Assemblée Législative de la Nouvelle-Écosse

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21 septembre 2017

Public Accounts -- Wed., Sept. 2, 1998

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HALIFAX, WEDNESDAY, SEPTEMBER 2, 1998

STANDING COMMITTEE ON PUBLIC ACCOUNTS

10:00 A.M.

CHAIRMAN

Mr. Howard Epstein

DEPUTY CHAIRMAN

Mr. Hyland Fraser

MR. CHAIRMAN: Ladies and gentlemen, good morning. We have a quorum now for the start of the meeting of the Public Accounts Committee. I would like to welcome you all here today for the continuation of our inquiries. We have two members substituting for otherwise regular members of the committee. I would like to welcome Mr. Lawrence Montgomery and Mr. Kevin Deveaux to the committee today. We are scheduled for a three hour session so we will run until approximately 1:00 p.m. I would like to remind all members of the committee and any of our witnesses and anyone else in attendance since, of course, this Chamber can become quite warm, they are welcome to remove their jackets or otherwise adjust their dress in any way that would make them comfortable.

Before we finish today, I wonder if the members of the committee could participate in a discussion on where we would like to go in terms of our proceedings afterwards. I have also been advised by committee member Samson that he wishes to raise a point of order at the end of the meeting. So we will deal with both of those at the end.

Finally, I will now swear in the witness and we will proceed.

Would you take the Bible? Thank you. Do you, Robert MacKay, swear that the evidence you shall give to the Standing Committee on Public Accounts touching on matters pertaining to the Nova Scotia Gaming Corporation, shall be the truth, the whole truth and nothing but the truth, so help you God?

MR. ROBERT MACKAY: I do.

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MR. CHAIRMAN: Mr. MacKay, it is our tradition to invite any witness to make an opening statement to the committee. I know you have circulated a short statement in writing just a few moments ago. Would you care to read that into the record, sir?

MR. MACKAY: Mr. Chairman, thank you. As the statement indicated, I would, at your direction, like to take a few minutes to make a brief statement. The Nova Scotia Gaming Corporation is an agent of government with a role to implement government policy. That the government should express its general wishes to the corporation is inherent in that relationship. In the matter before this committee, the government expressed its view that a negotiated settlement was preferable. The government did not direct that the corporation settle. Government did not direct the terms of the May 20, 1997 settlement agreement. I cannot speak to events which occurred after the latter part of June 1997 because I had no further involvement with the file.

In the time period between April 21st and May 20th, counsel were more firmly of the view that a negotiated settlement was preferable to an arbitrated settlement. By mid-May, Mr. MacKeigan told us that the Gaming Corporation's case was weak and I understand that Mr. [Carl] Holm and Mr. Merrick had the same opinion. Thank you very much.

MR. CHAIRMAN: Our normal procedure is to turn to each of the three caucuses in turn and invite members to ask questions. We will take this in groupings of about 20 minutes each and I would invite Mr. Dexter to start the questioning.

MR. DARRELL DEXTER: Good morning, Mr. MacKay. Just a couple of preliminary questions. Before you came here today, what did you do to prepare for your testimony? Who did you speak with?

MR. MACKAY: I had a conversation with a lawyer with respect to the procedures before the House and a conversation and a discussion with that person to review the transcripts provided by Hansard and the evidence that has been in this House. I had a conversation with Dr. John Savage some weeks ago. I had, during the course of the period of time, a conversation with Bernie Boudreau. I had, early on in the transactions before the House, a brief conversation with David Thompson and the latest conversation I had was with Robbie MacKeigan who had been counsel to the Executive Council during this time period.

MR. DEXTER: In the course of those conversations, was any direction given to you with respect to the manner in which you are to answer questions before this committee today?

MR. MACKAY: No.

MR. DEXTER: What was the purpose of your conversation with Dr. Savage?

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MR. MACKAY: The purpose of my conversation with Dr. Savage was in the normal course of events, some weeks ago, at which time he indicated that he was going to seek whatever redress he could under the law.

MR. DEXTER: But it didn't have to do with the actual substance of your testimony before this committee?

MR. MACKAY: No.

MR. DEXTER: How about your conversation with Mr. Boudreau?

MR. MACKAY: The same. The conversation with Mr. Boudreau was in passing. It was a conversation at the time which simply referenced the proceedings of the House but no conversation with respect to what I would say or not say.

MR. DEXTER: You have made your opinion here today clear. The Nova Scotia Gaming Corporation is an agent, as you say, of government, with a role to implement government policy. I would suggest to you that there is a difference between the implementation of government policy and the day-to-day running of the corporation. Would you agree with that?

MR. MACKAY: Yes.

MR. DEXTER: When decisions are made with respect to the Gaming Corporation, the agency or Cabinet portfolio that is responsible for that is the Department of Finance. Is that not correct?

MR. MACKAY: Yes.

MR. DEXTER: In your position at that time, you were the Deputy Minister to the Premier.

MR. MACKAY: I was the Deputy Minister to the Premier, I was the Secretary to the Executive Council and I was the Deputy Minister of the Priorities and Planning Secretariat.

MR. DEXTER: Did you think it was odd that you were dealing with this file rather than the Minister of Finance?

MR. MACKAY: No.

MR. DEXTER: Why was it that you were dealing with it rather than the designated Cabinet Minister?

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MR. MACKAY: There was no particular reason.

MR. DEXTER: Well, somebody must have come to that decision. Did you make that decision?

MR. MACKAY: No.

MR. DEXTER: Who made the decision?

MR. MACKAY: The issue with respect to intervention with respect to this file, Mr. MacKeigan was engaged on behalf of the Executive Council, on behalf of the Premier who is also President of the Executive Council.

MR. DEXTER: Well, at some point in time, that decision had to get made. Did you make a recommendation in that regard? How did you become involved in this file?

MR. MACKAY: As in most files, it was the result of a discussion that the Premier would be briefed. As a result, he sought a briefing from Mr. Fiske and at that point, not being familiar with the nuances of the law or the merit, one way or another, of the case, it was thought desirable to retain counsel on behalf of the Executive Council and the Premier in his role as President.

MR. DEXTER: Did you talk to the Minister of Finance about that decision?

MR. MACKAY: No, I don't recall having talked to the Minister of Finance about that decision.

MR. DEXTER: So the Minister of Finance was left out of that loop.

MR. MACKAY: Not that I am aware of.

MR. DEXTER: You say not that you are aware of. You said you didn't talk to him.

MR. MACKAY: I didn't talk to him.

MR. DEXTER: Do you know if anybody else talked to him?

MR. MACKAY: I don't know that. I really don't. I know I did not talk to him at that point.

MR. DEXTER: When Ms. Gordon was here, she said that she believes, although I think she said that she wasn't sure but she thought that you had asked her to apply to be Vice-Chairman of the Gaming Corporation. Is that your recollection?

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MR. MACKAY: Yes, it is.

MR. DEXTER: Were you the one who called and asked Ralph Fiske to be the chair of the Gaming Corporation?

MR. MACKAY: No.

MR. DEXTER: Do you know who did that?

MR. MACKAY: No, I don't.

MR. DEXTER: Do you know if anyone else was ever invited to apply for the position of Chair of the Gaming Corporation?

MR. MACKAY: I don't know.

MR. DEXTER: How would that have been handled?

MR. MACKAY: Probably in conversations, or general awareness of what was happening with respect to the development of a casino and a corporation. There are any number of mechanisms.

MR. DEXTER: Was there a search done?

MR. MACKAY: I don't recall.

MR. DEXTER: I am trying to get your evidence straight here. You weren't involved in the file until there was a briefing done by Mr. Fiske to Dr. Savage. That is your recollection?

MR. MACKAY: That is correct.

MR. DEXTER: Prior to that, with respect to the hiring of the Gaming Corporation Chair and hiring decisions within the Gaming Corporation, you weren't involved in that?

MR. MACKAY: No. Other than the processing of documentation with Cabinet, but general involvement in the recruiting and/or others, no.

MR. DEXTER: You wouldn't say, or your evidence is not that Mr. Fiske in any way requested your intervention in the process that was taking place between the Gaming Corporation and ITT Sheraton?

MR. MACKAY: Not prior to April 21st, no; subsequent to that, yes.

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MR. DEXTER: The Gaming Corporation requested your involvement?

MR. MACKAY: Yes.

MR. DEXTER: The briefing took place, perhaps you could just tell us who was involved in that briefing, it was Mr. Fiske, Dr. Savage, yourself, anyone else?

MR. MACKAY: Yes. Robbie MacKeigan, John Merrick and Carl Holm.

MR. DEXTER: Okay. So Mr. MacKeigan was actually engaged prior to this briefing that took place?

MR. MACKAY: He was engaged earlier in the day, or the day before, just to be there and to provide advice if needed.

MR. DEXTER: This confuses me somewhat, because you are saying that even before the briefing took place, there was a decision made to engage a solicitor.

MR. MACKAY: The decision to engage the solicitor, if I recall, was either on the morning of the briefing or that weekend prior, but it was reasonably coincidental with April 21st or April 20th. I am not sure actually the date on which I contacted Mr. MacKeigan but I think it may well have been the morning of the briefing.

MR. DEXTER: Which is just before the arbitration?

MR. MACKAY: Yes.

MR. DEXTER: Prior to that time, had you had any communication from the Sheraton interests or anybody on their behalf?

MR. MACKAY: I did not.

MR. DEXTER: Had any other lawyers contacted you with respect to the arbitration?

MR. MACKAY: Not that I recall.

MR. DEXTER: It seems rather odd or coincidental that just a day before arbitration that you would decide to have a briefing and engage a solicitor. Did you lack confidence in the Gaming Corporation?

MR. MACKAY: No. I, at the time, considered it, and still do, to be quite routine. There are a number of issues on the go at any given time. Some of them, you get a briefing done very early in the game, others, because of events, that doesn't happen until very late in

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the game. I did not think it unusual whatsoever. The Premier or ministers are briefed as a matter of course all the time.

MR. DEXTER: They don't retain solicitors as a matter of course.

MR. MACKAY: It depends on the nature of what is happening. If it is something that is highly technical in nature, you will retain the best advice you can get.

MR. DEXTER: You already had two lawyers. You had the Gaming Corporation's lawyer, Mr. Merrick, and his opinion prior to this time, according to Mr. Merrick, was that the case for the Gaming Corporation was rock solid. You had Mr. [Carl] Holm, who had been engaged. So you already had two legal opinions, on different aspects mind you, but two already existing. You decided to hire a third solicitor and to come to a briefing, which you apparently didn't have any idea about beforehand, and out of that meeting you send the solicitor to an arbitration and have the arbitration halted. That, to me, seems premeditated.

MR. MACKAY: The solicitor wasn't sent to an arbitration, and the solicitor didn't halt the arbitration. To the best of my knowledge, the arbitration was not halted by the actions of Mr. MacKeigan. Mr. MacKeigan, as I indicated, was retained as a matter of course. There was no feeling, that I am aware of, that we doubted the integrity or the abilities of any of the counsel that had been involved in the corporation.

MR. DEXTER: Let me ask this question then. You said in your statement that you felt that a negotiated settlement was better than an arbitrated settlement. Was it a negotiated settlement at any cost?

MR. MACKAY: No.

MR. DEXTER: What was the motivation for a negotiated settlement?

MR. MACKAY: I think, if I recall at the time, during the discussion, as a matter of philosophy, counsel present indicated that under the normal course of events, a negotiation generally speaking was better than an arbitration. That philosophy was shared. At the time, the government, through the Premier, expressed that its preference would be a negotiated settlement.

MR. DEXTER: Mr. MacKay, you said earlier that you had reviewed the transcripts of the proceedings to familiarize yourself with the evidence that has been given, and you will know then that Mr. Fiske alleged that at least part of the motivation behind the push to settle the arbitration was a desire to favour the prospects of one leadership candidate over another. At any time during your negotiations, or during your involvement in this file, did you hear Premier Savage, Bernie Boudreau or anyone else suggest to you that an arbitration might harm Mr. Boudreau's chance for the Liberal leadership?

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MR. MACKAY: No.

MR. DEXTER: Let me be clear. That just never happened, or you don't recollect it?

MR. MACKAY: It never happened in my presence.

MR. DEXTER: And you are sure of that?

MR. MACKAY: I don't recall it.

MR. DEXTER: You don't recall it, is what you are saying.

MR. MACKAY: I don't recall it.

MR. DEXTER: Now, just so that I have the chronology right, as you recall, Mr. MacKeigan was retained the morning of the briefing. This was a phone call by you, was it?

MR. MACKAY: That is correct.

MR. DEXTER: How did you select Mr. MacKeigan?

MR. MACKAY: I have known Mr. MacKeigan over the years as I do know a number of other lawyers in this town. I knew him as a person who had a practice involved in business. And so, no particular reason, other than I felt he was an individual who was qualified. I could have phoned others, it was just . . .

MR. DEXTER: Did you make this decision on your own or were you acting on someone else's instructions?

MR. MACKAY: I made the decision on my own.

MR. DEXTER: Why would you take this kind of a step without consulting the Premier?

MR. MACKAY: As a staff position, I have the responsibility, then and now, to see that my minister or ministers are briefed as well as I can see them briefed. In doing that, it is not unusual to retain the best advice you can get. That is what I did.

MR. DEXTER: Coming into the briefing - and Mr. MacKeigan said this - he did not know anything about the file at all. He is not going to provide any advice.

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MR. MACKAY: No, but he would at least be familiar with the file. He is familiar with business transactions. To my knowledge, at that point, this was an arbitration over a contractual issue. That is Mr. MacKeigan's background.

MR. DEXTER: Can you recall the precise instructions that you gave to Mr. MacKeigan?

MR. MACKAY: No, I don't recall precisely. I can recall, in general, that when I asked him, I described to him that there would be an arbitration process. There was a briefing meeting for the Premier scheduled for later that afternoon. I would like him in the meantime to familiarize himself, as much as possible, with the Gaming Corporation legislation and so on and be prepared to provide advice, if needed, during the meeting. I don't recall anything specific. I understand that during that period of time Mr. MacKeigan sought a conversation, I think, with Mr. [Carl] Holm and with other solicitors, just to get himself familiar.

MR. DEXTER: I am not sure how my time is going here but I will ask this last question. What do I have?

MR. CHAIRMAN: You have another four or five minutes.

MR. DEXTER: In evidence before this committee, both Mr. Merrick and Mr. Fiske agree on one essential fact which is that the inclusion of Mr. MacKeigan in these negotiations caused difficulties for the Gaming Corporation. In fact, I think Mr. Fiske went so far as to say that this inclusion essentially neutered the Gaming Corporation. Mr. Merrick said, well, it was obvious that Mr. MacKeigan was sitting in the corner and when he would be negotiating, the Sheraton interests would look over and Mr. MacKeigan would nod. This is an obvious interference in the negotiations. Did you expect that this was going to cause some difficulty for the negotiations?

MR. MACKAY: I did not expect it and I am not aware that it did. I am aware that this was the opinion. To the best of my knowledge, Mr. MacKeigan was involved on an interface basis or in the presence of the Sheraton on very few occasions, that I am aware of. One, the first meeting, the Sheraton was not involved, the meeting with the Premier, very clearly. I think the next involvement that Mr. MacKeigan had would have been following the first day of arbitration.

Permit me, the sequence of events strikes me, that - and I have to go back on this - would have been a Monday, Tuesday, Wednesday, Thursday of that week in April. Mr. MacKeigan was involved on April 21st during the briefing where the government's preference was expressed and the preference was negotiated versus arbitration.

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I do not think - but I am not sure of this - that Mr. MacKeigan was involved with the arbitration proceedings on the day of April 22nd at all. I am aware of Mr. MacKeigan being involved following a conversation with Mr. Merrick, as to whether or not Mr. MacKeigan could help facilitate a meeting between the corporation and the Sheraton. I do not know the extent of Mr. MacKeigan's involvement during the negotiations.

It was my understanding that he met in the presence of Sheraton personnel on two other occasions. One would have been in that same week in his office. To the best of my knowledge, subsequent to that, Mr. MacKeigan was not present during the actual negotiations between the Gaming Corporation and the Sheraton.

MR. DEXTER: You talk about Mr. MacKeigan acting on an interface basis and as a facilitator. The reality was that the Gaming Corporation had taken a hard line with the Sheraton interests. They were going to force commercial arbitration because they felt that the terms of the contract had not been lived up to by the Sheraton. That was their opinion?

MR. MACKAY: Yes, that was their opinion.

MR. DEXTER: Was that what you understood as their opinion?

MR. MACKAY: The policy that was expressed by the Premier was that negotiation was preferable. Mr. Fiske and the Gaming Corporation agreed on April 21st to explore that option and, again, during the period of time that the arbitration was adjourned, it is my understanding, and I have not looked at this, but it is my understanding that it was adjourned with a view that during the subsequent period of time avenues to negotiate a settlement would be explored.

MR. DEXTER: I want to just be clear on this because if I understand your evidence correctly, what you are saying is that a decision by the Premier to do an end run around the Department of Finance and intervene in a commercial arbitration and to put in place another lawyer to carry out some other function, other than an arbitration, is a policy decision? That is what you call a policy decision?

MR. MACKAY: I did not see it as an end run. I saw it on the basis that here was an ability offered to the Gaming Corporation for some additional support and advice that they needed and that was Mr. MacKeigan's role, was as a facilitator.

MR. CHAIRMAN: I am sorry, I have to move now to the Progressive Conservative caucus. Mr. LeBlanc or Mr. Leefe, do either of you have any questions? Mr. LeBlanc.

MR. NEIL LEBLANC: Thank you, Mr. Chairman. Mr. MacKay, I am listening to the conversations this morning and your testimony in regard to the legal counsel for the Executive Council. I have sat in that capacity as a member of the council and I was just commenting to

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my colleague, the member for Queens, saying that I do not ever recall the Executive Council hiring a lawyer to represent the Executive Council directly. I have seen on many occasions that we have asked for legal opinions from the Department of Justice. I have had numerous occasions, different departments, whereby there were some extenuating circumstances that involved legislation or whereby there were some complexities, whether it be lawsuits or pending lawsuits, that would come forward that they would request some legal counsel.

I am very confused I guess in a sense as to why Mr. MacKeigan was hired. Really here what you are looking for is an interpretation of the Act because I think if you are looking at the arbitration process, you are the one that is saying that the Premier indicated that he wanted to go with a negotiated settlement rather than an arbitration settlement. So can you re-clarify why you would go to an outside lawyer rather than just using legal advice from the Department of Justice?

MR. MACKAY: I do not think there was any particular decision to deliberately go to an outside lawyer. The decision was made on the basis as I assessed the situation at that point. It was a matter of business, a matter of contract law, and that was the practice that Mr. MacKeigan was in. With respect to advice to the Executive Council and legal terms, I think in general terms your description is correct but it ebbs and flows. There are many times in which the Executive Council or departments retain legal counsel within or outside the Department of Justice. It is a matter of course.

[10:30 a.m.]

MR. LEBLANC: We could beat this thing to death but I will say that when legal counsel is retained, it is for an extensive legal proceeding or a legislative proceeding. I very rarely have ever seen someone hired as legal counsel to give advice on how to proceed with an arbitration process which is exactly what happened here.

MR. MACKAY: It may well be. I did not think it unusual at the time.

MR. LEBLANC: Was it also the fact that perhaps you felt, since this was coming through the Executive Council, that you would rather have someone who is more comfortable to the government, such as Mr. MacKeigan, rather than a civil servant to deal with this?

MR. MACKAY: No.

MR. LEBLANC: You picked Mr. MacKeigan personally, is that correct?

MR. MACKAY: That is correct.

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MR. LEBLANC: You still have not explained to the committee, and perhaps you could try one more time, as to why the Executive Council, and specifically why yourself as Deputy Minister, or whatever, to the Premier, would be dealing with this issue at all because clearly the Gaming Corporation falls within the parameters of the Minister of Finance. This, of course, leaves the government to far-reaching criticism as whereby the Premier himself, and you, as his right-hand man, are tinkering with something which is going to arbitration and you are getting involved almost in the middle of a leadership convention at the same time. This is not my recollection of how things are dealt with in the government. Can you explain to me what were the extenuating circumstances that would bring this about?

MR. MACKAY: As I indicated earlier, it was in my role, a number of roles at the time, one of which being Secretary to the Executive Council, to see that the President of the Executive Council, or the Premier, whichever title you want to address, was familiar with an issue that was unfolding. I do not know why it took place at that time. It could just as easily have been a week earlier that we would have retained counsel and had the briefing. There was no particular significance in my mind to the timing. As to why I would become involved, that is my job as the senior staff person to make sure that advice is there. One other point that I would also reference is that the Minister of Finance is a member of the Executive Council.

MR. LEBLANC: So you mentioned that you were involved and that is why you wanted to attend the meetings and become the lead person on this. Can you explain to me why the Minister of Finance was not present at all the meetings because I look at myself as a former Minister of the Crown and I darn well would be attending the meetings that affect any corporation or any responsibility that falls within my parameters. I would not be leaving it to deputy ministers or other people to be doing the negotiations in my absence. Can you explain that to me?

MR. MACKAY: No, I cannot but I do not remember at any time feeling that the Minister of Finance was excluded.

MR. LEBLANC: I am looking at the testimony that Mr. Fiske has made and also you have made mention here this morning that when quite a few of the meetings that took place, he was not present. Is that correct?

MR. MACKAY: Meetings that involved me on this file, most often were in the staff role. There is only one meeting that I can particularly recall leading into this instance and that was the April 21st meeting that the minister was not there. Why he was not there, I do not know. It may have been simply that on a Monday he was not in town. I do not know. He was not excluded, in my view.

MR. LEBLANC: I know you are the messenger and you do not shoot the messenger but I will say that I think it is very inappropriate for the Executive Council to interrupt a proceeding that was in process by the Gaming Corporation and the intervention of such

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without meeting directly with the Gaming Corporation and letting them handle it whereby you have meetings with the Sheraton personnel being present whereby your counsel was there also and I guess in a sense neutering is a good word, Mr. Fiske mentioned. In essence what you did do is exactly that. Mr. Leefe has some questions and I will pass on to him.

MR. CHAIRMAN: Mr. Leefe.

MR. JOHN LEEFE: Looking at Mr. Fiske's testimony, Mr. Chairman, and if Mr. MacKay happens to have it in front of him . . .

MR. MACKAY: No, I don't have it in front of me.

MR. LEEFE: I am looking at Page 21. Here Mr. Fiske references a meeting, I think on or about April 22nd at 6:30 in the morning in the Premier's Office. At that meeting, John Merrick, Carl Holm and Sheila Butler had put together a briefing paper which was employed at that meeting. At any rate, Mr. Fiske said, what is significant is that both Mr. MacKay and Premier Savage, at this 6:30 a.m. meeting, after hearing of the compromise that was being put forward by Mr. Fiske's group, thought it should be sufficient to get a deal.

I wonder if Mr. MacKay recalls that meeting, and if he recalls indeed stating that he thought the compromise put forward by Mr. Fiske's group was sufficient, and what caused him to change his mind as the evidence would seem to indicate?

MR. MACKAY: Let's back up. As a result of the meeting on April 21st with the Premier, as I indicated earlier, Mr. Fiske and the corporation indicated that they would explore other avenues with a view to seeing if they could establish the parameters for a settlement. Mr. Fiske indicated that with counsel, and I assumed it meant Mr. Merrick and Mr. [Carl] Holm, and with staff, they would review their position. That is what they did. Early in the morning of April 22nd - now whether or not it was 6:30 a.m., I don't know, but it is quite possible, I don't know if the House was in session at that time, but 6:30 a.m. is probably about the time that many things really did get underway, a little unusual, not totally unusual, especially if the House is in session. I don't recall if it was at the time - at that meeting, I don't recall who was present. There could have been more than Mr. Fiske, and there may have been Mr. [Carl] Holm, I don't know that. But in any event, there was a proposal that the corporation indicated that they would be prepared to present to the Sheraton with a view to trying to achieve a negotiated settlement. At that point, it was expressed to Mr. Fiske that it seemed reasonable.

I don't recall the substance of what the proposal was. I am sure it is around somewhere, but I don't recall it. Subsequent to that, Mr. Fiske left, I assume the arbitration then began. I had no further involvement until later on April 22nd, and had a conversation with Mr. MacKeigan. I understand sometime later on April 22nd, Mr. MacKeigan contacted either Mr. Merrick, and I assume it was Mr. Merrick, because he was the person designated

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as the negotiator, and offered his services as a facilitator. That is the recollection, Mr. Leefe, as I have it at that point.

MR. LEEFE: Thank you, Mr. MacKay. About three weeks later on May 15, 1997, you again were involved, according to Mr. Fiske, and I will share - and they are entirely within context, I have been very careful to ensure that - the remarks made by Mr. Fiske for the committee or the evidence given.

He says, ". . . a few days before May 20th, I contacted . . .", that is Mr. Fiske, ". . . 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 . . . 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 that he was the best person to get matters moving. He then advised me that he intended to meet directly with legal counsel for the parties without my involvement.".

In your view, is that statement correct?

MR. MACKAY: I think it is within the ballpark. My recollection of events, the time-frame is roughly the same. It strikes me that there were a couple of conversations with Mr. Fiske, one of which was to explore whether or not we could be of further help in arranging a discussion between the Sheraton and the corporation. Then Mr. Fiske, at some point in that time-frame, and it is prior to the 15th, but I don't know the specific dates, it was somewhere between the 10th and the 15th. Anyway, he indicated at that point that, I think to some extent, they had been unsuccessful in arranging a meeting, that . . .

MR. LEEFE: They being?

MR. MACKAY: The corporation.

MR. LEEFE: Thank you.

MR. MACKAY: That he felt that the Premier should contact and arrange for a meeting between the corporation and the Sheraton. I thought about that for a little bit and had a conversation with Mr. MacKeigan at the time, and felt that that would have been intervention at far too high a level, that at the request of the corporation, the Premier's Office or the government would be arranging a meeting with the Sheraton at the highest order. I did not think that was appropriate at the time, and I indicated that to Mr. Fiske.

I didn't indicate on the basis of the word, could. I think you said that Premier Savage could not do it, or Dr. Gillis could not do it. I think I probably used the term, should, that it would have been more appropriate given the timing of events that had transpired up to that

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point that, if possible, meetings would be arranged with counsel, because that is how it had unfolded at that point. I suggested to Mr. Fiske that perhaps that would be appropriate.

The tenor of those conversations with Mr. Fiske was one of which that he thought it would be appropriate for either the Premier or me to knock heads together, read the riot act, something to that effect. As a result of those calls, and as a result of going back to Mr. Fiske, I did, through Mr. MacKeigan and with Mr. Fiske's knowledge, arrange for a meeting among counsel.

MR. LEEFE: Did you, in advance of arranging that meeting, advise either the Premier or Mr. Gillis that you were intending to arrange such a meeting?

MR. MACKAY: I don't recall. It would not have been unusual to do so, but nor would it have been something that I would have specifically done. It was something in the course of events, and it is quite possible that during a meeting of Priorities and Planning, or a meeting of Cabinet, I would have shared that. I don't recall. I don't know one way or another.

MR. LEEFE: It is clear then, that in your opinion, you were acting well within the discretion of a person serving as Deputy Minister to take a decision of that magnitude?

MR. MACKAY: I had responded to a request from the corporation, and I didn't think it was an unreasonable request.

MR. LEEFE: Mr. Fiske goes on to say that, ". . . Mr. MacKay insisted on proceeding and did convene a meeting with himself, John Merrick, Robbie MacKeigan and Larry Hayes; . . .", Mr. Hayes, of course, acting for the Sheraton, ". . . for reasons he did not explain, he . . .", that is you, Mr. MacKay, ". . . excluded Carl Holm.". Would you explain to the committee why Mr. [Carl] Holm was excluded?

MR. MACKAY: I don't know. I did not exclude him. I was asked to facilitate a meeting; Mr. MacKeigan facilitated and arranged for the meeting. I do not know whether Mr. [Carl] Holm was invited or not invited. He was not consciously excluded, let's put it that way.

MR. LEEFE: Not consciously excluded by you?

MR. MACKAY: By me.

MR. LEEFE: Somebody clearly did not invite him. Would it be fair to assume, then, that since Mr. MacKeigan was your contact, that it was Mr. MacKeigan who did not invite Mr. [Carl] Holm?

[Page 16]

MR. MACKAY: I don't know. The only conclusion that I might come to on that was it was indicated that Mr. Merrick was the negotiator on the file.

MR. LEEFE: The person with whom you were dealing was Mr. Merrick?

MR. MACKAY: No, I was dealing with Mr. MacKeigan.

MR. LEEFE: I'm sorry, Mr. MacKeigan.

MR. MACKAY: Yes.

MR. LEEFE: Later on, Mr. Fiske says, "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.". Is that a fair statement by Mr. Fiske with respect to the - I was going to say advice but I think a stronger word is needed there - directive that you gave to those gentlemen?

MR. MACKAY: It may be a fair statement by Mr. Fiske. I cannot comment on that. I can comment on my general recollection of that meeting.

At that meeting, again, I, at Mr. Fiske's request, generally speaking, reinforced the principle that the Gaming Corporation was the agent of the government and that the Sheraton was to be dealing with the Gaming Corporation with respect to giving a directive, indicated that the preference was for a negotiated settlement.

Remember that arbitration still had not been suspended or ended. Arbitration was scheduled to recommence on May 20th. It was with respect to that deadline that I felt Mr. Fiske had asked for my intervention.

MR. LEEFE: Mr. Fiske goes on to express the view that, according to Mr. Merrick, negotiations with the Sheraton were effectively over. To quote Mr. Fiske, attributing words to Mr. Merrick, ". . . that Bob MacKay had effectively given the Sheraton everything . . .". Could you enlarge on that for us, please?

MR. MACKAY: It is not possible for me to elaborate on what their thought process was. I can speak to my recollection of what I thought had transpired.

With the Chair's permission, let me just put a little bit more in context here, on the basis that the meeting was convened at the request of the Gaming Corporation, at the request that heads were to be butted, or something to that effect, that it was to be clearly understood that the Gaming Corporation was the vehicle with which the Sheraton should be negotiating.

[Page 17]

During the course of the discussion, I did indicate, repeat and emphasize that the Gaming Corporation was the one with whom the Sheraton should be dealing. There was a discussion in broad terms around the proceedings to that point and that arbitration was to take place soon, as on the 20th. I did indicate that it was the view - and I repeated the view - that a negotiated settlement was preferable.

With respect to giving the ship away, in context, and a bit more specific, to answer your question, I am at a meeting which I helped arrange, at their request, and the discussion unfolds. I took Mr. Merrick's comments or questions, and I don't remember if it was a question or a comment at the time, to be a rhetorical question or a rhetorical statement. I took it in the context that it was something he was asking me to affirm. I, in my mind, affirmed that the province would be flexible. The province had indicated that negotiation was preferable. If you are indicating that you are going to negotiate, there is probably a degree of flexibility there.

In retrospect, having read in the testimony, both Mr. Merrick's comments and Mr. Fiske's comments, that may have been in error but it wasn't an error to give the ship away, it was what I thought a response in context to the situation.

MR. CHAIRMAN: We are passed time, I have to move now to the next questioner but we will be back.

Mr. MacKinnon.

HON. RUSSELL MACKINNON: Mr. MacKay, Mr. Fiske has stated that you and Robbie MacKeigan negotiated a lopsided deal without the Gaming Corporation's involvement. Mr. Merrick and Mr. MacKeigan have both testified that the Gaming Corporation and Ralph Fiske negotiated "the nuts and bolts" of the deal. Could you tell the committee here today what direction did you provide to Mr. MacKeigan?

MR. MACKAY: I have indicated that the directions to Mr. MacKeigan and the instructions to Mr. MacKeigan were to help facilitate. To the best of my knowledge, Mr. MacKeigan did not negotiate and I know I did not negotiate.

MR. MACKINNON: My colleague for Queens made reference to the telephone call between yourself and Mr. Fiske, whereby Mr. Fiske made the suggestion that you should have the Premier intervene. Is that your recollection of it?

MR. MACKAY: Yes, it is.

MR. MACKINNON: So it was Mr. Fiske who asked for the Premier's intervention?

MR. MACKAY: That is correct.

[Page 18]

MR. MACKINNON: Mr. Merrick had testified before this committee as well that you made a statement that the province could be as flexible as necessary during, I think, a particular meeting between the Sheraton solicitor, Larry Hayes, John Merrick and, I believe, Mr. MacKeigan. What did you mean when you said that the province could be as flexible as possible?

MR. MACKAY: I don't recall saying as flexible as possible. I recall indicating that the province would be flexible and as I indicated a few minutes ago, I took that in the context of affirming to Mr. Merrick that that was the province's position. I assume that that, as I said earlier, was a rhetorical question and I took it in that basis. You have to put it into context, you see, I was not dealing with Mr. Merrick.

MR. MACKINNON: So at that time you wouldn't have given consideration or the thought wouldn't have crossed your mind that this would create some difficulty for Mr. Merrick?

MR. MACKAY: Not at all.

MR. MACKINNON: Well, Mr. Fiske has also testified that during the same meeting you assembled Mr. Merrick, Mr. MacKeigan and Larry Hayes but excluded Carl Holm and Mr. Fiske. Was there any particular reason or is it as you had testified a little earlier, it was just one of those things?

MR. MACKAY: There was no conscious decision on my part to exclude Carl Holm. I must admit that I didn't think much of it one way or another. It was a meeting requested by the Gaming Corporation and I just assumed they sent who they saw fit.

MR. MACKINNON: You try to get all the representatives from the appropriate bodies.

MR. MACKAY: Well, that was their call, it was their meeting.

MR. MACKINNON: So it was their meeting. That's all I have.

MR. CHAIRMAN: Mr. Samson.

MR. MICHEL SAMSON: To just follow up on that a bit, Mr. MacKay. Who was John Merrick representing in all of this?

MR. MACKAY: To the best of my knowledge he was representing the Gaming Corporation.

MR. SAMSON: And who was Carl Holm representing?

[Page 19]

MR. MACKAY: The Gaming Corporation.

MR. SAMSON: So therefore Mr. Merrick was there on behalf of the Gaming Corporation.

MR. MACKAY: As far as I know.

MR. SAMSON: Mr. MacKay, how did you first become involved in the deal between the Gaming Corporation and the Sheraton?

MR. MACKAY: I don't know what you are talking about here now.

MR. SAMSON: I guess, how did it first come about that you first got involved with this file, I guess we could say?

MR. MACKAY: Oh, as I indicated earlier, my involvement with the file is as a matter of course, as the senior staff person involved in trying to make sure that my boss or bosses, as it may well be, are as well briefed and as well prepared as they can be. As Mr. Leefe would recall and as Mr. MacKinnon is fully aware, being the Deputy Minister to the Premier and the Secretary to the Executive Council, one has many bosses, every member of Cabinet, because you are the Secretary to the Executive Council. In the course of making sure that the Premier was briefed, that was the nature of it. I thought, nothing unusual.

MR. SAMSON: Now, I don't want to get into a political science lesson, Mr. MacKay, but there seems to be . . .

MR. MACKAY: I am not sure I could get into one.

MR. SAMSON: There seem to be some questions that have come out which kind of indicate that you even coming close to this file seems to be some abnormality or something out of the ordinary. Is it safe to say, in your position as the Deputy Minister to the Premier, that you are almost in a position of first mate to a captain on a ship, and it is almost like saying, to some of the questions coming out today, if there is a problem in the boiler room and a boiler breaks down, the captain shouldn't get involved, the chief engineer should be the only one to deal with it. Or if there is a problem on the deck that something breaks or something, well, whoever is in charge of the deck should deal with it, not the captain.

Is it safe to say, in your position, that you oversaw a lot of files dealing with various departments and wherever there were problem areas or areas where, as you mentioned earlier, you felt the Premier needed to be briefed upon, that you were actively involved in numerous files and that this was an everyday part of your position?

MR. MACKAY: I think it is fair to say that.

[Page 20]

MR. SAMSON: Mr. MacKay, Ralph Fiske testified before us that he thought that some of your actions were interference. Did he ever seek out your assistance on this file?

MR. MACKAY: Yes. He did on a couple of occasions, as I have referenced earlier, with respect to helping to facilitate a meeting, asking that the Premier get involved, and it was with his acquiescence and with his total understanding that I arranged the May 15th meeting. So yes, Mr. Fiske did ask for involvement.

MR. SAMSON: The testimony we have heard up to now by both Mr. MacKeigan and Mr. Merrick clearly indicated that the government had a preference to drop the arbitration and instead seek a negotiated settlement. Why would you say that the Savage Government took this position?

MR. MACKAY: I think the preference was to negotiate. I don't think the decision was to drop the arbitration. That would be something that may or may not come at a future time. As a matter of fact, I recall somewhere in the piece, it may have been on April 22nd, which we talked about earlier, that Mr. Fiske indicated that the offer to negotiate, under the terms that had been presented at that point, was not acceptable, and proceed with the arbitration. At that point, I said fine.

I guess, as a matter of philosophy, to me and I think to many others, it is not unusual that if you can negotiate something, you are better off. I think that was the view. That was what was communicated. It happens often in labour relation matters and so on. That is the nature of things.

MR. SAMSON: Now, the testimony that we heard from Carl Holm, John MacKeigan and John Merrick, was that all three of them did suggest in their legal opinion that the government seek a negotiated settlement. Is this your recollection and your understanding?

MR. MACKAY: I think what they indicated was that a negotiated settlement would be preferable, and that was the nature, I think, of the personalties involved. At some point, and it is toward the middle of May, as I indicated in my statement here, counsel was of a view that the corporation's case was weak. I don't recall counsel saying, negotiate at all costs. I am saying that counsel, at that point, indicated that the case was weak. In that context, I think if one were to go forward with a case that was weak, one would have to assess judgement, and that is the way I personally felt. At the same time, I think I am of a view that if the case were extremely strong and we decided to negotiate, I may have interpreted that in my mind to be a sign of weakness. The issue was on the strength of the case and on the preference to settle.

[Page 21]

[11:00 a.m.]

MR. SAMSON: Would it be safe to say, I guess, that legal counsel was not really propping up the benefits of negotiation, but what they did raise was serious concerns about the arbitration process and as it relates to the government's position with the arbitration process?

MR. MACKAY: No. I don't recall them ever talking about the arbitration process. I think what they talked about, Mr. Chairman, through you, was the merits of the case, and that in their view, the case was weak.

MR. SAMSON: Okay. Mr. MacKay, during your dealings with this file, at any time, did you feel personal pressure by anyone involved with the Sheraton to reach this settlement?

MR. MACKAY: No.

MR. SAMSON: Did Mr. Savage or Mr. Boudreau, or in that case any other member of Cabinet or government, ever indicate to you to give the Sheraton whatever they wanted in order to reach a settlement?

MR. MACKAY: No.

MR. SAMSON: At any time, have you ever conveyed that message to either the Gaming Corporation or legal counsel, that they were to give the Sheraton anything they wanted in order to reach a settlement?

MR. MACKAY: No.

MR. SAMSON: During his testimony before us, Mr. Fiske continues to refer to the deal reached with the Sheraton as the Boudreau deal. From your employment and your involvement with this file, what do you know about Mr. Boudreau's involvement with the deal that was reached?

MR. MACKAY: I don't recall him having any involvement with it at all. I am not even sure Mr. Boudreau was still in Cabinet at that time.

MR. SAMSON: I guess on that note, at any time, did you - the question was raised before - feel that this deal had to go forward because of Mr. Boudreau's involvement with the casinos and his attention that he had given to this file?

MR. MACKAY: No.

[Page 22]

MR. SAMSON: Mr. MacKay, there have been some serious allegations by Mr. Fiske which have attacked, in my opinion, the credibility of Mr. Bill Gillis, and his ability as a minister in some of the statements made by Mr. Fiske that Mr. Gillis was left out of the loop, that he was aloof to this whole casino deal, that he, in some sense, either did not care or did not take the time to get involved, and has left that impression with this committee. From you dealings with Mr. Gillis on the casino deal and with the Sheraton, at any time, did you feel that Mr. Gillis was completely aloof or unaware of what was going on with the Sheraton?

MR. MACKAY: No.

MR. SAMSON: In any way, shape or form, was it your intent or the intent of the government to keep Bill Gillis out or to cut him out of the loop as to what was going on with the Sheraton?

MR. MACKAY: No. I didn't know he was out of the loop.

MR. SAMSON: Mr. MacKay, I am going to take you back to the June 5th meeting which took place between Premier Savage and Mr. Fiske, which I believe you were also present for.

MR. MACKAY: Yes, I was.

MR. SAMSON: Mr. Fiske has noted that meeting, in particular, in the testimony that he has given before this committee. He refers to a shouting match between him and the Premier, that there were several outbursts, that the Premier made some comments which he, I believe, deemed were unrepeatable or that he did not see fit to repeat. Can you give us your personal recollection of that meeting of June 5th?

MR. MACKAY: I recall returning either the night before that meeting or on the morning of the meeting, from Rhode Island. There had been a meeting of the Eastern Canadian Premiers and New England Governors Conference. June 5th, I think but I have to check this, was a Thursday, and coming into the office and checking my schedule a meeting had been arranged to take place sometime following the Cabinet meeting. So I think it was in that context it was held.

My reaction to the meeting or my recollection of the meeting was that, I do not particularly recall it getting into a shouting match but I do recall that Mr. Fiske felt strongly that there was information that he was not aware of, that there had been negotiations taking place without his awareness and without any involvement. What I had indicated to him was that there were no negotiations involving me or that I was involved in that took place without his awareness or knowledge. That was the general tenor of the discussion.

[Page 23]

MR. SAMSON: Do you recall these outbursts or these alleged statements made by the Premier during this meeting to Ralph Fiske?

MR. MACKAY: No, I do not.

MR. SAMSON: From your recollection of that meeting, what was the foundation of Mr. Fiske's claims that negotiations were taking place without his consent or his involvement?

MR. MACKAY: I cannot comment on the foundation of his beliefs. I do not know why and I do not know what they were.

MR. SAMSON: He did not name people or say, these are the specific people who are taking these negotiations and I am not part of it? Was there any foundation that you recollect that he said this is why I am saying this, I have this evidence or . . .

MR. MACKAY: No, I do not recall anything of that nature. I recall it being his view. I do not recall him substantiating that view.

MR. SAMSON: There was no mention of an honourable gentleman, or anything of that nature, handling negotiations?

MR. MACKAY: No. The first time I saw or was aware of an honourable gentleman was as a result of testimony here. I had never heard of it before then.

MR. SAMSON: You have never heard . . .

MR. MACKAY: I have heard of honourable gentlemen.

MR. SAMSON: But at this meeting or at any other time did Mr. Fiske ever make mention to you of the existence of this honourable gentleman?

MR. MACKAY: No.

MR. SAMSON: Now, by this June 5th meeting, Mr. MacKay, had the terms of settlement already been agreed upon?

MR. MACKAY: It was my understanding that by June 15th there had been what I will refer to as a term sheet which to the best of my knowledge was the basis on which the Gaming Corporation had agreed to suspend the arbitration. I do not think, and counsel opposite would have to advise me on this, as to whether or not arbitration is discharged until after there is an agreed upon minutes of settlement, I do not know if that is normally the case or not.

[Page 24]

But in any event it was my understanding that there was a term sheet in effect and on the basis of that term sheet the Gaming Corporation agreed to work with the Sheraton and with the Sheraton's counsel to finalize a set of minutes or an agreement which then would see the arbitration discharged. I am not sure how that works but you are a counsel as well.

MR. SAMSON: I am not even going to try to answer that but, Mr. MacKay, was it your understanding, what you have recollected about the settlement, was this supported by the Gaming Corporation Board?

MR. MACKAY: My understanding, yes, that it had been approved by the board.

MR. SAMSON: So basically at this point the requirement that was left was for the Gaming Corporation to bring this settlement that had been reached to Cabinet for their approval?

MR. MACKAY: At an appropriate time if - again, I am not familiar with the particular operating procedures of the Gaming Corporation nor am I particularly familiar with the legislation but what I am familiar with is that from time to time in legislation, or anything else, there are issues of which, especially if the contract were to be amended, and I understand this would require a contractual amendment, that that would have to come before Cabinet. The day-to-day operations of the Gaming Corporation, which would see normal business transactions take place, would not have to come before Cabinet.

So I would think that in the course of events, through you, Mr. Chairman, what would happen is that with the assistance of counsel the Gaming Corporation would determine which issues would require an Order in Council and Executive Council ratification. Then that would come forward in due course. The last recollection I have of this file was sometime in late June receiving some advice, or through a telephone conversation and maybe even paper, from Robbie MacKeigan to the effect that he had had a conversation with Carl Holm who indicated that discussions were underway finalizing the minutes and the agreement but that not to expect anything to come before Cabinet until sometime in July. That is the last I recall of it.

MR. SAMSON: Thank you.

MR. CHAIRMAN: We will do a second round now, I think, of about seven or eight minutes each through each of the Parties, but perhaps I can just quickly start. You retained Mr. MacKeigan?

MR. MACKAY: Yes, I did.

MR. CHAIRMAN: You did it because you felt that the Premier or you needed some advice about the nuances of the law and the merits of the arbitration? I think that is what you told us before.

[Page 25]

MR. MACKAY: I retained Mr. MacKeigan on behalf of the Executive Council, on behalf of the Premier as President of the Executive Council with a view that if he needed advice, it would be there.

MR. CHAIRMAN: But did I understand you correctly to say to us before that what prompted you to do this was some kind of interaction with then Premier Savage?

MR. MACKAY: No, no. I guess to me it was standard procedure that I would have the best available help there.

MR. CHAIRMAN: Help with what, Mr. MacKay? How did you even know that there was an arbitration going on?

MR. MACKAY: I was aware that there was an arbitration going on.

MR. CHAIRMAN: How?

MR. MACKAY: I do not recall. In specific, it was either because Dr. Gillis would have mentioned it, or the Premier would have mentioned it, or somewhere, but the fact that there was an arbitration about to be undertaken was not a secret.

MR. CHAIRMAN: It would not necessarily be public either, it is a private commercial arbitration and you have no recollection as to how you learned about that at all?

MR. MACKAY: No. In a private commercial arbitration, as I understand it, involving companies that are out there, I would not be aware of them. This was an agent of the government and as a matter of course I - now, I do not know whether I was aware of it or whether the Premier was aware of it because of Dr. Gillis, or whoever. It was just a matter of fact.

MR. CHAIRMAN: Someone told you?

MR. MACKAY: Yes.

MR. CHAIRMAN: You do not recollect who?

MR. MACKAY: No.

MR. CHAIRMAN: In your opening statement you used the word, government. You said the government should express its general wishes to the Gaming Corporation?

MR. MACKAY: Yes.

[Page 26]

MR. CHAIRMAN: In this case are you using government to mean something different than Executive Council?

MR. MACKAY: I suppose in the nuances of the law there may be something different. I did not have any reason to choose one word over another.

MR. CHAIRMAN: At any point was there a Cabinet decision that suggested that there ought to be either a solicitor retained or that directions ought to be given to the Gaming Corporation with respect to the arbitration that was pending or was it a decision that was made by the Premier or yourself?

MR. MACKAY: The decision to retain Mr. MacKeigan was mine.

MR. CHAIRMAN: I understand that. The question was, who gave instructions or took the initiative to take a role in the proceedings?

MR. MACKAY: I think that that was a mutual agreement - that the meeting of April 21st - that a negotiated settlement was . . .

MR. CHAIRMAN: Was there a formal Cabinet directive or decision that you are aware of?

MR. MACKAY: I cannot speak to what . . .

MR. CHAIRMAN: You have no recollection of such a decision?

MR. MACKAY: I cannot recall. I cannot speak to Cabinet anyway.

MR. CHAIRMAN: I beg your pardon?

MR. MACKAY: I cannot speak to Cabinet anyway.

MR. CHAIRMAN: I think that does not apply in this forum.

MR. MACKAY: No, but what I am saying is, I just cannot.

MR. CHAIRMAN: No, it does not. Not here it does not. (Interruptions) Your answer, though, is, you have no recollection?

MR. MACKAY: Was there a specific written Cabinet directive? Not that I recall.

MR. CHAIRMAN: Okay, thank you. Mr. Dexter.

[Page 27]

MR. DEXTER: Mr. MacKay, have you ever met with Mr. Mel Thomas?

MR. MACKAY: No.

MR. DEXTER: There was no intervention and no request by Mr. Fiske for any intervention by your office or anybody in your office until after your decision on April 21st to become involved in this matter? That is correct?

MR. MACKAY: I think that is fair, yes.

MR. DEXTER: Yes. So by the time that there is any request from Mr. Fiske, you have already indicated to him your interest in this proceeding and the fact that you are taking a role in it?

MR. MACKAY: No, what I had indicated to Mr. Fiske, I have indicated earlier, was in the course of a meeting in which the Premier and his counsel were present, the expression, the wish or the feeling that a negotiated settlement was preferable was conveyed and that Mr. MacKeigan was there to help facilitate.

MR. DEXTER: Yes, you said that. I don't know if you recall or if you have seen Mr. Merrick saying that, one of the things about a negotiation is, he is standing there saying, there is nothing in the bag, there is nothing in the bag, there is nothing in the bag, and then you say, well, Mr. Merrick, maybe there is something more in the bag.

He said that, I would like to take my client outside, at that point in time. I can't remember if he said, box his ears, or what he said. (Laughter) I mean, he was obviously very distressed by that lapse in judgement.

MR. MACKAY: I don't recall him being stressed at the time. As I indicated earlier, I responded to what I thought was in the context of a meeting that I was asked to help put together, that it was a rhetorical question.

In retrospect, as I said earlier, maybe I was in error and in hindsight. I suppose, maybe, another error is that perhaps there should have been a pre-meeting meeting. But it was not, that was not the intent. It was not to determine anything . . .

MR. DEXTER: But as a result of that response, Mr. MacKay, he gave up the penalties that otherwise would have accrued. The estimates by Mr. Fiske was some $20 million cost to the taxpayer. Do you agree with those?

MR. MACKAY: I don't know what the estimate was. I was not aware of an estimate.

[Page 28]

MR. DEXTER: Did you ever read the contract between Sheraton and the government?

MR. MACKAY: No.

MR. DEXTER: No. Were you satisfied that the idea of having a weak case was based on press releases and newspaper articles?

MR. MACKAY: No, I had no conversation to the effect of why counsel was of a view that the case was weak. They are learned counsel. If the case is weak, I don't probe into that.

With respect - through you, Mr. Chairman - on the issues of having given up the negotiations, I do not recall thinking at any time that there was anything discussed at that meeting that had not already been offered, that there would have been an offer to an extension, very clearly.

MR. DEXTER: Were there offers to change regulations with respect to things like hours?

MR. MACKAY: There were no discussions with respect to hours or anything that I was involved in.

MR. DEXTER: There were no additional agreements with Sheraton to loosen the regulations with respect to credit for out-of-province high rollers?

MR. MACKAY: No, not that I was aware of. My involvement in this one was with respect to the contractual relationship as to the construction time-frame. With respect to the agreement - and I will volunteer this - the information I had at that point was that there would be an extension, that there could be an extension, that there could or could not be money exchanged in lieu of that extension and Mr. Merrick and Mr. [Carl] Holm, following that meeting, conducted negotiations, as I understand it, with the Sheraton and came back at some point on or about May 20th with a settlement that addressed the issues that were before the arbitration - I think the issues before the arbitration were the construction frame - and came back with an agreement that construction would begin, that the construction would be complete some time in the May time-frame of 1999, that the corporation would have a say in the drawings and the approval of the drawings, that there was a firm commitment to do construction.

If memory serves me, and again I would have to go back and re-read the testimony here, but I do have a general recollection that there was an enhanced penalty, that the casino would be deemed to have been completed as of a certain date, whether or not it was, and as a result, that would result in more monies coming to the province. In other words, and I don't remember the exact time-frames, but in other words, let's say the Sheraton had committed

[Page 29]

to have the casino in play by the end of June or the end of May or whenever. It strikes me May 15th was a day somewhere in that mix. Let's say they had committed to that and it, in fact, had not been completed as of that date, for purposes of assessing the expenditures and recognition of the expenditures, the meter would be ticking with respect to amortization during that period. I can remember thinking, if that is the case and there is a commitment to construct, definitively, the casino, but that is an even better deal.

MR. DEXTER: How do you think that worked out?

MR. LEEFE: Excuse me, Mr. Chairman.

MR. CHAIRMAN: I am sorry, we have to move to the PC caucus, eight minutes, go ahead.

MR. LEEFE: Eleven minutes later, Mr. Chairman, I might add; 11 minutes, not the seven that you referenced at the beginning . . .

MR. CHAIRMAN: It was 10 . . .

MR. LEEFE: . . . and you made no effort to ask the witness to be brief so that the other members could get on. I suggest here that you should extend the same time to both the other Parties.

MR. CHAIRMAN: The time was taken in the witnesses' answer. It seemed fair to the witness . . .

MR. LEEFE: And you, sir, I take it, will extend the time.

MR. CHAIRMAN: . . . to hear the fullness of his answer and there is no suggestion that your caucus will not get the full amount of time.

MR. LEEFE: I would think not.

MR. CHAIRMAN: Please proceed.

MR. LEBLANC: Anyway, Mr. Chairman, I will start the questioning. I just wanted to make the point that, Mr. MacKay, you mentioned that Mr. Fiske asked you to intervene to arrange a meeting. Is that correct?

MR. MACKAY: He asked that the Premier intervene to arrange a meeting . . .

MR. LEBLANC: Through yourself. Is that correct?

[Page 30]

MR. MACKAY: Yes.

MR. LEBLANC: So, if that is the case, can you explain, then, when the meeting took place that he was excluded.

MR. MACKAY: Oh, with his agreement. Mr. Fiske, in conversation, had agreed that at that stage, counsel to counsel would be the appropriate way to go.

MR. LEBLANC: Do you agree that the fact that he had to ask yourself or the Premier to arrange a meeting was due to the fact that the Sheraton was talking to other Parties than the Gaming Corporation long before this thing came to an impasse?

MR. MACKAY: I don't agree. If they were, it was not to my knowledge. They were not talking to me.

MR. LEBLANC: When they had a gag order against the Gaming Corporation, did they have a gag order against speaking to government yourselves?

MR. MACKAY: Not that I know of but they did not speak to me.

MR. LEBLANC: When this was going on and Bernie Boudreau was into his leadership campaign, did Bernie Boudreau speak to you regarding this issue?

MR. MACKAY: Not that I recall.

MR. LEBLANC: Do you recall whether or not he was in conversations with Premier Savage?

MR. MACKAY: I wouldn't know that.

MR. LEBLANC: You are saying that Mr. Fiske asked not to be at the meeting?

MR. MACKAY: I didn't say he asked not to be at the meeting, I am saying he agreed that the meeting would be convened with the lawyers.

MR. LEBLANC: Can you explain to us, Larry Hayes was at two or three meetings. What were Mr. Hayes' comments at these meetings in regard to what was going on at Sheraton or their position because we have asked everybody else what their comments were. Can you recall what Mr. Hayes was saying at these meetings that were taking place?

MR. MACKAY: I may be missing something here but, Mr. Chairman, I do recall only one meeting that I was involved in that Mr. Hayes was also present and that was the May 15th one. I don't recall the specifics but I think Mr. Hayes would have expressed confidence

[Page 31]

in his case and the counsel for the corporation would have expressed confidence in his. The reason for the meeting was, as I said, at the request . . .

MR. LEBLANC: Mr. MacKeigan was your legal counsel at the arbitration hearing. When they broke off and Mr. MacKeigan had a private meeting with Mr. Larry Hayes, what did Mr. MacKeigan report to you because he was reporting to you as to what happened in that meeting because I think most of us would like to know what happened there.

MR. MACKAY: I recall, and again I don't recall the specifics, but I recall in general that Mr. MacKeigan's role was not negotiations. Mr. MacKeigan's role was to explore whether or not negotiations could take place. To the best of my knowledge, his conversation with Mr. Hayes was to that end, as to whether or not the Sheraton would be prepared to sit down and negotiate, rather than proceed with an arbitration or suspend an arbitration. That is what I understand his role was and that is what I understand the undertaking he had given to Mr. Merrick.

MR. LEBLANC: When you talked to Mr. Hayes, I am sure Mr. MacKeigan would have had some parameters about what types of flexibility the province would be willing to look at. You are saying that he had no such parameters. He just said to Mr. Hayes that the province would be willing to negotiate. Is that what you are telling us here today?

MR. MACKAY: Mr. MacKeigan's role was not to negotiate. His role was to facilitate.

MR. LEBLANC: So you are saying that you hired someone probably for $200 or $500 a day to tell someone that you are looking to facilitate an agreement. Is that correct?

MR. MACKAY: That happens in conciliation boards in this province every day of the week.

MR. LEBLANC: Yes, but usually you do them with civil servants. Do you have an idea of how much you paid Mr. MacKeigan for this whole transaction?

MR. MACKAY: The complete involvement of Mr. MacKeigan was somewhere between $10,000 and $20,000. The exact amount, I don't know.

MR. LEBLANC: Well, next time you want to have someone to give directions on, I am sure there are a lot of Nova Scotians who would be willing to send the message. I will pass on to my colleague here.

MR. LEEFE: Mr. Chairman, we have heard from Mr. MacKeigan, we have heard from Mr. Merrick. We are hearing from you this morning. We have heard from Mr. Fiske, Mr. [Carl] Holm has had an involvement, all of whom, from time to time, speak of the

[Page 32]

involvement of the others whom I have named. Yet, the person of whom we hear very little is Larry Hayes, who was representing the Sheraton. My question, of course, if Mr. Hayes were to be called before us, he would claim solicitor-client privilege and would not be able to respond to our questions which I suppose would at least be a refreshing change from lack of recall that we have heard so often before this committee.

My question to the witness, Mr. Chairman, is this. Was it you, Mr. MacKay, who directly contacted Mr. Hayes to invite him to attend the May 15, 1997 meeting?

MR. MACKAY: No. I relied on Mr. MacKeigan.

MR. LEEFE: Mr. MacKeigan made that contact. Did you at any time, before or since, have any communication, written or oral, with Mr. Hayes?

MR. MACKAY: On this file? No.

MR. LEEFE: None whatsoever. Thank you. There was already reference made to the matter of the honourable gentleman and you have made it clear and unequivocal that in your experience there was no one outside government or outside the employ of government, including the government's lawyers, who provided any advice to government respecting this matter, in your experience?

MR. MACKAY: In my experience, your statement is correct.

MR. LEEFE: And at no time during the period in which you had responsibility for this file, did anyone other than those associated with government and government's position speak to you nor did you solicit any response from anybody outside government respecting this file?

[11:30 a.m.]

MR. MACKAY: Nobody spoke to me and the people I sought advice from and counsel, they are all in the matter of public record.

MR. LEEFE: Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you. To the Liberal Caucus, any questions? Mr. Samson.

MR. SAMSON: Mr. MacKay, just quickly a few questions here. Have you ever read the terms of the agreement or the whole contract with the Sheraton?

MR. MACKAY: The contract, no.

[Page 33]

MR. SAMSON: Would you say that this contract is a very intricate and involved contract, that dropping it on someone's desk and asking him to make sense of it would probably not be a reasonable request?

MR. MACKAY: Not having read it, I cannot comment on it, so I assume.

MR. SAMSON: Mr. MacKeigan, who you hired on this case, to your knowledge, he has been a member of the Nova Scotia Barristers Society for a number of years?

MR. MACKAY: Yes.

MR. SAMSON: And Mr. MacKeigan is a well-known lawyer in the business law field?

MR. MACKAY: That is my understanding.

MR. SAMSON: Mr. MacKay, we have had four members of the Nova Scotia Barristers Society come before us and give testimony and under questioning each has said that at no point during their employment on this file or with the province have they infringed on their integrity. Would it be your testimony today that you have also in your employment on this file and your involvement, that you have maintained your integrity and that you have served the Province of Nova Scotia well in your dealings with this file?

MR. MACKAY: Yes.

MR. SAMSON: Mr. MacKay, from your knowledge on the Sheraton deal, could you indicate to this committee how much money the Nova Scotia's taxpayers are on the hook for?

MR. MACKAY: To the best of my knowledge the Nova Scotia taxpayers are not on the hook for anything.

MR. SAMSON: And to your knowledge, Mr. MacKay, under this deal with the Sheraton how much money has the Province of Nova Scotia received?

MR. MACKAY: That I cannot comment but I think depending on when the time-frame is up, they will have received a minimum of $100 million.

MR. SAMSON: $100 million, which would be the testimony we heard from the Gaming Corporation. One last thing, Mr. MacKay, just clarify again for the committee and for the public the role of the Priorities and Planning Secretariat. Would you agree with me that it is a central agency of government which is there to ensure the bigger picture on issues, that government acts as a whole instead of independent units, that most major deals come to P & P to ensure due diligence has taken place, that it is put there to ensure the best interests

[Page 34]

of the province as a whole and that while each department has its own agenda, the role of P & P is to bring government together so that it operates in the best interests of the province? Would you agree that is the purpose and function of the Priorities and Planning Secretariat?

MR. MACKAY: I think that is one of them. The Priorities and Planning Committee and its Secretariat is defined in the Statute and it is quite clear as to what it is. When two of the members opposite were members of Cabinet at that point, I think there was a Policy Board at one point and a Management Board. The Priorities and Planning Committee is today's evolution of that process and so there are a number of roles, but one of them clearly would be as you described.

MR. SAMSON: One last question, was your involvement, and the involvement of Priorities and Planning, on this file in any way inappropriate?

MR. MACKAY: Priorities and Planning, I was involved as the Deputy of Priorities and Planning and as the Secretary to the Executive Council. I did not think my involvement was inappropriate.

MR. SAMSON: Thank you very much, Mr. MacKay.

MR. CHAIRMAN: Mr. MacKinnon has a question.

MR. MACKINNON: I have just one question to summarize, Mr. MacKay, for my own peace of mind. Do you know of anyone, or any group of individuals, that have contributed to political interference, coercive forces, or anything that would require you to make decisions that you did not want to make in this whole transaction? I guess I am asking because . . .

MR. MACKAY: No. I felt no pressure. Nobody has politically . . .

MR. MACKINNON: You were not forced, like political forces or anything, to do something that you would not have done as a professional doing your duty through due diligence?

MR. MACKAY: Not at all.

MR. MACKINNON: Thank you.

MR. CHAIRMAN: Mr. MacKay, thank you very much for coming to assist us today at the committee.

MR. MACKAY: Thank you.

[Page 35]

MR. CHAIRMAN: Our next witness will be available in just a moment. We will recess but before we do I should point out that a question arose during the evidence that we have just been through with respect to Crown privilege. We have received legal advice from the Legislative Counsel in his letter dated June 23, 1998, with respect to Crown privilege. If members want to refresh their memory with respect to that, they might have a look at the letter but, in essence, it seems that a very legitimate position of this committee is that it does not apply although anyone who wishes to invoke it could ask the committee to hear their testimony in private if there is a compelling reason. In any event, let us take a break. Thank you.

[11:36 a.m. The committee recessed.]

[11:48 a.m. The committee reconvened.]

MR. CHAIRMAN: Ladies and gentlemen, perhaps we can recommence our proceedings. I am afraid we are a bit behind time here. As we move through the next part of today's session, perhaps we can move as expeditiously as possible. We have our second witness. I am now going to swear the witness and he has an opening statement for us.

Do you, David Thompson, swear that the evidence you shall give to the Standing Committee on Public Accounts touching on matters pertaining to the Nova Scotia Gaming Corporation shall be the truth, the whole truth and nothing but the truth, so help you, God.

MR. DAVID THOMPSON: I do.

MR. CHAIRMAN: Thank you very much. Mr. Thompson, welcome. Please, read your opening statement if you wish to do so.

MR. THOMPSON: Good morning. To help provide a point of reference before taking questions, I would like to provide a very brief overview of my role in relation to the Halifax Casino issue.

In my position as Deputy Minister of the Priorities and Planning Secretariat, I am involved in a wide range of government issues. My department is the main clearing house for all items moving forward to Priorities and Planning and Cabinet. We try to be a central link between Cabinet, government departments and agencies of government. A lot of the work we do is information exchange, analysis and coordination. We to the best of our ability do the due diligence. My involvement in the casino project was a direct result of that role.

Overall, I have four points to make. One, my involvement in the issue was limited. It was directly related to my role at P & P and my ongoing involvement with the Minister of Finance and the Cabinet. The bottom line - it was about doing my job, fulfilling my duty as a public servant to ask questions and act on full information and ensure that the issue was

[Page 36]

handled in the best interests of the province. Towards that end, I discussed this issue with a number of people in government and advisers outside of government.

My second point is that the deal was all but done by the Gaming Corporation before I arrived on the scene. It was the Gaming Corporation's job to negotiate the contract. They had done that. In fact, the fundamental decisions had been taken in May 1997.

Thirdly, I did not direct Ralph Fiske to take action at all costs. Again, remember, the deal was done. It would be contrary to my interest as a public servant, my interest as a taxpayer, my business sense, and to be honest, it would be contrary to all of my political instincts. There were absolutely no gains to be made by going anywhere beyond the settlement that the corporation had negotiated with the Sheraton.

Finally, in the end, when presented with the facts, government, Cabinet, agreed with the position put forward by the Nova Scotia Gaming Corporation and signed by Ralph Fiske and agreed that the deal was in the best interests of the Province of Nova Scotia.

Part of the information exchange I mentioned earlier was communicating Cabinet decisions back to departments and other agencies. Cabinet asked that I communicate their decision back to the corporation and Mr. Fiske. On September 25th, I met with Mr. Fiske and communicated Cabinet's approval of the corporation's direction and minutes of settlement. This was not the news Mr. Fiske wanted to hear and shortly thereafter, he tendered his resignation.

Ladies and gentlemen, I would now welcome any questions you may have.

MR. CHAIRMAN: Mr. Thompson, thank you very much. I will turn first to Mr. Deveaux; 15 minutes, please.

MR. KEVIN DEVEAUX: Mr. Thompson, if I can just start, when were you appointed Deputy Minister to the Premier?

MR. THOMPSON: In July 1998.

MR. KEVIN DEVEAUX: 1998?

MR. THOMPSON: 1997, I'm sorry.

MR. KEVIN DEVEAUX: You are still in that role?

MR. THOMPSON: Yes, I am.

[Page 37]

MR. KEVIN DEVEAUX: What was your experience with the Civil Service prior to being Deputy Minister to the Premier?

MR. THOMPSON: I was not in the Civil Service of Nova Scotia, have not been. I did serve as Executive Assistant to the Premier under the Government of Gerald Regan.

MR. KEVIN DEVEAUX: So for the past 20 years you were in private sector roles, I take it, were you?

MR. THOMPSON: Private and public sector. I was in the federal government for a number of years as Chairman of the Canadian Transport Commission.

MR. KEVIN DEVEAUX: In July 1997, when you entered the job of Deputy Minister to the Premier, that was the first time you had acted in a deputy minister role?

MR. THOMPSON: That is correct.

MR. KEVIN DEVEAUX: I want to actually start out with a bit about the stopping of construction of the casino project. If I may, I just have a few questions around that. We have heard some suggestions that regulatory changes, longer hours, free liquor and credit for out-of-province high spenders is part of the problem holding up construction of the project. Did the Government of Nova Scotia, while you were Deputy Minister to the Premier ever make an agreement with Sheraton or MEG or whatever form it did take as part of the settlement that they would pass these regulations?

MR. THOMPSON: Not that I'm aware of.

MR. KEVIN DEVEAUX: Has the Cabinet considered the regulations? Have they been thought out?

MR. THOMPSON: I don't think they have been formally considered by Cabinet.

MR. KEVIN DEVEAUX: So, there has never been an opportunity for them to pass the regulations as of yet?

MR. THOMPSON: I'm hesitating because I don't recall that they have. They may have considered them and stood them, that's why I'm hesitating. I'm aware that Sheraton wanted regulations passed but, I'm sorry, I would have to go back (Interruption) No, I don't know if they considered them and stood them or have not considered them at all.

MR. KEVIN DEVEAUX: Stood is the same as tabled?

[Page 38]

MR. THOMPSON: Stood would be the same as tabled, to not come back or to come back on a future day.

MR. KEVIN DEVEAUX: You can't recall whether that has been done?

MR. THOMPSON: I honestly can't.

MR. KEVIN DEVEAUX: In your role of Deputy Minister to the Premier, what is your understanding of why the construction has stopped at the permanent Casino project?

MR. THOMPSON: I have not formally been told why construction has stopped. I am told it has been stopped. I have been told that it presently, according to the Gaming Corporation, would be in the best interests of the province to not act at this time. That is really where I would be and what my knowledge would be on it.

MR. KEVIN DEVEAUX: So the Gaming Corporation has instructed the government not to act at this point but to sort of sit back and wait for future developments?

MR. THOMPSON: It would be in the best interests not to act at this time.

MR. KEVIN DEVEAUX: Let me ask you this. What did Nova Scotia get out of the deal that was approved by Cabinet back in September 1997? What is your understanding of the benefits that the Nova Scotia people got from that deal?

MR. THOMPSON: Basically my understanding, and I just have a general knowledge of it, I do not know what the agreement says, I have never read it but the government would be getting the construction of approximately a $100 million casino on the waterfront and that, as a result of this being completed, projections were that revenues would increase dramatically and the government would get a share of those revenues.

MR. KEVIN DEVEAUX: But wasn't it supposed to get a $100 million casino anyway? That was part of the original deal.

MR. THOMPSON: I believe it was part of the original deal, yes.

MR. KEVIN DEVEAUX: So what was the special benefit to renegotiating it and the new settlement, what was the benefit to the renegotiated settlement? What did the province get out of that?

MR. THOMPSON: I do not think the deal changed very much from May 1997. It was to move the project along primarily. The project was not going anywhere.

[Page 39]

MR. KEVIN DEVEAUX: But you do not have any particular understanding of the benefit that was gained by the province?

MR. THOMPSON: No, I do not. I primarily got involved initially when one of the policy analysts who worked for me, Mr. Howard Windsor, came forward with some concerns in relation to a memorandum to P & P that had been sent to my department by Mr. Fiske.

MR. KEVIN DEVEAUX: Ms. Gordon, several weeks ago during her testimony before this committee, suggested that the construction project could be stopped for three to four weeks before there would be any delays in the project, that it was ahead of schedule three to four weeks, I think, was her particular comment. It has been more than three to four weeks that this project has been stopped. Would you agree now that the project is behind schedule?

MR. THOMPSON: It would be an assumption. It sounds like a logical assumption. All it would be on my part would be an assumption.

MR. KEVIN DEVEAUX: What discussions have you or the Premier's Office, or the Premier himself, had with Caesar's World or Starwood, or whatever the name of the particular company is, since construction halted?

MR. THOMPSON: I am not aware of any discussions. I know I have not had any discussions.

MR. KEVIN DEVEAUX: You are not aware of the Premier having had any discussions either then?

MR. THOMPSON: Not that I am aware of.

MR. KEVIN DEVEAUX: Do you have regular conversations with the Premier, daily or . . .

MR. THOMPSON: Yes, I am generally briefing the Premier on a daily or second-day basis of what is going around.

MR. KEVIN DEVEAUX: Originally when Ms. Gordon testified, she suggested one of the benefits of the deal that was approved in September 1997, was twofold; one was more control over the design of the casino and also friendlier long-term relations. Would you agree with those as some of the benefits that were received from the particular . . .

MR. THOMPSON: I was aware that the process, the relations that were taking place between the Gaming Corporation and the Sheraton were not at an all-time high, if I might be a little facetious.

[Page 40]

MR. KEVIN DEVEAUX: Did Cabinet think by approving it in September 1997 that that would help facilitate a better relationship?

MR. THOMPSON: I think primarily the reason given to move forward was that this particular project had been stalling for some time. It was time to get on with the construction and activity on the waterfront site and that a business decision had to be made. Cabinet weighed the options and they thought the best deal would be to go forward and that was the recommendation. I might say, we always make a recommendation to Cabinet.

[12:00 p.m.]

MR. KEVIN DEVEAUX: So, they didn't see the long-term relationship as a benefit to approving the deal, a better long-term relationship?

MR. THOMPSON: Well, other than that we were in a partnership arrangement and the longevity of a partnership is sometimes contingent upon whether or not the parties get along. It is not unlike any partnership.

MR. KEVIN DEVEAUX: Was it approved for political expediency, was it a matter of trying to get this deal done before the next election? Why was there such a desire to move forward with it at that time?

MR. THOMPSON: No, it was not an expediency decision. It was a decision taken as a result of recommendations coming from the board that it was time to get it done.

MR. KEVIN DEVEAUX: In hindsight, given the approval by Cabinet of the renegotiated settlement, given the work stoppage, given the lack of communication between the government and the builders of the casino project over the last several weeks, looking back, do you still think it was the right thing to do to approve that deal?

MR. THOMPSON: Well, I am not so sure there has not been communication with the Gaming Corporation and the principals but given the fact that we are dealing with a major creditable corporation of considerable size, one would still expect that they will live up to their obligations. If they do not, then the province will have recourse against that.

MR. KEVIN DEVEAUX: The builders of the casino, this is not the first time that they have sort of gone against what was originally agreed to with the government. How many times do you think the government is going to allow them to breach their agreement with the government before they are finally going to say, let's just tear up this whole deal and do you not think that time has come now?

MR. THOMPSON: I would not want to jeopardize our position by giving a comment on that at this time. I could give you my own private opinion but I should withhold that.

[Page 41]

MR. KEVIN DEVEAUX: I want to talk a bit about the actual deal that was approved by Premier MacLellan's Cabinet in September 1997. When did you first become aware of the settlement and the negotiation process and who briefed you?

MR. THOMPSON: I guess it would be early on and when I was trying to get up to speed on what was going on. That would be probably early August 1997. I was in the job, I think, about the third week in July and as I made my way around, I had a call from Mr. Fiske, who I knew for many years, telling me a little bit about it. Then I had some conversations with Minister Gillis and was gradually getting up to speed. I had a conversation with the Auditor General just to ask him how things were going. He had done an audit down there a short time ago that I had become aware of.

MR. KEVIN DEVEAUX: Who briefed Premier MacLellan on the deal, on the negotiations?

MR. THOMPSON: I had some discussions with the Premier on it. I would say primarily it would be Minister Gillis. I do not know if I was involved in those briefings or not but I know I have had occasion periodically to just kind of update the Premier where are we, well, we are here or there, or somewhere.

MR. KEVIN DEVEAUX: So what did you see as the best when you first looked at this originally back in August 1997. Would you agree with me that you saw the objective of the government at that time was to get the deal done and get the casino built?

MR. THOMPSON: The consensus of everyone that I talked to was that the deal was a good deal. I did not get into the deal to the point where I would make my own total determination on it but I rely heavily on my policy advisers especially, and it was a good deal. So on that basis we went forward.

MR. KEVIN DEVEAUX: So at that time, back in August, knowing that the Sheraton at that point had been breaching their agreement with the government, it was not considered by the MacLellan Government at all to just tear up the whole deal, to just say, look, clearly Sheraton is not playing ball here, it is better if we just walk away from this?

MR. THOMPSON: We had a problem and the problem was who, in fact, was breaching the deal, who was causing the breach. Was it the government representatives albeit the chairman of the Gaming Corporation or was it the Sheraton? I do not think it is clear-cut that the Sheraton was necessarily breaching and that was problematic for us because we were faced with an agreement. We were faced with an arbitration, results of an arbitration. Everything seemed to be going along fine and all of a sudden nothing is happening. It was a nothing-happening situation that caused all this.

[Page 42]

MR. KEVIN DEVEAUX: There are people in the government who actually felt that the government was wrong in breaching this agreement, that was some of the advice you were getting from some people within government?

MR. THOMPSON: The advice that I received was that we could very well be held responsible for some of the breach.

MR. KEVIN DEVEAUX: Who gave you that advice?

MR. THOMPSON: Mr. MacKeigan.

MR. KEVIN DEVEAUX: So Mr. MacKeigan was still advising you as Deputy Minister to the Premier at that time?

MR. THOMPSON: As a result of a conversation I had with Mr. MacKay I said, what is the background on this, can you get me up to speed? He said, you are probably best to talk to Robbie MacKeigan. So I called Mr. MacKeigan and asked him if he would review his file. He did and eventually came to my office and we had a discussion about it. I believe it was at that time that he indicated that we could be on some shaky ground. Now, I am not sure if I talked to Carl Holm about that or not. My memory is a little faulty on that. I had discussions with Carl but I do not know on that point.

MR. KEVIN DEVEAUX: I want to talk a bit about Mr. Fiske. In his testimony he alleged that the Premier was originally opposed to the deal negotiated in May 1997 and was willing to renegotiate it. Is that your understanding of Premier MacLellan's position early on, in August 1997, I guess?

MR. THOMPSON: No, it is not.

MR. KEVIN DEVEAUX: So at no time did he feel that he was in a position to renegotiate this deal?

MR. THOMPSON: You would have to ask him as to whether or not he wanted to or not, on negotiation. I think he has some general feelings on . . .

MR. KEVIN DEVEAUX: Did you give advice to the Premier with regard to whether they should try to renegotiate the deal?

MR. THOMPSON: No, I did not, I do not believe so.

MR. CHAIRMAN: Excuse me, Mr. Deveaux. We have to move to the next questioner. Mr. LeBlanc, do you have any questions, sir?

[Page 43]

MR. LEBLANC: Yes, thank you, Mr. Chairman. I was just listening to your testimony and there is a marked difference between yourself and your predecessor here today, especially Mr. MacKay, in that Mr. MacKay became very much involved in the negotiations. I take it either you learn from experience or you have a different style and I am not trying to be facetious when I say that. Have you made a marked attempt to ensure that the Gaming Corporation, which is the entity that should be dealing with the Sheraton is, in essence, the one that is dealing with it and not the Premier's Office? Is that a fair statement? Maybe you could just clarify that.

MR. THOMPSON: Yes, I would say that is fair. I carry on discussions with the acting chairman of the Gaming Corporation on a regular basis as I do with a lot of agencies of government. This particular file, because of the casino, because of the Atlantic Lottery Corporation problem, or potential problem, because of the video lottery terminals, and it is really more because of some administrative matters in relation to possible appointments of board members. Those are the discussions I have with Ms. Gordon and she keeps me apprised. I have not, quite frankly, talked to her about this latest work stoppage, for instance, but to answer your question, yes, I try to keep things at arm's length as much as possible.

MR. LEBLANC: If I could just pick up on that, you are saying - and we are going in retrospect here - that if the government had had a difference of opinion with the Gaming Corporation on how it was to proceed and whether there was an impasse on how it should be resolved, in your opinion, and I am asking you to prejudge and I know it is difficult to do so, should it have been holding meetings on its own or giving direction through the Priorities and Planning Committee to the Gaming Corporation on how to proceed?

MR. THOMPSON: I think it is a question of degree. There is always a fine line between dealing with any agency and their responsibilities as an independent regulatory body. There are so many different agencies that you kind of have to click every time but it depends on the severity of the situation. This one was going nowhere.

MR. LEBLANC: Let me ask you another question. Do you agree that the province, by way of the Deputy Minister to the Premier, or by the Minister of Finance, or other agencies having discussions with the Sheraton during a negotiated arbitration, was in essence undermining the position of the Gaming Corporation?

MR. THOMPSON: I do not really know enough about it, Mr. LeBlanc, as to what went on then. I know it eventually got settled rather than arbitrated at the last minute.

MR. LEBLANC: I want to ask you about the recourse. You make mention that if the Sheraton, Caesar's, I am not sure which entity I am referring to now, but the casino would not go ahead, that there would be recourse available to the province. Are you aware of exactly what that recourse would be?

[Page 44]

MR. THOMPSON: No, I am not. I guess what I am doing is assuming that the ordinary boiler-plate conditions in a contract would be there that would call for breach and remedies for the breach.

MR. LEBLANC: So if I could pick up on that, you are saying you are basically unaware of what the exact recourse is, is that correct?

MR. THOMPSON: I know there is a certain time-frame as to when things can or cannot be done. That is really all and I have been told that it is not the appropriate time to move and act.

MR. LEBLANC: Let me ask you another question then. If you are not aware of that answer, you may not be aware of this one either. If you waive penalties and provisions that the Sheraton was bound to under the original contract that you signed by the subsequent agreement that was signed in September 1997, I think, whereby the Sheraton got out of many of the provisions that they were legally bound to, such as penalties and payments that they would have had to have paid - basically they have got out of it by signing an agreement that they would build a casino - are you aware whether or not, if they do not build that casino, whether the preceding penalties would still be bound or has that basically all been waived as of that point in time? I am going further back and not only subsequent to that agreement. I am asking the question as to whether or not if the Sheraton does not build the casino, is it just penalties and provisions subsequent to September 1997, or does it go prior to that?

MR. THOMPSON: My understanding is that if they do not complete the casino before September 1999, they have got a financial problem.

MR. LEBLANC: But you are not aware of how far back the penalties would go, is that right?

MR. THOMPSON: I really have not gotten into it.

MR. LEBLANC: Mr. Fiske says in his testimony that he was told that the Priorities and Planning staff was against the deal. Are you aware of that or can you comment on that?

MR. THOMPSON: Mr. Fiske spent a considerable amount of time dealing with Mr. Windsor of my staff. One of our responsibilities is getting to a point where what goes forward to Cabinet is in a reasonable form and has some options or has some recommendations that are clear. Mr. Windsor was somewhat taken aback by the memorandum that, as I subsequently found out, Mr. Fiske prepared and came to me and explained this is not something that normally would go forward to Cabinet in this form. So I said, well, leave it with me. I . . .

[Page 45]

MR. LEBLANC: That was a briefing note that he prepared for Mr. Gillis, is that correct?

MR. THOMPSON: Yes. I got hold of two of our provincial directors from the Department of Finance, Mr. McAloney and Mr. O'Connor. They are our provincial government directors on the board and I asked them about it. They didn't know about this memorandum that had come forward. So I suggested to Howard that he better get hold of the Gaming Corporation to see what was going on and subsequent to that, we were advised that this was not the board's view and the board was not aware of this memorandum coming forward. So I said, well, send it back, Howard, and get this thing in the proper form. So that is the story on that one.

MR. LEBLANC: Mr. Fiske also makes mention that he was asked to prepare, if I recall exactly, the recommendation for the acceptance under the contract but that it was basically for consideration by Cabinet, in his understanding, that it wouldn't be supported by Cabinet whereupon in his testimony he said he was dismayed to find out that it had actually been accepted. Do you recall any conversations along the lines of what Mr. Fiske said that it was just basically to bring Cabinet up to snuff on what was going on in that Cabinet at that point in time was against the deal?

MR. THOMPSON: I was aware that Mr. Fiske didn't want the deal to go forward. Why he would assume that Cabinet wouldn't approve it, the only way he could get that information would be talking to Cabinet Ministers. Whether he did that or not, I don't know.

MR. LEBLANC: Looking at the building of the casino that is there now and the fact that it is stalled and it has been stalled, I think, for five or six weeks - I am not sure exactly the number of weeks - and obviously that we have a serious impasse, can you tell us whether government is planning on giving direction to the Gaming Corporation in a formal manner, perhaps through Priorities and Planning as to what position they are going to take? I don't dispute that the government has the right to give direction to the Gaming Corporation, it is in there but it is supposed to be transparent and above board and I am hoping that if they do give some direction that it will be in that format. Can you basically tell the Committee as to whether the government is considering giving some direction in regard to this impasse? It appears that another impasse is coming up.

MR. THOMPSON: I would assume that some serious discussions would take place fairly soon on this. It has been, as you said, an impasse for a period of time.

MR. LEBLANC: But the regulations, to the best of your knowledge, that is just on hold as it stands? These are regulations that the Gaming Corporation has put forward, looking for changes to the operations of the casino.

MR. THOMPSON: The minister responsible has not brought them forward.

[Page 46]

MR. LEBLANC: Can I ask you a question? Mr. Fiske mentioned in his testimony that in conversations with Premier MacLellan that he indicated to him that he had some reservations against the deal and was against it. You mentioned here that you contacted Bob MacKay subsequent to Mr. MacLellan becoming Premier whereupon Mr. MacKay brought you up to par on the deal and also made mention that you spoke to Mr. MacKeigan. Is that correct?

MR. THOMPSON: Yes.

MR. LEBLANC: So then you got briefing notes, you got briefed by Mr. MacKeigan subsequent to that again?

MR. THOMPSON: Yes.

MR. LEBLANC: So prior to those two conversations, did you have an opinion on this situation one way or another or were you basically with no opinion in regards to it?

MR. THOMPSON: What I basically had was the results of a conversation with Mr. Fiske, as I recall. I did talk, as I said, to Mr. Salmon about just the general how are things going down there? You have been down there on an audit, is it all right? There is no problem there, is there? That type of thing. No, I did not get into the nuts and bolts.

MR. LEBLANC: Did you feel that the province was legally bound at that point in time with the amount of negotiations that had gone forward and the commitments given to the Sheraton that you had to go through with this deal?

MR. THOMPSON: No, but I was concerned about the delays because on the one hand you had Mr. Fiske saying that the Sheraton were dragging their feet and on the other hand you had the Sheraton basically saying that they couldn't sit down with Mr. Fiske.

MR. LEBLANC: Has your office had any dealings with the Sheraton, Mr. Larry Hayes, any one of those individuals trying to deal with you directly?

MR. THOMPSON: Not recently, not for some months, but I had a number of conversations with Mr. Hayes, whom I have known, and I had one meeting with Mr. Thomas and his solicitor. I had a call from this solicitor, would I be kind enough to meet with the general manager and they attended at my office sometime in August, I guess it was. It would be somewhere before the decisions were made and they were there.

MR. LEBLANC: Could you tell us what those meetings were for?

MR. CHAIRMAN: Excuse me, it is August 1997 you are talking about?

[Page 47]

MR. THOMPSON: Yes. They basically were, as best as I can recall, I had two concerns. They had a concern with the regulations as they related to all-night gambling and all-night drinking and . . .

MR. LEBLANC: Free booze, you mean.

MR. THOMPSON: Yes, that is what it was, and they also had a concern with some of what they thought was over-enforcement of the regulations. I remember that and also they were concerned with their relationship with the Gaming Corporation. So he said to me that our relationship with Mr. Fiske was very good before Ms. Butler arrived on the scene and now that she is there, we don't seem to be getting along well. So I basically said, it is nice to meet you, see you, good bye. After that, I didn't do anything. A courtesy call, I guess.

MR. LEBLANC: I think it is always difficult. If people want to meet with you, you try to accommodate them as much as you can but as my colleague mentioned to me when you were speaking, it begs the question as to why wouldn't they have met with the Deputy Minister of Finance rather than the Deputy Minister to the Premier. I tend to think it is the example of how the Sheraton has tried to usurp the negotiation. No reflection on yourself, the meeting and so forth. It just has gone on and on and I tend to think that in subsequent dealings with the Sheraton that the Government of Nova Scotia should maybe formalize a formal protocol as how to deal with it because obviously they have been, as much as possible, trying to go around it and it has been difficult.

MR. THOMPSON: They were in more than one bailiwick. They were in the bailiwick of the Minister in charge of the Alcohol and Gaming Authority. They were in the Gaming and Control Commission bailiwick. I know when I first went in, I was trying to figure out why they were separated but eventually was told that it was, and it appears to be, the best thing that they are separated. That is maybe why they came but any conclusion I would reach would be just an assumption on my part.

MR. CHAIRMAN: Excuse me, I have to move to the next caucus. Are there any questions? Go right ahead.

MR. LAWRENCE MONTGOMERY: Mr. Thompson, you have already indicated earlier today during this meeting that you had known Ralph Fiske for over 30 years. Is there anything else in terms of the relationship with Mr. Fiske that you would like to mention this morning? So he was well known, in other words.

MR. THOMPSON: I worked in the Regan Government so Mr. Fiske was a Cabinet Minister there. I knew him them and I knew him over the years. I guess all I would do is say I am a little surprised.

[Page 48]

MR. MONTGOMERY: In relationship to this, were you surprised? You have indicated you were surprised. Would you care to discuss that any further?

MR. THOMPSON: I guess the bottom line on all this is when my people went through it and everyone we talked to, this seemed to be like the mother seeing the army marching down the street, look, everybody is out of step but Johnny. Every recommendation we received was that this was a good deal and we weren't getting that from Mr. Fiske.

MR. MONTGOMERY: Did you ever tell Ralph Fiske to give the Sheraton whatever it wanted?

MR. THOMPSON: No, I did not and I would not, I could not. The board was doing the dealings with the Sheraton. My dealings with the Sheraton were to the extent of what I just suggested to Mr. LeBlanc, meeting Mr. Thomas. No, I did not - that is positively, absolutely did not - tell him that.

MR. MONTGOMERY: Now reference has already been made to the next question that I had, by Mr. Neil LeBlanc, about receiving a 14 page draft memo from Mr. Fiske. What happened, once P&P received this memo? Is there anything you would like to add to that, what you mentioned to Mr. Neil LeBlanc?

MR. THOMPSON: I understand Mr. Windsor had a number of discussions and meetings with Mr. Fiske, that he had some discussions with the minister, I believe, Mr. Gillis. He had some discussions with some of the members of the board or was able to determine where the board was on it. A lot of things like that. He was around making sure where we were on it or where the board was on it.

MR. MONTGOMERY: Was Bill Gillis out of the loop, as Mr. Fiske suggests?

MR. THOMPSON: Not while I was there. Mr. Gillis was very much involved in it. He could better speak for himself but he had some concerns of the way things were going. Mr. Gillis is not normally out of the loop in much of anything, if you knew him. If he read a letter, he read every last word in the letter. He is not that type of person. He really isn't. He is a very detailed guy, in my experience with him. What about this word?

MR. MONTGOMERY: Also, this question has been dealt with but I would like to repeat it just to make it clear, with respect to Robbie MacKeigan. Did you ever speak to Robbie MacKeigan about this deal?

MR. THOMPSON: About the deal?

MR. MONTGOMERY: Yes.

[Page 49]

MR. THOMPSON: Yes, I did. I asked him for his opinion on it and he offered that it was a good deal. I believe he offered that John Merrick thought it was a good deal the province was getting, too. I didn't have a lot of dealings with Mr. MacKeigan, other than just kind of getting up to speed on what was going on.

MR. MONTGOMERY: What was the Premier's involvement in this matter?

MR. THOMPSON: Very little, other than just kind of periodically tell him what was going on. He wasn't involved in it. He was involved in Cabinet like every other minister.

MR. MONTGOMERY: Those are all the questions I have, thank you.

MR. CHAIRMAN: We have time, then, for another round of about five minutes each. Perhaps I can just ask you, Mr. Thompson, if you can help me. At the end of September or beginning of October 1997, Mr. Fiske tendered his resignation as Chairman of the Gaming Corporation. His letter of resignation is quite an extraordinary document because of what he suggests is the reason for his resignation. Can you tell us what actions, if any, the Premier took to investigate or act upon what Mr. Fiske said in his letter of resignation?

MR. THOMPSON: Mr. Fiske's letter of resignation came in to the minister, I believe. I believe it was brought forward, eventually, to Cabinet and accepted. Other than that, I am not aware of any other actions.

MR. CHAIRMAN: You weren't directed, for example, to look into what he said?

MR. THOMPSON: No. I don't even recall what the letter said now. We were in ongoing discussions with Mr. Fiske coming up to the resignation. It wasn't the first time he said he was going to resign, I can tell you that. I think he said that about, I don't know how many times. We made some inquiries to find out whether or not this is, in fact, the case. Well it wasn't the case and it was the case and it wasn't the case and finally we got a letter. Now this is before the decision was made. Mr. Fiske was going to resign, he wasn't going to resign, then he is going to resign. We didn't know what the heck he was going to do, quite frankly.

MR. CHAIRMAN: Mr. Deveaux.

[12:30 p.m.]

MR. KEVIN DEVEAUX: Mr. Thompson, I guess I want to clarify your testimony here today and a couple of other things. You say in your opening statement, I think on Page 2, the second bullet, "My second point is that the deal was all but done by the corporation before I arrived on the scene. It was the corporation's job to negotiate the contract. They had done that. In fact, the fundamental decisions had been taken in May of 1997.".

[Page 50]

So is it your position and I guess, as Deputy Minister to the Premier, that for all intents and purposes, this deal had been negotiated under the Savage Government and therefore your government when Premier MacLellan was elected Leader of the Liberal Party, was required to follow through with the agreement as it had been agreed to in May 1997?

MR. THOMPSON: Excepting the fact that if it had to be approved by Cabinet, then the deal was not finally done. It is never done until it is approved by Cabinet, and just as an example, if the Cameron Government or the Buchanan Government made a deal, we, as a government, would stick to that deal.

MR. KEVIN DEVEAUX: Now that would be, and I am going to quote from Wednesday, June 17, 1998 Hansard, Page 1441, on a question from the Leader of the Opposition, the Premier states, "Mr. Speaker, we did not cave in to anyone.", talking about the Sheraton agreement. "What we did was follow an agreement that had been set forth and entered into long before last July.", July 1997. So that is sort of the perspective that you and the Premier have taken with regard to this deal or did at the time?

MR. THOMPSON: My understanding of it, Mr. Deveaux, was that the Sheraton and the board of directors were content to go forward with the May 1997 deal and that was the basis of the recommendation, I believe and that is what the approval of Cabinet was given on.

MR. KEVIN DEVEAUX: But I get the sense from your statement here today that it was also the fact that it had been negotiated already in May 1997 before you and Premier MacLellan came on the scene was a key factor in the acceptance of the deal in September 1997.

MR. THOMPSON: No, I don't want to convey that message. What I am really saying is that still Cabinet has the ultimate authority to approve any of these. This is continual in various negotiations where everyone says, well, the department has agreed and our company has agreed. We say, there is no agreement until Cabinet agrees.

MR. KEVIN DEVEAUX: So given that Cabinet had the final approval of this settlement agreement, given that Cabinet had the ability to send this back to the Gaming Corporation to renegotiate it if they wanted to, what changes were made to the agreement between May 1997 and its approval by the MacLellan Cabinet in September 1997?

MR. THOMPSON: I don't know of any. I don't know if there were any or there weren't any. I would be just assuming.

MR. KEVIN DEVEAUX: Well, let me put it to you that there weren't any changes. Would agree with that?

MR. THOMPSON: Yes.

[Page 51]

MR. KEVIN DEVEAUX: Okay, so let me make this clear then. What we have with regard to this particular situation, based on your testimony here today, we have a situation where the government wanted a deal, they wanted that casino built. Based on my earlier questions, you said they weren't willing to tear up this contract even though potentially Sheraton was violating it. You had the power to renegotiate it but you made no changes and on top of it all, based on Mr. LeBlanc's testimony also, you were being lobbied directly by the Sheraton by Mr. Mel Thomas, and based on all this, the government approved an agreement with the Sheraton that cost this province millions of dollars and we still don't have a casino. Is that how it all looks right now to you?

MR. THOMPSON: I would suggest that it may look that way to you, Mr. Deveaux, but it doesn't look that way to me. The way it looks to me is simply this. There was a deal in place. Cabinet had to make a decision between whether we dealt with suggested daily penalties or the overall benefit to the community and the province of building a $100 million casino. So you separate the chaff from the wheat and you make the business decision. The Cabinet made the business decision, which I suggest was the correct decision, notwithstanding what happens to be going on down where the only crane in Halifax is.

MR. CHAIRMAN: I am sorry, Mr. Deveaux, I have to move to the PC caucus now, thank you. If there is any question? Mr. LeBlanc.

MR. LEBLANC: I just want to go back to the meeting you had with Mel Thomas and Larry Hayes. Could you clarify, did you feel uncomfortable; I know you try to be accommodating and I look at myself as an MLA, when people want to meet with me I always try to meet with them and I don't try to prejudge their objectives, or something like that.

Did you find yourself sort of uncomfortable when you met with him? Is that something that you . . .

MR. THOMPSON: Yes. It was actually Bill MacInnes who was the lawyer.

MR. LEBLANC: It wasn't Larry Hayes at that time, is that right?

MR. THOMPSON: No, it wasn't Larry, it was Bill. Bill phoned me up - he is a former law partner of mine - and said, would you see these people? I said, yes. I felt particularly uncomfortable dealing with anything in relation to the Alcohol & Gaming Authority. In another life, I have been in that independent role where you act on your own, so I was very cognizant of it.

It was hale and hearty, a courtesy visit and thank you very much. As you say, having been a minister, you would know. I get those kind of calls all the time. You try to shuffle them, you know.

[Page 52]

MR. LEBLANC: So, basically, what you are saying is that once you understood what the meeting was for, it was basically very short and sweet, along the lines of trying to direct them to where they should go, is that right?

MR. THOMPSON: Yes.

MR. LEBLANC: Did they mention to you as to whether they had approached - I am not sure what the regulatory body is in regard to alcohol and all these other entities - whichever department would be responsible. Did they start at you or did they approach these other entities which would be making recommendations to government?

MR. THOMPSON: I am not sure whether they had been dealing with the alcohol and gaming. I always remember the example they used. It was an example of having to register to sell things to the Sheraton. Then there was an investigation that went on to see whether or not you were a bona fide supplier.

The bonafide supplier in this case was the Sobeys organization, Clover Farms, where they were buying lettuce and produce from Clover Farms and they wanted to get their financial statements, or something, and Sobeys would not give it to them. That is why I remember that particular thing.

MR. LEBLANC: The Gaming Corporation was looking for ......

MR. THOMPSON: No, this was the Alcohol and Gaming Authority.

MR. LEBLANC: Is that so?

MR. THOMPSON: That would be Elwin MacNeil's operation.

MR. LEBLANC: I am looking at the whole picture. Right now we have a stalled situation of the casino down at the waterfront. I guess I look at the Sheraton signing an agreement with the Province of Nova Scotia in September 1997. I look at them signing contracts with contractors, beginning construction and then having it stopped. I look at this, not only as a politician, but as a business person. I am sort of saying, how do you get yourself into this type of situation?

I look at it and I say, well, it begs the question as to whether the Sheraton had an understanding from this government that these regulations that they say they require, as Ms. Gordon has mentioned in the newspaper that, supposedly, the regulatory concessions are part of the problem. Did the casino have an understanding from this government that these regulations would be passed?

[Page 53]

MR. THOMPSON: Not that I am aware, Mr. LeBlanc. There is a fair amount of money in that site. It does not look like it but they spent a lot of money on that site so far.

MR. LEBLANC: Well, I agree 100 per cent. They have a lot of money . . .

MR. THOMPSON: That is the conundrum. I know you are saying, what the heck is going on here?

MR. LEBLANC: Anyway, when you look at the situation, these regulations passed prior to an election would not be very popular, passed subsequent to an election, if you have a majority government, usually it could be forgotten by a subsequent election.

I am talking as a politician here. It begs a lot of questions and perhaps you do not have the answers. However, I look at the Sheraton - or Caesar's, whatever - having spent the money that they have already spent down there and I agree with you, they have spent substantial amounts. They have signed contracts with different general contractors. If they back out of the deal there are probably going to be penalties and so forth. This is a major problem and it begs the question as to whether or not they had any commitments.

You say that, to your information, they had no such commitment, is that right?

MR. THOMPSON: Not that I am aware of.

MR. CHAIRMAN: Are there further questions?

MR. LEBLANC: Is my time up, Mr. Chairman?

MR. CHAIRMAN: It is by my timekeeping.

MR. LEBLANC: Okay.

MR. CHAIRMAN: Did you have another quick question?

MR. LEBLANC: No, I was going to pass it to my colleague. That is okay.

MR. CHAIRMAN: Okay. Mr. Leefe, something?

MR. LEEFE: Just very quickly. Mr. MacKay, just a few moments ago, said that he had never had direct dealings with Mr. Hayes or Mr. Thomas; yet, it appears that when the Premiership changed, we had a very dramatic change with respect to the way in which the province began to deal with the Sheraton. You have told us that you did have meetings, both with Mr. Hayes and with Mr. Thomas.

[Page 54]

MR. THOMPSON: I believe I only talked on the phone with Mr. Hayes.

MR. LEEFE: You just spoke on the phone with Mr. Hayes?

MR. THOMPSON: Yes.

MR. LEEFE: But nonetheless, that is more contact than Mr. MacKay has stated that he had with Mr. Hayes. He arranged his meeting, I think, through his secretary.

What would cause the Sheraton to decide that now is the appropriate time to move directly in through the Office of the Premier, rather than deal with the corporation? Why would your office respond positively, rather than tell Mr. Hayes, look, your role is to deal with the corporation, not us?

MR. THOMPSON: Well, that is what he was doing. He was not really dealing with me. When I had conversations with Mr. Hayes, some of them were not issues relating directly to the construction of the casino. I think most of them were in relation to an HST rebate which eventually went to arbitration and I think the province won. They were interested in getting that waived because it cut down on their take.

Why would he be dealing with me? I have known him for 31 years since I started practising law and I practice in the same community. I had a lot of dealings with him over the years. I guess I might have felt it easy to pick up the phone.

MR. LEEFE: It is that old adage, Mr. Chairman, it is not what you know, it is who you know. (Laughter)

MR. CHAIRMAN: Any questions from the Liberal caucus anymore, or are we finished our round? If so, we have some procedural matters to deal with and unless there is any quick finish - if not, okay. Mr. Thompson, thank you very much, sir, for assisting us today.

MR. THOMPSON: Thank you, Mr. Chairman, and members of the committee.

MR. CHAIRMAN: We have some procedural matters to deal with as a committee. Mr. Samson has said that he had a point of order that he wanted to raise and I think he is in a rush to head off to catch a plane, so perhaps we can let him raise his point of order first.

MR. SAMSON: Well, Mr. Chairman, it is in relation to where we are going, I guess, in the nature of witnesses.

MR. CHAIRMAN: Well, there is a difference between scheduling and a point of order. Is this a point of order or is this our scheduling?

[Page 55]

MR. SAMSON: Well, it is a statement on scheduling.

MR. CHAIRMAN: Well, in that case, that is something entirely different. Scheduling is on our agenda. That is what we are going to discuss right now. The question is in front of us as to how we are going to proceed. Everyone knows we have spent quite a lot of time on this particular issue, following what Mr. Fiske said to us originally.

We had originally looked at a possible list of witnesses. We have been through part of that list. A general decision was taken at the beginning to move step by step. I believe you, Mr. Samson, made a specific motion to call a number of witnesses and I think we have actually been through those witnesses at this point. The question in front of the committee now for general discussion is how we wish to proceed.

At this point, we do not have anyone specifically scheduled on this or any other topic. We have to decide whether we wish to continue to pursue the topic and, if so, how, or whether it is now in front of us to move to other topics. That is a point that is open for general discussion and I will recognize anyone who wants to speak.

MR. SAMSON: I would like to make a motion on that.

MR. CHAIRMAN: Mr. Samson has a motion, apparently.

MR. SAMSON: Mr. Chairman, Ralph Fiske appeared before this committee several months ago and made very serious allegations of political interference and of the government selling out Nova Scotians' interests in relation to the casino deal. Many of the allegations were personal and they damaged the reputation of several individuals. He made these allegations here in this Chamber, with all the privileges and protections offered to witnesses in this room. He was granted a public forum, funded by the taxpayers of Nova Scotia, not once but twice.

As a result, this committee has undertaken an extensive investigation based on these allegations. We have heard from three very well-respected members of the Nova Scotia Barristers Society. The acting chairperson of the Gaming Corporation was also a member of the Nova Scotia Barristers Society. Now, both the previous and current Deputy Minister to the Premier and to the Priority and Planning Secretariat, David Thompson and Bob MacKay.

Mr. Chairman, to this point, we have heard absolutely no evidence to support any of Ralph Fiske's absurd allegations. In fact, the evidence of these witnesses who have been prepared to speak, both inside and outside of the Chamber, has consistently shown Mr. Fiske's allegations to be without merit. There has been no political interference and the Gaming Corporation has negotiated a very good deal with the Sheraton, a deal which is good for Nova Scotians.

[Page 56]

Mr. Chairman, we have yet to hear from all the players involved. Mr. Fiske's allegations included serious accusations against two honourable members who served this province with distinction. These are two individuals who have served the province for over 10 years and have not been given the opportunity to defend themselves or to refute Mr. Fiske's damaging allegations. Their names and reputations have been tarnished by completely unsubstantiated allegations made by Mr. Fiske in this Chamber and it is now the duty and responsibility of each member of this committee to provide each of them with the opportunity to speak to us directly in these allegations.

Ralph Fiske has alleged political interference. It would be political opportunism of the worst kind for this committee to now conclude this process without giving these honourable gentlemen the opportunity to defend themselves before us against these allegations.

Mr. Chairman, on behalf of the government members of the Public Accounts Committee, I hereby make the motion that this committee call as their next witnesses, Mr. Bernie Boudreau and Mr. John Savage to address Mr. Fiske's damaging allegations.

MR. CHAIRMAN: Do other members of the committee have any comments? Mr. Dexter.

MR. DEXTER: I guess it is all a matter of what we want to do next week and how much time is going to be required for these witnesses. I certainly would think Mr. Boudreau would be fine to come up next. I am not sure whether or not Mr. Savage shouldn't be put off until later on in the agenda. I would like to hear what . . .

MR. CHAIRMAN: Are there any other comments from any other members of the committee? Mr. Leefe.

MR. LEEFE: We, early on, had some difference of opinion within the committee respecting the number of weeks in succession that we would deal with this matter. The committee then was of a view, at some variance with my own view, that we should stick to this matter until it had been brought to some kind of conclusion. I fully accepted the judgement of the committee in that respect and we have proceeded in that way over something in the order of close two and one-half months now. Bearing in mind that consistency is very important with respect to the deliberations of this committee, I would see that it would be difficult for the committee not to support the motion put forward by my colleague that these other two players, who clearly were central to this matter, be brought forward and sworn as witnesses to give testimony as has been the case with all others who have come before us.

[Page 57]

MR. CHAIRMAN: I take the general tenor of the committee to be in agreement that we attempt to arrange convenient times for Mr. Boudreau and Mr. Savage to come before us, presumably at the next available opportunity and . . .

MR. SAMSON: Mr. Chairman, on that motion, I would add to that motion that we ask Mr. Boudreau and Mr. Savage to both appear next week and that we have a similar format to what we have had here today so that we can have both witnesses appear at the same time, with our format today, a three hour format, 10:00 a.m. to 1:00 p.m.

MR. CHAIRMAN: I think that is how we have been proceeding, three hour sessions normally when we are expecting lengthy testimony or questioning of witnesses. We can leave it perhaps in the hands of the clerk to check with the proposed witnesses as to their availability and their schedules. I assume, as usual, she will get in touch with all members of the committee to let us know the results of her phone calls and if it turns out that there are problems in scheduling, we may have to readjust but I take it our objective is to try to meet next Wednesday with these two. Is that essentially the burden of the motion? Mr. Dexter, you have a comment.

MR. DEXTER: If Mr. Savage is not available, can we go ahead with Mr. Boudreau anyway next week?

MR. CHAIRMAN: Well, I think that that is what we have been doing. If both proposed witnesses are not available, we try for one and shorten the meeting accordingly. So I take it we don't really need a formal vote on that. There seems to be universal agreement among the committee members that that is how we proceed. Mr. LeBlanc, did you have a point you wanted to direct our attention to?

MR. LEBLANC: No, I am just looking forward, subsequent to that, and I think as a committee we should try to sort of set our agenda further ahead and maybe refocus ourselves. We have been spending considerable time on this one issue and other than the P3 school, I think we haven't had a whole lot of other meetings. So it has been a little bit obsessive in a sense that we haven't looked at where else we want to go. So I just think that perhaps at each caucus we could sort of refocus ourselves so that we can start to get our fall schedule done.

MR. CHAIRMAN: Yes, that is a very useful suggestion. I think at one point the clerk of the committee spoke or issued a memo to the members of the committee inviting them to think about other areas we might wish to explore. You will see that there is a memo that has just been distributed to the committee members from me, passing on a request from the Department of Finance on a topic that they would like to address later in the fall. So there is no shortage of material that we could deal with and I would agree with that completely and ask all members to think about other possible topics.

[Page 58]

Thank you very much for your attention today. We stand adjourned until next week or until further advised.

[The committee adjourned at 12:51 p.m.]