Proceedings of the Special Senate Committee on the
Pearson Airport Agreements
Evidence
Ottawa, Tuesday, September 26, 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: Good morning, colleagues, ladies and gentlemen. By a special resolution, the Senate of Canada established this committee's terms of reference and required it to, quote, "examine and report on all matters concerning the policies and negotiations leading up to and including respecting the redevelopment and operations of Terminals 1 and 2 of Lester B. Pearson International Airport and the circumstances related to the cancellation thereof", and, I add, the committee has powers to send for persons, papers and records, and examine witnesses under oath.
We have duties and responsibilities commensurate with this mandate. We have an obligation to examine and report our findings unaffected by political bias and based on a careful weighting of the evidence submitted to us. But we should not forget that this is also an adversarial body, and it would be optimistic to expect that the committee report will be unanimous.
However, Senator Kirby and I have agreed that, with the assistance of counsel, clerk, and our research staff, Kirby and I will write a separate report which will deal with the obstacles and frustrations which all committee members experienced and continue to experience in attempting to get legitimate information to which we were entitled. This third report will be a personal one, signed only by Kirby and MacDonald.
Now, we have some very important witnesses today, and I ask Mr. Nelligan please to introduce them.
Mr. John Nelligan, Q.C., Counsel to the Committee: Senators, our witnesses today are Mr. Robert Nixon, who is now chairman of the board of Atomic Energy of Canada Limited and the consultant designated to prepare the report we've been discussing. With him on his right is Mr. Allan Crosbie, of Crosbie & Company, and on his left Mr. Stephen Goudge, of Gowling, Strathy and Henderson. I understand that the witnesses, after being sworn, will make introductory statements.
The Chairman: Are you prepared to take the oath, gentlemen?
Mr. Nixon: We are.
(Robert Nixon, sworn:)
(Allan Crosbie, sworn:)
(Stephen Goudge, sworn:)
The Chairman: Mr. Nixon, you have an opening statement?
Mr. Nixon: I do, Mr. Chairman, thank you.
Honourable senators, on October 27, 1993, a few days after the election, I received a telephone call from the Prime Minister designate John Chrétien. He asked me to review for him personally the contracts relating to Terminals 1 and 2 at Pearson airport. I accepted the invitation and arranged to meet with him in Ottawa the next day to discuss the matter further and to make the necessary arrangements for the review.
On October 28, I met with Mr. Chrétien and his policy advisor Mr. Eddie Goldenberg in Ottawa. The PM designate reiterated his desire that I personally review the Pearson contracts. As a result of our discussions, I understood my assignment to be the provision of personal opinion and advice privately and directly to the Prime Minister, thus contributing to the ability of the Prime Minister and his colleagues, who were not yet named, to decide on the policy and action of the government with respect to the Pearson contracts.
Time constraints, staff, and office space were discussed, and Mr. Goldenberg took me to see Mr. Shortliffe, the Clerk of the Privy Council, to formalize arrangements. I indicated that I would need a lawyer, an accountant, and an administrator. These were agreed. I suggested that the federal office space used by Toronto cabinet ministers might be used since the cabinet was not yet in place. It was agreed that that space and the staff located at that location would be made available. By the way, that is on Wellington Street in Toronto.
I subsequently entered into formal contractual relations with the government. Mr. Goudge, who I engaged as my legal advisor, was paid by me, which expense I billed to the government. Mr. Allan Crosbie, of Crosbie & Associates, was engaged directly by government contract to provide me with assistance on certain financial matters. In addition, Mr. Brad Wilson was engaged as my administrator.
Contractual documentation in relation to these engagements is in materials which I understand have already been provided to the committee. I draw the committee's attention to the fact that all those engaged were subject to confidentiality obligations, obligations that I assumed that I would be obliged to meet as an inherent aspect of my engagement.
On the same day, I visited Transport Canada and met with the minister and associate deputy minister for a discussion on the steps that I would be taking. They agreed to have prepared for me appropriate briefing papers and to arrange for a briefing of me and my colleagues in Toronto in due course.
On October 29, I met with Messrs Goudge and Wilson and discussed a plan of action sufficient to fulfil the PM designate's request in the allotted time. Mr. Goudge suggested the retaining of Crosbie & Associates, in particular Mr. Allan Crosbie, as my accounting advisor, which was agreed, and Mr. Goudge undertook to contact Mr. Crosbie and make arrangements, which I understand he did the following day.
A list of organizations and individuals conveying their information and opinions to me is part of my report. Meetings with individuals and organizations were held either at the offices on Wellington Street in Toronto or at the offices of the individuals or groups participating. These meetings had to be somewhat restricted in number and time since I took the time limit of one month seriously and informed my colleagues that I would not return to the Prime Minister's office requesting an extension.
My direction was that the first three weeks would be spent interviewing and reviewing material from appropriate resources and the last week reserved for discussion of conclusions and preparation of the report.
It was decided that Messrs Goudge and Wilson would be present at as many of my meetings as possible to assist with discussion and to provide points of view to me on the information received.
Mr. Goudge, as well as providing legal counsel, undertook an examination of the clauses of the contracts and planned to have a summary of his findings available in the final week which would provide a significant contribution to the report.
Mr. Crosbie and his staff worked independently, collecting information to perform the service of assessing certain accounting and other related matters to the contracts. Mr. Crosbie regularly met and contributed to our discussions. In addition, he provided a formal written report during the last week of November which I understand has also been made available to the committee members.
Senators will recall that the Pearson contracts constituted a volatile issue in the election campaign of September-October, 1993. Indeed, the privatization of Terminals 1 and 2 at Pearson International airport had been the subject of much debate and comment publicly well before the election amongst many interested parties in the greater Toronto area, in the media, and in the records of the debates of the House of Commons. The then Leader of the Opposition publicly warned participants that if the government proceeded to finalize the contracts during the writ period, that the contracts would be in jeopardy. For those reasons, there was substantial interest in my appointment as one of the first acts of the new government.
I immediately received requests for meetings which I balanced with my own requirements for information gathering. Many meetings were supported by briefs, others were informal, several characterized by requests for confidentiality which I must honour.
One of the first persons to contact me was Mr. Gardner Church, a senior civil servant in the Ontario government who had been materially involved in attempts to establish a local airport authority at Pearson. During a lengthy meeting involving Mr. Church, Mr. Goudge, Mr. Wilson and myself on October 31, Mr. Church provided me with a great deal of background on the concept of a local airport authority and the history of efforts made to obtain one for Toronto. I understand that Mr. Church testified on a panel before this committee, and therefore the committee will be aware of his knowledge and views. Mr. Church advised me that attempts by local and provincial authorities to establish a local airport authority for Toronto inclusive of Pearson had effectively been rebuffed by Ministers Lewis and Corbeil, leaving considerable frustration among the ranks of those who were supportive of the LAA concept. In addition, Mr. Church advised me of his information and views to the effect that the process and transaction leading to privatization had been pushed at an undue rate of speed and, further, that there were significant flaws in the process.
On Monday, November 1, Messrs. Goudge, Wilson and I met with Her Worship Hazel McCallion, Mayor of Mississauga. She impressed me with her concerns on the subject of the relationship of her municipality to developments at Pearson International airport and potential relationships to the Island Airport.
Also on November 1, Mr. Goudge and I met with Mr. Bill Rowat, Mr. John Desmarais, and Mr. Wayne Power, of Transport Canada. The department provided me with a briefing document which I understand has also been provided to the committee, and Messrs Rowat et al provided a further briefing on the background of the transaction, the parties involved, the specific agreements and economics of the transactions, the process involved in reaching the agreements, and future options. This effort, which I greatly appreciated, gave me and my colleagues extensive background information that we required for both our understanding and assessment of the transactions and the processes by which the agreements were reached.
Since the matter appears to be of significant concern to this committee, I should advise you that, as a result of the briefing, I and my colleagues were left with the clear impression that the contract was not completed until execution of various documents on October 7, 1993, and, indeed, that Mr. Rowat did not proceed with the execution of these documents until he had received clear direction from high authority, given that the transaction was a matter of controversy in the midst of an election campaign.
On November 2, Mr. Wilson and I met with representatives of the Council of Concerned Residents held at the home of Raffaela Baratta. I heard extensive concern expressed about the impact on the environment of developments at Pearson International airport.
Also on November 2, Messrs Goudge, Wilson and I met with representatives of Metropolitan Toronto, including Mr. Alan Tonks, the chairman, Ms Deanne Young, Mr. Don Baxter, Mr. Steve Shaw, and Mr. Jack Horsely. The message I received from that meeting was that consideration of the concept of a local airport authority for Toronto was not given a fair chance by the federal government. We were advised that Paxport Incorporated officials had advised Metropolitan Toronto officials that Minister Corbeil had made it clear that there would be no recognition of a Toronto LAA prior to privatization. The Metropolitan Toronto position was that in such circumstances, an LAA would not have a significant role in terms of control and management after privatization were it given control of the airport.
On November 3, 1993, Messrs Goudge, Wilson, and I met with representatives of Pearson Development Corporation, specifically Mr. Peter Coughlin, Mr. Norman Spencer, and Mr. Robert Vineberg. The PDC officials made a helpful comprehensive presentation on the contracts and how they were achieved. During the course of that meeting, I requested information on payments to lobbyists, which information was subsequently received and which has been made available to this committee. That information contributed to my eventual conclusion that there had been significant lobbying in connection with the process and eventual achievement of the contracts. I was also informed during this meeting that the government and Pearson Development Corporation had agreed in late August to achieve final agreements and closing during the week of October 7, 1993.
On November 3, Mr. Wilson and I met with the Mississauga Board of Trade, represented by Mr. Ron Dennis, Mr. David Gordon, and Mr. Lawrence Bryan.
Finally, on November 3, Messrs Goudge, Wilson and I met with Ms Huguette Labelle, formerly deputy minister of Transport Canada. Ms Labelle, as I'm sure this committee is aware, is an intelligent, highly respected, and experienced civil servant. These facts added greatly to the weight of her comments to me. Essentially, Ms Labelle advised me that the local airport authority option had not effectively been considered for application at Pearson, most certainly before privatization was to take place. Ms Labelle advised us that, in her view, putting terminals ahead of runways in fact was putting the cart before the horse. She advised us that the condition that the request for proposals not be proceeded by an expression of interest stage and be restricted to 90 days gave Paxport an enormous advantage over other potential and actual bidders once the RFP process had been formalized. She advised me that both Claridge and Air Canada had been opposed to the RFP. She advised me that lobbyists had been observed all over the file and that, in her opinion, based on her experience, considerable pressure had been exerted as a result of these efforts, albeit not directed by lobbyists on civil servants. She indicated that, notwithstanding these efforts, they had no apparent impact.
On November 4, Messrs Goudge, Wilson, and I met with Premier Rae, members of his government, and a number of Ontario civil servants. During the course of that meeting, it was made clear to us that the Government of Ontario considered Pearson airport as very important to the Ontario economy. We were advised that the Ontario government had been a long-standing supporter of a local airport authority. We were provided with information derived from an analysis done of the contracts for the provincial government by the respected Toronto law firm of Fraser & Beatty which expressed opinions about certain inadequacies. Relying on this advice, we were made aware of the Ontario government's concerns about the integrity of the contractual process and the actual contracts themselves and the further view that, were the contracts to remain, that any LAA that might be created would be left with little meaningful input.
Also on November 4, Messrs Goudge, Wilson, and I met with a number of individuals who had been significantly involved in the attempt to have a local airport authority established at Pearson. We met with Mr. Robert Bandeen, Ms Anne Edgar, Mr. Steve Shaw and Mr. Sid Valo. These individuals relayed to us the history of the attempts to have an LAA established at Pearson and the fact that all the prerequisites of an LAA had been achieved but that notwithstanding, Mr. Corbeil, the then Minister of Transport Canada, had refused to engage in discussions leading to a formal acknowledgment of their role. These sources also advised that, to their observation, various members of the federal civil service involved in the Pearson airport contract process were disgruntled with the process.
On November 5, my colleagues and I met with representatives of Paxport Incorporated, including Mr. Jack Matthews, Mr. Robert Vineberg, and Mr. Peter Kozicz. These gentlemen provided us with a thorough review of events leading up to Paxport's response to the RFP. In addition, they gave us greater insight into Paxport's ownership position in Pearson Development Corporation. Finally, we discussed certain differences between the Paxport and Claridge proposals.
On November 9, Mr. Wilson and I met with Mr. Chern Heed, the then manager of Pearson airport. Mr. Heed provided us with valuable information on certain financial aspects of Pearson International airport's operations. In addition, he described his role in the processes which eventually led to the negotiations culminating in the agreements. He tendered his views which made it clear that he was uncomfortable with pressures placed on civil servants in these contexts and his concerns regarding the way in which negotiations took place and their direction. He indicated this was a factor in his accepting a position in Hong Kong.
On November 10, Mr. Wilson and I met with representatives of Morrison Hershfield. We were given to understand that Morrison Hershfield had originally responded to the request for proposals but decided not to provide the $1 million deposit required as a condition of being considered for the simple reason that the company was of the impression, under the realities of the situation, that their opportunity for success was remote.
On November 11, my colleagues and I met with representatives of Air Canada. Air Canada's concerns as related to me were the costs associated with development. Air Canada did not appear concerned as to whether its landlord was the government, an LAA, or a private operator.
On November 12, Mr. Goudge met with two lawyers from Fraser & Beatty and a number of officials from the Ministry of Transportation of Ontario. As a result of the analysis done by the Ministry's officials on the process, and with the assistance of their solicitors, the Ministry had serious concerns with the process leading to the eventual contracts, specifically the fact that terminal development had been put before resolution of the runway issues; the fact that there was a very short request for proposals stage; the fact that financeability had not been effectively addressed during the consideration of the bids; the fact that there was a relatively short closing date; and the fact that a local airport authority as an option had not been appropriately considered.
On November 15, Messrs Goudge and Wilson met with lawyers from the Toronto law firm of Osler, Hoskin, lawyers for the Greater Toronto Authority. As a result of their meeting, Mr. Goudge received information on clauses in the agreements and criticisms of them.
Also on November 15, Mr. Goudge met with Messrs Green, Pigeon, and Desmarais of Transport Canada and Mr. Gordon Dickson of Cassels, Brock, who had assisted Transport Canada in the context of the agreements. During that meeting, there was specific discussion of various aspects of the agreements. The advice received at that meeting confirmed my earlier understanding that Transport Canada officials understood that there was no agreement until the execution of certain documents which took place on October 7, 1993.
On November 17, I met with representatives of the Board of Trade of Metropolitan Toronto. While not expressing criticism of the agreements, they advised of the board's preference for an LAA.
At regular intervals beginning in the first week of the review, I set down my thoughts under headings related to the most prominent aspects raised in the election campaign related to the transaction. These included:
1. Public attitude toward leasing the busiest air travel facility in Canada to the private sector for 57 years instead of using the LAA alternative already established as public policy;
2. Dissatisfaction with specific terms in the lease;
3. The appearance of political favouritism in the process;
4. Too short a time allocation for RFP responses;
5. The questionable financeability of the bid deemed best overall; and
6. The value of competition in the operation of the Pearson terminals.
These evolving thoughts, as reduced to writing as they were, have been made available to the committee.
Parenthetically, I should advise the committee that one of the first projects I completed was the drafting of my intended letter of transmittal to the Prime Minister. That letter, which was created several weeks before my report was eventually delivered, was dated November 30, 1993 because that was the date I had contemplated I would be delivering my report. Senators will be aware that my report was actually delivered on November 29, a fact which is reflected in the covering letter accompanying my report on its delivery to the Prime Minister.
Lest there be any further misunderstanding, I repeat what I have said earlier publicly: There is only one report, that being the report which was made public accompanying my letter to the Prime Minister of November 29, 1993.
As the information gathered, I reached a number of conclusions. These are all expressed in my report to the Prime Minister. I expressed criticism of the substance of the agreements and the processes by which the agreements were eventually reached.
However, most significant to me was the signing of this transaction at prime ministerial direction in the midst of an election campaign where this issue was controversial. In my view, such an event flew in the face of normal and honourable democratic practice. It is a well-known and carefully observed tradition that when governments dissolve Parliament, they must accept a restricted power of decision-making during an election period. In my opinion, the closing of a transaction of significant financial importance, sealing for 57 years the privatization of a major public asset, should not have been entered into during an election campaign where that very transaction was the subject of widespread public controversy.
In the circumstances, given my concerns about the substance of the agreements, the processes by which they were reached, and the timing of the agreements, I formed the opinion and so expressed it that the process to privatize and redevelop Terminals 1 and 2 fell far short of maximizing the public interest.
To underscore the controversy surrounding the Pearson contracts and the process by which they were achieved, let me summarize my findings:
1. The process to privatize Terminals 1 and 2, the remainder of the largest airport in Canada, is inconsistent with the major thrust of the policy of the Government of Canada announced in 1987. That policy clearly emphasized the importance of local airport authorities, a fact reflected in the creation of such authorities for both airports in Montreal and airports in Calgary, Edmonton, and Vancouver.
2. The request for proposal stage, having, as it did, only a single stage and requiring proponents to engage in project definition as well as proposal submission, all within a 90 day time frame, created an enormous advantage to a proponent that had previously submitted a proposal for privatizing and developing the terminals.
3. Other management and construction firms, not having been involved in the manoeuvring preceding the RFP, had no chance to come up to speed and submit a bid in the short time permitted. Broader dissemination of information regarding the opportunity for development should have been provided.
4. No financial prequalification was required in this competition. For a project of this magnitude, the selection of a best overall acceptable proposal without complete assurance of financial viability of both the proponent and the proponent's proposal seems to me to have been highly unusual and unwise. Information that has arisen since the delivery of my report appears to indicate that Paxport Incorporated's financial viability, both as a corporate entity and in terms of its proposal, were matters of concern well before the public pronouncement of Paxport's preferred status.
5. According to a 1987 Transport Canada study, Pearson has a $4 billion direct economic impact on the economy of the province of Ontario and is directly and indirectly responsible for 56,000 Ontario jobs. It is, by any estimation, more than the sum of its parts or the total of its assets and liabilities. It is a critical national gateway and a hub for service to travellers, families, and shippers. It cannot be duplicated by any other facility in the area, indeed the province or the country. This combination of its economic and social importance to the region, the province, and the country, and the fact that it produces a unique service for which there is no alternative, transforms the airport from a simple transportation facility into one of the most important public assets in southern Ontario and in the Canadian economy. Terminal 3 has been privately leased and will be operated pursuant to those lease arrangements for 57 years. To contemplate the privatization of the remaining two terminals of this public asset was, in my view, contrary to the public good. Only by ensuring that the redevelopment and operation of T1T2 are in the lands of a body with considerable responsiveness to the broadly defined public interest can the Government of Canada properly discharge its obligation to the region, the province, and the country.
6. The agreements proposed to turn over this asset to the T1T2 Limited Partnership for 57 years. The length of this leasing arrangement is difficult to fathom. Capital repayment requirements will be met long before the term of the lease expires. Technological change suggests that, inevitably, transportation will be undertaken very differently 57 years from now. Just compare today's transportation to that of 1935. With an asset as moved by technological change as an airport, the length of this obligation does not serve the public interest.
7. The revenue stream provided to the Government of Canada by these agreements is far from overwhelming. In the immediate term, the rentals received would in fact be less than in recent years. As the lease unfolded, the rental stream was highly dependant on an aggressive pricing conducted essentially without government control and at the risk of making Pearson uncompetitive with airports in Canada and in the United States.
8. I have been advised by my business evaluation advisor that the rate of return provided to T1T2 Limited Partnership could, given the nature of the transaction, well be viewed as excessive.
9. Failure to make public the full identity of the participants in this agreement and other salient terms of the contract inevitably raised public suspicion. Where the Government of Canada proposes to privatize a public asset, in my opinion, transparency should be the order of the day. The public should have the right to know the full details of the agreement. Those details were not made known on October 7, 1993. In this context, matters of concern relating to the terms of the agreement were detailed in my report.
10. The agreements contained a constraint on alternative airport development within a 75 kilometre radius of Pearson, including Hamilton, of course. This may well constrain desirable policy initiatives on the part of the government at southern Ontario airports that must, for planning purposes, all be considered part of a single system. Moreover, the constraint is relatively absolute until Pearson is processing 33 million passengers per year, guaranteeing no ability on the part of the Government of Canada to alleviate the pressures of growth until that point is reached. Information I received strongly suggested that pressure for such alleviation would commence when a 30 million per year figure was reached. Accordingly, not only will a limitation constrain possible desirable policy issues, but it may well ensure overcrowding at Pearson.
11. The proposed agreements presented very disadvantageous precedential value to the Government of Canada in dealing with local airport authorities that now operate a number of major airports across the country under conditions far more favourable to the Government of Canada than the agreements under study. This fact, in my view, might create major pressure on the federal government to amend its relationship with those local airport authorities to give them as favourable treatment.
I observed in my report that Mr. Donald Matthews, a principle of Paxport Incorporated, had been the chairman of Mr. Brian Mulroney's leadership campaign in 1983, President of the Progressive Conservative Party of Canada, and chief fund raiser of that party. In addition, I observed that Mr. Otto Jelinek, a cabinet minister in the Progressive Conservative government, did not seek reelection and subsequently was engaged by Paxport interests. While I did not draw any definitive conclusion, I observed that, in my opinion, one was left with a suspicion that patronage may have had a role in the selection of Paxport Incorporated as the preferred proponent.
Based on the information I received, it was my conclusion that lobbyists played a prominent role in attempting to affect decisions in this context. The information I received from credible public servants indicated to me that pressures were brought to bear through lobbying efforts which exceeded permissible norms. The information I received indicated to me that politicians were interested in this transaction to a highly unusual extent. Again, based on the information I received, I formed the conclusion that this climate of pressure resulted in some civil servants being reassigned or requesting transfer from the project.
The change in rationale for the role of competition during the process struck me as significant. It must be remembered that the RFP implicitly indicated competition between the lessee of Terminals 1 and 2 and Claridge, the lessee of Terminal 3, was desirable. Moreover, Paxport Incorporated based its proposal, which was eventually deemed best overall acceptable, heavily on its competitive position vis-a-vis Terminal 3. However, after succeeding in the competition, Paxport Incorporated could proceed only after Claridge took over financial responsibility for the project. Indeed, Claridge, whose bid provided a lower return to the Government of Canada and a lower cost to Air Canada, found itself, after losing the bid, forced to accept a less advantageous position to save the Paxport bid. In my view, it appeared that Paxport Incorporated was receiving unaccountably favourable consideration and that it was able to maintain its involvement and its proposal despite the loss of competition.
Finally, I observed and drew conclusions regarding the then government's disposition favouring privatization over the evolution of a local airport authority. I note, and as the evidence clearly shows, the concept of an LAA has been used in Vancouver, Calgary, Edmonton, and Montreal. The provincial government, local municipalities, and business organizations clearly expected a similar policy to be followed in the Toronto area. Instead, the then Minister of Transport declined to recognize the local authority then supported by the local municipalities and regions. His steadfast refusal was based on what, in my view and experience as a provincial politician, was minor and normal intermunicipal strife. It is hardly therefore surprising that a perception existed amongst many persons with whom I spoke that the government's adamance that a local airport authority not be recognized was simply to ensure no jeopardy to the award of this project to Paxport.
On the basis of the information gathered and my experience, I reached the conclusion that I was obliged to advise the Prime Minister to cancel the transaction.
Toward the end of my mandate and for the purposes of drafting my final report, I engaged Mr. Goudge's considerable talents, and his work, as it reflected my views, was combined in what became my report. Senators who have read my drafts which have been made available to the committee will know that the final recommendations are almost identical with the conclusions that I had arrived at in preparing those drafts. Counsel advised some modification of the phrases, which I accepted and which improved the report.
On November 24, I invited Mr. Goldenberg, the Prime Minister's policy advisor, to meet with me and Mr. Goudge in Toronto. I wanted to inform him of my conclusions and to make arrangements to have the report transported to the Prime Minister. He read the material that would make up the report and offered no advice regarding my conclusions. We discussed the timing of my presentation to the Prime Minister and agreed on November 29 at 10 a.m. On that date, I met with the Prime Minister for approximately one hour with Mr. Goldenberg, the Honourable Douglas Young and my administrator Mr. Wilson and myself present. Later I was advised that the report would be made public on December 3 through a press conference attended by the Minister of Transport and myself.
In conclusion, I should make it clear that the recommendations in the report are my own and were not dictated or adjusted in substance by anyone else. No powers were offered or sought which would have given me the right to take evidence under oath, to compel witnesses, or to hold public hearings. I was asked to use a month to review the matter and give the Prime Minister my opinion and advice for him to act on as he saw fit. I carried out my duty in this regard, and I feel confident that my recommendation to cancel the contracts with minimum cost to the public was proper and appropriate.
Following the opening comments of my colleagues Mr. Goudge and Mr. Crosbie, I look forward to responding to your questions.
The Chairman: Thank you, Mr. Nixon.
Mr. Stephen Goudge, Gowling, Strathy and Henderson: Let me say briefly that I was called to the bar in Ontario in 1970 and am presently a partner with Gowling, Strathy and Henderson practising litigation in our Toronto office.
On October 28, 1993, I was invited by Mr. Nixon to assist him in the task he had undertaken for the Prime Minister. In the 30 days that followed, I attended meetings with Mr. Nixon, reviewed much documentation relevant to the transaction in question, and held some discussions myself with lawyers and other officials to assist with Mr. Nixon's task.
On Mr. Nixon's instructions, I retained Allan Crosbie to provide business advice. Mr. Crosbie's background makes him eminently suited to the task. After graduating from the U of T, he obtained a degree in Economics from Oxford and an MBA from Harvard. He has been a vice-president in the corporate finance department with Wood Gundy, senior vice-president with Merrill Lynch Canada and head of its Canadian mergers and acquisitions department, and in 1989 he formed his own merchant banking company and financial advisory firm, which has been very successful.
For my own part, I provided Mr. Nixon with my views on relevant matters as requested and, on November 26, provided him with a short written opinion. I may say, Mr. Chairman, I was pleased to have been able to assist in this important public policy matter. Thank you.
The Chairman: Thank you, Mr. Goudge. Mr. Crosbie.
Mr. Allan Crosbie, Managing Partner, Crosbie & Company Inc.: Thank you very much. Crosbie & Company is a specialty merchant bank. An important part of our business is analyzing and valuing a broad range of financial transactions. Our services are retained by large and small companies alike, as well as governments, to assist them in maximizing value in transactions.
Our work for Mr. Nixon involved, one, looking into the sale process that was followed by Transport Canada to attract buyers and investors for the transaction involving Terminals 1 and 2, and two, assessing the transaction that was entered into. We have assumed that one of the key objectives in this transaction was to maximize value to the government and the taxpayers.
Given this to be the case, and based on our understanding of the circumstances, we believe that the sale process followed by the government to attract buyers and investors was flawed and could have been significantly improved. If the government had followed a more advantageous sale process, we believe the government would have been able to secure a better transaction.
In the traditional sale process, if one is looking to maximize value, it is usually advantageous to proactively seek out as broad a range as possible of potential credible buyers and investors. Accordingly, in the sale of a major asset or business such as the transaction currently being reviewed, we believe an important part of the sale process should involve identifying, creating, and then approaching potential buyers and investors to sell them on the business opportunity.
In addition, as part of this selling process, it is generally important to package the investment opportunity in such a way as to demonstrate to buyers and investors the attractiveness of the opportunity and how it could be best structured and financed to meet their objectives.
We do not believe this was done. In the major financial centres of the world, there are major financial organizations that are experienced and skilled in advising on and arranging these kinds of transactions. We understand that none of these types of organizations were retained by the government to advise them in developing the optimum sale process to best achieve the government's objectives.
By not undertaking what we believe would be a more advantageous selling process as set out previously, we believe that the government was disadvantaged. In assessing the kinds of returns investors would require in a project such as this, we looked at this subject from a number of different perspectives. In our opinion, the transaction would appear to provide a return to the investors in excess of that required by the market. Based on this, the returns that were to be provided to the investors would appear to be excessive. This is what we advised Mr. Nixon.
This could represent significant lost revenues to the government. For example, as set forth in our report, if the transaction had been negotiated so that the investors before tax rate of return had been reduced by even 1 per cent, from 23.6 per cent to 22.6 per cent, or if they had been reduced by 5 per cent, from 23.6 per cent to 18.6 per cent, the government would have realized an additional $45 million to $213 million of value respectively. This amounts to approximately an additional 5 per cent to 25 per cent respectively on the $834 million of value ascribed to the transaction for the sale of Terminals 1 and 2.
Thank you, and I look forward to your questions.
The Chairman: Thank you. Copies of that are being photocopied now.
Can I have an expression of interest for questions? I have Senator Tkachuk. Anybody over there?
Senator Tkachuk?
Senator Tkachuk: Good morning, witnesses, and good morning, Mr. Nixon. It is a pleasure finally meeting you. We have heard your name a lot over the last three months.
So I'd like to - I was reading your résumé, Mr. Nixon, and it was very impressive. You have a proud political history in this province. You have been an MLA for - is that what you call them in Ontario?
Mr. Nixon: We call them MPPs, for some strange reason.
Senator Tkachuk: I understand you were elected in 1962 and served as a member for 28 years.
Mr. Nixon: Right.
Senator Tkachuk: And you also served as a leader of the Liberal Party. What years did you serve, just for the record?
Mr. Nixon: Sort of in and out. I took over the leadership for the first time in 1967 and served as leader through three elections, all losing from my point of view, until 1975. Then after the defeat of the Peterson administration, I found myself acting leader of the opposition for a brief time until I was transported to another chamber being the agent-general for the province of Ontario in the United Kingdom.
Senator Tkachuk: And you were a cabinet minister as well for Mr. Peterson for, I think, all the five years?
Mr. Nixon: Yes.
Senator Tkachuk: From '85 to '90. I noted with some interest you were also the president of the Liberal Party of Ontario at one time.
Mr. Nixon: Yes, actually, my term as president was 1962-63. It is a long time ago. So I was definitely a Liberal, in case you are wondering.
Senator Tkachuk: I wanted to talk a little bit about your relationship with the now Prime Minister. How long have you known Mr. Chrétien?
Mr. Nixon: I met him in 1962.
Senator Tkachuk: About the same time you were president of the Ontario Liberal Party?
Mr. Nixon: Yes, he had just been elected and I believe he was parliamentary assistant to Mitchell Sharp.
Senator Tkachuk: Where did you meet? How did you meet?
Mr. Nixon: Probably in the halls of the Centre Block.
Senator Tkachuk: Have you been associated with him in campaigns?
Mr. Nixon: Yes.
Senator Tkachuk: Do you want to elaborate?
Mr. Nixon: I have a high regard for his capability, but I was never his fundraiser. Let's see, what other points of comparison would you be interested in?
Senator Tkachuk: Did you support him for the leadership?
Mr. Nixon: Yes.
Senator Tkachuk: Were you chairman of his campaign?
Mr. Nixon: Well, I was essentially a vocal supporter. I didn't have an active role in the campaign particularly but I certainly associated with it whenever I possibly could.
Senator Tkachuk: Both times?
Mr. Nixon: Yes.
Senator Tkachuk: You were honourary chairman, I think, one year, weren't you? Or is that a press report that was -
Mr. Nixon: I guess so. But as far as the organization, that was handled by others. Whenever he came into southwestern Ontario, I tried to be with him and be as supportive as I could effectively be.
Senator Tkachuk: Has he been to your home?
Mr. Nixon: He has.
Senator Tkachuk: Have you been to his?
Mr. Nixon: His new one, yes, once.
Senator Tkachuk: Was it one of those tent meetings or that you got inside?
Mr. Nixon: Well, we had a look at the swimming pool and so on.
Senator Tkachuk: I think it would be safe to say that you are friends?
Mr. Nixon: Oh, yeah. Yes.
Senator Tkachuk: Would you call yourself a close friend?
Mr. Nixon: I would say we are friends.
Senator Tkachuk: You would do nothing to embarrass him?
Mr. Nixon: I wouldn't think that such an occasion would present itself.
Senator Tkachuk: When did you first hear of the Pearson airport controversy during the election campaign?
Mr. Nixon: I expect about the same time as other people who were following this as an issue in the campaign. I would expect August, September of '93, although I had followed it previously. I had known of the Matthews and Paxport. I had known of the competition that had been associated with the RFP, and I had read that the British Airport Authority had shown an interest.
I was interested that some of the real estate firms that had been so huge and powerful in Canada at the time that Terminal 3 was under discussion had lost a bit of their financial strength and had not joined in the latter competition. But I was well aware, as a person interested in the political scene, that the issue became more and more pointed through the summer of 1993.
Senator Tkachuk: Was it particularly controversial previous to the campaign?
Mr. Nixon: Controversial, I think, on the basis that a number of people expressed concerns on the concept of privatization, although, as far as I know, not the Liberal Party formally. But there was also considerable interest in the concept of a local airport authority which was, for Ontario, a relatively new concept. People were interested in how this had developed in the west and in Quebec.
Senator Tkachuk: Do you remember, during the campaign, Mr. Chrétien calling for a public review?
Mr. Nixon: Obviously, I remember his statements and I have since read them fairly carefully, because his views expressed at that time would have an impact on what I did two years ago. I think he - as I recall, he called. He said that he warned the government not to proceed. In fact, he warned the principals in the agreement not to proceed on the basis that he reserved for himself when/if elected the right to review it and reverse the contract.
Senator Tkachuk: He did call, though, for a public review?
Mr. Nixon: I don't recall those exact words. Certainly he used the word "review". It seems to me he used the words "thorough going" or "extensive" or something like that, which I think has been referred to.
Senator Tkachuk: Well, I want to - Mr. Chrétien and you were close political friends. Were you social friends?
Mr. Nixon: I would not say so. Our contacts began during the years of my presidency of the party which, in those years, in the province of Ontario, had federal and provincial responsibilities combined. Mr. Pearson was the leader of the party, and so I had responsibilities in Ottawa from time to time of a public nature.
But there were no private associations particularly with Mr. Chrétien. I don't play golf, actually.
Senator LeBreton: He does a lot.
Senator Tkachuk: He does.
Senator LeBreton: A lot. That's all he does.
Senator Tkachuk: I am surprised that you remember a lot about - during the election campaign about the election, but you don't - have you since had an opportunity to make yourself aware that he did call for a public review? Or is that just sort of not part of anything that -
Mr. Nixon: I clearly recall that he said that it would be reviewed and that he reserved the right to reverse the contract or cancel the contract.
I was interested that he did not say at the time and in the heat of the campaign that, if elected, I will cancel it. He said, I will have it reviewed. And that was the extent of his comment. I certainly expected it to be reviewed.
Senator Tkachuk: You mentioned in your opening statement that, in the fall of 1993, on October 27, you received a call. Was it a phone call, I would believe, from the then Leader of the Opposition, future Prime Minister? And he asked you to do - like, how did he ask you? Could you be a little more specific as to what the call was about?
Mr. Nixon: I can't be much more specific than in my announcement. Because he said - you know that I want this reviewed and I ask you if you will do it. I have to admit, I demurred, and he said that I would like you to carry this forward and I believe that you can do it. I have confidence in your judgment in this matter. And under the circumstances, I certainly wasn't prepared to turn him down. I agreed to come and see him the next day. We discussed it in more detail in his office.
Senator Tkachuk: Did you receive a call from anyone in the transition team or the campaign team about this matter before Mr. Chrétien called?
Mr. Nixon: I did not.
Senator Tkachuk: Let's talk about the phone call a little more. When he called you, did he ask - you've mentioned that you thought that he - I'm not sure if I got this right. Did you think that he asked for a private report, or did you think he asked - or did he specifically ask for a private report?
Mr. Nixon: I don't recall the matter being discussed. I considered that I was asked to become a policy advisor to the Prime Minister; that the limit would be one month; that I was to undertake a review as I saw fit and provide him with my advice on the matter.
It really wasn't until the end of the report that the idea of going into the press building and sitting down behind a desk and presenting it publicly came home to me. I didn't have any particular objection to that. It would have been a bit simpler if it could have all been considered advice to the minister from a policy advisor, but the decision was made by himself and his people that that is not the way they would proceed.
Senator Tkachuk: So really, you were like a paid staff person, like Mr. Goldenberg?
Mr. Nixon: That's right. I considered myself a paid policy advisor for a limited period of time and on one subject.
Senator Tkachuk: During that telephone call, did you discuss terms of reference?
Mr. Nixon: No.
Senator Tkachuk: Money?
Mr. Nixon: No.
Senator Tkachuk: You discussed a time period.
Mr. Nixon: He told me that he wanted it within a month.
I was interested, actually, to read Mr. Coughlin's comments to this committee where he had been asked, I believe, by the Clerk of the Privy Council if he would postpone taking over the ownership, I suppose, in that sense of the term, long enough for the Prime Minister to hold his review.
I think he indicated, with some subsequent regret, that he had said that, naturally, he would not stand in the way of that.
Whether or not that was an aspect of the timing, my own view at the present time is that Mr. Chrétien wanted to proceed without delay.
Senator Tkachuk: When you talked to him on the phone - you have been in politics for a long time. Your dad was a member. Your daughter is a member of Parliament, I believe. You know a lot about the political process. Were you concerned when the Prime Minister or future Prime Minister called and asked for you to do the review? Did you suggest other candidates?
Mr. Nixon: No, we - I said something that I've said many times in my life without regret: I'm not a lawyer.
Senator Tkachuk: Neither am I.
Mr. Nixon: Nor am I an accountant.
Senator Tkachuk: I like you better already.
Mr. Nixon: I am not sure that his response was as I might describe it, but he might have said, "There is competent legal advice available and there is competent accounting advice available." I feel that he was correct in that.
Senator Tkachuk: So you weren't worried that, because you were close to him, you were a Liberal like him, you were involved in campaigns together, that there might be a suspicion that the process of the report would be tainted because you were a Liberal?
Mr. Nixon: No, I didn't. I don't consider Liberalism a tainting factor.
Senator Tkachuk: But Conservatism?
Mr. Nixon: No. I very strongly support the partisan method of our democratic process, and I support it in every way I possibly can.
Senator Tkachuk: You then say you met with the Prime Minister. Was he prime minister when you met or was this just before the swearing-in?
Mr. Nixon: He was not sworn in yet.
Senator Tkachuk: Did you go into any more depth after your telephone conversation about exactly how the job will be done?
Mr. Nixon: No. There wasn't anything new. He reiterated that he would like my report within a month; that he wanted to be ready to take some action without further delay. I told him that, as I say, I needed a lawyer and an accountant and somebody to manage our appointments and to look after this. Mr. Goldenberg was there, and he said Eddie will look after this. And Mr. Goldenberg suggested that we go around to Mr. Shortliffe's office, and we had a discussion there in which very brief terms of reference were agreed on. They could not possibly have been brief nor broader and I think you have got a piece of paper, probably with the elimination of some clauses, that simply gave my term of reference as reviewing this matter.
Senator Tkachuk: So you discussed money with the Prime Minister, Mr. Shortliffe, and Eddie Goldenberg or -
Mr. Nixon: No. Mr. Shortliffe said that he would like me to - I believe they said we have a standard process for this, and there will be some contracts sent to you at your home in due course. That is, in fact, what happened.
Senator Tkachuk: Did you discuss with the incoming Prime Minister your independence or was this clearly an employee-employer relationship?
Mr. Nixon: I am not sure that you have listed all of the alternatives there, but I understood and was quite honoured that he had confidence in my views and opinions; had asked me to take on what essentially was the first, important role for his government, other than transition and so on; that, obviously, he wanted me to look into this and give him my personal advice.
There was never any thought, other than he, as the incoming Prime Minister and head of the new government, would make whatever decisions I saw fit. I was to provide him my opinion which I did, and he would take whatever action he saw fit, and I would go back to the farm, never thinking I would have an opportunity, for example, to be here.
Senator LeBreton: I'm sure.
Senator Tkachuk: So what did you - who did you negotiate your contract with? Mr. Shortliffe or -
Mr. Nixon: I think it might have been Mr. Shortliffe. In fact, I didn't even know what the number or what the contract was by way of payment until it arrived. It also - we were also asked to sign an undertaking of - what do you call it?
Senator Tkachuk: Confidentiality agreement.
Mr. Nixon: Confidentiality. Which was signed and witnessed. And actually, the piece of paper, which was essentially a contract, didn't arrive until a couple of weeks into what we were doing, as I recall.
Senator Tkachuk: How much was it, if you don't mind me asking?
Mr. Nixon: Seven hundred fifty dollars a day.
Senator Tkachuk: Was that for you?
Mr. Nixon: Yeah.
Senator Stewart: A good lawyer gets much more.
Mr. Nixon: That will get you a couple of hours at the lawyer's office, that is if, you know, you are getting a provincial lawyer.
Senator Tkachuk: So the sort of - the process was, you were phoned and then you had a meeting. And you met with him - like, when you met with him in his office, it was a contract to be an advisor to the Prime Minister. Political advisor?
Mr. Nixon: No.
Senator Tkachuk: But obviously because of your friendship and - I mean, you have a consulting contract, an employer-employee relationship here. It is not an independent contract. You are working for him directly.
Mr. Nixon: I don't have the contract here. It may be in what you've got, but I considered that I was being paid for one month on the basis of the work that I did to look into the matter of the Pearson contracts and to give the Prime Minister my personal views, which I did. And at the end of the month, that was given to him. We had a press conference, it was made public, and I went back to the farm.
Senator Tkachuk: So the month's work, was that $750 a day, every day, seven days?
Mr. Nixon: I'm not sure. No, it wasn't seven days.
Senator Tkachuk: What did you finally end up putting up in the bank?
Mr. Nixon: I don't know actually what the total amount was.
Senator Tkachuk: So 750 times 30, what, about 22,500?
Mr. Nixon: It wasn't 30 days.
Senator Tkachuk: Pardon?
Mr. Nixon: I didn't work on weekends. Or at least I figured that my Methodist background would not permit me to bill for it anyway.
Senator Tkachuk: And then you hired - how did this work? Mr. Goudge was hired out of the same contract that you had?
Mr. Nixon: I was advised by the PCO that I should retain Mr. Goudge and he would bill me and they would pay him through me. For some reason that's too arcane for me to understand, they undertook to pay Mr. Crosbie's firm direct.
Senator Tkachuk: So that was separate, too.
Mr. Nixon: Yes.
Senator Tkachuk: And so the legal bills were about twice as much as Mr. Nixon's?
Mr. Nixon: Are you asking him?
Mr. Goudge: I am sure they were more, senator. The precise amount is in the record. I simply billed my hourly rate.
Senator Tkachuk: Did you have discussions with only Mr. Nixon, or did you have discussions with Mr. Chrétien as well?
Mr. Goudge: I had no discussions whatsoever with Mr. Chrétien over the period of this 30 days.
Senator Tkachuk: So who - Mr. Nixon, like, just phoned you and said you are on? How did this work? Or did the PMO's -
Mr. Goudge: He phoned me, I think, on the evening of October 28 and asked if I was able to assist him in this task and, given my respect and affection for him, I said, immediately, yes.
Senator Tkachuk: You were a friend of his?
Mr. Goudge: I have known him for some time, yes.
Senator Tkachuk: Did you have to sign a confidentiality agreement as well?
Mr. Goudge: I don't know that I signed a specific confidentiality agreement. I certainly, given what I viewed to be my solicitor-client relationship with Mr. Nixon, viewed myself to be bound by a confidence. Absolutely.
Mr. Nixon: And I did sign one.
Senator Tkachuk: You did sign one.
Did you have to sign one as well?
Mr. Crosbie: I believe that one of my associates signed a confidentiality agreement and I think that, in the agreement that we signed with the government, I think it has confidentiality clauses in it, but I can't be certain of that. But whether we signed a confidentiality agreement or not, when we are retained by a client, for all practical purposes, we believe that we have entered into a confidentiality agreement. So we feel very strongly about that.
Senator Tkachuk: Have we received them, Counsel, the confidentiality agreements?
Mr. Nelligan: Yes. They are in the material. I can pull them out for you.
Senator Tkachuk: When you organized yourself, you said you went back to the farm and then -
Mr. Nelligan: (Inaudible.)
Senator Tkachuk: Well, if we are missing anything, I will have Senator Bryden phone the minister's office.
We'll have a smoke after. It's all right.
Mr. Nelligan: We have Mr. Nixon's.
Senator Tkachuk: You went back to the farm and what was, sort of, your first act for getting organized?
Mr. Nixon: I think my first act was to phone Goudge. And then Wilson, who had been my executive assistant when I was treasurer - and if there was some advantage in the 30-day limit, it meant that both these gentlemen, in response to this, were actually delighted to say, "I can spend a month at this."
Wilson is a very good administrator and did a good job for me in that regard. And he is a young local person from Brant County whom I have worked with quite closely in the past. We met and generally put our ideas together as to how we might move into the offices, how we might conduct ourselves in contacting people from whom we might seek information.
We had - even over that weekend, I had received a couple of calls. Gardiner Church was one of them. He was a deputy minister during my days in government and had continued, at least for a time, as a deputy minister with the New Democratic government. But he called because he had been involved on behalf of the government at Queen's Park in establishing an LAA and was anxious that I understood what had been going on.
So I think he came to see me over that weekend and then I arranged for him to spend some more time with Mr. Goudge and myself and Mr. Wilson a bit later. And the list of those meetings, I think, has been provided, as precisely as we can fathom it, to the members of the committee. I was just trying to think of phone calls that I received from those who were, of course, interested in this. And whenever possible, if I didn't know the people myself, I would make a note of their interest in talking to me about this matter.
I have already said in my opening statement that I had no powers to take any information under oath nor any power, nor did I seek any, to compel witnesses. So I've tried not to use the word "evidence", because obviously that is not an appropriate word to use under these circumstances.
Senator Tkachuk: Mr. Brad Wilson, was he a Liberal as well?
Mr. Nixon: I don't even know whether he votes.
Senator Tkachuk: He is not old enough or what?
Mr. Nixon: Yes, he's old enough but he's quite an independent-minded person. But I would suspect that if either myself or my daughter's name were on the ballot, we could count on his support.
Senator Tkachuk: Contributed to your campaign actually.
Mr. Nixon: Smart guy.
Senator Tkachuk: And Mr. Goudge, is he a Liberal as well?
Mr. Nixon: Who knows?
Mr. Goudge: Can I claim privilege on that answer, senator?
Senator Tkachuk: Is that a - here you are, you are employees now of the Prime Minister's office. Really contractual employees.
Senator Kirby: Of the PCO.
Senator Tkachuk: Of the PCO. But you didn't - you worked with Mr. Goldenberg, too, so you were - and you worked directly for the Prime Minister. So you were kind of working for both even though you were getting paid out of the PCO?
Mr. Nixon: Mr. Goldenberg, I think, is designated as the chief policy advisor for the Prime Minister, is he not?
Senator Tkachuk: Is that who you reported to?
Mr. Nixon: I certainly wanted him to know when the report was completed, what its contents were, so that he could convey it to the Prime Minister as he made arrangements for us to meet with him and present it.
Senator Tkachuk: So you had the three of you - did it bother you, or were you concerned about the fact that there might be a suspicion of - a suspicion that this was a political thing, that this was - or maybe that didn't concern you and it was?
Mr. Nixon: It is hard for me to respond to the senator's comment/question because I responded to the request from the Prime Minister, and that's what I did.
Senator Tkachuk: I can understand. Hard to turn down.
Mr. Nixon: And that's what I did. And if, perchance, there are people somewhere in the body politic who feel that my ability to review this and make a recommendation was somewhat undermined, there's not much I can do about that.
Senator LeBreton: Nice that he acknowledges it.
Senator Tkachuk: Did the three of you sit down and make out, like, sort of a business plan of how you were going to proceed for the 30 days?
Mr. Nixon: I made it clear to everybody that I considered the Prime Minister's request for a report in 30 days as something that I was going to respond to, that we were going to be finished by the end of the month. I did not want to be pushed in the last week by a whole bunch of people lining up saying: You haven't spoken to me, you haven't spoken to me. I wanted that week to be as free as possible, so that we could call in any additional sources of information we felt were appropriate, but essentially to get our views established, get my views established with the assistance of my two colleagues here, and get the words down on paper.
I did not want to be amending and editing and taking into the Prime Minister something hot off the machine. So that basically we said, we're going to look at this for three weeks, we will work on it for one week, and that will be the end of it.
Probably one of the first calls I got was from Mayor McCallion whom I've worked with for a long time, and it is not untypical of her that she said, "Look, I want to talk to you Monday morning." And I said, "Well, I'm driving to Toronto. I'll drive through Mississauga and we will talk to you Monday morning," or whenever it was.
So in fact, in many respects, our timetable simply grew from people who had called, wanted to talk with me and people that I wanted to talk to. There were some people, I have to tell you, that I had to put off and say, well, you know, I will speak to you in two or three weeks; if we can possibly work you in, we will do so.
So that our structure of meetings grew. It was up to Wilson to see that the meetings were planned so that, in fact, the time was appropriate for me to meet with them in the office. Wherever possible frankly - I always find if there are four or five people involved, it's better that I go to their office. I always find it is a bit more interesting to find out where they are doing work, what their people are like, and they talk to me on their own ground. My rule of thumb is to do that wherever I possibly can. So we did travel around.
Senator Tkachuk: But you did have a business plan written up. You didn't sit down and say, "Here is the month, here's what I'm going to do this month."
Mr. Nixon: No. Other than we were going to gather information for three weeks, consider it and write the report in one week.
Senator Tkachuk: And did you set up an interview schedule so that you would be consistent in the information that you asked for and information that you received? Did you have that?
Mr. Nixon: I can't say that the questions asked in each interview were identical. But, basically, we were asking for the view of the people that came before us on what they were contemplating, the future of Pearson, whether they felt the contracts were appropriate from their particular point of view and what alternatives they might suggest to us.
Senator Tkachuk: Did you take - you took notes of these meetings?
Mr. Nixon: Frankly, I did not. Mr. Goudge did and, not thinking, in fact, that our memories would have to be freshened 20 months beyond, I am very glad that he did. And these have been reviewed, I understand, by officials assisting the committee and they are probably available to committee members.
Senator Tkachuk: They are, Counsel, right? Yes, they are.
Senator LeBreton: Who? What officials assisting the committee?
Senator Tkachuk: Were you involved in that process of going through those documents?
Mr. Nixon: Actually, in preparing for this, in preparing for the report, whenever we were saying, well, you know, what did Gardner Church say about LAAs, for example, in most cases, Mr. Goudge would be able to refresh my memory.
Senator Tkachuk: Did you keep - did you tape these conversations? Did you -
Mr. Nixon: We did not.
Senator Tkachuk: So these were conversations that took place between the - as far as the way you operated, there was, in most cases, you and Mr. Goudge and Mr. Wilson all who worked directly for the PCO and who responded to Mr. Goldenberg and the Prime Minister and the PMO. And these people, did they - at this time, you thought all of this was going to be private and confidential to the Prime Minister? Is that what you told the witnesses? How were they dealt with? How did you deal with the people you talked to?
Mr. Nixon: They were aware from news reports that I had been asked by the Prime Minister to review the matter and report to him my opinions and advice. I don't think it was characterized other than that, but I have to tell you that there were individuals who contacted me who I thought were sufficiently knowledgeable that I wanted to hear their views, and they made it clear that their views and their information was for myself only or to be transmitted to the person who is - to whom I was to report.
I have mentioned in this that I feel bound by certain matters of confidentiality which it would not be possible for me to break either by naming these people or specifically attaching their views to their names. That is just a fact.
Senator Tkachuk: So there was no oath, of course. There is no - so these people are meeting with you privately, and they are telling you their side of the story, frankly. They are telling you their side of the story. You won't be able to tell us what they've told us? But they had no idea, they thought this was all going to be nice, private conversation between three friends of the - three friends, all working for the Prime Minister, and themselves. So how did it work?
Mr. Nixon: It was the Prime Minister that was seeking the advice. And as far as they are concerned, they came to me on the basis, in most cases, that they knew me and had confidence in me personally and felt that they could speak frankly with me.
Senator Tkachuk: You mentioned that you thought this was going to be private. Would your report have been any different if it was public, if you knew it was public?
Mr. Nixon: No. I think a few people felt that I was perhaps more direct and, to some extent, draconian than I might otherwise have been, but I didn't feel it was necessary to expand the report beyond what it was and I felt that I should express my views clearly.
The Chairman: Mr. Nixon, did the people who you were talking to, did they request anonymity?
Mr. Nixon: The ones that I intend to keep private did.
The Chairman: And, anybody else, you have quoted?
Mr. Nixon: Yes. Now, there was not a time when I would say, look, do you want this kept private or may I use this publicly. It was not a topic for concern.
They knew that I had been approached directly by the Prime Minister and was to report to him and they wanted to express their views to me as a person that they knew personally or knew my reputation and that they could speak with me frankly.
The Chairman: Madam Labelle didn't obviously request anonymity?
Mr. Nixon: No.
The Chairman: Senator Tkachuk?
Senator Tkachuk: How many people asked for privacy?
Mr. Nixon: I would think five, four or five.
Senator Tkachuk: They didn't want to be made -
Mr. Nixon: I think it would be characterized better by my perception and my discussion with them that the information they gave me was personal and private.
Senator Tkachuk: You mentioned quite a few people who phoned you and said that they wished to talk to you. Would these be - these would be like who?
Mr. Nixon: Gardiner Church, Hazel McCallion, the president of the Toronto Board of Trade, the Chairman of Metropolitan Toronto.
In many instances, the people we spoke to got to me before we could get to them, even though in our discussions we had previously decided that we wanted to go forward. There were very few instances where we had to locate the phone numbers of the person and get Wilson to make the call and set up the meeting.
Essentially, it was to respond to offers to come to see me or arrange for me to go to see their organizations.
Senator Tkachuk: So this wasn't like public? You didn't have, like, ads in the paper? This was people who had a definite interest in the airport.
Mr. Nixon: That's right.
Senator Tkachuk: And who were responding to the fact that he had hired a consultant or an advisor to look after this matter and to report to the Prime Minister in a private way.
Mr. Nixon: Yeah. I think the only individuals - the individuals that I contacted personally were the newly elected members of Parliament from the areas right around Pearson where they had - it had been a major issue. They found themselves elected. I don't believe they'd ever even been to Ottawa. And I felt, frankly, as a former parliamentarian, that I should call them to be sure they knew what I was doing.
A couple of them actually requested to come in to see me, but most of them understood that they had a direct access to the Prime Minister to express their views that was better and probably more effective than mine anyway.
Senator Tkachuk: When you took this job on behalf of the Prime Minister, your actions and what you do, have an impact on the country. This is not just Ontario. When I fly from Saskatoon or my friends from Winnipeg fly to Toronto, what happens in Toronto affects everybody. Would you agree with that?
Mr. Nixon: Yeah. I'm not a Torontonian, but I agree.
Senator Tkachuk: It's an international airport. You had a duty, all of you had a duty to be independent and to have a review that I would - like, you point out in your - that the Prime Minister asked you to carry out a review of the matters pertaining to the privatization of T1 and T2 at Pearson airport in Toronto and to report your findings by November 30th.
So you have become the government's agent here, all three of you did, and aware that what you said, what your conclusions would be, would be adopted, would be ultimately maybe adopted by the government. So you had a duty to be fair. You had a duty to be fair and you had a duty to be honest.
As a matter of common sense - and I think the public would expect that we would be entitled to review without bias to seek out all evidence that was relevant pertaining to T1 and T2 and report all the facts without material omissions. And when you set out upon your conclusions for the government, you also had a duty to be fair and to be honest with the Canadian people and to be sure that whatever the decisions were made accurately reflected what happened and, in the circumstances, what happened. Do you feel you did that, Mr. Nixon?
Mr. Nixon: I would think that in every case we did do that. I did not consider myself the agent of the Government of Canada. I considered myself a policy adviser to the Prime Minister and undertook to get information that I thought would be useful for him and back it up with advice based on that information.
Your comments were more extensive than that, but I feel that I did my duty as requested and I did it as a responsible, I hope; fair, I hope, intelligent, citizen.
Senator Tkachuk: That really wasn't, sort of, the question, but-
Mr. Nixon: That's my answer.
Senator Tkachuk: But that's your answer.
You mentioned at the beginning that you worked for the Prime Minister under a consulting contract. What did Mr. Brad Wilson get paid?
Mr. Nixon: Four hundred dollars a day, I think.
Senator Tkachuk: And, then-
Senator Stewart: He's not a lawyer.
Senator Tkachuk: You mentioned that you work for AECL now. You're chairman of AECL. And who appointed you to that?
Mr. Nixon: Order in council.
Senator Tkachuk: By the Prime Minister?
Mr. Nixon: I think the Governor General signed it.
Senator Tkachuk: And when was that done?
Mr. Nixon: About April of a year ago - 1994.
Senator Tkachuk: 1994. That's all the questions I have, Mr. Chairman.
The Chairman: Mr. Nixon, you must be doing a good job so far because you've rendered my Liberal colleagues temporarily speechless, which is the first time it's happened. So, I haven't imposed any time limits on the questioning until such time as the thing becomes a little bit more active.
Senator Bryden: Mr. Chairman, are you trying to start a fight, now?
Senator Jessiman: Is this a matter, Mr. Chairman, that they want us to say everything and then they want to talk, or are we going to-
The Chairman: No. They can put their hands up whenever they want to, but I have no obligation now to impose time limits. So, Senator LeBreton.
Senator LeBreton: Thank you, Mr. Chairman. Thank you for appearing, Mr. Nixon.
I was thinking when my colleague, Senator Tkachuk, was questioning you: Asking you to conduct an impartial, independent inquiry into this matter is rather akin to asking me to conduct an independent and impartial inquiry into the merits of Liberal patronage appointments. That is just a thought. Because I think certainly your opening statement has been pretty well refuted - and I think we'll get into that later - by every witness that we've had before us.
So, Mr. Nixon, I want to position the verifiable facts regarding what I believe is the dilemma the Chrétien government now finds itself in. Up until October 6th or 7th, the Liberal Party did not have a position on the privatization of Terminals 1 and 2.
Senator Jessiman: 1993.
Senator LeBreton: 1993, yes. That is to say that the Liberal Party had no policy or it was non-existent. Further proof of this can be found - and you refer to it in your statement - by checking the records of Hansard. In 1992, the Hansard record of the House of Commons tells us that on only five days were questions raised on the privatization of Terminals 1 and 2.
In 1993, after the announcement was made, no questions were asked on the privatization of Terminals 1 and 2. In fact, in the much touted red book, there was no mention at all of this issue.
A search of media reports shows some activity in August and September, particularly in The Toronto Star and The Ottawa Citizen. When the announcement was made on August 30 that the proponents had come to an agreement and the announcement was made, there was even some favourable press in The Toronto Star.
Then, in Toronto, on October 6th - and I have the Canadian Press story here, John Chrétien waded into the debate, one month after the writ was issued. He caught the wave or hit a hot button, a tactic used by Preston Manning. Up until that point in time the Liberals - and I repeat again - had no policy on Pearson privatization.
Mr. Chrétien is quoted in that October 6th Canadian Press wire story that if he is elected he will order a full-scale inquiry to investigate the deal. "If it is a good deal, we will sign it if we form a government." And then he goes on to say that he will conduct an independent inquiry. He said actually that people have a right to know all the facts. So, I assume that that means all the people.
The election is over, and as you responded to my colleague, Senator Tkachuk, you responded to his telephone call on October 27th. On October 29th, in a story in the Globe and Mail by Geoffrey York, the following is reported - and I think it's important to read this into the record because it puts on the record your mind set at that point in time, which ultimately did not follow through into your final report. And it's a story in the Globe and Mail, Geoffrey York, October 29, 1993:
Mr. Chrétien announced yesterday that he has appointed Robert Nixon, a former Ontario treasurer, to review "all factors" relating to the privatization of Toronto's international airport. He said Mr. Nixon will report his findings with in 30 days.
In an interview later, Mr. Nixon said there could be -
And I quote you:
...a "meeting of the minds" between the new Liberal government and the business consortium that will control the airport.
`It might possibly be that the thing could be rearranged without going to Draconian lengths to change it -
It's interesting; you used that word a few moments ago.
- Mr. Nixon said.
Mr. Nixon: It's my favourite word.
Senator LeBreton: Obviously; I've seen it many times.
Asked about the possibility of cancelling the privatization, Mr. Nixon made it clear that he would prefer to avoid scrapping the deal. 'It's difficult to go down those lines because it leads you into scenarios that are tougher than surely would be contemplated. People don't like to interfere with contracts. And I don't think they should, unless there is a substantial reason to do so.'
Mr. Chrétien has the "moral power" to persuade the privatization consortium to amend the deal to provide more safeguards and benefits for the public, Mr. Nixon said.
`We've got a person with an extremely powerful, fresh mandate,' he said.
He, of course, was referring to Mr. Chrétien:
`He might very well say, `I'd like this to be done differently.' It seems to me that a business consortium would be somewhat unwise not to give some consideration to the views of the head of the government. The government has quite a number of powers at its disposal.'
During the election campaign, Mr. Chrétien called the privatization agreement a "bad deal" and said his "instinctive approach" was to oppose it.
That's so much for his instincts on October 6th.
He also threatened to pass legislation to kill the deal. But yesterday Mr. Nixon showed little interest in such action.
`Rather than having to undertake some tough legislative moves, which would be unpalatable perhaps, I would think that some sort of meeting of minds could occur,' he said.
Meaning you.
He promised, however, that his 30-day review will look at all options, including the idea of putting the airport under the control of a regional non-profit authority. He said he will hire a lawyer and an accountant to help him study the airport deal, and he praised the Pearson business consortium for its co-operation in the review.
Of course, we've now heard, under testimony, that both business consortiums - and, particularly, Mr. Coughlin from Claridge - saying that all of them had faith in that this would be a fair process. And, as Mr. Coughlin said, the agreement to allow the extra 30 days was something he will regret for the rest of his life.
My intention this morning is to ask you about some of the people who were key to this process.
This committee has been meeting since July 11th. We have heard some 60 witnesses - actually, 59 individuals; 60 witnesses because Mr. Shortliffe appeared twice: Once as Deputy Minister of Transport; and once, of course, as the former Clerk of the Privy Council.
So I will go through these witnesses first and I will ask you about each. Did you meet Victor Barbeau?
Mr. Nixon: No.
Senator LeBreton: Why not?
Mr. Nixon: He was in India.
Senator LeBreton: Victor Barbeau was the Assistant Deputy Minister, Airports and very much involved in this file. You did not think it was important to your impartial inquiry to find out what his views were?
Mr. Nixon: I wish that I could have had a chance to talk to him because he had a representation of being strongly opposed to the deal and had, in fact, been removed from his position as the leader in this matter and replaced by, I guess, David Broadbent. Was he the next one to take that over?
Senator LeBreton: No he was not.
Mr. Nixon: And when we asked for Mr. Barbeau, we were told that he was attending a transportation conference in India and that I might be able to speak with him by telephone, but that otherwise he would not be available. And there was some thought that when he got back we might have a chance to meet with him, but that did not occur.
Senator LeBreton: Did I hear you say that there was knowledge that Mr. Barbeau was opposed to this?
Mr. Nixon: He was certainly described as being opposed to the privatization process.
Senator Lynch-Staunton: By whom?
Senator LeBreton: Yes. Who told you that?
Senator Lynch-Staunton: He never told us.
Senator LeBreton: 'Cause he didn't tell us that.
Mr. Nixon: I think it probably was David Broadbent who spoke to me indicating that Barbeau was not effective as the lead for the Department of Transport in these negotiations and had been replaced.
Senator LeBreton: I think that you will find that he was not replaced. He's still there as Assistant Deputy Minister, Airports.
Mr. Nixon: He was replaced for this discussion, at least, and the development of these contracts. That was clearly told to me.
Senator LeBreton: Well, in this age of communications, did you not try to telephone Mr. Barbeau?
Mr. Nixon: No, I did not. I didn't feel that a discussion with him in New Delhi was appropriate at that time. They said that he would be back. Whether or not he got back before the end of the 30 days, I don't know, but there were a number of officials from the Department of Transport. Mr. Rowat had assumed the position of Associate Deputy Minister; Madam Bourgon had become Deputy Minister, the deputy minister at the time of these negotiations ending in June of 1993; Ms Labelle - all these people are were available to discuss the matters with us.
Senator LeBreton: Well, Mr. Nixon, with all due respect, Mr. Victor Barbeau did appear before this committee, and I'll read into the record his testimony. And it specifically is related to questions we asked him surrounding the Nixon report. And he is quoted on July 12th, which is the day he appeared, page 1130-2 as saying when asked - he said on the comment about whether this was a private Tory deal:
Well, sir, again, I can't comment on specific discussions going on leading up to this project. What I can say...is that with any project of this magnitude, indeed with projects of differing magnitudes, there is, of course, a tremendous amount of discussion...not only within the department, but indeed with other departments, with central agencies including the board, including the political level...including cabinet committees.
It is a very involved process of consultation, very often also bringing in industry to consult, bringing in experts on the technical, financial, personnel sides...
And so forth. When he was asked about the fairness of the process, he said:
...that the process was followed to the best of all of our abilities jointly, and it went ahead in a way that certainly met my professional expectations of how a project should go ahead to the minister.
When he was asked about lobbyists he said that:
Well, lobbyists, of course, are not allowed to...interfere with the process of evaluation. To the best of my knowledge...
Lobbyists did not interfere in the evaluation process.
I still find it rather interesting that you would not start off in your so-called impartial report - although it's far from impartial - to talk to the very person that was responsible for the airports.
The next question. Did you meet Mr. Ed Warrick?
Mr. Nixon: Ed Warrick?
Senator LeBreton: Yes?
Mr. Nixon: No.
Senator LeBreton: Do you know who Mr. Warrick is?
Mr. Nixon: No.
Senator LeBreton: Well, Mr. Warrick was the General Manager, Main Crown Projects, Pearson airport. Why would have you not met?
Mr. Nixon: Because we met with Mr. Chern Heed, who was the manager on the scene who was involved not only with the operation of the airport and was very familiar with any shortcomings that might in fact become apparent but was also asked by the deputy minister to act on at least one committee associated with the negotiations leading up to the deal.
During my interview with him, he was forthcoming, quite frank, very knowledgeable, straightforward, said that he found the process so objectionable that he asked to be taken off of it and was very glad when he received an offer of employment as an airport manager in Hong Kong and intended to accept it.
Senator LeBreton: So you spoke to Mr. Chern Heed who, according to testimony here by Mr. Bandeen, was identified as a person that was hostile, even though Mr. Chern Heed signed off as one of the ones on the evaluation?
Mr. Nixon: I don't know how hostile he was, but I would identify him as being well informed.
Senator LeBreton: From your point of view. You seem to have talked to more people who supported the Bandeen-
Mr. Nixon: He was certainly involved in the operation of Pearson International airport. He was involved with the department in the discussions relating to the deal. He, I suppose, had moved into an area of some independence since, though it had not been announced at the time, he indicated he had accepted a senior appointment on the other side of the world and I was very impressed with him.
Senator LeBreton: But you would be impressed with his views but you would not think it necessary to discuss this as well with Mr. Warrick who was the General Manager, Major Crown Projects, Pearson airport. Amazing, amazing. That goes to prove again that, you know, I think at the end of this it's going to be very obvious.
Did you meet with Mr. Gerry Berigan?
Mr. Nixon: No.
Senator LeBreton: Do you know who Mr. Gerry Berigan is?
Mr. Nixon: Who is he?
Senator LeBreton: He's the Regional Director, Airports, Atlantic Division, but he was working on this file.
Mr. Nixon: Right. I didn't meet with him, although Mr. Heed did say that there were more people dealing with Pearson airport at Ottawa than there were at Pearson.
Senator LeBreton: Well, don't you think it might have been of value to talk to some of these people?
Mr. Nixon: We met with the deputy minister, the associate deputy minister-
Senator LeBreton: We'll get to those.
Mr. Nixon: - the people who were associated at the top administrative offices of the Department of Transportation. We felt reasonably satisfied that we were provided with the information that we needed under the circumstances.
Senator LeBreton: Mr. Berigan was involved in the request for proposal process and in questions when he appeared on the 26th of July when asked if he'd feel any undue pressure from the minister to organize the RFP in a way that would favour one proponent over the other, he replied at page 1100-7 with a categorical "No". And then he was asked again:
If there had been something going on that you considered unethical...would you have reported it?
And Mr. Berigan replied, "I would have."
Did you meet with Ron Lane?
Mr. Nixon: No.
Senator LeBreton: Do you know who Mr. Ron Lane is?
Mr. Nixon: No.
Senator LeBreton: Mr. Ron Lane was the man who headed up the evaluation. I find it rather amazing that you would not meet the very person who headed up the evaluation of the results of the requests for the proposals.
Mr. Nixon: Our arrangements provided for us independent evaluation. The person who did that for us is present on this panel and I was quite satisfied with his professional independence in looking at the contracts not from the standpoint of the department, which had been deeply involved over a number of months in establishing the deal; or even from the standpoint of someone who was opposed to it, but from an independent point of view whose report was appended to my own and as nearly as I can recall, not criticized by either members of this committee or others who might be associated with the review of the review.
Senator LeBreton: You have a strange definition of independent. It's independent with a specific objective.
Well, if you'd have met with Mr. Ron Lane on the so-called "rush", although I can hardly - we've been through this so many times on this committee; this whole process took place over four years. But Mr. Lane, who headed up the evaluation team for Transport Canada, chosen by Mr. Barbeau, by the way, on the whole matter of external pressure to rush, his answer was, on July 26, page 1330-7:
We had no external pressures to go fast. As a matter of fact, we were told there was lots of time and take whatever time is required...
It was our decision to go quickly and get things done.
And then Mr. Lane went on. When asked if there was political interference in this process his answer was: "No. I felt no political interference in the process." And that's July 6 (sic), page 1400-26-27. When asked whether he had been influenced by lobbyists he said, "We had no contact with lobbyists." - The same date. Asked if it was a flawed process: "No. I was quite happy with the process and the way it was conducted."
So again, Mr. Nixon, I find it very strange that you were named to head up this so-called inquiry and you did not speak to the very person who headed up the evaluation process.
Did you speak to Keith Jolliffe?
Mr. Nixon: I believe he was on the group from the department that came to our offices in Toronto on two occasions.
Senator LeBreton: Keith Jolliffe testified that you did not meet with him.
Mr. Nixon: Perhaps the counsel could assist me in that.
Mr. Goudge: Certainly, I'm sure at some point Mr. Jolliffe said involvement with us came to Mr. Nixon's attention.
I think, senator, it's important, though, to understand that, from my perspective at least, this was not an exercise nor was the time line sufficient for it to be an exercise where it was the objective to seek out and interview every individual who had been involved with this process.
Senator LeBreton: Why not?
Mr. Goudge: Because that wasn't the object of the exercise.
Senator LeBreton: Well, what was the object of the exercise?
Mr. Goudge: The object of the exercise, as Mr. Nixon has said, was to provide the government with the soundest advice Mr. Nixon could, at the end of his 30 days of inquiring. And the facts that came forward and that he based his opinion on are those that you have before you.
Senator LeBreton: Well, it's going to be very interesting. And I hope you've read the testimony, sworn testimony because I doubt very much if you'd have read it you would have prepared Mr. Nixon the report you put in today. But any event Mr. Jolliffe, who was financial adviser air navigation system, when asked by the Chair:
- do you believe - the whole process was - cooked up -
From the beginning? This is on the collusion. Mr. Jolliffe said, "I absolutely agree with Mr. Rowat", who had previously testified that there was no fact that would support that kind of thesis.
Senator Kirby was trying to show that the deal was not in the public interest and Mr. Jolliffe responded:
I still hold to my earlier statement that what we came up with was, with the objectives we were following, a good deal.
August 16th, page 838.
Mr. Nelligan, our counsel, asked Mr. Jolliffe:
- did anyone ever suggest to you that someone was to be given the edge?
Mr. Jolliffe replied:
Absolutely not, sir.
Senator Lynch-Staunton: That's probably why he wasn't interviewed.
Senator LeBreton: That's probably why he wasn't interviewed, you're quite right.
Senator Lynch-Staunton: Did you meet Austin Douglas?
Mr. Nixon: No.
Senator LeBreton: Do you know who Mr. Austin Douglas is?
Mr. Nixon: No.
Senator LeBreton: He was associate Executive Director, Airports Group and he was involved in this process on the policy side and the question to Mr. Douglas was:
Was this consistent with the government's 1987 policy?
And his answer was he wasn't directly involved in the policy but "from the information that I have had at my disposal at the time, it appeared to be well in accordance with this policy".
Did you meet with the former Minister of Transport, Mr. Doug Lewis?
Mr. Nixon: No.
Senator LeBreton: Why not?
Mr. Nixon: I didn't feel it was necessary for my purpose.
Senator LeBreton: What was your purpose?
Senator Lynch-Staunton: That figures.
Mr. Nixon: To look into the terms of the agreement and report my views to the Prime Minister along with my advice.
Senator LeBreton: But, Mr. Nixon, with all due respect, your report and your statement today does not deal with the terms of the agreement - very little, as a matter of fact. But did you meet with the other Minister of Transport, who had been there through the whole process for two and one-half years, the Honourable Jean Corbeil?
Mr. Nixon: No.
Senator LeBreton: Why not?
Mr. Nixon: I felt it was not necessary for the purpose of my review.
Senator LeBreton: I ask you again: What was the purpose of your review?
Mr. Nixon: What I said previously.
Senator LeBreton: You're certainly leaving a lot to our imaginations, because I find it really incredible that a person of your stature and a former politician would not have the courtesy to at least ask the views of the people who are actually involved in the process unless, of course, you had a very set of instructions which certainly are leaving the impression.
Did you meet with any of the Treasury Board people, Al Clayton, Mel Cappe or Sid Gershberg?
Mr. Nixon: No.
Senator LeBreton: Why not?
Mr. Nixon: We didn't feel it was necessary for the purpose of our review.
Senator Jessiman: That sounds like Treasury Board.
Senator LeBreton: You're beginning to sound like the Leader of the Government in the Senate when we ask her questions. "I'll have to check with my colleagues and get back to you."
You did not think that it was in the interest to find out all the facts, to talk to the Treasury Board people who actually went over the submissions and, you know, there was cabinet approval in August; Treasury Board approval; an order in council. You respect order in councils, obviously, because you were appointed by an order in council and have been subsequently.
Mr. Nixon: So were you.
Senator LeBreton: And you did not think it necessary to talk to Treasury Board officials?
Mr. Nixon: It's come to my attention the last few days that the role of Treasury Board and the material that they had at their disposal is a somewhat sensitive matter around here. I think under those circumstances, I should defer the matter to Mr. Goudge to make some comment.
Mr. Goudge: What's the question, senator, if I could have it again, please?
Senator LeBreton: I just said: Would you not consider it important, in the process of looking into this deal, to talk to Treasury Board who ultimately had to approve the Treasury Board submission before the order in council was issued and the minister made the announcement that a deal had been struck?
Mr. Goudge: We had information from the Treasury Board that, or that went to Treasury Board by way of the submission. We had that material. We were given it.
Senator LeBreton: Can you describe what material that was? Is that one of the famous things that we, Mr. Chairman, can't seem to get our hands on?
The Chairman: Yes.
Senator LeBreton: Oh, isn't this interesting? You had Treasury Board material that this committee can't have.
Mr. Goudge: I don't know whether you can have it or not, senator. All I can tell you is what I know we had.
Mr. Nixon: If there's a complaint in that regard, surely it should be directed elsewhere.
Senator LeBreton: Well, no. I mean, you asked your colleague to answer the question so now you can't defer it now that he's answering it. What specifically did you have, Mr. Goudge?
Mr. Goudge: We had, I think, the submission that was made to Treasury Board.
Senator LeBreton: Do you remember what date?
Mr. Goudge: I can't. In my recollection it was late August.
The Chairman: The 26th of August?
Mr. Goudge: I mean, that sounds in the right ballpark, Mr. Chairman.
Senator LeBreton: Mr. Chairman, I think it's something we'll have to come back to, this particular issue.
Just for the record, we had many, many memoranda circulated at this committee, mostly by our friends opposite. There was some people in Treasury Board - most of the memorandums were to, you know, they were either Mr. Cappe or Mr. Gershberg, but they were all prepared mostly by a gentleman by the name of Clevely and Clevely, obviously, by the tenure of his remarks and his memorandums, was another one who was definitely favouring the LAA route. So we always took Mr. Clevely's drafting into consideration. And I always took the view that the Treasury Board favoured the LAA route because Treasury Board - and a lot of people in government like to follow the line of least resistance. But we will get back to Treasury Board.
The Chairman: Senator LeBreton, I wonder if we could have a 20-minute break and then, if there's no one else, you can continue after that.
Senator LeBreton: I've got lots of questions.
The Chairman: Yes, all right. You can continue after that.
The committee adjourned for 10 minutes.
(Upon resuming)
The Chairman: Senator LeBreton, you can never adequately thank me for all the time I'm giving you, but since nobody else has their hand up, please continue.
Senator LeBreton: Thank you, Mr. Chairman.
Mr. Nixon, in the course of your inquiry, or whatever you call it, could you tell me whether you met Harry Swain?
Mr. Nixon: Not in this connection.
Senator LeBreton: Not in this connection? Could I ask you in what connection?
Mr. Nixon: Well, I'm also at Atomic Energy of Canada, and his responsibility had some interest in our activities, and I believe we've met in that connection.
Senator LeBreton: So you didn't meet with Mr. Swain, the Deputy Minister of Industry, in your 30-day -
Mr. Nixon: No.
Senator LeBreton: If you had, Mr. Nixon, Mr. Swain would have told you, as he did under sworn testimony here on the 27th of July, page 1013, when asked, "...was there anything unusual...", which is a word we seem to see a lot here about the whole Pearson process, Mr. Swain answered, "Not particularly."
Did you meet with anyone else from Industry Canada?
Mr. Nixon: No.
Senator LeBreton: Did you meet with Mr. Robert L'Abbée, from the firm of Raymond Chabot Martin Paré, who were involved in the evaluation?
Mr. Nixon: No.
Senator LeBreton: Why not?
Mr. Nixon: We didn't think it was necessary or appropriate for the work that we were undertaking because I had arranged for an independent assessment of the values of the contracts, which was made available to me before the end of my review.
Senator LeBreton: So you didn't think it was necessary to talk to anyone again because you already testified that you did not talk to Mr. Lane. You did not think it was relevant or important to talk to anyone involved with the evaluation.
Mr. Nixon: Well, we did get information, as has been previously referred, from submissions to Treasury Board. We talked to the people in the department who have also talked to you. In addition, we had an independent review from Crosbie Inc.
Senator LeBreton: With regard to the evaluation process of which, as I mentioned earlier, Chern Heed was part of, when Chern Heed spoke to you about his views, which you have already testified, did he talk about his role in the evaluation process?
Mr. Nixon: He spoke about his role in the department dealing with the buildup to the agreement in general terms. He was not complimentary to the process that had been taken by the department and indicated to me that he had asked to be removed from his committee responsibilities. Then there were certain other aspects involving him accepting another job that I've already referred to.
Senator LeBreton: Did you say he asked to be removed from the evaluation process?
Mr. Nixon: He spoke about being removed from the departmental committee dealing with the Pearson deals. Whether or not it was the evaluation process, I cannot say.
Senator LeBreton: It's rather strange because he was one of the signatories to the evaluation that was submitted naming Paxport as the best overall proposal. So it's rather curious, I suppose, that he would say this when his signature is on the document, and it's been, of course, placed before this committee. There was an acknowledgement in the evaluation that they all signed on willingly.
Mr. Nixon: It would certainly be after that that he indicated to me his dissatisfaction with the process undertaken by the department and his decision to leave.
Senator LeBreton: Did you meet or have conversations with Paul Stehelin of Deloitte Touche?
Mr. Nixon: Mr. Crosbie contacted Deloitte Touche on our behalf.
Senator LeBreton: Can Mr. Crosbie, then, comment on his conversation with Mr. Stehelin?
Mr. Crosbie: Yes. We spoke with Mr. Stehelin on the telephone and had a fairly lengthy conversation with him discussing their views and various things, the background on this that they provided to us. Then I believe that one of my associates also had some further contact with him to clarify some different points.
Senator LeBreton: All on the telephone? No face-to-face meeting?
Mr. Crosbie: It was all on the telephone, yeah.
Senator LeBreton: This is Mr. Paul Stehelin, who had in fact done two reports on this particular transaction. One was in March or April, and then one, finally, in August. Did you go over his documents?
Mr. Crosbie: Yes. We had the August letter, and we talked - a number of things we talked about were things that were bought up in those letters - in that letter. We also talked about other things in terms of some of the background on the process and their views and their thoughts on a range of issues.
Senator LeBreton: Did you challenge the things he had said in his August letter?
Mr. Crosbie: I don't believe we challenged the things.
Senator LeBreton: The findings, I mean?
Mr. Crosbie: Pardon me?
Senator LeBreton: The findings in the report, did you challenge them?
Mr. Crosbie: No. The conversations - my recollection, basically, is we were just asking him for his views and his thoughts and the background work that he had done and how he had reached his conclusions, and so forth and so on.
Senator LeBreton: Do you have notes of those conversations?
Mr. Crosbie: Yes, I do.
Senator LeBreton: Are you prepared to file them with the committee?
Mr. Crosbie: Oh, they have all been filed with the committee.
Senator LeBreton: Okay. You can understand that we have had thousands of pieces of paper.
Mr. Crosbie: I understand you have had a lot of paper presented to you.
Senator LeBreton: Sometimes whited out.
I will have to check Mr. Stehelin's testimony because I'm not sure - there seems to be some discrepancy here as to the recollections, but we will check that later.
Mr. Nixon, did you meet John Simke, who was at Price Waterhouse?
Mr. Nixon: No.
Senator LeBreton: Why not?
Mr. Nixon: I don't know who Mr. Simke is.
Senator LeBreton: You don't know Mr. Simke?
Mr. Nixon: I do not know Mr. Simke.
Senator LeBreton: Price Waterhouse were involved in this process. Of course, the question of the RFP being too short a period, which you mention in your report as 90 days, which, if you check government records, is sort of the standard length of time. Some are much less. In any event, this ended up being 127 days.
Mr. Simke, of Price Waterhouse, testified before this committee under oath on the 23rd of August on page A-7. The reason we asked him this question is because we had a memo on file from those two gentlemen, from Chern Heed to a Mr. Barbeau, where it was alluded that they should have a six-month RFP. In any event, Mr. Simke, in response to our direct question on this, said:
The 90 days in this case we felt was within the acceptable range, particularly given the work that had been done by all these unsolicited proposals previously.
Then he went on to say:
- anyone who had not yet submitted an unsolicited proposal, one could make the argument that they were not that interested.
That's at page A-14.
Then he went on to say:
- the community of players interested in such development keep their ear very close to the ground in terms of potential business opportunities.
Mr. Simke was asked if there was political interference. On page A-11, he testified:
I was not aware of any such interference.
He was asked if there was excessive lobbying. My colleague, Senator Jessiman, asked him, "Were you ever interfered with or lobbied in relation to..." your work on Pearson? Mr. Simke replied:
Not at all, no.
Did you meet with Mr. Raymond Hession, president of Paxport?
Mr. Nixon: No.
Senator LeBreton: Why not?
Mr. Nixon: We had contacted the Matthews Group involving Paxport, and Mr. Jack Matthews arranged to come and speak with us at our offices and brought with him some of his officials. We thought that was a sufficient contact, under the circumstances.
Senator LeBreton: Under what circumstances?
Mr. Nixon: The circumstances of preparing the report that I was asked for by the Prime Minister.
Senator LeBreton: What report were you asked for by the Prime Minister?
Mr. Nixon: It was a report to review the contracts associated with Pearson and to provide my views and advice to the Prime Minister.
Senator LeBreton: And you did not think it important to talk to Mr. Ray Hession when you were supposed to be dealing with contracts? I mean, Mr. Hession was the president of Paxport and was involved in the whole process up to and including the awarding of Paxport as the best overall bid on the 7th of December, 1992. You didn't think that was necessary?
Mr. Nixon: We felt that we had sufficient information from the Paxport/Matthews conglomeration by speaking to Jack Matthews, who was designated president of the Matthews Group.
Senator LeBreton: But you didn't think it was necessary to speak to Mr. Hession in his capacity, in the interests of balance and fairness?
Mr. Nixon: Well, I wouldn't know that Mr. Hession would provide a balance to Mr. Matthews. They would sort of be on the same side of the scale. We felt that Mr. Jack Matthews, in bringing with him some of his colleagues, including Mr. Vineberg, who appeared on that occasion as well, was very well equipped to provide the Matthews/Paxport point of view.
Senator LeBreton: Going back to Mr. Hession, in view of his long-distinguished career as a public servant in Ottawa prior to going into the public service, did you not think that it would be of some value to your process not to have at least given him a phone call and discussed it with him?
Mr. Nixon: I guess I have to say yes.
Senator LeBreton: Meaning?
Mr. Nixon: We felt that we were sufficiently informed.
Senator LeBreton: Did you meet with any lobbyists?
Mr. Nixon: No registered lobbyists.
Senator LeBreton: Unregistered lobbyists?
Mr. Nixon: There are people who have opinions who sometimes talk to politicians. We didn't meet with anybody who you would have in mind or I would have in mind as among the group who offer their services for hire to promote business or political information.
Senator LeBreton: You certainly, in your report, had a lot to say about lobbyists. Do you not think that in fairness to them, because they are business people working in this city and also in this country, that at least you owed it to them at least to hear their side of the story? You didn't think that was -
Mr. Nixon: No, I didn't think that way.
Senator LeBreton: You didn't feel that was necessary.
Did you meet with Donald Matthews?
Mr. Nixon: No.
Senator LeBreton: Why not?
Mr. Nixon: We met with the president of the Matthews Group, Jack Matthews. We felt that was sufficient.
Senator LeBreton: Obviously, in your report, you mentioned Mr. Donald Matthews. Do you not think in fairness to Mr. Donald Matthews that if you were going to single him out in the report, at least he should have had the opportunity to have a conversation with you about - I think Mr. Matthews is on the public record as saying he had great faith in your fairness. Do you not think that it would have been fair to at least call Mr. Matthews?
Mr. Nixon: I didn't think it was necessary.
Senator LeBreton: You didn't think it was necessary.
Do you see anything wrong with being a president of a political party? Senator Tkachuk asked that because you seem to list that in your report.
Mr. Nixon: No, I don't think there's anything the matter with being president of a political party.
Senator LeBreton: You might have put the year he was there. It was 1972 under Mr. Stanfield's leadership.
Of course, yesterday, we had three professors. Did you seek any academic input into your report from the academics?
Mr. Nixon: No, I did not.
Senator LeBreton: I'm now going to turn to people who appeared before the committee under oath and testified that they met with Mr. Nixon. I'm going to want to clarify whether in fact they met with him and what his recollection - obviously he says they have notes of what happened.
Now we had testimony yesterday from Glen Shortliffe, the former Clerk of the Privy Council. We had testimony from him earlier on in his capacity as Deputy Minister of Transport. So the question obviously is, did you meet with Mr. Shortliffe?
Mr. Nixon: Not in his capacity as former Deputy Minister of Transport, but only in his capacity as Clerk of the Privy Council Office where it was his responsibility, presumably, to see that the commission that I had received from the Prime Minister was provided with office space and support as I saw necessary.
Senator LeBreton: Mr. Shortliffe obviously had a lot of knowledge of this file, being that he was the former Clerk and also Deputy Minister of Transport. Did you seek out his views on your particular mandate vis-à-vis his responsibility in his former roles?
Mr. Nixon: No.
Senator LeBreton: Why not? You had a meeting with him. It would be obvious that you would ask him his views, surely?
Mr. Nixon: I was able to speak with the deputy minister who had the responsibility during 1992 and her successor who took over in June of 1993 just at that time when there were a number of deputy changes and just at the time when the prime ministership changed.
Senator LeBreton: So you, then, were interested in the testimony of Madam Labelle and Madam Bourgon, but not of Glen Shortliffe?
Mr. Nixon: Well, his responsibility had changed at that stage, and we felt that talking to the deputy ministers presently in charge and who had immediately previously been in charge was appropriate and sufficient.
Mr. Goudge: As a lawyer, senator, I think it's important to say that I didn't view us as in any sense taking testimony, to use your words.
Senator LeBreton: So the basis of your report, then, is not on any sworn testimony or evidence.
Mr. Goudge: That's absolutely correct.
Senator LeBreton: As opposed to what we've been doing here.
Mr. Goudge: That's absolutely correct. What we got was information on which Mr. Nixon based his advice to the Prime Minister.
Senator LeBreton: Is it fair to say, then, that if it was not under oath and sworn testimony, that some of it might have been hearsay?
Mr. Goudge: Absolutely. In a legal sense, absolutely, just as I suspect a great deal of information on which public policy decisions are made in this city are based on the information of the same kind.
Senator Bryden: Also, Mr. Chair, we might know that a great deal of the information we've had before this committee has been hearsay.
Senator LeBreton: Especially from you, Senator Bryden.
Senator Tkachuk: By witnesses or by -
Senator Bryden: Well, I'm not going to enter into any argument. Our counsel would comment on that.
Senator LeBreton: You meet with Michael Farquhar.
Mr. Nixon: I did not with him personally, but he was consulted by people on my group.
Did you speak to Farquhar?
Mr. Goudge: I don't think so.
Mr. Nixon: No, I guess we didn't. We read material prepared by him.
Senator LeBreton: You know who Mr. Farquhar is, of course.
Mr. Nixon: I do.
Senator LeBreton: Deputy General of Airport Transfers.
Mr. Nixon: Yeah.
Senator LeBreton: In his testimony, he actually said you did. It was interesting. I don't have the testimony, but I have a great memory recall. In his testimony, he said something very curious. He said that when he talked to you, you were discussing with him - and I won't use his exact words because I haven't got them in front of me, but it's pretty close - that you were seeking his advice on the makeup of a board of directors of a local airport authority. So it looked like you were shopping around - the yet to be named minister - oh, maybe he was named at that time - policy. That's what Mr. Farquhar testified to under oath, and I will find the exact quote.
Mr. Nixon: I think I should say that I apologized to Mr. Farquhar for not recalling the occasion, but I'm finding this a problem from time to time.
The Chairman: I think that the major assistance that Mr. Farquhar might have been to you was describing the evolution of the efforts to form a local airport authority in Toronto. You spent a fair amount time in your statement this morning indicating that.
Mr. Nixon: I appreciate your comment, Mr. Chairman, because there's no doubt I sought and did receive a good deal of information on that very topic. I was interested in it in that it was, in my view, a reasonable move toward removing the direct supervision of the airport from the government and giving it to the community without, at the same time, agreeing to pay a profit on its operation. I found the concept attractive and indicated in my report that I found it attractive. I'm trying to recall the occasion where I met the gentleman, and, frankly, I cannot. I apologize for that.
Senator LeBreton: Well, I can now - sorry, Mr. Chairman.
The Chairman: It's very relevant to the matter you brought up with respect to what you referred to as the adamancy of Mr. Corbeil with regard to the formation of a local airport authority and the difficulties that he was having with the various municipalities, and so on, trying to get them to come to a common resolution, which would have satisfied the whole thing. As a matter of fact, he drafted a letter for the minister which was never, ever sent, in which the minister was to put his blessing on the matter, but still the resolutions hadn't come.
Her Worship, the Mayor of Mississauga, testified before us about what she called an "illegal airport authority". They just did not get off the ground. Mr. Farquhar could have been very, very helpful in describing exactly how long that process took, trying to get them to form, to get together.
That's all.
Mr. Nixon: I appreciate you making that point because we were certainly aware of the continuing difficulty in that regard, particularly in that Mississauga - and that normally means the Mayor of Mississauga - did not seem to be amenable to accepting the concept without certain other matters being agreed to, which is not uncharacteristic.
The Chairman: Yes. The Island airport, you are referring to.
Mr. Nixon: Yes.
Senator LeBreton: Which, Mr. Chairman, points out - I just refer to a letter that was sent by Minister Corbeil to Mayor McCallion, who was a witness here last week. She referred to the local airport authorities as the "illegal airport authority" because of the problems of Toronto Island, but in a letter from the minister to Mayor McCallion, he actually asked her to drop her objection to Toronto Island being part of it, and he would then recognize the LAA. That's on the record.
I've now got Mr. Farquhar's exact quotation, his evidence under sworn testimony here. Our counsel, Mr. Nelligan, asked Mr. Farquhar:
Mr. Nelligan: Mr. Farquhar, were you interviewed by Mr. Nixon?
Mr. Farquhar: Yes, I had a short telephone conversation with him, I think, for probably 15 minutes.
He specifically asked me the question about what my view was with respect to the policy being changed or adjusted to accommodate federal government nominees to an airport authority board and provincial government nominees to the board.
Our counsel asked:
Mr. Nelligan: So, basically, you were discussing about the merits of a new policy without getting in particularly to the history of the old policy?
Mr. Farquhar: No. We strictly talked about the airport - what is an airport authority, that kind of a discussion, and then the specifics about the possibility of provincial and federal nominees, and that was the extent of it.
So that was just to refresh your memory.
Mr. Nixon: If I may just comment, I appreciate the fact that you brought that to my attention. I have to admit that I still don't remember the phone call, but you will know that in my report, I do refer, perhaps in more detail than was appropriate, what the LAA form might be if the government eventually decided to establish one in the Toronto area. I pointed out that it would be worth considering having a different makeup of that board with direct representation from the Government of Canada, perhaps even the naming of the chairman, and direct representation from the government of the province, which I felt was very important, indeed, as well as representation from the municipalities concerned.
Senator LeBreton: Was that part of the instructions you got from the Prime Minister's Office when you were preparing -
Mr. Nixon: He asked me for the information and my views and advice. I might very well have not referred to the LAA at all, but my own, strong feeling was that this, as an alternative to the deal that I felt was not good enough in the public interest in that it was business based on profit of 23.6 per cent before taxes, that some kind of contemplation might be given to taking it out of the direct management of the Department of Transport and putting it in the hands of citizens who were appropriate and dedicated to the improvement of the community served. So, I took it on myself to offer that advice, which you might consider gratuitous, but I felt it was within my mandate.
Senator LeBreton: Did Mr. Bandeen participate in you kind of taking it upon yourself to add that in just as an aside?
Mr. Nixon: I think I met Mr. Bandeen twice, but I'm not sure. Certainly one of the - I suppose in Mayor McCallion's words - "illegal LAAs" came in with most of their members to express their views to me and to express their frustration with the policy of the then Government of Canada.
There was another occasion, I know, where he was in my office with another group. I'm not sure just what that was. So I had his views on the LAA, and as you people know in the committee, he can put them forward rather forcefully.
Senator LeBreton: I'll get back to Mr. Bandeen later.
Did you meet with Mr. Wayne Power?
Mr. Nixon: Yes. He was in the group from the Department of Transport that met with us early in our deliberations.
Senator LeBreton: You know, of course, who Mr. Power is.
Mr. Nixon: Yes.
Senator LeBreton: Director of Transition, Pearson International airport. When did you have this meeting and where was it held?
Mr. Nixon: As I recall, it was held in the Wellington Street offices, about Tuesday or Wednesday after I had started the work.
Senator LeBreton: Just as an aside, you were working out of the Wellington Street offices which, of course, as we all know, are the cabinet offices of the government in Toronto?
Mr. Nixon: The date of that meeting was November 1st, Monday.
Senator LeBreton: November 1st. Okay.
Proportionately, how much time did you spend talking to people in the Toronto area, and how much time did you spend here in Ottawa, just roughly, in the period of your -
Mr. Nixon: I went to the Department of Transport, I believe, on the very day that I came down to see the Prime Minister, and met, not as my statement said, the minister and the deputy, but the deputy and the associate deputy because there wasn't a minister of Transport on that day, as I recall.
Senator LeBreton: So you met the deputy who, at the time, was Bourgon.
Mr. Nixon: Bourgon and -
Senator LeBreton: The associate deputy.
Mr. Nixon: The associate deputy.
Senator LeBreton: Who was?
Mr. Nixon: The associate deputy was Rowat. That was when they indicated that knowing that the Prime Minister designate had already said that he was going to have a review, and now I was named as the reviewer, that they had already gotten together a large amount of information, that they would want to know where I wanted it sent, and when their officials might assist me, and anybody who was assisting me in going over that material and responding to any clarification that we might request.
Then later, probably in the third week, I came to Ottawa and met Ms Labelle for a second time. I met Mr. Broadbent, and it's possible that I met some of the other officials at that time. I spent most of an afternoon at the Department of Transport meeting a number of officials.
Senator LeBreton: So just to put a time line on this, in the third week, that would be somewhere around - three weeks into November is -
Mr. Nixon: Probably the week of the 20th of November, approximately at that time.
Senator LeBreton: 20th of November, nine days before your report.
Did you met with Mr. D.G. Dickson?
Mr. Nixon: May I just say, Mr. Chairman, that in looking at the chronology, it appears that that meeting was Monday, November 15th.
Senator LeBreton: November 15th.
Mr. Nixon: It says here that I met with Transport Canada officials on - I remember Broadbent. I met with Ms Labelle for a second time. She was not the deputy then, but she, I believe, had come up from Hull.
Senator LeBreton: This is the Power meeting you are talking about.
Mr. Nixon: The Power meeting? No. I cannot say for sure that I met Power on the second occasion.
Senator LeBreton: Yeah, okay.
I already asked you about Mr. Dickson.
Did you meet a man by the name of John Cloutier?
Mr. Nixon: I'm sorry. I didn't hear the name.
Senator LeBreton: John Cloutier.
Mr. Nixon: I don't recall. I don't believe so.
Senator LeBreton: He was Senior Financial Advisor, Airport Transfers.
You have already testified as to your meetings with Huguette Labelle. When you met with Huguette Labelle, were documents given to you at those meetings, or were they just briefings?
Mr. Nixon: No documents.
Senator LeBreton: Do you have minutes of those meetings?
Mr. Nixon: No documents. No notes.
Senator LeBreton: Other than what you put in your statement today.
Mr. Nixon: At the first meeting, Mr. Goudge was present; the second meeting, only Ms Labelle and myself.
Senator LeBreton: In your statement today, you seem to cite Madam Labelle as a person who was very unhappy with this process, and yet her testimony clearly before this committee does not indicate that at all. Do you have any comment on that?
Mr. Nixon: I have a high regard for her, and the last thing I want to do is to contradict her because I don't believe that's appropriate, nor do I feel that her testimony to you was in any way incorrect. I feel, however, that she gave me a different slant on her perception; that I had the impression that there was substantial dissatisfaction in the senior levels of government, in the cabinet, and in the Privy Council Office at the rate at which the negotiations had proceeded; that the embarrassing discovery of preconditions involving Air Canada had, in the minds of some, delayed this to some extent and that there had to be additional negotiations with Air Canada, because it was discovered that they had a substantial lease that had not been factored into the negotiations that were under way.
The Prime Minister of the day was down to the last few days of his incumbency. There was a sense that was conveyed to me that people in the government were anxious that this move forward so that it attained some degree of completion before he left office. I believe that this triggered the letter that had been prepared and signed by Ms Labelle as Deputy Minister indicating no new information, which stated clearly that this was not an acceptance of the deal, per se, and was not a signature that closed the deal, but that conveyed to the Paxport/Claridge Group that everything was moving toward closing the deal finally in their favour. I found the letter interesting. I might even use - forgive me - the word "irregular".
Shortly after that, Ms Labelle was moved from her responsibility as Deputy Minister and reassigned out of that stream.
Senator LeBreton: She was reassigned as the head of CIDA, where she is today.
Mr. Nixon: Yes, and I believe doing a good job and, as nearly as I can tell, very pleased with that responsibility.
Senator LeBreton: On Madam Labelle, you talk about your conversations with her as opposed to her sworn testimony here. Would you then categorize a lot of that as impressions and hearsay? Did Madam Labelle not feel that she had to take some responsibility for what is now known as the so-called "Air Canada sandwich"?
Mr. Nixon: I don't think that she would be more responsible for that than the former deputy would have been, the one that I did not interview.
The matter, while it was significant, had been ironed out. Air Canada seemed to have been reasonably satisfied. There had been some additional concessions made to them, and then the deal moved forward.
I have read some of the evidence that has been elicited here where people said that it did not hold it up. I believe I have also been informed, either from reading your material or that had come to me, that it was a delaying concern. I think Mr. Rowat indicated that he had to work assiduously to see that that matter was looked after satisfactorily.
Senator LeBreton: So in your meetings with Madam Labelle - and she was the Deputy Minister of Transport, and she relays these concerns, frustrations, hearsay - she does not take responsibility for the fact that the letter regarding Air Canada, later to become known as the "Air Canada sandwich", was not in the databank - and she was the Deputy Minister of Transport - was not, in fact, even listed in the Request for Proposals.
Mr. Nixon: There would be no reason for me to attempt to pin the responsibility for that on anyone, and I did not undertake that. It never entered my mind so to do.
I know that some of the officials were prepared to describe their activities without referring to that letter in any way. I believe it was Mr. Broadbent who was the first to tell me specifically about it and the unexpected difficulties that it entailed.
Mr. Goudge: Just let me say, senator - again, this is a legal point, I suppose, but at the meeting I attended with Madam Labelle, certainly she was straight forward and careful in giving us information. I don't think the characterization of hearsay or not hearsay was relevant for what we were doing. She was giving us the information that she thought was relevant and responding to the questions we asked her. I kept some of that conversation, and it was a very straight forward meeting.
Senator LeBreton: But she was the Deputy Minister of Transport. As she's testified, she had a responsibility for her department. It's rather interesting, I suppose to be kind, to see her supposed comments in your introductory statement today as opposed to her testimony.
Mr. Chairman, it's twelve o'clock now. I'm prepared to continue on. I have got a lot more questions, but I'll end with Madam Labelle and come back.
The Chairman: Yes. I think we'll adjourn for lunch now. Two o'clock, gentlemen?
Mr. Goudge: That's fine. Thank you, Mr. Chairman.
The committee adjourned to two o'clock.
Ottawa, Tuesday, September 26, 1995
The Special Senate Committee on the Pearson Airport Agreements met this day, at 2:00 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: Continuing, gentlemen and lady. Senator LeBreton, you were continuing, I guess.
Senator LeBreton: Yes, Mr. Chairman, with pleasure.
Senator Bryden: Mr. Chairman, I would ask for the opportunity, when Senator LeBreton has finished this line that she is on, if I could raise some points relating to the evidence that has come out on this line of questioning.
The Chairman: Certainly.
Senator LeBreton: Thank you, Mr. Chairman. Mr. Nixon, following on from our line of questioning this morning, we established that we had heard, under sworn testimony at this committee since the 11th of July, 59 separate witnesses, 60 witnesses because, as I pointed out, Glen Shortliffe was here twice. And according to testimony given before this committee, 18 of these people were contacted by you in some respect or in fact interviewed by you. I am working, as you know, now from the list of people who said that in fact they had met with you. The last person we were dealing with was Madam Labelle, the former Deputy Minister of Transport.
The next person on my list is David Broadbent, and I should like to know, did you meet him, when you met him, and what was discussed at the meeting?
Mr. Nixon: Yes, Mr. Chairman. I met Mr. Broadbent on the second occasion that I visited the Department of Transport, and I was just - it was a date about the 15th of November, I believe. No, it was - yeah, November 15, meeting with Transport Canada officials.
Senator LeBreton: And do you recall, did you take notes of the meeting?
Mr. Nixon: No.
Senator LeBreton: Do you recall any of the discussions with Mr. Broadbent or any of the issues he raised or whether he had any comments with regard specifically to the issue of T1T2?
Mr. Nixon: He discussed the events that led to him becoming the principle negotiator following Mr. Barbeau's reassignment. He referred to the letters having to do with the Air Canada lease that had caused some dislocation and in fact consternation in the Department of Transport. He generally actually described his own background, because I understand that he had retired from the public service after many years of service and had been asked back because his abilities to bring these situations to a close, a successful close, was known and understood by I believe the people in the Privy Council Office.
He also asked to meet with me privately, which he did, and he had some comments to make at that time. I think I've already referred to the fact that he had some personal comments to make as to the efficacy of Mr. Barbeau's leadership in the discussions of the contracts up until that time. I think his point was that the government had been well advised to make a change in that leadership.
Senator LeBreton: And this meeting took place on the 15th of November, according to your records?
Mr. Nixon: Yes.
Senator LeBreton: I should like now to read into the record Mr. Broadbent's sworn testimony, on the 2nd day of August, 1995, at page 999:
Two things stand out in my mind from that meeting.
Referring to the meeting of course with you.
Number one, Mr. Nixon asked about lobbying. And all three of us, who'd been chief negotiators at various times covering the most significant periods, said we'd never been approached by a lobbyist. Now, there are lots of lobbyists around, and I know who they were. But I'd never been approached and the other two said they had never been approached, to which Mr. Nixon responded, "What were these guys wasting their money for?" In other words, if they weren't getting at you.
Later on in the meeting Mr. Nixon said, "You know, it wouldn't have been so bad if this deal had been finished earlier in May or something like that, but right on the eve of an election." So I said, "Mr. Nixon, may I see you privately?" And when the other two left, we reconvened. And I said, "Let me tell you why this wasn't finished earlier." And, of course, what I told him about was the Air Canada mess because I was convinced that if we'd not had the failure to disclose the 40-year lease document or I should say more correctly, I suppose, the elimination of that as a problem before the RFP was issued - if we hadn't had that and we hadn't had the extra complication of the $8 million in unpaid rent but, I mean, the big thing was the 40-year lease - I am firmly convinced that we could have concluded this deal on slightly better terms to the Crown. There wouldn't be the need to do the second deal with Air Canada on slightly better terms for the Crown in - I don't know, hard to say - "Juneish", July at the most. And I wonder what difference that would have made. But, I mean, it said to me that Mr. Nixon didn't seem to think that the deal that we'd negotiated was so bad. I'm not putting better words than he used in his mouth. But it was the timing of the thing.
Well, I'm only here to defend one thing, and that is the deal to the extent that I was involved in its negotiation. And I'll close where I started, Mr. Chairman: I think it was a deal in the public interest or I wouldn't have been part of it. Thank you for patience and I'll do my best with questions.
I would like your specific comments, Mr. Nixon, on the comments that Mr. Broadbent made with regard to you saying, "You know, it wouldn't have been so bad if this deal had been finished earlier in May or something like that, but right on the eve of an election." I would like your comments, please.
Mr. Nixon: Two things. I've already expressed my view about the judgment of the government under the direct instruction and approval of the Prime Minister to proceed with the signing of the deal in such a short time before the election when it had become a major issue.
And the second thing is that the usefulness of the deal to the government, therefore to the taxpayers of Canada, was as that time being reviewed independently by a firm that I had retained. I stated at the beginning of my appearance here that I had asked that material to be made available to me in the fourth week of my work, and that my colleague who is at the table with me, Mr. Crosbie, was working on that matter and gave me his recommendation and professional review of that matter and indicated that the deal was not as good as many of the witnesses that you, senator, have been referring to who spoke under oath - was not as good as they described.
Senator LeBreton: We will ask Mr. Crosbie those questions later, I am quite sure.
But Mr. Broadbent clearly had the impression that you didn't think it was such a bad deal.
Mr. Nixon: I had not had the report on the return to the taxpayers, return to the government. It was independently arrived at by my colleague, which was an extremely important matter. The same thing applies to counsel who had, as I said in my opening remarks, had taken on the job, independent of going to meetings with me and giving me his views, of reviewing clause by clause all aspects of the deal.
I also felt that Mr. Broadbent was quite forthcoming, had a certain degree of independence, but I also had the feeling that he had bought into the ownership of the deal, having been the principle negotiator. And how could he possibly say anything other than that it was a good one? It was his deal.
Senator LeBreton: Excuse me, Mr. Nixon. It wasn't his deal. Mr. Broadbent is a respected public servant, former deputy minister of the government, that was brought in as a negotiator by the Deputy Minister of Transport, Huguette Labelle. But it indicates to me, this comment that you made, that perhaps the cancellation was really political, because here you are saying to him - here you are saying to him when you met him, you're reporting - you're talking about his portion of the negotiations, but you're saying that if it had been resolved then and didn't become an issue - and I point out again, as I did in my opening statement, my opening preamble, this was not an issue. This was not a policy. The Liberal party did not have a policy. This was an issue that was first raised in Toronto on the 6th of October by Mr. Chrétien. So I just, you know, I ask you again why you said that to Mr. Broadbent.
Mr. Nixon: My answer has got to be somewhat similar, Mr. Chairman, to what I've already said. That was that I had not received the material that assessed the value of the deal from Mr. Crosbie. I had not received the independent assessment of the sections of the agreement from Mr. Goudge. That I was concerned about political aspects, which we may get around to talking about. And I'd expressed those concerns and asked about them from people like Mr. Broadbent who might have been exposed to some of those pressures, and he indicated that he was not. I was still in the formation of my views, and night by night was expressing them in the drafts of the report that I was preparing which culminated in the report that I gave to the Prime Minister.
Senator Tkachuk: What did you ask him about the political pressures?
Mr. Nixon: I was responding to Senator LeBreton's comment when she quoted Mr. Broadbent's testimony before this committee that he was not aware of those and not subjected to them in any way.
Senator Tkachuk: What did you ask him, though?
Mr. Nixon: If he were.
Senator Tkachuk: By whom?
Mr. Nixon: Whoever would be exerting those pressures. I think part of his testimony was he was aware that lobbyists had been in action on the brief for many months and that they had not had an impact on him.
Senator LeBreton: And that follows with the testimony we've had from many other witnesses as well.
Mr. Nixon: I suppose that lead me to make the comment that he reported that I had said, rather ungrammatically, according to him, "I wonder what they were being paid for."
Senator Bryden: Mr. Chairman.
The Chairman: Is this a question to the witness?
Senator Bryden: Point of clarification, but not to the witness. I think inadvertently Senator LeBreton may have mis-spoke. Mr. Broadbent was not a public servant at the time that he did this.
Senator LeBreton: I didn't say that. He was a former public servant.
Senator Bryden: He was a consultant hired to negotiate this deal, just so the record is clear.
Senator LeBreton: I just stated, Senator Bryden - not that I need any lessons from you. I said he was a - I believe I said, and I'm sorry if I didn't say, he was a former - he's a respected public servant, and I should have said former deputy minister. I mean if we're going to - well, I won't.
The fact of the matter is Mr. Broadbent had been a chief negotiator for the government on many files and was not just a consultant dragged in from outside. He had a lot of experience in the government.
Mr. Nixon, testimony shows, of course, that you met with John Desmarais, senior advisor to ADM Airport Group. When did you meet him, and where, and how long did the meeting take place?
Mr. Nixon: I might ask for some advice from Mr. Goudge on this, but he was part of the panel that came to our offices on Wellington Street in Toronto on the Tuesday following my appointment. He was there to provide additional information and to explain wherever was - explain and clarify wherever was necessary the material that had been provided to us.
I believe that both Mr. Goudge and Mr. Wilson had reason to contact him from time to time by telephone for clarification. I believe also that I did meet him when I spent the day in Ottawa on Monday, November 15.
Senator LeBreton: Was it at the first meeting in Toronto or in the meeting on Monday, November 15, where Mr. Desmarais and others presented the report that they prepared in the Department of Transport outlining the complete - from their perspective - complete deal?
Mr. Nixon: I believe it was the first meeting where that was presented. It was a more formal meeting around a boardroom table where the papers could be readily passed back and forth, and I recall that that was a rather full meeting, an hour and half or so, where the discussions ranged over the material that had been presented by Transport Canada.
Senator LeBreton: Okay. We'll get back to that again later. Did you meet - testimony shows that you did - with Jocelyne Bourgon, who was former Deputy Minister of Transport, now the Clerk of the Privy Council?
Mr. Nixon: Yes, I did.
Senator LeBreton: When did you meet her?
Mr. Nixon: I met her on the day of my appointment with Mr. Rowat, and I also met with her briefly on the 15th when I was spending some time at the Department of Transport.
Senator Tkachuk: Just on Mr. Desmarais, how long did you meet with him? I'm sorry. You didn't answer that.
Mr. Nixon: Desmarais. The meeting in Toronto was, as I recall it, at least an hour and a half. It was a long solid meeting in which many matters were referred to. The meeting in Ottawa was three or four meetings that - we did not meet in a larger group. I had arranged to meet either individually or, as I recall, maybe two of them together. I met Madam Bourgon alone, I believe. I think Mr. Desmarais may have been accompanied by one or two other people. I met Mr. Broadbent with one or two others and then met him alone as well.
Senator LeBreton: Do you have notes on all of these meetings?
Mr. Nixon: I have no notes on those meetings.
Senator LeBreton: No notes, all right.
Mr. Goudge: From my perspective, Mr. Desmarais was essentially available to us throughout the month and served as a resource person from Transport Canada, and, frankly, I found him very helpful, and I suspect Mr. Nixon did as well.
Senator LeBreton: So did we.
Of course you've testified that you met with Mr. Rowat. Did you ever meet alone with Mr. Rowat, or was it always part of the panel of Rowat Desmarais?
Mr. Nixon: I don't recall meeting with him alone.
Senator LeBreton: And was this at the same meeting in Toronto a couple days after your appointment, and then again in Ottawa, on the 15th?
Mr. Nixon: Yes.
Senator LeBreton: Was it at this time that they presented the document that they prepared at the request of the Deputy Minister that they provided for you?
Mr. Nixon: At the first meeting.
Senator LeBreton: At the first meeting. How long did you -
Mr. Nixon: Mr. Goudge has just - well.
Mr. Goudge: Are you referring, senator, to the memorandum that was prepared by Ms Bourgon directed to Mr. Rowat?
Senator LeBreton: No, I'm referring to the background briefing.
Mr. Goudge: Sorry. Mr. Nixon is absolutely right. The background briefing was on November 1.
Senator LeBreton: Okay.
Senator Jessiman: The document is dated November 4.
Senator LeBreton: My colleague Senator Jessiman reminds me that that document is dated November 4. The first one is October 29; the second one is November 4.
Senator Jessiman: Which one did you get?
Mr. Nixon: The first meeting with Desmarais, Rowat and Power was Monday, November 1. They had sent us a compendium of documents by delivery that was in our office the Monday that they arrived, so we had it opened up and glanced at it. They brought us some additional documents and may have in fact sent us something by delivery a bit later. I don't know about that. I thought there were two decks of documents. There may have been additional ones that arrived from time to time.
Senator LeBreton: Okay. Going on to looking for witnesses in this long list that you actually met, here is one. Ran Quail, who of course was the chief negotiator early on in this stage, then left because of a promotion from this position to a deputy minister's position. When and where and how long did you meet Ran Quail?
Mr. Nixon: I don't recall meeting him.
Senator LeBreton: I'll have to check the testimony. He testified that he met with you, so I will come back to Ran Quail.
Mr. Nixon: I should just say, Mr. Chairman, that in preparing for this occasion, my colleagues and I have searched our memories as to who we met and what days. Mr. Goudge had notes of the meetings that he attended. There were no notes of meetings where I attended on my own, and so the record may obviously have gaps in it. For example, the telephone call to the gentleman that Senator LeBreton mentioned this morning that I didn't recall speaking with.
Senator LeBreton: Farquhar.
Mr. Nixon: Yes, Farquhar is one such gap, and there may be another one.
Senator LeBreton: I will try and refresh your memory on Ran Quail.
Senator Tkachuk: You took no notes of any meeting that you had on your own?
Mr. Nixon: That is correct.
Senator Tkachuk: You trusted what was said to your memory?
Mr. Nixon: That's correct.
Senator LeBreton: Now you don't remember if you met Ran Quail?
Mr. Nixon: That's correct. I think I should say, perhaps in my own defence, and I'm not going to reiterate what I said this morning, and that is that I sometimes find it more and more difficult to remember people's faces and names, but you will find out about that eventually.
But I should say that in most occasions, there were staff people with me who were taking notes, and otherwise the matters were of a personal nature. There was a - "confidential" is a better word. There was one quite important person that I spoke with who has already been mentioned around the table here, who particularly asked that notes not be taken, that he/she wanted simply to indicate personal views about matters which they thought would be of assistance to me.
I thought that one of my special qualities in this regard, which you might feel did not come up to the sort of system that a royal commissioner might have used, was that I could speak with them on personal terms. They realized that I was expressing my views directly to the Prime Minister as requested, and they felt that they could convey those views to me under those circumstances.
Senator LeBreton: That begs an interesting question. Did you discuss this through the process with the Prime Minister?
Mr. Nixon: What?
Senator LeBreton: You just said, discuss these conversations with the Prime Minister.
Mr. Nixon: When I spoke with the Prime Minister on the presentation of my report, I certainly conveyed to him any personal information that had come to me which I thought would be useful to him. My understanding, when information came to me confidentially, that it was with the understanding that I was in a position to convey this material to the Prime Minister for whatever use he felt might be properly made of it.
Senator LeBreton: So how many times, as you were working through the month of November, did you talk to the Prime Minister?
Mr. Nixon: I spoke to him only once after the - that is, as I presented the report. That was the only occasion.
Senator LeBreton: And did I hear you say earlier, perhaps in your opening statement, that you held the pen? That you actually dictated and the words are your words on the various drafts we now have of the Nixon report?
Mr. Nixon: In the famous second report, it's all mine. The report -
Senator LeBreton: Which second report?
Mr. Nixon: Well, I certainly can't get into that business. There was a draft of the final report, which is the one I'm talking about, and perhaps I should simply refer to it as my draft. The draft of the final report was my work, with the idea that that draft would form the basis of what could be added from the accountant's review and from the lawyer who had reviewed the specific provisions of the deal. And that was all brought together, and the report then was presented on that basis. I think or I'm sure you perused both those documents, and you would agree that the main thing is that the recommendations are, in essence, identical.
Senator LeBreton: The draft report, then, what you refer to as the draft report dated November 30, which was the draft of the report that was released on November 29, is the draft report November 30?
Mr. Nixon: Yes.
Senator LeBreton: The draft report of November 30 were your words, not the final report of November 29?
Mr. Nixon: The final report was essentially based on my views in the draft, with the assistance that I have already mentioned.
Senator LeBreton: Who held the pen?
Mr. Nixon: In my opening remarks, I mentioned that the review of the contracts themselves was essentially the professional work of Counsellor Goudge.
Senator LeBreton: Whose words ultimately were in the final report, then?
Mr. Nixon: I take responsibility for all the words. The recommendations are essentially my own.
Senator LeBreton: Who held the pen?
Mr. Nixon: I can't answer that question other than any more fully than I already have, Mr. Chairman, that it's my report. The conclusions were mine. The conclusions are essentially in my words. The work about the LAA is essentially my concept and my words. That the body of the report where the individual sections of the contract are referred to in detail is essentially prepared by Mr. Goudge. The part of the report where the return on investment and the procedure for entering into the RFP is essentially from Mr. Crosbie.
Senator LeBreton: I'm glad you tried to clarify this, because it's obvious that there was a different drafter of the draft of November 30 than the final of November 29. But in any event, we'll get into that in a little more detail.
Back to the list of people who appeared before this committee. Robert Bandeen, chair, Greater Toronto Regional Airport Authority. When did you meet him, for how long, how many times? I would like as much detail as possible, please. And who initiated the meeting?
Mr. Nixon: We received a call from Mr. Bandeen's office as soon as my appointment was announced. He explained to me that he was chair of the regional airport authority and that he wanted to come in with his colleagues and meet with me as soon as it could be arranged. As I'm speaking to you, I'm looking through the chronology, trying to find when that was. If anybody can help me with that, I would appreciate it.
Mr. Goudge: I can find that for you, senator. I know we had that when we were working up to this.
Mr. Nixon: Actually, I don't see it on the list here. I don't see it listed here, because it was fairly early, and he was most anxious. There is one for the GTRAA on November 15, which was lawyers from Osler, Hoskin that had been I believe retained by that group, but our meeting was I believe in the first week that we were undertaking these meetings, and I would suggest to you that it would be around November 4.
Senator LeBreton: November 4.
Mr. Goudge: I have a note, senator, of a meeting November 4 with Mr. Bandeen and others from the authority.
Senator LeBreton: And was that the only meeting with Mr. Bandeen?
Mr. Nixon: I mentioned this this morning. I recall him coming in again under some other auspices that must have included LAA. It could very well have been as part of a meeting with municipal officials, either the regional chairs or some other group of municipal officials, because the basis of the local airport authority was the municipalities in conjunction with business development groups.
Senator LeBreton: Were you aware of Mr. Bandeen's threats over the summer made to one of the proponents about going public, going to the press? You know, the federal government needs Ontario. I read this into the record before. Mr. Bandeen obviously indicated that he was going to embark on a massive campaign to obviously sell his point of view of the local airport authority, and we must establish for the fact, for the record, that the local airport authority, as Her Worship calls it, the illegal airport authority, was not an entity with which the government could deal with. We've had many witnesses that have testified to that. Were you aware of his well-targeted campaign?
Mr. Nixon: Yes.
Senator LeBreton: You were. Did you have any follow-up phone calls with Mr. Bandeen?
Mr. Nixon: I would say no, I can't recall any. I don't have any impression that there was. I think probably he would be fairly satisfied with my acceptance of the concept of the LAA.
Senator LeBreton: I'm sure he was.
Mr. Nixon: Sure, as opposed to giving it to the private sector at 23.6 per cent overall profit. And on that basis, he wouldn't have any reason to feel that I had not been receptive to his views. He is a very aggressive arguer.
He pointed out in his early meetings how unfortunate it was that Mississauga's inability to accept the concept of the LAA as it was then described made it more convenient for Minister Corbeil to indicate that it was not possible for him to proceed with the LAA. I do not agree with his view of that, and you may want to proceed with that, because if you're interested in the LAA at all, that aspect is important.
He was, I think, frustrated by the fact that Mayor McCallion had been adamant in her refusal. And while I can't put words in his mouth, he felt that Mississauga was playing politics on this important deal and using it to accomplish ancillary goals such as opening up the Island airport to jets, to have a more substantial say in the runways and the timing of the new runways at Pearson, and he expressed, as perhaps he did to some extent in this committee, his frustration as leader of the LAA movement that he had not been able to proceed as effectively as he had hoped.
Senator LeBreton: Of course, when Mr. Bandeen was here, I read him a quote that he made in the middle of the election campaign.
Did you share a draft of the Nixon report with Mr. Bandeen?
Mr. Nixon: No.
Senator LeBreton: Are you aware of a meeting, a dinner meeting that was held, attended by Steve Shaw, of the Greater Toronto Airport Authority, Jim Murphy, of the Metro Board of Trade, and Chern Heed, prior to your report being released where this was discussed?
Mr. Nixon: No.
Senator LeBreton: You are not. Okay. I just thank you for that.
The next witness that we met in the committee that apparently met you was a man by the name of Gary Harrema, Chair of the Regional Municipality of Durham. Can you tell me where that meeting took place, at whose initiative, and how long it took place, and what was your recollection of it?
Mr. Nixon: Is there a hotel called the Triumph on the north side of 401? It was at the Triumph hotel, a very nice place, and it was at the behest of Harrema, who is not only the chairman of the Regional Municipality of Durham but also chair of the chairs, and, I might say, one of the most effective politicians I have ever worked with, a very, very capable person. He may appeal to me particularly because he comes right out of the dairy barn into the leadership of a very large regional government and in my view has given that area outstanding leadership and has the confidence not only of the people in his community but the other regional leaders in a way that I admire.
He conducted meetings of the regional chairs. I think there were five of them, perhaps six, including metropolitan Toronto, and there was intense interest in the development of Pearson. In my opening remarks, I reiterated my view of its economic importance to Canada and so on, but certainly you can't overestimate its economic importance to the greater metropolitan region.
They were very interested in the local regional municipalities particularly having a far greater say in the management of the airport, and they were quite concerned that part of the deal meant that other airport development would be put on hold until the passenger pass-through, if that's the right word, were up around 35 million a year. They felt that the greater metropolitan area would not be well served by that particular aspect. They had other views about the deal. And essentially they wanted to convey to me that they felt it was quite possible to come up with an arrangement that would mean the LAA would be acceptable under any reasonable circumstances. So I'm glad to have a chance to talk about Mr. Harrema, who was extremely useful to me in that area, and the other regional chairs who participated in quite a free-wheeling discussion as well.
Senator LeBreton: Did you tell me the date of that meeting, Mr. Nixon? I don't recall. Perhaps you did, but I didn't write it down.
Mr. Nixon: I don't know whether it's in this thing or not. It was a dinner meeting. We had a long day. It was - I arrived late. It was pouring rain. I was not keen about the meeting, but it turned out to be the most valuable meeting of the day.
Senator LeBreton: But you don't remember the day?
Mr. Nixon: I don't remember the day.
Senator LeBreton: Do you believe it was early on in the process?
Mr. Nixon: About half way through.
Senator LeBreton: Actually, I must agree with you. He appeared to us to be a fine gentlemen.
Hazel McCallion, Mayor of Mississauga. When did you meet her, and where, and whose initiative, and did you take notes, and what was the result of the meeting?
Mr. Nixon: I met her Monday November 1, which is the first day of my assignment. We had meetings over the weekend, but I have had political business dealings with Ms McCallion for quite a long time, and I respect her very much indeed. She is an extremely effective politician, as everybody knows.
And she phoned and said, you know, "The airport's in my bailiwick. I want to talk to you about that, and I want to talk to you without delay." And I said, "Well, I'll stop in on my way Monday morning." We went to city hall. Mr. Goudge and - actually, I was travelling with Mr. Wilson, who lives in our farm area, and we went in to see her. Her city administrator - I don't recall his name - was present at the meeting. And I do recall that we may have had a brief meeting in private.
Senator LeBreton: Did she express her views on the LAA to you?
Mr. Nixon: She had strong views about the future of Toronto Island. She felt that the coordination of airport facilities should relieve Pearson of so much traffic from small private jets that could go somewhere else. I think somebody told us at one time that 60 per cent of the airplane movements were in fact small private jets that could go somewhere else and take their noise and difficulty away from Pearson. That we talked about the runways, which of course for anybody in politics around Pearson is an extremely sensitive matter.
She told me - I can't really tell you the details of the story, but the government had indicated they wanted to proceed unilaterally with some developments there, and she said, "Fine, as long as you can arrange to get the water in and the sewage out without me." And that was the end of the discussion.
Senator LeBreton: Of course, her testimony here was just that, that on the local airport authority, because of the traffic problems and the noise problems at Pearson, that was exactly her objection, because she insists that Toronto Island be included in an LAA. Of course, she eventually, in 1994, dropped that provision, but at this point in time, there certainly was no LAA.
You testified earlier, and we had testimony from Gardner Church, and you testified, I think correctly, if my memory serves me correctly, that he contacted you. Could you tell me - obviously he initiated the meeting - where it was held, how long, and what was discussed?
Mr. Nixon: Sunday, October 31, my colleague advises me, and that was the first Sunday following my meeting with the Prime Minister. And Mr. Church called, and I said, "Listen, if you want to come down to the farm, I'm going to be here all day Sunday." So he did come down, and we had an extensive discursive conversation about his experiences as a senior official with the Government of Ontario having to do with the LAA and all things airport.
He had undertaken, I think you're aware, to organize what I think he called the Southern Ontario Regional Airport Authority, and I think that there were those who might have thought he had gone just a bit beyond his mandate in that regard. Any way, he found that he had other responsibilities at the time he was talking to me, but he was very - he was very knowledgeable about the precursors of the LAA, their early success in other communities where they were operating, and how my report might further the cause of transferring the airport administration and in fact responsibility to an LAA.
Senator LeBreton: Did you say that Mr. Church had been a former deputy minister when you were a minister in the Ontario government?
Mr. Nixon: He was either a deputy minister or a very senior ADM.
Senator LeBreton: In your department?
Mr. Nixon: No. No. He was - I don't know whether this is interesting or not, but some years before, he had been the provincial official who had guided the County of Brant and the City of Brantford into an acceptance of modus vivendi for changing local government, which as a politician locally had for me been a very troublesome matter and the politicians hadn't really been able to work it out. Mr. Church went in and, using his inimitable style, came out with a deal that fixed things for 25 years. You might be interested to know that we're now in year 18, and the porridge is beginning to bubble.
Senator LeBreton: The next person on the list of people who testified here, one of the 18 who did see you, was Dominic Fiore of Air Canada. When did this meeting take place, were other Air Canada officials present, were there notes taken, and what was the basis of the discussion with Air Canada?
Mr. Nixon: Did you say the 18th?
Senator LeBreton: No, I said it was one of 18 people that actually testified that you in fact contacted them.
Mr. Nixon: Sorry. The meeting took place November 11.
Senator LeBreton: November 11. How long?
Mr. Nixon: One hour.
Senator LeBreton: Were notes taken?
Mr. Goudge: I have some.
Mr. Nixon: Mr. Goudge was there.
Senator LeBreton: Mr. Goudge, could you? We had Mr. Fiore testify before the committee. Can you characterize from your notes what was discussed at that meeting? Air Canada was a major tenant in Terminal 2 and a very important - and you heard their testimony, a very important witness. What was discussed in this one-hour meeting?
Mr. Goudge: I'm just looking. I don't have notes of that meeting. I can remember it, but given that we don't have notes, you'd probably want Mr. Nixon's memory rather than mine.
Mr. Nixon: If that's okay, senator, I would proceed with your permission.
Senator LeBreton: Yes, please.
Mr. Nixon: I don't recall any strenuous objection to the deal other than the Air Canada official indicated that they were prepared to function however the disposition of the terminal eventually occurred, that he said if - we're getting along fine with Transport Canada. They felt that the local administration was good, and he was very - he commended the local administration. He said if it's privatized - and I think Air Canada was in the process of completing its own privatization at that time, although I may be mistaken, so they were working through that, and quite enthused about it. But if it went to a LAA, that was all right with them as well.
He spent some time talking about he considered to be the inadequacies of their facilities for flights into the United States, and I think that is an issue at the present time, certain inadequacies in their international facilities, but that Terminal 2 they considered to be an excellent facility and they liked the plan that had been approved from Paxport for the development over the next nine years.
Senator Tkachuk: Can I just have a supplementary on this Air Canada? I know what you said, but I want you to tell me again. Your meeting with Air Canada, the major tenant in Terminals 1 and 2, no one took notes?
Mr. Nixon: I think we took notes whenever there was something that impinged on our responsibility. Is this a good deal? Is there anything wrong with it? Is there any complaint about supervision of the terminals, both either now or in the future?
I got the impression that Air Canada was reasonably satisfied with facilities that they had and they were not bringing a litany of complaints.
I have read the testimony of - oh, I guess the president of Air Canada made a speech to the Canadian Club or somebody and was reported as saying that they wanted this improved in the future. But the point is that the passenger count had fallen dramatically during the economic decline in the first half of this decade and that they were well within the range of the utilization of the facilities without undue pressure coming on.
Now, the recent Open Skies agreement with the United States has meant that Air Canada and other airlines have instituted new routes into the United States, and it may very well be, although I have no direct information about this, and that is that the area of Terminal 2 that serves the airlines, particularly Air Canada to the United States, may now be considered inadequate.
Senator Tkachuk: So did you make that decision before the conversation or after the conversation? How did you know before the conversation what was going to be said or whether it was of any importance to you?
Mr. Nixon: Senator, my friend took the notes, and the fact that there were none indicates that he did not feel that anything was said by Air Canada which impinged on our direct responsibility.
Senator LeBreton: Which were?
Senator Tkachuk: So that you wrote the notes and then dumped them in the garbage, or did you write notes during that meeting and make a decision beforehand to write notes? How was this decision made?
Mr. Goudge: I wouldn't have taken notes, senator, because if I had - what I did, I kept them in a binder. And, frankly, I was keeping notes of highlights. We were working on a very tight time frame. We were, virtually throughout, learning information that would be used very shortly thereafter and the fact that I didn't take notes is, for me, simply a reflection of the fact that nothing that was said in the meeting was something that would have driven Mr. Nixon's views one way or the other.
I mean, I wasn't there as a scribe. Had I known then what I know now, you know, that I was going to be cross-examined on what happened, I would have taken notes, I can assure you.
Senator LeBreton: Excuse me, okay, I'm going to just pick up on something Mr. Nixon just said. He said it wouldn't impinge on our direct responsibility, what he had to say. What did you think your direct responsibility was? Here we have Air Canada, a major tenant in Terminal 2. We have had testimony - I read, by the way, the article - I think I have a slightly different view of it - of Hollis Harris, last week, it was in the Financial Post and the Globe and Mail, where he certainly did not leave the impression that everything is hunky-dory and, you know, things are going along.
We have Mr. Durrett, Lamar Durrett, telling us in this committee that there is a serious crisis looming for Air Canada at Pearson. We must find a way to redevelop our terminal facilities at Pearson very soon. In this testimony, they indicate that the ideal time to have dealt with these renovations was in fact 1993 when there was, because of the recession, a slowdown in the economy.
So I ask you again, what - you said his testimony - I find this incredible. Air Canada's testimony did not impinge on our direct responsibility.
Mr. Goudge: Can I invite the senator to get away from the word "testimony". You know, Air Canada came in to provide us with information.
Senator LeBreton: Or hearsay.
Mr. Goudge: Well, information, the same kind of information that this committee has been getting since July 11.
Senator LeBreton: No, we've been getting direct, sworn testimony under oath.
Mr. Goudge: A lot of it's hearsay, senator. Indeed a good deal of what you're asking us is hearsay in a technical sense. I don't think that matters. What we were getting was information from people that, from my perspective at least, told it to us in a straight-forward and entirely credible way.
Senator LeBreton: Just for the record, Mr. Fiore did comment that, you know, his recollection of the meeting was very casual and - I will find the exact reference in a moment but this - of course, these questions are painting a very interesting picture. And that's why I am asking details and, also, of the date.
Mr. Nixon: May I just make a further comment in that regard, Mr. Chairman?
I think I recall reading his testimony when he referred to a casual discussion, and I simply say, again, that Air Canada was reasonably satisfied with the plans for the development of Terminal 2.
Senator LeBreton: Thank you for that.
Mr. Nixon: The development of Terminal 2, of course, might, in your view, be held up by my report. And in another view, it might be seen to be held up by sober, second thoughts, having extended over 20 months.
We are not here to particularly find blame for why Terminal 2 has not undertaken the development that Air Canada and other sensible people might wish. But, in fact, there was a plan. And if the Government of Canada did not feel that it could proceed with that contract, that does not mean surely that the Government of Canada would not have undertaken a reasonable development of Terminal 2 as it was required.
Most of you people use Terminal 2 from time to time. I do. And it is a reasonable place. There is a good deal of capacity at Pearson that is unused which you are aware of. And probably the useful distribution of that capacity is also a function of the distribution on a privatized basis of the terminal facilities.
There is a section of Terminal 3, a whole section that has never had a plane loaded or unloaded in it. There's lots of capacity there.
And it will occupy the reasonable ingenuity of the government and whoever has the responsibility for administering Pearson to see that it is adequately used in the public service and the people who have invested privately have their opportunity to administer it, and I see no problem with that.
But I simply say, again, that Air Canada did not come in, in a critical frame of mind at that time, saying that we are right up against a difficult situation. Because the economy had gone substantially down, the passenger throughput had been reduced substantially. As a matter of fact, we are still only up to what it was in 1989, I believe, or 1988. And so I simply reiterate that Air Canada indicated that they were satisfied with the plan as it was and could work with whoever had the responsibility.
Senator LeBreton: You know, we have had a lot of testimony about the need, and especially from the experts, to plan ahead and not be responding to capacity when it is upon you but look into the future a little bit. And I think this is what this was doing. And of course, now, it is eventually going to have to face the situation of dealing with something that is upon us.
We have had testimony from the president of Claridge Properties and the senior vice-president and the senior counsel, Mr. Coughlin, Mr. Spencer and Mr. Vineberg, that they met with you. Can you tell us when this meeting took place and how long?
Mr. Nixon: If you will forgive me, I am just looking at the chronology that's - November 3rd. November 3rd, Wednesday, Nixon, Goudge, Wilson with PDC.
I recall the meeting, probably an hour, maybe a bit more. I would categorize it by saying that the three of them were very effective proponents of the deal that they had purchased.
Senator LeBreton: So you say PDC, but you're talking about the Claridge part of PDC?
Mr. Nixon: Yes, that's right. At that stage, Claridge had the impression somehow that it was their deal.
Senator LeBreton: Well, I think they owned a big part of PDC so I can understand.
Mr. Nixon: Well, that's right. It was their deal. It was not as advantageous as the one that they had put before Transport Canada; however, they had not been designated as the best overall, in spite of the fact that Mr. Coughlin told you that he was 100 per cent sure that he would be.
Senator LeBreton: Mr. Coughlin also told us that Paxport could have gone on, on their own, without Claridge, three times.
Mr. Nixon: Do you want to pursue that one or -
Senator LeBreton: No, no. I'll pursue that in a moment.
Mr. Nixon: Okay.
Senator LeBreton The evidence - that's his evidence, by the way, under sworn testimony.
Mr. Nixon: That was his view. Sworn testimony, his view.
Senator LeBreton: That was his view. That's right. That's correct.
Senator Tkachuk: Were there notes taken at this meeting?
Mr. Goudge: Yes, yes.
Senator LeBreton: What was your sense of this meeting and what did you communicate to Messrs Coughlin, Spencer and Vineberg at this meeting? Was it a friendly meeting? Did you encourage them? What did you ask them?
Mr. Nixon: There certainly was no aggressive confrontation in it. They, as I recall, had a brief describing - it may have been that we were simply using the material that had been provided by Transport Canada that had been delivered a few days earlier.
We discussed those matters with them. This is calling on my memory - that we were interested that they had been beaten in the RFP and then had more or less indicated quite clearly that they felt they wanted - I hesitate to use the word "desperately", but Mr. Coughlin used words similar to that in testimony before this committee. They wanted to be involved in the privatization of 1 and 2, somehow.
I was interested also to read the testimony before the committee where, on the one hand, it was clearly indicated that the only contact between those two competitors had been a social one followed by a negotiation of, finally, Claridge taking over the bid and the testimony that had come from other sources that someone in Transport Canada or the Government of Canada had initiated the contact.
Obviously, we had not talked about those matters, but we did talk about how Claridge, having lost the - I should not call it a bid but the proposal - was still - their proposal was on the table until they withdrew it some months later. And if, in fact, Paxport had been found incapable of fulfilling their proposal, that Paxport might very well have been dismissed and the Claridge bid taken on.
I'm not sure whether it was that Mr. Coughlin lost his nerve and was not prepared to wait for Paxport to be dismissed because of financeability difficulties, but he clearly took the other course of action, and that was to buy into the Paxport arrangements and finally take it over, so that it is now essentially the Claridge proposal.
Senator LeBreton: Were you suggesting - were you doubting the word of Mr. Bronfman and Mr. Matthews, when they reported - you seem to cast doubt on their version of - and you're saying it is on Transport Canada. Is that what you're saying?
Mr. Nixon: I think it was the testimony of Mr. Hession who I didn't have a chance to speak with, and we discussed that earlier, who indicated that it was his impression that somebody in Transport Canada had initiated this marriage of convenience.
Senator LeBreton: That was not the word. It was "synergies".
Mr. Nixon: Oh, that's probably a better word.
Senator LeBreton: And interestingly enough, if you were following the testimony closely, Mr. Coughlin testified that he advised - after this meeting on the phone call from Mr. Matthews to Mr. Bronfman on the 9th of December, he advised his government relations people. So, knowing this city, as soon as government relations people know the details of this, it doesn't take long for it to filter around. So I am just asking you, do you doubt, do you doubt the word of Mr. Matthews and Mr. Bronfman?
Mr. Nixon: Or Mr. Hession? Which?
Senator LeBreton: Well, Mr. Hession didn't say anything about a merger. All he talked about was - all he said, that someone in Transport Canada, within a few days - it was two days after the 7th. It was the 9th. You know -
Mr. Nixon: You put it in terms, why should I doubt anyone's word.
Senator LeBreton: Well, you were the one who -
Mr. Nixon: If Mr. Matthews wanted to phone Mr. Bronfman and say, "Nice try, buddy. Better luck next time", well, that's fine. And if Mr. Bronfman came back and said, "Listen, I want to talk to you because our people tell me we want in on this, and I have a feeling maybe you would want to talk to me."
Now Mr. Matthews, Junior, in our discussions with him, said quite a bit about this financeability problem. Certainly I raised it with him on a number of occasions and there was some reference to the fact that he and his colleagues had sat down with Transport Canada officials, I think under the chairmanship of Mr. Barbeau, so that they might work out this financeability matter.
It came to me, I believe, from some of the Transport Canada officials -
Senator LeBreton: Can you name them?
Mr. Nixon: They are one of the four that have been frequently named who would be sitting around that table, I guess.
Senator LeBreton: Well, no, tell us which ones.
Mr. Nixon: Well, I don't know who they were.
Senator LeBreton: You don't remember.
Mr. Nixon: No, it would be - anyway, to get on with this tail, and you can dismiss it if you wish, that the matter of financeability was very much in the minds of the Transport Canada officials, and they wanted to pursue that, and that the Paxport officials had repeatedly indicated that this was being looked after, and it was nothing that Transport Canada had to worry about, that according to the people who described at least one of those meetings, it became, if not acrimonious, a feeling of irritation on both sides and, eventually, it passed off without anything particularly happening, except that Transport Canada found and continued to find that financeability was a problem.
One of the pieces of paper that has appeared before this committee that I had not seen, had been a note from the Clerk of the Privy Council to the Prime Minister referring to the financeability difficulties well before the approval by Transport Canada of the RFP proposal from Paxport. And that's the one where Mr. Shortliffe, it is alleged, had written in, "as per our discussion last Thursday", or something like that, where he indicated there would be little motivation for the two bidders to get together, so that you would have one plan from Paxport and the money from Claridge.
There is an indication then that the Government of Canada, at the very senior level, knew that the difficulties were present well before. The -
Senator LeBreton: Well, Mr. Nixon, I - you know, you're not telling us anything startling here. We've had testimony from -
Senator Bryden: Sworn testimony.
Senator LeBreton: - sworn testimony from -
Senator Stewart: Not hearsay.
Senator LeBreton: - from the Deputy Minister of Industry and, in fact, when the announcement was made on the 7th of December, Minister Corbeil put it right in his press release and Mr. Barbeau put it right in his letter. So these are not - but I was asking -
Mr. Nixon: I thought the part that was new, from my point of view, and I probably didn't follow it as closely as you did, senator, was that the Government of Canada, at the highest level, was considering what the solution for Paxport might be.
Mr. Matthews told me that he had gone up and down Bay Street looking for finance, that he had gone to the banks, that he had gone to the pension funds and had been unsuccessful in raising the financing that he sought. This is in spite of Mr. Coughlin's view who said, well, he could turn to Bracknells, he could turn to Allders, he could turn to Ellis Don, he could turn to any of the deep-pocketed partners who were involved in the Paxport partnership, each of which had a non-arm's length contract in Paxport to not only share on the profits of Paxport but to do business on a monopoly basis within Terminals 1 and 2.
For example, Allders was going to have a monopoly of the duty-free stores for the first section of time - what was that, 37 years - and they were fairly satisfied with it.
I think it was Mr. Coughlin's view, as I interpreted his testimony to this committee, that Paxport could turn to one of the partners of Paxport and they would finance it.
It is not possible for me to explain why that didn't take place, but it did not. And I would certainly not conjecture -
Senator LeBreton: But that's what you are doing.
Senator Tkachuk: Financeability, what are you talking about?
Mr. Nixon: The financeability of -
Senator Tkachuk: No, no. Are you trying to tell me that if they had concluded the deal on the 15th of December, they didn't have the $61 million?
Mr. Nixon: It's not - the financeability of the proposal was certainly under review by Transport Canada for a long time.
Senator Tkachuk: But isn't that because of the Air Canada -but you didn't even talk to Air Canada. You talked to Air Canada about that? You don't even have any notes.
Mr. Nixon: I can assure you, senator, that the financeability was well beyond that because I don't believe the people dealing with the financeability were even aware of the gap in the list of documents -
Senator LeBreton: No.
Mr. Nixon: - in the file room of Transport Canada at that time.
Senator Tkachuk: But you didn't talk to Air Canada about that, did you?
Mr. Nixon: They didn't say anything to us. How would we know about it?
Senator Tkachuk: But would you not -
Mr. Nixon: We didn't know about it until Mr. Broadbent told us and that was a meeting on -
Senator Tkachuk: Did you phone him back, say -
Mr. Nixon: No. Air Canada - it wasn't necessary. That had been cleared up. Mr. Rowat had indicated that that had been cleared up, and they had gone forward with their work.
Senator LeBreton: Mr. Nixon, what you've done is simply reiterated the erroneous assumptions of the Nixon report which we will get into, and your own view of which testimony before this committee has refuted.
But I was asking the question about your meeting with the - with the Claridge people, and you launched off into a tirade against the Matthews, which is sort of indicative of what has happened with your report.
But in any event, for the Claridge meeting, you said it lasted for about an hour. Did the Claridge people leave documents?
Mr. Nixon: Do you remember?
Mr. Goudge: I'm sure, senator, that they left us some documents. I know that we also - I had some discussions with Mr. Vineberg about forwarding some additional documents to us and they did so. I mean, there were a number of things that I think I requested of Mr. Vineberg, for example, either a list of the lobbyists that Claridge had used or a record of the invoices, and he was going to provide me with some thoughts about aspects of the contractual relationship that he thought were relevant to determining whether the public interest was properly protected. So I know there were documents sent to us thereafter, but I am also certain he left some documents with us.
Senator LeBreton: You just say I am sure he left documents. But an important group of Claridge, Bronfman, and you just can say I'm sure they left documents. You don't have a record of the documents they left?
Mr. Goudge: I can't put it any higher than I'm sure they left documents with us. That's about as certain as I think I'm able to get -
Mr. Nixon: I might just say that, if documents were left either with me or with either of my colleagues, they would appear in the material that we had sent on to this committee. Nothing that we received has not been sent on to this committee.
Senator LeBreton: In their testimony, Mr. Coughlin talked about the meeting and had communicated what he thought was a very positive view of it, and then waited by the phone to ring, and no one ever got back to him.
They expected, because of the complexity of this particular deal and all of the work that had gone into it by all the proponents, the public servants, the evaluation, he expected to hear from you. Why did you not call him back?
Mr. Nixon: We had an independent assessment of the values and shortcomings of the deal that was undertaken by a person who was working for me. I personally felt that our discussions with Claridge and with Paxport were sufficient contact with those people who were intimately associated with a successful part of the deal.
I preferred to have an independent assessment of that matter. After all, Claridge had bid something like 17 per cent after-tax revenue and had finally bought into a contract that was going to pay, what, about 14.2.
Senator LeBreton: We're going to get into the details later, of all of these things.
The last person, the last witness we had before our committee - so 18 of 60 who actually you bothered to meet with - was Jack Matthews, president of Paxport. And you already went into some detail about your meeting with Jack Matthews, but can you tell me when this meeting took place, who was there, who initiated it and how long, and did he leave documents?
Mr. Nixon: My friend is looking up the date. I believe I asked Wilson to phone Paxport and request that some of their officials come to see us. I could be wrong about that because, in most cases, we heard from the people concerned right after my appointment saying that they would be available to come at my convenience, which I appreciated.
So I'm not sure whether I initiated it or they did. But Jack Matthews came. With him -
Mr. Goudge: Bob Vineberg.
Mr. Nixon: - Vineberg came and he'd been with Claridge. And somebody else.
Mr. Goudge: Peter.
Senator LeBreton: Peter who?
Mr. Nixon: Kozicz.
Senator LeBreton: When did you say this meeting took place?
Mr. Nixon: Did we get a date?
Mr. Goudge: November 5.
Senator LeBreton: November 5th. So these meetings all took place within a few days of your appointment.
Did Mr. Matthews leave documents?
Mr. Nixon: If he left documents, they would be in the file available to the senators.
Senator LeBreton: Did you have any follow-up meetings with Mr. Matthews?
Mr. Nixon: No. Oh. At the end of the meeting, he indicated that he would send us invoices of payments made to lobbyists, which he did. I don't think there was a meeting. I think those just arrived.
Senator LeBreton: Was there any phone calls?
Mr. Nixon: Not between myself and Jack Matthews.
Senator LeBreton: Mr. Matthews testified under oath before this committee that you in fact called him. He was on his car phone, returning from Waterloo, Ontario, and you asked him about Mr. Bandeen, what - his views of Mr. Bandeen being named head of the new LAA, yet unformed.
Mr. Nixon: I don't recall that, but if Jack Matthews does, I believe it would have happened.
Senator LeBreton: I'm glad you believe Jack Matthews. All right, I'm going to now turn to a list of witnesses that you have appended to the Nixon report, as soon as I can put my hand on them.
This is a list appended to the November 29th final Nixon report, as opposed to the November 30th draft, because even that list changed. There was a different list on the 3Oth than there was on the 29th. So I'm going by the final Nixon report on the 29th.
Of course, we could probably go through this relatively easily because we've already - you've already testified. You say -it's entitled, "Pearson Airport Review consulted with officials from the following organizations...". Air Canada, and of course, we've already had testimony.
Air Transat. Did you have a meeting with Air Transat, who initiated it and for what purpose?
Mr. Nixon: As I recall, Air Transat and Canada 3000 came in together. I may be wrong on that, but I believe there was one meeting involving those two. I believe that they initiated it, and the gist was to remind me that there was something other than Air Canada using the facilities and that they wanted me to be aware that they were effectively trying to establish a business, that they employed a number of people and offered a useful service. And I think they may have thought that I might have something to do with more of the details of what the facilities were than I have or had. I was glad to talk to them. They were not particularly critical. They simply wanted to be sure that, in my particular capacity, I knew about them.
Senator LeBreton: Do you remember how many people or who it - the names of the people from Air Transat? So this is just one meeting then. So instead of having two different groups here, it's Air Transat and Canada 3000 together?
Mr. Nixon: I'm sorry, I don't recall the names.
Senator Tkachuk: Do you have notes?
Mr. Goudge: No, sir.
Senator LeBreton: So in other words, when we show this -
Mr. Goudge: I suspect I was not at that meeting.
Mr. Nixon: How about a coffee break?
Senator LeBreton: So therefore, when we have this impressive list, that Air Transat and Canada 3000 are one meeting.
Mr. Goudge: Yes.
Mr. Nixon: Yes, that's right.
Senator LeBreton: British Airports Authority, who did you meet for British Airports Authority? When did you meet them, on whose initiative and what was discussed and I want the name of the person you met.
Mr. Nixon: The British Airports Authority, as you know, had shown a substantial interest in the privatization of Terminals of 1 and 2 and had established a Canadian subsidiary with its own board.
The name of the subsidiary was Canadian Airports - I'm sorry, I can't recall the specific name. But you probably have had presented to you the board that had been established under the aegis of the British Airport Authority which was essentially the same organization that runs Heathrow and, in fact, Gatwick and the other very successful privatized airports, although quite expensive airports, in the U.K.
The board that had been established here was a very impressive board indeed with names on it that all citizens would recognize. It was a judicious balance of people with influential positions in politics and in finance and, in fact, leaders in the Toronto community in every way.
Senator LeBreton: Can you name the people who represented British Airports Authority?
Mr. Nixon: On that board, Eddy Goodman was on that board, Bill Summerville was on that board.
Senator LeBreton: No, but the meeting, did they come to the meeting?
Mr. Nixon: There wasn't a meeting. I phoned them.
Senator LeBreton: Oh, because it said - oh, you've said "consulted". So you phoned them. Why did you phone them? What was the purpose -
Mr. Nixon: Well, they weren't here because they had -
Senator LeBreton: So this was a phone call.
Mr. Nixon: - decided to have a real push to get this North American plum and establish themselves in the North American market. They said that they had committed a lot of resources and people, that they had gotten good advice to get a board that they felt confident was an influential board that would be respected by the community and by government and some of whom had access - not access but who were representing pension funds and so on.
Senator LeBreton: So what was the purpose of your phoning them then?
Mr. Nixon: To find out why they pulled out four days before the RFP was promulgated. Because they had spent a lot of money. They had retained good political advice by way of lobbyists. They had done everything that, under those circumstances, apparently one had to do. And they were going to show the expertise that had been so successful in the U.K. They were going to show the people in the Government of Canada and at Pearson what they could do here.
I was particularly interested that, after this commitment of energy and money, that they did not even wait for the RFP to be promulgated, let alone compete.
So I tried to track them down and find some people. And there were many names. I don't know who they were. I spoke to a senior person in London who finally agreed to take my call and, in answer to the question, his response was, "We considered that any more time spent in competing for the contracts at Pearson would be a waste for us. We decided to pull up stakes and move out," which they did and they went to Pittsburgh. And I understand that they were quite successful down there.
Senator LeBreton: Did they say why they pulled up stakes? Just because they had waited so long or what was the problem?
Mr. Nixon: Well -
Senator LeBreton: And you don't know the name of the gentleman you talked to in London?
Mr. Nixon: It is no to both counts. Presumably anybody who wanted to contact them would be able to do so by asking for the president of the British Airport Authority. That's who it was.
Senator LeBreton: So that's what you did, called up and said, "I'm Robert Nixon. I want to speak to the president."
Mr. Nixon: I called them and they eventually established an official who would take my call. And he said that they had, after making a commitment in the many millions of dollars and having constructed a subsidiary board here that they felt was very influential and competent, that the advice that they finally got was that there was not much sense in them wasting any more time and money, and they just folded their tent and marched away.
Senator LeBreton: Did they indicate to you -
Senator Tkachuk: Did you take any notes?
Senator LeBreton: Yeah, did you take notes at this meeting?
Mr. Nixon: No.
Senator LeBreton: And did you just say that they pulled up stakes a few days before the request for proposals were called?
Mr. Nixon: It was shortly before the RFP.
Senator LeBreton: What do you define as "shortly"?
Mr. Nixon: I don't know. You tell me what the answer is and I'll tell you whether I think it's short.
Senator LeBreton: Well, we're asking you the question, Mr. Nixon.
Mr. Nixon: They were here for a number of months, and then they decided that they would not proceed. My impression, and I don't know for sure, but that they left before the RFP. They didn't even bother to stay to see what it looked like, to see whether they wanted to participate.
Senator LeBreton: So it looks like they - so they - it wasn't weeks before. As a matter of fact, I think we had testimony that they finally gave up and left on December 31st which, in fact, was two and a half months before the RFP was issued.
Senator Tkachuk: Excuse me. You said you traced these people down. You mentioned Mr. Barbeau earlier on. Where was he? He was away somewhere?
Mr. Nixon: He was in New Delhi.
Senator Tkachuk: He was in New Delhi. So this is the head of Airports. You didn't phone him but you traced these people who left town, phoned all the way to London and -
Mr. Nixon: In the case of Barbeau, as I said previously, there was every indication that he would return. I thought I would have a chance to speak with him on his return. Whether or not he was back before the 30 days was up, I cannot be sure, but in the event, when I went to Ottawa to meet the officials of the Department of Transport, I did not meet with him and I would have if he had been available.
Senator LeBreton: We'd better get on through this list. It is a rather interesting list. We've now got Air Transat and Canada 3000 as one instead of two. We have a phone call to the British Airports Authority.
Buttonville Airport, who did you meet and where? Did you go out to Buttonville Airport? Who did you meet from Buttonville Airport?
Mr. Nixon: I went to Buttonville, and I met Messrs Sifton.
Senator LeBreton: Beg your pardon?
Mr. Nixon: Sifton, father and son.
Senator LeBreton: The two Siftons. And when did this meeting take place?
Mr. Nixon: Any help there? I don't know.
Mr. Goudge: I wasn't at it.
Senator LeBreton: Did you take notes?
Mr. Nixon: No.
Senator LeBreton: What was the purpose of the meeting?
Mr. Nixon: They were concerned that the proscription against development within 75 kilometers would mean that their facility, which was totally private, would not be able to maintain its competitive position. If you know Buttonville, it is well separated in a rapidly growing area of North York, I guess, but near the town of Markham - that the Siftons were contemplating closing the airport and applying for redevelopment of this extremely valuable property.
Their preference was that proscription against development be removed and that they would be able to continue with the advantageous development of Buttonville which they said was an extremely important adjunct to the rapidly growing business and commercial district of North York.
I was interested to see what their facilities were, to see that the number of private jet facilities that were maintained by a variety of businesses, and they were quite proud of the fact that they offered this very important growth stimulus and, in another sense, potential for the other side of Metropolitan Toronto.
Senator LeBreton: Canada Airports Limited, when did you meet with them? Who initiated the meeting? Did you take notes? Canada Airports Limited is on your list.
Mr. Nixon: Canada Airports Limited.
Senator LeBreton: No, there was no notes.
Mr. Nixon: I don't know.
Senator LeBreton: Canada Airports Limited? Mr. Nixon, it's on your report. "Pearson Airport Review consulted with officials from the following organizations...", and you've got Canada Airports Limited. I'm simply asking, who are they? Who did you meet with or who did you consult with?
Mr. Nixon: And I am telling you I don't remember. Can anybody help me with that?
Senator LeBreton: In other words, strike them off.
Mr. Nixon: Suit yourself.
Senator LeBreton: City of Mississauga, you've already talked about your meeting with Hazel McCallion -
Mr. Nixon: Canada Airports Limited, I'm told, is the official name of the British Airports Authority here and -
Senator LeBreton: Oh.
Mr. Nixon: So put those two together.
Senator LeBreton: Oh, again, another two together.
The Chairman: I think you mentioned it before, it is a subsidiary of Canadian -
Senator LeBreton: But the thing is, Mr. Chairman, it is listed as two separate organizations as an addendum to his report. The City of Mississauga, you've already testified. The City of Brampton, who did you meet from the City of Brampton?
Mr. Nixon: The mayor and development officers. We met in the - not in the council room but in a boardroom adjacent to the mayor's office.
Senator LeBreton: When?
Mr. Nixon: And I don't recall the date.
Senator LeBreton: You obviously then have no record of the meeting?
Mr. Nixon: No.
Senator Jessiman: How long?
Senator LeBreton: Did they have any input then into what you ultimately decided, if you don't recall -
Mr. Nixon: Well, they requested the meeting. They said that, you know, this used to be thought of as the town associated with Malton Airport. I suppose Malton was the village. He gestured out of the window and said, "We can see the CN Tower from here. We're a part of Toronto and we want to tell you how important the development of this airport is to the development of Brampton."
I don't recall them expressing any view other than they regretted that the government had not proceeded using the LAA alternative.
Senator LeBreton: I might point out again that there was no LAA alternative at that point.
City of Hamilton, who did you meet, when, where, and what was the - the date, who did you meet, and what was the discussion about?
Mr. Nixon: I met in the office of the chairman of the Regional Municipality of Hamilton-Wentworth. The mayor of Hamilton was also present. Their business development officers were there and there may have been one or two councillors. They were intensely interested because a good deal of public money had already been spent on the Hamilton airport and it had all but international capability.
I think they pointed out that all airports - or all aircraft presently in use, other than a fully loaded 747, were approved for the use of that airport. They were very concerned, indeed, and I underline that, with the possibility that the agreement with Claridge would mean that no further development could be undertaken, except at quite severe penalty by the Government of Canada, and that they would find they had this excellent facility which would remain inadequately used.
Senator LeBreton: Do you have notes of that meeting or the date of the meeting?
Mr. Nixon: I am quite clear that that was the view they put forward.
Senator LeBreton: But you have no notes. Can you tell me what date?
Mr. Nixon: No.
Senator LeBreton: No notes, no date. City of Toronto, that's a pretty tall order. Who did you meet from the City of Toronto?
Mr. Nixon: I met in City Hall with Her Worship the Mayor. And, once again, she was reiterating the view that the metropolitan chairman had expressed and was, as I recall, fully in support of his view that the future of Pearson was one of the most important aspects associated with the economic future of the City of Toronto.
We couldn't help but discuss to some extent the future of Toronto Island airport. I believe she reiterated some of the tripartite agreement among the city, the federal government and the region which had held up, if you want to put it that way, any development of the Island airport, other than for turbine engines. No jets were allowed and no physical contact, other than by ferry, was permitted. And she was interested in that and wanted to be sure that I understood what the basis of that was about.
Senator LeBreton: And the debate goes on every day in the paper.
The Chairman: I think we would like to have a break now.
Senator LeBreton: Okay, Mr. Chairman, because I have just - that's fine with me. I have just to complete the remaining people that Mr. Nixon listed. So we can take a break if you'd like. I still haven't finished my questioning.
The Chairman: All right. We will take a break.
The committee recessed.
(Upon resuming)
The Chairman: Before we continue, Mr. Nixon, I was wondering if I could ask you if, over the evening, before tomorrow's hearings, you and your colleagues could give some thought to assist us. In the people that you are speaking to in the course of preparing your report, would it be fair to ask you to prioritize those concerns that made the biggest impression on your report, not to say that all of the things that you have in your report did not make an impression, but those things that made the biggest impression. Perhaps you could prioritize them so that the last thing on the list will be the least.
Mr. Nixon: Mr. Chairman, you are thinking in terms of concepts, not people.
The Chairman: No, nothing to do with people. For instance, I'll throw out two - return on investment, timing, and things like that.
Mr. Nixon: I'm sure we could do that, and we'll have it for you in the morning.
The Chairman: That would be very helpful.
Senator LeBreton, can you finish up fairly quickly?
Senator LeBreton: Well, I will try, Mr. Chairman.
I simply want to continue on with the list that was appended to the November 29th Nixon report entitled "Pearson Airport Review Consulted With Officials From The Following Organizations". We left off with the City of Toronto, but was I clear that you said you didn't have any notes or date of this meeting?
Mr. Nixon: That's correct.
Senator LeBreton: The next group on the list is Claridge. Of course, we have already had testimony from you and from them.
The next group is Counsel of Concerned Residents. Who is this group? Who is the head of it? Where did the meeting take place? Were notes taken and at whose initiative?
Mr. Nixon: The head of the group is Raffaela Baratta. The meeting occurred in her home in Mississauga. She was head of an organization that I believe has been in existence for a number of years, which is a group of citizens that have their sole purpose in being sure that politicians and anyone else associated with Pearson airport understand the problems and difficulties of the residents in the area.
When she called, I thought first of saying, "I wish you well, but this has nothing to do with me," but she was so effective and persuasive that I said we can stop in as we drive in at a certain date, which was two or three days out.
She had her executive and a group of neighbours there. I think we sat around her dining room table. I think there may have been 15 of us jammed around there. She had entertained us very well, but she had also organized four or five of her vice-presidents to present me - and I think Mr. Wilson was with me - with their concerns about additional runways, particularly the north-south runway, which when built will mean that there will be approaches and take-offs over that part of Mississauga. I say again it had very little to do with me, but I felt, under the circumstances, I did not want to turn her down.
Incidentally, I had a chance to talk to these people just in general terms about their view of what was happening at Pearson.
Senator LeBreton: When did this meeting take place?
Mr. Nixon: November 2nd.
Senator LeBreton: November 2nd. So the subject matter of this meeting was not the redevelopment of Terminal 1 and Terminal 2.
Mr. Nixon: Unless you consider the runways as part of the redevelopment, and they certainly did and do.
Senator LeBreton: Delta Airlines. Who did you meet, where, at whose call, and what was the subject matter of the meeting?
Mr. Nixon: They came to our office on Wellington Street. I don't personally have a record of who came in. I think their main idea, as I recall, was to be sure that I was aware that, besides Air Canada, they were looking to improve their utilization of Toronto, not only as a destination, but as a hub. The whole concept is one that I think is extremely important. I think the president of Air Canada made that point in a recent speech, that Pearson is well fitted to be an important air transit hub in North America. I have no notes of that meeting.
Senator LeBreton: No notes. Do you remember the name of the person that represented Delta Airlines?
Mr. Nixon: No.
Senator LeBreton: No name. No notes.
The Government of Ontario. We've already talked about Mr. Church. Was he representing the Government of Ontario when you met with him?
Mr. Nixon: No.
Senator LeBreton: Who did you meet from the Government of Ontario?
Mr. Nixon: Rob Rae, the minister of transport, who was the member from Nipigon.
Senator LeBreton: Mr. Pouliot.
Mr. Nixon: Pouliot. The treasurer was there for old times' sake, and a very large number, at least 15 officials, most of them from the Ministry of Transportation and Communications, I think it's properly called. We met in the premier's office.
Senator LeBreton: Who called the meeting?
Mr. Nixon: We were contacted by an official in the Department of Transportation saying that they were preparing a brief for my perusal and that they wanted an opportunity to present the brief. I believe that the minister had arranged, because the premier had expressed an interest, that it be in his office, in his presence.
Senator LeBreton: And of course you have already indicated 15 officials - Mr. Rae, the Minister of Transport, and the treasurer. They presented a brief, and the brief, I take it, has been filed with this committee.
Mr. Nixon: Yes.
Senator LeBreton: Was the brief presented at that meeting?
Mr. Goudge: I can't remember, senator, whether the brief was actually presented at that meeting or forwarded to us later, but we certainly got it very shortly thereafter. I would be virtually certain that it's part of the record of this committee.
Mr. Nixon: I do recall that we did not sit around a table paging through a brief. It was fairly general but focused discussion on the importance of Pearson, that the Government of Ontario, even before the time of the NDP government, had made commitments to improve road access, and that very serious commitment was made to extending public transit access to Pearson as well. But the role that Pearson plays in the economy of Toronto and Ontario was very much in the minds of the premier and his ministers.
I don't know whether Minister Lankin was there, but certainly the emphasis on trade and economic development was primary.
Senator LeBreton: Was Minister Grier there at the -
Mr. Nixon: I do not think so.
Senator LeBreton: When did this meeting take place?
Mr. Nixon: November 4th, Mr. Chairman.
Senator LeBreton: Early on as well.
Okay. The next group that you have here is the Greater Toronto Area Regional Chairpersons. Was the list intended to be an organization, or was it a group, or did one person represent -
Mr. Nixon: Essentially, I would say that was the Gary Harrema group.
Senator LeBreton: Is that the meeting that took place at a Toronto hotel?
Mr. Nixon: Correct.
Senator LeBreton: When you talked about the meeting with Gary Harrema, I didn't get the sense that there was anyone else at that meeting, other than him. It was a dinner meeting, you said.
Mr. Nixon: They had had dinner. I wasn't able to make it in time. I think I was with the Mayor of Brampton.
Senator LeBreton: Who else was at the meeting other than Gary Harrema?
Mr. Nixon: I would simply tell you the other regional chairs - Metropolitan Toronto; the Chair of York Region, the Chair of Peel; the Chair of Halton. I think there were five.
Senator LeBreton: You think there were five.
Do you have notes of this meeting?
Mr. Nixon: No.
Senator LeBreton: You don't have any notes?
Mr. Nixon: No.
Senator LeBreton: Mr. Goudge, do you have notes of this meeting, a meeting of five or six regional chairs?
Mr. Goudge: I wasn't at that meeting.
Senator LeBreton: And what was the date of that meeting again? He was late for dinner, but he was at the meeting.
Were you at the meeting, Mr. Crosbie?
Mr. Nixon: It's very rare for me to be late for dinner.
Senator LeBreton: Were you there, Mr. Crosbie?
Mr. Nixon: No, you weren't there.
Mr. Crosbie: No.
Senator LeBreton: The date?
Mr. Nixon: It may not be on this list.
Senator LeBreton: Okay, date unknown. We won't belabour this.
Mr. Nixon: No notes.
Senator LeBreton: No notes, date unknown, but we do have a couple of participants this time.
Greater Toronto Regional Airport Authority. That obviously is Mr. Bandeen.
Mr. Nixon: That's correct.
Senator LeBreton: Is there anyone else from that group? Mr. Shaw, perhaps?
Mr. Nixon: Yes, and Mr. Valo was there, who is presently the chairman, I believe.
Senator LeBreton: Yes, he is.
Mr. Nixon: Steve Valo was president.
Senator LeBreton: And they have now, I think, finally named a general manager from, I believe, San Francisco.
So when you listed this as one of the - that was the meeting that you referred to earlier with Mr. Bandeen.
Mr. Nixon: Correct.
Senator LeBreton: Metro Job Start Coalition.
Mr. Nixon: This was a group that met at the Metropolitan Toronto - what do they call their government headquarters there? Anyway, the new building beside -
Mr. Goudge: Is that the CBC building?
Mr. Nixon: Beside the CBC building. Metro Hall.
Senator LeBreton: Oh, the Metro Toronto Convention Centre, do you mean?
Mr. Nixon: No. The place is called Metro Hall, and that's where the meeting was.
Senator LeBreton: Oh, yes. I know what you're referring to.
Mr. Nixon: It was headed up by the unions that work in the Metropolitan Toronto area. Their concern was totally valid, and, that is, they did not want the jobs that were going to be a part of this contract to be delayed. We had a very useful discussion about what governments in general were doing, and they were very keen that this not be delayed.
Senator LeBreton: Isn't that an interesting group.
Who was the person that headed up this group?
Mr. Nixon: Don't recall.
Senator LeBreton: You don't have his name. Any notes?
Mr. Nixon: No notes.
Senator LeBreton: Were you there, Mr. Goudge?
Mr. Goudge: I was not, senator.
Senator LeBreton: It is interesting. I can well understand their concern because, as I said earlier today, the unemployment rate today in Toronto's construction industry is 12.1 per cent.
Members of Parliament from Metro Toronto, when did you meet them? Who did you meet? Did you meet them as a group, or did you meet them individually?
Excuse me. On the Metro Job Start Coalition, just to go back, did they initiate the meeting?
Mr. Nixon: They did.
Senator LeBreton: Members of Parliament from Metro Toronto.
Mr. Nixon: I think I had indicated earlier that I had contacted the newly elected MPs, some of whom hadn't even been sworn in, in the area of the airport. Many of them had spent the last two weeks discussing that issue and practically none other, but right across the city, I was receiving phone calls from them. My general feeling was that it was more appropriate for them to contact the Prime Minister direct or through their caucus in Ottawa rather than through myself.
Mr. Dennis Mills, I believe, had already either been selected as chairman of the Toronto Liberal caucus or was undertaking some role of leadership. He contacted me, and he explained that there was intense interest, that I hear their views, and would I agree to meet with them.
I agreed to meet with them. We met in the Holiday Inn behind City Hall.
Senator LeBreton: The date?
Mr. Nixon: Sometime in that three-week period.
Senator LeBreton: Well, I'd like to know the date, if you could pinpoint it, Mr. Nixon.
Mr. Nixon: We don't have a record of that. I'm sorry, Mr. Chairman.
Senator LeBreton: And how many newly elected Liberal Members of Parliament were at that meeting? The whole Toronto caucus?
Mr. Nixon: I don't recall. I'm sure that some of them were not there. As a matter of fact, it was the total Liberal caucus from Metropolitan Toronto, so there were senators there as well. I'm not sure whether some of the senators on this committee were present. I think not.
Senator LeBreton: Certainly not from this side.
Mr. Nixon: So it was what you call an "active meeting".
Senator LeBreton: I would really like to try, if you have it in your notes, to pinpoint the day of this meeting. I think it's rather significant.
Mr. Nixon: I don't have it in my notes, and I might be able to give you a closer indication than saying it was in that three-week area. I will make some inquiries to see if I can pin it down a bit closer.
Senator LeBreton: Do you believe it was close to the date of your report finally coming out?
Mr. Nixon: If I were to guess, I would say it would be in the third week.
Senator LeBreton: Did you keep notes of this meeting?
Mr. Nixon: No.
Senator LeBreton: Were you there, Mr. Goudge?
Mr. Goudge: I was not there, senator.
Mr. Nixon: No one went with me.
Senator LeBreton: Did Mr. Nunziata try to reach you directly?
Mr. Nixon: Yes. He had sent me a letter, and he was, what you call, at the meeting.
Senator LeBreton: I'm going to read for the record - I think Mr. Nunziata was probably taking at face value your comments that I read at the beginning of the meeting where you said it might possibly be that the thing could be arranged without going to Draconian lengths. He was making a great deal of - he was in the media a lot reported in and around the 27th of November, which would be two days before your final report was released. Mr. Nunziata is saying, when they were talking about the possibility that you may suggest some compromise be made:
He (Nixon) wasn't appointed because of his legal skills...
Well, you have already said that you are not a lawyer.
Mr. Nunziata said:
If they wanted a legal opinion, they could just go to the Justice Department. I'm a lawyer, and I have my own legal opinions that this contract is unconscionable.
He went on to make many threats in the public saying there's a whole long list of reasons why this is a bad deal and ought not to go ahead, and he was convinced the Prime Minister would do the right thing and cancel the deal.
Then he goes on to say:
I didn't spend the last nine years in Ottawa bashing Tory sleaze to have it in our party, or for our party to condone it. My view and the view of my colleagues is that the deal is so fundamentally flawed that it is an unconscionable contract.
So he was putting a lot of pressure on.
Dennis Mills, who you indicated was chairman of the Liberal caucus also, said as a result - I believe the meeting was just before November the 27th:
From what we do know about the deal, we believe it is something Canadians would want us to question...
He was not quite as strong as was Mr. Nunziata.
At that meeting of the Toronto caucus, was the Pearson airport, T1T2, the only agenda item?
Mr. Nixon: Yes.
Senator LeBreton: It was. So it was called specifically for this purpose.
Mr. Nixon: Yes.
Senator LeBreton: Interesting.
Did you at that time indicate to them what your report would say to the Prime Minister?
Mr. Nixon: No. I was very careful not to. As a matter of fact, I had not completed my review.
Senator LeBreton: Actually, I could have a lot of fun reading some of these things, but I won't.
Senator Lynch-Staunton: If you don't know when the meeting was, how did you know you hadn't finished your review? That's the week before we undertook the -
Mr. Nixon: I told you it was in the third week.
Senator Lynch-Staunton: Oh. When did you complete your review? It started on the 11th. The conclusion was written on the 11th.
Senator LeBreton: Well, it started on the 11th.
Mississauga Board of Trade.
That was the first draft, John, the 11th. It was the same conclusion.
Who did you meet from the Mississauga Board of Trade, when, who initiated the meeting, and what was the general discussion? What can you tell me about it?
Mr. Nixon: I don't recall the answers to the first three questions. The final one is that they took a stand similar to the mayor's, that they did not want to participate until the Government of Canada were prepared to move to open up the Island airport.
I listened to what they had to say. Mr. Valo, I think, was a member of that delegation and also on the LAA - that is, the organization that called itself LAA. I don't recall his comments, but the LAA was in existence in that form, but that Mississauga felt that it could withhold its approval until it gained certain other commitments from the Government of Canada associated with air transit, air transport.
Senator LeBreton: So this is separate from the meeting with Mayor McCallion?
Mr. Nixon: Yeah.
Senator LeBreton: And you don't have a record of the date, and you have no notes.
Mr. Nixon: No.
Senator LeBreton: Morrison Hershfield Group Inc., you will just have to refresh my memory. Who are they, why did you meet with them, and when did the meeting take place?
Mr. Nixon: They were an organization of engineers and developers with very broad experience and a good deal of success in construction and development. I think they had been associated with some of the work at Terminal 3. They had thought, as the run-up to the issuance of the RFP occurred, that they had the capability and the resources to undertake a participation in the contest. They had spent some money in preparing a plan which was considerably different from that which had been the basis of the other competing plans, even some that had been part of the non-solicited development before the RFP was actually promulgated.
I met with them and heard their views, which were - these are pretty sophisticated, intelligent people, so I would hesitate to use the word "bitter". They are used to negotiating and competing. They had said that rather than proceed with the RFP with the million dollar deposit, which was needed as an indication of good faith, that they would withdraw.
The discussion, however, was it "ramified" into aspects of the development. It was their opinion, expressed to me, that there was every appearance that Paxport was in line to win the RFP, and they felt that they were not going to proceed. The phrase "the fix is in" was used.
Senator Lynch-Staunton: Mr. Chairman, on a point of order, if anything is hearsay, that is that. We are now being told that there was a suggestion that the Paxport bid was rigged. That is hearsay, and unless that can be supported, I would suggest the witness may want to reflect on the significance of his remarks.
Mr. Goudge: Can I just say in response to that, senator -
Senator Lynch-Staunton: No. I was speaking to the witness. He made the statement.
Mr. Goudge: Senator, you are raising a legal issue when you use the notion of hearsay.
I simply want to reiterate what I've said before, that from my perspective, speaking as the lawyer involved in this exercise, we were not engaged in a trial; we were not engaged in a royal commission.
Senator Lynch-Staunton: Nor are we.
Mr. Goudge: Mr. Nixon was engaged in information gathering.
Senator Lynch-Staunton: That's right; so are we.
Mr. Goudge: Rules of hearsay are applicable to trials. Mr. Nixon gathered information from what he viewed, I think, to be credible sources and his opinion reflects that.
Senator Tkachuk: Were you at that meeting?
Mr. Goudge: Which meeting?
Senator LeBreton: The Morrison and Hershfield.
Mr. Goudge: I met, I think, separately with an official of Morrison Hershfield. I was not at the meeting that he describes.
Senator Tkachuk: Were there notes taken?
Mr. Goudge: Of my meeting?
Senator Tkachuk: Yes.
Mr. Goudge: No.
Senator Tkachuk: Were there notes taken of Mr. Nixon's meeting?
Senator Lynch-Staunton: If I may finish, senator, if it's not hearsay, then it's certainly unfounded rumour and destructive gossip. I cannot accept that a witness would come before us and say that he was told that a serious bidder had refused to go along with the proposal with the knowledge or at least the feeling that another bidder was being given favoured treatment.
Senator LeBreton: The opinion was that every appearance was in line for the RFP to go to Paxport.
Senator Lynch-Staunton: We would like to know more about that.
Maybe, Mr. Chairman, we will have to bring in that particular witness and see whether they can come to it, unless Mr. Nixon would like to correct the impression he's left here.
It's a very serious allegation, Mr. Nixon, as you are certainly aware.
Senator Bryden: Mr. Chairman, as we know, there have been opinions expressed by virtually every witness that has appeared before us. It's always rather interesting to me that Senator Lynch-Staunton objects to the ones that don't support the side that he happens to be supporting.
Senator Lynch-Staunton: I think that you should be shocked equally -
Senator Bryden: I'm not shocked at all.
Senator Lynch-Staunton: - to know that the bidding process may have been rigged. That appals me. I want to hear more about it. I don't want to defend whoever is being charged. I want to get to the bottom of it.
Mr. Nixon: If I may respond to Senator Lynch-Staunton.
Number one, I was responding to the question from Senator LeBreton as frankly as I could.
Senator Lynch-Staunton presents a very serious matter and a difficulty for me. With your permission, I would just say, in the brief from the Province of Ontario, which is a part of your compendium of documents, and I understand that Fraser & Beatty assisted in the preparation of this brief, the following paragraph is written on page 20:
...the province is aware of possible irregularities associated with this federal initiative. The province acknowledges that some of those involved in this agreement may have behaved in ways that were not good business practice. There is also some considerable belief in the business, aviation and government communities that the federal government either blatantly broke its own contracting rules, or demonstrated a degree of unfair consideration of one terminal development bid.
Senator Lynch-Staunton: Where is the supporting evidence for that? That's what we're looking for. I don't care what brief it's in.
Mr. Nixon: This comes to me -
Senator Lynch-Staunton: And you take it at face value?
Mr. Nixon: - from the province, and I present it to this committee for their consideration.
Senator Lynch-Staunton: Yes, at face value.
Mr. Nixon: This committee can dismiss it or call these people in or take whatever action they deem fit, but this is the sort of material that was presented to me.
Senator Lynch-Staunton: And it's on that that you based your conclusions?
Mr. Nixon: In part.
Senator Lynch-Staunton: If it was a flawed process, Mr. Nixon, you are the first one to be guilty of it.
Senator Tkachuk: Could I ask you a question? Did you receive that brief before you met with Morrison Hershfield?
Mr. Nixon: I can't tell you for sure, and the relevancy of that escapes me.
Senator Tkachuk: Well, I'm asking you a very important question here because - did you receive that brief - did you have your meeting with the provincial government before you met with Morrison Hershfield?
Mr. Nixon: I'll have to get some advice on that.
Mr. Goudge: I'm not sure we can reconstruct when Mr. Nixon met with Morrison Hershfield. You have the date, senator, of the meeting with the province.
Senator Tkachuk: No, but my point is that you have a brief there which makes a serious allegation. You meet with Morrison Hershfield, who you tell us is making the same claim, and you, as a lawyer, Mr. Goudge, don't say, "I think this is really important, and I should make some notes here"?
Mr. Goudge: What's the question, senator?
The Chairman: Senator Tkachuk, why don't you just try to cut through it? Just try asking the witness a question as to whether this group, Morrison Hershfield, gave you any evidence around which to base their -
Senator Jessiman: Did you ask them for any evidence? That's more important. Having gotten this brief from the Ontario government and now from Morrison Hershfield, you now have allegations - did you just accept them for what they were and say, "Oh, isn't that great; that will add something to our being able to say that this thing is wrong"?
Mr. Nixon: I wasn't pleased to hear that.
Senator Jessiman: Whether you were pleased or not, surely, sir, there was some responsibility on you. You, Mr. Goudge, as advising the chairperson, to say you are going to accept this and use that kind of evidence to write a report that something is wrong, you didn't even ask the people. You didn't ask Morrison Hershfield, and you didn't ask the - you just accept the - it's incredible!
Mr. Goudge: Can I respond, senator, in this way?
Senator Jessiman: Sure.
Mr. Goudge: There is no question that what Mr. Nixon was told was the view of those telling that view to Mr. Nixon.
Senator Jessiman: Yes.
Senator LeBreton: Their unbiased view.
Mr. Goudge: I think what's important is at some point - and I hope we'll get to it at some point - the committee actually gets to the conclusions that Mr. Nixon came to and the reasons for it. We will answer the chair's question in the morning as to the various rationales to the conclusion, but it is very important that we come to the conclusions that Mr. Nixon actually came to.
Senator Jessiman: But you used these state-
Senator LeBreton: He said that -
Senator Jessiman: Excuse me, please. You used these statements - one was verbal; the other was in writing - and you accepted them without even asking these people, "What are you talking about?" You just accept them. You're making an inquiry. We're inquiring, and what we've done, we've gotten the people before us. We've examined them. They've cross-examined them, in the case that there were witnesses that were favourable to this side, trying to find the truth. But you people-
Senator Bryden: Mr. Chairman, I didn't know we were on examination in direct and cross-examination here.
Senator Jessiman: Well, it certainly sounds - That's what you've called it from time to time.
Senator Lynch-Staunton: You've used that term yourself.
Senator Bryden: Look at how quiet I've been all day, senator.
Senator Jessiman: I can understand why, senator. But surely, sir, as the chairperson; and you, sir, as a lawyer, advising this person that's trying to give advice to the Prime Minister that involves $800 million and you also know - or at least I assume you both knew - that if you're going to cancel this contract, it could cost the Government of Canada, the people of Canada, up to $2 billion. And you base part of your reasoning on some document that has no back up.
Senator LeBreton: Or a "non-document".
Senator Jessiman: And just say- It's incredible.
Senator Tkachuk: I just want to ask that question about that meeting with Morrison Hershfield because this is important. Maybe I'm not making myself clear, but you told me you didn't take notes of that meeting.
Mr. Goudge: I did not take notes of my meeting with the staff person from Morrison Hershfield.
Mr. Nixon: And he was not at the meeting.
Mr. Goudge: And I was not at the meeting with Mr. Nixon, but I have no hesitation in saying, senator, that the kind of information that Mr. Nixon has recited was also communicated to me by the official of Morrison Hershfield with whom I met.
Senator Tkachuk: But you didn't write it down?
Mr. Goudge: I didn't write it down, no, because it was absolutely clear. And in terms of what Senator Jessiman is saying, as a substantiation for the conclusion that this transaction was concluded under the shadow of possible political manipulation, I considered the views of Morrison Hershfield to be substantiation of that conclusion.
Senator Lynch-Staunton: But did you ever try and figure out on what that company and the province of Ontario were basing their views on?
Mr. Goudge: There is no question that their views were honestly held and that that constituted in my view - you may not like the conclusion, senator -
Senator Lynch-Staunton: No, I certainly no do not -
Mr. Goudge: Substantiation for the conclusion that Mr. Nixon -
Senator Lynch-Staunton: I certainly do not, Mr. Goudge, because it tends to confirm a suspicion that your views as to the conclusion of the report were already made and you were looking for those to support it and you did not take into consideration opposite views, which we are taking into consideration here.
Senator Jessiman: Did you ever ask either of those parties whether or not, having those views, they contacted the government at any time?
Senator Lynch-Staunton: Or the police, the RCMP?
Senator Jessiman: Or any one? The government, in particular?
Senator Lynch-Staunton: Rigged bidding is a serious charge.
Mr. Nixon: They thought they were contacting the government through me.
Senator Lynch-Staunton: No, because you believed what they said. It helped your conclusion.
Senator Jessiman: If Morrison Hershfield felt this was happening beforehand, did they write to the Minister of Transport and say, "Hey, wait a minute. We understand this is being rigged. And whatever information they had, give it to us."
Now we've had all the people that Transport Canada, the Government of Canada, thinks we should talk to. Now you come along and say, "Well, this fellow said this. I didn't even ask him whether he wrote to the government.
Senator LeBreton: He doesn't have the date of the-
Senator Jessiman: He didn't ask where he got the information-
Senator Lynch-Staunton: Or proof.
Senator Jessiman: - or any proof whatsoever; and the same from the province of Ontario. Incredible.
Senator LeBreton: Mr. Chairman? Sorry, David. Can I just clarify a few things here on Morrison?
So we do not know the date of either meeting: The one that you had, Mr. Nixon; or the one that you had, Mr. Goudge.
Mr. Goudge: I can't give you a precise date but I can give you the timeframe in general and you know that's the first three weeks in November.
Senator LeBreton: And you make this strange statement about Morrison Hershfield's perception. And, Mr. Nixon, did you not say that Morrison Hershfield was involved in Terminal 3?
Mr. Nixon: They have had extensive construction work as engineers. It seemed to me that they had something to do, but I'm not sure.
Senator LeBreton: Because if they were involved in Terminal 3, we've had ample testimony that people that were involved in the Terminal 3 experience used that expertise and experience when they were making bids for Terminals 1 and 2.
Mr. Nixon: Mr. Chairman, before I allow that to go too much further, I have to tell you that I'm not sure that they were involved in Terminal 3. So, if the senator is going to make a case out of that-
Senator LeBreton: Well, then, maybe you're not sure about there allegation.
Mr. Nixon: Please let me tell you that I'm not sure about that information.
Senator LeBreton: I don't think you're sure about a lot of things, Mr. Nixon. And another thing. I'm going to check the record tomorrow, but I believe, Mr. Goudge, you said, "It's very important to come to the conclusions that Mr. Nixon came to." I believe you said that a few moments ago. And that is going to be very interesting because -
And the reason I've been asking all of these dates is that in all of the drafts in the Nixon report there's some very interesting conclusions drawn very early on that don't change the whole thing. But we'll get into that later.
Just going back to Morrison Hershfield, then, for the purposes of the record - who, by the way, Mr. Nixon - what person from Morrison Hershfield did you meet with, person or persons? Can you name them?
Mr. Nixon: Mr. Dale Patterson is the one that Mr. Goudge met with and Patterson was in the group that met with me as well.
Senator LeBreton: So Dale Patterson's a staffer and Dale Patterson was in the group that met with you. Who else was in the group?
Mr. Nixon: I don't know.
Senator LeBreton: You don't know.
Senator Jessiman: How many?
Senator LeBreton: And they make these unbelievable - How many people?
Mr. Nixon: Two others.
Senator LeBreton: Two others and you don't know or you can't recall who they were?
Mr. Nixon: Well, I don't know who they are. I can't recall. It was 20 months ago.
Senator LeBreton: And you have no notes?
Mr. Nixon: No.
Senator LeBreton: Interesting. On to the list again. We'll get back to Morrison Hershfield, I'm sure.
Past Transport Canada officials. Who from past Transport Canada officials?
Mr. Nixon: Well, Broadbent, the previous deputy who had moved on to other responsibilities, Madam Labelle. Those two are all I can think of right now.
Senator LeBreton: And so when you list this, you're not talking about people who were in the Toronto area that had been previous Transport Canada employees?
Mr. Nixon: No.
Senator LeBreton: So rather than put their name in the report, you just put past Transport Canada officials who are both, by the way - well, one is in the private sector but one's still, of course, the deputy minister.
The next on the list is Paxport Inc. We've already had testimony to that effect. And then the next one is "Leester", but not "Lester" - I'm sure Mr. Pearson must love this - "Leester" B. Pearson International Airport. Whom did you meet from Lester B. Pearson International Airport?
Mr. Nixon: Actually, the principle person was Chern Heed but when we arrived at the administrative building, he asked us if we wanted somebody to take us through the parts of the facilities that might be interesting to our review. And so we spent most of an afternoon talking with Mr. Heed. And he had a couple of his senior officials who had a Jeep or some sort of a vehicle. And they drove us out so that they could explain the runway situation. They showed us the so-called area 4. They discussed what they consider to be the growing problem with Terminal 1. They also discussed, at this stage, their disappointment in the sense that the passenger throughput had been reduced so dramatically because of the economic recession. And so that Chern Heed was the one I recall readily, and there were two others whose names I don't recall.
Senator LeBreton: So this was kind of an on-site tour of the airport facility just to familiarize yourself with what you were -
Mr. Nixon: Yes.
Senator LeBreton: And when did this meeting take place?
Mr. Nixon: As I say, we have a chronology as nearly as we could work out for the honourable senators. And I don't see it listed, unfortunately, so I don't know. But it was in the first three weeks of November, 1993. And I would say about the middle week, 'cause it was not right then.
Senator Lynch-Staunton: There are only 30 days in November.
Senator LeBreton: And was this just a tour of the airport? Was this the only meeting with this group, or did you have several meetings?
Mr. Nixon: It was the only meeting, although we contacted Mr. Heed by phone. He had indicated that he had some statistical material that he would provide for us and I believe the material was appended to the report, which was just a spread sheet of the revenues of Pearson, I think over a few years. And I thought it was reasonably interesting. He made some comment that their revenues had been fairly stagnant because of the reduction in the utilization of the airport; that they had not undertaken any concerted attempt to maximize on the business that was still there, which was, of course, still very substantial.
Senator LeBreton: The next one on the list is Pearson Development Corporation. So we've already had Claridge and we've already had Paxport, so I - Was there anybody else from Pearson Development Corporation, or should have that been one entry on your report and not three?
Mr. Nixon: Well, we met separately with Paxport and with, essentially, the Claridge group-
Senator LeBreton: Yes.
Mr. Nixon: - who had taken over the carriage of the successful RFP, and that was the Pearson Development Corporation.
Senator LeBreton: So for the purposes of the record, though, it's another, its a duplication as is the case with several other organizations on this that it's really - it looks like a separate organization and in fact it is the same.
Just going back for a moment - and you talked about Delta Airlines. Why didn't you meet with U.S. Air or American Airlines or any other of the U.S. carriers?
Mr. Nixon: Delta asked for a meeting.
Senator LeBreton: They did. Well, I've maybe already established that.
Former South Central Ontario Airport Authority. What organization is this? Who represented them? When did the meeting take place? And did you take notes?
Mr. Nixon: This was, I believe, a largely defunct organization that had been erected under the leadership of Gardiner Church and with the concept that the airports going out into a radius - well, I would think of it as including Brantford, about 100 kilometres - ought to come under an LAA so that the service to the greater Toronto region ; and that's a bit pejorative when you get around Brantford - could be coordinated. And they decided to call it the South Central Ontario LAA, or whatever that is, and this was the concept that he had brought forward.
The difficulty in getting approval for such a local airport authority soon became apparent, but there were people who believed very strongly that that was the way airport authorities in the Toronto area should be construed. And so there were some people who continued in this, and I believe Mr. Bandeen was the principle one. And this was the second time, as nearly as I can recall, that I had a chance to hear his views expressed on the efficacy of local airport authorities.
Senator LeBreton: And so this was, as you said, a defunct organization. Was Gardiner Church at this meeting as well?
Mr. Nixon: No.
Senator LeBreton: And when, again, did this meeting take place?
Mr. Nixon: I can't recall. It would be in that period of time that we've been discussing, however.
Senator LeBreton: And did you take notes?
Mr. Nixon: I didn't take any notes.
Senator Bryden: Mr. Chairman, can I just ask a question? Because I'm not from Toronto.
Mr. Nixon: Good for you.
Senator Bryden: What airports would be taken in that southern Ont-
Mr. Nixon: I think it would go as far east as Oshawa. I'm not sure, but it would go close to Peterborough, Barrie, Guelph, Waterloo, which has a very active airport facility, Brantford and curve around including the major facility at Hamilton. There were always those who felt that the alternative to major expansion at Pearson would involve utilizing the already constructed facilities in Hamilton. The problem is to persuade the travelling public that this is not so seriously inconvenient. And so the discussion was on the basis that we have a wide spectrum of capital-intensive facilities already on the ground. Surely governments, through their cooperation, can work to utilize them rather than making an unnecessary additional commitment of capital.
Senator Bryden: Just one more. Coming from a province that is lucky to sometimes have three, approximately how many airports would that be? Would it be six, or eight, or ten?
Mr. Nixon: Buttonville, Oshawa, Island, Peterborough, Barrie, Guelph, Waterloo - I'm not sure whether that's one or two - Brantford, which has a very good municipal facility - the Brantford Expositor, please copy - Hamilton, which is the major facility that I've referred to, Pearson. There is another airport in the Niagara Peninsula that I believe they call the Niagara Airport Authority which is, I believe, within that 75 kilometre radius. So the concept was a coordination of these facilities. Buttonville was the only private one that I'm aware of.
Senator LeBreton: That's 10.
Senator Bryden: That's 10. That's mind boggling to a New Brunswicker.
Senator Lynch-Staunton: To a few other people too, a larger population.
Senator Bryden: But we have more geography than that little area. Anyway, thank you. I'm sorry, senator.
Senator LeBreton: So in terms of this defunct organization, it was Mr. Bandeen and not Gardiner Church. Gardiner Church and Mr. Bandeen's and Mr. Chern Heed's name keeps surfacing and surfacing and surfacing and they obviously had a tremendous bias against the privatization of T1 and T2 and a tremendous bias in favour of the LAA. How many times would you say you met or had phone calls with Gardiner Church in the period?
Mr. Nixon: He called me right after my appointment to indicate how important he thought the matter was and when could he speak to me. I said, "Tomorrow's Sunday. Come on down and have a cup of coffee," and he came down to the farm and we had quite a wide-ranging chat. And then we arranged a meeting which you attended, did you not?
Mr. Goudge: I was at that Sunday meeting.
Mr. Nixon: You were at that? Well, that was it.
Mr. Goudge: That was it.
Senator LeBreton: And then how many phone calls?
Mr. Nixon: None beyond that. Chern Heed was not aggressively courting me in any way, I'll tell you that. His view was on other horizons at that stage. He was very proud, obviously, of what had been accomplished at Pearson and was very proud that it was considered internationally as a well-administered facility. And I think his record there would be one of the reasons why he was so successful in an international competition for the Hong Kong job.
Bandeen, I think I mentioned that I spoke to him twice, and I think he's expressed his views to you people and you know how effective he can be in that regard.
Senator LeBreton: Yes. You say that Chern Heed was not aggressively courting you. Are you suggesting that perhaps Gardiner Church and Mr. Bandeen were by that statement?
Mr. Nixon: No, not particularly, although Mr. Bandeen was very strongly trying to follow up on what you might consider his political initiatives during the summer to be sure that citizens in general, and particularly people who were involved in the development of Pearson, would understand the advantages in his sight and, frankly, in mine, that local airport authorities offered.
Senator LeBreton: Let the record show that Mr. Nixon said Mr. Bandeen was pursuing his political initiatives during the summer - I think very successfully, as we now find out.
The Regional Municipality of Hamilton-Wentworth. When did this meeting take place? Who initiated it? Do you have notes? And who was there?
Mr. Nixon: No, I was - I described the meeting with the mayor of Hamilton and I said that the regional chairman was present. There were two meetings, and this was in the office of the regional chair. And I believe I think they call it the mayor not the reeve of the rural township where Hamilton airport is located. Binbrook is the name it used to be, I think under regional government its name has been elided with a couple of other townships.
And, once again, there was a very, very forceful presentation that the agreement that was part of the Pearson deal that would proscribe any activities of the Government of Canada to improve airport facilities within 75 kilometres of Pearson until the throughput of passengers was 36 million. They were very concerned that this would have a detrimental effect on the opportunities for Hamilton, Hamilton-Wentworth development -
Senator Jessiman: 33.
Senator LeBreton: It was 33.
Mr. Nixon: - and they were very serious about this.
Senator LeBreton: It was 33 million.
Mr. Nixon: 33.
Senator LeBreton: And when did this take place, this meeting, and did you take notes?
Mr. Nixon: It took place in the second week of November and I took no notes.
Senator LeBreton: No notes.
Senator Bryden: Mr. Chairman, just for the record, I am going to be beginning with a document tomorrow that I think is a letter that refers to that meeting and that letter is dated November the 8th and it refers to, "We are most pleased to have the opportunity to speak to you last week".
Mr. Nixon: Oh.
Senator LeBreton: So, it was earlier on. Thank you, Senator Bryden.
Mr. Nixon: It was not too far from where I live, and I went directly to the meeting from our home in Brant County, which would be about 20 miles.
Senator LeBreton: The next, second last - no, excuse me, third last, the Board of Trade of Metro Toronto. Is that Mr. Meinzer?
Mr. Nixon: Yes. Thank you for - I was just going to ask Mr. Goudge about Mr. Meinzer's name.
This meeting was held in the offices of the Metropolitan Toronto Board of Trade. Mr. Meinzer was accompanied by two others who were interested and knowledgeable about the role of boards of trade and chambers of commerce in LAAs in other Ontario cities and communities. They expressed their disappointment that they felt that the policy of the Government of Canada had unnecessarily excluded them and they were very hopeful that, in my advice to the Prime Minister, I would suggest this as a preferable alternative if he were to cancel the contracts that we're discussing.
Senator LeBreton: So there's another one chalked up on the LAA side.
Mr. Nixon: I didn't find anybody who was against the LAA in Toronto.
Senator LeBreton: Nor, as a matter of the fact, in the government or with the proponents, if you'd have asked.
Mr. Nixon: I think the proponents were quite prepared to accept the trusteeship of the property by the LAA as long as they didn't have any idea that they should be into the management in any way other than perhaps keeping the grass cut.
Senator LeBreton: Well, those words are actually Mr. Bandeen's, Mr. Nixon.
Mr. Nixon: Right. I thought they were quite effective.
Senator LeBreton: Yes. That's right. It's nice that you're quoting Mr. Bandeen. I see his words in many of the things that are reported here.
When did you say this meeting took place with the Board of Trade of Metropolitan Toronto?
Mr. Nixon: It took place in the first three weeks of November-
Senator Lynch-Staunton: Or 30 days.
Mr. Nixon: - and I didn't take notes.
Senator LeBreton: No notes. No date, no notes.
Mr. Nixon: They served a nice lunch.
Senator LeBreton: You said earlier on in your testimony about your memory, and with no notes in most of these meetings I wonder how you managed to use that memory of these meetings to write any kind of a report. But, in any event.
Toronto Island Airport.
Mr. Nixon: I was invited by the manager of the airport - and I believe it's the same person who is still managing there -
Senator LeBreton: Do you have the name?
Mr. Nixon: No, to go down and look at their facilities and hear his view as to how the island airport would fit into a coordinated system of provided air services for Metropolitan Toronto.
It's really a remarkable facility indeed, and I believe a big advantage to the business community at least of the city of Toronto. Naturally - and we can understand this - people who live close by it in condominiums and on the island feel that it is a needless irritant and they certainly don't want the irritation of sound and perceived pollution to get worse. So this is the kind of issue that will occupy a lot of time and attention of politicians who have the responsibility on the scene for making the relative decisions.
The operator of the airport - at least, the manager of the airport - of course didn't have that problem at all and pointed out what a serious loss in economic and modern travel advantage it was that there was no proper access to the airport and that the rules did not permit jets to use it.
Senator LeBreton: So the purpose of this meeting was more or less to discuss the concept; it was not specifically about Terminal 1 and Terminal 2.
Mr. Nixon: Only in that he made the point that many of the private jet landings at Pearson could be far better accommodated at the island for the convenience of the people using the airport and the fact that they had room in the capacity of the island airport to accommodate it. He was certainly aware of the view of the city of Mississauga in this regard and had tried to make it clear to me that the solution was easy as long as the three participants in the tripartite agreement associated with the island airport could bring themselves to approve access and permission for jets.
Senator LeBreton: Correct me if I'm wrong, but private jets do not utilize the facilities of either Terminals 1 or 2, so.
Mr. Nixon: Well, that's true, except that a lot of reasonable people felt that the landing strip situation there was at least as important as the terminal facilities and that if, in fact, there was a limiting factor, it was that rather than the terminal facilities. It was apparent that whatever happened to the contracts involving T1 and T2, somebody - whether it was the government or privatized runway co., had to do something about an additional north-south runway and perhaps the doubling of other runways.
Senator LeBreton: Yes, and as Mayor McCallion testified, she had come to an agreement on a north-south runway with the former Minister Corbeil, who you chose not to discuss with this.
Senator Bryden: Mr. Chairman, can I ask a question for point of clarification. If private jet users don't use Terminals 1, 2 or 3, I take it, what facilities do they use there in Toronto?
Mr. Nixon: Perhaps the senator would answer that question?
Senator LeBreton: I don't know where. You're asking me to say where the private jets land?
Mr. Nixon: Well, you said they didn't use Terminal 1 and 2. Perhaps you could tell him what they do.
Senator LeBreton: I said, "Well, correct me if I'm wrong", but you were the one that had the tour of Toronto airport, not I.
Mr. Nixon: There are smaller facilities that are-
Senator Lynch-Staunton: Privately run.
Mr. Nixon: - available out there and normally I think you'd drive past the terminals and go along the north road and drive in there. And there's a range of fairly good facilities available. For example, they house the planes used by the government of Ontario.
Senator LeBreton: The last person or organization on the list, of course, is Transport Canada. I take it that that means the people, Messrs Rowat, Jolliffe.
Mr. Nixon: That's correct.
Senator LeBreton: Now, all of this to say, Mr. Nixon, that this is a very interesting list, and chosen for a very interesting reason: People coming to you. But it hardly is reflective of the witnesses that we have seen, mostly suggested to us by Transport Canada, as people who are key to this process.
And I'm going to be very anxious to look at the record of this report today because it's very revealing that you relied on very biased information for the assumptions in your report and, actually, in most cases we don't have names, we don't have notes, we don' t have dates. Like, no names, no date, no notes. I mean, I've made those notes more than anything.
And I cannot - I have to say this: If there is a flawed process or if there's been political manipulation or an inadequate process, this is it not the Pearson agreement. And that's all I have to say, Mr. Chairman, for now.
Senator Bryden: I'm sure we're all pleased to have the opinion of Senator LeBreton.
Senator LeBreton: I beg your pardon, Senator Bryden?
Senator Bryden: I say, "I'm sure we're all pleased to have your opinion."
Senator LeBreton: You should. You should be pleased.
Senator Tkachuk: Aren't you concerned, Senator Bryden that we have here an officer of the court; we have a former leader and cabinet minister; we have Mr. Crosbie and company; we have these three people selected by the highest elected officer in the land, the Prime Minister, and to investigate contracts - I mean, I'm glad weren't investigating - How would we all feel if we were investigated like this? How would normal Canadians feel, if the Prime Minister asked three people like you to look into something and at the end of the day you would say to me, "I'm sorry. No dates. No times. No notes.
Senator Lynch-Staunton: No evidence.
Senator Tkachuk: No evidence. Accept my opinion. I don't have background documents. Selective memory here, sometimes "yes", sometimes "no", opinions, allegations that are unproven. I mean, this isn't about them now, this is about how people behave in a democratic country.
This behaviour is unbelievable, that I would ask you whether you took notes at a meeting, no notes. I don't know a lawyer in Canada that doesn't say, "Time, date, place. Let's see, 15 minutes billing", notes, notes, notes. No notes.
How did this go on with you getting paid $40,000, you getting paid $20,000; and I don't know how much you got paid. How did this happen?
Senator Bryden: Mr. Chairman, I think he started out by referring to me.
Senator Tkachuk: Not you.
Senator Bryden: He has referred to Mr. Goudge as an officer of the court.
Senator Tkachuk: He's a lawyer.
Senator Bryden: And I would like to hear Mr. Goudge and Mr. Nixon's reply to that.
Senator LeBreton: So would we.
Senator Bryden: I think they have stated it over and over-
Senator Jessiman: They've had all day.
Senator Bryden: - but if we want to put that on the record again, I would very much like to give them the opportunity to do that as fully as they wish.
Mr. Goudge: I'd welcome that, senator.
In many other contexts, Senator Tkachuk, I am an officer of the court. This was not a trial. Justice Letterman conducted a trial and made findings of fact. We were not engaged in the taking of evidence or the findings of credibility.
Mr. Nixon has indicated a number of times that he was in the business of gathering information so that he could render what he thought was responsible and fair advice and he did so.
Senator Tkachuk: You were there as a lawyer.
Mr. Goudge: I was there to provide legal advice. I was not there, sir, to cross-examine witnesses who were under oath in order that findings of credibility could be made. It's really important to understand that this was not a trial.
Senator Tkachuk: I didn't ask you that, I asked you if you write.
Mr. Goudge: You asked me, sir, or the inference was that I was there as an officer of the court and the answer is "no"; this was not a court. We did not have the power of subpoena. This was not an exercise of examination or cross-examination under compulsion. This was not a royal commission. There was an exercise in gathering information so that responsible and fair advice could be given. A month was taken, and that's the end result.
The Chairman: You will have lots of opportunities tomorrow, ladies and gentlemen. I do not think anybody wants to start questioning at ten to five, do they?
Senator Bryden: Mr. Chairman, it would be unfair to you and to me and the witnesses because I cannot confine myself to 10 minutes, as I think I've proven over and over again.
Senator Jessiman: Are you going first tomorrow?
Senator Bryden: Pardon?
Senator Jessiman: Are you going first tomorrow?
Senator Bryden: I would hope so.
Senator Jessiman: Yes, fine. That's okay. I've got lots of questions.
Senator Lynch-Staunton: I would like to ask Mr. Crosbie a couple of questions on the statement he made today and also get a little background because we will be getting to the Crosbie report. It has been referred to during our hearings on more than one occasion, but since we have a few minutes perhaps I can dispose of the preliminaries now.
Can you tell us a bit about your company, you know, its head office? Because the term "merchant bank" is not a foreign one in Canada but it's certainly not one we hear very often. So, if you'd just give us a little background who the principles are, where the head office is and especially what a merchant bank does.
Mr. Crosbie: Sure. I'd be pleased to answer that question.
Our firm is based in Toronto. We have in our Toronto office about 16 employees. A few years ago we entered into a partnership arrangement with a company in the United States which is similar to our own in many ways and is one of the leading independent valuation firms in the United States. On a combined basis, we have offices in eight cities throughout North America and we have a little over 200 employees.
On a combined basis, we do about 600 evaluation engagements a year. About 5 per cent of those would be to the Canadian market.
Our firm is active and advising and arranging transactions in the area of financings, mergers and acquisitions and restructurings as well as business evaluations, which I've already mentioned.
One of the things that I think makes our firm, give us a uniqueness in the market, is that we back that up with our capital where we provide capital directly as a principle to facilitate and help make some of the transactions in which we're involved work. So that as a merchant bank, we're more than just an adviser. We also provide capital, and that's what makes us a merchant bank as distinct from a pure adviser.
Senator Lynch-Staunton: Thank you. That's very helpful.
In your statement you use a term "sale process", which surprised me because there was no sale process in the Pearson agreement. Why would you use that term?
Mr. Crosbie: Sorry, in which documents?
Senator Lynch-Staunton: In your opening comments.
Mr. Crosbie: Oh, in the opening comment.
Senator Lynch-Staunton: You use the term "our work for Robert Nixon involved looking into the sale process that was followed by Transport Canada to attract buyers and investors".
I'm just wondering what the "sale process" is that you're talking about.
Mr. Crosbie: Well, we looked at the sale process.
Senator Lynch-Staunton: But what is being sold here?
Mr. Crosbie: Well, the government was selling, under a lease arrangement, the Terminals 1 and 2. So it was selling the right for someone to come in and take over Terminals 1 and 2 and pay a ground rent to the government.
And one of the things that, as we got into this and we looked at the process as to how the-
Senator Lynch-Staunton: No. Stop there, please. You used the term "sale process" and any layman reading this will go under the assumption that the Government of Canada was selling Terminals 1 and 2. And that may be the term you used within your field, your profession, but it's certainly not the term that we've ever even heard here.
What the government wanted to do, if it had the right bidder, was lease T1 and T2 for a given number of years, after which the ownership would revert to it.
Mr. Crosbie: Yes. This was the sale of a lease hold interest.
Senator Lynch-Staunton: Okay. So there was no sale of assets here.
Mr. Crosbie: No.
Senator Lynch-Staunton: All right. Well, that should be made clear.
Mr. Crosbie: Just to make sure we are clear on this one, when we use the word "sale process", that does not necessarily mean the sale of assets. The word "sale process" in the process in which you went about selling whatever it was you had to sell. In this case it was a lease hold interest and the sale process referred to how the government went about selling its lease hold interest.
Senator Lynch-Staunton: Okay. As long as we're clear that we're talking about the leasing of assets. Whether your term or my term-
Mr. Crosbie: Yes.
Senator Lynch-Staunton: - it's a leasing of assets through a ground lease basically.
Mr. Crosbie: Yes. That's absolutely right, senator.
Senator Lynch-Staunton: Thank you. Now, you questioned the government's dissemination of information on this suggesting in your statement that they could have been a little more professional, hired an outside group - there are many like you all over the world - to disseminate the information as far as possible, obviously to attract more bidders. Is that what you're saying here?
Mr. Crosbie: Well, that's part of what we're saying. I think we -
Senator Lynch-Staunton: In other words, if you had been in charge how would you have handled that?
Mr. Crosbie: If we'd been in charge, how would we have handled it?
Senator Lynch-Staunton: In the "identifying, creating and then approaching potential buyers and investors to sell them on this business opportunity". How would you have handled it contrary to the way that you feel Transport Canada did not properly handle it?
Mr. Crosbie: Well, how we would have handled it - and how I think many financial organizations who would be skilled at handling this kind of transaction would handle it is, first of all, they would get in and do a detailed analysis working with the government and finding out what it is one has to sell here and why it's attractive to a purchaser.
Senator Lynch-Staunton: No. We assume we've got all that information, all that data and we know exactly what we've got up for bids. Is that what you're saying?
Mr. Crosbie: We don't believe that was done.
Senator Lynch-Staunton: No, no. But let's assume that it has been done properly.
Mr. Crosbie: Oh, if it was done properly?
Senator Lynch-Staunton: How do you believe that information should have been better distributed than it was by the government?
Mr. Crosbie: Well, I think what you do is you'd spend a lot of time identifying groups and people throughout the world who you think would have the skills, and expertise, and capital and combination of these things and would have an interest in perhaps becoming involved in this project.
Senator Lynch-Staunton: So you think it would have been proper to have a bidder from outside with 100 per cent foreign ownership to come over and take over the -
Mr. Crosbie: No, I didn't say that at all.
Senator Lynch-Staunton: Well, no. You said "to scour the world" assumes that anyone's invited to bid.
Mr. Crosbie: Well, this was a bid that led itself in many ways to a consortium approach, as eventually was the case. In the particular case of the final bidder, for example, Allders are participants. They're from the U.K; Lockheed is a participant; they're from the U.S. So this is a transaction that lends itself to a consortium approach. And one of the skills as the seller is to identify parties who could participate in this and who would have an interest in it and who could bring certain skills and certain components to it. And some of those parties might be from different parts of the world.
And that could be built around - that doesn't necessarily mean that its foreign controlled; it could well be Canadian controlled, but you're bringing in expertise and forming a consortium that's going to provide maximum value and maximum benefit to the government.
Senator Lynch-Staunton: Well, the Canadian control was a major condition in the RFP.
Mr. Crosbie: Yeah, absolutely.
Senator Lynch-Staunton: So I'm just wondering, you know, who out there, other than those who bid and other than those who were aware of it in Canada, who else out there did we neglect?
Mr. Crosbie: Well, I think it's a big world out there -
Senator Lynch-Staunton: No, no. I know it's a big world.
Mr. Crosbie: - and there are a lot of parties. And the investment required to make this deal was only $66 million. So it wasn't a lot of money.
Senator Lynch-Staunton: No, no. We're going to hear the details of your report tomorrow. I just want to get on to your statement today where you suggest that, had the information been disseminated in a more professional way, we would have received much more interest than God knows where.
Mr. Crosbie: Yeah.
Senator Lynch-Staunton: And I'm just wondering where those people are.
Mr. Crosbie: Well, they're in the marketplace.
Senator Lynch-Staunton: No, no. If that's the kind of answer you're going to give, we'll get onto something else.
Mr. Crosbie: No, no. Hold it. Let's just-
Senator Lynch-Staunton: No, no, you hold it. I mean, vague answers are of no interest here; we've had them all from Mr. Nixon all day. We're hoping you'll be a little more professional tomorrow when we come to your report.
Senator Bryden: Well, is it not similar, Mr. Chairman, to a contract that was done at virtually the same time for the fixed link that I watch being built out my front window. And there are people there from Denmark; there are people there from Brussels; there are people from Calgary -
Senator LeBreton: Yes, and it wasn't cancelled. It was signed the same day as the Pearson agreement.
Senator Bryden: -who are all participating in this project.
Senator Lynch-Staunton: What's that got to do with it?
Senator LeBreton: It's a consortium.
Senator Bryden: I think what the witness is saying that there's expertise that could have been applied to this project the same as is being applied in relation to the fixed link, which is about the same-
Senator Lynch-Staunton: The witness has suggested that the information was not properly distributed and I'm just trying to find out-
Senator Bryden: No, it could have been better distributed.
Senator Lynch-Staunton: Well, I know. And I'm trying to find out way and the answer is, "It's a big world out there." Well, if that's the kind of answer we're going to get - and it's nearly five o'clock - I will go on to my next question, which is a request, rather. Can you bring tomorrow, or Thursday, whenever we question you on the Crosbie report, or whenever it is, the list of people and organizations that you consulted with to allow you to write this report? I would like to know who you consulted with. I know you mentioned transport officials and Deloitte, and we'd like to know if there are any others who are they, the individuals, and so forth because we have had comments on you report and if some of those comments are made by people who were interviewed by you, it would be interesting to compare their views on certain aspects of the report and the conclusions that you came to. Is that possible?
Mr. Crosbie: Yes. But I would like to say that on your question as to who was out there in the market, I don't believe you give me a proper opportunity to properly answer that question. And it's not necessarily to put in the answer now but I just don't want it left here that - I don't feel you gave us a proper-
Senator Lynch-Staunton: Well, then, I apologize for my impatience. I'll certainly give you all the time you need to answer that.
Mr. Crosbie: Good.
Senator Lynch-Staunton: I just don't like vague answers to precise answers (sic). Do you want to go ahead now or come back another day?
Mr. Crosbie: No we can - whatever's convenient with you.
Senator Lynch-Staunton: Well, it's up to the chairman.
Senator Jessiman: I've just got just - I really want to ask this question.
Senator Lynch-Staunton: Well, it will be another time, then.
The Chairman: Is it brief?
Senator Jessiman: Yes. It takes two or three minutes. It's not long.
Senator Jessiman: You said that you had called Mr. Stehelin and you spoke with him personally. Was it on a speaker phone?
Mr. Crosbie: Yes. One of my colleagues and I were on a speaker phone and I-
Senator Jessiman: And you know it was Mr. Stehelin?
Mr. Crosbie: I'm certain it was Mr. Stehelin. All my notes say Mr. Stehelin.
Senator Jessiman: All right. Let me just read you what he said to us.
I'm just going to read it into the record on page 4 where he is giving us three examples, and it's your report and it's just the first part.
We reviewed with Deloitte & Touche, financial advisors to Transport Canada in this project, their analysis of required returns on equity in utilities...
And I just stopped there. And I said:
Is that a correct statement?
Mr. Stehelin: No, they never reviewed them with us. Certainly not with me. If they reviewed them with somebody else in the firm, I'd be very surprised, but they never reviewed them with me.
I asked:
And if someone else in your firm had been interviewed, wouldn't they have told you?
Mr. Stehelin: There would be only one other individual, and I know for a fact that they never reviewed it with him.
I just leave that with you. That's on the record. I wonder who you did talk to?
Mr. Crosbie: Well, we spoke to Deloittes. We were told it was Mr. Stehelin. We have detailed notes of this conversation with Mr. Stehelin and we have detailed notes of subsequent conversations with Mr. Stehelin. So, we had a lengthy conversation with somebody at Deloittes who we were told was Mr. Stehelin. So it was Mr. Stehelin.
Senator Jessiman: Okay. Thank you.
Mr. Crosbie: I mean, what can I say?
The Chairman: Nine o'clock tomorrow morning.
The committee adjourned until Wednesday, September 27, 1995.