Seniors are demanding action on income trusts!

Liberal MP Garth Turner of Halton is on a speaking tour of western cities, outlining the multitude of reasons why Stephen Harper and the Conservatives ought to be thrown out of office. One of those reasons is the October 31, 2006 announcement by Finance Minister Jim Flaherty that income trusts would no longer enjoy tax-free status.

That announcement quickly devalued trusts, and investors whose portfolios were top-heavy with income trusts felt burned. That hit seniors particularly hard. Garth Turner says as much:

The Harper Party has repeatedly attacked its own bases of support. It betrayed seniors by taking their income trusts – folks who consistently have voted blue.

Seniors had their income trusts taken away? Why would seniors be so heavily engaged in income trusts in the first place? They are not a low-risk investment appropriate for a retiree's portfolio, at least not in a large proportion. You would think that the advice given by investment dealers is the real problem, especially since the taxation sword had been hanging over income trusts for quite some time.

Actually, you would be right to think that. A lot of seniors are thinking that too. If they are angry with Jim Flaherty, it is because they don't think he's moving fast enough on cleaning up that industry, an industry they believe is home to people who are little better than con men and who have been able to collect fees and commissions while dispensing poor advice to people who were too trusting.

Not exactly the spin Garth Turner has been putting on things.

Don't take my word for it though.

Check out other entries from the Garth Turner Lost Tory Tour category
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The Scott Reid Meltdown and the Chretien-Martin War

Scott Reid had a major meltdown on CTV's Mike Duffy Live last night. But putting aside the humour value of watching a senior Liberal Party strategist foam at the mouth, there is something significant to be gleaned from the outrageous display.

Someone spiked Scott Brison's leadership bid

Who torpedoed Scott Brison's Liberal leadership bid?

The Canadian Imperial Bank of Commerce has turned over an e-mail received from Liberal MP Scott Brison to police and regulators as part of a probe into the income-trust controversy that dogged the Liberals in the recent election campaign, The Globe and Mail has learned.

Sources said the former public works minister, a potential contender for the Liberal leadership, sent an e-mail to one of CIBC's employees the day before Ottawa announced its much-anticipated policy on income trusts last November, in which he suggested the recipient would likely be pleased by the decision. [emphasis added]

It wasn't the bank and it wasn't the RCMP. I say that because people in either of those organizations have little to gain from the leak and a lot to lose if they were revealed to be the source.

So that leaves someone in the Liberal Party itself. Presumably a few key Liberal cabinet colleagues were made aware of Scott Brison's meeting with the RCMP on January 18. The Prime Minister, House Leader Tony Valeri, Public Safety Minister Anne McLellan perhaps, since the RCMP was leading the investigation. Key people in the Prime Minister's Office. But no one else -- the election was only days away, and as bad as things were, a revelation like this could have destroyed the Liberals.

The Liberals end up losing the election on January 23 (though not as badly as some had expected), Paul Martin announces that he will step down, and major Liberal figures (Brian Tobin, John Manley, Frank McKenna, etc) announce that they will not run.

Suddenly second-stringers like Belinda Stronach, Ken Dryden, and Joe Volpe are leadership contenders. Include in that list Scott Brison.

So we have suspects -- Stronach, Dryden, etc -- with motives but no means. Certainly they are motivated to eliminate a potential leadership run by Brison. But how would they have known about his involvement in the Income Trust Scandal?

As I said, I can't believe that the knowledge of Brison's RCMP interview was widespread. Indeed, I expect the circle of people who knew was almost certainly kept very small.

That means one of these key people decided to spike Brison's bid. Is this person trying to help one of the other potential leadership candidates, or is this person just out to get Brison? Or did this person conclude that Brison would damage the party as leader, or even by running for leader? And more intriguing -- is this person acting alone, or with the knowledge of the power players in the former PMO, or even under the guidance of Paul Martin himself?

Or maybe the source of the leak was the bank or the RCMP after all.

And here's a very speculative and very unlikely scenario. What if David Emerson knew? I doubt he did, but let's say he knew or found out. He joins the Conservatives and brings this little nugget of knowledge. Next thing you know, it's splashed all over the papers. Why would the Conservatives have done this, if indeed they did, as unlikely as it is? Well, there could be better a time to reveal this, like during a leadership campaign itself, but that might be so far off in the future that it's impact would be minimal. In any case, Scott Brison might not even run. On the other hand, reveal it now, and suddenly you have a story competing for attention with the Emerson thing, which is good news for the Conservatives. Moreover, you bring the focus back to what the Liberals have been accused of doing (in this case, insider trading) which makes the Emerson thing look like small potatoes.

Just musing out loud.

Question Period should be reversed

The Income Trust Scandal has touched yet another senior Liberal:

The former Liberal government insisted that details of its Nov. 23 plans for income trusts were tightly held and that its staff kept details secret until the announcement was made.

[Former Liberal Finance Minister Ralph Goodale] disclosed during the election campaign that two other cabinet ministers knew in advance about the Nov. 23 announcement: former revenue minister John McCallum and then-House leader Tony Valeri. The campaign began Nov. 29.

Mr. Goodale also said that three of the then-prime minister's senior aides were aware of the substance of the income-trust announcement in advance, but he didn't name them.

Of course, we all know that the suspicion is that someone spilled the beans, that income trusts, which were under threat of taxation, would not be taxed. That afternoon, before the announcement, there was some seriously weird trading on income trusts, as if someone knew that an announcement would be made soon that would pump up the price of these depressed stocks.

Apparently the Canadian Imperial Bank of Commerce has an incriminating email:

The Canadian Imperial Bank of Commerce has turned over an e-mail received from Liberal MP Scott Brison to police and regulators as part of a probe into the income-trust controversy that dogged the Liberals in the recent election campaign, The Globe and Mail has learned.

Sources said the former public works minister, a potential contender for the Liberal leadership, sent an e-mail to one of CIBC's employees the day before Ottawa announced its much-anticipated policy on income trusts last November, in which he suggested the recipient would likely be pleased by the decision.

The bank did not learn of the e-mail until after the federal election campaign began, but when it did, it launched an internal review of its trading activity in the lead-up to Ottawa's announcement. The sources said the review did not turn up anything unusual, but CIBC still decided to bring its report to the attention of the RCMP and the Ontario Securities Commission.

Of course, Brison is denying everything, which is bizarre, if only because the email is actual hard evidence. This isn't someone recalling a conversation. This is an email with headers and whatnot. The email was sent on November 22, a suspicious date indeed.

Even if the CIBC did not act on the information, and it insists it did not, the fact is that there is evidence that a senior cabinet minister sent a nudge-nudge-wink-wink email to a financial house about impending tax law changes.

People go to jail over stuff like this.

If the email turns out to be legit, I wonder exactly why Brison knew about the tax decision. I can't see why he should have known. McCallum as revenue minister and Valeri as House Leader made sense. Public works minister? Don't see it. How did he know about the decision? Paul Martin, Ralph Goodale, John McCallum, and Tony Valeri all insist that they confided only in immediate senior staff, and that no one leaked the information any further.

Someone else is lying.

You know what the bizarre thing is? When Parliament resumes sitting, Question Period will make no sense. The Conservatives, as the governing party, will be asked all the questions. But the answers to all the interesting questions still lie with the Liberals.

The Income Trust Scandal: More news...on the news

Heads up! The CBC will be running more on the income trust scandal on Politics (4:30 to 5:30 Eastern on CBC Newsworld), and on The National.

Check your local listings.

SEC Investigation: The importance of transparency

From CTV:

The U.S. Securities and Exchange Commission is reviewing last November's alleged income trust leak and may launch an investigation, the regulator revealed in an e-mail sent to NDP Finance Critic Judy Wasylycia-Leis.

The e-mail was written Thursday by Ann H. Sulzber [sic], special counsel to the SEC.

"We are taking your complaint very seriously, and have referred it to the appropriate people within the SEC," Sulzber [sic] writes, and refers to a telephone conversation with Wasylycia-Leis from the previous week.

Sulzber [sic] adds that "the SEC generally conducts its investigations on a confidential basis and neither confirms nor denies the existence of an investigation unless we bring charges against someone involved … As a result, we will not be able to provide you with any future updates on the status of your complaint or of any pending SEC investigation."

The special counsel is Ann Suzlberg, not Sulzber (the Toronto Star got the spelling correct). She works for the Division of Enforcement.

So by my count, there are three simultaneous investigations ongoing into the Income Trust scandal.

But recall that on December 22, this blogger had confidential information that the OSC had initiated an investigation. So by my reckoning, Paul Martin and Ralph Goodale knew for two weeks that the OSC had concerns.

Did they announce the investigation in order to assure the investment community and Canadians at large that the regulatory mechanisms that ensure that Canadian markets operate in a fair and open manner were themselves working?

Of course not:

The next hallmark of the rule of law is transparency.

Transparency is particularly important in financial sector regulation and supervision because of the need for confidence in the system.

Who spoke these words of wisdom? Finance Minister Paul Martin, at Cambridge University in England, on July 12, 1999.

I guess transparency matters only some of the time. At other times, it is important to be evasive and opaque.

How can you tell when? I don't know. Even those rulese are not all that transparent.

OSC Investigation: It's worse than we imagined

Now that I'm back online (I do have a life beyond blogging), I can give the OSC statement some proper attention.

A complainant, still unnamed, asked the OSC to investigate two issues:

1. insider trader allegations
2. a report that Ralph Goodale's staff tried to silence a CARP member who said the group got advance notice

Thanks to CTV, we know that CARP member was assistant director William Gleberzon. We also know that Gleberzon retracted his comments, much to the confusion of CTV such that the network stood by the original story.

CARP was so adamant that no such communication took place that they made the error of calling Warren Kinsella a liar. Bad move. Within a few days, CARP backed off that allegation.

One shudders at the thought of what Kinsella had to say to them.

But clearly someone got to CARP, and that is even more interesting, and potentially far more damaging, than allegations of insider trading.

If true, someone from within Ralph Goodale's office (or the PMO) threatened Gleberzon in particular, or CARP in general. Threatened with what? A lifetime of audits? Suspension of this license or that?

Even if the threats were bluffs, even if there was no way some functionary within Ralph Goodale's office (or the PMO) could actually follow through on the threat, the utterance of a threat, even a hollow one, is a crime.

Moreover, the allegation suggests that one or more people within Ralph Goodale's office (or the PMO) felt it was appropriate to use the power of the government to protect and preserve the fortunes of the Liberal Party.

This is worse than Adscam. The Sponsorship Program generally involved willing participants in both government and in the private sector engaged in a scheme to steal taxpayers' money. Though some witnesses claimed that they felt pressured to engage in these activities, the threats were of the nature that if they did not play ball, they could no longer expect government largesse.

Unseemly, to be sure. But the crime was the theft of the money, not of behaving boorishly.

But here, the tone of the report suggests that one or more people within Ralph Goodale's office (or the PMO) behaved like soldiers in an organized crime syndicate. Using the threat of violence (in this case, probably financial violence) to compel someone to lie.

This is no longer about Liberal Party bungling and waste. This is no longer about Liberal Party theft. This is about a Liberal Party that, when entrusted with the vast power of the government, sees no problem in using that power to intimidate and punish its enemies.

From the OSC:

"The commission takes allegations of trading on insider information and allegations of potential interference with an investigation very seriously. Your concern has been forwarded to the Enforcement branch of the OSC for further review.''

Has the Liberal Party stopped being merely an incompetent and greedy organization? Is the Liberal Party now a dangerous one?

OSC Investigation: It's official!

The CP is reporting the existence of the official investigation into the Income Trust Scandal by the Ontario Securities Commission, first reported by this blogger on December 22.

Via the Toronto Star:

However, the OSC was somewhat more forthcoming in a letter sent two days later to another complainant, who asked to remain anonymous, from senior inquiries officer Jeffrey W. Fennell.

This complainant asked the OSC to look into insider trading allegations and also reports that Goodale's staff may have tried to silence a member of the Canadian Association of Retired Persons who indicated that his group got advance notice of the income trust announcement.

Fennell wrote that he'd been asked to "co-ordinate'' a review of the complainant's concerns and added:

"The commission takes allegations of trading on insider information and allegations of potential interference with an investigation very seriously. Your concern has been forwarded to the Enforcement branch of the OSC for further review.''

Fennell further advised that "this may or may not result in a formal investigation'' and warned that the OSC doesn't normally comment on the existence, nature or status of any investigation unless it "brings proceedings in the matter.''

The income trust controversy has dogged Martin throughout the crucial post-Christmas phase of the campaign and has helped reactivate concerns about the Liberal government's ethics as he heads into the home stretch for the Jan. 23 vote.

Goodale has denied that he or any of his staff leaked information about his income trust decision ahead of time. But it has emerged that Martin, three of the prime minister's senior staff, and two other cabinet ministers, as well as some of their staff, had advance knowledge of the announcement.

INDEX: POLITICS JUSTICE BUSINESS

I will get a web link soon.

Some thoughts about the significance of the OSC investigation.

The Income Trust Scandal: The Americans take note

From PoliticsWatch:

[ NDP finance critic Judy Wasylycia-Leis] has also filed complaints with the Ontario Securities Commission and the U.S. Securities Exchange Commission.

She said the OSC will not confirm or deny if they are investigating the trading activity, but the SEC has responded.

"They did acknowledge that the letter has been registered. They've given me a file number, a person that is in charge and say they are having discussions with their international affairs office."

But the SEC has a policy of not confirming an investigation until a case is filed in court and Wasylycia-Leis said they were pretty clear to her they would not divulge any other information regarding her complaint.

Just one more reason for the Liberals to be nervous.

Donald Black: Personal friend but not a political friend?

Donald Black has been caught up in the Income Trust Scandal. He has had close ties with Liberal Finance Minister Ralph Goodale. Goodale, of course, is at the center of the controversy involving the RCMP investigation into the possibility that there was a leak of sensitive information concerning the taxation of income trust funds to select traders before the public announcement.

Donald Black was present at a meeting with Goodale as a director of the Investment Dealers Association. Goodale met with the IDA the morning before the announcement. That afternoon, there was a huge spike in trading in income trusts by certain traders. After the markets closed, Goodale announced that income trusts would not be taxed. The next day, income trust unit values soared, making a tidy profit for those traders who bought the afternoon before.

Donald Black is a fund manager, and his funds include major holding in income trust funds.

Donald Black is a close personal friend of Liberal Finance Minister Ralph Goodale.

Donald Black insists, however, that he is not a political friend of Liberal Finance Minister Ralph Goodale:

Conservative finance critic Monte Solberg described Black as a Liberal insider, so "I don't think he's the right guy to be defending Ralph Goodale on this."

Black had said he was a personal friend of Goodale's, but not a political one.

Really?

On the CBC report on this story last night by Margo McDiarmid, at the 14:49 mark, Margo reveals the following:

[14:49] He [Donald Black] is Goodale's close friend, contributing a quarter of a million dollars to his '93 campaign.

By my accounting, anyone who donates a quarter of a million to the campaign of an MP is a political friend.

Remember that from 1988 to 1993, Ralph Goodale was working at Pioneer Life in a senior position given to him by Donald Black.

Ralph Goodale was elected with the help of that quarter million dollar donation, and was made Minister of Agriculture by Jean Chretien.

In 1995, less than two years after that generous donation, Goodale appointed Donald Black as head of the Farm Credit Corporation, ignoring charges of patronage from the opposition.

I just don't buy the idea that Donald Black is just a personal friend and not a Liberal insider.

The Income Trust Scandal: Mike Duffy says CARP is changing its story

From December 7:

"The day they made the announcement they phoned us and said something is going to be said," the associate executive director of Canada's Association for the Fifty Plus, William Gleberzon, told CTV News.

Gleberzon said the call came from a senior policy advisor in the finance minister's office.

When asked what exactly he was told, Gleberzon indicated the specifics were vague, but the underlying message was clear.

"They said something was going to be announced later in the day. And we assumed that if they told us that ... it would probably be something we'd be happy with."

So CARP got a nudge-nudge-wink-wink call? Well, the next day CARP backpedalled:

There is no truth to the serious accusations that CARP had inside information about Minister Ralph Goodale's announcement regarding Income Trusts. In fact, the political crossfire regarding who knew what, when and how about the Minister's announcement has created the false allegation that there was a leak to CARP.

The record must be set straight! At no time was CARP given an indication by the Minister's office of when the announcement would be made or what it would say.

Needless to say, the Mounties are interested in talking to these CARP folks:

The RCMP interviewed an executive member of a seniors group shortly before launching a criminal probe into a possible federal leak about income trust changes.

Gleberzon says he received a phone call from Finance Minister Ralph Goodale's office indicating there would be an announcement on income trusts.

But he denies being told of the content or timing.

The article doesn't provide more detail on that interview, but tonight on Mike Duffy's Countdown, Mike Duffy said to Ralph Goodale's Parliamentary Secretary John McKay that he, Duffy, "understood" that CARP was reversing its reverse, returning the original story it told to CTV and later retracted.

John McKay had no response, and Duffy let it drop.

Has Bill Glerberzon returned to his story that the phone call from Goodale's office indicated the nature of the decision yet to be announced? If so, why the reversal of the reversal? And did any other elements of the CARP story change?

Stay tuned...

The Income Trust Scandal: Don Black to appear on TV tonight

And you thought blogs don't matter.

The blogosphere's interest in Don Black seems to have been noticed.

My MSM source tells me that Don Black, close personal friend of Ralph Goodale, will be answering questions on a story being aired on CBC Newsworld tonight an 9pm EST and again on CBC's The National at 10pm EST. And he'll be appearing live on CTV Newsnet on Mike Duffy's Countdown at 8pm EST.

Check your local listings.

The Income Trust Scandal: Goodale's secret meeting included his good friend

Donald W Black, good friend of Ralph Goodale

Update: Check out Stephen Taylor's review of just how honest Ralph Goodale has been over the years, including some new insights into the cosy relationship between Ralph Goodale and Donald Black. Some of that information has been added below.

We all know, after some initial denials, that Ralph Goodale met with the Investment Dealers Association just hours before letting the rest of us know that income trusts weren't going to be taxed (too late, of course, for the rest of us to do anything about it):

Finance Minister Ralph Goodale had an hour-long meeting with senior representatives of Canada's investment community -- at which the issue of income trusts was discussed -- only hours before his decision on the issue was announced, CanWest News Service has learned.

An official in Mr. Goodale's office confirmed yesterday that the previously undisclosed meeting with the executive committee of the Investment Dealers Association of Canada (IDA) took place, but said those who attended left the morning meeting "no wiser" about the decision that was announced later that day after markets closed. [emphasis added]

Of course, Goodale's people insist it was all on the up-and-up:

"There was a very vague, very general discussion," [John Embury, Mr. Goodale's director of communications,] said, adding it dealt with the association's planned submission on the income trusts issue. "They left the meeting no wiser than when they came through the door."

Really?

Let's look at who would have been at this important meeting. I have a source who tells me Donald Black was at the meeting. Donald Black is a director at the IDA:

Donald W. Black, C.M.
Chief Executive Officer
Greystone Managed Investments Inc.

Greystone manages funds, including this fund, Hartford Growth and Income Fund (D), that invests heavily in income trusts:

Top Holdings as of Nov 30, 2005
TSX Group: 4.32%
Canadian Oil Sands Trust: 4.16% [income trust]
Bank of Montreal: 4.12%
Fortis Inc.: 4.00%
Great-West Lifeco: 3.99%
Canadian National Railway: 3.96%
Royal Bank of Canada: 3.93%
AltaGas Income Trust: 3.92% [income trust]
IGM Financial: 3.90%
Bank of Nova Scotia: 3.86%

I guess that's why he was at the meeting. Of course, Black is particularly eager to make sure that Greystone thrives:

Based in Regina, with offices in Edmonton and Winnipeg, Greystone offers a full range of investment products and services to a national clientele. Greystone is majority owned by its employees, more than half of who are shareholders.

So who is Donald Black? Just what are his links to Ralph Goodale and the Liberal Party?

In December 2003, following the advice of Prime Minister Paul Martin, Black was made a member of the Order of Canada:

A distinguished leader in the Canadian financial services sector, Donald Black has been instrumental in restructuring many large companies and redirecting them to financial profitability. Equally committed to the welfare of his community, he has given generously of his time and expertise in support of a myriad of charitable, healthcare and educational organizations. A long-time supporter of the United Way of Regina, he created and sustained its Leadership Giving Program. In addition, the Hospitals of Regina Foundation Inc., the Saskatchewan Indian Federated College and the CNIB have benefited from his dedication and leadership.

He is also Ralph Goodale's good friend and a generous contributor to Goodale's campaigns (see this update as well). They worked together at Agriculture and Agri-Food Canada, and Goodale helped him out in getting this plum patronage appointment:

OTTAWA NOTEBOOK
October 29, 1998
Western Producer Barry Wilson

Regina investment manager Donald Black has been re-appointed chair of the Farm Credit Corp. for a second three-year term. It is a part-time position for the president of Greystone Management Inc. When he was appointed in 1995, the announcement was greeted with some skepticism by opposition politicians because Black was a friend of then-agriculture minister Ralph Goodale. [emphasis added]

His re-appointment was made by Goodale's successor, Lyle Vanclief. The minister praised Black as "a strong proponent of corporate governance" who has helped create the rules that separate the duties of the FCC management from the responsibilities of the directors.

Of course, that plum appointment was a return for Black helping out Goodale (see Stephen Taylor for a longer history):

So, how close are Goodale and Black? Greystone Capital Management is based out of Regina, Saskatchewan. Black ran Pioneer Life Insurance and gave Goodale a senior position in the firm during his brief stint in the private sector [1988-1993]. According to some sources, Goodale was appointed this senior position to allow the now Minister of Finance to continue working on his political ambitions.

No wonder the opposition squawked in 1995. Can you blame them for not trusting these two to be in the same room together and not exchange favours?

I wonder if the skepticism the opposition members voiced in 1995 when Donald Black got this little plum from Ralph Goodale will be repeated when they realize he was in that critical income trust fund meeting ten years later?

The Income Trust Scandal: Goodale meets with the RCMP

From CTV via Bourque:

Finance Minister Ralph Goodale met Tuesday with RCMP investigators to talk about the income trust affair.

"Well, obviously it's not a normal part of the campaign, but it's a circumstance that has to be dealt with, and I'm very glad and happy to deal with it because I'm absolutely confident of my position," Goodale said from his campaign office in Regina.

But yesterday we were being told that the meeting had been postponed:

[Jason Kenney, a Conservative MP,] noted the finance minister's spokesman said earlier Tuesday there would be no meeting with the RCMP this week. "Yet it turned out he was meeting with him today. What is there to hide?" he asked.

One thing we don't know is the nature of this meeting. Was Goodale deposed? Was there counsel present? Was Goodale warned of his rights and obligations?

Or was this a planning meeting? A get-together to sort out schedules and arrange for a proper interview?

One thing is for certain, and that is we can't depend on the Liberals to clarify any of this. Their only hope now is to keep the situation confused and murky. As long as we Canadian are not quite sure what is going on, a significant number will find it easy to ignore the whole thing and vote Liberal.

Clarity is Paul Martin's enemy.

The Income Trust Scandal: Which ministers knew? We need names

The income trust scandal is becoming more and more muddied. As we all know, on November 23, after trading had closed, Liberal Finance Minister Ralph Goodale announced that income trusts would not be taxed. The next day, the value of units in income trusts surged.

Curiously, trading in income trusts surged in the hours before the announcement. Was there a leak? The RCMP is investigating.

One of those traders who made a lucky trade was TSX CEO Richard Nesbitt, who invested over $700,000 that afternoon, and on November 24, realized a profit of $100,000.

In my piece on Richard Nesbitt, and his simultaneous role of a stock exchange CEO, a major personal investor, and a lobbyist registered to talk to the government on income trading, which might or might cover income trusts, I mentioned that one of Nesbitt's team, David Ablett, had worked closely with Jim Peterson in the past.

Jim Peterson is Ralph Goodale's cabinet colleague. Peterson is the Minister of International Trade. That ministry is works closely with Finance.

I wondered if Peterson knew what was going to happen. Until yesterday, the Ralph Goodale and Prime Minister Paul Martin were the only two cabinet ministers to have stated that they knew what was going on.

Until yesterday.

From CTV:

However, Goodale appeared flustered when asked if other cabinet ministers were in the loop of his Nov. 23 announcement on income trusts.

"There where [sic] ministers that obviously were involved in the discussion because they simply had to be," he said.

Did that include Jim Peterson, a person who had worked closely with David Ablett, a member of the lobbying team of Richard Nesbitt, who profited so handsomely by making trades ahead of the announcement?

And even if it did not, just who did it include? And who among their staff?

Or maybe it would be easier just to tell us who didn't know. Other than small investors, of course. We know they had no chance to make a quick profit.

The Income Trust Scandal: RCMP isn't ready to meet with Ralph Goodale

From the CTV Election Blog:

Last Friday, Finance Minister Ralph Goodale told CTV's that he would be meeting with the RCMP "next week" to discuss the RCMP's income trust investigation. He said that during an interview with CTV's Craig Oliver that was aired Sunday on CTV's Question Period.

Well, that was Ralph Goodale's understanding. Or assumption. Or wish, hoping to get the interview over with as quickly as possible.

Well, if wishes were fishes...

On Monday, we asked Goodale's press secretary Pat Breton what day of the week this meeting would take place and whether or not it was taking place in Regina or Ottawa. Today, Breton sent this reply:

No mtg has been scheduled.

He went on to say:

it's up to the RCMP to determine precisely when. And they haven't.

If we assume all the facts are true as reported, the RCMP has decided to investigate further. This is a double blow to the Liberals, as I see it. First, it means that the scandal will not die an early death in terms of being in the news. Even if there are no new revelations and the story fades, the interview is certain to thrust it back into the spotlight. The closer that interview is to January 23, the worse it is for the Liberals.

Also, and I could be wrong with this, but an interview has two purposes -- to ask questions about information already known, and to reveal new information. The more precisely planned the former, the more likely that you will succeed at the latter.

If the RCMP is investing more time before the interview, I suspect it is because they feel that they haven't exhausted the first level of investigation. That can't be good for Ralph Goodale or anyone else who is going to be interviewed. The more the RCMP can dig up ahead of the interview, the more nasty that interview will be.

[Thanks to reader JW]

Richard Nesbitt: TSX CEO and Income Trust Fund Lobbyist

TSX CEO (and registered income trust lobbyist) Richard Nesbitt

Recall the CTV report that was quite brutal in providing evidence that a leak happened just prior to Ralph Goodale's announcement that income trusts would not be taxed?

The allegation of insider trading following that leak has led to a formal criminal investigation by the RCMP into the highest levels of the Paul Martin Liberal government, dealing a body blow to the Liberal Party during this election.

One of the revelations from the CTV report was that Richard Nesbitt, the CEO of the Toronto Stock Exchange, made out very well for himself:

Richard Nesbitt, CEO TSX Group: According to CTV, Nesbitt purchased $759,000 worth of stocks hours before the announcement and made $100,000 in profit the next day. However, he could not be reached for comment, yet his spokesman said that he was only filling up his core holdings before the calendar year end.

What the spokesperson did not mention was that since August 19, 2005, Richard Nesbitt was also a registered lobbyist, and still is today.

What topics did he discuss?

2. discussions with the Department of Finance with regards to fixed income trading.

Fixed income trading includes trading in income trust funds. In fact, it's mostly about that.

Now that the CEO of the TSX talked to the Minister of Finance and his people about income trusts and tax policy is probably fine. But then one wonders whether he really was just "filling up his core holdings" at exactly the right time.

Of course, the fact that part of his team included David Ablett, now VP of Public and Corporate Affairs at the TSX, and formerly a Senior Assistant Secretary to the Cabinet in the Privy Council Office, couldn't hurt. Now that was a long time ago, 1978 through 1983. That doesn't mean that he hasn't had his hand in government business, of course. For example, Ablett helped Jim Peterson write this report on the preparation of budgets, and public participation in that process, in 1995.

Citizen involvement in budget-making was seen as a good thing.

Where is David Ablett's friend, Jim Peterson, today? He's still in government, in cabinet in fact, as the Minister of International Trade. One wonders if Peterson was on the "need to know" list.

The Income Trust Scandal: A question for Anne McLellan

Anne McLellan, Liberal MP for the riding of Edmonton Centre, is Deputy Prime Miniser and Minister of Public Safety and Emergency Preparedness.

That's relevant because the Minister of Public Safety is responsible for the Royal Canadian Mounted Police.

As such, it would be interesting to ask Minister McLellan whether she believes that Commissioner Zaccardelli is on a wild goose chase now that the RCMP has decided to initiate a formal criminal investigation to determine if the decision not to tax income trusts was leaked to select traders prior to the formal announcement on November 23.

Would Anne McLellan support her Mounties?

"I support the Commissioner's conclusion that a criminal investigation in the matter of a potential leak from either the Finance Minister's Office or the Prime Minister's Office is justified. The professionalism of the Royal Canadian Mounted Police is beyond question, and I know they will serve Canadians by following the investigation wherever it leads."

Or would she undermine the federal police in favour of her fellow Liberal cabinet ministers?

"I am certain that there is no evidence of wrongdoing to justify the allegation of a leak from within the government. An investigation will certainly show that the market was responding to speculation, and not leaked information. This is an exercise in response to an opposition ploy to use the RCMP to embarrass the finance minister, a man above reproach, the prime minister, and the Liberal Party, during an election campaign."

Prime Minister Paul Martin has already decided that the Mounties are wasting their time and has said so publicly:

Martin said Friday the investigation is taking place solely because NDP Finance Critic Judy Wasylycia-Leis requested it.

"The statement by the RCMP said there's absolutely no evidence to demonstrate that there is, in fact, any wrongdoing here at all," Martin said while campaigning south of Montreal. "And we're dealing with opposition allegations in the middle of an election campaign."

I wait for a reporter to ask the question of Anne McLellan.

The Income Trust Scandal: The same old same old

"the same old same old"

1. something that has not changed (Cambridge Dictionary of American Idioms)
2. an attitude that potentially spells doom for Canada's Liberal Party

The new year opens with an Ipsos Reid poll showing the Conservatives and Liberals in a tie, but significantly, the Conservatives slightly ahead and the Liberals slightly behind.

And momentum is favouring the Conservatives.

What about attitudes?

With three weeks to go, attitudes are souring against the Liberals:

Just one-third of Canadians now agree with the statement "I'd be comfortable voting for Paul Martin and the Liberals in the next election because they will govern very differently next time due to the lessons they learned from the Gomery Inquiry"

That's down 7 percent from a week ago, when Paul Martin garnered more support.

Paul Martin scorched the Liberal Party landscape when he succeeded Jean Chretien. The entire cabinet was replaced. Chretien loyalists like Sheila Copps were hounded out of the party, or turfed at the 2004 election.

The goal was to make the new Liberal Party different from the old Liberal Party.

Why? The old Liberal Party was the party of corruption. The new Liberal Party is the party of integrity. That's what we were supposed to believe. The suspicion that the changes were driven by Paul Martin's desire to be surrounded by loyalists was unfair. This was about cleaning house and earning the trust of Canadians.

Canadians want change? Fine. Vote for the Liberals. They're different. They've changed.

The old Liberal Party was the party of Adscam.

The new Liberal Party is the party of ... um ... the Income Trust Scandal?

Not really all that different. And Canadians are realizing that. Last week 40% of Canadians bought that line. This week, it dropped to 33%. Next week? Who knows? But it's not trending well for the Liberals.

Old Liberal Party? New Liberal Party? Same old same old.

The Income Trust Scandal: Who had December 31 in the pool?

From CTV:

As he prepares to answer to RCMP investigators in a matter of days, Ralph Goodale remains defiant in the face of unyielding calls by Tories and New Democrats to step aside from his post as finance minister.

Mid-campaign allegations of insider trading have rocked the Liberal Party, threatening to derail Paul Martin's quest for victory in the Jan. 23 election.

But Martin has unequivocally backed his minister of finance. And Goodale repeated Sunday on CTV's Question Period that he's "absolutely confident" he and his staff will be absolved of any wrongdoing in a criminal investigation into allegations that his Nov. 23 plan for income trusts was leaked in advance.

"I am determined to stand my ground, based on over 30 years of ethical conduct that I'm very proud of," said Goodale in an interview with Question Period co-host Craig Oliver.

A number of observers thought December 31, 2005 would see Ralph Goodale step aside. Well, we are now well into January 1, 2006, and there is no hint of a resignation. Anyone who had December 31 in the resignation pool has lost out. Indeed the rhetoric has become more defiant, more strident.

My guess is that the Liberals have decided to ride out the RCMP investigation. If nothing changes between now and January 23, they've decided that the investigation will fade as the campaign focuses on attacks on the Conservatives.

What will it take to change things? The RCMP could announce, or leak, some preliminary findings that establish that a leak happened in November. Alternatively, the opening of a second investigation, by the OSC (which I know to be in progress, though I can't prove it), or by the SEC in the US, could make the situation untenable.

Three weeks to go. We might have have to put up with Ralph Goodale's protestations for the duration.

The Income Trust Scandal: Incompetence

Paul Martin said a number of PMO people needed to know the details of the income trust taxation decision ahead of time.

I wondered just who really needed to know, since it seems like too many people knew.

On the question of who needed to know, a former PMO staffer got in touch with me with some insights:

Paul Martin is telling the truth, somewhat.

PMO coordinates two things: communications and policy. So Scott Reid would have needed to know, so that Goodale's press conference was not taking place at the same time as some other announcement. And the policy shop would have needed to know, so it did not contradict some overall government priority, etc. So those things are true.

But what he does not address is this: this was a matter of tax policy that had huge market implications. Those things are treated with budget-level secrecy. And, here, we know that was not the case -- junior staff were running around spouting off well before the press conference. Hell, John McKay went on TV to say what the tax policy was (and got it wrong)! It was madness.

We have the solid example from CTV of the call to CARP from Ralph Goodale's office that happened before the announcement.

Even if the leak was inadvertant, the whole thing was handled in a haphazard way. Which begs the question why should the Liberals be trusted with levers of government.

What does "Need to know" mean?

When information is classified as "need to know", it means that you will be told the information if you require the information to do your job.

I used to work on military systems, and "need to know" had a very straightforward definition. Can you do your job without knowing that information? If the answer is "yes", you don't need to know.

I knew stuff my managers didn't know. I needed to know in order to write the software. They didn't need to know because they cared about schedules and all they needed to do their job was a progress report from me. It all made sense to us.

Paul Martin invoked that phrase when he explained why he was told of the decision not to tax income trusts well ahead of the announcement:

"I knew and I'm one of them. The fact is, that the people who would be on a need-to-know basis would have that information," said Martin.

I would be interested to know who in the PMO would need to know this piece of tax policy ahead of time, and why exactly? What part of their job could they not perform without having that knowledge well ahead of time?

Heck, why would Paul Martin need to know? I can't think of a reason, actually.

Maybe a speechwriter would need a heads up to help prepare a speech. But if you were serious about compartmentalizing the information to avoid these sorts of problems, you would simply have your speechwriter prepare two speeches -- one to explain why income trusts needed to be taxed, and one to announce that they would not.

The concept of "need to know" is really quite simple. What would you have done differently today had you known about the decision not to tax income trusts versus what you normally would have done?

If the only thing you can think of if that you would not have placed one or more phone calls to some friends of yours on Bay Street, then you really didn't need to know.

Paul Martin: Can't say "No"

Now how hard is it to say, "No, I didn't do it"?

For Paul Martin, apparently he'll pull a muscle than answer with a simple "No".

The Income Trust Scandal: The Liberal Party website grinds to a halt

The Conservative Party website is headlining the Income Trust Scandal, focusing on the effect on the Liberal Party:

>>>Income Trust Scandal Rocks Liberals<<<

The NDP website is headlining the Income Trust Scandal, focusing on what the NDP sees as Ralph Goodale's imminent resignation:

>>>When will he step aside? Ralph watch: 2 days<<<

The Liberal Party website is headlining the Income Trust Scandal, focusing on Ralph Goodale's innate honesty:

>>> <*cough* *cough*><<<

Take two!

The Liberal Party website is headlining the Income Trust Scandal, focusing on the lack of solid evidence:

>>> <*cough* *cough*><<<

Take three!

The Liberal Party website is headlining the Income Trust Scandal, focusing on the way the opposition parties have blown this out of proportion:

>>> <*cough* *cough*><<<

OK, the Liberal Party website has remain completely unchanged. Frozen in time from December 24. Even Scott Feschuk's blog has not been updated in days.

Why does this matter? The party website is a means to get a message out without the selective filtering of the main stream media. On any major issue, and the Income Trust Scandal certainly counts, the party has to explain to its supporters (and to the curious visitor) their side of the story.

So what can we make of the fact that the Liberals are entirely silent via the website?

One possible reason is that the Liberals are keeping to the promise not to campaign through the Christmas break, and that includes updating the website. I don't buy it. First, Paul Martin has been electioneering in Montreal. Second, the scandal is just too important, especially to leave the Conservative and NDP attacks unanswered.

Perhaps a faction that believes that ignoring the problem means it will go away in a couple of days. I happen to think that strategy will fail, but besides my opinion, Paul Martin has been telling reporters that he stands by his minister, and Ralph Goodale has been saying there was no leak. If this faction was running the show, Paul Martin and Ralph Goodale would both be saying something along the lines that no comment should be made until the RCMP delivers its findings.

I think this silence reflects the confusion within the Liberal Party itself. At the highest levels, or so it is rumoured, the strategists are at odds about what to do. What to do about Goodale. What to do about the press. What do to about the opposition.

What to do about a campaign that seems to have come apart at the seams.

Until they can decide on a strategy and can craft a message, the Liberals will have no message to deliver. That leaves the field open to the Conservatives and the NDP to frame the debate. In the meantime, I will continue to watch the website. When it updates, it will be the first clue, and perhaps the best clue, to tell us who is running the show now.

In the meantime, the lack of official reaction does not reflect well on the ability of Paul Martin's Liberals to lead in a crisis.

Two types of traders

I wonder if we'll find out that there are two types of traders at the Toronto Stock Exchange.

The first group will demand that TSX CEO Richard Nesbitt resign until such time as the questions surrounding his suspicious purchase of thousands of income trust fund units just before the Goodale announcement are resolved.

The second group will insist that no investigation is necessary, that there's nothing to see here, and we should just carry on with our business as before.

It's the second group we should be looking at.

The Income Trust Scandal: Changes in the Liberal war room?

More inside dirt at Bourque about the tremors being felt within the highest levels of the Liberal Party election team in the wake of the Income Trust Scandal bombshell:

According to insiders well-placed to understand the nuances within Martin's braintrust, Bourque has also learned that key campaign personnel are at risk of being replaced in an increasingly desperate attempt to maintain control of the public agenda, and more importantly, the key messaging that is driving this election.

Uh-oh. Desperation? Replacements? Need for new messaging?

The message is crafted by the Communications Director, in this case, Scott Reid.

You remember Scott Reid? He got reamed for suggesting on national television that Canadian parents can't be trusted with money to spend on childcare because they were likely to spend it on beer and popcorn.

He hasn't been heard from since.

And now the Income Trust grenade and a need to "maintain control of the...key messaging."

If I was Scott Reid, I'd be worried.

The Income Trust Scandal: The Mounties should start by asking Paul Martin some questions

In the case of the Income Trust Scandal, the focus has been on Ralph Goodale and his office.

Senior Ottawa Liberals are telling me the focus is misplaced.

First, check out these quotes captured from the CTV newscast tonight at M K Braaten:

• Don Drummond, VP/Chief Economist: CTV said that Drummond told them he first heard about the announcement via email, 4 hours in advance of announcement. Also, stated that Liberal strategists in Ottawa were the source of email. CTV quoted Drummond as saying "Alot of people seemed to know there was an announcement coming and a few people seemed to know what it was."
• Jim Leech, Teachers pension fund - CTV said that Leech received emails at about 2 pm stating that the announcement was guaranteed. CTV Quoted Leech "I got a bunch of emails around 2pm saying for sure Goodale was making an announcement after the close."
• Sandy Mcintyre, Sentry Select Capital: CTV reported he sent the following email: "There is a strong rumor out of Ottwa that Goodale is going to pronounce after the close today his trust solution…hope my sources are right!" Mcintyre said his sources were quoting 'well connected Liberals'.

Note that the source is ill-defined. Just well-connected Liberals.

Not well-connected finance ministry officials.

Just well-connected Liberals.

Recall that Ralph Goodale's original plan was to announce the decision in January. Suddenly the timeline was moved up. By Ralph Goodale?

Mr. Goodale said in September that the government would consult with a variety of industry and stock market players before announcing any policy change. Industry observers immediately began speculating that the government might consider reducing taxes on corporate dividends as a way of levelling the playing field with income trusts.

On Tuesday, Nov. 22, Mr. Goodale indicated that he would provide direction on the income trust issue because of the impending collapse of the government, effectively ending the consultation process. That night, department officials began discussing the possibility of taxing income trust, sources have said.

The next day, Mr. Goodale's office confirmed that he would be making an announcement and just moments before his scheduled news conference, his parliamentary secretary, Toronto MP John McKay, gave a television interview suggesting the government planned to levy a modest tax on income trusts. Shortly after 5 p.m., Mr. Goodale said there would be no tax on income trusts and that dividend tax credits would be increased starting in 2006.

Pat Breton, a spokesman for Mr. Goodale, said yesterday that Finance officials met on the night of Nov. 22 for two or three hours and came up with the plan that became the next day's announcement on income trusts. He also said that the Prime Minister's Office was told after that Nov. 22 meeting — either later that night, or the next day — about the decision. The policy development was “entirely an internal Finance” effort, he added.

However the media is reporting today that the focus is starting to shift (via Bourque):

Aides to the Prime Minister were told about a taxation change for income trusts "some time immediately before" Mr. Goodale made the announcement after markets had closed on Nov. 23, Pat Breton, a spokesman for Mr. Goodale, said yesterday.

While it is not unusual for the PMO to be informed of high-profile policy announcements, this indicates that the list of officials who had advance knowledge of the pending change went beyond the Finance Department and Mr. Goodale's office.

Well, I know some well-connected Liberals as well, and they've let me know what really happened. As reported in the Globe and Mail, Paul Martin's aides are insisting that Paul Martin was told "some time immediately before" November 23.

It's getting closer to the truth, but still not quite there. It has the date wrong. It also has the direction of the decision-making reversed.

The decision to close of the consultations and deliver the good news not to tax income trusts, probably in response to an election campaign that imminent, was made not by Ralph Goodale, who by all accounts is too honest to be making decisions like this based on election calculations, and who intended to stick to his timetable of accepting submissions on tax policy until December 31. It was not an entirely internal effort, as spokesperson Pat Breton insists. The major decisions were being taken outside of the finance department.

The decision was made by Paul Martin himself.

Paul Martin told Ralph Goodale on Friday, November 18 to bring the consultations to a close and to make an announcement on income tax trusts.

Paul Martin and his immediate PMO staff would have known for five days prior to the announcement how the decision was shaping up.

Paul Martin and his staff were dictating the pace of the work, and possibly the decision itself.

Paul Martin and his immediate PMO staff are as likely suspects as the source for the leak as Ralph Goodale and his office.

When Ralph Goodale stresses that Paul Martin knew nothing, you know he's trying a bit too hard to deflect attention from where the attention should be.

When I read about John McKay's flub on November 23, I wonder whether the finance department was really in the loop. It helps explain McKay's confusion if the PMO was more deeply involved in the decision making.

Where you see Paul Martin standing by Ralph Goodale, I see Paul Martin standing behind Ralph Goodale, keeping him up front and centre not out of a commitment to his minister and a firm belief in his basic honesty and his innocence, but in order to have a shield to hide behind.

Paul Martin made the call on Friday, November 18, not Ralph Goodale on November 22...that's the way it happened, or so well-connected Liberals are telling me.

The Income Trust Scandal: But I've got a string tied around my finger

Some Liberals believe they can ride out the scandal caused by the announcement of the RCMP investigating a potential leak from Finance Minister Ralph Goodale's office to select traders willing to use inside information to turn a quick profit.

The reason? Christmas:

Liberals believe the fact that the criminal investigation was revealed in the dead zone between Christmas and New Year's Day, when few voters were paying attention, will save their electoral bacon.

"There is a God after all,'' chuckled one Liberal MP.

I know this unnamed MP was joking, but if any spiritual being has a hand in guiding the Liberal Party, I'd be willing to bet it isn't God.

But does he have a point about the timing? Is three days the shelf life of a scandal?

We'll all know next week, but I can tell you this. I've been in constant contact with a major Canadian on-air media personality with regards to the Income Trust Scandal, well before the events of this week. This person told me during one of our talks that if the main stream media has remained focused on this story during the lull between November 23 and this week, it was largely because the Canadian blogosphere would not let this story go.

Bloggers kept up the pressure, kept revealing new elements of the story, kept identifying new trusts with weird trading patterns, kept finding new links between particular funds and the Paul Martin Liberals.

Christmas comes and goes, but the bloggers are still here.

So I'll tie a string around my finger to remind me about the scandal. Hopefully next week, I won't have been distracted by bright shiny Liberal promises to spend my money wisely on my behalf.

And if bloggers are the string around the finger of the main stream media, then they won't have forgotten about the income trust scandal next week either.

For now, though, some main stream media journalists are doing an amazing job on this story.

The Income Trust Scandal: Paul Martin speaks

From the Globe and Mail:

Prime Minister Paul Martin said today Finance Minister Ralph Goodale will not resign because of the RCMP decision Wednesday to launch a criminal investigation into whether advance notice of Ottawa's plans for income trusts leaked from the federal Liberal government.

"He is a person of the greatest integrity, and he will not be stepping down," Mr. Martin said during a campaign photo op this morning.

I guess Goodale goes into the Scott Reid bucket of "keepers" and not the Mike Klander bucket of "losers".

Of course, from a purely partisan point of view, this is great news. The longer Ralph Goodale remains minister, the longer will the Conservatives, the NDP, the Bloc, and the media have a specific identifiable target for discussing the Income Trust Scandal.

You can't underestimate the value of putting a face on a story.

Of course, now we have a Paul Martin soundbite to go along with it, one that will get repeated in an ironic way if and when Ralph Goodale resigns:

"I have full confidence in Ralph Goodale. I believe that an investigation — as does he — will clear the air, including the allegation as to whether or not a leak actually took place."

Is Paul Martin going to go to the mat for Ralph Goodale. My gut says no, but I could be wrong. Clearly, Paul Martin is being supportive right now. But that might have less to do with confidence in Ralph Goodale and more to do with Paul Martin's penchant for dithering. He might be waiting for a poll to help guide his actions.

Still, Paul Martin has staked out a position. If the Income Trust Scandal story goes south for the Liberals, Paul Martin will pay a price if he's forced to change direction. He might come to regret not cauterizing the Goodale gash as soon as it happened.

The Income Trust Scandal: Election timing

Bet the Liberals and their supporters are furious at Jack Layton and the NDP for supporting Stephen Harper and the Conservative Party decision to hold an election now.

Remember, if we had followed the Liberal timetable, the election wouldn't have started for another couple of months, assuming Jean Chretien didn't succeed in getting the second Gomery Report delayed with his appeal to federal court. As it turns out, the Income Trust Scandal has exploded in the middle of the campaign, instead of being old news.

With that sort of fury gnawing at them, I wonder how difficult it is going to be for the Liberals put on a false smile and try to appeal to the NDP to support them against the Conservatives. And with the massive gash and uncontrolled hemorrhaging being suffered by the Liberals from the Income Trust Scandal blowing open, on top of Klander's slander and "beer and popcorn", how many NDP voters are reconsidering whether a vote for the Liberals is a strategic vote or a wasted one.

The Income Trust Scandal: Paul Martin must resign!

From the Conservative Party website:

“The Finance Minister has no choice but to tender his resignation,” said Conservative Finance Critic Monte Solberg. “This investigation confirms that there are reasonable grounds to suspect criminal wrongdoing in his department or office, and as minister he must accept responsibly. That’s how our system works.”

Solberg pointed out that the Conservative Party has consistently raised serious concerns about suspicious trading patterns of certain income trusts in the hours preceding his November 23rd policy announcement.

“Why has Mr. Goodale refused to take seriously the compelling evidence of a government leak that ended up benefiting privileged insiders?” Mr. Solberg asked. “Now basic principles of public ethics and ministerial responsibility require that he do the honourable thing and resign.”

Now read it again, with a few substitutions and additions here or there:

“The Finance Minister Prime Minister has no choice but to tender his resignation,” said Conservative Finance Critic Monte Solberg anyone with a brain. “This investigation confirms that there are reasonable grounds to suspect criminal wrongdoing in his department or office, and as minister in charge of Quebec under Jean Chretien as well as finance minister he must accept responsibly for exercising no oversight over $350 million in public funds. That’s how our system works.”

Solberg Any person with even a shred of intelligence pointed out that the Conservative Party has consistently raised serious concerns about suspicious trading patterns of certain income trusts in the hours preceding his November 23rd policy announcement the allocation of contracts to advertising firms in Quebec and about the official response to the conclusions of the Gomery Inquiry.

“Why has Mr. Goodale Mr. Martin refused to take seriously the compelling evidence of a conclusion of an inquiry confirming government leak manipulation of contracts that ended up benefiting privileged insiders Quebec advertising firms, and ultimately the Liberal Party itself?” Mr. Solberg every person giving this story only a few miniutes consideration asked. “Now basic principles of public ethics and ministerial responsibility require that he do the honourable thing and resign.”

Really, I'm not sure what the difference is. Ain't going to happen, of course.

The Income Trust Scandal: An easy prediction

Remember what I said about Ralph Goodale keeping his job? That it wasn't really up to him?

Even as we speak, Liberal Blackberries are alight. Many, I am certain, are carrying messages considering the consequences of cutting Ralph Goodale loose.

Cutting him from his privileges and responsibilites as Minister of Finance.

Maybe even cutting him out of the party altogether. Long odds for that one, I think.

But Ralph Goodale's future is not going to be determined by the RCMP, the OSC, or even by Ralph Goodale. It will be determined by Scott Reid, John Duffy, Cyrus Reporter, and others in the Liberal war room. These unelected lobbyists advising Paul Martin are interested in only one thing -- how to get the Liberals back in power and thus preserve their conduits to government influence and cash. If Ralph Goodale's troubles get in the way, he'll be out.

Bourque is carrying news that Goodale is likely to get the boot:

Bourque has learned that embattled Finance Minister Ralph Goodale is being pressured to give up his Cabinet seat for an indeterminate period of time, this in light of devastating news first revealed to the nation here yesterday that the RCMP has launched a criminal investigation into leaks from his department regarding rulings relating to the growing income trust scandal. According to senior sources inside the Paul Martin Liberal Party who spoke on condition of anonymity, "the official party posture is that Ralph didn't know anything and therefore shouldn't have to resign, but the public perception is devastating, it's killing us, and we need to move firmly to squelch the stink." Incredibly, Prime Minister Paul Martin has refused to comment publicly on news of the RCMP criminal probe, though it is understood that he has had a few choice words with key staff about this file.

Any guesses about what those choice words were?

Here are some ideas:

• "Do what needs to be done!"
• "All I'm saying is that we don't need this right now. That's all I'm saying."
• "Let me be perfectly clear..." [followed by an extended silence]
• "Boy, am I lucky they never caught on to any of my leaks when I was in charge of finance!"
• "Scott, what do I think? What should my opinion be on this? Where's the latest poll?!"
• "Will someone go tell Ralph to stop knocking on the door? Tell him we'll call him in when we're ready to tell him what his decision is going to be. Now read that part back about 'After careful consideration of my role as finance minister...' "
• "What a miserable and weary day. It would do well for a smile to cross my royal visage. Call the court jester! Call Feschuk!"
• "Ralph #%&@ Goodale! "

The Income Trust Scandal: The twisted logic of a true believer

From Liberal for Life:

I want Jack Layton to step down while the RCMP investigates his moustache
Wednesday, December 28, 2005

That's about as stupid an idea as asking Ralph Goodale to step down while the income trust affair is being investigated. Of course that's the way the opposition likes to do things, Guilty until proven innocent.

I should call up the RCMP under the false name Miguel Sanchez and tell them Stephen Harper and Monte Solberg have been running drugs for years. Then by their own logic they'd be forced to step down while the investigation takes place.

Please Canadians: buy a clue and vote the Liberals back to majority!

If after a review of the allegations, the Mounties found enough evidence to justify an official investigation of either Jack Layton's moustache, or of the drug running activities of Stephen Harper or Monte Solberg, then they should step down.

Duh.

But a review would conclude quickly that any such allegation is nonsense, and no investigation would be initiated. Unless it was an investigation of criminal mischief by Mr Sanchez.

The review of the income trust situation came to a very different conclusion.

It's not about the determination of guilt, or the presumption of innocence. The court of law provides for those. It's about earning, retaining, and protecting the public trust. Protecting the public trust even at the expense of your job.

Normally, I ignore the sort of non-thinking exhibited by Liberal for Life. But the announcement of an RCMP investigation is yet another blow to the Liberal campaign, and perhaps the biggest one so far. It's hard to imagine it getting any worse.

How does something like this affect the "true believer"? Someone who is an uncritical supporter, utterly unable to imagine the Liberal Party doing anything wrong, without it being a setup or a conspiracy, or blown out of proportion, or already fixed and thus a distraction from the "important" issues.

Well, we've just seen an example. It's not pretty.

For the more critical Liberal supporter, the response is more reasoned and more gloomy:

On The Bright Side...

...no one's going to be talking about Klander much.

This is HUGE. Martin will use the "can't comment on an RCMP investigation" line and I doubt we'll find out much else before voting day, but the mere fact that Goodale's office is being ivestigated [sic] is a massive blow to the Liberals. It's also an absolutely golden way for Harper to switch to "Phase 2" and the corruption issue which I've always assumed was his intention for the second half of the campaign.

That makes a lot more sense. Of course, the Liberal Party is better served, in the long term, by members of the second sort instead of the first. While the first can always be counted on for a donation and a vote, the second can be counted on for honesty.

If the Liberal Party is going to survive this unending stream of scandals and gaffes, they are going to have to find a way to fill their collective reserve of honesty, which seems to have gone dry quite some time ago.

The Income Trust Scandal: It's not up to Ralph Goodale

The RCMP have opened a formal criminal investigation into an alleged leak from Finance Minister Ralph Goodale's office in the hours before the formal announcement on income trust taxation.

The news tonight of that formal investigation has generated calls for Ralph Goodale's resignation.

Minister Goodale is refusing to step down:

The RCMP, said Goodale, "have said they are looking into this matter because of the seriousness of the allegation. They have, at the same time, said they have no information, no evidence of any wrongdoing on the part of anyone - most particularly on my part - and quite frankly if I were to resign under those circumstances I believe I would only feed allegations that are out there in the context of a very political situation."

By refusing to resign, Ralph Goodale is going to act as a beacon attracting a barrage from the Conservatives, the NDP, and the Bloc Quebecois, aimed squarely at the issue of Liberal corruption.

Even as we speak, Liberal Blackberries are alight. Many, I am certain, are carrying messages considering the consequences of cutting Ralph Goodale loose.

Cutting him from his privileges and responsibilites as Minister of Finance.

Maybe even cutting him out of the party altogether. Long odds for that one, I think.

But Ralph Goodale's future is not going to be determined by the RCMP, the OSC, or even by Ralph Goodale. It will be determined by Scott Reid, John Duffy, Cyrus Reporter, and others in the Liberal war room. These unelected lobbyists advising Paul Martin are interested in only one thing -- how to get the Liberals back in power and thus preserve their conduits to government influence and cash. If Ralph Goodale's troubles get in the way, he'll be out.

The Income Trust Scandal: The Bizarro World of Ralph Goodale

Ralph Goodale is meeting all the expectations we have for a minister of the Crown, at least for an honourable member of the Liberal Party, who all seem to inhabit some kind of Bizarro world:

Finance Minister Ralph Goodale said Wednesday night in an interview on CBC's The National that he is not going to bow to political pressure and step aside while the RCMP conducts a criminal investigation into a possible leak of information from his department.

"The RCMP said in their statement of this afternoon that there is no evidence of any wrongdoing on my part- or on the part of anyone else for that matter," Goodale said in an interview with the CBC's chief correspondent Peter Mansbridge.

So the RCMP has passed the stage of a review and into a formal investigation without any evidence?!

Oh, tell me another one!

So how does the Honourable Ralph Goodale justify remaining the finance minister?

"It is not by any means proven and I know I've examined my own conduct in this matter and I'm confident that conduct is consistent with 30 years of integrity and trust in public life."

I guess he figures he's entitled to the job. None of that nonsense of public trust.

But wait. He's staying on, even as Mounties are sniffing around his office, to help ease fears:

"Quite frankly if I were to resign under those circumstances I believe I would only feed allegations that are out there in the context of a very political situation."

Oh yeah, I do feel better. Don't you? If he resigned, I would get all hot and bothered. But now that he's staying put, I feel the urge to examine the allegations draining away.

But before the comforting thought of Ralph Goodale remaining as finance minister overwhelms me and causes me to blog about ferns, let's recap what we've learned:

• The RCMP is investigating, but without even a shred of evidence.
• Evidence, or the lack thereof, notwithstanding, Ralph Goodale will remain on the job because he has it on excellent authority that he has done nothing wrong. That authority being Ralph Goodale, of course.
• Having the old finance minister whose department is under investigation for leaking information to traders is better than having a new finance minister not under investigation. Who says so? The old finance minister.

Make sense? Maybe in Bizarro World, but I don't think Canada is that far gone yet. At least I hope not.

You gotta wonder who in the Liberal Party brain trust thought this load on nonsense would keep things under control.

The Income Trust Scandal: The Mounties believe a crime has been committed

From Bourque:

BREAKING: Bourque has learned that RCMP Commissioner Giuliano Zaccardelli has confirmed that the Paul Martin Liberal Government is under a criminal investigation over potential leaks stemming from decisions in Finance Minister Ralph Goodale's department relating to the multi-hundred million dollar Income Trust debable. This, stemming from an official complaint received by the RCMP from an NDP MP. Late today, the NDP indicated that Zaccardelli confirmed that the RCMP has "launched a criminal investigation "regarding a possible breach of security or illegal transfer of information in advance of the federal government's announcement of changes to the taxation of Canadian corporate dividends and income trusts November 23, 2005." The NDP MP who filed the complaint, Judy Wasylycia-Leis, today called on Liberal Finance Minister Ralph Goodale to step aside from his Cabinet role, until the criminal investigation is complete. According to the MP, "Goodale is personally responsible to ensure his office and his department protect average Canadians from the consequences of improper disclosure. "Goodale has stonewalled this issue for a month now, insisting without any qualification that there is nothing to this issue." Developing.

Clearly Finance Minister Ralph Goodale can no longer remain finance minister. As bad as this is for the Liberals in terms of timing, there is no other option.

No finance minister can command the confidence of the marketplace while under criminal investigation for illegal financial practices.

Every editorial in every paper in Canada should be calling for his resignation on Friday if he doesn't resign by tomorrow.

As for the OSC investigation, I stand by my posting. The investigation is happening, and I'm still trying to obtain clear evidence that I am allowed to share with you.

By my count, Ralph Goodale is under two distinct official inquiries into how he and his office might have used their knowledge that income trusts would not be taxed to allow certain traders to profit dramatically.

Both investigations must ask the question whether any of those illegal profits from insider trading, if it happened, made their way to the Liberal Party, a party fighting an election while millions of dollars in debt.

The nightmare scenario? The Liberals squeak by with another minority on January 23, and then soon after the Mounties or the OSC announce their conclusion that illegal money from insider trading was used by the Liberals to finance their election fight. Canada would be faced with what amounts to an illegal government and a constitutional crisis. In that case, I certainly hope Governor-General Michaelle Jean surprises all of us, because my expectations of her are frankly very low.

Income Trust Scandal: The OSC has initiated an investigation into Ralph Goodale's office

Income Trust Scandal: CARP backs off accusing Warren Kinsella

Warren Kinsella

CARP, Canada's Association for the Fifty-Plus, has backed down from its claim that Warren Kinsella was responsible for starting an "unsubstantiated rumour" that Ralph Goodale's office gave an executive director at CARP inside information about the plan not to tax income trusts.

They've replaced their December 8 news release with a new version, same title, but throwing the accusation against Warren Kinsella down the memory hole.

Income Trust heads up!

Tomorrow (Wednesday, 21 December) at 9pm EST on CBC Newsworld, and repeated at 10pm EST on the main CBC network (check your local listings), a story on income trusts and the alleged leak from Finance Minister Ralph Goodale's office will be presented by Margo McDiarmid.

Is this the Big One? Not yet. But the main stream media has not lost sight of this story, though it might have seemed like that for the lack of coverage. I for one am glad that the CBC is not waiting for January 24 to come and go before moving forward on the story.

It'll be interesting to see what they've come up with.

Yet another interesting income trust fund

CML Healthcare is another one of those income trust funds that warrants attention in light of the strange trading patterns in the hours and days just prior to Liberal Finance Minister Ralph Goodale's announcement on the evening of November 23 that income trust funds would not be taxed.

As it turns out, one of the original trustees of the fund was also a major contributor to Paul Martin's leadership campaign, and today manages one of Canada's most exclusive mutual funds, a fund that includes income trusts as one of its core investments.

More income trusts links and connections

Sometimes a thing can look very suspicious, but it is overlooked because what "it" is, it didn't seem to work the way it was supposed to.

Is this one of those "it"s?

No one likes a snitch

Robert McLelland at My Blahg is getting into the Income Trust game.

OK, not in a constructive way.

Another Liberal-tied trust and precisely timed profits

Cargojet Owner and CEO Ajay Virmani

Cargojet is a major supporter of the Liberal Party. Since 2003, the corporation has made $18,667 is donations the the Liberal Party, and only the Liberal Party.

The CEO and President of Cargojet, Ajay Virmani, has ties to the Liberal Party:

The Globe and Mail’s Jane Taber adds some interesting poop about the polluting plane--it's all about cronyism:

"The plane is owned by Ajay Virmani, a Toronto businessman, who last spring held a fundraising cocktail event at his lavish home for Mr. Martin. The Liberals leased his aircraft last year as well for their campaign. The NDP and Conservatives lease campaign aircraft from Air Canada. Mr. Virmani said that if he wasn't leasing his plane to Mr. Martin he'd be leasing it to someone else and it would still be flying around. He said there are 800 727s flying around today."

That event cost $5,000 a plate. I would have gone, but I had to wash my hair that day.

Virmani personally donated $10,000 to the Liberal Party in 2000.

Sales executive Jamie Porteous donated $10,000 to the Liberal Party in 2003. Chief Financial Officer Dan Mills also made a modest donation. All this is besides the lease and the lavish parties, of course.

Cargojet manages its public offering via an income trust fund. The history of recent trading is interesting.

On November 21, 12,725 units were traded.

On November 22, and 23, trading spiked at 39,112 and 47,157 units changing hands.

The price per unit before the announcement? $9.60.

The price per unit today? $10.00.

In the middle of November, the unit price was languishing at under $8.50. People were nervous about what the Liberal government had planned for income trusts:

Cargojet units rose 4 cents to close at $8.34 Friday on the Toronto Stock Exchange. That's down 15 per cent in the past month amid anxiety about the income trust sector, sparked by Ottawa's decision on Sept. 19 to halt advance tax rulings on new offerings, independent trust analyst Harry Levant said.

Virmani was actively involved in trying to influence Ralph Goodale:

Mr. Virmani, an influential fundraiser for the federal Liberals, said he has urged Finance Minister Ralph Goodale to protect existing trusts and preserve tax laws governing them while writing new rules for new entrants. "The government should grandfather the existing trusts for at least five to 10 years," he said. "If you want to change the rules, don't change them in the middle of the sixth inning."

Looking at this chart, it appears that someone got over their nervousness just in time.

Ajay Virmani owns 20% of Cargojet. Mills and Porteous own 5% each.

Though not as dramatic as the trading with Medisys, someone at Cargojet picked just to right time to grab a healthy chunk of units just before Ralph Goodale's office announced the favourable news on income trust taxation.

Another curious example of income trust trading, hitting close to home

A big hat tip to MK Braaten for this one.

The day before the November 23rd income trust announcement by Finance Minister Ralph Goodale, the shares were worth $10.80, and traded 5,714 units.

The day of the announcement, but before the announcement was made, the shares closed at $11.00, but were trading at an amazing 203,953 units!

The day after the announcement, the price continued to trend up, closing at $11.02.

This past Friday, the unit price closed at $13.25.

The trust fund in question? Medisys, the health care and pharmaceutical company run by Paul Martin's personal physician, Dr. Sheldon Elman.

Here's a visual representation of the activity. Look at that volume spike just before the announcement and the subsequent unit price racing up.

It's quite the turnaround. This time last year, the shares were trading at $4.25, with an expectation that in a year it would be trading at $4.00. This researcher had some harsh words:

Surprisingly weak quarter. Punctuates why Medisys is not ready to be an income trust.

The recommendation? Sell. The only hope for Medisys? More for-proft clinics opening nation-wide to improve cash flow.

In fact, in 2005, from a peak $15.21 in the summer, Medisys was on a downward trend, dropping 30% of its value until late November, earning another negative report on November 21, just two days before the income trust announcement.

I can only assume no one from Ralph Goodale's office called Jennings Capital Inc.

Whoever decided to ignore that negative report and picked up an astonishing 200,000 shares really picked exactly the right time.

I bet Dr. Elman will have a big smile on his face when Paul Martin comes for his next visit.

By the way, who owns Medisys? Well, when they converted into an income trust in November 2004, 45% of the issued and outstanding shares were owned by directors and senior management at Medisys.

Who are these people? One is former Liberal Senator Leo Kolber. Leo Kolber has donated nearly $60,000 to the Liberals since 1993, including $17,500 in 2002 through his company 87215 Canada Ltd.

Ironically, in his autobiography Leo, A Life this member of the pro-business wing of the Liberal Party speaks of his disappointment at the decline in business ethics.

I guess he must still be disappointed.

The CBC reports on the Income Trust scandal

The CBC is finally reporting on the Income Trust scandal, in which allegations have been made that senior officials in Finance Minister Ralph Goodale's office tipped key investors to the planned announcement to not tax income trusts. That information allowed certain investors to position themselves for a handsome profit after the announcement was made.

This report, prepared by the CBC itself, doesn't add anything new to the story. But it is significant because it kicks off with Stephen Harper's call for Goodale's resignation.

And where does the government response appear? The obligatory statement that says that an investigation is underway, that Goodale acted responsibly, that no leaks happened, that the Conservatives are playing politics or jumping the gun or muddying the waters or this or that?

Nowhere. Not even a snide remark about Stephen Harper looking "angry" when he demanded Goodale's resignation.

Every single paragraph is a report on facts about the story, or a report on Stephen Harper's statements or on Conservative Party policy.

Well, there's something you don't see every day from the CBC. Maybe some folks at the CBC are starting to worry that they will be reporting to a new boss on January 23, and someone in the news department trying to make nice.

The Income Trust Scandal: Denials, challenges, admissions, and insults

CTV is now reporting a bizarre series of denials and grudging admissions surrounding the CTV story in which a senior director at an investment company a seniors' advocacy group claims that he was tipped by a senior member from Finance Minister Ralph Goodale's office of the forthcoming announcement not to tax income trusts, but to reduce the taxation on stocks paying dividends.

The suspicion is that he flurry of market activity represented key investors using this inside information to position themselves to profit after the announcement was made.

Denials. Challenges. Grudging admissions. And even an insult! Do you get a feeling that a sense of panic setting in with some people connected with this story.

The Income Trust Scandal: An attempt to smear Warren Kinsella

Experienced political operator Warren Kinsella

A new twist to the story that someone in Finance Minister Ralph Goodale's office called a senior investor at CARP, Canada's Association for the Fifty-Plus, to let him know that an announcement would be made later that day that income trusts would not be taxed.

CARP's William Gleberzon, an associate executive director, told CTV news, point blank, that he received a call from a "senior policy advisor", delivering the inside scoop.

But now CARP is denying any of it happened.

They are trying to blame Warren Kinsella, but as far as I can tell, Kinsella didn't do anything wrong, while CARP seems to be engaged in some serious misquoting of Warren's blog entries.

I'm defending Warren Kinsella. Who'da thunk it?

Ralph Goodale: Looking closer to home for the enemy

The gauntlet has been thrown down with a call for the resignation of Finance Minister Ralph Goodale by a Conservative MP.

No surprise there.

But in this election period, some Liberal MPs might well be very nervous about holding their ridings while being weighed down by the scandal-ridden reputation of the Liberal Party. Can we expect some private, or even public, calls for Ralph Goodale to step down from Liberals as well?

More than one Liberal MP will consider whether he or she can win some local votes (and maybe scrape out a win) by being "the Liberal who took a stand against corruption".

RCMP Investigation: Lousy timing for the Liberals

Being subject to a criminal investigation during an election being fought largely on the question of ethics sounds like something from a sitcom.

It's hard to imagine a worse possible time:

The RCMP have begun a review of reported heavier-than-usual trading in income trusts and dividend-paying stocks ahead of an announcement last week that the federal government was increasing the tax credit on corporate dividends.

NDP finance critic Judy Wasylycia-Leis sent a letter of complaint to the Royal Canadian Mounted Police earlier this week requesting the probe into whether Bay Street insiders received advance knowledge of the announcement, Staff Sgt. Paul Marsh told Bloomberg News.

"The RCMP will review the information provided to determine if there is a basis to proceed with a criminal investigation," Marsh said.

"It would be inappropriate to speculate what action may or may not be taken."

Not just the RCMP, but other stock market regulators as well.

Finance Minister Ralph Goodale denied allegations that information was leaked.

Expect a lot of airplay, as well as some very pointed questions aimed at Paul Martin from the other party leaders during the leadership debates.

You have to wonder if maybe the Prime Minister should have taken the opposition up on its offer to start the election in mid-January.

Did well-connected Liberal friends benefit in any way?

That's the question being asked by NDP Finance Critic Judy Wasylycia-Leis.

It'll be a question asked by the chairman of the Ontario Securities Commission.

It'll be a question asked by RCMP financial investigators.

And if there's any justice, it'll be asked by Canadians when they are looking at their ballots.

How would they have benefited? By taking advantage of a convenient leak of a crucial tax decision from Finance Minister Ralph Goodale's office last week:

On Friday, CBC News reported that trading in many income trusts and dividend-paying stocks became much heavier than usual late Wednesday – just before the government announced that it would not tax trusts and would cut the tax on stocks that pay dividends.

And several published reports said investors knew early about the plan, which lowers taxes on some stock returns.

Here's one such "published report". And here is an example of the weird trading patterns.

What was that about the Liberal Party being utterly unlike an organized criminal syndicate?

Angry in the Great White North by Steve Janke is licensed under a Creative Commons Attribution-Share Alike 2.5 Canada License. Based on a work at stevejanke.com.