Proceedings of the Special Senate Committee on the

Pearson Airport Agreements

Evidence

---

Ottawa, Thursday, September 21, 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.

Senator Finlay MacDonald (Chairman) in the Chair.

The Chairman: We will come to order. Is the committee happy? Any points of order, any statements?

Senator Bryden: Is the committee happy? Ecstatic.

Senator Jessiman: We on this side have reviewed some of the questions that we will ask this morning and, looking at what the witnesses have to give to us, it would be our thoughts that we would hope that we would be finished with these witnesses at the latest by 12:30 today, probably earlier.

We are also told that the witnesses who were going to be available for seven o'clock tonight will be available at one o'clock, if we are ready for them. So they will be here, they will be ready to go.

So from our point of view, we'd think it would be in the interest of all of us, if, in the event that we do finish with these witnesses on or about 12 or 12:30, that we do meet with the next witnesses shortly thereafter, after a break for lunch.

The Chairman: Working on that assumption then, does Mr. Matthews know that there has been a change?

Senator Lebreton: Mr. Matthews is in the room. Yes, he does.

The Chairman: Without further ado, Mr. Nelligan, would you introduce -

Senator Bryden: Excuse me. That does not preclude us continuing the examination of Mr. Matthews into the evening then?

Senator Jessiman: If that's required, I would think so.

Senator Tkachuk: We didn't want to go on Friday.

The Chairman: Everybody wants to get out of Ottawa.

Mr. John Nelligan, Q.C., Counsel to the Committee: Senators, this morning, we have with us Ms Margaret Bloodworth, deputy clerk, security and intelligence, and counsel to the Privy Council Office, and Mr. George Thomson, deputy minister, Justice Canada, who are here to answer your questions with regard to the type of materials that are available to this committee. I understand that they have a brief oral statement which they are prepared to make.

The Chairman: Mr. Thomson and Ms Bloodworth, you are aware that we are swearing witnesses?

(Mr. Thomson, affirmed:)

(Ms Bloodworth, sworn:)

The Chairman: Welcome and thank you for coming. I hope you can be of some assistance to us today. I don't think that any of us have had any experience with an animal like this. I am referring, of course, to a parliamentary committee unlike other parliamentary committees, rarely used, little understood, working under the assumption that we have virtually unlimited powers to ask witnesses to appear and to provide the information we require.

So if I may start, just to prime the pump, I'd like to put my first questions -

Senator Kirby: Mr. Chairman, I thought I heard you say they have a brief opening statement. Am I wrong?

The Chairman: I am sorry. Yes. Please, Mr. Thomson, go ahead and proceed.

Ms Margaret Bloodworth, Deputy Clerk, Security and Intelligence, and Counsel to the Privy Council Office: Actually, Mr. Chairman, I will begin if that's okay.

Good morning, Mr. Chairman and senators. I am, as Mr. Nelligan pointed out, Deputy Clerk and Counsel to the Privy Council Office. I have held that post since May '94 and, prior to that, I was assistant secretary to the cabinet legislation house planning for about five years.

Among my responsibilities at the Privy Council Office is support to the Clerk of the Privy Council in her capacity as custodian of the cabinet confidences of the present and former governments. I hope that, during my appearance today, I will be able to explain some of the principles associated with cabinet confidentiality and advice to ministers.

Ministers are both individually and collectively responsible to Parliament for the policies, programs and activities of the government. They are responsible individually for the decisions and actions they take within their own portfolio, and they are collectively responsible for all decisions and actions taken by all ministers.

There are two important conventions associated with the collective responsibility of ministers; first, the convention on confidentiality of cabinet deliberations and, secondly, the convention on access to the papers of a former ministry.

Let me start first with a few comments on cabinet confidentiality. Cabinet is the forum in which ministers reach consensus on actions that individual ones of them may take. Providing a forum in which ministers are free to express their individual opinions to their cabinet colleagues, vigorously debate issues and come to a consensus on how to proceed, ensures that the full range of views can be taken into account before any decision is arrived at. It also ensures that ministers can collectively support all decisions taken and answer for them before Parliament.

The collective decision-making of ministers in cabinet is the key process for ensuring solidarity among ministers and their ability to retain the confidence of Parliament to which they are collectively responsible.

If ministers are to be able to make decisions collectively, the privacy of their opinions and views relative to the evolution of government policy must be protected. If these opinions were made known before or after the decisions were taken, it would be difficult to maintain the solidarity and consensus among ministers which is essential to cabinet government.

Let me turn now for just a few comments on the convention on access to papers of a previous ministry which is related to this other convention.

The convention on access to the papers of a previous ministry flows from this principle of collective responsibility of ministers to Parliament. It is now a well-established convention, respected by successive governments, that a new ministry may not have access to the cabinet and cabinet committee records or related ministerial briefing material and correspondence of preceding governments.

This convention has been affirmed by each successive Prime Minister since Mr. St.Laurent. When a change of government occurs, the outgoing Prime Minister traditionally leaves cabinet records of the government in the custody of the Clerk of the Privy Council. The Clerk of the Privy Council, in that role of custodian of the records of previous ministries, also advises the Prime Minister and the ministers and former prime ministers and ministers on the implementation of this convention.

I'd like to turn now to advice to ministers, as we use the term, because, of course, cabinet confidences will also include advice to ministers. But in addition to advice to ministers in their role as collective decision-makers, i.e, with regard to issues that are considered by cabinet, a device is also provided by public servants to ministers in support of their individual responsibilities. That is for matters that each individual minister deals with on his or her own authority, without going to cabinet.

In order to ensure that public servants provide full and frank advice and that ministers remain accountable and responsible for the ultimate decision, not public servants, this type of advice is also kept confidential. The underlying purpose for the protection of this particular form of advice flows from the convention on individual ministerial responsibility to Parliament.

Now, section 21 of the Access to Information Act also refers to advice, and it provides for a discretionary ability to withhold not just advice provided directly to a minister but advice developed broadly within a government institution. It is however, discretionary. It is not a mandatory exemption and discretion has to be approached.

In this particular case, in view of the task of this committee, and in interests of providing as much information as possible, the principle that was followed, however, was that only advice provided to ministers would be protected, not advice that was provided throughout the department or departments involved.

I'd like to conclude with just a couple of comments on how these principles relate to public servants before parliamentary committees, because I think this has come up several times.

Parliament, which is the highest court in the land, obviously has very extensive legal powers. However, the legal powers of any of the institutions within our constitutional system of government, whether it is the Queen, the Governor General, the Privy Council, the Prime Minister or the cabinet, cannot be considered in isolation from the practices and conventions associated with how they have actually been exercised.

As Professor Hogg says, what conventions do is prescribe the way in which legal powers should be exercised. The nature of each of those institutions I've mentioned and how they really function can only be fully understood if the conventions and past practices are considered along with their actual legal powers.

And I stress, I am referring to all of the various components of our parliamentary system. That's not unique to Parliament.

By long tradition, Parliament has respected the convention of cabinet confidentiality and has not asserted a right of access to cabinet confidences or to the production of cabinet documents.

As stated by Ms Davidson in her presentation to the Standing Joint Committee for Scrutiny of Regulations on the powers of parliamentary committees, and this is a quote:

Practically, however, it must be, and usually is, recognized that the question of the nature and scope of Crown privilege is clearly of fundamental importance in a parliamentary system of government. In practice, committees do often afford special consideration in regards to the testimony of and production of documents by ministers or senior public servants. Generally speaking, parliamentary committees restrict their questions of public servants to factual and operational matters, leaving comments about government policy, wider political ramifications and advice given to ministers to ministers themselves.

I'd like now to turn to George Thomson, who will discuss the role of the Department of Justice in support of this inquiry.

After his opening remarks, we will be pleased to answer your questions.

Mr. George Thomson, Deputy Minister, Justice Canada: Thank you, Mr. Chairman. I am the Deputy Minister of Justice and I have held that role since last fall.

In my opening remarks, I will talk about the role that the department has played in working with your committee and also the process we have followed in making material available to you and, in doing so, building on what you have already heard.

I should say, at the outset, that I agree with Ms Bloodworth's remarks that the legal powers of Parliament and, through it, parliamentary committees are very extensive. Some members of this committee we will know that I previously had the opportunity to address this issue before the Standing Joint Committee for the Scrutiny of Regulations. That was last fall. At that time, I was addressing the issue of solicitor-client privilege, and I noted that a parliamentary committee has broad authority from a strictly legal perspective to require the attendance of witnesses and the production of documents.

Now, however, as Mrs. Bloodworth has pointed out and as I went on to talk about in the context of solicitor-client privilege, the issue goes beyond the question of simple legal authority in that there are some well-known practices and, in some cases, conventions that will determine how that legal authority will or will not be exercised. She has already addressed the manner in which Parliament exercises its authority in the case of cabinet confidences and advice to ministers. That is important because it explains why we have vetted the documents as we reviewed them to ensure that such information is not disclosed.

I propose to comment on three other areas where the government generally protects information; first, advice that a government department has received from its counsel where the department desires to maintain the confidential nature of that advice, i.e. information subject to solicitor-client privilege where the client - and it is the privilege of the client - is not waiving that privilege; secondly, business information that should be treated confidentially; and thirdly, personal information of a confidential nature.

Dealing first with solicitor-client privilege, the established practice of parliamentary committees has been to only very rarely seek information that requires lawyers to breach this solicitor- client privilege. And lawyers, on behalf of their departments, almost invariably claim that privilege when they come before parliamentary committees to provide them with information.

I don't need to explain at any length to this committee why the solicitor-client privilege is so highly valued. Often when giving legal advice, very hard and complex decisions are called for involving judgments as to trade-offs and possible options. To disclose legal advice in such circumstances can run the risk of producing a chilling effect on full and frank discussion between a client, or a client-department in this case, and their lawyers. In addition, such disclosures can have serious implications with respect to present or future litigation before the courts.

Of course, it is possible that the client may decide to waive the privilege, in which case the information is disclosed. When I spoke to the committee last fall, I not only mentioned that but I also pointed out that, sometimes, it is important to make sure that this really is information to which the privilege applies. Sometimes one can make that assumption where it is not the case.

Where the privilege is not waived, I also suggested to the joint committee, and I felt I was respecting the practice that I've talked about, that is built up, that it should only be in very rare cases that committees should order such information to be provided. I went further and suggested that, even in those rare cases, this should be done only after there has been an opportunity to make representations about why the privilege should be respected in this particular case. As well, I suggested that consideration should be given to ways in which that information might be disclosed so that it does not become publicly known, for example, through in camera proceedings.

Applying that established practice to the work of the committee, those vetting the documents to be provided to the committee have removed information that they considered fell within the solicitor-client privilege. The other categories or the other two parts relate to business confidences and personal information.

Once again, the practice is not to disclose such information to committees in accordance with the principles that are, for example, set out in existing access to privacy laws. Here, too, it is only in rare cases where that practice is not followed. The vetting of documents for this committee included removal of such information. However, as you know, consents were obtained that permitted release of the relevant business information.

Turning to the role of the Department of Justice in the work of this committee, based upon those givens, our role has been really twofold. First, we have acted as liaison with the committee's clerk Mr. O'Brien and with counsel Mr. Nelligan. We were the department, as well, which was given responsibility for making government documents and witnesses available to the committee. We were the department chosen to carry that responsibility.

I would like to make some context points about how those responsibilities were assumed or the context within which they were assumed.

First, I note that the Senate set a demanding task for the committee. As you are all acutely aware, you are inquiring into events that occurred over a period of approximately six years. These events involved policy-making and deliberations by many government departments as well as complex, intricate negotiations between the Crown, the private sector and various levels of government in relation to one of Canada's most valuable assets.

Secondly, that mandate that was established meant that there were approximately 200,000 pages of documents in the possession of the government of potential interest to the committee. As well, obviously, we had many witnesses of potential interest to the committee working for government.

Thirdly, I note that the committee set for itself a very aggressive timetable for the completion of its work. On May 25, the committee was established and, in early June, the committee resolved to commence its hearings in early July. This, as you obviously know, placed significant demands on you as the committee and your staff. It also placed major demands on government departments and on us in terms of performing our task for you.

Of the documents that have been received by the committee, the government has produced the overwhelming majority. And of the witnesses to be heard by the committee, a great many have been public servants.

Within that context, we assumed responsibility for acting as liaison and making the documents available. In light of the time pressure we were facing and the need to do this work within those time lines, the department retained the law firm of Scott & Aylen, in particular, two lawyers in that firm, David Scott and, even more importantly, George Hunter who has worked almost exclusively on this file.

In turn, Scott & Aylen retained Lindquist Avey to carry out much of the work associated with the task of amassing and organizing the documents. As I believe you know, both firms were subjected to confidentiality agreements.

The process by which the department, with the assistance of these agents, made documents available to the committee is explained in detail in first a letter that Mr. Edge sent to Mr. O'Brien on July 21, and then a later letter that Mr. Hunter sent to Mr. Nelligan on August 18.

I will just do a quick summary. Scott & Aylen and Lindquist Avey were provided with access. The access was given at Privy Council Offices to approximately 200,000 pages of documents. Only a small portion of that were Privy Council documents.

Lindquist Avey then assembled briefs. After going through all of that and pulling out what is relevant, they assembled briefs of documents relating to each witness as the witness was identified and scheduled to appear before the committee, and delivered the briefs of documents to the Department of Justice. Officials of the Department of Justice and Privy Council Office then reviewed the briefs of documents to protect, as appropriate, cabinet confidences, advice to ministers, solicitor-client communications, business confidences and personal information.

We then delivered the vetted briefs of documents to the committee, relevant officials and the office of the Minister of Justice, and we did so all at the same time.

In addition to preparing documents, Scott & Aylen and Lindquist Avey assisted current and former public servants to prepare for their evidence by reviewing with them their documentation.

In addition, Department of Justice officials, with the assistance of Scott & Aylen and Lindquist Avey, ensured that the Minister of Justice as the minister responsible on behalf of government for performing the government's work in relation to this inquiry, through his staff, was briefed on upcoming witnesses by reviewing with them the vetted material after it was delivered to them.

My overall assessment of the process is that it has, for the most part, gone very well. The steps I've outlined have been followed. The material has been made available to the committee within the very tight time lines that were set, although often only shortly before witnesses were scheduled to appear in light of the time pressure we were under.

I think we have developed a good working relationship with the committee's counsel and clerk. I also believe we have tried hard to minimize the deletions while still respecting the conventions and practices I have described.

On the other hand, the tight schedule, coupled with the enormous amount of relevant material, has meant that we have occasionally overwhelmed you with documentation with little time to review it in light of the time and the material involved. The materials management exercise has been a very resource-intensive and costly exercise, partly because of the need to have a very large number of people from both in and outside of government, either as government employees or agents of government, working very long hours over a short number of months.

In addition, the process has not been perfect. On one day in particular, there were two glitches, as you know, which led to material being given to the minister's office and later being made available to senators which ought not to have been made available to the minister's office.

However, this error was unintentional and, given the material released, did not, I believe, add up to a major breach and should be seen in the context of the huge amount of material that we processed.

As well, there have been some cases where there has been legitimate debate about whether we have vetted material in a way that was either excessive or, in other cases, was not inclusive enough. That debate has occurred from time to time.

But, as I say, over all, I think the process has gone well. That is my summary of the process as I see it having been followed. I, too, would be pleased to answer any questions you might have of me.

The Chairman: Thank you, Mr. Thomson. You covered a great deal of the material that I had in some preliminary questions to put to you and Ms Bloodworth to sort of prime the pump. But, undeterred, I will go on with my original questions.

On November 16, '94, Diane Davidson, to whom you referred - she is the general counsel to the House of Commons - made a presentation to the Standing Joint Committee on the Scrutiny of Regulations. Her presentation dealt with the issues of the powers of parliamentary committees.

You, of course, are familiar with that because you appeared - I was there at that particular day you did appear before the Joint Standing Committee on the Scrutiny of Regulations.

At that time, Mr. Thomas Wappel, distinguished member of the House of Commons, asked you whether you agreed or disagreed with the following paragraph taken from Ms Davidson's paper.

What these grants of powers mean, of course, is that, provided a committee's inquiry is related to a subject-matter within Parliament's competence and is also within the committee's own orders of reference, Committees have virtually unlimited powers to compel the attendance of witnesses and to order the production of documents.

In response to Mr. Wappel's questions, you relied:

I agree with that...I am acknowledging that the committee has those powers.

And that is still your opinion today, Mr. Thomson?

Mr. Thomson: Yes, that is still my opinion. I do need to note that I went on to talk about how rarely I thought that information that was subject to solicitor-client privilege ought to be released, and I talked about the process that ought to be followed prior to making such a decision. I tried to explain why I thought the basis for having solicitor-client privilege was such that one ought to very rarely exercise that power. But I did not deny that the power itself existed.

The Chairman: And we will come to that point.

Mr. Wappel put before you a second paragraph from Ms Davidson's paper. She wrote:

It is a sobering statement of the reality that a witness before committees must answer any and all questions put by members and produce documents as required by the committee.

And he added the following commentary:

That would include any questions that might otherwise fall into solicitor-client privilege.

And you replied, Mr. Thomson, and I quote:

Yes, I have acknowledged that, with regard to information that is privileged, it is the client's privilege and the client may waive it. However, even if the client is not waiving it, the committee ultimately has the power to require that that information be put before it.

And that is still your view today?

Mr. Thomson: Yes, it is. I need to add two things, and I feel that, in my statement, I made this very clear as well.

First, the committee has the legal power to do that. The way in which that power is exercised is it is requested. If it is not provided, if the claim is made that the information ought not to be provided following the practice I am about to come to, then it can be referred back to the House or to the Senate where the enforcement power lies. In other words, while the legal authority is there, the enforcement power lies with either the house or the Senate.

Secondly, I did point out that it is very rare event to exercise that power, and my own view is that one should be very careful to do it very rarely and only after the process that I have described is followed.

The Chairman: On April 28, 1995, you prepared a memorandum addressed to all departmental lawyers. The memo was entitled, "Privileges and Parliamentary Committees."

You then went on to suggest a number of general principles that could guide departmental lawyers appearing before the committees.

Principle one reads:

When invited to appear before a parliamentary committee, Justice lawyers should do their utmost to assist the committee in gathering the information necessary to fulfil its mandate.

The second principle reads:

To this effect, committees have the right to summon witnesses and send for documents, and Parliament has the power to enforce these rights, although -

- as you just said -

- the power to enforce has not been used in the recent past.

Do you know when was the last time these rights were enforced?

Mr. Thomson: I'm not sure I do, Mr. Chairman.

I know that, recently, with consent of all parties, there was an order made in order to technically comply with the provision of the Privacy Act to make some personal information available in a particular case. I do not know of a case where that power has been exercised in relation to material subject to the solicitor-client privilege. I think I could find that out, but I just don't know. In fact, I simply have not been advised of such a case yet.

The Chairman: The reason I mention that, I have kind of a personal reason because not only was I at that committee, the Joint Committee on the Scrutiny of Regulations, but as a chairman of a Senate committee for some four years, the Transport Committee, and deputy chairman of the Banking and Commerce, we were oftentimes placed in a position where, as I look back, it was timidity or ignorance on the part of we parliamentarians to accept what was absolutely baloney on the part of the witness who said, "I'm sorry, I can't answer that question". And we accepted that. We didn't pursue it. We didn't ask the reasons, et cetera.

And I think that the parliamentary committees over the last number of years have fallen into that lazy habit of just accepting and not realizing that certain information is required and it can be obtained if they were to just study up what the rights of the committees were.

And I feel sorry for - as a matter of fact, I mentioned the candy store incident in the committee that day. But that's just an aside. I don't expect an answer to that now.

Mr. Thomson: If I could say one thing, sir, I don't want to mislead you or the committee. I do support the practice that has been followed of generally claiming that privilege, although I think first a question has to be asked: Does the privilege apply? And secondly, the client has to determine whether they are waiving that privilege. But if they are not, our practice is claim that privilege for the reasons why I think the privilege is enormously important. I support the practice of claiming that before committees. And I think it should be very rare event to exercise one's legal authority to override that.

But having said that, I don't want to be implying that I am disagreeing with what I have earlier said about the legal authority of committees.

The Chairman: Yes, but the incident to which I am referring did not require a reference to the House, to enforce our rights and to have the witness answer a question. It was a very, very simple question, and we should have simply said to the witness, "Look, do you realize what you are saying? You just refused to give us some simple information, and I suggest that you either answer the question or simply go back and get advice from your department."

It was not necessary to undertake any draconian measures to force him to answer. It was just a simple stupid piece of ignorance on the part of the parliamentarian - in that case me - asking the question.

Mr. Thomson: The circumstances we were discussing last fall were circumstances in which I acknowledged to the committee, one, I didn't think the privilege applied and, two, the client was prepared to waive it. And so in fact we were in a situation where that information ought to have been fairly easily supplied to the committee.

Senator Stewart: May I ask the chairman to what document you were referring earlier, just for our record? I have a document here and I'm not sure whether it is the one to which you are referring.

The Chairman: Are you talking about the principles I am referring to? It is the memorandum that the deputy minister sent to all departmental lawyers in which he indicated that the principles were, et cetera, and said that there would be -

Senator Stewart: Do we have that in this committee?

The Chairman: No, we have the notice. We have that which -

Senator Stewart: My problem is that you are asking very interesting and important questions, but I don't know the material from which those questions arise. I don't have it before me at least.

The Chairman: I may come to that.

Senator Stewart: This is highly technical material, Chairman, and the precise wording is important, and that's why I have difficulty relying on what I hear rather than what I see. That is, as far as I am concerned, an obscure document. I haven't seen it. Perhaps other members of the committee have.

The Chairman: Well, this was the memorandum sent from the deputy minister to all departmental lawyers.

Senator Stewart: I'm sorry, I don't fall into that category.

The Chairman: Neither do I. There is a reference here. It says:

A paper summarizing how parliamentary law and practice provides for the production of government information before parliamentary committees is in the final stages of preparation by the Public Law Sector and will be available...

And I will come to that. Maybe if you give me time, I may assist you, and if not, you can - but I am quoting from this document.

Senator Stewart: Perhaps if I could have a copy of that document and the other documents to which you are to come?

The Chairman: Yes, all right.

Mr. Thomson: Mr. Chairman, if I could just add one other point in relation to your discussion of past practice, I think I should say I don't believe that the decision not to, in each case, seek this information by parliamentary committees was simply an error based upon lack of understanding. I do believe, as I have said already, that it reflects a practice which is well established not to go behind the solicitor-client privilege unless there is a very, very compelling reason to do it in the individual circumstances and only after the process that's been followed.

So without in any way commenting on what would have been appropriate in the particular case you are talking about, the practice of committees is not just through ignorance. It is an established practice that has been followed for some time and it needs to be acknowledged to be that, I think.

Ms Bloodworth: Mr. Chairman, I wonder if I can make a comment further to that? I certainly would not disagree with you that there have been times when witnesses may have refused to answer questions that appropriately should have been and, in the course of all committees, I am sure that occurred. But I would reinforce what Mr. Thomson is saying. I don't think that committees, in not insisting on some of this information, have acted out of ignorance or timidity.

I must say, I have not found parliamentary committees in my experience to be particularly timid. I think they are reflecting that that practice is important in our parliamentary system, and all of the various components of our parliamentary system and the constitutional system are not governed simply by their legal powers.

A good example, if one looks at the Prime Minister and the cabinet, the Prime Minister and the Cabinet have no legal powers because they don't exist in the Constitution. But I would be very foolish to say, "And so that means they don't have any power", because by practice and convention, they have a considerable amount of power.

So I think parliamentary committees, as one of the components of our constitutional system, have simply reflected that. Now, that is not to take away from the fact that, I'm sure, in individual cases, there have been instances when witnesses, for various reasons, should have answered the question, and maybe committees should or should not have pursued it. But in general, the principle, I think is an important one.

The Chairman: In the case of Senate committees, 90 per cent, 95 per cent - I don't know what, but it is an overwhelming percentage of our work is in reaction to the legislation coming to us from the House of Commons, and it is an examination of that legislation and so on.

So I am not suggesting that there is timidity on the part of senators or members of the House of Commons in asking the questions. I am referring to those isolated events in which a witness declines to answer for whatever reasons and it is not followed up.

And I am saying that this is a strange animal that we haven't had experience with, and I think you have to agree with that. We are talking about a parliamentary committee, sometimes referred to as an inquiry, which is not a word I particularly like, but it is an examination of public policy on the privatization of Canadian airports. That's what we are involved in.

Now, may I continue my questions?

In the sixth principle, you remark that where a client - now we come to your points. You remark that where a client does not waive solicitor-client privilege and the committee insists that a question dealing with the privileged information be answered, the witness should ask for an opportunity to make representations to the committee and to, and here are the key sentences:

...work out ways of disclosing the information in the least damaging manner for the client, keeping in mind the interest of the government as a whole.

Could you elaborate on what you meant by this?

Mr. Thomson: For me, it is divided into two parts. First of all - I guess three parts. I have already alluded to the first. I think there needs to be time taken to determine, does the privilege apply, is the client prepared to waive it? And there are situations where information - and I agree with your earlier point - can simply be provided by waiving the privilege. That's been done. It has been done in the course of this committee's work.

Secondly, I have indicated that I believe that there are a number of situations where, when the privilege has not been waived, the lawyer in question should, on behalf of the client, claim the privilege, should state strongly why he or she feels it ought not to be disclosed and, if necessary, the matter might have to be referred to the house or to the Senate for a ruling.

Thirdly, I also pointed out that where there are situations where ultimately the power of the committee is to be exercised, or it is agreed that it would be exercised, there is an opportunity to ask a third question: Is there a way to disclose this information that won't increase the potential damage of that information becoming public, for example, by having the information disclosed in camera or privately?

That is, in my view, one way to ensure, where you get to the point that it is being disclosed, the risk of harm in disclosing it can be minimized. That is what I was referring to in that particular clause.

The Chairman: That was all?

Mr. Thomson: I don't rule out that there might be other ways in which one could try to disclose the information without causing damage, but the one that most came to my mind was the thought of an in camera proceeding, and I know that has been done, for example, with respect to personal information.

The Chairman: Yes, I am aware of that comment in Ms Davidson's paper, and I agree with it. Fortunately, it has not happened before in this committee where we have - and there has been no reason for any decisions to be taken in camera with regard to the testimony the witnesses have been giving.

In solicitor-client privilege, you are the solicitor and your client is the Department of Transport.

Mr. Thomson: Yes.

The Chairman: If your department, that is to say Transport, does not waive the privilege, is it not true that, implicit in this relationship is a recognition of the fact that the final decision rests with the House as to the disclosure of this information?

Mr. Thomson: Well, if the client is not waiving the privilege - it is not the lawyer's to waive, it is the client's. If the client is not waiving it, then the lawyer does not have authority to waive it unless, for example, we are in a situation where the rules of professional responsibility in relation to that lawyer requires some form of disclosure.

So, at that point, the claim would be made. This is subjected to solicitor-client privilege and it ought not to be revealed. If, following consideration of the established practice, if following consideration of the reasons why it's felt that it ought not to be disclosed and the committee is of a view it ought to be, and there is still an unwillingness to disclose it, then you are right. The committee can refer the matter to the House or the Senate where a decision can be made as to whether the information will be disclosed.

The Chairman: Did you ever ask your client to waive the information or suggest to someone that the client be asked to waive it?

Mr. Thomson: I have been part of discussions in the time I have been with the government about whether a particular client would waive the privilege in a particular case. Yes, I have been part of those discussions.

The Chairman: In this particular case?

Mr. Thomson: I have been part of discussions about that in this particular case, actually quite recently in relation to a document, I think, disclosed yesterday.

The Chairman: In which the client, Transport Canada, waived the privilege?

Mr. Thomson: That's correct.

The Chairman: Mr. Nelligan would like to ask a clarification question, Mr. Thomson.

Mr. Nelligan: Mr. Thomson, while accepting, as I must as a lawyer, the importance of solicitor-client privilege, I am concerned about the extent to which it may be broadened. And I only give this by way of example, but we had a document early in these proceedings called 000828 which was a relatively innocent memo of a meeting in the Department of Transport.

At the time, the members of the committee were struck by the number of deletions under section 23, which was the solicitor-client deduction. And when we finally obtained a copy of the document, we found a whole series of references not to lawyer's opinions but to lawyer's names.

For instance, paragraph 3:

The wording around the volume triggers need to be more specific, e.g. timing of events and start of construction. J. Pigeon to draft.

And that was deleted. And there are a whole series of others where there would be things such as:

Bob Green to determine overnight whether DPW organized meeting with Etobicoke to proceed.

Now, I don't expect you to explain those particular deletions. But when you ask your team to review, as you've said you've done, what type of instruction do you give them for them to determine whether it is solicitor-client?

Because I must tell you, in my view, you've said very properly "advice to a department", but merely where a lawyer was involved, was this part of the restriction that was given to your group to apply?

Mr. Thomson: I am pleased you are not asking me to give advice on that particular document, but, two things: First of all, I should agree with what I think may be the broad point you are making which is, there are situations and that may be one of them, where we have been excessive in the claiming of privilege. I alluded to that earlier. I think there is a very important question to be asked at the beginning. Is this information subject to the solicitor-client privilege?

I don't think it would be unfair to say that our past practice has, perhaps, at times, been excessive in that regard. I can say that, over the last few months, we have been, as the Chair has been noting, trying to work out ways of being clearer about exactly when the privilege applies and when it doesn't. And you will appreciate that we have about 1,200 lawyers who make these decisions on a regular basis.

Having said that, we tried in this particular case to take a broad view as I indicated. If that's an example of the situation, and based on the little bit I've told you, you may be right of us having been excessive, or those who applied it being excessive in their definition, then I will accept that. And I hope that, when it was raised with them, they then released the information.

But I can say that we certainly asked them to apply the privilege. The persons we put in charge of that are people with some real expertise. And I think, in general, they tried to apply it very carefully, rather than being too excessive in that claim. But you may have an example that demonstrates they weren't always successful in that regard.

Mr. Nelligan: Now, this is a practical problem for me. I don't think this committee wants to intrude where it doesn't have to intrude. But where, in a document they receive, there is just a bald statement, section 23, they have no way to determine whether they should investigate further. And I may say, the reason that we suspected this document was that there was a heading, "Additional points raised by Mergeco". Since we felt this was an outside party who raised the points, this could hardly fall within solicitor-client and, as a result, we found it.

Is there some way you could suggest to us that, where your departmental officials have felt there might possibly be such a privilege, that there is an opportunity for some person on a confidential basis within the committee to review that decision so that any submissions or discussions can be carried on discretely without public disclosure before it is necessary.

Mr. Thomson: I am not sure there is an easy way I can suggest that can be done without it being a situation where then the information that it is felt is privileged, is being disclosed in order for that decision to be made or at least for the decision that we've made to be confirmed.

My understanding has been that we have been open to having discussions with individual cases, and I think it may have to be in an individual case, because I don't have a suggestion to make to you as to how we could have someone on the committee review all of the information that we are suggesting is subjected to solicitor-client privilege in order to determine whether we have applied that - made that decision well and properly. I can assure you that I have encouraged our lawyers to not be excessive in the way they have made that decision, and I would be quite prepared to be part of discussions with you about how, over all, that is being done and the approach that is being taken.

It might be possible to find some situations that could be used as examples, but I don't easily know of a way we can do that without creating the very difficulty that disclosing information that is privileged creates.

Senator Jessiman: Why could counsel for this committee not be in the same position as these other people are? Your lawyers -

The Chairman: Let him finish, senator, and then you can have your turn. Did you have something to add?

Mr. Thomson: No; unless you wanted me to try to answer that question.

The Chairman: I referred earlier to the document which you said the law sector was preparing. I have been trying for three months to get this document. I would think that that document would be available to any student in either law, or political science, or anything else.

Senator Kirby: Which document?

The Chairman: I am referring to the document prepared by Mr. Henry Molot of the law sector division.

Senator Kirby: That is just for the record. I thought that is what you meant.

The Chairman: Mr. Thomson, in his memorandum, in his circular, refers to a document in the final processes of preparation. This was dated April of last year. It is apparently not finished yet.

Mr. Thomson: It was actually April of this year - at least, I hope it was. This may still demonstrate to you that the wheels turn slowly in the Department of Justice. But I must tell you that we are still working on that document. It has been through various drafts. It is a difficult document to draft. I quite recently, actually, was part of a discussion to ask Mr. Molot to do further work on the document. I think it is extremely important that whatever we produce be correct and be right and, to be frank, we are not yet there. Once we have something that I and the minister have reviewed - and, if something of that form is created and circulated - I would be prepared to make that available. I just simply have to tell you that in light of the difficulty of the task - and we've talked a bit this morning about how clear one has to be about the nuances here. It's simply not done.

The Chairman: I see. Well, it was only two days ago that officials of your department indicated that this paper was simply an update of the 1990 blue book prepared by the Privy Council Office. That was entitled: "Notes on the Responsibilities of Public Servants in Relation to Parliamentary Committees". Now, I gather from what you're saying that your paper differs in some respects from that document in 1990. That is the last one we have seen.

Mr. Thomson: I am not sure I can answer the question other than to say what we were working on was not an update of that book. It's conceivable that what we produced could find itself at some point within an update of that book if it was prepared but, no, this was a separate document we thought of preparing that would speak specifically of the issue of appearances before committees particularly by lawyers and in relation to information that might be privileged. We have not - I have not been part of any discussions about whether or not that would then constitute an update of that book. There have been various drafts prepared, I can tell you that. I have seen drafts but, frankly, there is not a document been produced that I would in any way say was a final document.

The Chairman: I see. Okay. What was your purpose in retaining the council of Scott & Aylen and the firm of Lindquist, Avey? You have 1200 lawyers in your department.

Mr. Thomson: Well, we have 1200 lawyers; we also extensively retain legal agents. When we do that, we normally do it when exactly this kind of situation arises where we are under a very short time line; we have an enormous amount of work to do. We require legal counsel to be part of doing that work whether it is for major litigation that is moving rapidly before the courts or whether it's an inquiry that's suddenly called of some kind, a royal commission, whatever. That's a common area for us to retain outside counsel in order to have the work done on time. The 1200 lawyers are very busy, and pulling them off other material to concentrate exclusively on a task like this one can be very difficult. And so that is the classic situation where we look to retaining legal agents to do that work.

In this case, we knew in retaining the agents we were going to need to authorize them to retain someone to do the major task of amassing this material and making it available to the committee and helping them carry out their task as agents of the government in support of the government's work for this committee. So that's why we both allowed an outside firm to be retained and, secondly, allowed them to retain another firm to do that work.

The Chairman: You felt that you didn't have the resources in your department to amass these documents, as you put it, to collect these documents?

Mr. Thomson: Yes. I felt, as did others, that we did not have the resources to do this work, at least within the time lines that we needed to do it. And there were people there - We could have pulled a lot of people off other work to do that - in fact, we did involve a number of people from within the department in this work - but we then would have had to farm out all the work they were doing. So it made sense to us to pick one legal agent supported by people from with inside the department and to give them the authority to retain someone to do this work. And, frankly, very much because of the tight time lines and the huge amount of material we knew we'd be dealing with.

The Chairman: Did you have to go to Treasury Board to get the funds to employ these people?

Mr. Thomson: I had the authority - or the department does - to retain legal agents and to authorize them to engage in work that produces dispersements that have to be paid for. I'm having trouble recalling. I certainly know that we had discussions with the Department of Transport about what the cost of this work could be to them. I am not sure in my mind whether they had to go and seek specific added funds for that purpose or whether they decided that they would, as the client department, incorporate these costs - pay for these costs out of their existing budget.

The Chairman: In other words, you don't know whether you had discretionary funds under your control in your own department or whether or not you had to get specific authority from the Treasury Board?

Mr. Thomson: Yes. Part of the difficulty in answering your question, sir, is that the rules of government have changed in the sense that there are not reserves you can go to now to seek added funds for costs for like this. You're expected to find a way to incorporate them and my assumption is that both the Department of Transport's client department realized that in determining how they would come up with the money to pay for this. I also knew that I would be required to come up with the costs for any internal lawyers we assigned to the task.

The Chairman: If there was a submission to Treasury Board, would that be readily available through access to information, in your opinion?

Ms Bloodworth: No it would not, sir. It would be a cabinet confidence.

The Chairman: I see.

Ms Bloodworth: The fact that money was put into a budget would be certainly available; the actual submission would not be.

The Chairman: Yes. Now, you've told us pretty well what the functions of Scott & Aylen and Lindquist, Avey has been. Just to go back to Lindquist, Avey, these people are called - what is their name? Is it forensic auditors? Is that the name?

Mr. Thomson: I think that's correct, forensic auditors or forensic accountants. I'm not sure what the exact title is.

The Chairman: Are they accountants in the formal sense of the word? Are they chartered accountants or CPAs, or what? Do you know what their qualifications are?

Mr. Thomson: I can't answer that for you. I think there are some accountants that were part of that firm, but I'm sure there are other professionals as well. I could find that out for you and provide it to you, but I don't personally know of the specific qualifications. I think they're up to 12 people from that firm who have been involved, professionals who have been involved in this work.

The Chairman: You realize, of course, that they were going around invoking the name of the Department of Justice and interviewing witnesses?

Mr. Thomson: Well, I do know that at the beginning of their work - and my understanding is that this was done to assist counsel for the committee - they were involved in finding people and gathering witnesses for the purposes of the policy discussions that took place at the beginning of this committee's work. I know they did that. I have also been advised that someone within Lindquist, Avey at one point contacted two people who were external witnesses at some later date for the committee. My understanding is that had to do with the task we did give them, which was to go through this material, sort out which had to be pulled together and to amass it. We did not ask them to go and do a broad-based search for witnesses or do an external investigation. The task we gave them was to manage this material for us.

Senator Tkachuk: Just a point of clarification. What was your first point? You made a first point about witnesses and counsel.

Mr. Thomson: My understanding - and perhaps Mr. Nelligan can assist me with this - is that Lindquist, Avey did do some work, and Scott & Aylen as well, at the very beginning when there was a desire to prepare for what, I think, was the first thing you did as a committee, which was to review the overall policies and work of government relationship to airports, the policies over the years. My understanding is they did do some work to try to identify who would be the best people to come and speak to the changing government policies in this area. I may be wrong about that, but that's my understanding.

Mr. Nelligan: You're quite right, sir. What it was that they were good enough to provide us with a briefing session at the Department of Transport of transport officials so that we could acquire a background in the matter. We were advised by Mr. Hunter that the firm, which I know and respect as a senior forensic firm, had been hired for the purpose of collating the documents. I think that was the information that was given to us. But the witnesses were not as such. The department did tell us that they would nominate the witnesses who would appear on the first day here by way of briefing background, and that was also done.

The Chairman: And by the simple expedient of these people, strangers outside of government, from Toronto, I believe, taking an oath of confidentiality, you provided them with documents mostly from the Department of Transport but also some of them from the Privy Council Office, as you mentioned, Ms Bloodworth. And they were provided with these documents before the present ministry was sworn in.

Mr. Nelligan: You are right about the department; maybe not these individuals.

Mr. Thomson: Perhaps Ms Bloodworth can speak to this as well. We retained the firm as agents. We subjected them to the same confidentiality oath we do to anyone we retain as agents. The same was done to the people they employed, Lindquist, Avey, and, in order to do the job we gave them, which was to take all the material and organize it by witnesses so that we could then do the vetting task, yes, it was necessary for them to have that material. But I must say that that would be normal practice. The only way that we can have the work done is to give them the material and they did it as agents for the government doing work for the government in this area.

Senator Tkachuk: The law firm or Lindquist, Avey?

The Chairman: Yes. Counsel has just reminded me that I misspoke. When I was talking about Lindquist, Avey, I was talking about things which happened after May of this year. I suppose I can put the question maybe to Ms Bloodworth later on. I was now going back to the material made available on an oath of confidentiality to Mr. Nixon. That's what I was speaking about.

Mr. Thomson: I'm unable to speak to that.

The Chairman: All right. I'll ask the question to Ms Bloodworth in a moment.

With respect, however, to Lindquist, Avey getting material after May of this year with respect to the matters before this committee, they received the information by taking an oath of allegiance.

Senator Jessiman: Of confidentiality.

The Chairman: An oath of confidentiality - in my Boy Scout days, I think. We have wondered why, if the Privy Council Office who, I suppose, is responsible - is that correct - is providing documents by accepting an oath of confidentiality, we wondered why the council to a parliamentary committee has not been afforded the same privilege. It would have made it enormously easier to satisfactory the puzzlement and the frustrations of members of this committee if our counsel had been allowed, by taking an oath of confidentiality, in the loop. So that he could, with the others, agree and explain to us, satisfy us as to the reasons, the validity, of certain white outs. That would make enormous sense to us. It would have stopped a tremendous number of questioning if this would have been allowed.

Senator Stewart: Speak for yourself. You are saying "to us" but I think you are speaking for yourself and perhaps some other members of the committee. The "us" - you don't mean the committee as a whole, do you?

Senator Jessiman: Certainly.

The Chairman: Yes, certainly I do.

Senator Jessiman: Why wouldn't you? Wouldn't you want to know, as our counsel, if they have whited things out?

Senator Stewart: The problem is I haven't seen the documents to which the chairman made reference until just now and, frankly, I haven't been au courant with the discussions which he evidently has had with counsel, and so on .

The Chairman: Senator Stewart, you don't need any documents to either disagree or -

Senator Stewart: Look, we needn't take a long time on this. I think I've said enough to exempt myself from your "we".

Senator Tkachuk: Do all three of you exempt yourselves from -

Senator Stewart: I'm just speaking for myself.

Senator Tkachuk: You also said "we." "I", then, would be better.

The Chairman: All right, Mr. Thomson, I am sure my colleagues will want to return to these comments but I thank you. I want to return to Ms Bloodworth.

Senator Kirby: Can I ask a supplementary-

The Chairman: Yes, sure.

Senator Kirby: - just to complete this issue. Mr. Thomson, can you just explain to me what - I understand that the authority that both Lindquist, Avey and Scott & Aylen had, that authority in terms of having access to the documents for purposes of ultimately vetting them or at least for assembling them, that was granted by you or by the PCO? I don't mean by you, I mean by Justice or by the PCO.

Mr. Thomson: Well, the broad authority that they got by becoming employees of an agent of our department was the broad authority that made them employees of or agents of the government that would enable us to enter into the arrangement at all with them, which comes back to the issue that the chair is raising.

Senator Kirby: The "they", in this case you're talking about Scott & Aylen, or both?

Mr. Thomson: Well, Scott & Aylen and those whom they retained.

Senator Kirby: And Lindquist, Avey was in fact retained by Scott & Aylen.

Mr. Thomson: By Scott & Aylen and subjected to the same and very strict confidentiality requirements. So the broad authority that they had by becoming our agents - the capacity that that gave us to enter into this arrangement was done by the Department of Justice. The release of cabinet confidences to them was done through Ms Bloodworth's office and maybe she can speak to that.

Ms Bloodworth: Yes. Certainly I was part of that discussion, and I should correct certainly my view of it.

The chairman's certainly right that it was a conscious decision. This was not an automatic decision to give access to Lindquist, Avey and Scott & Aylen at all, and it was consciously thought through in the practicalities of the time. It was not simply a question of confidentiality oath. We took a number of precautions because we don't automatically allow access. I will not use the word "release" because release to me means releasing it publicly.

We retained them through a lawyer. This may reflect my personal bias, but I preferred to give the instructions to a lawyer and make a lawyer responsible for it, and he is responsible to us for any of their actions. We had an oath of confidentiality, but before there was an oath of confidentiality I insisted that the conventions on cabinet confidences and the convention on access to papers of a previous ministry be explained not only to our lawyer but to each of the individuals involved, and they all had to individually sign confidentiality agreements in order to ensure they would not only release confidences elsewhere but they would not discuss any of them or release any of them to either ministers or members of ministers staff of the current administration, who are also not entitled to see a great deal of this material.

The other thing that we did was - They actually don't have the documents on their premises; they have the documents on the premises of the Privy Council Office. We provided them with space so that they were not carting them away somewhere else; they are physically secure in our building. I should note, too, that we have not provided them with access to everything. They certainly have not had access to something like cabinet minutes, for example, because there was no question that we were going to reuse them. So those are the particular measures, then. Certainly I would have been involved in that, Senator Kirby, because I insisted on those measures.

Senator Kirby: When you said you preferred to give your instructions to a lawyer and then have the lawyer give the instructions to the other people, the lawyer you're talking about was a lawyer for Scott & Aylen or the lawyer was one of the PCO lawyers?

Ms Bloodworth: Scott & Aylen.

Senator Kirby: And knowing, from my days in the PCO, how the PCO always operates on precedent, or likes to - maybe it's just because there's a lot of lawyers around but, in any event, precedent is a big deal in the PCO - in looking at what documents you'd make available through this process did you look back to see if similar - Were you basing this on a process that had been followed elsewhere in the past? Did you look back to see what other cases there had been or was this a new process?

Ms Bloodworth: It's certainly not unusual that lawyers would have access to cabinet confidences generally in any case, and that would include-

Senator Kirby: Outside lawyers?

Ms Bloodworth: Outside lawyers.

Senator Kirby: I'm sorry, I've got to be quite precise here, I guess, lawyers for outside legal firms, right?

Ms Bloodworth: But I was getting to that. Lawyers, obviously when they're defending a case or representing the government in a case would often need access to those as well as others if only for the reason of helping in the preparation of the certificate required. If the government chooses an outside lawyer in those instances, there certainly are many cases in which the outside lawyer would have had access, too. So it's not unprecedented to do that. As I say, the reason we took what might be called extra precautions in this case were because of the concerns about the previous ministry documents - and we knew we would be talking about a large number of previous ministry documents - and also volume and the short time period. We wanted to ensure that those involved understood clearly that they were not entitled, if there was a document that had a confidence of Mr. Mulroney's government, for example, in it, that they were not entitled to show that to a member of the Minister of Justice's staff, and so on. So, in this case we took extra precautions. It's a fact of life that when lawyers aren't representing the government they would be-

Senator Kirby: Have access to cabinet confidences.

Ms Bloodworth: Yes. Not all, I should say. It's not blanket because we very rarely, as I'm sure you would realize, senator, give access to things like cabinet minutes, or so on. But there are cabinet confidences represented in a number of departmental other documents as well.

Senator Kirby: Right. And, therefore, making cabinet confidences available to outside lawyers is not a one off. I mean, it's has happened before.

Ms Bloodworth: It has happened before.

Senator Kirby: Thank you, Mr. Chairman. I just wanted to be clear on the process in my own mind.

The Chairman: I'll return to that in a minute. Ms Bloodworth, when this committee was established, when we received our reference from the Senate in May that a special committee of the Senate be appointed 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 Pearson International Airport and the circumstances relating to the cancellation thereof, when did that come to your attention? Who took the lead? Did the Privy Council Office say, "Now, boys and girls, here's how we're going to work?" Justice would take the lead, so and so would do the quarter backing? What's the process that you followed? What did you set up?

Ms Bloodworth: Well, let me say first of all, it certainly came to my attention as soon as it happened. In fact, as I recall I think I knew that it was being though about before it actually happened, but I could be wrong in that.

I don't think I could say there was an actual one department that said that. I mean, Justice and Transport and PCO were all involved from the very early stages as I recall, and George may have some recollection of that as well. I do recall having discussions, and there may have been meetings about how we would organize to handle that. In the course of those discussions, there was an agreement that the Department of Justice would take the lead because we were very conscious of the fact that we would have to have one department take the lead or else the chances of things falling between the cracks.

I can't honestly say where that idea originated. I just don't owe recall unless may be Mr. Thomson does. I know I was part of discussions at the time and was part of the agreement to do that, but I don't recall where it originated.

Mr. Thomson: I do recall meetings held that either involved Ms Bloodworth or people from her staff and a deputy from transport. And my recollection, sir, is that we first had those meetings in advance of that date because there was some advance knowledge that such a decision might be made - or at least a thought that such a committee might be established. And we did agree, we have - somebody's got to manage the work that has to be done by government in relationship to this inquiry. We had those meetings. And in light of the choices available to us, we felt that, and did recommend, Justice be that department.

The Chairman: So that Justice took the lead. Justice was the place that anybody who wanted to know anything would go.

Mr. Thomson: That's correct.

The Chairman: And you in turn delegated this responsibility to your senior assistant deputy minister, another Mr. Thompson.

Mr. Thomson: Yes, with a "P".

The Chairman: Yes, okay. Now, back to conventions, Ms Bloodworth. Under the convention that Senator Kirby referred to, the convention on access for papers of previous ministries -

Senator Kirby: I don't think I referred to it.

The Chairman: I thought you did.

Senator Kirby: It usually means leadership in front of it.

The Chairman: Well, it's a convention that exists in Canada and certainly in the United Kingdom. Under this convention, members of an incoming ministry agreed not to have access to the confidential documents and papers of preceding ministries. This convention has been recognized judicially. I'm not telling you something you don't know, I'm just doing this for the purposes of the record. The convention of cabinet confidentiality and the convention respecting access to papers of previous ministries were expressly recognized in Canada at the time, as you mention, of the change of the government of Mr. St. Laurent to the government of Mr. Diefenbaker and it was agreed that confidences of the previous ministry were to be seen only by persons who were members of the ministry at the time to which the information related and, in order to ensure continuity in government, by the Clerk of the Privy Council, and those few Privy Council Office members who might be specifically authorized by the clerk to have access for such purposes.

Since that time, the practice of ensuring the confidentiality of the records of the previous ministry has continued with the Clerk of the Privy Council acting as the custodian of the documents. But, you see, I don't see anything in that time honoured convention that adds to by the Clerk of the Privy Council and those few Privy Council Office staff members who might be specifically authorized by the clerk for such purpose. Now, you can take an oath of confidentiality. You can add that to that convention under certain circumstances. Is that not right?

Ms Bloodworth: No, Mr. Chairman, I would not agree with that.

If I could try and answer your question, because you're quite right, this is not an easy area to deal with.

Senator Kirby: Can I ask, Mr. Chairman, you were reading from a document.

The Chairman: I was reading from, well-

Senator Kirby: It's not to complain about documents, I'm just curious as to what you are reading from, that's all.

The Chairman: Well, I'll supply the document. The document is entitled - and I'll make it available to you - the document is the conventions respecting the - I will find it by the end of this and I will provide it.

Senator Kirby: Okay. Sorry.

Senator Stewart: This is difficult to follow, you know. This is very difficult. This is not easy material, Mr. Chairman and, although you seem to be familiar with the documents, I, for one, for example, have not had advantage of reading this document and as I said before, the ears are not sometimes as precise as the eye.

The Chairman: This is hardly a new document.

Senator Stewart: Yes, but we'd like to know what it is.

The Chairman: I'll get it for you. I'll find it in a minute. Just give me time to finish this. As soon as you start questioning the witnesses, I'll find it.

Senator Stewart: Sure.

The Chairman: Now, you say that the same principle of confidentiality is still in place but with exceptions under certain circumstances.

Ms Bloodworth: Perhaps, Mr. Chairman, if I could start by explaining, if I can call them different types of cabinet confidences maybe that would be helpful in getting to the practicalities we deal with.

And the first time is what I will characterize as what are normally the most sensitive cabinet confidences. Into that would fall cabinet minutes, to which there are very few public servants ever receive access let alone anyone else; briefing notes to chairs of cabinet committees, numbered cabinet documents that are actually retained physically and kept by the Privy Council Office. There are also cabinet confidences, however, that are found throughout government. That would be where there is briefing notes written by public servants that may contain a particular paragraph that says, "And at cabinet we understand the following views were expressed", and so on. Those are certainly cabinet confidences because they express some information that may be found. But as a practical matter, they are found throughout documents of the government. Those are the ones that I was referring primarily to by Senator Kirby that those are not unusual that people would have access to. And, indeed, we don't physically have control. We have to tell the departments to be very careful and by and large they are about those. However, the ones at the Privy Council Office are ones that we can take a definite decision.

What I'm saying is that, even in numbered cabinet confidences there will be drafts of those found in department files and we know that. And when we prepare a certificate for a court case, we simply can't do it without our lawyer having had a look at the document. So that's where they will have access. It is certainly not routine and I would not pretend that it would be. There is a definite decision, as there was made in this case.

The Chairman: Yes. And I'm not suggesting for a second that you would release cabinet confidences or meetings - not for one second. But I'm curious to know how far you would go in providing information documents from the Privy Council Office or Transport Canada to people who simply took an oath of confidentiality and were given the unexpurgated documents, no white outs, to take them to some place where the white out people were working.

Ms Bloodworth: Well, I guess I would say I would not agree simply to give it on an oath of confidentiality as a general principle. I did not in this case. And, indeed, even in this case they were not given everything. I mean, we certainly did not give them access to cabinet minutes, nor would I have agreed to do that.

The Chairman: No, no; I haven't suggested that. No, I'm not suggesting that. I'm suggesting that you did give, provide documents - Transport Canada did and the Privy Council did - to people who had simply taken an oath of confidentiality. And they were given the original, unexpurgated, pristine documents and collected them and took them to whoever was in charge of the white out department.

Ms Bloodworth: Well, I guess I'm agreeing that they had access. I guess I'm not agreeing with the characterization it was done simply on an oath of confidentiality.

As I explained earlier, we took other measures and Lindquist, Avey doesn't take them anywhere. They're in public, government premises.

The Chairman: Well, yes. They could take them down the hallway. I don't know where, how far-

Senator LeBreton: Just a minute. In other words, Lindquist, Avey had an office in the Privy Council Office?

Ms Bloodworth: They were provided with space to work in within the Privy Council Office's space with these documents, yes.

Senator LeBreton: Interesting.

Mr. Thomson: If I could add this, Mr. Chairman. I want to stress that the decision to retain Scott & Aylen and then have them retain Lindquist, Avey was not tied to the issue of cabinet confidences. It was tied to the difficulty of preparing, in a short period of time, for committee hearings that could potentially involve having access to up to 200,000 pages of paper. And that would include some material that would be subject to cabinet confidence. And that's where the decision of PCO was made with respect to what would be made available there.

But the decision to retain them was simply because the task involved was absolutely enormous and our ability to meet the time lines set was going to be very dependent upon getting someone who would go through all this material, organize it by witnesses, prepare the government witnesses for their appearances before these committees, this committee. And it was that which led to their retention. If it had been a very small amount of material and a lengthy period of time, then probably it would have been done internally. And I just want to separate the issue of why we retained then from the question of the decision to make some cabinet confidential material available to the committee.

The Chairman: I assume that the famous case of the Auditor General after the government for the Petrofina material, the Supreme Court ruled that this was a no, no. I gather that what the Auditor General was looking for was cabinet confidences, was it not?

Ms Bloodworth: Yes. And subsequent to that decision there was an Order in Council issued by the previous government that allowed the Auditor General access to certain cabinet confidences. But you're quite correct, the Auditor General did not get it through the courts.

The Chairman: Who gave that order?

Ms Bloodworth: It was an Order in Council issued, I believe, either in late 1985 or early 1986, subsequent to the court case.

The Chairman: So it was a formal Order in Council.

Ms Bloodworth: That's correct.

The Chairman: Yes. In the case of the honourable David McDonald in doing investigation into the RCMP. David McDonald.

Senator LeBreton: Donald.

Senator Kirby: No, David, RCMP.

Senator LeBreton: Oh, I see.

Senator Kirby: Capital "D" not little "d".

The Chairman: When he wanted information, there was a very formal resolution.

Ms Bloodworth: That's correct.

The Chairman: Prepared by - it was a cabinet decision.

Ms Bloodworth: That's correct.

The Chairman: So that cabinet has been very scrupulous, in observing this decision.

Ms Bloodworth: Well, that's correct, but the two instances you've referred to are both agents outside of the Government of Canada. I mean, the Auditor General is an independent agent of Parliament; commissions of inquiry are by definition independent and, indeed, as I recall it, the McDonald Commission is the only commission that cabinet confidences have been provided. But they are not agents of the Government of Canada. They are by definition outside of the government. So, when I referred to Senator Kirby in answer to him earlier I said I didn't use the term "release" because to me "release" means to give it beyond government-

Senator Kirby: Right.

Ms Bloodworth: - as opposed to within government control.

Senator Kirby: Right.

Ms Bloodworth: Once the cabinet confidences are released to the McDonald Commission, for example, they were free to publish them and use them. Similarly, the Auditor General, once the Auditor General has access to the limited group that he has access to, he is free to do what he wants with them. So there is a form of release beyond government.

The Chairman: Yes. Well, do you not agree that documents, however innocuous they might be, however innocent they might be, regardless of what they might be, of the Campbell or the Mulroney ministry, were released to Mr. Nixon, Robert Nixon, Mr. Goudge, his lawyer, Lindquist, Avey and, furthermore, were released to them before the ministry, the present ministry was sworn in.

Ms Bloodworth: Let me say again that "release" is not a term that I would use in any of those cases. So if we understand that, they certainly had access to them. Let me differentiate cases, though. Lindquist, Avey we've explained what happened, and certainly they got nothing before the current government took office because they were not retained until this spring. Mr. Nixon, it's my understanding - and I was not directly involved in that but I have made some inquiries - it is my understanding with Mr. Nixon that he had access to three Treasury Board submissions and one Treasury Board decision letter. It's also my understanding that the former clerk, it was not his intention that he would have access. Now Mr. Nixon was under contract with the government, so he's within government, if I can put it that way. But there's no right of access. It's a decision in each case. Scott & Aylen did not have a right to access, it was a deliberate decision as to how.

The Chairman: When was Mr. Nixon put under contract to "the government?"

Ms Bloodworth: Mr. Nixon was under contract with the Privy Council Office.

Senator Jessiman: What date?

Ms Bloodworth: Pardon me?

Senator Jessiman: What date?

Ms Bloodworth: I believe it was in late October of '93.

The Chairman: Before the present government, before the present ministry was sworn in, November 4.

Ms Bloodworth: No question about that.

The Chairman: Yes.

Ms Bloodworth: But as I started to explain it's my understanding that it was not the intention of the former clerk that Mr. Nixon would have access to any former cabinet confidences, and he told Mr. Nixon that. I have made inquiries and to my knowledge the only cabinet confidences that Mr. Nixon had access two were three Treasury Board submissions and a Treasury Board decision letter. But he should not have had access because the clerk did not intend him to have access. There was apparently some breakdown in communication somewhere; I cannot explain what that was, not having been directly involved. But in that case, there could have been a decision because he was under contract to give him access. The former clerk's decision was not that, but he did. I can only speculate what happened. Either there was a break down in communication or, as I referred to earlier before, there are as a matter of practice, different types of cabinet confidences and it is a fact that public servants generally probably don't see Treasury Board submissions in the same category as memorandum to cabinet. I think, Senator Kirby, that would have been true from your-

Senator Kirby: I agree.

Senator Tkachuk: May I ask a supplementary on that? Those three Treasury Board documents that you mentioned that he shouldn't not have had access to, did he ask for Treasury Board documents or were they offered up to him?

Ms Bloodworth: I can't answer that, senator. I was starting to explain why - my speculation as to how he may have got access. Either the public servants involved who gave it to him were not aware for some error having occurred of the clerk's view that he should not have had access; or they may, as I started to say, not have viewed these as cabinet confidences. I mean they should have; that was an error, but it is a fact that people do not see Treasury Board submissions -

Senator Tkachuk: Who would have them?

Senator Kirby: In the Treasury Board, all kinds of people.

Senator Tkachuk: No, I'm just asking her.

Ms Bloodworth: Treasury Board would have them but so would departments have copies of all these.

Senator Tkachuk: All departments, or in this particular case does transport send their Treasury Board documents to all other departments or do they just keep them themselves and file them with Treasury Board. Does everybody else see transport's Treasury Board documents?

Ms Bloodworth: I doubt there would be a general distribution but transport would have them; there may be other departments, other interested departments may have a copy, I don't-

Senator Tkachuk: So another department would just write a letter, say, "I'd like to see your Treasury Board document on this", is this the way it works?

Ms Bloodworth: No.

Senator Tkachuk: No? Tell me how it works exactly.

Ms Bloodworth: There would be other departments who may well have had an interest in that case, that particular Treasury Board submissions.

Senator Tkachuk: So in this particular case of the airport, who else would have an interest besides Treasury Board and Transport?

Ms Bloodworth: I can't answer on the specific case, senator. I don't know flow enough about the specific case.

Mr. Thomson: I think, senator, it might be important to distinguish the broad issue which is some times Treasury Board submissions that are submitted by one department relate to an expenditure or a decision that affects another department. So I, for example, as the deputy minister in justice, might want to look at - in fact be part of developing a Treasury Board submission that might have a relationship to expenditures on lawyers, for example. So they may be more broadly circulated. Whether these particular ones were more broadly available or more broadly circulated, I'm not sure either one of us knows the answer to that.

Senator Tkachuk: So once Mr. Nixon sees them, are they then public documents in the sense that once he sees them are they the background documents that we would receive?

Ms Bloodworth: No, senator, they are not public documents because I return again to the difference between Mr. Nixon and, indeed, Lindquist, Avey or Scott & Aylen. They were retained as people working for the Government of Canada and doing -

Senator Tkachuk: No. If Mr. Nixon has the three documents, right?

Ms Bloodworth: He doesn't have the three documents, senator.

Senator Tkachuk: No, but he Saw the three documents.

Ms Bloodworth: Yes, he did.

Senator Tkachuk: So, what happens in that case? Does someone say, "We have a whoops here and this should be deleted from your consideration"; or "It's now part of your consideration and, therefore, you can use it in your report, which is a public report but these three documents, they passed the whoops stage and you can now use the information in these three Treasury Board documents and make them public."

Ms Bloodworth: Well, it's not my understanding that Mr. Nixon made the Treasury Board submissions public.

Senator Tkachuk: No, no but the information within it. Would he have then been told that he can't use that information? Like I don't know how it works because I'm not a lawyer or anything, you know, but I would say in a court when someone says something - 'cause I watch TV, when someone says something that shouldn't be used, the judge says, "Strike that from the record", you know, "Don't put that in the record." Now he received a Treasury Board document - three of them - that he shouldn't have seen, right?

Ms Bloodworth: Hm-hmn.

Senator Tkachuk: Right? So, like, is it a whoops, or he can now use that information and make it public?

Ms Bloodworth: Well, first of all in this specific case I'm not sure that anyone realized until I made inquiries in relation to this inquiry as to the fact that he shouldn't have. I mean, that's what I'm saying.

Senator Tkachuk: Oh, so he could have used it. He obviously did use that information.

Ms Bloodworth: But the information - and let me return to what the nature of Treasury Board submissions - especially in relation to a contract, it would be unusual to have a case in which the actual information was not available elsewhere than the Treasury Board submission. So the information would have been available widely throughout a number of documents in the Department of Transport. What the submission would do would pick out the pertinent information that needs to go to Treasury Board and it would provide some recommendations for ministers and put forward the considerations they should consider.

But the information about the contracts in question would be widely - in fact I believe this committee has heard a lot of-

Senator Tkachuk: But I'm asking about the Treasury Board documents.

Hypothetically - not in this particular case - once someone sees them they can now use that information from those three Treasury Board documents in their own information, i.e., the Nixon report, make them public?

Ms Bloodworth: No.

Senator Tkachuk: He can't?

Ms Bloodworth: No.

Senator Tkachuk: But he did?

Ms Bloodworth: Well, I'm not aware that he made the Treasury Board submission public.

Mr. Thomson: Or the information contained within it. I think he'll have to answer that question, I'm afraid, I don't know.

Ms Bloodworth: But let me return to what I think is behind your question, senator, and it is an important issue you're raising. If cabinet confidences are released to someone outside the government by someone with ostensible authority to do so, in fact the privilege is waived - and there are court cases to that effect. That's why the distinction of whether they're related to the government or not is an important one. Mr. Nixon was under contract with the government. We would not consider it a waiver of the privilege generally by the fact that Mr. Nixon has seen them.

Senator Jessiman: I have a copy of a memorandum dated November 1, 1993 to Mr. Nixon. And it's signed by W. A. Rowat, enclosing 17 documents, of which four in our document is whited out. Do I assume that he received those that are whited out as well?

Ms Bloodworth: Yes.

Senator Jessiman: So he got the actual documents and we don't know what four of them are.

Ms Bloodworth: Well, I just explained to you what they were in general terms, senator. They were three Treasury Board submissions and a Treasury Board decision letter.

Senator Jessiman: So those are the four. That's number one, number nine, number 12 and number 14.

Ms Bloodworth: Well, I don't have the paper in front of me but they were on that document as I recall.

Senator Jessiman: Do you know if he received any other documents?

Ms Bloodworth: No, and I have made inquiries, senator. As far as I can determine, that is the only cabinet confidence Mr. Nixon had access to. Indeed, Mr. Nixon had access to much less information than this committee has had - certainly in terms of volume.

Senator Jessiman: Can we get copies of this?

Mr. Nelligan: You have talked, Ms Bloodworth, about Treasury Board decisions. At page 12 of Mr. Nixon's report, he refers to Treasury Board submissions. Would that be included in the decision, or is that a separate document?

Ms Bloodworth: No, submissions are a separate document. That's why I said there are three Treasury Board submissions.

Mr. Nelligan: Submissions. Oh, I thought you said-

Senator Kirby: No, she said submissions.

Ms Bloodworth: Yes, and one decision one.

Mr. Nelligan: Okay.

The Chairman: I just have one last question before I get the documents that Senator Stewart requested.

These Lindquist, Avey people were given space in the Privy Council Office so that they wouldn't be going down the street carrying all these bundles of documents. Now, where was the white out department?

Ms Bloodworth: I'm not sure where it physically was. The people who made the deletions were public servants. They were mostly members of the Department of Justice, but there was at least one member of my staff that was involved in that from the cabinet confidence point of view.

Mr. Thomson: Senator, my understanding is that the "white out" department, or the people who vetted the documents and then would white out those was located in the Department of Justice. So that the material that would be gathered for a particular witness would be brought to this group in the Department of Justice and they would do the vetting and the whiting out, if there was any, would be done there.

The Chairman: I see. How many people, approximately, involved in the whiteout department?

Mr. Thomson: If there is a break, I can probably give you an exact answer. I know for sure there was one person who was an expert in the area of access to information and privacy and also an expert on solicitor-client privilege. There was at least one person from the Privy Council Office. I can give you the exact number of people.

The Chairman: So that's the assembly line that went down, and someone said, "Charlie, this is yours. It's solicitor-client privilege, and you take a crack at it first."

Mr. Thomson: I think we had people with broad expertise in this area as opposed to dividing it up that way, but there was an identified team whose job it was to go through all of that material, when made available, and then to apply the conventions and practices we have spoken of.

The Chairman: And they were not required to take an oath of confidentiality.

Mr. Thomson: No. They were all employees of the Department of Justice. They were all subject to that oath as part of their job.

Ms Bloodworth: They were all public servants.

The Chairman: Thank you very much. That's all I have.

Senator Bryden: I just had a point I wanted to refer to. I had raised, I think, maybe a week and a half ago, that I had wished that this portion had happened at the beginning. I now have a double reason for wishing that because then I would not have been constrained on my time in the manner that I have been in the past. I notice that you've been able to consume an hour and three-quarters.

The Chairman: There's no limitation placed on the chairman.

Senator Kirby: That's a Cape Breton rule.

The Chairman: Which of you three gentlemen want to take a crack at this? Senator Stewart.

Senator Stewart: Thank you, Chairman.

Am I correct, chairman, in believing that the document from which you quoted earlier with regard to cabinet confidences of a previous ministry was the case in the Federal Court of Canada, Auditor General of Canada and the Minister of Energy, Mines and Resources, et. al., and the material that you quoted was provided in an affidavit of one Ward Elcock, signed February 1, 1985, supported by another affidavit from one J.F. Osbaldeston, and that would be signed March 5, 1985?

The Chairman: The documents that I am prepared to give you, as soon as I can find my assistant, are more voluminous than that and contain those particular things to which you refer.

Senator Stewart: Mr. Chairman, I think you have opened up a most important topic. May I suggest that the various documents from which you have quoted and to which you have referred be included as an appendix to the proceedings of the committee for this day, or at least that that be considered. It may be that the committee will not want to have the entire document, but at least the relevant portion. I think you may be too modest in understanding the importance of the topic to which you have addressed yourself.

The Chairman: Modesty is not one of my virtues.

Yes, we will do that.

Senator Stewart: Mr. Chairman, as you know, back in May when the motion to set up this committee was before the house, I anticipated some of the difficulties in which we find ourselves, but I'm not going to say "I told you so". It's one thing to say there may be shoals and reefs out there, and it's quite another thing to sail into troubled waters and discover shoals and reefs. In the second instance, one knows more precisely than one would by mere speculation the nature of the shoals and reefs. So the discussion in which you have led us this morning may not be entirely untimely.

The Chairman: Could I respond just for a moment?

Senator Stewart: Surely.

The Chairman: I think what I am trying to find out, understanding these conventions as best I can and having studied them, is whether or not committees of this type in the future are going to go on a Quixotic adventure. That's what I'm trying to find out.

Senator Stewart: We agree that the discussion which we are now having is of significance far beyond the specific matter of the Pearson airport.

The Chairman: I agree.

Senator Stewart: Consequently, we ought to proceed with great care and with precision. I assume you agree.

Senator Tkachuk: Are you going to go out there and -

Senator Stewart: No. I'm going to try to be as precise as I can be. Where I have uncertainties, I'm going to try to remember to declare them before the committee.

Senator Tkachuk: Go ahead. I just want to make sure we stick to what we want to try if we're going to go on a theoretical journey here. One, I don't think that's relevant to the resolution of the Senate; but, nonetheless, if you are going to ask them questions as to how they relate what they have been delivering to us, I think that's good stuff to know. You guys can have that discussion anytime.

Senator Stewart: I can assure you that I won't raise any topic that was not already raised by the chairman this morning. Is that satisfactory?

Senator Tkachuk: Don't ask me.

Senator Stewart: Well, you are the one who is indicating a possible dissatisfaction.

First, I wanted to ask about the client-solicitor relationship. Let me say first that I'm going to make a distinction between Her Majesty the Queen, on the one hand, and the Crown, on the other hand. Sometimes in the literature, both theoretical and practical, the Crown means the Queen, but at other times the Crown is a very amorphous and inclusive entity which includes public servants and so on. So I'm going to make that distinction for the sake of clarity.

Let me come at it this way. I'll go through this so that you'll see where I'm going before you start answering.

Am I correct in believing at law that the Crown is a single entity? The Department of Justice and the Department of Transport are all part of the Crown, with "the Crown" having that inclusive meaning which I explained earlier. If that is the case, then is it not misleading to speak of, in this particular instance, the Department of Transport as the client and the Department of Justice as solicitor?

Sure. I admit that ordinarily this may be a useful analogy, but when we get into a situation such as the one which is now before this committee, is this not misleading? Is there not a fundamental distinction in the relationship between a private person who engages a professional solicitor open to receive the business of other private persons, and the relationship between the Department of Justice and the Department of Transport?

Mr. Thomson: I think, senator, you raise an accurate point and an important point in asserting that all of the employees in question are part of the overall Crown in the sense that we are all Crown employees. Overall, we are part of the Crown in right of Canada.

I think you are also right that there is a Crown interest or a broader interest of the Crown that can transcend that of the individual departments. If you apply that to the issue of solicitor-client privilege, I think it can be properly said that where the privilege exists and the decision is made who the client is for the purposes of waiving that privilege, I may be speaking too narrowly when I speak solely of the department itself. I think the broader Crown as a whole might have an interest and we, as lawyers, serve the Crown, as well as doing work for individual clients who are part of that Crown.

I don't know whether that answers your question. Perhaps Mrs. Bloodworth may want to add to that.

Senator Stewart: I guess your answer is helpful in that you talk about waiving privilege because the implication is, to use the analogy, that the client department could waive the privilege. I'm suggesting to you that here the analogy may be misleading, that it would not be up to a particular department to waive privilege as if the relationship between that department and the Department of Justice is comparable to that between a private person and a professional solicitor on Main Street.

Mr. Thomson: I think that's correct.

Ms Bloodworth: If I could add, senator, I think what Mr. Thomson has done is avoided getting into the difficulties we internally may face with waiver because you are quite correct. As a practical matter, there are many instances that involve solely the department. That analogy of justice as the lawyer and the department as the client is quite sufficient for the purposes of it.

Senator Stewart: Yes, a useful analogy.

Ms Bloodworth: But there are many instances, as well, where there are broader Crown purposes. I speak up as one who often gets involved in the broader Crown purposes.

The Chairman: But let's be clear. There is a solicitor-client relationship between your Department of Justice and every department of government. Is that not so?

Mr. Thomson: When we give advice, yes.

Senator Stewart: Now, do you say that advisedly, or are you simply back onto what I have called "a useful analogy"?

Mr. Thomson: Well, my view would be that when we, as lawyers within government, give legal advice to a department or to a central agency or to the government as a whole, we are functioning as lawyers and the solicitor-client privilege -

Senator Stewart: No, no. Surely you are not. You say "as a lawyer". You are not giving advice as a lawyer. You are giving advice as an employee of the Crown. Now it is true that you are a lawyer.

Mr. Thomson: I guess I am suggesting, senator, my understanding is that privilege attaches not because I am a Crown employee, but because I am a lawyer giving legal advice.

Senator Stewart: So you are saying that the client-solicitor relationship overrules the integrity, in the old sense of the word, of the Crown?

Please. This is getting very close to high treason, isn't it?

Mr. Thomson: I guess I'm saying that when, as a Crown employee, I function as a lawyer, I'm subject to the rules that apply to me as a professional, including the rules of professional responsibility. As well, the solicitor-client privilege is relevant to the legal advice I give to the Crown as a lawyer.

Senator Stewart: I must say, then, that I find your answer very disappointing coming from a deputy minister of Justice. I invite you to reconsider.

Let's go on.

Questions have been raised about the priority of obligation of persons under oath before a parliamentary committee. Would you distinguish between the situation or status of a private person and that of servants of the Crown?

Ms Bloodworth: Yes. I think there is a distinction, and certainly in practice there has been a distinction. Public servants appear before parliamentary committees on behalf of ministers. They don't appear, subject to rare instances - I guess it would be possible - in their own capacity. Therefore, certainly they are subject to their obligations as a public servant.

Senator Stewart: But could you be more specific as to the inhibitions under which a servant of the Crown would testify?

Let me help you. I assume that a servant of the Crown - for example, a minister - would have to take into account the possible limitations imposed upon her or him by the Privy Council oath.

Ms Bloodworth: That's correct.

Senator Stewart: Is the Privy Council oath prescribed in a statute, or is it an ancient prerogative? Is it based on the ancient prerogatives of the Crown?

Ms Bloodworth: I'm not sure I can answer that, senator. As I recall, when ministers are sworn in, there's more than one oath they take. I think one of those oaths may be -

Senator Stewart: They take an oath of allegiance, and they are sworn off the Privy Council.

Ms Bloodworth: Yes, and I think they also swear an oath that has to do with doing their best, faithful service. I believe that some of those oaths are in statute, but I can't answer for you whether all of them are. Certainly the Privy Council oath, whether it's in statute or not, predates statute. I mean it's one that goes back before statute law.

Senator Stewart: All right. So there is one impediment to free response to questions in a parliamentary committee that would have to be taken into consideration by a witness. I don't want to go beyond "taken into consideration". Is that correct?

Ms Bloodworth: That's correct.

Senator Stewart: What about the Official Secrets Act oath as prescribed by the Official Secrets Act? That too would have to be taken into account; am I correct?

Ms Bloodworth: I believe that is an oath applying to public servants as opposed to ministers.

Senator Stewart: In that case, it is clearly a statutory -

Ms Bloodworth: Yes.

Senator Tkachuk: Just a supplementary to something she said.

You said that when a public servant comes here to testify, he's testifying on behalf of the minister.

Ms Bloodworth: Yes.

Senator Tkachuk: Presently?

Ms Bloodworth: Any time any public servant appears before a parliamentary committee, they are doing so because the minister has consented to them appearing.

Senator Tkachuk: So Mr. Rowat, Mr. Desmarais, Mr. Barbeau, all of those people who work in Transport, they are here on behalf of Mr. Young.

Ms Bloodworth: Certainly the ones who work in Transport would have been.

Something unusual has happened in this committee that is not usual, and, that is, former deputy ministers of Transport appearing. That is not usual to happen because of the principle of public servants appearing on behalf of ministers. That's maybe an abberation, if I could put it, from the general principle. I'm not sure whether one could say that they are appearing on behalf of the minister strictly or not, but certainly that's described in this booklet on notes on the responsibility of public servants.

Senator Tkachuk: So what they have said in this committee here under oath is on behalf of their present minister, i.e., the ones who are presently working in Transport.

Ms Bloodworth: Yes. I guess I could put it the other way.

Senator Tkachuk: So what happens if the minister contradicts what they have said here?

Ms Bloodworth: Well, the minister is free to do that. I'm not sure I understand the question.

Senator Tkachuk: I'm just asking. Are they speaking on behalf of the minister?

Ms Bloodworth: No, they are not speaking on behalf - they appear on behalf of their minister. Perhaps I'm best to use the notes here to describe that. They certainly don't - there's no way what public servants say before a parliamentary committee limits ministers in some way. I'm saying that if a minister theoretically was to say "No, that public servant is not going to appear, and I'm going to appear instead," that minister would be free to do that. I'm not saying it happens often, but they are free to do that.

Senator Tkachuk: Okay. I just find it ironic.

Senator Stewart: In the case of the oath under the Official Secrets Act, we've established that that is a statutory oath, an oath prescribed by the Parliament of Canada and not by the House of Commons alone or by the Senate alone. Am I correct, therefore, in assuming that an oath to tell the whole truth, for example, before a House of Commons committee would be inferior to the obligation imposed by the statutory oath imposed by Parliament as a whole?

Ms Bloodworth: I don't think I would describe it as "inferior".

Let me just correct one point. I believe the oath that public servants take is in the Public Service Employment Act as opposed to the Official Secrets Act.

Senator Stewart: But some do take the oath under the Official Secrets Act.

Ms Bloodworth: But I wouldn't refer to them as "inferior". If I was to appear before a court, I would swear the oath that I did this morning, and I wouldn't consider that inferior to my oath as a public servant. It's a different oath. They don't necessarily contradict one another.

Senator Stewart: Not necessarily, but in some cases they may. I am raising the question if an oath which is statutory, that is, authorized by the Parliament of Canada as a whole, as distinct let's say from the House of Commons or the Senate, is not a superior obligation.

Ms Bloodworth: I guess what I'm having trouble with is I don't see a contradiction between the two oaths.

Mr. Thomson: Perhaps I could assist, senator. I think the obligation to tell the whole oath is simply an obligation that in those areas where you are permitted to give evidence, that shall be truthful evidence. It shall not be half truthful evidence; it will be the whole truth. That's a different issue than the question of what statutory rules, what conventions, and what practices apply with respect to what you may testify about.

Senator Stewart: But then you are, I think, making my point for me by using the word "permitted". The implication is that there are certain limits on what elements of the whole truth you may divulge. I suggest that one of the limits are the limits imposed by the Official Secrets Act in the case of a public servant who has taken that oath.

The Chairman: Could I ask a question?

Senator Stewart: Sure. Could we have the answer before and then -

The Chairman: I think the deputy minister has just given the answer. I was just going to give an example.

Senator Stewart: No, I don't think he has, Chairman.

The Chairman: We had the example of a deputy minister coming before this committee and having the temerity to say, "I so swear, subject to my Privy Council oath."

The oath that we're asking witnesses to take is to tell the truth. It's a matter of judgment as to whether or not they can answer the question or whether their oath to the Privy Council is there. A truth is a truth; it's not conditional.

Senator Stewart: You seem to think, chairman, that this is an easy matter. I think it's much more complicated than that.

The Chairman: If you are asking God to bring evidence as to the truth of your statement, that's got nothing to do with the God damned Privy Council!

Senator Kirby: It may depend on your definition of "God", Mr. Chairman.

Senator Stewart: But suppose you have sworn before God in one case not to divulge confidential information, and in another case, you come in here and swear to tell the whole truth.

The Minister of Justice has told us that, in this situation, the obligation under the second oath, the committee oath, is to tell only that part of the truth which he is permitted to tell. This is the problem, Chairman. I don't think it's easy.

Ms Bloodworth: I guess in my mind it is not dissimilar to the case of a witness in court. If I was to go and be a witness in court as a lawyer, for example, the fact that I swore the oath to tell the whole truth does not relieve me from my obligations not to reveal solicitor-client privilege. To me, the whole truth, whether I swear an oath or not - I've been before a number of parliamentary committees, and I've never sworn an oath before, but I've never lied before either.

Senator Jessiman: We are not suggesting that you are lying now.

Ms Bloodworth: I just don't see them as inconsistent, is what I'm saying. I think that an oath to tell the truth, the whole truth and nothing but the truth simply means subject to the normal laws and privileges and practices that exist in the body in which you have sworn the oath.

Senator Stewart: What we are trying to discover is what those normal limitations are. The chairman seems to feel that there are none, and you seem to imply that they are limits.

Senator Jessiman: In practice.

Ms Bloodworth: Yes.

Senator Stewart: I see you nodding your head.

Mr. Thomson: I'm only, senator, agreeing with the Chair that there is a distinction between your obligation to tell the truth overall on whatever you testify about after you have given an oath, versus the debate we've had for actually much of the morning about what are the conventions, statutes and rules with respect to what you may testify about. So if that is the distinction being made by the chair, and I understand that's what it is, I would agree with that.

Senator Stewart: We've talked about the solicitor-client privilege. Is that simply a matter of practice? I'm avoiding the word "convention" because in the trade, the word "convention" has a specific meaning.

Mr. Thomson: Well, Mr. Nelligan may be able to assist me with this. It's a privilege that is well established in law and has been reinforced and affirmed by the courts. It is repeated in our professional obligations that are established for us as lawyers.

Senator Stewart: All right, fine.

Chairman, I think this may be important. Is there a common-law right for a witness not to incriminate herself in response to a question, in questioning under oath?

Mr. Thomson: In general, the law of our country is "no" to that unless there are statutory exceptions created. There are some situations where evidence acts, for example, will say you may not be asked certain questions. You may not be required to answer certain questions. You have a privilege to refuse to answer certain questions, but those are established by statute. Overall, there is not a broad right in our law to simply refuse to answer a question on the basis that it might incriminate yourself.

Senator Stewart: Chairman, please don't think I'm being antiquarian. I assure you that -

Mr. Thomson: I might say, senator, I should also say that there are obviously special rules in relation to criminal proceedings where those who are accused may not be required to testify at all.

Senator Stewart: This is a very important topic, Mr. Chairman. I assure you, I don't want to be antiquarian about this, but I think there's a point here that we ought to make clear.

I didn't go to the bowels of the library to dig into this, but in 1742, Sir Robert Walpole was defeated in the Commons and resigned. It was proposed by some members of the House of Commons that there be an investigation to discover how much money he had got away with. The chief officer of the treasury refused to take the oath. Indeed, he threatened the Middlesex justices who tendered it to him. He wanted to fight Pitt. Of course, the committee was outraged, but they couldn't break through his common-law right not to give testimony which might incriminate himself.

In an attempt to solve their problem, they brought in a bill of indemnification, but they couldn't get it through the House of Lords. So Walpole got away with all the money.

You've told us, if I understood you correctly, that a witness appearing before this or any other parliamentary committee could not refuse to give evidence on the ground of a common-law right against self-incrimination; is that correct?

Mr. Thomson: That's my understanding. I'm feeling some temptation, as lawyers always do, to get into it on a "on the one hand, on the other hand" kind of discussion, but, in general, I would agree with that statement.

Mr. Nelligan: There is, of course, a constitutional protection of using that evidence against them on another proceeding.

Mr. Thomson: That's correct as well.

Senator Stewart: But that's not the 1867 act. When you say "the Constitution", do you mean -

Mr. Nelligan: The Charter. Our Charter.

Senator Stewart: All right, you are not using the Constitution in the broad sense.

Mr. Nelligan: So if Mr. Thomson admits robbing a bank here, we cannot use that evidence against him in subsequent criminal proceedings.

Senator Stewart: That's part of our Charter, but it's not under the Constitution in the broad sense.

Mr. Nelligan: Well, I thought the Charter was part of our Constitution.

Senator Stewart: Yes, but I wanted to be more specific than that.

Reference was made earlier to Treasury Board documents. Sometimes we fail to distinguish between the board, which is a committee of ministers, and the secretariat. To what extent would Treasury Board have been involved in putting together what I will call the "Pearson airport deal"? What, at law, was their role?

Mr. Thomson: I don't think I can answer that question, senator, because I don't know what specific role they played. I'm assuming, given the nature of the arrangement and the financial and other implications, that they were clearly involved at a number of stages in this process, but I can't answer that. I could get you that answer.

Senator Stewart: I guess the question is, would it have been, at law, their task to give their approval to the whole package, or would the business that went to the Treasury Board deal only with specific aspects of the whole package?

Ms Bloodworth: Let me premise this by saying that I think, senator, you are probably asking the wrong people since neither of us had any involvement in the Pearson deal, but let me explain, generally, Treasury Board.

As I understand it, Treasury Board has - there are certain agreements that must be approved by Treasury Board but not all. I can't tell you what all of those details are, but there are. So I suspect the same was true in Pearson; but, as I say, neither I nor Mr. Thomson had any involvement in Pearson.

Senator Stewart: Mr. Chair, Senator Kirby wants to ask -

Senator Kirby: Just a short supplementary perhaps because some members of the committee aren't as familiar with what I would call the "Treasury Board process". Do you want to distinguish between - could you help us by describing the difference between a Treasury Board submission and a cabinet submission? I know they go to different groups of people, but I happen to agree with the statement you made earlier, which is that traditionally around Ottawa, they have been regarded as different levels of secrecy, even though they may be formally secret. Maybe you could help the committee a bit by explaining what the difference is between a Treasury Board document and a cabinet document, and then perhaps enlarge just a little on kind of the historical reasons as to why they have - and I agree with you - been regarded as somewhat different in terms of importance.

Ms Bloodworth: I was careful not to use "importance".

Senator Kirby: No, I used "importance". You did not.

Ms Bloodworth: Let me preface by saying that these are generalizations. Like any generalization, there would be exceptions.

Senator Kirby: Right.

Ms Bloodworth: In general, the Treasury Board, under the Financial Administration Act, has the responsibility for approving a number of expenditures and approving a number of ways in which money is expended, including contracts and some others, by the government of Canada, by, particularly, departments. When you get out to agencies, it can differ. They are also the employee for the public service, per say, so there are a number of personnel issues that would go. That means that, in general, the nature of Treasury Board submissions tends to be somewhat technical. Now, that's not to say they cannot contain views of ministers or disputes about a particular thing, but, in general, they tend to be technical about contracts, about personnel matters, that type of thing. That's, as I say, a generalization, but that would be the nature of what they are.

Memorandum to cabinet are proposals by a minister or ministers to the cabinet for particular policies, directions of the government of Canada. Some may involve legislation, some may not. As such, they will outline, normally, the pros and cons of various options or ways to proceed in a policy area. They will contain recommendations to ministers of which way to proceed, and they will normally be quite explicit about differences that may exist among various departments and/or ministers about those. So they tend to be more sensitive in that way.

Having said that, there's no question that Treasury Board can deal with some very sensitive issues. I think perhaps the Pearson deal was one. It's just the nature of the way in which it goes to it because of what they deal with tends to be more technical.

Senator Kirby: Is it fair to say that the Treasury Board submission deals frequently with the implementation of a policy, the policy having been set by cabinet in the sense that often to implement a policy, you need either human resources or financial resources, and that the Treasury Board submission deals, in large measure, with the approval of those consistent with a cabinet policy, the cabinet policy having been established some time or at some earlier point in time?

Ms Bloodworth: I would agree with that as a generalization. I think there are also statutes that require Treasury Board approval.

Senator Kirby: I understand that.

Ms Bloodworth: But I want to be careful not to minimize the Treasury Board because they do deal with - obviously by the very nature of the types, not every contract goes to Treasury Board. Not every personnel policy goes to Treasury Board. So they can have some very sensitive issues. But, in general, I would agree it's implementation as opposed to policy in the big sense, if I can put it that way.

Senator Kirby: Right. Well, let's put it this way. Most of the issues going to Treasury Board would have been preceded at some time, weeks or months in advance, by a submission to cabinet which dealt with deciding what the appropriate policy ought to be. Most, but not all. I understand not all.

Ms Bloodworth: I'm not even sure whether I could say "most", and the reason I say that is because I never looked at it in particular. In some cases, it may be something within a minister's authority, but generally the policy part, but for particular aspects, needs authority. I am agreeing that's possible, but I do not know the proportion.

Mr. Thomson: It is a fairly common practice that the policy itself be approved by cabinet, and then the implementation or the financial implications of that would then come back through Treasury Board. That's seen as a followup to the cabinet approval of the policy itself.

Senator Kirby: Is the reason that historically within Ottawa in general, within a bureaucracy in general, Treasury Board submissions have not been thought of as the same degree of secrecy as involve cabinet submissions? In a sense, in a cabinet submission, you are really dealing with what the government's policy ought to be, is likely to be, and what the options for government policy are. In fact, in Treasury Board submissions, you are frequently dealing with the question of how you implement it, the policy decision having been made, and, bluntly, the politically sensitive pieces to policy decision, much more than the implementation decisions. We may not have an example of that for the purposes of this committee, but, generally, isn't that generally how it works?

Ms Bloodworth: I would agree generally. I guess the only thing I would dispute is the word "secret". There's no question that we would protect Treasury Board submissions as cabinet confidences because they are. They are certainly seen as less sensitive.

Senator Kirby: Fine. "Sensitive" is a better word. Generally, they would be regarded around town as "less sensitive". It is a better word than "less secret".

Ms Bloodworth: Yes. I think that's what I would agree with.

Mr. Thomson: If I could add one thing, too, I think as well, Senator Kirby, that sometimes the difficulty or at least the failure to recognize Treasury Board submissions as cabinet documents arises from the fact that people tend not to think about the fact that Treasury Board is a committee of cabinet and material is on its way to cabinet, whereas nobody has any doubt in their mind that memoranda to cabinet that are coming through the cabinet committees themselves are on their way to cabinet. That, obviously, is a distinction that's not valid, but its one that I think is in the heads of many people and can lead them not to see the two documents in the same way as they ought to.

Senator Kirby: Right, and I think that has been true for a long time. I don't think that's a recent phenomenon.

Senator Stewart: There are two more aspects of our discussion of the Treasury Board that I want to bring up.

In the case of a complicated deal such as the Pearson airport deal, which involved apparently scores of contracts, not all those contracts would have to be put before Treasury Board. Am I correct? I believe there are statutes which say that, for example, lease of Crown land would require Treasury Board approval. A minister could not do that on his own, even if it were part of a larger deal being made on behalf of the Crown by his department.

Ms Bloodworth: I think that's true, senator, but let me just preface it by saying that I don't know the detail in this case. I've certainly heard that some had to go and some didn't have to go to Treasury Board. That would be consistent with what I said, but not every contract goes to the Treasury Board of the Government of Canada.

Senator Stewart: All right. The second thing on the Treasury Board is a matter that Chairman MacDonald raised earlier, and that is where approval would have been found to expend money to engage persons not normally in the service of the Crown. This is a topic on which, over the years, I've had a good deal of interest, as people from the Treasury Board could tell you.

In the bad old days, I gather that departments in their Estimates put before Parliament would have a fair amount of - probably on the street it would be called "fat". In other words, money that could be used, not wastefully of course, but at their discretion, would not be subject to a specific grant by the House of Commons. Yet, you have told us that the amount of fat, the amount of discretionary money has been considerably reduced. Would a department such as the Department of Justice, confronted by what it regarded as a need to engage an outside firm, have to go to Treasury Board, or would there be some line in the parliamentary appropriation, provided there was money there, which might be used to pay those persons?

Ms Bloodworth: Let me, first of all, say right at the front that I'm certainly not an expert on Treasury Board, but my understanding is that it's not a question of discretionary funds. I assume that in the Department of Justice, for example, they will have a budget for outside agent counsel because they hire them all the time. They will have estimated how much they need in a given year, as will Transport for certain issues.

Senator Stewart: But that detail of Estimate will not have been put before the House of Commons.

Ms Bloodworth: They won't have gone into that detail, but it will have been approved by the House of Commons and by Parliament.

Senator Stewart: Yes.

Ms Bloodworth: But the point I'm making is sometimes with contracts, they have to go to the Treasury Board, even though the department has the money in their own budget to do it. In fact, these days, because there are no central funds, they have to have the money, but tracks of a certain type and a certain amount require Treasury Board approval whether the money is within the department's budget or not.

Senator Stewart: Yes, but I gather that the answer given earlier in answer to Senator MacDonald was that in the case of these engagements, it was not necessary to go to Treasury Board.

Mr. Thomson: Yes, that's correct. In general, the department has the authority to retain agents. It does not need to go to Treasury Board both for the permission to do so or for permission to pay them. In general, they are paid out of the overall allocations to the departments, for example, who are being served by those agents.

In some cases, the money for those agents can be specifically identified within a budget, perhaps with some searching or inquiring. For example, the Department of Health has a sum of money they set aside specifically for their retainer of agents whom we retain to prosecute drug matters. They hold that money, and I think that money can be specifically identified.

In general, though, apart from some specifically identified, the money would be paid out of the overall allocation to that department. They would have, in calculating their budget, developed some sense of how much that money is. In fact, we are just implementing now a planning process with each department to try to be clear in our minds at the beginning of the year how much legal work we can provide and what kind of resources there will or will not be available for additional agent work if required.

Senator Stewart: If enough money were not appropriated as a result of your first Estimate, you would have to go back to the House of Commons with a request for additional funds in the Supplementary Estimate.

Mr. Thomson: That's correct. If the budget overall did not enable that agent to be paid, then you would need a Supplementary Estimate in order to generate the funds.

Senator Stewart: At the very beginning of her statement, Ms Bloodworth raised the whole question of responsibility. I want to come to that now.

Senator Kirby: It's two minutes to the break.

Senator Stewart: I'm told that it's two minutes to the break.

The Chairman: Ms Bloodworth and Mr. Thomson, would you be kind enough to return at 12:30 this afternoon? I'll just find out from the committee.

Senator Stewart wants to continue. Anybody else?

Senator Tkachuk: I have a few questions to ask, but Senator Stewart has gone on now for well over 40 minutes.

The Chairman: Yes, but besides that, do you want to do the same thing?

Senator Tkachuk: No, no.

Senator Stewart: Mr. Chairman, I'm quite prepared to cease and desist on my first round now.

Senator Tkachuk: And then you want to come back for a second round?

Senator Stewart: Oh, of course, because this is ground which the chairman, as I said initially, opened up. I think he's to be thanked by the committee for his prescience in opening this ground because it is very important to -

Senator Tkachuk: To whom?

Senator Stewart: To this committee. I'm sure we wouldn't be sitting here this morning or following along from what the chairman -

Senator Tkachuk: How much longer do you have?

Senator Stewart: No, I can't -

Senator Tkachuk: Because your questions have been very long. Their answers have been short. How long do you think you will be?

Senator Stewart: That, I cannot -

The Chairman: Senator Tkachuk, we'll have Senator Stewart and yourself.

Senator Tkachuk: We have other witnesses. This is important to me. If we're going to be here tonight, I'd like to know. If we are going to be here tomorrow morning, I'd like to know. So if he's going to go all afternoon, that's -

The Chairman: I am looking for the assistance of the committee. We have some very important questions to be asked by Mr. Nelligan as well. If these witnesses will come back, we'll be very, very grateful.

Following that, I don't know how long we'll be. We'll start again at 12:30, and then at -

Senator Kirby: We'll start at 12:30, and when we're finished with these witnesses, we can -

The Chairman: And then Mr. Matthews will start immediately following that, but I can't predict what time that will be.

Senator Tkachuk: Well, these people live in Ottawa. They can pop in any time.

The Chairman: No, I'm afraid they can't pop in any time.

Senator Tkachuk: They can't?

The Chairman: No.

Senator Tkachuk: The other witnesses, I understand, have come from Toronto and Dallas and stuff. Would it not be kind if we could sort of start with them at, say, 2 o'clock? Like, set a time. I can't imagine that we're going to have these people here for another hour and a half. I can't imagine that, unless it's deliberate.

Senator Stewart: I don't know why you would make that accusation against the chairman.

Senator Tkachuk: Not against the chairman - you!

Senator Stewart: No. No. The chairman took, what was it, three times -

Senator Tkachuk: Let's go for lunch.

Senator Stewart: - as much time as I've taken.

Senator Tkachuk: I'm just serving notice. It better have some relevance.

The Chairman: Order, please!

Senator Lynch-Staunton: The point is well taken. There are witnesses we've agreed to hear this afternoon who are from out of town. Out of courtesy to them, can we find out what time they can be expected to be heard?

Senator Kirby: Mr. Chairman, at 9:30 this morning or at nine o'clock or whenever we started, those witnesses thought they weren't on until 7 o'clock tonight. So, I mean, whatever we do by starting earlier this afternoon, we have clearly helped them. We were trying to be helpful.

Senator Lynch-Staunton: We agreed to hear them this afternoon.

Senator Kirby: We agreed to hear them following these witnesses. We're not objecting to that, but we don't think that we ought to take the position that we're going to start cutting people off because some witnesses who we've already done a favour to by agreeing to hear them following these witnesses this afternoon rather than tonight - it seems to me that cutting off any discussion with these witnesses is something we haven't done with anybody else.

Senator Tkachuk: What I am trying to get at, Senator Kirby, is that we have a schedule normally on Thursday which ends at three o'clock. Are we going to be extending that schedule?

The Chairman: That's what I am asking the committee to decide.

Senator Tkachuk: That would be great, and then we can run into - then I can catch a seven o'clock flight, which would be real nice for me. Otherwise, I'm staying overnight and so is everybody else because we don't want to stay past three o'clock. It doesn't hardly make any sense.

Senator Kirby: I'm sorry. I'm really confused. I thought we had an earlier discussion today - certainly Senator Lynch-Staunton and I did - in which we would finish with these witness. We would then come back - sorry. We could come back from lunch, and we would finish with these witnesses. We would then move into the next witness. There was no - we discussed explicitly the question of whether we would adjourn at 3:00. I thought we were not adjourning at 3:00.

Senator Lynch-Staunton: I consulted with my colleagues, but in fairness to the committee members, the staff, and particularly the witnesses, these and the ones that are to follow, it would be nice to have an idea at what time the next witnesses can be heard.

Senator Kirby: Mr. Chairman, since as I understand it from Senator Lynch-Staunton that the witnesses are either in the room or in the building, the answer is, bluntly, "I don't know".

Senator Tkachuk: But these people are also in the building. They can come back tonight, could they not? If it's that important that we work the evening, they can come back tonight.

Could you not?

The Chairman: You see, the witnesses originally were called for seven o'clock.

Senator Kirby: Right, Mr. Matthews was called.

The Chairman: Yes.

Senator Lynch-Staunton: Because we thought we had witnesses this afternoon, which were cancelled.

The Chairman: I realize that, but the mere fact that they were prepared to come at 7:00, and we were prepared to stay and hear them at seven o'clock, would suggest to me that if we hear these important witnesses and have them finished, we are still prepared to extend the hours to 3:00 rather than go to 7:00.

Senator Kirby: I've already said that.

The Chairman: Perhaps you could make yourselves available, Mr. Thomson and Ms Bloodworth.

The committee adjourned to 12:30 p.m.

---

Ottawa, Thursday, September 21, 1995

The Special Senate Committee on the Pearson Airport Agreements met this day, at 12:30 p.m., to examine and report upon all matters concerning the policies and negotiations leading up to, and including, the agreements respecting the redevelopment and operation of Terminals 1 and 2 at Lester B. Pearson International Airport and the circumstances relating to the cancellation thereof.

Senator Finlay MacDonald (Chairman) in the Chair.

The Chairman: Come to order, please.

If we can agree on a few things here, I spoke to Senator Stewart, who is going to continue now. He assures me that, unless interrupted, he can dispose of most of the questions he has in an hour or less. At that time, I think Senator Tkachuk has a few questions. Has anybody else?

Senator Jessiman: I have some, but I don't necessarily have to put them in today.

The Chairman: So we'll allow a half an hour there.

Mr. Nelligan has some very important questions to clean up with these witnesses. With this schedule, if everything goes well, Mr. Matthews would be with us at three o'clock.

Does that satisfy the committee?

Senator Kirby: Just a slight caveat. I understand Mr. Matthews will come when we finish with these witnesses. If it's 2:30, it's 2:30, right? You are not suggesting that if we were finished at 2:15, we would adjourn until 3:00? I was just trying to understand the process.

Senator Jessiman: No, he's here.

Senator LeBreton: Three o'clock or earlier.

Senator Kirby: Three o'clock is an ETA; is that right?

Senator LeBreton: Yes.

The Chairman: Okay, Senator Stewart.

Senator Stewart: Thank you, Mr. Chairman. Just a couple more matters.

One of the witnesses - I believe it was Ms Bloodworth - made reference to Parliament as the highest court in the land. I've used that expression. I've been told that it's all right in rhetoric in Canada, but that it can be quite misleading when we get to ascertaining the powers of Parliament or one of the Houses of Parliament. As I understand it, that term is an ancient English term and still retains some vitality in that country by reason of the jurisdiction of the House of Lords. However, I'm told that to carry it west to this hemisphere is quite misleading.

Now the reason I raise this question, Chairman, is that the expression "highest court of the land" seems to have - it may not in fact - implications for the powers of a committee of the House of Commons or of the Senate. I wonder if we could be given the justification behind the use of that term earlier this day?

Ms Bloodworth: Well, you are quite right, Senator Stewart. I think it is a fairly ancient term. I use that rhetorically. I'm not sure exactly how far back it goes.

You are also correct. It can be misleading if one thinks by that that we mean something like the Supreme Court of Canada. It's not that type of body.

I don't refer to it as the highest court solely because the English Parliament happens to have a court attached to it as well. I think it does have fairly extensive powers legally. I think the big difference between it, or the difference I would make between Parliament and the court system, the judicial system, is that it's very misleading, I believe, to look at any component, including Parliament and our constitutional system of government, and look only at legal powers. Whereas one looks at the courts, and one can talk pretty confidently - and I put some caveats there - of legal powers and know what type of body one is talking about.

If one talks only about legal powers in relation to Parliament or in relation to the Governor General or in relation to the Prime Minister, you really wouldn't have a very good idea of how they actually operate at all. When it comes to those components of our Constitution, the unwritten part of our Constitution, the conventions, practices and usages can be every bit as important as the legal powers associated with them. So, I guess I'm agreeing with you that "highest court" is perhaps a bit rhetorical in this day and age, but it does have, in fact, powers.

Senator Stewart: There's no question but that it has powers.

Can we go to another part of your initial statement. I intended to raise this - I thought of interrupting you because I think it's fundamental, but I didn't. Then the chairman raised many other matters. I think he did not raise this one.

You spoke, probably in your first paragraph or two, about the ministers being responsible to Parliament. So that we don't wallow around, I wonder if you could refresh my mind as to what you said in that regard.

Ms Bloodworth: I believe I said ministers are both individually and collectively responsible to Parliament for the policies, programs and activities of the government.

Senator Stewart: It's that responsibility to Parliament on which I wanted to focus.

You do not wish to imply that ministers are not responsible, not to the Crown, but to Her Majesty?

Ms Bloodworth: I'm sorry?

Senator Stewart: You do not imply by what you have just repeated that ministers are not responsible to the Queen?

Ms Bloodworth: No. I guess the reason I hesitate is because I don't think they are responsible in the same sense. I guess, in my mind, I use "responsible" in terms of the elected part, but of course the Queen is part of Parliament as well.

Senator Stewart: But it's not as part of Parliament that ministers are sworn of office, is it?

Ms Bloodworth: No. I guess the distinction I am making is I was trying to use, perhaps incorrectly, "responsible" in a constitutional sense. I guess I think of the relationship with the Crown as slightly different. There certainly is a responsibility there.

Senator Stewart: I'm trying to avoid the word "Crown", and that's why I say "the Queen".

Ms Bloodworth: Yes.

Senator Stewart: But is it not a fact that ministers legally are hired and fired by the Queen? Sure, there are intermediaries, but that's correct, is it not?

Ms Bloodworth: That's correct, yes.

Senator Stewart: You mentioned a sense of responsibility, different senses. We're using the word "responsible" in at least two senses here, and we have just defined one of them. Let's come to the other one, the one to which you referred, responsible to Parliament. You referred to individual responsibility and to collective responsibility. What does that mean? I don't mean collective responsibility, but what do you mean when you say they are responsible to Parliament? Obviously you mean not the Queen as part of Parliament.

Ms Bloodworth: No. I guess in the sense I'm using it, I would mean primarily the elected officials, the House of Commons. Did you mean individually versus collectively?

Senator Stewart: No. It's simpler if we talk about individual responsibility rather than collective, which brings up a whole penumbra of other considerations.

Ms Bloodworth: Ministers are, as you have pointed out, legally hired and fired, as you put it, by the Queen, in the sense that they are really advisors to the Queen, as are all Privy Councillors. The cabinet happens to be a body of active advisors to the Queen, if I can put it in that term. Now, by convention - not by law, but I would argue that it has reached the level of a constitutional convention - the cabinet, while they are advisors to the Queen, can only remain advisors to the Queen while they retain the confidence of the elected body. That's why we are a democracy. In a sense, we evolved into a democracy because that was not the case if one goes back some period of years.

Senator Stewart: So they are responsible in the sense that they have to satisfy. They have to respond to and they are answerable to the House of Commons particularly. How is that responsibility exerted? How does the House of Commons hold the ministers responsible? In real life, what happens?

Ms Bloodworth: Well, I was going to make a distinction. There are the day-to-day Question Period and committees where they are called to account, but I guess the more fundamental way is that the government must retain the confidence of the House of Commons. There are a lot of practices and traditions associated with that, but if there is no confidence of the House of Commons in the government as a whole, they must resign.

Senator Stewart: But, again, we have a convention here. I think you have stated it properly, but the convention is the result of certain practicalities. Would you agree with me that historically I am accurate when I say that the way the House of Commons succeeded in making ministers responsible to it was by saying, "Either you satisfy us in your answers in the daily Question Period or in your performance, or we will not vote you supply." Supply is the crucial -

Ms Bloodworth: Yes.

Senator Stewart: They can say, "We won't enact your ordinary statutes," but the government can say, "We can get by another year without changes in the statute law." But they have to get annual supply, right?

Ms Bloodworth: You are quite correct, Senator Stewart. That, indeed, is what one could argue was fundamental in us becoming a democracy. The Crown needed elected money from the elected officials.

Senator Stewart: You started off your statement today with an emphasis on the fact that we have a responsible government system, that the executive government is responsible to Parliament and, more specifically, to the House of Commons. We tend to focus on that because we don't get to deal with the supply bills unless they pass the House of Commons. In what practical sense, as aside from theory, was the government of the day responsible to Parliament in August, September and October of 1993?

Ms Bloodworth: Are you talking after the -

Senator Stewart: No, I'm talking about was there a Question Period in that? Were Estimates submitted? Indeed, was the House of Commons sitting in that period?

Ms Bloodworth: No, they were not sitting, but they existed and certainly Parliament existed until the election.

Senator Stewart: There's no question about that.

Ms Bloodworth: But there was no Question Period because it was not sitting.

Senator Stewart: And there were no Estimates. It's conceivable that if the House of Commons had met in the middle of June or the middle of July, it would have been revealed that the government no longer had its confidence. I don't say that politically it's likely, but logically, following the line of argument you defended earlier, responsible government takes on quite a different complexion once the House of Commons ceases to sit and when that House of Commons is not going to sit again because there's going to be an election.

Ms Bloodworth: I guess for me there's a pretty fundamental distinction as to when Parliament still exists and when it's been dissolved.

Senator Stewart: But you're saying that the mere fact that Parliament has not been dissolved makes for responsible government, notwithstanding that there is no way in which the majority in the House of Commons can enforce that responsibility.

Ms Bloodworth: I'm saying that must be so, otherwise every time Parliament adjourns, we no longer have responsible government.

Senator Stewart: No, no, not just when it adjourns, because they are coming back.

Ms Bloodworth: No, I'm saying even at that period.

Senator Stewart: When they dissolve, it's a different period.

Ms Bloodworth: I agree. When they dissolve, then it's different.

Senator Stewart: Thank you, Chairman. That's all I wanted.

The Chairman: Thank you. I thought we were going to get to Highland settlements.

Senator Stewart: No. We leave that to you. You know more about that than I do.

The Chairman: Senator Jessiman, do you want to go now?

Senator Jessiman: Are they going to come back ever?

The Chairman: No.

Senator Jessiman: All right. Let me ask a few questions, if I may. I won't be that long.

You mentioned the letter of August 13th, 1995, from the Scott Aylen firm and the mention of the 200,000 pages of documentation. It said approximately that. Is that approximately 200,000 all the documents in respect to this particular transaction? Do we know that - you know, they kept referring, various witnesses, to this file. Mr. Barbeau starting, "I was taken off this file," or "I was referring to this file." What is "this file"? Is it 200,000, or are there 400,000, or are there a million, or how many are there?

Ms Bloodworth: The reason I hesitate, senator, is that I know there were documents that the Privy Council would have, for example, which would not be in amongst those 200,000, but my understanding of the 200,000 - and Mr. Thomson could maybe add to that - is that that comprises the best efforts of a number of departments to gather all the various files they had that related to Pearson.

Senator Jessiman: Without exception? They didn't take any out? There wasn't some judgment made? They just said, "These are all the documents. We don't know what's in them. Here are the files. We don't know what's in them, and here they are." When you add them all up, it's 200,000.

Ms Bloodworth: What I'm saying - not without judgment because I did not say that in our case - we did not provide everything that would have referred to Pearson. Cabinet minutes, for example, if there is any reference to Pearson airport in cabinet minutes, would not have been provided in that. There may well have been that in departments. If departments had a group of documents easily identifiable that were memorandum to cabinet, for example, they may well not have provided them into that because they would know immediately that would not be produced.

Mr. Thomson: Perhaps I can add to that, if I could, senator, and give you the material that I have that describes the documentation as a whole.

The primary source of the documentation was the assembly of documents that had been pulled together for the litigation, composing 180,000 pages. Those documents were amassed by Transport Canada and the Department of Justice. Included in the 180,000 pages were 60,000 pages relating to the work product of Price Waterhouse, and these documents are related to the contract development stage and are primarily technical documents. Approximately 20,000 pages represented documentation received by the government under the auspices of a confidentiality agreement. So Lindquist Avey were given the 100,000, and then they were given the 60,000 from Price Waterhouse, and they reviewed all of that as well.

Senator Jessiman: I'm talking before that. I'll get to what you gave to the Avey people. I want to know how do you determine what you told me now, that 60,000 pages is Price Waterhouse documents, up to 200,000? My question was and is, is that all the documents? Who determined that 200,000 documents covers all the correspondence, all the memoranda, whatever, in respect of this transaction?

Mr. Thomson: With respect to information other than the information that Mrs. Bloodworth would have control of -

Senator Jessiman: PCO and the PMO?

Mr. Thomson: Yes. Apart from that, the information was obtained simply by asking Transport Canada to provide the documentation they had, and, secondly, making available all of the documentation that we had in relation to the litigation.

Senator Jessiman: And do they say that they have given you it all, or they have just selected which ones they wanted to give you?

Mr. Thomson: My understanding is that they would say they have given us all the information that they had.

Senator Jessiman: Have they said that to you?

Mr. Thomson: Not to me personally, but I can verify whether they have said it to others.

Senator Jessiman: I would like to know whether you really do have the 200,000 pages and that the 200,000 pages does in fact include everything.

Mr. Thomson: I will be able to find the answer whether we have been told it includes everything. We in Justice did not go and then search through the records of Transport Canada to make sure that's the case, but I will find out whether we've been told that that is all that they had.

Senator Jessiman: Tell me, over what time period - you have mentioned six or seven years. I thought we went back to 1985 when there were certain policy statements by the government. We're now at 1995, so that's 10 years. If you have chosen six or seven years, which six or seven years have you chosen?

Mr. Thomson: Well, I think that we've covered all the years it was agreed that were relevant and -

Senator Jessiman: Agreed by whom?

Mr. Thomson: Well, I'm assuming that that was sorted out within this committee itself. When I said six years, I didn't mean to be saying that I know it's exactly six years. I was trying to illustrate that it was over a long period of time.

Senator Jessiman: My period that I'm really interested in is from October 25th, 1993, to date.

Mr. Thomson: Well, my understanding is that the material that we've pulled together is up to the end of December 1993; in other words, the last date at which materials were pulled together related to December 1993. It's my understanding that that was worked out with the committee or with counsel to the committee on the basis that once we go beyond that date, we're into documentation that becomes highly relevant to an issue before the courts right now.

Senator Jessiman: So you are telling me December 1993, and that would include similar documentation to what we've seen.

Let me see. We see Treasury Board secret documents. We see six at least, maybe more, documents from Mr. Shortliffe to the Prime Minister - at least six. Do we see any of those kind of documents in the period October 25th? Probably November 4th because that's the day they were sworn in - but from October 25th to December? Any of those kinds of documents?

Ms Bloodworth: If there were any, they would be in this package. I'm not aware that there were any.

The memos from Mr. Shortliffe to the Prime Minister covered only a very small period of that time. They were related to updates of the deal. So I'm not - if there were any, they would have been in that package. I'm not aware that there were any in that period of time.

Senator Jessiman: On August 13th, '95, you processed 58 volumes of 350 pages each, which is a total of 20,300 documents. You said that there were 200,000. You have limited that, because I assume we're not going to look into the 60,000 pages from Price Waterhouse. If we were to get the 200,000, I've worked it out that we would have 571 volumes. It would be less than that because of the Price Waterhouse - where are we today? How close are we to having all of the documentation ready?

Mr. Thomson: Well, it's my understanding that I think, in general, the documentation that's related to particular witnesses has all been pulled together, and most of it is in your hands. My understanding, as well, is that it's been agreed that we will provide the committee as well with a list of all remaining documentation, subject to documentation that falls within, for example, the cabinet confidences rule, that we would be providing a list of that to you so that you would know what is there in terms of a list of the material that was not - did not become relevant to any particular witness' testimony so that you would get to see to that. Mr. Nelligan can perhaps speak to this, but it's my understanding that it's been agreed that a list of that will be provided to you.

Senator Jessiman: So from the 200,000, we are down to really 140,000, taking off 60,000 for Price Waterhouse. Are we assuming that 140,000 pages is now available, approximately?

Mr. Thomson: Well, 140,000 pages were gone through by those who were asked to go through it, but it was done. It's all been entered, as I understand it, in some form of computer program.

Senator Jessiman: And Lindquist Avey, what they have done - and I think it must be a great help - they can recall it by subject matter and potential witnesses, right? That's what the letter says.

Mr. Thomson: Yes. My understanding is that they attempted to develop a list - perhaps once again, Mr. Nelligan can help me. Perhaps it was done in consultation with your counsel. At any rate, a potential list of witnesses was generated, and the material has been organized in a way that would enable it to be pulled out in relation to one or another of those witnesses if called.

Senator Jessiman: Right, potential people that you thought might be -

Mr. Thomson: That's my understanding.

Senator Jessiman: Minister Doug Young was on our list as a person that was going to be a witness. Do I assume that there's documentation in respect of him?

Mr. Thomson: I don't know the answer to that question, but I can find out the answer.

Senator Jessiman: Could you find out and let us know?

Mr. Thomson: I'm assuming that there must be some material there that may be relevant to him, although I stress that the material is only up to December '93.

Senator Jessiman: Right, but he was appointed, was he not, on November 4th, 1993?

Mr. Thomson: That's correct, some time prior to December.

Senator Jessiman: I ask the same question of the present Prime Minister, Jean Chrétien. Was he considered by anyone to be a potential witness here?

Mr. Thomson: I don't know the answer to that question.

Senator Jessiman: Could you find that out and let us know?

Mr. Thomson: Yes.

Senator Jessiman: Of the people that you have engaged in the persons of Scott Aylen, how many persons were engaged and how many professionals? You told us that there are 12 professionals for Lindquist Avey. I'm going to ask you something about them too, but how many at Scott Aylen? How many lawyers?

Mr. Thomson: Well, we retained the firm. I know in particular of two lawyers who have been active on the file, one who has been, I think, active on a full-time basis. I'm assuming some other lawyers in that firm have given time to this file, but I don't know the answer to that question.

Senator Jessiman: And were these people, both of them - that's Lindquist Avey and the person engaged in Scott Aylen - were they engaged just for this particular transaction, or are they also involved in the lawsuit?

Mr. Thomson: Just for this particular transaction.

Senator Jessiman: Did you make an estimate of what the cost might be to engage both these firms?

Mr. Thomson: We certainly, entering into this, knew that the costs were going to be very large given how much we had to have done and the time within which we had to do it.

Senator Jessiman: Could you give us some idea of what "large" might mean?

Mr. Thomson: I would say we knew going in that it was going to cost us several hundred thousand dollars to have this work done given the huge amount of material to be looked at. We have not yet paid our lawyers or those who are working for them any money at all yet, but it will be a very large bill.

Senator Jessiman: I have been informed by maybe third person hearsay that it exceeds $1 million. Am I close?

Mr. Thomson: I think it's possible that the total bill, once we're fully done, if you take the total cost of this, could exceed $1 million.

Senator Jessiman: So the cost to the government to determine what this committee can actually look at will be in the vicinity of three times of what the cost of this committee is.

Mr. Thomson: I guess I would say, sir, that the cost of meeting the requirements of this committee, which was to review all of that material and to organize it in a way to make it available to you in the way you wanted it made available and the time lines you wanted it made available was very high. There's no question about it. But the size of that was because of the task that was given and the time line within which it needed to be done.

Senator Jessiman: Right, and yet back in the end of October, 1993, which I understand was the date that Mr. Nixon was appointed - I'm told, I think from his letter, that it was October 28th. Between that date and November the 4th, he got whatever documents - I understand it's 10,000 pages, so I'm told - without whiteouts and done by the same people, the Justice Department and Transport.

Ms Bloodworth: That's not my understanding with Mr. Nixon.

Senator Jessiman: Tell us what it is, then.

Ms Bloodworth: My understanding with Mr. Nixon was that, yes, he was given some documents. I think you have a list to which you referred, Senator Jessiman, earlier.

Senator Jessiman: While you are telling us that, there are four blanked out. You said there were three Treasury Board. What's the fourth one?

Ms Bloodworth: A Treasury Board decision letter. Three submissions and one decision letter.

Senator Jessiman: They are all Treasury Board?

Ms Bloodworth: Yes. He may have got some other documents. I'm not aware that he got anywhere near 10,000 pages, but I don't know the exact number. Mr. Nixon, what he got immediately is what you have seen on your list that he got. He certainly never, ever got anywhere near the amount of material that this committee has. He did not receive anything, for example, from the Privy Council Office.

Mr. Thomson: I would only add, senator, the task was not simply one of gathering the material in one place. It was then taking all of that material, trying to organize it in a way that all relevant material in relation to any particular witness would be available as and when required. That's what made this a task that has consumed a large number of people on a very full-time basis.

Senator Jessiman: But that wasn't considered necessary for him to review this and come to the conclusion that it should be cancelled, right? I mean, somebody had to make a decision. What should he get? What should this man get who is going to make a decision and advise the government, because that's what he said he was doing in his second or first report. I don't know which one it is, but one of them said, "I'm advising you that this isn't to be a public document unless you think it should be." Then the one that was made public, he doesn't mention that, that he's just advising the government. But someone at Transport and at Justice together said, "Give it to him."

Ms Bloodworth: And I think those witnesses have been before you here. I think it was largely Mr. Rowat and Mr. Desmarais. There may have been others. You are quite right. They made a decision as to what to give to him.

Senator Jessiman: Could they make that decision on their own?

Ms Bloodworth: No. I'm assuming they talked to others as well.

Senator Jessiman: Who would they have talked to? At that particular time, the minister was Mr. Corbeil. That's who the minister was at that time. Notwithstanding the election is over, who would they have talked to to determine -

Ms Bloodworth: I don't know. You'd have to talk to them.

Senator Jessiman: Yeah. Well, we may have to call them back.

Mr. Thomson: I would like to stress, though, that the decision we made here was that we needed to go through all material, that there should be a decision made to pick key documents and just make those available. Our assumption was that this committee would have a serious concern if we were saying, "We exercise some discretion just to look at certain documents and to assume what were key documents." That's what got us into an exercise that has involved enormous time and expense to go through, as I say, 200,000 pages.

Senator Tkachuk: So you knew what the key documents were already.

Mr. Thomson: I think asking anyone involved in this case, they might have a judgment about what were key documents. I personally wouldn't, and we made a decision that we ought not to try to exercise that judgment or to have any particular person exercise that judgment, but, rather, we should go through all of that material and organize it by way of witnesses.

Senator Tkachuk: Help me through this. Key documents obviously were organized for Mr. Nixon, from what you just said. Then you said, "But we should have all the documents." So was the trick was key documents are thrown in with all the documents and here they are, or could you have separated out key documents for us because they were already separated out? Could you have said, "Here are the documents that were given to Mr. Nixon and, by the way, here's the rest of them"?

Mr. Thomson: Well, my assumption would be that giving this committee only the documents that were given to Mr. Nixon would not have been seen to be satisfactory, that in fact this committee wanted to see all documentation that might be relevant to any witness -

Senator Tkachuk: I'm not asking that question. I asked you - you said the key documents were already separated out.

Mr. Thomson: No.

Senator Tkachuk: Well, Mr. Nixon's documents obviously were.

Mr. Thomson: I'm assuming that someone could identify the documents that were made available to Mr. Nixon, and I'm assuming - and I don't know the answer to this - that they were key documents, yes.

Senator Tkachuk: So if that was already done, why did you mix them all up and send them over here?

Mr. Thomson: I'm not sure, senator, we mixed them all up. What we did decide to do was to assume that that was not sufficient, and we needed to go through all of the documents on this file.

Senator Tkachuk: So these were all ready at the beginning of the summer.

Mr. Thomson: It's conceivable - in fact, I'm assuming that anyone involved in this matter could identify early on some documents that were key, but the assumption we made was that that wasn't sufficient, so we reviewed all the documents.

Senator Tkachuk: See, you have to help me, because I'm a lawyer here. You are under oath. I'm asking you a question because I'm trying to get information. You have made it clear that you didn't want to make the distinction between the key documents and all the rest of the documents, and you wanted them all over here. Now, you can't have it both ways. They were either all ready for Mr. Nixon, and therefore we could have had them in June, or else they were mixed together, or else they were kept until we got them just recently. It has to be one of the three. I just want to know which one it is.

Senator Jessiman: There is a little more to that because you also have a lawsuit. It has to do with this, and there must be one devil of a lot of documents with respect to that lawsuit.

Mr. Thomson: That's correct. The only way I can answer your question is to say that we made a decision at the beginning that what we needed to do was to go through all the material so that we could say with some confidence to you that the material being provided to you for any witness was all of the relevant material that we could pull out of the overall pile of documentation, subject to the vetting process we've already described.

Senator Tkachuk: Could you help me, Counsel? I still haven't got my answer, and maybe I'm not asking it right. Could you help me?

Mr. Nelligan: Well, I think there may be some confusion as to what it was that was given at any particular time. The first documents we requested were the Nixon documents.

Mr. Thomson: My understanding is they were provided.

Mr. Nelligan: They were provided subject, however, to deletions in accordance with the Access to Information Act. As a result, some of the information has never been fully disclosed to us and, in particular, the Treasury Board submissions. The original request was answered on June 16th by the submission of documents which the department felt were appropriate to give us, but we did not get the fully uncensored documents.

Senator Jessiman: I'm almost finished. I still would like to know - maybe we have to call Mr. Rowat back.

I wonder if you could find out for us - maybe if we just knew, maybe we should call that person rather than Mr. Rowat. We know Mr. Rowat was before us, and he did show us a document - actually there were two. Then we found there were three. Later, after he left, we found there was a fourth document that was prepared for Mr. Nixon. We're going to have to wait until Mr. Nixon gets here to find out which one was given to him.

What I want to know is who else, other than the civil servants that say they drew these, who determined what documents should be delivered to Mr. Nixon? It has to be between October the 25th, the dates I'm concerned with, the date of the election, and the date he actually got them, which I don't know when that was. They are dated October the 29th in some cases and November the 4th in others. Who was it they spoke with? Was it the people that had been elected that hadn't been appointed? Was there a transition team that didn't involve politicians at all but just people that were advising them? Who was it that told them that these are the documents to give if they didn't make that decision on their own?

Ms Bloodworth: All right, senator, we can certainly try to find out the identity of the people, but I will say, as far as I'm aware, it would have been public servants who made that determination. Now, I don't know because I wasn't involved exactly -

Senator Jessiman: Under no direction from anybody and would not have reported - they didn't talk to Mr. Corbeil, who was the minister. He said that.

Ms Bloodworth: Okay, I don't know that, but -

Senator Jessiman: Could you find that out?

Senator Tkachuk: So is that unusual? Did department officials usually do this?

Senator Jessiman: He's got almost a billion dollar contract here, and someone is going to advise the government. We assumed it was going to be an independent report. I would have thought that you people would have thought certainly there's evidence before us that said, "Look, we delayed this. We delayed taking over the airport because we thought we would get a fair shake." Now we've got either some civil servants on their own saying, "This is enough documentation. If he gets this, you know, that will be good enough." I mean, surely to goodness somebody has some responsibility here. I'm not suggesting it's you people, but someone.

Ms Bloodworth: I can't answer on Pearson particularly.

Senator Tkachuk: Can you answer who would be normally responsible?

Ms Bloodworth: If I could just finish.

Senator Tkachuk: Oh, certainly.

Ms Bloodworth: I do know that Mr. Nixon was under contract with the Privy Council Office, and I think that was testified to before.

Senator Jessiman: Would he have talked to people in the Privy Council Office?

Ms Bloodworth: I believe he talked to Mr. Shortliffe, but Mr. Shortliffe is coming, so he could testify to that. I don't know of anyone else at the Privy Council Office he spoke to, but he may have.

Senator Jessiman: His letter indicates that it was the Prime Minister, and we find out there was nothing in writing, we understand. We don't know if it was a telephone call. We don't know if he went over for dinner or what it was, but it was the Prime Minister himself that appointed him. Did he - we'll have to ask him, I guess, but you don't know, or do you? Do you know anything about his appointment?

Ms Bloodworth: I know that he was under contract with the Privy Council Office.

Senator Jessiman: And is that in writing?

Ms Bloodworth: Oh, yes. There's a written contract with Mr. Nixon.

Senator Jessiman: Do we have a copy of that contract?

Mr. Nelligan: Yes, I believe it's signed November the 24th.

Oh, don't we have a copy?

Senator Jessiman: We don't have a copy.

Mr. Nelligan: I thought we had an unsigned copy.

Senator Jessiman: I would like to see the signed copy. I would like to see who signed it. We're now told it's dated November 24th, and he was engaged on October 28th. Anyway, I would like you to take back to whomever you speak with, if it is the Prime Minister, I would like to tell him we'd like to see the contract under which -

Mr. Nelligan: We have that, senator.

Senator Jessiman: Oh, we do, eh?

Mr. Nelligan: Apparently it's been revised. It's a confidentiality agreement. At least, we can't find the signed copy.

Senator Jessiman: And it wasn't amended afterwards?

Mr. Nelligan: Yes.

Senator Jessiman: It was amended. Do we have the amended copy?

Mr. Nelligan: Yes, we have.

Senator Jessiman: Fine. I'll have a look at it.

Mr. Nelligan: It's in the material we got the other day.

Ms Bloodworth: It was my understanding that you had it, but, I mean, contracts are accessible. He was under contract as part of the transition process of preparing for the new government. I'm giving you generalities here. Certainly those more directly involved, like Mr. Shortliffe, can speak more specifically to that, but that was the process by which he was hired.

Senator Jessiman: I've been in and out of the room, and maybe this has been answered, but I'd certainly like to understand why is it that, one, Mr. Nixon got documents that weren't whited out? Two - I'm forgetting the name of this firm - Scott Aylen got copies or had access to looking at copies that weren't, and Lindquist Avey had access to these. If this committee is not going to get them, why its counsel, Queen's Counsel, one of the outstanding counsel in Canada and agreed to by both sides - this is partisan, but the gentleman there is not. Why is it that someone - and maybe you can tell me who that is - has made a decision that our counsel, if he took the same kind of an affidavit these other people made, he can't have access to the same kind of documents or the documents not whited out? Can you give me the answer of why and who made the decision?

Ms Bloodworth: Okay. Shall I take them in order? First of all, Mr. Nixon.

Senator Jessiman: Please, if you would.

Ms Bloodworth: As I referred to earlier today, I have made inquiries about Mr. Nixon's access. Mr. Nixon was under contract and did have a confidentiality agreement, but it's my understanding that it was not the intention of the former clerk - and he is coming, so he can tell you that - that Mr. Nixon would have access to cabinet confidences. I will limit myself to that category. However, he did get access to, as I said, three Treasury Board submissions and a Treasury Board decision letter.

I don't know how that happened. I speculated a couple of ways in which either the message did not get conveyed to the people who actually provided the documents, or the people who actually provided the documents did not think of the Treasury Board submissions as cabinet confidences. I explained earlier that it is a fact Treasury Board submissions are cabinet confidences, but they are sometimes not seen as a sensitive document. That's the Mr. Nixon category. Mr. Nixon was under contract with the government. He was part of the government in that sense, if I can put it that way.

Senator Jessiman: Do you distinguish his being part of the government as opposed to this committee not being part of the government?

Ms Bloodworth: Yes, I am distinguishing that.

Senator Jessiman: Because you are saying that they are the executive.

Ms Bloodworth: Yes, and I'll get to that. I'm using "government" in terms of the governing elements of the party. I realize if you use "government" in a broad sense, obviously the legislative branch helps to govern, but I'm using "government" in terms -

Senator Jessiman: So he's part of the executive at this point?

Ms Bloodworth: He was working for the executive, under contract with the executive.

Senator Jessiman: I thought in a kind of quasi-judicial - but it obviously wasn't, but, go ahead.

Ms Bloodworth: No, he was under contract.

Senator Tkachuk: A consultant?

Ms Bloodworth: I'm not sure whether he describes himself as that, but he was under contract.

Senator Tkachuk: He's a consultant.

Ms Bloodworth: In the case of Scott Aylen, Mr. Thomson has explained why the decision was made to go to an outside firm and to retain people, so I won't go through that.

Senator Jessiman: Was it 1,200 or 12,000 lawyers you've got? Is it 1,200 in-house lawyers?

Ms Bloodworth: No, I only have had five or six.

Senator Jessiman: No, no, but the number you gave.

Mr. Thomson: I'm the one who has the 1,200.

Senator Kirby: And lawyers who aren't in-house are out-house.

Senator Jessiman: These are the in-house. It's guys like me that are the out-house.

Mr. Thomson: I might add that the government not only has the 1,200 lawyers, but in any given year spends in excess of 30 to $35 million on outside agents who are lawyers.

Senator Jessiman: I'll give you my card at the end of this hearing.

Ms Bloodworth: There was an issue about cabinet confidence - and I'll speak to what I know specifically - as to whether or not they would get access because it is not automatic. Indeed, it's not automatic for a given justice lawyer, and it's certainly not automatic for counsel we retain.

Senator Jessiman: Who are the people now that are discussing this? Yourself and others?

Ms Bloodworth: It would certainly be me. When it came to cabinet confidences, I would be discussing it on behalf of the clerk.

Senator Jessiman: And in Transport?

Ms Bloodworth: I don't know if I ever discussed it with anyone in Transport. I certainly discussed it with the Department of Justice. I'm not sure whether George and I ever had a discussion, but there were with some people. Certainly when it came to cabinet confidences, I think it's fair to say that I would have more say in that than the Department of Justice.

The conclusion we came to was that as matter of practicality it would not be possible for them to do the job without seeing some cabinet confidences.

Senator Jessiman: You said that in the letter.

Ms Bloodworth: We had also came to the conclusion as a matter of practicality that we simply could not do it with the resources we already had without going to them. So it was put to me that it was not going to be practical without them having access.

Now I insisted that certain steps be taken to ensure confidentiality. One of those was I was certainly more comfortable with them having them retained through a counsel and making the counsel responsible for protection of cabinet confidences.

Senator Jessiman: Right, Scott Aylen. You said there were two lawyers involved with Scott Aylen. Do they have other staff? Do they have stenographers? Do they have -

Mr. Thomson: Yes, there would be other people in the firm. There are other lawyers as well.

Senator Jessiman: From their firm, or outside lawyers as well as Scott Aylen?

Mr. Thomson: No. The lawyers, as I understand it - any lawyers would be lawyers within Scott Aylen.

Senator Jessiman: And you said two or three, or are there more?

Mr. Thomson: I know of two because I have personally dealt with them. There may be others. I don't know the answer to that.

Senator Jessiman: Other staff is what I am asking.

Mr. Thomson: I am assuming support staff to those lawyers, for example, may have processed documentation or at least -

Senator Jessiman: All of them would - part of their work would be looking at these documents, or had access to them?

Ms Bloodworth: Yes. I must say that I'm not aware that there were support staff that looked at documents as part of Scott and Aylen, but they may have.

Senator Jessiman: But you don't know that.

Ms Bloodworth: Well, let me continue with Scott and Aylen.

From my point of view, I was holding the counsel we deal with at Scott and Aylen responsible, and that is one of the reasons I wanted the firm that was going to do work to be retained through them, so we could look to the counsel. We ensured that the counsel understood the cabinet confidence convention and, most importantly in this case, that they understood the convention on access to papers of a former ministry because we knew that within some of the those departmental documents, there would be cabinet confidences of a former government which would not be properly shown to any member of the current government or their staff, and they understood that. They all signed agreements to that effect.

We also chose to use government premises so that we would not have all of these documents sitting over in a private office which may not have the same security measures that we have. So, yes, the decision was made to show them under those conditions.

Now if I could come to - I've dealt with Scott and Aylen and Lindquist Avey together.

Senator Jessiman: I understand that. That's satisfactory.

Ms Bloodworth: So let me come to the distinction between Mr. Nelligan and those other two categories. Let me first say, it has absolutely nothing to do Mr. Nelligan personally. I have no doubt of Mr. Nelligan's integrity, so it's not a personal issue at all.

Mr. Nelligan, unlike those other people, is part of this committee, not part of the government, as I've described it. Particularly when it comes to cabinet confidences, the very people that you are protecting cabinet confidences on behalf of ministers and former ministers from, are from the other partisan parts of our system, including legislative branches. So Mr. Nelligan is in a very different position from Mr. Nixon or Scott and Aylen in the sense that he is counsel to this committee, not part of the government.

Senator Jessiman: Well, it must make it very difficult for people who are sitting out there, not lawyers - and I happen to be a lawyer, and I am having difficulty with this - that here we have a committee, the majority of whom ask that there be a judicial injury. On the other side is the government, the same executive part of the government that's keeping information back from the counsel of this committee. There's just something wrong here.

Ms Bloodworth: I should say with a traditional inquiry, it's not at all a foregone conclusion that a judicial inquiry would have got access to cabinet confidences. It is only in very unusual cases. The only commission of inquiry I'm aware of that had access to cabinet confidences was the -

Senator Jessiman: Let me ask you something else.

The Chairman: I'm sorry. No one is asking for cabinet confidences. No one has ever brought up in this committee anything to do with cabinet confidence.

Ms Bloodworth: I understood the question to be to have Mr. Nelligan look at them on your behalf.

The Chairman: These other people who took the oath of confidentiality did not look at cabinet confidences.

Senator Jessiman: Because you wouldn't have released them.

The Chairman: Yes.

Ms Bloodworth: Yes, they did.

Senator Jessiman: Oh, they did see the -

Ms Bloodworth: Yes, that's what I thought I had said earlier. Mr. Nixon saw -

Senator Tkachuk: You mean to tell me that Lindquist Avey saw cabinet documents?

The Chairman: Cabinet confidences.

Ms Bloodworth: Confidences. I said, and I thought we made that clear earlier, Mr. Nixon saw the four cabinet confidences I referred to earlier. Scott and Aylen and Lindquist Avey, the only reason for taking all those measures is that yes, they have seen some cabinet confidences. I said earlier we did not provide them with all. We certainly would have provided them with ones -

The Chairman: Cabinet confidences of a previous administration?

Ms Bloodworth: Yes.

Mr. Thomson: But I need to, if I could, senator, stress that the distinction here is these are persons retained by the government, working for the government to perform a specific task. As we said earlier, just as with other lawyers who have been retained by government for a particular litigation, this kind of material has been provided. They are subject to the oath of confidentiality, and the information may not be disclosed. But, it is not unique for some material that would be subject to the cabinet confidence rule to be seen by lawyers retained by and working for the government.

Senator Tkachuk: But these are forensic accountants.

Mr. Thomson: Those are people working on behalf of those lawyers to whom this same rule would apply.

Senator Tkachuk: This group here, super sleuth? The heat was definitely on when, on a sultry day in late July, the dapper 46-year-old accountant stood before the Caribbean. You are giving documents to these guys?

Mr. Thomson: We made the documents available to the counsel we retained, who used them for a specific purpose which had to be performed, which was to go through 200,000 documents and to sort out how we made that available to this committee, the relevant documents relating to particular witnesses.

Senator Jessiman: I would like to ask either one: Do you consider the information in respect of this national or public security? Matters of national and public security?

Ms Bloodworth: I don't believe we made that claim. In any case, we have claimed that there is cabinet confidentiality.

Senator Jessiman: I have no further questions.

Senator Tkachuk: Just a couple questions on this. I would just like to follow these documents around a little bit. First of all, who made the decision at Justice? It was a cabinet decision that Justice would be in charge of this? Like, why are you in charge of this?

Ms Bloodworth: I don't believe it was a cabinet decision. As I said, I think we discussed that earlier. I wasn't - I can't recall.

Senator Tkachuk: Who decided?

Ms Bloodworth: I don't think it was one person who decided.

Senator Tkachuk: I always get that. Someone had to decide. Someone had to say "yes" or "no".

Ms Bloodworth: Well, there was agreement between Privy Council Office, which included myself -

Senator Tkachuk: Yes.

Ms Bloodworth: - and the Department of Justice and the Department of Transport that that was the appropriate department.

Senator Tkachuk: So who is the head honcho of that three? Is it the clerk? Would the clerk be able to say, "No, you can't do that"?

Ms Bloodworth: I guess if we couldn't agree.

Senator Tkachuk: That would be the only one that could say, "No, you can't do that;" right?

Ms Bloodworth: If we hadn't agreed, I guess she could have decided, yes. She didn't have to because we agreed, but.

Senator Tkachuk: Okay. So what was the first action taken, then?

Mr. Thomson: Once we'd been asked to organize this?

Senator Tkachuk: Yeah.

Mr. Thomson: I think the first step taken is that I turned to my senior assistant deputy minister and asked him to take on the task for Justice, and he organized some people from within the department to be assigned full-time to the task. Shortly thereafter, we sat down and reviewed the task ahead of us and the time lines facing us, at which point the decision to retain Scott & Aylen was made. And then at that time, or shortly thereafter, we would have agreed that they could retain Lindquist, Avey in order to do the task we wanted done. And then the work began.

Senator Tkachuk: So they got Transport, Treasury Board, maybe Finance, and the Privy Council Office; right?

Mr. Thomson: Sorry, we have them doing what, sir?

Senator Tkachuk: Where are you getting all this stuff from? What departments?

Mr. Thomson: You are now talking about gathering the information?

Senator Tkachuk: Yeah.

Mr. Thomson: Well, as I say, I think the bulk of it came from - actually, a large amount of it came from us, because Justice - we had gathered a large amount of this information for the purposes of the litigation that we were involved in, from Transport, certainly Privy Council Office. I'm unsure whether Treasury Board had any material.

Ms Bloodworth: I believe there was some.

Mr. Thomson: Some from Treasury Board. I think they gathered whatever information Nixon had as well.

Senator Tkachuk: Nixon is Privy Council Office; right?

Mr. Thomson: For the purposes of the work that he did, he is.

Senator Tkachuk: Yes.

Mr. Thomson: Well, he was retained by Privy Council Office.

Senator Tkachuk: Yeah. So there would be people in each of these departments gathering all these documents up. And now what happens? I'm in Transport. I've sent out the bullets and the memos, and stuff is coming in. I've accumulated it in Transport. Where do I take this now? Where do I take these documents from Transport?

Ms Bloodworth: As I said before, we provided space in the Privy Council Office space.

Senator Tkachuk: I take them to the Privy Council Office? Where do I take them? How do they get there? Do they just - like, do you get a taxi, or what?

Ms Bloodworth: No, they would be either delivered by government messengers, or individual public servants would have brought them over.

Senator Tkachuk: So you take it from the Department of Transport over to the Privy Council Office; right? Does anybody in Transport examine these things, or just wherever there is a file that says "Airport", it's in? What happens? How does the process work?

Mr. Thomson: They were asked through the deputy to provide that material. The deputy would have taken whatever steps he felt had to be taken in order to pull that together, and then that -

Senator Tkachuk: The deputy takes it to the Privy Council Office. What room is it stored in? We're talking 200,000 pieces of paper. Where is it stored? Where do all these documents come in?

Ms Bloodworth: They're on the sixth floor of the Postal Services building.

Senator Tkachuk: The sixth floor. That's where they come in.

Ms Bloodworth: That's where they are.

Senator Tkachuk: Is that where they come in? No, no. Where do they go?

Ms Bloodworth: Well, I don't know where they went first, sir. I know that they would have come either by government messenger, or they would have come by public servants delivering them.

Senator Tkachuk: To the Privy Council Office.

Ms Bloodworth: Yes.

Senator Tkachuk: Where? What address?

Ms Bloodworth: Well, they are -

Senator Tkachuk: Where did they go?

Ms Bloodworth: They go to the sixth floor of the Postal Services building.

Senator Tkachuk: So that is the Privy Council Office.

Ms Bloodworth: It's part of the space in the Privy Council Office, yes.

Senator Tkachuk: So they go to the sixth floor of the postal service, and who is there to receive them?

Mr. Thomson: The name of the person?

Senator Tkachuk: Well, person, people. Someone is responsible.

Mr. Thomson: I don't know.

Ms Bloodworth: Neither do I.

Mr. Thomson: We don't know the answer to that question.

Senator Tkachuk: Did they sign a confidentiality agreement?

Ms Bloodworth: Yes, they would have, anyone that was involved.

Senator Tkachuk: Everybody in there would have signed it.

Ms Bloodworth: Yes.

Senator Tkachuk: So someone in the sixth floor of the postal - what is that again?

Ms Bloodworth: Postal Services building.

Senator Tkachuk: Postal Services building. Where is that?

Ms Bloodworth: Right on Sparks Street at Elgin.

Senator Tkachuk: On Elgin and Sparks. So they now got it on the sixth floor. Somebody receives it. We don't know who, but somebody gets it. Is it Lindquist, Avey or government bureaucrats or who?

Ms Bloodworth: I don't know.

Mr. Thomson: Our assumption would be that it would be someone working in Privy Council Office who would receive it and put it in the material, but the exact name in the room, the exact name of the person - if you like, we could try to find that out for you.

Senator Tkachuk: You're in charge. Justice is in charge of the documents. You've just released them out of your office. Surely you must know who receives them. Privy Council Office, Lindquist, Avey, the law firm. Who gets them?

Mr. Thomson: I'm simply telling you, senator, I don't know the name personally of the person who actually in that room received the material.

Senator Tkachuk: Okay. But do you know the person, the government department responsible?

Mr. Thomson: For managing this material?

Senator Tkachuk: For that sixth floor room.

Mr. Thomson: Privy Council.

Senator Tkachuk: Privy Council. The Prime Minister's Office. Privy Council Office.

Ms Bloodworth: Not the Prime Minister's Office.

Senator Tkachuk: Privy Council Office. Lindquist, Avey is working there with the Privy Council people on the sixth floor of the postal building?

Ms Bloodworth: There is only - I don't have any staff working there. There is -

Senator Tkachuk: They're all there by themselves?

Ms Bloodworth: We have provided space within a government building because our decision was that it was more secure than a private sector -

Senator Tkachuk: For whom?

Ms Bloodworth: For the documents.

Senator Tkachuk: For what people, now? Lindquist, Avey? All 12 people working there?

Ms Bloodworth: Yes. Whatever number there were.

Senator Tkachuk: You said 12. Is everybody working there? I'm just trying to - just answer the question. "Yeah, somebody is in charge. Joe is in charge. There is 12 people. They got two tables like this. They're going through the documents."

Mr. Thomson: Whatever number of those 12 people working for Lindquist, Avey who went through the material on a daily basis would be the people from Lindquist, Avey who were in those rooms. They were given access to -

Senator Tkachuk: Is anybody else there? Was there anybody there from the PMO in that room?

Ms Bloodworth: No.

Senator Tkachuk: Was there anybody there from the Privy Council Office?

Ms Bloodworth: There was no one there on a regular basis, but I would have had staff that would have been there from time to time.

Senator Tkachuk: You leave these guys all alone? You leave these guys alone, these guys? These are private detectives. They go around and - they are professional people, but that's what they are. They're private detectives. You leave them alone there with all these documents. They are sorting through this stuff.

Ms Bloodworth: They certainly had access to the documents, senator.

Senator Tkachuk: Okay. Are they the only ones?

Ms Bloodworth: Scott & Aylen would have had access as well.

Senator Tkachuk: And the law firm. So now they sorted through the documents they think - whatever they do there. I figured out they do three or four pages an hour by the amount of time we're getting them here. Three pages per hour, if there is twelve of them working on the basis of the amount of documents we've received. Did you pay them by the hour or by the page?

Mr. Thomson: Senator, they needed to go through all of the documents in order to create the documentation for each witness. In other words, they had to review all of the material in order to sort it out and then to enter it in the computer material which would enable one later, when Witness X or Y was going to come to the committee, to pull out all of the material relevant to witness X or Y.

Senator Tkachuk: Now this is shipped to where? What happens to them now? They've all sorted out what happens.

Mr. Thomson: Once it was determined that a particular witness was to be called, what they would then do is use their computer equipment to generate the material relating to that witness. This is unvetted material. At that point, it would be brought to the Justice building, and I have actually here somewhere the exact office that we had the people that were referred to earlier today. Brought to Room 301 in the Justice building. In that building, in that room or in those rooms, were a number of people whose job then was to do the work I talked about this morning in terms of vetting the documents, deleting that which needed to be deleted, and creating books that had the material they delivered, but after the vetting had occurred.

Senator Tkachuk: The copies are made, and vetting is done; right? You don't vet the originals; you vet copies. Right?

Mr. Thomson: My assumption is that what was brought by Lindquist, Avey would in fact be copies. The originals remained in the room where they were being looked at back in Privy Council Office.

Senator Tkachuk: Oh, okay, in the postal building. So now they're vetted, and they're shipped out. What happens? Okay. So they are all vetted and stuff, and the white stuff is put on, and they go back to Justice building. Now what happens?

Mr. Thomson: At that point in time, the books would be made available to this committee, the book for that witness -

Senator Tkachuk: Yes.

Mr. Thomson: - and it would be made available to our staff who were working on the matter, and it was made available to the minister's office.

Senator Tkachuk: The minister's office, and our committee, and then back to -

Mr. Thomson: As I indicated, my senior ADM and people working for him were involved in working in this case. They would have had a copy of this file, of each of these books as well. After they were vetted.

Senator Tkachuk: When you say "minister's office", you are talking, like, minister's office in the department he runs, or minister's office in one of the three or four parliamentary buildings?

Mr. Thomson: In the Justice building itself. In the same building with this -

Senator Tkachuk: The Minister of Justice's office.

Mr. Thomson: The Minister of Justice.

Senator Tkachuk: So those are the only three places it goes? Minister of Justice's office, the committee office, and that is us, and then back to Lindquist, Avey?

Mr. Thomson: Well, Lindquist, Avey, I assume, would get - I'm not sure, but I just assume this. Yes, they would have to, I guess, if they were then sitting down with the witnesses themselves. They would get a copy of what was then vetted, the vetted material. If the witness was a government employee, at least - I don't know if the non-government employees took advantage of this - was also given a copy of the material so they knew what material -

Senator Tkachuk: The vetted or original?

Mr. Thomson: The witnesses, I would assume, as government employees, witnesses would see the material probably prior to it being vetted in order to be satisfied and get their advice on whether everything that ought to be in there was there. So my assumption is that the people about whom this material related, and I think this is true, had an opportunity to see that material and to give advice to Lindquist, Avey on whether they thought everything that was relevant was in there.

Senator Tkachuk: Okay. So did they make decisions about whether something should be vetted in that office of Lindquist, Avey?

Mr. Thomson: No, the decision was made by us at Justice.

Senator Tkachuk: So they see vetted material, then, or they see original material?

Mr. Thomson: Well, as already said, Lindquist, Avey at Privy Council Office saw all the material prior to being vetted, original material without - before we made the decision about vetting. That was to enable them to pull out all the material that was relevant to the witness, the particular witness. We then at Justice vetted that material.

Senator Tkachuk: So then what happens is that all the original material is still up on the sixth floor of the post office, or the postal building or whatever? It's all still sitting there?

Mr. Thomson: Yes.

Senator Tkachuk: So how did it get to the minister's office?

Mr. Thomson: Well, the original documents wouldn't get to the ministers' office. What would come -

Senator Tkachuk: Well, they did.

Mr. Thomson: No. What was delivered to the minister's office was the vetted material.

Senator Tkachuk: No, no, no. Senator Bryden had original material.

Mr. Thomson: On one day, and by mistake, Lindquist, Avey, as I understand it, when delivering the material or briefing the minister's office on the material, provided a document that had not been vetted. In other words, they used some material that they had that had not yet been vetted, and they made that available to the minister's office, as I understand it, on one day. That was the day on which Lindquist, Avey, as I understand it, themselves -

Senator Tkachuk: It couldn't have come - you see, they got the original documents. Then the vetted documents are done in Justice; right? Then you sent them to committee, to the minister's office, and the admin office. Right? So how did those original documents get over to the minister's office and then get over to Senator Bryden?

Mr. Thomson: If I understand it, Lindquist, Avey - it says here in the letter that was written on the 13th that Lindquist, Avey personnel made an error and delivered a copy of a particular document containing the full text of the last paragraph. So in other words, the material, I'm assuming after we vetted it and went back, I guess Lindquist, Avey then delivered that material to the minister's office and included a document that had not been vetted.

Senator Tkachuk: Why would they be delivering that? You delivered it to the minister's office from Justice.

Mr. Thomson: I don't know the answer to that question. I'd have to find that out, why in that particular case, or whether it's the regular practice, Lindquist, Avey brought the documents or the books over. What I don't know, and I can try to find out for you, is whether after we vetted them, we gave it back to Lindquist, Avey who then delivered them, or whether we delivered them ourselves, or whether -

Senator Tkachuk: You got people signing oaths and stuff; right? "I swear I will not tell anybody whatever I see in here, blah blah blah, whatever" right? This is a very important deal here; right? So for some reason, documents that only you could have - you vetted these documents in your department. You sent them over to the minister's office, back to Lindquist, Avey, and over to this committee.

So someone in the minister's office simply makes a phone call to Lindquist, Avey and says, "By the way, I want to get more copies." And you send them over there? They send them over there? Wouldn't they say, "Well, just a minute here. We're not authorized to do that"?

Mr. Thomson: Well, my understanding is that the material for that particular day, when it was delivered, and it may be that I have the process wrong in the sense that the vetted books were delivered by Lindquist, Avey. On this particular day, they delivered by mistake a document that had not been vetted.

Senator Tkachuk: A book.

Mr. Thomson: It's not my understanding they delivered a whole book that had not been vetted, but that a document was delivered that had -

Senator Tkachuk: The document that Senator Bryden wanted was - out of all the 200,000 pages, it happened to be sitting over there in the minister's office, unvetted. I mean, this is actually quite incredible. The one document. Because he requested it. It wasn't delivered by mistake. He requested a document. You have an unvetted document. So this one document out of 200,000 that he was requesting, pulled out of the minister's office, brought to his office, which he used here in the committee. I don't believe you.

The Chairman: Come on. Come on.

Senator Tkachuk: Well, I want an explanation.

Mr. Thomson: Senator, I don't know whether this was the only vetted document in the material for that day or not. All I know is that I've been advised by both counsel, by counsel for Scott & Aylen that in this particular case, by mistake, a person in Lindquist, Avey by mistake included a document that had not been vetted in the material.

Senator Tkachuk: The one document that the minister - that Senator Bryden asked for.

Mr. Thomson: What I don't know for sure is that that was the only unvetted document or whether there were any other unvetted documents in that material.

Senator Tkachuk: Did you launch an investigation? Did you investigate this obvious breach of security?

Mr. Thomson: Well, what I did do was I questioned counsel, Mr. Hunter, who advised me that this was an error. I spoke with the minister's office, who advised me of the same thing. I was advised by Mr. Hunter that some changes were made in the process to make that not possible to happen again. I satisfied myself of that, and that this was a one-time event based upon my discussions with them, and that's as far as it went.

Senator Tkachuk: So for all you know, the minister's office was phoning over to Lindquist, Avey and asking for documents all the time previous to the time Senator Bryden brought the one here that was original and we found out.

Mr. Thomson: I've been advised that that's not the case. I've been advised by counsel that that's not the case, and that has not happened other than on that occasion.

Ms Bloodworth: I would say, senator, if that is the case, Scott & Aylen are directly in breach of their retainer by the Government of Canada.

Senator Tkachuk: That's good.

The Chairman: Now, I think we're winding up. I think Mr. Nelligan now has some very important questions. I just wanted to get clarification. Mr. Robert Nixon was appointed under his terms of reference here to undertake a review of the Pearson airport agreement. That is in the contract, the purposes of his ...

It would be assumed, do you not agree, that his remuneration for that task would have also been agreed at that time? More or less? Unless he was doing it pro bono, I mean.

Ms Bloodworth: No, Mr. Nixon was certainly paid. I don't have a copy of the contract. I guess why I'm hesitating is that I was not involved in the actual retention of Mr. Nixon, so I don't know the details of how it happened.

The Chairman: Well, his appointment was on October 28, as we have agreed, and his contract with the - Mr. Morris Rosenberg, what is his position?

Ms Bloodworth: He is assistant secretary to the cabinet for economic development policy.

The Chairman: I see. He is one of your associates?

Ms Bloodworth: Yes.

The Chairman: Yes. Then on November 22, when the contract - a month later almost, when the contract is signed with Mr. Nixon, Mr. Rosenberg of your office writes a memorandum to Mr. Glen Shortliffe, and he says:, "You will recall that we reviewed the question as to how to remunerate Mr. Robert Nixon for his review of the Pearson airport agreement. We agreed that a personal services contract between yourself and Mr. Nixon would be the most appropriate way to proceed. Since that time, an issue arose over how to pay for the services of the counsel Mr. Nixon had hired from Gowling, Strathy and Henderson. Following discussions with Ward Elcock and Bill Pratt" - who are they?

Ms Bloodworth: Ward Elcock was my predecessor in my current position, and Bill Pratt was, until he retired a couple of weeks ago, the assistant deputy minister of Corporate Services for Privy Council Office.

The Chairman: I'm referring to page number 22811. It's marked secret, and that is the number of the document. I will just finish reading: "Following discussions with Mr. Ward Elcock and Bill Pratt, it was decided to build these costs into the Nixon contract because this will preserve the solicitor-client relationship and it would allow Mr. Nixon to determine the appropriate fees for counsel."

What is the significance of preserving the solicitor-client relationship?

Ms Bloodworth: I believe, and I'm trying to remember - because I think I recall this being discussed at the time. I think the question was that we did not - if we had retained Mr. Goudge, he would have become counsel to the government, and he was not counsel to us. He was counsel to Mr. Nixon. So I think that's referring to the fact that Mr. Goudge would remain Mr. Nixon's counsel and not government counsel. I think that's that it refers to.

The Chairman: Thank you very much. Mr. Nelligan, please.

Mr. Nelligan: Perhaps first to Mr. Thomson: I think we're in general agreement, depending on the presentations you've made to earlier committees, that the Senate and the House committees do have the right to a considerable amount of information, but what concerns me is that the standard seems to have been set that it is somehow bound by the limitations in the Access to Information Act. Is it your view that this committee is limited to the material which would be given to an ordinary citizen under the Access to Information Act?

Mr. Thomson: No. It's my understanding that the - they are not limited to only the material provided under the Access to Information Act. However, the principles that are reflected in the Access to Information Act are in accordance with the practice that I talked about earlier that is followed. That means that personal information such as the information that is covered by the Access to Information Act is not made available.

Mr. Nelligan: You never made those exceptions in your previous presentations to other committees, and I had assumed, sir, as a result, that these might have been guides to the discretion of a Senate committee, but that the Senate committee itself would have the right to determine when and under what circumstances it would insist upon information which falls under those headings.

Mr. Thomson: Well, I have only had one previous presentation on this topic, Mr. Nelligan, and it was in relation to solicitor-client privilege and not in relation to private information that would be subject to the Privacy Act if it applied. And I am only indicating that with respect to that information, there is the similar practise of not making that information available. That has grown up as a practise of the committee. That is what I was indicating. I also indicated, though, that the committee has the power, as I said earlier, to seek that information.

Mr. Nelligan: Well, perhaps I was attributing to you things that Ms Davidson had said, but I thought you had supported her position. And she seems to say that there is virtually an unlimited power in a Senate committee or the Senate, under certain strictures, to ask for information from witnesses. What you're telling me now is that, apart from the Access to Information Act, there is a custom that, for instance, they can't even ask for private business information if they feel that it's relevant to their inquiries. Is that so?

Mr. Thomson: Yes. What I distinguished this morning in my presentation was between the legal power of the committee, and I acknowledged what that legal authority is, as opposed to the practises that have built up and been respected by committees with respect to access to, for example, private confidential information.

Mr. Nelligan: All right. Now, it appears to me too that Senate committees can operate from two perspectives. In its traditional role, a Senate or a House committee is concerned with public policy and the application of the policy to legislation. In the particular circumstances of this case, while there may be policy elements, it is in fact a factual inquiry. Are you of a view that the need for facts by such a committee exceeds those of a committee which is simply looking at general public policy?

Mr. Thomson: I think my answer would be that I can see that what they might seek, given the nature of their work, might be different, but I think the rules which apply to those committees are no different. In both cases, they are functioning as parliamentary committees.

Mr. Nelligan: See, sir, here is the committee's dilemma: Mr. Nixon was granted access to a number of documents and has expressed views which have now been adopted by the government as policy. It is the purpose of this committee to review his decision. How can they come to valid conclusions if they cannot at least see everything that he saw and hear all the opinions that he heard?

Mr. Thomson: Well, I think they can be advised by Mr. Nixon as to what he saw and reviewed, but my view is that the committee - the fact that Mr. Nixon as a person retained by government has and was given access to documentation - setting aside the question of the particular cabinet confidences; there was an authorization for him to look at that material - is different than what by law and in this case practice is made available to committees. I think the fact that Mr. Nixon was able to or was given - based on what was said earlier, was given material perhaps that was not specifically authorized for him to receive in that one narrow case relating to Treasury Board submissions, but apart from that, the committee must function within the normal rules of committees. I stress, though, and I said this at the beginning, that committees have the broad and legal authority that I identified.

Mr. Nelligan: All right. Assuming they have that broad legal authority, would not it be necessary for them to have at least some assistance from witnesses and from departmental documents to determine whether they should exercise that strong power, and isn't there some way that the department and witnesses can then help them to come to valid public decisions as to whether that information should be put on the public record?

Mr. Thomson: Well, I agree, and that's why we got ourselves into the major exercise we went through, which was to try to make all of this material available to the committee. A separate question, though, is whether, in making - we should be making available to the committee material that by convention and practice is not made available. That's a separate issue, in my mind, but apart from that, the whole exercise we've gone through is designed to make all that material available to this committee.

Mr. Nelligan: But if all they know is that some member of your staff has determined that, if you were a private citizen, it would not be available under a particular section of Access to Information, how can they come to any valid conclusions on their own? How can they exercise the discretion which apparently they have?

Ms Bloodworth: That is not all they know, Mr. Nelligan.

Mr. Nelligan: Well, for instance, the examples I gave this morning, where someone arbitrarily said that certain paragraphs were solicitor-client. On examination of the document, it was determined they were not solicitor-client; they simply were references to solicitors. All I'm asking for is some help as to how we can resolve these impasses without having to have it all exposed in public. Is there not some way that someone could review these matters to determine whether it's of sufficient importance and advise the committee as to whether they should insist on their legal powers?

Ms Bloodworth: Well, let me just say why I disagreed with your statement there. This committee did get far more than we would have released under Access. I mentioned earlier, quite a bit earlier in the day, that under the Access to Information Act, for example, section 21, which has been referred to, is the advice section. It allows a discretion to withhold a lot more than advice to ministers. In this case, a very conscious decision was made that we would limit it to simply advice to ministers for the reasons I spoke this morning. I am just saying we are not talking about simply a private versus public process here. When we get to cabinet confidences, this is why I'm a little uneasy with your use of the term right of cabinet committees. I would question whether as a right, as opposed to a legal power, that parliamentary committees have as a convention a right to cabinet confidences. It is certainly not one they have exercised.

Mr. Nelligan: I respect this problem about cabinet confidences, and I'm trying to step one modest level down to such mundane things as personal information, commercial information, and perhaps, and I'll come to the example in a moment, solicitor-client. We will leave the cabinet confidences aside.

But for instance, if it becomes relevant to whether or not there was an unfair or inappropriate contract here, it perhaps might be very relevant as what dollars are mentioned, and this would be part of the consideration of the committee. How does the committee get that information if it is deleted from all documents provided by the department?

Mr. Thomson: I would say my understanding - I mean, we tried very much to make as much of that available as we can and not to read the practice too broadly. Secondly, my understanding is that we or you took steps to enable to have those about whose business confidences were being discussed or who had this information on a confidential basis or was about them to waive that protection so the information was made available. And my third understanding is that there has been an openness to discussion in individual cases to see if that information can be made available.

Mr. Nelligan: Yes. But when we only have blank paragraphs in these other cases - there was one Mr. Hession gave an example when we managed to get a clause open because apparently there had been another uncensored document somewhere, and it turned out the stuff which was deleted was not properly deleted but was relevant to the position he was taking. This is a concern we have. And I quite sympathize with your position, but I'm asking for some way of operating whereby we can preserve confidentiality and yet ensure that the objectives of the committee are achieved.

Mr. Thomson: I think, Mr. Nelligan, it's important to distinguish between two things: one, being satisfied that the solicitor-client privilege or the protection of confidential information practice is being properly applied, that it's not being excessively applied, as opposed to deciding is this information that, notwithstanding the proper application, the committee should be trying in some way to either order its delivery or to have parliament order its delivery.

I recognize the problem in the first case, and I can't totally defend every decision that's been made all the way through this exercise. There have been nine people working, as I understand it, day and night going through this material. And I think I would agree that there ought to be some way, perhaps in a random way or something, that could enable one to be satisfied or at least to have discussions about how we are applying the practice, so that one can have some confidence that we're not overdoing it.

I talked earlier about the work we're trying to do to help our lawyers and others understand when and how to use these privileges or these protections. I think it's a different matter when it comes to the issue of looking at the material to decide whether it's the kind of material the committee might then want to seek an order on, because, in my view, that becomes, in essence, disclosing the material, which is why the whole practice exists.

Mr. Nelligan: All right. It's been called to my attention on the famous Order in Council which permitted access to documents in the McDonald inquiry, that they anticipated some of this problem. As you recall, the commissioners themselves then were allowed to actually look at cabinet documents, which of course goes far beyond what we're interested in. But they made this proposal, or rather this is in the Order in Council:

the Secretary to the cabinet shall provide the Commissioners access to such indexes or other information as may reasonably be necessary to enable them to determine the minutes of the Cabinet or Cabinet Committee meetings to which they wish to be granted access for the purpose of paragraph (1) above;

Now, what I'm suggesting to you is, is there some way that, when a document comes with the deletions which you think preserve confidentiality in general, that there should be some note or memo indicating the portions deleted relate to the salaries paid to the consultants or to advice given to a minister or whatever so that some determination could then rationally be made by the committee?

Ms Bloodworth: Well, let me first say that there has been an attempt to do that by using the sections of the Access act, so it may not be perfect for what you are saying, but, in a sense, that's what's done. Every time you see section 21, that was a short form of saying what was involved there was advice to ministers.

But let me return to the McDonald Commission. As you rightfully point out, that was quite an extraordinary circumstances, and the three occasions on which I am aware in recent history in which a decision has been made to waive cabinet confidence, and we're talking about cabinet confidence there, all involve situations in which there were allegations of serious and in some cases criminal wrongdoing associated with ministers. So there was a pretty high standard, and that was true in the McDonald Commission as well.

But that's a long bit of diversion, I guess, from my main point, that that was what the attempt to put numbers in was intended to do, so that you knew that when you see section 21, that was advice to ministers. When you see section 23, that was solicitor-client privilege. It was using the Access to Information Act not because that is what is applicable to this committee but because it was a short-form way of communicating what it was we were protecting. When you see section 69, it is cabinet confidence. That's what that communicates.

Mr. Thomson: If I could add, Mr. Nelligan, you are raising I think a valid point, which is when we see this claim being made, we like to have some sense of why it's being made in the particular case. And obviously my concern is that that not be done in a way that ends up just disclosing the information itself. In this particular case, I think what we've been doing is to try to deal with it on an individual basis when a particular case comes up where you have concerns or questions.

I think you raise a good question, and I think there might be some value in us exploring it. We're talking about how this might be dealt with in future cases, exploring whether it's possible to be a little clearer about why the particular claim is being made, so one at least has a sense of the rationale for it without disclosing the information itself, and whether that might be done in a way that goes beyond simply the section of the act itself. We've not done that, but I would be happy to consider and perhaps consult with you in that discussion.

Mr. Nelligan: Another aspect of the question of solicitor's advice: I had thought, and you seem to suggest, that the solicitor-client privilege is only invoked where it involves advice of the solicitor to the client. Is that correct?

Mr. Thomson: That's my understanding.

Mr. Nelligan: It would appear that in these cases, from the examples we've received, that any involvement of a solicitor in any part of a business process was deleted on the same basis. I wonder if you can instruct your solicitors that their privilege is not quite so broad?

Mr. Thomson: Yes. I might say that part of the work that we've been doing is work designed to try to better clarify exactly how the privilege applies. There are situations where it may not look on the face strictly as advice, but when you think it through about what's being described, it could fall under that category.

But I hear the point you're making, and I do believe, and I've indicated this - I did last fall when I came before the other committee - that we have work to do as a department to help all our lawyers, and the fact there are so many of them helps to realize the need for it, understand where it applies and when.

Mr. Nelligan: All right. Now, perhaps you can help me with a little problem I have in this case: We're going to meet with Mr. Nixon and his group next week, and it has been indicated to us that he will state that he met with certain departmental solicitors on the 15th of November. We also have available now a letter from Mr. Goudge in anticipation of that meeting, in writing to Mr. Rowat. He said: When we meet, I would look forward to discussing the views of your legal team as to when and to what degree legal obligations arose that bind the federal government as this process evolved.

Now, by coincidence, this issue has already been raised by a previous witnesses, Madam Bourgon, who indicated that such a situation might arise and referred us to the lawyers.

Now, I am not yet prepared to give an opinion on it because I do not have enough facts, and we are not really interested in my opinion. We are interested in what was in the minds of the parties and particularly in the mind of Mr. Nixon when he made his decision. Given the strictures that you have mentioned, how do we determine what was said to Mr. Nixon during this meeting?

Because you will recall in attempting to prepare for Mr. Nixon, we've been asking each witness, "Did you meet with Mr. Nixon? What did you say? What did he ask you? What advice did you give to him?" Is it your suggestion that, in this particular case, because it was legal rather than financial advice, those questions cannot be asked?

Mr. Thomson: Well, I do know, and you would be aware of this as well, that there was material provided that set out the lawyer's view of the legal obligations as of I think it's October 7.

Mr. Nelligan: Yes.

Mr. Thomson: That opinion, which I agree would be subject to solicitor-client privilege, we - the client waived I think it was yesterday and it was made available. You're asking would we make available or is there value or does it - would we be objecting to having those lawyers provide or provide you any advice they gave with respect to legal obligations as they existed or may have existed before that time. At least that's how I understand the question that's contained in the letter from Mr. Goudge.

The issue of solicitor-client privilege doesn't arise until we satisfy ourselves that such an opinion was given. At this point, I'm advised that no such opinion was given, that this was not done, such an opinion was not provided, and, in fact, the lawyers did not provide a legal opinion on the legal situation as of a previous date. I will confirm that.

If in fact there was an opinion provided of some kind, then we're into the question of whether we would waive that particular legal advice and make it available. I would like to first determine that there is such an opinion. As I say, up to now, I've been advised that the opinion was not given by the lawyers. If no opinion was given, then we're into the issue of who ought to form a legal opinion today as to what was the - what were the legal obligations as of those earlier dates, and my view would be that that is something that would be more properly done by you or counsel you might retain.

Mr. Nelligan: I have no problem with that. What I'm more concerned with is that in the Nixon report, there are certain suggestions that there were actions taken by the then government which they should not have taken. The propriety or wisdom or legality of those decisions may well depend upon what their honest views were at the time. It doesn't matter whether the views were right or wrong, but what were they. These are factual matters rather than legal matters. When it is a matter of what did a witness know or think at a time, rather than whether they gave a proper legal opinion, does that still fall within solicitor-client, in your view?

Mr. Thomson: If in fact the legal team was giving advice as to what they felt they knew or thought was the state of legal obligations as of a particular date, I think that's a legal opinion, if it were given. As I'm saying at this point, my understanding is that it was not given, but if it were given, yes, I think that would fall under the solicitor-client privilege.

Mr. Nelligan: Assuming again that the privilege is in the client, if the client is the witness, may we ask the witness?

Mr. Thomson: Well, assuming the legal advice was given and the privilege is with the client, and we talked earlier today about the client and the broader Crown, but if that's the case, yes, I agreed earlier that the client is capable of waiving the privilege for the purposes of disclosing the information, as we did yesterday. What I'm suggesting is that we ought first to determine whether there is a legal opinion that was given, orally or in writing, and then secondly, if the answer is yes to that, I would advise you, or the committee through you, the position of the client with respect to waiving privilege.

Senator Jessiman: It's the client. It's not the solicitor, isn't it, that's protected? It's the client. We're asking the client.

Mr. Nelligan: If we ask the client.

Senator Jessiman: We're not asking the solicitor. If the solicitor said, "I can't give you that because there is solicitor-client." But we're now asking the client. So answer the question now.

Mr. Nelligan: He's not the client. I have his answer. All right.

One other area, and that is on the question of the protection of past governments. The standard things about cabinet meetings and so on are understood. Now, what is the rule with respect to confidential memos to a minister or a former prime minister of the kind that have been produced to this committee? How do you distinguish between the ones that are releasable and the ones that are not available to anyone?

Ms Bloodworth: First of all, a memo to a minister, unless it's about cabinet or about views of his colleagues on someone, does not come under cabinet confidence, as a general rule. There may be - I can't think of any exception to that, but if it's not dealing with a view, an issue that is being dealt with collectively, then it wouldn't be cabinet confidence. So under even under the Access act, we cannot protect all of that.

If there is some purely factual or purely information in it, it would have to go out, and indeed that has happened in past with memos to the Prime Minister, for example. There will be certain paragraphs that will simply relate factual information about something without any opinion of any kind. Now, that's the general rule. And that's what we would normally follow.

Let me say that in this case, I think we went a little further, and let me tell you why. Part of what is protected under section 21, if I come back to the Access act, you can protect stages leading up to negotiations, and you can protect advice within an institution. In this case, we're beyond the negotiations, and a great deal of the information that was provided to the Prime Minister - there were some exceptions because there was some advice, and we protected that, and there was some cabinet confidences, but a great deal of the information that was provided was just simply that, information that had gone out through all of the Department of Transport witnesses.

Now, the general principle that was to be followed is where it was simply information, even if it was about the negotiations, if that was, that would be released in the memo to the Prime Minister, as it was in any other case here. What was to be protected was any advice.

Now, the difficulty we fall into is that there is some information that is in the grey area there, and, in those cases, a judgment had to be made as to whether that falls on the side of the line of being information or it falls on the side of the line of being advice. That's what happened in terms of all of these memos. If it was advice, if the judgment was that it was advice, it was to be protected, and there are a number of paragraphs or sentences that are protected in those memos on that basis.

Mr. Nelligan: All right. Because as I understand the protocol, unlike the normal rule on cabinet confidences, the Clerk of the Privy Council is the personal custodian of the previous government's confidential documents. Is that correct?

Ms Bloodworth: Of their cabinet confidences, yes.

Mr. Nelligan: And what is that limited to?

Ms Bloodworth: Cabinet memorandum, cabinet agendas, cabinet minutes, briefing notes to ministers about cabinet. That would be - and correspondence between ministers. That would be the general categories.

Mr. Nelligan: Because -

Ms Bloodworth: The type of thing that would be excluded from the Access act. Maybe that's the easiest way to characterize it. Why I say that is because obviously we're also governed by the law. Under the Access act, if it's excluded, which is what happens with cabinet confidences, the Access act simply doesn't apply to them, so the judgment is made they are outside of it. If they are inside of it, then it would be governed by the same. Whoever the memo was to, it is governed by the principles of the Access to Information Act, not by the convention.

Mr. Nelligan: Normally, those documents couldn't in any way be turned over to your consulting firms or anything of that kind.

Ms Bloodworth: Sorry, which documents are you talking about?

Mr. Nelligan: The documents that are in the personal custody of the Clerk of the Privy Council are in her personal custody and could not be turned over to, say, Scott & Aylen.

Ms Bloodworth: No, they wouldn't be turned over to anyone else. I'm afraid I'm not understanding the question.

Mr. Nelligan: In other words, I'm just trying to distinguish, memos to the Prime Minister is not part of that secret cache of documents.

Ms Bloodworth: It's not part of cabinet confidences, no. It would not be covered by the convention by which the letters exchanged between incoming and outgoing ministers are. If that's what - Prime Minister, sorry.

Mr. Nelligan: Then finally, with regard to submissions to Treasury Board, does an incoming minister of a new government have access to the submissions to Treasury Board of a prior minister?

Ms Bloodworth: No. Treasury Board submissions are cabinet confidences. They are defined in the Access act as cabinet confidences.

Mr. Nelligan: So the Treasury Board submissions which fell into Mr. Nixon's hands were not available either to Mr. Young or Mr. Chrétien?

Ms Bloodworth: That's correct. And as I explained earlier, it was not the intent of the Clerk at that time that they be made available to Mr. Nixon.

Mr. Nelligan: What steps are taken on a new regime to alert departmental staff that their file copies of Treasury Board submissions should not be available to the new government?

Ms Bloodworth: Oh, in every transition, there is a letter sent from the Clerk to every deputy minister reminding them of the convention and asking every deputy minister to take steps. Indeed, they are. I can say from experience of one personal experience of one point a number of years ago when I was attached - although a public servant, I was attached to a minister's office for a period of time. I was refused a particular cabinet document, as I should have been. I was not aware of the convention at the time. So it is widely known, but, at every transition, the Clerk writes to every deputy minister to remind them.

Mr. Nelligan: Finally, since Madam Bourgon has referred us to the lawyers on this question of increasing liability, have you any suggestions as to how we can resolve the matter that she put to us as to what that increasing liability was or might be, since this was something that would appear to be relevant, right or wrong, to the state of mind of the participants at the time?

Mr. Thomson: Well, Ms Bourgon indicated that she made the decision she did to confirm whether to proceed with the last part of the work that had to be done without seeking that legal advice on her assumption that the state of affairs was as she described it. So the question arises, do you wish to know whether or not - what were the legal obligations at particular stages in advance of that date.

The difficulty I have is that if in fact we have in fact done work at some point in time to determine what - if there is a lawyer somewhere that has done work to determine, in their view, whether or not there were legal obligations at earlier dates, then we're into the question that you raised earlier, would we make that opinion available. If in fact that has not been done, but the committee is of a view that they want to form their own view on that, personally, I think that my view would be that that ought to be done by the committee or done by you with us making available whatever additional information you might feel you require in order to develop that legal opinion, or you might retain someone to do it. I don't think Justice lawyers should give - should on their own give that advice directly to the committee. They give legal advice to government.

Mr. Nelligan: I take it from what you say that if they did do it at the time, that that advice should be available to us? That information should be available to us, not the advice.

Mr. Thomson: If they did it at the time. I will confirm to you whether or not that's the case. If the answer is yes to that, if you would give me an opportunity, I would then like to have a chance to determine whether the client in this case is claiming solicitor-client privilege or not, and I would advise you of that. I dealt both last fall and now with respect to what the process might be if that were the case. I'm not suggesting whether or not that would be done. I'm simply saying I think the first step is to determine whether such an opinion exists.

Mr. Nelligan: Is that client the present minister or the former minister?

Ms Bloodworth: I think we're getting directly into the issue that Senator Stewart so ably raised, is that although we use the analogy of departments as clients, it in the end does break down, because the Crown, which is continuing, is the ultimate client. And so we are forced back on analogies. But ministers, former ministers, do not remain the client of the Department of Justice, if that's your question. We're all the Crown. But I think we are broaching on the area that Senator Stewart so properly raised with us this morning of the difficulty.

Mr. Nelligan: I thought that the former minister who was the custodian of the advice to him, so I assume he was in that same position, and I quite agree with Senator Stewart that when we get into the various emanations of the Crown, we might just as well be discussing the Holy Trinity, because it can get a little abstract.

Mr. Thomson: It would be my understanding that the decision not to claim the privilege would be a decision made today not to do that, and it would be present government that would make that decision rather than the previous minister. But I would like a chance to review that, Mr. Nelligan.

Ms Bloodworth: Let me just make the distinction between the two, and the reason for that. Cabinet confidences are protecting political secrets, if I can put it that way. I don't say it in any pejorative sense; I say it in the best sense. Political secrets, that's what cabinet confidence does. That's the reason for the convention on access between successive ministries, because you're talking about different political -

Mr. Nelligan: I think we're agreed that this didn't happen, and he has not given that evidence. He was very clear he did not give that evidence. But if a former minister said, "I did X because based on the best advice in my department, this was the best course," is he barred from saying that on the basis of solicitor-client?

Ms Bloodworth: Not on the basis of solicitor-client. I must say it's somewhat - it would be somewhat unusual for a minister to say that because normally it's ministers who make decisions, and they receive advice, but it's very few ministers I know of who have said, "I took that decision because the public servants advised me to." Because what they're suggesting is somehow they haven't taken responsibility. I'm just saying I haven't found that to be my experience with ministers, that they say, "I made that decision because of the public servants." They normally make it because of their own decision.

Senator Kirby: "The devil made me do it."

Ms Bloodworth: Sometimes those are the same.

The Chairman: Before I thank the witnesses, I would just like to end by saying that with regard to cabinet confidences, I want to repeat: No member of this committee has asked any witness any question which would breach this convention. So far as documentation is concerned, what this committee required is all the information on the basis of which the Mulroney government and the Campbell government decided to proceed, on which Mr. Nixon recommended cancellation, and on which Mr. Chrétien decided to cancel the contracts. We've been working on the theory that the presumption should be in favour of providing information and not withholding it.

You have been very forthcoming witnesses, and we thank you very much for appearing today.

Mr. Thomson: Before I leave, if I could clarify one thing: Senator Tkachuk spoke to the incident he talked about with respect to an unvetted document being provided. I feel I should at least clarify one thing.

The practice up until that point was to do the vetting and then to advise Lindquist, Avey of the vetting that had been done so that they would change their records. They would then bring a copy of the material that had been vetted to the briefing they did at the minister's office. In this particular case, on this particular day, they erroneously took an unvetted copy of the document to the minister's office. It was not a request from the minister's office for that particular document. It was brought for the briefing. And that unvetted document was included erroneously in the material. I simply wanted to clarify it was not simply a request for that document. Thank you very much.

The Chairman: Thank you, Ms Bloodworth. Thank you, Mr. Thomson.

Just a few words, colleagues. Next week, you will notice, we will be starting on Monday and the hours are 9 to 5 all during the week for reasons which will become obvious. We have very, very important witnesses. So it is the 9 to 5 hours, not our usual meeting hours.

Senator Kirby: Mr. Chairman, just so that we do not add sessions, we are not sitting in the evenings? Because some of us have things in the evenings. Am I correct on that?

The Chairman: Nine to five.

Senator Kirby: What our normal Wednesday schedule would be.

The Chairman: Mr. Nelligan will introduce our witnesses.

Mr. Nelligan: Senators, we have before us today Mr. Jack Matthews who was president and chief operating officer of Matthews Group until August 1992 and then became chief executive officer of Paxport Inc.

With him is Mr. Peter Kozicz who was senior vice-president, operations, at Pearson Development Corporation until the contracts were cancelled.

And also, and I apologize to Mr. Sasso, I couldn't get to him on the phone today, Mr. Bill Sasso of the law firm of McMillan Binch.

(Jack Matthews, sworn:)

(Peter Kozicz, sworn:)

(William Sasso, sworn:)

The Chairman: Mr. Matthews, we have a copy of your opening remarks. Will you please proceed?

Mr. Jack Matthews, Former President and CEO of Matthews Group, Former CEO, Paxport: Mr. Chairman, I thank you for the opportunity to address this committee. At the outset, let me say that I believe Bill C-22 is a travesty of justice. Since the cancellation of the Pearson Airport contracts by the government on December 3rd, 1993, I have tried to maintain faith in the Canadian political system by remaining confident that the process would draw out the truth. I am still hopeful.

The truth is that the selection process for the airport contracts was fair. The airport contracts were in the public interest and were arrived at as a result of hard bargaining between government representatives and the consortium. And the contracts were arrived at without undue political interference.

Peter Kozicz, the former senior vice-president of PDC, would now like to address the committee. I will complete my opening remarks when Mr. Kozicz is finished.

Mr. Peter Kozicz, Former Senior Vice-President, Pearson Development Corporation: My name is Peter Kozicz and I am speaking to you today as a former employee of Pearson Development Corporation. I am grateful for this opportunity to address the committee.

My involvement with the Pearson project dates back to January 1992 when, as an employee of the Matthews Group, Jack Matthews assigned me to work with Ray Hession at Paxport. I subsequently worked on the Paxport proposal, the merger with Claridge, the negotiations between PDC and Transport Canada and, for a short period, on the implementation of the airport contracts.

After the December 1993 cancellation, I helped PDC gather information for the Revay costing exercise. And for the past seven months, I have worked in a litigation support role, most recently as PDC's representative at the Crown's discoveries in the lawsuit between PDC and the government of Canada. The Pearson project has been an all-consuming part of my life for the past four years.

As I understand it, the committee's mandate is to address the cancellation of the airport contracts in light of three issues: Number one, was the selection process fair to all parties? Number two, was the deal in the best interest of the Canadian public? And thirdly, was there any undue political influence involved in the process.

I believe the testimony you've heard to date has demonstrated overwhelmingly that the selection process was fair and impartial and that the deal was, in fact, in the best interest of the Canadian public.

I further believe that the testimony offers no support whatsoever for the claims made by the government or by Mr. Nixon in his 1993 report on the issue of undue political influence.

My motivation for wanting to address the committee is to speak out about the merits of the PDC deal and the impact of its cancellation.

This project began for Paxport back in 1989 with Ray Hession developing a vision for what Pearson could become, Don and Jack Matthews having the courage of their convictions in supporting Ray and an extremely talented group of people led by Trevor Carnahoff turning the vision into a reality. This effort culminated on December 7, 1992, with the selection of Paxport as having the best overall acceptable proposal.

This announcement was made on the basis of the August 28, 1992 project evaluation report which was prepared by a proposal evaluation committee of six senior members of government, four members from outside government. The committee was also supported by technical experts from government and from outside consultants.

Shortly after the selection of Paxport, as the record shows, the Paxport Group and the Claridge Group began discussions to investigate the merits of merging the T3 interests with the T1T2 project.

Mergeco was formed in mid-January 1993, and thereafter negotiations began with Transport Canada and its advisors to reach agreement on the multitude of issues encompassed by this project. These negotiations were demanding, difficult and, at times, very frustrating, but throughout their duration, John Desmarais and Wayne Power did an outstanding job as representatives of Transport Canada. They truly fulfilled their obligations as public servants, always ensuring that the interests of the Canadian public were at the forefront of the issues being negotiated.

As we all know, these negotiations culminated with what we now refer to as the airport contracts which came out of escrow on October 7, 1993. PDC quickly mobilized its forces in order to fulfil its obligations and, in this regard, committed a tremendous amount of resources to the planning, design and preparatory work in order to implement the job-creating, early-start packages called for in the contracts.

Subsequent to closing, I was appointed senior vice-president for operations at PDC, responsible for the full scope of operations at T1T2 and at T3. By November 1, 1993, I had 13 people working in my group and a mandate to hire another 6 over the course of the management services agreement. We were also preparing to transfer up to 163 Transport Canada employees onto the PDC payroll.

Following the election of the Liberal government, I personally felt that it was a sound business decision by PDC to agree to extend the commencement date of the airport contracts by 30 days. PDC and the Government of Canada were about to embark on a 57-year relationship and consenting to a review of the agreements would go a long way in establishing a cooperative tone for the relationship to follow. I had little concern that the airport contracts would be cancelled or modified in any significant manner, knowing what I knew about the deal and knowing that the government had promised to conduct a fair and impartial review.

The fundamental basis of the deal was sound and fair, and I believed that if an impartial review was conducted, the project would be allowed to proceed.

Throughout the month of November, as I have already said, the PDC team worked extremely hard in fulfilling its obligations and had upwards of 100 consultants engaged on the project along with more than two dozen head office staff.

The morning of December 3rd is a morning I will never forget. I was taking representatives of the Bracknell Corporation and the State Group on a tour of the T1T2 facilities and, at about 9:45 a.m., from the International Departure holdrooms in T2, I decided to call Claridge to see if they had heard anything from the government. Norman Spencer answered the phone and informed me that in fact the airport contracts had been cancelled.

To give you an idea of how fast bad news travels, later that morning, I received a call from a friend in the airport business in Europe who said:

Maybe in a dictatorship or maybe in the former Soviet Union, but surely not in democratic Canada. What has your government done?

To this day, I still do not fully comprehend the reasons behind the government's decision.

Since my involvement began on the airport project and in keeping with PDC's obligations under the industrial benefits agreement, I had the opportunity on a number of occasions to travel to foreign countries and meet with politicians and senior bureaucrats responsible for upgrading and expanding airport infrastructure. I used to explain with pride the approach the Canadian government had taken with respect to the privatization of Terminal 3 and with respect to the then imminent transaction on T1 and T2. However, on recent trips, I found myself defending not only the merits and the fundamentals of the way Terminal 3 was privatized, but I also find myself attempting to explain the reasons behind the decision the Government of Canada took over T1T2.

I also find myself spending a lot of time defending the integrity of the PDC consortium, its employees and consultants, and trying to demonstrate that it was not a default on behalf of PDC that led to the cancellation but was, as far as I can tell, a political decision made with little regard for business fundamentals, the needs of the travelling public or in the interests of the Canadian taxpayer.

Where we would be today if the airport project had gone ahead? PDC by now would have completed the West Finger Addition, the South Addition and the new Rapidair Pier. It would have also completed the schematic design for all of the works to be implemented during phase 1B of the program. PDC would have invested well in excess of $100 million and would have created more than 2,000 person-years of employment.

But instead, we sit here today. The facilities are two years older with little to no work undertaken by Transport Canada and with T1 nothing less than a disgrace and an embarrassment, and with Air Canada forced to take pre-emptive measures in order to ensure its future competitiveness.

Most notable, however, are the life-safety, security and environmental issues that were so urgent two years ago but have yet to be upgraded or improved to any significant degree. In fact, if PDC were in the same position today with respect to the state of its fire and life-safety systems in the terminals as Transport Canada is, it is very likely the facilities would have long since been closed down by the Mississauga Fire Department.

In addition to the capital improvements that would now be in place if the airport contracts had gone ahead, the government would have also benefitted in the following ways: 163 federal civil servants would potentially be on PDC's payroll, thus saving the government approximately $8 million per year. The present value of this savings to the government is $132 million.

The partners at T1T2 Limited Partnership would be paying income taxes on account of their involvement in the airport project. The estimated present value of those taxes is $312 million. And the government would be receiving a stream of ground rent payments with very good downside protection and the ability to participate in better-than-expected revenues. The present value of this payment stream is estimated at $909 million.

I'd like to note at this point that the above numbers are based on the August 23, 1993 KPMG model run prepared for the government.

The sum of all of the above is approximately $1.4 billion and should be compared to the Price Waterhouse valuation report of July 1992, Appendix C-1, which estimates the net value of T1T2 of between $174 million and $205 million.

In passing, I should also add that PDC was going to pay municipal taxes which had a present value of $182 million.

All of this leads me to the question: Where do we go from here? The LAA option is obviously the route the government has chosen, but I have extreme difficulty in comprehending how the LAA will move forward and effect the required changes.

My best guess is that, in order for the LAA to redevelop T1T2, they are will require a Vancouver-style airport improvement charge, also called a passenger facility charge or PFC. Some people find the PFC in Vancouver an inconvenience and imposition. It is nonetheless working reasonably well in terms of financing their capital improvements.

However, at Pearson, where Terminal 3 does not have a PFC, I find it difficult to see how an LAA can reasonably implement a PFC at T1T2 without causing a major traffic shift to T3, to the very significant detriment of the T1T2 operations.

This leads me to conclude that whatever the LAA does at T1T2, T3 must be part of the solution.

In addition to the T3 problem, the LAA will obviously need to redevelop T1T2 and will also have the responsibility for any improvements required to the airfield. A conservative estimate of the amount of capital required by the LAA is between $1.5 billion and $2 billion. Where will they get the money?

Given all of this, I cannot conceive of how a deal with the LAA will put the government in as good a position as it was in under the PDC deal, that would be as favourable to the airlines as the PDC deal was or that puts the travelling public in as good a position as they would have been in under the PDC deal.

But perhaps I am missing the point. Perhaps the main issues are not about economics and service to the travellers.

What is the responsibility of the government in respect of this action? Much has been said about the rule of law and the Senate's justice committee has heard from witnesses about the unconstitutionality of the government's legislative attempts to deal with the airport contracts.

From where I sit as a former employee of PDC, the issue of the government's responsibility is quite straight forward. The government is the entitled to establish airport policy. The government was entitled to cancel the airport contracts without offering any justification for its decision. As I understand it, all of this is permissible behaviour in our parliamentary system.

The government took a bold and decisive step when it cancelled the airport contracts. It is now time for the government to accept responsibility for its actions and to be held accountable for the ramifications of its decision.

Bill C-22 should be withdrawn and a long-standing traditions of the Canadian legal system should be permitted to determine the outcome of the PDC claim.

Whatever the government may wish to say in justifying its decision, the decision to cancel the airport contracts cannot be justified on the grounds the process used to reach agreements was improper or unfair or that the airport contracts were not in the best interests of the Canadian public.

Thank you very much for allowing me this opportunity to address your committee.

Mr. Matthews: Mr. Chairman, too many good people have been hurt by the government's decision to cancel and the unsubstantiated report advanced by the government to justify the cancellation. It is time that the government accepts responsibility for its conduct.

The Nixon report has been put forward as justification for the government's conduct in cancelling the airport contracts. The Nixon report is in error in its conclusions and the grounds advanced to support those conclusions. I will not attempt in the brief time available to me to canvass all the aspects of the Nixon report with which I disagree.

I have reviewed the evidence of almost all the witnesses heard by this committee who are engaged on both the private and public side in the process that led to the airport contracts and who were interviewed by Mr. Nixon. I agree with their testimony. The information that they provided to Robert Nixon and their testimony before this committee do not support the conclusion in the Nixon report.

I will attempt to limit my remarks to the Nixon report to those aspects with which I disagree and which I do not believe have been emphasized in the evidence to date.

The unsolicited proposal by Matthews Group: On September 28, 1994, Minister of Transport Young responded to the Senate's proposed amendments to Bill C-22. During his speech in the House of Commons, he raised an issue which was earlier raised in the Nixon report. The minister stated:

One of the proponents had commenced lobbying to achieve the privatization of these terminals in mid-1989, had submitted an unsolicited proposal, offered policy advice to the then Ministers of the Crown. Surely this is not a normal tendering process or acceptable practice.

I never understood Mr. Nixon's criticism of the unsolicited proposal by Matthews Group Limited for the redevelopment of Terminals 1 and 2 in 1989, and I did not understand why the minister raised this issue again.

What Mr. Nixon admitted in the report and the minister failed to state in the House of Commons was that, in August of 1989, the government announced a strategy for accommodating future growth of aviation in southern Ontario. The Matthews Group responded to that announcement as did the British Airport Authority, by submitting an unsolicited proposal to the government. In fact, a total of 5 unsolicited proposals were received by the government.

I found it difficult to understand why the Matthews Group, a Canadian company, would be criticized for competing against a British company for the business of developing and managing Canada's most important airport.

The Matthews Group believes there was not impropriety in submitting an unsolicited proposal. The law firm Lang Michener acted as our legal advisors on that proposal. Never once was there any suggestion by Lang Michener nor their representatives with whom I spoke that there was anything improper nor untoward in the proposal.

I met with Mr. Nixon on one occasion and spoke to him briefly by telephone about two weeks later in connection with this report. To my recollection, the meeting lasted about one and a half hours. Peter Kozicz and Robert Vineberg attended with me as PDC representatives, and Steven Goudge and one other gentleman were with Mr. Nixon.

The meeting's agenda was set by Mr. Nixon and the meeting consisted of a series of questions which he asked me. Mr. Nixon posed most of his questions by referring to prepared notes which he had with him. I have not seen any notes or other documents of that meeting since it was held but I do understand that notes were being kept by certain others in attendance.

To my recollection, Mr. Nixon was primarily interested in four topics: lobbyists, Paxport-Claridge merger, local airport authority and a number of government negotiators.

On the topic of lobbyists, he made inquiries about the reasons for retaining and the nature of services rendered by Ray Hession and Bill Neville. He also asked for my thoughts on whether lobbyists were effective. On the Paxport-Claridge merger, he asked me about my objectives and role in the merger discussion.

He asked about my meeting with representatives of the LAA and I described a meeting with which I will detail separately below.

On the change of government negotiators, I can recall discussing with him, the difficulties that were caused for those engaged on the private sector side of the negotiations arising from the lack of continuity of the government negotiators.

To my recollection, we discussed no documentation at the meeting, but Mr. Nixon asked that a summary be prepared of the provisions of the agreement which would protect the public interest. A booklet was subsequently prepared and delivered as described by Peter Coughlin in his testimony before this committee.

At the end of the meeting, we shook hands and he committed to me that if any evidence brought to him was different than that was told to him by me, he would get back to me and give me a chance to refute or explain.

Most of the particular problems and concerns that Mr. Nixon refers to in his report were not discussed. Information and opinions that he may have heard from others which differed from my own, were not brought to my attention. I did not get the chance to refute or to explain.

Robert Nixon phoned me about two weeks later. The purpose of his call was to ask me for an opinion of Robert Bandeen as head of the LAA. I explained my reservations. I also explained that I was not sleeping well and asked if I should be having that problem? I believe his response was, if I am willing to be flexible, meaning me, I should not have a problem sleeping.

The Bandeen meeting, July 6, 1993: The persons in attendance representing the LAA were Robert Bandeen and Steve Shaw. The representatives of PDC were Andy Pascoe and myself.

The meeting opened by me explaining that Paxport did not oppose the creation of an LAA and was prepared to work with any future authority, but the decision to accredit an LAA must be made by the federal government.

Mr. Bandeen expressed great frustration at not being accredited. He stated this was due solely to a patronage deal with Paxport. He stated that Minister Corbeil was being obstructionist and threatened that if he did not have a satisfactory meeting with Minister Corbeil on the next Thursday, he would, quote, "go public".

That should be in quotes.

He explained his election strategy where Vancouver and Montreal were allowed LAAs, but 5 million people in Toronto were being denied. I offered to brief the LAA fully on the negotiations taking place, with the understanding that he would not take this information to use against Paxport or to interfere with the negotiations that were taking place.

He did not agree. He concluded by threatening to build the Pickering airport to compete against Pearson International.

Comments on negotiation and other matters: Robert Vineberg, Donald Matthews and Gordon Baker attended and testified before the transportation committee of the House of Commons.

Messrs Baker, Matthews, Vineberg, Spencer and Ray Hession attended and testified before this committee. They have set out the pertinent facts relating to Terminals 1 and 2 transactions and, I believe, have fully answered any questions with respect to this transaction.

Coupled with the evidence of those in the public service who were involved in this process, they have, in my view, fully refuted the Nixon report, pointing out its numerous errors, omissions and faulty analysis.

The transportation committee decided not to call Mr. Nixon to respond to their testimony. The transportation committee also decided not to hear testimony from George Ploder, the president of Bracknell Corporation; Scott McMaster, the president of Allders International Canada; Bill Pearson, the president of AGRA Industries; or myself.

Most of these individuals have not been interviewed by Mr. Nixon. To my knowledge, there have been no negotiations in good faith by the government's negotiator, the Prime Minister's former law partner Mr. Robert Wright. The minister of transport has never agreed to negotiate. The minister of transport has only threatened us with Bill C-22.

The minister of transport has demonstrated that he has absolutely no concern whatsoever for Canadian companies involved in this venture and no concern for the hundreds of people who have lost their jobs at the Matthews Group, NORR Architects and the Pearson Development Corporation. Nobody knows how many countless others at the members of consortium and their suppliers have lost jobs. Is there any concern for over 2,000 construction workers who would have been working today on Terminals 1 and 2?

It is truly amazing to me that the Government of Canada would introduce a bill like C-22. On the same day the cancellation of Pearson Airport's contracts were announced, the government announced in accepting NAFTA the rights of Americans and Mexicans to due process, fair compensation and timely payments with regards to any expropriation, taking or cancellation of their investments in Canada.

Why are the Canadians involved in this partnership treated as second-class citizens in their own country with regards to their legal right?

Mr. Chairman, there have never been any allegations of criminal or unlawful acts by the consortium, its officers or its members. How can the government propose to deny legal rights of the consortium and its members? This is wrong. Thank you, sir, for this opportunity.

The Chairman: Thank you very much, Mr. Matthews, Mr. Kozicz.

Senator LeBreton, you had your hand up?

Senator Lebreton: Thank you very much, Mr. Matthews, for coming, and Mr. Kozicz and Mr. Sasso.

Actually, I also would like to thank you for your very, very detailed statement. As a matter of fact, you know, I'm going to have to now rephrase some of my questions but - because you've already answered them. But I perhaps can just ask you to enlarge a little bit on some of the things that you have already talked about.

By the way, just for the record, and I thought of it, Mr. Matthews, as you were going through your statement, the latest unemployment statistics in the construction industry in Toronto are 12.1 per cent. Just thought you would like to know that.

You've already, in your statement, Mr. Matthews, talked about your meeting with Mr. Nixon. He was appointed, as we all know, a few days before the Chrétien government took office. When did this meeting that you refer to in here, when did it take place and where did it occur?

Mr. Matthews: It took place November 5th, 1993. It occurred in a government office of which I don't have the address.

Senator Lebreton: On King Street in Toronto?

Mr. Matthews: That could be. That would make sense.

Senator Lebreton: Yeah. The ministerial offices. Some other witness said that that's where they were.

As an aside, when you first heard that Mr. Nixon was appointed to review this deal, what were your feelings about that, when you heard about Robert Nixon? Did you know Robert Nixon? You know, did you know him, because he was from London? What were your feelings, your personal feelings?

Mr. Matthews: Actually, I believe he is from Brantford.

Senator Lebreton: That's right. Sorry.

Mr. Matthews: I only know that because my mother went to school with him. And when he was, I guess, leader of the Liberals and finance minister, I would have heard of stories in school and - but I didn't - I probably met him on a couple of occasions but just shook hands with him before that meeting. Never any - he wouldn't know me to see me before that, I don't think.

Senator Lebreton: So from his reputation, you didn't have any thoughts about - when you heard it was Robert Nixon that was appointed?

Mr. Matthews: I was actually very relieved when I heard Robert Nixon. That was my feeling at the time. He had served a long time in government in very many different ways, a highly respected gentleman. I knew nothing negative about the man at all. So I was actually happy with that selection.

Senator Lebreton: When you had your meeting with him, and you already indicated the areas that he seemed to be concentrating on, did you get the sense that he was well informed of the facts at the meeting, or was it just a fishing expedition?

Mr. Matthews: I guess my impression was that he did not understand airports. That isn't a slight at all. To understand airports, it is a totally different business and to evaluate an airport - he was given an unbelievably tough mandate. I believed at the time he was trying hard to get a general idea of what happened, but the level of detail was so low that - you know, this was I-don't-know-how-many days into his mandate, but he was not up to speed yet, would be my opinion.

Senator Lebreton: And at the end - you said the meeting was about an hour, Mr. Matthews?

Mr. Matthews: My guess would be about an hour and a half.

Senator Lebreton: An hour and a half. As the meeting came to a conclusion, did you have any sense or - you know, any sense of what conclusions he might be - did you have any sense of where he was coming from?

Mr. Matthews: I felt very good at the end of the meeting in the sense that he had asked us questions; we had responded promptly and fully to the limited number of questions that were asked. My feelings walking out, after shaking hands with him, was that if he heard any nonsense - and, you know, after what had gone up to that point, I believed there was going to be a lot of nonsense - that we would have another kick at the can, once he had gotten negative information.

And I was - I felt very confident that once I could explain our side of the story, that there would be absolutely no problem. That was my opinion leaving there.

Senator Lebreton: And did you anticipate, leaving the meeting, that you would be hearing from him often?

Mr. Matthews: I guess what I expected, because the level of detail was so low that, as he ran into things that didn't make sense, I expected to be called. I knew there was a lot of technical detail that you need to understand to make sense of all those documents. There were, my guess, approximately 50 Transport Canada employees. That's my guess, working on this. They all had their own areas of expertise and they all put their input into the documents at different places. So going through that and trying to understand the Transport Canada side and understand our side of a negotiating point, I thought we would get calls.

Senator Lebreton: And then, you, of course, in your statement, talked about a follow-up phone call. Just for clarification, that was a phone call from Mr. Nixon to you?

Mr. Matthews: I was in my car coming back from Waterloo at the time. I was either phoning him back on a phone call he had made to me, or he was phoning me directly in my car. I'm not sure if we traded a couple of calls or not. So I don't know if the phone rang and I picked it up or whether I just dialed him there returning his call.

I don't know if I answered your question.

Senator Lebreton: I was just saying did he call you or did you call him?

Mr. Matthews: I'm sorry.

Senator Lebreton: So this was on the cellular -

Mr. Matthews: I'm sorry. I should tell you that I was either answering his call or responding to his call.

Senator Lebreton: Either returning his call or answering the phone.

Mr. Matthews: It wasn't my idea to phone him.

Senator Lebreton: Oh, I see. When approximately was that?

Mr. Matthews: That would be about 10 days before the release of the report.

Senator Lebreton: So it would be 10 days before - what is the final - we have got two reports. We've got a draft that's dated November 30th and the original is dated November 29th. I guess it was November -

Mr. Matthews: I'm going to say it's sometime around the 20th, that's my best guess.

Senator Lebreton: Yeah. And in that phone call, he, as you've indicated, was trying out the idea of Robert Bandeen as the head of an LAA?

Mr. Matthews: That is correct.

Senator Lebreton: Was that the sole purpose or did he ask you any other follow-up questions as a result of your earlier meeting?

Mr. Matthews: Basically the discussion was on Robert Bandeen. I don't remember any other questions. The thing that stuck out to me most - well, two things. The question on Bandeen. Because I think I had been a little guarded when I first talked to him about my negative impressions of Mr. Bandeen when we first - where we sat down. And he wanted me to expand on the views that I said at the meeting. So I think I let him know I had some negative views but maybe not explained exactly what they were.

The other thing was, you know, after he had asked me that question, I had the chance to ask him a question. And I knew I could not ask him, "How's the report going?", so I asked him about how I should be sleeping.

You know, I did my best to find out what was going on. And maybe he did his best to tell me what was happening or maybe not, I have no idea.

Senator Lebreton: So his response to you was that you shouldn't be losing any sleep. Like, did he seem -

Mr. Matthews: The conversation was very friendly. He was asking me for advice. I don't know why - reading the report, finding out what bad people that report put us as, I don't know why, if we were those sort of bad people, why you would ever ask me for advice on anything. But that is - so I took it that the conversation was - it seemed friendly and he asked me and I answered honestly, and I believed he was answering me honestly when he told me, if I am flexible, you shouldn't have too much of a problem sleeping.

Senator Lebreton: If you are flexible. Because there are media reports around that - and we believe there's a third Nixon report. But there's media reports around that, you know - and, of course, we've got lots of quotes in the newspaper where it seemed to me that he was actually looking for a compromise solution. And as a result of your testimony, I'm just - I am just making - I am perhaps putting - trying to put my view of what maybe he was doing.

Perhaps what he was trying to do was be a conciliatory person and suggest that they could go ahead with the airport deal with modifications but, at the same time, get on with the LAA with Robert Bandeen as the chair. That sort of seems to me what he was about if that was the type of conversation that you had with him on the phone.

Mr. Matthews: That's very close to, if I was asked that question, how I would describe it, yes.

Senator Lebreton: How did you find out that the government was going to cancel? Peter Kozicz has told us -

Mr. Matthews: I guess I wasn't unlike Peter. Because what I did is I phoned the Claridge office as well. They seemed to be better hooked in at the time.

Senator Lebreton: More lobbyists.

Mr. Matthews: At the time, I was basically phoning to say where my mindset was: Don't worry about 'em, let's get 'em, the announcement's coming out but I'm confident.

But the response I got was, "Jack, it's great that you're confident but it's too late, it's over." It wasn't my happiest moment.

Senator Lebreton: I can imagine not. And Mr. Nixon, of course, never tried to follow up? You've never heard from him since?

Mr. Matthews: No.

Senator Lebreton: Any correspondence?

Mr. Matthews: I have written letters and thrown them out. I have thought about phoning and not. But, no, I have not talked to him since.

Senator Lebreton: I will now just turn to another part of your statement and, of course, it is the references you made to Mr. Bandeen, and I was going to ask you questions about this, and I am tired of reading this memo into the record.

This is a meeting that was held on Tuesday, July 6, between yourself, Andy Pascoe, Robert Bandeen and Steve Shaw. So if I could just pass these around to people here. This is a - and it is this whole - it is the - and, of course, this is the report of the meeting that you testified where Mr. Bandeen was using some pretty strong words about going public, going - you know, the government needs Ontario and we won't get it. And then he goes on. Well, I've read it into the record, that he would go to the papers.

The question I'm going to ask is, was that your only meeting with Mr. Bandeen, or did you have several meetings with him?

Mr. Matthews: It was my only meeting with Mr. Bandeen that I can remember. I think, as others, I knew what he looked like, I had seen him at other meetings. We probably shook hands a few times. But that was my first sit-down meeting with him that I can recall. And I have not met with him since.

Senator Lebreton: When you read this memorandum, it seems pretty clear to me that you were expressing to him your - that you were not against the LAA concept. And it sounded to me like, when you read this memorandum, that you were trying to be as helpful and as forthcoming. Was he prepared - did you get a sense that he was prepared to kind of listen to the things that you were - or listen to you or take you up on your offer to get back to him with more detail or -

Mr. Matthews: I guess, if you ask my impressions of that meeting of Mr. Bandeen - and that's what I based my feelings to Mr. Nixon on - were varied in the sense that you had a man who was driven in a way to take over this airport. He was - I think driven is the best word I can think of.

It was also apparent that he did not understand the airport business. The best reference to that is his discussion about competing with a Pickering. It just isn't something you do, go spend a couple of billion dollars and divide the traffic in half.

Senator Lebreton: And no roads.

Mr. Matthews: It doesn't make sense. It doesn't work financially. It doesn't work in many other ways. It is a waste of money. But that's - and, I'm sorry, I think I got off track on what your question was.

Senator Lebreton: You had offered to get back to him and discuss the LAA, but he didn't seem -

Mr. Matthews: I'm sorry, yes. He was not interested in - I guess I shouldn't say he wasn't interested in hearing about the negotiations. He was. But he wasn't interested in hearing about them if he could not use those to publicly stop the process. So it is - basically, the olive branch I thought I was putting out there is - I had nothing to do with whether he was accredited or not, although he talked to me in a way that I felt he thought, or felt or whatever, that I may be in his way or I was in his way.

I had nothing to do with his side of the process. But we were totally open, as Paxport, to having an LAA. It made no difference to us whatsoever. In fact, it could be argued that it would be a benefit. Okay?

But we were not willing to stop - we were spending a lot of money every month on professionals, on consultants, on lawyers. And we just could not stop the process to allow another process. It wasn't our choice to stop it even if we wanted to stop it. It was a ridiculous position for him to put to me, I thought, but, you know, that's my opinion, so.

Senator Lebreton: Well, I think it's been proven that he carried through on his threats.

Mr. Matthews: Well, no, he's got to be congratulated in some ways. I don't - infamous, not famous, maybe.

Senator Lebreton: When you say that he didn't appear to know a lot about airports, I hasten to add that he was an appointee of the Trudeau government as the head of the CN for 10 years, so maybe that speaks for itself.

Mr. Kozicz, did you ever meet with Mr. Bandeen?

Mr. Kozicz: No, I didn't.

Senator Lebreton: No discussion at all.

Mr. Kozicz: None at all.

Senator Lebreton: Okay. Now, in the - I just have a couple more questions and then I will turn it over. I may come back later, Mr. Chairman.

In the testimony that we've had thus far, and there are many references on the file to Senator Leo Kolber's involvement in this file - what was Senator Kolber's position, do you know?

Mr. Matthews: I don't know his position. I would speculate that he was chairman or - I think maybe even an honourary chairman or chairman of Claridge Holdings. I just don't know that.

Senator Lebreton: And how many meetings were held where Senator Kolber was working on the file, from the Claridge point of view, that you were at?

Mr. Matthews: Just one meeting. I had met him, you know, by chance at another one where we discussed what was happening, but that was just the one meeting, I believe.

Senator Lebreton: And did you get the sense, was he very involved on the Claridge side, or would you know that?

Mr. Matthews: I am really the wrong person to ask how involved he was. He was very knowledgeable. He's an intelligent man.

Senator Lebreton: I can't disagree with you there. He's a very fine gentleman.

Would it be fair to say - or perhaps this didn't even enter your thoughts. Would it be fair to say that you felt some security in the knowledge that a high-profile Liberal senator was involved in this process?

Mr. Matthews: I guess you have to look at what you're thinking about at the time. That's how I will try to answer the question. I don't think, at the time that I met with him, that I was really thinking about a change of government or who would form the next government. We were very focused on doing a deal on an airport. And, you know, if I had to list from 1 to 20 all the criteria that were important to us, it might be down at the lower end of those 20 points. And so, yes, it probably would be considered, but I can't think now that I actually did do that.

Senator Lebreton: You were just concentrating on the deal. Thank you, Mr. Chairman. That's all I have for the moment.

The Chairman: Senator Bryden.

Senator Bryden: Thank you, Mr. Chairman.

Mr. Matthews, I believe that the clerk's office or counsel contacted you or your office today to provide copies of documents?

Counsel, am I correct in saying that?

Mr. Nelligan: I provided a list just this morning, yes, and I got it from Senator Kirby.

Senator Bryden: Okay. And I see we have provided here the minutes of a meeting of the board of directors of December 14, 1992. In the back of that, as often happens with corporations, is the corporate calendar for 1992-93.

Mr. Matthews: Maybe before we talk about it, can I get a copy of this? I'm sorry, I don't know where my original went to.

I'm sorry, you wanted me to go to which page?

Senator Bryden: It is the next to the last page, before where the secretary would sign.

To identify it, it is where the 1992-93 corporate calendar is laid out. And I see there was to be a meeting on December 14, '92, February 24, '93, June 17, '93, September 22, '93, and December 15, '93. Do you know, did those meetings occur?

Mr. Matthews: I believe the schedule was changed after this. In fact, I know it was changed for one meeting, because when this came out, I don't believe we had - we had maybe had our first meeting with Mr. Bronfman or Senator Kolber and Mr. Coughlin. So I don't - I know there was one meeting. I believe it was December 16 or 17? Sorry, 14.

I'm sorry, I mean January. I'm talking about when the deal with Claridge was ratified by the board, and I don't have that documentation here. So I know it was changed. Whether the other meetings happened or not, I can't -

Senator Bryden: Were there a number of board meetings that occurred during '93?

Mr. Matthews: Yes.

Senator Bryden: And you will be able to provide in due course, the minutes of that?

Mr. Matthews: I come from Dallas, Texas. The -

Senator Bryden: I don't mean to provide it today but to -

Mr. Matthews: I would be happy to give you whatever files I have on that, but I am not the recordkeeper of that company, but I will give you whatever files I have.

Senator Bryden: Who would be the proper person to have the clerk address to get the - would that be the secretary?

Mr. Kozicz: I think the corporate records, or at least the minutes from the meetings to the extent they took place in '93, have not been located.

There's two or three PDC archive boxes that have gone missing, and I suspect that any of the minutes to the extent they exist would be found.

Mr. Matthews: That being the case, I know I have some at my home, and I will forward everything that I've got.

Senator Bryden: Can I just follow up on that just a little bit? How many boxes of documents are missing?

Mr. Kozicz: It's either two or three.

Senator Bryden: And I think we also asked to have counsel ask if you would file correspondence, relevant correspondence between yourself and the - any Paxport management people and Mr. Hession or other persons that would be relevant to the matter before this hearing.

Mr. Matthews: I believe I brought everything that was relevant with me -

Senator Bryden: You brought it with you?

Mr. Matthews: No, but my definition of relevant - because of you wanting this, I didn't think these were relevant, so I didn't bring them. I didn't think it would really matter whether we had a meeting, what day it was. So I will get this and I will put together a greater definition of relevant and send it up here.

Senator Bryden: It's not the date of the meeting that might be relevant. It's contents of the minutes of that meeting that might be relevant. I do not know.

Mr. Matthews: That's fine.

Senator Bryden: The other item that was asked for, I believe, was if you will provide agendas and/or appointment diaries for the period of time that is under consideration by this committee. That would be from about 1989 until the end of October or the end of December 1993.

Mr. Matthews: I have '92 and '93 calendars and one is actually in an electronic organizer, so I don't know how you want that produced. It doesn't print. It just is what it is, as far as I know. Mr. Sasso is willing to go through with Mr. Nelligan and have all relevant things given over.

Mr. Sasso, Counsel, McMillan Binch: Senator, I have been assisting Mr. Matthews in preparing his evidence for this committee. I have not had any inquiries made of my office to search for documents or to produce documents. So I have your questions and will do what we can to look at these documents and produce them.

Senator Bryden: Really that's all I am asking. I don't expect you to perform miracles. But I just wanted to be sure, because I think this is the only time I will get an opportunity to speak to you about it.

But the documents that occurred and writings that occurred at the time of the event are very important information for the investigating - or an inquiry committee like this. So what you can do to assist at whatever point would be very useful.

Mr. Matthews: No problem. I'd be happy to do that.

Senator Bryden: Mr. Matthews, I would like to refer you to a document. It is my tab 1, and it is dated July 12, 1990.

This document has been referred to in committee many times, and I am sure the senators have it, although if they need extra copies, they are available. It is addressed to Don Matthews, Jack Matthews, Peter Gorring, and Trevor Carnahoff. It is from Ray Hession, and it is dated July 12, 1990, and there is a number on the top. It is Paxport 478. This is a document that was provided to us by Mr. Hession. Do you recognize that document, Mr. Matthews?

Mr. Matthews: I do not remember this document from that period of time. I believe I was probably sent it, though.

Senator Bryden: But you would have probably received a copy of it in the normal course?

Mr. Matthews: I assume so.

Senator Bryden: It is not my intention - I am sure senators will say, "Thank goodness" - to go through this document again in detail but I would like, if it's not being unfair, to ask you to go to page three of that document.

Mr. Matthews: Did you want me - Do you mind? I'm sorry to ask if everyone's read this document; I have not read this document lately. My I have a chance to get up to speed here?

Senator Bryden: Sure. We have lots of time.

Mr. Nelligan: May I say, Senator Bryden, that I have received today - and I was going to read it into the record at an appropriate time - a letter from Mr. Hession dealing with your reference to this memo when you were examining Mr. Neville. And perhaps I should -

Senator Bryden: I didn't even examine Mr. Neville.

Mr. Nelligan: Well, he's referring to when you were examining Mr. Neville and you asked him questions about the references to him in the Hession memo.

Senator Bryden: Well, it wasn't me. I was doing much more constructive things at that time. Perhaps you could read it, counsel.

Mr. Nelligan: Well, perhaps I'd better read the first two paragraphs so you know what he's talking about. He says:

During my giving of evidence on August 1...Senator Bryden introduced a memorandum from me to four addressees dated July 12, 1990. The memorandum including a verbatim report from Bill Neville in which reference to an "efficient" competitive process was made.

I note that in subsequent questioning of other witnesses, references to the so-called "efficient" process was apparently being used to suggest the alleged "sham" or those variants that suggested a process biased in Paxport's favour.

And he then goes on to give his explanation of what was meant in the memo. And I have that now so that I'm simply pointing that out. He was asking that some explanation be put on the record as to the interpretation because he felt he hadn't been given an opportunity when he was asked before.

Senator LeBreton: Is that Mr. Hession?

Senator Bryden: Mr. Hession has been before us two or three times. Can we in fact do what we normally do and file those explanations?

Mr. Nelligan: Well, that's fine, but I'm just calling your attention to the fact that there is an explanation on the particular memo and we'll have copies made and file them.

Senator LeBreton: That was from Mr. Hession?

Mr. Nelligan: This is from Mr. Hession, addressed to me as counsel.

Senator LeBreton: Yes, Senator Bryden was here when Mr. Hession appeared.

Mr. Nelligan: No, but I think the point is that Mr. Hession was complaining that subsequently this document was being used for purposes that he said misinterpreted it.

Mr. Matthews: As I'm reading this, can you tell me what you wanted me to comment on?

Senator Bryden: Yes, it's a very small point. Well, I think it is numbered because you have copies of my numbers that I put on that document. On page three -

Mr. Matthews: I don't have any page numbers, though. Page three? Okay, fine.

Senator Bryden: The third page. And just to give you a little context, it refers to - Everson lists the problems as including - and there's evidence as to who Everson was, and I don't even want to get into that. But number four, one of the problems that was identified to you in this memo, was "heavy pressure from the other potential bidders, including increasing threats by BAA partners Bitove and Cogan that they might well launch legal action if they are denied a fair opportunity to compete".

Now, we know who BAA are or were at that time. Who was Bitove and who was Cogan?

Mr. Matthews: Mr. John Bitove Senior and Mr. Edward Cogan. I know the two of them worked for BAA as - I'm sorry, Mr. Cogan worked for BAA; I think Mr. Bitove may have been a partner. I'm not an expert on how they were set up. I do know that BAA worked out of Cogan's office in Toronto or - whether they sub-leased office space, you went in the same door for both offices. So I'd be highly confident that's who he was referring to.

Senator Bryden: Is that Edwin Cogan?

Mr. Matthews: I would believe so, yes. I know him as Eddie or Edward, but he may be Edwin. I haven't checked his birth certificate, so.

Senator Bryden: Because I'm not from Toronto, his offices are in Toronto?

Mr. Matthews: Yes, they definitely were at this time.

Senator Bryden: Pardon?

Mr. Matthews: They definitely were at this time. I don't know today.

Senator Bryden: Yes, okay. And I've one other question relating to this. To your knowledge, were you ever sued - that is, Paxport or the Matthews group ever sued - by either Bitove, or Cogan, or both?

Mr. Matthews: No, I don't believe so - unless it was some minor thing under a numbered company I've never heard of, but I don't think so.

Senator Bryden: And what did Bitove do?

Mr. Matthews: Mr. Bitove is primarily in the food business. He operated and operates now, I believe, the food concessions at maybe all three terminals. He also is the food concessionaire at the Dome in Toronto. He has other businesses, I'm sure.

Senator Bryden: Just to complete on Edwin Cogan, what type of business is he in?

Mr. Matthews: He's basically a real estate - this is my explanation of what he is; he's better asked than me, but he's a real estate, whether a broker investor, developer at times, I believe.

Senator Bryden: Thank you. That's all I wanted from that is an attempt to get a clarification.

Mr. Matthews: I think if you're looking for clarification, my guess is that they were not threatening to sue Paxport. But that isn't the way I read it. I don't know if that's relevant or not.

Senator Bryden: In any event, they didn't to the best of your knowledge.

I refer now to a document which is my Tab 2. Once again - and I'm not going to go through this stack.

Senator Tkachuk: You can if you want - if you can do it in half an hour.

Senator Bryden: I can continue on a second round. This document is a report of a meeting that occurred on March the 4th - I'm sorry, March the 3rd; the memo is March the 4th - between persons from Transport Canada and Paxport. This would have been after Paxport being chosen as the best overall proposer and, indeed, after, I would think, the letter agreement at least with Claridge on the 15th of January. And I wanted to draw to your attention - do you want to take some time to read further because I am going to -

Mr. Matthews: Well, if you want to ask the question and I'll read the memo and understand your question, we can get through it a little bit quicker maybe. So I'm happy to listen to the question and then read it.

Senator Bryden: My question is that two of you are present, actually, who were at the meeting: Mr. Cozick and Mr. Matthews. And, Ray Hession was also there. And I am not concerned about who played the heavy, as the comments are in here, and who was the good cop and who was the bad cop, but I would direct your attention to the last two paragraphs on the first page, which says:

Hession presented the DM -

Which I assume is the deputy minister -

...with a letter to sign (DM to PAXPORT) stating that TC officials were being directed to begin discussions on March 4.

And then the DM, it purports to say:

The DM did not support the letter and said she never thought she would see the day when Hession was her executive assistant!! Also TC was not "going to roll over", PAXPORT should talk to Deloitte Touche on Friday...

Do you recall that happening at the meeting, either one of you or both of you?

Mr. Matthews: Just give me one more minute. Absolutely, I remember that meeting and I remember in the middle of a very strenuous time there was a little bit of humour and the deputy minister used words very closely to that. I think she was serious but being humorous at the same time. She was trying to - Basically, I think Ray had some very strong but very relevant and good points and she probably felt - and this is why I'm just, if you're asking me, she probably felt he was pushing just a little bit too hard so she backed him up. That's my guess. But you have to remember at the time we were highly frustrated. We were - You know, this was three months, almost three months after we've been supposedly, you know, the December 7th letter had come out and there was very little action at that point on the government side and it was very frustrating.

Senator Bryden: But I take it Mr. Hession was quite serious when he passed this letter and said, "Sign that and direct your people".

Mr. Matthews: I remember talking to him before the meeting. He felt that there was an outside chance that she would sign this letter is what I remember from that, but she would understand what he was saying. She would understand exactly what he wanted because it was in writing. Everything was on top of the table. There was no mistake about what the message of our meeting was. We were frustrated.

Senator Bryden: I really don't want to go too far with this, but isn't that unusual that a private president of a proponent would think there was even an outside chance that a deputy minister of the government would sign a letter that he had drafted directing the officials to take action?

Mr. Matthews: I don't think it's unusual in business and I can really - I can't speak for what's usual or unusual in government, but in business if you're dealing with someone and you're not coming to an understanding, you put it in writing, you give it to the person and say, "If you can sign this, we can go forward." I don't think that's unusual at all. It may be unusual in government circles; I just can't talk to that. But I did not discourage him from going forward with that, and we were frustrated.

Senator Bryden: I know. We've been frustrated trying to find our way through it in just what we're doing.

I refer you now to move along to a further document, number 3 of my tabs. And this is one that I'm bringing to your attention, Mr. Matthews, because I brought it to the attention of your father when he was here and he said, "Well, you better ask Jack about that."

This is a memorandum of a meeting of the subject being a meeting with the Bronfmans and the Matthews and it's from David Broadbent and it's addressed to Glen Shortliffe. Now what is included in there is in the second paragraph: "I have arranged to dine with Jack Matthews tonight."

Mr. Matthews: Are you reading the whited out paragraph right now?

Senator Bryden: I hope not.

Senator Jessiman: You said the second.

Senator LeBreton: You said the second paragraph.

Senator Jessiman: If it's the second, it's whited out.

Senator Bryden: No, no, no. You started with the wrong part. I always start my documents at the beginning, Senator Jessiman.

Senator Jessiman: They're numbered; these are numbered. Is it the number two or is it something else?

Senator Bryden: No, I said "paragraph two" and the way I learned in school, the first paragraph starts "In view", the second paragraph says, "I have arranged."

Senator Jessiman: Right. The other ones are numbered.

Senator Bryden: It's very difficult with you westerners. Anyway, I don't want to belabour the point but the question is: If you read this memo, it is obvious that Mr. Broadbent was very concerned that there was possibly going to be explosions, or whatever, between the Matthews group and the Bronfmans. That's why in the last sentence of the memo itself, the full memo, he says.

We will also get to you before the meeting tomorrow the best shot we can give on where the minds are located and which are armed.

Now, my question is this: Did you have a dinner meeting with Mr. David Broadbent that night?

Mr. Matthews: I had a dinner meeting with Mr. Broadbent when he first came on the file. I would guess this is the meeting that we had. We only had one dinner meeting together and that's just as he was trying to get from me right at the beginning where we were in the process, what had happened before, and where I thought the process was going.

Senator Bryden: And were there any conclusions to that meeting?

Mr. Matthews: How could there be conclusions? It was a dinner meeting that had no agenda from my point of view. I guess I was wrong from his point of view. I definitely didn't come away with any conclusions other than I thought I'd met a very serious, competent gentlemen who was asking some pretty direct and competent questions.

Senator Bryden: Can you tell us what was discussed relating to this?

Mr. Matthews: I don't remember. He must have been very gentle around the Bronfman issue. I don't remember that standing out. It was a very straightforward meeting. I discussed, you know, probably all the frustrations to date. At that point in time, in my mind there couldn't have been the mine field that's discussed here if it relates to the Bronfman-Matthews or Paxport situation.

In my mind at the time we were one trying to go forward. That's where I was. I can't tell you specifically. It was a good meeting, but.

Senator Bryden: That's fine. I know it's quite a long time ago but it was a rather startling memorandum and I wondered what was in the meeting.

Mr. Cozick: Senator, maybe I can add something here. I think the mine field that's being referred to here is listed in three paragraphs, the second one of which, of course, is whited out. The first one speaks to the changing of the phasing of the Paxport proposal to give rise to early jobs and more capital spending earlier on in the programs than the Paxport proposal contemplated.

The third paragraph talks of what's come to be known as the "Air Canada sandwich". On a personal note, what I find a bit distressing is that David Broadbent is writing about this on March 18th and yet it took until June 16th for that memo, the guiding principles, to be bought to our attention. So I believe that the government knew that the guiding principles were a potential mine field and their negotiator did back in March of '93.

Senator Bryden: Mr. Matthews, if you're finished with that memo, I am.

Mr. Matthews: I'm just trying to understand what my partner in life here is saying.

Senator Jessiman: And the guiding principle.

Mr. Matthews: Is there any way we can - Is the whited out paragraph not - It's hard to, it's gone?

Senator Bryden: We have a number of experts on whited out paragraphs here and, believe me, you don't want to get into that.

Mr. Matthews: Just in trying to give you the best answer we can, I'm trying to -

Senator Lynch-Staunton: It's kind of unfair to ask questions on documents which are incomplete. I'm not pointing at you, it's just that it's unfortunate that's all we have to go on.

Senator Kirby: You don't know what's there either.

Senator Lynch-Staunton: No, no one does.

Mr. Matthews: Can you give me just a little bit more? I just want to spend some more time.

Senator Bryden: Absolutely.

Mr. Matthews: This is actually - The Air Canada sandwich is a very serious situation in this deal to understand what exactly happened in the negotiations and I want to make sure that - This is the first indication that I would have that Broadbent was aware. And I'm still not sure that he was, so I want to read it.

Mr. Matthews: In reading this, it appears that Peter Kozicz is correct, that, as he calls it, giving comfort to Air Canada following the T2 partial renovation - and that, in effect, is what is called the guiding principles. What I don't know is how well David Broadbent knew. I think they were asking for legal advice at the time as to how serious it was, so. But it's interesting from that point of view.

Senator Bryden: Anyway, you've done the best you can. It arose out of the earlier testimony and I just wanted to see if there was any other thing that you could recall.

Senator Bryden: I would go to another document, it's my number four. And, once again, it is not to examine in detail the document but just to - It's the April 6, 1994 letter that relates to the Fred Doucet contract. Now, I'm not asking you whether or not the contract occurred or didn't occur - we've had all kinds of evidence on that so that's not what I'm into. What I want to ask you is: Is it your understanding that, as the evidence was given to you by us by Mr. Doucet, that in one of these contracts half of the money or a significant portion of the money would be paid to another company that would be providing assistance to the government business consulting group?

Mr. Matthews: I guess when I answer questions here I'm trying to give you my best recollection of everything I've heard, not just in accordance with what Mr. Doucet testified. So, I have a wealth of other knowledge that sort of melts into one.

It was my understanding - and again I'm not sure I'm talking about; I believe this is a different contract - but Mr. Doucet also had a company in Washington that was entitled to work on Paxport International work as well as another company in Toronto and I was not told except that Mr. Doucet at one time told me he got well under 50 per cent. I don't know if that means 48 or 35, but it really didn't matter to me because as far as a consultant goes, he's doing the job; he's got the right people or he doesn't.

Senator Bryden: Well, you've spent a lot of time in the contracting business. And you get a contract for $2 million dollars, you sub-contract a lot of it out.

Mr. Matthews: Absolutely.

Senator Bryden: It's not unusual that you don't get to keep it all. So I'm not questioning that. But the reason that I raise it is to try and create a type of paper trial, because I want to -

Mr. Matthews: Well, maybe what I should do - If you're putting together a paper trail, I'll spend some more time and read this and try to understand what - and comment on it. I don't think I've commented on this letter yet. I've just commented -

Senator Bryden: No, I'm not asking you to comment on the letter. What I was asking you is: It's my understanding, and it was some of the evidence by Mr. Doucet before the committee, that while he was, in general terms, to receive $2 million, a portion of that - it doesn't matter whether it was 30 per cent or 50 per cent, would be paid off to sub-contractors.

Mr. Matthews: I don't know of any $2 million payment at all. I do remember there's some discussion here, but I think that was completely debunked. But maybe I was wrong if you still believe that. I don't know of a $2 million payment to Mr. Doucet.

Senator Bryden: Believe me, I'm not trying to get you in a situation where you're causing problems with your legal situation. But the reference here, it wasn't -

Mr. Matthews: Maybe you know something I don't know. I don't have any legal problem there, I don't believe.

Senator Bryden: I'm sorry?

Mr. Matthews: I don't have any legal problem in this regard.

Senator Bryden: Oh, I didn't mean to put words in your mouth at all. If I can then just read, since there seems to be some -

Mr. Matthews: Can we maybe back up a bit and just start this questioning in the sense that you've said there may be a legal problem, you don't want me to comment on a legal problem and I want that clear because I don't want that hanging out. I don't have any idea what you're talking about.

Senator Jessiman: Why don't you show him the two contracts or the contract?

Senator Bryden: Well, the contracts are on file. The reference to the legal problem was in reference, I guess, to making sure that I was avoiding any legal suits that are currently before the courts and, therefore, asking you to comment on that. That was my only comment.

Mr. Matthews: Fair enough.

Senator Bryden: Is that fair enough? I don't have that particular contract in front of me, but the reference is in the transcript.

Mr. Matthews: That's a fair explanation. That's fine.

Senator Bryden: Let me go next to the transcript of the proceedings which refers to Mr. Doucet's testimony. And it's the proceedings that are Thursday August 24th . Do you have them for distribution? It's number five. And I've just reproduced the pages that are appropriate.

Senator Jessiman: All right.

Senator Bryden: Believe me, I'm not trying to create a trick situation here. I'm just trying to get, trying to understand.

Mr. Matthews: I haven't seen a trick yet, so if I tell you I see a trick, but not yet.

Senator Bryden: I haven't been successful in three months, so I don't know why I would be now.

Mr. Matthews: I'm sorry, where is this document from?

Senator Bryden: The document that you have is two pages, I think, from the proceedings of this committee -

Mr. Matthews: They've turned into two pages.

Senator Bryden: - the transcript. This is the evidence of Mr. Doucet and it was why I asked about Mr. Cogan. Mr. Doucet, who was employed by you at some point, he says in this transcript if you look at the very bottom of the page, of-

Mr. Matthews: Yes.

Senator Bryden: -page 1230-2:

My involvement with the Pearson International project, such as it was, began with the British Airport Authority/ Canadian Airports Limited.

In March of 1990 we -

And I take it that's his company.

- were recruited by Mr. Edwin Cogan, a leading international developer.

Would that be the same Mr. Cogan who was referred to in the memo that we looked at earlier?

Mr. Matthews: I would believe so.

Senator Bryden: That would be the same one. Now there's one other page that I wanted to refer to.

The second page that you have is 1230-5. If you come to the last two paragraphs, what Mr. Doucet said in his statement, I believe - and I'm doing this in order to shorten it but, hopefully, not to be unfair:

Taken together, one-half of the two contracts was for consulting services to be done outside Canada and one-half for consulting services to be done inside Canada. The Paxport Incorporated contract was intended primarily to advise on other Canadian airport opportunities as the airports devolution program progressed over the next decade. The international side, as illustrated by the word "international" in the name Paxport International, was to assist in developing international...

The next paragraph - and this is the one that I'm trying to get some clarification on -

To perform the services of these two contracts, our firm was committed to use the services of an outside firm, Sagegate Incorporated, in which it had and continues to have no benefit or ownership, and to pay 50 per cent of its fees to this firm. Sagegate's principals had a key involvement in the redevelopment of the Pittsburgh International Airport and other international development projects.

And then it goes on: "Additionally".

Well, I've had difficulty trying to understand who Sagegate is. Have you ever - did you know that Sagegate had a competence in this area?

Mr. Matthews: Yeah, I do know that but I didn't know that - Basically, if you want to look at Paxport International, that's really what you want to understand, if I get your drift.

Senator Bryden: Yes.

Mr. Matthews: Basically, Mr. Doucet's company here in Ottawa was basically instructed by me to get ready to go out into the world - just as Ray Hession had done on many other occasions - and bring in opportunities that we can focus on. In doing that, he needed to have some people who were willing to go out and do that. I was very busy at the time he was doing this. I had a lot of work going. This was his responsibility to set that up. He was, as a consultant, working for me.

Senator Bryden: Yes.

Mr. Matthews: Mr. Cogan, I do know was involved in the Pittsburgh airport I believe with BAA and other airports - I can't tell you his resume. And the company in Washington, I was told after Mr. Eisenstatt - and I read the testimony and I forget who he is and everything; he sounds like a terribly competent person but I've never met the man. But it was Mr. Doucet's role to set that up properly and to coordinate with Paxport International.

Senator Bryden: Thank you. That's helpful. The one final document that I would like to file, and then basically I'm finished. I asked to, in trying to determine who Sagegate - which seems like an interesting term - was, I had a corporate search initiated. And the document being distributed now is document six. And if I read it correctly, it indicates that Sagegate Corporation was incorporated on the 29th of December, 1992. And I think, as you may have referred to, if you go to the list of directors, one of the two directors of Sagegate is Edwin Cogan. And I think you indicated that you were aware of that.

Mr. Matthews: I don't know. I want to be clear on this. I wasn't aware until actually I read Mr. Doucet's testimony about Sagegate. But Mr. Cogan, that makes sense to me; it fits. He's been involved in airports.

Senator Bryden: Oh, he new something about airports. Thank you very much. That's all I had, Mr. Chairman.

Senator Tkachuk: Thank you for coming, witnesses. I've got a number of questions. Some of them refer to some of the allegations in the Nixon report and some of them are questions arising out of the evidence. You became the president of Paxport around December the 15th, is that correct?

Mr. Matthews: No, I was made CEO of Paxport - I'm going to estimate - my best guess would be about end of November. I really didn't take into, maybe before that, but I really didn't take any role. There was really nothing to do until the announcement came out. So it was with the understanding that if -

Senator Tkachuk: In 1992?

Mr. Matthews: I was going to - that's right; that's right.

Senator Tkachuk: Mr. Shortliffe, in a memorandum that we've had filed here by Senator Bryden, August 27 '93, 002087, it says a memorandum for the Prime Minister and it says, "One of the owners of Paxport Inc. is the Matthews group whose head, Jack Matthews, has been a high-ranking Conservative party official". Do you consider yourself a "high-ranking Conservative party official"?

Mr. Matthews: I don't know. If I am, a lot of other people are probably very happy. But, no. Absolutely not is the best answer I can give you.

Senator Tkachuk: Have you ever been an officer in any Conservative organization?

Mr. Matthews: When I was about 15 years old, I was president of the YPC in London, Ontario, for one of the ridings and I didn't long last in that job. It was about a year or two.

Senator Tkachuk: Which, maybe after the 1993 election might have described you as a high-ranking party official, but certainly not before. I wonder if Mr. Shortliffe knew something I didn't know.

Senator Bryden: Senator, just a point on that. I believe that memo, just to substantiate what the witness said, goes on to say "high-ranking official" and then in handwriting, "son of Don"?

Senator Tkachuk: Yes, but I -

Senator Bryden: No. I'm just confirming that.

Senator Tkachuk: Yes. So maybe he really meant the son of a high-ranking party official. I don't know.

But this whole process of politics involved in the selection process which was announced on December the 7th, and on December the 7th, from all the evidence we have, your company, Paxport, had the best overall proposal. But there was testimony given earlier, and I can't remember where and I can't remember what day, but I'm just going to ask a question to verify that.

Could the government, on December the 15th, the RFP that you made the proposal on, if the government would have signed off on December the 15th on that RFP, would that have made a contract? Would there now have been a contract between the government of Canada and Paxport on the terms that you presented your proposal?

Mr. Matthews: The answer to your question is "yes". Basically, I believe the bid would not have been compliant had it not been ready to sign. It was a firm offer to the Government of Canada. So basically, if the government had said, "We've gone through your proposal. We like absolutely everything about it. We're signing it," I believe it's a firm deal.

Senator Tkachuk: So on the RFP - and you can correct me, either one of you, if I'm wrong - my understanding of the way it would work, when you presented your RFP, you had to give a deposit of $1 million. Is that right?

Mr. Matthews: That's correct.

Senator Tkachuk: Right. And the balance of funds promised at the time of closing?

Mr. Matthews: That's correct.

Senator Tkachuk: So if you'd closed on December the 15th, which you could have - if the government would have signed off on December the 15th, if you closed on December the 15th or a prearranged day somewhere there - in 1992, could you have come up with the $61 million needed to close the contract?

Mr. Matthews: Absolutely; yes. I believe, just to give you a fuller answer, all the partners that were supplying the money to get this deal done had signed the bid that were - we were going forward with it. We were ready to say, "The government likes it. We're done." It was absolutely a binding situation. So, yes, we were ready to go forward. I don't think that the government would have said you'd close December 15th but probably at the earliest - In any real estate transaction you'd probably say 30 days after signing, or something, but we were ready to close.

Senator Tkachuk: Okay. One of the reasons that we are here, or one of the main reasons that we are here, is politics. You know, the government was trying to help your father. I mean, that's what Mr. Nixon said.

Mr. Matthews: It appears to be what Mr. Nixon said. I had no evidence of that whatsoever throughout the entire negotiations.

Senator Tkachuk: To make my point, sometimes I go to observe lane. So you'll have to excuse me in what I'm about to say. But, if the government wanted to help your dad, you could have signed the contract on the 15th with closing on January 15th, 1993.

Mr. Matthews: That's correct.

Senator Tkachuk: There was no, like, big political storm out there during this contract time period. I mean, that I remember or that I've been able to find in the newspapers.

Mr. Matthews: It's actually my belief that if the government had signed that deal notwithstanding that it was not as advantage to the government as the deal that was finally negotiated, it would still have been a very good deal for the government as well as ourselves. I think that's an important thing to understand: That at that point in time that was a good deal for the government.

We were in a competitive situation. We were giving the government the best deal we could think of, giving them everything we could at the time, being financially responsible with ourselves. So, yes, it could have been signed.

Senator Tkachuk: So how many civil servants - I'm going to skip a little bit - ended up being on the negotiating side of the Government of Canada?

Mr. Matthews: My best guess in Transport Canada and the various other ministries, somewhere around 50.

Senator Tkachuk: Around 50?

Mr. Matthews: That's my best guess.

Senator Tkachuk: So this government that was trying to help your dad get this contract decided, "Well, the way we're going to help Mr. Matthews, Don Matthews, I think, let's really help him out a lot. Let's not sign this contract. Let's instead" - as some of the opposite senators have said, "let's instead, oh, I don't know, get Claridge involved. That'll take a while. And then let's tell 50 bureaucrats about this and a bunch of consultants and let them negotiate for 10 months. And that's the way we're going to help your father."

Mr. Matthews: With friends like that?

Senator Tkachuk: So, and I know that he's paying heavy overhead over there with Paxport because you have staff and lawyers and consultants and, like people that you have on the Paxport staff, right?

Mr. Matthews: At that point in time there's a major effort going on because we could have been asked, as you said, to take over the that airport.

Senator Tkachuk: Right there.

Mr. Matthews: So we had to be ready. So we were in the process of maintaining readiness, let's call it. If I had understood how long that process was going to take, I wouldn't have done it anywhere near to the degree. It just was not financially responsible from my point. But, you know, it's easily seen in hindsight now.

Senator Tkachuk: So instead, the Government of Canada, which was trying to help your dad, created this whole situation of negotiating all over the summer; and 50 civil servants hanging around and talking to you and having discussions and dinners; and you guys are having confrontations, you're merging with Claridge and money's rolling out. They were a really big help.

Mr. Matthews: I guess. In some ways it's funny what you say and in other ways it's -

Senator Tkachuk: It's sad.

Mr. Matthews: Yes, it's very sad.

Senator Tkachuk: The political process has been interesting and we've had lots of discussion here. Did you ever meet the Prime Minister, Brian Mulroney, the former Prime Minister?

Mr. Matthews: I've seen him at dinners. I've been in line ups and shook hands with him. I was at 24 Sussex once with about 350 or 400 other close friends.

Senator Tkachuk: One of those tent meetings we talk about.

Senator Jessiman: Intimate!

Senator Tkachuk: Intimate tent meetings.

Mr. Matthews: Actually, it was a tent, yeah.

Senator Tkachuk: Have you ever had a private meeting with him, Brian Mulroney?

Mr. Matthews: No.

Senator Tkachuk: You've met two Prime Ministers, then?

Mr. Matthews: Yes. I've actually met Mr. Diefenbaker when I was a small child as well.

Senator Tkachuk: Oh, three! You also talked about doing a lot of politics that Paxport did before the actual RFP. You were meeting people, Mr. Hession has testified, meeting everybody?

Mr. Matthews: It wasn't just politics, it was business people, business leaders, political leaders, people who were interested in the airport at Pearson. That's really the customers, the users, Air Canada, the other airlines. It was basically as many people as we could because we wanted to understand what all the problems were. We wanted to fix as many of the problems as we could and to do that you have to understand what the problems are. So part of the ongoing discussion with people was to understand what the problems are; the other was to develop solutions as you went along. And that's what the process was. It was a good process, I believe.

Senator Tkachuk: You were taking advice from these people as well.

Mr. Matthews: We tried to listen to anybody who had problems with the way Pearson was run, or the way it was designed, or the way they operated through it. We talked to cargo people. I remember a briefing I got on Northern Telecom and the amount of hours wasted by their employees because Pearson was a problem - and it was significant numbers for one corporation - and their decisions to stay and work in Mississauga. That was part of the decision they make as to where they locate. It's an important part of, you know that's one company. There's many, many companies around, so.

Senator Tkachuk: Your father, in his testimony when he talked about getting support from the community and getting support from the political process, mentioned a meeting that you had with Mr. LaBarge and Mr. Chrétien that you were in. When did that meeting take place?

Mr. Matthews: The meeting took place just prior to him announcing that he was going to run for the Liberal leadership. My best guess, because I do not have the books from that time, my calendar, is that it happened in December, January of '90. That's my best recollection of it.

Senator Bryden: Mr. Chairman, I would like to interrupt here because if we are now entering into the discussion that you had ruled out of order, which had been your ruling had been set aside, I want to restate what I stated before you made your ruling, and that is Mr. LaBarge is here. He is prepared -

Senator Lynch-Staunton: On a point of order, Mr. Chairman, can we hear what the witness has to say before we protest?

Senator Bryden: I just want to get it on the record if -

Senator Lynch-Staunton: I think you protest too much. Well, he hasn't said anything. Give him the courtesy of listening a moment.

Senator Bryden: I just want to go on the record that if that is the issue and if it's an issue of when the meeting was and what was discussed at that meeting, we are going to demand that Mr. LaBarge have the opportunity -

The Chairman: Senator Bryden -

Senator Bryden: - he's here, that he be given the opportunity to be sworn and give evidence.

The Chairman: Senator Bryden -

Senator Tkachuk: I just asked if there was a meeting, that's all.

The Chairman: I want to see where he's going, that's all.

Senator Bryden: Okay. I just want to put you on notice.

The Chairman: Don't put me on notice.

Senator Tkachuk: Yes. And, Mr. Chairman, my understanding always was that Senator Bryden made that request of you and counsel and as of yet there has not been a negative. So as far as I know, he may even be invited already. Do you know what I'm saying?

Senator Lynch-Staunton: And Senator Bryden voted in favour of the ruling, which means he didn't want Mr. LaBarge to show up. So I don't know where he' s coming from.

The Chairman: Senator Tkachuk.

Senator Tkachuk: So this meeting took place again - he sort of broke my train of thought here - January 1990? I mean, he announced his leadership bid, I think, some time at the end of January.

Senator LeBreton: January 23rd.

Senator Tkachuk: Marjory LeBreton knows every date.

Senator LeBreton: I looked them up.

Mr. Matthews: My best guess is in December '89, January '90. That's my best guess, and that's after basically refreshing my memory with Mr. LaBarge.

Senator Tkachuk: Where did that take place?

Mr. Matthews: It took place in Ottawa - I'm not sure of the office. I believe it was his office.

Senator Tkachuk: Mr. LaBarge's office?

Mr. Matthews: I believe it was Mr. Chrétien's office.

Senator Tkachuk: The same law firm?

Mr. Matthews: I believe so, yes.

Senator Tkachuk: Who organized it?

Mr. Matthews: Mr. LaBarge, Paul LaBarge.

Senator Tkachuk: Why would he organize a meeting with you?

Mr. Matthews: I guess that Mr. Chrétien was in his firm. Mr. Chrétien at the time it was known that he was running but in the time that I'd known Mr. LaBarge, Mr. Chrétien had always been available in the sense that Paul would say to me on occasion, "Do you want to meet Mr. Chrétien? He's in the office," or whatever. But there was really no reason to meet him up until this time. So I don't know if I had been asked twice before or three times before but I knew it was available to meet with him if it was any benefit. But up until that point in time there was no need to do that from my point of view.

Senator Tkachuk: So just so that it's clear, Mr. LaBarge at this time was counsel to whom? To you? To your company?

Mr. Matthews: Matthews group and the genesis of Paxport call it, because I'm not sure exactly of the date we came up with the word and the name "Paxport". I believe it was in the summer of '90, but I'm not 100 per cent on that.

Senator Tkachuk: How long was the meeting?

Mr. Matthews: The meeting was about an hour, an hour and one-half.

Senator Tkachuk: So did you discuss your plans with regard to terminal development at Pearson?

Mr. Matthews: Yes. Not the RFP that finally came out, but at that point in time we were dealing with, we might have been between proposals - and I'd have to check because I don't have the exact date, but effectively we were very much in the summer, fall of '89 to the following year. We were very involved in working with Air Canada trying to put together, you know, the unsolicited proposal and a second unsolicited proposal.

Senator Tkachuk: Did you at all discuss your history? I mean, like, that you had made a proposal before you lost a competition or your father lost a competition?

Mr. Matthews: Well, definitely. At the time I would start most discussions on Terminal 3 - I'm sorry, on Terminal 2 with what had happened on Terminal 3. And really, the reason for doing that is people couldn't understand basically, "Jack, what business do you have in the airport business?" And I'd go through the experiences we had at Terminal 3. Even though we'd lost the proposal, we put together a wealth of information and we wanted to use those people and that information to go forward with. So I believe at that meeting that the unsuccessful Terminal 3 would have been discussed and what we were trying to do going forward.

Senator Tkachuk: Did Mr. Chrétien make offers or any suggestions of how you should go forward?

Mr. Matthews: No, I believe he listened to what I had to say. I believe his response was to the effect that, "It looks like you're doing good things. It looks like you're", you know, "It's the way of the future". Basically that it seemed to be on the right track. Those sort of positive thoughts.

The Chairman: Senator Tkachuk, did you establish yet the relationship between Mr. Matthews and Mr. LaBarge? We haven't heard that yet.

Senator Jessiman: Yes, solicitor-client.

Senator Tkachuk: Solicitor-client.

Mr. Matthews: Basically, do you want me to go further on that?

The Chairman: Yes.

Mr. Matthews: Matthews group was involved in other deals in Ottawa. Mr. LaBarge and his firm - 'cause it wasn't just Mr. LaBarge, there were other people in the firm that worked on the file and I've met others. So they were responsible in two or three other potential transactions or transactions that happened. They were our main lawyer in Ottawa for the company. It was - I don't know if he'd categorize it as a major account or as a good account, or what, but I always knew I got his response when I phoned. Does that explain what you ask?

The Chairman: Lang Michener was your firm that you used in Ottawa?

Mr. Matthews: Up until when Mr. LaBarge moved firms, we went with Mr. LaBarge to -

The Chairman: At that time?

Mr. Matthews: To Blake, Cassels.

Senator Tkachuk: So when you talk about privatization, you use the word "way of the future". Would you have got the sense that if Mr. Chrétien was opposed to the idea -

Mr. Matthews: I'm sorry, are you saying if he -

Senator Tkachuk: If Mr. Chrétien was opposed to the privatization, would you have taken steps, would you have taken any steps to try and change his mind, or?

Mr. Matthews: Okay. Let me try and understand. I did not feel he was opposed to privatization in any way. I'm not sure that was your question. I think I might have missed part of it. Were you asking me if I did feel he was or, would I do something different if I felt he was?

Senator Tkachuk: Would you do something different? Let's put it that way. I think I got it wrong.

Mr. Matthews: Yes we would have done something different. Whenever we met someone in the process of, however you want to categorize it, basically trying to understand what people of -

Senator Tkachuk: Go ahead, sir.

Mr. Matthews: I'm sorry, basically we - Ray Hession did a lot more of this than I did generally, and he was very good at it. But, basically what we would try to do is understand what problems people had with Pearson, what problems they had with our ideas of how we wanted to lease and improve the terminals, and so when I met with Mr. Chrétien had he not, had he said, "I don't like privatization," or "I don't like private people involved in airports," or something, we would have absolutely tried to work with him to overcome those negative thoughts because we believed very strongly that what we were doing was not only good for ourselves but good for the airport, the people of Toronto and the airlines there, and the passengers who went through them. So, we believed we had an answer for everything but maybe we were short on a few, I don't know.

Senator Tkachuk: And Mr. Hession has testified, you know, that he's visited with other Liberal members in Toronto, and I'm just trying to sort of full the circle. You were trying to cover all the bases. That would be normal.

Mr. Matthews: We didn't really care if anyone was Liberal, or Conservative, or what we they were, whether they were the mayor of a town or a councillor. We tried to meet with everybody who had an opinion on Pearson. That may be a slight overstatement, but that's what we tried to do.

Senator Tkachuk: You spent an hour and a half, you say, an hour, hour and a half, half an hour. How long was the meeting?

Mr. Matthews: I'd say at least an hour, maybe up to an hour and a half. I didn't time it.

Senator Tkachuk: Did you talk about other things, family?

Mr. Matthews: I don't remember any family discussions absolutely. We talked about, I guess really what I needed to know from him either listening to what we have to do after he liked what we were doing the question was put to him: Is there anything else we should be doing or if we do anything or if you hear of anything that we're doing wrong, please get back. And that, we also talked about his upcoming leadership campaign.

Senator Tkachuk: What did you talk about? Did he ask for your help, support? Did he?

Mr. Matthews: That's a point that I've had to think a lot about in the sense that I do know that leaving that meeting I believed he was asking for a $25,000 donation. I should phrase it another way, that he was expecting or hoping that a $25,000 donation would enter into his campaign from the companies I represented. Whether that $25,000 made to come from Mr. LaBarge before the meeting or right after the meeting, but it was clear that he would like a donation, yes.

Senator Tkachuk: And there'd be nothing wrong with that. He's thinking of running for the leadership of the Liberal Party; he needs money.

Mr. Matthews: As I've stated many times that I saw absolutely nothing wrong with the meeting.

Senator Tkachuk: No.

Mr. Matthews: I saw nothing wrong with him asking for a donation or suggesting one. The only time I had any problem with it at all was when that meeting was forgotten or denied, and then I had a problem. But absolutely no problem in that meeting or walking out of there. I didn't think anything wrong had happened, if that's what you're asking me.

Senator Tkachuk: So wasn't it Mr. Chrétien who confirmed the date? Didn't he confirm that he did meet with you or was it a question of what was discussed?

Mr. Matthews: Well, the history on that as I know it is he was asked in the house whether he had met with Matthews group. And, at one point I had his quote but, basically the quote was he hadn't met with any of those people as a lawyer. When you're reading the newspaper, you know, that quote comes through Hansard. I've since had a chance to read the Hansard quote. I didn't like that, I said. But, you know, being, at that point you say, "Maybe he forgot." But it was, you know. Do you want to go back to your question? I think I've just answered a little part of it.

Senator Tkachuk: I can't even remember what it was. I'm just trying to get the date. My understanding is that Mr. Chrétien had agreed that the date was in January of 1990.

Mr. Matthews: I went to the earlier things because my understanding, and I read the - I have never said what the actual date was. I've told you when I believe it was. I was down in Dallas, and I was phoned by a reporter as to this meeting. I had only talked about that meeting with internal people to Paxport and Claridge up until that time. But when I was asked by the reporter, he seemed to know about the meeting, about what was discussed, so I had a choice of saying, "No comment," or correcting him, and so I corrected him on his inaccuracies and explained to him exactly what happened. I also explained to the reporter that I didn't think anything was wrong at the time with what was done, so I wasn't challenging the Prime Minister in any way. It was his response to what I had said that basically was the counter argument.

Senator Tkachuk: Mr. LaBarge, who was your counsel at the time, there was some confusion about the date. I think Mr. LaBarge said it was like April, '89, and you said it was - you didn't quite know. Mr. Chrétien said it was in January of 1990. Have you done any work to sort of, like, nail this down, or what?

Mr. Matthews: I talked to Mr. LaBarge approximately January, late January of this - just previous January this year. In talking to him, what he said to me was just before the leadership campaign, and he had actually remembered a cheque being cut for Mr. Chrétien's war chest, as he I believe said it, so that's the best evidence of when the meeting was. April, '89 doesn't - I'm not categorically denying it. I would have to look at when the leadership campaign happened. I did a little bit of research, and it seemed to be that it would be in December, January, those areas I've said.

Senator Tkachuk: Did you cut the cheque?

Mr. Matthews: No, I did not cut the cheque?

Senator Tkachuk: Why not?

Mr. Matthews: Every once in a while you make a mistake, maybe, but -

Senator Tkachuk: I was just going to say. Wrong thing to do.

Mr. Matthews: I didn't cut the cheque. Basically I left that meeting in a very positive frame of mind. I left intending to get approval to write a cheque. I in fact got approval to write a cheque.

Senator Tkachuk: From who?

Mr. Matthews: From my father.

Senator Tkachuk: Must have been real happy.

Mr. Matthews: It was an interesting meeting. And he had - so basically I got approval to write the cheque. He was understanding of what had transpired and did not think it was a bad idea, did not like the amount. And so basically that was proceeding.

I don't remember actually signing a form to have a cheque cut, but what happened in the meantime was that I got a call from a Chrétien fund raiser who basically put pressure on me to write a $50,000 cheque. You know, my response at the time was that to say something to the effect, "Thanks for phoning. I'll think about it." My thoughts about it afterwards, I didn't like the attitude, and I didn't write a cheque at all. It wasn't that I was never going to write a cheque, but I expected some follow-up of some sort. There wasn't any, to my memory. And so that's the history of why a cheque wasn't written.

You know, you can say it's naivete, or you could say it's an ego problem with me, however you want to phrase it. I didn't write the cheque.

Senator Tkachuk: Did you write one to anyone else in the Liberal party? There were more people running, you know.

Mr. Matthews: Yes, we did. We wrote a cheque to Mr. Martin, I believe, and I believe the number was $25,000, although I haven't done the research to - I know I okayed a cheque for $25,000 for Mr. Paul Martin's campaign.

Senator Tkachuk: I want to get back to Mr. LaBarge, because he said publicly April, and then you said to me just a minute ago you had a telephone conversation with him. Did you guys argue about the dates?

Mr. Matthews: We had a conversation whereby he suggested to me that the meeting was about the Transport Canada building in - basically the head office relocation. I explained to him why that couldn't be so. He believed that Ray Hession was effectively taken on to do the head office project of that. That wasn't the case. Ray Hession came on weeks after the awarding to Huang & Danczkay, or agreement to Huang & Danczkay to go ahead with Terminal 3. We started on this. Sorry.

Senator Tkachuk: So -

Mr. Matthews: You're basically saying did we argue about things on that phone call?

Senator Tkachuk: Yeah.

Mr. Matthews: We didn't argue. We discussed what we thought. Later on in the phone call, he - well, he remembered the timing of the meeting. The timing of the meeting was well after when the Transport Canada bid had been submitted, and then later Mr. Wilson, the Finance minister at the time, had basically stopped the deal. I don't know what the technical term is, but taken it out of the budget, so it was quite apparent of when the timing happened.

Senator Tkachuk: You feel this is important, so you feel this telephone conversation was an agreement between you and Mr. LaBarge that the meeting took place shortly before the Liberal leadership - Mr. Chrétien's announcement as Liberal leader, running for the Liberal leadership?

Mr. Matthews: He had not announced at the time I met with him, but it was apparent to a political person or someone that was involved that this was imminent, say.

Senator Tkachuk: Mr. LaBarge confirmed this in your telephone conversation, did he not?

Mr. Matthews: That's correct.

Senator Tkachuk: In your darkest hours, did you ever think that your refusal to donate money may have something to do with the cancellation?

Mr. Matthews: I guess I understand the seriousness of the question.

Senator Tkachuk: I'm seriously asking all these questions. I hope you're seriously answering them.

Mr. Matthews: Yes. This one, did I at any point in my darkest hours, the answer to the question is yes. But I want to explain that when something like this happens, you go through many, many questions. You ask yourself, if I would done this, if I would done that, if I would done - what would have been different. If I had not said to Mr. Nixon on the phone my negative thoughts on Mr. Bandeen, would things be different? So there is many things you ask yourself. Yeah, that was one of them.

Senator Tkachuk: Please, I want you to understand. Who you met with is, you know, I couldn't care less whether you met with Chrétien. I couldn't care less what you say with him or the meeting that took place or anything else. I have difficulty understanding the controversy that ensued over the meeting, because why wouldn't you meet with him? And why wouldn't he ask you for money, or what would be such a big deal about this meeting any way? It became a big deal for some reason, but to me it's not a big deal except as it relates to politics. That's why I'm asking you these questions.

Mr. Matthews: I guess my response to that is, at the time, the meeting with Chrétien came up with internally in our company going forward with the negotiations maybe half a dozen times. Basically it would come up in to regards that Mr. Chrétien was becoming more of an important person, and so that meeting took on more significance than it had when it actually happened. So that meeting was brought up internally because of that. I think I've lost track of what your question really was.

Senator Tkachuk: I kind of got to the politics because the political process was set up by - I'm going to - I'm trying to develop an argument here, because Mr. Nixon was the person who said that there was a suspicion of patronage. What I tried to do before was to relate to you that if there was patronage involved by the Conservatives, I tried to ask a question of why wouldn't it have been exercised sooner. Like, if you're going to do it, why go through all the trouble of all of 1993? Why wouldn't you just do it?

And so I hope that it solidifies my argument that it wasn't done, and the witnesses' argument, and what I'm trying to get at now is that once you open that can of worms about politics, and Mr. Nixon opened that can of worms, and I asked about that yesterday in reference to documents, the can of worms spreads all over the place. It's possible that the politics - I mean, I don't want to believe it, but if you're just going to deal with suspicions, with suspicions, then I can also deal in suspicions. That's why I asked the question about whether you ever felt that the reason you lost this was because of politics too, because, you know, you can ride both horses.

Mr. Matthews: I guess as time goes on, it seems more and more political, and more and more information comes out that suggests it's more political.

My problem is with the - call it the Chrétien-LaBarge- Matthews meeting, was not that it took place, not what was discussed, not what was asked for. My problem was that at first it was denied. And after it was denied, there was then I would call it a change of view when Paul LaBarge came out with a public statement that said this meeting took place, but the airport was not discussed. Okay?

He was my lawyer. Okay? And the Prime Minister in the House says, "I talked to the lawyer at the meeting." Well, he's talking about my lawyer at the meeting. Okay? So my lawyer is talking to the Prime Minister about a meeting he had with me. Okay?

Mr. LaBarge does not phone me and say, "I had this conversation with Mr. Chrétien, and Jack, I agree, the airport wasn't discussed. I don't remember that any more." I didn't get that call. What I got was a call from a reporter saying, "I've just received a copy of a - I believe it was a press release or public release that Mr. LaBarge says, yes, a meeting took place, and the airport was not discussed."

I remembered back to my conversation with Mr. LaBarge in January, and said to this reporter. I said, "Well, you should phone Mr. LaBarge." I was too - probably too angry to phone him at the time. "You should phone Mr. LaBarge and see if he was in the meeting for the entire time." Because I remember absolutely he said he was gone for up to or more than half an hour of that hour, hour and a half meeting.

So I'm sitting in Dallas, hearing that my lawyer has now denied a meeting that he's effectively in my mind agreed with me what happened and what happened in it. There is a reason that I talked to Mr. LaBarge at the time to fully understand what had happened. And now he is, without any discussion with me, issuing a public release that basically suggests that either my memory is terribly faulty or I'm not sincere, or I may be a liar or however you want to categorize it. Was that a problem for me? Absolutely, yes.

Then it's interesting that after the reporter phoned Mr. LaBarge three or four days later, he changed his story in that now he says, "There was a meeting, it was however long, and I was gone for half an hour." Well, you know, the easy way out for me at that time is to say, "Well, his memory is good, and we talked about everything, about the donation and the airport, during that half hour." That's the easy out. Well, that isn't the truth of the matter. The truth of the matter is the meeting was set up to talk about the airport, and the truth of the matter is that the donation was discussed, and Mr. LaBarge was involved in the discussion about the donation.

I don't know if I've answered your question. I probably got carried away thinking about this again.

Senator Tkachuk: Let me get this straight: During the time of the meeting, you are a client of Mr. LaBarge.

Mr. Matthews: Correct.

Senator Tkachuk: So Mr. Chrétien isn't Mr. LaBarge's client. Mr. Chrétien is part of the law firm and a colleague of Mr. LaBarge.

Mr. Matthews: That's correct.

Mr. Matthews: But you are his client.

Mr. Matthews: I am the firm's client. Mr. LaBarge happens to be representing me most of the time.

Senator Tkachuk: Before he talked to Mr. Chrétien and before he talked to anybody, he didn't phone you and say, "I'm going to say this. You're my client. Am I released from client privileges?" He didn't phone and ask your permission to talk to anybody? He just went ahead and yacked around town, or what?

Mr. Matthews: I don't know if he yacked around town or not. However, he did issue, I am told, a public statement that regarded a meeting that I was involved with as his client, and he did so knowingly in a way that he knowingly was suggesting my credibility was in question. A very nice way of saying it, I think.

Senator Tkachuk: How long was Mr. LaBarge your lawyer? Till what time? Until 1991, 1992?

Mr. Matthews: He was our lawyer. He worked very hard and diligently during the bid process for Terminals 1 and 2. He was very effective and -

Senator Tkachuk: All the way to 1992?

Mr. Matthews: He worked up until the - right through the bid process. We got the letter basically on December 7 of '92 suggesting that we were the best bid to negotiate with, and it was after that. I would say it was about a week after that, because it was suggested that there was a conflict, and that basically against my suggestion at the time, Mr. LaBarge was replaced with Mr. Baker. That's -

Senator Tkachuk: Were you upset when he issued the press release? Did you phone him and give him heck?

Mr. Matthews: No, I did not phone him. I was - as I say, I was very upset. It's a - you go through life, and you try to do things right, and we thought we'd done a very good thing with this airport. I can - I could not understand Mr. LaBarge issuing that, if in fact he did issue that, and if you're having him before you, if someone issued it for him, which I think he would have denied if that had happened - but so I was very upset. You have your lawyer who is your confidante in many ways. I looked at him as a friend, not only a - you know, so through that whole process, you're working very closely together. All of a sudden your knees are knocked out. It's not a nice experience.

Senator Tkachuk: Because his law firm, Mr. LaBarge's law firm, got dropped from the file, and it was something that you didn't want to have happen, actually; is that not correct?

Mr. Matthews: That's correct.

Senator Tkachuk: If you would have been successful and he would have still been the lawyer, that law firm would have been getting all the work from the Terminal 1 2 company, Paxport; right? Which is kind of what he would be hoping for.

Mr. Matthews: Yes. I do know that he switched law firms, and I'm not sure the timing of when he switched law firms.

Senator Tkachuk: Would you have followed him along?

Mr. Matthews: We did follow him.

Senator Tkachuk: You did follow him?

Mr. Matthews: Yeah. I don't believe that the - you know, understand the Lang Michener situation. I don't believe they would have been happy having him leaving with our file. I don't think that was probably a great parting. I don't know that, but it's speculation.

Senator Tkachuk: Yes. So you have Mr. LaBarge - you get the impression that he knew Mr. Chrétien well, obviously? Colleague, friend?

Mr. Matthews: That was the impression I got from Mr. LaBarge, yes.

Senator Tkachuk: You turned down the money. You turned down the money, and you got rid of the lawyer. You've got two people that aren't happy with you.

Mr. Wright, he worked for that same law firm, did he not? He is the person negotiating for the federal government now. And do you know a Mr. Goldenberg?

Mr. Matthews: I believe I talked to him, but I don't - I wouldn't know him to see him.

Senator Tkachuk: Why would you have talked to him?

Mr. Matthews: I believe it was Mr. Goldenberg who phoned me on the donation. I'm not - I'm not 100 per cent. I went through about six months after as to who exactly had phoned, or maybe it was even a year, but I do not know it was him. So I may have talked to him then. But Mr. Wright, I've only met Mr. Wright once, and that was after the cancellation of the contract. And I was in a room with 40 other unhappy people regarding the airport.

Senator Tkachuk: You may have three enemies sitting in that law firm now, Mr. Chrétien, Mr. LaBarge, and Mr. Goldenberg, if it was true he was. I don't know if it was Mr. Goldenberg who asked you for the cash, but I mean if it was, we can always ask him -

Mr. Matthews: I don't know who is upset with me and who isn't. I can only speculate. Chances are they are more upset as of this minute than they were two minutes ago. However, I'm trying to just answer the questions.

Senator Tkachuk: Well, I think -

Mr. Matthews: I do want to say that the firm Lang Michener did very - they did excellent work for us. I didn't have a -

Senator Tkachuk: I'm sure.

Mr. Matthews: I just don't want to widen that out.

Senator Tkachuk: No. They're very well known. I'm just talking a little politics here. Thank you very much, Mr. Chairman.

Senator Bryden: Mr. Chairman, if I may, we have had the direct evidence of Mr. Matthews in relation to this meeting. I would now ask that, in fairness, you would call Mr. LaBarge, who was also supposedly a participant in this meeting, so we could have his evidence on this matter.

Senator Lynch-Staunton: Mr. Chairman, before deciding on that, could we finish with these witnesses? We're not going to interrupt one witness because he made a controversial statement. That could set a precedent.

Senator Bryden: We can recall these witnesses.

Senator Lynch-Staunton: No, Mr. Chairman. I insist. These witnesses are on the schedule for this afternoon, and I would object if suddenly springing another witness on us, without any preparation for questioning, without any -

Senator Bryden: What are you trying to hide?

Senator Lynch-Staunton: I'm not hiding anything, sir. You're the one who voted against -

Senator Bryden: Can't we just get - I sat here and listened, and Mr. Matthews has given his recollection under oath of this story. I'm asking that the other person who has been referred to throughout be given the same opportunity.

Senator Lynch-Staunton: There were two other people referred to throughout. Which one, Chrétien or LaBarge?

Senator Bryden: LaBarge.

Senator Lynch-Staunton: What about the other one?

Senator Bryden: If we want to get into calling Prime Ministers, there are three involved. The point that I'm making, Mr. Chairman, is I believe you and counsel have always tried to deal with this situation fairly, with the members of the committee, with the witnesses, and so on. We have in front of us direct evidence about a controversial meeting. We have the other person in the room who can give evidence in relation to that. And what I'm asking, in fairness, is that that person be prepared to come to be sworn, that he give his evidence, and then we be in a position to go back to cross-examine Mr. LaBarge or whatever. That's what I'm asking.

Senator Tkachuk: Mr. Chairman, first of all, the meeting that took place, I mean, I don't even know if it's that controversial. The point is that the meeting, we asked about a meeting with the - they've had meetings with Mr. Manley, and we've asked about other ministers. He's testifying under oath here. Mr. Chrétien does not deny that the meeting took place. He said he did not meet him as a lawyer. That's all he said, which is fair enough. He probably didn't.

Senator Bryden: There is a very basic dispute here as to when the meeting took place, as I understand it. There is a very significant issue in relation to what was the meeting called to do. And there is the issue of what was discussed at the meeting and how much time Mr. LaBarge was there and when the contacts were made between Mr. LaBarge and Mr. Matthews afterwards. All that I really am asking is to allow both of the people who are currently in this room - one has given his direct evidence, and allow the other person to give his direct evidence in relation to this, and then let us all have at them. But in fairness, if what we're after is truth and some semblance of justice, we should at least allow that opportunity.

Senator Tkachuk: I think that would be - I wouldn't mind Mr. LaBarge coming. I just don't understand why it's important just - you've been talking about - I have listened to insults to former Prime Ministers. All I'm saying is, there was discussion of a meeting. If Mr. LaBarge is asked to come, he can come next week. I don't care if he comes. I would like him to come. There has been no - I just think that -

Senator Bryden: Mr. LaBarge is here. He is here, sitting right behind you. He is prepared to give evidence under oath.

Senator Tkachuk: Let's finish with the witnesses, these people you've been accusing. Are you done with these people?

Senator Bryden: We've asked the chairman -

Senator Tkachuk: Look him in the eye and tell him all the things you tell them in the newspapers. Look him in the eye and tell him.

Senator Bryden: That's what I would like to do, is have Mr. LaBarge have the opportunity under oath to give his evidence. Mr. Chairman, perhaps you could make a ruling. I don't know whether it will be allowed to stand.

The Chairman: I'll make a ruling. I mentioned in my ruling which was overruled that relevancy was a very difficult thing to determine in this committee, but I know what disingenuous is. I know that clearly. I sometimes don't know what relevancy is. How long will it take you to finish up with these witnesses?

Senator Lynch-Staunton: I have a number of questions, Mr. Chairman. Half an hour at most. I just want to clarify the sequence of events which we tried to clarify leading up to October 7. That's the focus of my questions.

The Chairman: Yes. There is no time to - we have a very busy schedule next week, and -

Senator Lynch-Staunton: We have a free day on Friday, I think.

The Chairman: You can finish up, and then we can get a bite to eat, and then I'll rule that Mr. LaBarge be called at seven o'clock.

Senator Lynch-Staunton: Well, are we going to have some research material, as we usually do when witnesses come?

The Chairman: Come on.

Senator Lynch-Staunton: What do you mean, "Come on"?

The Chairman: What do you have to prepare yourself for?

Senator Lynch-Staunton: Prepare for the diatribe which obviously we're going to get, thanks to Senator Bryden.

The Chairman: Please, please.

Senator Bryden: I'm prepared to have the witness Paul LaBarge come and sit there and give his version of events. I will not ask him one single question.

Senator Lynch-Staunton: I have no objection to Mr. LaBarge coming. As a matter of fact, my colleagues, and I stayed out of it because I'm ex officio, voted against a ruling which would have denied, had it been upheld, the right of Mr. LaBarge to come, and you voted in favour of the ruling. So one day you ask him to come, the next day you deny him the right, and now you ask him to come.

At least we're consistent. We want every witness who can contribute to the clarification and the understanding of our mandate to come here and say all they want under oath. And if one comes and contradicts Mr. Matthews until he's blue in the face, so be it. If he can confirm it, so be it. We want to get the facts.

I just suggest that perhaps bringing him here suddenly without any warning might not give us the opportunity to ask him the questions that we should, rather than having him come next week when we're better prepared for him. That's all I'm saying.

Senator Bryden: I still don't know, Mr. Chairman and Senator Lynch-Staunton, why you are so concerned that Paul LaBarge -

The Chairman: I'm not interested in any more things across the table. I've ruled that we will hear Mr. LaBarge at seven o'clock. Carry on your questioning with Mr. Matthews and the group as long as you want to before that time.

Senator Lynch-Staunton: On any topic?

The Chairman: On any topic relevant to Mr. Matthews and his testimony.

Senator Lynch-Staunton: I want to actually address my questions to Mr. Kozicz, and I am sorry if I don't pronounce your name properly.

Mr. Kozicz: That's fine.

Senator Lynch-Staunton: Did you attend the closing? On October 7, the day of the closure, you were in attendance that day?

Mr. Kozicz: Yes, I was.

Senator Lynch-Staunton: You were, good. I mean good in the sense of now we can speak to somebody who was actually there since we have not seen anybody since Mr. Rowat was here to tell us.

What actually happened on the 7th of October? What was the significance of it, and what was the procedure? What was followed, and what were the documents, and what were the signatures involved?

Mr. Kozicz: As I recall it, there was - the actual closing took place some time around four o'clock in the afternoon, and that was really the event of the day, if you like. Leading up to that point of time, there was a lot of organizing of copies of documents, copies which to my understanding had already been signed. And sometime around 3:30, quarter to 4, in a big boardroom, the meeting was called to order. And as I recall, Mr. Rowat, Peter Coughlin, and a lawyer by the name of Don Guthrie sat at a head table and basically waived the escrow, and the documents were then at that point in time out of escrow and it was over.

Senator Lynch-Staunton: So there were no contracts signed that day?

Mr. Kozicz: Not to my knowledge, no.

Senator Lynch-Staunton: No. When in your mind was the agreement between the Government of Canada and Pearson Development actually take place?

Mr. Kozicz: Well, as I recall, the actual signing of the documents started either on October 3 or October 4.

Senator Lynch-Staunton: Okay, let me rephrase and go back. In June, you get a non-binding - I'll just wait till this conversation is over so you can hear me better. You can hear me?

Mr. Kozicz: I can, thank you.

Senator Lynch-Staunton: In June sometime, you get a letter from the Deputy Minister of Transport, a non-binding letter of agreement.

Mr. Kozicz: That's correct.

Senator Lynch-Staunton: Could that be considered a green light to go ahead to final agreement? You've got so close now that you're heading towards an agreement that will satisfy both sides?

Mr. Kozicz: I think at that point in time, we had agreement on the major provisions of the main agreements to the airport contract.

Senator Lynch-Staunton: At the end of August, there are a couple of events, including the minister announcing an agreement has been reached.

Mr. Kozicz: That's correct.

Senator Lynch-Staunton: Do you consider that date as being the date when a binding agreement between the government and yourselves actually takes place?

Mr. Kozicz: I think I'd be only speculating, because I can't speak to constitutional issues and so on, but I know there was the Order in Council and the Treasury Board approval and so on I believe all in place by August 27. Then there was the announcement by the minister on the 30th of August, and it's my understanding that, provided there were no material changes from the contracts that were approved by Treasury Board at that point in time, that in fact PDC and the government had a binding agreement. And what was completed in September and the first part of October were all the ancillary documents that go along with the airport contracts.

Senator Lynch-Staunton: I'm struck by the fact that in your presentation, up until December 3, it was business as usual. Despite what you were hearing during the election campaign and the tremendous controversy, particularly in the Toronto area, based on what you told us, you kept hiring people, and you kept moving along right through till the 3rd of December.

Mr. Kozicz: That's correct.

Senator Lynch-Staunton: Right through. Even during that period when you agreed not to execute the contracts; right? You still were doing a lot of work in preparation to - for once the contracts began to be executed. They were going to take force on the 1st of November?

Mr. Kozicz: One of the provisions, as you will recall, is that we, in the contracts, had to have significant work under way within 30 days of commencement date. We were preparing ourselves for that date, and the commencement date was extended once, I guess. So that 30 day period went - I think ultimately it wound up being January 15. That's the date we were shooting for.

The reason we didn't pull back in the office was, number one, that commitment or obligation, and number two, as I said in my opening address, knowing what we all knew in the office about the merits of this deal, how good it was for the airport, the airlines, the Canadian taxpayers and so on, we felt there was no way in the world this transaction would ever be cancelled.

Senator Lynch-Staunton: You intrepreted both Mr. Chrétien's and his candidates' warnings during the campaign as being part of the campaign rhetoric? You really never felt that there would be any - did you ever sense that perhaps when Mr. Chrétien came in, which at that time seemed inevitable, that maybe they'd ask for renegotiation of the contract? Call you back to the table and say, "Look, there are some things in there we, after looking at them, would rather change"?

Mr. Kozicz: I wouldn't want to categorize it as renegotiation. What I honestly thought was that, you know, a lot of things get said in political campaigns and so on, and some of them are followed through on, and some aren't. I thought what would happen with this particular transaction is he would conduct the review as he committed to do, and then he would make five or six basically cosmetic changes to the agreement so that he could then turn around and say to Canadians that he's reviewed the transaction, he's made the appropriate changes, and he is now satisfied with the airport contracts and the deal can proceed.

Senator Lynch-Staunton: Now, on the 7th of October, we are told that Mrs. Campbell had been - we know that Mrs. Campbell had been consulted first to make sure she wanted to see these documents released from escrow and that the closing signatures were all - and she said, yes, go ahead with it. The suggestion was made that she could have delayed. Well, not only suggestion, a fact she could have refused. The government could have refused to execute the closing documents. What would have been your reaction then? Did it ever occur you to as a possibility?

Since the government was having problems with executing its - abiding by the agreement that they would sign on the 7th of October, did anyone suggest to you, "Would you mind, in case it's suggested, to postpone till after the election the closing date?"

Mr. Kozicz: I was never party of a conversation in that regard.

Senator Lynch-Staunton: Okay. On the closing day itself, there was never anybody suggesting, "Well, maybe we're doing this under duress or politically disastrous?" Or there was a business meeting -

Mr. Kozicz: There was never any suggestion that the October 7 date be delayed until after the election.

Senator Lynch-Staunton: Well, that pretty well confirms what we have been told happened on the 7th of October, that it was a requirement, and your legal advisor for Matthews and the one for Coughlin, for Pearson, both said that the 27th of August was, by their definition, the binding date, and the rest was really a normal legal result of a binding agreement which took place then. Thank you, Mr. Chairman.

The Chairman: All right. Do you have any questions? Senator Bryden, are you going to be questioning these witnesses on the matter of the relevancy of the terms of our committee? The matters we're going to discuss at seven o'clock are put off until that time.

Senator Bryden: But can I ask the witness questions about evidence he's already given?

The Chairman: Yes, with regard to his position as Paxport.

Senator Bryden: With regard to the sworn evidence that he just gave. I wanted to get some clarification in relation to how he determined the date of the meeting that occurred.

Senator Lynch-Staunton: No.

Senator Bryden: Why not?

Senator Kirby: We're changing witnesses as 7 o'clock.

Senator Bryden: I want the opportunity to clarify what he said.

The Chairman: What information precisely do you want to get from this witness? Tell me again.

Senator Bryden: I would like to ask the witness, he said, "I don't know exactly when the meeting was, but I believe it was around," and I was wondering if he could be exact.

Mr. Matthews: I would be happy to, Mr. Chairman, if you want me to.

Senator Bryden: I will not be long. It's just that there is a lot of vague comments that I would like to get as specific as possible before the other witness comes.

The Chairman: Go ahead.

Senator Bryden: I promise I'm not going to make this a long thing. I've got about five questions.

The Chairman: That would be very helpful. Go ahead.

Senator Bryden: You indicated that you thought the meeting was around a certain time. When was it? Did you say early '90? Late '89?

Mr. Matthews: Late '89, early '90. It was before the announcement of Mr. Chrétien that he would run. It was while people knew he would be running. It was speculation, a pretty high level speculation in the press, that he was getting ready to run. When I met with him, I understood that he would be running soon. So when you take that with the date that the announcement, which I believe was January 20 to 23 of 1990, when you take that with where I know I was in the process, it is approximately, within my best guess - because I do not have the calendars from that time, and I cannot get them. I tried to get them to find the exact date - is within about two months before that date.

Senator Bryden: It's my understanding that the lawyer for your company, Gordon Baker, has the time sheets from the law firm.

Senator Lynch-Staunton: How do you know that?

Senator Bryden: Is that -

Senator Lynch-Staunton: Is that testimony?

Mr. Matthews: Do you want me to answer that question? I think you have to ask Mr. Baker that.

Senator Bryden: That's fine. Now, you received -

Senator Lynch-Staunton: There's another allegation. That's what I call an allegation.

Senator Bryden: I'm trying to -

Senator Lynch-Staunton: An allegation that some witness before us has time sheets of another lawyer. That's a serious allegation.

Senator Bryden: No, it's not. It's in relation to the -

Senator Lynch-Staunton: Where are they? Let's see them. You can't talk about documents.

Senator Bryden: You didn't ask for all the court documents.

You received a call from a fund raiser.

Mr. Matthews: Correct.

Senator Bryden: I think your indication was that he wanted, instead of $25,000 - and before I ask you that, you can't remember whether it was Mr. Chrétien or Mr. LaBarge or someone else who referred to the $25,000? That was your direct evidence.

Mr. Matthews: You're asking me two different events.

Senator Bryden: Let me ask you the first one first. You don't know for sure -

Mr. Matthews: At the meeting, I thought I was very clear about this, so I'll go through it again. At the meeting, when I left the meeting, it was clear to me that I had been asked for a $25,000 donation. But whether, okay, I was asked on the - told on the way in, "Jack, he's going to ask you for 20 grand, 25 grand," or on the way out LaBarge says, "When he asked for support, he was thinking about 25 grand," or whether Mr. Chrétien asked me for 25 grand.

What I remember today quite clearly was my impression leaving that meeting, okay, walking down the hall, however it was, that okay, now I've got to - the reason I remember, if you try to - I've got to now go to my father, who is not exactly in a giving spirit when it comes to the Liberal party, asking for a $25,000 donation. It's something you remember.

Senator Bryden: If I were asked for $25,000, I would remember who asked me. So you don't know.

Mr. Matthews: I guess you have a better memory.

Senator Bryden: You don't know whether it was Mr. Chrétien, but you're saying it could have been Mr. LaBarge on the way in or Mr. LaBarge on the way out. Did you talk with Mr. LaBarge on either the way in or the way out about donations?

Mr. Matthews: I think I've just explained to you what I believe happened.

Senator Bryden: Okay. Now, later, someone, some fund raiser, called you, and you don't know who it was.

Mr. Matthews: I did not keep a record of that.

Senator Bryden: And he called you to double the amount to 50 from 25.

Mr. Matthews: No, it wasn't - it was that he was asking for $50,000. Basically I had the impression that I was not on the team or not one of the - this donation wouldn't be important unless it was 50,000. I'm thinking, "I'm sorry, like."

Senator Bryden: You don't know who that person was.

Mr. Matthews: As I've earlier said, okay, going through a list of possibly who it could be, the name of Mr. Goldenberg came out, and I said, "It's possible that it's that one." That was the familiar name to me, but I cannot sit here and say under oath it was absolutely him. I'm not that - I think I was clear that I was not saying -

Senator Bryden: No, you were pretty clear that you were not sure about a lot of this stuff. You're saying that somebody called you and asked you for $50,000, and you didn't bother to determine who that was? Is that possible?

Mr. Matthews: I think you're putting a spin on it that doesn't -

Senator Bryden: I'm asking the question.

Mr. Matthews: If the question is, did someone phone and ask for $50,000 and give me the impression that 25,000 wasn't enough, yes, that happened. Was it a Chrétien fund raiser? That's how he identified himself. It may have been a Martin fund raiser trying to trick me. I don't think so. But my impression was clearly that it was.

I did not send a cheque. You really don't - if you ask me whether I was just going to give a cheque to a guy at the door, like, did I not check out who he was, I would have done that before the cheque was delivered, believe me. But that was - it was a phone call. It wasn't the signing of a cheque and the delivery of it. So I think you're putting a different interpretation on that than really exists.

Senator Bryden: Could I ask, you referred to a phone conversation with Mr. LaBarge. I think that it - I didn't put the date down, but -

Mr. Matthews: I believe -

Senator Bryden: It resulted after this came up. You were in Texas or somewhere.

Mr. Matthews: Correct.

Senator Bryden: Was it approximately - where are we now, '95?

Mr. Matthews: It was approximately - I believe it was January 24 of this year.

Senator Bryden: Of '95?

Mr. Matthews: Correct.

Senator Bryden: Did you tape that conversation?

Mr. Matthews: Yes, I did.

Senator Bryden: Did you have Mr. LaBarge's permission to tape that conversation?

Mr. Matthews: No, I did not.

Senator Bryden: Is it normal for you to tape conversations between yourself and your solicitor without his permission?

Mr. Matthews: Only when I'm given the indication by other sources that he's going to not remember what happened at that meeting.

Senator Bryden: Who gave you those indications?

Mr. Matthews: Basically, it was a number of things. I heard comments that were given to me. I heard what the Prime Minister was saying. I know that Mr. LaBarge was close with the Prime Minister. At that point, I have serious doubts as to whether he's going to be remembering what I'm saying or remembering what he's saying.

Senator Bryden: But you said you were given indications. From whom?

Mr. Matthews: I had one phone call from a friend who I talked to about, "Do you think Paul is going to support the Prime Minister now he's made this statement?" So this is after December 8.

Senator Bryden: Did you initiate the phone call, or did he?

Mr. Matthews: To Mr. LaBarge?

Senator Bryden: Yes.

Mr. Matthews: I definitely initiated it. Whether that particular call was him responding to me or me phoning him at that time, I don't know.

Senator Bryden: But the conversation occurred as a result of your initiative?

Mr. Matthews: Yes, that's correct.

Senator Bryden: That's all, Mr. Chairman.

Senator Kirby: Mr. Chairman, one question. Just for the record, Mr. Matthews, I think you probably know this, but just to sort of complete it, when your father was here and this whole issue of Mr. LaBarge came up and the issue arose as to whether or not Mr. LaBarge would be a witness, your father as chairman of the company was asked whether he and the company would waive solicitor-client privilege in order to enable Mr. LaBarge to testify, and your father said absolutely, he would do that. I guess just formally for the record I should ask you the same question. Do you have any difficulty with Mr. LaBarge -

Mr. Matthews: I encourage Mr. LaBarge to come.

Senator Kirby: Thank you, Mr. Chairman. That's all I have.

The Chairman: If there is nothing else, we will adjourn until seven o'clock.

The committee adjourned until 7:00 p.m.

---

Ottawa, Thursday, September 21, 1995

The Special Senate Committee on the Pearson Airport Agreements met this day, at 7:00 p.m., to examine and report upon all matters concerning the policies and negotiations leading up to, and including, the agreements respecting the redevelopment and operation of Terminals 1 and 2 at Lester B. Pearson International Airport and the circumstances relating to the cancellation thereof.

Senator Finlay MacDonald (Chairman) in the Chair.

The Chairman: Order, please .Any statements, points of order, any unusual things to say before we start ?Any happy, smiling faces that would like to bring up something else now before we start?

Our witness will be introduced by Mr. Nelligan and the reasons for his appearance.

Mr. Nelligan: Our next witness is Mr. Paul LaBarge, presently a member of the firm of Blake Cassels & Graydon, formerly of Lang Michener, and I believe he has evidence to give us with respect to the evidence of the previous witness.

The Chairman: Are you prepared to be sworn, Mr. LaBarge?

Mr. Paul LaBarge, Lawyer, Blake Cassels & Graydon: Yes, I am.

(Paul LaBarge, sworn:)

The Chairman: Do you have a statement, Mr. LaBarge?

Mr. LaBarge: Yes, I do.

I listened to the evidence this afternoon, and I believe that the issues can be very simply summarized. I do not think there is any dispute as to the fact that there was one and only one meeting with Mr. Matthews and Mr. Chrétien. That meeting was held on April 14, 1989. I have verified the time and date of the meeting both with my own daytimer and with the dockets for that particular day. I have also reviewed the dockets for the Matthews files for the entire 1989 fiscal year, which is February 1st, 1989 to January 31st, 1990.

There are three dockets that are referenced with the initials J.C. Those dockets are the 17th of March, 1989, which was a telephone conversation between myself and Mr. Chrétien with respect to strategy issues and details. And I will provide you more information with respect to what that is in reference to in a moment.

The second one was the 21st of March, 1989, and it was a conference, in-office conference with Jean Chrétien, with respect to the Department of Public Works reaction and control.

And the third docket references the particular meeting, and it is the 14th of April, 1989, conference with J.C., Matthews, re proceedings and alternatives.

I do not have those dockets in my possession. They are the records of Lang Michener. I had signed an undertaking on my departure of Lang Michener to return to them all files and dockets relating to the Matthews Group at their demand or at the demand of the client.

Those dockets, for your information, have been available to Mr. Baker since April 10th of 1995.

In that reference, I give you a copy of a letter which was forwarded to me by the Law Society relating to correspondence between Lang Michener and Mr. Baker in that regard dated April 10th, 1995.

Secondly, the meeting is docketed for a period - that particular docket entry is for a period of 1.5 hours. That includes the time spent before the meeting with Mr. Matthews and after the meeting with Mr. Matthews. The purpose of the meeting was the response to the request for proposals for a build-to-suit building for the Ministry of Transport with a project value of approximately $200 million. The request for proposals had been issued in 1988 and Matthews had submitted a response to the request for proposals.

The request - the response to the request for proposals was quite innovative and it involved a land swap with the City of Ottawa and a relocation of the Ministry of Transport offices from Place de Ville to LeBreton Flats.

During the course of the meeting - and let me be clear that I was present not for the entire meeting. My recollection is that the meeting was approximately 45 minutes in duration. It could have been an hour. I can't say. I was absent from the meeting for 20 to 30 minutes while I was taking a call in my office.

The meeting was held in Mr. Chrétien's office in the Lang Michener offices on the 3rd floor of 50 O'Connor Street.

During the period in which I was in the meeting, no reference was made to Pearson or to fundraising or a request for funds. And no request for funds was made by me at any time.

Subsequent to the meeting, there was no reference to the discussion relating to Pearson by either Mr. Matthews or Mr. Chrétien to me until I first read a reference to it in the press in December of 1994.

I can also confirm, from a review of the dockets, that the first reference in my dockets to Pearson is in August of 1989.

I have never solicited campaign contributions for Mr. Chrétien from any client or indeed from any non-client. My participation with respect to politics has been limited to acting as a security volunteer at the 1983 Conservative convention when Mr. Mulroney was elected party leader.

With respect to the conversation of January 1995, I must say that I suffered the same disappointment that Mr. Matthews has evidenced today with respect to what appears to have been a deteriorating personal relationship. I believed and I believe now that that conversation was motivated by one purpose alone, and that was to obtain information to pass on to Mr. Baker or, indeed, to Mr. Matthews Senior. Quite frankly, in the circumstances, I wanted to see how far they'd go.

I have prepared and delivered to Mr. Warren Seaford, who is the managing partner of Lang Michener, a brief summary of the work that was undertaken with respect to the Matthews Group and, in particular, the dockets in question. This was directly as a result of his request for me to review the dockets to confirm that they were, in fact, the applicable docket requested by Mr. Baker and, because of the terseness of the dockets, to supply him with some additional information. I have a copy of that for you as well.

I might add that, in 1990, February 1st of 1990, I moved from Lang Michener to Blake Cassels & Graydon. I think it is fairly common knowledge that there had been substantial disruptions within the Lang Michener office with respect to its organization and operation in the latter part of 1989. I was directly implicated in those discussions and I can tell you that not only was I occupied in trying to maintain my practice, but I was also trying to deal with the issue as to whether I would stay with the firm or relocate.

During that period, I only had two meetings with Mr. Chrétien and not with any clients, and those two meetings were, one, a discussion with him, whether he would exercise any mediation within the office to maintain harmony, and, "B", the second, was to bid farewell.

There were no meetings with the clients during that period.

I think it is important that you understand the context of the events as they occurred. Initially, Matthews wanted to submit the bid for the Transport Canada building. It was seen as a first initiative in the Ottawa area. I had never met or worked with the Matthews Group prior to that date. At that time, I met with Ray Hession and Jack Matthews to try and devise a strategy for a successful bid proposal.

The bid, when filed, based on the information that was made available to the public, was rated number 7 in competitiveness on price.

The discussions that I had with Mr. Chrétien, specifically with the concurrence and at the request of Mr. Matthews, was to consult with him with respect to the assessments that would be applied by the members of the Department of Public Works and what kind of presentation we could make to make the proposal more effective.

The importance of the meeting of April 14th is underscored by the fact that, informally, we had been told that we had moved our position from 7 to 2 by virtue of amenities and other assessment factors that had been advanced and argued.

There was, however, a budget proposed for April 27th, 1989. And there was serious concern that that budget would contain in it major cost reduction programs that would imperil this particular project. Those concerns were not ill-founded.

I am reading to you from the budget papers tabled in the House of Commons by the Honourable Michael Wilson, Minister of Finance, on April 22nd, 1989. At page 26:

Transport Canada Building

Public Works Canada has requested tenders for the construction of a new headquarters facility in the National Capital Region for Transport Canada. This facility would provide new accommodation for approximately 5,000 Transport Canada employees who are presently accommodated in several leased buildings in the National Capital Region. The total capital cost of this facility is estimated to be in the order of $200 million.

The call for tenders for this new facility will be terminated as part of the government's overall restraint effort. Accommodation for Transport Canada employees will continue to be arranged through leases of existing properties in the National Capital Region.

I think, gentlemen, that that addresses the issues that were raised.

As I said, I make no comment with respect to any period when I was not present, save only to indicate that my first awareness of a discussion of Pearson in that meeting was through the press in December of 1994, and I had never received any discussion of that issue from either Mr. Chrétien or Mr. Matthews or any member of the Paxport group prior to that date.

And I repeat, there was one meeting with Mr. Chrétien. That meeting was on April 14th, 1989. And I might say that, with respect to the statements that were attributed to Mr. Chrétien, with respect to "You seem to be doing the right things, talking about the right policy issues", those statements reflect the advice that I received from Mr. Chrétien with respect to the Transport Canada building proposal which was first and foremost on our plates at that time. Thank you.

The Chairman: Our counsel will reserve his questions until later. Senator Kirby, you've indicated -

Senator Kirby: No.

The Chairman: Senator Bryden?

Senator Bryden: No.

The Chairman: Anybody else? Senator Bryden and then - you passed.

Go ahead.

Senator Tkachuk: Just to clarify a couple of points from your statement, we have the unique situation of two people under oath telling a little bit different stories, but I'd like to just ask - Mr. Chrétien, in the House of Commons, did not deny the meeting took place either. But he made an interesting statement. He said:

...I never had, as a lawyer, any discussion about the Toronto Airport with any of these people. Besides, I am the one who proposed that this project be cancelled. Not only is there no conflict of interest, but I am the one who axed the whole thing.

What did he mean when he said, "as a lawyer"? Was he a lawyer in your law firm?

Mr. LaBarge: Officially I believe his position was of counsel.

Senator Tkachuk: What does that mean?

Mr. LaBarge: Well, I guess that makes him not a partner, not an associate but affiliated with the firm. I mean it is a distinction that perhaps Mr. Nelligan would be better suited to answer than I am.

Senator Tkachuk: It would be a strange thing to say because he didn't really have to say that. He could have said, "I never had any discussion about the Toronto airport with any of these people." But he qualified it by saying "as a lawyer" which would lead me to believe that he may have had the discussion as something else. Because why would he say that? He is a lawyer.

Mr. LaBarge: I am afraid you're asking me to walk inside Mr. Chrétien's head which I am not either able or at liberty to do.

Senator Tkachuk: Neither am I. That's why I thought you might be more able than me.

Mr. LaBarge: I'm afraid I can't shed any light on that.

Senator Tkachuk: Would he have been a lobbyist in your firm?

Mr. LaBarge: My understanding is that I certainly have no awareness of him being a lobbyist. In fact, he exercised considerable discretion in making sure that he did not -

Senator Tkachuk: Then why would he be meeting -

Mr. LaBarge: - hold himself out as a lobbyist.

Senator Tkachuk: Why would he be meeting - if what you say is correct, why would he be meeting on that other building, that other project? Why would you be meeting with Mr. Chrétien?

Mr. LaBarge: Because Mr. Chrétien had held just about every significant portfolio as a minister at one time or another, and his knowledge of the policies and processes within government would be very useful, even in the absence of any contact. He was certainly never requested to make any contact or to seek any information but rather to provide an opinion with respect to what was being done.

Senator Tkachuk: Did you ask Mr. Matthews to attend that meeting, or did Mr. Matthews ask you to attend that meeting?

Mr. LaBarge: Mr. Matthews asked me to set up the meeting.

Senator Tkachuk: To set up a meeting with Mr. Chrétien to discuss -

Mr. LaBarge: The bid.

Senator Tkachuk: The bid.

Mr. LaBarge: And that was the only bid that was in existence on April 14th, 1989.

Senator Tkachuk: So he wasn't meeting him as a lawyer. Did he have other accounts out of your firm? Did Mr. Chrétien have other accounts?

Mr. LaBarge: I would be speaking on hearsay. I believe he also did work with Gordon Capital at the time.

Senator Tkachuk: What other accounts did he have?

Mr. LaBarge: I couldn't tell you, sir. I'm not responsible for his personal affairs. I have no knowledge.

Senator Tkachuk: Did he have accounts with Mr. Perez or -

Mr. LaBarge: I couldn't tell you, sir.

Senator Tkachuk: He had a number of lobbying accounts. Was he doing legal work for these people?

Mr. LaBarge: I have no idea. I wasn't monitoring his practice.

Senator Tkachuk: Did he have dockets? Did Mr. Chrétien bill dockets from the law firm?

Mr. LaBarge: I don't know, sir.

Senator Tkachuk: Well, you have to help me through there because you arranged - he's your partner or I would say an employee of the partnership then. Like what kind of financial arrangements did you have then with Mr. Chrétien?

Mr. LaBarge: Well, again, that's not an arrangement that I made with him. That was an arrangement that was made with management in Toronto.

Senator Tkachuk: You weren't a partner of the firm?

Mr. LaBarge: I was a partner but I didn't - I don't bother myself with the personal affairs of every one of our counsel.

Senator Tkachuk: Were you a managing partner?

Mr. LaBarge: No, I was not, sir.

Senator Tkachuk: So you have no idea what he was making or what money he was making.

Mr. LaBarge: Well, I had -

Senator Tkachuk: You just knew he kind of -

Mr. LaBarge: I have a rough idea of what he was making -

Senator Tkachuk: - worked there, just the guy who was going to be Prime Minister.

Well, I'm just asking these questions.

Mr. LaBarge: In February - you know, Mr. Chrétien, at first, said that the meeting did take place in January. And then you replied in a newspaper article that perhaps he was mistaken. Is that not right?

Mr. LaBarge: Well, I don't rely on the press for my information generally.

Senator Tkachuk: Well, I don't know. I'm just asking you. I know that he said that originally - his office said the meeting did take place in January. Did he not?

Mr. LaBarge: Well, that may have been in response to - because he did know that he met Mr. Matthews and he has never denied that.

Senator Tkachuk: No, I know that, but he also says -

Mr. LaBarge: As far as the dates are concerned, he didn't have the liberty of checking his records.

Senator Tkachuk: I'm just asking the question. How would he have checked the record? He was Prime Minister at the time.

Mr. LaBarge: Well, he would have had to call the law firm, wouldn't he?

Senator Tkachuk: Did he phone you?

Mr. LaBarge: Yes.

Senator Tkachuk: So let me get this straight. Mr. Matthews is your client.

Mr. LaBarge: Mr. Matthews was my client.

Senator Tkachuk: No, but at this time he was your client.

Mr. LaBarge: When?

Senator Tkachuk: Was he not?

Mr. LaBarge: No.

Senator Tkachuk: During the time of the meeting of -

Mr. LaBarge: In 1994 or in 1989?

Senator Tkachuk: No, no, in 1990. Or '89 and '90.

Mr. LaBarge: Pick a date and we'll talk about it.

Senator Tkachuk: Then let me do this. I'm trying to - look, I ask the questions here and I'm just trying to get some answers. So was he your client in 1989?

Mr. LaBarge: Yes.

Senator Tkachuk: Was he your client in January of 1990?

Mr. LaBarge: Yes.

Senator Tkachuk: Now, Mr. Chrétien calls you and seeks information about a meeting that he had with you to establish a date. Did he ask you what was said?

Mr. LaBarge: Did he ask me what was said.

Senator Tkachuk: To refresh his memory?

Mr. LaBarge: No, he didn't ask me what was said. He told me what his recollection was and asked whether I could confirm it.

Senator Tkachuk: Okay. What was his recollection?

Mr. LaBarge: His recollection was a building project.

Senator Tkachuk: Did he say what kind of building project?

Mr. LaBarge: In Ottawa.

Senator Tkachuk: Well, if it was a - Mr. Matthews, though, is your client. Mr. Chrétien was not in that room. Mr. Matthews phoned you and asked you to arrange a meeting with Mr. Chrétien who, he says, in the house, that he did not attend as a lawyer. You are telling me that you would then -

Mr. Nelligan: If I may correct you, senator?

Senator Tkachuk: - cooperate - I'm just asking - cooperate -

Mr. LaBarge: I am afraid I don't understand the question.

Mr. Nelligan: Senator, he said he did not as a lawyer discuss the Pearson Airport. Just in fairness to this witness.

Senator Tkachuk: Well, he says:

...I never had, as a lawyer, any discussion about the Toronto Airport with any of these people.

Mr. Nelligan: Right.

Mr. LaBarge: Exactly.

Senator Tkachuk: That's the point that I'm getting at. If he wasn't a lawyer having any discussions -

Mr. LaBarge: Maybe you've got the inference wrong. Maybe he wasn't having discussions about Pearson as a lawyer because he didn't have any discussions about Pearson.

Senator Jessiman: He doesn't say that.

Mr. LaBarge: What does he say?

Senator Jessiman: As a lawyer.

Mr. LaBarge: As a lawyer he didn't have any discussions about Pearson.

Senator Kirby: The question was asked in the context of it being in the law firm.

Senator Tkachuk: It doesn't matter, though, does it? You're the lawyer. Matthews is the client. You are now telling the Prime Minister of Canada what happened at the meeting. You're refreshing his memory. Talking about the date -

Mr. LaBarge: Well, sir, I think you're misstating that. I didn't tell him what happened -

Senator Tkachuk: Well, okay, you're refreshing his memory -

Mr. LaBarge: - at the meeting. I confirmed his -

Senator Kirby: He didn't refresh his memory. He said he was asked the question and he confirmed it. You keep putting words in his mouth, Dave. Come on. Be straight -

Senator Tkachuk: Okay, I'm not going to put words in your mouth. I don't want to do that.

Senator Kirby: I understand why you're trying to do it, but be honest.

Senator Tkachuk: I am. I'm always trying to be honest. I'm just trying to find - I'm just trying to find out why you would reveal, at that time, to Mr. Chrétien what happened at that meeting anyway, if your client was Mr. Matthews?

Mr. LaBarge: This was a meeting between a member of my firm, counsel of our firm -

Senator Tkachuk: No, he's not a lawyer now. No matter what happened at that meeting, he's not a lawyer.

Mr. LaBarge: Well, I'm no longer with Lang Michener but that doesn't mean that I've lost my responsibilities with respect to the time frame.

Senator Tkachuk: No, I'm not mixed up.

Mr. LaBarge: I'm sorry, sir. I'm having trouble understanding where you are going with these questions because he was a lawyer, he is a lawyer, he is responsible to the Law Society, as am I. And if there are two lawyers in a meeting - the fact that Mr. Nelligan might no longer be with Nelligan Power would not stop us from talking about a meeting that we had while he was at Nelligan's and I was at Lang Michener. Not as I understand the law.

Senator Tkachuk: I just have difficulty understanding why he added the "as a lawyer there", which means no matter what happened at the meeting he was not a lawyer.

Mr. LaBarge: That's your interpretation, sir, I can't help you.

Senator Tkachuk: Well, I have no other way to interpret it because that's what he said.

And then in the Financial Post April 6, '95 Mr. LaBarge writes, it says, "March 3rd, Mr. LaBarge writes to the law society. I - have no files belonging to Lang Michener relating to these clients, i.e. Matthews clients.

Mr. LaBarge: Right.

Senator Tkachuk: You found them since?

Mr. LaBarge: I did, sir, because I got a letter from Lang Michener saying, "We've looked everywhere. We can't find them." I then instructed my office staff to go through every box in dead storage, which they did. And if you have that information, you should have the rest of the information because it was provided to Mr. Baker and to the law society.

Senator Tkachuk: I didn't get anything from Mr. Baker.

Mr. LaBarge: That the files were located in mislabelled boxes and they were delivered to Lang Michener with a letter of advice delivered to Mr. Baker that the files were with Lang Michener in July of 1995.

Senator LeBreton: Two months ago.

Mr. LaBarge: Two months ago.

Senator LeBreton: Can I just ask a supplementary, Senator Tkachuk?

Senator Tkachuk: Yes.

Senator LeBreton: You have just said, Mr. LaBarge that the Prime Minister, Mr. Chrétien, remembered the meeting was about a building. May I refer you to a question in the House to him on March 27th, 1995, in response to a question from Mr. Michel Guimond. And the Prime Minister says:

Mr. Speaker, I think it is clear: the answer is now -

This is asking about the meeting of privatization:

I even took the time to check with the lawyer who represented the Matthews Group in the office. I spoke with him and he confirmed that the Toronto airport was not discussed at all. At that time, I was not aware of the privatization plan.

So, you were confirming to him not him remembering to you that it was not the airport, it was a building. So, according to the Prime Minister-

Mr. LaBarge: Well, I'm sorry, but-

Senator LeBreton: That's the Prime Minister.

Mr. LaBarge: That's the Prime Minister, yes. And you know as well as I do his facility with the English language.

Senator LeBreton: Really?

Mr. LaBarge: Yes. Yes, it's not his mother tongue. And I can tell you that in the conversation we had, he asked me whether his recollection was correct. And I believe if you check the word "confirm" in the dictionary you'll find that you can confirm in several different ways. So, if you want to put that twist on it senator, I can't help you. That's pure politics.

Senator LeBreton: Well, let me get, I just want to go on. And that same time he again confirmed that he'd never solicited funds and Mr. Matthews himself said that he did not contribute a penny to the John Chrétien leadership campaign Well, Mr. Matthews cast confirmed that, but-

Senator Tkachuk: I want to go back to this because, you see, I'm not a lawyer so I may ask counsel to help me here. But at this time you say you were Mr. Matthews' lawyer?

Mr. LaBarge: At which time?

Senator Tkachuk: 1989, 1990.

Mr. LaBarge: Right.

Senator Tkachuk: Now, let's hypothetically say - because I'm going to say this hypothetically - you have a client who you're the lawyer for and he says something which is reported in the paper. Did you phone, then, to Mr. Matthews and say, "Gee, I don't think that's right. I'm going to contradict what you said?" Well, did you?

Mr. LaBarge: Did I phone Mr. Matthews?

Senator Tkachuk: Yeah.

Mr. LaBarge: No.

Senator Tkachuk: So your client says something in the newspaper, or says something to a reporter -

Mr. LaBarge: My ex-client, yes.

Senator Tkachuk: No, no. But at this time he's you client.

Mr. LaBarge: No, no, he's my ex-client.

Senator Tkachuk: Well, you mean to tell me that ex-lawyer-client relationships don't work?

Mr. LaBarge: No, no. I'm not saying that at all, sir. I just want you to get the facts straight. At the time he was not my client. In 1994 he's not my client.

Senator Tkachuk: 1994. No, but this was in reference to a meeting that took place, and whether it was in 1989 in April as you say it was -

Mr. LaBarge: Right.

Senator Tkachuk: - or in January, December as he says it was -

Mr. LaBarge: Right.

Senator Tkachuk: - he was your client. Now, he went ahead and said something in the newspaper.

Mr. LaBarge: Right.

Senator Tkachuk: And he revealed something that happened while you were his lawyer and then you didn't phone him to contradict him?

Mr. LaBarge: Why would I? I received a call from Philip Mathias who's been getting his information from God knows who and he says, "I understand you were at this meeting".

Senator Tkachuk: Yes?

Mr. LaBarge: I said, "Yes I was".

Senator Tkachuk: Yes?

Mr. LaBarge: And he said, "Can you tell me what was discussed?" I said "No, I can't." But on the advice of counsel, I can tell you that Pearson wasn't discussed in my presence. So if there's an issue with that, I'll have to take it up with my counsel who gave me that advice.

Senator Tkachuk: So it could have been discussed.

Mr. LaBarge: Not in my presence, sir. It could not have been discussed in my presence.

Senator Tkachuk: Now, your docket says one hour and a half?

Mr. LaBarge: That's for the whole morning.

Senator Tkachuk: Chrétien, Matthews and yourself?

Mr. LaBarge: No. See, I had a meeting with Mr. Matthews before we met with Mr. Chrétien, and I met with Mr. Matthews after, which is how I get to the 45 minutes to one hour; 'cause the total docket was one and one-half.

Senator Tkachuk: So how long do you meet with Mr. Matthews, then?

Mr. LaBarge: Well, between the time that I spent with him before and the time I spent with him after, and the time I spent in the meeting with Chrétien, was 1.5 hours.

Senator Tkachuk: Okay. How long did you meet with Mr. Matthews?

Mr. LaBarge: I think I just answered that.

Senator Tkachuk: 45 minutes, 30 minutes, 10 minutes?

Senator Jessiman: He said one hour and a half.

Senator Tkachuk: An hour and a half?

Mr. LaBarge: Total time with Mr. Matthews, one and one-half hours.

Senator Tkachuk: And Mr. Chrétien?

Mr. LaBarge: In that one and one-half hours as well.

Senator Tkachuk: So he was only there 45 minutes?

Mr. LaBarge: He was there approximately 45 minutes. I didn't break it down into components as to who was in and who was out at what particular point.

Senator Jessiman: There's another time. When he's out of the room he's not charging when he's out of the room.

Mr. LaBarge: Exactly. Thank you.

Senator Jessiman: So the total time has to be one hour and one-half, plus whatever time you were out of the room, which is another 30 minutes. So the time that Mr. Matthews was in the office, whether with you or with you and Mr. Chrétien together, or with Mr. Chrétien alone-

Senator Bryden: Or with him alone.

Senator Jessiman: Or with him alone would have been about two hours and a bit.

Mr. LaBarge: My recollection, senator, for what it's worth is he arrived about 9:30 and left around 11:30. Okay?

Senator Jessiman: Two hours. All right. Would the firm have charged just one hour and a half, or did you charge for the two hours?

Mr. LaBarge: I charge an hour and a half, the docketed time.

Senator Jessiman: And Mr. Chrétien did not?

Mr. LaBarge: Didn't charge anything.

Senator Tkachuk: Are you done?

Senator Jessiman: Yes.

Senator Tkachuk: You mentioned something about this telephone conversation that you had with Mr. Matthews.

Mr. LaBarge: Hm-hmn.

Senator Tkachuk: You referenced it by saying that you wanted to see how far he could go. What did you mean by that?

Mr. LaBarge: Well, you see, Mr. Matthews, in his own testimony, basically said he was taping it 'cause he didn't trust what I was going to say. Well, I'm afraid at that point in time I wasn't quite comfortable with what he was saying. And, as the conversation wore on, I noticed we moved from a stage of where I'd said what my recollection was and his to, and then there's this and then there's this. And I thought, well, let's just see where this goes. Let's agree with this and see where it goes because I was sure it was going to show up somewhere in this parade.

Senator Tkachuk: So in this telephone conversation you were playing super sleuth and you were trying to lead him on?

Mr. LaBarge: Well, I was actually playing super sleuth with somebody who playing super sleuth, yes.

Senator Tkachuk: And you were trying to lead him on.

Mr. LaBarge: No, not lead him on; I just wanted to see where he was going.

Senator Tkachuk: Well, where was he going?

Mr. LaBarge: Well, I think he was going to where he has gotten to today.

Senator Tkachuk: So he discussed with you the time of the meeting?

Mr. LaBarge: He discussed with me the meeting, yes.

Senator Tkachuk: And what did he say the meeting was and you lead him on to believe the meeting was?

Mr. LaBarge: No, I didn't lead him on; he was doing most of the leading.

Senator Tkachuk: Okay. And what, did you guys agree-

Mr. LaBarge: Well, I'll tell you, senator. I believe that you have a transcript.

Senator Tkachuk: I don't have a transcript.

Mr. LaBarge: You don't?

Senator Tkachuk: No.

Mr. LaBarge: Well, I'm surprised. The Financial Post has one.

Senator Tkachuk: Well, they're -

Senator Lynch-Staunton: What does that have to go with -

Senator Tkachuk: What's that got to do with anything?

Mr. LaBarge: Well it's just that I'm in a position where, "a", I'm not allowed to record my phone conversations with my clients because of the law and if we're going to proceed down this course we might as well go with the best evidence.

Senator Tkachuk: Mr. LaBarge-

Senator Lynch-Staunton: A point of order, Mr. Chairman. We did not bring up any reference to a tape. Senator Bryden asked the witness if there was a tape.

Senator Tkachuk: Yeah, I didn't.

Senator Lynch-Staunton: That's where it was discussed. No one on this side has seen a tape or a transcript.

Senator Kirby: We don't have one either. We haven't seen any transcript either.

Senator Lynch-Staunton: So we have know idea what the witness is referring to and to suggest that we have one is completely off the wall.

Senator Jessiman: May I ask a question, Senator Tkachuk?

Senator Tkachuk: Yeah, sure.

Senator Jessiman: Would you have any objection to this committee either getting a copy of that transcript that you say that the Financial Post has and/or allowing us to listen to that tape and yourself listening to it? Have you-

Mr. Nelligan: Senator, may I interject? I am seriously concerned that this committee is getting entirely off the track of what it was intended to do. I am very concerned that it is turning into a test of credibility of what appear to be two very responsible citizens, and that is not your primary issue.

You have to determine certain things about the Pearson report. If there's been any misconduct or any misstatement by people there are other people who can deal with it. I'm very concerned that in doing this we are missing the objective and we are in effect putting smears on people, properly or otherwise, which are not our normal function and I would therefore ask that, having got the information from both these witnesses, you get on with your business.

Now, you can vote as you like, but I'm upset that we are getting into something that is really none of our concern, and I think I have to put that on the record.

Senator Tkachuk: Counsel, I have tried to be extremely careful about this whole matter. This matter was a matter of public record. It was not something that I made up. It was a matter of public record which I asked Mr. Matthews, who had made that matter a matter of public record along with the newspaper, questions about it to find out what the truth was.

Counsel, we're here to find out - and, surely there have been a tremendous amount of reputations that have been hurt in this process from outside of the field of government and inside of the field of government. There have been allegations made, there have been statements made. Now, it seems to me that when Mr. Nixon can say something that's okay, but if I bring something up which I think is relevant, there's a problem with that. Counsel, I'm going to take this matter on because the witness - I didn't ask this witness to come. I didn't want him to come today as a matter of fact, I wanted time for him to prepare and me to prepare. I mean, I'm doing my best; I didn't expect him. I thought we'd be here a lot longer with the Matthews Group. He was here waiting to come. He was sitting over here, right here with this gentlemen here waiting to come. And now he's here. Now, once you put your foot in the water you better be able to swim.

Mr. Nelligan: All I'm talking about, Senator Tkachuk, it's the question of the tapes. If you produce the tapes, then what was the providence of the tapes? Will we have a technician to see whether the tape has been doctored? Will we have the people who heard the tape machine? We can go on forever.

Senator Lynch-Staunton: Well, then, why did we bring it up in the first place. Why was it brought up in the first place?

Senator Tkachuk: Why am I getting heck? Senator Bryden brought up the tapes. I'm asking about a telephone -

Senator Stewart: You were the people who voted to sustain the -

Senator Tkachuk: He was the one who asked for Mr. LaBarge. I didn't ask for Mr. LaBarge.

Senator Lynch-Staunton: That is right. He didn't want Mr. LaBarge to show. That's what you voted for.

Senator LeBreton: Exactly.

Senator Tkachuk: Now, I'm going to proceed as best I can, counsel. The witness is here and I thank him for being here and I appreciate it. I'm just trying to find out whether - there are two stories at the table, and that's fair enough.

I will just go back to this conversation on the phone that you say you had. You say you were leading him on. In other words, you weren't telling the truth?

Mr. LaBarge: Umn. Let me put it to you this way, senator. I was dealing with him the way I felt I was being dealt with.

Senator Tkachuk: Well, Mr. LaBarge -

Mr. LaBarge: Look, senator -

Senator Tkachuk: I'm asking you a question.

Mr. LaBarge: Let me just make something clear here.

Senator Tkachuk: Were you telling the truth in the telephone conversation or are you telling me the truth today?

Mr. LaBarge: Sir, I am under oath today.

Senator Tkachuk: You weren't under oath so that would be okay?

Mr. LaBarge: It depends who you're talking to, doesn't it?

Senator Tkachuk: Not to me it doesn't.

The Chairman: Did you hear a telephone conversation, senator?

Senator Tkachuk: No, I'm asking him about a telephone conversation. And I'm asking him - He told earlier on in his testimony that he was leading this person on. So I says to him, "That means you may not be telling the truth in the telephone conversation." And he says to me - Well, I don't remember what he says, it was so shocking.

Senator LeBreton: That depends on who you're talking to.

Senator Tkachuk: That depends on who you're talking to. And so now its under oath but when you're not under oath it's okay?

Mr. LaBarge: Well, let me put it to you this way, senator. I don't have the benefit of 100 per cent recall. I don't have the benefit of a tape or a transcript. I can tell you - and if you listen to Mr. Matthews' testimony today he'll say, "At the outset Mr. LaBarge said the following." Now, Mr. Matthews has the benefit of the tape and the transcript. I cannot recall verbatim what was said. I can tell you that.

Senator Tkachuk: But you were leading him on? You've testified to that.

Senator Bryden: No, he didn't say that.

Senator Jessiman: Yes he did, under oath!

Senator Tkachuk: Okay. Were you leading him on or not? You said you were leading him on. So, tell me: How were you leading him on?

Mr. LaBarge: I was being receptive to his points.

Senator Tkachuk: And so all points that you may make in that telephone conversation and all points that you make in that telephone conversation were just leading him on and being receptive?

Mr. LaBarge: Again, I don't have the advantage of having a transcript or a tape.

Senator Tkachuk: Mr. LaBarge, you remember really well what happened in 1989 and April and you can't remember what happened in January and in March of 1995?

Mr. LaBarge: Senator, I have the advantage in 1989 of having dockets.

Senator Tkachuk: What do the dockets say?

Mr. LaBarge: I read them to you.

Senator LeBreton: Produced in 1995.

Mr. LaBarge: They weren't produced in 1995, senator, they were produced contemporaneously.

Senator LeBreton: They were turned over in 1995.

Senator Tkachuk: Well, I'm having a terrible time with this, chairman. I mean, he's saying that in the conversation he had he was leading him on. If he was leading him on, he may have reminded and led our previous witness on to verify things that the witness wanted to verify. So the previous witness is talking to his own lawyer and he's saying, "I want to remember where something is" and you're helping him remember by lying to him?

Mr. LaBarge: I think you're overstating it, senator.

Senator Tkachuk: Well what am I stating, then?

Mr. LaBarge: Well, "a", he wasn't my client at the time.

Senator Tkachuk: You know, sir, I have a lot of problems with this in front of a Senate inquiry, Mr. LaBarge. You came in here and you were waiting to testify. You were waiting to testify, Mr. LaBarge, about what a witness said under oath.

Mr. LaBarge: Hm-hmn.

Senator Tkachuk: You came prepared to do it.

Mr. LaBarge: Hm-hmn.

Senator Tkachuk: I'm asking you about a telephone conversation you had in January and March of 1995.

Mr. LaBarge: Right.

Senator Tkachuk: You're telling me that you led on to have the witness that testified just previously by not telling him the truth, by leading him on, verified -

Mr. LaBarge: Now, that's not true.

Senator Tkachuk: - verified particular memories that he was trying to have. And what are you trying to tell me, then?

Mr. LaBarge: That's not true.

Senator Tkachuk: Well, what are you telling me, then?

Mr. LaBarge: What I'm telling you -

Senator Bryden: Mr. Chairman, the witness has any number of times refused to accept Senator Tkachuk's stylization that he was being led on.

Senator Tkachuk: No, he told me that. I didn't make that up.

Senator Jessiman: He said that.

Senator Bryden: He did not.

Senator Tkachuk: His evidence - Senator Bryden, he said to me that he was leading him on -

Senator Bryden: He did not.

Senator Tkachuk: - to see how far he'd go. I mean, I'm over 50, you know. I've got to wear classes and stuff, but I know that's what he said.

Senator Bryden: That's not what he said and the transcript will show that, Senator Tkachuk.

Senator Tkachuk: Okay. Let's wait to see.

I don't know whether Mr. Matthews, is he still here and whether he's still, but, I mean, you asked Mr. Bryden whether he had a tape.

Senator Jessiman: That's right.

Senator Tkachuk: Could we find out, then, whether he has a tape, or transcripts, or something that. I mean, this man is contradicting his testimony and I feel he has a right to at least redress, or apologize, or whatever has to be done here so we can find out what really happened.

So, I'm asking, chairman, whether Mr. Matthews, if he's here, would do that.

The Chairman: No. We're not having any further. There's not going to be any rebuttals or redirects. You heard the opinion of counsel and I'm ruling on it.

Senator Tkachuk: But if he has a tape, chairman, if he has a tape of the conversation.

The Chairman: He can play it on Capitol Hill.

Senator LeBreton: Good. Maybe that's what he should do!

The Chairman: And he can drop it, the affidavits in a low-flying aircraft. He can do whatever the hell he wants with them; produce whatever the hell he wants to. Nothing is stopping him. It's not relevant to this committee's hearings.

Senator Tkachuk: But it is relevant, chairman.

The Chairman: It's not relevant.

Senator Tkachuk: It is relevant.

The Chairman: It's not relevant at all.

Senator Tkachuk: You can't have the Prime Minister of this country cancel a contract because of a Nixon report that says that there are suspicions of patronage - suspicions, not facts or evidence, suspicions of patronage. That's Nixon's words, not mine. And then when I say, "Perhaps there are suspicions by another political party," that seems to be an apocalypse. That's not an apocalypse.

Senator LeBreton: What about honestly and integrity?

Senator Tkachuk: I didn't think there was anything wrong with the one-hour meeting and I told the previous witness that. I just asked him if it was had. It was Senator Bryden who got all excited, who turned this thing into a whole side show. I said, "I don't think there's anything wrong with this meeting." The Prime Minister's never denied privatization; this is another piece of evidence. It was no big deal to me but it seemed to be a big deal to everybody else around here.

The Chairman: Senator Tkachuk, you know, there's a lot of things I don't like, but being conned is one of them. If you had followed a line of questioning, which I was quite prepared to accept, with respect to the matter which had originally been brought up that the private citizen Chrétien had supported privatization in 1989 -

Senator LeBreton: What about private citizen Matthews?

The Chairman: - that was fine. But your disingenuous questioning led squarely to the point in which we find ourselves now.

Senator Tkachuk: No, but you see Mr. LaBarge -

The Chairman: And you can carry this as far as you want to -

Senator Tkachuk: I don't want to -

The Chairman: - but it has nothing to do with this committee.

Senator Tkachuk: Mr. LaBarge was brought here because he wanted to come here.

The Chairman: And furthermore, if you think that I'm trying to protect the Prime Minister's reputation, my credentials as a Conservative are one hell of a lot stronger and of longer term than any other member here.

Senator LeBreton: That's just because you're older.

Senator Tkachuk: But, Mr. Chairman, I would never think that. I would never think that. This has gone too far. I mean-

The Chairman: If there's no more. Anybody else want to comment on anything here? Any more irrelevant questions?

Senator Lynch-Staunton: No, Mr. Chairman. I have some hopefully relevant comments. I mean, are we going to let two witnesses - I agree with counsel and with you that a lot of what we heard today is irrelevant and should not have been brought before this table. And I admire your patience and your stoicism knowing your personal feelings about this. The damage, unfortunately, has been done.

The point we are trying to establish here is exactly as you said: Was there a meeting between the future Prime Minister or the future leader of the Liberal Party and other Liberals with Mr. Matthews to establish their feelings about privatization? We understand from Mr. Matthews there was and he got encouragement. We understand from Mr. LaBarge that there wasn't, and that's as far as that goes.

Do we let this contradictory evidence stand here and go on to other things with this, or do we try and reconcile it, or do we feel that we've gone far enough and let them fight it out in another forum?

The Chairman: Well, we go on to other things. We go on to our agenda. We start Monday morning at nine o'clock with our first witness.

Senator LeBreton: Right. Fine.

Senator Tkachuk: Who?

The Chairman: Our first witness happens to be Mr. Shortliffe, I think, isn't it? No, the academics, yes.

Senator Jessiman: On Monday.

The Chairman: On Monday, rather, yes. That's solved. If there's nothing else, we'll adjourn.

Senator Tkachuk: Thank you, chairman.

The committee adjourned.

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