Assemblée Législative de la Nouvelle-Écosse

Les travaux de la Chambre ont repris le
21 septembre 2017

Public Accounts -- Wed., July 8, 1998

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10:00 A.M.


Mr. Howard Epstein


Mr. Hyland Fraser

MR. CHAIRMAN: Ladies and gentlemen, good morning. I would like to call to order this meeting of the Public Accounts Committee. We are still short two members of the committee but we do have a quorum. I understand that those two members are on their way. I would like to make a couple of introductory remarks about the business of the committee this morning and how it is I intend to proceed.

As you know, of course, we have scheduled one witness today, a continuation of the evidence of Mr. Ralph Fiske in elaboration of his earlier evidence to us. I intend to, at his request, swear in Mr. Fiske. In a few moments I will turn to that. I just want to say that our meeting today is scheduled to run from 10:00 a.m. until 1:00 p.m. That is a three hour stretch. It is a long time. I propose that we do take a very short break at about the halfway mark, no more than about five minutes so that we can just have a short break in the middle.

I should also say that partly because it will be an extended period of time, partly because it is warm in the building, I invite anyone who is wearing a jacket to remove it if they feel like it during the course of the proceedings. There is no reason why the members of the committee should be any less comfortable than, say, the members of the press sitting behind us. That said, unless there are any other procedural matters, I will get on with this.

Before I turn to the witness, I should just note that the committee wishes to offer its condolences to Mr. Salmon, the Auditor General, whose mother has just died recently. Mr. Salmon, I am sorry to hear that news.


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I will now swear in our witness. Mr. Fiske.

Mr. Fiske, do you swear that the evidence that you shall give to the committee touching on matters pertaining to your tenure as Chairman of the Board of Directors and as Chief Executive Officer of the Nova Scotia Gaming Corporation shall be the truth, the whole truth and nothing but the truth, so help you God?

MR. RALPH FISKE: I so swear.

MR. CHAIRMAN: Thank you very much. Mr. Fiske, you are now sworn in as a witness before this committee. May I ask if you are prepared now to adopt your previous evidence given to the committee?


MR. CHAIRMAN: Thank you. I understand you have a statement you wish to give to the committee?

MR. FISKE: I do.

MR. CHAIRMAN: After that we will certainly turn to the members of the committee and invite them to ask questions. Please proceed.

MR. FISKE: Thank you, Mr. Chairman, members of the committee. Since I last appeared before you, there has been considerable public and private discussion arising from my remarks of June 17th. As indicated in my subsequent letter to you of June 25th, I am here to provide the further particulars that some say are required and others say do not exist.

You may be curious as to my reaction to yesterday's sudden three hour press conference by the Gaming Corporation. I wish I could say you now have all the answers and you can now go home. Unfortunately, it is not that simple. My focus last evening was preparation for this morning. I did not allow myself to get distracted by what I suspect was a carefully timed diversionary tactic, delivered just enough in advance to swamp me with a three inch thick binder without any opportunity for analysis and reply.

Today is not the time for me to respond to all of those assertions that I believe can be disproved. I have skimmed the opening statement of the acting chairman. Let me simply say this. I received her assurances of candour and full disclosure with the same degree of scepticism as the assurance that the timing of the press conference was not related to my appearance this morning.

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That is all I am prepared to say today on that orchestration, other than perhaps this observation. Ms. Gordon complained how my statement had caused such operational disruption within the last three weeks. She said it has been quite difficult and that she and her staff are being distracted by the controversy. I have some sympathy for her plight, as I experienced the very same type of disruption from the political interference of the likes of Bob MacKay and David Thompson as I was trying to negotiate a deal with the Sheraton that would protect the interests of Nova Scotians and place us on a proper footing for a 20 year working relationship with the Sheraton.

My remarks will be broken down into the following categories:

I will address briefly my reasons for returning before this committee; I will describe certain occurrences that I believe invite statutory amendments to ensure greater operational independence and integrity of the Gaming Corporation; I will speak to the role of the Minister of Finance; I will provide a chronology of events that details inappropriate political interference and the unexplained circumstances that caused two different Premiers and two different Cabinets to do a 180 degree about-turn; I will provide an overview of the Sheraton contract negotiations, the aborted arbitration proceedings and the resulting Boudreau deal; I will speak to issues of public accountability and due process; Finally, I will endeavour to answer any questions you may have on these issues as best as I am able.

I have forewarned you that I will not be brief. I expect the details I will provide will take up most of the time you have allocated for this meetings. Members of this House have called for specifics and I will provide them even at the risk of putting you to sleep. You are forewarned in advance, I bear no semblance to Joseph Howe other than the length of my oratory. You will be given a typed copy of my remarks upon completion. In light of the denials already on record, I will provide detailed insights into the circumstances surrounding the approval of the Boudreau deal.

I must note my regret that the actions of others these past few weeks have required the type of detail I will now disclose.

MR. CHAIRMAN: Mr. Fiske, can I just interrupt at this point. You anticipate taking most of three hours to present your details?

MR. FISKE: Yes, it will be a substantial portion.

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MR. CHAIRMAN: I think this is somewhat longer than we had anticipated. I think we had perhaps not anticipated that simply hearing your account would take quite that amount of time. I think it is important that the members of the committee get the opportunity to ask you questions based upon what they heard the last time and what we will hear from you today. I would urge you to try to move fairly expeditiously through it.

MR. BRUCE MACINTOSH: If I may, Mr. Chairman. Mr. Fiske is prepared to stay as long as the committee wishes to ensure that you have whatever time you wish to answer questions and he is prepared to return another day, but we were specifically advised whether the time allotment of three hours would be sufficient. There are serious matters. There are details that have been asked for that he is willing to provide, but they are simply not the type of details that can be included in a 15 minute opening statement like we had the last time.

MR. CHAIRMAN: I think no one is contemplating 15 minutes but, for whatever reason, I think I had it in my head that we were thinking about one hour. Let me just see if any members of the committee have any observations or comments about this although we, again, should not waste a lot of the time of our committee discussing procedures. Mr. Fage.

MR. ERNEST FAGE: Mr. Chairman, I think it's extremely important that Mr. Fiske has the opportunity to certainly read all his comments into the official record of this committee. They have graciously made the offer to stay for questions and I, for one, would certainly want all the details disclosed. When you see what some members of this committee have asked in the press and here and in this committee, I think it is incumbent upon us to hear the full story not the abbreviated one.

MR. CHAIRMAN: I certainly don't disagree. My only concern is that I think we set a three hour time period hoping that we might be able to get through this process, at least the beginning, today. However, I am certainly prepared to be flexible and the committee, as we proceed, may decide we want to spend more time today or come back another date. Mr. MacKinnon.

HON. RUSSELL MACKINNON: Mr. Chairman, I am all for getting as much detail as possible, but I would have thought that in fairness to all members of the committee that Mr. Fiske would have provided - he knows the Rules of the House, he has been here before, he knows the guidelines which govern the Public Accounts Committee, it would have been, I feel, in fairness to all members of this committee, appropriate and incumbent on Mr. Fiske to provide - a written report of what he has to say. If it is going to take that long, if it is going to be that long an oratory, three hours, then I think it really hijacks the intent of what the Public Accounts Committee is. I am not afraid to sit here for hours and hours on end, don't get me wrong, we are all for that accountability but anyone who knows the Rules of the House and, indeed, of this committee and the reforms that have been brought in, they know it is customary to the Rules and Forms of Procedure of the House and of this committee, 15 minutes, maybe one-half hour max, to make opening statements and the intent of the Public

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Accounts Committee is accountability not to be lectured as to who said what, when and why; it is, I said, you said, we said, they said, who said, we are not getting into this type of thing. I think that hijacks the whole intent of Public Accounts.

Now, this honourable individual knows that if it is going to be that type of situation, it would have been far more appropriate and, I believe, in fairness to all members of this committee, to provide that written report prior to coming to this committee today, not to use the inner sanctum and the rules and the immunities of the House to come in here to get into a spitting match. This is not what this committee is for.

MR. CHAIRMAN: I think it is a little early to characterize anything as a spitting match. Mr. Dexter.

MR. DARRELL DEXTER: I conferred with my colleague, we agree with Mr. Fage. We just think we should get on with it and hear what Mr. Fiske has to say.

MR. CHAIRMAN: Yes, I think that is a good point. We will see where we end up after hearing from our witness. Please proceed.

MR. FISKE: It had been my hope that the Government of Nova Scotia would have come forward with full explanations in response to the questions and issues I raised before this committee, instead they tried to shoot the messenger. That approach has merely stiffened my resolve to fight for the amendments to the Gaming Control Act, which I believe are necessary to preserve the future integrity of the Gaming Corporation.

I preface all my remarks with the observation that I am at a singular disadvantage in not having access to my former files. I have been denied such access. There is much documentation within the files of the Gaming Corporation and other parties that corroborate the testimony I gave on June 17th and what I will be giving to you this morning. I urge you to obtain those particulars before hearing from the witnesses you intend to call.

Why am I here today? Much has been said, both publicly and privately, about my motives in appearing before this Public Accounts Committee. It has been suggested I was derelict in my duty or that I did not know what my responsibilities were. I have been told that I was long on accusations and short on facts. I have been accused of being unfaithful to my friends. I have been accused of using this forum to advance my wrongful dismissal lawsuit. The list of rumours and innuendoes to discredit me has been imaginative. By the time I am finished, each of you will have to make your own determination as to my motive and whether I am here today for honourable or dishonourable purposes.

I do wish to respond briefly to the suggestion that my comments are motivated by my lawsuit. I have tried as best I can to keep that issue separate from these proceedings. My lawsuit was very much a secondary afterthought formed several months after my resignation

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letter. When the Premier first suggested in this House that he could not respond to the issues I raised for fear of harming my legal rights to my lawsuit, I confessed I was tempted to drop my lawsuit simply to call his bluff and demonstrate in a tangible way that money is not my driving motive. When I reflected more fully on the matter I realized the futility of such a financial sacrifice. Think about it, if money was my motive, then why would I not have bitten my tongue and simply done as I was told back in September 1997? Having already sacrificed my financial security once, I concluded no sceptics would be convinced otherwise if I were to do it twice, besides which I remain unemployed and can ill-afford to let someone unfairly deprive me of a job that I tried to do well on behalf of the public I was supposed to serve and protect.

I also want to note on public record that there has been no attempt by me or the defendant to have my silence bought with settlement negotiations. That will not occur. Under no circumstances will I sign any pact of confidentiality or non-disclosure with respect to any future settlement. I still remain hopeful that someday soon the defendants will acknowledge the legitimacy of my lawsuit and pay me that which I am lawfully entitled to in accordance with the laws of the Province of Nova Scotia. If not, then the matter will be resolved by our courts. It is important to note that both defendants to their credit, have made no such settlement overtures to me in an attempt to forestall my testimony today.

There has also been a suggestion that I am being mean-spirited or seeking political revenge. I can only tell you that I take no comfort in giving the type of testimony I will give today. Had it been my intention to create political mischief, I would have made known during the general election of March 1998 that I was suing the province for the reasons that are now on record. My notice of intended action was served on the government on February 16, 1998. I made no public mention of this lawsuit during the election, because I did not think it relevant to the public interest. My lawsuit is private. My concerns about the future integrity of the Gaming Corporation are public. As best I can, I am trying to keep these issues separate.

The Operational Independence of the Gaming Corporation. Much has been said these last few weeks about the whole concept of the operational independence of the Gaming Corporation. Some have suggested that unlike the Alcohol and Gaming Authority, the Gaming Corporation was never intended to be completely independent. I do not disagree, that is why I have used the phrase operational independence. I have acknowledged that it currently has no such independence. I have never suggested that it is wrong for Cabinet to intervene or give properly documented and public directives to our Gaming Corporation. To the contrary, on June 17th I especially acknowledged the legitimate role of Cabinet to intervene and give directions, so long as such intervention is open, transparent and justifiable in the context of the Act's purpose and intent.

Let me refer first to the Gaming Control Act itself. Section 2 sets forth the purpose of the Act; any decision made by any decision maker, be it the Gaming Corporation or Cabinet, must be consistent with such purpose. To paraphrase Section 2(a), there must be a

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framework for conducting, managing, controlling and regulating casinos; - and I highlight the word framework, not an ad hoc interventionism - (b), such framework must ensure the casinos are conducted in a socially responsible manner; and (c), any such framework must ensure that all decisions regarding casinos are undertaken for the public good and the best interests of the public, or put conversely any decision that is purely political or not based on the public's best interests cannot be justified; and finally, and not to be overlooked, all decisions made within such framework must minimize the opportunities that give rise to crime.

Those are all criteria that are set out in the opening sections of the Gaming Control Act. Any decision, whether by the Gaming Corporation or Cabinet must fit within such framework. As I have already said, the history of other jurisdictions has proven that the gaming industry cannot be allowed to become a political playground. The adverse consequences of mixing the cash-rich gaming industry with the temptations of political agendas is well documented. While Cabinets and Premiers can and do make decisions every day that are properly motivated by partisan considerations, the Gaming Control Act in contrast is more restrictive. Because of the historical problems that accompany a gaming industry, our legislation specifically requires that any Cabinet decision with respect to casinos must pass the litmus test of being in the public interest.

Section 10 of the Act identifies the objects of the Gaming Corporation. Included in that list of objects is doing such things as the minister or Cabinet may from time to time require. That section must be read in conjunction with Section 24(1) of the Act. It says that the Gaming Corporation shall, subject to the Act and regulations comply with any directive of Cabinet. It does not say that the Gaming Corporation shall comply with any directive of Cabinet. Instead it requires as a prerequisite, that any such directive be demonstrably consistent with the purpose of the Act, which I have already described. It is noteworthy by the way that the Act gives no such authority to the Premier or the Premier's Deputy Minister. Any such directive requires formality of a Cabinet decision.

So much for the legal niceties of the Gaming Act. I think the publicly-expressed intentions of the Liberal Government that introduced this legislation back in 1994 are equally important to the concerns that I have raised. From the first day of my hire I was assured that the Gaming Corporation would be given operational independence. I do not for a moment suggest that we were given total independence since I maintained ongoing and detailed briefing sessions with the Minister of Finance. If there were major policy decisions to be made, I always conferred with the minister and received assurances that the direction being taken by the Gaming Corporation was acceptable to government.

Finance Minister, Bernie Boudreau, was particularly insistent in that regard. He appeared determined to avoid any political interference. An earlier illustration of that attitude occurred in the fall of 1995 when Minister Boudreau apologized to me and our board for improperly announcing the first six month extension to the permanent casino. Although he

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and I had discussed the matter during our trip to Nevada, it had not yet been considered by our board of directors and we had not finalized the details of the negotiations with the Sheraton to allow such extension. Minister Boudreau explained to us that he got caught in a media scrum and let slip our intentions before he realized the implications of the announcement. He later acknowledged that both the decision and announcement should have come from the Gaming Corporation, and not the minister.

Minister Boudreau assured us it would not happen again. I relate that incident not to be critical of the minister but to demonstrate the early commitment that the Savage Government had made to the operational independence of our Gaming Corporation. That type of operational independence was recognized even before the Gaming Control Act was formally passed by this House of Assembly. You will recall that Premier Savage publicly threatened to fire on the spot any Cabinet Minister caught fraternizing with any of the various casino proponents and Mr. Boudreau in a debate introducing the legislation before this House on November 9, 1994, made the following remarks, at Pages 4212-4213 of Hansard:

"I suspect that anybody who looked at the way you did business in this province over the last 15 years, might figure you should have somebody of the ruling Party on your side, on your team. I can understand how they would get that impression in Nova Scotia.

I will tell you, Mr. Speaker, those days are over. We have set in place an arm's length process and we will stick with that arm's length process . . .

Mr. Speaker, gaming can be managed, controlled and regulated in a manner that significantly reduces the possibility of social disruption. We have made the decisions responsibly and we will proceed with implementation at an arm's length process from government.".

Mr. Boudreau never varied from that arm's length approach from the day of my hire until his resignation from Cabinet to seek the leadership of the Liberal Party. We had innumerable briefing sessions and I took his good advice on many occasions but never once did he flex his muscles and try to make the Gaming Corporation do something that it did not think was appropriate to do. Mr. Boudreau always recognized the importance of allowing the Gaming Corporation the power and authority to negotiate directly with the Sheraton without being undermined by behind the scenes interventions by the Premier or other members of Cabinet.

Incidentally, Mr. Boudreau also acknowledged, at Page 4255 of Hansard, the responsibility of the Gaming Corporation to promote legislative reform as circumstances evolve:

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"Both the commission and the corporation have legal responsibilities to ensure the gaming industry and the laws which govern it are constantly evolving to serve the public interest . . .The two agencies will publicly recommend amendments to the law and regulations as necessary.".

Although no longer chairman of the Gaming Corporation that, in effect, was what I was trying to achieve when I last appeared before this committee. My personal experiences have convinced me that there is a need to strengthen operational independence, to narrow and more clearly define a transparent process in those situations where Cabinet decides to intervene and give directives to the Gaming Corporation.

Role of the Minister of Finance. There is a related issue with respect to such political interventions. It is an issue that should be troubling for those who wish to ensure the process of accountability intended by the Act. I refer to the role of the Minister of Finance. Under the Gaming Control Act it is the Minister of Finance who has responsibility for the Gaming Corporation. While Minister Boudreau was Finance Minister that was always the case. However, after Bill Gillis was appointed as Finance Minister that accountability began to shift by April 1997. I do not know the reasons. By the spring-summer of 1997 Mr. Gillis was repeatedly complaining about how he was left out of the loop when it came to dealing with the issues surrounding the Sheraton. He repeatedly complained that he was a minister yet he was not often permitted to know what was going on. I can tell you this. In the almost 30 years I have known Bill Gillis, it is the only circumstance where I have observed him to become so outspokenly frustrated. Despite the fact that he was minister responsible for the Gaming Control Act, he was being cut out of the loop by Premier Savage's Office and Bob MacKay in particular.

While he was Minister of Health and Chairman of the Planning and Priorities Committee, Mr Boudreau remained very interested and involved. I will recount one conversation that highlighted this exclusion. I was embarrassed to be present. At a meeting among Minister Gillis, myself and Premier Savage's Deputy Minister, Bob MacKay, Mr. MacKay had the audacity to tell Minister Gillis that he didn't need to know what was going on with respect to the Sheraton negotiations. For a public servant and political operative to tell that to one of the most senior and respected Ministers of the Crown was, to me, both unacceptable and humiliating. It remains part of the inexplicable puzzle I described on June 17th and will describe in further detail this morning.

If you require further corroboration of the exclusion of Minister Gillis, let me read to you an excerpt from a formal 14 page memorandum which had been prepared at one point in time for submission to Cabinet. It dealt with the Boudreau deal and the history behind our board's coerced motion of May 20th. The memorandum itself never actually made it to Cabinet and was eventually replaced by a more toned down and neutralized memorandum. However, the draft document in question detailed the chronology of events that led to

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grudging approval of the Boudreau deal by the Gaming Corporation. It was personally drafted by myself, Minister Bill Gillis and our Director of Finance, Sheila Butler.

Minister Gillis was intimately involved in the specific drafting of the document. We spent several hours together over three or four days, working on its content. Minister Gillis joked that it was the longest memorandum ever to go to Cabinet. Under the heading of the Minister of Finance, the following appears on Page 10 of that memorandum:

"It became clear during the briefing sessions with the Minister of Finance during the April/May period that Dr. Gillis had not been involved in the discussions related to the proposed Terms of Settlement and the Shareholders' Directive, as advanced by Mr. Bob MacKay and Mr. Robbie MacKeigan.".

That draft memorandum, which I urge you to obtain directly from the files of the Gaming Corporation, set forth particulars of the political interference that occurred between April and September 1997. The memorandum itself was eventually withdrawn at the insistence of our legal counsel who thought it to be too blunt, too telling and too one-sided. Remember, despite lawyerly cautions, these are words which were carefully chosen and reviewed and revised with the full input and approval of Minister Gillis.

Let me read to you from the opening executive summary of the memorandum which clearly speaks to the marching orders received from the Premier's Office. Remember that any reference to the shareholder refers to the Government of Nova Scotia, as represented by Cabinet. "Minutes of Settlement have been prepared which reflect the terms of a proposed Settlement dated May 20, 1997 . . . The Minutes of Settlement reflect the Shareholder's directive as communicated by Mr. Bob MacKay and Mr. Robbie MacKeigan.".

Public Statements about Boudreau Deal. Subsequent to my resignation of September 30, 1997 and following my appearance before this committee on June 17, 1998, some revealing and inaccurate things were said about the operational independence of the Gaming Corporation. I believe it is helpful for this committee to contrast these public statements with the documentary record, which I will refer to this morning. Put aside for the moment the legal arguments about who can tell whom what to do. Instead let us examine specifically what has been said on the record by Premier MacLellan. I believe it may assist this committee in deciding what aspects of my testimony are credible and believable.

[10:30 a.m.]

In the media coverage that followed my resignation, the Daily News of October 24, 1997 carried the following news story, the headlines read, MacLellan denies casino interference. Gaming body only reports back on negotiations - premier. "The Nova Scotia Gaming Corporation alone is in charge of striking a casino deal with ITT Sheraton, Premier Russell MacLellan said yesterday. He said neither he nor members of his cabinet have

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interfered in negotiations between the two parties to build a $97-million permanent casino on the Halifax waterfront. 'The gaming corporation has complete control over it, but they are reporting back to us, which is something we appreciate because we want to know what is going on,' said MacLellan. 'I, for one, want to know what's going on and they've been very professional in conducting the negotiations with ITT Sheraton and reporting back to the government. It's gone very well.'".

The Halifax Chronicle-Herald of the same day carried a virtually identical story with the headline, MacLellan denies casino-deal charges. "The province is denying accusations that it's too cosy with the Nova Scotia Gaming Corp. Premier Russell MacLellan said Thursday his government isn't telling the corporation how to handle the contract with ITT Sheraton for a new casino on the Halifax waterfront. 'No, not at all,' the premier said following a cabinet meeting. 'The gaming corporation has complete control over it, but they are reporting back to us, which is something we appreciate because we want to know what's going on.'".

Some eight months later, the same attitude was still being expressed by Premier MacLellan in a direct quotation which appeared in the Halifax Chronicle-Herald on June 18, 1998, "'I know David Thompson and I know he simply wouldn't do something like that. I don't imagine there was any political interference.'".

Ladies and gentlemen of the committee, I respectfully suggest to you that the quotations I have just read from the Premier are incompatible with the facts, facts which you will find well documented in the files at both the Gaming Corporation and the Premier's Office. I will be providing you more documented facts this morning. Nothing in the documents I am about to describe will suggest, as the Premier did to both the Chronicle-Herald and the Daily News reporters, that Cabinet was simply a passive recipient of reports from the Gaming Corporation. Frankly, for anyone to suggest there was no political interference defies imagination. For example, why send Robbie MacKeigan to the arbitration hearing if Cabinet was only receiving reports, as suggested by the Premier?

Since my letter of resignation of September 30, 1997 specifically addressed to the undermining influence of David Thompson on behalf of Cabinet, why did the Premier not investigate the allegations at that time rather than waiting almost eight months before questioning Mr. Thompson with respect to what he said to me? Should not the seriousness of my involuntary resignation have tweaked the conscience or curiosity of someone, and did the Premier or Dr. Gillis or anyone else properly question Mr. Thompson before the knee-jerk denial that was included in the subsequent acknowledgement letter to me from Dr. Gillis of October 2, 1997?

It is curious that Premier MacLellan explained to this House that the reason he did not speak to me directly about the concerns raised in my resignation letter was because of his desire not to prejudice my legal rights under my wrongful dismissal claim. I quote from Page 1462 of Hansard, "Mr. Speaker, I didn't talk to Mr. Fiske for the specific reason that I have

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tremendous respect for Mr. Fiske's right to take any matter he wants before the courts of this province without having in any way any allegation upon this government of trying to interfere with his right, or in any way trying to talk him out of his right to go before the courts.".

A review of the public record will disclose that it was almost four and one-half months after my resignation in February 1998 before I first advised government of my intention to pursue such a claim. I never even intimated that I would be filing such a claim before that date. Whatever the reason for not investigating the circumstances of my departure, my pending lawsuit was not one. To the contrary, I tried for months following my departure to get someone to explain to me the Boudreau deal. It was the total silence and absence of any legitimate explanation that eventually led me to consider a lawsuit.

However, on September 30, 1997, and for months thereafter, litigation was the farthest thing from my mind. The more troubling aspect of all of this, the question that has not yet been answered to my satisfaction, is, why did the MacLellan Government bother to weave such a web? Everyone acknowledges that Cabinet had the legal authority to give bona fide directives to the Gaming Corporation. If that is so, why engage in this process of denying such involvement? Why deny that which, if done properly for bona fide reasons, was Cabinet's right?

The draft memorandum to Cabinet is only one of many documentary sources that are available to verify the intervention by government. I again encourage this committee to seek full production from the Gaming Corporation, the Premier's Office, and the files of those lawyers who have been released from any claim of solicitor-client privilege. You might also want to ask the Sheraton whether it is prepared to disclose the full particulars of all communications and lobbying done by it or on its behalf with respect to these matters. If it is as clean and pure as it suggests, the Sheraton should be willing to make the same unrestricted disclosures and waivers of privilege that the government has promised.

This morning I will provide you details of how I have sought unsuccessfully, since May 20, 1997, to get an explanation from a variety of both official and unofficial government sources. Everywhere I turned, I was met by a brick wall. Since I have been accused of fabricating such political intervention, I will of necessity describe in some detail the conversations I have had with a variety of government officials. Once you have heard those details, you can then decide for yourself whether my recommendations for a more independent Gaming Corporation deserve the attention of this House of Assembly.

The Chronology of events. In piecing the puzzle together, it is difficult to know where to begin and how to sort the wheat from the chaff. I have some of the documentary pieces to the puzzle but not all. For reasons that I hope this committee will understand, I would prefer not to disclose in full detail those documents in my possession until both the Gaming Corporation and the Premier's Office have first delivered to your committee all their documents relative to these issues.

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Let me more specific. Based upon the comments of the Minister of Labour when he questioned me before this committee on June 17th, it is obvious that despite his acknowledged enquiries, the minister was not given the type of documentary evidence that would have confirmed to him that I had already told members of this committee. Given the denials on record to date, I believe such a precaution on my part is prudent. I hope that the government's promised disclosure process would include all relevant materials, including working papers, memos to file and notes of assistants, secretaries and other such observers, as well as the participants themselves. If such production is made as promised by the Premier, I am satisfied that the statements I made to you on June 17th, and will make to you today, will be fully corroborated in painstaking detail.

Since I was being kept in the dark, it is difficult to determine with 20/20 hindsight which events bear significance. However, as I go through the following sequence of events, please keep in mind two overriding events of importance that have yet to be adequately explained. Number one, . . .

MR. CHAIRMAN: Mr. Fiske, sorry, could I just interrupt at this point. Mr. MacKinnon.

MR. MACKINNON: Mr. Chairman, a very important point and it's a point that the honourable individual has raised himself. He has quoted from a confidential document, the memorandum that he refers to, he quoted verbatim from that document. The rules of the House state quite clearly that if he quotes from that document, he has to table that document. I would respectfully submit that our guest table the document as per the rules of the House.

MR. CHAIRMAN: That is a point that I think we will consider when we finish hearing the evidence. I don't think it has to be tabled at the very moment that it's quoted from.

MR. MACKINNON: It's a rule of the House, Mr. Chairman, that he has to table the document when he quotes from the document. That has always been the rule. It has always been precedent. It has always been custom. It's a rule of the House. He has quoted from the document. He has to table the document.

MR. CHAIRMAN: I think the way it goes is that in association with the statement, the documents are to be tabled, but I will have a look at the rule. At this point, which is still at the beginning of the statement of the evidence of the witness, he is in no way in violation by not having given us the document. We can take this up at the end of his statement.

MR. MACKINNON: He is in violation.

MR. CHAIRMAN: I have ruled on this. You have made your observation.

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I would ask the witness to proceed.

MR. MACINTOSH: If I may, Mr. Chairman, certainly Mr. Fiske will abide by any directions of this committee in terms of productions of documents. His request has been to forestall it but we are certainly prepared to make available whatever documents the committee directs him to provide.

MR. CHAIRMAN: I take it you have the documents with you?

MR. MACINTOSH: No, but I can make them available to you, Mr. Chairman, before the end of the day.

MR. CHAIRMAN: All right, I will continue to think about this, please proceed.

MR. FISKE: Number one, until mid-April 1997, Premier Savage, Mr. Boudreau and Mr. Gillis and every other Cabinet Minister with whom I had spoken fully supported the approach being taken by the Gaming Corporation in its dealings with the Sheraton Group. Suddenly, without advance warning or any explanation other than the most base form of political expediency, we were told by the Premier's Office to do whatever it takes to avoid arbitration.

Number two, from the swearing in ceremony of Premier MacLellan until the unexpected Cabinet directive of September 25, 1997, I was assured by every major government player that the MacLellan Cabinet would reject the Boudreau deal. For the second time in a row, again suddenly and without any bona fide explanation, we were directed to approve the Boudreau deal plus meet any other terms required by the Sheraton Group to settle the matter. These two inexplicable reverses in government position by two separate Premiers and two separate Cabinets provide the backdrop for the events I am about to describe.

Mr. James Spurr. With the value of hindsight, it is possible there may be some significance with respect to the role played by the Acting Clerk of Cabinet, Mr. James Spurr. I encourage this committee to inquire about the role Mr. Spurr played in influencing directly or indirectly the decisions of one or both Cabinets or individual Cabinet Ministers. His involvement was the first early precursor of the micro-managing allocation fabricated against the Gaming Corporation. It remains my view that he was the initial author of that fabrication.

Mr. Spurr is a member of the Bar and has been a lawyer for the Nova Scotia Department of Justice for many years. It was my understanding he had a close working relationship with Minister Bernie Boudreau. On June 7, 1995, Minister Boudreau advised that Mr. Spurr had been assigned as legal counsel to the Gaming Corporation. This was following his removal as counsel for the Gaming Commission because of his conflicting relationship

[Page 15]

with the Department of Finance. Even before his official employment, Mr. Spurr was providing advice to our board of directors.

The minutes of March 22, 1995, one of our first meetings disclosed that Mr. Spurr was advising our Gaming Corporation that we should not have a hands-on role in running the casino. This was prior to the signing of the operating agreement with the Sheraton, which was dated May 31, 1995.

As I reflect back, I find it curious that legal counsel would try to be influential on something that was policy related and clearly beyond the normal scope of his legal counsel responsibilities. One would have expected him to take direction from us on that policy issue and then ensure the, as yet unsigned, legal documents with the Sheraton were drafted accordingly. That did not occur.

He argued instead that we were contracting for the expertise of the Sheraton to run the practical side of the casino and that the Gaming Corporation was created to be the vehicle to receive the revenue. Mr. Spurr felt that we should invite the Sheraton to our meetings from time to time to give us a review on operations and on any problems there might be.

The same minutes also record that Mr. Spurr was of the opinion that the Gaming Corporation should hire a chief executive separate from the chairman as soon as possible. Mr. Spurr's very early interest in advocating a hands-off approach to the Sheraton was not a view shared or adopted by our board of directors.

In later conversations with Mr. Spurr, he advised me that it was too much for him to expect to have been appointed chairman but that he had been hopeful he himself would be appointed chief executive officer. I can think of no reason why he would consider himself qualified for either such position other than his apparent connections, which were not disclosed to me. Events, eventually, unfolded to the point where our board of directors was required to ask formally for the removal of Mr. Spurr as our legal counsel. The circumstances that led to that drastic action were disturbing and provided an early indication of the behind the scenes power plays that we would increasingly face.

The minutes of the board of directors of November 6, 1995, disclosed that Mr. Spurr informed our board that Sheraton's solicitor, Mr. Larry Hayes, was requesting a lawyers' meeting with him to discuss concerns raised with respect to the relationship between the Gaming Corporation and the Sheraton. Our board authorized Mr. Spurr to attend that meeting which took place on November 7, 1995.

At our next board meeting of November 28, 1995, Mr. Spurr was requested to report on his meeting. He described that meeting as a candid discussion between lawyers of the slipping, deteriorating relationship between Sheraton and the Gaming Corporation. He reported that the Sheraton was feeling crowded by the Gaming Corporation and would not

[Page 16]

tolerate any attempt by the Gaming Corporation to co-manage its affairs. He also reported that Mr. Hayes expressed concerns on behalf of the Sheraton with respect to the corporate structure of the Gaming Corporation, including both the composition of the board of directors and the fact that myself, as Chairman, was also acting as chief executive officer.

The immediate reaction of our board was that such comments coming from the Sheraton, if true, were completely inappropriate. Mr. Spurr also reported the Sheraton's complaint that the amount of time being spent examining the Sheraton's books by our Director of Finance, Sheila Butler, was excessive. When asked for specifics by our board, Mr. Spurr reported that the only example provided of such alleged micro-management was the approval process for the first Sheraton budget. Our board demanded other examples of micro-management. Two days later Mr. Spurr alleged he was contacted by Mr. Hayes who reported that the Sheraton could not provide any other allegations of such micro-management.

As an aside, I note that the Gaming Control Act requires our Gaming Corporation to approve all operating expenses of the corporation. As well, our operating agreement with the Sheraton requires that both the annual operating budget and the annual capital budget be submitted to the Gaming Corporation for approval. For example, Section 33(1) of the Gaming Control Act requires that the Sheraton make available to the Gaming Corporation at all times all reports, accounts, records, and other documents in respect to the operation of the casino. Despite all of this, Mr. Spurr appeared to be echoing Mr. Hayes purported position that our approval of the Sheraton's first budget was inappropriate micro-management. This allegation, of course, was considered preposterous by our board.

To digress for a moment, I noted that the vice-chairman, herself a lawyer, maintained yesterday at Page 5 of her statement that the corporation's right to request documents and reports are defined only by the casino contracts. I understand Mr. [Carl] Holm later expressed a similar legal opinion that the corporation had no investigative powers. They could not be more wrong. I invite them to read the Gaming Control Act and, in particular, Section 33. They might also want to review the professional opinions on file of the widely respected accountant and lawyer, Mr. Ed Harris, Q.C. If those opinions reflect the level of vigilance now being exercised by the Gaming Corporation over the Sheraton, then matters have deteriorated more than I feared.

At that same board meeting of November 28th, the minutes disclose that Mr. Spurr informed us that he had briefed Minister Boudreau on his meeting with Mr. Hayes without reporting back to his client, the corporation. He also reported the matter to me after I demanded a report from him. I can tell you that the report which our board received from Mr. Spurr about the concerns of the Sheraton was inconsistent with feedback I had been receiving from both the Sheraton General Manager, Mel Thomas, and their local legal counsel, lobbyist, Mr. Bill MacInnes. Prior to the board meeting I had foreknowledge of what Mr. Spurr would be reporting and I had checked with Mr. MacInnes. He denied that Larry Hayes had been instructed to discuss anything, other than some contractual matters related to the construction

[Page 17]

contract. Mr. MacInnes advised me that he had also checked with Mr. Mel Thomas, who as well denied that Mr. Hayes had any instructions from the Sheraton to complain about the manner in which we were running our Gaming Corporation, or who should be on the board, or who should be chief executive officer.

At one point Mel Thomas offered to make Larry Hayes available directly to verify that no such instructions were given or intended. The plot thickened. I was told by Sheraton representatives that Mr. Hayes gave an entirely different report to his client. Mr. Hayes reported to the Sheraton that Mr. Spurr claimed he did not know what the staff of the Gaming Corporation did to keep themselves occupied. Mr. Spurr felt that the Gaming Corporation was overstaffed and had nothing better to do with its time than attempt to manage the Sheraton. According to the Sheraton, it was Mr. Spurr not Mr. Hayes who was promoting the idea of a chief executive, separate and apart from myself as chair. In subsequent conversations with Mel Thomas, he insistently denied any criticism by Sheraton of micro-managing. If you wish to reflect on Mr. Spurr's judgement and objectivity on this issue, he might try to reconcile his assertion of overstaffing with his insistence on a new chief executive officer.

As was so often the case with Mr. Thomas, his position shifted markedly after he obtained instructions from others. He subsequently, without explanation, became less critical and more protective of Mr. Spurr's involvement. He subsequently sent me a letter dated December 4, 1995 which asserted the view that management of the casino business had been delegated to the Sheraton by the operating contract. I recall it being his first subtle hint at the micro-management argument. Nevertheless even with his new marching orders, he gave a clear and unequivocal contradiction of the report of Mr. Spurr.

Specifically Mr. Thomas' letter to me of December 4, 1995 noted, "I expressed to Mr. Hayes, as I have to you, that I believe we are experiencing growing pains, and that it is my belief that everyone involved with the Casino project wants Sheraton Casinos to be successful. More to the point, I have since reinforced this fact with him and given every indication that you, Sheila Butler, Debbie Mountenay and the other members of the Board have repeatedly asked questions with the intent to educate yourselves about the business. This has never been questioned by any of us at Sheraton; neither have the functions to be performed by the employees of NSGC or the Board Members. Quite simply this is none of our business, it does not involve us.".

Having received Larry Hayes' version of Jim Spurr's undermining remarks, having received the letter from Mel Thomas of December 4, 1995, and not having received any satisfactory explanation from Mr. Spurr as to why he was discrediting the Gaming Corporation's staff and seeking appointment of a new chief executive officer, our board of directors passed a motion authorizing me to seek the removal of Mr. Spurr by Minister Boudreau. I reported the details of this inappropriate attempt to influence events to Mr.

[Page 18]

Boudreau. He immediately agreed Mr. Spurr's position was untenable and had him removed as counsel for the Gaming Corporation.

There are a couple of other incidents that caused me to believe that Mr. Spurr's influence with respect to Sheraton matters did not cease with his removal from the Gaming Corporation in February 1996. At one of my meetings with Bob MacKay in April or May 1997 he mentioned to me in passing that Jim Spurr was being quite critical about the way the Gaming Corporation was being run, how unhappy the Sheraton was, and in particular, how poorly Ralph Fiske was doing his job. I particularly do not understand how he would be familiar with the Sheraton's unhappiness since he no longer had any responsibilities in that area.

I also did not know why Mr. Spurr's negative undermining was even mentioned by Mr. MacKay. I concluded he must be having some significant influence on someone. I had known Bob MacKay for a long, long time. I expressed my surprise to him that he would not have picked up the phone as a courtesy, and let me know what was being said behind my back. Mr. MacKay responded that he had no interest in doing so. I received no further information from Mr. MacKay on who Mr. Spurr was attempting to influence or why. Later in September 1997 when I thought the Boudreau deal was in the process of being dumped by Premier MacLellan, Carl Holm told me that Robbie MacKeigan and Jim Spurr wanted to meet with him to explore the Boudreau deal further. Again, Mr. Spurr's interest in the matter made no sense to me; the meeting did not occur.

I now regret I did not pursue the matter further at that time. I do not know what the nature of Mr. Spurr's involvement was beyond the matters I have described. I do believe Mr. Spurr was the first to plant the allegations of micro-management. I do know that Ralph Fiske did not remain on Mr. Spurr's list of favourite people. I do know that he had an early express desire to give more free rein to the Sheraton than our board considered appropriate, and that his interest in advocating views helpful to the Sheraton's strategy continued unabated after his removal. Finally, I know that given his other presumed priorities in the MacLellan Government, his offer to personally arrange to have the terms of settlement delivered to and signed by the Sheraton reflected an unconventional level of personal interest at the very least.

An honourable gentleman. The next significant event was what came to be known as the honourable gentleman. It was a matter I reported to the board of directors. It was a matter we took seriously.

You will note the final contract documents for construction of the permanent casino were signed on May 31, 1995. Less than three and one-half months later on September 6, 1995, I was first advised of Sheraton's desire to delay commencement of the permanent $97 million casino. By December 18, 1995, less than six months after inking its commitment, our board had received formal notice from the Sheraton that it did not consider a permanent

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casino to be appropriate or in the best interests of Nova Scotia. Instead they were promoting the idea of a down-scale casino to remain within the current hotel complex.

Our board, on August 30, 1996, formally declined this first alternate proposal for a revised casino complex. Throughout this period when the Sheraton was promoting the alternate casino proposal a variety of official and unofficial communications took place between and amongst the various parties. As I reported to you in my opening statement of June 17th, it had become very clear to me that the Sheraton was playing a bait and switch game. From the very beginning our board of directors was resistant and suspicious of the Sheraton's motives. Another unsuccessful casino bidder even suggested to me the province would be sued if we let the Sheraton so easily get off the hook from commitments that it got in the contract in the first place.

Although we agreed we would review any alternate proposal, we indicated we would only review it favourably if we could be convinced it was in the best interests of Nova Scotians. We repeatedly advised Sheraton that the preparation of such an alternate proposal was not to be used as an excuse for delaying the timetable set for the permanent casino. Given our firm stance, it struck us odd that the Sheraton remained so confident and smug that its hotel casino proposal would eventually be accepted by us. We were hanging tough and Minister Boudreau was supporting us 100 per cent in that regard. To my knowledge, no one in Cabinet disagreed with our position.

The source of the Sheraton's confidence was eventually disclosed to me by Mel Thomas in one of his rather mellow and unguarded moments. In a conversation with Bill MacInnes and myself Mr. Thomas confided in me that the Sheraton believed they had approval in the bag so to speak because they had already been assured the backing of an honourable gentleman. Mr. MacInnes appeared as well to know the identity of this mysterious and apparently very influential supporter of the Sheraton. Despite my inquiries, both then and later, I was unable to determine who Mr. Thomas was referring to. I only know that on that occasion and subsequent occasions he remained very confident that our board of directors would eventually be convinced by someone to approve the alternate casino proposal.

This reference to an honourable gentleman was discussed at our board of directors but we were never able to determine who the alleged person was or what commitments, if any, had been made. This arrangement if, in fact, true was all the more mysterious and disturbing because neither the Premier, the Minister of Finance, or any other influential member of Cabinet, had ever suggested that the hotel concept was good for Nova Scotia.

My first meeting with Premier Savage and Bob MacKay. I received a telephone call directly from Premier Savage. It was not normal for me to receive such calls. He indicated that he and Bob MacKay wished to meet with myself and our legal counsel, Carl Holm and John Merrick. My recollection is that Robbie MacKeigan was not at this meeting and that I did not learn of his retainer until a subsequent phone call from Bob MacKay. I recall learning

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that way because I found no humour in Mr. MacKay's suggestion that the legal bill be absorbed by the Gaming Corporation. I felt two lawyers were already more than enough. Despite this recollection, I am told Carl Holm describes Robbie MacKeigan being present with the rest of us and that truly puzzles me. I believe that it was the Monday immediately following the Liberal Annual Convention which had just been held in Halifax. It was shortly prior to the first scheduled day of private arbitration proceedings.

When we arrived at the Premier's Office, Premier Savage advised us that he was under considerable pressure from some of his ministers to get the Sheraton deal settled without arbitration. It was clear to me there had been an intense lobbying campaign by someone over the weekend. The Premier made a point of noting that no Sheraton officials had talked to him but he believed they were lobbying his Cabinet Ministers. I do not recall him providing any justification or reason for seeking settlement, simply a political imperative.

[11:00 a.m.]

Mr. Merrick or Mr. [Carl] Holm may have better recollections. At that time the Premier did not specifically order us what to do, but he made it very clear that he wanted to get out of the impending arbitration on April 23rd. We agreed we would try to find a compromise that would achieve that purpose. I agreed that I would meet with the Premier and Bob MacKay at 6:30 a.m. the following morning to discuss what we would recommend to achieve that goal. The Premier intended to report our proposal to his Cabinet colleagues that same morning. He did not indicate whether it was to be a formal Cabinet meeting, or the extent of involvement of those with whom he would be conferring. In hindsight, the identity of those parties may be insightful to this committee.

I arrived back at the Premier's Office at 6:30 a.m. the next morning, and reported the compromise solution that John Merrick, Carl Holm, Sheila Butler and I had prepared the previous evening. I do not recall the specifics of that compromise proposal, although I am confident you can obtain the details elsewhere. We all thought it would be sufficient to break the impasse. What is significant is that both Mr. MacKay and Premier Savage, after hearing our compromise proposal also thought it should be sufficient to get a deal.

After they tentatively approved our compromise plan, I expressed the view that the Premier's Office would be neutering the Gaming Corporation if it allowed Sheraton to think it could bypass the Gaming Corporation through the back door of the Premier's Office or other Cabinet Ministers. Although Bob MacKay initially expressed some sympathy to that view, Premier Savage indicated that he did not share that view, and that as Premier he had to make hard decisions.

That was not the only time I was to hear that phrase. Premier Savage indicated he was going to consult with his colleagues on the compromise position and would phone me shortly, once he had conferred with them. Approximately three quarters of an hour later, I again

[Page 21]

received a telephone call from Premier Savage who advised that Cabinet supported our compromise and that we should proceed.

The arbitration hearing, April 23rd. It is my recollection that my second meeting with Premier Savage occurred early in the morning of April 23rd, the same day as our arbitration hearing. I am not positive of the date. Just prior to commencement of the arbitration, our legal counsel presented the compromise proposal to Sheraton's lawyer, Larry Hayes. I was advised by Mr. Merrick that Sheraton's counsel rejected the proposal outright, and demanded a global settlement package including waiver of all penalties and outstanding disputes. The Sheraton also remained insistent that it would not deal with myself as chairman of the Gaming Corporation. In the face of this intransigence, Mr. Merrick broke off negotiations and shortly thereafter the arbitration hearing commenced.

This was the arbitration hearing I described to you on June 17th. Shortly thereafter, Mr. MacKeigan appeared at the hearing and requested a temporary adjournment while he negotiated directly with Larry Hayes in our absence. I have already described our reaction to this unannounced and uninvited arrival. Shortly after those negotiations, the hearing reconvened for a brief period and was then adjourned to May 20th with the expectation of both parties that settlement discussions would be explored further, prior to May 20th.

Meeting with the U.S. Consul General. The next noteworthy incident I recall occurred on May 8, 1997. I had forgotten about this meeting until very recently. At the time, I did not place much significance on this meeting, and only recently reflected that it might form part of the larger picture that was developing behind the scenes without the knowledge of our board. I refer to an off-the-record breakfast meeting which I had at the Prince George Hotel on May 8, 1997 with Mr. Bruce Ehrnman, Consul General of the United States. Although I was puzzled by this level of lobbying, I saw no harm and agreed to meet.

Mr. Ehrnman reported that he had been contacted by the U.S. Foreign Affairs office in Washington to see if he could help advance the negotiations that were ongoing between the Gaming Corporation and the Sheraton. Since the meeting was off the record, I will not discuss its details, other than to note that there was nothing surprising said by the Consul General and certainly no agreements made on my part. I simply listened and explained the position which we had already stated on numerous occasions directly to the Sheraton.

I can tell you, I benefited from a clearer prospective of the turmoil and conflicts within the Sheraton organization, which I had already come to suspect. It was clear that the Sheraton was still of the view that rejection of the hotel-based casino was a big mistake by the province. I indicated that one of the biggest obstacles to the current gridlock was the failure of the Sheraton to appoint someone within their organization who was in a position to speak on its behalf and make decisions on its behalf. It had become a common pattern where Mr. Thomas or Mr. Hayes would appear to be agreeable to something only to later find them shifting positions when they received contrary instructions from external sources.

[Page 22]

At the end of our breakfast meeting, the American Consul General suggested he was not going to pursue the matter further and would simply report back to Washington. I was sceptical as to whether that would be the end or the influence being exerted by the Consul General, however, I have no details on any further involvement of the Consul General in this matter.

The intervention of Bob MacKay. The arbitration hearing of April 23rd had been adjourned to May 20th with a goal of seeking a negotiated settlement between those dates. Our solicitors were seeking a principled compromise not an abdication and submission to the increasingly strident and confident demands of the Sheraton. However, no progress was being made. As a consequence, a few days before May 20th, I contacted the Premier's Office and suggested to Mr. MacKay that it might be appropriate for Premier Savage to intervene personally by convening a meeting with myself and a top representative of the Sheraton. The intent would be to bang our heads together in an effort to achieve the settlement the Premier was seeking.

Mr. MacKay thought the idea of the meeting was a good one, but he concluded that neither Premier Savage nor Minister Gillis could do the job that was required. He decided he was the best person to get matters moving. He then advised me that he was intending to meet directly with legal counsel for the parties without my involvement. At this point, the gag order placed by the Sheraton was still in effect and they were refusing to communicate with me or my staff. I suggested to Mr. MacKay that using lawyers was not the solution. To the contrary, I believed that part of the problem was that we already had too many lawyers involved and that behind-the-scenes lobbying was successfully insulating the Sheraton and neutering the Gaming Corporation's mandate to deal directly with the Sheraton. Nevertheless, Mr. MacKay insisted on proceeding and did convene a meeting with himself, John Merrick, Robbie MacKeigan and Larry Hayes; for reasons he did not explain, he excluded Carl Holm.

According to the report I later received from Mr. Merrick, Bob MacKay advised Messrs. Merrick, MacKeigan, and Hayes that the Premier and Cabinet wanted the arbitration settled quickly and that the Gaming Corporation would have to do what was required to get the matter settled. I do not recall the specific words that Mr. Merrick reported to me. Knowing his thoroughness, I am sure both Mr. Merrick's notes and memory can tell you how he felt after that meeting. I do recall him coming to my office. He was in total disbelief. He said the negotiations with Sheraton were all over, that Bob MacKay had effectively given the Sheraton everything and that his comments made in the presence of Larry Hayes ensured that any remaining bargaining position we had was destroyed. I repeat, John Merrick was in disbelief that the Deputy Minister to the Premier would so blatantly instruct the Gaming Corporation lawyer, in the presence of the Sheraton lawyer, to do what had to be done to get a deal. Knowing the province's desperation for a deal, the Sheraton could now effectively write its own terms which is, by and large, exactly what happened.

[Page 23]

After he had calmed down somewhat, Mr. Merrick suggested we should nevertheless try to get back to the Sheraton with some compromise position that would preserve at least some of our credibility. Mr. Merrick and I spent most of that weekend working together trying to find a solution that would give us some assurance we were fulfilling our mandate. However, each time Mr. Merrick contacted Larry Hayes to discuss something, he reported that Mr. Hayes simply added to the Sheraton's list of demands. Mr. Merrick continued to tell me that what bothered him most was that the very experienced Bob MacKay, in the presence of Larry Hayes, instructed Merrick to do whatever is necessary to get a deal. It was, of course, an impossible negotiating position created by Bob MacKay's candour in expressing his views to Mr. Merrick in the presence of Larry Hayes. By the end of that weekend, we both concluded it was dumb to even think that we could find some compromise. Based on the conversations with Mr. MacKay, the Sheraton knew they would get what they wanted. It was futile on our part to pretend otherwise.

Over the next few days, Mr. Merrick was also in touch with Robbie MacKeigan for the Premier's Office. Mr. Merrick would tell Mr. MacKeigan that neither myself nor the board of directors would be approving the deal and that if Cabinet wanted it signed, then Cabinet should simply issue that directive. Mr. MacKeigan would respond that the decision rested with our board and that the Premier really wanted us to settle the matter. This ping-pong match went back and forth until our board meeting of May 20th, which was scheduled early in the morning, immediately prior to the reconvening of the arbitration hearing. It is noteworthy that, to my knowledge, neither the Finance Minister nor the Savage Cabinet ever gave any formal directives on this matter. It was always Mr. MacKay, sometimes supported by Premier Savage. You will remember that the Minister of Finance and Cabinet are the only legal authorities authorized by the Act, there is no power or right for the Premier or the Premier's Office to unilaterally give such directives, yet I believe that is what happened.

The board meeting of May 20th. Although Mr. Merrick will give you his own recollection of events, it was my sense that by the meeting of May 20th, John had reluctantly concluded that our board of directors should abide by the directives being issued by Mr. MacKay. By May 20th, he was no longer providing active resistance to the overtures of the Premier's Office. I have no doubt that he genuinely thought that he was recommending what was in our best interests as board members. I believe that he had concluded that fighting city hall was no longer productive, however, self-preservation was not my priority and Mr. Merrick was not privy to some of the background information that I was acquiring.

I might also add that Mr. Merrick is the one who conducted the negotiations not Mr. [Carl] Holm as might have been the impression from yesterday's proceedings. Mr. Merrick was brought in at my insistence, with the full agreement of Ms. Gordon. Mr. [Carl] Holm was not directly involved with the details of the negotiations, which his own statement conceded. I encourage you, at the appropriate time, to hear directly from Mr. Merrick, whose perspective may be more valuable and, hopefully, more balanced. I simply note that I had some rather strong words with Mr. [Carl] Holm about my dissatisfaction with his services.

[Page 24]

Given the opinions he so strongly asserted yesterday, I am disappointed that the candour of his disclosure did not include the client's expressed views on the objectivity of those opinions.

As I discuss our board deliberations, please remember who was on our five person board of directors. There was Ms. Gordon and myself, two bureaucrats from the Department of Finance who readily acknowledged that they reported to and took instructions from someone within the department and Mr. Bob Cordy, a senior chartered accountant from downtown, whose brother happened to be the executive assistant to Bernie Boudreau.

I wish to acknowledge the obvious danger in providing you only excerpts from these documents in my possession. I encourage you to obtain and read carefully the full minutes of our board of directors meeting of May 20th and subsequent minutes which refer to that meeting. As you do so, it is important to read and try to understand the nuances involved; minutes do not reflect the full picture. Although I will quote you some of those particulars, I emphasize that minutes do not reflect the subtleties and pressures that were at play when our board was being encouraged to approve the Boudreau deal prior to reconvening the arbitration hearing that morning. I believe a review of those minutes will reveal the tension and reluctance felt by some board members in trying to reconcile unwarranted concessions with Mr. MacKay's directive to settle.

The following are some excerpts from the minutes of May 20th. On Thursday, May 15, 1997, John Merrick met with Bob MacKay, Larry Hayes and Robbie MacKeigan, where it was indicated that the Premier and the province wanted this matter settled. Merrick added that Bob MacKay indicated that the province was willing to extend the construction completion to March 1999 without penalty. However, if this date was missed the impact of such should be revenue-neutral to the corporation. Merrick also reported that Hayes had indicated that his client wanted to have global settlement of all issues.

As a result of the discussions with Mr. MacKay, the corporation's counsel agreed to offer an extension to the completion date to March 1999 with no financial penalty. Hayes responded to the proposed compromise settlement by requesting an extra two months to May 30, 1999, with no amortization of capital costs during this additional two month period. Merrick contacted myself who recommended that Merrick speak to MacKeigan as the corporation was following the direction of the province. MacKeigan discussed this proposal with MacKay who asked for the position of the corporation and indicated that it was the corporation's decision, subject to Cabinet approval. Merrick indicated that the corporation did not support this proposal but it was really the province's decision.

Please note the reference to Mr. Hayes' demands for a global settlement of all issues. It basically meant the Gaming Corporation approving or withdrawing objections to every single disputed account.

[Page 25]

During the May 20th board meeting it was clear that Carl Holm was by now encouraging the board to adopt the Premier's position. Mr. Merrick was more subtle but was steering our board in the same direction. Discussion and debate occurred amongst board members as to the evolving positions of both Messrs. Merrick and [Carl] Holm and the pressures that were being brought on them by both the Premier's Office and Mr. MacKeigan. At one point we asked both legal counsel to leave the room while we discussed their advice more openly amongst ourselves.

Further excerpts from the business include:

"Merrick noted that NSGC Shareholder (i.e. Government of Nova Scotia) was in favour of accepting the settlement. He also noted that MacKeigan had tried to facilitate negotiations.

Bob Cordy inquired as to whether an alternate financial penalty could be counter proposed. Merrick indicated that he felt that the Sheraton would not move from this proposal by saying 'this is as good as it gets'. . .

Merrick repeated that the NSGC Shareholder did not want to dictate but that it had made its wishes very clear. MacKeigan clearly expressed to Merrick that he wanted him to convey that the pros outweigh the cons with this settlement . . .

Merrick indicated that, notwithstanding the Board, it is ultimately the Shareholder's decision, but the Shareholder did not want to circumvent the Board and it was ultimately their decision.".

If I may interject for a moment, Mr. Chairman, I believe that last sentence from the minutes highlights the very real dilemma which was facing our board of directors and let me reread that sentence:

"Merrick indicated that, notwithstanding the Board, it is ultimately the Shareholder's decision, but the Shareholder did not want to circumvent the Board and it was ultimately their decision.".

We found it most awkward to reconcile the conflicting messages in that statement.

The detailed minutes go on to note:

"Merrick confirmed that he was in agreement with the three advantages of accepting the settlement . . . as mentioned earlier by MacKeigan and recommended that NSGC accept the proposed settlement. Merrick indicated that he would confirm this in writing, at the request of the Board . . .

[Page 26]

Fiske indicated that he did not want to take part in the issuance of a joint press release . . .

Counsel departed to adjourn the arbitration process.".

It is clear from the minutes that our board of directors was heavily influenced by the recommendations being provided by both John Merrick and Carl Holm. At one point in the debate board member, Bob Cordy, sought confirmation from Mr. Merrick that this was the best deal that our board can negotiate. Mr. Merrick's response was all telling. He advised that this was the only deal he could negotiate, or as the minutes reflect, this is as good as it gets. To suggest there was some defensive posturing going on at the board would be to understate the matter. Great care was taken to set out the basis upon which the deal was being sanctioned. Subsequent minutes of the board confirm the heavy reliance placed on these legal opinions.

In fact, there were at least two draft written opinions provided by Mr. Merrick before the board was satisfied. I urge this committee to obtain all such drafts. In what I believe was his final draft opinion he stated:

"In circumstances where the Shareholder takes an active interest in the decision to be made, it is incumbent upon the Board to ensure the Shareholder is fully informed of the advantages and disadvantages of the proposed course of action. If the Shareholder then clearly expresses its desire that a course of action should be followed, it is my opinion that the Board of Directors must ultimately accede to the wish of the Shareholder. In the circumstances, I am satisfied that Mr. MacKay, through Mr. MacKeigan, was fully and completely informed as to the negotiations which occurred and all the advantages and disadvantages of accepting the settlement proposal. It was also my clear understanding through Mr. MacKay that acceptance of this settlement was in accordance with the wish of the Shareholder. In these circumstances, I recommend to the board that the settlement proposal be accepted.".

As an important side comment, in hindsight I am not confident that this, in fact, was our only option. The Gaming Corporation was not a normal body corporate in terms of its relation to the shareholder. I believe we could instead have made our own best judgement and then await a reversing directive from Cabinet. Unfortunately, that option was not adequately explored and we were told to accede.

The subsequent minutes of the board of directors of July 24, 1997, further corroborate the influence which Mr. MacKay's pressure had on the board of directors, including the following:

[Page 27]

"Fiske indicated he would neither speak for or against the Minutes of Settlement when put forth to Cabinet . . . Fiske noted that he was told by the Shareholder to accept the Minutes of Settlement and felt there was no choice, but that he was not obliged to personally agree to them.

Bob Cordy noted that there were two main reasons why the Board had accepted the Minutes of Settlement.

1. It was the shareholder's wish;

2. Based on Solicitor Merrick's advice, it was the best deal the Gaming Corporation could get.".

or, as Mr. Merrick noted, the only deal we could get.

As I continue with this documented litany, I remind you to reflect back on the earlier public assurances given by the Premier about the absence of any political interference. Compare those media statements with this documentary proof to the contrary.

Dara Gordon. The subsequent board meetings of August 19th are equally revealing, even more so with respect to the contradictory public statements made by Acting Chairman Dara Gordon with respect to the merits of the Boudreau deal. As I read the following excerpts from the minutes, I encourage members of the committee to reconcile the position of Ms. Gordon in the minutes with her subsequent statements after my resignation. I might add, all of the following was taken from written records, not conversations with Ms. Gordon. Given the less than subtle veiled threat at Page 10 of her remarks, I suppose I should be loath to say anything for fear of some unspecified reprisals. Why she would threaten to disclose what she confesses would be irrelevant confidences, I simply do not understand.

At Page 3 of the minutes of August 19, 1997:

"Dara Gordon noted that the Shareholder's directive was paramount in her decision to accept the Minutes of Settlement and that even though NSGC had accepted the Minutes of Settlement in principle, the relationship with the Sheraton had not improved.".

MR. MACKINNON: Mr. Chairman, on a point of order. I must implore. This honourable individual must table these documents that he is quoting from extensively. I believe it is incumbent upon this committee to direct this individual to do so. Failing that, we will have to direct the corporation to table such documents because these are the Rules of the House. The honourable gentleman, particularly having been a Minister of the Crown, knows full well what the Rules of the House are. It is highly improper. There is something wrong with this process. Even yourself, through your observation, Mr. Chairman, indicated not the need to do it.

[Page 28]

If the whole exercise is that we want information, we want disclosure, we want transparency, then you, yourself, Mr. Chairman, should be supporting tabling the documents, not questioning whether we will look at it at a future moment. We need evidence if we are going to continue on this. I would submit that if we have a private citizen in possession of confidential documents, as he suggested, then he should be willing to submit those before the committee so we can proceed and ensure that we bring a conclusion and some closure to what is going on here.

MR. CHAIRMAN: This is the same point raised before. I gather from the hand signals that other members of the committee want to comment on this. I think Mr. Dexter and then Mr. Leefe.

MR. DEXTER: First of all, to my knowledge, Mr. Fiske does not have before him any document that he is quoting from. He is quoting from his statement which has references to documents, so he is going to table his statement at an appropriate time, as I understand it. Second, as I understand what Mr. MacIntosh said, he intends, at the direction of the committee, to table these documents. (Interruptions) I would note that these are certainly all documents that the government has access to in one fashion or another. We requested, in fact, that the Gaming Corporation table all of their documents before this time; they decided to take another avenue on their own. We would have preferred to have those files in advance; we don't. So, in my view, we should just move along.

MR. CHAIRMAN: Mr. Leefe.

MR. JOHN LEEFE: Mr. Chairman, when the point of order was raised, I believe that Mr. Fiske was making reference to statements made by Ms. Gordon with respect to documentation that would be within her control. He can hardly be requested to table documentation to which she referred in her statements. Secondly, as all members know, members frequently in committee and, more frequently, in the House, will make reference to documentation which they believe exists, perhaps documentation which they have seen but which is not in their possession. While it would always be helpful to have such documentation tabled, it is not always readily available and the lack of its ready availability should not, however, ever prevent a member or, in this case, a witness from making reference if that witness believes it to be true. Our witness is under oath this morning, a very unusual precaution taken by this Chair, and we have every obligation to accept him at this word.

MR. CHAIRMAN: Mr. Samson.

MR. MICHEL SAMSON: If that has been the case, no problem, we all seem to be in agreement that he should be tabling those documents. Why don't we just put the directive right now so Mr. MacIntosh can inform his office immediately that these documents should be readily made available to us so that we can have them in our possession as soon as

[Page 29]

possible. Why are we waiting here and not just immediately saying, please table these documents as soon as possible?

MR. CHAIRMAN: I don't think anyone disagrees that it is desirable for the witness referring to any documents that he does have, to table them with the committee. I think that is a common position and I don't see that anyone disagrees with that. I think that is clear. I take it that that is the position the committee has and I didn't understand the witness or his counsel to say anything different. I did understand him to say that he did not have those documents with him in his briefcase here today but would provide them. I think that is desirable.

You can hear, Mr. MacIntosh, that the committee would like to see documents quoted from. Can you tell us which of the documents referred to so far that you or your client might have in your possession and for which you can supply us copies?

MR. MACINTOSH: I can supply copies of all documents that are referred to, Mr. Chairman. If it is reasonable to the committee if I could have until tomorrow to fax those, I would have to go back this evening and sort through our files and pull them out, because we are referring from a variety of sources. But anything to which Mr. Fiske refers or quotes today, we have copies of those documents and would be willing to provide them at the direction of the committee.

MR. CHAIRMAN: I think this is exactly the way to go. I think it is desirable during the course of testimony, if documents are referred to, that it would be preferable, of course, to have those documents at the time but if you don't have them, then as soon as possible thereafter. I think that is what has been requested from the committee.

I should emphasize the point that Mr. Dexter raised in his comments, which is that Ms. Gordon of the Gaming Corporation was invited, by way of a letter from me - which I tabled with the committee at our meeting last week or the week before - to supply the committee with a copy of the minutes of May 20, 1997 and any other documents which might be relevant to the original testimony. Her reply, in writing, was that she would try to get the materials together as soon as she could. I believe that written communication was dated July 2nd, and committee members have a copy of that letter. Everyone, of course, will be aware that yesterday there was a press conference held by members of the Gaming Corporation to talk about these matters and we are being provided with at least some of the background material that was released publicly yesterday.

In any event, I would ask the witness to proceed and the directive from the committee is that we would like to be provided, by the witness, with copies of any documents to which he refers, if he has them in his possession. We have the undertaking of his counsel that he will provide any documents he has with him, today and any others, by fax tomorrow.

[Page 30]

Is that clear and agreed? Fine. Please continue.

MR. FISKE: To continue [Page 3 of minutes of August 19, 1997]:

"Dara Gordon agreed to re-read the Memorandum (a subsequent Memorandum prepared by Carl Holm) but affirmed that she is not comfortable presenting a Memorandum that presents Sheraton's point of view, as NSGC's primary concern is to act on behalf of the Province and promote its business interests. Gordon declared that she felt it was more than appropriate to 'draw the line' with the Sheraton (her actual words were 'declare war with the Sheraton'), as NSGC has been exceptionally flexible in the past and this had not benefited the Corporation. She further indicated that assuming the Minister was properly advised, she was very pleased that he supported NSGC and that she felt that the time had passed to attempt to repair the troubled relationship and was not confident that the Minutes of Settlement would be able to do this.

Gordon commented that there was a new Executive Council (Cabinet) and therefore there could be a new Shareholder sentiment about the Minutes of Settlement. Gordon further noted, that in her opinion, there is no agreement, as the final Minutes of Settlement had not been completed and signed. Subsequent to this, Gordon also stated that she would like to see the Board strongly recommend that Cabinet not approve the Minutes of Settlement based on the original approval having been given as a result of Bob MacKay's intervention. Gordon's suggestion would be that Cabinet could mandate NSGC and that NSGC would determine their bottom line and proceed accordingly.

Gordon suggested that NSGC remove all concessions which had been made to date as these concessions had been made in an attempt to try and have something signed.

[11:30 a.m.]

S. O'Connor questioned whether the disapproval of Cabinet would lead to the enhancement of the relationship with Sheraton. Gordon replied that she felt it would, in that NSGC has attempted to compromise and act in a conciliatory manner for some time and this has not had a positive effect on the relationship.

R. McAloney questioned whether NSGC had received a new mandate from its Shareholder. Fiske replied that he had met with the Premier [MacLellan] and the Minister and that the Premier requested that the Minutes

[Page 31]

of Settlement be presented to Cabinet, although they were not the final version. Also noted was the necessity and opportunity to restore Gaming authority in the Province back to NSGC and to once again have the Minister involved.

Fiske commented that the Shareholder directive had not come through Executive Council or the Minister and noted that NSGC may have received incorrect legal counsel . . .".

Members of the committee, I encourage you to reflect on the minutes which quote Dara Gordon as suggesting we withdraw all concessions which had been made to that date. I then invite you to compare that position with her statement before this Public Accounts Committee on October 22, 1997 at Page 10 of the Hansard Committee report:

"MR. HOLM: . . . I want to ask, however, in that proposal that the corporation has agreed to and is sending back to Cabinet for approval, is there any condition in that, that provides the Sheraton with any kinds of concessions, any kinds of write-offs of their interest costs against revenues that are supposed to be coming to the province from the original agreement?


MR. HOLM: No concessions whatsoever?


Mr. Chairman, an objective analysis of the full Terms of Settlement, which I am not certain has, in fact, been publicly disclosed, will reveal many concessions. However, Dara Gordon is not the only person to have publicly denied that any concessions were given to the Sheraton.

Premier MacLellan, in this House of Assembly on the afternoon following my comments, had the following to say at Page 1458 of Hansard, ". . . when I became Premier, the agreement for the building of the new casino was renegotiated. The agreement we entered into for the building of the casino was negotiated and signed while I was Premier. It was not negotiated by a previous administration . . . When I became Premier, the instructions were that this was to be a business-like arrangement. ITT Sheraton was to be given no favours. We were to abide by the arrangement that was entered into initially. The agreement for the actual construction of the casino was negotiated and then signed.".

[Page 32]

As well at Page 1442 of Hansard, the response to Dr. Hamm, "That is just ridiculous. No one who worked for me would ever say that to Sheraton, and the fact of the matter is that they followed through with an agreement that was entered into by the Province of Nova Scotia and ITT Sheraton to get a casino built in Nova Scotia. That is what has happened. The fact of the matter is that there was nothing given to Sheraton that they were not entitled to under the agreement that was entered into.".

Mr. Chairman, in the face of all the foregoing documentary evidence, I invite you to reflect carefully on the assertions that there was no political interference and that there were no concessions to Sheraton in the Boudreau deal.

If I may return to the public statements of Acting Chairman Dara Gordon for a moment, I can recite other examples of situations where her public defence of the Boudreau deal conflicts with her well-documented position to my resignation. As I previously described to you, I had a very close and, I thought, effective working relationship with Ms. Gordon. I cannot recall a single incident in our two and one-half years where she and I disagreed on any issue of substance. I always thought we made a very strong team in our dealings with both the Sheraton and the government. I urged her to become my successor when I resigned.

The minutes of August 19th refer to her insistence on the independence of our board from Cabinet. I suggest you ask her to describe what she said at that meeting and to reconcile it with her subsequent actions upon my departure. You will also recall the reference to her going to war with the Sheraton and all of this was before the repeat intervention of the new MacLellan Government and, in particular, Mr. David Thompson.

Ms. Gordon subsequently confirmed publicly that the deal eventually signed with the Sheraton was basically the same deal as was considered by the board of directors when I was Chairman. Despite what the minutes reflect, she has since taken the public position that the Boudreau deal was a good deal for Nova Scotia. For example, at Page 15 of her testimony before the committee:

"MR. WILLIAM MACDONALD: The renegotiations that are going on now with the Sheraton due to things you found out over the last three years, do you believe they are in the best interests of Nova Scotia?

MS. GORDON: Absolutely. I mean we regard that as our mandate to work out the best business deal with the Sheraton, to push that forward on proper, prudent business terms and the board believes that that is the direction we are taking.".

[Page 33]

And also at Page 35 Ms. Gordon says, "We believe that we have received the concessions and the things that we require, and to my mind this is a good business deal and one that will work for the Corporation and for the people of Nova Scotia.". I have already pointed out her inconsistency with respect to concessions.

At Page 17 of her testimony, she also asserted that the Gaming Corporation is satisfied it has a good handle on the nature of the related party transactions between the Sheraton Hotel and the Sheraton Casino. Given the long list of such disputed transactions that were only removed from the table by the imposed Boudreau deal, it is difficult to understand how she could provide such ready assurances, particularly in view of the following specific clause contained in the terms of settlement.

The withdrawal - of objections to the December 31, 1995 audited financial statements - is not to be regarded as a precedent. It is not acceptance or rejection of the appropriateness of the amounts, and in particular the related party transactions. Ms. Gordon also neglected to report that the terms of settlement specifically did not approve the 1997 operating and capital budgets.

I again encourage you to review carefully the records of the Gaming Corporation, which will document in great detail the various types of related transactions which were of significant concern to us. Given the documented history of such disputes, to suggest that the Gaming Corporation has no difficulty with Sheraton's approach to such transactions is difficult to fathom. As a starter, you might ask Sheila Butler to produce and explain what we described charitably as the error's list.

At Page 22, Ms. Gordon told this committee that the Gaming Corporation was seeking more assurances on the cost of food services being charged the casino by the Sheraton Hotel. She did not report to you, as I understand to be the case, that all such disputed food costs were signed off and forgiven as part of the terms of settlement of May 20, 1997, despite the fact that Sheraton Hotel was charging Sheraton Casino full list price for all such services.

At Pages 30-31, Ms. Gordon assures you that the Gaming Corporation works with Sheraton's independent auditors and the Auditor General. She neglected to report that despite assurances to provide all its findings jointly to the Gaming Corporation and the Sheraton, the Sheraton's auditors, Ernst & Young complied with the gag order, and thereby deprived us of access to one of the most valuable sources of verification available to us. Ms. Gordon neglected to tell you that the Auditor General does not examine the books of the Sheraton directly, but relies upon the investigative techniques of the Gaming Corporation. The accuracy and reliability of the Auditor General's review is therefore only as good as the information we are able to glean from our review of the Sheraton records, which of course is problematic with gag orders, refusal to provide access, and muzzled auditors.

[Page 34]

As a final anecdotal example of Ms. Gordon's candour before your committee, I refer to Page 42 of her transcript where Mr. Ronald Russell questioned whether a minister had ever rejected or requested a change to a recommendation from the board to Cabinet. Ms. Gordon assured Mr. Russell that there had never been any such rejection or request for a change. That assurance appears inconsistent with the minutes of the board of directors of September 5, 1997, which state, "Ralph Fiske reported to the Board that he and Sheila Butler had met with the Minister on Tuesday, September 2, 1997 and had presented NSGC's Report and Recommendation . . . which was produced as a result of the August 29, 1997 meeting of the Board. Fiske indicated that the Minister was not satisfied in signing the document in its present form . . . Dara Gordon questioned Carl Holm (and reiterated that Fiske had forwarded the R&R to the Minister and that the Minister instead wanted a Memorandum) . . .".

Ms. Gordon assured this committee that the Sheraton's bottom line is a reasonable one, Page 23. She did not advise that the terms of settlement of the Boudreau deal required that all outstanding disputes be wiped clean. That is what Mr. Hayes demanded with his global settlement clause. She did not report to you that up to my resignation of September 30th, not a single budget or single audited financial statement of the Sheraton had ever been approved by the Gaming Corporation, because of such outstanding disputes. She failed to report that the May 20th terms of settlement wiped clean the disputes with respect to the Fife and Drum and Library restaurant, as well as all other outstanding issues with respect to the interim casino in Halifax.

She neglected to report that the terms of settlement required actual Gaming Corporation approval of the operating budgets for 1995 and 1996, and withdrawal of the objections to December 31, 1995 audited financial statements, approval was given not based on merit but based on concession. She neglected to tell you that she was as incensed as I with respect to the political interference and underhanded manner in which the Boudreau deal was forced upon the Gaming Corporation. Shortly prior to my resignation, she encouraged me not to sign the memorandum being forwarded to Cabinet, instead she suggested that I should refuse to sign it and force Cabinet to fire me if they really wanted the deal that badly.

Mr. Chairman, I take no delight in pointing out these inconsistencies to your committee, but do so because I sacrificed my job as a matter of principle to preserve the future integrity of the Gaming Corporation. I believe that the person who occupies the position of chairman must not be permitted to place political loyalties ahead of the statutory mandate described in the Gaming Control Act.

Perhaps my concern can best be summed up in Ms. Gordon's parting comments to me, while she said she respected and admired the decision I was making, she told me that she in contrast was a pragmatist. She was also a pragmatist who was kept fully informed on almost every major incident I will be describing today. Practically speaking, she knew what I knew, and most such matters were discussed in the presence of Sheila Butler as well. With

[Page 35]

respect, I suggest the Gaming Corporation requires something more than a pragmatist to protect the best interests of Nova Scotians.

MR. CHAIRMAN: Earlier in the proceedings, I suggested that it might be appropriate when we got the chance to take a very brief break as we move through. We are at one hour and 42 minutes of our proceedings. I would like to take a five minute break. No more please, and we will resume. I hope we are close to hearing the full evidence. Thank you.

[11:42 a.m. The committee recessed.]

[11:55 a.m. The committee reconvened.]

MR. CHAIRMAN: We have a quorum of the committee available now in order to proceed. Can I ask, Mr. MacIntosh, if you can have your witness continue with his presentation? I should note before you have Mr. Fiske continue speaking that I have now distributed to all members of the committee copies of the statement that he is giving to the committee at the moment. Thank you. Please proceed. I believe it is Page 37.

MR. FISKE: Mr. Chairman, I will begin now with, Meeting with Premier Savage. I will now return to the chronology of events and the involvement of other individuals who can shed light on the circumstances which led to the approval of the Boudreau deal.

The next incident of significance which I recall was my meeting with Premier Savage on June 5, 1997, a couple of weeks after our board approval of May 20, 1997. I was still completely in the dark as to why government was caving in to the pressures of the Sheraton. The meeting was arranged at the request of Finance Minister, Bill Gillis, and was intended to permit me the opportunity to meet with Premier Savage and discuss why Bob MacKay was pushing so hard, through Robbie MacKeigan and others, to drop the arbitration and settle the deal.

It was significant that the Liberal leadership convention was scheduled for July 12, 1997, a little more than a month away. Our meeting did not go as I had hoped. There was little discussion on the merits of the Boudreau deal. Instead the meeting deteriorated rather quickly into a shouting match between myself and Mr. MacKay with the occasional outburst from the Premier. I had suggested to Premier Savage that the interventions of Mr. MacKay and Mr. MacKeigan were neutering the Gaming Corporation and also placing the government in an indefensible situation should the public learn of what was going on.

Mr. MacKay then went aboard me. He said he resented my attitude and that neither he nor Premier Savage wished to hear any more about the matter. I responded that I did not care what they preferred to hear or not hear. I was insistent on being told how both the Cabinet and the Gaming Corporation could justify giving away $27 million to $30 million hard-earned taxpayers' dollars in concessions to the Sheraton. Premier Savage's response to

[Page 36]

my concern about taxpayers' money both angered and disturbed me. He said he was doing it because the government could not allow the arbitration proceedings to become public knowledge. Premier Savage stated that if the arbitration did become public knowledge, people would once again say that the Savage Government had taken a good deal and screwed it up badly in its implementation.

He said the casino was Bernie Boudreau's project and he could not risk public knowledge of the arbitration hurting Mr. Boudreau's chances to win the leadership race. He said he believed that any adverse publicity surrounding the arbitration might harm Mr. Boudreau's reputation if the public concluded that even Mr. Boudreau was incapable of negotiating a good deal. I will not describe the details of my reaction to this political expediency other than to say it was one of the few times in my professional life when I had difficulty in controlling my emotions. I have been around politics and politicians for a long time and am not naive with respect to such matters. I know that politicians at times do make decisions based on political expediency. But I have always believed that there are lines to be drawn, where protection of the public interest and trust must take priority over political expediency and self-interest. In this instance, I thought up to $30 million of a cash-strapped government was way over any line that any politician could rationally draw. I was obviously wrong.

My words to the Premier do not bear repeating and I am not proud of the language that I used. Suffice it to say that I questioned how he could stoop to giving away $27 million to $30 million to the Sheraton simply to ensure that Bernie Boudreau won the leadership race. I pounded the Premier's table and said some things that I regret about his character. Premier Savage pounded the table in response and told me, for the second time in two months, that when you are Premier you have to make such hard decisions. After that heated exchange I departed and that was the last conversation I ever had with Premier Savage. I subsequently apologized to Bill Gillis for the language that I used in his presence.

As a side comment, the amount of $27 million to $30 million discussed at this meeting was later revised downward by Sheila Butler. However, on June 5, 1997, we all believed the value of the concessions was in that range.

Mr. Chairman and members of the committee, it gives me no pleasure to describe that particular encounter. I wish to add that I do not believe that it was reflective of the type of decisions that former Premier Savage generally made during his tenure as Premier.

[12:00 p.m.]

If it is possible for something to be more troubling than what I just described, it is perhaps the fact that the explanation provided me simply did not add up. First of all, there was no particular reason to assume that a private arbitration would become public but, more importantly, I found it difficult to believe that withholding knowledge of a commercial dispute

[Page 37]

going to arbitration was the driving force behind the decision to push through the Boudreau deal. Commercial disputes and arbitrations occur every day of the week. If anything, had the arbitration become public knowledge, I believe it could as easily have been perceived by the public as the Gaming Corporation protecting and fighting for the financial best interests of Nova Scotians.

It simply does not make sense to me that settling the Sheraton dispute was so critical to the political survival of Mr. Boudreau. Of course, if I am correct in that belief, then there remains the more troubling question of what was the real driving force behind the decision to grant such massive concessions to the Sheraton and how many layers below the Premier and his deputy do we have to go to find the real source of the power and influence? To be blunt, who was pushing whose button and why?

Following my meeting in the Premier's Office, I gave serious consideration to immediately resigning in protest. However, with encouragement from Dara Gordon, Gaming Commissioner Elwin MacNeil and others, I decided instead to fight this political expediency with some tactics of my own. I decided I could be more effective by slowing down the Cabinet approval process, until calmer heads could prevail after the leadership race. I decided to ensure all contractual details were in place before the matter was referred to Cabinet for its required approval, and if that could not occur before the leadership convention, then so much the better. I was successful in that regard.

Conversation with Gaming Commissioner Elwin MacNeil. I had various formal and informal conversations with the Gaming Commissioner during my tenure with the Gaming Corporation. During the spring of 1997, I told Mr. Elwin MacNeil what I was being asked to do by the Premier, and I told him why the Premier was doing it. I also informed him of the Sheraton gag order. At that point, I was still considering resigning. Mr. MacNeil discouraged me from doing so.

My reason for providing him this information was twofold. I had hoped he might choose to do something with the Sheraton with the illegal and offensive gag order, especially when his commission was so reliant upon our access to the Sheraton records. However, to my knowledge, Mr. MacNeil was non-responsive and did not intervene with the Sheraton. I also apprised him of the Premier's political motive, because I knew of Mr. MacNeil's close personal relationship with Bernie Boudreau. I was hopeful he would carry the message to Bernie that what was unfolding simply could not be allowed to happen. Instead, Mr. MacNeil was fatalistic and suggested I should not resign, but roll with the punches and do as I was being asked.

Conversation with Bernie Boudreau. Having gotten nowhere with the Gaming Commission, I decided to contact Bernie Boudreau directly. From day one, Bernie had been the staunchest defender of the Gaming Corporation's independence from political interference. I had kept him fully informed of our deteriorating relationship with the tactics

[Page 38]

of the Sheraton. If anything, he was the one who bolstered my resolve and insisted that I fight for the provisions of the deal that the Sheraton had originally agreed upon. He had always supported our taking the matter to arbitration if we could not find a negotiated solution with which we could live. Like me, he felt arbitration was neither a win or lose situation, but simply an independent direction from an arbitrator as to how to interpret and apply the relationship between the two parties for the next 20 years. I was perplexed that this same Bernie Boudreau was now being cited as the reason for the neutering of the Gaming Corporation and the granting of all concessions to the Sheraton.

I decided to contact Bernie and hear first-hand from him whether he was aware of, and approved of, what was being done in his name, or on his behalf. This was still prior to the leadership convention, by then he had resigned from Cabinet and was travelling across the province. I had difficulty getting him to return my calls. I eventually caught him by phone while he was in the Valley.

I described to him straight-out what the Premier had told me. I asked him if it were true. I told him I wanted to hear the words from his own mouth. There was what seemed like a long period of silence. I again asked him, is this true, is it with your blessing? His guarded response was, Ralph, my circumstances have changed. I'm no longer in Cabinet. I can't say much more than that.

By his non-responsiveness, he had given me his answer. At no time then or since has Mr. Boudreau ever explained to me what caused him to make such an 180 degree about turn. When I hung up, I was more perplexed than ever. I knew that Bernie Boudreau had nothing to be afraid of with respect to the bargain we had struck with the Sheraton. To the contrary, he and our Gaming Corporation had negotiated such a good deal for the taxpayers of Nova Scotia, that the Sheraton was trying to wiggle out of its commitments.

I believe that the Sheraton had concluded that it would not get its way through the legitimate front door of arbitration. I was now convinced they were using some back-door approaches to get a concessionary new deal which they could not get at arbitration. I became more determined than ever to slow down and frustrate that process, until I could sort out what was going on. So with the support of Dara Gordon and Bill Gillis, I ensured that continued clarifications on the May 20th deal would not permit the matter to get before Cabinet prior to the leadership convention. I was subsequently thanked by Premier MacLellan for doing so.

Directions from Premier MacLellan. I have already related to you, the memorandum that was prepared on the direction of the new MacLellan Government Finance Minister, the Honourable Bill Gillis. It detailed the interventions of the Premier's Office and Bob MacKay. I can tell you that Dr. Gillis was delighted that Premier MacLellan was committed to the operational independence of the Gaming Corporation, and our accountability directly to the Minister of Finance, not others in the Premier's Office.

[Page 39]

I remember telling our staff that Minister Gillis was walking on clouds and felt he had been made whole again. The enthusiasm was a direct result of our meeting with Premier MacLellan a week or so following his swearing-in ceremony. You will recall how I described to you in my last appearance, Premier MacLellan's appreciation for how both Mr. Gillis and I resisted and delayed the Boudreau deal. Ironically, despite his recent chastising of the Leader of the Opposition for referring to the matter as the Boudreau deal, that was the very phrase used by Premier MacLellan, the Boudreau deal.

Premier MacLellan was more specific than that in referring to the Boudreau deal, he said he was not going to go in that direction, because it was not an honourable deal. Those were not the exact words he used. He used less flattering words which do not bear repeating. Premier MacLellan then told me that he wanted me to run the Gaming Corporation without interference and to simply keep his Minister of Finance briefed and consulted on what we were doing.

At that point, his new Deputy Minister, David Thompson interjected and suggested that he would speak to the now departed Bob MacKay to get more background information on the Boudreau deal. Premier MacLellan's response was cryptic. In less than flattering language, he urged Mr. Thompson to be very careful in relying upon any explanation provided to him by Mr. MacKay with respect to the Boudreau deal.

During that meeting, I told Premier MacLellan that Premier Savage had ordered me to give the concessions to the Sheraton because of the major event in July. I was intentionally obtuse, because I was embarrassed to even repeat what Premier Savage had specifically said to me. That was the phrase I used, because of the major event in July. I was of course referring to the leadership convention. Premier MacLellan then asked what major event in July, I was referring to. At that point, Dr. Gillis intervened and explained that I was referring to the leadership convention.

After that meeting, I was convinced that the Boudreau deal was dead, and the Gaming Corporation had been directed to regain control of its responsibilities with the Sheraton. Premier MacLellan expressed his displeasure at the Boudreau deal without any mincing of words. As I told you in my earlier appearance, I have no explanation as to why within a few short weeks, he was subsequently convinced to do a complete turnaround, and instead endorsed the Boudreau deal in a very similar and secretive manner, uncannily similar to that of Dr. Savage. Given the statutory significance of the position I held, and the written assertion of my resignation letter, that the statutory mandate of the corporation had been seriously compromised, it troubles me that my act of resignation under protest was not considered worthy of investigation or review by Premier MacLellan.

From a personal point of view, there is something even more troubling to me. Assume for the moment, the Premier is correct, and that I had completely misinterpreted or misunderstood Mr. Thompson, that I was not being directed by Mr. Thompson to give the

[Page 40]

Sheraton whatever it was they wanted. If that had been so, why then did not the Premier simply refuse to accept my resignation letter, and instead reassure me that I had misunderstood Mr. Thompson's directive, and that we were still free to negotiate a deal, that my resignation on an issue of principle was unnecessary and a simple misunderstanding.

It is really that simple. If I had it all wrong, then given the Premier's stated satisfaction with my previous job performance, one would have expected someone to speak to me and straighten out the misunderstanding. The fact that they did not, reaffirms to me that I did not misunderstand Mr. Thompson.

David Thompson's Directive of September 25th, 1997. I have already described to you how I was first contacted by Bill Gillis and advised that Cabinet had approved the Boudreau deal. Although I have always thought that his call was the same date as Mr. Thompson's, I am no longer certain and do not have my files to help me reconstruct that sequence. Bill Gillis did not take the detailed memorandum to Cabinet that I had earlier described. He had told me that he was going to describe the full history of the deal to Cabinet and strongly recommend against its approval. As per his insistence, you will note that the memorandum that I was required to sign specifically did not contain a positive recommendation. Were it not for Mr. [Carl] Holm's insistent legal opinion that our board had no choice but to recommend, then the recommendation from Dr. Gillis would have been to reject. For whatever reason, yesterday's full and candid disclosure by Ms. Gordon at Page 9 of her remarks neglected to mention this rather significant piece of context.

I had already been told directly by the Premier that he disapproved of the deal in the strongest of terms. I was told that Planning and Priorities Committee staff were against the deal and that David Thompson was against the deal. No other Cabinet Minister had contacted me or discussed the deal with me and I knew of no one in Cabinet who was abdicating the Boudreau deal. Despite all of this, I get an official letter from Cabinet's Acting Secretary James Spurr, dated September 24th and received September 26th, advising me that Cabinet was approving the Boudreau deal that had been proposed by our memorandum. I confess, given the strong opposition from both Dr. Gillis and myself, I took no particular pleasure in being told by Mr. Spurr that Cabinet had approved the deal purportedly by Dr. Gillis and myself. If there was any doubt as to the mischievous nature of Mr. Spurr's letter, you might ask how many other times he has offered to be a personal runner to obtain signatures on a document. When Dr. Gillis called me about Cabinet's approval, all he would tell me was that he found the experience disturbing, but could not talk about it because of Cabinet confidentiality.

When Mr. Thompson called me that same day, he told me he was simply the messenger in carrying out the orders of the Premier. My resignation letter has already described what he said to me. There was more to that conversation. I told Mr. Thompson that, based on what I had been told of the reasons for the directive I could not in good conscience sign the contract that Cabinet was directing me to sign. Accordingly, I told him

[Page 41]

I would be required to submit my resignation. His very first response was to ask me what I was going to say to the press. Frankly, given the seriousness of my decision, I was surprised that media control was his only apparent concern. Nevertheless, I told him that I would say nothing to the media, if the minister, the Gaming Corporation and the Sheraton were truthful in any statements they made about my resignation. I expected them to simply announce that I had disagreed on a policy directive from Cabinet and, therefore, submitted my resignation. I thought he agreed to this arrangement. Regrettably, that did not occur. As a consequence, when I heard of the deliberately misleading reasons given, I let it be known, both publicly and privately, the reasons for my resignation.

I do not know if Mr. Thompson had earlier talked with Bob MacKay as he had wanted, nor obviously do I know what Bob MacKay may have said to him that may have changed Mr. Thompson's mind.

I expect it would be enlightening to this committee if it were permitted access to the secretarial notes of what was said at Cabinet during its meetings of September 1996. For some reason, I have a sense that those records may not contain the same explicit marching orders as provided to me by Mr. Thompson.

Shortly thereafter, I submitted my resignation letter of September 30, 1997. I subsequently received an acknowledgement letter from Dr. Gillis dated October 2, 1997. This committee might wish to inquire who actually drafted that letter for Dr. Gillis' signature. In it, there is the assertion that the primary objective of Cabinet was to get the project moving. This is the same justification used by Premier Savage and Minister Downe for the last three weeks. It made no sense then and it makes no sense now. That was the whole purpose of the arbitration proceeding of May 20th. The construction of the permanent casino was no longer in dispute. Remember, win, lose or draw at arbitration, the Sheraton was required to construct the permanent casino. That battle had already been lost by the Sheraton despite the alleged assurances of some honourable gentleman. To the contrary, the only substantive difference between an arbitrated solution and the May 20th terms of settlement were the immense concessions granted the Sheraton, which I was told was approximately $20 million.

Dr. Gillis' written acknowledgement of my resignation also contained some carefully chosen words to the effect that nothing said by Mr. Thompson or others was intended to be construed as conceding all outstanding issues. Why the carefully chosen verbiage? If Cabinet did not instruct it or if Mr. Thompson did not say it, why not simply say so?

That did not end matters for me. For a matter of several months thereafter, I continued to make inquiries of a variety of official and unofficial government and Liberal sources. I was having trouble accepting the fact that the Gaming Corporation was being ordered to approve the Boudreau deal without any legitimate explanation having been provided. I knew a $30 million concession to boost Bernie's campaign was no longer needed. I believed that construction would have commenced even sooner had Mr. Justice Stevenson

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been allowed to interpret the contract and define responsibilities back on May 20th. I knew job creation and the expenditure of $97 million was already in place and, with or without the arbitrator's support, we could publicly force the Sheraton's hand and get it moving on the much-needed capital construction project.

My gentle inquiries became so persistent and well known that it was suggested to me by a few individuals, not the least of whom was a very prominent and influential member of the Liberal Party, that I should stop my inquiries or I would be personally destroyed. Such threats to my reputation and my relationships simply made me more determined to find out what was the motivating force behind the deal.

You will have heard the recent professed ignorance of this whole issue by some members of Cabinet. However, simply as an example, on February 5, 1998, I had a two hour private luncheon at McKelvie's Restaurant with the Honourable Donald Downe. I am somewhat disappointed in the role which Minister Downe has taken these last few weeks in attacking my credibility, since he was well informed of my concerns during our lengthy, private luncheon. Minister Downe told me that he understood why Premier Savage had changed his position in order to help Bernie Boudreau, but he advised me he could not understand why Premier MacLellan had also done an about shift. Don Downe's response to me was not reassuring. He told me that he did not have any idea why Cabinet approved the Boudreau deal because it was never discussed in his presence at Cabinet or at the Planning and Priorities Committee. He then went on to note that, even if he had been present and did know the reason, he would be restrained from telling me in any event because of Cabinet confidentiality.

I then asked Minister Downe whether he could arrange for somebody to authorize release of the explanation I was seeking. His response was again troubling. He told me that he had already tried and "they" just say it is something that he, Don Downe, would not be interested in. Given his profile within the MacLellan Government, that explanation certainly did not diminish my suspicions or concerns.

I had a similar conversation with the honourable Guy Brown, who also told me that the matter had never been discussed in Cabinet in his presence and that, even if it had been, he would be unable to talk to me because of Cabinet confidentiality. It was virtually the same answer as I had received from Don Downe. I understood his position with respect to confidentiality but I remained troubled by his professed lack of awareness of what was supposed to have been decided at Cabinet.

I also had a similar conversation with the Honourable Edward Lorraine. For the third successive time, he as well told me that the matter had never been discussed in Cabinet in his presence. When I again asked if he could get somebody to authorize an explanation for me, his response was disturbingly similar to Mr. Downe's. Ed told me that "they" will not talk and that it has been given to David Thompson to look after.

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Those conversations, Mr. Chairman and members of the committee, are typical of the wall of silence that I have faced from a variety of sources. There is one other question I invite you to reflect on. What should be the true nature of Cabinet confidentiality? Was it designed to prevent Cabinet and its individual members from having to provide public justification for the decisions made by Cabinet? I think not. Once the decision has been made, there should be full public accountability, and perhaps even more accountability to the board of directors who are being ordered to carry out such a Cabinet directive. Instead, Cabinet confidentiality becomes yet another cloak to hide behind. That, as I understand it, is not the purpose of that long-standing parliamentary tradition.

When I last appeared before this committee, I chose my words carefully and left sufficient opening to permit the Government of Nova Scotia to explain itself to the people of Nova Scotia. I did not provide this type of detail, perhaps in the vain hope that a bona fide explanation existed and would be forthcoming. At the very least, I hoped government would agree to disagree with me, but perhaps hold out the olive branch of legislative reform to address the issues of the future integrity of the Gaming Corporation. Regrettably, that opportunity was not seized and instead the decision was made to deny any political interference and instead attack my credibility.

I fully appreciate the seriousness of the report I have given you this morning. I have not done so lightly or readily. I emphasize that which I said when I first appeared before you, that I have no evidence and make no allegation of criminal impropriety. That is not a matter for me to determine. Knowing the good people involved, I continue to hope there is some non-sinister explanation. At the very least, there appear to have been forces at work that caused two separate Premiers and two separate Cabinets to unnecessarily change direction and grant massive financial concessions which can be ill-afforded by the taxpayers of Nova Scotia, simply to achieve what the Gaming Corporation was about to achieve without concessions through arbitration and enforcement of its contractual rights.

The merits of the Boudreau deal. This forum is not the place to discuss the pros and cons of the Boudreau deal as reflected in the terms of settlement of May 20th. Frankly, for your purposes, it does not matter whether the deal costs the taxpayers of Nova Scotia $5 million or $20 million or $30 million. I can anticipate there will be all kinds of subterfuge thrown at you on that dollar figure or, as I heard, to my surprise, for the very first time from yesterday's press conference, that the deal actually made the province money - and $7 million at that. I can only say this. The only language ever used by any Gaming Corporation person between April and September 1997 was that with respect to the cost of our concessions, no one ever had the vivid imagination to suggest it might make us money. Of course, if it was making us money, why were we pushing for the permanent casino?

In fact, yesterday was the first barrage. I am not in a position to defend those figures since I no longer am granted access to the documents or the people who did the calculations. What is important is that the figures I have cited were the figures that everyone is relying on

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back at the relevant time when decisions were being made. I encourage you not to lose sight of that fact if others try to come before you and nit-pick the details or challenge my lack of specifics.

At some appropriate time, you may wish to interview the Director of Finance, Ms. Sheila Butler. She was our principal accountant and I relied on her heavily for all such calculations. I have not spoken to her since shortly after my resignation and I therefore do not know what her present intentions are or testimony will be. I can only begin to imagine the intense pressure she is under to adopt the type of pragmatic defensive posture adopted by Ms. Gordon. I can only tell you that I found Sheila Butler to be intensely protective of the best interests of the Gaming Corporation and the people of Nova Scotia. I am confident that she will be able to provide you the detail corroboration of much of the overview I have provided you.

As further corroboration, the minutes of August 19, 1997 make specific reference to concessions costing up to $27 million. As well, it is my understanding that such calculations did not attempt to include the less direct cost of such things as approving entire budgets, disputed rate of transactions and financial statements containing entries from the errors list. I also invite you to search out the minutes to find any reference of any staff person, board member or advisor who, between April and September 1997, described the matter as a good business deal, as Ms. Gordon has characterized it. To the contrary, at most, you will only find references to it being the best deal we can get.

Repeated justification has been provided by the MacLellan Government of its duty to break the gridlock of the differences between the Sheraton and the Gaming Corporation. What the government has failed to do is explain why it chose to bypass the very mechanism which both parties agreed to use to resolve such gridlock, that is commercial arbitration. I encourage you to explain the full exchange of correspondence between the Sheraton and the Gaming Corporation during this time period. I encourage you to obtain an independent legal opinion on the extreme interpretive arguments being advanced by the Sheraton. I think you will discover an extraordinary degree of smugness and arrogance that is not becoming to any corporation that expects to do business with a statutory body such as the Gaming Corporation.

Mr. Chairman, anyone can break a gridlock. That is easy. However, when a government decides to intervene and unilaterally break a gridlock with one-sided concessions, one should be entitled to expect that the forced concessions used to break the gridlock be calculated in such manner that the intransigent party not be rewarded for having intentionally created the gridlock in the first instance. As Dara Gordon indicated in the minutes I have described, if anything, our Gaming Corporation has already bent over backwards to try to make accommodations in the hope of developing a good working relationship with the Sheraton. We found out the hard way that such an approach merely invited more demands from the Sheraton. That is why we eventually concluded with the only way to break the

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gridlock, without providing massive and unreasonable concessions, was to refer the matter to arbitration.

I could spend further hours describing to you some of the examples of the extreme positions taken by the Sheraton. I could tell you had their left hand sign a lease with their right hand for use of the Sheraton Hotel and then they refused to provide a copy of that lease to the Gaming Corporation for several months, despite the fact that any such commitment required our advance approval. I could tell you about the multitude of items that were included on the errors list. I could tell you about alleged clerical errors or mistakes in accounting practices that would have, but for the vigilance of the Gaming Corporation's staff, resulted in losses of millions of dollars of revenue to the Government of Nova Scotia.

I could tell you about the Sheraton's reluctance to provide architectural drawings to its permanent casino, not because it feared giving such drawings to us for our review, but because it was smug in its view that incurring the actual costs of an architect would be wasteful in view of the assurances provided by some honourable gentleman, that they would not be forced to build a free-standing $97 million casino. And the list of the gridlock items goes on.

It was for this reason that our board of directors, with the full support of both Finance Ministers Boudreau and Gillis had decided that such issues should be placed before Mr. Justice Stevenson for resolution. Had that process been allowed to unfold without political interference, I suspect the construction of the permanent casino would have commenced earlier and more effectively than is now the case, whether we had won, lost or split the arbitration award. More important than the construction date, we would have had the arbitrator's directives as to how the Sheraton was to report and be accountable to the Gaming Corporation for the next 20 years.

As our board of directors had discussed so many times, despite the fact that our legal counsel gave us a 90 per cent probability of success before the intervention of the Premier's Office, winning or losing was secondary to us. Our real goal was to have an independent arbitrator interpret the contract documents and advise the Sheraton that it was required to follow the due process, which it had agreed to follow when it entered into its 20 year contract with the Province of Nova Scotia. Instead, Cabinet has now established the precedent that whenever the Sheraton dislikes something, it can disregard the Gaming Corporation and slip it through the back door of the Premier's Office, with the assistance of unidentified parties who are not subject to the intense security clearance checks required by anyone who does business with the Gaming Corporation.

I have already told you that there are less than a handful of Nova Scotians who have developed the expertise and first-hand experience to truly understand the broad policy issues and checks and balances that are required for the successful regulation of the gaming industry. It is something new to us in Nova Scotia. One of our advantages is the opportunity to learn

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from the mistakes of others. Part of my responsibility was to network with my counterparts across North America and beyond. Through that process of osmosis, I came to learn that one of the most effective safety nets is the unequivocal right to immediate and unannounced access to the books, records and property of the casino operator. This Legislature obviously was told the same lesson by the consultants retained to help in drafting its legislation.

Section 33 of the Gaming Control Act requires the Sheraton Group to make available to the Gaming Corporation, not the Gaming Commission, ". . . at all times all reports, accounts, records and other documents in respect to the operation of the casino . . .". What could be clearer, and yet the Sheraton Group got away with both its gag orders and its various refusals and delays in making available its records for our staff. That denial of access was not only a breach of the Act and the operating agreement, it was also in violation to one of the gaming industry's most unbreakable rules, that of immediate and unrestricted access.

What did government's breaking of the gridlock achieve? It wiped the slate clean and effectively condoned, without penalty, the obstructionist strategies of the Sheraton. What troubles me more, and should trouble you more, is what happens today or tomorrow? Where in the terms of settlement was there a binding commitment on the part of the Sheraton to never again issue a gag order or deny rightful access? We all know the answer. The Cabinet-imposed terms of settlement instead contained a further gag order that was so offensive to our Nova Scotian values that the Minister of Finance, after the fact, felt obliged to publicly distance himself from that provision, even though two successive Premiers and Cabinets had approved the package that contained the clause.

Ladies and gentlemen of the committee, when you hear that government intervened in order to break the gridlock, I invite you to pursue in further depth what was conceded and why the gridlock needed to be broken in such fashion. I also encourage you to requisition the many professional opinions that confirmed the course of action we were adopting was reasonable, appropriate and not micro-management. In anything and everything we did, we always ensured that we received the very best of professional advice, and up until the time such advice was being unduly influenced by subtle and not-so-subtle political pressures, I followed that advice faithfully.

One comment on yesterday's suggestion that there could be no bait-and-switch strategy because all seven proponents were required to provide an interim casino, that response is a classic red herring. It means nothing. What is relevant is whether the proponent, once successful, tried to wiggle out of that contractual agreement to move to a permanent and independent casino facility.

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[12:30 p.m.]

Public accountability and due process. Finally, I wish to respond publicly to those of my friends, former or present, who have expressed disappointment in my breach of the unwritten code of silence. I will not and cannot remain silent because of any political consequences that may shake out as a result of the matters I have described. That responsibility must rest with those who placed me in this predicament in the first place.

Others have described my resignation and subsequent testimony as political naivety. I am many things but not politically naive. However, I do not believe that setting limits to political expediency is the same as political naivety. I recognize that in both business and politics there is an expectation of discretion and confidentiality. I am certain that some of the discussions that I have described to you today were not intended by others to become a matter of public knowledge. I do not disclose them with any eagerness or sense of satisfaction. I understand very well that business and political leaders must have reasonable assurance that there are such things such as confidential conversations. However, I have wrestled with where one draws that line.

I drew it more gently in my first appearance before you. I provided sufficient information to put both this committee and the Government of Nova Scotia on notice that the taxpayers of Nova Scotia were entitled to an explanation that apparently the chairman of the Gaming Corporation was not. Unfortunately, some backroom advisors thought they could bluster and stonewall through this issue by ignoring the message and shooting the messenger, that was a mistake on their part.

When I was here last time, you will recall I talked in general terms about the history of the gaming industry in North America and the hazards that await any jurisdiction which enters into it without clearly defined parameters and statutory protections. You are all aware of the extraordinary security clearances and detailed financial disclosures that any of us connected to the Gaming Corporation must provide to the RCMP and others as we make decisions with respect to how the gaming industry will be managed and controlled in this province. Those detailed security clearances and intimate disclosure of one's personal affairs are not required of Cabinet Ministers or other alleged honourable gentlemen. That is not acceptable.

The circumstances that I have described highlight that need for legislative reform. Decisions regarding gaming cannot be made in the back rooms of any office. If politicians wish to interfere, which is their right, then first ensure that their decision-making process is fully disclosed and transparent and that those who exercise such intervention are subjected to the same high-level RCMP security checks as required by Gaming Corporation staff.

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It was the denials and refusals to account and explain that caused me to cross the line and describe in fuller detail the particulars of the concerns that I had accumulated during my tenure. I have always recognized that governance is a difficult issue and that politics involves compromise and the art of the possible. Regrettably in this instance, absent any other reasonable explanation forthcoming from the government, I concluded that public accountability required me to provide the details that I have given to you this morning.

Once again, let me repeat, all we have at this stage is an absence of any fulsome explanation. We cannot assume there is not one. Despite what I have been put through, there is still within me the fervent hope that there is some reasonable and non-sinister explanation to all of this. Our province does not need another crisis or embarrassment but one thing is clear at this point in time, that bona fide explanation has yet to be provided. Perhaps, just perhaps, there is an acceptable justification that could have and should have been made available to our board of directors from the very beginning, both by the Savage Government in May 1997 and by the MacLellan Government in September 1997.

That said, those who may now offer such explanations should understand that, given their mysterious silence to date, the people of Nova Scotia are entitled to expect something more than bland and uncorroborated reassurances.

One final comment, Mr. Chairman. I recognize as well that I have raised at least as many questions as I have answered. There are individuals who have been named who, if we are not careful, will be tarred with adverse inferences for no other reason than that they were doing their job. In my opinion. that has already occurred in a few instances. Simply by way of example, I refer to solicitor Robbie MacKeigan, who I have every reason to believe is a lawyer of integrity and was simply endeavouring to do the job that was assigned to him by his client, the Premier's Office. That will undoubtedly be the case with others who have been named or will be named as matters unfold. I urge you to give very serious consideration to the proper forum in which your inquiries should be made.

I have asked that I be sworn today so that the seriousness of my testimony may be highlighted. There are legal consequences to providing false sworn testimony. I am hopeful you will ask any further witnesses to meet that standard. Some of the incidents I have described, of necessity, will boil down to a matter of my word against the word of another. I must assume that everyone who gives sworn testimony will tell the truth. If there are denials and significant inconsistencies, that may be determinative of the depth of the investigation that will be required.

It is not for me to recommend what the appropriate forum is, other than to observe that I do not for one moment suggest this province needs another lengthy and costly Marshall Inquiry or Westray Inquiry. This is not an issue that should take months or years or dozens of lawyers to resolve. It is important that we all keep this issue in perspective and not allow the extraordinary political sensitivity that exists as a result of the current minority government

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to exaggerate serious issues and trample upon the legal rights and reputations of those involved.

This committee has a serious responsibility. It has the power and authority to bring public scrutiny to issues that the public is entitled to scrutinize. But identifying an issue and resolving an issue are two separate matters. You will have to decide whether this committee has the resources and the built-in procedural fairness to ensure that it gets the fulsome answers to which it is entitled in a manner that respects due process and the reputations of those who have done their jobs and served the province well.

Given the denials now on record, it is my earnest hope that you will get to the bottom of this matter quickly and find out why and how, and by whom, the decisions were made. As is sometimes the case in this type of situation, it may involve layers of influence below direct and unwitting participants. Until that investigation is complete, I hope we can all stick to the facts as we know them without any premature judgement. I have tried to provide you a fair balance between the facts as I know them and the road map as I perceive it. I hope I have done so fairly.

With those comments I am open to answer any inquiries the committee may wish to make of me with respect to the matters I have described. Alternatively, given the length and the detail of my remarks, if the committee would prefer to adjourn and reflect upon my testimony, then I can make myself available at some future date when the committee has had an opportunity to digest and reflect on what I have said. Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Fiske. Before we turn to the matter of asking questions, I would like to raise with the committee, given the amount of time it took to hear this statement and our 10 or 15 minute break, how the committee wishes to proceed? I heard some suggestion earlier today that it might be useful if we extended our hearings today, but that certainly was not pursued, that is discussion of that point was not pursued. I raise it now. If we are not going to extend our proceedings today, then we only have 22 minutes left for questions today. I am going to start with Mr. Dexter. Mr. MacKinnon, on a point of order.

MR. MACKINNON: Yes, I am sure I speak for our caucus when we would respectfully submit we would entertain staying here as long as required to ask whatever questions need to be asked of this particular witness. We would stay an hour or we will stay three hours. It is of little consequence to us. We have all our questions and we have them ready.

MR. CHAIRMAN: All right, that is one suggestion. Mr. Dexter.

MR. DARRELL DEXTER: I agree with that actually and the only thing that I would say is that perhaps it might be appropriate at this time to take a break for 45 minutes because I think the questioning is going to be long as well. That would be my suggestion.

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MR. CHAIRMAN: All right. Mr. Leefe, did you have any comments?

MR. LEEFE: I have a personal problem in that I have made another appointment for 1:30 p.m., but clearly if it is the will of the committee to stay for some period of time, that will be done. Our members are prepared to take one-third of whatever time is available. We have agreed that Mr. Fage will be the spokesperson for us in order to expedite the process, understanding that time is of the essence. So however much time you provide, Mr. Chairman, we will take one-third and Mr. Fage will speak for us.

MR. CHAIRMAN: I hear a general willingness to spend a good portion of the rest of the day, if necessary, asking questions. It gives everyone a fair opportunity to do that. In that case, I raise the question of whether anyone needs a break. I heard five minutes but there is also the question of a lunch break, I guess, although we do not want to extend that. You do not want a lunch break. All right, originally we had planned to go until 1:00 p.m. in any event. My suggestion is we do this, that we go until 1:00 p.m., break for half an hour, and then continue. I think that is the best thing we can do. So let us start off, Mr. Dexter, do you want to start asking questions?

MR. DEXTER: I am not sure what time allotment. Do we have 20 minutes?

MR. CHAIRMAN: You have 20 minutes for now and I propose to go to individuals in 20 minute allotments. That should give us a fair bit of time to go through the material.

MR. DEXTER: And we can split these up between . . .

MR. CHAIRMAN: If you want to now.

MR. LEEFE: Mr. Chairman, with respect to procedure, for today's purposes, I think we have to come to some time of closure. We can't simply sit here and ask questions until everybody, out of exhaustion, decides it is time to go home. My preference - and I don't know that this is the view of my colleagues - would be that we take a reasonable amount of time for each of the three caucuses to raise questions this afternoon and when that time is expired that we do adjourn and if there are still questions which members wish to raise, that at a future date we accept the offer of Mr. Fiske to make himself available to us again.

MR. CHAIRMAN: And my suggestion that we take a half hour break for lunch, any problem with that? Mr. Fage.

MR. FAGE: Would it be acceptable, then, if each Party or caucus went for 10 minutes at this point, we take our break for lunch and then reconvene?

MR. CHAIRMAN: That sounds all right to me. Is there any problem? Mr. Samson.

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MR. SAMSON: Is there any limitation to the questioning?

MR. CHAIRMAN: Limitation as?

MR. SAMSON: As in time limit.

MR. CHAIRMAN: Well, for now we are going to do 10 minutes each to go through the next 20 minutes. I was suggesting that we go in 20 minute groupings when we get back. (Interruption) I think there will be ample time.

The question was raised about finally breaking today. That is a good point. If we do take the half hour, my suggestion is, we will be back at 1:30 p.m. to commence again. If we agree to break at 4:00 p.m. or 4:30 p.m. for the day, that, I think, should get us through a lot of questioning and, if necessary, we can return to it another day. I would think that should get us through a lot of time with ample time for questioning.

All right, let's start. Mr. Dexter, 10 minutes and then Mr. Fage, 10 minutes.

MR. DEXTER: Mr. Chairman, at the very beginning of this today, you talked about the briefing of the Gaming Commission and you were very diplomatic in saying that it was carefully timed, I think were your words. I am not nearly so inclined to soft-pedal that. It appeared to me that yesterday's briefing by the Gaming Corporation was contrived, it was manipulative, it was duplicitous and it was a very cynical attempt to get out partial pieces of a story in order to present an alternative view. I am not asking you to comment on that, I am just saying that that is the way it appeared and, in fact, it was more designed to generate a headline in today's paper, knowing that this thing was being undertaken.

I take it, because you have referred to it repeatedly, that you have had an opportunity to go through and look at the comments that were made by Dara Gordon over that two and one-half hour press conference?

MR. FISKE: Mr. Dexter, as I said earlier, I have only skimmed that document. I did make some comments this morning in that regard but I have in no way studied it to the extent that I would wish to do so. So I wouldn't go any further than that. I well understand Dara Gordon when she says that they are having difficulty and I would gather she is blaming me. I think one should bear in mind that the difficulty she is going through is her own and it is this government's responsibility. That is why she is having difficulty operating. I went through it month after month and it won't change until the person operating that organization is unencumbered by direction from outside.

MR. DEXTER: I am going to refer to this, and maybe you have seen this as well. The comments of Ms. Gordon, when she talked about the Gaming Corporation, she used a specific description of what she considered the role of the corporation was, and I don't want

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to go into this too far along that line. They keep talking about or keep presenting the idea that you somehow didn't understand your role or the role of the corporation. That seems to be kind of part of the political spin that keeps coming out of those people involved, either with the government or with the Gaming Corporation. This was somehow just a matter of misunderstanding.

Yesterday, Ms. Gordon described the corporation as autonomous as opposed to being independent. Now, I am not aware of a difference between something that is an autonomous body and something that is an independent body. In fact, my understanding of that word is that autonomous is usually a stronger word than independent. We talk about an autonomous judiciary and we talk about the need to be autonomous for bodies that are in a regulatory position.

I am wondering if there was some kind of nuance with that language that is internal to the Gaming Corporation which made something autonomous as opposed to being independent, and whether we are supposed to believe that that means something different than it would appear on its plain face?

MR. FISKE: Mr. Dexter, that word autonomous was used by Ms. Gordon in her testimony in this committee. I asked a solicitor what was the meaning of the word, the same as yourself. I am not a lawyer so you would have a better understanding what the full meaning of that word is better than I. I can tell you that there is a need here for this organization to be more independent than it is.

MR. DEXTER: I guess my question was more around whether or not there was something that we were not aware of, something that was internal to the Gaming Corporation that gave that word some nuance or some definition that was different than the usual definition.

MR. FISKE: I don't know as I can answer your question because I don't know what the definition of that is. I can tell you that Ed Harris was very clear in what the duties of the corporation were, as well as other individuals. We attempted always to follow that direction and we did so with the full unanimous support of the board.

MR. DEXTER: I guess, sadly, much like yourself, I was presented with this three inch ring binder yesterday at three o'clock in the afternoon and spent a good deal of my evening last night reviewing it, and there are a number of detailed positions that almost appear to be, there are letters of opinions and recounting of instances put together by Carl Holm, setting out the details or his recollections of meetings. I found one particular instance, and I know we don't have much time, to be both disturbing and in some ways difficult to understand. They talk about the role of Mr. Merrick and it seems that right up until the time of the meeting of May 20th, that Mr. Merrick is fairly firm in his opinion with respect to the probability of success at arbitration.

[Page 53]

Then one of the things that is mentioned is that in providing advice to the corporation, this is from Mr. [Carl] Holm's letter, he says that it was conceivable that an arbitrator could find that the Sheraton had been misled by press releases, other communications and the fact that the corporation was continuing to consider the alternate proposal as late as January 1997.

You had a lot of time to deal with the Sheraton and their interests. Do you think it is possible that the Sheraton could have been misled by things like press releases and those kinds of communications?

MR. FISKE: No, I think that that is a good example. It is one item that they would not be impressed with nor would follow in any way, shape or form. I think the wrong item has been chosen to expect them to accept as the gospel.

MR. DEXTER: In fact, the construction contract itself provides in a section that says that no changes to the construction contract can be made unless they are made properly in writing, signed by the parties, acknowledged in a proper legal form. Isn't that a proper understanding of that?

MR. FISKE: Mr. Dexter, you would find dozens upon dozens of letters from me and other officials in the corporation where we reminded the Sheraton often that in no way were we letting them off the commitment that they made in the original agreement to build a permanent casino, to build it on a certain date and have it completed and operating and so on and so forth. We reminded them constantly of that so there is no way that they can misinterpret anything of that nature.


MR. FAGE: Mr. Chairman, I want to thank Mr. Fiske on behalf of our caucus for reappearing today. Certainly I think it is important testifying under oath. With the circumstances that are presented in front of us, it is an extremely prudent move.

The basic question, after hearing testimony today that I would like to propose to start with is, this deal, when you look at the relationship between the Sheraton, the Province of Nova Scotia, the Gaming Corporation and Cabinet's involvement and the involvement of the Premier's Office, was this deal with Sheraton or for Sheraton? I think that is an important question to ask, in your opinion, because when you look at the terms with concessions, you look at a deal at any cost. It begs that question specifically for the value of taxpayers in Nova Scotia and the role of the Gaming Corporation and the role of the Cabinet. Was that deal, when it was ultimately signed, with Sheraton or was the deal and concessions negotiated for Sheraton?

[Page 54]

MR. FISKE: If you are asking whether the deal that was made favoured of the Sheraton, there is no question that it favoured the Sheraton in a very substantial fashion. Contrary to what Ms. Gordon has said, that it is now was very profitable by some $7 million. Well, if that is the case, let's delay it for 10 years or 15 years because we will make a lot of money. It doesn't jibe.

MR. FAGE: In that regard, the massive concessions it says in one statement, that is why we eventually concluded that was the only way to break the gridlock without providing massive and unreasonable concessions. What were some of those massive, unreasonable concessions?

MR. FISKE: That were made to the Sheraton?

MR. FAGE: Yes, that they were demanding and then subsequently were granted to them.

MR. FISKE: They were allowed to delay the construction of the facility. They were allowed to dispense with the commitment to pay penalties for late construction. They were allowed to have a long list of items just simply written off - a list of items that I do not have with me but they are available. I think if you examine the terms of settlement, the minutes of settlement that were approved by Cabinet, that that in itself would give you a list of those items but they would be substantial. Some of them don't have dollar values attached to them at this stage but they could be immense down the road.

MR. FAGE: In terms of some of those concessions, would you have examples? Were they involved in irregularities of accounting for monies, how they were being expended or accounted for between the hotel operation and the casino? Would some of those be the type of concessions?

MR. FISKE: It means there was a list of a number of items of that nature that, as I understand, have been totally dispensed with, totally written off, yes. There was also, at the time of my leaving, another list in addition to that that was not part of that minutes of settlement. So whether that still exists or not, I don't know.

MR. FAGE: It appears highly irregular when a negotiated or signed contract, which the corporation did have, with the Sheraton to build the casino laid out all the terms right down to arbitration if you couldn't decide that Cabinet would override your negotiation and arbitration process. During that arbitration process and that meeting you described with Bob MacKay, which had Mr. Merrick take over the negotiations, what was the role of the commission, or the thoughts of the corporation at that time specifically? It seemed that you were charged with doing that negotiation. This did not appear to be a transparent approval by Cabinet. It seemed to be them directly taking the lead in the negotiation.

[Page 55]

MR. FISKE: If I understand your question, no question that I was on the outside looking in for a large portion of that time and all brought about by the fact that the Sheraton has, obviously, lobbied the government for this compromise and rather than the government turning them around immediately and say you go talk with the Gaming Corporation, which is where you should be, they did not. They sat and they talked and they decided to direct the corporation to do their bidding for them.

MR. FAGE: In that regard, when you move forward in time and I read the response of the present Minister of Finance in your meeting when I review and was present in the House when the Premier responded and the Minister of Finance said that there was no interference by Cabinet. It was supposedly an open and transparent process. In your view that transparency certainly did not seem to transfer to Nova Scotians. The disclosures today highlight that there are still points. What was the overriding factor that Sheraton did not want to build a $97 million casino on the time line? What was the advantage for them to have those concessions all erased and a different time line for that casino?

MR. FISKE: I think that they had gone over a period of several months, maybe a year or more, with the thought that they have got it made. They did not have to build the $97 million development, that they had a commitment from some honourable gentleman that they did not have to do that and, therefore, it was a farce that we were going through in looking at alternatives and this sort of thing and when they felt, and if you examine the proposals that they made for alternate developments, I mean they were proposals that Mr. Thomas himself apologized for because they were the most amateurish sorts of proposals that one could ever imagine and coming from an organization like the Sheraton, it was not very becoming to their supposed expertise.

MR. FAGE: In that regard then, one, I suppose, should not speculate too much, but when you look at the government's and the Cabinet's motive, would one possible explanation be that a $97 million casino needed to be built regardless of whether the interests of the taxpayers of Nova Scotia were protected or not? Could that be one possible answer that the mandate of the day was to build a casino at any concessional rate?

MR. FISKE: I would not want to speculate on that.

MR. CHAIRMAN: This is a convenient point to take our break. It is just coming up 1:00 p.m. We will stand adjourned for one-half hour. Thank you very much.

[1:00 p.m. The committee recessed.]

[Page 56]

[1:40 p.m. The committee reconvened.]

MR. CHAIRMAN: Thank you very much. We will now reconvene our session for the afternoon. I think we will probably have ample time for people to ask questions. I have had some representations made to me by several members of the committee to the effect that they don't propose to be lengthy in the questions that they have to ask. The result may be that we will be out of here maybe in an hour and one-half or two hours; that is certainly my hope.

Before we invite Mr. MacKinnon to ask any questions that he has, I would like to make some comments in amplification of the point that he raised earlier, which is the question of the production of documents that are quoted from during testimony by a witness in front of the committee. It was suggested that there was a rule of the House that any documents quoted from be tabled. In fact, there is no such rule, and certainly there is no such rule for a committee, and in making the comments I made earlier, I made them in part out of my own knowledge and in part in consultation with the Legislative Counsel. I would like to just speak a little bit more about this.

It is clear that in the House, that where there is no rule that the Speaker is guided by the usages and precedents of the House. On the other hand, to the extent that usages and precedents with respect to the tabling of documents quoted from has been a tradition of the Legislature, it is one that applies to members of the Legislature of course. The original English rule upon which it is based is one that applies even more narrowly just to Cabinet Ministers, but it has been the usage of the Legislature in Nova Scotia that it applies to all members when they are speaking. Whether it actually applies to witnesses when they are appearing before a committee seems to be quite open.

On the other hand, it certainly is the case that it is desirable from the point of view of the credibility of the witness, and in terms of advancing the ability of the committee to do its job if documents are tabled when they are quoted from or certainly, at the end of the statement. In any event, although that isn't a rule, it is within the powers of the committee to require the production of documents, and certainly I think this witness has to take the direction of this committee that documents that have been quoted from are to be tabled and as I said earlier, we do have the undertaking of legal counsel that they will be provided.

I should say that we might consider making it part of our standard instructions to witnesses in advance of them appearing before the committee that they might be advised that if they are going to be quoting from documents, that they should bring them with them and be prepared to table them at the time. Anyway that taken care of, I would ask Mr. MacKinnon if he would like to lead off, or if there is some other member of the Liberal Party who has questions.

MR. MACKINNON: Through you, Mr. Chairman, Mr. Fiske, how much were you paid when you were Chairman of the Gaming Corporation?

[Page 57]

MR. FISKE: I received $102,000 minus the 3 per cent employee deduction, whatever, or reduction in wage, whatever that was. So it was $99,000 and something.

MR. MACKINNON: I am looking at Page 52 of your presentation under Section 7, Public Accountability and Due Process. In last sentence of that paragraph, "That responsibility must rest with those who placed me in this predicament in the first instance.". The question I ask Mr. Fiske is, did you voluntarily sign an oath of secrecy, or were you under duress?

MR. FISKE: It was called for, and I signed it.

MR. MACKINNON: Voluntarily?


MR. MACKINNON: Did you at any point in time ever lobby for this position?

MR. FISKE: No, I did not.

MR. MACKINNON: You didn't speak to any member of the Savage Government?

MR. FISKE: No, I did not.

MR. MACKINNON: You did not lobby any Cabinet Minister?

MR. FISKE: No, I did not.

MR. MACKINNON: You never raised the issue with Cabinet Ministers prior to . . .

MR. FISKE: No, I did not. Premier Savage approached me about assuming the job, and it would be several weeks, if not months, prior to actually starting the job. It is possible that I would have mentioned it to one of the ministers.

MR. MACKINNON: Just one?

MR. FISKE: I do not recall, Mr. MacKinnon, I really do not and if you have knowledge of that, you could help me. I do not recall, but I did not lobby, as you refer to it, in any way, shape or form.

MR. MACKINNON: I am going to go one step further. I am going to refer to a letter, November 27, 1995. I will table it, Mr. Chairman. It is addressed to Mr. Ralph F. Fiske, Chairman of the Nova Scotia Gaming Corporation, with regard to a request, I believe, you made of Mr. Spurr as to the opinion respecting the role and responsibility of the Board of

[Page 58]

Directors of the Nova Scotia Gaming Corporation. I understand that Mr. Spurr's opinion was that, and I quote from the last paragraph, an excerpt, "In particular, the Board of Directors of the Corporation should be under no illusion that it operates independently and to the exclusion of a general supervisory power of the Minister responsible for Part I of the Act, . . .".

Mr. Fiske, my impression from your initial presentation, and to a lesser degree but still to some extent today's lengthy oratory, is you felt that the Gaming Corporation should have been at arm's length to the government. Obviously, you were given legal counsel, legal opinion to that, contrary to what you have stated. My understanding as well is that you had been given legal opinion subsequent to this particular opinion. Why would you see fit to continue to hold out the position that the Gaming Corporation was independent or should have been independent of the government when you knew both legislatively and by your own request legally that that was not the case?

MR. FISKE: Mr. MacKinnon, if I could see the letter and have an opportunity to read it, maybe we could respond, not at this moment maybe, but later in the day possibly.

MR. MACKINNON: I guess my next question is you have indicated that you have documents that you have quoted from. You are a private citizen. They are documents, obviously, that were in reference to your position as Chairman of the Gaming Corporation. Why would you see fit to take confidential documents with you after you left the Nova Scotia Gaming Corporation?

MR. CHAIRMAN: I would at this point caution the witness that the witness is not under any obligation to answer any question which might tend to incriminate him.

MR. MACKINNON: He is under oath.

MR. CHAIRMAN: Excuse me, being under oath is quite a different matter than . . .

MR. MACKINNON: And he is under the immunity of the House.

MR. CHAIRMAN: The extent of the immunity is not clear. I wonder if the witness is asking for the protection of the Canada Evidence Act. Do you seek the protection of the Canada Evidence Act? I offer it.

MR. FISKE: Yes, Mr. Chairman.

MR. CHAIRMAN: Granted.

MR. FISKE: Thank you.

[Page 59]

MR. CHAIRMAN: Please answer as you are obliged to answer the question. Mr. MacKinnon is quite right in that context.

MR. FISKE: Mr. MacKinnon, I, as a director of the corporation, similar to every other director, had copies of the minutes. I have those documents and there are a few other documents that I do have, but I do not have anything substantial in any way.

MR. MACKINNON: Mr. Chairman, I would like to remind the honourable individual that he quoted from a memorandum, it was not minutes of a meeting. It was a memorandum of agreement that the individual quoted from and that was my initial request. That is a little different and I guess my question is, do you think it is appropriate that a private individual should have in his or her possession such documents given the relationship of your position?

MR. FISKE: I made the decision that that was one document that I was going to retain a copy of.

MR. MACKINNON: Just one?

MR. FISKE: Whether that was right or wrong, I do not know, Mr. MacKinnon. I confess that I do have it.

MR. MACKINNON: Do you have any other documents?

MR. FISKE: It was probably one of the best judgements that I made, let alone all of the hundreds and hundreds of other documents, that was a decision that was very prudent on my part to have made as circumstances are now showing.

MR. MACKINNON: Do you have any other documents?

MR. FISKE: I have . . .

MR. MACINTOSH: Mr. Chairman, if I may. The witness has already requested, given the nature of how the evidence has unfolded in this issue that he be extended the courtesy, any document that he has is already in the possession of the Gaming Corporation and he is certainly prepared to abide by any direction of this committee, but he has already requested of this committee that it first seek from the source, from the party who has the originals of those documents, production rather than letting them know what Mr. Fiske has. I think there are obviously very practical reasons for making that request.

MR. MACKINNON: Well, Mr. Chairman, with all due . . .

[Page 60]

MR. CHAIRMAN: Just a moment. In fact, we have requested the Gaming Corporation to supply us with documents and the response from that, I suppose an indirect response, is the binder that was released publicly and to this committee yesterday and we will go through that. At this point, however, although it doesn't seem penetrating in terms of helping us understand the witness's evidence, the question has been asked and I think the witness is bound to answer. Again, I extend the protection of the Canada Evidence Act for the answer. The question was, do you have any other documents? Please answer. The answer was yes, you do. Please continue.

MR. MACKINNON: What are those documents?

MR. FISKE: As counsel has just said, they are not prepared.

MR. MACKINNON: Maybe I will clarify for the benefit of all in attendance here. We have a private individual who has brought forth this entire issue on his own volition and made reference to certain pieces of evidence. If I want to go look for evidence in Point a, b or c, I will do that, but this individual brought the evidence to us and made reference to it. So I would submit that we have a private individual who has confidential documents of the Gaming Corporation which he had come to and with the benefit of the immunity of this House or any other immunities and made some rather wide brush remarks imputing questions to people's integrity and character from this lengthy presentation this morning, I believe in all fairness the individual should state what evidence because he is the individual who brought this concern to the Public Accounts Committee and should present the evidence if he has it.

MR. CHAIRMAN: I will hear Mr. MacIntosh and then I have an observation. Go ahead.

MR. MACINTOSH: Thank you, Mr. Chairman. The committee will recall that none of those documents were referred to by Mr. Fiske in his first presentation to this House, it was only following the Premier's and the government's announcement that there was no such thing as confidential documents with respect to this matter that anything and everything relevant to this issue would be produced and based upon the assurances we were given and the opinions of the legislative counsel of this committee, as to issues of confidentiality, that Mr. Fiske concluded that it was appropriate to refer to them. There are no such things as confidential documents because they have already been undertaken to be produced.

MR. CHAIRMAN: I think the direction of the committee has to be as follows. It is certainly the case that in his original statement Mr. Fiske did say that the documentary details of what it is he raised with the committee would, of course, be in the hands of the Gaming Corporation. He is quite correct and therefore on that basis I wrote, as Chairman of the committee, to the Gaming Corporation inviting them to provide us with whatever documents they thought were relevant to the matters Mr. Fiske had raised. We have had a partial and indirect response from the Gaming Corporation and we are waiting to hear.

[Page 61]

Now, this committee has a legitimate function. The legitimate function is the oversight of the handling of government money and how those functions were performed. It is not the function of this committee to perform anything that amounts to discovery that would relate to a private lawsuit. So although I think it is entirely appropriate, as I ruled earlier, that there be production by the witness of any documents from which he quotes, if he has those documents, and although he was quite appropriately required to answer whether he had additional documents in his possession, I think there is a line to be drawn and I think it is not necessary to continue to inquire in a lot of detail as to what he has and he does not have. He has agreed that he does have additional documents. To the extent that he has quoted from documents, those are to be produced.

I think it is correct that the Gaming Corporation is the correct entity to put before us any documents that they think are relevant. The minister put it on the basis of his desiring to be able to look at materials that might be relevant. It seems to me that is entirely legitimate but all documents would be in the hands of the Gaming Corporation and we have requested the Gaming Corporation to bring them before us. I don't see that we can go beyond that.

So you have had an answer to your question and I think we should proceed.

Monsieur Samson.

MR. SAMSON: Mr. Chairman, we have before us today a former employee of this province who was paid a very considerable sum of money and had a very important position over the Public Accounts of this province, at least a section of it. This witness has already testified before us today that he had signed an oath of confidentiality as part of his employment. Today he has just admitted before us that before leaving employment he brought some documents with him, for example, the memorandum of law, which he now states he is very happy that that was one document he did bring with him when he left. There is a serious question here as a Public Accounts Committee to know what sort of documentation does this witness have in his possession that deals with confidential matters dealing with the Public Accounts of this province. I don't think in any way should we be limited and to ask that this honourable witness table before this committee every document he has in his possession so that we know exactly what documents he took with him before he left. He was an employee of this province, we were his employer and he signed a contract with us, we should therefore have every right as this committee to ask that he submit to us every documentation he has dealing with the private confidential affairs of the Gaming Corporation of Nova Scotia.

MR. CHAIRMAN: Several points, one is, I don't believe the witness actually said that he deliberately took documents away.

MR. SAMSON: Oh he did. Check, he said, I took it with me and I am very happy I took it with me. He said that.

[Page 62]

MR. CHAIRMAN: Took or had in his possession might be a different question. In any event, that is a matter for interpretation, we will look at the record or he can answer it himself.

In any event, it is not our function to attempt to conduct an investigation I think along that line nor is it clear that in any event this would amount to any kind of breach of an oath of office. So I don't see that we are in a problem with respect to that.

I see other members of the committee who want to comment on this. It is using a lot of the examination time. I think Mr. Fage you had your hand up first, did you have a point you wanted to make on this? No. All right, Mr. LeBlanc.

MR. NEIL LEBLANC: Mr. Chairman, we could argue this question all afternoon. I am here to hear what Mr. Fiske has to say and I want to ask some questions. If the government is concerned with this regard they can do this subsequent to the meeting. He has been here for over three and one-half hours or whatever and I would like to get a few questions in and I suppose subsequently if they want to discuss this they can but the time is going by and I want to continue with the hearing.

MR. DEXTER: I am not sure if it is lost on my colleagues that the important function that waiting until the Gaming Corporation . . .

MR. CHAIRMAN: You are speaking to the point that was raised?

MR. DEXTER: Yes. Waiting for the Gaming Corporation to produce their records, this function, what Mr. Fiske may or may not have in his possession provides an important measure of the veracity of the Gaming Corporation in their actual delivery of documents. So I guess that may be lost on them for some reason. That's my only point.

MR. CHAIRMAN: This leads us I think where we are back with Mr. MacKinnon asking questions. Please continue.

MR. MACKINNON: Mr. Chairman, my question to Mr. Fiske is, what would the consequence be had the government or the Gaming Corporation or whoever gone to arbitration with the Sheraton and lost? What would the consequence be?

MR. FISKE: Well, it would depend on what you mean by lost, Mr. MacKinnon.

[2:00 p.m.]

MR. MACKINNON: The loss that the arbitration (Interruption) that you referred to.

MR. FISKE: Well, the loss that it would never be built or something?

[Page 63]


MR. FISKE: No, that wasn't the subject of the arbitration at all.

MR. LEBLANC: Mr. Chairman, I'm questioning why the Liberals are still asking questions, and I am not trying to be small-minded in this. However, they have had more than their 10 minutes. We only had 10 minutes and the process was to go back to the NDP at this time and then to ourselves.

MR. CHAIRMAN: I think the original intent was to allow 20 minutes per person and I think the request of the committee members, when we found ourselves at 12:40 p.m., was to split that. I'm certainly prepared to go back and give the extra 10 minutes to those, but the original intent was to go in 20 minute groupings. So, Mr. MacKinnon is still on.

MR. MACKINNON: Does he want to answer that question?

MR. CHAIRMAN: I thought he did answer it.

MR. FISKE: I did answer, Mr. MacKinnon. You mean what were the results of the arbitration?

MR. MACKINNON: Yes. Well, let's focus around the same issue again. You made reference on a previous day to the fact that the government lost $20 million. I have been trying to figure out in my mind, you know, the taxpayers lose $20 million, I didn't see anything in Public Accounts that $20 million of the taxpayers' money was taken out of the Department of Finance or the Department of Fisheries or any other department. It was a penalty thing that the government made a policy decision to forgo. That is really the reality of it. Am I correct on that?

MR. FISKE: No, it's not just a penalty. The penalty per annum the first year was $3.65 million. So, I mean that was only a portion of the possibility. It's $10,000 per day the first year of delay from an original date that had been established, and it's $15,000 per day from the beginning of the second year if delayed.

MR. MACKINNON: But even at that, that would take between five and six years to come up with $20 million.

MR. FISKE: No, and again, I say that was only part of it. Let me remind you that the figures that I was relating to were figures that came from the corporation. I didn't generate those just out of the air, Mr. MacKinnon. Those were the figures at the time. When I left the employ of the corporation, those were the figures that were projected by the corporation as to the costs.

[Page 64]

MR. MACKINNON: So, you don't have any documentation to substantiate that? That is just your recollection.

MR. FISKE: That is exactly, sure.

MR. MACKINNON: Did you not provide a number of extensions to Sheraton through this process?

MR. FISKE: One extension.

MR. MACKINNON: Just one?

MR. FISKE: Just one.


MR. FISKE: Not two, one, which was the one that Bernie Boudreau announced in November 1995.

MR. CHAIRMAN: Did you have another question, Mr. MacKinnon?


MR. CHAIRMAN: I am certainly going to come back to you.

MR. MACKINNON: I think the honourable member has basically summarized his position. He has come in and he has made his presentation here. Quite frankly, I believe that there are a lot of things that impute motive and question people's integrity. I have seen no evidence outside of your presentation, what you have in here. It is easy to come in and say whatever you want to say under the immunity of the House. I would respectfully submit that for some of the things that are in this here, I would certainly invite the honourable witness to say the same things outside the immunity of the House and then we will deal with them accordingly.

MR. LEEFE: Mr. Chairman, on a point of order. The whole point in having meetings held in this committee is to ensure that those who come before us as witnesses are able to tell the entire truth, that they do not have to worry about the possibility of facing legal action outside this committee. It is exactly the same level of protection that is provided any member of the Legislature including Mr. MacKinnon. Each and every one of us has exercised that from time to time. I think it would be very unfortunate if anyone on this committee were to try to badger a witness into making a statement outside this Chamber or trying to undercut what they have said under oath as a consequence of that.

[Page 65]

MR. CHAIRMAN: Perhaps I can clarify the nature of the immunity as I understand it. It's an immunity from a lawsuit based on defamation. On the other hand, a sworn witness I do not believe, is immune from a prosecution for perjury and that should be clear in everyone's mind.

MR. LEEFE: Of course, and hence the reason for swearing.

MR. CHAIRMAN: Well, indeed. Now, let's go back to Mr. Dexter for 10 minutes and then, I believe back over to Mr. Fage for 10 minutes or whichever other member of his caucus he wishes to defer to.

MR. DEXTER: I just wanted to actually pursue something that Mr. MacKinnon had raised and that was the whole question of the loss of taxpayers' money. You indicated that the penalty provision was one aspect of the calculation that led to what you now believe to be something in the order of $20 million and, at the time, your understanding, based on the work of the senior financial people within the corporation was the result of these concessions was going to be $27 million to $30 million. Is that a correct re-statement?

MR. FISKE: That is correct, Mr. Dexter.

MR. DEXTER: Do we know what the other elements are of that $20 million loss?

MR. FISKE: There were several. The major one would have to do with the four year guarantee period, the application of repayment of the costs of the development over a period of seven years, the financing costs, the interest costs, the forgiving of the penalties. There was some figure in for that. There was some estimate of the increased profits that the Sheraton would receive from the period of May 1998, when the temporary casino is paid in full, the capital cost is paid in full and therefore that doesn't have to be serviced anymore, which is $8,000 or $10,000 per year. So when you add all of those up . . .

MR. DEXTER: You said $8,000 or $10,000 per year?

MR. FISKE: Yes, $8,000 or $10,000 per year to amortize the original temporary casino which was amortized over three years. So if you add all those up, then that is how that figure would have been arrived at. As to the specifics, I do not recall, Mr. Dexter. I just remember the global figures.

MR. DEXTER: There was an analysis piece done today in The Daily News which referred to the amortization. If you move the amortization back so that the repayment comes out of the revenues that are generated after the guarantee period, then that reduces the net amount that the Sheraton actually pays and results in a loss to Nova Scotia, to the taxpayers. Did you manage to see that piece today?

[Page 66]

MR. FISKE: No, I did not.

MR. DEXTER: But that seems to be consistent with what you are saying in terms of . . .

MR. FISKE: If I may, Mr. Chairman. Mr. Dexter, the document describing the guarantee, I am told by lawyer after lawyer that it was the most complicated document they had ever seen in their lives. The only person that I know for sure who had a total and complete understanding of that document was Sheila Butler. I did reach a point in my latter days where if I had the thing in front of me and I had her previous lessons on this all before me, I might follow it but it was a very complicated document and if you want to get the full ramifications of that guarantee, she would be the only person that I could suggest that you should talk to.

MR. DEXTER: It was an interesting statement made by Ms. Gordon with respect to changing the minutes of settlement or the proposed minutes of settlement. At one of the points where they had been rejected by the Sheraton, this was in the negotiation process, she comes to the conclusion, or says that they are advised at that point that to withdraw from those would have been seen as bad faith on behalf of the Gaming Corporation. Was that a consideration? Did you believe that you would be perceived as not dealing in good faith if you withdrew?

MR. FISKE: Mr. Dexter, it was a fact that we were being told by Mr. [Carl] Holm that that would be the case and that our having approved the minutes of settlement on May 20th, under duress, as I have quoted the acting chairman in my remarks earlier this morning, as to her feelings on that. She didn't agree with it. I sought other legal opinion on that item as well, and I was informed that that wasn't the case. However, the majority of the board did accept Mr. [Carl] Holm's direction that if we did anything other than to recommend it to Cabinet that we would be in severe difficulty.

MR. DEXTER: You don't believe that the sidetracking of the arbitration was just an intervention in the leadership race of the Premier's Party, do you?

MR. FISKE: That is speculation, Mr. Dexter, and I have related it.

MR. DEXTER: I am just asking if you believe. That was the explanation that you seemed to offer.

MR. FISKE: That was the explanation I received from Premier Savage.

MR. DEXTER: But do you believe it?

MR. FISKE: I can't imagine. If it was, I think it was a great error.

[Page 67]

MR. DEXTER: You talked and you alluded to this idea, you are almost asking the government to come forward to give you some explanation, and you said, I think, an explanation less sinister, but you don't say less sinister than what. What is it that you think? You are alluding to it, but you are not saying it. What is it that is out there that you think is the motivating factor for this decision?

MR. FISKE: I wish I could answer you, Mr. Dexter, but I don't know. I wish that someone could tell me. Someone does know. Why aren't they allowed to come forward?

MR. DEXTER: I am just going to turn it over to my colleague here.

MR. CHAIRMAN: Ms. Godin.

MS. ROSEMARY GODIN: How much time do I have, Mr. Chairman?

MR. CHAIRMAN: Three minutes.

MS. GODIN: Mr. Fiske, right from the beginning you say, from day one, you were assured of operational independence. That is what you felt. Where did that understanding come from? Was it through discussions with key people, or was it your interpretation of strict adherence to the Gaming Control Act? Where did this assurance . . .

MR. FISKE: Ms. Godin, Bernie Boudreau was minister from the very beginning of this whole matter until he was moved to Health in July, or so, 1996, if memory serves me correctly. He was a man who was very bright, is very bright, was dedicated to this project. He involved himself in discussions, he loved to talk about it. We did talk about it often. He always gave me the impression that he wasn't going to interfere. He recognized the sensitivity of the very topic, because not everyone in this province was in favour of gaming. These were matters that we talked about. We talked about it, as a matter of fact, with Ms. Dara Gordon, with Mr. Boudreau. So it was well considered by Mr. Boudreau during that period.

I can't say that I had any such discussions with Bill Gillis after he became minister, because those who know Dr. Gillis will understand when I say that Dr. Gillis didn't have the same feeling, if you will, towards the business of gaming that Bernie Boudreau had, the same understanding. He didn't have the interest in it. So we never did discuss that aspect of it.

MR. CHAIRMAN: Mr. LeBlanc.

MR. LEBLANC: I would like to ask a question, Mr. Fiske. Yesterday, during Ms. Gordon's dissertation, it was mentioned that at one point Sheraton had asked for an extension until September 30, 1999 and had indicated that they would be willing to pay $2 million. Do you recall that?

[Page 68]

MR. FISKE: That they would be willing to pay?

MR. LEBLANC: Yes. The province had supposedly asked for a six month extension instead, and would have asked for a $1 million extension. I realize that it is difficult to be throwing a lot of this information at you, because it was quite extensive yesterday but the whole reason I am bringing this up is that Ms. Gordon mentioned that their legal counsel, as time went on, had started to change its opinion as to whether or not we could win the arbitration; in time, Mr. Merrick changed his mind and was more of a mindset that we wouldn't win the arbitration.

In your estimation and your opinion, the fact that there were two series of negotiations going on, obviously one between yourselves and the Gaming Corporation and Sheraton, and another one that was going on between - from what I have been able to gather now - the Sheraton and someone within government, in my estimation would very much undermine the negotiations that you had. That in itself, could that play a factor in Mr. Merrick's changing his opinion as to whether or not you would be successful at an arbitration hearing?

MR. FISKE: I do not know, but I am confident that John Merrick would answer that question. My memory would be that it probably did influence him because, again going from memory, I think John Merrick was probably aware well, probably aware, he was definitely aware of the goings on, if you will, other than through me or other people at the corporation. So it could very well have been a factor but it is a question that I would like to suggest that you put to John Merrick and you will get it from him.

MR. LEBLANC: We heard a lot yesterday, Mr. Chairman, from Ms. Gordon and also Mr. [Carl] Holm about the fact that the legislation gave the government the ability to direct the corporation in its dealings, or where to go with its dealings, and I think you have said that in your opening statements, that provision was there and you were an instrument created by the province and as such the Cabinet had the ultimate detail. And they kept saying that it was appropriate and it was appropriate. I go back to the comment that you said though, that it should have been transparent and open, and from all the testimony that I have heard, and I heard a long one yesterday and I am hearing a long one again today because it is a long complicated issue, if the Government of Nova Scotia had said, Mr. Fiske, we do not like how the proceedings are going along, how should they have proceeded? Should they have come about and given a written directive or something to the board and made a presentation in that regard? How do you see that?

MR. FISKE: I wish I could pass that to my solicitor but my understanding is that if they had wished to do that, that they should have analyzed the whole proposition in the same way that we attempted to analyze it and then make a decision that if it is in with keeping within the Act and the agreements, that it is in the best interests of the province, of the people

[Page 69]

of Nova Scotia and so on, forgive me, I have forgotten all the legal terms, then that is the way it should have been handled.

MR. LEBLANC: I have been in government before and I have been in Cabinet and my recollection is that for Cabinet to consider is that there are memoranda produced which point out the pros and the cons of any type of situation whereby Cabinet will make a determination. I think in essence what you are saying here is that is what you are looking for in the sense of why the government changed its mind?

MR. FISKE: But that never happened, Mr. LeBlanc, to my knowledge and, why, because the board was warned that unless you can speak in favour of this transaction, then, you know, you do not dare to speak against it or we will be in great difficulty with the Sheraton.

MR. LEBLANC: The other thing that was mentioned yesterday is that the submission that came in September, I think it was the 23rd, went to Cabinet, September 1997. Ms. Gordon stated that it was passed unanimously by the board, and without getting into the details, it appears that everyone was in agreement. That differs very much from your recollection of it in the sense that you were doing so upon direction?

MR. FISKE: I guess I could understand why she would say that because as Chairman I did not vote. We had a rather informal basis that we used from day one in that we probably only had a recorded vote maybe twice during the whole time I was there. Otherwise a motion was made and passed. Everyone on the board was long familiar with what my intention was insofar as this item was concerned but if it was unanimous, I certainly didn't vote on it.

MR. LEBANC: I am not really trying to put words in your mouth because I know you have said before, and I am just trying to clarify in my own mind, there is a difference between your testimony and Ms. Gordon's in the sense that you said that the government asked you to put it forward for consideration to Cabinet. Is that correct?


MR. LEBLANC: They said that there wasn't support from the ministerial . . .

MR. FISKE: That was the way that they saw in clearing the whole matter up.

MR. LEBLANC: The minister didn't support that he had given you assurance and supposedly the Premier's Office didn't support it and Policy Board also hadn't supported it.

MR. FISKE: Priorities and Planning.

[Page 70]

MR. LEBLANC: I have another question here. In this agreement - I want to be very clear about this - you mentioned the fact you were having problems getting access to financial information from the Sheraton and that they had put gag orders on you in direct contravention to the Act and the agreement that they had signed with you. I want to understand what was signed in September, has that prejudiced the Gaming Corporation's future access to those records? Did it set a precedent, is what I am asking.

MR. FISKE: Well, I think it could very well establish a precedent but whether it actually has or not, I don't know. But if it is done once, unless there are some changes, it can happen again. That is my view.

MR. LEBLANC: I want to pass on to my colleague, please.

MR. LEEFE: How much time do I have? Two minutes?


MR. LEEFE: Mr. Fiske, would you agree that it was the government which put forward the initiative to attract a casino to Nova Scotia rather than a casino seeking out the government and asking for an invitation?

MR. FISKE: Yes, I would.

MR. LEEFE: Would you agree that Mr. Boudreau gave every appearance of being the person who was largely charged with the responsibility of handling that initiative on behalf of Cabinet?

MR. FISKE: That was my impression, yes.

MR. LEEFE: Would you agree with this view, that the government, once having taken the policy position, that it intended to move forward with the creation of the casino gaming opportunity in Nova Scotia, that they then consequently very much reduced their capacity to deal with a company - in this case ITT Sheraton - from a position of strength but whereas a consequence, them coming more and more to deal with ITT Sheraton from a position of weakness in that they simply could not afford the embarrassment of having the project fall through? Do you agree with that view?

MR. FISKE: Project fall through in that the permanent casino wouldn't be built, do you mean?


[Page 71]

MR. FISKE: Mr. Leefe, while we did consider alternate proposals - two, as a matter of fact - from the Sheraton for something other than a permanent development on so-called Parcel P, we turned each of those down. To be really careful of this whole matter, we employed a couple of consultants to research the permanent and the two alternates and to advise us where we should be going because we did have to face the decision that the revenues that we were receiving, and felt we were going to receive were entirely different, probably 50 per cent of what we had been told we would receive in the original proposal. So this was the most major decision the corporation would ever make.

So we determined that we should insist, after getting advice from consultants and analyzing it ourselves, talking to many people in the industry, that we should go for the permanent, that while we were getting revenues - supposedly 20 per cent of the win, but then we were getting 65 per cent of the net profit - we determined that we would be better off in taking 20 per cent of the win in the new, larger, improved, world-class major casino on Parcel P than we ever would if we left it where it was so to speak. So, no government person, Bernie Boudreau or anybody else, ever questioned that direction until it came out of the night.

MR. LEEFE: Exactly. Very quickly, Mr. Chairman, the intention as I understand it was that the casino would complement the downtown waterfront business sector?


MR. LEEFE: In your view, does the Boudreau deal complement the downtown business sector or does it, in fact, allow it to compete unfavourably with the downtown business sector?

MR. FISKE: I think it's going to be an addition to the downtown infrastructure, if you will. I think the Parcel P development, where it is presently being built, is where it should be and that was the original plan.

MR. LEEFE: During your time as chairman, did you ever receive any written letters of expressions of concern from people who would be involved with the business community in Halifax respecting ITT Sheraton's project?

MR. FISKE: Yes, I did. Some of them were more difficult than others. Some did not want certain developments to take place within the new facility. I could understand that, but there was substantial effort made to ensure that facilities, this is mostly food and beverage operations, of course, that they were not excessive but rather could accommodate not all of the volumes of people going through there, but a portion, an appropriate number. I have forgotten what that number was.

MR. LEEFE: Did the Boudreau deal provide that protection?

[Page 72]

MR. FISKE: Yes, because it is in keeping with the plans that we had eventually approved.

MR. LEEFE: Thank you, Mr. Chairman.

MR. CHAIRMAN: In fairness, now we move back. Mr. Samson, I understand, has questions.

MR. SAMSON: Mr. Fiske, during your time as chairman when the board met, did you have a vote on any of the issues?

MR. FISKE: I don't recall ever having to break a tie or anything of that nature.

MR. SAMSON: Therefore, when Dara Gordon stated that the board was unanimous in supporting the deal, upon looking at the minutes, that is a factual statement isn't it? There were no lies there. Looking at the minutes, the board was unanimous for you didn't have a vote.

MR. FISKE: Well, I suppose one could say that, yes.

MR. SAMSON: Under your leadership as the CEO of the Gaming Corporation, you would agree with me that negotiations with the Sheraton had come to a gridlock and were not proceeding? Is that true?

MR. FISKE: Well, they were not proceeding because the government had interfered in that process.

MR. SAMSON: Okay, but before this government interference, it was still at a gridlock as far as negotiations between the Gaming Corporation and Sheraton?

MR. FISKE: It was at a gridlock and that is why we went to arbitration, which is a very normal experience and one that is under the requirements of the agreement.

MR. SAMSON: Okay, but it did reach a gridlock, though, you would agree with that?

MR. FISKE: Yes, I would say that is probably a right description.

MR. SAMSON: Mr. Fiske, you have a number of mentions of this gag order that the Sheraton had not to speak to you. Do you have any proof of such a gag order, any document that states this? Do you have any factual proof of this?

MR. FISKE: I don't have any document in my possession, but I can tell you that it is on file at the Gaming Corporation.

[Page 73]

MR. SAMSON: There is a document from the Sheraton stating?


MR. SAMSON: Have you seen that document?


MR. SAMSON: Do you have that document with you?

MR. FISKE: No, I do not.

MR. SAMSON: You do not. So, there is a document specifically stating not to speak to you, Ralph Fiske, as the CEO of the Gaming Corporation?

MR. FISKE: Not to have any communication, whether it included me specifically or not, I don't recall, but it was applied to all employees of the corporation. In addition, they placed a gag order on Ernst & Young who were their auditors as well as ours. By the way, Ernst & Young accepted the gag order.

MR. SAMSON: His name is signed on the gag order?

MR. FISKE: Pardon me?

MR. SAMSON: You said he sent it?

MR. FISKE: No, I am saying that the gag order applied not only to the employees of the corporation, but it applied to the auditor.

[2:30 p.m.]

MR. SAMSON: Who signed this gag order?

MR. FISKE: I am not sure if it was Mel Thomas or Roberto Rivera-Soto.

MR. SAMSON: Mr. Fiske, you have also made mention of a conversation with Mel Thomas that you had, it seems, at some sort of social function. It was an off-the-cuff comment and referred to that they had had some assurances from an honourable gentleman that some deal would be worked out in their best interests. Other than Mr. Thomas, has anyone else ever made reference to the existence of this honourable gentleman?

MR. FISKE: At the time, Bill MacInnes was present, and confirmed that which Mel Thomas was telling me.

[Page 74]

MR. SAMSON: So you have had two people speak about the existence of this honourable gentleman?


MR. SAMSON: Do you have any proof of who this honourable gentleman is?

MR. FISKE: No, I do not.

MR. SAMSON: Therefore you are basically going on the statements made by Mr. Thomas and Mr. MacInnes that there actually existed this honourable gentleman?

MR. FISKE: Just as I have said this morning, yes.

MR. SAMSON: Okay, but throughout your document you continue to refer to the existence of this honourable gentleman, and your speculation that some of the events that took place were the result of actions by this honourable gentleman and other political operatives and that, that were working behind the scenes. I can't help but feel that what you are talking about here is a conspiracy theory against you, and that we are in version here of The X-Files, and the honourable gentleman is this Cancer Man, and you are Agent Fox Mulder, who is trying to figure out what the conspiracy is here.

We certainly want to get the truth as well as we can here today, but at the same time, I would certainly appreciate it if you could give us a bit more, on what grounds you are stating, other than these two gentlemen stating to you that there existed this honourable gentleman. Do you have any proof to bring to us today that this person did exist, and who was it?

MR. FISKE: Mr. Samson, I have simply told you of the discussion that I had with Mel Thomas and Bill MacInnes, one the general manager of the casino and the other a local solicitor who was present and they advised me of this matter. I know nothing more about it. I am relating this to you, and I would hope that you would be sufficiently exercised at learning this that maybe you can find out who it was.

MR. SAMSON: Maybe he doesn't exist?

MR. FISKE: Maybe so, but that is up to you.

MR. SAMSON: Yet, throughout your document, you have attributed these theories that some of the stuff that happened, maybe it was this honourable gentleman, maybe it was these political operatives working behind the scenes. You have theorized that there was a gag order coming from Cabinet, that they were not to speak to you, that ministers refused to speak to you, that this had even been discussed. My question to you, is do you have any

[Page 75]

factual background to base this on? Basically what we are hearing today is Ralph Fiske's theory on what went wrong with the casino, and about these theories of who might have done this, who might have done that. What we are asking you today is, can you bring anything substantial before us to substantiate your claims here?

MR. FISKE: Mr. Samson, I indicated that I was simply relating to you and your colleagues an experience that I had that possibly has an involvement here, or certainly appeared to have an involvement from the point of the view of the Sheraton. I think it is quite significant. Do I have the answers? No I don't. There are other things as you well know that I don't have the answers to. That is why I am here.

MR. SAMSON: Mr. Fiske, I am just kind of curious. You have a very good memory, I take it?

MR. FISKE: Not bad.

MR. SAMSON: Throughout your time as CEO, when you had private conversations on the phone, or at different places, did you keep notes?

MR. FISKE: On occasion, yes.

MR. SAMSON: I will just point your attention to Page 41 of your submission, third paragraph. You are referring to a conversation that you had with Mr. Bernie Boudreau prior to the leadership convention, so that would be prior to July, 1997. I will just quote what you say here, "I described to him straight-out what the Premier had told me. I asked him if it were true. I told him I wanted to hear the words from his own mouth. There was what seemed a long period of silence. I asked him again, is this true? It this with your blessing? His guarded response was, Ralph, my circumstances have changed. I am no longer in Cabinet. I can't say much more than that.".

Did you keep notes of this conversation?

MR. FISKE: I don't know.

MR. SAMSON: Did you keep notes of any conversation?

MR. FISKE: Yes, some that I have.

MR. SAMSON: Do you have any notes that you could back up some of the statements you have made today. I guess I am just concerned with . . .

[Page 76]

MR. FISKE: Mr. Samson, I do not intend to back up, as you refer to it, in that particular involvement. I am simply telling you what I did. I called Bernie Boudreau and asked him this question.

MR. SAMSON: But with all due respect, Mr. Fiske, you are attributing specific words to Mr. Boudreau here, that he said these specific words, and you are very specific.

MR. FISKE: I certainly am.

MR. LEEFE: On a point of order, Mr. Chairman.

MR. CHAIRMAN: A point of order has been raised. Can we ask the witness to hold off for a moment until we hear the point of order?

MR. LEEFE: Mr. Chairman, the witness has testified today under oath. That has value in this committee. The witness very clearly has testified under oath that this conversation occurred and that to the very best of his recollection this was the response to the questions which he put to that person.


MR. LEEFE: Now, unless a member has some reason to believe that the witness has perjured himself, then I think the questions are entirely out of line.

MR. CHAIRMAN: Well, actually I have to say I cannot agree with that. We know the witness is under oath. We know he is giving us the best of his recollection, but it is a fair question to ask, were any notes kept. That is fine. Please, continue.

MR. SAMSON: As far as you recall, you did not keep any notes of this conversation? I guess the reason I am asking you that, Mr. Fiske, is I am not questioning your overall memory of this, but just in this statement it stood out to me that you are very specific in how you are describing this conversation. This conversation took place over a year ago and you are talking about a guarded response, a period of silence and specific words that he said. That is why I just wanted to ask you have you kept notes to back up these statements you are making here. This might be what Bernie said, this might not be exactly what he said, or he may have said more after he made this statement, but you do not have your own personal notes that would back that up?

MR. FISKE: I have said that I do not recall whether I have that noted or not.

MR. SAMSON: Mr. Fiske, just on the issue of James Spurr, on Page 44, I guess, once again with this conspiracy thing, it goes back to it, in the second paragraph about nine lines down, you talk about, let me see, "I confess, given the strong opposition from both Minister

[Page 77]

Gillis and myself, I took no particular pleasure in being told by Mr. Spurr that Cabinet had approved the deal purportedly proposed by Dr. Gillis and myself. If there was any doubt as to the mischievous nature of Mr. Spurr's letter, you might ask how many other times he has offered to be a personal runner to obtain signatures on a document.".

Do you have anything to back this statement up, that Mr. Spurr ran and got these signatures himself and that he had never done that in the past?

MR. FISKE: I am simply relating, Mr. Samson, that that is what he offered to do, in writing.

MR. SAMSON: In writing he stated that he would personally go and get the signatures for each person?


MR. SAMSON: And you have that letter?

MR. FISKE: I do not have it but if you look in Ms. Gordon's file, I think you will find it.

MR. SAMSON: And it is signed by James Spurr and it specifically states that he would run as a personal runner to get the signatures himself?


MR. SAMSON: And that he had never done that in the past?

MR. FISKE: Not to my knowledge.

MR. SAMSON: But you have no proof that he has never done that in the past?


MR. SAMSON: Or that this was not a standard thing that he offered to people. Mr. Fiske, you were quite proud of your position as CEO. You mentioned earlier that you were very concerned about protecting the integrity of the position and the integrity of the taxpayers and that you were very concerned that Nova Scotians' best interests were being served in your position as CEO, is that correct?

MR. FISKE: Yes, I took the job and myself very seriously. I cannot say I can say that about myself personally but my job I took very seriously.

[Page 78]

MR. SAMSON: You took pride in it?

MR. FISKE: Absolutely. I felt that it was an important job, yes.

MR. SAMSON: When you first approached Premier MacLellan with your resignation, you did not expect him to accept it, did you?

MR. FISKE: I never gave it a thought whether he would accept it or otherwise. I have said here today, and I quoted the Premier on a matter there, that if he had wanted to be involved, he could very well have been involved.

MR. SAMSON: I am trying to find where you said it in your statement, but you clearly stated in here that you were disappointed that the Premier accepted your resignation and did not, in any way, say, please stay on, Ralph, do not leave, we need you to continue.

MR. FISKE: I was disappointed after learning of his statement.

MR. SAMSON: So it is safe to say that you expected that he would not accept your resignation?

MR. FISKE: No, I didn't expect at the time I submitted my resignation. I don't think I have said that.

MR. SAMSON: So, in no way, shape or form were you disappointed that he didn't say, no, Ralph, I will not accept resignation?

MR. FISKE: I never thought of it.

MR. SAMSON: That's all my questions for now. I will come back on that point after when I find it.

MR. CHAIRMAN: There are five minutes remaining. If any of the Liberal caucus want to ask questions before I move.

MR. HYLAND FRASER: I have just a couple of questions. When you took the position originally, Mr. Fiske, were you under the impression that you and the Gaming Corporation would be autonomous from government altogether and that you would be allowed to go and do your thing?

MR. FISKE: Well, if I understand the word autonomous or independent . . .

MR. FRASER: We won't argue with that one. That has been mentioned already.

[Page 79]

MR. FISKE: . . . I think that's it exactly. Was I going to fly off on my own without any reporting procedures? Absolutely not. I was reporting under the Act to a minister for whom I had the greatest respect and admiration; a man who understood the comings and goings of this industry. I had no qualms whatever about that and I believe that Bernie Boudreau would support a good, sound operation, the Gaming Corporation, and I think that he did. If that means autonomous or independent, then I think that is exactly what it was.

MR. FRASER: In the fall of 1995, you presumably were concerned about where you fitted in the scheme of things when you asked for his opinion, from Mr. Spurr, and you got an opinion. Is that the reason he responded to that? The letter that was tabled by . . .

MR. FISKE: I have not read it, Mr. Fraser. The first couple of lines of role and responsibility of the board of directors and I assume he goes on to describe what that is. At that particular stage in the history of the corporation, we were inquiring about a lot of things. This was just one of them. So, as I indicated in my words this morning, Mr. Spurr was attempting to take us in certain directions that the board didn't agree with. That is not unusual. I have not read this letter in its entirety, but I don't find it unusual. It's just the question that I posed to him and ask for his opinion. I have not read it.

MR. FRASER: You never had this letter or you just didn't have it . . .

MR. FISKE: Well, I don't recall reading it. I probably did. I am sure I did.

MR. FRASER: You, through your career, have been in business for yourself and you have been able to go out and cut deals and you had the final say in operations that you owned and controlled. Did you find working under this umbrella stifling? Is that frustrating?


MR. FRASER: Not at all?

MR. FISKE: No, not at all. Mind you, I had been involved, outside of my own business career in a very large national firm where I was chairman of the board of directors on a national basis. So, it was not entirely new. The business of gaming was new to that extent that I was involved, yes, but the way of operating was not particularly new.

MR. FRASER: How long was the contract that you had with the corporation? Was there a buy-out provision if the government did not like what you were doing, that they dumped you?

MR. FISKE: Personally?

[Page 80]


MR. FISKE: I had no contract other than an appointment under an Order in Council.

MR. FRASER: So, they could have fired you on September 30th, no recrimination whatsoever?

MR. FISKE: No recrimination whatsoever?

MR. FRASER: But you choose to continue going. I guess I am just wondering why, let's say if negotiations were going on and they came to a roadblock which obviously they did whether there was interferences as you contend or whether they wasn't, at some point in time government would have to stand in and come to the table or go somewhere and say, we got to move this thing along. Under this interpretation that I read, and I understand that you haven't read it today, but it was reported, I think it would be government's responsibility to come in at some point in time and say, you are not doing your job, you can't get it done or you are not getting along with the negotiators for the Sheraton, for some reason there is a roadblock here and it is time for someone to come in and let's get a deal. Isn't that possible to happen as well?

MR. FISKE: Mr. Fraser, no one, absolutely no one ever told me that I was not doing my job. No one ever mentioned those words to me or any words meaning that, in any way, shape or form.

MR. FRASER: Can I have one more short question?

MR. CHAIRMAN: Sure, go ahead.

MR. FRASER: On Page 45 of the document that you presented this morning, in the fourth paragraph, "Shortly thereafter I submitted my resignation . . .", you go down about half-way through that paragraph, "This is the same justification used by Premier Savage and Minister Downe for the last three weeks.". I am just wondering if you could put a date on those three weeks so I will know when it is?

MR. FISKE: Since I last appeared here, I was here on June 17th, that's what I am referring to.

MR. FRASER: I was just wondering when Premier Savage came back, if this is the last three weeks that you are referring to or is it the three weeks a year and one-half ago?

MR. FISKE: I am sorry, there is a typo there, it should be MacLellan instead of Savage.

[Page 81]

MR. CHAIRMAN: We better get the page reference on that. What page reference was that?

MR. FISKE: We are on Page 45.

MR. FRASER: I am just wondering, you know, in light of that if there are any other names or dates that might be not correct as well?

MR. FISKE: I am not infallible, there could well be.

MR. CHAIRMAN: Okay, thank you, Mr. MacKinnon has a question.

MR. MACKINNON: One question, Mr. Chairman, through you. Mr. Fiske, you made it clear, as I understand, that politics should never enter into the running of the Gaming Corporation but yet on the very first line of Page 42 of your testimony you stated, you were ". . . more determined than ever to slow down and frustrate that process, . . .", to me meaning you were determined to delay the approval of this project by delaying government approval for the May 20th deal with the Sheraton Group.

Then later on you went on to say, ". . . ensured that continued clarifications on the May 20 Deal would not permit the matter to get before Cabinet prior to the Leadership Convention.". It would appear to me that at least in this particular situation you weren't adverse to playing politics yourself. I just wonder how you would reconcile something that you criticized everyone else for doing?

MR. FISKE: Mr. MacKinnon, I don't think you can call it politics, either big 'p' or small 'p'. I am just telling you what I did along with the agreement of others. Was it wrong? Maybe so, I don't know, you make that judgement and I gather you think it was wrong.

MR. MACKINNON: We are trying to reconcile the difference between interfere and intervene. It is a matter of opinion.

MR. FISKE: The question, Mr. MacKinnon, is whether it was in the best interests of the people of Nova Scotia and I felt, along with others, including Dara Gordon, that it wasn't. Was it right that I would have dragged my feet at that stage, you know, maybe I was wrong. If I was, then I am sorry.

MR. CHAIRMAN: Back to any of the NDP members. Ms. Godin.

MS. GODIN: Mr. Fiske, the mandate of the Gaming Control Act, I believe, as you mentioned, is to manage, control and regulate casinos in a socially responsible manner while at the same time increasing economic activity and revenues to the province in a way that

[Page 82]

serves the best interests of Nova Scotians. I am sure you began your chairmanship with that goal in mind. Would you say that that mandate is being followed today?

MR. FISKE: No, it is not. As I indicated this morning, I think that in making our decisions there were four or five or more things that we had to take into consideration and there was a framework established in order to do that. That framework was not followed. It was not followed.

MS. GODIN: Is it a good deal for Nova Scotians? Now that you are out of it and you can look back, you are looking at it from a different perspective now than you would have maybe a year ago, is it a good deal for Nova Scotians?

MR. FISKE: Is it a good deal for Nova Scotians?

MS. GODIN: Not the government, if you want to answer is it a good deal for the government or is it a good deal for Nova Scotians, I think those are two different things.

MR. FISKE: Well, I guess we are going to get a permanent casino. That was what I wanted. The way in which it came about . . .

MR. CHAIRMAN: Mr. Fiske, could I ask if you could speak up or get a little closer to the microphone, it would be a big help.

MR. FISKE: Sorry. The fact that we are getting a permanent casino as close to the original proposal is important to Nova Scotia and I think we will benefit from having that so-called world-class casino. So, yes, I think we will benefit from that.

Will we benefit to the extent that it was originally proposed? No, I don't think we ever will. I think that the event that we have been discussing has a very serious impediment to the ongoing operation of that facility. Great risk is involved and I think we have to be very careful.

MS. GODIN: If I may I would like to move on to something that maybe you are headed towards, these risks. I asked you when you appeared before the Public Accounts Committee the first time if you had ever been threatened and you said, no. You may not have understood the question. But on Page 46, you do say - and well, it sounds like a threat to me - that when you were asking questions a prominent and influential member of the Liberal Party said that you should stop your inquiries or you would be personally destroyed. That was a threat.

MR. FISKE: I think as I understood your question previously was I threatened by the Sheraton, or at least I put that interpretation on it.

[Page 83]

MS. GODIN: Okay, I had meant were you threatened in any way.

MR. FISKE: Maybe I was wrong in doing that.

MS. GODIN: I just want to say that I am certainly offended that somebody with influence is going to conduct business in this province in the way that you were treated. I find that there is a thread of corruption that is running through a lot of this stuff that you have said and I am concerned about that. (Interruption)

On two other occasions in your testimony today you mentioned, well, in one place you mentioned forces at work that have caused two separate Premiers and two separate Cabinets to unnecessarily change direction and later you mentioned, unidentified parties who are not subject to the intense security clearance checks that appear to have influence with the Premier's Office. Are you saying that if we continue the way we are going, the Gaming Corporation, that we are sitting ducks for big, big crime?

MR. FISKE: Ms. Godin, I think that I have encouraged you twice now to consider changes to the Act that will ensure that that doesn't happen. I think that we, as I also indicated, can learn by others who have gone before us in other jurisdictions around this great country. We should learn from those experiences and not run the risk of this happening again. I am not concerned about yesterday at all. I am concerned about tomorrow. That is what I am trying to say.

MS. GODIN: Okay, so it is a warning then that the framework is there, you have spoken about the framework and that if the framework is working properly, as I understand it, it should minimize opportunities that give rise to crime. Is that right?


MS. GODIN: Is the framework working properly at this moment?

MR. FISKE: Is it working properly at the moment? It doesn't appear so. It didn't work, which accounts for the reason of my resignation. It didn't work. It couldn't resist the pressures that were brought to bear in a fashion that was not in keeping with the Act.

MS. GODIN: So you have sincere . . .

MR. FISKE: I am not saying, Ms. Godin, that Cabinet cannot give direction to the Gaming Corporation but when they give direction they have to go through the same performance that those at the corporation go through to ensure that the decision is in keeping with the framework that is established and the Act in its entirety, and whether it is in the best interests of the people of Nova Scotia. That was not done.

[Page 84]

MS. GODIN: So you really do have sincere and grave concerns about the future, the way we are going now?


MS. GODIN: One last thing. You mentioned that about three weeks ago the Premier's quotes in the paper were inconsistent with the facts. Could it be that he has been, as you say, out of the loop as well and naive, that he just doesn't know what is going on?

MR. FISKE: Ms. Godin, I am tempted not to comment on that, quite frankly, but I have to. It has occurred to me that he possibly doesn't know what went on and I guess at this stage that would be my hope.

MS. GODIN: You are a very kind man, Mr. Fiske.

MR. FISKE: Well, I am not sure but it is possible.

MS. GODIN: Those are all of my questions, Mr. Chairman.


MR. FAGE: Mr. Fiske, operational independence was the term I believe you used in connection with the corporation's day-to-day operations and negotiating in working with the Sheraton. How did you feel when it appeared that there were actually two processes going? As I go through the testimony and review it, we come to the point where we see Mr. Hayes and Bob MacKay coming in and deciding that the process and the operational independence that you were told you and the Gaming Corporation did have working along, what were your thoughts or feelings when you saw two parallel processes very evident at that point?

MR. FISKE: I am sorry, Mr. Fage, I don't get the question.

MR. FAGE: Well, two parallel processes of negotiation - one with Cabinet and the Premier's Office being represented through Mr. MacKay and one with the Gaming Corporation represented by yourself and the lawyer, John Merrick - when the two converged and that arbitration was no longer needed, that Mr. MacKay would protect your operational independence, is that indeed what occurred when those two processes came together?

MR. FISKE: If I understand your question, then I think, yes, that is what occurred.

MR. FAGE: If that is what was occurring, what is the significance then of the recommendations coming as that process moved along - it is a good business deal, it is the only deal we are going to get - all those inferences and comments being made to you in the corporation by various lawyers, Carl Holm, Mr. Merrick? Did it indeed appear at that point,

[Page 85]

and perfectly crystal clear, that the negotiation was being conducted through the Premier's Office by Bob MacKay rather than the Gaming Corporation?

MR. FISKE: It was very clear, yes.

MR. FAGE: That draws the question, was the Gaming Corporation required to negotiate at all or be involved, or did it need to be created in Nova Scotia to protect the interests of Nova Scotians if they had no operational independence? Apparently, by that point, everything was redundant, what had occurred in the negotiation. Was it required, in essence, or not?

MR. FISKE: At that stage, the authority of the Gaming Corporation was nil. The Cabinet had permitted the Sheraton to go around us, if you will, and rather than Cabinet saying to Mr. Sheraton, you go to the proper authority here and talk to the Gaming Corporation, they didn't do that. They made a deal with the Sheraton and then told the corporation what to do and we succumbed to that and the deal has now gone through. It is in the past.

[3:00 p.m.]

MR. FAGE: So it points that the Gaming Corporation, at that point, had been cut out of the loop or Cabinet had decided that they should be doing their own negotiations. I guess if you accept that set of circumstances, it starts to draw a very large question, certainly in my mind, in the dealings with ITT Sheraton, with their smugness and arrogance that was described here, that ITT Sheraton obviously decided that maybe, in your case, the Gaming Corporation was standing firm and they felt arbitration would work. From the information you have supplied in your testimony, putting it bluntly, the weak link appeared to be the then Liberal Cabinet and the Premier's Office and was the one place they could negotiate a deal that was in the best interests of the Sheraton and not possibly the best interests of the people of Nova Scotia. So ITT Sheraton's manager and negotiation made that strategical decision.

MR. FISKE: Prior to my leaving the Gaming Corporation, I felt, Dara Gordon felt, and management felt that it wasn't the best deal, a good deal, for the people of Nova Scotia.

MR. FAGE: Taking that into the future, I think that draws a really serious question then that I would ask you to comment on. Given those set of circumstances, how the decision was arrived at, how the decision was made, and we look at all the concessions, and some of those concessions we do know, the list is there, but we do know they involved outstanding accounting procedures, amount of revenues that could have possibly gone to the Province of Nova Scotia and were required, that were on the errors' list. Can we, under those circumstances, then assume that in the future, if a company such as ITT Sheraton in dealing with the Gaming Corporation and the government, amasses a large list of irregularities that are in dispute, they can go to Cabinet, and Cabinet can say that is fine, we have done it before,

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you are absolved of any consequences from this, we have a new set of circumstances, and we start again another day? Is that possible?

MR. FISKE: Absolutely. This is why I have pointed out to you what I think has to be done.

MR. LEBLANC: I have been listening to your testimony here and two weeks ago and also to Dara Gordon. I am really perplexed in regard that we have a Gaming Corporation, and we have from your testimony, here and last week, where we have had very strong presentations that the Gaming Corporation has to be of a strong will, because of the fact that you are out there negotiating for the best interests of government and so that we don't have the same situation happening into the future again whereby any proponent can go around you and negotiate with government. So I guess I ask myself as to how can we prevent this from happening?

The events have transpired and we can't go back and renegotiate this, it has been done. So I ask myself the question, as a chairman what would be a suggestion that we can look at in the sense of trying to ensure that the chairman, however he is put in place, can remain independent? Can we bring about some amendments to legislation that would make the process more transparent if the government decided to say - if you were still chairman - Mr. Fiske, we want these negotiations to move on and we would like to move it in these directions, that they would be accountable or we could have a lot of hocus-pocus negotiations going on on the side, lawyers showing up the morning of the arbitration saying we have changed our mind? If you had some very pointed suggestions in regard to the independence of the chairman, and whether that would be for a period of let's say five years, I am using some examples here, so that you know that you would have some protection if you wanted to do it.

Also that the government direction, and they have access to, they have provisions to make suggestions, and give directions to the board, to the Gaming Corporation, should that be by direction of Cabinet? I think that it should, personally, I think there should have been directive brought to Cabinet in written form and brought forward to the Gaming Corporation. That makes it accountable, it makes it transparent in the sense that the government is on record saying thou shalt do this, and they can't say well, we said that or we didn't said that. Which is what they are saying now.

Those suggestions, are those the types of modifications or amendments that you are looking for to try to deal into the future in regard to the Gaming Corporation?

MR. FISKE: Well, I think you are on the right track, Mr. LeBlanc. There may be much more required, but as I say you are certainly on the right track, that is the direction. My hope is that you could somehow move in that direction, or that you could encourage movement in that direction.

[Page 87]

MR. LEBLANC: The other thing, there are currently five members of the board. Is that correct?


MR. LEBLANC: Two of them who are civil servants who will do as they are told to do so, is that correct?

MR. FISKE: With respect, I say that, yes.

MR. LEBLANC: So, it begs the question. If you are going to look at the composition of a board, which was supposed to serve the interests of Nova Scotians and I suppose a cross-section of different business interests, would it be better to have people appointed from the Civil Service who would sit on the board as participants but not have votes and so forth? I beg to question, because eventually the province has the authority to control any important direction of the Gaming Corporation. So, it isn't as if they are altogether independent, but I beg to question as to when we brought the point of the agreement being sent to Cabinet for ratification, that the opinions of those two members were already decided before it happened.

MR. FISKE: That is correct.

MR. LEBLANC: So, going back to the situation in which we find ourselves now, in your opinion, would it be best for all involved perhaps to have new members added or maybe a cleansing of the board, and I am not trying to pick anybody? There are a lot of questions being asked as to whether the board has been appropriate and how they have dealt with it. I am not trying to be derogatory to any of the members who are there now. Would it be, in your opinion, a marked improvement if we started perhaps having some changes and maybe some new blood on that board?

MR. FISKE: I think that is a good idea.

MR. LEBLANC: I have one or two more questions at the very most. We are all having difficulty trying to understand the agreement. You mentioned in your testimony that it is very complex. From the three dissertation I heard yesterday - it seems to be long days lately - in trying to understand them, because they are very complex. If you wanted to have someone to do an analysis of this deal, because we are getting yourself saying that we have missed opportunities as to lost revenues, we are getting into complexities of whether or not if they had built a new casino whether the amortized costs would be put against the income statement now which would benefit the province rather than just later when it is going to be on the net income, and all these other questions. Is there someone who could do a review of what is there now to give Nova Scotians the answers that we have? We are all here as politicians taking excerpts of all these files and saying, well, it cost us this or it cost us that and the governing Party is saying, well, it didn't cost us anything. So, I am asking myself the

[Page 88]

question, in your opinion, who could look at this and give us perhaps a relatively unbiased opinion?

MR. FISKE: Mr. LeBlanc, I don't have the answer to that question. At the present time, there is no penalty in the future and there ought to be. We used to say at the corporation that we thought we were well aware of what our framework and our direction should be, but we used to boil that down to simple words that we really only had one thing to sell and that was credibility. If we were to constantly keep that uppermost in our mind then that would take care, if you will, of most of the aspects of our involvement. It didn't work because while it was okay for us to feel that way, those who were above us didn't have that understanding.

MR. LEBLANC: Well, Mr. Fiske, I have looked at this whole exercise and I really feel that, being a former minister, your position was usurped. There were obviously, even by the admission of the Gaming Corporation yesterday, very clearly there were interventions by Cabinet going on at the same time that you were negotiating with Sheraton, which I think is totally reprehensible by government, totally unprofessional, and it is something that the government really did not serve the interests of Nova Scotians when they were doing so.

I will say one thing, Ms. Gordon was mentioning yesterday, and I know that you probably, it took two hours to read the thing, and there was one point, on Page 15 of her dissertation, she was making the comment that the province would have received approximately $7 million less than what we expected of the permanent casino when it opens in September 1999, versus it opening in 1998. Upon questioning she had this graph. I corrected her that actually with the guarantees and so forth that was not the case. So I am sure as we have time to go through these documents and try to understand them some more, that a lot of the statements that she made yesterday will not stand up. So I would like to thank you for your time, for your questions and for your answers to my questions. I think right now that is all the questions that I have.

MR. CHAIRMAN: Thank you. Back to Mr. MacKinnon, I think, first.

MR. MACKINNON: Thank you, Mr. Chairman. Mr. Fiske, through you, Mr. Chairman, on Page 51 of your presentation you have stated:

"I have already told you that there were less than a handful of Nova Scotians who have developed the expertise and the first-hand experience to truly understand the broad policy issues and the checks and balances that are required for the successful regulation of the Gaming Industry.".

Do you see yourself as one of those handful of people?

MR. FISKE: Yes, I do.

[Page 89]


MR. FISKE: I do.

MR. MACKINNON: And what special expertise do you bring to that?

MR. FISKE: Nothing more than two and one-half years of attempting . . .

MR. MACKINNON: Two and one-half years of lobbying for a casino for yourself?

MR. FISKE: I never lobbied in one day for casinos myself, not one day, not one moment.

MR. MACKINNON: Isn't it a little contradictory to your last presentation before the committee here?

MR. FISKE: I do not think so.

MR. MACKINNON: But you are not sure?

MR. FISKE: Yes, I am sure. If I said otherwise, I was wrong.

MR. MACKINNON: Well, under the Criminal Code, as I understand, only governments have the control of casinos. What I am leading up to, it seemed like you had a lot of problems with the Sheraton Group. Ultimately, and I am trying to find out, the question I ask myself is, is the Sheraton Group, are they criminals? I do not think you would suggest that, would you?

MR. FISKE: I could not answer that. I would not answer that. I would not dignify the question by answering it, in other words, Mr. Chairman, forgive me.

MR. MACKINNON: We have done a lot of speculating here and a lot of inferences and imputing motives to individuals?

MR. FISKE: I am saying the question you just put to me, I will not answer it.

MR. MACKINNON: Okay, that is fair.

MR. LEBLANC: Mr. Chairman, he cannot refuse to answer it.

MR. CHAIRMAN: It is true. You cannot refuse to answer although the form of words you used is an implied answer, I think. You might try and clarify . . .

[Page 90]

MR. MACKINNON: I guess the question I am asking is, the question quite clearly is the way I am reading this entire situation from day one as you have unfolded it according to your agenda is, to me, it seems like you wanted to run the casinos in Nova Scotia and not anybody else, you know, through your Gaming Corporation, and you were not going to be satisfied until you were at the helm in terms of running the casinos, hands-on, yourself, and nobody else would suffice?

MR. FISKE: Mr. MacKinnon, that is absolutely and totally absurd. If you wish, you might want to obtain, as I have mentioned, Ed Harris' opinion as to what we should be doing insofar as our responsibilities in relation to the casino. Your implication that I was trying in some way to run it, that is micro-managing, I never did, I never did.

MR. MACKINNON: Well, you have suggested on Page 45 of your presentation there this morning with regard to the arbitration, ". . . win, lose or draw at Arbitration, the Sheraton was required to construct the permanent Casino.". Then you appear to be a little more, from my point of view, flippant when it comes to possible negatives from the outcome of this particular arbitration and you have already stated that you are not a lawyer. Was it not possible that the arbitrator could have ruled that the province, through the Gaming Corporation, had violated the terms of their agreement with the Sheraton Group to the extent that the entire project could have been lost?

MR. FISKE: No, not at all.

MR. MACKINNON: But that is your opinion.

AN HON. MEMBER: Nobody ever suggested otherwise.

MR. FISKE: No, I mean, look, we had lawyers . . .

MR. MACKINNON: Is it your opinion?

MR. FISKE: . . . coming and going and it was never ever part of this scenario in any way, shape or form. That is a sheer fantasy, Mr. MacKinnon.

MR. MACKINNON: Well, it is certainly one man's opinion, thank you.

MR. FISKE: If that be so, if that be your feeling, go ask somebody else.

MR. MACKINNON: You were the one who brought all the . . .

MR. FISKE: Ask a dozen people.

MR. MACKINNON: You are the one who brought all the suggestions of impropriety.

[Page 91]

MR. CHAIRMAN: Please address your remarks through the Chair.

MR. MACKINNON: Through you, Mr. Chairman, it is this honourable individual who brought all the suggestions of impropriety before the Public Accounts Committee and I am certainly trying to get to the facts.

MR. CHAIRMAN: I think the suggestion made in the question was that one possible outcome of the arbitration might be a finding that the contract had been so fundamentally breached that it might be at an end. I think we heard from Mr. Fiske the first time he spoke to us that he was of the opinion that the Sheraton had not so fundamentally breached the contract that it could be repudiated by the government. As you say, he is not a lawyer but he gave us his view and I think, again, he has just given us a slightly different answer which was, as I understood it, that that issue was not in play in front of the arbitrator at the commercial arbitration that took place.

If I have misunderstood your answer, please let me know but we also, of course, do have two of the lawyers who are involved in this coming before us next week. We can also ask them when the time comes. All right please continue. Mr. Samson now.

MR. SAMSON: Mr. Fiske, I just want to clear up a few things. My honourable colleague here, Mr. LeBlanc, talked about the composition of the board and is concerned that the fact that there were a couple of civil servants on it that basically they were just going to be puppets of government and do what government told them. Let's just get something straight here. Gambling is illegal in Nova Scotia, is it not?

MR. FISKE: Gambling is illegal in Nova Scotia?

MR. SAMSON: According to the Criminal Code of Canada, gambling is illegal . . .

MR. FISKE: Only the Province of Nova Scotia can operate games of chance in Nova Scotia, you are right.

MR. SAMSON: Therefore the board must be under the supervision and authority and direction of government in order for gambling to be legal in Nova Scotia, isn't it?

MR. FISKE: Now I think you are stretching it entirely.

MR. SAMSON: I will refer you to Carl Holm's legal opinion on this issue and on the interpretation of the Criminal Code of Canada. On Page 2 of Tab 3 of the Gaming Corporation's press release yesterday, you will see that it states, "Provincial governments are the only organizations that can legally conduct certain types of gaming, including the type of gaming conducted in a casino. [s.207(4)]", the Criminal Code. "These types of gaming (slot machines, etc.), if not conducted and managed by a government, are illegal.". It goes on to

[Page 92]

further state, "As only government can legally conduct and manage gaming, the bodies which government creates to conduct and manage gaming on its behalf (the Corporation and Authority) can only legally perform their functions as the agent of government.". Is that not true?

MR. FISKE: Yes, it is true.

MR. SAMSON: Therefore, the board is under the authority and direction of the Government of Nova Scotia, is it not?

MR. FISKE: If you are coming to the point whether government, Cabinet, can give direction to the Gaming Corporation, I have never said that they couldn't.

MR. SAMSON: My point to you, Mr. Fiske, is it must. In order for it to be legal, in Nova Scotia, it must. It states it right here, unless it is as an agent of government. That is what is necessary in order for gaming to be legal in Nova Scotia. So this idea that this board was supposed to be completely independent, not taking any directive from the government, is a silly notion because the law, itself, states it must be an agent and an arm of government under the control and direction of government.

MR. FISKE: Mr. Samson, I would encourage you to put it to the lawyers you are going to be talking to next week and get it from them. I am not a lawyer.

MR. SAMSON: Well now, Mr. Fiske, when my honourable colleague here, Mr. MacKinnon, asked you about your statement that only so many people had expertise of gambling in Nova Scotia, you stated yourself to be one of those experts. Are you now going back and saying you are not an expert?

MR. FISKE: No, I am not calling myself an expert, Mr. Samson. I said that I had some knowledge, along with a few others in Nova Scotia, of gaming. But I am not an expert on anything, Mr. Samson.

MR. SAMSON: Okay, back to my earlier questioning, Mr. Fiske. Some of my concerns about these conspiracies, I guess, I would refer you back to Page 45 where in the third full paragraph it states, "Shortly thereafter I submitted my resignation letter of September 30, 1997. I subsequently received an acknowledgement letter from Dr. Gillis dated October 2, 1997". You further state, "This Committee might wish to inquire who actually drafted that letter for Dr. Gillis' signature".

Do you have any information or documents or proof that you wish to submit to us today indicating that you are aware, or that there was some conspiracy or intention against you, and who drafted this letter?

[Page 93]

MR. FISKE: No, I don't.

MR. SAMSON: Why did you make this statement?

MR. FISKE: I was making the statement because of the nature of the letter, the contents of the letter, that it was so unlike Dr. Gillis. That is why I was making the comments.

MR. SAMSON: So this is speculation on your part?


MR. SAMSON: But earlier you said you were not here to speculate anything. So there is speculation in your presentation today, is what you are now saying.

MR. FISKE: I have answered your question I think, Mr. Samson.

MR. SAMSON: I have asked you a second question. Are you now saying that there is more speculation in this document . . .

MR. FISKE: No, I don't believe so.

MR. SAMSON: So, just your contradiction. Okay. Page 43, around the bottom. Back on this idea of speculation, you are talking specifically about your resignation and basically what your whole perception of your resignation and what conclusions you have drawn, therefore speculation.

In the second last paragraph from the bottom, around the end, you say:

"If that had been so, why then did not the Premier simply refuse to accept my resignation letter and instead reassure me that I had misunderstood Mr. Thompson's directive and that we were still free to negotiate a deal? That my resignation on an issue of principle was unnecessary and a simple misunderstanding.

It is really that simple. If I had it all wrong, then given the Premier's stated satisfaction with my previous job performance, one would have expected someone to speak to me and straighten out the misunderstanding. The fact that they did not reaffirms to me that I did not misunderstand Mr. Thompson.".

Once again, this is just merely speculation on your part, isn't it? Do you have anything to back this up? That just by refusing your resignation, the Premier had some ulterior motive or that he was not coming to this admittance which you expected, and therefore this answers everything. You were right, they were wrong, and the deal is done.

[Page 94]

MR. FISKE: Mr. Samson, I am simply making an observation.

MR. SAMSON: It is not observation, it is speculation. You have theorized . . .

MR. FISKE: It is an observation that I am making for your consideration . . .

MR. SAMSON: But you have theorized . . .

MR. FISKE: . . . in order to help you . . .

MR. SAMSON: . . . what you can see, you are saying that by the fact that you refused my resignation, that means this. And this is what you are saying to us today.

MR. FISKE: I think that if you continue and read the other areas that I have mentioned the Premier's comments, that he said that he didn't wish to, in response I think to Dr. Hamm, that he didn't wish to respond or to speak to me, because he felt it would hurt my legal case. Mr. Samson, you know, that didn't even exist at that time. It was four and a half months later.

MR. SAMSON: But still Mr. Fiske, you stated earlier that you are not speculating in this. Yet, I have given you four or five different examples of where you have stated stuff, and you have no factual background or document to back up your statement. This is Ralph Fiske sitting down, looking at the situation, saying this is what I think happened, and this is my theory on what has happened here. But yet, you are saying to us, it is not speculation. So what you are saying is this is the truth. If not speculation, what you are saying is the truth, and you want us to accept it as the truth according to Ralph Fiske. Is that true, or is it speculation on your part?

MR. FISKE: Mr. Samson, it is an observation. I came in here, I was sworn, and I have put it there before you.

MR. SAMSON: But when you give testimony Mr. Fiske, you are putting it before us to accept as the truth. I am asking you . . .

MR. FISKE: I am suggesting, I am telling you that it is true, and it is up to you to determine whether it is untrue.

MR. SAMSON: So you are standing by that statement that the fact that your resignation . . .

MR. FISKE: I am, I am.

[Page 95]

MR. SAMSON: . . . was accepted, that this is the only reason. It can't be because of job performance, or because they were not impressed with how you had been operating, or anything else of that nature. It is only, simply because of the fact that you are saying that they did not accept it, it makes it that your interpretation of the statement of Mr. Thompson is therefore true. That is the only explanation for the acceptance of your resignation. Is that your statement?

MR. FISKE: Mr. Chairman, I think I have responded to this.

MR. SAMSON: Yes or no. Yes or no, that is all you have to answer.

MR. MACINTOSH: Mr. Chairman, that is not a yes or no question, it is an unfair line of questioning with respect.

MR. SAMSON: What is unfair?

MR. CHAIRMAN: It is probably, saying yes or no in response to that kind of question is not your only option.

MR. MACINTOSH: With respect Mr. Chairman, that is what he was asked by a member of this committee to do, to say yes or no. Mr. Fiske is trying to respect this committee, and if the committee sets guidelines, then I think with respect, it is fair for the chairman to ensure that the line of questioning is fair and appropriate.

MR. CHAIRMAN: The line of questioning is acceptable. I told the witness that his option is not only to say yes or no. He has another option, he can say no, this is wrong because of the following. He can say yes, you are entirely right, or he can say no and give an explanation.

MR. LEBLANC: He answered the question, however the honourable member for Richmond wants a yes or no. This seems to be more of a legal wrangle than anything else. Unless he wants it to repeat all over again, I don't want to get repetitive here. Thank you.

MR. CHAIRMAN: Mr. Fiske did you have anything else you wanted to say to us in response to that last question from Mr. Samson.

MR. FISKE: No, I have nothing further to add.

MR. CHAIRMAN: I think he answered it before, it was rephrased in a yes or no fashion. As I said it is not his only option. If you want to persist and ask the question again, do it.

[Page 96]

MR. SAMSON: Is it your statement before us today that by the fact that the Premier accepted your resignation, the only possible interpretation of that, in your view, was that what you had understood from Mr. Thomas was correct, that there was absolutely no other explanation as to why your resignation was accepted and that we should accept that the Premier's action was an indication that you were clearly with the right interpretation and that you are not wrong in any way, or there was no other possible explanation as to why the Premier would have accepted your resignation?

MR. FISKE: Mr. Samson, I think you are misstating the facts as I have tried to relate them and I am not going to answer that question. You have misconstrued what I have said.

MR. CHAIRMAN: I think it is incumbent on the witness to explain to us why he thinks the statement is misconstrued, how it has been misconstrued.

MR. MACINTOSH: Mr. Chairman, the question is asking Mr. Fiske to confirm that the only interpretation of the facts set forward is, and Mr. Fiske has never said that.

MR. SAMSON: Well, that is what I am asking . . .

MR. MACINTOSH: He made an observation, not a speculation, and he has answered that that was his observation. At no time has he ever suggested that was the only conclusion that Premier MacLellan could have come to.

MR. SAMSON: That is all he has to say.

MR. CHAIRMAN: The witness can say that, if that is his answer.

MR. SAMSON: Get him to say that. (Interruption) No, he did not.

MR. CHAIRMAN: Mr. Fiske, can we hear from you, please?

MR. FISKE: Pardon me?

MR. CHAIRMAN: Can we have an answer to Mr. Samson's question?

MR. FISKE: Mr. Chairman, I have answered his question as I understand it.

MR. SAMSON: Do you want me to ask it one more time?

MR. FISKE: I think legal counsel has in addition explained of the convoluted question that it is.

[Page 97]

MR. CHAIRMAN: Your counsel is here to assist. He is not the witness and, Mr. Fiske, I am trying to help both you and the committee in getting an answer. It has been suggested to you in reference to a passage in your testimony, that you are offering us only one possible explanation and that interpretation of the passage has been suggested to you and I understand you to be suggesting that that is not what you are saying. Could you help us understand the difference between what is being suggested to you in the yes or no question and what you believe you were intending to say in your passage?

MR. FISKE: I was making an observation, Mr. Chairman, in relation to my resignation in the sense that the Premier did have an opportunity to refuse to accept that resignation and that he did not. I said this in addition because of his comment in this House in answering a question to Dr. Hamm, that the reason he did not speak to me at the time was because of my legal suit. This is an observation that I have made.

MR. CHAIRMAN: I think we got beyond the point of what you said with respect to the Premier's comment about the lawsuit. It is not that point. I think it has to do with a slightly different point. It has to do with your understanding of the circumstances? All right, first, Mr. Fage, and then your legal counsel.

MR. FAGE: On a point of order, Mr. Chairman, this committee has never been a forum for legal cross-examination. This has been a committee where questions were duly and forthrightly answered and the witnesses attempt to answer them in the best possible manner that they can. What we are having now is courtroom semantics. That is not the role or has never been the precedent of this committee.

[3:30 p.m.]

MR. CHAIRMAN: I think the problem is this. It is not just that the room is full of lawyers but it is that cross-examination is, in fact, a useful tool. I think people are entitled to ask tough questions and there is a lot of latitude in the questioning. Mr. MacIntosh, did you have anything? Do you want to help us here?

MR. MACINTOSH: Mr. Chairman, yes. We can't blame it entirely on the lawyers and tough questions are appropriate. It might also have something to do with the fact that it is 3:30 p.m. and all of you, including Mr. Fiske, have been going for four, five or six hours. Perhaps a five minute break for the witness might give him a chance. I think things were getting lost in the time of day as much as anything.

MR. CHAIRMAN: Here is a problem. I think it is certainly correct that we are all getting a little tired. I think everyone has been putting in a long day today. If you are ready to go, all right. Mr. Leefe.

[Page 98]

MR. LEEFE: This is the Public Accounts Committee of the Nova Scotia Legislature, not the judicial committee of the Privy Council. Mr. Chairman, I move we adjourn.

MR. CHAIRMAN: All right. There has been a motion to adjourn. Is there a seconder for the motion? Do you mean to adjourn for the day? Is that the motion, to adjourn for the day?

Mr. LeBlanc, a comment?

MR. LEBLANC: Mr. Chairman, I guess, in a sense, I don't understand where the committee is going and perhaps someone can enlighten me. I have been to Public Accounts Committee meetings on many occasions over the years and somehow we are moving from a Public Accounts Committee to more of a formal court proceeding and I don't understand. The witness has indicated that he made an observation. The honourable member for Richmond is trying to get him to say a yes or a no and because he is not saying a yes or a no, we are at a stalemate. I really have a problem because this has never been the role of the Public Accounts Committee in the past.

All of a sudden, we are getting into a quasi-judicial board here or a court or a Supreme Court of Nova Scotia and you are making interpretations. I am at a loss for words as to where we are going with this thing. My understanding of it is along those lines. So if we are saying that if we don't have a yes or a no from a witness, that we are going to stay here until he says it, then I would like to get a clarification as to where we are going.

MR. CHAIRMAN: It is certainly the case that we don't want to spend an excessive amount of time dealing with things that are not on the main point of what it is that we are trying to deal with. I also tend to agree that the particular point of the question that the member is asking of the witness has probably essentially been answered by the witness but he is entitled, if he doesn't feel he has had a satisfactory answer, to continue with it. Now the observation that this might not be the usual style of questioning by members of the committee, I have to say is neither here nor there. This is a formal procedure in which the House, which is a court of record, allows committees to swear witnesses, we have statutory powers of inquiry, we have statutory powers to request subpoenas, we have statutory powers to compel the attendance, through that mechanism, of witnesses and we can swear witness. So quite a variety of formalities do attach to what goes on here.

The reason that rules of law do apply with respect to the asking of questions and cross-examination are appropriate is because they are generally regarded, through the test of time as being a useful mechanism for eliciting information. So, again, although I had asked the member to think about his question and whether he hasn't already had an answer to it, he is entitled to put the question.

[Page 99]

However, we are also in the middle of what I understand to be a motion to adjourn. I would ask for clarification. Is this a motion to adjourn for the day until our next meeting? I wasn't sure what it was. Is it still on the floor (Interruption) or is it a five minute adjournment we are asking for?

MR. LEEFE: Mr. Chairman, I understood that we were going to go for a specified period of time.

MR. CHAIRMAN: Earlier, we talked about finishing by 4:00 p.m. or 4:30 p.m. Other members of the committee came to me during the break and suggested that it would be good if we finished up earlier than that and I agreed that we would try to finish up earlier than that. Unfortunately, we are finding ourselves with questions which have accumulated among all members. I think we are almost finished, really, in terms of time.

MR. LEEFE: We have digressed from asking questions which are pertinent to the Public Accounts Committee in favour of beating up on the witness. That is inappropriate.

MR. CHAIRMAN: Well, I have to say this, what the case is, is that the credibility of a witness is always an issue. Now there are limitations on the ways in which credibility can be tested. But questions earlier for example, about testing memory, entirely appropriate. Now we are seeking some clarification, which I think is something the member is entitled to ask. I think we might have spent too long on it, but I think the member is entitled to ask his question. (Interruption) All right, thank you. Can we take one more stab at it, and see if we can actually get some clarification here.

MR. SAMSON: On Page 43, the very last sentence where you are referring to the fact that Premier Russell MacLellan accepted your resignation, you state, the fact that they did not, and when you are saying did not, is refuse to accept your resignation. Is that a correct interpretation? That is what you are referring to here, right? "The fact that they did not refuse to accept my resignation, reaffirms to me that I did not misunderstand Mr. Thompson.".

Is it your statement to us today that as far as you are concerned, this is the only possible explanation why Premier Russell MacLellan accepted your resignation, or is there a possibility there may be other reasons why the Premier accepted your resignation? (Interruption)

MR. DEXTER: That question is really out of order. It has nothing to do with that sentence, in fact he is doing exactly what the counsel for Mr. Fiske has said. He is misinterpreting this completely out of context. (Interruption)

MR. CHAIRMAN: All the witness has to is deny the implication of the question.

MR. FISKE: Deny the implication of the question?

[Page 100]

MR. CHAIRMAN: If that is your view.

MR. SAMSON: Is that what you mean? You were saying that is the reason in your opinion, why he accepted your resignation, that by accepting it, it means that you had the correct interpretation of Mr. Thompson. Is that the correct interpretation, and if it is, is that the only possible reason?

MR. FISKE: Mr. Samson, I think that was one of them, yes.

MR. SAMSON: My supplementary to that, in your opinion, Mr. Fiske today, are you telling us that as far as you are concerned, that is the only possible reason, as far as you see it, looking at this, why the Premier accepted your resignation?

MR. FISKE: Oh my soul, there could have been a dozen reasons. But I would like to know just one.

MR. SAMSON: But as far as you are concerned, this is the only one that you see?

MR. FISKE: You are trying to get me to say something, I don't know what it is.

MR. SAMSON: But you have said it here. At no point have you said, I have misunderstood your statement.

MR. FISKE: Well, if I have said it, what are you asking? I don't understand, Mr. Samson. I would like to help you.

MR. SAMSON: No problem, that is what we want. You are saying that the fact he didn't accept your resignation means therefore in your eyes, that you did not misunderstand Mr. Thompson. Is that correct?


MR. SAMSON: I am asking you, are there any other possible reasons why the Premier accepted your resignation?

MR. MACINTOSH : Mr. Chairman, the question has been answered, and he said there could be at least a dozen.

MR. CHAIRMAN: He asked it a second time. You are agreeing with him?

MR. FISKE: Sure, as I said, there could be a dozen other reasons.

MR. CHAIRMAN: Thank you. Mr. Samson, are you finished your questions?

[Page 101]

MR. SAMSON: For now, yes.

MR. CHAIRMAN: For now. I think, we are rather hoping we might finish up now. Are there any other questions? We have about - I am trying to remember back where we were - two minutes from the Liberal members. Are there any other questions? Mr. Fraser.

MR. FRASER: A short question to Mr. Fiske, Mr. Chairman. On Page 53, you go into talking about some things in the future that perhaps should happen. You say that employees of the Gaming Corporation provide intimate disclosures of personal affairs, that sort of thing, that you feel that government members, Cabinet Ministers do not; they don't go through the same processes that you went through when you got hired. Is that correct?

MR. FISKE: That is my understanding, yes.

MR. FRASER: So you and your employees at that period of time would have been pure white or whatever, where Cabinet Ministers could be stained and basing their decisions on wrong reasons, or whatever. Is that what this statement is saying?

MR. FISKE: Mr. Fraser, I can't imagine why a Cabinet Minister would ever want to involve themselves in any aspect of the gaming business to the extent that happened in this particular case. I mean, of all businesses for an honourable gentleman to involve himself, this is not one of them.

MR. FRASER: I guess in your opinion in the future, would you see Cabinet as not having any role whatsoever, wash their hands of it and say they are not going to . . .

MR. FISKE: Not at all. I have never said that Cabinet should not give direction to the Gaming Corporation. All I said was that when they do, they should go through the same performance, as required by the Act. That is what I have said.

MR. FRASER: But by nature of their position, don't they have the confidence of their constituents to first go through an election process, they go through public disclosure in Cabinet. Isn't that a little different than an employee who has not gone before the people to say, am I a worthy candidate or not? I am just questioning. You are talking about some recommendations, perhaps for the future. Maybe that should be considered as well because their method of getting to their position is different than say yours was or the other employees of the corporation.


MR. FRASER: Okay, thank you.

[Page 102]

MR. CHAIRMAN: Mr. Samson has another brief question, he assures us.

MR. SAMSON: Yes, just a point of clarification. My honourable colleague here, Ms. Godin, spoke about doom and gloom with the casino, and break-out of crime and everything. Just for clarification so that Nova Scotians understand, who regulates the casino?

MR. FISKE: The Alcohol and Gaming Authority.

MR. SAMSON: And you were the CEO of what body?

MR. FISKE: Of the Nova Scotia Gaming Corporation.

MR. SAMSON: Are those the same body?

MR. FISKE: No, they are two separate bodies.

MR. SAMSON: Thank you very much.

MR. CHAIRMAN: Are there any other questions from any other members from the NDP caucus or PC caucus? If not, can we take it that we are finished with the witness for today? (Interruptions) No, we are not. Sorry, Mr. Dexter.

MR. DEXTER: I have one brief matter that I want to raise.

MR. LEEFE: Does it involve the witness?

MR. DEXTER: It does not involve the witness and the witness, in my view, can leave unless there are any more questions. I would like to say one thing and that is that I would like to acknowledge the fact that you spent a very long day here under some very tough questioning. You have obviously put a great deal of work and time and effort into your appearance here. I appreciate that, at least for myself, and I am sure for others here, I would like to say thank you.

MR. CHAIRMAN: Okay, I think everyone agrees on that.

Mr. MacKinnon, did you have one more matter to raise.

MR. MACKINNON: We agree with the witness' participation and so forth but I guess to the extension of that, are we going to start inviting this witness back indefinitely? (Interruption) Well, we have a lot more questions, if you want. As my colleague, the honourable member for Queens, has suggested, and rightfully so, and I indicated this right at the start of this morning's hearing, that we have deviated substantially from what the intent of the Public Accounts Committee was set up for. That is why I made that note right from the

[Page 103]

start. But that wasn't the wish of the majority so we went in that direction but we are setting a very dangerous precedent by focusing singularly on one issue. I haven't seen any new evidence that would compel myself - I am not speaking for my colleagues here or anybody, I am speaking for myself, I haven't seen any substantive evidence to compel me - to want to have this witness back any more on this issue anyway.

MR. CHAIRMAN: I think that is a decision we have to make on another day. I think the direction of the committee is that we proceed to hear two other witnesses a week from today. I certainly hope that when we hear those witnesses we are able to deal with them and finish up within the scheduled time and we don't find ourselves tempted to go well beyond the time. On that point, Mr. LeBlanc, and then Mr. Leefe.

MR. LEBLANC: I think that for all members, today has just thrown a monkey wrench into my schedule. I am not diminishing the importance of this testimony in the committee meeting, it is just that it is very important that when witnesses are coming, that we know how long they are going to speak and how much time we have to ask questions. I would suggest that we do not deviate from the time because, of course, for a lot of us it is difficult to be voting against the motion to hear more testimony because it is an important issue but, Mr. Chairman, I think for a lot of us who have other commitments that we will set a time and we will live by that time. If we have to come back another day, then that shall be the point. I appreciate Mr. Fiske coming and staying this amount of time. It is very warm in here. It has been difficult but on the other committee hearings I think it is important that we adhere to the time limits and I know that is difficult sometimes but we just have to because it is too difficult for a lot of us who have other schedules.

MR. CHAIRMAN: Yes, I think most members of the committee feel that way and I think we were all a bit taken aback by the length of the statement we were faced with. Actually I meant to thank all members of the committee, plus the witness, for their flexibility in adjusting their timetables but you are right, it is not desirable to find ourselves in this kind of a squeeze. Mr. Fraser and then Mr. Dexter.

MR. FRASER: Yes, Mr. Chairman, just on that procedure and the motion that was passed two weeks ago, or the agreement, in Hansard indicated that another witness or two would be requested to be here today. When Hansard started recording today, we had a witness who was not agreed to two weeks ago. How is that rectified or does it make any difference? Sometime through the piece there it changed from Mr. Merrick or Mr. MacKeigan, to Mr. Fiske and I am just wondering how is this recorded? If a recorded vote was done, I did not hear about it or what.

MR. CHAIRMAN: Go right ahead, Mr. Leefe.

[Page 104]

MR. LEEFE: It has been the case for many years that when the witness who has been requested to be available is not available, that a rescheduling is done through the Chair with the assistance of the secretary. It is my understanding that that is what was done on this occasion.

MR. CHAIRMAN: Yes, that is exactly correct. That is what happened. The problem was that Mr. Merrick was just not available today. We do not control his timetable.

MR. FRASER: Mr. MacKeigan was not available either then because either one or the other was asked to be here today. We were given an option of one or the other.

MR. CHAIRMAN: I think Mr. MacKeigan was available but I think the direction from the committee was that we were desiring to hear from the two lawyers and we hoped, I think, to hear from them together. All committee members were polled by the secretary of the committee as to whether they were prepared to make a change and that is the result. In any event, let me remind the counsel for our witness that he has undertaken to table the documents that were quoted from today. I hope that can be done by fax within the next 24 hours. That would be very useful. Are there any other procedural matters before we adjourn until our next meeting date? Mr. Dexter.

MR. DEXTER: Yes, I wanted to deal with this because I have to say I am very distressed by the way in which the materials that have been coming forward have come forward. We made a request to the Gaming Corporation for their files and rather than responding, they did respond by letter on July 2nd, said they would probably have the materials to us shortly, but rather than providing us with materials what they do instead is they hold a press conference to which the members of the Public Accounts Committee are not invited. Then they release parts of their files that - the point I want to make is that we should be going back to them. We should be going back to the Gaming Corporation and, again, requesting those materials as soon as possible.

The second thing is that when we get here, there is an additional piece of information that is tabled, apparently from the files of the Gaming Corporation, by a member of the committee which, again, gives the appearance that the Gaming Corporation is conveniently dribbling out its material piece by piece as it chooses.

AN HON. MEMBER: It is a public document.

MR. DEXTER: Well, it might be a public document and if it is, and there are materials that should be helpful to this committee, then they should be tabled but I am not very impressed by the way in which the materials arrive in a haphazard way. If members of these committees have materials that are relevant to the committee, then they should be tabled.

AN HON. MEMBER: We did. It was tabled.

[Page 105]

MR. DEXTER: This is the only document you have?

MR. CHAIRMAN: It is a fair point and I think we do anticipate hearing from people at the Gaming Corporation at some point. We can certainly make that point to them directly. I am sure they are reading the transcripts of this, though. Mr. Samson.

MR. SAMSON: Mr. Chairman, I just want to make a quick point. Your correspondence to honourable counsel on the other side clearly asks that we be provided with the information that Mr. Fiske was going to present today in order to try to expedite this process, that we would be able to research, prepare our questions in an organized fashion, so we could have an organized discussion here today. Instead, Mr. Fiske has sat here for two and one-half hours and read from a prepared document and I can only question, why was this document not given to us before? I propose to you, Mr. Chairman, we would have been out of here at 1:00 p.m. Had we been given this document, we could have read it, done the research, posed the questions to ourselves and put the questions to Mr. Fiske today. Instead, two and one-half hours of our committee time was spent by Mr. Fiske reading word by word, not just his own ad lib, but word by word. Why was this not made available to us?

MR. CHAIRMAN: It is certainly true that if there is a 55 page prepared statement that probably it was available beforehand.

MR. LEBLANC: Mr. Chairman, as someone who sat for two and one-half hours in the Gaming Corporation boardroom yesterday, and that member who is a member of the Party that is in government, in power, and read the same document for two and one-half hours and kept us there forever and happened to do it just the day before the Public Accounts Committee met, it is amazing that we wouldn't have to be able to go through, I find it kind of amazing for him to be complaining.

MR. CHAIRMAN: I think we have all managed to get a number of things off our chests. Thank you very much. We are adjourned until our next meeting date on July 15th.

[The committee adjourned at 3:52 p.m.]