Nov 26, 2006: Trust and Liberals

Liberals dance around trust funds

Quick now. Who said the following? “Since the beginning of the Regan administration… the Liberal Party… has been living… from the proceeds of crime.”

If you guessed those fightin’ words were uttered — and later retracted —by a politically potty-mouthed NDP MLA during last week’s filibuster on a Tory-Liberal campaign-finance reform bill, you’d be close… but no cigar.

The quote actually comes from Jan. 28, 1992, and the speaker was the Liberal party’s most prominent dissident of the day, the late George Hawkins, whose father set up one of the party’s controversial trust funds and who spent years trying — and failing — to convince the party to give up its ill-gotten gains and offer Nova Scotians “a profuse apology.”

Let’s rewind.

In 1983, three senior Liberal finance committee members were charged with influence peddling for forcing companies to pay a “toll” to the party to do business with the government.

“Tollgating” was business as usual in Nova Scotia politics. If you owned a distillery and wanted the liquor commission to stock your brand, you had to pay a fee to your friendly party bagman for every case sold. If you were a butcher and wanted your local hospital’s cafeteria to buy its meat from you, you knew who to see — and it wasn’t the hospital purchasing department.

Though tollgating was standard practice for Liberal and Tory governments, the RCMP specifically investigated the 1970-78 Regan administration. (The Mounties tried to unravel Tory fundraising practices too, but an investigator testified a Conservative bagman burned the records before the police could seize them.)

In just those eight Liberal years, however, the Mounties identified more than $4 million of illegal fundraising.

One of those charged pleaded guilty. The two others were convicted at trial, though one conviction was overturned on a technicality. He was acquitted in a retrial.

Which began a tortuous Liberal dance over what to do with the money.

In 1991, eight years after the first convictions, the party was still using the funds to pay off campaign debts and provide a secret salary to its leader. In an interview with the Daily News at the time, then-treasurer Bryan Duffy tried to tap dance around reality. “It may not be something that one would otherwise want to see happen in the 1990s, but [the money] sure as hell wasn’t illegal based on what the court said.”

But, of course, it was.

A year later, thanks in part to George Hawkins’ pressure, the party agreed to audit the funds and turn any tainted money over to the province.

After another year of obfuscating, the party released its so-called “audit,” which wasn’t. Instead, the auditors, “as specifically agreed,” only perused the actual trial transcript and identified $1,287,473.14 “proven or alleged to have been obtained” through kickbacks. “This procedure,” the auditors noted dryly, “does not constitute an audit.”

Last year, the party passed yet another motion to allow it to use the tainted trust funds to not only pay down its bank debt but also provide another $500,000 for this year’s election campaign.

The fund, then-Liberal House leader Manning MacDonald declared, “has been cleansed many years ago.”

Uh, no… And not yet either. Although the Tories struck a deal with the Liberals to allow them to continue using the questionable funds for non-campaign purposes in exchange for propping up the Tory government and supporting its so-called campaign finance reform package, it’s worth recalling the 1997 words of Conservative MLA Brooke Taylor — now a cabinet minister — who declared “these accounts are illegal and will always be felonious and criminal until they are completely disposed of.”



There’s no doubt the NDP filibuster last week was largely a partisan opportunity to stick it to its political rivals, but the result — a deal to hoist the bill for six months to allow for more public consultation — is worthwhile.

It gives us a chance to ask some important questions. Should the Liberals keep those trust funds, for example? Should our political parties collectively end up with $1.3 million — 28 per cent — more in public funding than they’d been able to raise privately through the old system? And should the cap on corporate and union donations really be $5,000 when federal campaign rules only allow for donations of $1,000?

The delay gives us time to ask those questions. And, hopefully, get some answers.

Stephen Kimber, the Maclean Hunter Professor of Journalism at the University of King’s College, investigated the tollgating scandal in his 1999 nonfiction book, Not Guilty: The Trial of Gerald Regan.

  1. […] for taking them in the first place. “Since the beginning of the Regan administration,” Hawkins said, “the Liberal Party… has been living… from the proceeds of […]


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