Paul Martin’s other deficit problem

Lawrence Solomon
National Post
January 8, 2004

Patronage, ethics and other corruption-related issues loomed large in the last federal election. They didn’t stop Jean Chretien and the Liberals from being re-elected with an increased majority but they did cast a poll over the country.

A poll taken in 2002 by EKOS Research Associates Inc. showed 51% believed Paul Martin would be better able to deal with ethics and corruption issues than Mr. Chretien, who received the nod of just 21% of those polled.

In fact, much as the public anticipated, the country’s international standing did decline, according to Transparency International, a Berlin-based non-profit group that is the gold standard in monitoring international corruption. In its 2003 survey, Transparency International dropped Canada from the top 10 least-corrupt countries, based on the perception that Canada’s hands aren’t quite so clean.

Another international group, the Trade Union Advisory Committee to the OECD, also ranked Canada poorly in its 2003 study of the developed world’s export credit agencies. It placed Canada in the bottom half of 28 OECD nations it surveyed, based on the policies of its crown corporation, Export Development Canada. As EDC revealed in an OECD working group survey of the standards to which export credit agencies adhere, EDC does not feel compelled to report evidence of corruption to authorities and, even if a company is convicted of corruption, EDC will continue to do business with it if it so chooses.

Canada in 1999 signed the OECD’s Anti-Bribery Convention to stamp out corruption, but so far it has shown no interest in cracking down on wrongdoing, even after a Canadian government official performed double duty as a briber. In a landmark decision last year involving a water megaproject in the African country of Lesotho – the first case in the history of international development to see a multinational brought to trial – Acres International, a Canadian engineering firm, was convicted of corruption in bribing a foreign official. The person depositing Acres’ illicit payments into Swiss bank accounts on behalf of a corrupt Lesotho official was Canada’s own Honorary Consul to Lesotho, a Canadian Cabinet appointee. Yet, rather than showing contrition for Canada’s role in this crime – which the Lesotho Court of Appeal called “this premeditated and carefully planned criminal act” – our federal government is rallying to Acres’ cause and lobbying international bodies such as the World Bank to continue to provide Acres with contracts. Export Development Canada spokesman Rod Giles maintains that his organization will continue to do business with Acres. “It’s not the role of financial institutions to punish companies for these things.” The government’s role, Mr. Giles and other government officials convey by their deeds, is to defend Canadian companies that have been convicted of corruption, and to minimize any financial consequences that these companies may face.

In the next federal election campaign, as in the last, the ethics of government leaders may again be a issue. In recent years, the public has witnessed a slew of scandals, among them Mr. Chretien’s lobbying of the Business Development Bank to favour a constituent, former B.C. Premier Glen Clark’s resignation over “Casinogate” and a Toronto scandal over a questionable computer leasing deal.

If Mr. Martin is vulnerable on any issue in the coming election campaign, it’s on patronage and ethics. He has already been attacked for perceived conflicts of interest over his shipping empire and over his friendships with, and gifts from, recipients of government largesse. During Canada’s federal election campaign, the U.S. presidential campaign will also be in full swing. Charges of “cronyism” have emerged as a major issue there, with the Democrats demonizing Vice-President Dick Cheney’s past ties to Halliburton. In Canada, both the Conservative and the NDP parties are sure to echo such charges.

Mr. Martin would do well to aim for a fresh start by acting to clean out the rot, before an election call. He can do so in any number of ways – appoint an independent ethics advisor, refuse to do business with companies convicted of criminal wrongdoing, curb the patronage system. The public has waited long enough for integrity in government.

Lawrence Solomon is executive director of Toronto-based Urban Renaissance Institute. www.urban.probeinternational,org 

 E-mail: LawrenceSolomon@nextcity.com

View a response to this article by Eric Siegel, executive vice-president, Export Development Canada (EDC)

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