Political Corruption in Canada: Cases, Causes and Cures 9780773582019

Citation preview

Political Corruption in Canada

This page intentionally left blank

Political Corruption in Canada: Cases, Causes and Cures Edited by Kenneth M. Gibbons and Donald C. Rowat

The Carleton Library No. 95 Published by McClelland and Stewart Limited in association with the Institute of Canadian Studies, Carleton University

THE CARLETON LIBRARY A series of reprints, original works, and new collections of source material relating to Canada, issued under the editorial supervision of the Institute of Canadian Studies of Carleton University, Ottawa. DIRECTOR OF THE INSTITUTE

Davidson Dunton GENERAL EDITOR

Michael Gnarowski EXECUTIVE EDITOR

James Marsh EDITORIAL BOARD

B. Carman Bickerton (History) Dennis Forcese (Sociology) David B. Knight (Geography) J. George Neuspiel (Law) Thomas K. Rymes (Economics) Derek G. Smith (Anthropology) Michael S. Whittington (Political Science)

© McClelland and Stewart Limited, 1976 ALL RIGHTS R E S E R V E D

0-7710-9795-6 The Canadian Publishers McClelland and Stewart Limited 25 Hollinger Road, Toronto Printed and bound in Canada

Table of Contents Preface

vii

Part One: Introduction The Study of Political Corruption Kenneth M. Gibbons \ Part Two: Historic Cases The Pacific Railway Scandal Pierre Berton 15 The Distribution of Railway Subsidies Gustavus Myers 19 Early Corruption in Newfoundland S. J. R. Noel 33 The Saskatchewan Liberal Machine Before 1929 Escott Reid 42 The Beauharnois Power Scandal S. J. Donovan and R. B. Winmill

57

Part Three: More Recent Examples Quebec: Corruption Under Duplessis Herbert F. Quinn 66 Election Day in New Brunswick Hugh G. Thorburn 81 Graft in Civic Office Alan Philips 85 The Munsinger Affair Peter C. Newman 104 The Churchill Forest Industries Scandal Nick Hills 107 The Hydrogate Affair The Ontario Select Legislative Committee A Criticism of the Hydrogate Report Harold Greer 140

117

Part Four: Nature, Causes and Effects

Patronage and the Press Norman Ward 144 The Ethical Conduct of Public Servants Kenneth Kernaghan 159 Members of Parliament and Conflict of Interest The Privy Council Office 171 Federalism and Party Finance Khayyam Z. Paltiel 193 Money and Politics Norman Ward 204 Politics and Corruption in Quebec Ralph Heintzman 217 Graft Never Hurt a Politician at the Polls Peter Bruton, John Downing and Fraser Kelly 225 The Political Culture of Corruption in Canada Kenneth M. Gibbons 231 Part Five: Proposed Cures

Municipal Conflict of Interest: The New Ontario Law Ian MacF. Rogers 251 Guidelines for Ontario's Ministers Premier William Davis 261 Debate on Guidelines for Federal Ministers House of Commons Debates 264 Proposals for Public Servants Kenneth Kernaghan 274 Proposals for Members of Parliament The Privy Council Office 211 Improving Laws on Financing Elections Khayyam Z. Paltiel 295 Conclusion: Future Studies Kenneth M. Gibbons and Donald C. Rowat Selected Bibliography

304

300

Preface At first, Canadians thought of the political corruption revealed by the Watergate affair as a purely American problem. This attitude was naive, given the realities of politics in the present century. First, no society is completely closed; all nations interact in varying degrees with others. Governments are influenced by and tend to emulate the behaviour of other governments, particularly when the nations concerned share fundamental characteristics, as do the western democracies. Secondly, modern technology guarantees that news travels both very rapidly and very widely. People in one country can become fully informed of major political events in other countries. Within the United States, the Watergate hearings were broadcast daily over the television and radio networks, and reporting by the print media was equally constant. Canadians shared, with others throughout the world, exposure to this process of mass education, as revelation after revelation was described here by press, radio, television and magazines. Finally, there is Canada's unique relationship with the United States, the only country with whom we share a border. We share, for the most part, a common language and a fundamentally similar political system based on British democracy. Like most westerners, we tend to think of corruption, bribery, vote-buying and so on as curious relics of the past, still entrenched only in the developing countries of the Third World. The Watergate crisis reminded Canadians that democracy and economic development are not guarantees of immunity from the occurrence of serious improbity. The concern occasioned by the wide coverage of the Watergate affair has provided a stimulus for some self-interested soul searching among Canadians, and for an analysis of the affair's significance for the Canadian political system. This process of self-examination often has taken the form of questions about whether a Watergate affair could occur here, of the need for provisions to deal with similar cases in Canada, or of the degree to which the parliamentary system is more adept at solving such crises. Formerly nonchalant about corruption in Canada, Canadians began to ask questions, not just of Watergate, but of the potential for corruption within our system. To begin with, corruption by its nature does not invite public scrutiny. Newspapers are good sources, and often the only sources, of information on cases of corruption, but in their treatment of particular cases, they ignore, or treat in a rather superficial

viii

POLITICAL CORRUPTION IN CANADA

way, the background of the ca.--. They deal with news; the analysis is left for academics. Unfortunately, while newspapers carry out their role quite well, academics have not attended to theirs. Any mention of corruption in journals or scholarly texts is usually fleeting and anything but analytical. The only book devoted solely to the subject, Richard Gwyn's The Shape of ScandaL follows the journalist's tradition of relating the details of a particular case. Historians have used the case-study approach in much the same way as journalists. It is true that political scientists like Kenneth Kernaghan, Khayyam Paltiel and Norman Ward have looked analytically at a specific aspect of political corruption, such as conflict of interest, election expenses or patronage. But clearly, the greatest attention has come from the practical demands placed on politicians and bureaucrats. These pragmatists not only have begun to study corruption, but they have also adopted or proposed cures for some pressing problems, particularly in relation to conflict of interest and election expenses. Amid the works on Canadian politics, there is then some material on political corruption, but it has not been collected in a form easily accessible to both the academic and the concerned layman. What exists is an assortment of cases of corruption documented in newspapers, committee reports and history books; a few analyses of corruption and related problems which have appeared in popular magazines, and less frequently in learned journals; and finally, the cures proposed for various levels of government by the governments themselves or occasionally by interested others. This categorization of the existing literature on corruption forms the basis of this book of readings, that is, in terms of cases, causes and cures of political corruption in Canada. The logic of this approach does not rest solely on the ease of classifying available writings in this way. There are other reasons which are equally valid. First, it follows the process of inductive reasoning, that is, from the particular case to the general problem. The case studies provide the particulars of corrupt behaviour, allowing a process of abstraction towards a general analysis of corruption. In other words, we should first observe the evidence of corruption before we begin to analyze its nature, causes and impact on the political system. Attempts at analysis are therefore presented after the cases. Secondly, given the nature of our subject, the need for prescription seems great. To ignore prescription is to ignore the practical side of the corruption problem: its control. Thus, we have included several selections which deal with the problem of controlling corruption. At the same time, we have organized the anthology

PREFACE

IX

in such a way that readers will encounter the analyses of causes and effects before attempting to assess the validity of the proposed cures. Part I, an introduction to the study of political corruption, is an initial attempt by one of the editors to assess Canada's conventional wisdom about corruption, to clarify the meaning of the concept, and to define the various forms of corruption. Parts 11 and HI deal chronologically with major and minor cases of corrupt activity in Canada. Some of the readings present an account of many interrelated incidents rather than any single crisis of corruption. Such a series of events may relate more realistically to the spirit or the mood of a particular era than the more infamous cases. At any rate, they are treated as cases because they are discussed descriptively and not analytically, making little or no attempt to assess the nature or cause of the event or events described. Part 11 deals roughly with the post-Confederation era, up to the Second World War, and concludes with a previously unpublished essay by S. J. Donovan and R. B. Winmill on the Beauharnois Power Scandal. Part in relates to more recent and current affairs. Cases are included from all three levels of government: federal, provincial and municipal. Part iv , on the nature, causes and effects of political corruption, is somewhat more eclectic in its scope. It is comprised of analytical writings on various aspects and forms of corruption, such as patronage, conflict of interest, graft, and the corrupting influence of gifts to political parties. Some of these pieces can also be categorized as case descriptions, but we distinguish them from that category because they attempt to introduce some analysis. As might be expected, some are less successful than others. We suggest that this lack of success is not entirely the fault of the authors, but is largely due to the deficiency of analytic models on corruption in the literature on Canadian politics. Part iv concludes with a previously unpublished essay by one of the editors on the relation between political culture and corruption. We hope that it will be helpful to an understanding of the nature and impact of political corruption in Canada. Part v , on proposed cures, includes documents and articles on all three levels of government, illustrating recent proposals or actions to restrain political corruption in Canada. We use the term "proposed" cures to avoid the impression that the laws and guidelines recently put into action are proven remedies. We have also included two pieces which critically evaluate some of the existing laws, the concluding one being a previously unpublished essay by Professor Paltiel on improving laws to control the financing of elections. Fi-

X

POLITICAL CORRUPTION IN C A N A D A

nally, our Conclusion discusses the desirable directions in which future studies of the subject might go. We know that this selection may be too academic for some and not academic enough for others. However, we are confident that it will help to fill a serious gap in the literature on Canadian politics, and we hope that it will be useful not only to scholars and reform-minded citizens, but also to students as a supplement to texts on Canadian government. Students need to learn more about the harsh realities of politics. For making the production of such a volume possible, we thank the authors and publishers for their permission to reprint selections from their published works. K.M.G.

D.C.R. Ottawa, Ontario June 1975

Part One: Introduction The Study of Political Corruption Kenneth M. Gibbons It has been said by one observer of Canadian politics that "if nations could be rated according to their proclivities for shabby political goings on, Canada would emerge with a remarkably pure record."1 This assessment, made by Richard Gwyn in the 1960's, is still representative of two basic conditions of the current status of the study of corruption in Canada. The first condition is relevant not only to academics but to much of the Canadian population as well, and might be described as the prevalence of a "holierthan-thou" attitude vis-a-vis political malfeasence in other countries. One reputable reporter stated that this was a common reaction to the Watergate scandal in the United States, for example.2 This supposition of our innocence in such dark matters may rest upon some very faulty premises. For instance, Gwyn argued that Canada's relatively pure record had been stained, from Confederation until 1965, by only five major cases of political impropriety.3 Unfortunately, this appraisal ignores the smaller incidents which fail to qualify as full-blown national scandals. Why should the definition of "shabby political goings on" exclude vote-buying or petty graft and bribery? There is, in fact, no common definition of political corruption in Canadian political literature, nor even modest attempts to define the concept of corruption. It is not surprising that Gwyn followed the tradition of implicit rather than explicit interpretation of the term "political corruption." Another problem in claiming a relative purity for Canada's record is the failure to offer evidence of political corruption in other nations with which our standards could be compared. Missing as well is a description of an ideal system free of political corruption against which the real world of Canadian politics can be measured. How, then, can we contend that Canada is relatively devoid of political improbity? As was stated in the Preface, the study of political corruption in Canada has been woefully neglected. Since Gwyn is the only author who has considered corruption in Canada significant enough to devote an entire book to the study of one particular case, we should

2

POLITICAL CORRUPTION IN CANADA

not be too harsh in judging his appraisal. His claim is only a symptom and not a cause of the dereliction in this area of study. Most academics fail to consider the importance that corruption may have for the political system. Also, from the point of view of the average citizen, it is a very practical issue, and scholars would seem to have some obligation to the political community to analyze such pragmatic questions. "Woefully neglected" is not meant to imply that no study has taken place at all. Rather, the argument is that little or no analytical work exists in this field of inquiry. Writing on the subject in a comparative context, Arnold Heidenheimer has observed that political corruption has never been central to the discipline of political science or the related social sciences. This lack of scholarly consideration has "left the investigation of political corruption to journalistic and other purely descriptive or impressionistic writers."4 K. Z. Paltiel draws a similar conclusion about the Canadian situation in his study of party finance, a central element of political corruption. Paltiel claims that the study of party finance has not been considered a suitable field for academics; thus it has been abandoned to journalists and political biographers to treat in a more or less superficial manner.5 Patronage, one of the major types of corruption, is another area which has not been researched thoroughly in Canada. Since one of the most striking developments in Canadian politics, civil service reform, was founded on the motive of eliminating the evils of patronage, some students of Canadian bureaucracy have found it curious that "patronage has never been the subject of sustained analysis on the part of Canadian social scientists and historians."6 While this problem of inadequate analysis continues to linger in Canada, the situation is beginning to change elsewhere. Several major texts have appeared on the subject of political corruption since the early 1960's including the following: Rogowand Laswell's Power, Corruption, and Rectitude (1963); Arnold Heidenheimer's collection of readings, Political Corruption: Readings in Comparative Analysis (1970); James C. Scott's Comparative Political Corruption (1972); and Carl J. Friedrich's The Pathology of Politics (1972). Despite this growing concern about corruption, however, the field remains poor in comparison with others in the social sciences, for example, bureaucracy, power, political parties and social change. For this reason, it is important to note that a significant spin-off of the Watergate scandal and of recent Canadian scandals could be an increasing awareness by Canadian citizens that corruption is still

THE STUDY OF POLITICAL CORRUPTION

3

a serious matter in Canada. Indications of an expanding cognizance of the problem are already with us as we continue to encounter demands from various segments of society for the control of election spending and disclosure of financial interests by politicians. In addition, many Canadians feel that corruption is on the increase in our national politics. The 42% who felt this way in 1974 (according to one national opinion poll) represented a 6% jump over the number reporting similar feelings in 1966.7 Even if Gwyn's allusion to Canada's "pure record" was correct, it seems less relevant today, at least as far as the public is concerned. This public awareness may in turn result in greater attention being paid to the subject by those academics who do not think of themselves so isolated from the political community that they can avoid the study of problems of obvious social impact. Problems in Defining Political Corruption It is often assumed, at least implicitly, that political corruption needs no definition since it has a common usage which is acceptable to everyone. Yet, this is far from the truth. Heidenheimer, for example, points out that the word "corruption" has had a number of different meanings in the history of the English language. 8 Our argument that political corruption deserves analytical treatment in Canada is based, in part, on the realization that implicit meanings are poor substitutes for concrete and explicit definitions. Even when writers cannot agree on terms, it is helpful to know just how one particular author has used the concept of corruption in order that we may understand exactly what he or she means when defining some activity as corrupt. Unfortunately, analysts of the concept have been no more successful in agreeing on a definition. To their credit, however, they have made their definitions quite explicit, though in varying degrees of specificity. In examining the concept, Rogow and Lasswell have stated that "a system of public or civic order exalts common interest over special interest; violations of the common interest for special advantage are corrupt."9 J. S. Nye's definition of political corruption was adopted by James C. Scott for his work in this area: corruption is "behavior which deviates from the formal duties of a public role . . . because of private regarding . . . wealth or status gains; or violates rules against the exercise of certain types of private-regarding influence." 10 There are still other examples of definitions, but these should suffice to make the point that there is no one

4

POLITICAL CORRUPTION IN CANADA

definition which enjoys substantial agreement among social scientists. However, Carl J. Friedrich has found what he believes to be a "central core of meaning" within the many definitions of corruption which exist. This central core defines corruption as a deviation in behaviour from some norm which is held to be operative within the political system. Such deviance is associated with a particular motive, for instance, "private gain at public expense."" Friedrich's appraisal has much to recommend it. It seems clear, for example, that the two definitions given earlier make apparent this conflict between public and private interest. The only problem with this approach is the realization that these two terms are rather vague. The result of such ambiguity is that one has no guidelines to determine a clear division between public and private interest. To illustrate this point, let us note that Friedrich extends the definition of private gain beyond the purely monetary reward to include such symbolic rewards as promotion, decoration, or improvement in status.12 On the other hand, the green paper entitled Members of Parliament and Conflict of Interest contracts the definition of private interest, insisting on a meaning based solely on "pecuniary interest." Given the need to impose manageable limits on the question of conflict of interest, in order that the green paper could serve a very practical and specific purpose, this limitation is quite understandable. The authors of the green paper were aware, however, of the many other forms that private interest could take.13 In a similar vein, the concept of public interest is also unclear and, perhaps, even more difficult to delineate. Scott is alert to this difficulty when he suggests that neither public interest nor public opinion is a sufficient criterion for measuring corruption. He argues, instead, for the use of legal norms and rules as measuring criteria.14 Starting with Nye's definition of corruption, Scott proposes that only these more specific concepts adequately operationalize the basic concept of corruption. Using public opinion as a criterion requires that we must arbitrarily choose which public opinion is the most appropriate: the majority opinion, the "best" opinion, or the opinion of the politically influential. Employing public interest, on the other hand, leaves us with no acceptable single definition. The concept is, in Scott's analysis, a normative or ideological question which cannot be resolved by definition alone.' 5 In contrast, Heidenheimer argues that the use of legal norms and rules does not solve the normative or ideological issue. The question still remains, whose statement of norms is to be applied?16 By inference, legal norms would indicate that those norms are explicitly

THE STUDY OF POLITICAL CORRUPTION

5

defined by the political decision-makers. Yet, Scott's definition leaves no room for new situations where many would describe behaviour as corrupt but for which no legal precedent is established. Heidenheimer chooses instead to rely on a public opinion criterion for defining the concept of political corruption. Public opinion is flexible; it can account for new problems not covered by existing laws and for old laws which are overridden by new attitudes. Moreover, this approach makes use of both elite and mass opinion in distinguishing among "black," "gray'* and "white" corruption. Black corruption is measured in terms of high disapproval by both the mass and elite opinions. Gray corruption is indicated by conflicting opinion between and within each group, that is, the mass and the elite. White corruption is that type of behaviour which is considered corrupt by minorities of both mass and elite opinions.17 The distinction between mass and elite opinions is significant, as it permits the researcher to judge whether or not legal norms or rules are more applicable in some cases rather than others, since elite opinion is usually translated into legal norms. There are no definitions of political corruption which are specifically relevant to Canada. Few Canadian studies, if any, have explicitly defined corruption. Those which have come closest to defining the concept only refer to one aspect of corruption. Kenneth Kernaghan, for example, defined conflict of interest but not the broader concept of corruption. 18 This seems reasonable, given the narrow subject with which he deals, and it is a tendency which pervades most of the limited Canadian literature on the subject. Few writers ever specify what they mean by corruption in the wider sense of that term. This proclivity towards ambiguity constitutes a central characteristic of the study of corruption in Canada. At this point, we will suggest a definition of political corruption, with the following caveats in mind. First, most of the studies which are included in this volume are subject to the criticisms we have made about problems in definition; their definitions are either implicit or very narrow according to the particular subject of the article. Second, we cannot assume that one definition will suffice for all the various authors included herein. Thus this definition is intended solely to show where we stand on the matter, and we suggest that: Political corruption is the use of a public office in a way that forsakes the public interest, measured in terms of mass opinion, elite opinion or both, in order that some form of personal advantage may be achieved at the expense of that public interest. The term "personal advantage" is more specific than "private

6

POLITICAL CORRUPTION IN CANADA

interest" and examples of it are easier to identify. In addition, the "opinion" approach makes the term "public interest" more specific, though it leaves more than ample room for variations in measuring such opinion. Finally, the need for personal advantage to be gained at the expense of the public interest means that the cost of such behaviour must be ascertainable in some way, even in a theoretical sense. Otherwise, it may be possible to include rightfully self-seeking activity within the purview of the definition. In sum, this definition represents an attempt to avoid being overly vague, though it still permits considerable freedom of interpretation. Whether such flexibility is virtuous is debatable; that it may be unavoidable seems reasonable. Dimensions of Political Corruption Political corruption is a very comprehensive concept covering a host of related yet somewhat distinct kinds of activities. These activities are related, according to our definition of political corruption, in that each represents private gains which are made (or attempted) at public expense. They are distinct, on the other hand, because each type of corruption is characterized by certain recognizable traits. These traits include the type and number of actors involved, the role of the political actor in any corrupt activity, his or her status as an official or combatant in the electoral process, the kind of reward involved, the degree to which rewards can be meted out to individuals selectively or only as indivisible rewards, and the location of the act in either the electoral or administrative spheres of government. These traits, which might be called the dimensions of corruption, are discussed briefly in the following. The number of actors taking part in an act of corruption can be identified as indicative of the scope of social involvement in corruption. Some types of activities are very narrow in scope and involve only individuals or small groups directly. Bribery and illicit campaign financing related to individual candidates would fit this description. Other activities, for example patronage and porkbarrelling, can be considered very broad in their scope since they involve a wide range of persons in the country, province or constituency. The classification of scope is never exact, however, and must be used in a rather general fashion. In other words, this dimension, like those still to be discussed, can be seen as a continuum ranging from "always narrow" to "always broad" with any number of mixtures of these extremes to be found somewhere between the two poles. Thus, we can say that bribery is usually narrow in scope and that patronage is usually broad.

THE STUDY OF POLITICAL CORRUPTION

7

The political actor can be identified as the person who represents (or potentially represents) the public interest. In most cases corrupt conduct occurs between a political actor and another person (or group) who is not political in this sense. Thus, we can describe the individuals who sell their votes for liquor, to take one example, as nonpolitical actors. Political actors can be either party politicians or non-partisan bureaucrats or judges, and may be either the mitators or the targets of corrupt acts, or even both. The distinction between initiator and target is rather simple: the political actor as the initiator T sets out to conduct a venal act; as the target, he or she becomes a more passive element to be influenced by another actor who may be political or nonpolitical. In cases of bribery, the political actor is the target of corruption; in the case of patronage, he is the initiator. The status of the political actor refers to the distinction between an official and a competitive (or electoral) status in the political system. Official status means that one is an incumbent of an elected or appointed position in the government and includes civil servants within the latter group. Competitive status refers to those political actors who are engaged in electoral activity only (and who are not necessarily incumbents) and therefore excludes civil servants. In this way, unsuccessful candidates for elected office can be considered political actors. Bribery and graft usually take place when the political actor has official status, while illicit campaign financing and pork-barrelling represent cases where the political actor has a competitive status. The type of reward refers to the motivation for corruption. In a very broad sense, we can classify such motivations into two major groups: power rewards and income rewards. Power rewards apply to at least two fundamental reward patterns. First, political actors seek to maintain themselves in public office and this might be considered as a motivation for power, per se. Second, on the nonpolitical actor's side is the desire for special access, that is, for a chance to have his or her problems considered in a way which does not follow normal channels. Income rewards refer to goods which increase one's wealth or status and may consist of, for example, money, jobs or contracts. (A third type of reward is relevant usually to only one type of corruption and that type is not very prominent in Canada. Nepotism, the practice of favouring relatives or friends over others of higher merit, uses social acceptance as a reward and, hence, is somewhat analytically distinct from either power or income rewards.) We may cite vote-buying as a case where the political actor's motivation is power and the non-political actor seeks an income reward. Petty bribery constitutes a situation where the pol-

8

POLITICAL CORRUPTION IN CANADA

itical actor's motive is income and the non-political actor seeks a power reward, that is, access to decision-makers through questionable means. In the latter's case, one might also receive an income reward and this pattern of mixed rewards can be attributed to many participants in corrupt activities. The selectivity of inducements relates to the degree to which the rewards can be distributed on a case by case basis or, conversely, where everyone in the particular constituency benefits from the reward. (Or, to quote the Queen in Alice's Wonderland, "everybody has won, so all must have prizes.") A selective inducement can be offered or withheld as the initiator of corrupt behaviour sees fit. For example, patronage is offered only to party supporters. A diffuse induqement applies to everyone, regardless of the whims of the initiator. Pork-barrelling represents such a circumstance, where all residents of one riding can benefit from a new road or other public works project, regardless of the way they voted. Finally, the location of corruption is that dimension which identifies the political arena of misconduct as being the electoral, legislative, administrative or judicial. Usually, where the status of the political actor is competitive, the location of the corruption is in the electroal process. On the other hand, when the political actor's status is official, the location can be in any one or more of the political arenas. Hence, vote-buying takes place solely in the electoral sphere of government while bribery is usually associated with the administrative arena. As with other dimensions of corruption, the location of the misconduct can be mixed, for instance, where both legislative and administrative actors are jointly guilty of conflict of interest. These dimensions can be usefully employed in analyzing and identifying the various types of political corruption. We will turn our attention to this problem now, while reminding the reader that we do not suggest that this list is all-inclusive. We do feel, however, that most of the problems of corruption can be investigated within this framework. Others who are interested in this phenomenon may wish to add or delete dimensions from our initial attempt, as they see fit. Thus, one should be critical in his examination of this aspect of our analysis. Types of Corruption We have previously mentioned that political corruption is a very complex concept and have shown how it consists of several dimensions. The concept also can be divided into several types of activi-

THE STUDY OF POLITICAL CORRUPTION 9

ties which can be distinguished from each other by means of the dimensions just discussed. The analysis of types should aid us in understanding the problem of corruption in a general sense, as well as in terms of the numerous variations in behaviour which may occur in this area of politics. Patronage is the process by which governments award employment or contracts on the basis of partisan support rather than on the basis of merit. This concept is normally associated with the idea of "political nomination," whereby party supporters are given preferential treatment in acquiring government posts and often supporters of the defeated party are removed.20 In addition, contracts are often let on the basis of partisan criteria rather than merit. Thus recent disclosures concerning the use of advertising money by the federal government pointed to the advantage held by certain politically "correct" advertising agencies in landing lucrative contracts.21 Patronage can be distinguished from other types of corruption by reference to the following dimensions: 1) it is a broad-scope activity, since it can only achieve results when a number of persons are indebted to government for jobs or contracts; 2) it can be administered selectively, that is, on a case by case basis; 3) the rewards involved are power for the political actor or actors (retention of office) and money in the form of contracts or jobs for the nonpolitical actor; 4) only a political actor holding official status (elected or appointed) has the resources necessary to carry out patronage; 5) the political actor is usually the initiator of such activity, though certainly he will react to the demands of others; and 6) patronage can occur in any political arena, but is more prevalent in the electoral and legislative processes. Vote-buy ing is simply described as the act of soliciting a citizen's vote in exchange for some reward of monetary value, for example, cash or liquor. It is an historical problem in democracies, and still continues to some degree today.22 The identifiable characteristics of vote-buying are identical to patronage except for the following distinctions: 1) it occurs only during the electoral process and 2) more commonly a party rather than a political competitor initiates such action. Pork-barrelling is a somewhat misunderstood term, and even suffers from the problem of not being defined as corruption by many people. First of all, pork-barrelling is not the same as patronage.23 Scott considers pork-barrelling as basically a diffuse inducement in that rewards are not doled out individually. A new school, or post office, for example, benefits everyone in the constituency. On the other hand, the construction of such projects does allow for

10

POLITICAL CORRUPTION IN CANADA

jobs to be filled selectively through patronage.24 The major distinction of pork-barrelling is that, while it is very similar to votebuying, the reward is diffuse and can be used by everyone in a given community. It cannot be handed out selectively as in the case of patronage and vote-buying. Walter Stewart provides an interesting report on the role of pork-barrelling in the federal election of 1972, but he fails to argue conclusively that such actions on the part of politicians are necessarily corrupt.25 This is one dilemma of political corruption which remains to be solved. The difficulty is to prove that the benefits handed out to one constituency are necessarily injurious to the whole community, that is, to the "public interest." Bribery is one type of activity which has wide acceptance as being corrupt in nature, to the extent that criminal law codifies such behaviour as illegal. Section 108 of the Canadian Criminal Code, for example, states that any member of Parliament who, corruptly accepts or obtains, agrees to accept or attempts to obtain any money, valuable consideration, office, place or employment for himself or another person in respect of anything done or omitted or to be done or omitted by him in his official capacity is guilty of an indictable offence and liable to imprisonment for fourteen years.26 With the addition of the words "for himself," this prohibition has been extended to include graft and conflict of interest. But the main intent seems to have been to prohibit bribery. Perhaps partly because of such potentially harsh consequences, bribery usually has a narrow scope of involvement. The number of actors involved is small, often the transaction is enacted on a one-to-one basis so as to minimize the danger of publicity. The selective rewards usually consist of some monetary benefit for the political actor and either monetary or power gains for the non-political actor. In this case the political actor is the target for corruption and, in order that he or she may be able to provide the rewards demanded, must also be an incumbent. Bribery, furthermore, is usually associated with the legislative and administrative processes, (that is, the normal activities of an elected or appointed official) rather than with the more competitive electoral process. Related to the problem of bribery is graft. Graft has been considered by some as a synonym for corruption and a general category of behaviour of which bribery constitutes one specific element.27 Others, including this author, use the term in a more restricted sense28 to describe those activities where an official demands payment, usually explicitly, for rendering a public service which it is otherwise

THE STUDY OF POLITICAL CORRUPTION

11

his duty to perform. In effect, this narrow definition of graft is the reverse of the definition for bribery. Graft, as we have defined it, has not been dealt with fully and specifically in the Criminal Code. Yet it seems necessary, for the sake of analyzing political corruption, to maintain the distinction that in cases of graft the official is the initiator and not the target of demands for illegal rewards. Analytical distinctions are not always identical to those provided by law. Graft, like bribery, can take place only when the political actor has official status, since only an official can grant or withhold the services required. Again, like bribery, graft can be petty or important. Unlike bribery, graft is usually very broad in its scope of involvement, since it requires for instance that a toll must be exacted for every licence granted or for every contract let. Thus, the importance of graft depends on the degree to which it permeates any government and on the degree that many small transactions, when added together, become significant. Conflict of interest represents another type of political corruption. It too has been subsumed at times under the rubric of graft, though this is not its ideal usage.29 Kernaghan has defined conflict of interest as "a situation in which a public employee has a private or personal interest sufficient to influence or appear to influence the objective exercise of his official duties."30 Note that Kernaghan does not include the presence of a second actor in his definition. The absence of such an actor would seem to be the major distinguishing feature of conflict of interest. This type of corruption (or potential corruption) does not require a second actor or group of actors, as in the case of patronage, bribery or graft. Conflict of interest is between the actor and the public interest, that is, between a person and a social construct, which may be thought of as "the whole community." The rewards for such behaviour go only to one person or group. Thus, there is no transaction process. Examples of conflict of interest are cases where a city councillor votes for the purchase of a lot from a company in which he (or his family or friends) has some financial interest. In such cases, the official stands to benefit privately from his public role. In addition, conflict of interest is marked by its narrow scope (individual involvement), the selective nature of inducements, rewards in monetary form, the official status of the political actors, who are also the initiators of conflict situations, and by the fact that though conflicts of this type can occur in any political arena, they are usually found in the legislative and electoral arenas. Corrupt campaign financing and influence peddling are two specific forms of conflict of interest. Like other types of political cor-

12

POLITICAL CORRUPTION IN CANADA

ruption, they do not appear to have satisfactory definitions in the literature on politics. Corrupt campaign financing is very nebulous, since the borderline between it and legitimate campaign financing is hardly recognizable. Moreover, students of party finance in Canada tend to speak of problems in party finance without defining what corrupt financing might be,31 and have done little to give us a clear understanding of what illicit campaign funding entails. Hence, we shall define corrupt campaign financing very tentatively and very broadly as any contribution received or expenditure made related to a political campaign which is seen, in light of the community opinion, as compromising the integrity of one or more political actors. This definition is assumed to exclude items such as outright bribery and vote-buying, which have already been defined, and to include such sundry activities as money spent on "dirty-tricks" or for intimidation or other illegal purposes. That corrupt campaign financing has both an input (contributions) and an output (expenditures) increases the difficulty of arriving at an acceptable definition. However, we can identify the distinguishing feature in that the political actors are competitors during such activity, since either an incumbent or a challenger may be guilty of such misbehaviour. That it occurs only in the electoral process seems obvious enough. Influence peddling, unlike some other types of corruption, has been explicitly defined in the Canadian literature on this subject. In his recent study on ethical conduct for civil servants, Kenneth Kernaghan unfortunately defined the term in a way which fails to adequately distinguish it from the related concept of conflict of interest and thereby made the definition of influence peddling too inclusive.32 The basic distinction between these two concepts is that influence peddling involves two or more actors, rather than just one as is the case with conflict of interest. Hence we propose that influence peddling be defined as that situation wherein a government employee offers, in return for some type of reward, his presumed influence upon those in political office to a person or persons who wish to gain a special favour from the government. The concept of nepotism, whereby one uses his influence to secure governmental favours for friends or relatives is thus subsumed under this definition as well.33 Finally, we conclude this series of definitions of types of political corruption with a brief note on criminal corruption. This concept cannot be clearly defined as distinct from other types of corruption, yet it seems necessary to employ a separate category for misconduct involving criminal elements. Simply stated, criminal political corruption is any improper conduct on the part of political actors

THE STUDY OF POLITICAL CORRUPTION

13

which involves criminals as the second actor. The conduct may involve bribery, graft, influence peddling or other forms of corruption, but the focal point remains with the involvement of criminal actors. Recent publicity dealing with the rapport between several federal politicians and a union accused of engaging in illegal activities points to this type of political corruption.34 These definitions are not intended to be the final word; rather, they represent the author's attempt to clarify the meaning of the concept of political corruption. If disagreement exists between what we have stated here and the viewpoints taken in the articles which follow, this may be because of the lack of explicit definitions and assumptions that we have described as characteristic of the present literature on corruption. We hope our framework of categories and definitions gives some focus to the study of political corruption in Canada. Footnotes 1

Richard B. Gwyn, The Shape of Scandal: A Study of Government in Crisis (Toronto, 1965), p. 4. 2 Maurice Cutler, "Watergate: Could It Happen Here?," Business Quarterly, vol. 38 (September 1973), p. 11. 3 Gwyn, op. cit., p. 4. 4 Arnold J. Heidenheimer, "Preface" in A. J. Heidenheimer, ed., Political Corruption: Readings in Comparative Analysis (New York, 1970), p. v. 5 K. Z. Paltiel, "Federalism and Party Finance: A Preliminary Sounding," in Committee on Election Expenses, Studies in Canadian Party Finance (Ottawa, 1966), p. 2, reprinted in this volume. 6 J. E. Hodgetts et ai, The Biography of an Institution: The Civil Service Commission of Canada 1908-1967 (Montreal, 1972), p. 8. 7 From a poll by the Canadian Institute of Public Opinion reported in the Ottawa Citizen (May 8, 1974), p. 7. 8 Arnold J. Heidenheimer, "Introduction" in Heidenheimer, op. cit., p. 3. 9 A. A. Rogow and H. D. Lasswell, "The Definition of Corruption" in Heidenheimer, op. cit., p. 54. 10 Cited by James C. Scott in Comparative Political Corruption (Englewood Cliffs, N.J., 1972). 1 ' C. J. Friedrich, The Pathologv of Politics (New York, 1972), p. 127. "Ibid. 13 Canada, Privy Council Office, Members of Parliament and Conflict of Interest (Ottawa, 1973), p. 1, parts of which are reprinted in this volume. 14 Scott, op. cit., pp. 3-4. 15 Ibid., p. 4. 16 Heidenheimer, "Introduction," op. cit., p. 6.

14 17

POLITICAL CORRUPTION IN C A N A D A

Ibid., pp. 26-28. Kenneth Kernaghan, Ethical Conduct: Guidelines for Government Employees (Toronto, 1975), p. 13. 19 Scott, op. a'/., pp. 109-110, defines inducements as either indivisible or particularistic. This corresponds with our use of diffuse and selective categories, respectively. 20 J. E. Hodgetts?/0/., op. tit., pp. 9-12. 21 John Gray, "Pork-barrelling still in style for government ads," Ottawa Citizen (March 6, 1975), p. 1. 22 See for instance Alden Nowlan, "Passing the time with Gerry Regan," Macleans, vol. 88 (May 1975), pp. 65-68. Premier Regan of Nova Scotia is quoted as recognizing the continued existence of vote-buying in that province. 23 See John Gray, op. cit., for an example of one newspaper's misuse of this concept. The headline identified patronage incorrectly as pork-barrelling, though the author made the proper distinction. 24 J. C. Scott, op. cit., pp. 109-110. 25 Walter Stewart, Divide and Con: Canadian Politics at Work (Toronto, 1973), Chapters. 26 Cited by the Privy Council Office in Members of Parliament and Conflict of Interest, op. cit., p. 15. 27 V. O. Key, Jr., "Techniques of Political Graft" in A. J. Heidenheimer, op. cit., p. 46. 28 See for example Alan Phillips, "Modern Manual for Graft in Civic Office: Corruption," Maclean's, vol. 75 (March 10, 1962), p. 36, reprinted in this volume. Phillips refers not only to the problem of officials demanding payment above and beyond the cost of licenses but also to conflict of interest, which we shall discuss separately. 29 Ibid. 30 Kernaghan, op. cit., p. 13. 31 See K. Z. Paltiel, Political Party Financing in Canada (Toronto, 1970), passim, and Committee on Election Expenses, Report (Ottawa, 1966), passim, for evidence of this problem. 32 Kernaghan, op. cit., p. 13. 33 Kernaghan sees nepotism as a subtype of influence peddling as well, ibid., pp. 13, 15. 34 These reports concerned the so-called SIU affair. See for instance "Thanks a million Munro tells SIU," Ottawa Citizen (December 4, 1974), p. 49, and "SIU 'toughs' named in Commons," Ottawa Citizen (December 20, 1974), p. 24. Numerous other articles appeared in the Citizen and other newspapers on this subject. 18

Part Two: Historic Cases 1. The Pacific Railway Scandal Pierre Berton On the morning of July 4 [1872], the faithful readers of the Toronto Globe and the Montreal Herald opened their slim papers to the scoop of the decade. "PACIFIC RAILWAY INTRIGUES," the Globe headline read, and there, for column after column, was laid bare the correspondence of Sir Hugh Allan with his secret American backers. It was all in print for the country to ponder: Allan's remarks regarding Brydges and Macpherson . . . Allan's list of prominent Canadians who, he said, were to be given free stock... Allan's detailed account of his victory over Cartier . . . Allan's long report to General Cass (whose name was withheld from the press) reporting on his coercion of the Quebec press and public . . . Allan's disbursements of $343,000 . . . Allan's double game with his American associates. There were seventeen letters in total and they all but ended Sir Hugh Allan's public career. One associate, the engineer Walter Shanly, declared in Montreal that he would not be seen walking the streets with Sir Hugh. The board of the new railway company met hurriedly that afternoon while, not far away in Chaboillez Square, a public meeting expressed its dissatisfaction with the investigation. For the first time the public had something it could get its teeth into and the Pacific Scandal, as it was now universally called, became the major topic of the day. The letters, the Globe insisted, showed that the Government was "hopelessly involved in an infamous and corrupt conspiracy." They scarcely showed that. Macdonald's name was mentioned only three times and always innocuously. There was only one suspicious paragraph in the letter of August 7 to General Cass, in which Allan wrote that "we yesterday signed an agreement by which, on certain monetary conditions, they agreed to form the company, of which I am to be President, to suit my views, to give me and my friends a SOURCE: Pierre Berton, The National Dream (Toronto, 1970), pp. 101-104. Reprinted by permission of The Canadian Publishers, McClelland and Stewart Limited, Toronto.

16

POLITICAL CORRUPTION IN C A N A D A

majority of the stock." The letter was ambiguous enough to be capable of innocent explanation. Meanwhile, a much chastened Allan, at MacdonalcTs urgent behest and with Abbott's legal skill, was preparing a sworn affidavit to be published on July 6 in major Government newspapers. This lengthy document, which was seized on with glee by the Government's supporters, was designed to get the administration off the hook. It largely succeeded. Allan's sworn denials were explicit and positive. Though he certainly subscribed money to aid in the election of his friends, he had done so without any understanding or condition being placed upon such funds. None of this money, he swore, had come from the Americans. It was true that he had left the door ajar for his American friends until told specifically by the Government that they must be excluded; he felt honour bound to do so. As for McMullen, he had made such financial demands on Allan that "I declined altogether to entertain them." He was, of course, prepared to return all the money the Americans had expended but he was not prepared to pay McMullen an exorbitant fee for his time. The statement, which bears the imprint of Abbott's sensitive legal mind, was a masterpiece of tightrope walking. "He [Abbott] has made the old gentleman acknowledge on oath that his letters were untrue," Macdonald wrote gleefully to Dufferin. "This was a bitter pill for him to swallow, but Abbott has gilded it over for him very nicely." It was not easy for Allan to wriggle out of correspondence written in his own hand but he did his best in a painfully contorted way: the letters, he said, were "written in the confidence of private intercourse in the midst of many matters engrossing my attention, and probably with less care and circumspection than might have been bestowed upon them had they been intended for publication. At the same time, while in some respects these letters are not strictly accurate, I can see that the circumstances, to a great extent, justified or excused the language used in them." Allan, then, was the villain of the piece and the ministerial press cast him in that role. The Government's position was also immeasurably helped by the fact, easily substantiated, that the Globe and Herald had deliberately suppressed two other letters which showed that Allan had finally broken off negotiations with the Americans. McMullen too, was reviled as a scoundrel and a blackmailer. His own relatives on the Picton Gazette attacked him, carefully refraining from any reference to his local family connections. Though the Globe regurgitated the correspondence daily, it was

THE PACIFIC RAILWAY SCANDAL

17

clear that Macdonald's ministry, though bruised, was by no means broken. Indeed, Macdonald felt that the publication of the Allan correspondence was 'Very fortunate for the government" and Dufferin, in reply, agreed: "The unfolding of the drama is quite sensational and in spite of all the annoyance to which you have been put in this business, it must have afforded you a good deal of amusement. . . . Nothing can be more satisfactory than the way in which your own position and that of your colleagues remains unassailed in the midst of all these disreputable proceedings." The weary Prime Minister now felt that he could afford a short holiday at Riviere du Loup. It was while he was there, in his small cottage by the riverside, that the world crashed in on him. The blow fell on July 17, just as the public was growing weary of the newspapers' incessant harping on the scandal. It was devastating. The Globe ran a great bank of type on the right-hand column of its front page: "THE PACIFIC SCANDAL: ASTOUNDING REVELATIONS." The revelations appeared identically and simultaneously in the Globe, the Herald and I'Evenement of Quebec and they were astounding. The story, which ran to several columns, took the form of a historical narrative by George McMullen, whose dubious presence had hung over the affair from the outset. McMullen, goaded by "the vilest slanders," laid about him with a scythe as he gave his version, often highly coloured and inaccurate, of his role in the drama. He claimed that Allan had lent Macdonald and Hincks $4,000 and $4,500 respectively "with very good knowledge that it was never to be repaid." He said that Allan had sounded out the finance minister regarding "the extent of his personal expectations" and that Hincks had asked for a flat fifty thousand dollars a year. He identified the newspapers, including La Minerve of Montreal, which Allan told him he had paid. He said that Allan had made an additional indefinite loan of ten thousand dollars to Hincks and had promised Langevin twenty-five thousand for election purposes, "on condition of his friendly assistance." This was strong meat, though not of itself conclusive since McMullen, branded in the public mind as a blackmailer, was himself suspect. But unlike most newspaper stories, the sting of this one was in its tail. Appended to McMullen's narrative, deep inside the newspaper, was a series of letters and telegrams which contained political dynamite. They had been buried at the end by design in an attempt to divert suspicion from the source from which they had been obtained. They had been rifled from Abbott's safe in the dark

18

POLITICAL CORRUPTION IN CANADA

of the night, during the lawyer's absence in England, copied by his confidential secretary, George Norris, Jr., and an assistant, and sold for hard cash to the Liberal Party. Cartier to Abbott, Montreal, August 24, 1872: "In the absence of Sir Hugh Allan, I shall be obliged by your supplying the Central Committee with a further sum of twenty thousand dollars upon the same conditions as the amount written by me at the foot of my letter to Sir Hugh Allan of the 30th ult. George E. Cartier "P.S. Please also send Sir John A. Macdonald ten thousand dollars more on the same terms." Terms? Conditions? What price Allan's sworn denials now? Memorandum signed by three members of the Central Committee, J. L. Beaudry, Henry Stames and P. S. Murphy: "Received from Sir Hugh Allan by the hands of J. J. C. Abbott twenty thousand dollars for General Election purposes, to be arranged hereafter according to the terms of the letter of Sir George E. Cartier, of the date of 30th of July, and in accordance with the request contained in his letter of the 24th instant." Montreal, 26th Aug., 1872. Again, that damning word: terms. It was well for the Government that poor Cartier was dead. Telegram: Macdonald to Abbott at St. Anne's, Aug. 26, 1872, Toronto: "I must have another ten thousand; will be the last time of calling; do not fail me; answer today." Reply: Abbott to Macdonald from Montreal, Aug. 26, 1872: "Draw on me for ten thousand dollars." "Three more extraordinary documents than these . . . never saw the light of day," Lord Dufferin wrote to the Colonial Secretary. . . .

2. The Distribution of Railway Subsidies Gustavus Myers The circumstances of the promotion of the Caraquet Railway and the operations of its chief promoter and owner, K. F. Burns, member of the House of Commons for Gloucester, occupied discussion in Parliament on May 8, 1890. This was a railway chartered, in 1874, to run from a point near Bathurst to Caraquet in New Brunswick. This distance originally was to be about 60 miles. Caraquet Railway Transaction Directing his attention to this transaction, Edward Blake said that Burns represented and owned eleven-twelfths of the subsidies that the Caraquet Railway Company had received. The Dominion Government, Blake said, had given a subsidy of $224,000, of which Burns' eleven-twelfth share would be $205,000, and the Government of the Province of New Brunswick had donated a subsidy of about $180,000 of which Burns' share would be $165,000. These amounts, Blake figured, made a total from both Governments "for the corporate Burns" of $370,000.' In a sort of prefatory style, doubtless to let other members know that this was not a personal attack upon Burns, nor solely applying to him, Blake quoted J. C. Rykert, then a member of the House of Commons, as saying in an address to his (Rykert's) constituents, "Why I should be singled out for public censure when there are dozens of members in the same House, who not only have applied for and obtained limits for themselves, but sit there daily voting money into their own pockets, I cannot understand."2 Blake proceeded. He told how Burns was the president, contractor, financier and altogether the general all-in-all of his own company. The capital stock of the Caraquet Railway Company had been subscribed to the full amount of $950,000, of which about $751,000 had been paid in. Ways of Railway Contractors "I believe," Blake went on, "that the whole cost of the enterprise, rails included, at fair values, with contractors' profits, was provided SOURCE: Gustavus Myers, A History of Canadian Wealth (Toronto: James Lewis and Samuel Limited, 1972), pp. 320-337. First published in 1914. Reprinted by permission of James Lewis and Samuel.

20

POLITICAL CORRUPTION IN CANADA

for out of the Government subsidies and the sale in bonds in England for