Why we need citizen's accountability

The purchase of Petro-Fina is a thing of the past yet still influencing us today. It's a typical scenario of Crown Corporations and their lack of accountability to Parliament and consequently, to the taxpayers.

The Auditor General of Canada, over a number of years, has attempted to study cabinet documents to properly assess what evaluation had been done by the head of Petro-Canada, the responsible Minister and the government, before purchasing the corporation. Both the Liberals, who were in power at the time, and the Conservatives, who later won the majority in the House of Commons, refused to release these documents.'

The Auditor General took this decision to the courts of Canada for judgement. The initial judgement ruled in favour of the Auditor General but the government appealed. A further appeal by the Auditor General was unsuccessful. The courts had made the decision that cabinet documents should not be given to the Auditor General for his investigation and thereby releasing the decision-makers from any accountability for their actions.

The following quotes from Hansard are a small representation of the many debates on the Petro-Fina purchase. They are grouped into four categories for greater facility of understanding. Some of this information has been released piecemeal but, because of the gravity of the effects of the decision, an overview must be published.



"Founder of Petro-Fina, Mr. Alfred Campo, amazed at the offer by government re: Petro-Fina shareholder delighted....but as a Canadian citizen, I say it is absolutely incredible. No private person would buy at that is presumably going into foreign lands to borrow $1.5 billion to pay $120 per share for a company called Petro-Fina." (1)

"If Fina followed market trend, it's shares would presently be trading at $25. Petro-Canada paid $120.....Canadian taxpayers paid $1.7 billion for market value of April 1982 about $300 million....some insiders made a lot of profit from that.....and hair on's a pork barrel." (2)

With further research, it was found that owners of Petro-Fina shares did not have to sell all their shares at one time. For capital gains benefits, they were allowed three years to sell. The shares, then valued at $120 each, bore compound interest which, at the end of three years, cost the government $152 per share.



"Petro-Fina adds nothing to production capacities, simply buys gas stations (1100-1200), a refinery, some real estate, some reserves underground." (3)

"Did not get heart and core of Petro-Fina, (petrochemical plant) was pulled out of deal. Paid $120 for shares that 6 weeks prior were worth only $60." (4)

"But Petro-Fina got to keep the petrochemical plant, which is where the future of the oil industry is....Petro-Fina was paid double the market value of the shares and they got to keep the most important part of their operation. It is a criminal act." (5)

It is interesting to note that our Members of Parliament were initially misled into thinking that there was refinery and underground reserves involved in the deal. Later, they discovered the truth.



"Insider's report filed with Ontario Securities Commission dated Jan. 23, 1981, shows that four officers of Petro-Fina Incorporated sold shares and options over a short period, in excess of $400,000 and in view of the fact that one officer in particular purchased 1,000 shares on Jan. 16 for $60 per share and sold them on the same day for $90, for a profit of $30,000 in one day." (6)

"Statement today by Petro-Canada, to the effect that a fee of $1 million was paid to a firm called SOGENER of which the principal officers are Mr. Hentsch and Mr. Strong, that is Maurice Strong." (7)

"There is a report that 91 senior employees of Petro-Fina netted over $10 million in profits through a company stock plan.

MOVES: That the Prime Minister act immediately to commence a judicial inquiry into the allegations that insiders profited from the sale of Petro-Fina to the Government of Canada, with the Canadian taxpayer picking up the tab.

FAILED." (8)

"Maurice Strong $1,000,000 fee - Petro-Fina deal." (9)

"91 employees made profits, $10.3 million. Mr. Nadeau made $1 million." (10)



"The Auditor General states in his report that he could not find anyone in the Dept. of Energy, Mines and Resources who was taking responsibility for the Canadian Ownership account. Yet this account attracts approximately $1 billion in revenue every year. The Auditor General stated, "It is unclear to us who has prime responsibility for the Canadian Ownership account."

Acquisition of Petro-Fina by Petro-Canada, this was a $1.7 billion acquisition, yet the Auditor General states that he has been unable to ascertain whether, "due regard to economy has been demonstrated or achieved in respect of the $1.7 billion acquisition of Petro-Fina because of lack of evidence of a pre-acquisition evaluation...was repeatedly told by Petro-Canada that it is none of the Auditor General's business." Unusual bridge financing agreement, Petro-Fina transaction gain for Petro-Canada $60.7 million in a tax deduction. If any other company had been involved in a transaction such as that, it would owe the Government of Canada $60.7 million." (11)

"Legal advisers advise no permitted access to the Cabinet documents of predecessors." (12)

"Sec. 13(1) of the Auditor General act states, "The Auditor General is entitled to free access at all convenient times to information that relates to the fulfillment of his responsibilities.except as provided by another Act of Parliament, the Auditor General is entitled to free access." (13)

The previous Liberal government had refused access to the documents on Petro-Fina for the Auditor General and, as of now, the Conservatives have reversed their previous position and also refused the release of these documents. The Auditor General at the time, Kenneth Dye, worked diligently for the Canadian people to bring accountability to the Petro-Fina deal was blocked in all his attempts by the ruling parties.



Far more damaging than the cover-up, the cost, the inequity of the profit-takers with inside information and the misleading of our M.P.'s, is this ruling which sets a legal precedent not to allow pertinent cabinet documents to be handed to the Auditor General of Canada. The rationale for this precedent is that a Crown Corporation is under the direct management of a Cabinet Minister.

As shown in the Hansard debates, many new M.P.'s were astounded when their questions on finances and policies of Crown Corporations were rebuked with "It's none of your business."

In the past, when a Crown Corporation was shown to have functioned illegally or grossly inefficiently (such as the Uranium cartel), the government of the day would state that the activity was a Cabinet decision. This protected the Minister responsible from resigning, since the whole Cabinet could not be expected to resign. In the end, no one was held accountable.

At a time when the taxpayers of Canada are being overburdened with new projected tax loads, this final judgement of the courts makes it impossible for the House of Commons to get information pertaining to Cabinet decisions. Consequently, the taxpayer has no protection or accountability from the 320+ Crown Corporations, and the hundreds of subsidiaries, who have a direct pipeline to the taxpayers pocket.

It would be useful to know how much of our $550 billion national debt with our $45 billion interest payments (much of it owed outside the country), is due to the mismanagement, profiteering and corruption found in our Crown Corporations.

Petro-Fina is but one example of how our Government is out of control. Citizen's involvement through the democratic tools of initiative, referenda, recall and impeachment is the only peaceful way to return to real democracy.



(1) M.P. Sinclair Stevens (Page 6981 Feb. 6, 1981)

(2) M.P. Harvie Andre (Page 16222 April 5, 1982)

(3) M.P. Charles Moyer (Page 9792 May 21, 1981)

(4) M.P. Thacker (Page 12232 Oct. 27, 1981)

(5) M.P. Blaine Thacker (Page 3693 May 14, 1984)

(6) M.P. Ian Waddell (Page 7653 Feb. 25, 1981)

(7) M.P. Ray Hnatyshyn (Page 9299 April 15, 1981)

(8) M.P. Gordon Towers (Page 10831 June 22, 1981)

(9) M.P. Harvie Andre (Page 4094 May 28, 1984)

(10) M.P. Ian Waddell (Page 1288 Dec. 17, 1984)

(11) M.P. Pat Carney (Page 102, Dec. 12, 1983)

(12) M.P. Pat Carney (Page 825, Dec.3, 1984)

(13) M.P. Ian Deans (Page 825, Dec. 3, 1984)



Who's Debt is it?

Whenever I hear another story in the newspaper or news flash on the TV. about the National debt crisis, I pause to reflect "Who's debt is it?" Who bears the responsibility for payment? Who incurred this debt and how? And ultimately, who profited from this debt and continues to do so?

The politicians and media would have the citizens believe that this debt is ours. That the debt is due to incredible amounts of spending to keep our social programs going, our schools, universities and hospitals open and projects, such as the Vancouver Island super highway, progressing forward. In fact, there is such a desire by these parties to promote this citizens responsibility that I am reminded of others who also developed good propaganda to convince the masses that what they are saying is indeed true.

But the reality of who's responsible for the national debt is quite different than what we may be led to believe.

According to a recent Fraser Institute report (yes, even the Fraser Institute occasionally reports on something worth reading!), only a mere $37 billion of the debt (at that time, $423 billion total) was spent for actual goods and services. The other $386 billion was for interest charges borrowed from private banks. By allowing private banks to create our currency in debt, we have established the national debt as a debt in perpetuity. Under this situation, we will never be able to repay this debt.

We are not spending ourselves into debt, we are allowing private banks to profit obscenely from usurious rates of interest and by continuing to borrow from them.

The first step out of debt slavery is to return banking to the citizens of Canada. We need to demand that our government return money lending to the Bank of Canada who should do so with no interest charges but at the cost of administering the currency. We need to stop the private chartered banks from producing money out of thin air by returning the banking reserves to 100%. Currently, they can take in $1 deposit and loan out whatever they desire. This is the real cause of inflation. By demanding 100% reserves, they could only lend what they take in.

The next step out of slavery, is to enact Federal legislation (and of course, in every province) the tools of accountability necessary in any democratic government: Citizen's initiative, referenda, recall and impeachment. Workable, fair and binding legislation needs to be upheld to ensure that political corruption, treachery and profiteering does not remain a part of our democratic system.



In past months, we have been merrily printing two separate newsletters, the FREEDOM FLAME and the FAIR FOUNDATION's. Both newsletters are actually written and produced by the same team of writers/activists. This month we decided to incorporate the FAIR FOUNDATION's newsletter under the FREEDOM FLAME umbrella. That's why you'll find a FREEDOM FLAME heading with a back page about the FAIR FOUNDATION.

Let's us know what you think about the combined effort and any future articles you might like to see.


In this edition of our newsletter you will find a page outlining a referenda call on issuing our currency interest-free from the Bank of Canada. We need your help. Please reproduce the referenda call and distribute it to friends, neighbours, co-workers. If you have some time, why not help us collect some signatures? Mail your completed forms back to us. All the details are on the referenda call. Go ahead, get involved!


We will be sending out letters shortly to some of our members advising you that your membership with the FAIR FOUNDATION has expired or will expire shortly. We would like to thank you for your past support and look forward to your continuing membership.