Proceedings of the Special Senate Committee on the
Pearson Airport Agreements
Evidence
Ottawa, Wednesday, September 20, 1995
[English]
The Special Senate Committee on the Pearson Airport Agreements met this day, at 9:00 a.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.
The Chairman: Come to order, please. Mr. Nelligan will introduce our first witness.
Mr. Nelligan: Senators, our first and only witness today is the Honourable Jean Corbeil, who was Minister of Transport from the 21st of April, 1991, until the 24th of June, 1993. I understand that he has a formal statement which he will make after he has been sworn.
The Chairman: Are you prepared to take the oath, Mr. Corbeil?
[Translation]
Mr. Corbeil: Yes.
[English]
(Jean Corbeil, sworn:)
The Chairman: We are very pleased to have you.
Senator Kirby: Before the witness begins, could I ask our counsel to clarify. You said that Mr. Corbeil's term as minister ended when? I believe he was minister until the end of the government. I believe you said the 24th of June.
Mr. Nelligan: I'm sorry. I was reading from the sketch. It is quite true. He then continued, under the new regime, until the 3rd of November, 1993.
Senator Kirby: That's what I had always understood and I though, for the record, we should clarify that.
Senator Stewart: Before we go on, just for greater clarity, was he sworn in again or was his tenure of the office continuous?
Mr. Nelligan: I think he will explain it to you, but when there is a new Prime Minister, I think the appointments are all fresh and they are all resworn, but he will explain that to you.
The Chairman: You have a statement, Mr. Corbeil. Please proceed.
[Translation]
Hon. Jean Corbeil, P.C., former Minister of Transport: Mr. Chairman, Mr. Deputy Chairman, senators and counsel, first I would like to thank you for your welcome and to congratulate you and your collaborators for agreeing to carry out a complex and demanding mandate.
Your sense of duty is a credit to you and I hope, by my answers to your questions, to shed further light on the constituent elements of a fundamental government exercise whose success was my responsibility as Minister of Transport Canada.
I would like to recall, Mr. Chairman, that I agreed in 1988 to leave the municipal sphere, to which I had devoted nearly 20 years of my life, in order to pursue my public commitment on the federal political stage.
I agreed to take up this new challenge, Mr. Chairman, because I felt it was my duty to contribute, within the limit of my modest means, to the essential exercise of consolidating and modernizing a country that has given me much and to which I was, am now and always will be profoundly attached.
I made this gesture because I deeply shared the fundamental values of a political party that had played a major role in the history of this country and because I more particularly shared the modern, broad and generous vision of an exceptionally talented leader whom I truly came to know when I entered cabinet, where he invited me to sit as Minister of Labour on June 30, 1989.
If I ultimately agreed to seek a mandate as a federal MP on November 21, 1988, it was because the direction that Brian Mulroney had given to his party and to our country during his first mandate had vastly impressed me.
First, his unshakable determination to cement Canadian unity through the Meech Lake Accord, to which he had rallied the premiers of all 10 Canadian provinces, made me realize that this man was uncommonly clear-sighted and was possessed of a stimulating vision of the future to which a reconstituted Canada could attain.
I was furthermore enthralled, even seduced, by the challenge of free trade with the United States, that financial and industrial giant inhabited by a population of 250 million men and women and so readily accessible to our business people, who would thus have the opportunity to tap a pool of consumers 10 times greater than that of their usual markets.
With energy and determination, Brian Mulroney convinced a recalcitrant House of Commons of the timeliness of adopting the Canada-U.S. Free Trade Agreement, the FTA as it is called, an essential tool to successfully meeting the challenge of economic globalization.
It was moreover with the same energy and the same determination that he strove throughout his second mandate to have an equally recalcitrant House of Commons pass a new accord, the North American Free Trade Agreement (NAFTA), which pushed the borders of our potential markets even further to the south, now enabling us to take part in the globalization of markets that instantaneous communications have made inevitable.
And to think that our exporters came within a hair's breadth of being excluded from this fabulous market of 350 million consumers with a gross "continental" product of $7 trillion! We were that far from not becoming one of the three amigos.
I also knew that, from the start of its first mandate, the Progressive Conservative government had been intensely preoccupied by the question of the country's airports since the report of the Task Force on Program Review and the Auditor General's Annual Report, both published less than eight months after that government was elected in September 1984, had addressed the issue at length.
Subsequently, starting in July 1985, Don Mazankowski as Minister of Transport published a policy paper entitled "Freedom to Move", before establishing another task force in October 1985 to examine new management structures that might improve the operation of federal airports.
Completed in less than 12 months, the report of that task force was made public in September 1986 by the new Minister of Transport, John C. Crosbie, and, on April 9, 1987, Brian Mulroney's government accepted the principal recommendation by adopting the principle of the devolution of the airports to the local airport authorities (LAA).
Virtually at the same time as that task force's report was published in September 1986, the request for proposals process respecting Terminal 3 at Toronto's Pearson Airport was initiated.
That process was to end on January 22, 1987 with the selection of Airport Development Corporation's proposal for the construction of a new terminal, "The Trillium", and for the subsequent operation of that dazzling airport facility so long needed.
Then came the adoption by Prime Minister Brian Mulroney's government of a Strategy for the Future, which the new Minister of Transport, Mr. Benoît Bouchard, unveiled on August 18, 1989 and under which the status of the Lester B. Pearson International Airport as a major Canadian airport was officially confirmed.
How? Through various measures including the redevelopment on an urgent basis of Terminals 1 and 2 and the construction of new runways, as well as a subsequent agreement designed to share the costs of the initial redevelopment effort for Terminal 2 with Air Canada.
In January 1990, Transport Canada published a paper for the purposes of the environmental review of the construction project for three additional runways at Pearson Airport.
Lastly, on October 17, 1990, the new Minister of Transport, Mr. Doug Lewis, announced the Canadian government's decision to proceed with the redeployment of Terminals 1 and 2 through private sector intervention by means of a request for proposals (RFP).
At the same time, Mr. Lewis made it known that he intended to gather suggestions from the Toronto community (elected representatives, travellers and business people) as to the content of the proper documents.
I was appointed Minister of Transport on April 21, 1991, as counsel mentioned, and I then set myself the threefold objective of finalizing these matters of national importance:
(1) devolution of the four airports in the cities of Vancouver, Calgary, Edmonton and Montreal;
(2) privatization of Terminals 1 and 2 at Toronto's Lester B. Pearson International Airport so that their modernization could give the Toronto area and Canada as a whole a national airport of international class;
(3) the construction at that airport of three additional runways necessary to its full capacity at the dawn of the twenty-first century.
The first two objectives have been achieved, Mr. Chairman, and the third, as far as I know, is in the process of being realized.
The spirit of innovation and sense of renewal that Brian Mulroney and his team were able to instil in the federal administration in the course of their first mandate was obviously, to my mind, a guarantee that the concept of the privatization of government activities was at last going to be implanted at the national level and consequently contribute to eventually relieving the state of its costly, complex and inefficient involvement in ultimately everything that does not belong to the government sector.
Contributing in this way to the eventual reduction of the annual budget deficit and the public debt through the shedding of operations that are more matters for the private sector was to mind a very valid and stimulating objective.
As you will remember, Mr. Chairman, I mentioned earlier that my first cabinet assignment was to the Department of Labour, where I was very happy thanks to the cooperation of my Deputy Minister Jennifer MacQueen and her successor Robert Proti, as well as to all the departmental officials who enabled me to tame that enormous machine that is the Government of Canada. I am convinced that together we were able to accomplish meaningful things that helped improve relations between employers and employees.
When the Prime Minister of Canada gave me additional responsibility as Minister of State for Transport on February 23, 1990, I had to familiarize myself in short order with the innumerable issues of that captivating Department. During the inevitable and necessary period of acclimatization and familiarization with that new position, I was able to observe that, since the start of its first mandate in 1984, the Progressive Conservative government had also taken a passionate interest in the modernization of Canada's airports and that that concern had been transported (if you will pardon the pun) constantly from one minister to the next among my predecessors, from Don Mazankowski to Doug Lewis to John C. Crosbie and to Benoît Bouchard.
The shoes I had to fill were great indeed, Mr. Chairman, particularly since Transport Canada was preparing to file with the Federal Environmental Assessment Review Office a few days later its analysis of the environmental and socio-economic impact of the construction project for the three additional runways at Toronto's Lester B. Pearson International Airport.
The opening of the magnificent Terminal 3 at that same airport a few weeks earlier was still the topic of many conversations within the department, as was the direction of the negotiations then under way on the "Open Skies" treaty with our U.S. neighbours, as well as the continuing discussions with the cities of Vancouver, Calgary, Edmonton and Montreal respecting the devolution to local airport authorities of the airports located in each of those cities. Furthermore, the public remarks of my predecessors over the previous two years were still the subject of most of the deliberations within the Department.
Perhaps you will remember, Mr. Chairman, that Benoît Bouchard, then Minister of Transportation, announced on behalf of the Government of Canada that all necessary efforts would be made for Toronto's Lester B. Pearson International Airport to be developed to the maximum of its economic, environmental and airport capacity.
To that end, Mr. Bouchard had announced that absolute priority would be given to redeveloping Terminals 1 and 2 and to building new runways, work which, combined with the opening of Terminal 3 planned for mid-1990, would provide the travelling public with three efficient and comfortable terminals as well as an international class airport.
On November 21, 1989, my colleague Benoît Bouchard subsequently announced, also on behalf of the Government of Canada, that an agreement had been reached between Transport Canada and Air Canada on an initial redevelopment project for Terminal 2 in which the government would invest $52 million.
In January 1990, Transport Canada forwarded to the Federal Environmental Assessment Review Office a document entitled, "Aviation in Southern Ontario: A Strategy for the Future", including inter alia information required for the preliminary review of the additional runway construction proposal of which I spoke a moment ago, as well as the appropriate environmental assessment.
Furthermore, on August 1, 1990, the Minister of Transport Doug Lewis received a copy of a study conducted by Aerocan Aviation Specialists Inc. at the request of the Greater Toronto Airport, Greater Toronto Area Airport Study Committee, one of the three recommendations of which was as follows:
Upgrades should be given highest priority and fast tracked to the greatest extent possible to construction of a new runway at LBPIA to a length of 8500 feet.
On October 19, 1990, Mr. Doug Lewis thus intervened again to announce the decision by the Government of Canada to undertake, together with the private sector, the Terminals 1 and 2 modernization project upon completion of a competitive request for proposal process.
As you will no doubt imagine, I was certainly not going to abandon the hard work done by my predecessors over the previous nine years to achieve this difficult target, that is to say to consolidate the role and status of Lester B. Pearson International Airport as a major, international class airport.
While reflecting on the most appropriate way to break the impasse that this project for the modernization and operation by the private sector of Terminals 1 and 2 appeared to have reached, we continued to focus our attention on negotiations respecting the devolution of the airports of the four cities mentioned earlier because the representatives of those four local airport authorities were beginning to show disturbing signs of impatience.
This policy of devolution of the airports to airport authorities supported by their respective communities was, for our government, the sine qua non of the vitality that we wanted to breathe into the management of Canadian airports so that those facilities would help support and activate the Canadian economy, while promoting a more commercial approach to the transportation of passengers and cargo, one better suited to the needs and conditions of each region of this vast country of ours.
Thanks to the invaluable cooperation of my colleague Shirley Martin, Minister of State for Transportation, my Deputy Minister Huguette Labelle and her predecessor Jocelyne Bourgon, and all the members of the Internal Management Committee of the Department of Transport, we were able to determine in short order the options that were available to us in the difficult case of Terminals 1 and 2 at Pearson airport, and we acted.
We analyzed the advantages and disadvantages of a few realizable options, and together we agreed to initiate as soon as possible the request for proposals process for the modernization and operation of Terminals 1 and 2 at Toronto's Lester B. Pearson International Airport.
Throughout this arduous task, we remained attentive to the difficulties that the commercial civil aviation industry was experiencing in Canada, to the concerns of the air carriers of various sizes for whom Pearson airport is the primary base of operations and to the needs of passengers who use those facilities, as well as to the expectations of residents of that area.
Events occurred at a heightened pace and we could not ignore their potential effects on the operation of Pearson airport as a whole.
We all worked in a disciplined, responsible and professional manner.
On March 16, 1992, we proceeded with the publication of documents respecting the request for proposals.
In early August 1993, a final agreement wholly consistent with the interests of Canadian taxpayers and the travelling public and intended to generate significant and beneficial economic impact for the City of Toronto and the Toronto area, for the province of Ontario and for Canada as a whole was finally reached.
We made it public at the end of that month in accordance with the regular decision-making process of the Government of Canada.
Mr. Chairman, I would like to digress here in order to congratulate Ran Quail, Dave Broadbent and Bill Rowat, who pooled their expertise, talents, time and, I would even say, hearts in order to reach an agreement consistent with the public interest. They succeeded magnificently.
I will repeat here today that, beyond any shadow of a doubt, the usual procedure for this type of situation was religiously followed throughout a process that was sound, just and rigorously monitored.
Mr. Chairman, on the oath that I took before you a few moments ago, and on the oath that I made and signed on April 21, 1991 when I took up my responsibilities as Minister of Transport for Canada, I solemnly state that the agreement respecting Terminals 1 and 2 of Toronto's Lester B. Pearson International Airport was reached in early August 1993 in absolute compliance with the laws that govern us and with the principles of honesty, probity, integrity and equity that characterize our institutions. I also state, Mr. Chairman, that the public interest guided the actions of all participants in this collective success of which I am particularly proud. The interests of Canadian taxpayers were furthered because the realization of this project as provided under the agreement would have permitted gradual investment of an overall amount of $750 million by the private sector, thus avoiding the heavy fiscal and budgetary consequences that an investment of the same nature out of public funds would have caused for the Canadian government.
Mr. Chairman, it is imperative that the public know that the interests of Canadians were protected by the fact that the normal costs of all this work would have been absorbed solely by those Canadian and foreign travellers and visitors who use air services, thus relieving those who do not use this means of transportation of any additional tax burden. The interests of the travelling public were also preserved because potential increases in utilization costs of a more modern, welcoming, comfortable and efficient Pearson airport would nevertheless have maintained the costs paid by travellers at a level lower than that prevailing at the majority of international airports because the agreement provided a mechanism for controlling most of the costs to be collected by the operator. The economic impact for the city and region of Toronto, for the province of Ontario and for Canada as a whole would have been stimulated by a guaranteed injection of $100 million from the first year, followed by an additional injection of $240 million starting in the nineteenth month following the coming into effect of the agreement, for an initial amount of $340 million.
The other three phases of investment would have been realized as traffic increased, ultimately to total $750 million.
All this redevelopment and modernization work would have created an annual average of about 1,400 paying jobs throughout its duration.
If they had so wished, the present employees of Transport Canada at Pearson airport would automatically have been hired by the new operator.
Mr. Chairman, I won't tell you about all the indirect impacts of a project of this scope. The members of your committee are in a position to assess them accurately for themselves.
However, I do wish to cite one that is not as obvious as the others: the exporting of the expertise that Canada is developing in this emerging niche of privatized infrastructures.
Consequently, the unreasonable and unjustified treatment that the present Government of Canada has reserved for the agreement on the modernization and operation by the private sector of Terminals 1 and 2 at Pearson Airport is depriving Canadian businesses wishing to offer their knowledge to foreign countries of numerous, highly attractive business opportunities. I am personally very honoured to have acted as prime contractor in the faultless effort that led us to the signing of an agreement concerning which the Nixon report emphasized no negative element apart from repeated and groundless gossip, insinuations and allegations bandied about before, during and after the fall 1993 election campaign by individuals who confused their personal interest with the public interest.
However, I wish to express my deep gratitude who all those who, as members of the public service or political staff, or as outside consultants, contributed directly or indirectly to the conduct of a process designed for a single, noble and highly strategic purpose: to preserve for the largest airport in Canada it status as a major centre of domestic air links and its role as a hub for Canadian civil aviation in an international class environment.
With all my coworkers of that time, I share the legitimate satisfaction and pride of all those who contributed to this collective project, the impact of which would have generated tangible benefits for the Canadian public as a whole.
Mr. Chairman, all those citizens who followed the work of this special committee of the Senate in person, on television or by reading the transcripts of the hearings are today in a position to observe that the request for proposals process, the proposal evaluation process and the negotiations that led to a comprehensive agreement in August 1993 as well as the agreement itself bear all the hallmarks of honesty, probity and equity.
And as no evidence of manipulation or undue influence has been adduced, we are obliged to conclude, Mr. Chairman, that the present government was not at all justified in relying on an unsigned report of a little more than 4,000 words in order to destroy a $750 million agreement.
In conclusion, Mr. Chairman, I can only hope that the work of this special committee of the Senate will make it possible to safeguard the currently endangered future of this airport so invaluable to the economic health of our country.
Mr. Chairman, senators and Counsel, I thank you for listening to me and I am entirely prepared to answer your questions.
[English]
The Chairman: Thank you very much, Mr. Corbeil.
Colleagues, we are sitting from 9:00 to 12:00 this morning, and again this afternoon with Mr. Corbeil from 1:30 until 5:00. So I suggest that we keep our questioning to approximately 30 minutes for the first round. We have lots of time today.
The first questioner is Senator Tkachuk, followed by Senator Bryden.
Senator Tkachuk: Welcome, sir, and thank you very much for that.
I'm going to start by asking a number of questions on the process that you followed in the contract that was finally signed in 1993. I'm going to start with a couple documents that were in the documents that were sent over to us.
I want to point out, sir, that there are things in here that would force me to ask a question, but they're not to you. I learned that from members across the table. They're not written by you and they're not to you, but they refer to the airport agreement, so I'm going to ask you about them.
I ask my colleague if he could give you them. Take your time and go through them. One is document 00304, which has been distributed in this committee before. It is from Mel Cappe. There are a lot of memos from Mel Cappe and to Mel Cappe. He's the Treasury Board guy. It is to Ian Clark, with a copy to J.A. Macdonald, dated March 12, 1993.
Some comments that have been asked before of other people, if we go to the second page, to the bottom:
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.
This is after, I might add, the contract was given to Paxport in December of 1992. I am going to get a couple of these questions out of the way.
Did you, in any way, during the issuance of the RFP or during the time that the decision was made to give the best overall proposal agreement to the Paxport corporation, did you at any time attempt to interfere in the process or in any way try to influence the process to favour one group over the other?
[Translation]
Mr. Corbeil: Mr. Chairman, I believe that, in my opening statement, I told you and repeated, and I believe that all 3,500 government officers who have testified here before me, according to what I have read in the transcripts of the hearings, determined, and I repeat it again, that I did not interfere in any way in order to influence the work of the officials in any way in the entire process from A to Z.
[English]
Senator Tkachuk: I have another document here. It has a reference number on it, Counsel; 5700-1.35/P1-13. It's dated October 4, 1991, and it's to a Richard Lelay who, I believe, was a chief of staff. It is from a Mr. Doucet. He sends you a two-pager, which looks like a letter, that he asked you to send to Treasury Board. He says:
I have sent a copy of it to Perrin Beatty and Otto Jelinek.
It looks like he'd be sending you a letter to send to others. Could you explain this to me?
[Translation]
Mr. Corbeil: Mr. Chairman, my first answer is that this is not addressed to me; it is addressed to Mr. Richard Lelay, who was my chief of staff, and I am reading this document for the first time. I have no memory of reading this document previously. I can shed no light on this document.
[English]
Senator Stewart: Could I ask, when it says "Chief of Staff", does that mean chief of staff to the deputy minister, chief of staff to the minister? What are we to understand by that designation?
[Translation]
Mr. Corbeil: The chief of staff to the minister.
[English]
Senator Stewart: So you know Mr. Richard Lelay?
Mr. Corbeil: Definitely.
Senator Tkachuk: Now, he wrote this in 1991, this Mr. Doucet. Although I don't know why his testimony would say that he wasn't the lobbyist for Paxport at this time, he was the lobbyist for, I believe, the British airports. Is that right?
Senator LeBreton: British Airport Authority.
Senator Tkachuk: I just wanted to get these two pieces of paper out of the way and let you comment, if you were going to comment. Now I'm going to take you through the process and ask you a number of questions.
I was going to ask you a question on the actual policy development, but you've addressed that in your opening statement. When you made the decision and the ongoing discussion that took place after the decision was made on December the 7th, what took place? Did you meet with your cabinet colleagues or Treasury Board or how did this happen on December 7 when you made your decision? Was the cabinet consulted previous to the issuing of the press release notifying the winner?
[Translation]
Mr. Corbeil: Mr. Chairman, I have certain problems with the document that you had conveyed to me a moment ago and with my ability to answer questions related to cabinet work.
Like you, who are a member of the Privy Council, I took an oath of confidentiality. So if I answer this question without reference to the cabinet process, I am prepared to answer all your questions. However, you will understand that I have a problem in honouring the oath of confidentiality of Privy Council members while answering all questions directly relating to the operation of cabinet or what may have occurred in cabinet.
What I can tell you in response to your question is that the decision of the evaluation committee was communicated and that we subsequently followed the cabinet decision-making process for all the actions that we took. In other words, cabinet was constantly kept informed of all the actions that the Minister of Transport subsequently took. The Minister of Transport does not have the authority to make decisions of this importance on his own initiative and the Minister of Transport that I was would never even have thought of doing things of similar importance without consulting cabinet colleagues as is proper.
[English]
Senator Tkachuk: So without getting into the matter of your oath of office, I understand, sir, and cabinet confidentiality, I was just clarifying for myself the fact that a decision of this import that would have been announced on December the 7th, publicly, the normal process was that after the department officials had made their decision, you would have reported back to cabinet. That would have been the normal procedure and there would have been a decision made and the process would have proceeded during that time period, some time before December the 7th.
[Translation]
Mr. Corbeil: That was the procedure that was followed. It was in fact the decision-making process I spoke of a moment ago that was respected. There was a decision by the evaluation committee that was forwarded through the normal bureaucratic channels and then communicated to cabinet, and cabinet then guided the Minister of Transport who in fact, of course, reported to cabinet.
So, once again, all the processes, each time there were stages that led us to the signing of the agreement, at each of those stages, cabinet was consulted and the usual decision-making process was complied with.
[English]
Senator Tkachuk: How many members of cabinet were there at the time? I'm not sure how many appointees.
Senator Corbin: I think it was 29.
[Translation]
Mr. Corbeil: Twenty-nine in cabinet. Did your question concern total membership? I think it was 29 or 32, roughly 30, I believe.
[English]
Senator Tkachuk: And of course, I would say that amongst most people, this is public knowledge that decisions of this kind would take a fairly large group of people to decide on an issue like this. I'm asking these questions, sir, because there have been allegations made since 1993 that this was some kind of a grand conspiracy to fix up some Tory friends.
So you'd have to have the agreement of a lot of people. Minister Mazankowski, he was there as well. He was a member of cabinet at the time. Mr. McKnight was a member of the cabinet at the time. Barbara McDougall was a member of the cabinet at the time. So this would have been a grand conspiracy, if Mr. Nixon can be believed.
[Translation]
Mr. Corbeil: Mr. Chairman, that is the reason why I thought it necessary to state in my original presentation that the usual cabinet decision-making process was fully complied with at every stage of this process, which was very long since it can be traced back to August 1989, and which ended in August 1993.
So it was a process that gradually evolved until August 1993 and at each of the stages, and I would emphasize this point, and this is why I say there is absolutely nothing reprehensible in this agreement, everything was done according to the rules of the game and the entire cabinet was involved in each of the stages, in addition of course to the entire bureaucratic structure of government. There must have been 200 to 250 persons who took part in this process at one time or another. And you can therefore see how impossible it is to imagine that roughly 250 persons would conspire to reach a predetermined objective.
[English]
Senator Tkachuk: You'll have to bear with me. From time to time I try, by my questions, to show how ridiculous this whole thing is. One of the ways I'm trying to do that is by going through the process, but also to point out that this is not a one-man show - or a one-person show, I should say - but that there is cabinet and there is Treasury Board, there are department officials, there is a process of choosing the person. There are all these people that are involved from the issuance of the RFP right to the signing of the contract who would have to be part of this decision making. So just bear with me as I go through this.
I'd like to run through some of the aspects of the process with you. Why did you decide not to ask for an expression of interest rather than go to a one-stage process?
[Translation]
Mr. Corbeil: My idea of an expression of interest is that you normally resort to that process when you are trying to test the waters in order to determine whether there is an interested party. This is the process that was adopted at the time of the request for proposals for Terminal 3 because then it was something completely new that had never been done in Canada and not much in the world.
It was normal for the Minister of Transport at the time to want to check to see whether, in going out to the market for an RFP, there would be possible replies. In the case of T1 and T2 a few years later, the concept of privatizing airports was no longer new. We knew that there was interest since there had been unsolicited proposals presented to government. We therefore knew that, yes, there was interest in the market for this kind of thing and the period for expressions of interest, in my view, was entirely pointless and was a stage that we did not have to concern ourselves with.
[English]
Senator Tkachuk: Why did you decide to proceed with the RFP prior to the environmental assessment for the runways?
[Translation]
Mr. Corbeil: Mr. Chairman, it must be borne in mind that a few months earlier, before he was assigned other responsibilities, Mr. Lewis made a statement to the effect that we were going to proceed with the issue of a request for proposals to the private sector for Terminals 1 and 2.
He said, "We intend" - because there was an awareness in the Toronto regions particularly to the new runways issue. People were concerned about the environmental consequences of the construction of new runways. So there was an awareness and, by informing the public that he was going to go to RFPs in order to redevelop and operate T1 and T2, Mr. Lewis took the trouble to specify that the government did not want to circumscribe the environmental process in any way.
He had thus established a kind of procedure that provided that the environmental study report would be done during the summer of 1991 and that he was going to ask for the RFP around December 1991. And we learned roughly at the time I arrived at the Department of Transport that the environmental assessment office was not going to begin public hearings before the end of the summer.
It later decided that it would not start public hearings before the Ontario municipal elections that were to take place in November, which definitely meant that the final report would not reach us until later in 1992. At that time, I received a similar report from the Vancouver Airport, where there was no objection to construction of a new runway.
There were roughly 85 municipalities in the region that had given their consent to construction of a new runway in Vancouver, and the report of the office responsible for environmental assessment had been completed - I think that was in February 1991 - and the conclusion had not been forwarded to the government until September 1991. That meant that there were roughly seven months between the end of the hearings and the time the report was filed.
So taking all those things together, that led us even more to postpone the RFP for T1 and T2 indefinitely. So we simply said, "The group that does the assessments, the EARO as it is called in the professional jargon, was going to take a lot of time" and that there was in fact no link between the runways and the airport.
We therefore decided that, when the time came to issue the RFP, we would demonstrate publicly that there was no link between the redevelopment of the two existing airports and the construction of the runways, which had an environmental impact.
[English]
Senator Tkachuk: Some of the other senators have made much of the fact that, even though in '88 and '89 and early '90 it was very busy at Pearson airport, and it was overcrowded, there were a lot of complaints, there were a lot of hold-ups and all the rest of it, but by '92 the situation, for economic reasons and other reasons, had eased a little bit. Why did the government proceed even though much of sort of the public outcry about what was happening at Pearson airport had kind of died down?
[Translation]
Mr. Corbeil: Mr. Chairman, I think it is important to point out here that, to my knowledge and as I remember it, there was no objection to renovating Terminals 1 and 2. The RFP that we issued in March 1992 was only to redevelop the two existing terminals, Terminal 1 and Terminal 2, and to hand over the operation of those two terminals to the private sector.
So that is why I said a moment ago that there was no relationship between construction of new runways and the redevelopment of the terminals which was urgently required. I believe that a number of people here testified that T1 was literally falling apart. The situation has not improved since that time. On the contrary, I believe they have now been forced to close the garage completely.
It was essential to redevelop Terminals 1 and 2 as quickly as possible because Terminal 3 was creating a certain imbalance in that it was possible for one of the national airlines to operate out of an absolutely modern terminal and the other airline was operating in Terminal 2, which was certainly not of international class. So to achieve the objective of giving Pearson a completely international status in order to consolidate its role as a major Canadian airport, it was important that we proceed with that.
We had said it in 1989; it was 1991-1992 and we were receiving letters from everywhere from people who told us, "Look, you have announced this on a number of occasions; when are you going to go ahead?" And I think that in 1992, in fact, we also lost a bidder along the way because it was taking too much time to proceed.
[English]
Senator Tkachuk: Why did you set the RFP for 90 days?
[Translation]
Mr. Corbeil: I thought, Mr. Chairman, that it was a normal period and that we had even said at that time in sending out the request for proposals that if there were proponents who found that it was not long enough, we were prepared to extend it, but it was important that we allow a normal amount of time so that people could get to it quickly and that we could deliver the goods and have a modern airport as soon as possible. And so to my mind, 90 days was an entirely normal period.
[English]
Senator Tkachuk: In 1992, in March, before the House of Commons Standing Committee on Transport, you said that if someone came forward and asked for an extension it would not be a problem. Did you make this public?
[Translation]
Mr. Corbeil: I made it public on a number of occasions and I believe that the officials who testified said that at the first meeting of people interested in any way in the RFP in the days following my public announcement, there were perhaps 200 persons at that meeting and the public servants who were in charge of the process repeated - and this was reported in the media - that we were prepared to accept requests that were made if someone found the 90 days were not long enough.
[English]
Senator Tkachuk: Did you receive any complaints from any group that said that they hadn't been given enough time or the opportunity to participate during this time?
[Translation]
Mr. Corbeil: None.
[English]
Senator Tkachuk: There have been insinuations from newspapers and others that the RFP process was somehow rigged in favour of Paxport.
[Translation]
Mr. Corbeil: As you said, Mr. Chairman, those were insinuations that did not hold up under examination. Anyone who examined that document could testify, as I am doing, that it was an absolutely clear document that covered all the angles and that enabled everyone who might have any innovative ideas to put them forward.
For proof, I would simply point to the manner in which we dealt with the issue of Terminal 1. You will remember that there were the operators of Terminal 3, there was Air Canada and there were other persons who felt that what we should do was to eliminate Terminal 1 and concentrate all operations in Terminals 2 and 3.
On the other hand, the Department contended, and had evidence to back it up, that it was impossible to proceed with the closing of Terminal 1 in the near future because there would have been a reduction in the number of gates, a loss of roughly 24, and that we would then have shot ourselves in the foot; we would have had a sub-par operation.
So what we did in the RFP was we said, "It is our view that Terminal 1 must remain in place, but if there are bidders who have any brilliant and innovative ideas to enable us to dispose of Terminal 1, they may do so and we will examine them," and that is what one of the bidders submitted. Claridge simply proposed to eliminate Terminal 1 from the outset.
[English]
Senator Tkachuk: Why was Paxport eventually chosen?
[Translation]
Mr. Corbeil: I believe that the chairman of the evaluation committee told you when he appeared here that he had set up an absolutely airtight evaluation system consisting, if my memory serves me, of five committees independent of each other. The members of each committee did not meet together, did not discuss together; each examined one aspect of the RFP.
Then there was a coordinating committee, or an executive committee, chaired by the deputy minister, which examined all that and it was compliance with this process that enabled that committee to reach the conclusion that the proposal submitted by Paxport was "the best overall acceptable proposal".
[English]
Senator Tkachuk: When you announced this decision in your press release, there were a couple of conditions attached to the best overall acceptable proposal, I think you called it. One of them was the issue of financeability. Could you explain what the problem was or how that...
[Translation]
Mr. Corbeil: Mr. Chairman, it must be borne in mind that, throughout this entire period, the situation of the airlines had deteriorated appreciably, even dramatically. At the time, possibilities for the amalgamation of Canadian Airlines and Air Canada were bruited about at certain times and non-amalgamation at other times. There were all kinds of elements: the possibility of an alliance between Air Canada and U.S. Air, and so on.
The aviation world was in trouble and the government did not want the action that would be taken to be based on rent increases, on general price increases that would force a deterioration or contribute to the further deterioration of the airlines' situation.
So we asked that the proposal accepted be able to prove its "financeability" - I don't know if that is a correct French word, but "financeability" -, that it show that it could be realized in a manner consistent with the situation of the airlines, and that is why we established that the evaluation committee's decision was respected. We accepted the Paxport proposal, but Paxport had to submit to a test to check the "financeability" of its proposal, having regard to the situation of the aviation industry in general.
[English]
The Chairman: Senator Tkachuk, may I ask a supplementary?
Senator Tkachuk: Sure.
The Chairman: Mr. Corbeil, a moment ago you mentioned that the evaluation committee - it was chaired by Mr. Lane, as you know, but did you give us the impression it was chaired by a deputy minister?
[Translation]
Mr. Corbeil: No. The evaluation committee consisted of five independent committees that were each chaired by a public servant and Mr. Lane was the boss, if you will, the coordinator of that committee. Then there was a kind of executive committee on which the chairman of each of the committees sat. And as I remember, that executive committee was chaired by the deputy minister herself.
[English]
Senator Tkachuk: To go back to the decision-making process which I had talked about earlier, you have now made a number of decisions as a minister, expression of interest, the RFP, decision to proceed in 1992, setting the RFP at 90 days, the decision to have an extension of the 90 days if someone could make a case for it. Did you sit around your office kind of by yourself and say, "Gee, I'm going to make this decision"? How did you make these decisions?
[Translation]
Mr. Corbeil: What decisions? All the decisions?
[English]
Senator Tkachuk: Yes. Did you have a process set up for yourself as to how this would be done?
[Translation]
Mr. Corbeil: After the RFP was issued, everything became strictly a matter of the government's bureaucratic process. As to the make up of this evaluation committee, I had nothing to do with anything in selecting the members, defining how that would be done or establishing the ratings. All that was done exclusively, and I repeat, exclusively by public officials. The minister, the office of the minister had nothing to do with this evaluation process from A to Z, nothing. That was all done by the government bureaucracy.
[English]
The Chairman: Senator Tkachuk, you have had 32 minutes. Are you prepared to wind up and relinquish for a second round?
Senator Tkachuk: Sure, I am. I have got a number of questions yet which will take me quite a bit longer on the process, so why don't we just pass on to someone else and then I will come back when they are done.
The Chairman: Thank you. Senator Bryden.
Senator Bryden: Thank you, Mr. Chairman.
Mr. Corbeil, you were Minister of Transport from April 22, 1991 until about the 25th of October, 1993.
[Translation]
Mr. Corbeil: Officially, from April 21, 1991. I believe the last meeting of the committee was held on November 3 to finalize the issues. That was in fact the period when I was Minister of Transport.
[English]
Senator Bryden: Earlier in these proceedings - in fact, very early - we were provided, the committee was provided with a document by the Department of Transportation which sets out the period from '89 to October '93 with the events, salient events and the ministers, deputy ministers and managers involved. I would like just to circulate that document because I find it very useful. Perhaps other senators haven't brought it today.
If you look at the second line on "Event," during the period that you were minister, certainly from your announcement on the 11th of March 1992 that there would be an RFP, through to - if you go to the next page, it is also in French, Mr. Corbeil. They were back to back, but I put them together this way because they are easier to read.
Mr. Corbeil: I have no problem reading English.
Senator Bryden: Okay. So that you were the responsible Minister of Transport during what probably is referred to, or sometimes referred to, as the crucial time, from the time of the issuance of the RFP to the actual execution of the agreement in October of 1993; is that correct?
Mr. Corbeil: I think it speaks for itself.
[Translation]
I was minister from April 21, 1991 until the end of the mandate of the party with which I was affiliated. So everything that happened during that period was my responsibility.
[English]
Senator Bryden: Although you, as you indicated earlier, did not do everything yourself, under our system as the minister responsible you were responsible to the cabinet and to the Prime Minister for all of the activities of your department, its officials, its agencies, its consultants, all of the things that relate - that were done in relation to this agreement?
[Translation]
Mr. Corbeil: As the popular expression goes, "That's where the buck stops." The minister is responsible for everything that happens in his department, which, as you know, is a department consisting of 22,000 employees.
[English]
Senator Bryden: If you - the other side of that, of course, goes accountability, that you are also accountable to the Prime Minister and the cabinet and, ultimately, to the people of Canada through Parliament for whether the agreement was a good agreement or a bad agreement; that is correct as well?
[Translation]
Mr. Corbeil: Yes, sir.
[English]
Senator Bryden: Yes. How often did you report the progress of this negotiations and agreement to the Prime Minister?
[Translation]
Mr. Corbeil: Mr. Chairman, I never reported anything to the Prime Minister as such. The reports that I made, the authorizations that I received were made through the usual cabinet decision-making process.
[English]
Senator Bryden: So your reporting was done to cabinet?
[Translation]
Mr. Corbeil: Yes, sir.
[English]
Senator Bryden: Mr. Corbeil, I would like to show you a document that is marked 2188 - 002188. It is my tab "B".
This is a memorandum to the Prime Minister dated November 16, 1992 from Mr. Shortliffe. I refer you to the second bullet that is there and I would like to read the first paragraph. It says:
Transport has identified a number of issues to be considered before proceeding:
- the recession is continuing longer than expected and traffic may decline due to the current airline industry situation so the need for the expanded terminal space has slipped 2 to 3 years. There is no need to start construction until 1996;
As minister responsible, were you taking the position that the need to construct had slipped for two to three years?
[Translation]
Mr. Corbeil: Mr. Chairman, I would like to mention here again that I will not comment on a document marked "Secret", which is correspondence between the Prime Minister and the Clerk of the Privy Council of that time and of which I have no knowledge.
If the question concerns the construction itself and what my opinion is, I must first say that the issue was not construction of new facilities; it was not a decision to increase the capacity of two terminals; it was simply a matter of modernizing, reconditioning more especially Terminal 1 and modernizing Terminal 2 and handing over operation to the private sector. And each time we talk about "capacity", to use the English word, it is not entirely accurate because we were not concerned with the "capacité", the size of the two terminals, but rather their modernization so that they could achieve status that would resemble as closely as possible T3 so as not to disadvantage a group of travellers who were required to use those two terminals since - excuse me - Terminal 3 was used by another group of carriers. In my view, the decision to proceed with T1 and T2 had nothing to do with increasing any capacity; it was a matter of fitting up a modern and efficient facility.
[English]
Senator Bryden: So as of the 16th of November, you were not contemplating delaying the process for two or three years?
[Translation]
Mr. Corbeil: Never, speaking for myself, Mr. Chairman.
[English]
Senator Bryden: As of the 16th of November, and I use this memorandum which has been introduced in evidence before, as, to use counsel's term, an aide-mémoire, to perhaps direct your attention. The second paragraph under that bullet says, and I quote:
- it had originally been expected that construction might start next year. Transport's current estimate is now 1994 at the earliest as it will take a minimum of 12 months to negotiate the lease.
That was the opinion of the Department of Transport for which you were responsible?
[Translation]
Mr. Corbeil: Mr. Chairman, I do not want to be unresponsive; I do not want to evade the questions, but in my view - I think as you do: the Privy Council oath of office is very clear and, once again, I cannot comment. If you want to ask me questions that are based on that, but without reference to that, then I am not - I do not feel compelled by the oath because I am being asked questions of a general nature that anyone may ask. However, if you refer to matters that arise from a document marked "Secret" which belongs to the Privy Council in which I was not a participant, I cannot answer them.
[English]
Senator Bryden: Okay. As of the 12th of November, was it the department's position that it would take 12 months to negotiate the agreement?
[Translation]
Mr. Corbeil: Mr. Chairman, we can just return to the negotiations because they were parallel to the negotiations respecting the transfer of the Vancouver, Calgary, Edmonton and Montreal airports to local airport authorities and they took a very long time. As you know, in the machinery of government, decisions go through a number of committees and, consequently, it has become virtually accepted by the public service that negotiations for anything always take a long time. So it was probably the thinking of the department, of certain persons in the department, that that would take 12 months.
[English]
Senator Bryden: At that time, as of November, and this is before the announcement of the successful bidder, was it the position of the department that the carriers' costs, the air carriers' costs, would double to $60 million, which is what is said in here? I know you can't comment on it.
[Translation]
Mr. Corbeil: Everyone - and this is the answer I gave Senator Tkachuk a moment ago - everyone was concerned about the possible increase. If someone is about to spend $700 million, there must obviously be revenue to pay those costs. And everyone was concerned. Having regard to the situation of the air carriers, what would be the consequence? What would be the size of the increases and how would that really affect the airlines? So everyone - the minister, the department, cabinet - everyone was concerned about how these things would be financed, how these expenses would be financed and what effect those increases would have on the airlines.
[English]
Senator Bryden: Were you aware that at this time Air Canada had requested the redevelopment be postponed?
[Translation]
Mr. Corbeil: Mr. Chairman, I was aware that Air Canada had asked that Terminal 1 be redeveloped and that the kind of practice that had previously been used to redevelop the domestic section of Terminal 2 jointly by Transport Canada and Air Canada be continued.
I also knew at that time that Claridge absolutely wanted the Government of Canada to close T1 and concentrate on modernizing T2. I was aware, and I had received requests from the unions, from the business community and so on, to proceed with that approach. I know because that is what the Department told me and showed me, that it was impossible not to proceed with T1, the improvement of T1, because of the operational problems and because we did not want to isolate Terminal 1 so as to make it a separate entity because it was not a large enough terminal to be able to support itself. So we had to - we were about to make improvements, to consider Terminal 1 and Terminal 2 in overall terms.
However, conflicting opinions, as in all projects of this kind - there was each - each person had his perception of things and that fuelled the discussions and it was as a result of that that we came to the end with what we thought was the most adequate solution. And whatever solution is chosen, as you correctly mentioned, it is ultimately the minister's responsibility, and I assumed by responsibility.
[English]
Senator Bryden: As of this date, had there been discussion of the bidders, the two bidders getting together? Because there is a reference here that there is no incentive for the bidders to get together. Had you had any discussion, had the bidders talked to you about getting together?
[Translation]
Mr. Corbeil: Mr. Chairman, I had absolutely no memory, no knowledge, no indication before that was announced that the two bids that had been submitted for evaluation would wind up as a single bid by the bidder that was selected as the best and that allied itself with Claridge. I had no knowledge of that until it happened.
[English]
Senator Bryden: Mr. Chairman, before I get in trouble for having something that I shouldn't have, the document that I gave you today has the complete sentence that was missing from that note; and the reason that it is complete is we went back to the binders, it had been cut off with photocopying. So this is the document that is in the binder and that sentence, that complete sentence is, "As discussed last Thursday, I am looking at bid compensation."
Was there discussion in the department about compensating the bidders? I assume that means compensating the bidders if the agreement did not go forward. Do you recall discussions for compensating bidders?
[Translation]
Mr. Corbeil: No, sir.
[English]
Senator Bryden: Mr. Corbeil, I refer you to document 002184, it is my tab "C". This is a memorandum to the Prime Minister from Mr. Shortliffe dated December 4, 1992.
In the third bullet, not including the one that the privatization people have taken out, there is a reference that if Paxport is not able to finance, at that point the government would have to consider putting the whole project on hold until a later date.
As of the 4th of December, as the minister responsible, had any discussion ever taken place that you would put the whole project on hold for a later date?
[Translation]
Mr. Corbeil: No, sir.
[English]
Senator Bryden: Once again, there is a reference at the bottom that the government could consider alternatives. What alternatives would be considered?
[Translation]
Mr. Corbeil: Mr. Chairman, if the question is related to that document, I will not answer the question. If the question is general, I will answer it. But if we are referring once again to that document, for the same reasons as I explained earlier, I will not comment on a document that is a secret Privy Council document. That is out of the question.
[English]
Senator Bryden: Mr. Corbeil, I refer you to a document which is 002181. It is my tab "D". Once again, it is a memorandum to the Prime Minister from Mr. Shortliffe that is available in the binders.
There is a reference in there that action is going to have to be taken as of the 22nd of March 1993 to break the logjam.
Can you tell us what would have constituted a logjam to this process as late as the 22nd of March 1993?
[Translation]
Mr. Corbeil: Senator, may I ask you to respect the decision and obligation that I have been mentioning for a while now. If you want to ask me questions, ask me them without referring to a document about which, I will tell you for the third time, I will not answer questions that refer to a document.
[English]
The Chairman: Would you ask just a general question, if there is a logjam problem without referring to the memorandum?
Senator Bryden: Mr. Chairman, I am following through on my line of questioning. If this witness does not want to reply, I take it that his privilege. I am not going to use up the little bit of time that I have arguing over documents.
The Chairman: The witness has not refused to reply. He is just asking you to ask him a general question without referring to a document which he does not feel that he is in a position to reply. If you would ask him a question on logjams without referring to a secret memorandum, he will give you the answer.
Senator Bryden: Mr. Chairman, it may be a secret memorandum, but it came through the privacy police and it has been filed with us and we have had this discussion over and over. I refuse to spend my time once again with being obstructed by saying, "I can't use documents that are legitimately on file with the clerk."
Mr. Nelligan: I think, senator, the problem is not even that, but this is neither the author nor the recipient of the document. You can ask him questions which might assist us to interpret the document, but since he is not a party to it, may I suggest you can ask him, "Do you recall a meeting on March 19? Was its purpose to break a logjam? Was there a logjam?" There is a whole series of questions you can ask in which you have been assisted by having read this document.
But, whether he had an oath of office or not, he cannot be compelled to comment specifically on this document. We will have the author of it in due course.
Senator Bryden: Counsel, I really do try to follow your instructions, although you probably don't believe it. I am using this, as you have told me is legitimate even in this environment, as an aide-mémoire, simply as that. If it is now that it has to aid my memory and not the witnesses, that is fine.
Mr. Nelligan: You can simply ask him, "Do you recall a meeting on March 19th? Do you recall a discussions of logjam?" There are any number of questions you can ask him.
Senator Bryden: Thank you. Now, you made me lose my place.
Senator Tkachuk: Counsel, I am interested in this answer. Would you ask him that question? Would you please ask that question?
Senator Bryden: I did ask the question.
Senator Tkachuk: No, no, let counsel ask the question.
Mr. Nelligan: Mr. Corbeil, there has been discussion in these hearings at a meeting of March 19th at which Mr. Bronfman, Mr. Matthews and Mr. Coughlin were present. Do you recall such a meeting?
[Translation]
Mr. Corbeil: If you are asking me whether I remember a meeting specifically on March 19, I must tell you no. Many discussions followed the decision to award control or the agreement to Paxport pursuant to the committee's decision. There was much discussion from the moment we set a condition that "financeability" had to be proved. There was quite obviously considerable discussion.
The first discussion that I remember concerned the question whether the government wanted "financeability" to be demonstrated. And the government's position was: "It is not up to us to tell you how to prove "financeability"." You have to require the services of a consultant, if necessary, who, knowing the financial field, will tell you that if you want to demonstrate that it's financable, you must do A, X and Z.
There were many discussions. The question with Air Canada, the lease with Air Canada, posed problems, but that was a problem that, to my own knowledge, arose in January 1993, the existence of that long-term lease with Air Canada. That posed problems and on each occasion, our position as a government was to tell people, "You have to solve your problems and get back to us with solutions."
[English]
Mr. Nelligan: Again, Mr. Corbeil, there was apparently from the record further problems as to the two original bidders joining forces, and that as of March 19th there were continuing discussions between those two groups and your department relating to whether there should be a joint venture negotiated. It is said that on March 19th those gentlemen met with the department, including Madam Labelle and Mr. Broadbent, and there were some discussions with respect to whether or not this would be in violation of the RFP process where one had been declared to be the best proponent and that there was some concern with regard to whether it would be necessary for those two parties to both withdraw their bids. Do you recall such discussions?
[Translation]
Mr. Corbeil: Mr. Chairman, Counsel, from the notes I have here, the two bidders, Paxport and Claridge, announced their affiliation on January 29, 1993. After that, there were as you say discussions. Was that legal? How did that work? Could we accept it? If it was legal, could we agree to negotiate with the new corporate entity with two proposals that were on the table or should Claridge have withdrawn its proposal since the proposal that was accepted by the evaluation committee was Paxport's and so we could not consider the new discussion being about a mix of the two bids.
There was a decision by the evaluation committee, which said that the best bid was Paxport's, and so discussions had to continue; they had to be on that proposal. And after the issue of the legality or the legal possibility for us to do business with a new corporate entity was finalized, the discussions continued on the withdrawal of the bid that had not been accepted, which was done a little later. I have the date here. I do not have the date on which they withdrew the bid, but there was ... yes, on May 5, 1993, Claridge's bid was withdrawn from the table and it was only after that that the real negotiations on the agreement itself began.
So during the period from December 1992 to May 1993, there were all the discussions that I would call peripheral discussions, but it was only in May 1993 that the real negotiations began.
As to the "merger", if I may use the expression, between Claridge and Paxport, that was announced in January 1993 and the questions that you just mentioned began to arise.
[English]
Mr. Nelligan: Was that withdrawal of the proposal a breaking of the apparent logjam or were you aware that it was a logjam?
[Translation]
Mr. Corbeil: I believe there were two. In the negotiations, each time we reached a point where the two participants did not agree, there was a kind of "logjam". How serious was it? Could it be resolved or not? Subsequent events will prove it or not.
However, it was certain that from the moment it was necessary that - the first question so that we could really pursue the matter was: Is this first of all legal? The answer to that being yes, what happens to the two bids? And at that point, we made Claridge - Claridge and Paxport - understand that they could not leave both bids on the table. A decision had already been reached by the evaluation committee. So they eventually withdrew their bid. I do not know whether it was before or after, but at the same time as that, there were the problems with Air Canada respecting the existence of the lease. I believe it was for 20 years with two renewal options for 10 years. That posed a problem.
And indeed what we told the new corporate entity at that point was, "You have to settle that with Air Canada." And that was eventually settled between Air Canada and the new corporate entity. When that was completed, there were no more barriers to continuing the negotiations or to undertaking the negotiations. That's what was done.
[English]
Senator Bryden: Mr. Chairman, could it be noted that Mr. Nelligan just took 15 minutes of my time?
The Chairman: So noted.
Senator Bryden: Thank you.
Senator Tkachuk: It should also be noted that the logjam question got answered.
Mr. Nelligan: We broke the logjam.
Senator Tkachuk: I think that should go on your time, Senator Bryden.
Senator Bryden: Even in Miramichi it doesn't take that long to break a logjam.
Anyway, at about that time, Mr. Broadbent was named as the new chief negotiator or chief negotiator around March 22nd, 1993. Did you select Mr. Broadbent?
Mr. Corbeil: No, sir.
[Translation]
That was proposed by Mme Labelle and that was caused by the fact that Mr. Ran Quail, who at that time, from the start of the negotiations, that is to say from the potential negotiation period, after Paxport was selected as being the best bid, it was Ran Quail who was selected by Mme Labelle, the Deputy Minister, to act as negotiator. Sometime afterward, Mr. Ran Quail had the opportunity to be appointed Deputy Minister of Public Works, Supply and Services.
And I must digress here to say publicly, in order to emphasize the abnegation of one deputy minister and one senior public servant of the government, that he asked both Madam Labelle and your servant the Minister of Transport whether he was, whether he had to decline that appointment, since he had been asked to perform an important job.
We both told him obviously that no, we did not object to his accepting a position as deputy minister, that that was probably his last chance since, like us, he was getting on in years.
So it was at that point that the question of a successor arose. Madam Labelle told me, "There is a former public servant who has just retired who has experience in negotiating. I trust him entirely. Do you agree?" And I said yes.
[English]
Senator Bryden: Now I would like to file a document which is 2097. The witness may use it if he wishes; and I have a question arising out of that. It is a memorandum to the Prime Minister from Mr. Shortliffe dated April 8th, 1993.
On or about that date, Mr. Broadbent gave Mergeco what according to this document is an ultimatum, "Either make us a firm proposal within seven to ten days or we walk".
Were you part - did you discuss that ultimatum with Mr. Broadbent?
[Translation]
Mr. Corbeil: Mr. Chairman, it is much easier for me to cooperate to the very great extent that I can with the committee on any question if you do not put before me a document on which - once again, I must tell you and I hope it is understood by everyone that I'm not trying to avoid answering. In some cases, it would much easier for me to answer the question, but the fact that reference is being made to a document on which, by virtue of my oath, I am not entitled to comment, I cannot comment. If I am asked questions, be they the same questions but of a general nature, then I am completely comfortable. But I will not answer, even if it appears that I do not want to answer. I tell you that it is very often easier for me to answer, but I will not answer as a matter of principle, Mr. Chairman.
[English]
Senator Bryden: Okay. I would like then to file document 2210.
The Chairman: Before you get to the document, is there any information you want in which this document has assisted you in asking the general question to the witness?
Senator Bryden: Yes.
The Chairman: You have asked for another document. You are passing this one?
Senator Bryden: Yes.
The Chairman: You are not asking any questions?
Senator Bryden: I just did. I asked if in fact around this time, and I said he could look at the document if he wanted, at around this time that Mr. Broadbent gave this ultimatum that seven to ten days, Mergeco, you make us an offer or we are going to reconsider our position, and I asked if he was aware that this situation existed.
Was there an ultimatum given by Mr. Broadbent on about that date?
[Translation]
Mr. Corbeil: Mr. Chairman, to draw a clear distinction between the document and the answer. The question that I'm being asked is a general question. I have not even read the document; I have not even looked at it. Consequently, if the Senator admits that his question is not related, he may have it in his head, but that he is not putting me in the position of commenting on that document and that he is speaking of the negotiations themselves, certainly in the course of the negotiations, the negotiator, whoever he was, Mr. Broadbent or after that Mr. Rowat, like any good negotiator is required to call the adversary's bluff and to put him in a position - I will not use the expression that is usually used, but if he makes a decision, an agreement is reached on something that is a compromise or respects our decision and produces a document or an agreement.
Being an experienced negotiator, the negotiator did not have to telephone the deputy minister or the minister each time to ask, "Is it all right if I say such and such a sentence." What sentences were said? I do not know, but I know, because we spoke to each other regularly, that the negotiators informed me of the progress of their affairs and at what points they had more difficulty than at others. There was no problem with that. It's part of the process.
[English]
Senator Bryden: Mr. Chairman, I am going to file with the committee document 2210. I am going to ask the witness this question: At about this time, and once again it is my aide-mémoire, around the end of April, and don't look at the document, please, it has "Secret" written on it.
[Translation]
Mr. Corbeil: I'm just going to make sure, Mr. Chairman: is it marked that it's a document of the same nature or not? If you are putting different documents before me, I simply want to make sure and I assure you that I will not read them.
[English]
Senator Bryden: I should have said, and I apologize, I should have said it is a memorandum from Mr. Shortliffe to the Prime Minister.
[Translation]
Mr. Corbeil: First, we should understand the rules of the game. There's no problem.
[English]
Senator Bryden: About this time a May 31st deadline for concluding a deal was set. Did you set that deadline?
[Translation]
Mr. Corbeil: I believe we decided on that between us. One of the conditions, if you will, that Mr. Broadbent set for accepting the mandate to negotiate was that it had to be completed in a fairly short time because he had previously accepted another mandate with other persons. And that seemed to me to be a very normal deadline because when all the problems of the legality of the amalgamation, the issue of which bid would be discussed, the Air Canada issue, that could indeed have taken us to May 31.
As you subsequently may have seen, that was not a fixed deadline. It was precisely so that we would have regular reports on where we stood, whether things were going well or whether they were not going well, and that was a deadline put on the table for discussion purposes that was subsequently pushed back at first to July 15 and then to August 31.
[English]
Senator Bryden: Mr. Chairman, I want to make just one point. I can stop now but I have a very limited amount to complete this line of questioning and then I would be off this line of questioning. I would certainly come back on the second round, now it is up to you. I would hope it would take no more than 10 minutes and, I hate to say it, but depending on how long the witness takes in answer.
The Chairman: Go ahead.
Senator Bryden: I have lost my place which is causing me a bit of a problem.
When did you announce that the contract was now formally under negotiation?
[Translation]
Mr. Corbeil: As I remember it, I do not believe I made an official announcement. I don't think, Mr. Chairman, that there was an official announcement that the negotiations had begun. To my knowledge, we announced on August 30 or 31 that there was an agreement. The rest was only internal procedure. That is what I remember. I have no indication that we actually made an official announcement that the negotiations had begun.
[English]
Senator Bryden: Okay. Was there, and I would like to file this document, I am not trying to contradict the witness, but did you not make - the document number is 2213 - did you not make an announcement, or did you make an announcement that formal negotiations were now in progress, or did you - about this time but you don't remember?
[Translation]
Mr. Corbeil: I repeat: to my knowledge - I have no recollection, but if you in fact have a document that shows that I did it; I don't have in all the documents that I have - I don't have a document that says the date on which there was an announcement.
[English]
Senator Bryden: In fairness, I don't have a document that shows that it was done. The document I filed shows that it was contemplated being done, so maybe you did not do it, I just wanted to know.
[Translation]
Mr. Corbeil: I do not remember making a public announcement to that effect.
[English]
Senator Bryden: In your discussions with Mergeco, did Mergeco, and this would be after Claridge and Paxport got together, did they propose closing T1 as part of the negotiation?
[Translation]
Mr. Corbeil: I don't believe so. I think that it was provided in the agreement that there would eventually be, if you will excuse the expression, a "phasing out" of T1 in a subsequent phase. As I remember it, the agreement provided that if there was - Transport Canada - if the government wanted Terminal 1 to remain in operation until 1999, if my memory is correct, and that after that, we could proceed with a closing of Terminal 1 because in the plan, I think, that formed the subject of the agreement, there were the gates that we mentioned a moment ago, that were added in a different way that allowed for the efficient operation of the airport. That was absolutely necessary so that Terminal 1 could be eliminated.
[English]
Senator Bryden: Around the 30th of June, 1993 Air Canada was still taking the position, was it not, that this should be delayed?
[Translation]
Mr. Corbeil: I believe so. Air Canada, like every good negotiator, stuck to its position and preferred, and they had said that from the outset, they preferred that T1 be closed.
[English]
Senator Bryden: Mr. Chairman, I am filing document 2183 to have it on the record where that was established.
Finally, you will be pleased to know, I would like to file a document that is numbered 2087 and without looking - it is from Mr. Shortliffe to the Prime Minister dated August 27th, 1993 and that, I believe, Mr. Corbeil, without you referring to the document, it was about that time that you and Mr. Lewis, is that correct, made the announcement that the project was proceeding?
Mr. Corbeil: I am sorry?
Senator Bryden: Around August 27, 1993 was when you made the announcement that the project was going ahead?
Mr. Corbeil: M'hmm. August 27, 1993?
Senator Bryden: You and Mr. Lewis.
[Translation]
Mr. Corbeil: I don't think so. I'm not sure. I believe that Mr. Wilson - was Mr. Lewis there? I could not say so. My recollection is that Mr. Wilson was there, but it is possible that it was Mr. Lewis.
[English]
Senator Bryden: That is why I asked you the question, because the only indication I have whether it was you, together with Doug Lewis, and that would make sense because he was in at the inception, but -
[Translation]
Mr. Corbeil: I believe that Mr. Wilson - I also believe that Mme Martin was there because she was the Minister of State for Transport and she was from the Toronto area.
I personally think that it was Mr. Wilson and Mme Martin, but if there is evidence that Mr. Wilson was there, that would not surprise me. That would have been logical.
[English]
Senator Bryden: Mr. Chairman, that is all I have on this line.
[Translation]
Mr. Corbeil: Mr. Chairman, may I just add this because there is the other issue concerning Air Canada. I noted that in July 1993 - I do not have the exact date - that Air Canada announced that they had reached an agreement, that they had completed an agreement with Mergeco respecting their position.
[English]
Senator Bryden: Mr. Chairman, that is all I have on this round.
Senator LeBreton: I was going to go next, but I would like to defer to Senator Tkachuk because he had some questions on the process that sort of precede the questions I have on the role of the LAAs, so I will wait until this afternoon, chairman.
The Chairman: Okay, Senator Tkachuk.
Senator Tkachuk: Thank you, Senator LeBreton and chairman.
At some time during the hearings here Senator Bryden has suggested - as a matter of fact on August 2nd - that the Mergeco deal was a sham and that in actuality they had an agreement previous to the RFP to merge after December 7th and that they - that their initial proposals to the government were a sham. Would you comment on this for me, please?
[Translation]
Mr. Corbeil: I have no knowledge of such a situation. All I know is that the testimony that has been given before this committee during the previous hearings, the two protagonists denied those allegations, which in my view were only allegations and the insinuations I spoke of a moment ago.
[English]
Senator Tkachuk: Were you or the government - this question has been asked before earlier this morning, I am just going to ask it again because it is part of my list and I want to get it in - were you or the government involved in the marriage of these two companies?
[Translation]
Mr. Corbeil: Not in any way.
[English]
Senator Tkachuk: One of the key issues during the Pearson negotiations was Air Canada. Do you think that the withholding of the lease was a deliberate act on the part of Air Canada or its officials?
[Translation]
Mr. Corbeil: I do not believe that Air Canada had any need to make any statement. They had a document, but I'm not attributing any ill-willed or malicious intent to Air Canada. To their minds, they had an agreement with the government. They subsequently tried as hard as they could to have it honoured and at some point, I presume, they understood that it was in everyone's interests to proceed, as was done, because, as I said a moment ago, in July 1993, they themselves announced that they had reached an agreement with Mergeco for the redevelopment of T2 and some kind of arrangement concerning the lease.
[English]
Senator Tkachuk: Did you have any involvement in the final deal that was worked out between Air Canada and -
[Translation]
Mr. Corbeil: Absolutely not. There was a request from the proponents that the Department intervene and the Department's answer was, "This is a question that you have to settle as adults in negotiations between Air Canada and Mergeco."
[English]
Senator Tkachuk: Were you satisfied with the final result of the deal?
[Translation]
Mr. Corbeil: Inasmuch as it made it possible to address the concerns that we had, that it would enable the bid to be financable and at the same time meet the objectives that we had. I think that the agreement document speaks for itself and determines that the Government of Canada was indeed satisfied with the agreement that was reached between Air Canada and Mergeco.
[English]
Senator Tkachuk: I am going to go back to an earlier question that I asked, and I think we lost something in the translation. I want you to describe your - I will just ask it in a little different way. Would you describe your relationship with your department officials? How were major decisions reached in your department? How did you make them?
[Translation]
Mr. Corbeil: I can state that the symbiosis, the relations between all the department's senior officers and the minister were entirely cordial and cooperative relations. We operated, we progressed in this issue through collective decisions.
Neither the minister nor the officers or deputy ministers who imposed solutions on one another. We proceeded from start to finish in this matter with coordination, agreements shared to a high degree by all the stakeholders, the minister, deputy minister, assistant deputy minister, everyone who was there. There was cordiality and a meeting of the minds between the minister and his senior officers.
[English]
Senator Tkachuk: So when the major decisions were reached, they weren't done in a totalitarian or authoritarian way but, rather, in a collegial way?
[Translation]
Mr. Corbeil: You have found the word I was looking for, senator. It was collegiality that prevailed throughout the proceedings.
My previous experience at another level had shown me that it was impossible to reach acceptable and functional solutions if there was no collegiality between the political decision-makers and the public service collaborators.
[English]
Senator Tkachuk: So, for example, when you made the decision on the 90-day RFP, you would have made it after consultation with department officials and -
[Translation]
Mr. Corbeil: All the decisions without exception were subject to discussions among us. And this question was asked: What period of time are we going to allow for the proposal? And upon discussion, I asked questions, I was given answers and so on. At the end, I said it was my view that we should allow 90 days; that was a reasonable period. My knowledge of other similar things in government and elsewhere showed me that 90 days was sufficient. And to make sure at that point that we were not blocking anyone or anything, we offered that caveat that we would allow additional time if there were participants who had entered into the process as of the March 16 announcement and who ultimately found that they did not have enough time. We were prepared to do that and we in fact did it.
Claridge requested an extension. We in fact granted a 30-day extension. So the actual process took 120 days, not 90 days.
[English]
Senator Tkachuk: I think Senator Kirby has a supplementary.
Senator Kirby: Just one short supplementary. Thank you, Senator Tkachuk.
We had, and unfortunately this document - this was a document that was given to us a long time ago and I don't have it in front of the me, but Price Waterhouse, who had been brought in as outside consultants in the development of the RFP process, recommended in their report that led ultimately to the development of the RFP that the call for proposals should have a minimum of six months because - and it was a minimum, it was not a maximum - a minimum of six months because in their view to proceed with any shorter period of time would, and I think their words were "could have created the impression -
Senator LeBreton: That was not a direct recommendation of Price Waterhouse but, rather, it was a memorandum from Chern Heed to Victor Barbeau, where he talked about Price Waterhouse, you know, unsolicited made this comment. That is where it came from.
Senator Kirby: I stand to be corrected, but the Price Waterhouse name was attached to it. Subsequently, departmental officials said that the decision to not accept the idea of a hundred and - of a six month or a 180-day proposal but to go to a 90-day proposal was yours. I noticed in responding to Senator Tkachuk a minute ago and, indeed, in your earlier comments, I think also in response to a question from Senator Tkachuk, you used the term that 90 days was normal - I think "normal" was your word, not my word - and I wonder how you - can you explain to me why you would describe the 90 as normal and yet other evidence would have suggested that six months, given the complexity of the project, et cetera, six months would have been more quote normal unquote?
Senator Jessiman: That is not the evidence either.
Senator Kirby: No, I used it in quotes.
Senator Jessiman: But it was not the evidence. There is no "six months was normal". There was a suggestion in a memorandum -
Senator Kirby: That it ought to be six months.
Senator Jessiman: - that Price Waterhouse had suggested it may be six months, and that is all. All the other evidence indicates 90 days, a 120 days, and this, as I understand, from what we were given from the department, it is 95 days, if this is correct.
Senator LeBreton: And the memo is from Mr. Chern Heed.
Senator Kirby: Ignoring - do you mind answering my question?
[Translation]
Mr. Corbeil: Mr. Chairman, Senator, throughout the entire process, we tried to consult everyone who had anything to say about the content, about what should be in the RFP.
I mentioned a moment ago that there were all kinds of points of view. Senator, your colleague had me state that the decision was ultimately up to the Minister. My previous experience in different public institutions that I have served was that this was an average period - I may have used the word "normal" - let us say an average of 90 days.
There was even Canadian Airports which, in a letter in 1991, I believe, when we were preparing the process, said, "That's enough time for us; we could be ready in 60 days."
So analyzing all that and the need to proceed, once again, the objective was to resolve Pearson's well-known ineffectiveness and inefficiency and to give it its status as an international class airport. That began in 1989. We wanted that to work and so, in my wisdom, I decided, as my oath of office as Minister of Transport provides, to proceed on the basis of my experience, knowledge and wisdom. So I tried to use the three. I came to the conclusion that 90 days was a sufficient period saying, "If I am wrong and people need more, we are prepared to extend it."
There was a request to that effect. We extended it. So when we talk about a 90-day period, I think we are misleading people. One hundred and twenty days elapsed between the RFP and the receipt of the proposals.
[English]
Senator Kirby: Thank you.
Senator Tkachuk: I think I will get right to the nub of this.
The Chairman: One supplementary. When you refer earlier, Mr. Corbeil, to your good working relationship with your senior officials, were you aware of any complaints coming from the local airport authorities established in Vancouver, Calgary, Edmonton, Montreal, et cetera, about foot-dragging in your department?
[Translation]
Mr. Corbeil: Mr. Chairman, as you know, the general public feels that government affairs take far too much time. Not long afterward, very few weeks and at roughly the same time I am speaking of, I received a request from the presidents of the four local airport authorities negotiating with the government to meet me.
I was in Halifax at that time and I told my staff, who were asking me to hold this meeting, who informed me that the meeting had been requested, that I could not return to Ottawa to meet these people, but that I would do it upon my return to Ottawa. That same day, a request came back to me stating, "Would you agree..."
[English]
Senator Kirby: Just roughly what time is this? What date?
[Translation]
Mr. Corbeil: I believe we could check somewhere with the people concerned, but I think it was some time in July, June or July 1991. These people told me, "If you are prepared to receive us, we, the four presidents, are going to go meet you in Halifax; it is absolutely urgent that we hold this meeting."
So we found some time in the agenda and they came to Halifax. People from the department, from the public service also came and we had a meeting, which lasted a fairly long time and was fairly vigorous, and the conclusion was, "Mr. Minister, for more than four years we have been discussing the issue of transferring the airports of the four cities in question and we have accumulated about $1 million in debt that the banks have lent us on the strength - because we are non-profit organizations that have no assets, and the banks have lent it to us on the basis of the agreement that there would be -" or on the hope and belief that there would be local airport authorities formed. It has been four years and the banks are now telling us, "We are going to cut off your financing because we have come to the conclusion that this will never happen." And I can tell you that that was a stormy discussion.
The public officials concerned were present. I perceived very clearly, or I felt very distinctly that those people were like anyone who wants something, who waits for it and who works hard and who finds that it doesn't happen quickly enough and so on.
The public officials said - and I think this was natural - that they were doing everything possible, but since there were four very important negotiations going on at the same time, one had ideas and, without offending the lawyers, the lawyer or lawyers of each airport organization found that his way of saying something was more brilliant and more effective than that of the others and there was obviously considerable discussion as a result.
So in conclusion, the public officials, I believe - I not only believe, I am certain - were in good faith, but nevertheless the people concerned, not only the presidents, but their financial supporters, came to the conclusion that they would have to leave the bargaining table quickly if things did not happen soon.
I made a commitment as Minister of Transport that they would have to give us until December 1, 1991 to get as near as possible to finalizing the negotiations. I was unable to deliver the goods because the agreement with the four was ultimately signed in early April 1992.
But at least they had the satisfaction of hearing from the minister that there was apparently no foot-dragging, as you mentioned. However the perception was there, and very strong, that, yes, there was effort on the part of the government and its officials to delay that discussion unduly.
From that meeting forward, however, things seemed to change to the satisfaction of the local airport authorities since the "threat" was no longer heard and indeed on April 1, 1992, we happily signed the agreements with those four authorities.
The physical transfer occurred on July 1, then August 1 and, since that time, things must definitely be working well because no news is goods news and we never hear any more about problems that may exist with the local airport entities.
[English]
The Chairman: So in Halifax, you met what we will call the association of local airport authorities. There was four of them.
[Translation]
Mr. Corbeil: Yes, but the four presidents had in fact formed an association to ensure that the content of each agreement would be similar for each of the airports.
[English]
The Chairman: Did you learn anything from that experience which assisted in the -
[Translation]
Mr. Corbeil: I think it led me to follow the issue in a much more targeted manner and to ensure that there were indeed no problems. These things of course take a long time and I did not want to set myself up as judge: were the presidents right or were the public officials right?
I took it for granted that everyone was operating in good faith, but that there were different perceptions and interpretations, and my job as minister was to ensure that those perceptions were as softened, as tempered as possible so that we could reach a settlement, an agreement, and that is what occurred.
[English]
The Chairman: Did you suggest to your deputy minister as to who should conduct the negotiations?
[Translation]
Mr. Corbeil: With respect to the airports, there was no change. I requested no change. I believe it would have been a monumental mistake to change negotiating teams since that would have convinced the presidents that it was because it was the public officials who were really negotiating it.
I made a bet and I was right - even though it went beyond the deadline that I had set - that after that relations appeared to be better. There was a better understanding, I believe, between the public officials who had a job to do and the presidents of the local airport authorities that a job indeed had to be done, but the kind of tension that appeared to exist at that time between the presidents and the public officials seemed to decline and we came to a final decision, a final result.
[English]
The Chairman: Well, it is not your affair, but one might wonder why after all this time that the airport authority in Ottawa is mad as hell at the present government about establishing an airport authority in Ottawa. You wonder whether the bureaucrats have got used to the steep learning curve. That is the puzzlement.
[Translation]
Mr. Corbeil: Mr. Chairman, I believe that all those among you who have operated in the private sector are not aware of a situation in which it takes four or five years to finalize a matter of any importance whatever. People cannot afford to extend negotiations over four or five years because, in any case, between start and finish, things occur that ultimately complicate matters.
But you must remember here that were dealing with a government organization, and in government, there are decision-making levels that must be dealt with. Reports must be made to Treasury Board, to the Department of the Environment, to this person, to that person and someone on the outside who cannot understand these matters.
I cannot say that the public officials dragged their heels. What I'm saying is that there was a perception that the public servants were dragging their heels and that it was important to adjust that situation so that neither side felt more frustrated and pushed away rather than moving closer. So I believe that meeting managed to grease the wheels of the machine and to bring the public officials and their correspondents closer together.
And ultimately, the matter was settled when we signed in April, and particularly when we transferred the airports in July 1991. Everyone was happy, the public officials as much as the Department and the local authorities.
[English]
The Chairman: Thank you. Senator Tkachuk?
Senator Kirby: You said you transferred the airports in July, 1991. I think you meant 1992?
Mr. Corbeil: 1992.
Senator Tkachuk: I am going to go back to the time period of the RFP because some people have used this to show that somehow the government rushed at the time. So I am going to get to the nub of the question. I know from my experience in government, and I know Senator Kirby knows this too, and I know Senator Bryden knows this too, when a decision is coming up, there is a whole bunch of bureaucrats writing memos. There are people writing memos giving their advice to the minister as to what he should do, and of course, they are all right. They all have their own point of view and they are all right. That is what I know. That is exactly what I do.
So they would have given you advice as to whether it should be 30 days, 60 days, 90 days, 120 days, 6 months, a year, maybe some person thought it should be five years. The point is, when you made your decision on the 90 days, did you do it because you thought it would be advantageous to Paxport? That is the question.
[Translation]
Mr. Corbeil: No, Mr. Chairman. I made the decision because I thought it was the right decision for achieving the objective of closing the issue. That seemed to me to be an acceptable amount of time that gave people enough time to make their proposals.
Once again, I repeat, one of the participants, not Paxport but Claridge requested that the period be extended. We extended it by 30 days. I believe they requested 20 days; we extended it by 30 days to ensure that they would have the necessary time. So to the question put to me a moment ago, I answered no, there was absolutely no one who, at the time of the issue, complained saying, "We would have bid, but we decided not to because there were only 90 days." There was absolutely no individual, no organization that made representations of that kind.
[English]
Senator Tkachuk: I will ask another question because you know a lot of times the people who write the memos giving advice, after you make the decision of course, they may disagree with because that wasn't their advice to the minister, but there is always people who talk about whether this decision was properly taken and who act upon it. So did officials jump out of the Transport building or write suicide notes or resign because you made a 90 day decision? Did they disagree with you or what happened here?
[Translation]
Mr. Corbeil: No, no one committed suicide or attempted suicide and no one despaired. A normal discussion took place between the Minister and the officials in which each person expressed his point of view and they ultimately said, "Mr. Minister, it is up to you to tell us how much time must be allowed for this period," and I said to myself that a 30-day period was sufficient and that if in fact you are right that it takes more than that, we are going to see when the requests come in within 90 days.
And if people in fact complain that it is not sufficient, we will extend it. That's what was done and everybody seemed happy. Now I am completely positive and very satisfied that the officials were not afraid to express their point of view.
It think if you want to have a final decision that is as appropriate as possible, each person must mention and express his concerns provided that at the end of the process, as we said a moment ago, there is someone who makes the final decision and takes responsibility for it. That is the minister, and that is what I did.
[English]
Senator Tkachuk: You weren't in the habit of firing people because they disagreed with you?
[Translation]
Mr. Corbeil: No, and what I said a moment ago, this is what makes any government decision take so long: there are so many people who, by the nature of things, must be consulted. We can't talk about expenditures without Treasury Board being involved. We can't talk about doing things such as we did at Pearson without the Department of the Environment being concerned, without the Department of Finance being concerned.
So there was a constant coming and going among the officials. That is the government decision-making process and it is for that reason that you have to remove everything that is not of necessity governmental, that you have to take it out of the government system so that timely decisions are made at the right time.
[English]
Senator Tkachuk: I want to put this 90 day thing to rest, so excuse me. Mr. Nixon brings it up and the Liberal senators always bring it up, so I am going to ask you, did the deputy minister - and I am not going to ask you whether she disagreed or not with you, but this is matters of principle here because just in case some later time in the life of the world, they may have gone to Mr. Nixon and said, "Oh, I think it should have been 120 days." Did the deputy minister resign or quit or I like to say jump out of the Transport building because you said it should be 90 days?
[Translation]
Mr. Corbeil: No. Mr. Chairman, that is not my operating style. If there had in fact been a compelling opinion that the deadline could not be 90 days, we would have continued to discuss the matter, but the consensus was quickly reached. It was not a discussion that lasted three hours.
We discussed various other things and when we came to this point, each person said, "I think..." I asked what we should put. Each person said this or that. And at the end, they said, "Mr. Minister, the decision is up to you and what do you think?"
And I said - I don't want to repeat myself again - 90 days with an option to extend if bidders so request. And that is what was done and that is what yielded the results we got. And that is what leads me to say that the process was completely followed in a highly acceptable manner and was accepted by the officials as a whole.
[English]
Senator Tkachuk: Thank you. Senator Kirby, on August 1st, characterized negotiations between the government and Paxport/Pearson as almost a process of giving the shop away just to get a deal. Do you think that is what you did?
[Translation]
Mr. Corbeil: I do not know whether Senator Kirby read the Nixon report. I presume so, but I could not cite the paragraph.
[English]
Senator Tkachuk: I hope he did not write it, but I know he read it.
[Translation]
Mr. Corbeil: I think he writes better than that, in a more orderly manner in any case. I took the trouble, Mr. Chairman, to read that report four times. I analyzed each of the sentences of each paragraph in that document.
So I remember very clearly that there was a paragraph that alluded to this situation, but the paragraph, if you have it before you - there is a paragraph somewhere; I don't know on which page - where it states that Claridge was forced to accept the Paxport deal, which was a better deal than the deal that had been suggested by - a better transaction than what had been suggested by -
In other words, the Claridge proposal was there. The Paxport proposal was there. If you follow the evaluation committee's reasoning, that paragraph states that Claridge was obliged to accept the proposal submitted by Paxport because that was what Transport Canada required. And that paragraph in fact suggested that the Claridge proposal was not as good for the Government of Canada as the Paxport proposal.
So in reading that document and that paragraph in particular, that there was a lack of logic in the reasoning that Paxport had forced.. and it wasn't Paxport that forced, it was the Government of Canada that said, "We will not negotiate on anything other than the proposal that was accepted by the evaluation committee. And that report stated that it was a better proposal and Claridge was forced to accept it."
I am sorry, but Claridge was not forced to accept anything. There was an agreement between the two. I imagine that if there was an agreement between the two, it was because both were consenting. They were adults, I believe, and Claridge cannot be accused of being incompetent in the real estate field. It is one of the big real estate promoters in Canada. So they knew what they were doing and they agreed to undertake to execute an agreement that was better than the one Claridge itself had proposed.
I believe this question actually shows that the proposal that was found to be the best by the evaluation committee was accepted and implemented by the agreement that we signed and that it is necessarily in the public interest because it was the best proposal that was accepted.
[English]
Senator Tkachuk: On July 27th, Mr. Kirby also said that the Paxport consortium in its proposal showed little interest in or concern for passengers who would be using it paying for the redeveloped Terminal 1 and 2. I want you to comment on that as well.
[Translation]
Mr. Corbeil: There is a clause in the agreement that provides that the government must put in place a mechanism for monitoring Paxport's operational decisions with respect to the charges that will be applied to concession holders and travellers and, once again, to demonstrate how difficult it is to follow the Nixon report's reasoning and argument.
Somewhere else in one of the other paragraphs, the claim is made that we are going to be very unfair because we are going to increase the price of parking, which, according to the report itself, is lower than any other place in Toronto, where parking places are cheaper.
So there was underpricing by Transport Canada on the parking issue. And the agreement states that the average price in the Toronto area must be taken and applied. So the idea was at the same time to reconcile the interests of taxpayers in general with the interests of Pearson users and travellers.
And the charges as a whole, as I said in my presentation earlier, were done in this way, by being private, distributed among not only Canadian travellers, but among international travellers and at the same time among concession holders, thus the people who came from all parts, and it was no longer to be paid by taxpayers who do not use any one of the airports in Canada, especially Pearson.
[English]
Senator Tkachuk: Thanks very much, Mr. Chairman.
The Chairman: Colleagues, before I recognize Senator Stewart, we have not finished our first round yet. Who wants to go after Senator Stewart? All right then. Senator Stewart please?
Senator Stewart: Thank you, Chairman. I have two or three questions. I will take them in a sort of chronological order. Had you expected more considerable or acceptable proposals to be submitted as a result of your request for proposals?
[Translation]
Mr. Corbeil: I am not certain I understand you correctly.
[English]
Senator Stewart: We will have to go slowly then. How many proposals did you in fact receive as a result of your request for proposals?
[Translation]
Mr. Corbeil: To the best of my knowledge, at the time of the opening, we had received - there were three bidders, but there was one that did not meet the cash deposit or bid bond requirements and its proposal was not opened. It was immediately returned. There therefore remained two bidders.
[English]
Senator Stewart: Quite. So were you surprised that there were only two proposals which were opened?
[Translation]
Mr. Corbeil: I was convinced that there were at least three bidders because Canadian Airports was in the process the whole way. They had communicated with us on a number of occasions pressing us to request the proposal.
On December 23, 1991, when I received a letter stating that they were leaving Canada because the process had taken too long and no request for proposals had yet been issued, I was virtually convinced that they would reverse their decision when we issued the RFP three months later. That did not materialize and we had two bidders. I would recall that there were four bidders on T3.
Subsequently, two of the principal bidders of the time, Cadillac Fairview, Bramalea, I think, Wardair and so on, had financial problems and, it seems to me, looking back, no longer had the opportunity to take part in that process.
You know, the world of privatization, or the concept of the privatization of infrastructures that we have always traditionally considered as governmental is still in its developmental stage and we cannot expect there to be 25 bidders for a kind of business such as this.
[English]
Senator Stewart: We were told earlier - well, I do not know whether you have had a chance to read the testimony that the committee received, but we were told earlier by one of the quarterbacks of one of the lobbying teams that for a prolonged period, the chief concern of that lobbyist was to try to have financial feasibility of each proposal taken into account - to have it established that the financial feasibility of each proposal would be taken into account when the proposals were evaluated. Are you aware of any discussion on this point within your department?
[Translation]
Mr. Corbeil: The proposal document published in March contained a paragraph, a number of paragraphs, concerning the bidder's capability, its financial statements and so on. And that was one of the factors that was in the evaluation criteria and that was rated in the evaluation process.
The question of the bidder's capability was in fact one of the evaluation factors.
[English]
Senator Stewart: So what you are saying is that when the decision was made that Paxport was the best acceptable proposal -
[Translation]
Mr. Corbeil: Best overall acceptable proposal.
[English]
Senator Stewart: - best overall acceptable proposal, that that decision took into - was based on the belief - a belief based on evidence that Paxport could perform, could deliver on its proposal?
[Translation]
Mr. Corbeil: What I am saying, Mr. Chairman, is that the RFP document stated that the question of the bidder's financial capability would be taken into account, the criteria would be taken into account. The criteria that were established by the evaluation committee contained this question in their components and they examined that in the final result and gave Paxport a rating as they did to Claridge. That was mandatory.
So it was actually taken into account in the evaluation committee's eventual decision.
[English]
Senator Stewart: Obviously you accepted that decision. Now, do you know of any concern in the government about the financial feasibility of the Paxport proposal?
[Translation]
Mr. Corbeil: The government... I believe the decisions speak for themselves. When the government followed the evaluation committee's recommendation and accepted its recommendation to award the future contract to Paxport, we added... the government added a condition that the project's "financeability" would have to be proved having regard to the situation of the air carriers that would not necessarily be affected by that decision.
So in my mind - and I am certain in yours as well - there is a considerable difference between the ability to finance and "financeability". In a contract, you can say, "I base my proposal on an interest rate of 10 per cent, on a 10 per cent management fee for the partner and so on." He puts into his proposal, whatever if may be, components that show how he will finance the bid.
It isn't until he goes to finance them that he is capable of demonstrating "financeability". Is there a taker for that in the financial world? And it was important for the government to take into account, in the "financeability" that would eventually come from the financial world, that tenants' rents could not be increased too sharply because that would have affected their financial situation which was already not good.
So the requirement to prove "financeability" meant precisely going into the market, explaining to people that rents had to be increased reasonably - which formed the subject of this "caveat", once again - when the contract was awarded, the considerable difference being between the ability to finance and "financeability", the test of which is when you go to seek financing.
[English]
Senator Stewart: I gather - tell me if I am wrong - that you are saying that as of the date when you announced that Paxport had made the - shall we use shorthand - had won on the proposals, that there was no financial reason for attempting to bring the two bidders together?
Mr. Corbeil: No, sir.
Senator Stewart: Okay. A very different kind of question, Chairman.
[Translation]
Mr. Corbeil: I am very comfortable if you want to continue in the same line.
[English]
Senator Stewart: Oh, no. Oh, no. It is just that I have other questions. I am asking this question, Chairman, because earlier we talked about responsibility of the minister to the Prime Minister and so on. Tell me if I am wrong. As I understand the legal situation, you as minister authorized the signing that took place in October of 1993, is that correct? From a legal viewpoint, you as the minister were the person who either signed or authorized the signing that took place, is that correct?
[Translation]
Mr. Corbeil: Yes and no. The questions were never as clear as that. When we finalized the agreement, when it was reached between the negotiators and Mergeco, it was expected that we would announce it immediately, that the signing, if you will, the "due process", would continue until a closing date, which had been set sometime in early October so that the lawyers could put everything that had been agreed on at the time of the agreement into legal language.
So to my mind (and I think that, without being a lawyer, I am on solid ground), there was indeed a contract in existence in August when the negotiators and Mergeco agreed.
I learned that when I was in the insurance industry, which is a contractual field. There are five fundamental principles for the existence of a contract and those five conditions were met in August when cabinet accepted the proposal and we announced it. The rest was a legal formality that had to be signed within a reasonable period of time which the legal advisors considered to be from late July to early October. As far as I was concerned, my part was on October 4.
[English]
Senator Stewart: You answered a question which I did not answer. I am sure we are all very grateful for your kindness. The question was, am I correct in believing that you were the person who at law was responsible for signing the contracts or for authorizing other persons to sign the contracts?
[Translation]
Mr. Corbeil: You are asking me a question that you are going to have to put to legal counsel.
[English]
Senator Stewart: But presumably, you as minister knew something about the limits of your responsibilities, what powers you had.
[Translation]
Mr. Corbeil: Yes, my responsibility was to submit, through the usual government decision-making process, the recommendations which it had reached and to recommend that the contract be awarded as per the agreement reached between the negotiators and Mergeco. That is what I did. Cabinet decided somewhere in the course of its process in August.
[English]
Senator Stewart: You say you recommended and then you speak of cabinet. I get a picture that you are in a sense an advisor to the cabinet?
Mr. Corbeil: Of course.
Senator Stewart: It is the cabinet that actually had the statutory authority to sign the contracts. Is that correct?
Mr. Corbeil: It is the cabinet that has to accept the contract or not. The Minister of Transport cannot -
Senator Stewart: I am asking you questions about your legal position, not your political position.
[Translation]
Mr. Corbeil: It is the government decision-making process that I understand, that a minister cannot by his own authority say, "I accept this agreement." He must absolutely submit the whole to cabinet and cabinet decides on behalf of the Government of Canada. I have always understood that, apart from routine matters, government decisions, whatever they may be, must be subject to a cabinet decision. And I operated in this manner for five years and no one told me that it was not the right way.
[English]
Senator Stewart: That is very interesting. Assuming that there has been cabinet discussion, how does the result of that cabinet discussion obtain legal effect? One possibility is an Order in Council. Another is a signature by a minister. Am I correct that in this case - the cabinet is not a legal entity? We accept that.
Mr. Corbeil: It is the authority of the government.
Senator Stewart: I am asking legal questions and the former minister is telling us that he does not understand the Constitution, so I give up on that.
Senator Tkachuk: Senator Stewart, that is very unkind. First of all, that is not what he is telling you.
Senator Stewart: That is in effect what he is telling us.
Senator Tkachuk: No, he is not.
Senator Stewart: Well, then we have another.
Senator Tkachuk: Another dumb senator here. You asked how the decision was to be made. He told you that there was a ca0binet decision.
Senator Stewart: I did not ask that. I asked who had the legal competence to sign.
Senator Tkachuk: Why don't you tell us?
Senator Stewart: I asked the witness.
Senator Tkachuk: You are the smart guy. You tell us.
[Translation]
Mr. Corbeil: Mr. Chairman, if the question is what the Minister signed, the Minister actually signed on October 4, 1993. The Minister signed on October 4, 1993. There was no... the document speaks for itself.
[English]
Senator Stewart: We could have saved a lot of time, Chairman. I asked a question and only now do I get the answer.
Senator LeBreton: You said earlier you got the answer. That was exactly the answer he gave to the -
Senator Stewart: The record will show what we got.
Senator LeBreton: It surely will, as it will other things.
Senator Stewart: That is more time consumed. Before you signed or authorized the signature of these documents, do you have to obtain Treasury Board approval, and if so, in what particulars did you need Treasury Board approval?
[Translation]
Mr. Corbeil: Mr. Chairman, this is the decision-making process that I spoke of earlier. All decisions involving expenditures of a certain size go through Treasury Board. So this is the operationalization, if you will, of the decision and that was followed. The dossiers are there.
[English]
Senator Stewart: There is no question. All I am trying to deal with is the presupposition which I detect in some quarters that in a sense you signed or authorized signatures on behalf of Treasury Board.
Now my understanding, and your answer tends to confirm it, is that there were certain aspects of the deal which required approval of Treasury Board before it would have been proper for you to have signed, certain aspects, but not all aspects.
[Translation]
Mr. Corbeil: I am going to try to be even clearer, Mr. Chairman. When the agreement was reached between the two parties, a report was made to me. The negotiators told me, "We have an agreement", and explained the agreement and so on. I analyzed it with the authorized officials and out of that came a report that went to cabinet and to Treasury Board somehow through the system and, after that, there was a decision by cabinet.
If Treasury Board had not already given its blessing, that was done at virtually the same time. And after that, a date was determined for closing, which was done in October. At that point, however, as far as I was concerned, the document was complete and there was no signing at that time; the signatures came on October 4, October 5 and October 6. I believe it was spread over a few days. I was one of the signatories of that agreement.
[English]
Senator Stewart: Let me come back at it another way. Are you telling the committee that the Treasury Board reviewed the entire deal - let me start again. Are you telling us that it was the responsibility of Treasury Board to review the entire deal and that it did so?
[Translation]
Mr. Corbeil: Treasury Board did not come at the last minute and say, "Here we are telling you that discussions took place over a few months and you now have to examine all that." Treasury Board is a parallel participant in any action that involves major financial decisions and that was done.
I repeat, the entire decision-making process within the government was followed. There were lawyers everywhere along the way who gave rulings and no one ever stated that any procedure had not been followed.
[English]
Senator Stewart: Thank you, Chairman.
The Chairman: Mr. Corbeil, do you agree with what we have been led to believe, that the Order in Council authorizing you to enter into the lease of development agreements with T1,T2 partnership on the basis of Treasury Board approval took place on the 27th of August?
[Translation]
Mr. Corbeil: I do not remember the exact date, but, yes, that is the usual process (and again I do not want to go into the details). There are enough lawyers in the government, the Departments of Justice and Transport, that if part of the process had not been followed, they would have made the fact known and we would have complied. The entire process was carried in the usual manner in which government operates, Treasury Board, the various departments, cabinet and so on. All of that was done in absolute compliance with Government of Canada procedures.
[English]
The Chairman: Senator LeBreton, do you want to go on for 10 minutes and then continue this afternoon?
Senator LeBreton: I have about 35 minutes of questions.
Senator Kirby: Let's take a break.
Senator LeBreton: Rather than start now -
The Chairman: Do you want to adjourn until 1:30? Please return at 1:30, Mr. Corbeil. Thank you very much.
The committee adjourned until 1:30 p.m.
Upon resuming at 1:30 p.m.
Senator Tkachuk: Chairman, before we begin, I would like to raise an issue that I have raised before. I just want to clarify a few things with you and counsel regarding some of the documents that we've talked about in the past. Today is Wednesday; tomorrow we have one full day left; we're busy Monday; and Mr. Nixon arrives on Tuesday. I have received a memo from the clerk that there were a number of documents on Mr. Nixon's files that have arrived. More specifically, have we received Mr. Nixon's diary by any chance?
Mr. Nelligan: We have the docket entries for Mr. Goudge, but I'm not aware that he had any diary.
Senator Tkachuk: Mr. Nixon had no diary? Would we know that from Mr. Nixon or is it because it isn't there we say he doesn't have one?
Mr. Nelligan: I have received some indication of the various meetings that he has had, and I think you may have seen that, but there's no indication he had a diary. I'll follow it up again just to confirm.
Senator Tkachuk: You might ask another question. I also heard - and these are rumours, but they're from well sourced people. I heard all the way to Saskatoon that originally in the court case Mr. Nixon had a couple folders and then they were told that Justice has said that there was another 14 binders that were to come, but there's been quite a delay in them coming and I was wondering if you could serve notice to the Justice officials that I'm going to ask tomorrow whether those 14 binders that were supposed to go to court have arrived here for our purposes, for our interview with Mr. Nixon.
Mr. Nelligan: Just so I understand, the suggestion was that 14 binders in the litigation related specifically to Mr. Nixon?
Senator Tkachuk: Yes. So I want to know whether those 14 binders are either part of the - which I don't believe they are - part of the documentation we've already received. And my point is that we have to deal with Mr. Nixon on the basis of what he knew at the time, not what he's learned since. So it's very, very important. I don't want to be - and I don't think any of the senators here want to be two months down the road finding out about new documents that were there and information that he received.
Now I have one other point; another one that I've made before. We go to document 00092, October 7, '93, which was a fax to Rowat from Bourgon regarding advice on signing of the agreement that was reached in August; the signing ceremony, so to speak.
This, to me, is as close to ministerial advice as you get. It's all here, and I don't mind it being all here, but I would like you to inform the Justice people that the election took place on the 25th of October and the Langevin Block was still there and, as far as I know, the bureaucracy was still intact, and that they would use the same sort of - what is a good word for it - the same premise or the same criteria in releasing the documentation that was forwarded to ministers, to the Prime Minister, to Mr. Nixon from the time of the 25th to the actual time that cabinet made the decision to cancel, to be provided for us. I'm basing my argument really on Mr. Nixon, who recommends the cancellation of the contract, in his report, not only on the basis that there was a flawed process but rather impugns the motives of the government and the politics of the process.
I'm going to quote, Counsel, just because I want to make this clear because it's now the end and we still haven't got this stuff. Nixon says:
This, together with the flawed process I have described, understandably may leave one with the suspicion -
- suspicion -
- that patronage had a role in the selection of Paxport Inc.
And he based his whole argument on the fact that Mr. Don Matthews was involved actively in the Progressive Conservative party. That was his whole reason for making that statement. So I say that you can't have it both ways, and the government can't have it both ways, for if what he says is a logical supposition, which we are now examining, then it is also logical that one could cancel a contract because Mr. Matthews was a Progressive Conservative and, of course, the Prime Minister at the time and Mr. Nixon are Liberal.
So since we have examined at great lengths the questions raised by Nixon, we must also examine as thoroughly the politics of the cancellation. And we certainly have evidence of this because Mr. Nixon was appointed by the Prime Minister before the swearing in and Mr. Nixon is a Liberal. A key advisor to Mr. Chrétien in the transition is Mr. Eddie Goldenberg who, of course, is a Liberal, and he's now chief of staff. Mr. Wright, who's been appointed to negotiate the Pearson Development Corporation on behalf of the federal government, was engaged by the Minister of Transport, writes memos and reports to Eddie Goldenberg in the PMO. He's a Liberal.
So Mr. Chrétien had a motive to hurt Paxport. Don Matthews is a Progressive Conservative and Jack Matthews was the president of Paxport.
Mr. Nixon laid the groundwork with his, what I call, absurd assumptions. I'd like to examine the same absurd assumptions in the question of the cancellations.
So it is very, very important. We are now on Wednesday; next week Mr. Nixon is coming. We have the Justice people coming. We have Mr. Shortliffe coming and yet it seems that there is a reluctance to deal with this matter, but I will stay here and sit here as long as it takes for that stuff to come.
Mr. Nelligan: I have asked for all relevant documents, including those after the change of government, including the same type of memos as we received that were authored by Mr. Shortliffe. I have received none so my assumption has to be at this point that they have found none. However, you will have an opportunity tomorrow to speak to the people who are responsible for it and they can explain to you what searches they made and what diligence they had in locating such documents.
Senator Tkachuk: I want you to get it clear, Counsel. I know that you always do what you say you're going to do, but I'm saying this in a public manner so that they know that I've asked and that I'm asking again, and I just want to know why the paper dried up, or was shredded.
So either way, this is all extremely important. So I just wanted to clarify that before we start with our witness.
The Chairman: One thing that puzzles me is why would the government want to cancel a deal that's 67 per cent owned by Mr. Bronfman who is, to the best of my knowledge, not a card carrying member of the Conservative Party.
Senator Tkachuk: He is also a Liberal.
The Chairman: Curiouser and curiouser.
Senator Bryden: Maybe it was a bad deal.
The Chairman: Maybe it was a political deal. Who knows. All this in the fullness of time.
Mr. Corbeil, before we begin this afternoon with questioning by Senator LeBreton, is there anything you would care to add to your testimony of this morning, before we begin?
Mr. Corbeil: I am ready to answer questions.
Senator LeBreton: Thank you for appearing, Mr. Corbeil.
Just looking back at the entire process for a moment, a previous witness before our committee, a Mr. Stephen Turner of Public Works, testified on the 12th of July, at page 1600-10, and he referred to three fundamental operating principles in government procurement, including leases, and these were competition, equal treatment and transparency.
From your perspective as Minister of Transport, were these principles followed in this particular deal?
[Translation]
Mr. Corbeil: As I mentioned earlier, the process that was set up was excellent. It was followed to the letter from start to finish, and as you say about a public servant, all those I have come to know from their appearance before this committee have all said the same thing. It was a proper process, absolutely sound, that was followed quite closely, and unless we want to suddenly change the integrity of public servants, I believe it would be have been utter folly for the 200 or so public servants involved in this process to have agreed to conspire to commit an improper transaction with someone who had been selected in advance.
I presume that if these people had suddenly realized that they were being manipulated, they would have appeared before this committee, to state under oath that they had in fact been manipulated. So there is not a one of them who has said-we cannot say on the one hand, when it suits our purposes, as some do, that the public servants are lying, while stating on the other hand that the public servants made a given suggestion, as is their role and their duty, to point out to a minister with whom they work, that they disagree with a given thing, or that there would be other, better solutions.
That's why in the end, we have the best contract possible. The public servants did their job. As I was saying this morning, we operated with the greatest cordiality. What we did, we did together. There were no instructions, you're going to do this because I tell you to do it. All the important decisions were made after a consensus was reached with which everyone felt comfortable.
[English]
Senator LeBreton: In that vein then, Mr. Corbeil, I know you to be an ethical man, a man of good morals and an honest man. I thought you were an excellent minister when we were in government. If you had seen evidence of illegal or improper activities, or evidence of an immoral deal, to use the words of the now Prime Minister - he described the deal as immoral - or if you saw evidence that the whole process lacked honesty and integrity - it's sort of two words we get thrown around here an awful lot - with regard to different aspects of the Pearson process, would you personally have spoken up or done anything to correct the situation?
[Translation]
Mr. Corbeil: If at any point in this process I had received instructions or indications to do this or that, I would have made my decision immediately. I came to Ottawa to help do things to consolidate this country.
Pearson was one of the key components, the largest airport in Canada, 21 million passengers a day at the time, now I think it's 26 or 27 million, this formed part of what I called the "nation's building". We must provide the necessary instruments and this is what we have done. To answer your question very clearly, if at any time there had been improper interventions, if I had noticed anything, I simply would have left. I would have submitted my resignation.
[English]
Senator LeBreton: I would like to take a few moments now to address a couple of issues which have become sources of divided opinion among members of this committee and which I think require further attention, and I think you, in your capacity as minister, could help us here.
The first of these is the contention by some people that the Pearson deal was somehow rushed, so-called rushed to judgment. I actually said earlier on I think we are watching too much O.J. Simpson, but particularly in the summer of 1993 when negotiations entered their penultimate stage. Victor Barbeau, your ADM airports - who I'm sure you'll remember as one of your public servants - said before us on the 12th of July, on page 1530-8:
The minister of the day will give you reasons as to why there was a rush. I can certainly ascertain that there was a rush. We certainly were being directed to give our best effort to get this done quickly.
Could you comment on these statements by Mr. Barbeau and shed some light on the so-called rush theory?
[Translation]
Mr. Corbeil: I believe the issue of speed is a matter of perception. People travel by car at 100 kilometres an hour. They think they're going very fast. Other people think that 100 kilometres an hour is a snail's pace. I believe the best evidence we have been given here at the committee, from what I have read of the transcripts, it was the person in charge of the evaluation committee, or during Mr. Barbeau's earlier appearance, that reference was made to the fact that the people who conducted the evaluation had been placed in a procedure that was fast beyond all good reason.
In his testimony before you, Mr. Lane told you that he had placed the necessity on himself and his team of making a major decision. Once again, we are talking about an agreement here. We are not talking about opening a lemonade stand on the street corner, but about consolidating Pearson. The investment will exceed $750 million.
The people who have gone to the trouble of drawing up a proposal have invested millions of dollars in this. The government wants something to be done. The request from the minister, which I believe was reasonable, was that we proceed as quickly as possible, that we not drag our feet, and no one ever told anyone, you absolutely must do this, and damn the cost. The directive was, you have to move as quickly as possible, I think this is a normal business decision to proceed as quickly as possible while taking all possible precautions to reach an agreement that meets all the objectives, to help the economy through job creation, and so forth, all this had to be achieved, I said it this morning, I am extremely proud of the fact that we succeeded in this task while fully observing the process set in place.
[English]
Senator LeBreton: The second issue which has retained our attention here is the whole issue of the Toronto Local Airport Authority and the various names we've heard. Mr. Lewis told us that people representing this group had difficulties getting their act together - Her Worship Mayor McCallion last night kept referring to them as the "illegal airport authority" - and as a result the government never had an identifiable group with whom to negotiate.
What was your experience with the people representing the Toronto Local Airport Authority interests? And I realize there were many, but what was your experience in actually trying to ascertain what you were dealing with?
[Translation]
Mr. Corbeil: The greatest shock I faced, the greatest shock that happened to me, came just as we were preparing to issue the request for proposals, the RFP, when The Toronto Star published an article dated March 4, 1992 that alluded to the fact that the request for proposals was going to be released in the next few days and then the next day, or the day after that, the people from the Toronto region asked us, Michael Wilson, Shirley Martin and myself, to meet with them in Toronto to discuss the request for proposals, the RFP, and as soon as we had sat down, we were told that what they really wanted was for the government to indefinitely postpone the issue of a request for proposals, to give a chance to the people who had just realized that there was a government policy promoting local airport authorities.
We could not believe that people who had known since 1986-1987 that this policy existed... They were aware of the fact that the cities of Vancouver, Calgary, Edmonton and Montreal had started into this process, that it still was not complete by 1982 [sic], this had taken four or five years to be finalized and now they were saying, shelve the request for proposals ad vitam aeternam, perhaps we'll give you a request to recognize a local airport authority.
That was the first shock. But after that, what came as the second shock was the presentation of a document by this group, which included the Ontario Minister of Transportation and the Minister responsible for the Toronto region within the Ontario government of the day, to the effect that there was in fact a project to form a local airport authority in Toronto. Then we were given a paper that differed completely from all the basic principles. This was a private company, not people from the area. This was a private company that was going to align itself with the Government of Ontario.
The Government of Ontario wanted to dominate this local airport authority, contrary to the principle. They trotted out figures for us on the potential profits the government would earn. It was amazing.
Fourth, the Government of Ontario absolutely had to be in a local airport authority because it had to look after not only Pearson, but all the airports in the area, Hamilton, Oshawa, Toronto Island and so forth, when we know that 95 percent of air traffic in Ontario passes through Pearson. We found that this was really stretching matters, and our impression was that this was simply a tactic to try to prevent private business from becoming involved in this matter, for what ideological purposes.
After receiving a report that had been started in 1990, Mr. Tonks told us that he was the chair of this committee. This committee either had just tabled its report, or was going to very soon. But when we read this report, there is no focus on Pearson.
So we were a little concerned to learn that this was what was emerging. We told people, listen, if you're really serious and you want to form a local airport authority that complies with the government's policy, you just have to do it and at the proper time and place, when everything is set and so forth, you will be able to take over from the government as operators of the entire airport, literally replacing Transport Canada, and we were ready to work toward this.
There were all sorts of statements made around the table but that's about where we left it. No, we would not postpone the request for proposals, but yes, we were prepared to recognize a local airport authority that could meet all the government's objectives.
[English]
Senator LeBreton: According to Senator Bryden, on the 25th of July, at page 1500-14, Toronto was treated differently from the other cities applying for LAAs. He said different criteria were applied to Toronto's application for an LAA. Is that true?
[Translation]
Mr. Corbeil: Absolutely, we treated everyone the same. The problems were not the same everywhere. In Vancouver, for example, there really was only the Vancouver airport. We said that the other airports ultimately might form part of the local airport authority. There was no discussion of automatically including all airports in this arrangement. There was no action in this direction.
Nor in Calgary, in Hamilton, a similar situation arose over the municipal airport, which was resolved to the satisfaction of both parties and formed part of the agreement signed with Edmonton International Airport stating that the municipal airport would be included with the international airport, thus in the LAA when the city of Edmonton would decide this by resolution of its city council.
In Montreal, nothing similar occurred. There was just Saint-Hubert Airport which at one point came up. Here again, this was resolved by the local airport authority and the town of Saint-Hubert through a type of addendum stating that this would be resolved when the town of Saint-Hubert and the southern region were willing.
In Toronto, it was not at all the same thing. We knew and we were given documents when we requested them, for example, the resolutions, to see if there was any real support, we asked for the resolutions from the five regions in the Greater Toronto Area and the major cities.
Then we received all sorts of proposals. There was one that wanted us at the same time to agree to solve the taxi problem, while another involved parking at Terminal 1 and yet another, I think it was the most contentious, the City of Toronto absolutely did not want Toronto Island to be included in the airport, the airport authority and the mayor of Mississauga, Ms McCallion, made this a specific condition.
Our attitude throughout was to pare down, resolve, purify the resolutions. All we want to recognize you is that all local players, those involved, state: we support the creation of a local airport authority in Toronto. Give us that and we'll recognize you immediately. It never happened.
[English]
Senator Kirby: May I ask a supplementary question?
Senator LeBreton: Actually, I've got a follow-up on this and then Senator Kirby can - actually, I may ask the question you were going to ask on a supplementary.
Senator Tkachuk: I don't think so.
Senator LeBreton: Senator Kirby followed Senator Bryden's line of thinking and asked Mr. Robert Bandeen - and I'm going to get into Mr. Bandeen later - on the 25th of July - the same date of course - why Toronto was apparently treated differently than the other Canadian cities. Bandeen replied:
There was some thought that they were trying to encourage the use of Montreal and Calgary and Vancouver at the expense of Toronto. This was suggested by one of the ministers.
And I'm quoting Bandeen here, "Corbeil, I think".
Is that true and can you elaborate on this?
Mr. Corbeil: Is there a possibility I can get that?
Senator LeBreton: This was him quoting Bandeen. It was in the testimony where Bandeen - and of course Senator Kirby brought this in, that Bandeen said there was some thought that they were trying to encourage the use of Montreal and Calgary and Vancouver at the expense of Toronto.
This was suggested by one of the ministers.
Corbeil, I think...
[Translation]
Mr. Corbeil: I believe a statement like that speaks for itself. How could someone, even if he comes from Montreal and is interested in the economic health of his city and his region, how could someone make such ridiculous statements, that we're going to want to take flights from Toronto to force them to come to Montreal, much less Calgary or Vancouver. This just makes no sense, or else these are things that were said with tongue in cheek. This just isn't possible. We suffered enough grief at one point when decisions were made to try to move flights from Dorval to Mirabel, and we know what the outcome was. It was sure and impossible, and it was demonstrated quite clearly that a government cannot tell someone leaving from Europe, you're going to land in Vancouver, Montreal or Toronto. People take the plane that will carry them to where they want to go, and to take this as an argument reflects an attitude that a person is prejudiced, which leads people down the wrong path, and this does not surprise me. I too have one of these letters from Mr. Bandeen. I'm going to ask someone to hand them around. I'm going to read it so you can understand what he was saying at that time, it wasn't just off the top of his head. It was something he was developing. He began to develop it in the letter in question, which is roughly from the same date you mentioned a moment ago.
[English]
Senator LeBreton: Well I think what you've said is really - I have some examples that I'll read into the record later - I've read them into the record before - of Mr. Bandeen's overblown rhetoric and outrageous statements. But if you want to just enlarge on this letter, because obviously we're -
Senator Kirby: I don't want to throw you off your line of questioning. I just had one supplementary.
With respect to the level of support that you required from municipalities, there's been evidence to show - written evidence even - to show that the government required that there be effectively unanimity among the roughly 35 municipalities that were affected.
The argument was also made that you did not require unanimity among all the municipalities in the Montreal urban community area, the broader area surrounding Montreal, at the time the Montreal LAA was created. As I heard you - and correct me if I'm wrong - as I heard you in response to Senator LeBreton, you addressed - and I understood the issue you addressed, which wasn't specifically that one. You addressed some of her other concerns about the process.
Do you want to talk about specifically why there was a requirement that all the municipalities in the greater Toronto area supported the LAA?
[Translation]
Mr. Corbeil: I could refer to this letter in a moment, if you wish.
[English]
Senator Kirby: Okay, I understand what you're saying. I'm just saying that what you're saying is the evidence we had before which said that unanimity was required among the 35 municipalities is not correct. What you required was unconditional resolutions from the five regional municipalities?
Mr. Corbeil: The five regions and the municipality -
[Translation]
My request was not for unanimity. It was necessary that the resolutions - the five regions in the Greater Toronto Area, these regions - had to indicate their unconditional support. This was done.
Following this, the regional municipalities all cleaned up their resolutions to simply state what they wanted, except that there were two...
[English]
Senator Kirby: That's fine. That is not the way it was presented to us before, but that's fine.
Mr. Corbeil: That's not the only thing.
Senator Kirby: I was just trying to seek clarification.
Senator LeBreton: Going back to Mr. Bandeen - and I don't expect you to comment on what I'm going to read into the record, because it was not written by you, to you or about you, but it is very clear that there was definitely some resistance, and by this letter - I've just read it very quickly - that you've passed around, Mr. Bandeen is suggesting, on the 15th of June, even at that late date, that somehow or other they be allowed at the table even though they weren't recognized, which seems to me to be a rather strange request.
But in any event - and this has been read into the record before, and it's document 001316, and I'll just read it again for the record. It was as a result of a meeting between Mr. Robert Bandeen and Steve Shaw of the Greater Toronto Regional Airport Authority, as it was called at the time, and it was between those two individuals and Jack Matthews. And of course I'm going to ask Mr. Matthews about this tomorrow when he appears.
But it's an update of a meeting on Tuesday, July 6th, 1993, which is after this letter he wrote to you, Minister. It says:
Jack Matthews opened by saying that Paxport has not opposed the creation of an LAA at Toronto and is prepared to work with a future Authority, but that the decision to accredit an LAA is the federal government's. In any case, Paxport's highest priority at present is to complete lease negotiations. Bandeen expressed his frustration at the unwillingness of Minister Corbeil to grant accreditation to the GTRAA, which he attributes to the government's preference to complete its "patronage" deal with Paxport.
As an aside, interestingly enough, that word was used in the Nixon report.
Back to what he said:
He characterized the federal government as "obstructionist" and indicated that if he did not receive a satisfactory answer from Minister Corbeil at a meeting of Thursday, the LAA would "go public".
Bandeen expressed his view that the federal government "needs Ontario" to win the next election, but that they "won't get it" when the public finds out how badly the LAA, which "represents 5 million people" has been treated. Bandeen indicated that the GTRAA is under considerable pressure from the municipalities, who have not seen evidence of progress, while Montreal and Vancouver already have LAAs. While Mississauga and the City of Toronto are currently at odds -
- even he acknowledge that -
- over which airports should be included in an LAA, he claimed that there is unanimity among local municipalities.
At issue is the LAA's concern that Paxport and Transport will strike a deal that the LAA cannot live with from a business and operational standpoint, but they can't protect their interest without observer status.
Hence what he's saying in the letter to you.
Bandeen seemed alarmed at learning that a letter of intent has already been signed between Paxport and Transport.
And the evidence shows that that letter in fact was signed in June.
He kept repeating that he had no idea what was being negotiated, but when asked what it was he wanted to know, he made some vague reference to the implications of a future "Terminal 4".
That's where I got the Terminal 4. Somebody in testimony before was wondering where I'd seen Terminal 4. I knew I'd seen it somewhere.
Back to the memo:
Even after Jack Matthews reiterated his February offer to Gerry Meinzer of a Paxport briefing for the LAA, and then outlined the basic terms of Paxport's proposed lease with Transport, Bandeen repeated that the LAA will have to "go to the papers" to force the government to open up the negotiations to the GTRAA. When asked what the LAA would do with the information from Paxport about the negotiations - given with the understanding that it would not be used against Paxport - Bandeen suggested that the GTRAA would "scream" publicly if they felt that their interests were be ignored.
That's the end of the memo, which of course was read into the record earlier, in the testimony from the lobbyists.
My question to you, Minister, is what relationship, if any, did you have with Mr. Bandeen? Did you meet him and what was your sense of where he was coming from in all of this?
Mr. Corbeil: I don't like to talk negatively about people, but it was very obvious to me from our very first meeting that the agenda of that gentleman was not the agenda of the government. He wrote that letter to you and he wrote a letter to me in the same sense. He didn't refer here to papers and so on and so forth, but it was the same innuendo and I too would like to read it into the record. It's the letter that was distributed, I think, by the clerk a few minutes ago. It's addressed to me and it's dated June 15, 1993. It says:
Dear Minister: Re: The Greater Toronto Regional Airports Authority
The Board of Directors of the Greater Toronto Regional Airports (GTRAA) met on June 14, 1993 and authorized me to request that the GTRAA now receive the requisite recognition to begin negotiations with Transport Canada in connection with Lester B. Pearson International Airport (LBPIA) on an urgent basis. This matter is now urgent for as long as such recognition is withheld, it is impossible for the GTRAA to become involved in subjects such as the proposed redevelopment of Terminal 1 and 2 and the proposed construction of new runways at LBPIA. These are the kind of major developments in which the local airport authority that is to be charged with the future management of LBPIA should be involved, as they will have a fundamental effect on the LBPIA's future operation for many years. They will also certainly effect the future role of the GTRAA. Without GTRAA representation a large segment (5 million) of Canadians living in the Toronto Region will not be directly involved in these vital negotiations, through an organization whose directors are from the local community.
The Directors of the GTRAA are concerned that if prompt recognition is not given to the GTRAA, it will be placed in the position where it has to manage a system that was designed without its participation. The Directors are also concerned that if the arrangements for Terminals 1 and 2 and the runway expansion are put in place before the GTRAA is recognised, and the nature of those arrangements is such, perhaps because of the absence of the GTRAA from the negotiations, that they leave little or no useful role for the GTRAA to play in the future, then the local airport authority concept will have failed in Toronto, after being successfully implemented in the other major centres of Canada including Montreal and Vancouver. If the GTRAA does not receive recognition from Transport Canada so that it can become involved in the airport planning process while these issues are still being negotiated, it may cause some people to believe that recognition is being withheld so that a local airport authority will not have any input into these matters. There is already some speculation -
Funny that we find these same words different places.
- that it is what is taking place and the Directors of the GTRAA believe that prompt recognition of the GTRAA is necessary to eliminate this concern.
Following our recent meeting the GTRAA has taken and completed the further steps you required in order to be officially recognised and authorized by Transport Canada to commence discussions for the eventual transfer of LBPIA to the GTRAA as the local airport authority for the Toronto Region.
In your letter of May 6 1993, and in our subsequent meeting on May 13, 1993, you requested the GTRAA seek consistent, unqualified endorsement from the five Regions and the key to municipalities -
Is Mr. Kirby there? That's your answer, Mr. Kirby. The paragraph I've just started says:
In your letter of May 6 1993, and in our subsequent meeting on May 13, 1993, you requested the GTRAA seek consistent, unqualified endorsement from the five Regions and the key municipalities, to allow official status to be granted. In subsequent discussions between Mr. Stephen Shaw of the GTRAA and Mr. Michael Farquhar of Transport Canada, the text of a resolution was developed and the key municipalities identified as the City of Mississauga, the City of Brampton and the City of Toronto.
I am very pleased to advise you that the Council of the Municipality of Metropolitan Toronto, the Council of the Regional Municipality of Durham, the Council of the Regional Municipality of Halton, the Council of the Regional Municipality of York, and the Councils of the Corporation of the City of Brampton and the Corporation of the City of Toronto have all passed this additional clarifying resolution. Mr. Shaw is forwarding the text of these resolutions to Mr. Farquhar in separate correspondence.
The City of Mississauga passed a resolution (February 17, 1993) supporting the establishment of an LAA, and endorsing the recommendations in the report of the Chairman of the Region of Peel. On November 26, 1992 the Council of the Regional Municipality of Peel endorsed the formation of a local airport authority for the Greater Toronto area. These resolutions remain in effect. I requested the Council of the Regional Municipality of Peel to confirm its endorsement of the GTRAA by passing the clarifying resolution as I requested all five Regions and the three key Municipalities. The matter has been considered by that Council but was deferred without a vote, as a result of the current controversy surrounding the runway expansion at LBPIA and the Toronto Island Airport.
It is my understanding that the matters you raised regarding the incorporation documents have now been resolved with Transport Canada staff. Further the Councils of the City of North York, the Borough of East York, and the Town of Oakville have now confirmed their endorsement of the GTRAA and the City of York is proceeding to complete their endorsement.
There is no doubt that all five Regional Municipalities in the Greater Toronto Region are on record as supporting the concept of an LAA being created to commence discussions for the transfer of LBPIA to such an authority. It also clear that all major municipalities including the Councils of the City of Brampton, Mississauga and Toronto have given or reconfirmed their support for the same concept. No municipality has opposed this initiative. I trust you will accept this unusual broad unity of support as suitable and sufficient endorsement.
In light of the clear approval which has now been reaffirmed, as you requested, for recognition of the GTRAA as the representative body for the purpose of entering into formal airport transfer negotiations with Transport Canada, we trust that you will provide such recognition as soon as possible and will involve us in regard to any negotiations with respect to runway construction and operation and terminal redevelopment and operation.
I look forward to hearing from you about this matter at your earliest convenience.
Yours very truly,
Robert A. Bandeen
Chairman and President
Greater Toronto Regional Airports Authority
cc: The Right Honourable Brian Mulroney
The Honourable Kim Campbell.
Greater Toronto Area Regional Chairman.
So if you want to see who introduced the notion that Brian Mulroney was directing this thing, I think this letter is a pretty good indication.
Now, this is June 15, 1993. We have to bear this in mind. The RFP was issued on the 16th of March, 1992. So this is 15 months after the issuance of the RFP. The RFP decision, the choice of the evaluation committee, was rendered on the 7th of December, 1992, and this letter is written 15 months after the choice of the RFP best overall acceptable proposal has been made public. Now, how can we be expected to say through all of this process, "We're going to put that aside, we're going enter into negotiations with a -
[Translation]
Mr. Corbeil: An airport authority that has not yet been formed, we don't know when it will come into force, how the negotiations will proceed, and all this will be set aside because Mr. Robert Bandeen thinks that the people from Transport Canada are incapable of negotiating a good agreement with the selection of the evaluation committee.
So we continually said the same thing, Mr. Chairman. I am going to ask your permission to read another letter from a person you saw yesterday, the mayor of Mississauaga, which shows that there are at least half-truths in this document when she would have us believe that Mississauga's concern over Toronto Island Airport has evaporated. It did not evaporate, I think Ms McCallion told you yesterday that this was settled in 1994. Up to 1994, there still wasn't even the possibility of genuinely forming a local airport authority, and once again in this letter, it states that it must have, what I requested, the recognition, endorsements, acceptances by the five regions and the major city and the city that objects, because it wants to have Toronto Island at the same time, this is not the small municipality of 3,000 inhabitants in greater Toronto, it's the municipality where the airport itself is located, which therefore can use all types of tactics if its request is disregarded so matters can proceed.
We have seen that in 1989, earlier than that, I think, since in 1975 an Ontario government blocked development of Pickering, stating quite simply, you have the full authority to proceed, the federal government, if you will, its our responsibility, the Government of Ontario, to build the roads and you'll build an airport in the middle of a field, because we will not build any roads into the airport.
We weren't going to put ourselves - we weren't so stupid as to say, that's fine Mississauga, we have duly noted your resolution but we're going to disregard it. We can imagine the potential for judicial and legal battles that could have followed by saying that the city of Mississauga did not approve the condition, did not support the creation of a local airport authority unless it included Toronto Island. These proceedings did not include this. In addition, there were four local airport authorities traipsing through the scenery.
I referred this morning to the South Central Ontario Airport Authority which was not an airport authority in compliance because it was strictly private. This was a company incorporated taking this name from the Government of Ontario and which was going to receive financial assistance from the provincial government to proceed.
This entire scenario, since the government and Ministry of Transportation were opposed on a simple whim to the recognition of a local airport authority, is just hot air blown out by someone who suddenly discovered the lucrative opportunity of the Toronto airport. The creation of local airport authorities began in 1986. In 1986, Mr. Bandeen, where was he to come and tell us in 1993, gentlemen, get out of the way, the past president of Canadian National is coming in and will show you what to do. We are a government. We have studied this latter ad vitam aeternam, ad nauseam.
We set the process in place. It was followed in full. A selection was made. Gentlemen, you are welcome to create a local airport authority, comply with the government's requirements. At the same time, we're going to continue with privatization and operation of Terminals 1 and 2 and somewhere along the line, when your new LAA has been created, you will replace of the government.
Beyond the SCOAA, there was the Pearson Regional Airport Corporation, PRAC, there was the Pearson International and Greater Toronto Airport Authority and the GTRAA, the Greater Toronto Regional Airport Authority. So we were navigating through all this. It certainly wasn't these last-minute interventions that were simply going to sway us from our course on the chance a local airport authority might come in. We made the decisions. We followed them through the regular process and we always maintained and we still maintain that this did not rule out the creation of a local airport authority, since the obstacle to recognition was the city of Mississauga's insistence, which I believe was justified, that this include the Toronto airport.
Now a letter has been produced here yesterday by Ms McCallion which also sheds some light on this matter. I think you have a copy. There is no need for me to give you a copy. I am the person writing to Ms McCallion.
[English]
Her Worship Mayor Hazel McCallion
The Corporation of the City of Mississauga
300 City Centre
Dear Mayor McCallion:
I very much appreciated the opportunity to meet you in Montreal on July 9, 1993 to discuss a number of issues of mutual concern respecting the Lester B. Pearson International Airport. I believe our meeting was very constructive and productive.
In our discussion concerning the Greater Toronto Regional Airports Authority (GTRAA) I indicated to you that I felt that there was a need for a clearer indication of support from the City of Mississauga for the LAA. More specifically, I would reiterate my request to you that you seek a new resolution from your Council which would give uncondi- tional support to the GTRAA, hence withdrawing the requirement in your present resolution for a parallel transfer of the Toronto Island Airport. With such an unconditional resolution I would be prepared to endorse the Local Airport Authority.
Such a resolution would in no way preclude the GTRAA in the future from pursuing transfer discussions on the Toronto Island Airport with the appropriate parties. As you know, the agreements transferring the major federal airports to Local Airport Authorities is Montreal, Edmonton, Calgary, and Vancouver include provisions which could lead to the possible transfer in the future of satellite airports. However, the negotiations that led to the transfer of the major airports focused exclusively on those airports. The satellite airports are were not the subject of those transfer negotiations, instead being left for another day.
Thus, a clear unconditional resolution from your Council endorsing the GTRAA would clarify your city's support for the transfer of LBPIA and for the GTRAA's initiative to enter into formal transfer negotiations with Transport Canada leading to the transfer, initially, of LBPIA to the Authority.
Your early consideration of this request would be very much appreciated.
And signed by Jean Corbeil.
Senator LeBreton: I was going to ask in jest; do you have any strong views on this.
[Translation]
Mr. Corbeil: I cannot tolerate a person with such a lack of responsibility spreading such gossip, such insinuations, such misappropriations that tarnished me and all our cabinet colleagues.
[English]
Senator LeBreton: Touché. I agree.
What do they call it now, the body that's recognized? Just for the record, it's no longer the GTRAA, is it? It's something else now. It doesn't matter. It's not relevant to this. It's just not called the GTRAA.
I have just one final question, and I have run out of time, although I did have some questions on lobbying and on Nixon, but I'll get back to that.
To go back to the testimony for us in this committee, Senator Kirby then suggested on July 25, on page 1900-7, that the government had no intent at all of handing over T1T2 to a local airport authority. And I was just, obviously, going to ask you to comment on that.
[Translation]
Mr. Corbeil: The facts speak for themselves. There are tons of documents recording correspondence and discussions. Following the letter I sent to Ms McCallion, to which she did not reply, I could add that I subsequently put this question to her.
Why do you not want to remove this? She gave me satisfactory explanations which showed that the endorsement given by her city council was explicitly subject to this condition. It is the resolution by the Mississauga city council that stated, we endorse and support the formation of a local airport authority solely on the specific condition that this include the Pearson and Toronto Island Airports. This was explicit, you couldn't get around it.
The issue is that no one could get through it until recently, for reasons beyond me.
[English]
Senator LeBreton: And as she explained last night, it was because they have a desire for the Toronto Island Airport to take some of the traffic away from Pearson, short-haul traffic between Toronto, Ottawa, Montreal and short-haul flights into the United States, and on the whole traffic noise.
There was one last question, and it just came into my head as I was about to wrap up. Last night, Her Worship talked about the north-south runway and had talked about coming very close to negotiating a final solution with you whereby the north-south runway would only be used for aircraft that were landing. She just mentioned that. I don't believe that's been resolved to this date and I don't know whether you are following it now or whether you've just -
[Translation]
Mr. Corbeil: I have put this behind me and direct political action is now a thing of the past, I will not be a candidate in a coming election, or anything else. I have made my contribution. I believe I have paid my dues to the nation. The issue of the new north-south runway has been the subject of many more, many more genuine problems, not artificial problems like those we have just discussed, which were created in someone's mind, but real problems of noise caused by the airport. In the months that followed, we passed, the government passed legislation that tends to speed up much wider use of what the jargon calls Chapter 3 Aircraft, modern planes, 749s and so forth, with greatly diminished noise levels.
At that time, we also created, to the municipalities' satisfaction, I believe, I have a background from the municipalities, I am attentive to their concerns. We created a noise control committee with representatives from the airport, pressure groups, citizens and so forth specifically in an attempt to solve the problems and act as a monitoring committee to determine whether the airlines were using a type of corridor that was designated for the purpose of reducing noise as much as possible.
But there is no doubt that an airport will always have noise until silent engines are manufactured, but the key point was to reduce noise to the lowest possible level. I think this must have been solved in part if not completely, because we no longer hear anything about it. I do not live in the Toronto area, but it doesn't appear from the national media that the problem is as acute as it was at the time.
[English]
Senator LeBreton: Thank you very much. Thank you.
The Chairman: I believe there is only one senator who hasn't had - in the first round - so Senator Jessiman then Senator Bryden, for the beginning. Have I missed anybody on the first round?
Senator Kirby: No.
The Chairman: Senator Jessiman.
Senator Jessiman: I won't be too long, I don't think, Mr. Chairman.
Mr. Corbeil, it has been said that there was a great deal of pressure to get the Pearson deal done and that people from a variety of offices were involved. Were you aware of any pressure being exerted by staff from the Prime Minister's Office?
Mr. Corbeil: Not at all.
Senator Jessiman: It has been said also that the former Prime Minister Mulroney had a lively interest in the Pearson file. Would you say this was true?
Mr. Corbeil: Well, the Prime Minister is the Prime Minister, and his job is to make sure that his cabinet works and deals with the outstanding issues, so normally at cabinet meetings you discuss these things, and there was no indication that I could perceive that there was such a fixation on Pearson. It was a very important file.
[Translation]
This was an extremely important matter because of what Pearson represents and because of the work that had to be done, which could have such a major impact on job creation and activation of the regional economy.
[English]
Senator Jessiman: So you would say that it wasn't unusual for him to take an active interest in the leading policy initiatives in the government?
[Translation]
Mr. Corbeil: I hope that all governments in the world are led by a prime minister who, if you will allow the expression, is not asleep at the switch and is not neglecting important matters. I find it is one of the duties of a prime minister to ensure that his ministers do their job.
I believe that in all businesses, the boss asks people on a regular basis how a given matter is proceeding, and so forth, once again, within the normal decision-making process of cabinet and the government.
[English]
Senator Jessiman: Was he ever criticized at that time for taking an active interest in such major files?
[Translation]
Mr. Corbeil: Personally, if I could put all the pieces of the puzzle together...
[English]
Senator LeBreton: He was criticized for free trade.
[Translation]
Mr. Corbeil: The renowned GST that was supposed to be changed. It's not the fact that someone is criticized, but I believe I could sketch a picture by assembling the letters and interventions of the various people. I could easily demonstrate that the furor, if you will, and the proliferation of insinuations began shortly after the time of the letter I read to you a moment ago. Before that, there were interventions, as I said a moment ago, people who did not want Terminal 1 closed, people who didn't want it closed, and so forth. There were these interventions. But there was no national furor over this matter. It obviously grew in importance as the elections approached, heated up, and for the people who wanted to defeat the government, as is normal in a democratic process, every possible weapon was used to try to show that the government was not doing things properly.
What is interesting is that the Nixon report, which was specially commissioned for this purpose, contains no evidence of the validity of any of these allegations.
[English]
Senator Jessiman: I see. What about your contact with Mr. Shortliffe during this period? Would you be talking to him on a regular basis?
[Translation]
Mr. Corbeil: In the normal process, the public servants, their boss is Mr. Shortliffe and he speaks to them. I have no memory other than that within, once again, the government's decision-making process, of speaking specifically to Mr. Shortliffe at any time whatsoever outside the places where these things are discussed and where the presence of the secretary of Privy Council is a foregone conclusion.
[English]
Senator Jessiman: Now, there would be times when officials would come to you for advice and direction from time to time, and I want to break this down into two parts, before December 7th, 1992 when you declared the winner, and after December 1992. Let's talk about before the declared, as we called it, the winner, best overall acceptable proposal as announced.
Mr. Corbeil: It's not an easy term to use.
Senator Jessiman: Did you indicate to any of your people that were coming to you that you favoured Paxport over Claridge?
[Translation]
Mr. Corbeil: No, senator, that would have been totally unacceptable and ill-advised and stupid for a minister to imply, regardless of that aspect, and I know that if that had occurred, it would have made the headlines, and rightly so, and it is the public servant who would have requested through the process that Transport Canada and perhaps the cabinet be excluded. This would have been a huge mistake and it is a mistake I did not commit.
[English]
Senator Jessiman: But after it was declared the best overall acceptable proposal -
Senator Stewart: I am suggesting an acronym, BOAP.
[Translation]
Mr. Corbeil: This is something you have to get used to in government, we talked about this a moment ago, LAA, GTRAA, everything goes by acronyms.
[English]
Senator Jessiman: But all the other witnesses have indicated that you favoured and insisted on them negotiating the Paxport transaction because it was a better one.
[Translation]
Mr. Corbeil: Had I done this, Senator, Mr. Chairman, I would have been seriously derelict in my duty. We drew up-I said a moment ago that we had followed this fully-we drew up a request for proposals that was an excellent request, very clearly worded, which contained all the planned information.
We created an assessment process that was water-tight and fully protected from everything, and then this assessment committee told us: here is the proposal we consider the best; but added at the same time: both proposals were good but this is the one we selected.
So who am I to review something like this and say: no, no, that's not the bidder with whom we should negotiate, it's the other. If, at some points, I told people: we have negotiate with that one, I think I was carrying out the responsibilities that were expected of me: a process was approved, the people who made this choice told you this was the winner, to use your expression-negotiate with that bidder. The chosen bidder was Paxport and it's with them that we began immediately following the cabinet decision, not negotiating, but clearing the way, as it were.
Since the issue of "financeability" was included in the Council's decision, the public servants had to work with Paxport to try to meet the requirements of this criterion.
[English]
Senator Jessiman: Thanks, Mr. Corbeil.
You have said earlier that you have studied this report, and I am holding up the Nixon report. I think it is the - I am not sure if it is the first or second one, but it is the one that was published. I just want to read a number of sentences here and after I finish reading a sentence I will ask you a question. On page 9 it says:
It is clear that the lobbyists played a prominent part in attempting to affect the decisions that were reached, going far beyond the acceptable concept of "consulting".
From your perspective, is that a - how do you - what do you say about that particular sentence?
[Translation]
Mr. Corbeil: Personally, I have always worked on the basis that a politician and a person who holds a political position, who avoids all communication with anyone, is doing himself as well as the government he must serve a disservice.
I know it is not politically correct in this country to talk about lobbyists. The concept we want to give to this is that these are a species of criminal and people involved in an illegal profession.
Legislation has been passed by our government which stipulates that lobbyists must register, which was not the case before. Lobbyists have to register.
In my view, lobbyists are people who live in Canada, who have rights under the same Charter of Rights and Freedoms, and anyone who tells them that because they hold a certain position, they cannot speak to me. I am thinking once again of reprehensible conduct.
Especially in this case, practically all communications conducted with what could be called lobbyists, and then in the Paxport case, they were not since it was the president of the company. Personally, I would say that all the communications I had were either in writing or oral and subsequently confirmed by written communications.
I believe that people who think they can slip something under the table, who are shady or fraudulent or open to charges of undue pressure, would not do this in writing. I repeat that the process was clean from end to end. Had I not talked to Paxport, had I not talked to Claridge at some point, had I not talked to Canadian Airports and had I not talked to everyone who had something to say in this matter, I do not believe we would have succeeded in developing a request for proposals that was as broad as this was.
Once again, I believe, not only do I believe, but I am absolutely convinced that we developed a good request for proposals.
Almost everyone who had anything to say was heard, including lobbyists, and in my opinion, the fact that someone who is interested makes a presentation to promote what he's selling does not make this person some sort of outlaw. Otherwise, everyone who is a vice-president of corporate development, sales representatives, and so forth, would all be thieves.
[English]
Senator Jessiman: I am going to read another sentence and, before I do, we think that we have interviewed all the senior bureaucrats involved in the negotiations. You will know, if you have read the testimony, that none of them said that anything that they did was influenced by lobbyists. But this is what Mr. Nixon says so I want to know whether you know, of your own knowledge, whether any of this is true.
When senior bureaucrats involved in the negotiations for the Government of Canada feel that their actions and decisions are being heavily affected by lobbyists, as occurred here, the role of the latter has, in my view, exceeded permissible norms.
My question to you is: Do you know of any senior bureaucrats that were so affected?
[Translation]
Mr. Corbeil: Throughout the time I was Minister of Transport, there was not one "civil servant", as they're called, departmental officials, bureaucrats, no one ever came to tell me there was undue intrusion by anyone, including the lobbyists.
After reading the reports of your hearings, I like you was able to observe that these people under oath before the committee gave the same answer.
[English]
Senator Jessiman: I am going to read on here.
[Translation]
Mr. Corbeil: They cannot be believed in some instances and disbelieved in others. These people are speaking under oath and I believe they are telling the truth.
[English]
Senator Jessiman: I want to go on here. There are just two more sentences.
As well, there was the perception that political staff were interested in this transaction to a highly unusual extent.
Do you think that is a true statement in relation to -
[Translation]
Mr. Corbeil: Absolutely false.
[English]
Senator Jessiman: Absolutely not?
[Translation]
Mr. Corbeil: Absolutely false.
[English]
Senator Jessiman: "Indeed this climate of pressure resulted in several civil servants being re-assigned or requesting transfer from the project."
Now, we have questioned a number and we have not yet found any that have been reassigned or requesting transfer. Do you know of any?
[Translation]
Mr. Corbeil: No, sir.
[English]
Senator Jessiman: Thank you. Thank you, Mr. Chairman.
Senator LeBreton: Can I ask a supplementary?
Senator Jessiman: Sure, I am finished.
Senator LeBreton: Did Mr. Nixon make any attempt to contact you when he was -
Mr. Corbeil: Never.
Senator LeBreton: Nor anyone on his behalf?
Mr. Corbeil: Nobody.
The Chairman: I think we begin now the second round and Senator Bryden.
Senator Bryden: Thank you, Mr. Chairman.
Mr. Corbeil, I wonder if you still have available the document A that I passed out the first thing this morning. It is the chart.
If you look at the second row on the front page under "Event," it has a large block and then there is a series of smaller blocks, and you notice that on October 17th the announcement was made that there would be private sector participation in the modernization T1T2, and then you go all the way to 1992 and that little note that is in there is one that I put in weeks and weeks ago, "was anything happening" during that period.
This sounds like someone else's preamble. We know that some things were happening. For example, we know, I believe, that the EARP process was going on during that period; isn't that correct?
[Translation]
Mr. Corbeil: Yes, sir.
[English]
Senator Bryden: We also know that Paxport was actively lobbying to have the RFP issue as soon as possible. That activity was taking on during that period. There is all kinds of evidence that we could recoup, but it was introduced during this hearing, that during that period of time at least those two things were happening.
As smart business people, they wanted the RFP to be drawn in such a way that they would be as - it would be as favourable as possible to their strengths and keep out as many potential competitors as possible.
Now, we have had evidence led, and I am not saying that it has been totally proved, but we have had evidence led at these hearings that specifically Paxport wanted the following things: no expression of interest period; no international competitors; no involvement with an LAA in the process; the development of T1T2 to be delinked from the EARP; the RFP period to be as short as possible; the proposer not to have to establish financial viability and not to have to establish the financial viability of the proposal; and, finally, that the deciding factor in selecting the winning bid be based on the proposed dollar return to the government.
Now, those are all things that have been led here in evidence.
Senator Jessiman: Is that one document or several?
Senator Bryden: No, many.
Senator Jessiman: I would have to see that. I don't completely agree with it.
Senator Bryden: I am not saying it has been completely proven, but they in fact lobbied for all those things.
In any event, whether Paxport was - they ended up being pretty successful, if those were their objectives, in achieving them because the March 16th, 1992 RFP there was no expression of interest period; no international competitors were allowed to bid; no LAA was ultimately allowed into the process; the RFP was released without the results of the EARP being known; the time for reply to the RFP was only 90 days; the proposer did not have to establish financial viability, nor did it have to establish financial viability of the proposal; and the factor with the heaviest weight for evaluation was the net dollar return to the Crown.
Now, I believe that I have absolutely accurately stated the terms of the RFP; is that correct?
[Translation]
Mr. Corbeil: Mr. Chairman, to be able to answer that one way or another, I can read you the RFP document, if you wish, which will tell you exactly what you have asked. I cannot take this recitation as the absolute and irrefutable proof that this is what's in the request for proposals. If this is the committee's wish, I will read it to you. I have been saying from the very start that we listened to everyone. There are people who did not want us to close Terminal 1. There are others who wanted it closed. There are people who wanted us to move forward immediately. There was not just Paxport.
We could sift through this here and we would see organizations. Here, I have a city council member from Toronto. I have here a letter from August 22, 1991.
[English]
"I enclose for your information" -
[Translation]
And it's the Claridge company.
[English]
"I enclosed for your information a memorandum of August 21 which supersedes the one which Senator Kolber and I left with you on August 19. The revised version expands on a number of points which we discussed and comments on the recently announced association between Air Canada and US Air."
[Translation]
On September 25, 1991, I believe, we received a large document from Claridge expressing its concerns. So, we continually were in contact with labour unions, business people, municipal officials, asking us to proceed as quickly as possible with this airport, which was falling apart, Mr. Chairman. I repeat, Terminal 1 was literally... virtually all the parking spaces were closed.
So what the senator mentions is the result of the input we received from just about everyone. And we drew up the request for proposals so that, for example, for Terminal 1, while the department was saying, with reason, that we could not close or demolish Terminal 1, because that would have eliminated 24 gates. We all reached the conclusion in the end that we had to include a clause in the request for proposals so if someone had a solution to this issue of Terminal 1, demolishing it or eliminating everything while keeping the 24 gates we needed, that it would be considered, and this was considered in the request for proposal.
As for the "financibility" and financial capacity, these are two issues. For the financial capacity, this was covered in the document. And the "financibility" is a factor that we added, not during the request for proposals but after the selection had been made. For the reasons I mentioned twice this morning, there was what I would call a gradual but very negative shift in the entire air transportation sector in Canada that affected both Air Canada and Canadian, and we wanted to ensure that the leases we would seek from these people, the rates they would be charged, would not be a factor in making this unfinancible.
So this issue, I am certain that just about all the senators here have experience in business and it seems to me that course 101 in college teaches the difference between financial capacity and "financibility".
[English]
Senator LeBreton: Mr. Chairman, just to assist Senator Bryden in that long question that he asked about what, if anything, was happening. I thought perhaps testimony to this - you know, over this period of time might have happened when he was away. But, in fact, Senator Bryden was here, and it was the 26th of July 1995 when I asked that very question of - when Mr. Berigan and Mr. Power were here and I just refer him to page 631 and 632 where they give a rather lengthy answer of how they spent that period of time and used it to good use. I, just for the record, there has already been some people answer that from the officials point of view.
The Chairman: Since Senator Bryden refers to this as coming from evidence -
Senator Bryden: Yes.
The Chairman: - would you assist those who are compiling the evidence by giving the appropriate places in the evidence because it will assist a lot?
Senator Bryden: Sure, but I can't give it to you right now.
The Chairman: If you could make it available.
Senator Bryden: I thought what I was saying after having gone through what we have through - and I was not saying that that was the only things that were happening, the EARP and so on, there may have been other things going on, but certainly this process that I had referred to.
The Chairman: Now, could we also - this is rather important - could we also agree that we file the criteria for the proposals as an exhibit to today's hearings instead of reading it in?
[Translation]
Mr. Corbeil: Mr. Chairman, if I may just read you the part that specifically involves what the senator asked a moment ago regarding the financial requirements, they're here but it would be better, it's very long - that's my copy, I hope I will get it back - but you certainly may make similar copies on behalf of Transport Canada since this is the official Transport Canada document.
So, either I can leave my document with you, but I would like it returned as it will form part of my memoirs.
[English]
The Chairman: Yes, all right. We can get other copies. Is that agreed?
Hon. Senators: Agreed.
The Chairman: Senator Bryden.
Senator Bryden: Thank you. If you would, Mr. Corbeil, refer to that same document A, the summary of what was going on, again. If you look at the areas below the "Event" column you have a listing there: Minister, Deputy Minister, Project Manager, and senior exec, I guess - when I look at that, when I look at the first page, and you go up until the time on the 7th of December in 1992, the personnel from 1989 to that time seem to have been pretty stable. If you go to the next page -
[Translation]
Mr. Corbeil: Senator, I'm having trouble following you. Exactly where are you referring to?
[English]
Senator Bryden: Okay. Well, if you - the line says, on the front page says, "Minister". It says "Benoît Bouchard" March 31st; and then there was Mr. Lewis; and then you came in on the 21st of April 1991, and you continued then until the end of your mandate.
In the Deputy Minister column, Mr. Shortliffe was there for a short period of time during that period and then Madam Labelle was there during the rest of the period, and the manager of the project for the period from '89 to '92, Victor Barbeau, remained the same. The senior executive was Mr. Berigan for most of the time with Mr. Farquhar at the end.
Now, if you go to the next page -
[Translation]
Mr. Corbeil: Senator, Mr. Shortliffe was there from May 1988 to October 1990, which amounts to about a year and not quite a half. Ms Labelle was there from October 1990 to roughly April or May 1993, I believe. She was there about three years - two and a half years.
[English]
Senator Bryden: Okay. Now, if you go to the period starting January 1993 and up to October of 1993, that would be a period of, I don't know, what, nine months, during that period the Deputy Minister was replaced on June 24th. There were four chief negotiators: Mr. Quail, Mr. Barbeau, Mr. Broadbent and, finally, Mr. Rowat on June 15th, 1993; and the senior airport group advisor, Mr. Heed, was replaced on July 12th, 1993 by Mr. Power and Mr. Desmarais.
Mr. Corbeil, I have to ask you the question: Did you keep changing personnel until you got somebody that would make this deal happen?
Mr. Corbeil: It is a very insidious question, the same type that we find in the Nixon report, and I -
Senator LeBreton: Exactly.
Mr. Corbeil: - and I am very surprised that a member of the Privy Council would be asking these kind of questions because I am sure that the member of the Privy Council, the senator, knows that when you displace one senior civil servant, it -
[Translation]
- leads automatically to a series of appointments and all these things obviously are not within my power. And personally, I see nothing dramatic or conspiratorial in this. It obviously depends on where you're starting from.
If we start, as Mr. Nixon did, with everything being bad and then we reach this conclusion, it comes as no surprise. If you assume that people were manipulated for a specific need, you reach this conclusion.
I, however, do not reach the same conclusion at all. I know that Ran Quail was at Transport Canada for a long time as associate deputy minister and had the opportunity for a promotion. He asked about the consequences this would have for us and we told him we certainly had no intention of standing in his way. And I explained to you that Ran Quail's departure led to Mr. Broadbent's arrival, and that Mr. Broadbent had given advance notice that he hoped to complete these negotiations before taking on new responsibilities.
[English]
Senator Bryden: That is helpful.
Senator Tkachuk: Could I have a supplementary?
Senator Bryden: A simple "yes" or "no" would have done just fine.
[Translation]
Mr. Corbeil: Yes, but sir, I cannot say yes or no when you insinuate that I was part of a conspiracy that exists only in your mind. I know that you are here for partisan, liberal purposes. I am also a participant in this and, once again, I tell you that your smear campaign has deeply affected me because I consider myself as honest a man as you.
[English]
Senator Tkachuk: Just a supplementary to that. Even if your theory - maybe it is just a little comment here that I find really interesting, Senator Bryden. Even if your theory was correct, the final guy that the minister would have selected would have been Mr. Rowat because, obviously, your theory runs that, oh, what the minister did was got rid of people until he got the one he wanted. Obviously, the one he wanted was the last guy, which is the same one your government promoted to the Deputy Minister of Fisheries, isn't it?
The Chairman: All right. I think we can -
Senator Tkachuk: I am just asking. Isn't it?
The Chairman: I think you can address the question to the witness.
Senator Bryden: He is Deputy Minister, yes.
Senator Tkachuk: Maybe you should ask him.
Senator Bryden: I asked the witness a question and he has answered it.
Senator Tkachuk: Take as long as you want.
Senator LeBreton: That is right. You reap what you sow.
Senator Bryden: I now have 16 years left so I am not in any hurry.
Mr. Corbeil, virtually from the day that Paxport was announced as having the best overall proposal, there were concerns about whether Paxport could do this deal on its own. Is that a fair statement?
Mr. Corbeil: I don't know, sir.
Senator Bryden: Mr. Hession, who is Paxport's president, when he gave evidence here told us, and I can quote that because I did bring that, and I am quoting from whatever we call this, proceedings or whatever, 0945-36, and there was a controversy over whether Mr. Hession could divulge the name of his source, but that wasn't my concern.
My concern was this - I am reading from the transcript: Senator Bryden says:
Senator Bryden: Whoever that 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.
Now, he had answered that and I was just summarizing.
Mr. Hession's answer was:
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.
Now, it is Mr. Hession's sworn evidence that within two or three days of the announcement of the award some official of the Department of Transport for which you are responsible and accountable approached him and told him that the parties would likely get together.
Mr. Nelligan: Excuse me, senator, that is not what was said. It was that there were synergies which could be developed, I believe was the word.
The Chairman: Explored.
Mr. Nelligan: But there was no - as I recall, there was no suggestion the parties wanted to get together; it was the suggestion that there were synergies. I think you better get your right quote on that in fairness to the witness who hasn't heard it before.
Senator Bryden: Well, we had an awful lot of stuff relating to -
Senator Tkachuk: It should be clear we have no idea whether it is anybody from the Department of Transport who called because Mr. Hession may think it was, but we don't know that because he has never seen the person, obviously. He wouldn't tell us who it was.
Senator Bryden: Wait now.
Senator Tkachuk: We don't know who it was.
Senator Bryden: You are absolutely right, counsel, and I think I do have the exact quote.
I was off exploring another area -
Senator LeBreton: As usual.
Senator Bryden: - and I had asked: "Who approached who? Did Paxport approach Claridge or did Claridge approach Paxport?"
Now, we know since that I think it was the latter or - whatever. Mr. Hession, in reply to that, said: "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, indeed, on the ground in operation a real 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."
So that is the exact quote, and I appreciate counsel pointing that out.
The point that I was raising is that within two or three days, according to Mr. Hession, a senior Department of Transport official asked him to explore, or the parties to explore these synergies. I take it, Mr. Corbeil, that was not you.
Mr. Corbeil: M'hmm.
Senator Bryden: And I can ask you because there was a great deal of interest: Do you know who that person was?
Mr. Corbeil: No, sir.
Senator Bryden: Okay. At what point, Mr. Corbeil, did you have any discussions within your department about exploring the synergies of the two parties getting together?
Mr. Corbeil: The first discussion we had about that was the end of January after the merger was announced by both parties that they had come together and the question was: Is this legal?
Senator Bryden: Once again, I can provide the reference. This will not be exact. But the Deputy Minister in your department, Madam Labelle, who followed Mr. Hession, indicated that she was aware of this around Christmas time and she would not have advised you as her minister?
Mr. Corbeil: I have just testified sir, under oath, that I did not know until the January 16th or 20th announcement by Mergeco - by Claridge and Paxport that they had formed Mergeco.
Senator Bryden: That was around the time that they signed -
Mr. Corbeil: After the announcement.
Senator Bryden: - the letter of agreement, I think it was.
Mr. Corbeil: It must be. But they made an official announcement sometime at the end of January that they had come together and at the - in the following days we had a meeting - it may have been even the day after - that we had a meeting where the question was raised: Is this legal?
Senator Kirby: Mr. Corbeil, one supplementary, and I am not disputing your answer but just so I am clear: Since we know both from evidence from your deputy at the time and written documentation that there were two or three at any rate senior officials in the department who knew in December that there was an attempt being made to create Mergeco, you were not informed of that?
Mr. Corbeil: I was not.
Senator Kirby: Although the senior officials knew, they didn't tell you?
Mr. Corbeil: No. I was not aware of the incoming merger until we were informed of it.
Senator Kirby: I want to be absolute - so even though the officials knew, and even the PCO knew, they had not in fact discussed it with you?
Senator LeBreton: What officials?
Senator Tkachuk: What three officials?
Mr. Corbeil: Sir, throughout this whole thing there were a lot of discussions with individual officials that, until something happens, I don't understand why they would necessarily come to me.
Senator Kirby: I just want to clarify it to make sure I understood it.
Senator Tkachuk: What three officials? Did we have testimony that three officials knew or - I just thought that the Deputy Minister said sometime that she knew. What were the other two officials, just so I have it straight?
Senator Bryden: I referred to the deputy -
Senator Tkachuk: I am asking Senator Kirby.
Senator LeBreton: Senator Kirby just said, "I am not answering his questions."
Senator Tkachuk: You said two or three officials to a witness. I am asking you -
Senator Kirby: The deputy knew. We had the memorandum - sorry, I get confused on everybody -
Senator Tkachuk: The deputy knew.
Senator Kirby: No, no, come on, there was a memorandum that indicated that - because the memorandum said explicitly, "Don't tell anybody. This is being kept highly confidential." Frankly, I can't remember which of the many other officials, other than the deputy, who it was, but there were two other names on the memo.
Senator Bryden: If we check the record, the Deputy Minister said she was informed around Christmas time by Glen Shortliffe that the synergies of getting the parties together.
Senator LeBreton: And we also have testimony that Mr. Matthews - let's clarify this - that Mr. Matthews called Mr. Bronfman on the 9th of December; and on the Paxport side they held it very close to the vest; but Mr. Coughlin -
Senator Kirby: It wasn't the 9th, it was the 11th.
Senator LeBreton: Mr. Coughlin testified that he let his government relations people know, and anyone that lives in this town knows if you tell the government relations people, i.e. lobbyists, it is probably all over the department before anyone else knows.
Senator Kirby: The minister was not in the loop.
The Chairman: Order, order. We are talking in each other's washing here. Direct your questions to the witness.
Senator Kirby: That is why I tried to ignore them.
The Chairman: No interventions, please, just questions to the witness. Senator Bryden.
Senator Bryden: I would like to refer you to a document, and it is document 001540, and it is my tab 1.
I know that this is not directed to you, but this line of questioning that I am on really relates, Mr. Corbeil, to the almost immediate, if not earlier, concern about Paxport's ability to go it alone financially. At the bottom of the memo, and it is from - it is to Chern Heed from Michael Farquhar, who were both officials in your department, there is a note that says:
Claridge discussion with DM/Victor -
There is a reference that would show deep disappointment in not having won their proposal, and that is fair enough.
It goes on to say they are:
- positive they cannot finance and therefore will be observing closely and taking appropriate legal action if proposal changes.
So, certainly on the 17th of December, the report of the meeting between the Deputy Minister and Victor from - Victor Barbeau - from the Claridge people, was that they did not seem to be exploring synergies, they were protecting their legal position and they didn't believe Paxport could finance it, the competitors, did they?
Mr. Corbeil: If you are asking me if this is what the document says, yes, that is what it says.
Senator Bryden: No. But did you have any conversation with the people from Claridge or anyone of that nature to determine what their - did they contact you to express their disappointment at all?
Mr. Corbeil: No, sir.
This is a memo to Chern Heed from Michael Farquhar reporting a discussion between Claridge and somebody else. So I have no knowledge of that.
Senator Bryden: Okay. If you - just so that I can move quickly, and I have tried to summarize this, the next page, which is really the memo, is notes from a meeting on December 15th, and present were Victor Barbeau, Michael Farquhar, Bob Green of Justice, Ray Hession of Paxport and Jack Matthews. There is a bullet there that says:
Mr. Barbeau noted that:
- Ministers were concerned about the financeability of the project in light of the current uncertainties in the airline sector...
Were you one of those ministers who was concerned about the financibility of the project?
Mr. Corbeil: What it says here:
- Ministers were concerned about the financeability of the project in light of the current uncertainties in the airline sector...
That is what I have been saying all along this morning and today.
Senator Bryden: So you were concerned yourself?
Mr. Corbeil: We had a - the announcement specifically said that we had to be satisfied before a deal could be arranged to be agreed upon. We would have to be satisfied precisely of that. So that Mr. Barbeau would say that in a memo is not surprising because this is what the decision was.
Senator Bryden: There is a reference in there, and without reading it, it is in the fourth bullet, but to an early start option. Can you tell us what an early start option was or is?
Mr. Corbeil: My knowledge of that is that - my comprehension of that was and is that - excuse me - one of the elements that we wanted to proceed was to help -
[Translation]
- and for the economy in the Toronto region and create jobs. To achieve this, the Paxport proposal stated that they were going to start up, if you will, begin execution of their project very quickly. In fact, I believe they were saying they were going to start in the month following completion of all the legal documents, that is, I believe the legal documents were signed on October 5 or 6 and thus they were talking about starting work immediately, around November 5 or 6.
[English]
Senator Bryden: Was that option included in the RFP?
[Translation]
Mr. Corbeil: I could not tell you. I would have to look at the RFP again. But in my opinion, this didn't change the request for proposals. This only expedited execution of the work.
[English]
Senator Bryden: It was an unsolicited proposal.
[Translation]
Mr. Corbeil: No, we're talking about the contract that was awarded. We're no longer talking about an unsolicited proposal, we're talking about the contract that was awarded.
[English]
Senator Bryden: I am sorry, I am off my target.
The proposal to make an early start, not the large agreement but the proposal to make an early start, was a volunteered proposal, was it not, from Paxport? It was not part of the requirement in reply to the RFP.
[Translation]
Mr. Corbeil: I believe that is exactly what Mr. Barbeau is saying.
[English]
Mr. Barbeau noted that:
- the so-called early start option would be unacceptable both in terms of its substance, in that it effectively proposed turning over immediately the government's net cash flow in perpetuity, and, in terms of the process, given that it was never a requirement of the Request for Proposals and hence had not been evaluated as part of the RFP evaluation process.
So your answer is there.
Senator Bryden: So the early start proposal was rejected, I take it.
[Translation]
Mr. Corbeil: That is what I understood, because of the financial considerations.
[English]
Senator Bryden: At that meeting, on the second page, there is "Messrs Hession and Matthews noted that:". There was the notes in relation to your departmental officials, and I am interested really in a disparity, if you come down, one, two, three, four, five, six: that the Paxport people wanted to get a shovel in the ground by April the 30th, that is, the agreement completed and started construction was their position; and the department's position, which is stated here, is that it was unrealistic and that the preparation of documentation would take a year or more.
[Translation]
Mr. Corbeil: If I read the whole memo with regard to this.
[English]
Messrs Hession and Matthews noted that:
- they appreciated the opportunity for this early get-acquainted meeting.
- Mr. Hession's principal focus of attention would be on operational and personnel issues while Mr. Matthews would lead the actual negotiations.
- their negotiating team comprised five people including Messrs Hession and Matthews plus a legal team of about ten solicitors.
- they remained confident that the redevelopment project was financable.
- they would like access to Transport Canada-LBPIA data in order to update their data base for purposes of their financial planning and development timing. (Mr. Barbeau agreed that they should feel free to deal directly with Chern Heed and Wayne Powers in this regard).
- they were targeting on getting a shovel in the ground by April 30, 1993 but acknowledged this might be difficult (Mr. Barbeau noted that experience in drafting grounds leases for T-3 and airport transfers would indicate that April 30 was unrealistic and that the preparation of legal documentation could well take a year or more -
It proved not to have been so.
- noting too that a year's notice to employees was likely a prerequisite to their transfer to Paxport.
- the development of -
It is not clear. I don't know if it says "realistic" or "irrealistic"
- time horizons for the project would be helpful, noting that the only firm date was February 15, 1992, for demonstrating to the satisfaction of the government that the proposal was financable; both sides agreed to give some thought to developing a realistic timetable.
It was agreed that action on a number of points would proceed over the coming weeks, although it was recognized that progress would undoubtedly be limited during the holiday period. Both sides agreed to stay in touch and address any matters that might require clarification as they emerge.
So it is a -
[Translation]
Mr. Corbeil: My perception of that is minutes that we normally take when there is a meeting between people and the main points that were discussed, these are those main points.
[English]
Senator Bryden: Did Paxport meet the February 15th deadline to demonstrate the satisfaction of its financeability?
[Translation]
Mr. Corbeil: I believe the decision to merge was made, as I mentioned a moment ago, on the 16th or 20th, something like that, 1993, when they agreed.
[English]
Senator Bryden: So can I just -
[Translation]
Mr. Corbeil: January, 1993.
[English]
Senator Bryden: Can I just pursue that a little further? Paxport was never able on its own as the winning bidder to prove that it could finance the project until Mergeco -
[Translation]
Mr. Corbeil: I never had any indication of this information. There was never anyone - no one who demonstrated that Paxport was in fact incapable of doing it.
If I have properly read the testimony of the people you have heard, they have personally testified that their ability to finance was placed in doubt. What I have understood is that Senator LeBreton said a moment ago that the two contacted each other in December 1992 and reached the conclusion that it would be to their personal benefit to join forces and they notified us of this on December 16. At that point, we questioned the legality of this agreement and after we obtained an affirmative answer, we continued to discuss the matter when the negotiations were to be conducted. One of the last obstacles remaining at that time was the issue of the lease with Air Canada.
[English]
Senator Bryden: So Mergeco, when it came along, when that deal was done, basically removed the requirement then for Paxport to prove financeability?
[Translation]
Mr. Corbeil: My understanding is that this was concluded, that the new corporate entity which was called Mergeco provided proof in the eyes of the negotiators that the "financeability" had in fact been demonstrated. I do not believe we need to ask major questions when we know that one of the major partners in Claridge is a very well known family in Canada which brought with it guarantees that even the banks cannot provide.
[English]
Senator Bryden: It has always interested me how the government, your department, could negotiate with a company called Mergeco that had never participated in the bidding process.
Mr. Corbeil: Well, Mergeco was just an interim corporate entity because the final -
[Translation]
The final distribution of everything contained in the agreement was carried out between various companies, and instead of choosing an existing company name, both agreed that for purposes of discussion, it would be much simpler to refer to the Mergeco entity which represented both parties, and to my knowledge, this was amicably arranged between the two. They told each other this was how they wanted to handle the matter to avoid getting into the legalities that would be required at the end when signing the contract.
[English]
Senator Bryden: The company that finally the government made the agreement with that evolved was, I believe this is correct, called Pearson Development Corporation T1T2 Limited Partnership.
[Translation]
Mr. Corbeil: I think you have in your possession a list of the hundred or so legal documents that have been signed. And in these 111 legal documents, I believe that you see a whole range of companies that are all from the same family but handle different responsibilities for signing different portions of the overall agreement.
[English]
Senator Bryden: Just for clarification, and there are a lot of names floating around, but I was reading from the Transport document that says, "October 7 - closing agenda agreement signed with Pearson Development Corporation T1T2 Limited Partnership".
[Translation]
Mr. Corbeil: That's what I'm saying; the large umbrella company, if we can call it that, is that firm, which did not legally exist, to my knowledge, at the time the discussions began. Thus, a name was chosen that everyone recognized as the entity, for purposes of the discussions, that would be replaced by a duly incorporated legal entity.
[English]
Senator Bryden: I guess really - but this company, even by this name, was not a participant in the RFP.
[Translation]
Mr. Corbeil: But I am telling you, senator, that the two parties that had reached an agreement joined forces, and the department's lawyers made no fuss over the fact that for purposes of the discussions, they were using a company name that ultimately would be replaced by a genuinely constituted legal entity.
[English]
Senator Bryden: Mr. Chairman, I haven't got many documents and I am getting towards the end. I am moving as quickly as I can.
The Chairman: Could I assist on that name? That confused me. It was T1T2 Partnership Limited of which Pearson Development Corporation became the managing partner with both sides represented.
Senator Bryden: Okay. I guess my only point was, in any event, it wasn't one of the bidders.
The Chairman: No, not as such.
Senator Bryden: Not as such. It was some sort of a hybrid.
[Translation]
Mr. Corbeil: As I have said, if we had to continually do business and talk about -
[English]
- Paxport Corporation and Claridge and all the other companies that were eventually in the deal. It would have been very difficult to really follow the thing.
[Translation]
I believe it was agreed by everyone when the generic name Mergeco said what was meant, that this was the partnership between Airport Development Corporation and Paxport.
[English]
The Chairman: It's an acronym.
Senator Bryden: This document was put in actually by Senator Tkachuk this morning for other reasons, but it is my document number two, it is 00304, just so that - you are absolutely entitled to read that. This one is a Treasury Board document, but I can basically summarize what is there.
Mr. Corbeil: Please do.
Senator Bryden: Basically, what it says is there is a requirement in your announcement, an announcement that they allege was made on December - well, it was made on December 7th - that they had to establish the financeability of the process before negotiations could begin.
Mr. Corbeil: Exactly.
Senator Bryden: Then, in a subsequent event, in the interim, Mergeco was created, and that basically looked after the financeability issue, as I understand it.
[Translation]
Mr. Corbeil: To the satisfaction of the negotiators and the government's legal counsel.
[English]
Senator Bryden: Now, the problem with that was that the Claridge people refused to finalize the Mergeco agreement until Paxport signed the lease for the project. So that - and what is expressed in here and what I would ask: It seems like they are caught in a catch-22 situation, they can't negotiate until they demonstrate financeability. They would make a deal with Mergeco to solve the financeability, except Mergeco says it is not really a deal until you make - sign an agreement after you have negotiated with the department. How did you solve that?
[Translation]
Mr. Corbeil: Senator, once again, without referring to this memo, this internal secret document, what happened is that when the two companies joined forces and formed a single company called Mergeco, after looking after the legality of this matter and resolving it, we tackled the question that in fact, because of the appearance of Claridge in the picture, there suddenly were two proposals on the table, for all practical purposes: the Paxport proposal and the Claridge proposal. It was absolutely vital that the discussions that were to follow and the negotiations that were to follow would be based solely on the Paxport proposal because that was the one chosen by the selection committee. As long as we did not have a written notice from Airport Development that they were withdrawing their proposal, the discussions and negotiations did not begin.
[English]
Senator Bryden: Thank you. In that same document there is reference - and I am just reminding myself so I can frame my question - that even if the Airport Terminals Group withdraws their bid - now, at this time, the bid is still on the table, their million dollars is still on deposit and stays there up until May, I think - but even if that occurred, that to negotiate on the Paxport proposal would cause problems with what is referred to as the AG, which I take it is the Attorney General -
Mr. Corbeil: Auditor General.
Senator Bryden: Exactly, the Auditor General, because this would then appear to be a non-competed for sole source contract. Did you get a legal opinion on that or did your department?
[Translation]
Mr. Corbeil: In the normal decision-making process in cabinet, this was examined by the people involved. In the end, if all the documents were drawn up by legal counsel, I believe this takes precedence over any opinion that may have been issued along the way by a public servant who is not necessarily a lawyer.
[English]
Senator Bryden: As it has turned out, of course, the Auditor General has never had the opportunity to review the deal because the deal was cancelled.
[Translation]
Mr. Corbeil: This is your claim, that the agreement is cancelled. I think that if the agreement were truly cancelled and there were no dispute over this, we would not be here today.
[English]
Senator Bryden: I don't think there is any quarrel about the deal being cancelled.
[Translation]
Mr. Corbeil: I'm not the one who's going to settle that issue. I am simply an observer. I will not prejudge all the disputes in progress.
[English]
Senator Bryden: Finally, there was discussion about this time that, perhaps, the best course of action would be that both bidders be found non-compliant. Did you participate in any discussion?
Mr. Corbeil: Never, never.
[Translation]
I think that any person who may have suggested this would need to be examined. There is a process, which was followed. There was a winner, as the expression was used this afternoon, which was Paxport. The second bidder, if we can call them that, and Paxport merged. We checked the legality of this move and this was confirmed. We asked that the second proposal by Claridge or Airport Development be withdrawn so we could negotiate on the winning proposal, which was done.
Once again, as I said this morning, this means that the process was followed in any event and that all the problems raised were resolved by the people with the proper authority and, in many cases, the lawyers.
[English]
Senator Bryden: The people who you refer to was the assistant - the Assistant Secretary to the Treasury Board and the Secretary to the Treasury Board who indicated that "Transport officials will be meeting again shortly with their ministers to protect their legal position. Transport may have to declare both original bidders as non-compliant."
[Translation]
Mr. Corbeil: I hear it, I have not seen it and, once again, I am not discussing the content. I am simply stating that if what you claim did occur, this was settled since they said that Transport Canada will resolve this. So Transport Canada assuredly checked with the Department of Justice lawyers who are seconded to the government and the problem was solved.
[English]
Senator Bryden: But you are not suggesting these people need their heads examined?
[Translation]
Mr. Corbeil: I said it had to be referred. You appeared to say a moment ago that they were the ones saying this. What I understand from what you have subsequently repeated, is that they're suggesting that Transport Canada is checking this matter. So clearly this was only an idea they had and they did not confirm things, they were making assumptions. This was in fact resolved by Transport Canada.
[English]
Senator Stewart: Before you leave that, can I ask a question?
Senator Bryden: Sure.
Senator Stewart: Thank you, chairman.
I am looking at the same document, chairman, and the document is from one Mel Cappe to I.D. Clark, Clark being the Secretary of the Treasury Board.
I read:
The report of Deloitte and Touche (copy attached) is very clear. Paxport is non-compliant with the RFP. Subsequent meetings between Transport, Paxport and Deloitte & Touche Inc. have not resolved any of the issues raised in the report.
And then they go on to say that one of the major issues in the report is the failure of Paxport to get Air Canada, the major tenant of T2, on side with the proposal, and then there is more in that paragraph with regard to Air Canada.
Then we have a heading, Reaction of Paxport.
Paxport officials (Messrs. Hession and Matthews) met Mme Labelle last week and expressed outrage at what they see as bureaucratic stalling.
Paxport officials questioned the credibility of everyone including Deloitte & Touche. They also raised their concerns that until they are declared "the developer" by Transport Canada, Air Canada would not take them seriously.
Since last week, Paxport has increased their pressure via PMO and Ministers.
Now you would not know anything about the pressure through the PMO, did anyone talk to you at this stage in this whole process? Were you one of the ministers on whom Paxport had increased their pressure as reported by Mr. Cappe?
[Translation]
Mr. Corbeil: Without regard for the content of the document, which I have not read, and which I will not read, and I will not answer that question, I simply want to tell you that before the negotiations began, there was a statement by Air Canada and Mergeco that they had reached agreement on the famous Air Canada lease, and the negotiations began after that.
So the problems that were raised, as I said a moment ago, were all solved along the way through the normal decision-making process of the Government of Canada.
[English]
Senator Stewart: The document is dated March the 12th, 1993. So that my question will not put too much of a demand upon the minister's memory, let me put it this way, at any time during January, February, March of 1993, did you feel pressure from Paxport?
[Translation]
Mr. Corbeil: I don't know how you're going to take this, if I boast or anything, but after 20 years in political life, the pressure doesn't affect me very much. When someone makes representations, I listen to them and after that, I make my decisions.
[English]
Senator Stewart: But in other words, there were representations?
[Translation]
Mr. Corbeil: I mentioned this morning that the last problem remaining before we started negotiations was the issue of the Air Canada lease. And I believe I mentioned this morning that we received representations (if I did not, I am doing it now) requesting intervention, and we said: it's not our baby, it's your baby and it's up to you, as big boys, to go negotiate with Air Canada. And quite clearly, they negotiated effectively since the two jointly announced that they had reached an agreement. And this opened the way to the genuine start of negotiations.
[English]
Senator Bryden: Mr. Chairman, I do not have much left, one more document. It is number 002052 and what this is, so you would know in advance, it is a memorandum to the President of the Treasury Board from his secretariat. So you may not want to look at it. It is dated July the 20th, 1993, and that is why I think it is significant to what we have before us. The Treasury Board Secretariat's evaluation of the situation for T1, T2 negotiations at that time indicated that the government would likely have to pay a very heavy price in terms of winning Air Canada support or in granting concessions to Mergeco in order to get an early deal. Was there any discussion about the fact that the pressure to get the deal done was going to cause a problem as to the quality of the deal?
[Translation]
Mr. Corbeil: Not at all, Mr. Chairman, I think that the final agreement that was negotiated speaks for itself. It is an agreement that was good for the government, taxpayers, the economy and so forth. Just two seconds ago, I said that the people from Mergeco, when they intervened with Transport Canada to exert pressure on Air Canada to reach some agreement, we pointed them in the direction of Air Canada and told them that was where this had to be negotiated, in that place, between these two people, both adults.
When the result of the negotiations was finalized, the entire agreement went through the same process you mentioned a moment ago, the government's usual decision-making process in which Treasury Board obviously plays a major role.
[English]
Senator Bryden: In your involvement with government, and I have had some involvement with government, Treasury Board, and in particular Treasury Board Secretariat tends to be the keeper of the purse.
Mr. Corbeil: Yes.
Senator Bryden: As of July 20th, 1993, it is the Treasury Board Secretariat's opinion that Mergeco was pushing every risk back on to government either by guarantees of passenger volumes, deferred rentals or the introduction of a passenger charge since Mergeco believes the government wants a deal at any price. Was there concern that the party you were dealing with on the other side, that you were no longer negotiating from a position of strength?
[Translation]
Mr. Corbeil: Mr. Chairman, I have not read the document and thus I have no concept that anyone had the impression... (these are impressions and perceptions, there is no one who monitors this). The only thing on which I can testify is the final result, the final agreement, and since that agreement was signed, I have seen no demonstration, either by Mr. Nixon or anyone else to specifically indicate that for all practical purposes, the government caved in unacceptably.
I will again repeat the paragraph (for which I would like to cite the page) where it is explicitly stated that the proposal, this is not by me, it is by the authors (or whatever they were) of the Nixon report. These are the people who specifically state in the Nixon report that the Paxport proposal was a better deal and who asked how it was that Claridge had agreed to make the necessary sacrifices to negotiate with Claridge.
So we cannot speak out of both sides of our mouth. A report commissioned by the government to justify a decision to cancel the contract states: Poor Claridge, they were forced to sign and they signed a deal which they had not submitted and the deal in which they ultimately were a party was a better deal that they themselves had proposed.
So if the author of the report did his duty and reached this conclusion, I find it rather surprising that this committee states, as we are saying, that the Nixon report did not examine all parts of the document, or if it did, it found nothing reprehensible. This is the only answer I can give you.
[English]
Senator Bryden: What you said, Mr. Corbeil, has lots of things that could be further examined, but I am not going to do it because I am well over my time and I realize that.
Senator Stewart: Just for the record, chairman -
Senator Tkachuk: Who wrote this thing?
Senator Stewart: That is the question. It is on Treasury Board of Canada Secretariat letterhead and the date is July 20, 1993. It is memorandum to the President, who would have been the President of the Treasury Board?
Senator Tkachuk: Treasury Board President I would think -
Senator Bryden: Mr. Edwards.
Senator Tkachuk: Would this be an actual Treasury Board document? Seems to me it would be. It has President six copies, secretary two, Cappe two. It seems to me that this is Treasury Board. Would we have access to Treasury Board documents? Well, obviously we have access to some, but not all.
Senator Stewart: Do we know who sent this document to Mr. Edwards?
Senator Tkachuk: For all we know it was written last week, frankly.
Senator Bryden: And stamped July 20th, 1993 by me.
Senator Tkachuk: I would not say that about you, Senator Bryden.
Senator Stewart: Perhaps counsel could help us on this. Would it be fair to assume, since this is a communication to the Treasury Board from the Secretariat of the Treasury Board, that it is sent by the Secretary of the Treasury Board? Is that a fair assumption?
The Chairman: I would think so.
Senator Stewart: Would an assistant secretary send a memorandum such as this to the President of the Board? I think not, but I might be wrong on that.
Mr. Nelligan: I find it is usually the junior assistant secretary that does it and the secretary then initials it before it goes up.
Senator Stewart: Yes, but technically speaking it is the secretary who would initial it before it goes up.
Mr. Nelligan: Except it is not initialled.
Senator Stewart: That is why I raise the question.
Senator Bryden: Mr. Chairman, I just have one other area and it is off of the technical stuff. Mr. Corbeil, I believe that you said in part of your presentation or at some time during the day that the final agreement was in the best interest of the Canadian taxpayer's or words to that affect, is that correct?
Mr. Corbeil: Yes, sir.
Senator Bryden: Now, it is a big deal. There is a lot of dollars that we are talking, $500 thousand, three quarters of a billion dollars, and some of us it is pretty hard to understand those sorts of numbers. But I can understand and most people can understand six digit numbers. And I would like you to look at two documents that are six and seven. There are two agreements and it is to be circulated. These have been filed with the committee before.
The committee will certainly correct me if I am wrong in summarizing that the lengthy one, it is a contract to Government Business Consulting Group which really was Fred Doucet to pay Mr. Doucet $2 million over a 10-year period. No one has been able to find out what he was supposed to do for it, but even if we could, there is no possibility under any circumstances of cancelling that contract. So there is a payment to somebody that is absolutely uncancellable and indeed is being sued for in the court, that is being made by - it was ultimately assigned to T1,T2 Limited Partnership.
The other one I should like you to look at is an easier one to understand, but it is much the same. This is a letter contract to Matthews Investment Incorporated, and I will just read it. Have you seen it before, Mr. Corbeil?
Mr. Corbeil: No.
Senator Bryden: It states:
The undersigned hereby agrees to pay to you a consulting fee of $350,000 per annum for 10 years (payable monthly) commencing with the first payment on October 31, 1993.
This contract may not be terminated for any reason and is assignable and may be assigned by you.
It is dated this 4th day of October, 1993 and it is signed T1T2 Limited Partnership.
There is absolutely no evidence that we could find that any services were to be performed for this contract. Even if they were, if they were stopped, this is an iron-clad, no-cut no-cancellation deal.
Senator Jessiman: That is not what the evidence was. That is not what Mr. Matthews said.
Senator Bryden: Well, Mr. Matthews -
Senator Jessiman: Why are you showing it? It is there. What can he say?
Senator Bryden: What I am asking him is to provide a $3.5 million contract that cannot be cancelled for any reason on the 4th of October that we can determine, at least is not specified, any services to be performed, is that in the best interest of the Canadian taxpayer?
[Translation]
Mr. Corbeil: Mr. Chairman, this is a contract signed by Matthews Investments or a letter signed by Mr. Peter Coughlin and Mr. Norman Spencer, on behalf of Pearson Development Corporation, addressed to Matthews Investment 4 Inc. I have no comment to make on a letter that does not concern me. There is no indication of anything at all, this is a letter which says what it says and which makes no reference to anything at all.
So I certainly will not comment on this letter, which is beyond my knowledge.
[English]
Senator Bryden: Can I ask you this, Mr. Corbeil? Where would the money to come from to operate T1T2 Limited Partnership? Was it not to come from rents, from the air carrier's fees, from parking fees, from whatever so the more expense that T1T2 would have, the more those would cost I would think?
[Translation]
Mr. Corbeil: What I am telling you, it that the document I have here is addressed to Matthews Investment 4 Inc.
[English]
c/o Weir and Foulds, Suite 1600, The Exchange Tower, 2 First Canadian Place, P.O. Box 480, Toronto, Ontario, M5X 1J5. The undersigned hereby agrees to pay to you a consulting fee of $350,000 per annum for 10 years (payable monthly) commencing with the first payment on October 31, 1993. This contract may not be terminated for any reason and is assignable and may be assigned by you. Dated this 4th day of October, 1993.
That T1T2 Limited Partnership by its managing general partner Pearson Development Corporation per Peter Coughlin and Norman Spencer.
What I am saying is that I do not know at this point other than your interpretation, that this has anything to do with T1T2.
Senator Bryden: I think you said this was the first time you had seen this or had any knowledge of it?
Mr. Corbeil: Yes.
Senator Bryden: The same with the Fred Doucet contract?
Mr. Corbeil: Yes.
Senator Bryden: You had no knowledge of that?
Mr. Corbeil: No.
Senator Bryden: Mr. Chairman, that is it. Thank you Mr. Corbeil.
The Chairman: Just a short question. This is the last questions from senators before we ask Mr. Nelligan to wrap up.
Senator Tkachuk: I will not be long. I just want to - just a question on the opposition at that time with the Liberal government and now the present Liberal government was the opposition during the time this contract took place. Did you get a lot of questions from the opposition on this contract?
[Translation]
Mr. Corbeil: To the best of my knowledge, based on my memory, when the request for proposals was issued on 16 March, I think it was the next day, there was what we call "government parlance", a "late show" and an evening, there was a focus session on this and after that, there were fairly sporadic individual questions occasionally raised.
Just about every time the media published a critical article, there were one or two questions raised the following day, but we cannot say that this was the subject of intense questioning by the Opposition. And I believe that if you look at Hansard, you will in fact find that the number of questions was not very high.
[English]
Senator Tkachuk: The RFP now that is public, I mean we know that from testimony. The announcement on December 7th of the best overall proposal, that is public, press release, the whole thing. We have then the Mergeco. That is public. It is out there in February I think, end of February. We have - in 1992 I find I think five references, five days and a number of questions on the usual stuff. But surprisingly, in 1993, there is no questions. Zip, right? So there is no sort of huge public controversy and a brilliant Liberal airport policy for Canada being annunciated in January, February, March, April, May. Is there a big public controversy over this thing?
[Translation]
Mr. Corbeil: No. The answer I gave a moment ago is the same. There was not a lot of activity in Parliament, opposition if we can call it that. From time to time, when an article appeared in the media, this gave rise to one or two or three questions in the following days, a limited number of questions, and that's all.
There were more questions about open skies and these types of things, or the status of the air carriers led to many more questions than the Pearson file.
[English]
Senator Tkachuk: So the public criticism at this time in 1993, I just want to make clear here, there has been absolutely no questions asked by the Liberal party in the House of Commons, and as far as I can tell, there is really no public criticism by the Liberal party during this time really until the federal election rolls around?
[Translation]
Mr. Corbeil: From the time we announced that we were going to proceed with issue of the request for proposals, the RFP, in March 1982, and I think we clearly explained to people that the modernization of Terminals 1 and 2 was not linked in any way at all to the runways issue and that we had done this very clearly, I believe, and the people understood.
This is what we said: We're going to proceed with improvement of Terminals 1 and 2 and the bidders must submit two options, for all practical purposes, one with a single runway and the other with several runways, so that if the environmental report comes down with proposals that prevent us from proceeding with the addition of new runways, we will still be able to proceed because this was the issue that seemed rather uncertain to me at the very start, in that if we keep it linked to this issue and the environmental report rules out the runways, does this mean we will never upgrade Terminals 1 and 2?
Everyone's answer was to say: No, Terminals 1 and 2 must be done. And from this point, we said: We must inform the public that we are going to proceed with the request for proposals for upgrading Terminals 1 and 2, while clearly explaining what we were doing. Thus, the proposal will be made without factoring in the new runways and then there will be an option for the construction of the new runways.
From that point, the people were concerned with knowing - these were the preoccupations of people in the Toronto region. Will the environmental panel process proceed smoothly? Will there be public hearings, and so forth?
And throughout that period, I received a letter from Ms Barretta, I believe, who was co-chair of the committee focusing heavily on the addition of runways, and she voiced her concerns on this. Now that you have decided to proceed with the request for proposals for upgrading Terminals 1 and 2, will this really influence the runways issue? And we said no, we're going to wait for the report, and then we'll deal with this issue.
[English]
Senator Tkachuk: So, during all this time, there is really no Liberal alternative. We don't seem to have anything in Question Period. There is really not much in the newspaper. I have checked that, there is a few articles but nothing too serious. So this thing kind of arose during the election campaign?
[Translation]
Mr. Corbeil: Yes, I mentioned a moment ago - I particularly mentioned in my opening statement that in my opinion (this remains my opinion and I am sharing it), there was a campaign that was launched following the letters Senator LeBreton mentioned, the letter I mentioned, there are many others.
Suddenly a whole momentum was created to the effect that it was impossible for the government to proceed with privatization of Terminals 1 and 2 and carry out modernization before the local airport authority, LAA, was formed, so the LAA could participate in the negotiations that were conducted by the government.
So we know that the RFP, the request for proposals, was issued in March 1982. It was only in March-April 1993 that interest arose for creation of a local airport authority in Toronto, and then it suddenly became insurmountable problem, what we were going to do was terrible. Because these people decided for reasons of their own and they are - because I have some knowledge of the situation - aware that in Toronto there are five major regions and so they have difficulty making decisions and the focus taken by all the elected municipal officials is more on other airports than the Pearson airport.
So once again, more than 95 percent of air traffic in Ontario obviously moves through Pearson. There are 21 million passengers a year at Pearson. The next busiest airport is Toronto Island, with one million. Then the others, I think the next is London with 250,000 or 300,000. So there really is no relation.
As we say, this is something people trumped up because they wanted us to stop the request for proposals, so they could then form a local airport authority and negotiate. And that put us in the position of not knowing when we could - today is the 20th of September 1994. All this took place - excuse me - September 20, 1995.
All this took place more than two years ago and nothing has been done yet. So we were right after the fact, that we had reason to be concerned, that if we agreed, we would stop everything, first it would have been very unfair, and then we certainly would have been liable to lawsuits, but in practical terms, it was not possible for any local airport authority to be formed, negotiated quickly enough to actually do what had to be done at Pearson.
It's from there, I think, that - I would not want to use the expression that we use, it cannot be spoken in a room such as this, but someone whispered into someone else's ear that something terrible was going on there and so it had to be cancelled, and that person made commitments, I think, without actually investigating the matter thoroughly.
Then we finally woke up with a 14-page report written on the edge of a table, quite clearly, by someone who could not be Mr. Nixon because a former treasurer of the province of Ontario could not have written such an insignificant document.
[English]
Senator Tkachuk: So, my last question here, so what we have really got here when you really boil all this down is that the Liberal opposition nor the Liberal party, during all this time offered no real alternative to what was going on at Pearson International Airport by the government of the day, and so some smart guy in the Liberal campaign headquarters knew that he could make this a campaign. I mean, we are really here because some smart person, a strategist, a politician, a back room person figured -
Senator Kirby: Are you describing yourself based on your past history?
Senator Tkachuk: Well, I am in a way describing myself. That is why I know what happened here. Somebody in campaign headquarters made a decision to make this a political issue. It became so. It got out of control. Hence, the contract is cancelled. People are hurt, thousands of people are out of work and we are sitting in an inquiry. Do you think that is what happened?
[Translation]
Mr. Corbeil: In my opinion, the statements you make are not based on gratuitous assumptions or insinuations. In today's hearing, Senator LeBreton read a letter that refers to "threats" - not armed threats but media threats, that they will make a big issue of this matter, and I also read the same thing in a letter, with different words.
So it's clear in my view that this is where this whole issue began and those who started this process had absolutely no concern for the public interest. They were interested in the position they could - this person ultimately might hold if the local airport authority started up and he might find himself back in the position of control he had sadly held a few years earlier.
[English]
Senator Tkachuk: It would be interesting to see the overnight polling at the Liberal campaign headquarters and the documents that took place there as to how this decision took place, and in reality that is why we are all here today. I do not know if we can get those counsel, but we could always ask for them because there had to be memos to the leader at the time, polling memos and probably strategy memos from the chairman of the campaign saying how they could make this a political issue because it seems to be having some bite here and then I think the thing got out of control. In my view, it always was, they did not mean to cancel it, it just sort of happened by accident here.
I would like you to fire off a letter. The Leader of the Senate was co-chairman of the campaign. I did try to ask her in the Senate. She wasn't very co-operative, but maybe we could ask her to give those documents.
Mr. Nelligan: If you are going to search each other's campaign documents, you will open up a can of worms that will never get sealed.
Senator Kirby: When you wind up with two seats, you probably don't have any campaign documents.
Senator Tkachuk: I am just making my point and I can make my point, counsel. Whether we get them or not is another story.
Senator Kirby: Can I on behalf of the committee launch a complaint? Last Wednesday this place felt like a sauna and you did something between Wednesday and Thursday that got the temperature back to normal. I realize the temperature was lower in here today because John was away for most of the day, but the reality is it is still warm.
Seriously, tomorrow we have a long day. Can you do whatever you did overnight Wednesday because again, just looking at Dave, I do not think I am the only guy.
Senator Stewart: I think Senator Kirby is raising a systemic problem. This building was never intended to be a permanent building. I remember participating in the work of a commission on parliamentary accommodation let's say 20 years ago when it was decided that no heavy investment would be made in this building because it was a mere temporary building.
So I really don't think you should excerpt too great an effort because I do not think you will have much success.
The Chairman: I remind you it is nine o'clock tomorrow morning and the witnesses will be here all day or until we are through with them.
Mr. Nelligan: I must say in speaking to Mr. Hunter, he has expressed some concern that he has two senior officials coming and he hopes that they will not be kept into the afternoon unless it is absolutely necessary. So I promised that I would pass that on to you, but I told him that the afternoon was being kept open from the overflow from the morning.
He passed the request on from them. Mr. Hunter wasn't asking for his own sake.
Senator Lynch-Staunton: Do we know the names of the officials coming tomorrow?
The Chairman: The Deputy Minister of Justice and the Assistant Secretary to the cabinet, they are the two ones, Margaret Bloodworth and others. I do not know the others.
Senator Kirby: With respect to the current witnesses, those of us on this side have no other questions.
Mr. Nelligan: I just have a few short questions.
The Chairman: Mr. Nelligan?
Mr. Nelligan: Mr. Corbeil, we have heard evidence earlier of Mr. Barbeau being put on what was graciously called garden leave in the early summer of 1993. It has been suggested that it related in some way to the negotiations dealing with the Pearson contract. My question to you is were you aware that he was put on such leave for some five or six weeks at that time?
Mr. Corbeil: No, monsieur.
Mr. Nelligan: Did you at any time suggest to anyone that he should be taken off his usual duties at that period?
[Translation]
Mr. Corbeil: My intervention with the deputy minister was that we had experienced considerable difficulty finalizing negotiations on the four airport authorities I had mentioned: Vancouver, Edmonton, Calgary and Montreal and that people's perceptions was that there was an intention by negotiators not to allow these devolutions (since this is the word used), the devolution of these four airports.
This occurred at roughly the same time. I indicated a moment ago that it was in April 1992 that we finally signed the agreements with the four airport authorities. So I mentioned to Mme Labelle that it probably would not be a good sign at that time that Mr. Barbeau was the negotiator in the airport file because we could not allow the same perceptions to be present already, because it was public, because the same perceptions, even before the negotiations began, because the same perceptions would be there, because the Transport Canada representatives, according to what the people thought, would delay these discussions indefinitely.
And I truly believe that you will understand that this is not an offence, you have accepted it here. Mr. Barbeau has his own style, and I believe it feeds these perceptions because its nature - and I am not criticizing him - I am simply telling you what I think, its nature is extremely cautious, and this is what leads him to state in various documents that this will take so much time, and so much time and so much time, because that is how he operates.
And this caused the problems it caused with the four airports, the LAAs, and ultimately it almost failed because of this. And I did not want to resume the negotiations in the same way.
So I simply suggested to the deputy minister that she place someone else in charge of the negotiations and that is why she immediately chose someone who was higher up the ladder than Mr. Barbeau, since she chose Ran Quail whose title was associate deputy minister. So it was Ran Quail who was then placed in charge of negotiations.
But at no time, I think, did - Ms Labelle will confirm this for you - at no time was there any question in my request that Mr. Barbeau be sent home, or anything. These were not my prerogatives and my area of operations, it was the responsibility of the deputy minister to decide what she would do with Mr. Barbeau. So she didn't talk to me about it, and I did not talk to her about it.
In my view, what Mr. Barbeau was doing during that time, I am sure he could have been used elsewhere, but he could not be a negotiator because, in my opinion, of the disadvantages that would arise for everyone involved, all the organizations involved, including the government.
[English]
Mr. Nelligan: Subject to that incident, are you aware of any civil servant being reassigned because of their conduct on the Pearson file?
[Translation]
Mr. Corbeil: No, sir. At the time of the hearings, I was surprised to read specifically in the documents you were issuing that this incident may have occurred, and then when there was - testimony, I think, by the deputy minister at the time and other public servants, they testified that there had bene no massive changes and transfers from one place to another. In my opinion, it was "business as usual".
[English]
Mr. Nelligan: What role did your political staff play in the negotiations for the Pearson contract?
[Translation]
Mr. Corbeil: None.
[English]
Mr. Nelligan: Did you assign them any special duties by way of observing what was going on?
[Translation]
Mr. Corbeil: No. I believe most people here know how the so-called political staff operate in a minister's office. There is a large proportion of these people, even though they are called political staff, who for all practical purposes are permanent members of the Public Service, who are - I don't know the French expression - seconded to the ministers' offices.
Thus, they are employees of the Public Service who usually - in any event, that's how things worked in our office - have a very specific sphere of activities. If it is an employee who is working in the railway sector, he serves as "political assistant" to the minister and so forth. There are no other assignments that were given to anyone at all to intensely monitor political, truly political, staff, who are not in the Public Service, each have their duty to monitor the files in progress so the minister can react in time to the various events occurring.
[English]
Mr. Nelligan: Are you aware of any public servant requesting transfer from the Pearson project during your tenure?
[Translation]
Mr. Corbeil: Absolutely not.
[English]
Mr. Nelligan: During the election campaign, we have heard that certain documents were delivered to you about the 4th of October for signature. Up to the point that the documents were delivered, did you receive any advice from your staff with regard to any special caution you should exercise in completing the formal transaction on October the 7th?
Mr. Corbeil: Not at all.
Mr. Nelligan: When you received the documents for signature, who brought them to you?
[Translation]
Mr. Corbeil: My memory is that the legal representative was Jacques Pigeon, a lawyer with the Department of Justice, obviously, who once again is permanently seconded to Transport Canada. So this is someone who handles all the important legal files at Transport Canada and this certainly involved transfer of the airports, and the Pearson file. My recall is that it was always Jacques Pigeon.
[English]
Mr. Nelligan: Was he familiar with the details of the Pearson affair at that time?
[Translation]
Mr. Corbeil: Mr. Chairman, this was mandatory since it would have been rather incongruous that the lawyer responsible for advising the minister on what he should or should not sign did was not completely familiar with all components he had prepared jointly with counsel for the other party during the months of May... from August to October.
So my comfort was that the advise and observations given to me were in fact in the best interest of the government and the population, the public interest.
[English]
Mr. Nelligan: At the time that you signed the documents, were you advised of the fact that there were some documents still to be signed?
[Translation]
Mr. Corbeil: Yes. I was given the - I think you have a letter we transmitted - the Department of Justice, I think, or the Transport ministers, gave you a list of all the different contracts. The 111 legal documents that had to be signed. And on that document, if I remember correctly, there is an X or an asterisk indicating which documents I must sign myself.
[English]
Mr. Nelligan: So that your understanding was that some documents required your personal signature?
Mr. Corbeil: Yes.
Mr. Nelligan: What was your understanding of the nature of the documents which could be signed by someone else?
[Translation]
Mr. Corbeil: The understanding I had is that there were a certain number of documents - once again, I do not know how the word is translated - certain documents that were in escrow and these documents were going to be signed by the Prime Minister of Canada, to allow the documents to be removed from escrow, to become documents attached to the agreement.
[English]
Mr. Nelligan: So you will not be confused sir, we are aware of a document signed by Mr. Rowat subsequently which consents to the release from escrow of a number of different contracts and so on, and this depended upon the proof of monies being deposited, that kind of thing.
There were some other documents, it would appear, and we have only recently been given the list, that were signed after you signed the major documents. I just want to know whether you were given any information at that time by Mr. Pigeon as to why you were not signing them and why they were not available for signature at that time?
[Translation]
Mr. Corbeil: Because I believe that I had received some instructions - not instructions but verbal or written comments - I think they were in writing - from Ms Jocelyne Bourgon who at that time, for some time, had become deputy minister, and she was telling me that she had received a request from Ms Campbell's representatives, that as Prime Minister, she wanted to sign the documents.
So what Mr. Pigeon asked me to sign that day, he had indicated them with the asterisk I mentioned, and I signed these documents.
[English]
Mr. Nelligan: All right. What was your understanding as to how the other documents would be signed?
[Translation]
Mr. Corbeil: By the Prime Minister.
Senator Lynch-Staunton: Not by her, but authorized by her?
Mr. Corbeil: Pardon me?
Senator Lynch-Staunton: Not by her but authorized by her. She was not the one who signed. She authorized the signature.
[English]
Senator Kirby: He asked him a question. Let's live with his answer.
[Translation]
Mr. Corbeil: I think the facts speak for themselves. I mean, if that had been signed by others, it was with Ms Campbell's authorization. If it had been signed by her...
Senator Lynch-Staunton: Because Ms Campbell signed nothing. Ms Campbell signed nothing.
Mr. Corbeil: I believe the facts speak for themselves. We only have to look at...
[English]
Senator Stewart: It is so useful to have you here so you can be counsel to the witness.
Senator Lynch-Staunton: Of all people Senator Stewart, why don't you remind us what you said in the Senate a few months ago.
Mr. Nelligan: The list of documents - and perhaps I better get it for you. It would appear that most of the documents were signed either by you or were not needed to be signed at all. There were a very small number that were subsequently signed by Mr. Rowat. My understanding is that you signed an authority addressed to the other side authorizing his signature on the remaining documents. There were no signatures by the Prime Minister, nor was it ever suggested that she should sign. I am just trying to find out from you whether this was explained to you at the time that Mr. Pigeon brought the documents to you in Montreal?
[Translation]
Mr. Corbeil: I truly cannot tell you who... what Mr. Pigeon told me, I think... The only thing I know is that he indicated on a list with an asterisk the documents that I had to sign and that I was told Ms Campbell would sign other documents. I think it was the issue of removing the escrow, but whether that meant that Ms Campbell who would sign it herself or not, I cannot testify to that. I must state that have no recall of that situation.
[English]
Mr. Nelligan: Well, then we will have to ask Mr. Pigeon, then.
[Translation]
Mr. Corbeil: That's right. And to check these documents, who signed what document.
[English]
Mr. Nelligan: In any event, were you aware at the time you signed that Mr. Chrétien had taken any position on this matter?
[Translation]
Mr. Corbeil: yes.
[English]
Mr. Nelligan: My understanding, sir, is that his first speech was on the 5th of October dealing with this subject. Are you aware of him doing anything before that?
[Translation]
Mr. Corbeil: No, I have no recall of that, but it was the time where these things were signed on the fourth, fifth and sixth. It was that period and for some time during the election campaign there had been statements to the effect that it was a bad contract and so forth, and that consideration would be given to cancelling it after the election. So it was part of the picture.
[English]
Mr. Nelligan: Did you take that into consideration when you signed the documents?
[Translation]
Mr. Corbeil: When I noticed these commitments, I asked myself the question, but at the same time, I reminded myself of what I was saying this morning, that my concept of the existence of a contract based on the presence of certain elements provided by the jurists, that cabinet's decision in August 1993 was actually to draft an enforceable legal contract, and that all the rest (what we normally call the closing or closure) was legal formalities to finalize this document.
So I did not ask myself whether or not we should sign. In my view, it was and still is a joint issue that runs through all transactions in which people agree that the agreement is finalized, the agreement is in force, and then there is all the paper work, the legal documentation that must be completed.
So I believe there was no reason for me not to proceed, and I find that it was fairly clear that the lawyer, Jacques Pigeon, who proceeded to have me sign, who witnessed my signature, certainly would have told me, "Minister, what I am asking you to do is illegal." So I never understood why we were making a mountain out of this.
It is not possible that the government's jurists let anyone sign a document if this was not consistent with the habits and customs. I think everyone realized that the contract had in fact been sealed when there was a meeting of the minds, by the Treasury Board decision... the cabinet decision during August. There is no doubt in my mind that the contract already existed, was in force. That is why we announced it.
D'ailleurs, si on avait eu des réserves au mois d'aoÛt sur le fait que ce n'était pas vraiment un contrat, on n'aurait pas annoncé qu'effectivement, il y avait une attente de conclue. On aurait dit: «On va attendre que le tout soit fini.» Pour nous, c'était terminé et c'est les observations qu'on m'a faites à ce moment-là et c'est dans ce sens-là qu'on a procédé.
[English]
Mr. Nelligan: Thank you, sir.
The Chairman: Did you have a question, Senator Stewart?
Senator Stewart: I have two questions that arise out of counsel's questioning. The first relates to what has been called political staff. Now, I am looking at a copy of a letter dated October 4, 1991. It is to Mr. Richard LeLay, Chief of Staff, Transport Canada.
Dear Richard; this two pager may be helpful. You may wish to have the minister send it or something like it to the members of Treasury Board or others. I have sent a copy of it to Perrin Beatty and Otto Jelinek. Yours sincerely ...
And it is signed Fred, and under that J.A. Doucet, President and CEO. The letterhead is Fred Doucet Consulting International.
Would Mr. LeLay have been a member of the public service seconded to your office?
Mr. Corbeil: No.
Senator Stewart: So here we have the President and Chief Executive Officer of a consulting firm drafting a proposed memorandum to the Treasury Board. Does that seem strange?
Mr. Corbeil: Well, I think what we -
[Translation]
What we need to know is whether any action was taken on this intervention. The fact that someone suggests that the chief of staff do something, I think that we then have to check that we have the whole picture, whether there has in fact been transmission, and with recommendations... not recommendations, well we have to see the whole picture. Now there is a memo written by someone from outside who says, "So do that." This does not necessarily mean that the Minister of Transport acts in this way, far from it.
[English]
Senator Stewart: Second question is very different kind. There were questions by counsel concerning the signing of the document, and the expression was used I think - the translation came across something like "we were out". Were you a candidate for re-election when you signed the documents?
Mr. Corbeil: Yes.
Senator Stewart: Thank you, Chairman.
Mr. Corbeil: And still a cabinet minister.
Senator Lynch-Staunton: One thing about Senator Stewart, he certainly lets those questions hang there, makes me reflect as I try to sleep wondering what the purpose of them is.
My question is one of clarification, minister. No matter the signatures and who put them down over three or four day period in October, my understanding, and correct me if I am wrong, is that the government's advice was that at the end of August it had a firm deal -
Senator Kirby: There is no evidence to that. There is no evidence to the fact that - I am just doing exactly what he did all day when you were not here, John. There has been no evidence to say that the government had legal advice that there was a firm contract as of August 27th.
The Chairman: That's right. Don't appreciate any other side intervening. Let Senator Lynch-Staunton ask his question.
Senator Kirby: The leader should not be treated any better than the rest of us.
Senator Lynch-Staunton: Poor fellow. All I am trying to establish, rightly or wrongly, as far as the government of the day was concerned, the minister's advice was based on legal advice at the time that as far as the government was concerned the approvals and agreements of August 27th were to be considered by the government as a firm, final agreement with Pearson Development Corporation.
[Translation]
Is that correct?
Mr. Corbeil: That is perfectly clear.
Senator Lynch-Staunton: You had legal opinions to this effect?
Mr. Corbeil: Personally, I do not have legal opinions on this matter. I am simply stating that the contract was approved... the agreement, that is, was approved by the government, by cabinet. The duly constituted authority accepted an agreement and at that point, there was a de facto contract.
Each time you buy a house or anything, the offer is accepted. There is an offer to purchase and an offer to sell that is accepted and the actually contract is finalized because it is obvious that once the agreement is reached, there is then a lot of legal work, very detailed, that must be completed to lay down the contract in question in legal terms.
So in my opinion, the actual obviousness that certainly has not been challenged in court, to date. I believe that if the contract had not existed, why would an act be passed to cancel a contract that did not exist?
Senator Lynch-Staunton: And the government's opinion obviously was shared, I presume, by the cosigning parties to the contract because we have heard representatives here from Claridge and the representatives of Matthews, who told us that their conclusion was that on the 17th of October, or whatever date, late August, that is, there was an agreement reached by both parties that if there was a breach of contract without mutual consent, either party, there would be a notice to perform and extremely negative implications.
Mr. Corbeil: In fact, my perception was that I drew on 25 years' experience in the field of insurance, where all the talk is of that, contracts, and when there is an agreement between the underwriter of an insurance risk and the insured, in some way by telephone or letter, there is simply an agreement, the agreement is enforceable and the remainder is documentation and legal formalities that are required, but there is no doubt that when there is a meeting of the minds, and the three or four other principles required for the existence of a contract, these elements existed at the time Cabinet made its decision.
Senator Lynch-Staunton: And when Mr. Pigeon brought you all the documentation you signed on the third or fourth, did you ask the question, no matter how theoretical, how hypothetical, "What would happen if I did not sign?" Were you warned? Was there a choice?
Mr. Corbeil: I simply told Mr. Pigeon, "I hope you're not having me do things that will land me in jail." It was more a question... a joke than anything else, by both of us, to say, "We wouldn't have you do things that are illegal. Our duty is to ensure that everything is done legally."
Senator Lynch-Staunton: And your last signatures were on that day?
Mr. Corbeil: Yes.
Senator Lynch-Staunton: Because Ms Bourgon, in her testimony, stated that on the 7th of October, you signed some contracts.
Mr. Corbeil: That's why I'm saying, it's... It has in fact been a number of years and the precise date on which these things occurred is not always easy to say. We know it was early October, the fourth, fifth, sixth or seventh. It's around there.
Senator Lynch-Staunton: You signed only once in October?
Mr. Corbeil: But for me, it was... I later had to check that it was the 4th of October.
[English]
Senator Lynch-Staunton: Madam Bourgon says the minister also signed on the 7th of October which has caused a lot of confusion.
Senator Kirby: I did not know she said that because it was clear.
[Translation]
Mr. Corbeil: We would have to see the contracts. Only the contracts could determine this.
[English]
Senator Lynch-Staunton: The minister only signed once with Mr. Pigeon. We have heard that Mrs. Campbell signed on the 7th of October. Then someone tells us the minister signed on the 7th of October. We have to get rid of the myth which people want to create about the significance of the 7th of October.
Senator Kirby: Whether it is a myth or not is a legal opinion from a non-lawyer.
Senator Lynch-Staunton: It is a question of who signed. We are not giving legal opinions. We are trying to get the facts, who signed what and what is the significance of it on the 7th of October? Mrs. Campbell had signed the contracts. This is in the Nixon report. Mr. Bryden has also brought that up in earlier questioning of witnesses.
Senator Bryden: Senator Lynch-Staunton -
Senator Lynch-Staunton: You brought that up, Senator Bryden, and I will bring you the transcript tomorrow if you like.
Senator Bryden: You bring me the transcript. I am totally taken aback that you would misquote me like that. Absolutely totally shocked.
Senator Lynch-Staunton: Maybe you want to bring your lawyer in to contradict me like you want to bring the other lawyer in.
The Chairman: Thank you very much, Mr. Corbeil, for being with us and giving us some very useful information. Thank you. Merci beaucoup.
The committee adjourned.