Party of One (45 page)

Citing the results of an independent Deloitte forensic investigation (although Duffy did not cooperate with Deloitte), both the prime minister and the government house leader in the Senate, Marjory LeBreton, agreed with Duffy. On May 10, Government House Leader Peter Van Loan even praised Duffy in the House of Commons for his “leadership” in the expenses scandal, pointing out that he had repaid the money himself in March before Deloitte had even finished its audit.

The Senate had called in Deloitte to conduct an independent forensic investigation of the senators’ expenses, after its own attempts to quell demand for action in what the public saw as a
sleazy entitlement scandal had failed. As one senator described it to me, “It was better to take care of a few bad apples in our chamber than have every senator investigated by the auditor-general.” When Deloitte reported to the Senate in April, it appeared to support Duffy’s explanation. The auditors said that the Senate’s residency regulations and guidelines do not include criteria for determining “primary residence,” so they had not been able to determine which of Duffy’s properties—the one in Ottawa or the cottage in Cavendish, Prince Edward Island—was his primary one.

Hill watchers had expected the story to develop, but not in the sensational way it did. According to CTV News, Mike Duffy had not paid back taxpayers at all. The bombshell was who had in fact made the payment—none other than Prime Minister Harper’s superstar chief of staff, Nigel Wright. For Fife, this was big-game hunting at its most perilous. Tory bloggers and trolls had sharp claws. The party was rumoured to have a lot of young operatives working in shifts, paid to watch news reports and respond. And Nigel Wright was not just the darling of Conservative circles, he was the PM’s right-hand man. When jolted, Stephen Harper was a political player who took down numbers. As Fife told me, he was “scared shitless” about putting the story on air.

The second irony of the story was that it involved Mike Duffy. Duffy had been a fixture on Parliament Hill for decades. Legendary CBC News boss Trina McQueen had once told Duffy that she was going to make him the first successful “fat man” on television. Neither of them could have known how successful that enterprise would be. Duffy entered the TV-news stratosphere. For a time, he was the third musketeer along with Peter Mansbridge and Brian Stewart in the glory days of the CBC’s
The National
. Before his Senate appointment in late 2008, Mike Duffy had his own public affairs show on CTV and was easily the most
recognizable journalist in Canada. There was no one in the business who could match him in live broadcasting, and when he gave that intimate little wink to the camera when signing off, individual viewers really did think that the “Old Duff ” was winking at them.

Like all stars in the often ego-driven business of television news, Duffy had his detractors—too schmoozy for some, too pro-Conservative for others. But he was also something of an elder statesman in the press gallery, with a cultural memory and résumé few on the Hill could match. He often took rookie reporters under his wing, sharing contacts and offering advice. One of the beneficiaries of his largesse was Robert Fife. Sitting on Fife’s office bookcase was a picture of him with two legends of the business: Craig Oliver and Mike Duffy.

When Stockwell Day, as the leader of the Canadian Alliance, tried to forbid scrums because he thought they lacked decorum, it had been Duffy who took him aside and told him, “Stock, you’re not in Alberta anymore.” It was the kindest way of telling Day that he was playing in the big leagues now, that journalists in Ottawa wouldn’t put up with tacky restrictions on their right to seek information from public officials. No one had yet met a future leader named Stephen Harper.

Fife had the two essential assets required to publish a story of this magnitude: impeccable sources and a media lawyer, Peter Jacobson, more interested in finding a way to get the news out than avoiding all possible lawsuits. Before airing his blockbuster story on the late-night news, Fife placed the duty calls to the PMO, Conservative Party headquarters, and Senator Duffy for a response.

It was actually the second time in two days that Fife had called party headquarters, where the story of Wright’s payment to Duffy had been officially denied. Then another source, who was “outraged about the negotiations with Duffy and the payout,” came
forward with more details. This time when Fife made his duty calls, he got near-identical statements from the PMO and Senator Duffy. Their answers came with more topspin than Rafael Nadal’s forehand. According to the PMO, “Mr. Duffy had paid back the expenses in question, and no taxpayer resources were used.” The senator from PEI replied to CTV with an email that was exquisitely misleading but true: “The Royal Bank helped me. . . . I dealt with my bank personally. Nigel played no role.”

The next day, the sunny skies in Ottawa gave way to clouds; by noon a thunderstorm was roiling across the city. But nothing in the skies compared to the thunderheads gathering over the government. On May 15, 2013, the most shocking element of Fife’s story was belatedly confirmed by the PMO in plain language: Nigel Wright had indeed given Senator Duffy $90,000 to pay his expenses. And there was an added wrinkle—the money was not a loan, but a gift.

It was a
volte-face
from the original story that Duffy himself had repaid his improper expenses. Fred DeLorey continued to insist there was “no party money involved in any way.” The morning after Fife broke the story, deep in the shadows of the PMO, staffer Chris Woodcock sent an email to Senator Duffy: “Can you confirm whether you advised the Senate ethics office of any loan/gifts involved in the March 25th payment?. . . Trying to cover off all the angles.” The PMO was in pandemonium. A story that no one in the office ever thought would become public was out there for Canadians to see—or at least they could see the tantalizing tip of a much larger iceberg. The PMO’s objective was to come up with a “narrative” that would keep what lay beneath the surface hidden. Job one was protecting the prime minister.

Stephen Harper was so anxious to distance himself from the affair that he told the public an implausible, possibly panic-stricken story. He insisted that he, like everyone else, first learned
of the Wright payment to Duffy on May 15, 2013. But how could that be, since Fife had aired a news story the night before, May 14, and made confirming calls to the PMO before the broadcast? The prime minister was asking Canadians to believe that a professional staff expressly recruited to advise, inform, and protect him didn’t tell him about the dramatic news report of the night before, making explosive allegations about his own chief of staff and one of his highest-profile Senate appointments. It would not be the last of the fact-challenged stories from the prime minister about the Wright/Duffy affair.

On May 16, the prime minister was in New York pitching the controversial Keystone XL pipeline to the Council on Foreign Relations, a non-partisan US think-tank that also publishes the prestigious journal
Foreign Affairs
. (Nigel Wright was also in New York, celebrating a personal milestone with friends: his fiftieth birthday. It can’t have been much of a party.) Harper told his American audience that the pipeline would create forty thousand jobs in the United States. He stressed that Keystone XL also offered oil from allied Canada rather than from an ideologically unfriendly Venezuela. Thanks to advertising in US publications placed in advance of the PM’s appearance, pro-environment protesters were also alerted to demonstrate outside the event.

While the prime minister wooed his elite audience in the Big Apple, Senator Mike Duffy was being designated as the Rotten Apple back in Canada. The man who had co-hosted the Conservative Party Convention after the 2011 general election received a telephone call from Ray Novak, senior PMO staffer and trusted ally of Stephen Harper. According to Duffy, the government house leader in the Senate, Marjory LeBreton, was also on the line. Duffy claimed that he was told that if he didn’t resign from the Conservative caucus immediately, his case would be sent to the Senate ethics officer and he would risk being thrown out of
the Red Chamber. LeBreton insisted, “You’ve got to do this, Mike. Do what I’m telling you. Quit the caucus within the next ninety minutes. It’s the only way to save your paycheque.”

The Conservative brain trust was moving quickly to put as much distance between the party and its former star-fundraiser as possible. Duffy complied with the PMO request, explaining that he was resigning from caucus because the public controversy over his debt settlement had become “a significant distraction to my caucus colleagues and to the government.”

More to the point, there were potentially dangerous rumours swirling around Ottawa that Duffy may have charged the Senate for expenses he incurred while campaigning for colleagues in the House of Commons during the 2011 election. Though ostensibly disgraced, Duffy said that he looked forward to all the relevant facts of his expenses being made public in due course, adding that once the public knew what had happened, they would see that he had done nothing wrong. After that, the path to rejoining the Conservative caucus would be clear.

That was a tall order. The Harper government’s damage-control strategy was taking shape, with Senator Duffy as the main culprit. But the other participant in the $90,000 payoff was a different matter. Nigel Wright was a blue-chip political asset to the prime minister, with a long history of involvement in Conservative Party policy and finance going back thirty years.
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If there was any doubt that the PMO would try to come up with a narrative to save him from the scandal, it was quickly removed by the prime minister’s director of communications. Andrew MacDougall told the media that Nigel Wright had “the full confidence of the prime minister” and “he will not resign.”

MacDougall attempted to rag the puck by declaring that the PMO was cooperating with a probe by Parliamentary Ethics Commissioner Mary Dawson. If the Conservatives could give the
impression that something was being done about the extraordinary deal between the prime minister’s chief of staff and his celebrity senator, the brewing scandal might slip behind the fog banks of yesterday’s news.

It was not Mary Dawson’s first dealing with Nigel Wright. When Wright had taken the top job in the PMO, Dawson had helped devise the “ethical wall” designed to protect him from conflicts between his role in the PMO and his past life as a Bay Street whiz kid at Onex Corporation. The ethical wall would be administered by the deputy chief of staff to the prime minister. Then in 2012, Dawson got a chance to assess the height and thickness of Wright’s ethical wall. It became public that Barrick Gold, founded by Peter Munk, had lobbied Wright three times in May about international relations and international trade.
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Wright was personal friends with both Munk and his son Anthony, who had worked with Wright at Onex. The ties were close. Wright was godfather to Anthony’s son.

The calls were of interest because Barrick was the world’s largest gold mining company. It had an $8.5 billion investment at the troubled Pascua Lama mine in the Andes, straddling the border of Chile and Argentina. The project came to a grinding halt in Chile in April 2013 when Chile’s environmental regulator stopped construction of the mine on its side of the border, citing serious environmental violations affecting the water supply of the indigenous Diaguita Indian community living below the site.

For as long as anyone could remember, the Indians had taken their water directly from their glacier-fed river. Now toxic chemicals, including arsenic and sulfates, were flowing into the headwaters, causing health problems. Barrick was fined $16.4 million, after authorities confirmed that the company had not told the full truth when reporting environmental failures in their operation. Diaguita protesters held up signs that didn’t enhance Canada’s
image on the evening news: “Canada: What’s HARPERing here?” and “Harper go home.”

Foreign affairs minister John Baird vigorously defended Wright over conflict allegations arising out of the calls from Barrick Gold. The calls were made in May 2012, shortly after Harper blocked a resolution on Argentina’s claim to the Falkland Islands at the Summit of the Americas in Colombia. Canadian mining companies were concerned this move would make it harder for them to obtain permits from the Argentinian government, and Barrick planned to continue construction on the Argentinian side of Pascua Lama. According to Baird, Wright listened to Barrick’s concerns, said nothing, and directed the matter to the proper officials. Since Barrick called Wright on May 14, 25, and 29, one wonders if the “proper officials” were on a long lunch.
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Dawson discontinued her examination of a possible conflict of interest for Wright over Barrick’s contacts with him. As she often does, she did this without issuing a notice, ruling, or report. When CP reporter Joan Bryden pressed Dawson on the disposition of the file, the commissioner told her that she was satisfied there had been no violation on Wright’s part of the Conflict of Interest Act. It was transparency and accountability Harper-style. The PMO claimed vindication. Andrew MacDougall issued a statement: “As we have said all along, Mr. Wright conducted himself properly and in accordance with the rules.”
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NDP ethics critic Charlie Angus wasn’t buying it. “It’s who you know in the PMO and this is what the prime minister said he was going to change, this is the culture that he said was going to get cleaned up.”There were good reasons for the political opposition and the public to worry about the shadowy interface between big business and big government. Access to the highest legislative levels is a huge priority for companies like Barrick, and their executives were not shy about bringing in the politicians when they had a problem.

That’s exactly how Barrick recovered most of its losses from investing in asset-backed commercial paper (ABCP) that was being sold by Canada’s chartered banks by the late 1980s. Barrick was advised by CIBC World Markets that their $66-million investment was safe in a third-party ABCP trust called Ironstone. But when it turned out that the investment was freighted with a lot of toxic subprime mortgage debt, the big banks could not protect all investors and Barrick lost its money. Barrick sued the CIBC, and after years of legal wrangling got some satisfaction in May 2008. But it didn’t happen before a call went out from finance minister Jim Flaherty to the bank. As Bruce Livesey wrote in his book
Thieves of Bay Street
, “Federal finance minister Jim Flaherty had stepped in and telephoned senior executives at the bank, pressing them to return Barrick’s cash. CIBC reluctantly handed over $49 million to settle the matter.”
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