Corruption

In the 1872 federal election, Sir John A. MacDonald accepted $350,000 in campaign funds from the Canadian Pacific Railway Company and, in exchange, granted a contract to build a transcontinental rail line to British Columbia. As Aislin points out (See cartoon), not much has changed. We now know through the Gomery inquiry that vast sums of money were doled out in advertising contracts with some of the money funnelled back into the Liberal Party's coffers. However, as damning as the Gomery inquiry has been so far, some may still view Adscam as an isolated incident. Moreover, some see it as an unfortunate relic of the Chretien era -- something that no longer exists in the Martin era.

It is my contention that this is not the case. It is hard to believe that Paul Martin, as Finance Minister in the Chretien government, could have spent a decade in such a powerful government position, yet all the while remain oblivious to the schemes hatching around him. It is even harder to believe after considering some of his history with Canada Steamship Lines (CSL), the company he owned until 2003, when he handed it over to his sons.

At the earliest opportunity, Paul Martin exploited his position as Finance Minister to create a technically legal way for his company to evade its taxes. In the 1993 election, the Liberal Red Book promised to prevent Canadian companies from using off-shore tax shelters. Paul Martin's 1994 budget did actually address this issue. However, the budget bill also included an obscure clause that created a loophole, allowing companies to locate their headquarters in Barbados. By the next year, CSL moved its headquarters there, where it enjoyed a tax rate between 1 to 2.5 percent, as opposed to the 28 percent rate in Canada. (See insanely long article from The Walrus magazine, "Blind Trust".)

Even with the technically legal loophole, the evasion's legality is still murky. CSL's office in Barbados only had one "employee" (there was a lawyer there responsible for the CSL file). Meanwhile, the loophole required that the foreign subsidiary be "active", with at least five employees, for it to qualify. (Again, see "Blind Trust".)

Of course, let's not forgot the biggest CSL scandal. Figures released in 2003 suggested that CSL had received $137,000 in federal contracts during Martin's tenure as Finance Minister. By 2004 it was revealed that the actual value was $162 million. That's an accounting error of over %100,000. Or you could just call it fraud.

The point is that Paul Martin is poorly cast for the role of Innocent Bystander in Chretien era corruption and graft. He claims that he will clean up the Sponsorship mess, but as long as he stays in power we won't know how big the mess really is.