Martin’s problem: Corruption at home and abroad

Lawrence Solomon
National Post
March 27, 2004

The Prime Minister says he is fighting corruption, but he is merely keeping the lid on scandals. The Acres bribery case is one that could blow up

Paul Martin’s spin-filled response to the sponsorship scandal failed to maintain his pre-scandal popularity. His honeymoon as Canada’s dream prime minister abruptly ended only weeks after he assumed power. Corruption, however, has an international as well as a national face, and Canada’s corruption problems have as much of an international character as a national one.

Nationally, the Liberals’ first budget with Mr. Martin as Prime Minister – spun as an anti-corruption, pro-accountability document – provided little of substance. Finance Minister Ralph Goodale rightly declared that “Canadians deserve the utmost in accountability, transparency and value.” His government instead delivered the utmost in obfuscation.

Only one issue – corruption – has the potential to topple Mr. Martin and the Liberals from power. Inexplicably, Mr. Martin’s response to Canada’s greatest scandal in modern times has been a series of largely vapid measures that, even combined, add up to little. If Mr. Martin doesn’t set aside the spin and enshrine real reforms, he risks a fate that was almost unimaginable a mere six months ago: a John-Turner-like toppling of a newly minted golden boy prime minister.

Mr. Martin’s ersatz reforms betray a determination to place himself as the ultimate judge of his own conduct. Yes, he promises that future ethics commissioners for the House of Commons and the Senate will report to Parliament instead of to him. But Mr. Martin would retain the power to appoint cronies as ethics commissioners, and while he promises to give the Senate some say in his immediate choice, he refuses to enshrine that promise in legislation, allowing him to assert control over the position after a re-election, once the furor over corruption subsides.

Yes, Mr. Martin has set up an independent inquiry to look into the sponsorship scandal. But he will not commit to allow it to do its work, and allow Canadians to receive its verdict before asking Canadians to re-elect him in the next election.

Yes, he promises to bring back the position of comptroller-general, abolished a decade ago. But just as Mr. Chretien exerted tight control over his ethics commissioner, Mr. Martin and his Cabinet would both appoint the comptroller-general and have the comptroller-general report solely to them.

And yes, Mr. Martin proposes whistle-blower legislation, to give bureaucrats some measure of protection when they see wrongdoing. But it won’t generally allow knowledge of wrongs to be reported beyond the walls of the federal Cabinet. The legislation envisions the whistle-blower reporting to his own superior, or to the minister in charge of his bureaucracy, rather than going to the police, to the press or to Parliament.

Above all, Mr. Martin wants to hire legions of in-house accountants – people without the tools or inclination to ferret out wrongdoing – instead of simply legislating penalties tough enough to deter wrongdoing, and hiring independent forensic accountants to give the penalties relevance. Mr. Martin wants the illusion of reform.

Although there is no one definition of corruption, most authorities see it largely as a function of government. The Oxford English Dictionary defines corruption as “perversion or destruction of integrity in the discharge of public duties by bribery or favour.” The World Bank defines corruption as “the abuse of public office for private gain.” Most national chapters of Transparency International, the world’s leading anti-corruption organization, agree with the approach of the Hungarian chapter: “By the broadest definition, corruption means the abuse of public power in order to make private profit.” The United Nations Convention against Corruption overwhelmingly concerns itself with the corruption of public officials.

The more government grows, the greater the likelihood of corruption, the greater the need to take corruption seriously by showing there are consequences to wrongdoing. Mr. Martin’s government shows nothing of the kind: It blusters about “zero tolerance” only when caught in the high-profile sponsorship scandal, and pooh-poohs wrongdoing when scandalous behaviour does not make the front pages.

The Liberal government’s underlying tolerance of sleaze shows in the ongoing case of Acres International, a Canadian engineering multinational whose bribery conviction in a $12-billion water megaproject in the African country of Lesotho was recently upheld on appeal. The federal government neither deplored Acres’ behaviour nor cut it off from the public trough. Instead, it rallied to Acres’ defence. Federal officials denigrated the Lesotho court decision that castigated Acres’ “premeditated and carefully planned criminal act,” and our federal government’s man at the World Bank in Washington argued against debarring Acres, despite the bank’s policy of debarring companies that engage “in corrupt or fraudulent practices.” Debarring would disqualify Acres from participating in World Bank contracts.

As far as the federal government is concerned, Acres is a company in good standing. Export Development Canada, a federal Crown corporation that subsidizes exports, refuses to debar Acres, and the Canadian International Development Agency, a federal aid agency that on its own has provided Acres and its affiliates with more than $100-million over the years, only last month affirmed that no penalties were called for: “We will continue to fulfil existing contractual agreements with Acres and will consider new proposals when submitted.”

The federal government’s refusal to treat corruption, wherever it may find it, as a serious offence betrays a culture of corruption. In the Acres case, the very person who deposited Acres’ bribes into the Swiss bank account of a corrupt foreign official, and who enriched himself in the process, was himself a Canadian federal official, appointed by the federal Cabinet and abusing his official capacity as Canada’s honorary consul to Lesotho. The government’s evident reaction: “So what?”

Mr. Martin hopes his current scandal problem blows over by election day, and it may. But because he is only working to keep a lid on scandals, rather than eliminating them, new ones may well explode in his face. The World Bank’s pursuit of Acres continues apace, for example, and, because it is the world’s single-most-important case involving international corruption, it continues to be followed by the international press. A World Bank decision to debar Acres could come down during the coming federal election campaign.

Mr. Martin might then need to explain to a corruption-weary electorate why his government so ardently defended Acres, and dismissed actions against this company out of hand, when the Lesotho courts, and the World Bank investigation, held Acres to a higher standard.

Lawrence Solomon is the executive director of Urban Renaissance Institute, a division of Energy Probe Research Foundation.; LawrenceSolomon@nextcity.com

Acres responds

Re: Martin’s Problem (Corruption at Home and Abroad), Lawrence Solomon, March 27.

We are disappointed that Financial Post readers have once again been subjected to Lawrence Solomon‘s biased attacks against Acres International. The Post’s decision to allow Mr. Solomon to recycle the same unfair and inflammatory accusations made by the same writer in the same space last January serves only to mislead Canadians about the actions of their government and to misrepresent a Canadian company that has implemented one of the most comprehensive processes among our peers to ensure transparency, fair play and good governance.

Contrary to Mr. Solomon’s assertions, Acres asked for and received nothing more than the assistance of the Government of Canada in obtaining due process, something to which we believe all Canadian citizens and Canadian companies should be entitled.

Acres is grateful for the support we received and places a priority on working with government to resolve the issue and to move forward. We have co-operated with the judicial process in Lesotho at every stage, and we were deeply disappointed that the Lesotho Appeal Court overturned only one of the two counts that were subject to appeal. Nevertheless, we have agreed to pay the onerous fine of $2.9-million, and will fulfill our commitment to do so.

Acres will also continue to co-operate with the World Bank in a professional manner.

Above all, Acres will remain focused on our commitment to honest and ethical business practices both within our company and throughout the entire industry. As Mr. Solomon already knows, the decision by Export Development Canada to do business with Acres is based on a thorough, independent review of systems put in place by Acres and on their assessment that these systems are fully consistent with international best practices.

Mr. Solomon’s continued, baseless attacks are deceiving to Canadians and highly discouraging to the hundreds of proud Acres employees who not only conduct themselves with the utmost integrity, but are guiding the creation of similar standards that encourage our entire industry to do the same.

A. Hylton, president, Acres International Limited, Oakville, Ont.

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