afternoon, Mr. Broadbent, who was to be on this morning and we held over.
Senator Tkachuk: Yes.
The Chairman: I think you are the only questioner this afternoon?
Senator Tkachuk: I only know about myself, yes.
The Chairman: With Mr. Hession. Just for the sake of trying to keep order and time allowed for a very important - Do you think we can finish? If we start at 1:30, could we finish up at 2:00 and then hear Mr. Broadbent? Do you think that's reasonable?
Senator Tkachuk: I normally don't take more than half an hour.
The Chairman: All right. Mr. Hession, you will be with us this afternoon for a half an hour?
Mr. Hession: If that's your wish, Mr. Chairman. Moreover, I'll truncate my answers.
The Chairman: Thank you very much.
The committee adjourned until 1:30 p.m.
Ottawa, Wednesday, August 2, 1995
The Special Senate Committee on the Pearson Airport Agreements met this day at 1:30 p.m. to examine and report upon all matters concerning the policies and negotiations leading up to, and including, the agreements respecting the redevelopment and operation of Terminals 1 and 2 at Lester B. Pearson International Airport and the circumstances relating to the cancellation thereof.
Senator Finlay MacDonald (Chairman) in the Chair.
The Chairman: Colleagues, ladies and gentlemen, if anyone is curious about the length of time committee members are taking in questioning witnesses, I wish to assure them that Senator Kirby and I have agreed on important matters and have given unlimited time to witnesses to answer questions, and we have done that, particularly with lead questioners. So that if anyone thinks that Senator Lebreton or Senator Bryden was taking more time, it was previously agreed upon. But I have to say that now I am going to reimpose the 30-minute limit. I have my stopwatch here. I think 30 minutes is fair enough. We have not only an important witness to finish up with but another important witness to begin at, hopefully, around two o'clock. As well, Mr. Nelligan wishes to make a statement regarding documents.
Mr. Nelligan: This is arising out of Mr. Hession's comments about expurgated documents. I have spoken to Mr. Edge of the Department of Justice and, first of all, he confirmed with me - and I must confess I probably had some of this information before - that there are four lawyers in the Department of Justice who are reviewing the documents in order to ensure that they conform with the restrictions and the Access to Information Act. That prior review or examination is done by in-house lawyers and is not being done by contractual staff.
In addition to that, however, they have a team of examiners from the forensic auditors Lindquist Avey, who are themselves then taking these documents, coordinating them and putting them in the proper slots and actually doing the management of the documents. So that Mr. Hession's concern about unauthorized persons seeing the documents apparently is not well founded. That's all right.
They also agreed with me and with Mr. Hession that the deletion in the minutes of December 15, 1992, while purporting to be under 69(1)(g) of the Access to Information Act, should not have been deleted and, if it's of any assistance, I will read the expurgated paragraph which simply says: "Mr. Barbeau noted that ministers were concerned about the financeability of the project in light of the current uncertainties in the airlines sector, hence the need for Paxport Inc. to demonstrate financeability." And they agreed that that was perhaps a little overzealous on the part of the solicitors that did it and they are doing their best to ensure that the discretion will not be used in that way another time.
I just thought I should have that on the record while Mr. Hession is still here.
The Chairman: I wish to welcome Senator John Stewart. Nice to see you here. Senator Stewart, of course, has a perfect right to participate in all matters involving this committee, with certain restrictions.
Senator Stewart: I hope that's not an obligation, Chairman.
The Chairman: Senator Tkachuk.
Senator Tkachuk: Thank you, Chairman.
Mr. Hession, I want to ask a couple questions on the - even though you denied being a lobbyist, just from your testimony and what you said, if I was going to make a proposal on getting a consortium together I'd hire someone like you. You obviously - you may not be a lobbyist, but probably a great salesman. And as the president of Paxport you met with a large number of people which you have described in testimony to date.
Did you meet with any members who were either going to be candidates for the Liberal Party and/or were members of the Liberal Party while they were in opposition?
Mr. Hession: Oh yes, the latter, to be more specific. Opposition critics more specifically.
Senator Tkachuk: Who did you meet with?
Mr. Hession: I met with the Finance and Transport critics in particular. I met with certain members of the -
Senator Tkachuk: Who -
Mr. Hession: I will come to - I'm just formulating my answer here, senator. I'm mindful of the half-hour limit as well.
Senator Tkachuk: I may stretch it.
Senator Kirby: We're happy to let you stretch it.
Mr. Hession: I met with members representing ridings in the Toronto area - well, Toronto area including Hamilton. But coming back to where I started, I would have met with Mr. Tobin, Mr. Marchi and Mr. Manley. I think those were the successive Transport critics during this period. And I did my best to keep them apprised of what we were doing as Paxport and to seek, as I did actively, seek their advice with respect to that.
I met with Mr. Gray, who was the Finance critic, and candidly, senator, to try and remember the members of Parliament who attended at a meeting - these were the Liberal members who attended at a meeting in Toronto, I recall, at the Holiday Inn - I may be wrong on the locus but I think it was the Holiday Inn - but generally there would have been a half dozen. Jessie Fliss I remember was there. Stan Keyes was there. I remember that. The others, and I hope they are not offended by my poor recollection, but there were others present.
And again, I did faithfully what I had done for any member at any level of government, presented the same data, unaltered from one presentation to the other. My main purpose was to inform and to garner input for what it was we were trying to do, and I think quite successfully, I might add. Through that entire - no, sorry Dennis Mills I remember I also met with. He was an important meeting because I have great respect for Dennis Mills' acumen on matters of this sort.
All in all, in all those meetings, they were constructive, supportive, quizzical, naturally, but I would characterize them that way.
Senator Tkachuk: Would they have known that Mr. Matthews was one of the partners in Paxport?
Mr. Hession: Yes.
Senator Tkachuk: Did they raise that as a huge concern?
Mr. Hession: No, not at all. No, we were talking very substantively about the airport and I think it's, you know, it perhaps goes without saying, but they recognized me - most of them I have known for years, I have served many of them indirectly as members of former governments and so on - they recognized me an apolitical person trying to get a job done, which is exactly what I was, and probably still am.
But the point is in all of that that it was substantive discussions. I mean, for example the Toronto members were seized with the issues of ground transportation access to the airport and congestion on the ground. And we put together - it probably won't come out in these hearings - a very imaginative solution to that, including mass transit facilities which you heard the Deputy Minister of Transport refer to when they talked about federal-provincial-municipal discussions on transportation generally. We were ready, in our design, to accommodate a mass transit access to Pearson, for example. All of that came as a result of these interactions with these members.
Before I conclude, I met with all of the similarly relevant - not all of them; most that would see me - relevant members on all sides of the house including, at the time, the NDP critic.
Senator Tkachuk: You mentioned substantive issues, but as politicians they would be concerned about what's good for Toronto.
Mr. Hession: Oh yes.
Senator Tkachuk: And they probably would have been giving you suggestions as to what they'd like to see.
Mr. Hession: Indeed they did.
Senator Tkachuk: Any problems that they would have liked to solve.
Mr. Hession: Indeed they did.
Senator Tkachuk: Did they mention any specifically?
Mr. Hession: Indeed they did. That's the point I was making earlier. I may not have been articulate enough, but an awful lot of the concerns coming from members on all sides focused on the airport, which was the obvious set of issues; mainly congestion related and inefficiency related, but there was a surprising - surprising to me - focus and ability to articulate ground transportation problems as well. So we took that as a more complete design challenge. People wouldn't normally necessarily think about the ground access, but we took a lot of time on that and hired the crackerjack engineering firm to help us do that, namely Delcan, who I did a really fine job. And they know their stuff in that area.
Senator Tkachuk: So what you were trying to do throughout this whole period was try and build sector support in the community. Would that be a good description?
Mr. Hession: Yes.
Senator Tkachuk: You wanted to see all the important players; politically, financially, who had use of the airport, community groups -
Mr. Hession: Business leaders,
Senator Tkachuk: - business leaders. You wanted to solve some of the problems that they saw at Pearson Airport?
Mr. Hession: Without exaggeration, there wasn't one person who didn't, (a) understand the problem and, (b) want it fixed; not one. By the way, like everything else when I make these categorical statements I immediately think of an exception. This was not an exception in the normal meaning of the word. This was Stan Keyes who had a real concern about Hamilton Airport and where did it fit in all of this. Stan found out from our exchange that I was the deputy minister responsible for what was the special recovery capital projects program in 1983 that funded the building of the Hamilton passenger terminal. So I had a fair amount of knowledge about the problems and so on. We had a good exchange, but his interests were Hamilton more so than Pearson.
Senator Tkachuk: Okay. When we talk about Pearson Airport, we have heard a lot of general discussion about Terminal 1 and I just want to get a little more specific, and maybe you can help me on this. Terminal 1 serves as the terminal for international airlines or basically...
Mr. Hession: Primarily charter; not exclusively, but primarily.
Senator LeBreton: U.S. Air.
Mr. Hession: Yeah, U.S. Air would be an important transborder carrier, but the fact is it's primarily charter.
Senator Tkachuk: So we've heard it's in a terrible state and all this stuff, but maybe we can be more specific. We've talked a little bit and I have read a little bit about the parking problems there. Could you maybe describe that just a little further?
Mr. Hession: I'm not an engineer.
Senator Tkachuk: I understand that.
Mr. Hession: And presumably you aren't either.
Senator Tkachuk: No, I'm not.
Mr. Hession: So we'll get along just fine.
The fact is that the garage, which has whatever its full capacity, is probably today running at about 60 per cent of its full capacity because of the inaccessibility of certain of its levels, and that inaccessibility is tied to its structural integrity, or more particularly the fact that you see the ceiling fabric beginning to deteriorate physically. You see it falling before your very eyes. That's been a long standing problem subject of at least two engineering studies that I'm aware of, and a fairly expensive proposition to fix.
Ground access to the terminal's a problem, talking now about the curb facilities there. If you weren't there in the 1989-90 period when the peak of 11.5 million passengers were going through Terminal 1 - that terminal, by the way, is designed for about 3.5 million. That's its optimum capacity. It got to 11.5, if you can imagine. At the curb, where you're bringing people to and from the airport, it was woefully inadequate to handle the volume of people toing and froing, and there used to be no end of congestion problems and, in fact, angst to the level of fist fights, that I remember, of people getting so aggravated by the congestion.
That problem persists. The curb of Terminal 1 is not satisfactory vis-à-vis the ingress and egress from that terminal.
Inside the terminal, there are a litany of examples where standards established by the province primarily, building standards, are simply not being met. The building is dated and it is not meeting what are health, safety, fire; those kinds of standards. So it's in violation of those things. In fact, we learned -
Senator Tkachuk: If this building was sitting in Toronto -
Mr. Hession: In other words outside the federal jurisdiction?
Senator Tkachuk: Yeah.
Mr. Hession: It would be closed immediately, probably by the Fire Marshal, until such time as the sprinkler system was fixed and any related problems. But there's another important derogation from international standards, aviation standards, and that is the access security. Now, I frankly - you'll have to understand I may not, given that I've been out of this now for the better part of 20 odd months, if not longer, perhaps two years, I don't know that my data is still correct, so, you know, I stand to be corrected. But the access security in Terminal 1 was not adequate. And by that I mean people can access areas of that building, or could access areas of that building that they're not supposed to be able to. And of course that raises issues of security and there are times, not these days in Canada, but internationally there are times when one becomes quite concerned about access control in airports if somebody wants to do mischief. So that's probably still a problem but again I don't know. It was a problem back then.
So when you add it all up, senator, on top of all of those defaults from standards and practices, the building is terribly inefficient.
Senator Tkachuk: So the sprinklers - you mentioned the Fire Marshal. The sprinkler systems, do they all work?
Mr. Hession: Well -
Senator Tkachuk: Are they connected to anything, like water?
Mr. Hession: If I may, the question is would the sprinkler system pass the inspection of the Fire Marshal. That's the question. He's the only one who can answer it. My expectation would be, based on prior knowledge, that it wouldn't.
Senator Tkachuk: What about the doors, fire doors, or are there any?
Mr. Hession: Again, I'm not - technically whatever may be the tests that the Fire Marshal applies. My understanding, from that very source, when we were finalizing our work and anticipating taking over the building, there was a real risk that we would take it over on day one and he'd shut us down on day two.
Senator Tkachuk: I heard rumours they even have like a rodent problem.
Mr. Hession: Yes, I have that same understanding.
Senator Tkachuk: Do they?
Mr. Hession: I don't know. Sitting here today I don't know, but I've heard all those same things.
Senator Tkachuk: I mean I don't want to be sitting here sort of like - we could probably bring witnesses who would tell us, but my understanding is that there are.
Mr. Hession: They have a rodent program, which is indicative of something.
Senator Tkachuk: That's right.
Mr. Hession: I haven't seen a rodent in Terminal 1.
Senator LeBreton: Maybe the rodent program is working.
Senator Tkachuk: Do they prepare food in Terminal 1?
Mr. Hession: Yes, they do.
Senator Tkachuk: And the food goes for - do they have like restaurants there or do they prepare food for airlines?
Mr. Hession: They have food and beverage facilities there, yes.
Senator Tkachuk: Do they prepare food for like airlines?
Mr. Hession: I don't think so, no. That's done in kitchens that are elsewhere.
Senator Tkachuk: Somewhere else. They would just transport it through there.
Mr. Hession: Yes, you'd move it through in those aircraft receptacles.
Senator Tkachuk: Let me get this straight. The federal government is operating a building that would normally be shut down?
Mr. Hession: That would be my opinion based on the advice received by the people who have the authority to do that were it not a federal jurisdiction.
Senator Tkachuk: So the federal government is saying that the passengers should be going through what would normally be considered, in the city of Toronto, an unsafe building?
Mr. Hession: Again, that would be my conclusion based on the advice that I've had, yes; below standard.
Senator Tkachuk: Below standard?
Mr. Hession: Yeah. Again, it's important to understand that the standard-setting responsibilities under the various building codes which the provinces administer - province of Ontario in this case - are widely applied, in every case, presumably, except those where the jurisdiction is in conflict and they choose not to apply them.
Senator Tkachuk: So what would happen if you shut it down because the government felt responsible?
Mr. Hession: It would cause very considerable dislocation.
Senator Tkachuk: Well, what would happen?
Mr. Hession: The carriers would have to be reassigned to either Terminals 2 or 3.
Senator Tkachuk: What condition would that leave Pearson airport?
Mr. Hession: So much depends on gate availability, and because we're talking international and transborder - charter, international, transborder - it would be a real problem to achieve that transfer in today's conditions.
Senator Tkachuk: Would it mean that some of the conditions that prevailed in the late eighties would return?
Mr. Hession: They already do. That's the point I tried to make this morning. The transborder facilities in Terminal 2 are very congested today, and it will only get worse on top of that, obviously, if indeed some of that traffic moved into Terminal 2.
Senator Tkachuk: I'm asking you these questions because we've had discussions here in this inquiry about why the government had to act, to use the minister's words, fix Terminal 1 and 2, the Pearson airport problem. And there's been some testimony that, you know, maybe it ain't that important - maybe it isn't that important.
What I'm trying to establish here is that there is some moral responsibility on a government to act if certain facilities are considered unsafe.
Mr. Hession: I would agree.
Senator Tkachuk: You would agree?
Mr. Hession: Yeah, if indeed the facts in the present time are consistent with my understanding of the then facts, then I'd say yes. I'm not aware that there's been any fixing done since then, although I stand to be corrected.
Senator Tkachuk: I'm going to come back to that and, Chairman, I don't know if I'm running over my time, but I'm getting awful close.
Senator Kirby: Take your time.
Senator Tkachuk: We've talked a lot in this inquiry about, you know, we have bureaucracy and we have Claridge and we've got Paxport and we've got all these. This is all big business. This is all about something that almost seems alien to what people, you know, maybe the 100 people that might be interested that are watching this on CPAC. But the Canadian people have a stake in this, and we don't talk very much about that.
If the deal that was - and I can still say properly proposed and properly handled and properly contract was given out in 1992, how many jobs would we be talking - like what have we lost is what I'm trying to get at. What did we lose by not doing what we set out to do a number of years ago?
Mr. Hession: Let me speak in aggregates. The reason I'm doing that is that you'll recall from earlier testimony the projects spanned quite a number of years and so it would be a phase-by-phase job impact so to speak. That's too difficult for me to deal with today because, frankly, the details are not at my fingertips. But overall, had the project been executed beginning to end, there would have been about 19,000 person-years of work associated with that project, in addition to which, if our ambitions, which were not misplaced, not at all, if our ambitions to then move these technologies and move this knowhow, this Canadian knowhow out into the international market place - and I want to repeat, we were successfully - even without Pearson at that stage - we were successfully beginning to achieve incursions into that international market. Punta del Este was a done deal. We were ready to sign up at Prague, for example.
Senator Tkachuk: Help me here. When you say you were ready to sign up in Prague; to do what?
Mr. Hession: In that example, to effectively work with, as it happens, Schiphol airport and other interests to manage Prague airport and develop the terminal, do much the same thing we were planning to do in Toronto. The credibility of your international positioning is tied very much to what's going on domestically. That's been a long standing credo for anyone who's been in the infrastructure business. Lavalin, SNC, AGRA, these are companies who are flourishing today because they did major infrastructure jobs in Canada and took the technology to the international market.
Coming back to the point, had we succeeded, had our ambitions been fulfilled, over the same period of time we believe that there would be 45,000 person-years of work derived to Canada, the increment of difference being the international impact.
Senator Tkachuk: If we had begun - by we, the people of Canada, had begun the projects that were outlined in the proposal, how far along would we be, at Pearson International, in alleviating some of the problems?
Mr. Hession: The problems as seen through the eyes of Air Canada, which are pre-eminent here, I think - certainly Air Canada would agree with that - talking now about primarily the transborder focus problem would be fixed today.
Senator LeBreton: Terminal 1 would be fixed today?
Mr. Hession: Terminal 1 from the point of view of all those failings that I described, would also be fixed. Thank you, senator. That's also true. In fact, the staging was, go hard at Terminal 1 to at least get it up to adequate standards so that it could pass muster and do the transborder - there were other things, but the transborder thing primarily at Terminal 2.
Senator Tkachuk: If we jump now to the present rather than the hypothetical of what would have been, you were talking about Terminal 1 and we talked about capacity and I heard the Toronto Airport Authority people talking here, stuff about capacity. If we had to start this process now - and Senator LeBreton had talked about this earlier on - it's not a simple task of simply building airports, I mean, or building terminals. Like when you're fixing Terminal 1, somebody has to go somewhere.
Mr. Hession: That's right.
Senator Tkachuk: Where do they go? They would have to go to Terminal 2 and 3.
Mr. Hession: Yes. There would have to be redeployment. It doesn't mean you have to shut down Terminal 1. You can keep, for example, half the gates open while you fix the other half then just flip that sort of symmetrically. But you're onto something here that's the whole art form of redeveloping existing facilities as distinct from the building of a green field or a new terminal, which was the Terminal 3 example, which is why I found, and again I'm not wanting to appear negative on this, but I found the whole discussion of comparing Terminal 3 to Terminals 1 and 2 absolutely silly. It's apples and oranges absolutely, a green field versus... And the difference is in the phasing.
Imagine, there are, in this example, I think today probably 13 million passengers going through Terminals 1 and 2 today, and you're going to go in and start redeveloping these buildings. Well, what happens to those 13 million people? You've got to be very careful, very caring about their safety, their continuing access to available gates, cleanliness, environmental issues. There's a lot to think about when you're phasing construction in an existing terminal; a lot to think about. New terminal, there are no passengers so who cares. So that's terribly important, senator, to understand, and our phasing plan was a work of art, an absolute work of art, and the reason it was a work of art is that the people who did the domestic wing of Terminal 2, which was done on time, on budget by NORR and Ellis-Don as distinct from that module queue which took twice as long and cost twice as much. Same time frame; both of them were done, one by the private, one by the public sector. Those were the same people who meticulously, successfully managed the phasing for that work. And you may have walked through that area while it was going on, and it was amazing how they kept you safe and secure as you did so. That's the technology we were applying in our phasing program for Terminals 1 and 2.
Senator Tkachuk: Does it get to a point where Terminal 1 won't be worth fixing?
Mr. Hession: Well, this is opinion. We're there, in my opinion.
Senator Tkachuk: So what might have to happen by this delay is that they may have to shut the thing down?
Mr. Hession: Well, yes.
Senator Tkachuk: Like rebuild it somewhere else while they're using Terminal 1 unsafe facilities.
Mr. Hession: Yeah. This would obviously be Draconian, certainly from the point of view of the current users of Terminal 1 who, by the way, will tell you, some of them will, that they're happy with the present situation because it's extremely inexpensive for them to be in there, setting aside the safety and related issues. But on balance, would I invest a lot of money in Terminal 1 today? It would be anathema to good sense to do that and so I'd put the minimum in there and start doing what we proposed to do, which was create a new facility based on Terminal 2.
Senator Tkachuk: We've heard a lot about capacity here, again from previous witnesses, and we're not there yet, we're not at capacity. You made an interesting observation this morning where you mentioned an airport in Europe which is building for future capacity. And this is what I had difficulty understanding with some of the previous witnesses is that you don't build an airport for capacity because, if you do, then you're full, so now you've got to build another one or add to it or whatever.
So what we're planning for here is not like next year or the year after. When you were looking at your redevelopment of Terminal 1 and 2 you were looking at -
Mr. Hession: The year 2006 was our planning horizon, the year 2006.
Senator Tkachuk: That would have been starting in 1993.
Mr. Hession: Well, yeah, '94 I think. I think shovels were into the ground a matter of weeks after the contract was signed, had the contract been executed.
Senator Tkachuk: Okay. You were telling me about, and there was some questioning earlier about yourself and lobbyists and stuff like that. But despite all of this effort, you didn't always get your way - and all your knowledge - you didn't always get what you wanted.
Mr. Hession: Indeed not, indeed not. In fact, I was amused by Glen Shortliffe's comments, and indeed those of Madam Labelle, that lobbyists come and go from their offices with great frequency and, presumably, varying intensity, and they somehow carry on with their lives in more or less an inured way, more or less. I think that's a pretty accurate statement.
Bear in mind, my purpose wasn't lobbying for its own sake. I was, more accurately, using your language, I was selling something; something that starts with the identification of a need, which I, with my professional consultants, was able to well define, and a solution to that need. That's what I was selling. Now, you know, the conventional view of lobbyists, I don't think, contemplates that degree of intensity and focus. Maybe some people in this room have a different view. But I was running a company and I was selling a service and a product to solve a problem that I think it's widely agreed in this room needs solving.
Senator Tkachuk: You would have actually liked the RFP done earlier.
Mr. Hession: Oh, indeed.
Senator Tkachuk: From Paxport's personal point of view, the earlier the better.
Mr. Hession: No, forgive me, that's too easy to say. The problem was a major problem before Paxport came into being and so, whether we were there or not, that problem needed fixing. I didn't create the problem; it was there.
Senator Tkachuk: You would have liked not to have international competition for the bid?
Mr. Hession: Well, that's a whole different question. Again I go back to my roots which are, first, as the procurement manager for the government at Supply and Services and as the head of what is now the Industry Department immediately thereafter. Industrial regional benefits were an important part of my life. And I'd seen time and time again government after government, regardless of party, say, "How can we use our limited capital spending to create in Canada a capability that could be then exported?" And I was damn good at doing that. And ministers, both parties, will tell you, "That's right, he was damn good at doing that." So that's what I was doing, senator. I was saying, "Here's a chance to build in Pearson an international capability to go up against the best in the world." And when I said - I don't know if you picked up what I said - there was a $55 billion market going into the nineties that we could then get at. And in the meantime, British Airports who, as you know, were knocking on our doors and running back and forth across the country saying how wonderful they are - and I have no doubt they are wonderful. I didn't like the idea of a Union Jack flying over Pearson airport. I didn't like that idea. I was saying, "We have one chance, one chance, to get it right and put Canada on the map and then leverage our capability internationally."
That's what I wanted to do. By the way, some people think that's a good idea, some people think it isn't. Some people think the competition should be wide open. It's a point of view, and I think a very sound point of view relative to all those other examples that I've seen over the years, some of which I mentioned; SNC, Lavalin and so on. That's what I was trying to do, senator.
Senator Hervieux-Payette: Since you're talking about SNC, and I was with them before -
Mr. Hession: Yes, I know.
Senator Hervieux-Payette: I mean I know that SNC has had several occasions in the rest of the world to build airports in the rest of the world. I have stopped over in some of them. And I was wondering if your organization or the people you were with had the previous experience as well.
Mr. Hession: Yes. The answer is yes.
Senator Hervieux-Payette: Where?
Mr. Hession: You'll recall that I had invited into the group Schiphol airport as our principal advisors. That's where.
Senator Hervieux-Payette: Where are they from?
Mr. Hession: Amsterdam. They run Amsterdam airport. But in addition to which, Ellis-Don had done the building in Toronto. NORR had done the design and project management of Terminal 1.
Senator Hervieux-Payette: Where?
Mr. Hession: In Toronto.
Senator Hervieux-Payette: NORR is an organization from where?
Mr. Hession: From Toronto. By the way, I should tell you, I approached SNC. I met with the chairman, the president. We spent a fair amount of time talking. We had the gentleman from Toronto - is it Fenco? Fenco came up, we met with them. We had a number of meetings. The proposals were made by me, would they join our group, and they said no. So at least we gave it the old college try. They said no.
Senator Tkachuk: So despite all these efforts and lobbyists, government ground along at its own pace. Did you think you made much of a difference despite all this effort, or did government just sort of grind along and take its own time doing -
Mr. Hession: Oh, no, no, I don't underestimate the cumulative effect of what it was we did. The fact of the matter is there was a proposal call. In 1990, I sat with Ben Swirsky, the chairman and CEO of Bramalea, and with Don Matthews, the chairman amd CEO of Matthews Group, and I said, "We have to set out to do three things." One was demonstrate to the government that there was a feasible private sector alternative to traditional public sector financing of airport infrastructure. Second, we wanted to get a competitive proposal call out the door. And third, we wanted to build the indigenous industrial capability to do airport development internationally. Those were the three objectives. And I sat with those two gentlemen and there was agreement to that, and that led to the unsolicited proposal that you know about.
Senator Tkachuk: Once you lose something like this in the international competition that exists, it's hard to get back.
Mr. Hession: Well, in February of 1993, which would have been two months more or less after the award to Paxport, I was honoured by being asked to be the keynote speaker to a what was called a privatization summit in the western United States. And there were federal, state and local officials there, about 40 per cent of whom had airport interests. They were airport authorities and the like. And I made my speech and I remember concluding by expressing our pride again that Canada was the first to do something. By the way, I say "again" because Terminal 3, in case you don't know, was a world-wide first. It never happened before. And by the way, I take my hat off to Huang & Danczky, whom you may know are building the new terminal in Budapest. More power to them. They're leveraging their capabilities, the knowhow they picked up in Toronto, which is what we wanted to do.
I concluded my speech by saying, "Here we are, Canada; we're world champions in baseball and we're world champions in private airport development." And the people got up and said, "Hallelujah brother".
Senator Kirby: You ought to run for office.
Mr. Hession: I almost did, Michael.
And then later - this was sponsored by an organization called the Reason Foundation, and then the president of the Reason Foundation phoned me, when he learned of the cancellation, in utter disbelief. And he said, "Ray, what happened?" I wish I could have answered his question. I could not answer his question.
Senator Tkachuk: I just want to take you back to the RFP.
The Chairman: Senator Tkachuk would you sort of -
Senator Tkachuk: This is actually my last little point here then I'm done.
We've had some discussion on the Air Canada lease issue and we had the - you know, with the option - and we had the, Deputy, Madam Labelle, yesterday talk about the RPF and the lease issue. Did you know there was an option? Did you know that there was an option by Air Canada, or were you told when you were doing your proposal?
Mr. Hession: No. The proposal call made no mention of it. The proposal call did make mention of Air Canada's capital investment in Terminal 2 and the desirability of recognizing that in any deal that was done with Air Canada. We, by the way, in our proposal, offered $36 million to Air Canada, which was our estimate of the undepreciated amount of their capital investment, which I think at the time we estimated at $65 million. But that was tied to a 1997 lease renewal and we were depreciating it over the balance of the lease, which is a standard practice.
I learned of what I referred to in my remarks as the "Air Canada sandwich" in June, and I was frankly horrified, although it explained an awful lot of the dynamics that had preceded that June disclosure.
Senator Tkachuk: Do you know what Air Canada pays per passenger at Terminal 2?
Mr. Hession: Peanuts.
Senator Tkachuk: About what? What's peanuts?
Mr. Hession: Less than $2 per passenger.
Senator Tkachuk: What does Canadian pay in Terminal 3?
Mr. Hession: I'm relying on comments made to me by the Terminal 3 people, but it would be today probably under $7, maybe plus or minus 50 cents.
Senator Tkachuk: So they pay between two bucks and - there's a difference of say, use the high end numbers, of $2 and say $7?
Mr. Hession: Yeah.
Senator Tkachuk: And I can testify to this, and I would think any passenger, like a senator who travels a lot, there's no difference in - there's really no difference in rates between what I pay as an airline passenger to Canadian and what I pay to Air Canada.
Mr. Hession: You'll recall I commented earlier. The percentage of cost - if you look at the cost structure of an airline, the percentage of cost that airlines pay for airport facilities is a fraction of their total costs. So I'm not surprised to hear you say what you said. It would be imperceptible to you the passenger.
Senator Tkachuk: I make mention of this because Senator Kirby did mention last Thursday about that we didn't - that proposal callers didn't really care about the passenger and that somehow that the passengers would really pay more money, and I just wanted to clarify the point of what they pay at the gate didn't really perceptibly raise or make a difference in airline - what they charge the passenger as a rate.
Mr. Hession: Well, the economics speak for themselves. There's obviously increased cost associated with the improved terminal, increased above the present rates. But the imperceptibility of that is the important point. I'm not saying it doesn't exist; it exists, but the passenger is not likely to see it.
I think the more important point about what Senator Kirby said is that, while I don't agree at all with his summation, which was based on fallacious reports from the industry department, I would say -
Senator Tkachuk: You're not alone.
Mr. Hession: I know. That said, missing from that whole discussion was a $700 million investment. That wasn't even mentioned, which I find rather regrettable.
Senator Tkachuk: Mr. Chairman, I'm sorry I took 15 minutes longer than I should have, but I appreciate the extra time, I want you to know. I want to thank the Liberal members for letting me do this. It was a really big favour on their part.
The Chairman: You only took eight minutes over. That's very good.
Senator Tkachuk: Eight minutes over? That's real well.
Thank you very much, Mr. Hession.
Mr. Hession: Thank you, senator.
The Chairman: Mr. Nelligan has no windup questions for the witness. Is there anyone else?
Thank you very much, Mr. Hession,
Mr. Hession: Thank you, senators. Thank you very much.
The Chairman: You've been a very good and very forthcoming witness. I congratulate you.
Senator Tkachuk, if we've succeeded in nothing else, we've gone a long way to emptying Terminal 1.
Senator Tkachuk: It was not my intent.
The Chairman: Colleagues, we have another distinguished witness known well and favourably to myself as well as probably other members of this committee.
That's quite a military record you had, Brigadier. I didn't know about that part of your background as well.
Mr. David Broadbent, (Retired) Chief Negotiator for Pearson Airport Agreements: If I might say, senator, because sometimes a little bit of levity doesn't come amiss in a serious discussion of this nature, I recall the one and only occasion when I had to go and see Prime Minister Trudeau after I'd become a public servant. His EA showed me in and announced me as General Broadbent. I sort of did a double take and said, "Well, I answer to it but I don't advertise it." I have become a civilian.
The Chairman: Mr. Nelligan will more formally introduce our witness.
Mr. Nelligan: I think you all know the present witness, but Mr. Broadbent, in addition to his military career, had a long and distinguished public service career as well, being a deputy minister and ultimately retiring in 1991, Mr. Broadbent?
Mr. Broadbent: In 1992, I believe.
Mr. Nelligan: In 1992, yes, all right. He became involved in the Pearson airport as the special negotiator retained, as Dr. Labelle has told us, in 1993.
(David Broadbent, sworn:)
The Chairman: I understand you have some opening remarks.
Mr. Broadbent: If it pleases the committee, Mr. Chairman.
The Chairman: Please proceed.
Mr. Broadbent: I might say by way of preamble that while I will be using the structure of these notes, there will be certain embellishments. And I watched CPAC yesterday, except for the portion during the electrical storm which, by the way, I heard today resulted in a large number of calls to Rogers Television. So I think you have got more than 100 spectators.
I'm here willing, Mr. Chairman and honourable senators, to assist you in scrutinizing in public the deal for the long-term lease of Terminals 1 and 2. I realize its conventional to say that one is happy to make an appearance of this nature, but that would hardly be consistent with the proceedings I've just been through with the clerk. I'm not terribly happy. I find it disquieting because, in telling the whole truth, I'm going to have to say things that I'd rather not say.
But your quest for truth, in what I hope is as open and non-partisan a way as you can manage, that has my wholehearted support, and I think I should start by telling you why. It may sound a bit like Alice in Wonderland of sentence first and evidence later, but let me state my opinion and my position.
I would not have been party to this whole business without being able to look myself then and now in the mirror when shaving in the morning and know that what was done was right and that it was a good deal for Canada.
I say that and I start with that because, to be perfectly honest with you, I - and I know I'm not the only one, the gentleman who preceded me, for quite different reasons because his role was absolutely different and much bigger than mine from the private sector viewpoint, I know he feels, as I do, that our integrity has suffered, that there's been some form of slur cast on what we did, because if this deal was as bad as some people have said, and you've questioned some witnesses, I think, one who used the word "scandalous". If it was bad, what did we do wrong? Where have I got it wrong?
Not only that, but I'll be talking - I've been very proud. Canada has been very good me, an immigrant; a career you're aware of in the armed forces and in the public service. And I'm very proud of my years of public service and of the public service of Canada, which is going through pretty hard times. You have a large number of people who gave their all in terms of intellectual effort, support for what the government of the day wanted to do, absolute honesty, hard work, et cetera, et cetera, who similarly feel, "Good Lord, how could people think this is a bad deal?" We didn't. We didn't. And the difference is those people can't speak out when they come here, for good and valid reasons. I mean I've been an official and I know the sort of briefing one gets before one appears before a committee. I mean I've done it a number of times, as you all know. Stick to facts, don't speculate, stay away from opinions, okay. That's the role of the public servant. So these people can't say things and can't defend themselves, and I'm equally conscious of that, and I'll say it now, I'm equally conscious of that about the role of some of those who, in my humble judgment, was less than what it might have been expected. That's why I don't particularly like this situation.
But in comparing the two things, the defence of those who serve Canada well and produced what I believed, and still believe, was a good deal for Canada, and comparing that with the possible damage done some other people, there is no doubt in my mind which way the balance tips.
Okay, after discussion with your counsel, I concluded that it might be helpful to give you some notes. I did this for a number of reasons, first of all, having, for some seven years I guess, managed cabinet meetings and cabinet committee meetings, the Privy Council Office, I know that meetings run best when they're surprise free, and I didn't want to start dropping bomb shells. Therefore, I wanted you to have it before.
Et aussi, j'ai un grand respect pour la Loi sur les langues officielles et pour moi, c'est le respect pour le français de vous donner, par l'entremise du greffier, le rapport dans les deux langues officielles.
I might add at this stage, because first of all it may eliminate some questions and secondly, from a viewpoint of openness, that as I think Madam Labelle testified yesterday, I phoned her up, said I'd be appearing after her, which I thought was only appropriate - after all, I was her humble servant - but that I had prepared a statement and if she'd like to have a look at it I'd send it to her. I did. Because Madam Labelle accepted it, I thought it was appropriate to send it to the Deputy Minister of Transport, Nick Mulder, which I did, again on Monday afternoon. And the third person I sent it to was Bill Rowat, who should have been here this afternoon and presumably will be here tomorrow when you convene. Again, for similar reasons, he took over from me as chief negotiator, and I felt he should know what I was going to say, particularly as he is still a serving official, albeit now a full deputy minister.
I should just note here that I did not make available to any senators copies in advance of the distribution which I think the clerk made yesterday.
Et puis, quand j'ai noté que madame Hervieux-Payette a cité hier de ma documentation...
I just wanted you to know that I wasn't the source. I'm not making a big deal of that, but you will be clear I've not been playing favourites. I have friends, I like to think, on both sides of this room.
I concluded I should make an opening statement for a number of reasons, as I said. First of all, Mr. Nelligan told me that - I can't remember whether he said there were 20 volumes or there would be 20 volumes of material, and I said, "John, I've no intention of going through 20 volumes of material. Most of it I'd be seeing for the first time and what am I going to do?"
Surely it's better for me to lay out before you what I think is significant and then, whether you've got it in your paper records or not, you know, you can have at me and I'll take the questions, I'll take the fire, except, as I say later, if you want to get into intricate matters, I don't want to belabour the point where, first of all, when I came into this I knew nothing about airports except over the years I've flown out of a few. As Senator Kirby and I were, in an exchange before the meeting, saying, we both learned a bit, but I am not an expert. Let's get that clear. So if you want to get into detail or matters of intricacy, what I would like is round me the team that I will describe later that I had working for me in Transport. You could then get your questions answered by exports; not one at a time, but asking the team.
I did though, of course, review the documents I had in my own possession, as you probably read in my notes. These I had previously provided at the request of the Department of Justice to their senior counsel who was handling the litigation over the cancellation of the contract.
Let me add here, because of something that came up in testimony this morning from my good friend Ray Hession, I did indeed have a word with Ray Hession, and the circumstances were the following: I had a call - in fact I had two calls kind of back to back - from the private legal firms operating out of the Post Office building, so he told me, working for the Department of Justice on your books and the witness appearance and the like, and they said they'd like to see me. I asked them what their role was and they told me their role was in the preparation of document binders and the interview of witnesses, speaking to them on the evidence that they will be giving, et cetera, et cetera, so that they could advise the Department of Justice on how to handle things.
So I said, "Just a minute, let me get this straight. You would like me to come and tell you what I'm going to testify, and go through all your books, or particularly what I'm going to testify myself, when Justice already knows that. Senior counsel in Justice knows it." I said, "Surely that will be a waste of my time." So we left it. I didn't go.
To get back to the point that Mr. Hession made this morning, I phoned him and said, "Have you had a call to go and appear before this private law firm operating out of the Post Office building?" He said, "No, tell me about it." So I told him and, of course, I also shared that information with counsel here.
The Chairman: These were private law firms retained by the Department of Justice?
Mr. Broadbent: That was what they said, yes.
My aim in this opening statement then is to try and present a broad picture of what I think - I could be wrong, but what I see as the significant matters that happened during my time. My time was the 15th of March to the 17th of June, in terms of billing days anyway.
As I said before, I want to try and give you a framework to deal with this complex case. Earlier in Mr. Hession's session this morning when you got into the discussion about documentation, I was reminded of that episode in Yes Minister where the minister says to Sir Humphrey, "Oh, Humphrey, you must let me have all the information." And Humphrey went home that night with - as the Brits call them, boxes - a pile of these boxes; religiously went through them like the good senator working late at night, and it was only when he got to the bottom of the 12th box he really found the document he wanted. So there can be some problem, I submit, in just relying on paper records.
And there's another reason why I think I should talk, and that is because of the dog that didn't bark - the dog that didn't bark. I tested, over lunch, how many people knew that allusion which I'm quite certain doesn't have any French idiomatic equivalent anyway. So let me just, without trying to show off literary knowledge, at which I'd be a disaster, but this comes from a detective story, for those of you who may have forgotten, in which the significant thing was that the dog didn't bark. I think it was Sherlock Holmes who then deduced that this was indeed someone whose presence in the house wouldn't excite the dog. But it was the fact that the dog didn't bark that allowed him to solve the case.
Well, I suggest to you there are a lot of dogs that didn't bark in this story, and I'll tell you about some of them.
At the risk of appearing immodest, I better start talking about myself and my role because it's a bit unusual for an old retired guy like me to be pulled in to do this kind of job, or anyone, indeed, from the outside. And of course you have Madam Labelle's testimony, and I'll try and supplement that.
I'll then deal with the task that I took on, the key features of the situation I inherited, the strategy - part that I inherited and part that I developed - and this will lead me to a rapid review to give you a flavour for the types of issues that had to be dealt with. And it's in that area if you want to delve later, hey, I'll need help. And finally I'll conclude with what happened when I met Mr. Robert Nixon.
As has already been mentioned, I gave the clerk a copy in both official languages of the biographical sketch prepared when I was DM of Veterans Affairs. Since retirement in '92, through my company, I have undertaken off and on a few projects for senior government officials; two for National Defence, a small task for Parks Canada and, of course, a project for Transport Canada which you're interested in.
I have had one other major ongoing task in the private sector, so far without remuneration, seeking to assist, mainly with computer modelling, a fledging company called CanTalk, in Winnipeg, which, in alliance with Manitoba Telephone System, is hoping to introduce translation interpretation by fax and phone. I mention that because I have no business dealings, no business connections, with anybody who is involved or has been involved with Pearson et al.
I got a phone call from Huguette Labelle in earlyish March - can't give you an exact date - 1993, sounding me out on my interest on this, and I made a couple of points to her right away. Number one was that Ray Hession was and is a friend of mine. We're members of the same golf club, as is John Nelligan and the Prime Minister. We're in good company I guess. We play golf together, et cetera. And of course I've known Ray for a number of years. Madam Labelle said so was she a friend. She'd been a deputy minister colleague with him and she was sure that such an association wouldn't stand in the way of my objectivity, as it wouldn't with her. I said, "You're absolutely right", but I wanted this out in the open now, not running the risk of somebody coming along later and saying, "Palsy-walsy".
The second matter which I think I should cover was that I was still subject to the Treasury Board policy on fee abatement for senior officials. I'm sure you're not interested in the detail on this, but its major aim is to stop people leaving one day and going back into the same job on contract, but it's interpreted more broadly than that and the effect is that, if you're a guy like me, in the first year you can only be paid a pittance on a per diem for non-competitive contracts.
So I said to Huguette, "Without a waiver, look for somebody else." She was quite confident to get a waiver.
I'm not particularly keen on revealing all this sort of personal business information, but I think I should. TB approved the contract but, for what reason I don't know, took the decision that the 12-year clock, the fee abatement clock, should restart once I finished the contract with Transport Canada, a situation that, quite frankly, didn't please me greatly and led me to write, without any effect, to a couple of Presidents of Treasury Board.
I mention this for one reason and one reason only, certainly not pleading for support from this august body, but for anybody who may have been having any doubts as to whether Broadbent was sent in as the agent of the government, I think you'd agree that this evidence kind of points to such a cosy relationship not existing.
During these preliminary chats over the telephone, Madam Labelle explained the file and that the role of chief negotiator had been carried by Ran Quail, someone that hasn't appeared yet who was associate deputy minister until his promotion to DM of the then Public Works Department.
She told me - she stated the obvious, that she didn't have time to manage the file herself, nor could she pass the file to the assistant deputy minister, airports, because that wouldn't be acceptable to the minister, Mr. Corbeil, and she needed help.
I agreed to join her, started work virtually immediately, on the 15th of March. No contract in place, of course, but this is a good faith operation. And the task, as it became more spelled out, was to conclude arrangements, negotiations, so there could be a land lease and development agreement in place by the end of May, 1993; less than three months away.
Let me now turn to the key features of the situation I inherited when I started in the role of what Huguette and I eventually decided to call managing consultant. Paxport - and excuse me for taking you to task on this, Mr. Chairman - Paxport had not been decreed the winner. It had been judged to have the better proposal, but financeability and other matters, including the effect on stakeholders, had to be resolved prior to entering formal negotiations. This you know, but I'm afraid the members of the press continue to get it wrong.
A significant consequence of this situation that, as far as I know has not been revealed in testimony - you may have it in some papers, I don't know - was that the Claridge bid wasn't off the table; it was still there. So Claridge, if everything else fell apart, had a fall-back position.
Now, I won't go into any detail there because, as intelligent people, you can quickly work out what effect this sort of situation can have on the dynamics. The Claridge bid would remain on the table, pushed to one side admittedly, but would remain there until either Claridge withdraw it or a winner was declared.
You have had some talk about the financeability issue. It was quite clearly a central problem at this stage and needed a number of dimensions which I think I should seek to spell out for you. Number one was whether the capitalization of Paxport would be judged adequate by lenders to finance the redevelopment. Number two was whether all members of the Paxport consortium would ante up their shares so that capitalization would take place.
A third was the financial solidity of the Matthews Group given the situation of the day and the street talk of a lot of land developers running into difficulties, and this took on even greater prominence when Deloitte & Touche, in the person of Mr. Paul Stehelin, for whom I have a very high regard, discovered the presence of a $20 million loan to Matthews from Allders, for capitalization I guess, and of course this raised an issue of a completely different dimension that had in due course to be dealt with, and that was whether it was seemly for Allders, a company holding the lease for duty-free sales at Pearson, and I think a large number of other airports, to have such a large stake directly and indirectly in Paxport, an issue that had to be dealt with, and was.
The fourth issue was whether, given the troubled financial state of the airlines, which you have been reminded of by other witnesses, whether the airlines, and particularly Air Canada because of its dominance in Terminal 2, would be capable of or willing to pay the significantly high terminal charges, or rent, anticipated in the Paxport proposal.
However, circumstances were changed in a way that lessened at least some of these concerns. Paxport and Claridge, as you know, were combining forces into an entity called Mergeco and this morning you got into the business about the dates of that. How that was inspired I do not know. But, as Madam Labelle testified yesterday, she and I went, I think almost weekly, to meetings in Glen Shortliffe's board room, Glen, of course, being Secretary to the Cabinet and Clerk of the Privy Council, at which would be PCO officials, usually Bill Rowat, who eventually took over this file, Treasury Board, either Ian Clark or, more normally, Mel Cappe, now a deputy minister. At that time Mel Cappe was Deputy Secretary, Operations. And I think Finance was just about always there; usually Mike Francino, a good friend of mine.
From the very first meeting it was clear that the Crown did have a strategy and the strategy was to get the benefits of the Paxport proposal which had been judged better not only in the mercenary sense of a better return for the Crown but better development proposal, backed by the deep pockets of Mr. Charles Bronfman, as it was put. So how that would come about, I don't know. That was the Crown's strategy, and it worked. I claim no credit for it.
I should note also that very shortly after that - and I'm sorry I didn't keep a diary. I suppose one should, but I was a bit too busy to be making notes at the end of the day. Madam Labelle and I, together with an official from PCO, went to meet Mr. Don Matthews and Mr. Charles Bronfman in a hotel in Ottawa. Peter Coughlin of Claridge was there as well. The purpose for our attendance was to try and find out whether the marriage of the two companies was really taking place, and who better to talk to than the two principals. They confirmed what we had gone to hear, and a couple of things were said there that - it's funny how some things stick indelibly in your mind when a couple of years later you have trouble remembering other things. But two things stuck in my mind and I think are relevant to you.
One was a remark from Mr. Charles Bronfman towards the end of the meeting. He said, "You know, to me this is more than a business opportunity. I want to think that my grand-kids, in years to come, when they go through Pearson Airport, will be proud of it; proud of it because it is our principal air head, it's the place where so many visitors to Canada first get an impression of what Canada is."
Given Mr. Bronfman's reputation, which I don't need to remind this committee, of both integrity and as a philanthropist, I found his comments uplifting that there was somebody here who saw beyond the bricks and mortar to Canada.
The other significant disclosure was of a different nature. Mr. Don Matthews spoke, as we chatted, about the relationship with Air Canada and in essence he said, "Look we've been to see Air Canada but we haven't got anywhere. We've come away with an impression that they, as a major stakeholder, the major stakeholder, think they've got a veto on this." He said, "I don't blame them for playing those cards, if indeed they've got those cards, but if the government wants this deal to go ahead and we've got to make a deal with Air Canada, I think we're going to need help because, at the moment, they don't seem interested in doing business with us."
As will unfold, the Air Canada mention was, without doubt, the most critical factor in a highly complex situation.
Another very early meeting was with Mr. Barbeau. I took him to lunch and Victor Barbeau was very frank with me, and I appreciated that. He thought I was being asked to do the impossible; that a much longer time was needed to conclude these negotiations than the target date of the government allowed.
I assured him of two things: One, if I would discover it was not doable, I wouldn't stick around, I'd go and report that finding. And the other, a theme that I've referred to once and I'll refer to again before I finish, that there wasn't any question in my mind of producing a deal at any cost. Any deal that was produced was going to be a good deal or there'd be no deal.
But I went away pondering. Was it indeed impossible to do in less than three months what Mr. Barbeau estimated - and I'm not sure I recall this correctly, but I gave you in the notes needed 18 months, it may have been another figure. It was certainly a lot longer than three months.
As you know, I've had a bit of experience in managing turn-around situations; the Spicer Commission and Castonguay-Dobbie which became Beaudoin-Dobbie. But when you go into those things you never know whether you're going to be able to pull it off or not, I can assure you.
But to have a hope of success, I knew from experience there were certain key ingredients I needed. I needed a competent, full spectrum knowledge, fully dedicated - that means full time as well as dedication of spirit - team. I needed instant access to the deputy minister, so I didn't go out too far on a limb in negotiations. And I needed fast turn-around on inquiries, particularly to the Airports Group because that's where the expertise really resided on highly technical matters - highly technical matters.
Huguette Labelle agreed on all points. She put me in the offices just down the corridor from hers that had been Ran Quail's, the associate deputy's offices. She helped me get the staff together. She granted me access at every time. I think she would agree, and I don't think there's anything she said yesterday that would disagree with this, that we worked smoothly together.
I did pull together a first rate team. Initially I felt that a previous witness you had, Mr. Wayne Power, should, by virtue of the position he had - he was a senior official in Toronto really responsible for all the fiddling around with the redevelopment - I thought that he should be my right-hand man, but he declined. I didn't ask him why, so there's no point in you asking me. I did know one thing: I didn't want anybody who wasn't a volunteer, anxious and enthusiastic to do it, but, I stress, he did become heavily involved in negotiations later.
I was indeed fortunate in securing the services of a guy I'd never met before, Keith Jolliffe, from Airports, as my right-hand man. He'd been involved in the whole evaluation. He'd worked in the private sector, he'd been a vice-president with Canada Post, so he could see things both from the bureaucratic side and the private sector side easier then some other people could. He proved to be a man of high energy, absolute integrity and great moral courage. He was on the project pretty much throughout its life. He served Bill Rowat after I left and, hence, his expertise with the project, particularly on the - well I won't - his expertise on the project is, as far as I'm concerned, second to none. If you want to get into matters of intricacy, I want him, and preferably others, by my side. On the other hand, you might want to call him as a witness in his own right.
Working with Mr. Jolliffe was Don Dixon from the Finance branch. He's now in a different department, but you've had him as a witness. He worked closely with Paul Stehelin of Deloitte & Touche, who was also a tower of strength, and as well Don looked after - he developed and ran a system which allowed us to keep track of issues and where they were because, as I'll describe to you in a moment, not only were the issues complex that had to be dealt with, but we ended up with a complex system to deal with them in order not to take 12 months or whatever.
Other people involved; Ms Mara Lee McLaren was our analyst and, by golly, we needed one with all the number crunching that had to be done on how many gates do you have if you do this and if you do the other. And Judy Boulay, also from the Airports group, was my personal assistant. That, together with Christina Richichi, a secretary, was the core of the full-time team. I could not have been better served.
Similarly, I have nothing but the highest praise for the lawyers assigned to Transport from Justice, headed by Mr. Bob Green and his alter ego M. Jacques Pigeon. Able commercial law advice was provided for long periods, together with Justice lawyers essentially, on a full-time basis, for long periods of time, by Gordon Dixon of Cassells, Brock, and at critical early junctures he was joined by Mr. Don Guthrie, Q.C.
The strategy for negotiations with which Mergeco agreed was to run things as much as possible on parallel tracks. Remember, we couldn't get into formal negotiations because the financeability thing had to be dealt with, so what I called the blockers, the deal breakers, financeability would be handled at the central table that I would chair. But at the same time we instituted a number of other tables; for personnel matters, for operations and technical things, for personnel, and eventually for industrial benefits, although that came a little down the pike. And the idea was, to save time, to let these people go into informal discussions, which were really negotiations using a euphemism; to get as far as they could, to kick to the central table any issues that were too big for them where they bogged down. And the idea was, of course, that when we got into formal negotiations they would have made all these yards beforehand and would be able to conclude the whole thing more quickly.
The other thing we did, which I'm sure will frighten the lawyers in the room to death, is that we agreed that we would have legal drafting take place in parallel. This is a bit wasteful, and legal resources are expensive but, once again, we wanted to do everything we could to get things done on time.
In concluding this section let me highlight two things, if I may. First, the approach worked; not perfectly, but it worked. I'd like to draw particular attention to commend people on the personnel group. Ray Hession said he was on the other side of the table. The guy on our side was Mr. Daniel Paris from personnel in Transport, and he and his team did an outstanding job. They were the one group that finished their tasks ahead of deadline, and they had some very difficult issues to deal with. The same level of support came from Finance and Communications officials in the departments.
Additionally, I'd be remiss if I didn't express my gratitude to Mr. John Desmarais of the Airports Group, who didn't work full time with the group but came during the difficult negotiations, for his wise counsel and unbiased participation in negotiations, and creativity.
I'd stressed from the very beginning - and here's the third time I underline it - that any deal we reached would have to be squeaky clean and would be squeaky clean and able to withstand the closest public scrutiny. Some of the things we negotiated were with that end in mind. For example, at a certain and appropriate stage, I had persuaded Pearson Development Corporation that they would put in the public domain the very complicated organizational structure that had been brought about. Please don't ask me to explain it. I never fully understood it. The reason is that I knew that the relationship between Claridge and Mergeco and the other partial owners of T3 was going to occasion all kinds of questions and it was a token of good faith for them to put this out so that senior members of the financial community, or people who enjoy looking at such things, could see it and, if there was anything they thought was wrong, could raise it.
It's not just a question of public servants who were involved in this. I think if you were to question Paul Stehelin or Gordon Dixon, both of whom, as I said, for long periods of time were essentially full-time members of the team, I think they would give an opinion that this deal was in the public interest.
The final point is that we bore in mind, although it quite frankly didn't require too much bearing in mind because it didn't change things a great deal, but we bore in mind the desire of the government that the deal be transferable to an LAA if the government were ever in the future to choose to go to an LAA for it.
Key developments: Here, as I say, I'll be brief. I'll merely highlight, touch on some of the more critical problems to give you a flavour for what had to be done. The financeability question I've already mentioned. The Crown's concentration while Mergeco was getting its act together - and this was really something I inherited - was to minimize the up-front hit on the airlines and to get Mergeco to absorb the costs, at least for a few years. Mergeco weren't keen on doing this. Their position was, "Hey, if you want us to go easy on the airline, Crown, you cut back on your ground rent." And I said, "Gee, I don't think any government is going to be terribly keen on that because even-handedness between airlines, it could be construed as a quasi subsidy to one of them."
Eventually, there was a complex deal arrived at which sorted that one out. The whole question of passenger volumes, which-
...que vous avez abordé ce matin...
-you touched on today is a highly complex issue. The questions of what traffic volumes would trigger development stages - because it became clear that "financeability" - you didn't want to build something, the developer didn't, unless you could start getting some return to cover your expenses and pay off your lenders.
Mergeco, you might imagine since it was Mergeco at that stage, believed that more passengers could be accommodated than transport believed was suitable. That's to be expected, I guess. Similarly Mergeco, not unnaturally, wanted an assurance that a future government wouldn't divert traffic from Pearson once a development stage, triggered by a certain passenger volume, had been reached - in other words, wouldn't go under the projected volumes; wouldn't take traffic away.
This was a very thorny issue. And, if you think about it a minute, you can see why. You can't take passengers away at the margin. If you want to move - it doesn't matter whether you're opening a new airport or moving somebody to Hamilton, for goodness sake, you've got to move an airline. They don't want some of their flights going from one place and some from another. So you're dealing in crunchy numbers. Okay? This was tough to work out, but we worked something out.
Environmental concerns and who'd be responsible for pre-existing but currently unknown conditions was a thorny question that dragged on and on. Assurance was needed and received that one entity operating all three terminals wouldn't run afoul of competition policy. Seeing that came up in Madam Labelle's testimony yesterday, I would merely supplement that.
Yes, indeed, the parties had been alerted to get in touch with the competition policy people. Obviously I, as chief negotiator, needed to know if there was going to be a problem here. So what I did was phone our friend and former colleague, Janet Smith, who was running consumer and corporate, and said, "I know competition policy is arm's length but could you confirm with me that: (a) it's being looked at; (b) it's being looked at with some expedition; and (c) I'd sure like a phone call from somebody if it looks like being any difficulty." So, I mean, that was the extent of my intervention and, of course, the competition policy people eventually said "No; it's all okay."
Something that's not in my written notes here has come up and I'm perhaps as well to deal with here. The question was raised, from I'm pretty sure a member of the airports group, as to whether the departures from the Paxport proposal - both in the fact that it now just wasn't Paxport but was Pearson to be, Claridge involved on the one hand; and, on the other hand, the changes in the Paxport proposal - whether, these were sufficiently large to have crossed over a threshold to make it non-kosher. Madam Labelle and I raised this at one of the meetings with Glen Shortliffe and the Treasury Board, and Mr. Shortliffe gave instructions for the Treasury Board to jump on this issue right away; to have their people, who are defenders of the sanctity of the contracting process, look into it. As I recall, they came to see us, looked at the RFP, all the rest of it. And, of course, while I stress those people would not be the decision makers for the minister of the Treasury Board, they are their advisers and on a highly technical matter like that their advice would, you know, normally be followed. So they gave it a clean bill of health from that viewpoint.
The question of the reasonableness or rate of return has been addressed. And the media have played with this, you know, this enormous long lease. In my humble judgment, most of that is a lot of eye wash for the following reason: Pearson needs fixing now. You were talking about that this morning. You know it.
Without being precise, one can be pretty certain that if you'd done that, in 20, 25 years time there'll be something else that needs doing or you won't stay at world standards. That involves, you know, raising money; deciding what will be done, and all of rest of it, particularly if Mr. Bronfman's commitment from the soul for Pearson to be a world class facility was to be maintained.
And I'd like a transition on that because Charles Bronfman, like the rest of us, will not live forever. Ownerships can change. And we had to make some provision in there to make sure that nothing untoward happened in change of ownerships. But how could we nail down this commitment to make it and keep it, over the term of this long lease, a world class facility?
Well, I guess I'm responsible for the idea on this. And, essentially, it was to charge the Pearson Development Corporation with the responsibility for hiring an independent contractor with adequate expertise who would put down the standards of what constitutes a world class facility today. We can all imagine some of the things it might be: How many seats there are in given areas, et cetra. That same, or another independent contractor, will be required to audit periodically against the standards. If deficiencies were found, Pearson would have time to recover. The independent contractor or Pearson would also be obliged, through the independent contractor, to periodically update the standards because what constitutes world class standards changes with the body of aircraft and any number of other things change, passengers' expectations.
So, it was all theoretical, but we had there the makings of something pretty important.
Let me just share this with you. Peter Coughlin from Claridge was a bit nervous about this because, quite frankly, it was going to cost dough. Jack Matthews very quickly came around and said, "We should go with it, Peter", 'cause he could see that if Pearson development had done its job and made Pearson airport into world class that, as Ray Hession mentioned this morning, was really the precursor for strengthening its overseas marketing in building other airports. And if, in addition to that, you could go in and say, "And we have standards that you can audit yourself to make sure people continue to run the place", that would have strengthened its marketing arm, as you can see. So we went with that - I might add, with the deputy minister's support, which overruled opposition to it from the airports branch.
This, I hope, gives you some feel for the scope and complexity of the most major issues. I think that what I negotiated during my tenure virtually all stayed in place for Bill Rowat. I don't think they had to redo anything. Certain areas we've broken and perhaps ploughed the ground, but we haven't really produced any crop and, of course, Bill had another very difficult matter to deal with which, of course, was the Air Canada thing I'll come to.
Eventually we got the "financeability" question resolved to Deloitte Touche's satisfaction and that of the deputy minister and myself, the officials we consulted in the PCO and, ultimately, ministers. I wouldn't say that we had the agreement of the airports branch that all the requisite worries had been taken care of. We were in part driven to try and get into final negotiations by another factor, and that was the one-year notice provision in the government's "Work Force Adjustment Policy". So we got the okay to go ahead in formal negotiations. Claridge withdrew its proposal from the table, much to my relief. It had eliminated a nagging concern. And that, essentially, was the process.
There was a further dimension to this, and it involved Air Canada, and some of it you've already heard evidence on. I'd only been on the job a week or two - I'm sorry I can't be precise about dates but perhaps Bob Green, the justice counsel who came to me, kept a record. He brought disturbing news. Notice this came from the justice counsel assigned to transport, not from an official in transport. The disturbing news was this document that has been referred to as the principles document. It was signed by Mr. Ran Quail on behalf of Mr. Glen Shortliffe, as deputy minister. It was dated in 1989, I think August '89. But it doesn't matter. The important thing is it was long before any RFP. The reasons become clear later. I don't have a copy, although you probably have in the stack of binders there - at least, if you don't have that there's something wrong.
The thing covered at least 20 points, I believe, but the most significant one within it, and the one the lawyers pointed my attention to, was an undertaking, agreement, or whatever, to lease Terminal 2 to Air Canada for 40 years.
You may find this surprising. I don't have a written opinion on this. I did seek the views of both justice and Cassells, Brock, and it was pretty alarming. Perhaps I shouldn't go further on that point because I'm not absolutely sure that the principles document and the promised 40-year lease is completely out of the picture today with the contract being cancelled. So perhaps I shouldn't say what justice's opinion was any more than I have done.
The advice to me was that we had to disclose the presence of this document and we've got to sort things out.
Now, the dog that didn't bark. I have found it very strange how few people have asked, and I'm not speaking of this committee now, I'm talking elsewhere: How could an RFP go out in a department run by competent people when they know there's a document that promises to lease the thing that you're going out with an RFP to lease this to others? I mean, I'm not a lawyer but, a breach of promise?
The Crown - we were at risk on two sides. One was that, if we didn't sort out the Air Canada mess, we were in grave risk of Claridge or Paxport saying, "Hey, we wouldn't respond to the RFP if we knew this. Great! What are you guys doing?" I mean, this whole Air Canada situation consumed an inordinate amount of time in trying to resolve this and, ultimately, of course, could not be resolved during my tenure.
What we tried to do - I mean, the deputy minister spoke with Hollis Harris and I got put on to Durette Lamar - quite frankly, we tried to smoke 'em out without showing our hand as to whether they were going to be holding up this document. And, the same problem because we didn't want to do things if there was no problem there. This took time.
Ultimately, disclosure was made to the contenders. And I put in the 11th of June there; I think it was on the day before I left on the 16th from some documents because I'm pretty sure they read the letter in Madam Labelle's office.
The hope had been that Pearson development would go to Air Canada and sort this out along with the other things. They wouldn't touch that with a 10-foot pole - I mean, Peter Coughlin and Jack Matthews - really at no surprise to me. What they called upon was for transport to get the playing field levelled and, as I said, made references to "Hey, would we have? I don't think we would have bid on this contract if we'd known the existence of this document," which contained a hidden message, I think, which I needn't spell out.
While there were a number of approaches followed, ultimately what we decided to do was to have an estoppel certificate issued. I wouldn't know one if I met one on the street, Mr. Chairman, but I'm told it really allows the person who holds the lease to sign and say, "Yes, these are the conditions. This is my lease." And our hope was, "Gee, if we send that to Air Canada and they sign it, then we don't have to worry about the other promised leased document. If they don't sign it, we're going to have a problem but, I mean, hey, this is how we're going to try and smoke 'em out."
I thought an estoppel certificate could be prepared pretty quickly. Perhaps I was impatient, Mr. Chairman. It took longer to prepare than I would have liked and I guess I got on Chern Heed's back a little bit, you know: "Where is it?" I was told that, "Gee, you know, this is difficult to prepare because is it Mergeco or Pearson Corporation? We're not quite sure." I said, "For God's sake, put `To Whom It May Concern'. Just get me the thing!" In fact, I was losing my patience; not a good thing to do. It also so made me pretty uneasy.
I didn't have long to wait before my justice lawyers were back and said, "Hey, real problems, boss, with that estoppel certificate." The current Air Canada lease was dated - the formal document, I gather - in 1988 and there'd been four amendments made subsequently. I never saw the document, whether these were initialled or not or what, but the impact was that Air Canada owed the Crown, owed Transport Canada, about $8 million extra for this period of time, which hadn't been collected. The dog didn't bark.
When I heard this information, I was very disturbed. Huguette was away doing something else - and I don't think I've ever told her this - so, I immediately called Andy MacDonald, who was comptroller general and said, "You know what I'm doing, Andy. This is the situation I face. This could be very tricky." I phoned the ADM financial administration, the chief financial officer department and said, "I think you should know". And, I thought, in doing them a favour, I also phoned the head of the internal audit section because, I suppose, my expectation was that internal auditors would be sent in. As I say, I don't recall whether those three phone calls that I made would be a surprise now to Madam Labelle or whether I told her at the time. I rather suspect that I didn't mention it because, as I explained the situation, she said, "We must talk with the ADM airports", who by this stage was the acting ADM, Mr. Farquhar.
And again, you know, the shoe didn't rock. No one said, "Oh, yeah, well we know about that. We got the minister's direction to go easy on them". Or no one said, "Oh, I didn't know about that. Good God, what have those guys in Toronto been doing?" you know. Nothing.
I thought that this unfortunate situation perhaps gave the Crown a bit of leverage in dealing with that 40-year lease. But as you will have seen in the notes, Mr. Farquhar very properly reminded me that Treasury Board regulations require debts to be collected and you couldn't wheel and deal with them. Again, the dog didn't bark. If one's going to be so silent pure, why had that debt been allowed to accumulate?
That was really the finishing touch for me. A progress report was to be given to ministers I think on the 10th of June and before we went there I said to Madam Labelle: "Huguette, you know I feel I've been managing this file with one hand tied behind my back. I've not been getting the support from the airports group that I should have been getting". She said, "I know, David"; or, "I know you feel like that, David." I forget. I said that I couldn't stomach working in such an atmosphere. Any time that I had made, you know, that there'd been a problem that I'd gone to her with - and I can assure you I didn't go to her with all the problems - Madam Labelle took action. She spoke to people and tried to fix it. I mean, we had a good working relationship. She knew what a good public servant had to do, what a deputy minister had to do. She didn't need me to tell her. Of course, I wouldn't tell her. But I couldn't stick around there wondering when I was going to be blindsided the next time. I told Madam Labelle that.
I can't talk about what happened in front of ministers because while, you know, I'm not a public servant now, I consider myself bound by that same oath. I can, though, say what happened after the meeting and that is that Glen Shortliffe came to me and said, "David, all this bloody nonsense about you quitting, eh, you know? You know you're needed there." I said, "No, Glen. My thoughts are playing golf." Yes, I mean, that was something I was looking forward to. But it's not just to play golf that I'm quitting this. I said, "I told Madam Labelle, I can't stomach working under the conditions I've had to work under in Transport." He said, "Oh." I said, "Didn't you know that?" He said "No", and left it at that.
I think I was proved correct that what was needed, perhaps what was needed back in January when you look at it, was somebody with line authority who could take over this and not have to deal on a by-your-leave basis, as I had to with officials.
I was pleased that Bill Rowat was picked to do it because Bill knew the file and Bill pulled it off. He sorted out the Air Canada mess, as he will tell you, I'm, sure, at some expense to the Crown and to the Pearson Development Corporation but he negotiated a deal. That was the conclusion. I mean, we had a very brief handover. I took all my staff to lunch at our golf club, John, and we had a good time. And I thought, of course, that was the end of it. There was then the cancellation and Mr. Nixon's report or, rather, his investigation, and I was asked to go and see him. I can't give you a date on that; probably someone can. And I found myself there with Ran Quail and Bill Rowat.
Two things stand out in my mind from that meeting. Number one, Mr. Nixon asked about lobbying. And all three of us, who'd been chief negotiators at various times covering the most significant periods, said we'd never been approached by a lobbyist. Now, there are lots of lobbyists around, and I knew who they were. But I'd never been approached and the other two said they'd never been approached, to which Mr. Nixon responded, "What were these guys wasting their money for?" In other words, if they weren't getting at you.
Later in the meeting Mr. Nixon said, "You know, it wouldn't have been so bad if this deal had been finished earlier in May or something like that, but right on the eve of an election." So I said, "Mr. Nixon, may I see you privately?" And when the other two left, we reconvened. And I said, "Let me tell you why this wasn't finished earlier." And, of course, what I told him about was the Air Canada mess because I was convinced that if we'd not had the failure to disclose the 40-year lease document or I should say more correctly, I suppose, the elimination of that as a problem before the RFP was issued - if we hadn't had that and we hadn't had the extra complication of the $8 million in unpaid rent but, I mean, the big thing was the 40-year lease - I am firmly convinced that we could have concluded this deal on slightly better terms to the Crown. There wouldn't be the need to do the second deal with Air Canada on slightly better terms for the Crown in - I don't no know; hard to say - "Junish", July at the most. And I wonder what difference that would have made. But, I mean, it said to me that Mr. Nixon didn't seem to think that the deal that we'd negotiated was so bad. I'm not putting better words than he used in his mouth. But it was the timing of the thing.
Well, I'm only here to defend one thing, and that is the deal to the extent that I was involved in its negotiation. And I'll close where I started, Mr. Chairman: I think it was a deal in the public interest or I wouldn't have been part of it. Thank you for your patience and I'll do my best with questions.
The Chairman: Thank you very, very much. That's very interesting testimony, Mr. Broadbent. Thirty minutes for questions. Senator Kirby.
Senator Kirby: Mr. Chairman, consistent with our usual rule, it's 30 minutes so we can have a second or third round, or whatever is required to complete our discussions. Is that correct?
Thank you Mr. Chairman. Thank you, Mr. Broadbent, for your opening comments. Forgive me, Mr. Chairman if I make a mistake and occasionally call the witness by his first name. We happen to have been colleagues in the Privy Council Office at the same time and it's sometimes hard to be formal under those circumstances.
Senator LeBreton: Can I do that too, then?
Senator Kirby: Absolutely.
Mr. Broadbent: Equal time.
Senator Kirby: Equal time.
Just to clear up one point, Mr. Broadbent, because you sort of began and closed with the same point, which is your view of the quality of the agreement that you worked out, at the beginning in your opening remarks - in your ad libbing portion as opposed to the portion you just distributed - you made some observation to the effect that at least implied by innuendo that people who disagreed with you were in some sense questioning your integrity. I would have thought that someone who had sat around as many cabinet tables as you have had can understand that reasonable, well-meaning people can frequently differ on what is in the public interest and what constitutes a good deal. And, therefore, I was a little bothered by your opening. As I say, the ad lib part is not in the brief you have circulated but that seems to imply - and you've sort of touched on it in your closing comments - that people who have a different view of the quality of the agreement that was worked out are in some sense wrong in some absolute sense rather than a judgment sense or in some way are questioning your integrity.
I'm not sure you meant to leave that impression and so I ask you whether or not you really intended to leave that impression.
Mr. Broadbent: I think it's a "yes" and "no" answer, Mike. I mean, some of the people who said some of the things are people I respect highly - our Prime Minister, you know. I don't think the Prime Minister had been very well advised on this file, quite frankly. Now, I fully agree. If you say, "Hey, no. The only way to go is LAAs and let them sort this out," and that's your belief that that is good public policy, then obviously this is bad. If you believe that, "No, you should never have private sector developers build a terminal. This should be done through contracts with Transport Canada", well, I guess it would be bad as well and you'd probably set out expropriating Terminal 3.
But I mean some very - with respect, if I may - strong language has been used. I'm not speaking here about - wasn't "scandalous" Mr. Bandeen's word?
Now, I'm not talking about the veneer around this thing. I'm not talking about the motivation that set it off. I'm not talking about political interest in getting it moving. I'm just talking about one thing - was the deal good for Canada? I could be wrong, but if I'm wrong, an awful lot of people are wrong with me because, quite frankly, I have not spoken to anyone or heard a responsible official who's talked to people in the business community who has any knowledge of this who said it's a bad deal. That's why I worry about the shadow cast over me and over those public servants, the loyal public servants who tried to get this done.
If I overstated it, Senator Kirby, I'm sorry, but I think if you were in my shoes, you wouldn't feel terribly pleased to have done this amount of work and then...
Senator Kirby: Just as a comment, having negotiated a number of agreements for the federal government, I have been in your shoes where they also got shot down and have been bitterly attacked. So maybe I have somewhat less absolute certainty about my own judgment of what is good and bad than you do.
I wonder, Mr. Chairman, given the time limit, let me tell you what I would like to do. Since I have arranged my questions by topic, I'm happy to take a break, if I can, in between topics rather than part way through a topic. So when I get to the end of each of my topics, I'll gladly let you know, if that's okay.
The second thing is that - and I said this to Mr. Broadbent before we started this afternoon - consistent with our discussion in here this morning about documents and in an attempt to help anybody, I had my office duplicate at the lunch hour documents that I may use. If in fact I go to refer to a document, my assistant will immediately give a copy to both the witness and all the senators, including the clerk, so that we will have all the documents at the same time. I think I have duplicated some I won't end up using, and that's why I'm not passing the whole group out if that's okay.
The first subject I want to discuss, then, is the issue of essentially the timetable that was set or the deadline that was set. I refer you I guess - well, I don't even need to go to a document. In a number of the discussions that we've had thus far, it's been clear that there was a timetable, a deadline - whatever you want to call it - alternatively May 31st, June 1st, June 15th, that sort of time frame. I guess I'd like to understand where that date originated, why that date came, and who did it come from. What is the origin of that specific deadline? What was so magical about it?
Mr. Broadbent: Well, let me tell you what I know.
Certainly from the original conversation with Huguette Labelle, it was clear that there was a desired timetable to follow on this project. That was put perhaps in more crystal clear terms when we met with Glen Shortliffe, et al., in his boardroom in the Langevin building.
Why the end of May? I have no personal knowledge. I can speculate the way you can, but I mean, I don't think you particularly want me to speculate on a thing like that, but I mean I will if you want.
Senator Kirby: Well, I think some of your opening comments were speculation in terms of - two or three of the things or comments I thought included an element of speculation, so I guess I'm quite happy to have you speculate.
Mr. Broadbent: Well, I mean what seemed clear to me was that the government of the day, and particularly, probably the Prime Minister of the day, wanted to finish a bit of business before changes took place. That's, I would suggest - you know, we had a different experience, but that is not unique. Governments usually have unfinished business. There are usually some things that pressure is exerted onto. You know, "We want to finish this before the mandate or before leadership is handed over," or whatever. I don't find that unusual. In fact, I know it's not unusual because I was involved in another case before when I was a public servant. As long as what is being done is right, I don't think there's any real problem. It may be asking an awful lot of the public service, but the Public Service of Canada, as we both know, is used to having an awful lot expected of it.
Senator Kirby: Two questions. You keep using the word "right", and I guess I have trouble - the trouble I used to have with my students when I was a university professor - but I have trouble with the word "right" when it's a value judgment.
Mr. Broadbent: Sorry. May I correct myself, then?
Senator Kirby: You are acting almost as if your set of values are "the absolute right values", and I have difficulty with that.
Mr. Broadbent: I'm sorry. I didn't mean that at all. What I meant was provided that this is a legitimate and not illegal thing. Okay?
Senator Kirby: Okay, but I read it the other way.
Mr. Broadbent: Sorry.
Senator Kirby: In response, in your speculative answer, you made a comment - clearly, in your view, speculation, I understand - that the Prime Minister wanted to have it completed before he left office. Did you ever have that discussion with him directly -
Mr. Broadbent: No.
Senator Kirby: - or with his deputy?
Mr. Broadbent: With them?
Senator Kirby: Sorry. I guess at that point Mr. Shortliffe was his deputy, is that right?
Mr. Broadbent: Yeah, that is correct. In a way, I'd prefer Mr. Shortliffe to answer this himself, but I mean seeing what transpired when I was there with Mr. Shortliffe, I will, in order to try and assist the committee, respond.
Yes, Mr. Shortliffe said that the Prime Minister had a live interest in this file and quite frequently asked how it was going. Now whatever pressure, if there was any, came from that direction and stopped with Glen Shortliffe. He was the buffer. He absorbed it. There was no pressure on me.
Senator Kirby: I understand that.
I wonder if I could turn to document number four.
I'm looking at my assistant, Ross Little. Could you give document number four to people, please.
While it's being distributed, Mr. Broadbent, I'm not going to get into any technical details. I'm going to stay strictly at the policy level with you basically. So if you decide you want someone else on your staff to help down the road, that's fine, but my personal view is that that will not be necessary.
Senators, this is a memorandum from Sid Gershberg to Mel Cappe, with a copy to Ian Clark - that's I.D. Clark - which are the subject of a DMs' meeting. I don't know what the appropriate - whether it's up to me or to you to say - I know who all the players are, but maybe you just ought to for the record, Mr. Broadbent, tell us who Sid Gershberg and Mel Cappe and Ian Clark are.
Mr. Broadbent: I sure will. I have not seen this before, so I hope -
Senator Kirby: There's only one piece of it I want to refer to because these names are going to appear several times.
Mr. Broadbent: Mel Cappe at that stage was the deputy secretary of operations in the Treasury Board.
Senator Kirby: The old program branch.
Mr. Broadbent: The old program branch. He reported to the secretary, who was Ian Clark.
Sid Gershberg was one level down. I recall that Sid Gershberg represented Mel Cappe at one of these meetings, and this is presumably a report from Sid to his boss, copied to his boss's boss, on what transpired.
Senator Kirby: Okay. In your earlier comments - well, turn to the top of page 3 for a moment. I think that's the easiest way to do it. Have you got the first paragraph on page 3?
Mr. Broadbent: Okay.
Senator Kirby: The subhead is "Current Status", and then it begins:
Paxport officials... have stated that Transport has really "awarded" the contract to Paxport and are outraged at what they see as bureaucratic stalling. We understand that Minister Corbeil has indicated to his officials his preference to award the contract to Paxport, but he wishes to respect the system.
What do you mean - sorry. Do you know what was meant by "respect the system", or do we have to ask Treasury Board people that?
Mr. Broadbent: I'm troubled not only because - not only do I not know what that means -
Senator Kirby: Okay.
Mr. Broadbent: - I don't understand on what it's based because it doesn't really tie in with my recollections.
Senator Kirby: That's fine. The only reason I even raised it with you is that you commented earlier in your ad lib portion in the middle of your statement, and the notes I made to myself are that you commented that you had been asked to confirm or someone had been asked to confirm whether or not, given the magnitude of the changes and the two partners getting together, whether they had constituted a sufficient change to make the deal "non-kosher", was your word.
Mr. Broadbent: I don't think that's what he's getting at.
Senator Kirby: Okay, then, that's fine.
I'm happy to leave that, Mr. Chairman. I'll come back to it when we have Treasury Board officials present.
I wonder, then, if we could turn to document number five. I would ask that document number five be distributed. This is a document from Dale Nankivell to Jack Matthews, which was given to Mr. Broadbent on April 15th, 1993.
I believe we already know, for the record, who Jack Matthews is. Who is Dale Nankivell?
Mr. Broadbent: I don't - I mean I think I have come across the name before because, indeed, I think a copy of this came to me.
Senator Kirby: It did.
Mr. Broadbent: He's an employee of Paxport, I take it.
Senator Kirby: The cover sheet was to you.
In the bottom of the first paragraph - sorry, the bottom paragraph on page 1 of the memorandum itself as opposed to the covering sheet refers to Wayne. Am I correct in assuming that Wayne would be Wayne Power, who was a witness here before us?
Mr. Broadbent: I see that.
Senator Kirby: I'm sorry, Wayne Power is referenced up above. Wayne Power was, as I recall, a witness here in the first week. Am I right on that? Certainly his name appeared in the first week.
Mr. Nelligan: Yes.
Senator Kirby: Wayne Power, was he working for you at the time? Was he part of your team at all?
Mr. Broadbent: No. Wayne power was a gentleman who I think I testified I had because of his responsibility. When I went down to Toronto to meet him and Chern Heed, I offered him the job as my right-hand man, which he declined to take.
Senator Kirby: But he stayed involved.
Mr. Broadbent: He stayed involved. I mean, he came up and spent long times in Ottawa on the negotiations. I mean he's a man with an immense amount of technical expertise and knowledge.
Senator Kirby: You will notice in that paragraph, and I will just quote what it says:
...Wayne did make some interesting comments. He complained about the pace of the negotiations and about the political interference in the process. He bemoaned that the government, having made a decision about the future of the terminals, didn't sit back and allow the public servants to get on with the process in an orderly fashion "just like Terminal 3".
Although he was not working directly with you, you were involved with Mr. Power. Do you know what complaints - do you have any idea what he meant by "political interference in the process", or politicians not sitting back and letting the public service get on with the process?
Mr. Broadbent: There are a number of things in which I have been involved, and this is only one of them. Occasionally, organizations have what I call a "jewel in the crown". In days of yore, what would an army be without cavalry, a navy without battleships, or a transport -
Senator Kirby: We've thought about that in Canada. As a Nova Scotian, I couldn't resist making the observation that I'm not sure we haven't thought about an army without battleships. Anyway, go ahead.
Mr. Broadbent: There was certainly a feeling - I mean, I don't want to give my interpretation of views because it's based on evidence of straws in the wind of an official who can't defend himself, but I believe that there was - for example, on one occasion, when we were talking about passenger facility charges and the possibility of them and all the rest of it, I recall Wayne Power saying "Great, if we could charge a passenger facility charge, we could do the job ourselves." So, I mean, there was still that feeling of ownership. There had been a lot of commitment to Pearson by Transport Canada. You can understand it, you know? I can understand it to a considerable extent. I don't think I can really go beyond that.
I know of no political interference. I was never interfered with politically, nor was I the political interference. I mean that's why I made the comment about "some people may have perceived me..."
Senator Kirby: In fairness, I don't recall in certainly any of these sessions anyone ever having suggested that you constituted political interference. That is just for the record because you would not have heard everything we have heard.
Mr. Broadbent: Thank you.
Senator Tkachuk: Just a question on these documents.
Senator Kirby: Sure.
Senator Tkachuk: I want to go back to the first one, the one that's dated April 2nd.
Senator Kirby: Just a second. Yes, go ahead.
Senator Tkachuk: Just the first one you referred to. Who are you dealing with on April the 2nd, Mr. Broadbent?
Mr. Broadbent: This would be, senator, one of the meetings - a memo written reporting on what purportedly transpired at one of the meetings in Glen Shortliffe's boardroom.
Senator Tkachuk: Yeah, but who were you negotiating with? What was the company that you were negotiating with at this time?
Mr. Broadbent: On April 2nd?
Senator Tkachuk: Yeah.
Mr. Broadbent: 1993? Was it Paxport? Was it Mergeco? Was it Pearson?
Senator Tkachuk: Yeah.
Mr. Broadbent: At that stage of the game, Mergeco was being formed. It's about that time that we had - referenced in here, Huguette and I had the meeting with Mr. Bronfman and Mr. Matthews Sr., Mr. Don Matthews. So as I said I think in my testimony, Mergeco was going through this organizational formation at about that period of time.
Senator Tkachuk: Okay. It's just confusing.
Mr. Broadbent: Sir, it's a very confusing situation. Join the club.
Senator Kirby: And that was the document, in any event, that you said you hadn't seen before, and I said fine, we would leave it until we had Treasury Board officials?
Mr. Broadbent: Yes.
Senator Kirby: Again, I'm trying to understand the deadline and how realistic it was or whether it was really not very feasible.
In my document number 6, which is another document that is another DMs' meeting on the issue, which is a document dated April 29th, in the opening paragraph which is the purpose of the meeting, there's a sentence that says the following:
There remains serious concern at PCO over meeting the deadline established of June 1, 1993 to arrive at an agreement with Paxport Inc. or Mergeco.
I think that answers Senator Tkachuk's question. People got to the point where they were putting two company names in because they weren't clear on who was being negotiated with.
Then over on page 4 in the very bottom paragraph, it says the following:
The deadline of June 1 still appears extremely optimistic. Negotiations are to be completed with sensitive personnel and financial issues still to be worked out. Locking in a complex deal under a long term lease agreement in such a short period may not be very prudent.
Am I correct that this is Treasury Board expressing serious doubts about the wisdom of trying to conclude this kind of an arrangement, "this kind of an arrangement" being one that is complicated under such a short time frame? Is that your impression of what that effectively conveys?
Mr. Broadbent: May I first of all, senator, try to put this in some form of context?
Senator Kirby: Sure.
Mr. Broadbent: I interpret this, as I'm sure you have, senator, as a briefing note prepared for Sid Gershberg or Mel Cappe in anticipation of a meeting by an analyst working for them, not an unusual course of events.
Senator Kirby: Standard operating procedure.
Mr. Broadbent: Smell it out, find out what's going on, get the boss there, no surprises, and recommend what position he or she should take.
Senator Kirby: Got it.
Mr. Broadbent: So that's what it's about.
The fact that now we're looking at somebody four or five levels down in the Treasury Board - no disrespect meant at all to Ms Carole Swan - is a question of words and how, I guess, they can get back to haunt you.
Locking in a complex deal under a long term lease agreement in such a short period may not be very prudent.
"Very prudent", on reflection - would she have chosen the words "may not be very easy to do" -
Senator Kirby: I don't think we can sit here and second guess what people wrote. I mean we have to make the assumption that she meant what she said.
Senator LeBreton: Can I just clarify something, senator?
Senator Kirby: Yes.
Senator LeBreton: So this is a document prepared before a meeting setting out the attendees and the potential agenda and what may -
Mr. Broadbent: And giving advice which may or may not have been accepted. Again, I don't want to be seen to be picking on Carole Swan because I recall her, and she's a very competent person.
Senator LeBreton: - or may not even have been discussed?
Mr. Broadbent: May or may not have even been discussed.
Mr. Nelligan: For the reporter, document 5 is 001104; document 6 is 00269; and if we use document 4, it's 001103.
Senator Kirby: Mr. Chairman, I was trying to make it easy for my colleagues. Rather than using an obscure six numbers, I've been trying to circle them up on top.
Mr. Nelligan: That's fine for them, but I'm doing it for the shorthand reporter.
Senator Kirby: Sorry. I understood Senator Jessiman's concerns this morning, and that's what I was basically trying to meet.
During this process, I mean the process of the negotiations, you were reporting to Huguette - I mean, Madam Labelle was your boss.
Mr. Broadbent: She was my client.
Senator Kirby: To that extent, you were working for her.
Mr. Broadbent: Yes.
Senator Kirby: Did you at the same time deal - let me refer to it as if this was international negotiations - bilaterally with the PCO, for example, or Treasury Board, or did you in fact - like, I'm trying to understand how the process worked vis-à-vis the central agencies in general and the PCO in particular.
Mr. Broadbent: Yeah. As you are aware, senator, we were meeting, I think, almost weekly.
Senator Kirby: "We" being?
Mr. Broadbent: Glen Shortliffe in the chair, Huguette, myself, the Deputy Minister of Finance David Dodge on occasions, Mike Francino or somebody else from Finance, and appropriate senior level representation from the board.
Senator Kirby: Can I just provide some clarification on that for a second?
Mr. Broadbent: Sure.
Senator Kirby: Not to interrupt you, but you just said that there were weekly meetings. I guess maybe having been around the job of secretary of the cabinet on and off for many years, I'm quite stunned that this issue was of such importance that the secretary of cabinet would take the time to spend weekly meetings at it. That gives it a level of importance that is truly unbelievable. It's not unbelievable. You said it and I believe you; it's just incredible.
Mr. Broadbent: I may have unwittingly misled you in terms of frequency. I mean, we seemed to be meeting quite frequently. If one was to do the arithmetic of the number of weeks I was there and the number of times we met, I'm sure it wouldn't come out to one week because, you know, things tend to crush up. But, yes, I would agree with you. It did show the significant interest at senior levels of bureaucracy in the central agencies, and in part, senator, that, I put it to you, might well be because they knew that we were being asked to do an extreme amount of work in a very short time and didn't want things to go off the rails.
Senator Kirby: But would you not also agree on the basis of your other experience in the PCO that various parts of the public service often get asked to do things under very short time frames, but that central agency involvement - because after all, this was a line department transaction.
Mr. Broadbent: Yes.
Senator Kirby: This was not a major policy issue in a policy sense. It was a transaction type issue. I have certainly never seen a case where the central agencies would have taken - at least the PCO and the secretary of cabinet specifically - this level of interest in it.
Mr. Broadbent: I can't think of a comparable situation either.
Senator Kirby: Thank you.
Mr. Chairman, true to my word, I told you I had my topics broken down by topic. I suspect you are going to tell me - I haven't looked at my watch, but I'm sure I'm fairly close to 30 minutes. I have done one of my six topics, but I'm quite happy to pause at this point and move on to another topic subsequently.
The Chairman: Okay.
Mr. Broadbent, I think this is in your remarks which were not in the presentation, but you preferred to the Crown's strategy in your early days. The strategy of the Crown, as I understood you, was the merged result, the Mergeco, the Pearson Development Corporation.
Mr. Broadbent: In part. I mean there are two things that I inherited, I think. One was that Crown strategy, and as I say, I don't know how it was implemented, but it was pretty clear that that was the strategy to get the benefits of the Paxport proposal with the additional financial strength of Claridge Corporation. That was Part I.
Part II of the Crown strategy was to persuade these guys not to hit the airlines up front, and those are two things that I inherited.
The Chairman: Yes. Well, you've corrected my understanding that the Claridge bid was not off the table. The fact is that prior to your arrival, the intent to merge had been announced.
Mr. Broadbent: Yeah.
The Chairman: And that if it was the Crown's intention to make things move along, would it not be to move along in the general direction of this merged affair? I don't know what reference has been made by other people to a direction to arrive at an agreement with Paxport Inc. or Mergeco.
Mr. Broadbent: I'm sorry. I'm not sure what you're referring to, senator.
The Chairman: I was referring to document number 6, I guess it was. What I'm trying to really get at is what - there seemed to be some confusion as to what it was that you were being asked to complete.
Mr. Broadbent: With the greatest of respect, Mr. Chairman, I mean I don't wish in any way to be seeking to tell the committee how to go about its business because you will very quickly tell me what to do if I tried it; but, the consequences of this vast trawl for information is that you get a briefing note of this nature, written by an analyst for a third-level official in Treasury Board who might or might not go to the meeting and might or might not pass this briefing note on. We don't even know that it got to Sid Gershberg, you know. Did he agree with it? I mean it's a house of straw I think one risks building if you try and construct much on things of this nature.
The Chairman: I see. All right.
Senator Jessiman.
Senator Jessiman: I will ask a few questions, if I may.
You said in answer to Senator Kirby that if the policy of the government was that they should all be transferred to an LAA, a local airport authority, and we were going in this particular instance the private sector route as far as the two terminals were concerned within the airport, that that made some sense.
First, as I understand the Request for Proposals, it anticipates that the government would have the right to assign the agreement that was finally entered into to an LAA; is that correct?
Mr. Broadbent: That's my recollection.
Senator Jessiman: When you were negotiating, was a similar clause in the agreement at that time, at the time that you were negotiating? Do you remember?
Mr. Broadbent: I don't know, sir, whether we got to that level of legal detail because it's a legal nicety.
The point I did make is that we tried to keep it in the back of our heads that whatever we did do should be transferable. I'm confident that that was maintained.
Senator Jessiman: Well let's assume for the moment that we do transfer Pearson to an LAA. The LAA, although it's not Transport Canada, it isn't employees of Transport Canada, but that they are representatives appointed by various governments. The federal government, I understand, are going to have some appointments, the province of Ontario, the various municipalities, the Greater Toronto Area. They don't have any money, so they would have to - in some way, to build these two terminals, the only way they are going to get any money is from the assets that they are going to acquire. As they did in Vancouver, and they seemed to get away with it, they charge a fee when you leave Vancouver. It's $5 if you live within the province; it's $10 if you live within Canada and go in and out of British Columbia; and it's $20, as I understand it, if you are outside of Canada and you are leaving. We're told today by Mr. Hession that if they were going to go this route, just an LAA, not bring in the private sector to put up whatever moneys they might get, that the fee that may have to be assessed against travellers would be anywhere between $25 and $30 a person.
So my point and my question to you is the fact that the LAA really has nothing to do - the people running an LAA should also be considering, in the interests of the travelling public, in the interests of Canadians - because it's got to come from somewhere. If the private sector can put up 66 million from their own coffers or 150 million or whatever it might be and then raise others from the public, who are investors, as shareholders, it's quite a different thing than asking every taxpayer of Canada to pay for it. Don't you agree with that?
Mr. Broadbent: The whole question of LAAs, beyond the fact that this contract and my role in it was with possible transfer of the LAA to be kept in mind - I mean, you are really asking me to move well outside the question of my "remit". I'm not an expert on LAAs. Obviously I heard things when I was working at Transport Canada, both success stories and - well, mainly success stories, I think. But I don't really feel competent, senator, to really comment at all on the LAA situation beyond what I said.
Senator Jessiman: But you would agree with me from the part that you do know that the LAAs are really just a substitution for Transport Canada.
Mr. Broadbent: Well, Transport Canada doesn't completely vacate its role.
Senator Jessiman: Almost, though. Very close because they transfer over -
Mr. Broadbent: It gets it out of the management business, and that's perhaps a good thing in many ways.
Senator Jessiman: Yes.
Mr. Broadbent: Pearson is a very special case. It is a jewel in the crown. Almost as many passengers go through Pearson as the rest of the airports put together, I imagine. The interests of Pearson being well run spread well outside Metro. You can live in Winnipeg and be very concerned about Pearson airport.
Senator Jessiman: Let me just ask this question. Was the deal that you negotiated, at the time that you negotiated it, was it significantly different from the winning bid under the Request for Proposals?
Mr. Broadbent: I'm sorry. I can't answer that because -
Senator Jessiman: At the time that you -
Mr. Broadbent: At the time that I left, what I was dealing with were the things that we had agreed to in layman's language. Okay? The lawyers were off putting the dots over all the i's and crossing the t's and the sort of things that lawyers have fun doing at very high hourly rates, but I haven't seen the final agreement. All I know is - I mean, Bill Rowat and I did have a chat. We met at a social function over the Christmas holiday season. I mean, I think Bill Rowat characterized it. A lot had been done. There were a number of points that he had to deal with, and the big one was the Air Canada thing, but I don't think he had to undo anything that I had done. So in that sense there was continuity, and I believe he built on the foundation that I had prepared.
Senator Jessiman: Was it three months that you were there?
Mr. Broadbent: Yes.
Senator Jessiman: Three months?
Mr. Broadbent: Essentially, yes.
Senator Jessiman: But you didn't get down to the actual dollars?
Mr. Broadbent: I'm sorry?
Senator Jessiman: You knew what the proposal was from Paxport as to what the return would be to the Government of Canada.
Mr. Broadbent: We looked at - I mean that situation changed on a number of occasions, senator.
Senator Jessiman: Yes.
Mr. Broadbent: As we renegotiated this, it would have a quid pro quo effect over here. If you push for a bit here, you've got to be prepared to give a bit over there. I'm sure that's no surprise to you. So the whole rate of return and money coming back to the Crown was pretty fluid.
Senator Jessiman: At the time you finished, you were satisfied at that point that the rate was a fair rate to be paid to the Crown.
Mr. Broadbent: This isn't my field of expertise. I will tell you that - I mean particularly when Peter Coughlin took over after Claridge got control through buying out Ellis-Don's 13 million, he said on more than one occasion, "Gee, what are you trying to do? Do you want us to be a utility, David? Do you want to regulate us too?" Their feeling - now this could have a bit of puffery attached to it - was that they were squeezing him.
I was talking with Gordon Baker this morning, and he very kindly said to me, "You know, we looked upon you as a tough but fair negotiator." Okay? We pushed them. We tried to get the best deal we could.
Senator Jessiman: Thank you.
Mr. Broadbent: Thank you, sir.
The Chairman: Mr. Broadbent, to go back to something which you can help us with because maybe we're not asking the right questions, you made four references in your presentation, one, you wouldn't have put in here unless there was reason for it. You made references to the suggestion by Mr. Barbeau that this was going to take longer than three months. You mentioned that. You put it there. It has to have a meaning or you wouldn't have put it in.
Mr. Broadbent: Yes.
The Chairman: The second reference was to not supporting this approach. We're talking about the audit standards, that the deputy minister supported your approach, "thus overruling opposition to it from the Airports branch".
Mr. Broadbent: If I might qualify that slightly, just to respond to that point, what Madam Labelle said - and I think you will find it in a piece of paper, I quoted her - she couldn't think of anything better than what I came up with. It was better than nothing, so we flew with it.
The Chairman: But you say, "thus overruling opposition from the Airports branch."
Mr. Broadbent: Yes.
The Chairman: And, three, you obviously are impatient with the protestations of Mr. Chern Heed.
Four, you told the deputy that you "had been managing this file with one hand tied behind my back". Now, you have put this very gently, but you are a frustrated person. Now do you put this down to the fact that a number of public servants in the Department of Transport regard this whole business of airports in a possessive fashion, or is there something more? Were you blocked? Can you tell us how you were?
Mr. Broadbent: Senator, I think you can understand that while I may not agree and do not agree with some of the things that happened, I'm very conscious of the difficult role public servants have in not being able to answer for themselves. I'm quite willing to answer the question generically, but I don't want to point fingers any more than they were necessary to give you a coherent story as to some of the problems that we had to deal with.
Madam Labelle quoted yesterday, I think, that I wanted Chern Heed full time. You bet I wanted Chern Heed full time. I mean the things we tried to do with the assistance of my staff, we'd see if we couldn't find some other - I mean, after all, Chern Heed, presumably like anybody else, takes holidays. If he got sick, if somebody could fill in, we tried to find another airport manager who could move in, take over Pearson so we could have the full-time involvement of Mr. Chern Heed.
Well, we couldn't do it. There were legitimate - there were reasons why it could not be done. So, I mean, the lack of availability at that level of expertise on a five- to seven-day-a-week basis, it did impede progress.
If I can try - I know the direction you're going. I hope this will satisfy you.
The Airports group provided me a very valuable function, and that was they would look for problems and they would criticize. This is very helpful because you want to find out where you're likely to go wrong.
But in an operation like this, you need more than a statement of problems and a criticism of other people's work. You need people involved who can come up with solutions, who are creative.
Mr. John Desmarais was very helpful there when he was involved, but by and large, the second part of it, the creativity, the "Hey, there's a problem here, but we think if you were to do this, this is the way to go," that's what I wasn't getting.
I hope that answers your question, Mr. Chairman. I hope you've got enough there to have a feel for the situation as I have described it.
The Chairman: Well, I was just looking at the remarks made by the Minister of Transport, Mr. Young, and it's strange that he keeps coming back - he says - I will give you the dates as soon as I can find them. He refers to a lack of respect for the impartiality of public servants, absolutely unacceptable. Then again, a disregard for public service impartiality. Third, in many instances against the will of members of the public service, will not be tolerated.
You are not Mr. Young, so you can't answer the question, but what is the preoccupation with regard to the disregard for public servants? Who trod over the public servants?
Mr. Broadbent: Well, I don't think I did. I don't know of anybody who did. But, no - I mean, I'm put in a very difficult position. You say I'm not Mr. Young, and I'm not one of Mr. Young's advisors.
The Chairman: No, but I was wondering why the obsession he has with the treading over the public servants.
Mr. Broadbent: Hey, any time a minister of the Crown shows some concern for the public service, I listen. I may not like what he was saying, but too often the public service is taken for granted or ignored.
Senator Hervieux-Payette: I just refer to your presentation when you say you were given the mandate to negotiate a good deal, and you felt that within three months you could finalize the deal, which is considered and was described by everybody who came before us as a very complex transaction, including a lot of legal documents that have to be certainly - I mean, passing on the responsibility and all the contracts that were done with the government to the private entity.
My question is, first of all, did you get the terms of reference in your appointment as the chief negotiator? Were they in writing, and if so, can we have them?
When you described that you would never do a bad deal, what would have been a bad deal? It's important for us, since we know now from the previous testimony that the Request for Proposal, the proposal from Paxport and the final deal were different terms. Who wrote the terms of reference for the good deal that you had the mandate to negotiate? I mean they must be somewhere, somehow. We know that because when there is a negotiation in labour relations, I mean the negotiator doesn't go like that and negotiate a deal on behalf of his company or his client. They have terms of reference. Who was handing to you the terms of reference to conclude a good deal?
Mr. Broadbent: Well, those are good questions. I'm not sure I can answer them to your satisfaction, but I will try.
I mean, first of all, let's make the distinction - which I'm sure you agree with - that there's a world of difference between a mandate for labour negotiations and negotiating a contract of this type.
Senator Hervieux-Payette: This one for me is of a much larger magnitude. The disposal of the whole assets was a much bigger thing than just labour relations. You have one part that was labour relations in your mandate because the transfer of employees was part of it.
Mr. Broadbent: This is why I told you the strategies that I inherited and the strategies that I developed because it is within those very broad guidelines that one operates. What is the test, then, of a good deal?
Well, I guess it's the opposition of what a bad deal would be because I would have assumed that if we had been about to do something, that if someone - the deputy minister, a member of my staff, somebody at one of Glen Shortliffe's meetings - had felt it was bad for Canada, they would have said, "Hey, just a minute, what do you think you're doing that for or why did do you that?" I mean it's kind of open-ended.
You've got a Paxport proposal, but the Crown has sought to change a number of things. I mean these people have merged, and the Crown is saying "Hey, we know you, Paxport, were going to finance this by increasing fees for the airlines, et cetera. We don't want you to. You know, let's go easy on the airlines. It's a rough period for them. Let's give them a breathing spell, catch the money up from them later." Those are the things that the Crown wanted to do.
It's not like say, "Hey, go and negotiate your labour contract, and you mustn't settle for any more than 6 per cent. Shoot for 4, but 6 is the absolute top." Well, you know, then you know where you are, but it's not that kind of job at all.
Senator Hervieux-Payette: Was your basic mandate at the beginning at least to conclude the deal that was supposed to be the best deal - that was the Paxport deal - with the financial capability of Claridge, a reinforcing?
Mr. Broadbent: Yes.
Senator Hervieux-Payette: Was it the deal that you were supposed to negotiate?
Mr. Broadbent: That was what the government wanted brought about, yeah.
Senator Hervieux-Payette: And until you were still in charge of the negotiations, did you accomplish that?
Mr. Broadbent: Yes and no. I mean the deal through the course of negotiations, as happens I think not infrequently, the proposal took on a given shape, in part by influence of the Crown, in part by change of circumstances.
As an example, Paxport had, if I recall rightly, envisaged pretty much a continuous development operation because they were going to run on a "pay as you go" basis with the airlines. First of all, they were asked, "Don't hit the airlines hard on this." And because of all of that - and, quite frankly, we were pushing and succeeded in getting them too concentrate on Terminal 1 first. No money in that for any developer, right, fixing up the rat-ridden garage or whatever. No money there.
Senator Kirby: I like "rodent", which was Senator Tkachuk's word this morning, which is more sophisticated.
Senator Tkachuk: I wanted to use "rat", really. I did. I really did.
Senator Stewart: So we have rats and we have dogs.
Senator Hervieux-Payette: In your mandate, which was specifically given to you, you didn't have any terms of reference, except the Paxport proposal that was accepted. Your own specific terms of reference when you are appointed, I mean, were just "we hire you for a certain fee, for a certain period of time, and you have to make a deal".
Mr. Broadbent: Oh, no. Madam, please, no. No, no, no. There was no "you have to make a deal". It was clear to Shortliffe; it was clear to Labelle; and they agreed. I mean, not just me being holier than thou or holier than them. If we couldn't get a good deal, there wouldn't be a deal.
Now you get back to the problem of what constitutes a good deal, and I have tried to define it in a negative sort of sense, I suppose. It's the best deal that you can get that isn't a bad one. C'est vrai, n'est-ce pas?
Senator Hervieux-Payette: You were comfortable with the three-month time frame. You felt that you were capable of arriving at the conclusion of a transaction of that magnitude for -
Mr. Broadbent: I didn't know.
I'll tell you this. This was difficult. If my normal job was a 1, I would say this was about a 5. I would say the Spicer commission was about a 10. Okay? I have had tougher jobs than this one.
Senator Hervieux-Payette: But, you know, since there was some kind of disagreement as to the comments of Mr. Barbeau that it would take certainly up to six months to conclude the transaction, I was under the impression that you felt you were able to conclude that within three months. I'm just trying to figure out the length of time in order to arrive at the final deal that you put on the table before your boss and said, "Boss, I have concluded and it's done." So I would say when you left because you didn't end conclude the transaction - how far were you in the transaction when you left? I mean, was half of it done?
Mr. Broadbent: It's very hard to measure a thing like that. I think someone like Mr. Jolliffe would be able to make an appreciation of how much was done while I was there and how much had to be done when I left, but I would like to make one point.
Mr. Barbeau, when he made his estimate, was presumably talking about the normal government way of doing business. I don't say that in a disparaging way at all, but the normal government way tends to be linear, one step at a time, you know? Not infrequently, a negotiating tactic is to slow it down, you know, make them hungry, all that kind of thing. So I had going for me that the private sector wanted this deal, and the government wanted to get it done, and therefore delaying tactics - more importantly, I mean, while it complicated everybody's life, I tried to describe a system of running a number of things in parallel, most of which would normally have been sequentially. I mean that was my approach in trying to save time.
Senator Tkachuk: Could I just ask a supplementary, if you don't mind, on this?
Mr. Broadbent: Yes, sir.
Senator Tkachuk: We discussed this with Mr. Barbeau about the 3 months and the 18 months. Would Mr. Barbeau have known of the consequences of missing the 40-year extension on the Air Canada lease when he was talking with you?
Mr. Broadbent: When I had lunch with Mr. Barbeau, if that's the meeting you are referring to, senator -
Senator Tkachuk: Yeah, the same one she was talking about, the 3 months and the 18 months.
Mr. Broadbent: I mean, at that stage, I don't think - I know that Justice counsel hadn't come to me and said "Hey, we've got a problem." Now, I don't know whether Mr. Barbeau at that stage knew anything about the 40-year lease document or not.
Senator Tkachuk: Let's speculate. Is it possible he knew?
Mr. Broadbent: Well, I mean all kinds of things are possible. You know, the dog that didn't bark. How could an RFP go out -
Senator Tkachuk: I have been trying to find that out.
Mr. Broadbent: - without a minister being warned, "Look, minister, before we put this out, we've got a problem. Sorry, we didn't know this was coming along. We signed this thing in good faith with Air Canada, but we've got to deal with it." I don't know.
Senator Tkachuk: How would you have dealt with it if you found out the person responsible had left it out and cost the Government of Canada all this money?
Mr. Broadbent: Oh, senator, Madam Labelle was my client. Madam Labelle was deputy minister. I served her. We all have different management styles.
I'm sorry. I'm going to resist, if I really can, putting myself further into a situation because I'm already uncomfortable with some of things that I have had to say which would be construed as me criticizing my client. Okay? I don't want to do that.
Obviously I wouldn't have done everything the way Madam Labelle did, but that doesn't mean to say that she was wrong and I was always right.
Senator Tkachuk: Mr. Broadbent, I understand that, and I respect what you've been saying here. This 3 months and 18 months just bothered me a little bit, you see.
First, let me say that I have the utmost respect for the public service, but I also know there's a quarter million of them, 300,000 of them - some good ones, some bad ones. It seems when we talk about public servants here during this whole thing, Mr. Chairman, everybody's like, "Oh, God, if they said this, they must be right; if they said that, they must be right." As if who's running the country here?
Now we're speculating this morning. We're talking about two citizens in Canada, Mr. Matthews and Mr. Bronfman, who have nothing to be ashamed of and who have done yeoman's service to the country, and we're speculating about criminal conspiracies.
Senator Hervieux-Payette: Who said that?
Senator Tkachuk: Well, if you were conspiring to have a contract - I'm not a lawyer - to defraud the Government of Canada, I think that people may think there's some criminal intent here.
Counsel, you can correct me if I'm wrong, but it would border on it.
Anyway, 3 months, 18 months. I just want you to be a little more frank when we're talking because I think - I know you're being a gentleman. I understand that, but whoever missed this deal cost the Government of Canada, the taxpayers, a serious, serious amount of cash.
Senator Kirby: How do you know that? I would be happy to have you make a statement.
Senator Tkachuk: Well, I know it about as much as Senator Bryden knew it. All I know is that in the negotiation of the deal, they had to make concessions to solve the problem of the missed 40-year option, which wasn't in the contract and no one knew anything about.
Senator Kirby: Senator Tkachuk, the only point I'm making is that even if it had been in the RFP - and I agree with you and would like to understand why it wasn't - but even if it had been in the RFP, then the money would have been a cost to the Government of Canada in some sense anyway, I guess.
I was only questioning your bold statement that something got missed and it cost the Government of Canada a lot of money. If it hadn't been missed, it would have been a cost also, and it's the difference between those two that we ought to be talking about, if indeed there is a difference.
Senator Tkachuk: What I'm trying to get at, senator - and please don't misinterpret what I'm trying to say here - but if people can draw conclusions and make stories about political people and business people without evidence, make all of these things that cause us to be here, is it too far a stretch to say is it possible that within the bureaucracy itself perhaps there was a conspiracy there to stop the wishes of the Government of Canada? Is that possible or as possible as any of the other conspiracy theories I've heard?
Mr. Broadbent: Fortunately, I'm not an expert on conspiracy theories.
Senator Tkachuk: Neither am I, but I'm speculating along with everybody else now. I have loosened myself and become a free man. I can speculate now.
Is it possible?
Mr. Broadbent: I honestly don't think it is in any sort of wide sense because people tend to get their comeuppance. They tend to get caught out. The truth has a habit of coming out.
Senator Tkachuk: That's what we're trying to do here.
Mr. Broadbent: So you might get away with it once or twice.
The rules, what you expect of a public servant, are pretty straight forward at the senior levels, apart from hard work and all of that. You owe your minister or your deputy minister the benefit of frank advice, not just to say what you know they would like to hear, but keep them on the rails. The complement of that is after they have considered everything, you owe them due diligence in carrying out what they want to get done.
Senator LeBreton: There's the problem.
Mr. Broadbent: And the public service normally does that very well.
Occasionally, governments will ask the impossible or the near impossible. Okay? I don't think I would have been asked to come in on this if people thought it was going to be like falling off a log.
Senator LeBreton: So you didn't think it was impossible?
Mr. Broadbent: I didn't - I almost said Marjorie. I'm sorry. I didn't know. I didn't know when I went into Spicer if I could do that or Beaudoin-Dobbie.
Senator Hervieux-Payette: I would like to complete my questioning.
Senator Tkachuk: I'm sorry. That 3 months, 18 months just bothered me, senator. I'm just trying to find out.
Mr. Broadbent: I may be wrong and, if so, I apologize. It's just that the government, the normal process - there's nothing wrong with it - would have taken longer because it's linear.
Senator Tkachuk: My point is that I can speculate about 3 months; I can speculate about 18 months.
Senator Hervieux-Payette: But my question regarding the timing, since I have had experience to deal with the previous government or administration, I was part and I made, on behalf of my company, an unsolicited proposal to buy CN fibre. We went through the process then of a Request for Proposal where 12 companies made proposals. Then there was a second round. Then there was the award of the contract. Then there was the financial question of the financing period and then the conclusion of the transaction. Well, it took four years for a transaction that was not worth 50 million, and never, never - and I left the company in the meantime. I ran into the election in 1993, and so on. The transaction was finalized in the summer of 1994.
This is just to say, Mr. Chairman, that nobody when I was there or after I left the company ever said that Mr. Tellier, who was the former clerk of the Privy Council, dragged his feet or that there was some undue - I mean, this is the nature of the process. That's the point I want to make. I mean three months for me seems to be like a dream world. I've never seen that, and I don't think we will ever see that for a deal that was worth from 700 million to 1.5 billion.
Senator Tkachuk: This was a long process.
Senator Hervieux-Payette: I'm sorry, no. The conclusion and the finalization means that everything is signed and that everything is concluded. To start initiating the discussion and come up to the conclusion and finalize the financing and the whole transaction is something for that magnitude that would last from six months to a year.
Senator Tkachuk: It took eight months.
Senator Hervieux-Payette: So.
Senator Tkachuk: Well, it took eight months.
Senator Hervieux-Payette: Well, I'm sorry, but it wasn't finalized.
Senator Tkachuk: Well, yes, it was. That's the problem with the contract. It took eights months. It was announced the end of August. It took eight months, which is what you said is reasonable.
Mr. Broadbent: May I comment in what I hope is a helpful way, madam.
You may well be right. I didn't know, but unless you consider the following - I mean, there are two situations - three situations really. I might as well appeal to an old mathematician sitting on your right. You can have something that is absolutely impossible ruled out before you start, and then you can have various gradations of feasibility, and then at the other end, no problem. I would put it to you that if the people who were involved before me - Huguette Labelle, Glen Shortliffe, who while he was clerk had been a former deputy at Transport - if they put this into the "absolutely impossible, "don't even start it" category, they wouldn't have turned to me or anybody else. They would have said, "I'm sorry, government, we've missed the boat. There just isn't time to do it now."
Now, they didn't say that. The government's targets were maintained, and they said, "Hey, what can we do to try and do what we've been asked to do?"
So I wouldn't put it in the completely impossible, but at the same time, I wouldn't say to you that I, when I went into it, felt confident that I could pull it off with the help of the very able team that I had with me.
The Chairman: Mr. Broadbent, usually the Conservative members on this committee have put a final question to previous witnesses. Invariably, we get the answer "no". The question we put to them was, in your experience - this is the evaluation committee, et cetera - was the process flawed? We confidently expect that the answer will be "no".
Mr. Broadbent: I'm sorry, it's "yes".
The Chairman: No, was the process flawed?
Mr. Broadbent: You bet.
Senator Jessiman: In what way?
The Chairman: So I'm putting the question to you now, not worrying about the answer.
Was the process flawed in the period that you were there?
Mr. Broadbent: It was flawed in the sense that Senator Kirby was referring to. The fact of the promised 40-year lease, you would never put that in an RFP. That would be nonsense. You put out an RFP. You want people to do things to lease, at the same time saying that you have already promised to lease it to somebody else? No. It was flawed because the promise to lease wasn't removed from the agenda, wasn't sorted out with Air Canada before you went with an RFP. That's the dog that didn't bark.
The Chairman: And you can't lay the responsibility for this on any particular group or person?
Mr. Broadbent: You know, I got some sense of how Transport Canada operates, but I wasn't around at the time of pre-RFP or RFP. I mean we all know where the buck stops. The buck stops with the minister and the deputy minister. No prizes for guessing that, but they can't remember everything. They need advisors.
I mean, what was the lowest level down that knew of this 40-year lease? I mean, who should have thought of it, or was it a deliberate omission? Was it the time bomb left ticking? I don't know.
The Chairman: How long was the process delayed, approximately, by the need to work that out?
Mr. Broadbent: I'm sorry, senator. I can't estimate that. I mean, while all these other things were going in parallel, we had the Air Canada thing to deal with. I tried in shorthand form to describe to you how Huguette Labelle and I tried on various occasions to sort the thing out after the fact while the Crown was very exposed.
I mean I can't answer it. It's not that it cost time in a linear sense; it is that it added burden and complicated life and stopped us doing things with Pearson that we would like to have gone on with but couldn't because we haven't even told them yet that we've got this problem, a problem with this document.
Senator LeBreton: Mr. Broadbent, I just want to get back to your statement. I'm finding this very frustrating and certainly, as you say, the truth will prevail. No one wants to get to the truth of this any more than members on this side. I don't fear the truth, as I said this morning. I fear distortion of the -
The Chairman: There's truth on both sides.
Senator LeBreton: Exactly - well, we'll see.
Senator Tkachuk: Let them speak for themselves.
Senator LeBreton: That's right. You know, Confucius said, he who throws dirt loses ground, right?
So let's be clear. It's rather curious because there has been ample evidence before this committee - clearly Mr. Lewis' testimony, other testimony, street talk - that Mr. Barbeau was a problem. We have evidence from Mr. Bandeen that Mr. Chern Heed was expressing - was against this in the final analysis. It's very frustrating for governments and politicians, of whatever stripe I'm sure - although we seem to have a healthier dose of it than others - that when advice - and you talk about the role of the public servants and how, you know, they advise the minister and the government because I remind you that the government is answerable to Parliament and ultimately to the public. Unfortunately, there seems to be many layers between public servants, but when the advice is given and taken, that's fine. The public service goes along and implements. But when the advice is given and not taken, it's as if the government has committed a cardinal sin. Then there's headlines "Government Ignores Officials", et cetera, et cetera. I mean, it's a very, very frustrating process.
I have to go back and I'm dealing specifically now with Mr. Barbeau and the Assistant Deputy Minister (Airports). You say on page 10:
I said to the deputy that I felt I had been managing this file with one hand tied behind my back. She said she understood. Although Mme Labelle, Ministers, and the contenders wanted me to remain, I told the deputy that I could not stomach working under such conditions and wondering when I was next going to be blind-sided.
Having worked in this business myself for many years, I know what it's liked to be blind-sided.
So I left on June 17 to the disappointment of my team...
Senator Jessiman: Just one more.
Senator LeBreton: Senator Jessiman pointed out that you said:
...I had had to complain about the lack of responsiveness or obstructionism from the Airports group.
I'm sorry. I meant to say that. I didn't go far enough into the paragraph.
I thought your statement was outstanding. I believe that everyone that was involved in this process was involved for all the right reasons, and I agree with you totally that everyone of us have - everything we do, we want to look at ourselves in the mirror. I don't shave, but I have to look in the mirror for other reasons.
You talk about your meeting with Mr. Nixon. It's clearly obvious from your last statement that this decision was made for political reasons, pure and simple.
You know, you've made these statements, and I would just like, for the purposes of this committee, to clarify what exactly you meant. You know, you've said them. You are a man of honour. To now say or try to say that you didn't have a problem with Mr. Barbeau when clearly if you didn't, you are obviously the only one in the whole government who didn't -
Mr. Broadbent: I'm sorry. I didn't think I said recently -
Senator Kirby: I'm sorry, Mr. Chairman. I'm really getting troubled by something and let me just - I would be happy to discuss it even outside the room.
This is beginning to take on very much a tone of "let's find a victim here" or "let's find someone we can pillory".
Senator LeBreton: No, no.
Senator Kirby: Just a minute. You've made two or three statements, including one a minute ago which was the final straw, when what you said was, quote, "Everyone in the government knew Mr. Barbeau was a problem." That's exactly what you said.
Now the fact of the matter is that his two deputies have appeared before here, one of which was Mr. Shortliffe, one of which was Madam Labelle, and in both cases they were explicit in response to direct questioning from the other side that in their view the people in the Airports group and Mr. Barbeau in particular were in fact very competent public servants doing their job. That's point one.
I think we better be careful before we start saying everybody who has appeared before here, et cetera, has pilloried someone.
The second point to be made, and it's made by the witness himself clearly a couple of minutes ago and I happen to believe that he was exactly right, in which he said that in the end, the responsibility for the fact that the RFP had mistakes in it was the minister's. He said that.
This is starting to have a significant touch of the Al-Mashad affair to it in the sense of let's find someone to blame who is a public servant. I think we ought to be careful before we, as a group, proceed down that road. If that's the route we're going to go, that's quite different from something that we have ever done.
Senator Tkachuk: Senator Kirby, he said the deputy and the minister. That's precisely what he said, and that's fine.
The process of speculation and the process of who's responsible for what wasn't started by me and wasn't started by the Conservative group. This has been going on for two years, and it's still going on. Now as soon as I bring up a little speculation here and say that perhaps there's a different group around there that could have conspired to slow the process down and do something which I think is very serious, which is go against the will of the Government of Canada, the elected representatives, all of a sudden this is a problem.
Senator Kirby: Senator Tkachuk, I don't disagree. I want to be very clear.
Senator Tkachuk: Victor Barbeau told me -
Senator Kirby: I didn't object to any of the questions you asked. I only objected when the statement was made, quote, effectively, that everybody knew that the problem was a single person. We have had that individual's two superiors come here and say that wasn't a problem. I didn't object to what you said.
Senator LeBreton: I'm not mentioning Mr. Barbeau's competency as an individual.
Senator Tkachuk: I am. I don't know about you guys, but I am.
Senator LeBreton: We've had evidence.
Senator Kirby: Not conflicting evidence.
Senator LeBreton: Right, but I said also, and I added street talk, although I hate speculation, clearly from Mr. Broadbent's statement, he cites ADM (Airports).
Senator Jessiman: The Airports group.
Senator LeBreton: Now who is the ADM (Airports)? Now am I not supposed to name Victor Barbeau?
I think, Senator Kirby, I don't need you to interpret what I am trying to say.
Senator Kirby: I wasn't trying to interpret what you said. I was just quoting what you said.
Senator LeBreton: I am simply asking, this whole process - and I went back to my questions to Madam Labelle yesterday - went on and on and on from August 18, 1989 through until 1992. Then various people get into negotiating the final contract. Mr. Broadbent was brought in. He, from all accounts, did a tremendous job, although in his statement under oath, he outlined some very serious concerns he had with the Department of Transport and specifically the ADM (Airports). I'm simply saying, like let's get it out. Was there a problem - I asked the question yesterday - with Mr. Barbeau? Obviously there was because someone removed him for five weeks, but I just want a straight answer.
In terms of speculation - like, you know, you speculate. We allowed you to speculate on why if we're given three months, the three-month period of time - I mean, you could speculate six ways from Sunday.
The fact of the matter is that this was government policy. The government had a policy to implement. They should expect, should they not, public servants to implement the policy?
Mr. Broadbent: Yes.
Senator LeBreton: I would like you to comment on your comments on the ADM (Airports) and also on your conversations with Mr. Nixon again. I mean, you've got them in your statement.
Mr. Broadbent: Let me try and deal with the first one, senators.
Senators, you've got all the meat you need on this. You don't need me to do this for you, but you're forcing me to.
When Huguette Labelle first called me - okay, sure, it may not have been have been the first phone call meeting, but she said she hadn't time to do it and that the ADM (Airports) was not acceptable to the minister. Now I'm looking at you and I'm looking at Senator Kirby and those who have served at high levels in provincial administrations. The Public Service of Canada is pretty effective in more ways than one.
Senator LeBreton: I agree.
Mr. Broadbent: It is not unknown for there to be clashes between a minister and a deputy minister or a minister and an ADM. What normally happens - you've both seen it - is there's a quiet, lateral arabesque, where the curtain coming down takes place, and the person who has been having difficulty goes, and a new person comes in, and everybody lives more or less happily ever after.
I mean the dog that didn't bark, to me, is if a minister won't have a certain official looking after a certain file, and everybody knows about that, why wasn't someone saying, "Hey, it isn't fair to the minister; it isn't fair to Mr. Barbeau; let us arrange a gentle switch-a-roo"? Okay? That, I think, is what would normally happen.
Senator LeBreton: But is there no accountability? Like here we have this Air Canada surprise - a "sandwich", I think someone called it earlier. Who is responsible? I mean you have the deputy minister and you've got the ADMs. Is there no accountability? Are we afraid to name the person who was accountable for this massive oversight which obviously caused you no end of grief and delayed the process? Whether you want to say it or not, that's so obvious.
Mr. Broadbent: Senator, I think the appropriate and proper answer to your question is the minister of the day was informed when this snafu came to light.
Now, with respect, I think you should be asking Mr. Corbeil, "Hey, what did you do when you found out about this? It would just blow your RFP out water." Okay? It's his neck that's on the line, and then you start rattling officials' cages. So don't ask me questions I can't answer beyond that.
Senator Jessiman: I would just like to ask this question, if I may.
In this sentence, "...I had had to complain about the lack of responsiveness or obstruction from the Airports group," who do you say is the Airports group? Who is it?
Mr. Broadbent: The Airports group is the branch -
Senator Jessiman: Who are the people? Who were the ones that weren't responsive or they were causing obstruction to you?
Mr. Broadbent: All of their names are in the statement I made.
Senator Jessiman: All in here?
Mr. Broadbent: Yeah.
Senator Jessiman: Are they headed by Mr. Barbeau?
Mr. Broadbent: Mr. Barbeau was the assistant deputy minister.
Senator Jessiman: And was he the head of the Airports group?
Mr. Broadbent: Yes.
Senator Jessiman: Are those the same people that made you feel that you were looking after this file with your hand tied behind your back?
Mr. Broadbent: Yes.
Senator Jessiman: Are they also the same people "I could not stomach working under"?
Mr. Broadbent: Well that was really - this wasn't so much a personality thing. It wasn't a personality thing at all. It was, "Look, I've been blind-sided twice; what is the next thing going to be?"
Senator Jessiman: Right, but it was these people we were talking about, the Airports group.
Mr. Broadbent: It was the Airports group, but let me stress, sir, not the whole of the Airports group. Okay?
Senator Jessiman: Okay. All right.
Mr. Broadbent: I had very loyal work out of the Airports group by some people who joined my team and some people who stayed within the Airports group.
Senator Jessiman: But you said - I wanted you to name the persons, and you said they are all named in here.
Mr. Broadbent: They are all in the report.
Senator Jessiman: But now you are saying not all of them. Tell us which ones were not responsive, those ones - and they may be different - that were obstructionists, those ones that you felt because of their actions you had your hands tied behind your back, and those ones that because of them you couldn't stomach working under those conditions. Who were those people?
Mr. Nelligan: Senator, may I interject, please.
Rather than have Mr. Broadbent answer that question, I would remind the committee that we have certain specific issues to deal with here. We have had a broad description from the witness as to what his problem was. I would assume that your questions would be properly directed as to whether his frustrations arose from the administrative or the political side of the department. But whether it is one particular individual on either side or the other, I would respectfully suggest that it's not necessary for us to name particular names in the department unless it goes to a very specific issue.
Frankly, from a personal point of view, I think that the witness has described very adequately the reasons why he felt his mission was frustrated. I don't know if being more particular at this point will assist the senators in their inquiry. I simply say that as a general statement, and I now leave it to you.
The Chairman: Senator Kirby, you had a number of second areas you were going to go through.
Senator Kirby: I did, Mr. Chairman. I would like to suggest, since we have about five minutes left and in fairness to the witness, rather than ask him one question on a new area, I would like to suggest that we adjourn, and I'll pick up at 9 o'clock in the morning.
The Chairman: Mr. Broadbent, would that be convenient to you?
Mr. Broadbent: I would make myself available, sir.
The Chairman: At 9 a.m., Mr. Broadbent. Thank you very much.
The committee adjourned.