Just one more day on the stand for Brian Mulroney, yet somehow, the list of questions yet to be answered seems to be getting longer, not shorter.
Globe and Mail editor-in-chief Edward Greenspon has dispatched a letter to commission counsel Richard Wolson, in which he categorically — and convincingly — debunks the bizarre claim made by the former prime minister during yesterday’s testimony: that there was a “fourth article” in the series penned by William Kaplan that “mysteriously” failed to appear.
He also confirms that Mulroney attempted to “induce” the paper into pursuing another angle by offering to provide “explosive” information “in exchange for suppressing Mr. Kaplan’s story”. Which, as per Greenspon, turned out to be “unverifiable”.
(Could it have had something to do with that “leading political figure” from Cape Breton that, as per one of Mulroney’s other extraordinary allegations yesterday, was the true beneficiary of the Britan account, as he told the commission yesterday? Someone check page 129 of Kaplan’s “A Secret Trial” and find out!)
Oh, and that thing about a Globe reporter “giggling” during Mulroney’s testimony last week? “Completely without any foundation.” So — yeah.
Unfortunately, Wolson won’t get the chance to question the witness about these contradictions — he finished up with his cross-examination yesterday afternoon. Today, Richard Auger, lead counsel for Karlheinz Schreiber, will take the floor, although he told the judge yesterday that he won’t take longer than a couple of hours, which means we may still get to hear from those Canada Revenue Agency officials on the witness list for today — which, after yesterday’s revelations, could make for a very informative session.
9:13:04 AM
Good morning, Oliphantiacs! It’s a cold and bitter day outside Old City Hall, but the hearing room is buzzing with the latest developments, from the Greenspon letter to the curious case of the taxes paid. We’re in the home stretch now — just one day left on the schedule as far as this round of public hearings, although with Schreiber’s health still in flux, we’re not sure whether the finale will be postponed until next week.
In any case, Richard Auger is up today, and he’s already at the lectern, arranging and rearranging the many binders that have accumulated on the portable shelf that he’s wheeled onto the floor. (Remember, unlike some other parties, he doesn’t have a team of minions at his disposal to fetch any relevant documents of which he has need.) Meanwhile, the other lawyers seem relaxed — well, the commission counsel, at least, and Team Attorney General; Mulroney’s entourage is most likely in the holding pen with their client.
9:36:56 AM
Are we — late? Really? But Oliphant is never late — not unless recalcitrant airlines are involved, that is. No explanation yet from the commission staff — but I have to wonder if the absence of the witness has anything to do with the delay. The show can’t go on until the talent turns up, after all.
9:44:57 AM
Okay, apparently there’s some sort of discussion underway between the lawyers — Pratte and Auger have been deep in huddled conversation for the last few minutes, but I’m not sure if that’s the source of the delay — but we’re supposed to get started any minute now.
Meanwhile, I can report that, as far as the collective focus of the media this morning, the tax issue definitely seems to be the most compelling story du jour – well, du hier, with a strong likelihood of carrying forward into today’s coverage. It has that ineffable quality of being both noteworthy *and* instantly understandable, even for someone who hasn’t paid the slightest bit of attention to the saga so far.
9:49:50 AM
Oh, *there* he is — the right honourable witness, that is, who is giving the room his most beatific smile — I think it’s safe to say that he is ready for his closeup.
9:51:16 AM
And – all rise. Finally.
Guy Pratte begins with what is becoming a tradition for him: putting something on the record, just to get it out there. In this case, he wants to respond to the Greenspon letter — oh, I’ll bet he does — but it turns out he doesn’t have much to say about the “fourth story”; he just wants to confirm that yes, his client did have discussions with Kaplan and the Globe, mostly out of concern that the story would damage his family, not a single member of which has ever been linked to the Airbus Affair by any media outlet. Sorry, just wanted to put *that* on the record.
Anyway, with that out of the way, it’s Auger’s moment in the spotlight, and he begins by reminding Mulroney of his comments last week on the importance of context. He then moves to — oh, this is an intriguing introductory round; he reads from various Kaplan notes, and notes that at the time, Mulroney was *opposed* to Schreiber’s extradition, and had defended him — in fact, at one point, he says that he doesn’t want to see him “end up in a German court”.
9:59:33 AM
Auger wonders when Mulroney first realized that he had made a mistake about Schreiber, and gets the witness to acknowledge that it was probably before 1999, although Mulroney can’t point to a specific Schreiberian epiphany. He – like the rest of us, to be honest – doesn’t seem to know exactly where Auger is going with this – but when he tries to wriggle out of a question about the November 2007 affidavit – the one Mulroney has repeatedly described as “false” – the judge points out that he didn’t actually hear an answer.
Mulroney — who is having markedly more difficulty flipping to the correct binders and tabs today, although I’m sure that is just coincidence — eventually has to concur that the affidavit was actually a response to Mulroney’s motion on Schreiber’s lawsuit against him – which was eventually thrown out on jurisdictional grounds. Mulroney tries to point out that there is much material in the affidavit that isn’t strictly relevant to the lawsuit.
10:07:13 AM
More discussion of Schreiber’s various legal manoeuvrings, which – as per Mulroney – were just part of his battle to avoid extradition. Auger seems to be making the point that the timeline doesn’t actually back up that contention — and in fairness, may be doing so somewhat successfully, because Mulroney is getting crankier and more monosyllabic by the minute — and eventually gets the witness to concur that Schreiber had – and has – the right – a Charter right – to do whatever he can to pursue the issue in court — he has no problem with it, “not for him or any other citizen of this country”. So there. Go, Charter!
10:12:04 AM
Back to the Kaplan interviews, in which Mulroney confirmed that Schreiber was involved in Bear Head, but the witness notes that he never saw any of his letters — sure, one may have “slipped through”, but he doesn’t recall it, and the policy for handling mail in his PMO was similar to that in place under Stephen Harper.
10:15:25 AM
Auger wonders if Mulroney made a point of avoiding conversation with Schreiber — no, not really, he just didn’t have much contact with him. There’s a brief re-recap of the “Royal York meeting” – which, according to Mulroney, consisted of the two men exchanging pleasantries as the former prime minister was heading back to his table after visiting the washroom, but was nonetheless immortalized in a subsequent letter from Schreiber.
Did Schreiber call Mulroney in 1995 to tell him that the Eurocopter charges were dismissed? No, apparently not, according to Mulroney – he “certainly does not” recall him doing so, not while he was in Florida or anywhere else. Does he deny it? He doesn’t really *anything* it; he just insists that he didn’t speak to Schreiber for seven years — now, nine years — after that last encounter in 2000.
10:20:15 AM
Oh, thank goodness — the safety deposit box in New York, which is at least marginally more interesting than Schreiber’s voluminous one-way correspondence; Auger has a letter from the bank confirming that Mulroney hadn’t ‘visited the box’ since 2006 — wait, does that mean the money is still there? — although it does note that it was possible he visited the box on December 13, 1999, when the lock was changed. Wait, who is saying this? Anyway, Mulroney has no recollection of any of that, although as Auger points out, that would coincide with when he determined that the money was income.
10:24:19 AM
Okay, according to the bank, the lock was changed *at Mulroney’s request* — this, despite the fact that he insists that he has no recollection of doing so. Not to mention the serendipitous timing, what with it happening just before the Boxing Day meeting between Doucet and Schreiber.
As per Mulroney, the money was removed “in increments” once it was “his”, beginning in late 2000. He can’t remember how much each of those “increments” was — although he huffily “of course not”s when asked if it was $50,000, and the money was distributed to “members of his immediate and extended family” in the United States.
Oliphant wonders if he had a child – or children – attending school in the United States at the time — he’s a father too — and Mulroney confirms that he had at least two – in New York and Connecticut – and that, it seems, is mainly where the money went. So — he gave his kids $1,000 bills? Or paid tuition? Or — oh, my head hurts.
10:33:14 AM
More back and forth about exactly how this letter from the bank came to be: It was in response to a request from the Ethics committee, apparently. Interestingly, when Pratte pops up with another sort-of objection – clarification, I’m not sure how he describes these little cameos – Oliphant reminds him that this *is* a cross-examination, and his client can handle himself just fine. (He also notes that Mulroney actually owed a rental fee on the box, but only after establishing that despite the fact that Mulroney was a member of the board at the time, he did not testify that the box was provided as a complimentary service. This judge, you guys? He doesn’t miss much.)
10:37:35 AM
Auger moves onto the defamation suit, which the former prime minister eventually settled for just $2 million, and wonders whether he did so because he knew he hadn’t yet been *directly* asked if there was a commercial relationship between the two men, but that it could still come up – and that was a risk. Mulroney readily acknowledges that he was aware that it could come up, and insists he was prepared to answer it, but denies that it was part of any such “risk assessment”.
10:42:34 AM
Somehow, Mulroney found an opening to deliver his trademark How I Crushed The Evil Conspiracy Against Me On The Courthouse Steps And Did I Mention The RCMP Colluded With That Evil Stevie Cameron after all. The former prime minister is especially insistent that he didn’t get a cent from the settlement — it all went to his lawyers and advisors — but he *did* insist that the apology included a line about how there never had been any evidence of wrongdoing. For Mila and the family, you know. Eventually, in 2003, he got a letter from the RCMP stating that the investigation was closed.
10:45:21 AM
And — Bear Head? Really, we’re going back to Bear Head? I guess so; specifically, Mulroney’s testimony that he had “killed” the project in 1990, and the witness recalls that he had dispatched Spector to investigate the project — “fresh eyes”, you know — which led to the discussion in the car, and the then-PM saying that the project was dead — “or words to that effect”. At which point it was apparently up to Spector – his chief of staff – to convey the message to the Clerk; at that point, Mulroney “assumed” it wa done. Yet, as Auger points out, he then goes onto have *further* discussions with MacKay, Schreiber and others about the project. Ah, that was reconfiguration, Mulroney notes — it was a “moveable feast”. That never actually provided any *food*.
10:55:22 AM
Ahh, the mandate letter. Good old mandate letter — we’ve had some times together over the last few weeks, haven’t we? Anyway, Auger wonders why Mulroney – who was an associate at a major law firm at the time, remember – didn’t simply have one of his assistants draft a contract, and the former prime minister reminds him that he wasn’t really involved in the process. That was all Fred Doucet’s doing, although he does recall that the text was read to him over the phone.
10:57:50 AM
Oh, that was an unexpected tangent shift — from the mandate letter, Auger switches to the tax question, and wonders whether Mulroney ever told his advisors of the existence of this – what’s that word he likes so much? embryonic, that’s the one — this embryonic contract. Mulroney reminds him that he wasn’t involved in the discussions between his lawyers and Canada Revenue Agency, and Auger notes again – just in case we’d forgotten, which ITQ, she is forced to confess, had – that those negotiations were ongoing at the very same time that the mandate letter was being prepared by Doucet – and Schreiber, depending on which account you consider most credible, if any. Anyway, what is interesting — yes, there is something interesting going on here! It just took a while to show itself — is that amount that Schreiber reportedly paid Mulroney differs between the two documents: in the CRA letter, it is $225,000, but in the mandate notes, it was $250,000. Aha! Aha?
Mulroney tries to pretend this was all just part of the negotiations, and Auger points out that one doesn’t “negotiate” the amount of cash received.
Oh, and apparently Mulroney’s lawyer originally pegged the amount as somewhere between $150,000 and $225,000.
11:05:56 AM
Oliphant eventually intervenes – it was getting a bit tense between Mulroney and Auger – and suggests that perhaps Mulroney’s lawyer was considering declaring the income in the United Statse, but – oh, Mulroney has another theory — perhaps, he says, his lawyer was holding the money “in reserve”. Confusingly, he also brings up the expenses — you remember, the $45,000 or so that he didn’t end up declaring at all, paying tax on all of it, although as it turns out, not *all* of it.
And – ooh, we may break now, but if that’s the case, we’ll go until 1pm, or whenever Auger is done — whichever comes first. Sold!
See you in fifteen minutes!
11:24:26 AM
It’s official — the curious case of the CRA’s apparent benevolence has achieved the much coveted watercooler status. It’s definitely the number one topic of discussion in the media encampment — this, despite the fact that so much of the details surrounding the negotiations are, frustratingly, just out of bounds of the terms of reference.
Also, if any of y’all are skipping the comment section — which is pretty much *always* a bad idea, as far as ITQ is concerned, what the ratio of smartness to otherwise — you’d be wise to check out what Norm Spector has had to say vis a vis the latest claim by Mulroney that he “killed” Bear Head — or, in this latest version, said sufficient magic “words to that effect” to spur his chief of staff to do so on his behalf.
11:36:24 AM
And – we’re back, with a status update on the temperature in the hearing room, which can best be described as “bonechillingly cold”. The judge reminds us that it’s supposed to warm up this afternoon, but allows that he has asked Public Works to crank up the heat.
Back to Auger, who wants to go back to the mandate letter, and wonders whether Mulroney agreed with the wording of the document — he was, after all, a lawyer — and asks if he would agree “in hindsight” that he would have had it indicate that the work was *exclusively* international. Mulroney once again downplays the level of attention he paid to the details when he got a quick read-through of the contract courtesy of Fred Doucet; if this had gone on to become a *real* contract, he would have read it more carefully, he assures Auger, and made the necessary corrections.
11:41:08 AM
Mmm, brownies. Okay, so Mulroney “believes” that the document “basically” sets out an exclusively international “watching brief”, what with the references to peacekeeping, but Auger points out that the word “including” could imply other work. Mulroney doesn’t see it that way at all — the “general thrust” was for international work.
Why not send an invoice, Auger wonders – setting out his fees and services? Because Schreiber didn’t ask for one, Mulroney says, prompting Auger to note that, in the normal course of business, you don’t just send an invoice because the client asks for one. Apparently, that’s not the case for Mulroney — he has other international clients that arrange to pay him a retainer for his “exclusive services” in order to make sure he doesn’t work for a competitor. But does he send an invoice? These other companies are “publicly traded corporations,” Mulroney reminds him. So — private companies don’t work on an invoice basis? Huh. The international consultancy world is such a fascinating place.
11:46:46 AM
Apparently, despite their close friendship, Mulroney doesn’t, as a rule, share the “intimate details” of his business dealings with Fred Doucet – he saves those for the wife and kids.
Somehow, this spirals into a soliloque – or an aside – about Doucet’s travails as summit-arranger at large, during which Mulroney again claims to have had no knowledge that Doucet had set up a lobbying business after leaving government. So — didn’t he wonder why he kept showing up with Schreiber at meetings about the Bear Head project? Not just once, but on repeated occasions?
11:51:34 AM
And – wow, Auger does enjoy leaping from hither to yon when it comes to his lines of questioning, doesn’t he? Anyway, he wonders *why* Mulroney “hesitated” before accepting that first bundle of cash at Mirabel — was it because he was wondering how to spend it, or out of concern at the source? No, he was just “surprised”.
11:54:26 AM
And we’ve blipped back to 2007, and that letter from Schreiber that accused Mulroney of having done “nothing” for the $300,000 – he wouldn’t even meet with Schreiber, MacKay and “Mike” to discuss the No Fat Kids pasta pitch. Mulroney reminds him of all those wildly laudatory letters that preceded it, including one in which he predicted a Nobel prize victory. According to Mulroney, this bit of “blackmail” coincided with “noose tightening” around Schreiber on the extradition front, and when he failed to respond, the threatened lawsuit materialized. “He wanted his money back,” Auger noted. Yet rather than respond to Schreiber – or have his lawyers do so, “setting out the work you had done,” Mulroney — just ignored it. It was *Schreiber* who “set out” that work, Mulroney counters — on the fifth estate and in all those letters. Not the travel to China, France or Russia, ostensibly on his behalf, Auger points out. “But he knew that,” Mulroney insists.
As far as the former prime minister is concerned, you’d have to be “pretty naïve” not to understand “what was going on here.” Which can be said about so very many aspects of this story, really.
12:03:23 PM
What did I say about this judge not missing much? When Mulroney tried to suggest that all that stuff about the trips to Russia and China was part and parcel of why Schreiber’s Ontario lawsuit was dismissed, he pipes up to inquire whether it was actually put before the court, as a statement of defence; the Ontario suit was, of course, dismissed on jurisdictional grounds, and, as Mulroney eventually acknowledges, no defence was ever filed.
Auger wonders when Mulroney ever publicly confirmed that he had made those trips on Schreiber’s behalf (or whatever side trips were involved in meeting with the now deceased world leaders involved) and Mulroney points to his discussions with Schreiber, but the judge again pops up to point out that the question was when he made a *public* statement; somewhat sulkily, Mulroney tells “M’Lord” that he wasn’t aware he was under such an obligation to go public with his claims, but eventually suggests it was at the Ethics committee.
12:08:16 PM
After a brief – and somewhat technical – exchange surrounding Harrington Lake, and the driver that may or may not have been available to ferry the family back and forth, it’s off to the Savoy. Oh boy, salmon for lunch! Anyway, according to Mulroney, there were two subjects discussed: Airbus — the “trauma” that both had suffered, Mulroney quickly interjects — and the pasta project. Auger wonders: “Did that take over the meeting?” Not really — Mulroney wasn’t aware that Thyssen had “severed” its relationship with Schreiber — but it *did* take up a “large part” of the time.
12:11:43 PM
Another lesson in international business protocol: It turns out that having your office call someone else’s office to let that someone else know that you’re going to be in his town – Zurich, for instance – and would be happy to have you to lunch, that does not, in fact, constitute inviting someone to lunch, although it could be construed as “initiating” it.
Anyway, Mulroney clearly doesn’t relish the recollection of the one occasion on which *he* proposed a meeting with Schreiber; he describes it as a courtesy call, and reminds Auger that it was Schreiber who alerted him to that bit of sordid business involving the Swiss authorities, and that infamous Letter of Request.
12:15:57 PM
Mulroney denies that any of the things that Schreiber stated in his affidavit were discussed at the meeting actually came up at all, from Frank Moores to Airbus to an alleged request to transfer money to that lawyer in Geneva that Mulroney claims he never had.
Another long pause as Mulroney flips, page by page, through yet another binder – muttering the numbers loudly enough for the microphobe to pick it up. It’s from Mulroney’s testimony last week, in which he recalled the Mirabel meeting, where he first decided that this was “something he could do”; which was principally due to the concept art that featured Thyssen vehicles with big UN logos drawn on the side. But, as Auger points out, he didn’t actually *know* what he was going to do at the Mirabel meeting – oh, but he still took the cash, I think, is the point he’s making. As per Mulroney, it was “perfectly consistent throughout”, but Auger wonders why he didn’t ask Schreiber where the product would come from, or ask him for information on the plant that would produce it. No, he didn’t – and Schreiber, Mulroney points out, “never said a word” about the meetings that *he* had just had with various Quebec and federal politicians.
12:26:56 PM
Auger notes that, in recounting what turned out to be the last meeting between Schreiber and Mulroney at the Pierre Hotel, the former prime minister testified that he had mused about heading over to the United Nations to chat with the Secretary General about the group buy concept; did he ever do that? No, he didn’t — because, as per Mulroney, he hadn’t yet met with the other two P5 leaders – Tony Blair and Bill Clinton, the only ones, incidentally, who are still alive. Plus, this was in 1994, and soon afterwards, Airbus “exploded” — I really, really wish Mulroney would pick another verb to describe what happened, or change the structure of the phrase, or *something* — and they were all “out of business” for three years.
Wait, didn’t he tell the Ethics committee that, after the story broke, he called around to all the boards of directors to which he had been named, and nobody would accept his resignation, so much support did he have? Did he ever actually demonstrate any damage to his ability to earn a living?
12:33:07 PM
Auger quizzes Mulroney on various statements from Luc Lavoie, including one that apparently alluded to a military equipment facility in Quebec that Mulroney certainly had *not*, in fact, been hired to promote. The first part of the statement is accurate, however, Mulroney says.
12:36:29 PM
Ah, the question of the evershifting dollar amount of the retainer. Did Mulroney tell Lavoie in 2003 that he had actually received $75,000 — not, presumably $100,000? At “a point in time”, he did.
12:40:01 PM
Mulroney is now kvetching about — darn, I missed the description of the document on which Mulroney is being queried now, which seems to be related to the retainer payments; interestingly, Mulroney claims that he’s never seen the document before — this, despite the fact that it would have been provided to his team weeks ago as part of discovery. Why, Auger wonders, didn’t he simply add the money to his 2000 tax return, like a “normal person”, since according to *his* interpretation of the payments as retainer, it wouldn’t have been due before then anyway.
Oh, and Mulroney knew nothing about any meetings between CRA and his tax lawyers — apparently, there was at least one — and even seems to suggest that he was told there were none.
Was any corporate tax paid, Auger wonders — no, apparently not, according to the documents provided. Pratte, by the way, hasn’t made a single objection to this line of questioning; a more cynical sort would suggest he’s filing it all away for future federal court motions.
12:46:25 PM
Apparently, Mulroney didn’t even see these letters between his lawyer and the CRA – or was it RevCan back then? – until they were provided to the parliamentary committee, he thinks. Definitely not before.
And — oh, Auger has noticed that it is five to one, and wonders if perhaps we should take a short break — ten or fifteen minutes — and then he’ll try to conclude within the next half hour. The judge notes that we did get started late today – true, half an hour – and reminds Auger that people are going to have to eat. Yes, we will! Anyway, we’re going to have to wait a bit longer — oh, unless the judge heeds Wolson’s advice, which he does.
Half hour break, then we’re back for the final lap. I wonder if this means the rest of the witnesses will be bumped til tomorrow? I guess we’ll find out.
1:40:31 PM
And we’re back, for what we’ve been promised is going to be a short session – and possibly an early end to the day, or at least the liveblog, and Auger wants to know more about that first China trip, during which he was representing two other clients, and to which the work he did for Schreiber would be an “add-on”; he also didn’t consult with his new client on his plan to add it to the agenda.
With that out of the way, Auger seems to be approaching one of those lingering questions that has befuddled ITQ — the expenses for that trip. Didn’t the original clients pay the expenses? Yes, Mulroney says — until he felt he could be “helpful” to Schreiber, at which point he felt it would be right to assign him a “moderate” portion of the expenses. Which, for the China trip, worked out to approximately $12,000, Auger notes. How was that attributed? Fairly, Mulroney tells him – he had notations and everything – but he never claimed those expenses. That’s not Auger’s point, though — Schreiber paid for $12 thousand of *his* expenses. No, Mulroney says, he didn’t – it was all declared as income. Well, some of it was, but that’s another issue.
1:46:24 PM
These discussions in China were “preliminary”, Mulroney notes — he didn’t, you know, actually use Schreiber’s *name*, he was just seeking counsel and that sort of thing. Also, he didn’t charge GST, because these were *international* services — the GST came off at the border. Wait, was Bear Head a Canadian company? A subsidary, but still – incorporated in Canada?
1:49:05 PM
And – oh, back to the tax letters, which also stated that Schreiber’s name would not be disclosed as “the person who gave him the cash”; Mulroney claims he didn’t know at the time that this was part of the deal, which – as Auger reminds him – predates the 2003 Kaplan article. So, the lawyer — Lefebvre, that is; really, he does deserve to be named, since I suspect this hearing may end up sending a stream of potential clients to his door — put that in the agreement himself? I guess so.
1:51:52 PM
Some confusion over a related line of questioning – was Cansult –Mulroney’s consulting firm — set up to handle the arrangement with Schreiber? No — in fact, he wasn’t even the first client; he was the first client of Brian Mulroney, and yeah, that sounds odd to me too. Didn’t we hear testimony that the three payments should have gone on the Cansult books, but just didn’t end up there, for some reason? Or am I misremembering.
1:54:27 PM
Back to the meeting at the Queen Elizabeth — the second of three, just to remind — at which Schreiber was agog with love for the newly elected Liberal government. At no point did Mulroney inquire as to whether Schreiber wanted to rethink the arrangement, Mulroney says — he didn’t *blame* him for being excited by the prospect of a new government, especially now that he knows how much money he stood to make from the Bear Head deal.
Going back to those brochures that apparently inspired Mulroney’s UN P5 group buy concept, Auger wonders if he ever investigated those UN logos – no, he didn’t. Does he have any correspondence related to those meetings he had on the subject – followup letters, exchanges, courtesy responses — anyway, the answer is no, he doesn’t think so. There may be something, somewhere, but he doesn’t know, and it would likely be polite and “innocuous”. Would it refer to the concept? No, that’s not the sort of thing that is include in a courtesy thank-you letter, Mulroney tells him.
2:01:02 PM
Auger notes that, at the Pierre Hotel meeting, Mulroney actually reported to Fred Doucet on his trip to Russia *instead* of Schreiber.
2:02:27 PM
And now, a note from Lavoie to Francine Collins – Mulroney’s senior assistant – related to Bruce Campion-Smith — “Who is Bruce Campion-Smith?” Mulroney wonders, prompting an *actual* wave of giggles at the media tables, since the aforementioned has been in this very room, covering the hearings for the Toronto Star. Once the matter of his identity is cleared up, Mulroney then seems to have some difficult understanding what this document is — an email, apparently – which is eventually cleared up, at which point Auger reads an excerpt, which includes a then-current response from Lavoie that mentions that the money was to get Mulroney’s help on what is clearly the Bear Head project, and the pasta project. Mulroney claims that he’s never seen the letter before; at the time, Lavoie was employed as vice-president of Quebecor and was actually on holiday in France. He was “trying to be helpful” to Smith, so he typed up this email, on a BlackBerry, in a park. With no consultation with Mulroney.
This sparks a rather testy exchange between Auger and Mulroney; the former notes that, as written, it contradicts Mulroney’s version of events, which prompts the former prime minister to refuse to confirm or deny that this was the fact. He eventually has to be guided by the judge, who suggests, politely, that Mulroney doesn’t seem to have understood the question. Is that statement – the one about Bear Head and the pasta? – accurate? No, of course not, fumes Mulroney, but Oliphant points him a bit further down the page, to something *else* that concerns him: Lavoie’s assertion that the statements were “totally true”. Mulroney is sure that Lavoie *believed* that was the case, but – and so forth.
2:01:02 PM
Auger notes that, at the Pierre Hotel meeting, Mulroney actually reported to Fred Doucet on his trip to Russia *instead* of Schreiber.
2:02:27 PM
And now, a note from Lavoie to Francine Collins – Mulroney’s senior assistant – related to Bruce Campion-Smith — “Who is Bruce Campion-Smith?” Mulroney wonders, prompting an *actual* wave of giggles at the media tables, since the aforementioned has been in this very room, covering the hearings for the Toronto Star. Once the matter of his identity is cleared up, Mulroney then seems to have some difficult understanding what this document is — an email, apparently – which is eventually cleared up, at which point Auger reads an excerpt, which includes a then-current response from Lavoie that mentions that the money was to get Mulroney’s help on what is clearly the Bear Head project, and the pasta project. Mulroney claims that he’s never seen the letter before; at the time, Lavoie was employed as vice-president of Quebecor and was actually on holiday in France. He was “trying to be helpful” to Smith, so he typed up this email, on a BlackBerry, in a park. With no consultation with Mulroney.
This sparks a rather testy exchange between Auger and Mulroney; the former notes that, as written, it contradicts Mulroney’s version of events, which prompts the former prime minister to refuse to confirm or deny that this was the fact. He eventually has to be guided by the judge, who suggests, politely, that Mulroney doesn’t seem to have understood the question. Is that statement – the one about Bear Head and the pasta? – accurate? No, of course not, fumes Mulroney, but Oliphant points him a bit further down the page, to something *else* that concerns him: Lavoie’s assertion that the statements were “totally true”. Mulroney is sure that Lavoie *believed* that was the case, but – and so forth.
2:14:16 PM
Back to the meeting at the Savoy, about which Mulroney was questioned by Pratte last week, and noted that he was surprised to learn that Schreiber was in Switzerland, not Germany. In fact, at the time that he got the idea to have a “courtesy call”, he believed he was in Germany, not Switzerland. Did he want Schreiber to travel to Zurich to meet him? No, he was planning to head to Frankfurt the next day — he didn’t change his schedule at all.
And – oh, that’s it? Really? That was an anticlimatic ending.
Wait, no – it isn’t, as it turns out, because the *judge* has a couple of questions for him. This could be interesting.
2:17:23 PM
First Oliquestion — what did he mean with that bit about “only sending invoices when a client asks” — what kind of business did he mean, exactly? Mulroney pretty much repeats what he said earlier – it’s something that occurs in international consultancy, and has to do with exclusivity and retainers and that sort of thing. The judge wonders if he wouldn’t at least send an invoice once he had performed a service on that client’s behalf, and Mulroney agrees that this was unusual.
Second Oliquestion: Mulroney’s claim that Thyssen had “severed ties” with Schreiber in 1995; Mulroney thinks it may have been before this very commission – although according to Oliphant, no one else remembers hearing it, and the matter sort of rests there.
Finally, Oliphant notes that Mulroney has spent more time testifying before this commission than any other witness, and gets him to confirm that he feels he was treated fairly; Mulroney, it seems, does indeed feel that he has been treated well, and has kind words for everyone involved — well, not all by name — and the judge asks if anyone *else* has any questions for the former prime minister, which they don’t.
And – oh, we’re going to hear from the Canada Revenue Agency after all, apparently. Fifteen minute break, and then — Wayne Adams! (No, you’re not supposed to have heard of him, I promise.)
See you then!
2:41:15 PM
According to Team Navigator lead spokesman Robin Sears, Mulroney thanked everyone for their hard work, praised the commission for its professionalism and headed to Nate’s for a smoked meat sandwich before he gets in the car and goes back to Montreal. The Team, however, will still be here – at least until the second phase of public hearings gets underway on June 8th. Yes, there’s a phase two – it’s all about the policy, baby, and ITQ will try her best to be here for that.
2:48:53 PM
We’re not back yet — perhaps they’re waiting to see how many more reporters are planning to skip out the final session — and Wayne Adams — who has a spectacular moustache the likes of which certain leaders of the fourth party would envy — is pacing anxiously behind the now much less binder-cluttered table.
2:51:19 PM
And — here we go! Questioning the witness on behalf of commission counsel is Battista, and Team Mulroney would like to note that they’ve got a tax lawyer in attendance to provide assistance during *their* questions.
Okay, with that out of the way, Adams gives his background — he’s director general of the tax rulings division, and is, as Battista notes, entirely familiar with the act.
2:53:26 PM
Lightning round: What sections of the Tax Act are involved when income is disclosed, and when does it have to be reported? Section 9 deals with company tax, and – wow, am I liveblogging the tax code? really? I *am* freakishly devoted. Anyway, there is a declaration, and if the contract is partially fulfilled, the payer makes a reserve, which means that they may not have to pay tax on the full amount.
If a person receives a retainer, and no services are rendered the year it was received, there would be “no net inclusion” that year. What would they put on the income tax declaration? Well, there’s not a line item, it’s all part of figuring out the total.
3:01:15 PM
Does sending an invoice have an effect on reporting requirements, as far as retainers? It’s not confined or unique to a retainer; what matters is when the money was earned, not when an invoice is sent.
And – wow, that’s it; Battista fulfilled his goal to be the shortest at-bat for main examination so far, and gets a congratulations from Oliphant for his efforts.
3:04:57 PM
Team Mulroney is up now — Francois Grondier — who has exhibits to file, oh yes he does. Vicary – you remember him; he’s the lead counsel for the normally sphinxian Justice Department, and almost never asks any questions interestingly, seems to be a bit more apprehensive, but he allows it in for the moment. That reminds Grondier to “clarify” that *his* questions are being asked under the umbrella of potential objection related to the whole tax issue – the Pratte motion in reserve.
Grondier asks whether there are exceptions to the rules as described above, and Adams notes that there are some differences with how lawyers’ trust funds are treated — they aren’t included as income. They then move onto technical opinions, which are provided by CRA upon receipt of a “fact pattern”, which brings us to a 1998 technical opinion, which involved a deferred payment of some sort, and – wow, the audio on one of the two microphones has gone totally wonky, and is rendering this even more difficult to follow. Anyway, in that case, the payment would go through when the purchaser was “fully satisfied” with the installation of the machine – let’s pretend the machine, at least, was interesting; maybe some sort of Fringe-inspired teleportation device. Anyway, if not, the money would be returned to the vendor. The gist, according to Grondier, is that a deposit can’t be considered taxable until it is permanent, and the recipient is no longer under any restrictions as to its use. That — doesn’t sound remotely like any other payments about which we’ve heard earlier today, does it?
3:16:06 PM
Auger looks absolutely exhausted, by the way — he is hunched over his papers with his hand on his head, not in abject despair, but concentration. At one point earlier, I swear he was patting his binders before resuming questions.
Meanwhile, Grondier and Adams are — not arguing, exactly, but having a surprisingly lively discussion of the 1944 tax case that inspired the above opinion. At one point, Adams reminds him that this isn’t a ruling, and – yeah, I’m not really sure what Grondier is trying to establish here, as far as the tax issues, but Adams appears to be entirely unbothered by the experience.
3:22:34 PM
Oh, Oliphant may have just cut this line of questioning short — he points out that it seems to be related to the exception mentioned by Adams earlier, for lawyers’ trust funds, which, as far as the judge can see, doesn’t apply here, since Mulroney wasn’t acting as a lawyer at the time. Grondier tries to argue that Mulroney, as a lawyer, might have been aware of that protocol — at least, I think that’s what he’s doing – and Battista actually backs him up, at least in part, since this testimony is supposed to provide background information and context, but not directly relate to the specific case.
Eventually, Oliphant allows him to proceed, but suggests that he heed both his and Battista’s comments, which prompts Grondier to flip furiously through his pages of questions — noting that the fact that he’s doing so shows he’s following the judge’s advice – and then it’s on to another provision related to “unearned amounts”. Wait, or is this a case? Maybe it’s both!
So — wait, is the implication here that the money was a “security deposit”?
3:30:03 PM
Alright, the case we’re discussing now – which, Adams notes, was “largely a tax avoidance scheme”, and one that was ultimately unsuccessful. He also disputes the analysis in the article cited by Grondier, which prompts an even longer question — so long, in fact, that Oliphant finally has to intervene to let Adams answer one of the *previous* questions, which he does — well, sort of. He seems to think that the author in question “experienced some angst” while writing his article, but doesn’t dispute the interpretation. “An unearned receipt” should not be included as income — that’s from the conclusions, and once again, there will not be a test on *any* of this. Not even for the judge, I suspect, since from ITQ’s very, very limited perspective, it’s not actually remotely relevant to the case at hand.
3:36:14 PM
Oliphant intervenes again, and wonders whether Grondier actually has a *question* for the witness — or does he just want to put evidence on the record, when he – Oliphant – could simply read the report? Grondier – who is sounding a bit nervous, as, frankly, would ITQ if her line of questioning elicited this much of a “what’s all this about” reaction from the judge – asks what sounds suspiciously like the kind of hastily composed question that MPs come up with at committee when they get caught using up their entire seven minutes with a self-serving preamble.
3:40:29 PM
Okay, so — the point of the foregoing, apparently, is that some learned tax experts believe there are still some differences of opinion on how tax law should be interpreted. I know. I’m shocked, too.
3:43:09 PM
I wonder if this is more or less stultifyingly dull and yet oddly stressful than a typical day at the office for the director general of income tax rulings. He doesn’t have to say much — really, he wouldn’t get to say *anything* if Oliphant didn’t occasionally make Grondier add a question mark to the end of a sentence — but he has to know he’ll turn up on CPAC reruns from now until the end of time. So — a draw, really.
3:46:04 PM
This cross-examination is, apparently, brought to you by McCarthy Tetrault, the law firm responsible for publishing the articles in question. On the other hand, Adams is showing his feisty side, and is wondering aloud what, exactly, Grondier wants him to determine — he then makes the point that you could read that interpretation as giving *everyone* access to the Robertson decision. Hurray! Let the Robertson times roll! But no, Grondier thinks that it *also* makes the case that 12A *overrules* the Robertson decision. Oh, if only there was some sort of court that dealt with tax law. If only, if only.
And — that’s all for Grondier, as it turns out. He did the best he could with a dull, dull hand, so let’s not hold this against him.
3:49:46 PM
No questions from Vicary, who – as it turns out – is acting for the witness, nor from Houston, but Auger wonders if Adams can enlighten us on the requirement to keep documentation on, say, expenses. According to Adams, a taxpayer is expected to produce “reports and records”, but there is an obligation to make the material available to tax officials.
Is there a minimum time period? Six years, apparently — the three years that would be open, and three additional years.
3:51:59 PM
Oliphant notes that, if the taxpayer isn’t claiming expenses, there would be no requirement to keep those records, and Adams agrees.
3:52:33 PM
Good heavens, it turns out Vicary *does* have a question! And what a question it is: He wonders if Adams can share with the class the principle behind the Imperial case, and he does so: It had to do with whether the $70,000 in dispute was income earlier, or later — the taxpayer was claiming the former, and the court found against him, but this was, he notes, a very unusual set of circumstances. It involved real estate, that’s all I’ve picked up so far.
I cannot figure out who Vicary sounds like, but it is driving me *crazy*. It’s an MP — or maybe a minister — oh my goodness, is it Ignatieff? Seriously — is anyone still watching? Does Vicary sound hauntingly like Ignatieff to anyone else, or have I offically gone round the bend? Someone should totally put that in an ad.
3:55:56 PM
Battista has a quick followup question that I will spare you all, and with that, the judge dismisses him, with the note that he has drawn one conclusion — that he didn’t do tax law. You and ITQ both, judge.
That’s it for today’s witness list, I think — there are a few left for tomorrow, and even then, the hope is that the day will finish by noon.
And we’re out — til 9:30 tomorrow morning, when we’ll hear from various and sundry PMO people – no, not Giorno, alas, they’re all from correspondence. See you then!
