Assemblée Législative de la Nouvelle-Écosse

Les travaux de la Chambre ont repris le
21 septembre 2017

Public Accounts Committee - Wed., Sept. 9, 1998

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HALIFAX, WEDNESDAY, SEPTEMBER 9, 1998

STANDING COMMITTEE ON PUBLIC ACCOUNTS

10:00 A.M.

CHAIRMAN

Mr. Howard Epstein

DEPUTY CHAIRMAN

Mr. Hyland Fraser

MR. CHAIRMAN: I would like to call to order this meeting. We have two witnesses this morning. First, Mr. Bernie Boudreau. Second, Dr. John Savage. Before we finish the session today, we should again have another discussion at the end as to how we propose to proceed. What I will do now is swear our first witness, Mr. Boudreau, and then we will proceed.

Do you, Bernie Boudreau, 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. BERNARD BOUDREAU: So help me God.

MR. CHAIRMAN: Mr. Boudreau, thank you. It is our standard procedure to invite any witness to give an opening statement should they wish to do so. Following that, I will invite members of the committee to ask you questions. Do you have an opening statement?

MR. BOUDREAU: I appreciate the opportunity for that, Mr. Chairman, but I really have no opening statement. I am here at the request of the committee, hopefully, to answer any questions that they have.

MR. CHAIRMAN: That is just fine. Thank you. In that case, I will turn first to Mr. Dexter.

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MR. DARRELL DEXTER: Good morning, Mr. Boudreau. Welcome back.

MR. BOUDREAU: Good morning.

MR. DEXTER: As you know, we have been engaged, the last number of weeks, in a dissection of what arose out of, I guess, what essentially started with a commercial arbitration between ITT Sheraton and the Nova Scotia Gaming Corporation and the statements that were made by Mr. Fiske with respect to that. I guess I would like to start just by going back to when all of this started. I think casino gambling in Nova Scotia, and perhaps you would agree with this, was widely seen as an initiative that you championed?

MR. BOUDREAU: Well, I was the minister responsible at the time and certainly I was the point person on that initiative.

MR. DEXTER: I think you acknowledged in the House, at one point in time, that this was an initiative that was going forward despite the fact that the information you had was that the majority of Nova Scotians were opposed to casino gambling.

MR. BOUDREAU: I don't know if I ever said that but it was an initiative that once we decided to proceed, yes, we were going to follow through on.

MR. DEXTER: The deal that was negotiated with the Metropolitan Entertainment Group called for essentially two casinos?

MR. BOUDREAU: Yes.

MR. DEXTER: There was to be one in Sydney and one in Halifax?

MR. BOUDREAU: Yes.

MR. DEXTER: One of the eventual pay-offs in Halifax was going to be the permanent casino?

MR. BOUDREAU: Actually, the terms of what was called for proposals, those terms were framed, I think, at the end of the day by the committee that was charged by government - an independent, arm's-length committee from government - chaired by Laszlo Lichter. My recollection is that they helped frame the terms. Initially I think the terms called for the possibility of a temporary casino in both Sydney and Halifax, given the fact that it would take some time to bring a full casino into play. Events subsequent to that, the successful proponent, Sheraton, decided to do away with the temporary casino and proceed directly with the permanent casino in Sydney.

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MR. DEXTER: You used, just now, the words that Mr. Fiske has used many times, an arm's length process and that extended, did it not, also to the regulation of gaming?

MR. BOUDREAU: Yes.

MR. DEXTER: It was the intention that the Gaming Corporation was going to manage the affairs with the Gaming Corporation from the government's side of the contracts?

MR. BOUDREAU: Yes.

MR. DEXTER: I guess that is really what brings us to this point. Mr. Fiske, in his testimony, referred to Hansard, something that you had said on November 9, 1994. I am just going to read this to refresh your memory. You said at that time, November 9, 1994:

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

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

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

MR. BOUDREAU: I don't remember the specific circumstances but I very likely said it. It sounds like I was trying to torment the Conservatives.

MR. DEXTER: It sounds very much, and I hope that it was something, when you said it, you believed it.

MR. BOUDREAU: Absolutely and, in fact, that is exactly what happened. There has been some misunderstanding, I think, in the public, probably not among the members of this committee but certainly in public, about the role of the corporation as opposed to the role of the commission. As a matter of fact, one of the great advocates in this House of dividing responsibility between the commission and the corporation, in fact splitting the functions, was the former Leader of your Party, Ms. McDonough. The rationale that she advanced, and I agreed with, was that the regulation of gaming had to be at arm's length, had to be separate and apart from government because it was really a quasi-judicial function. In that way, just as the courts operate independently from government, even though the judges are appointed

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by government, in a similar fashion, the commission should operate separate and apart, even though they were appointed by government.

That is why, if you look at, for example, the appointment of the commissioner, Mr. MacNeil, it was an amendment introduced by, or supported in any event and precipitated by the NDP, that suggested that his appointment should be until age 65 and, in fact, he should operate on the same terms and conditions as a provincial judge in order the preserve that independence. However, the same is not true of the Gaming Corporation. The Gaming Corporation, if I could give you an analogy, would be something like the Liquor Commission. It runs the business on behalf of the province but the policy, ultimately, is set by government. We don't allow, for example, the CEO of the Liquor Commission to decide that he is going to open the liquor stores on Sunday. That is a serious policy decision and that is made by government.

MR. DEXTER: Of course, but by the same token, you don't intervene - I assume you don't intervene - and tell them what liquor to put on the shelves in the Liquor Commission. That is a practice that I think is gone the way of the dodo some years ago.

MR. BOUDREAU: Yes. As a matter of practice, I think, any minister who intervened in the day-to-day operation would be very foolish. I mean there is enough to do without getting involved in that but at the end of the day, fundamental policy questions of business and business relationships that fall within the Gaming Corporation, ultimately the people responsible for that and the people that are held responsible in this very House is the government and the minister.

MR. DEXTER: But there is a large difference between policy initiatives that come by way of directive from the Cabinet and day-to-day management especially - I mean what we are talking about really here is a commercial arbitration that is taking place between the Gaming Corporation on one side and the interests of ITT Sheraton on the other. I mean this is about as day-to-day in contract management as you can get.

MR. BOUDREAU: Well, I think everyone may take a different view of that and I was not involved but let me tell you that I think the question that was involved in that particular commercial arbitration was pretty fundamental. It was a pretty fundamental question. In fact, the attention that it has gotten from the Opposition, among others, pretty well indicates how fundamental a question it was.

MR. DEXTER: It is not the question that is getting the attention of the Opposition. It is what happened around the question that is getting our attention. When did you give up your position as the Minister of Finance?

MR. BOUDREAU: Early June 1996.

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MR. DEXTER: And this is after you had announced your intention to seek the leadership?

MR. BOUDREAU: No, no, no.

MR. DEXTER: Then when did you leave the Executive Council or did you?

MR. BOUDREAU: Yes, I did. I will not have it to the day but I would say I ceased to be Minister responsible for Gaming early in June 1996. I ceased to be a member of the Executive Council early in June 1997, yes.

MR. DEXTER: The leadership convention was when?

MR. BOUDREAU: July 15th or thereabouts.

MR. DEXTER: So a month or so before?

MR. BOUDREAU: A month and one-half, I think it was, yes.

MR. DEXTER: You continued throughout this time to take an active interest in what was happening with the Gaming Corporation?

MR. BOUDREAU: No more than a member of the public would.

MR. DEXTER: And I think you know that much has been made of the fact that your official agent during the time that you were running for the Liberal leadership was Larry Hayes?

MR. BOUDREAU: Yes.

MR. DEXTER: And Mr. Hayes was the lead solicitor for ITT Sheraton, was he not?

MR. BOUDREAU: Yes, I understand that to be the case. I never dealt with him.

MR. DEXTER: You did not know that at the time?

MR. BOUDREAU: Quite frankly, I did not know it at the time when I asked him to be official agent, or I am not sure if I knew it, but if I had known it, it would not have mattered to me.

MR. DEXTER: This is a matter in which you potentially are going to be the Premier of this province. Your official agent is an individual who, at the time that your leadership convention is taking place, is engaged in negotiations with the province and with the

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Premier's Office and that file is going to fall to you if you are successful. I mean you have got to say the optics on that is pretty bad, is it not?

MR. BOUDREAU: I do not know if the optics were bad. I had quite a number of lawyers supporting me in my campaign as I suppose the Premier did in his. I do not suppose either of us asked for a client list as to who their clients might have been. In fact, I had no dealings on this issue, on the issue of the casino, since early June 1996, which was about a year earlier. So I do not think I ever spoke to Larry Hayes on the issue of casinos and as a matter of fact probably did not know he was representing them. I would not swear to that because I am not positive but probably did not even know he was.

MR. DEXTER: So between June 1996, and July 1997, did you discuss this matter with the Premier?

MR. BOUDREAU: The commercial arbitration or what?

MR. DEXTER: Well, the casinos generally, let us start with that?

MR. BOUDREAU: That is a pretty big issue.

MR. DEXTER: Sure.

MR. BOUDREAU: Everybody talked about casinos in that time period. The issue is did I discuss anything purporting to involve this commercial arbitration, the issue that you are talking about?

MR. DEXTER: Yes.

MR. BOUDREAU: The answer is not to my recollection. As a matter of fact, the only discussions I can recall after early June 1996, that I had on this issue were with Mr. Fiske and they were initiated by him.

MR. DEXTER: Are you saying you were not lobbied during that year with respect to policy concerning the casinos?

MR. BOUDREAU: That is right. I think I had two, possibly three, conversations with Mr. Fiske in that year, all of them initiated by him, and all of them for the purpose of asking me to intervene in a decision process that was ongoing. He felt that his opinion was not being valued to the extent it should be and he wanted . . .

MR. DEXTER: Intervene with who?

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MR. BOUDREAU: With presumably the Premier and the minister responsible, that would be the Premier and Mr. Gillis.

MR. DEXTER: When Mr. MacKay was here last week, he said the first notice of this policy, or with respect to this arbitration, or the difficulties that the Gaming Corporation was having with the ITT Sheraton interests was not until April 21st when he retained Mr. MacKeigan in 1997?

MR. BOUDREAU: I cannot tell you when he became aware of difficulties or when the Premier became aware of difficulties or when the minister responsible became aware of difficulties because I had no conversations with them about that. I can tell you that Mr. Fiske felt there was some difficulty, at least to the extent that he asked me if I would intervene and I indicated that I would not, that I was no longer the minister responsible.

MR. DEXTER: The background to this, Mr. Boudreau, is this, at this point in time, in 1996, the government is having grave difficulties over cost overruns in the Department of Health. The GST proposal is not working out the way that it was initially conceived. Municipal amalgamation is far more expensive than was considered the case prior to its implementation. People are complaining about it. The QE II amalgamation is not working out. You have a Premier now who has resigned without having gone back to the people. The government is in pretty rough shape and what Mr. Fiske says is the reason why they wanted to rescue this deal was because if they did not, they would say even under Bernie Boudreau they could not salvage a deal. They even screwed up the casino deal. How do you feel about that? Was that the case?

MR. BOUDREAU: Well, about the litany that you have recited, there was a time in this House that I would have debated you on them, but I do not intend to do that now. That is a matter for the public policy decision-makers and that is you, gentlemen and ladies. So I am not going to get involved in a debate on the litany you have recited. All I will tell you is that I am aware of the suggestion that Mr. Fiske made for the rationale for the decision and that is because I think I have read a copy of the transcript of his testimony. I have no knowledge of any of that and as a matter of fact, to me, it strikes me as ludicrous.

MR. DEXTER: What strikes you as ludicrous?

MR. BOUDREAU: His suggestion that he made in his testimony that, in fact, the Premier, or some group of people, would make this decision to arrive at that settlement in order to facilitate my leadership campaign.

MR. DEXTER: So to your knowledge nobody intervened on your behalf?

MR. BOUDREAU: No, and I find the suggestion rather ludicrous that a man of the character of John Savage would spend $30 million of taxpayers' money to give me some kind

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of vague advantage in a leadership campaign, personally, but that is just as an observer, not as a participant I say that.

MR. DEXTER: I am sorry, Mr. Chairman, I do not think we discussed prior to beginning exactly how long we were going to have?

MR. CHAIRMAN: Since we have about one and one-half hours, I thought we might do as we did before, take it in about 20 minute chunks, and then do a second go-around a little later on in about 10 minute chunks.

MR. DEXTER: So my time is rapidly coming to an end and I think I am going to ask Ms. Godin if she has a couple of questions. Then I think we will get another round to come back.

MS. ROSEMARY GODIN: Mr. Boudreau, we have never met. I am Rosemary Godin, Sackville-Beaver Bank. I just wanted to follow up on some of the things that my colleague has been asking you. I was not sure if I heard you right. In the very beginning did you say that you were unaware that the majority of Nova Scotians were against gambling?

MR. BOUDREAU: I said I do not think I ever made that statement in the House. I could not recall it.

MS. GODIN: In the House. Did you not say something once that you knew that 70 per cent of Nova Scotians were against the casino or gambling?

MR. BOUDREAU: There were polls published as we were going through this and the amounts varied up and down. There were polls that said a variety of different things in terms of percentages. So I was generally aware as anyone who read the Halifax Herald would be aware of what the polls said.

MS. GODIN: When someone starts a business, they do some kind of market study beforehand. You must have done a market study or a market study must have been done by someone before you made a decision to bring a casino to Nova Scotia?

MR. BOUDREAU: Well, I think we discussed this in great detail at the time, and in fact, we commissioned an independent arm's-length committee, chaired by Laszlo Lichter to approach the process and make for us, absolutely the best arrangement they could for the people in the Province of Nova Scotia.

I think they did a tremendous job. It is my opinion that they achieved the best deal that any jurisdiction anywhere ever got, and it is mostly to their credit for that. In fact, that was the published view of the industry at the time. In fact, they acted responsibly, at arm's length and secured the arrangement.

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MS. GODIN: Okay. You say this is the best deal for Nova Scotians? Do you still think it is a good deal? What exactly was this supposed to do for Nova Scotians, bringing gambling to Nova Scotia?

MR. BOUDREAU: Well, there were a number of things which made it attractive. Number one was the employment it created. It has created employment, continues to create employment, both here and in Cape Breton, permanent ongoing employment without one penny of government assistance or incentive, which is something that, I can't think of anything else that we can say that about. There was ongoing employment, there was employment particularly in Cape Breton during the construction period, hopefully there will be here as well.

In addition to that, it supplied a minimum of $100 million over four years to the provincial Treasury. That money went into programs in health, education, community services. That money played a fundamental role in those areas. It did some little things too. It enabled us in Nova Scotia, I think, to set up a gaming regulatory regime here, which I think is second to none in the country. That gaming regulatory regime did not exist in any significant way, prior to 1993.

In any event, I think, yes, it was generally a positive thing. It contributed to the life of the province.

MS. GODIN: Do you recognize that there is a downside at all?

MR. BOUDREAU: There is a downside to almost everything government does.

MS. GODIN: You ran a leadership campaign. You didn't have anything to do with the ministry responsible for gaming after June 1996. Is that right?

MR. BOUDREAU: Yes.

MS. GODIN: Okay. Then you ran for the leadership to become Premier of Nova Scotia. You, Mr. Boudreau, must realize that you were very tied in to the casino in people's minds. When you were running for the leadership, were you ever worried that if the casino deal went bad at that time, that it would affect your bid?

MR. BOUDREAU: I think it is fair to say that I was tied in to more than the casino. I was tied in to virtually everything the government did. The casino wouldn't even rank in the top 10, in terms of the concerns and the issues that were raised. We went through a process of community debates all across the province, in every area. I don't know if I can remember once that the casino was raised. The highway was raised and some of the other issues that were mentioned a little earlier were raised but I don't know if I can remember the casino being raised. I don't think it was a major issue.

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MR. CHAIRMAN: Excuse me, it is time to move to the next caucus.

MS. GODIN: Okay. Thank you.

MR. CHAIRMAN: Anyone there have any questions? It is Mr. Leefe, is it?

MR. JOHN LEEFE: Mr. Boudreau, either up to June 1996, the date which you deemed to be a watershed or indeed after June 1996 when you ceased to have direct responsibilities with respect to the commission, on any occasion, were you in contact with, or were any of the following persons in contact with you at any time, respecting this matter: Larry Hayes, Bill MacInnes, Mel Thomas, or indeed anyone else either directly or indirectly associated with the casino operator?

MR. BOUDREAU: What time-frame are you talking about now?

MR. LEEFE: I am speaking, firstly up to June 1996.

MR. BOUDREAU: Up to June 1996, probably a good number of those people would have been in touch with me at one time or another.

MR. LEEFE: Can you name any one in particular with whom you would recollect having been contacted by or whom you might have contacted?

MR. BOUDREAU: I think there was a meeting. I can remember a meeting with Mel Thomas and a gentleman from Sheraton, from the head office, that Mr. Fiske and I attended. That was specifically . . .

MR. LEEFE: Mr. Fiske was in attendance at that meeting?

MR. BOUDREAU: Yes.

MR. LEEFE: At any time, did you meet with any of these people or did you have contact with any of these people in the absence of a representative of the Gaming Corporation or indeed without the knowledge of the Gaming Corporation?

MR. BOUDREAU: Not that I can recall.

MR. LEEFE: Thank you. Mr. Spurr played a significant role with respect to this matter. Could you very briefly outline for us the role that Mr. Spurr did play?

MR. BOUDREAU: Mr. Spurr was selected to be legal counsel to the corporation. He was a public employee, a civil servant, and we assigned him that responsibility for two reasons. One, I had had some experience with him at the Department of Finance, and I was

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confident in his talent and his abilities. The other thing was to save money. We would get him for his salary. We assigned him to that task, and he functioned there for a while as solicitor to the corporation.

MR. LEEFE: Did Mr. Spurr report to you or to the corporation?

MR. BOUDREAU: He reported to the corporation.

MR. LEEFE: At no time did he report to you?

MR. BOUDREAU: Mr. Spurr also continued on in the Department of Finance. He had other responsibilities as well, that wasn't his only responsibility. Occasionally, we . . .

MR. LEEFE: But with respect to this matter.

MR. BOUDREAU: No. If it he made comment, it was sort of casual comment on the side.

MR. LEEFE: Would you then say that at no time did you, in discussion with Mr. Spurr, give him directions, suggest to him what he might do with respect to the advice that he might give the corporation?

MR. BOUDREAU: There was one issue that involved Mr. Spurr that I can recall. Mr. Spurr and Mr. Fiske did not get along. I can only style it in that fashion. Mr. Fiske approached me and indicated that he was unhappy and indicated, in some detail, as I recall, why he was unhappy, and he wanted the corporation to hire their own counsel, somebody outside of the Department of Finance. I had subsequently called Mr. Spurr in, had a discussion with him, and said, look, if that is what the chairman wants, I think, forgetting the details, the fact of the matter is, if your client doesn't want you, then you shouldn't be acting. We made arrangements, and Mr. Fiske got another solicitor.

MR. LEEFE: So you recall that Mr. Fiske was not happy with Mr. Spurr. Perhaps you could share with the committee why he was not happy with Mr. Spurr.

MR. BOUDREAU: I am not even sure of the details now. I would really be reaching. It was something to do with . . .

MR. LEEFE: That is all right. I wouldn't mind that.

MR. BOUDREAU: You wouldn't mind me reaching. To tell the truth, it had something to do with Sheraton. Mr. Fiske was unhappy about the fashion in which Mr. Spurr was dealing with Sheraton, but I can't remember the details. At the end of the day, I really wasn't interested in the details, because regardless of who might have been right or wrong

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in that particular issue, if you are a lawyer and your client doesn't want you, then everything else is irrelevant.

MR. LEEFE: Mr. Fiske, on Page 41 in his testimony given on July 8th, makes reference to a cellular telephone conversation that he had with you respecting what he calls the Boudreau deal, and so on. Perhaps you could give your recollection of the substance of that conversation.

MR. BOUDREAU: If you will permit me a slight digression before I answer the question. I guess what annoys me a little bit about Mr. Fiske's testimony is that he was clearly aware that as of early June 1996, I was not responsible any longer and was not involved in any of the discussions. He gives no testimony, nor can he, that I was at any meetings, dealt with any issues involving this. As a matter of fact, quite to the contrary, the only contact I had past early June 1996 on this issue was from him. I think there were two or three, I think this is one of them, I think I remember the substance of that conversation but the only time that I had any contact or conversation with it, was two or three occasions with him in that year. All the occasions were roughly the same. He was unhappy that he wasn't being listened to, he felt, and he wanted me to intervene on his behalf with Bill Gillis or with John Savage to have his point of view accepted by them. In fact, my reaction was, look, Ralph, things have changed. I am no longer the minister. I am not directly involved in this. I have enough problems of my own and you are going to have to deal with them.

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In fact, the conversation that he refers to here, I think, took place while I was campaigning for the leadership. He caught me on a cell phone in the back seat of a car heading off somewhere. I think I was down at the other end of the province. In fact, he was again making the request that I intervene and I declined.

MR. LEEFE: You say that you had no direct involvement. Of course, you continued to be a Minister of the Crown over the following year and you would have had an involvement at the Cabinet Table in that respect.

MR. BOUDREAU: Well, that was one issue I tried to think about to prepare for this committee hearing, as to whether or not that issue came to Cabinet during that year because it obviously hadn't reached the resolution stage so I don't think it ever came to the Cabinet.

MR. LEEFE: You also, during that year, I think, continued to chair Priorities and Planning.

MR. BOUDREAU: Yes.

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MR. LEEFE: That matter never came before Priorities and Planning during your continued chairmanship up until the time of your resignation from public office?

MR. BOUDREAU: I, again, don't recall that specifically either but I might mention that my resignation as chairman of Priorities and Planning occurred prior to my resignation of Cabinet.

MR. LEEFE: That is correct.

MR. BOUDREAU: I don't remember how much earlier but right at the start of the leadership campaign, is when I resigned as chairman. So you might back that up about a month and one-half or two months earlier than June. So you have May, April, April 1st, probably, somewhere around there.

MR. LEEFE: Two very quick questions, Mr. Chairman, and then I will pass on to my colleague, Mr. LeBlanc. Who first brought the casino gambling initiative to the attention of government?

MR. BOUDREAU: The possibility that we might have casino gambling in Nova Scotia?

MR. LEEFE: Yes.

MR. BOUDREAU: I don't know that I could tell you that. I don't know. I don't think there was one person who said, look, why don't you consider casino gambling.

MR. LEEFE: Well, then perhaps there was a group or a class of persons who might have. It is not the kind of thing that normally an MLA would get a call about. You might get a call about a bad road or something of that nature but I would think that one would remember if a person of some influence, and I don't use that in a pejorative way, were to call and say, you know this is an opportunity and government should be considering this.

MR. BOUDREAU: I don't remember ever receiving such an intervention.

MR. LEEFE: Well, then, not remembering that, it is clear that this matter was brought before government presumably before Priorities and Planning, which you did chair during the time that this decision was taken. Do you recall who first brought this initiative to the attention of Cabinet? Where did you get your direction, as Chairman of P & P, to give serious consideration to his matter?

MR. BOUDREAU: I suspect that it was me who brought it, as minister responsible for gaming.

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MR. LEEFE: All right, so you brought the matter forward?

MR. BOUDREAU: I probably initiated the discussion.

MR. LEEFE: Did you think if this all yourself?

MR. BOUDREAU: Well, I knew about casinos. I have been in the odd one over the years.

MR. LEEFE: This was clearly, in your view, a very important initiative that had potential, in your view, of paying dividends to the province but you don't recall who may have suggested to you that this was a good initiative?

MR. BOUDREAU: I think the framework - and we are going back now almost five years - of it was I was Minister of Finance and at that stage I was almost ready to jump out the window on the fourth floor there because we were worried day to day that the entire provincial fiscal situation would collapse. So we were looking around, as minister, to find ways that we could improve that situation and continue to support health and education and all the other initiatives that government is responsible for. This probably came up as one among a menu of things. Look, here is an opportunity that we may be able to achieve revenue through this piece.

MR. LEEFE: So the best that you can recollect is that perhaps Mr. Buchanan was responsible for the idea?

MR. BOUDREAU: He may have had it, I don't know. I probably have to say that if anyone has to take credit or blame for it, it is probably me because I probably brought it up among a menu of suggestions as how we were going to deal with the incredible fiscal mess that we had.

MR. LEEFE: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. LeBlanc.

MR. NEIL LEBLANC: Mr. Boudreau, there are a couple of questions I want to ask. It has been asked before about Mr. Larry Hayes who is the solicitor for Sheraton. Is Mr. Hayes a close friend of yours?

MR. BOUDREAU: No, not particularly. I have come to know him a little better now that I am working in the same office as he is. Prior to that, I wouldn't say he was a particularly close friend.

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MR. LEBLANC: You mentioned the fact that you were part of a leadership bid, the previous one that took place in 1997. Did he support you in that campaign?

MR. BOUDREAU: Yes, he did. As a matter of fact, I asked him if he would take on the job of being official agent - I am sure you are familiar with that task - and he agreed to it. So he acted as my official agent.

MR. LEBLANC: So was he involved in the fund-raising aspects of it or whatever?

MR. BOUDREAU: No. The official agent just tries to keep track of the money and the spending. Other people are raising it.

MR. LEBLANC: Was it difficult keeping track of the money?

MR. BOUDREAU: Oh, absolutely. If you ever consider a leadership run, come and talk to me.

MR. LEBLANC: I think I will pass on that. Did Sheraton ever ask you for advice on a solicitor for their proposal?

MR. BOUDREAU: No. In all my time in government, for example, with Mr. Hayes, I think I only had one conversation with him and he approached me, I think it was when I was Minister of Health, with respect to the Motherhouse out at Mount Saint Vincent. They were looking for some accommodation in terms of the government's participation in the funding of that but I think that is the only time I ever spoke to him as a minister.

MR. LEBLANC: How well do you know Mr. John Merrick?

MR. BOUDREAU: How do I know Mr. John Merrick?

MR. LEBLANC: How well do you know him? Very well?

MR. BOUDREAU: No.

MR. LEBLANC: So he is not a close friend or supporter or anything like that?

MR. BOUDREAU: No.

MR. LEBLANC: He wasn't involved in your leadership campaign?

MR. BOUDREAU: I am not even sure what his politics are.

MR. LEBLANC: Do you know when he was hired, roughly?

[Page 16]

MR. BOUDREAU: No.

MR. LEBLANC: Was he hired through your office or was he hired through the Gaming Corporation office?

MR. BOUDREAU: He wasn't hired by my or any department I was responsible for.

MR. LEBLANC: Are you aware of why they would have two solicitors over at the Gaming Corporation? You were making mention of the fact that you had seconded Mr. Spurr to be the legal counsel for the Gaming Corporation which you thought was a good idea, it would save money, whereupon Mr. Fiske imposed upon you that that wasn't working and you hired another one. I would assume that would have been Mr. [Carl] Holm, whereupon they have also hired a second solicitor. Can you shed any light on that?

MR. BOUDREAU: No. The only light I can shed is up to early June 1996. At that point, I think after Mr. Spurr left, I think there were two lawyers, I believe, I don't know if they were ever acting together but they may have been sequentially. Ed Harris was retained by Mr. Fiske to act in some capacity and then Carl Holm, both of whom I regard as first-class lawyers. So I had no problem with either.

MR. LEBLANC: At the root of this whole issue, of course, is whether the corporation should be doing the negotiating, whether or not Sheraton was trying to basically go around the back door. I know you have heard a lot of the testimony that has been here. What is your opinion as to whether the corporation, itself, through the chairman should be doing the negotiation or whether or not there should be intervention through the high levels of government which is what has happened in the incidents as was shown by the testimony last week? Can you share your views with us in that regard?

MR. BOUDREAU: Sure. As I said, I agree with the positions that were taken in this House by other members who were here at the time, including Ms. McDonough, that the regulatory part should be separate from the business end because otherwise there is a fundamental conflict. The regulatory part should be kept completely independent, arm's length, and we even introduced amendments, when the legislation was going through, to ensure that that was the case. Some of the amendments were suggested by, as I recall it, Mr. Chisholm, who is now the Leader of the Opposition. So we did that to ensure that that regulatory regime would be independent and I think we have the best regulatory regime in the country, by the way. That is just an aside but I think it compares very favourably with any in the country.

On the business end, I think any minister who gets involved in the routine, day-to-day stuff, is very foolish. There is enough to do as a minister without worrying about who is going to hire the secretary or what lawyer is going to be hired and so on. My practice was not to be involved in that. Mr. Fiske was appointed, we were paying him to do the job, we let him

[Page 17]

do the job. But there is a big difference there, I think, on the business side. The fundamental framework of the decisions, and the major decisions for that matter, the government has every right to make them. In fact, they should make them.

If, for example, the Chairman of the Nova Scotia Liquor Commission or some other agency made a fundamental decision that was contrary to good public policy in the view of the government, the government should step in and say, no, no, you run the thing from day to day but look, here is the framework under which you run it. This is not a decision we are prepared to have you make, period. That is perfectly legitimate. As a matter of fact, I think that is the only responsible attitude a government can take.

MR. LEBLANC: I don't debate the fact that the government has the right to direct the Gaming Corporation as to where to go. Do you feel that it is correct for the government to get involved as a third party in negotiations or do you feel that they should have been directing the Gaming Corporation as to what direction they were going to take in their negotiations?

MR. BOUDREAU: It is hard to say without having been there. I don't know what the surrounding circumstances were. I can tell you what I might think the best case scenario would be but I am not privy to the specific circumstances at the time. I think the government, at the end of the day, has a responsibility to ensure that the Gaming Corporation makes the right decision. That is the fundamental responsibility.

MR. LEBLANC: Did you meet directly with Sheraton on many times, or a few times?

MR. BOUDREAU: I can recall meeting with them on three occasions.

MR. LEBLANC: Can you outline when and where you met?

MR. BOUDREAU: The first occasion was when we were about to award them - we had received the recommendation of the independent committee. The independent committee had recommended them and had recommended the deal. I flew to Boston with a negotiating team to finalize arrangements with them and we did a bit of negotiating there as well to, we thought, improve the deal from what was recommended. That was the first occasion.

The second occasion, Mr. Fiske and I met with them in Las Vegas, having to do with the casino and affairs here. The third occasion was the one I referred to earlier. It was a meeting here in Halifax. I think it was at the Delta Barrington or one of the hotels in Halifax, Mr. Fiske, myself, Mel Thomas and one or two people in from Sheraton headquarters.

MR. LEBLANC: How much time do I have left, Mr. Chairman?

MR. CHAIRMAN: One minute.

[Page 18]

MR. LEBLANC: All right, I will just ask a quick question. You are making the statement that since, I think it was in 1996 that you relinquished control of the Gaming Corporation and that you don't recall discussing this issue. You are also Chairman of the Priorities and Planning committee - I am not sure of the terminology, exactly, of the committee. Are you leading us to believe that this never came up for any discussion at that point and none of these discussions came forward at that committee in the next year?

MR. BOUDREAU: What I have said is that I can remember discussions, two or three, that I had substantive discussions and all three of them, or two or three of them were with Mr. Fiske. The issue never came for decision, that I recall, either to P & P or to Cabinet. I stand to be corrected on that but I don't think so. What may have happened at P & P is, as an aside, somebody may have given us a heads up, these discussions are ongoing or something like that.

MR. LEBLANC: So, all of these discussions were going on in the Premier's Office, because it wasn't going on at Cabinet, it wasn't going on at Priorities and Planning, is that correct?

MR. BOUDREAU: I think that is . . .

MR. LEBLANC: So everything falls at the door of the Premier.

MR. BOUDREAU: I shouldn't say. I don't know where they were going on. I know where they weren't going on.

MR. LEBLANC: Well, they were going somewhere.

MR. BOUDREAU: They weren't going on in any department that I was responsible for.

MR. CHAIRMAN: We have to move now to the Liberal caucus for questions. Does anyone have any questions? Mr. Samson.

MR. MICHEL SAMSON: Mr. Boudreau, could you describe for us how you first came to know Ralph Fiske?

MR. BOUDREAU: I have known Ralph Fiske from the 1970's. I was involved politically as far back as 1970, I don't admit that often these days but that is where I first met him. I didn't know him terribly well.

MR. SAMSON: What was your relationship with Mr. Fiske, prior to his employment as chairman, and then during his employment as chairman?

[Page 19]

MR. BOUDREAU: The only contact I had with Mr. Fiske before his employment as Chairman of the Gaming Corporation, Mr. Fiske approached me shortly after I was appointed minister responsible for gaming. He made an appointment, came into the office, and he had a proposal with him. Mr. Fiske wanted to operate a casino at the World Trade and Convention Centre. His suggestion to us was that the government should award him this franchise, if you will, to operate a casino at the World Trade and Convention Centre.

I think there were two visits, both of which were involved around that issue. I indicated to him that it was impossible for the government to award the casino to any group without going through an arm's-length process, that this was going to be examined critically all the way through, and that the whole process had to be absolutely transparent and arm's length from government, and that if he wanted to run a casino, he should put in a proposal, just like other people would put in a proposal.

He indicated that he didn't see that there was much point in doing that because, as he told me at the time, the big guys will make it impossible for him to compete.

MR. SAMSON: Did Mr. Fiske agree that yes, this is the process we should go through, or did he feel that by going to see you directly with this proposal, that that would be a way to get around this sort of a regulatory process?

MR. BOUDREAU: Clearly, the request that Mr. Fiske made did not involve a competitive process. He wanted the government to support his proposal to establish a casino. He had had some discussions and plans with respect to the World Trade Centre for a floor or two floors, I can't remember exactly and he wanted us to give him that concession, without competition, without arm's-length process and I refused. At the time, I think he was disappointed and somewhat annoyed.

MR. SAMSON: As far as you are aware, Mr. Boudreau, did Mr. Fiske approach anyone else with this proposal?

MR. BOUDREAU: I am not sure. He might have talked to the Premier about it. You will be able to ask the Premier shortly. The Premier was aware of it, I know. Whether he talked to anyone before that, I had that impression, but I can't swear to it. I don't know from first-hand knowledge.

MR. SAMSON: You indicate that Mr. Fiske brought this proposal to you on at least two occasions?

MR. BOUDREAU: Yes, we had two discussions about it.

MR. SAMSON: Mr. Boudreau, did you, yourself, as minister, appoint Mr. Fiske to the position of Chairman of the Nova Scotia Gaming Corporation?

[Page 20]

MR. BOUDREAU: Yes, I did.

MR. SAMSON: Can you explain to us why Mr. Fiske was selected for that position?

MR. BOUDREAU: At the end of the day, I think the reasons - Mr. Fiske, first of all, had an interest in gaming, he wanted to run a casino. He had done some work to become knowledgeable in that area. He did have a foundation of some knowledge in the casino area. I should say as well, he was in the hotel business, so he had some experience running hotels. There were very few people with qualifications around that had, first of all, some knowledge, background in casinos, and secondly, some experience in running facilities. Very few people had that combination. I think at the end of the day, that was what persuaded us to make the appointment.

MR. SAMSON: Did Mr. Fiske, in any way, contact yourself or make any representations to you or other of your colleagues that you are aware of that he wanted this position or that he was lobbying for this position?

MR. BOUDREAU: I don't think so. I think Mr. Fiske's name, as a candidate for this, first arose in the Premier's Office. So, I don't know what may have occurred there, but you, as I have said, will have a chance to ask, but I don't specifically recall anybody lobbying me directly.

MR. SAMSON: And Mr. Fiske himself didn't make any representations directly to you?

MR. BOUDREAU: I don't think so. Again, I am a little uncertain on that.

MR. SAMSON: You have testified that Mr. Fiske had an interest in gaming, naturally with the proposal that he brought to you, and that he had had some experience in the hotel business. Other than his interest in gaming, were you aware of any sort of background knowledge or previous experience that he would have brought to this position, having been specifically involved in the gaming industry?

MR. BOUDREAU: I don't know that I had any knowledge that he was involved in the gaming industry specifically, but his combination of experience in running facilities and his interest and, obviously, the background, he had spent some time and money learning about the casino thing in relation to his own proposal, so he had some background. The other thing is that at that time, too, we were in the process of dealing with the proponents. There were a lot of people who were tied in with one or other of the proponents. I think every law firm in town of any size had a piece of somebody's proposal, and managers and so on. So, there weren't a lot of people who were unattached to any of the proponents, and he was. He was unattached. That was another recommendation for him.

[Page 21]

One of the things, and I think, quite candidly, I think we were probably mistaken on, we had hoped that on the business side, there would be a recognition that we were partners with Sheraton. We are not opponents. Say what you like, believe what you like about whether we should be there, that is another issue, but having been there, we are partners with them. We are not antagonists. As partners in any business partnership, you work through the thing to try and solve problems. We were concerned that if we appointed somebody who was connected with another proponent, there might always be that antagonism, right from day one. We thought that with Mr. Fiske there wouldn't be, and I think we were wrong.

MR. SAMSON: You indicated that Mr. Fiske made representations personally on at least two occasions for his personal gaming proposal. After that time, did Mr. Fiske ever represent himself as an agent for another casino proponent, or did he ever lobby on behalf of a specific proponent for the casino operation?

MR. BOUDREAU: Not that I recall. I think Mr. Fiske was, I don't think there is any question, he was dedicated to what he felt were his responsibilities as chairman. I can't recall on that score. If there would have been a criticism it was that from very early on, Mr. Fiske treated or went into the thing with, I think, an attitude of opposition to the Sheraton. A certain amount of that is good, because in any business arrangement, you have to watch your partner, but at the end of the day, you also have to recognize that you are partners, and that presumably both partners have an interest in making this thing a success.

MR. SAMSON: Would you say that this opposition attitude that he did have toward the Sheraton was in large part due to the fact that he, himself, had approached this whole issue with his own gaming proposal and expected that that would go through?

MR. BOUDREAU: I don't know. I wouldn't speculate on what prompted the opposition, but I do think it was there. At the end of the day, if I may extrapolate, that what happened here, and I think there is a very simple and reasonable explanation for what happened, and I say it as an observer, I make that comment up front, but you had a situation with Mr. Fiske being uncompromising, unbending, unyielding in any of his views, in any of his opinions, not going to back up one inch. Then you had everyone else, including four professional lawyers and deputy ministers and so on, saying that we have to come to an accommodation, it makes good solid sense to do that. That was the fundamental disagreement. What I object to is that Mr. Fiske sought reasons why his opinion was not accepted, other than the obvious reason, and in doing that he took a pretty wide swipe at a lot of people. I think that he did so without that being founded on fact.

MR. SAMSON: Now, the fact, as you said, Mr. Fiske was uncompromising and unbending as Chair, what impact did this have with the business dealings between the Gaming Corporation and the Sheraton?

[Page 22]

MR. BOUDREAU: They were pretty well always in turmoil. Now, I must say I supported Mr. Fiske in much of these disputes because this is a big operation here. There are bound to be legitimate disputes between the partners and Mr. Fiske on occasion served our interests very well in taking the stands he did. I do not mean to suggest that for a moment but I think in this particular instance there was a difference of approach, Mr. Fiske on one side, everybody else on the other. I do not blame him, I do not criticize him for that. That is fine. My concern though is when he attempts to justify why the decision did not go his way. That is where I take issue with him.

MR. SAMSON: Mr. Fiske in his testimony before us claims that in April 1997, that you, Mr. Boudreau, and Premier Savage did what he described as a 180 degree turn and that you had decided that the Gaming Corporation must do whatever it takes to avoid arbitration. Now, we have had four different lawyers come in here who have worked for the Gaming Corporation, or on behalf, who have testified, each one, that it was their legal opinion that arbitration might not be in the best interests of the province and that a negotiated settlement may be preferable. First of all, is this statement true about this 180 degree turn and on what basis did you have concerns about the arbitration process?

MR. BOUDREAU: Mr. Fiske, obviously, believed and if you read the testimony, you can only conclude he believed that I was still involved because, as I say, he contacted me three times through that period. Each time he got the same response but that led to the subsequent call. As a matter of fact, just as a curious aside, this change that he refers to sometime in July 1997, or sometime in mid-1997, occurred more than a year after I had nothing more to do with it. Now, whether you agree with that compromise or whether you do not, it is just mildly amusing to me that on 37 separate occasions in his testimony he refers to that compromise as the Boudreau deal, 37 separate occasions, and this is a deal that was first seriously discussed about 15 months after I had no further responsibility and, in fact, was not even decided until long after I had retired from Public Service and decided by a new government.

MR. SAMSON: Why do you think he continually refers to it as the Boudreau deal knowing that you are no longer involved clearly well after this came to a decision? Why does he continually refer to it as the Boudreau deal?

MR. BOUDREAU: I am speculating on this, but let me preface it by saying this. I think Mr. Fiske was annoyed and disappointed with my reaction. We had always gotten along reasonably well when he was the chairman and I was the minister. He believed, obviously, that I must still be involved in the file and that I was refusing to help him. That was the sense I got when I spoke to him, why will you not do this for me, and the simple answer was, I am not responsible for this, Ralph, go and deal with the people who are running it.

[Page 23]

[11:00 a.m.]

MR. SAMSON: Just as a point of clarification, during his testimony here, as you alluded to in your own testimony, Mr. Fiske came out with many absurd allegations of these political operatives, which he could not identify, of negotiations taking place behind the scene, behind his back, that as chairman his power was being usurped, and nobody was consulting with him and that people were getting involved who should not get involved. Is it your statement today that Ralph Fiske, in the three phone calls he made to you after you were no longer the Minister of Finance, clearly wanted you, as Minister of Health, to intervene in these negotiations between the Premier's Office and the Gaming Corporation on his behalf to push forward his agenda?

MR. BOUDREAU: I do not think there is any question about that. You mentioned three phone calls. I am not sure there were three phone calls. I think there were three contacts. I think I recall a breakfast meeting and two phone calls. I could be a little wrong about that but that is my recollection.

MR. SAMSON: So his intent was clearly to say, look, I am not getting anywhere, Bernie, I need some help here?

MR. BOUDREAU: Yes.

MR. SAMSON: This is what I want to go through, these guys are not listening, I need you to step in there and to help me out and to change their opinions on my behalf?

MR. BOUDREAU: Yes.

MR. SAMSON: Your earlier testimony, clearly, just to reiterate that, that once you became Minister of Health that you were no longer directly involved with any dealings with the casino?

MR. BOUDREAU: That is correct.

MR. SAMSON: Just a few questions on the legislation, Mr. Boudreau. Were you involved in the actual design and drafting of the gaming control legislation?

MR. BOUDREAU: Yes.

MR. SAMSON: You did allude in some comments earlier about how it compares with other jurisdictions in Canada. Is it your testimony that it is one of the better pieces of legislation as compared to other similar jurisdictions?

[Page 24]

MR. BOUDREAU: Yes. As a matter of fact, unless some recent legislation has superseded it - and I am not aware of what has happened in the field in the last year - but at the time it was passed I believed that it was the best legislation in Canada, in any province in Canada, and the other thing you have to remember there too is what the situation was prior to that legislation. We were running through this province huge amounts of money from bingo and VLTs with virtually no regulation. I think there were three people over there at what was then the Lottery Commission. Now, they were good people. They were trying their best, but even they were scared to death with all of the money that was going through virtually unregulated. Well, that is not the situation in this province anymore. I would say we have, again let me say unless we have been superseded in the last year, the best regulatory regime in Canada.

MR. SAMSON: Now, in drafting the legislation for here in the province, did we just go out and do it on our own or did we go out and compare legislation in other parts of Canada and even in other countries?

MR. BOUDREAU: Yes, essentially, if I recall, that was done in conjunction with the Legislative Counsel's Office. There was research throughout and the legislation as well was amended to some significant degree when it came to the House here. I think amendments both by the Progressive Conservatives and the NDP were accepted and included. The one that sticks out is the one having to do with the status of the commission personnel but there were others.

MR. SAMSON: When Mr. Fiske appeared before here, he, obviously, did not agree with my interpretation of the Criminal Code as it relates to gaming and I will ask you. In your understanding of what the Criminal Code says and what the Gaming Control Act says, what is the role of government as it relates to gaming in Nova Scotia?

MR. BOUDREAU: Essentially gaming has to be a creature in control by government, a gaming operation, otherwise it is illegal. If government were in a position where they created a legal entity that was totally separate and apart from them, and then told that entity to go out and set up casinos or do whatever, that entity would be operating illegally. What makes it acceptable under the Criminal Code, in my view, as I recall - and it is a little foggy now - what makes it acceptable is the very thing that we have talked about, that the government remains in charge, even though there is a corporation that handles the day-to-day operations, the government remains in charge.

MR. SAMSON: How is my time?

MR. CHAIRMAN: You have 30 seconds.

[Page 25]

MR. SAMSON: Mr. Boudreau, during our testimony here, as I alluded to earlier, Mr. Fiske made a lot of allegations of political operatives, people behind the scenes, people who were doing things, dealing directly with Sheraton, government was dealing with Sheraton, nobody was consulting with him, and basically his position had become useless because everybody was doing everything around him. During his testimony, he alludes, on a number of occasions, to a conversation he had with an honourable gentleman who no one seems to have been able to identify at this point, including Mr. Fiske, who made some representations that they had an in with the government and that the Sheraton was going to be given what it wanted, regardless of what Ralph Fiske had to say about it as chairman.

In your time as the Minister of Finance in charge of the Gaming Control Act, and as a Minister of the Crown, or even as an MLA, have you ever had any knowledge of the existence of this honourable gentleman, who he might be, or who he might have been?

MR. BOUDREAU: No.

MR. SAMSON: Did Ralph Fiske ever ask you directly or talk to you directly and say, look, Mr. Boudreau, this honourable gentleman is doing things here, and I know who he is, or who is he?

MR. BOUDREAU: No.

MR. CHAIRMAN: Okay. Back to the NDP caucus. Mr. Dexter.

MR. DEXTER: I always wonder about following rabbit tracks, but since it was set out there, I am going to follow this. There was no question that the government was the sole shareholder of the Gaming Corporation. There is not any confusion about the legality or the illegality of the corporation, the way that it was set up was to comply with the terms of the jurisdiction of the federal government as opposed to that of the provincial government. I am not sure what the point is that Mr. Samson makes, but there was no question about that. That was set up in a way that was commensurate with your understanding of the division of responsibilities between the federal and provincial governments.

MR. BOUDREAU: Yes. No question that the government was the sole shareholder in the corporation, but I think there is a little bit of a concern beyond that, that the federal authorities would be, if they felt that the government took no responsibility or played no role in the thing, regardless of what the legal structure might be, they would take some serious question.

MR. DEXTER: But there was no question in your mind, and there was no suggestion that the provincial government was responsible for the broad policy initiatives of the corporation?

[Page 26]

MR. BOUDREAU: Not when I was there, no.

MR. DEXTER: In fact, even the signing of the agreements by the corporation had to come to the Cabinet for approval?

MR. BOUDREAU: Yes.

MR. DEXTER: There was a hierarchy put in place, and it was the day-to-day management of the gaming industry that rested with the corporation?

MR. BOUDREAU: Yes. There is always a line that you draw between what is a day-to-day operation, and what is a matter of public policy, but that . . .

MR. DEXTER: Well, of course. Sure. And there are sometimes areas where they cross over.

MR. BOUDREAU: Yes. Exactly.

MR. DEXTER: Sure. Just so that we put this in context for you again, you resigned from Priorities and Planning sometime in April 1997?

MR. BOUDREAU: I am guessing at that, because it was about . . .

MR. DEXTER: Do you know if it was prior to the annual Liberal Convention in April 1997?

MR. BOUDREAU: I couldn't say for sure.

MR. DEXTER: Mr. Fiske says that just after the annual Liberal Convention in 1997, on that Monday following it, he gets the first call from the Premier's Office for a briefing. The annual convention is on the weekend, on Monday, he gets a call, there is this briefing. The arbitration is supposed to go forward on the 23rd, it gets short circuited, and they go back into this whole question of negotiations. At the same time, what is happening in your life is that you are getting on with your leadership bid, you are engaging people, you are putting them in place. These things are happening at the same time.

At some point in time, you obviously gave direction to Mr. Fiske that this was to be his job, to be the arm's-length monitor on behalf of the government. He seems to take that very seriously. In fact, you said, he seemed to display almost an attitude of opposition. He says, that he called you on a number of occasions and finally in June 1997, he calls you and you said, you thought you received the call in the back seat of the car, somewhere at the other end of the province. What he says about this is, that I wanted Bernie to know what was being done in his name. We had these negotiations under way, and I was being told that this was

[Page 27]

being done to advance Bernie Boudreau's leadership chances. I wanted him to know that that was what was happening in his name. Do you recall him telling you that?

MR. BOUDREAU: No.

MR. DEXTER: That is why he calls it the Boudreau deal though, clearly, isn't it?

MR. BOUDREAU: You will have to ask him.

MR. DEXTER: Well, I mean, you said he refers to it 37 times. You have read his testimony, he said, he is calling you to let you know that this is being done in your name.

MR. BOUDREAU: I have no recollection of that. I think if he had given me the specifics of what he claims occurred, I can hardly think I would have not remembered it. I can tell you what the thrust of the conversation was, and that was simply that his view was not being accepted, or he thought it was being challenged, and could I intervene.

MR. DEXTER: I will get to that in a second, but if you read his testimony on Page 41, he says, "I described to him straight-out what the Premier had told me. I asked him if it were true. I told him I wanted to hear the words from his own mouth. There was what seemed like a long period of silence.". He goes on to say, ". . . Ralph, my circumstances have changed. I'm no longer in Cabinet. I can't say much more than that.".

MR. BOUDREAU: I think the second part of that quote is fairly accurate. That is pretty much what I was telling him on every occasion that he called me. Mr. Fiske, my situation has changed, I am not the minister responsible.

MR. DEXTER: But you don't recall him telling you the first part of that?

MR. BOUDREAU: No.

MR. DEXTER: It is really clear at this time that what is happening is Mr. Fiske is appealing to you to intervene, to give him back the operational independence of the Gaming Corporation. That is why he is calling you.

MR. BOUDREAU: I would put it in more narrow terms than that. Mr. Fiske had a view towards this arbitration. His view was that there should be no compromise, that we should go to the wall with our position. I, quite frankly, didn't even know what our position was, I still don't. I have never looked at the agreement, if in fact it is even public record.

MR. DEXTER: You have read his testimony, and his testimony was that at the time the Gaming Corporation was in the position, and the advice that they had from their people, the people within the Gaming Corporation who estimated what he refers to as the Boudreau

[Page 28]

deal was going to do, was to give up between $27 million and $30 million of taxpayers' money to the Sheraton interest. That is the position that he was advancing at the time. It is the position that he says he told you about.

MR. BOUDREAU: No. The only conversations I remember having with him, and there was more than one, was that he wanted to hang tough, he wanted to be uncompromising with the Sheraton, and that was not the position that was being adopted by others. We never discussed that, that I can recall, and to this day I don't know what the details of the various proposals were. I don't even know the details of what the settlement was. The situation clearly, at that stage, was that he wanted me to intervene to have his view prevail. I thought . . .

MR. DEXTER: The operational independence of the corporation?

MR. BOUDREAU: No. In respect to this particular arbitration, he wanted his views to prevail over the government, over the Premier, or whoever else he was having difficulty with. He wanted his views to prevail, and he wanted me to help him have his views prevail.

MR. DEXTER: You will agree that that is not a very generous observation . . .

MR. BOUDREAU: No. I think he would say that himself, if he were asked.

MR. CHAIRMAN: The next questions are for the Progressive Conservative caucus.

MR. ERNEST FAGE: Good morning, Mr. Boudreau. We are getting toward the end of the session, so I will try to make my questions certainly brief. I would be looking for some yes and no answers. (Laughter) First of all, these ones, I will try to phrase them in that form, sir. Did you appoint Ralph Fiske?

MR. BOUDREAU: Yes.

MR. FAGE: Were you confident in his abilities when you appointed him?

MR. BOUDREAU: Obviously, I felt his abilities where such that he would do the job, yes.

MR. FAGE: I have heard a lot of speculation from yourself in answering questions this morning, and other members here, certainly, after hearing the man's testimony, would agree with you that he was qualified for the job, and certainly speculate most Nova Scotians feel he was too, and that is why his testimony has borne the credibility to have witnesses in over the last number of months.

[Page 29]

After hearing your testimony this morning - I am new to this House, as you know - I felt you were always on the front benches from 1993 on but it appears that you were in the back benches because there hasn't been a lot of concrete information that I can take great confidence in when the testimony is given that the Premier's Office appears to be in charge of policy negotiations with Sheraton, a relationship with the Gaming Corporation rather than the minister of the Gaming Corporation. Who is responsible, Mr. Boudreau, the Gaming Corporation or the Premier's Office for matters dealing with casinos here in Nova Scotia?

MR. BOUDREAU: Well, let me tell you first, Mr. Fage, who isn't responsible. The Minister of Health is not responsible. That is the first lesson I think you should take from this.

MR. FAGE: We will deal, if you don't mind, Mr. Minister, pre-April 1995.

MR. BOUDREAU: The difficulty is none of the events over which you seem to be so concerned occurred in that time-frame but to answer your other question, I think that the minister responsible is, obviously, the Minister of Finance in our present arrangement but the Premier, obviously, is the First Minister and has ranging authority over all departments of government so that I think to be responsible he has to take some role in any government department if he feels it is warranted.

MR. FAGE: The reason for my question was your statements earlier said that you could not remember it coming to Cabinet. You remembered it as a low priority and dealing with it just marginally once in a while as Minister of Finance. Mr. MacKay and Mr. Thompson from the Premier's Office have been witnesses here. Most of the testimony deals with the issue of the casino going directly to the minister's office. Were you or were you not, while you were Minister of Finance in charge of the Gaming Corporation or was it run out of the Premier's Office?

MR. BOUDREAU: No, when I was Minister of Finance, up until early June 1996, I took responsibility for that. Any decisions that went before Cabinet I brought them there but, and I assume, I don't know what happened subsequent but I imagine it was somewhat similar, the process, Mr. Fage, and you may, if fate decides it, end up in government some day and perhaps even in Cabinet and if you do, then you will find that as minister you will have certain items to deal with and you will have responsibilities in that fashion. You won't be discussing them with the full Cabinet on a routine basis. When you have a proposal to take to Cabinet to resolve an issue, you will bring it to Cabinet. What I am saying is that in the time that I was in Cabinet I don't think this issue ever came forward and if it had come forward, it would have come forward through Bill Gillis, who was the minister responsible, and that would have been the appropriate format but I don't think it ever did because it wasn't obviously ready for resolution, ready for Cabinet action.

[Page 30]

It became ready for Cabinet action I think sometime in the fall when Premier MacLellan was in office and the minister, I guess it was still Bill Gillis at that stage and presumably - I don't know but I guess if you check the records - Bill Gillis brought it to Cabinet and it was dealt with.

MR. FAGE: I guess your priority in the question, obviously, in saying is the actual construction. I guess my questions are leading to is it a fair and a good deal for Nova Scotians, not when the construction date is. So, obviously, we have two different priorities. One, the government is building a casino at any cost and at any date. My concern through this entire process is value for dollars and protection of Nova Scotian revenues and I think that comes to a clear point that when you were minister and you talk about policies and the day-to-day running, discrepancies pointed out by Mr. Fiske and followed by questions to the Director of Finance, Sheila Butler, through Mr. Fiske's testimony, points to possible millions of dollars of lost revenue during that period. Were those issues not of serious enough concern to come to your attention?

MR. BOUDREAU: Well, when I was minister responsible, up to early June 1996, routinely I met with the chairman who reported to me on all outstanding issues and, in fact, we discussed them and they were dealt with routinely. The particular compromise you are referring to, the compromise arrangement, I am sorry, but I have no specific knowledge of it. I wasn't a party to it. I didn't discuss it. I would probably think it was a good idea but really that's off the top of my head because I don't know. I wasn't involved, nor should I have been.

What I will say is that any decision taken by the Government of Nova Scotia and the Gaming Corporation while I was minister I am prepared to defend, including the decision to bring the casino here to the province, and I have defended it on many occasions in this very room.

MR. FAGE: But, Mr. Boudreau, when you were minister, that is when the arbitration process was started, was it not?

MR. BOUDREAU: No, long after.

MR. FAGE: No, excuse me. I assumed the arbitration process, the first inklings of it, to be set aside during your tenure as Finance Minister. The actual date when it was set aside was certainly Mr. Gillis, but . . .

MR. BOUDREAU: Yes, yes, I can understand . . .

MR. FAGE: . . . Mr. Spurway's first recommendations do occur, I believe, in Ralph's testimony of April 1995 in regard to difficulties surrounding the monies owing, or possibly owing, and that's when the arbitration process began and that is where my question centres

[Page 31]

around, what is a small subject in day-to-day running millions of Nova Scotian taxpayers' dollars left because penalties weren't enforced, then I would take that as a major government policy issue that would be concerned with the minister.

MR. BOUDREAU: Yes. No question, I don't mean to be short with you, Mr. Fage, but what I'm saying is that that decision when it was made, was made by Premier Russell MacLellan and his Cabinet. It was brought to them and it was approved. I don't even remember what the date was. I didn't take particular notice. It was probably in the fall of 1997. Whenever it was though, that was the appropriate way to do it. Cabinet passed on that presumably.

I can understand your confusion, because in Mr. Fiske's testimony he is not clear about who was responsible when some of these actions took place. I can tell you that in any decision that was made while I was minister responsible, I take the responsibility seriously and I'm prepared to defend it.

MR. FAGE: That's my question. This one was lack of decision because that's when the arbitration process was avoided at any cost and prolonged rather than enforcing the penalties that were in the contract. A subsequent question though deals with Mr. Spurr and his relationship with you. In Ralph Fiske's testimony, Mr. Fiske contends that Mr. Spurr enjoyed his role as legal counsel and certainly endeavoured, would have liked to have had a much more permanent position there as CEO or whatever. Did Mr. Spurr ever discuss or make that suggestion with you in that regard?

MR. BOUDREAU: No.

MR. CHAIRMAN: Mr. Fage, I have to move now to Mr. MacKinnon. Thank you very much.

HON. RUSSELL MACKINNON: I will let Mr. Samson go first.

MR. CHAIRMAN: I see, sorry, Mr. Samson.

MR. SAMSON: Mr. Boudreau, during your time as Minister of Finance, as it relates to the casino and the gaming issues, did you ever consider yourself to be out of the loop, as Ralph Fiske has said about Mr. Gillis?

MR. BOUDREAU: No.

MR. SAMSON: Did Mr. Bill Gillis, once he became Minister of Finance, ever come to you and say, help me out here, Bernie, I am out of the loop, nobody is talking to me, I don't know what is going on?

[Page 32]

MR. BOUDREAU: No.

MR. SAMSON: Mr. Fiske resigned September 30, 1997. Prior to that time in conversations with you, or other information you may have received, did Mr. Fiske ever threaten to resign before that point?

MR. BOUDREAU: I don't recall any occasion. I don't know though.

MR. SAMSON: Looking back, you indicated when you first appointed Mr. Fiske that you felt he was competent and looking back now, today, what is your testimony today as regards his job performance as Chairman of the Gaming Corporation?

MR. BOUDREAU: That's a pretty broad question but let me say that Ralph Fiske knew the hotel business. He still knows the hotel business. There is no question about that. He also spent a lot of time learning the gaming business and I think primarily, at least initially, having to do with his own bid, but he had a good body of knowledge and he is knowledgeable. If I have a criticism of it, it's not with respect to the knowledge of either the accommodations industry or the gaming industry. It's more along the lines that Mr. Fiske tends to be absolutely, totally, 100 per cent uncompromising on any position that he takes. There is no room for compromise. Sometimes that serves you well, sometimes it doesn't.

I don't see any difficulty with Mr. Fiske taking the very strong position he did and saying to government, this is what I want done. This is what I think should be done but at the end of the day the responsibility is government's in this matter and on the advice of everybody else at the end of the day, if Premier MacLellan's Government decides to go and make this compromise arrangement, then I think it is their right to do that and as chairman you have to understand that. If you don't understand it, then I think you're not going to be able to do the job.

MR. SAMSON: Mr. Boudreau, I guess once you first heard of Mr. Fiske's damaging allegations, including many that relate to you, I want to know first what was your reaction to those allegations and, second, concerning the fact that we have had numerous witnesses come before us and not one has been able to substantiate any of these allegations, what is your explanation for why Mr. Fiske brought these allegations forward in the first place?

MR. BOUDREAU: I wouldn't want to speculate on his motives. I have indicated here already that Mr. Fiske has, in my view, every right to take a strong position in that compromise situation. As I say, I wasn't involved directly so I don't know but if I had been, I wouldn't have found anything wrong with Mr. Fiske taking that strong position. What I would take issue with are two things. If I were the minister responsible at the end of the day, I would say, Ralph, I appreciate what you're saying. I value your opinion but that's not the way it is going to be decided at the end of the day.

[Page 33]

That I have no difficulty with. I don't take objection to Mr. Fiske at all. My only problem is that when Mr. Fiske found that his view was not being accepted, he refused to accept the obvious explanation for that and the obvious explanation was that the government presumably gathered evidence from a bunch of people, including four very competent lawyers, of different political persuasions I might add, two senior deputy ministers, and decided to go with them instead of him and in trying to rationalize that, he rejected the ordinary everyday routine, simple explanation, and tried to I think reach way out in left field for all kinds of conspiracy theories which I think at the end of the day just fall flat.

MR. SAMSON: From your knowledge of this whole deal, how much taxpayers' money is involved in this deal with the Sheraton?

MR. BOUDREAU: You mean in the compromise arrangement?

MR. SAMSON: No, in the deal that was reached how much taxpayers' money was put on the line in that?

MR. BOUDREAU: In the original, none. We didn't risk any money and we had a guarantee for $25 million. I haven't read the reports lately but I doubt that they are making profits that would justify the payment of $25 million. So I think we have done reasonably well on the financial side.

MR. SAMSON: So, as far as you know that $25 million arrangement has been held and is taking place?

MR. BOUDREAU: I have had no contact with it for some considerable period of time so I don't know.

MR. SAMSON: Thank you. That's it.

MR. CHAIRMAN: Mr. MacKinnon.

MR. MACKINNON: I just have a couple short questions, Mr. Chairman. Mr. Boudreau, do you have any idea as to why there seemed to be such bad chemistry between Mr. Spurr and Mr. Fiske? I realize your answer that, if your client doesn't want you and you are a lawyer, she's over, but I mean . . .

MR. BOUDREAU: They may have been too much alike, quite frankly but at the end of the day I deliberately stayed out of the argument and the reason I did was I knew that Mr. Spurr would be staying on at Finance and I didn't want to get involved in refereeing an argument between the two of them, in which case coming down in favour of one side or the other and perhaps damaging the relationship in either area because Mr. Spurr was going to continue being at Finance. So the approach I took at that stage, and I thought it was fairly

[Page 34]

sensible, was to call Mr. Spurr in and say fundamentally, Mr. Spurr, your client doesn't want you. As a lawyer you don't want to be in that situation. He agreed 100 per cent and we just made the change.

MR. MACKINNON: I noticed a little earlier in today's questioning my colleague from the NDP caucus, made the suggestion that as minister you wouldn't get involved with the day-to-day operations of the Gaming Corporation and drew the analogy with the liquor stores, as minister in charge of the Liquor Commission, you wouldn't advise them what spirits to put on the shelves but yet in the last session of the Legislature the very Opposition suggested that we put certain spirits on the shelves at the liquor stores. So there was a little bit of a contradiction.

[11:30 a.m.]

On a previous date the same Party suggested that the government should not proceed with the construction of the $100 million project. In the last session of questioning here, they were very curious and very demanding as to why the government wasn't making every effort to proceed with the construction. Then in the last session, again still, the suggestion was made by the very Opposition that wanted to generate so much activity into this process, concluded that it was becoming an obsession even with themselves. (Interruption) Well, yes. That's my preamble. (Laughter)

My question is, do you have any general view as to what has really transpired by the activities that were generated by Mr. Fiske?

MR. BOUDREAU: No, I have to say I have always taken Mr. Fiske's advice into account when I made decisions and I have no reason to believe that that wasn't the case in this situation, although, as I say, I have no direct evidence of that because I wasn't involved. But it is a fine line, as I have discussed previously with the honourable member directly opposite, between what is a day-to-day operation and what is a matter of public policy. The politician can get that wrong, sometimes, let's admit that, but the chair of a gaming corporation can get it wrong too, as the CEO of the Liquor Commission can get it wrong. When areas wander into significant areas that affect or impact on public policy, this House and members from all Parties in this House have insisted that they have a voice and ultimately, this is where the decisions on public policy should be made, through the government.

I think it is unfortunate, and I regret it on a personal level, that Mr. Fiske doesn't seem to have been able to accept this in his situation with respect to this particular incident and in reacting to it, I don't believe he reacted appropriately.

MR. CHAIRMAN: We are out of time with this witness, committee members, thank you very much. Mr. Boudreau, thank you.

[Page 35]

MR. BOUDREAU: Thank you, Mr. Chairman.

MR. CHAIRMAN: We have our next witness present in the House. I would ask him to come down. I would say to the members that the Chamber is spoken for at 1:00 o'clock, I believe, by the Workers' Compensation Committee and so we will have to move fairly expeditiously through our next round. So I would ask the members to come back extremely quickly and not tarry outside. Thank you.

[11:33 a.m. The committee recessed.]

[11:41 a.m. The committee reconvened.]

MR. CHAIRMAN: We will now reconvene. We have with us our next witness, Dr. John Savage. Accompanying him is his legal counsel, Mr. Jim Connors. I will swear the witness, we will hear an opening statement from the witness and then we will proceed to questioning.

Do you, John Savage, 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?

DR. JOHN SAVAGE: I do.

MR. CHAIRMAN: Thank you very much.

Dr. Savage, please proceed.

DR. SAVAGE: Thank you very much, Mr. Chairman, honourable members. I would like to thank you, Mr. Chairman and members, for inviting me to appear before you today so that I might have the opportunity to publicly refute the defamatory allegations made against me by Mr. Ralph Fiske before this very committee on July 8, 1998.

I do not intend to repeat verbatim the words used by Mr. Fiske on July 8th. Suffice it to say that he alleged that while I was Premier I used my office and authority as Premier in matters involving the arbitration between the Nova Scotia Gaming Corporation and the Halifax Sheraton Casino to ensure that Bernie Boudreau won the leadership race. This is absolutely false. I did not say what Mr. Fiske says I said, nor was I motivated as Mr. Fiske says I was motivated. I completely deny the allegations made against me by Mr. Fiske.

While Premier of this province, I received many criticisms of my leadership policies and positions, as some of you well know, on the opposite benches. I accepted that as a legitimate part of the political process. The falsehoods, however, expressed by Mr. Fiske go far beyond that. They constitute an unjustified attack on my honesty and integrity.

[Page 36]

Why has Mr. Fiske spoken falsely about me? I can't really tell you. I can't look inside Mr. Fiske's mind and say why. Nor is it helpful, for you of this committee, for me to speculate as to why he has spoken in such a way. I do know that there were four people in the room during that June 5, 1997 meeting where Mr. Fiske says I spoke those words; namely, Mr. Fiske, myself, Robert MacKay and William Gillis.

I say I didn't say it. Mr. MacKay has told you it never happened. I have spoken with Bill Gillis and he has told me to tell you that he is prepared to come before this committee and testify that Mr. Fiske is wrong when he says that I said this.

I also know that when Mr. Fiske first appeared before you on June 17th, he made no such allegation. While he told you then that the government of the day was fundamentally wrong in its handling of the casino contract issue, and he said, "No reasons were given us, other than that Cabinet wanted the construction issue to go away and peace restored between the parties.", he also added: "It is important to highlight at this juncture that I make no suggestion of impropriety or an absence of such bona fide reasons. It is simply that we were cut out of the loop and provided no explanation . . .".

On June 17th, Mr. Fiske says he is making no suggestion of impropriety, and yet barely three weeks later he returned before you and made bold assertions of impropriety against me and others. I did not say it. Others who were there confirm that I did not say it. Nor was I, in the slightest, motivated in this matter by the leadership aspirations of any person.

It may be helpful to you to have some understanding of the context in which I became briefly involved in matters involving the casino in April 1997. As regularly occurred in the Premier's Office when I was Premier, my staff would brief me on current and emerging issues. I had been an original and strong proponent of a permanent casino, that would be good for tourism, good for the Nova Scotia economy, and good for producing much-needed revenue, and I might add, for the jobs.

I became aware that the relationship between Sheraton and Mr. Fiske was very strained. A briefing was scheduled for me on Monday, April 21, 1997, concerning the arbitration. Present at that meeting, to the best of my recollection, were, in addition to myself: Mr. Fiske; Mr. McKay; Carl Holm, Q.C.; John Merrick, Q.C.; lawyers for the Gaming Corporation; and Robbie MacKeigan, Q.C. Mr. MacKeigan had been retained on behalf of the government, through my staff, to also assist in this matter. I say, to the best of my recollection, because I have no papers in my possession, since leaving the Premier's chair, relevant to this topic, other than my daily appointment book.

This briefing was one of three early that week, and I might add, four, five or six during the week, and when viewed against the wide range of issues, policies and concerns I was dealing with as Premier, was not a major matter of ongoing concern. However, at the briefing,

[Page 37]

Mr. Merrick made it clear that there was a material or serious risk of losing the arbitration and that from the perspective of the best interests of the Gaming Corporation, it made more sense to negotiate than to arbitrate. I agreed with that advice, particularly as I understood that chances of winning were only 50/50, and to my recollection, they may have been less than 50/50 but I remember the words 50/50 being used by Mr. Merrick.

I met again the following morning, Tuesday, April 22nd, at 6:30 a.m. with Mr. Fiske and was advised of the position that they had prepared for negotiation. I told him I would be taking the matter to Cabinet. Now Cabinet was meeting that day, and I have evidence in my book here that Cabinet was meeting because of the business plans for Crown Corporations, that was way behind, and we were determined to get it together. We normally met on Thursday; in this case, we were meeting on Tuesday at 7:30 a.m., hence the early time of my meeting with Mr. Fiske.

Cabinet was already scheduled to meet at 7:30 a.m., as I have explained, shortly after which time, I telephoned Mr. Fiske and indicated that Cabinet wished the matter be resolved by negotiation between the Gaming Corporation and Sheraton rather than by arbitration. I then turned my attention to other matters on the government agenda, content to rely upon those to whom the resolution of this matter was delegated.

My next and only other involvement was the meeting to which Mr. Fiske has referred on June 5, 1997. To the best of my recollection, the meeting was requested by or on behalf of Mr. Fiske, but I can't absolutely say that, that is my impression. Present, as I have said, were Mr. Fiske, Mr. Gillis, Mr. MacKay and myself. During this meeting, Mr. Fiske accused me of having been got at by the Sheraton people. This angered me as nothing like that had happened at all. I told Mr. Fiske, quite forcibly, that this was not true.

I have already said, and will say again, that absolutely nothing was said about the Liberal leadership or about handling this matter in a way to help, or not to hurt, Mr. Boudreau's chances of winning that leadership. The very idea is preposterous.

What was clear was that Mr. Fiske was not happy accepting the lawyers' advice, which I had accepted, that there was a serious risk the Gaming Corporation could lose the arbitration, and that it was in the best interests of the corporation and the province that a negotiated settlement be attained.

That was what motivated me, as Premier, to talk to Cabinet, to go to Cabinet to seek approval that the dispute be resolved by negotiation rather than leaving it to the uncertainties of arbitration, not partisan political consideration. After that meeting on June 5, 1997, I had no more involvement in the matter of the casino. My successor, as Premier, was sworn in on July 18, 1997, and I again became a private citizen.

[Page 38]

Mr. Chairman, honourable members, I hope that this puts to rest this unfortunate, unnecessary and untruthful allegation. Moreover, I hope my comments are helpful to this committee and I will answer any questions that you may have, following this statement.

MR. CHAIRMAN: Thank you very much. I omitted to mention earlier that if you or your legal counsel would care to remove your jackets at any time, if you want to adjust your dress in any way to make yourself feel comfortable, please do. You will see that members of the committee have done so. I will start with 20 minute rounds by caucuses and we will see where we get at the end of that. Mr. Dexter.

MR. DEXTER: I am going to begin and then I am going to turn it over to Ms. Godin. I just have one question, because I think we should clear this up right at the very beginning. I want to say first of all, thank you very much for being here. We appreciate the fact that you are taking your time to come here today and to respond . . .

DR. SAVAGE: Time is what I have, Mr. Dexter.

MR. DEXTER: I have been following through this and tracking it as closely as I can, sometimes it is difficult to understand because there are many threads coming together here. In the statement that you have just made, you recount in particular the first meeting, which is the briefing that took place on April 21st, who was there, and that it was not high on your list but you make a very specific recollection about the chances of winning that arbitration and what the opinions of the individuals were. You say, at the briefing, Mr. Merrick made it clear that there was material or serious risk of losing the arbitration.

DR. SAVAGE: I think the word that you would recognize as a lawyer was material.

MR. DEXTER: Right. Mr. Merrick, as you may know, appeared before this committee and in addition to other documents that he provided, he provided a letter of August 20, 1997. At that time, in that letter he says that in the lead up to the arbitration, and I will just read what he says, "On that evidence I was of the view that there was little probability that the Corporation could lose the arbitration and furthermore that aggressive action should be taken to force the Sheraton to comply with its contractual obligations. I continued to have that view at the time of the commencement of the arbitration proceedings.".

That seems to be very much at odds with what you have just told us. What you have told us is that, at that time, and this is prior to the commencement of the arbitration committee meetings, he is saying, no, we have a 50/50 per cent chance. What he says in his letter of August 20, 1997, is that right up until the time of the commencement of the arbitration proceedings, he felt that there was no chance to lose that arbitration proceeding.

DR. SAVAGE: Of course the arbitration was beginning the next day.

[Page 39]

MR. DEXTER: Right.

DR. SAVAGE: All I can tell you is that there were two statements that Mr. Merrick made that struck me and which I remember quite clearly. One was that as a lawyer, I have always found it better to negotiate than go to arbitration. I think somewhere in his evidence, he talks about 95 per cent of deals that he has been involved with, which are in fact negotiated as opposed to arbitrated.

The second one was the 50/50. I can tell you that we were taken by surprise that there would be that kind of low estimate. All we had heard, and I should tell you that we hear things in a small town like this, there is a lot of stuff that goes around, the staff in P & P, the staff in our own office, reported that the relationship between Mr. Thomas and Mr. Fiske was poisonous. That was fairly commonly talked about.

All I can tell you is that that meeting, which was part of a series of briefings to do with this issue as opposed to other issues that I talked about on Friday, I had two with my advisers in Aboriginal Affairs, I had one on the budget, ongoing ones, at that meeting, Mr. Merrick quite clearly stated those two facts that I have already stated - that it is better to negotiate than to go to arbitration, and that he reckoned that it was probably a 50/50 chance, and he may even have said less than 50/50. All I can remember is those two figures which, in effect, told us quite clearly that any position held by the corporation was, in fact, not what the corporation had been saying that it was, strongly held.

MR. DEXTER: I should just say that that is at odds with what he says in his letter of August 20th. In fact, it is at odds with his testimony which was that he did not, in fact, become concerned until the intervention of Mr. MacKeigan who he says brought to light additional information which . . .

DR. SAVAGE: But Mr. MacKeigan was there.

MR. DEXTER: Right, and Mr. MacKeigan starts to say . . .

DR. SAVAGE: And Mr. MacKeigan had spoken to him before.

MR. DEXTER: Well, maybe there are other problems here as well. Mr. MacKeigan says that he got that call to come to the meeting and was essentially a neutral observer at that meeting.

DR. SAVAGE: He was present at the meeting.

MR. DEXTER: Mr. Boudreau, who was just here, described a very rigorous position that he, as Minister of Finance, took with respect to the Gaming Corporation. Essentially what he said was that, when I was the Minister of Finance and when I was in charge of this,

[Page 40]

what I did is I met very frequently with the Chair of the Gaming Corporation. I knew what was going on. There was a constant flow of information. He says, I am the one who took recommendations to Cabinet. I am the one who, when there was an issue with respect to the Gaming Corporation, I am the guy who showed up with the information. Given that that was the circumstance while Mr. Boudreau was the Minister of Finance, why does it change on April 21st and why is it at that point in time that the Premier's Office decides to get involved, apparently doesn't call the Minister of Finance, the Minister of Finance is not represented at the meeting? So why does that happen? Why does it not go through the channel which apparently had been previously promoted by Mr. Boudreau?

DR. SAVAGE: I think you will have to ask Mr. Gillis why he wasn't there. There was no intention to exclude him. I would say it was a Monday and Mr. Gillis is a very strong constituency person who seldom came up before he had finished in his office. But there was no attempt to exclude Mr. Gillis at all and he was present at the other meeting, as you are well aware.

MR. DEXTER: I am going to now move to Ms. Godin.

MR. CHAIRMAN: Ms. Godin.

MS. GODIN: Thank you. Hello, Dr. Savage.

DR. SAVAGE: Good morning.

MS. GODIN: Dr. Savage, when you were Premier, you worked very hard to bring a casino and gambling to Nova Scotia. Considering what has been happening lately and considering the social and the financial realities of what is happening, do you have regrets?

DR. SAVAGE: Not particularly. There were three motivations that we had for eventually deciding to bring casino gambling. One was the employment and as you are probably aware, there are close to probably 1,200 people and it has been higher that that at times, who have been employed. The other was the $100 million, $25 million a year over four years and the other one was the response to many people in the tourist industry who had told us that a casino would add another element of attraction for people who were coming to this province. Those were the three reasons that we introduced it.

We did take special efforts, we did make special efforts, to provide for gaming difficulties and as far as I know, the essence of what we introduced was perhaps best put forward by Mr. [Carl] Holm who expressed the regulatory and legislative regime in Nova Scotia and this is a letter that he wrote to Ms. Gordon which I think you have all seen. "The legislative and regulatory regime in Nova Scotia, . . . is at least as comprehensive and sophisticated as in any other Canadian jurisdiction. It is more comprehensive and sophisticated than many; in some jurisdictions, gaming is conducted, managed and regulated

[Page 41]

by the Minister of Finance, subject only to Governor in Council approval, in other jurisdictions one body, a gaming commission, members of which may be limited to cabinet ministers and senior civil servants, conduct, manage and regulate casinos.".

[12:00 p.m.]

In the process to which Mr. Boudreau referred this morning under Laszlo Lichter, the conditions were drawn up for visible, clean gaming. The social costs at this particular point are ones that obviously need to be tabulated but obviously there are people who are in trouble with gaming in the same way as there are more people in trouble with alcohol, that more people get killed on the roads, et cetera. This was an issue that we addressed by instigating help for people who are in trouble with gaming and putting the sum of money which - no, I had better not say $1 million - I seem to think it was $1 million they were going to spend on people who were in trouble with the gaming, which was given to the Department of Health by the government.

MS. GODIN: You talk about tabulations. The only figures that you mention are 1,200 people who have been employed in the gaming but you have no idea how many people have what you call gaming difficulties?

DR. SAVAGE: I don't have the percentage here. All I know is that the number of people who were employed initially were something like 700 in one and 600 or 700 in Sydney. I don't know the exact figures.

MS. GODIN: You clearly state in your presentation this morning that you feel there was no wrongdoing on your part. I am just wondering, do you have any theories why somebody of Mr. Fiske's professional reputation would have the perception that so many - and to use your word - improprieties had taken place with this?

DR. SAVAGE: I think it would be extremely unwise of me to comment on Mr. Fiske's reasoning and decisions.

MS. GODIN: Dr. Savage, who retained the services of Robbie MacKeigan?

DR. SAVAGE: The Government of Nova Scotia.

MS. GODIN: The Government of Nova Scotia? Is there a department or a name that you can attach to that?

DR. SAVAGE: What, you mean was there one person who contacted him?

MS. GODIN: Yes.

[Page 42]

DR. SAVAGE: Yes, Mr. MacKay was the person who admitted in this Chamber that he contacted him.

MS. GODIN: Is this normal to hire a private lawyer?

DR. SAVAGE: It is not unusual. For instance, in the long and prolonged discussion with the teachers in 1994-95, we had negotiators from the private sector and in many other areas, private sector lawyers are employed in addition to those who come from the Department of Justice.

MS. GODIN: Do you know why Mr. MacKeigan was hired instead of using department lawyers?

DR. SAVAGE: Mr. MacKeigan was hired to represent the main shareholder.

MS. GODIN: Do you know why? Was there a feeling that it was something that couldn't be handled by the lawyers attached to the - would it be the Justice Department?

DR. SAVAGE: Department of Justice?

MS. GODIN: Yes.

DR. SAVAGE: No, I can't tell you why. I would assume that in the case of Mr. MacKeigan, this was an area of his expertise and he was, in fact, extremely well versed and practised in it.

MS. GODIN: At any time, Dr. Savage, did you suspect that any of your ministers were being lobbied with respect to negotiations between the Gaming Corporation and Sheraton?

DR. SAVAGE: Nobody spoke to me about being lobbied but I cannot exactly, over a period of two years, remember whether somebody told me that they had spoken to x or y. Certainly, there was no indication to me that members of Cabinet were being extensively lobbied but they could have been, for all I know.

MS. GODIN: But what you are saying is it never came up in a conversation between yourself and any of your ministers.

DR. SAVAGE: No. I never spoke to Mr. Thomas after the opening of the casino.

MS. GODIN: Thank you, Dr. Savage.

MR. CHAIRMAN: Seven minutes, if you want to use it.

[Page 43]

MR. DEXTER: As I pointed out earlier, Mr. Boudreau had laid out this very kind of rigorous procedure that he went through in order to keep apprised of the Gaming Corporation matters and you indicated that there was no indication or no intention to keep Mr. Gillis out of the loop, but what information came to your attention with respect to this commercial arbitration that caused you to have that briefing on April 21st? Where did that information come from?

DR. SAVAGE: I didn't ask for the briefing, as far as I recall. It was a decision made by people who briefed me two or three, four times a week. It was a standard briefing. I can show you, as I indicated before, that on the Friday before that I had a meeting with the Auditor General concerning the Auditor General's Report. I had a briefing with my staff on Aboriginal Affairs. I had regular briefings with Ms. MacLean and David Harrigan. On the Tuesday of the day after that, I had a briefing concerning the Council of Maritime Premiers Conferences. So I was briefed regularly, sometimes early in the day, if there weren't enough hours in the day and sometimes at other times.

MR. DEXTER: In this case, though, I mean it is more than just a briefing. What is happening is, and it has been described alternatively as an intervention in the operations of the Gaming Corporation on the one hand, and that is clearly the perspective that Mr. Fiske takes. That is his whole complaint in this. On the other side, as a policy decision that is going to be made by the government with respect to its relationship with its partner. In this case, what happens is a decision is made on that day to retain legal counsel and to terminate, or bring to a conclusion, commercial arbitration.

DR. SAVAGE: As I told you, I did not have the figures until I got them from Mr. Merrick at that meeting on the Monday. I had no indication. All I knew was the commonly voiced opinion around town, which large numbers of people were quite clearly talking about, was that Mr. Fiske and Mr. Thomas could not sit in the same room. I think that has been borne out by other people and it was certainly our impression at the time. That may have prompted Mr. MacKay to feel that it was time I had a briefing. At the time, however, we had no figures and no indication until Mr. Merrick and Mr. [Carl] Holm were at that meeting.

MR. DEXTER: As I pointed out earlier, Mr. Merrick, at least going into the arbitration, from what material he supplied us . . .

DR. SAVAGE: When was Mr. Merrick hired, though?

MR. DEXTER: Mr. Merrick was hired, well, obviously well in advance. As I understand the breakdown of the responsibilities, Mr. [Carl] Holm provided primarily . . .

DR. SAVAGE: He was the solicitor and Mr. Merrick was the barrister.

[Page 44]

MR. DEXTER: . . . the ongoing advice to the corporation and then subsequent when this commercial arbitration came up, because Mr. Merrick is a litigator, he was hired to carry the litigation through to the end.

DR. SAVAGE: Spear-chucker, I think he is referred to.

MR. DEXTER: Well, he is the fellow, that is right, who carries the spear on behalf of the government. So he seems to come to this arbitration with the understanding that they are going to win it.

DR. SAVAGE: I can't answer that. All I can tell you is what he told us at that meeting.

MR. DEXTER: The other question for the lawyers, I guess, at that point would be have you considered the question of what damage is being done to the Province of Nova Scotia as a result of the failure of the Sheraton interest to live up to their obligation? Were those options explored at the same time?

DR. SAVAGE: I think you probably need to explore much more the deal that was involved. It was our understanding from Mr. Merrick that the fault was not all on the side of the Sheraton. The intimation was that if we were possibly going to lose this, then obviously, there was a risk that the government, i.e. the corporation, was in the wrong.

MR. DEXTER: Again, I am not going to go through, I don't know if you have had an opportunity to review all of this, but Mr. Merrick really very clearly says that all of this happened subsequent to his briefing with your office and subsequent to the termination of the arbitration. He says following that - I shouldn't say termination because originally it was adjourned - following the adjournment then I found out that the government had made a decision that there would be no permanent casino in the hotel. I found out that there had been news releases and information that may have misled the Sheraton. He says all of that happened after.

DR. SAVAGE: He discovered it afterwards.

MR. DEXTER: That is right. He discovered it afterwards. I guess my point is, at that point in time when he comes to you, he comes to you saying, no, we are going to win this arbitration.

DR. SAVAGE: Well, I am sorry to tell you that what Mr. Merrick told me was 50/50. I am not even sure that he said less than 50/50. It was a real insight to us, it explained some of what we had heard in terms of scuttlebutt which was pretty common around Halifax here about Mr. Fiske's and Mr. Thomas' relationship.

[Page 45]

MR. DEXTER: Maybe we can just move down the line from that initial time that you met. Was the file now coming back to you on a regular basis? Was it on your desk and you were dealing with it regularly?

DR. SAVAGE: No.

MR. DEXTER: Who did it go to, to be monitored?

DR. SAVAGE: I assume it went to the minister.

MR. DEXTER: The Minister of Finance?

DR. SAVAGE: Yes. I only intervened in issues when it was obvious that there was a significant policy decision that we thought was in trouble. In this particular case, the briefing told me that we might lose the arbitration. I therefore went to Cabinet to discuss that the following day and I called Mr. Fiske that Tuesday morning afterwards.

MR. DEXTER: So you didn't follow the negotiations after that point?

DR. SAVAGE: No, I never followed the negotiations.

MR. DEXTER: Did you know that the Gaming Corporation's opinion was that the result of the negotiations would be a cost to the Nova Scotia taxpayer of between $27 million and $30 million?

DR. SAVAGE: I would have to say in all candour that the $27 million to $30 million was never understood by anybody except Mr. Fiske. What we learned was the issue of the $10,000 per day, which in our terminology added up to $1.8 million. I would add that the government was still not losing money because the government did not put money into the casino.

MR. CHAIRMAN: I think we have to move to the PC caucus. Although, Dr. Savage, could you just clarify something? Did you just tell us that you took this matter to the Cabinet that day?

DR. SAVAGE: No, what I said was, that on the Tuesday, that meeting with Mr. Fiske was on Monday the 21st.

MR. CHAIRMAN: On the Tuesday rather, you took the matter to Cabinet?

[Page 46]

DR. SAVAGE: On Tuesday, we had a special meeting of Cabinet that was to deal with business plans for Crown Corporations. It was at 7:30 a.m. as opposed to the normal meeting of Cabinet, which was at 8:00 a.m. on Thursday. So I was able to go to Cabinet and get their approval for the stance of negotiation as opposed to arbitration.

MR. CHAIRMAN: Is there a written record, do you know, of that?

DR. SAVAGE: No, I would doubt it.

MR. CHAIRMAN: There isn't or you don't know?

DR. SAVAGE: No, most of what happens in Cabinet is not written down. I am sure others will tell you that who are more familiar with the process. The decisions are written down, because that is what happens afterwards, the decision is later.

MR. CHAIRMAN: Thank you. Mr. LeBlanc.

MR. LEBLANC: Mr. Chairman, you picked up on a point that I heard very clearly. So you are saying here today that subsequent to your meeting that a Cabinet meeting discussed this issue. Is that correct?

DR. SAVAGE: Cabinet was asked on Tuesday morning at about 7:30 a.m. or 7:45 a.m. whether they would please support the position that I was taking which was that we should negotiate rather than go to arbitration; Cabinet agreed.

MR. LEBLANC: This is in direct contravention to what your preceding witness just said here, that basically he had no dealings with this issue, had not come to Priorities and Planning The only deliberations or contacts he had was on three different occasions at the instigation of Mr. Fiske. So this, basically, substantiates the fact that there were discussions going on in regard to this issue and is basically in contravention of what Mr. Boudreau said. Perhaps, you could just clarify it for me.

DR. SAVAGE: Sure, it is quite easy. Mr. Boudreau resigned as Chairman of P & P on April 11th or April 12th. At 3:00 p.m. on April 15th, I was sworn in as Chairman of P & P. Mr. Boudreau was no longer at P & P at that particular time and probably doesn't know it because he wasn't there.

MR. LEBLANC: Okay, I agree with what you are saying there. But I don't agree that this wasn't discussed at Priorities and Planning and I don't agree that Cabinet didn't discuss it. I realize that there is some Cabinet confidentiality in this regard but I find it amazing that, by far the most senior Cabinet Minister of your Cabinet, who many people said was the mover and shaker of this whole government - and you can agree or disagree with that, other people will judge it and you can have your own opinion - was outside of the loop of a project that

[Page 47]

he was the instigator, it was his pet project that he began and then after he left that he had no discussions about this file whatsoever. I find that beyond belief, from my experience of being in Cabinet, moving forward from departments, you leave the file behind but you keep yourself informed but you realize that you don't have the responsibility for it. I find it beyond belief that Mr. Boudreau would have no knowledge, an apparent total disregard for this file after moving on from June 1996.

DR. SAVAGE: Well, you are entitled to interpret what Mr. Boudreau feels, all I can tell you is that by April 15th and April 16th, Mr. Boudreau was focusing on something entirely different.

MR. LEBLANC: Oh, I know that. But I find from June 1996 to March . . .

MR. CHAIRMAN: Mr. Samson has a point of order he wishes to raise.

MR. SAMSON: Mr. Chairman, I am just curious as to why Mr. LeBlanc is now making allegations or questioning the testimony of Mr. Boudreau when he did not raise those when Mr. Boudreau was here just recently and why he is now putting to this witness questions about Mr. Boudreau's testimony. I think that should have been dealt with when Mr. Boudreau was here himself to answer to those allegations and that it is completely inappropriate to question Mr. Boudreau's testimony to this witness here.

MR. CHAIRMAN: I think we heard additional information from Dr. Savage that led Mr. LeBlanc along the lines that he pursued. I think it is clear enough what led him to ask the question. It is okay.

MR. LEBLANC: First of all, Mr. Chairman, there is no point of order. The fact of the matter is, I didn't have time to get back to the questions and there is limited time to ask them here and it was one of the questions that I was going to ask him if I had time or if time would have permitted.

I want to go back to what the former Premier has said that, I think, it was Mr. Merrick indicated to yourself that it was only a 50/50 chance of winning the arbitration. Can you explain to me what the downside was to go to arbitration, because we gave them everything they wanted, if we had gone to arbitration and lost, could you explain to the committee as to what was the downside? Why wouldn't we go to arbitration? You said that most things are settled before they go to arbitration because they give to both sides but in this instance that didn't occur. So can you explain to us so that we can understand why this happened?

DR. SAVAGE: There was a serious risk that the government, i.e. the corporation, would lose the arbitration, in which case the issue of the new casino would be deferred and deferred and deferred and the issue of whether or not they might ever build it was deferred. As subsequent events turn out, which is beyond my ken and I won't even comment on the

[Page 48]

current difficulties, the issue was primarily that. We felt very strongly in Cabinet that we did not want to lose an arbitration if there was a possibility of a negotiated settlement, quite simply that.

MR. LEBLANC: By going to arbitration the decision would have been made at that instance, how would it have been deferred and by giving away all the points that were basically put on the table by the Gaming Corporation and giving them to Sheraton, how would we win in that instance? You haven't explained that to me, perhaps you could try again.

DR. SAVAGE: No, I don't think I can explain it to you. What I am telling you, quite clearly, is that there was a reasonable chance in the view of myself and others that this was an arbitration that we should avoid. We had seen, and by the recommendation of one of the most senior counsel, that this was a 50/50 chance. We had heard that a lot of the relationships between the casino and the corporation were poisoned by the relationship between Mr. Fiske and Mr. Thomas and we were concerned that were it deferred again and again and in arbitration lost, that we would lose the advantage of a new casino.

MR. LEBLANC: But you had signed a deal that the new casino had to be built, how would you lose that?

DR. SAVAGE: Yes but the arbitration process would have decided on a number of things, only one of which was the new casino.

MR. LEBLANC: We can go on with this, but I will let my other colleagues pick up that point later on. But I do want to pick up the point of the June 5th meeting. Mr. Fiske says in his testimony that it got into a shouting match. Perhaps you can clarify. Did it come to that?

DR. SAVAGE: I wouldn't say it was as loud as Mr. Fiske remembers it. I can tell you that I was incensed at the idea that I had been got at and I was further incensed at the suggestion that it was due to my plot to get this through for Mr. Boudreau. Both of those were offensive to me. But I don't think I was particularly noisy or offensive. Mr. Fiske was certainly exercised.

MR. LEBLANC: Let me say, in your opinion then, Mr. Fiske was unbending or unyielding in his approach. Is that correct?

AN HON. MEMBER: Mr. Boudreau said that.

MR. LEBLANC: I am sorry, Mr. Boudreau had said that but I will ask you, do you, in your opinion, did you find from that discussion that Mr. Fiske was unbending or unyielding in his approach with Sheraton?

[Page 49]

DR. SAVAGE: Yes.

MR. LEBLANC: So you have taken people out of senior positions before, when you came in you moved deputy ministers out, moved other people out of positions, why didn't you move Mr. Fiske if he was in disagreement with you?

DR. SAVAGE: Because on the Monday meeting, they had agreed to negotiate. Monday meeting they had agreed to negotiate. The Tuesday, the following, was the day that I got permission from Cabinet, the arbitration was suspended at noon on the Tuesday and did not resume, as far as I know, on the Wednesday, because of the belief that negotiation was the best way to go.

MR. LEBLANC: Mr. Chairman, I will pass on to Mr. Leefe.

MR. CHAIRMAN: Thank you. Mr. Leefe.

MR. LEEFE: Mr. Chairman, I know that Dr. Savage was not able to be present when Mr. Boudreau gave his testimony and that he cannot, of course, comment on that with respect to his having heard that with his own ears.

I must share with him that I was surprised this morning to hear Mr. Boudreau explain his role in this entire matter, a gentleman whom I had always taken to be central to decision-making in Dr. Savage's Government, who describes himself today as something more of a functionary - my word - rather than a person providing leadership in this matter, in fact, a functionary to the extent that he informed us that he did not recall this matter ever having been brought to P & P, nor did he recall that as the wider casino matter, nor did he recall it ever having been discussed at Cabinet. He did indicate to the committee - at least this is my clear recollection - that the real decisions were, in fact, taken not by the minister responsible nor by the Gaming Corporation but, rather, in the Office of the Premier, in his experience, when the witness was Premier.

My question to the Premier is this. In fact, was this matter run out of the Premier's Office, as Mr. Boudreau would seem to indicate? Why did the Premier's Office become involved in the matter which to most people would seem should have been resolved between the minister responsible and the Gaming Corporation?

DR. SAVAGE: Well, first of all . . .

MR. CHAIRMAN: Sir, just before the answer is given, I must observe with respect to some of the preamble of Mr. Leefe's question that, in fact, I believe Dr. Savage was in this Chamber for at least a small portion of the exchange between Mr. Boudreau and the members of this committee. I don't think we have ever excluded witnesses, if that was the implication of what you said before . . .

[Page 50]

MR. LEEFE: No, no.

MR. CHAIRMAN: . . .which, of course, wouldn't make sense since the proceedings are broadcast in any event. I believe he actually was present in the Chamber for maybe 10 or 15 minutes of the - I cannot remember exactly when he arrived. Anyway, it is perhaps not directly material to your point.

DR. SAVAGE: Well, let me add to the fact that I watched the entire proceedings until about 10:50 p.m. on television so I did hear.

I have to tell you, I did not get the impression that Mr. Boudreau said he was a mere functionary. I am not quite sure where you got that from. Mr. Boudreau was a leader and a person in whom I relied tremendously, no question. Therefore, I think the description of him as a functionary, quite apart from being vaguely insulting, is also inaccurate.

MR. LEEFE: Well, that is why I was very surprised, Mr. Chairman, that . . .

DR. SAVAGE: I don't think he said that.

MR. LEEFE: My view of Mr. Boudreau's role on this would be exactly that as expressed by the former Premier, that he was very much central to this issue from beginning to end, the end being at the time of his resignation. I thank the former Premier for confirming that for me.

DR. SAVAGE: May I just say one thing in this? I think you have to understand that for most of the Cabinet meetings, I can tell you since it is not a decision, the casino was not discussed very often because it was seen to be going reasonably well from the time that Mr. Boudreau resigned - I'm sorry - from the time that I changed him from Minister of Finance to become Minister of Health. That was in, I think, April or May of the preceding year. He was Minister of Health at that time. He was often, for instance, away from Cabinet. I am not sure that he retained the tremendous interest in the deal that all of you profess that he did. He was running a department that was the biggest budget, the biggest department in the province and it took all his time. He may well have retained a proprietary sense of ownership with the deal but at no time did he talk to me about it and bring it up as an issue.

MR. LEEFE: Mr. Chairman, again through you to the witness, in the July 8, 1998 testimony of Mr. Fiske, and I am looking at Page 36, Mr. Fiske states he - that is, Dr. Savage - ". . . said the casino was Bernie Boudreau's project and that he could not risk public knowledge of the arbitration hurting Mr. Boudreau's chances to win the leadership race. He said he believed that any adverse publicity surrounding the arbitration might harm Mr. Boudreau's reputation if the public concluded that even Mr. Boudreau was incapable of negotiating a good deal.".

[Page 51]

I believe I heard - and I ask the witness again to confirm this to me if, in fact, I heard him correctly - that he denies ever having made any such remark whatsoever.

DR. SAVAGE: Absolutely.

MR. LEEFE: That being the case, did anybody else in the room suggest that that might be a reason for the arbitration being set aside?

DR. SAVAGE: No.

MR. LEEFE: Mr. Fiske did not mention it at that meeting?

DR. SAVAGE: Are you talking now about the June one?

MR. LEEFE: Yes.

DR. SAVAGE: At the June meeting?

MR. LEEFE: Yes.

DR. SAVAGE: Well, that was when Mr. Fiske came aboard me too.

MR. LEEFE: But did Mr. Fiske suggest to you at that time that that was the reason for setting aside the arbitration?

DR. SAVAGE: No, no. He said nothing at that meeting at all about Boudreau or if he did, it was only an allegation that I had said something. I at no time brought the issue up.

MR. LEEFE: But here we have, Mr. Chairman, two witnesses, both sworn, and we have a sworn witness saying that not only did he not say this or anything remotely similar to what is written here in this evidence and that, in fact, the matter was never brought forward at that meeting at all and yet on the other hand we have Mr. Fiske, again under oath, giving us a very different version. It is very clear here that somebody has not been forthright with this committee and there is a very strong legal word for that lack of forthrightness with respect to evidence given under oath and we will have to weigh that.

MR. CHAIRMAN: Yes, we will. Mr. Fage.

MR. FAGE: Thank you, Mr. Chairman. Good afternoon, Dr. Savage.

DR. SAVAGE: Good day.

[Page 52]

MR. FAGE: Several questions, and going back to one of my colleague's questions, on the downside of the negotiation. It is my recollection or understanding in an examination that part of the permanent casino, the construction of it, was not part of the arbitration process. Again, if the arbitration had been completely lost, what would the taxpayers of Nova Scotia have been faced with as a downside?

DR. SAVAGE: I can't tell you that. I don't know. All I can tell you is that the advice that we had was that we should not enter arbitration.

MR. FAGE: The point concerns me greatly because a large amount of discrepancy centres around that. John Merrick offered the advice, you said 50/50 or less, and had made those sorts of assertions. At that point if the permanent casino is not part of the negotiation, I think it begs the question, why was the Office of the Premier becoming involved through Mr. MacKeigan, yourself, and Bob MacKay when clearly the Gaming Corporation is under the auspices of the Minister of Finance? What was such a concern that at this point your office became involved in the driving force?

DR. SAVAGE: The Premier is briefed on a whole variety of issues. Sometimes the ministers are there, sometimes the ministers are not there. A whole variety of issues come up on my agenda as they do with every other Premier and this was a briefing which was on Monday in company with other briefings for that day.

MR. FAGE: But why would you have direct contact with Sheraton through your deputy ministers or . . .

DR. SAVAGE: I had no direct contact with Sheraton.

MR. FAGE: Bob MacKay's testimony certainly leads one to believe that Bob MacKay was having discussions through . . .

DR. SAVAGE: I had no direct contact with Sheraton. I had no direct contact with Sheraton. Under no circumstances did I ever speak to anybody at Sheraton.

MR. FAGE: Did members of your staff have direct contact with Sheraton?

DR. SAVAGE: No, I can't say that Mr. MacKay did not meet with them because he may have but the point is I never met them.

MR. FAGE: Given that situation and your office becoming involved through Bob MacKay and Mr. Merrick, does that mean there was a lack of confidence in Minister Boudreau at the time he was Finance Minister? Is that the indication why . . .

DR. SAVAGE: Mr. Boudreau wasn't minister at that time.

[Page 53]

MR. FAGE: Subsequent to Mr. Boudreau, what about Minister Gillis? Was there a lack of confidence in his ability to run it?

DR. SAVAGE: No.

MR. FAGE: What about Mr. Fiske? Was there a lack of confidence in Mr. Fiske's ability, since he was appointed head of the Gaming Corporation, to handle those negotiations? Was that a clear indication of lack of confidence in Mr. Fiske, why Sheraton would be dealing directly with officials from your department?

DR. SAVAGE: I'm sorry, I lost the question in there.

MR. FAGE: The lack of confidence in Mr. Fiske, is that what this indicates, that Bob MacKay, members of your department, the Premier's Office, were dealing directly with Sheraton in negotiation as well as with lawyers, John Merrick, does that indicate a lack of confidence in Ralph Fiske's ability as chairman?

[12:30 p.m.]

DR. SAVAGE: I can't answer some of the first part of your sentence. What I can tell you is that we had heard, and I have stated it before, that the relationship between Mr. Fiske and Mr. Thomas and, therefore, Sheraton was poisonous. They couldn't talk to each other. They did nothing but fight and it was brought to our attention by senior staff and executive directors, et cetera, that this was an issue.

MR. FAGE: But why wouldn't Ralph Fiske not be instructed to do his job and to negotiate, to go through the arbitration process, if that's what you preferred . . .

DR. SAVAGE: That's what he was told.

MR. FAGE: . . . rather than officials from your office dealing directly with Sheraton then? It appears that Mr. Fiske was bypassed in this process as chairman because Sheraton was dealing directly with officials from the Premier's Office?

DR. SAVAGE: Ninety-nine per cent of the contact with the Sheraton was by Mr. Fiske and his department, and his organization. Our contact with it was, obviously, through Mr. MacKay and I have no comment on that since I don't know anything about it. I have not been told as to what Mr. MacKay did with Sheraton.

MR. FAGE: Thank you.

MR. CHAIRMAN: Over to the Liberal caucus, Mr. MacKinnon.

[Page 54]

MR. MACKINNON: I just have one question, Mr. Chairman. Dr. Savage, Mr. Boudreau indicated earlier that Mr. Fiske had lobbied for a casino himself. At some point in time as this process went down the road was there any feeling that perhaps Mr. Fiske might be trying to torpedo this deal with the Sheraton Group because in the back of his mind he still had the intention or the motivation or some inkling that he might come back and come into the scene as a casino proponent?

DR. SAVAGE: I really can't answer that very clearly. What I can tell you is that after Mr. Fiske made his first visit to Mr. Boudreau, Mr. Boudreau called me up and said, guess what, I have just had a conversation with Mr. Fiske. That's all I know about the conversation in which he wanted, as you intimated, to set up a casino in the World Trade Centre and I just re-enforced to Mr. Boudreau, I said there is no way that that could be allowed. Insofar as Mr. Fiske's ambitions, I guess you will have to ask Mr. Fiske.

MR. MACKINNON: Thank you.

MR. CHAIRMAN: Mr. Samson.

MR. SAMSON: Dr. Savage, how did you first come to know Ralph Fiske?

DR. SAVAGE: I don't think that I personally met Mr. Fiske until we were in office in June 1993. Before that time he was known as Mr. Fiske who had been in Regan's Cabinet. He was involved with the Regan Government and with the Liberal Party. I don't think that I had any contact with him. I knew him to see and I knew his brother but that's about all.

MR. SAMSON: Prior to being appointed as chairman was there any sort of relationship between yourself and Mr. Fiske?

DR. SAVAGE: No.

MR. SAMSON: Dr. Savage, who hired Ralph Fiske?

DR. SAVAGE: The department hired him.

MR. SAMSON: That would be the Department of Finance?

DR. SAVAGE: Yes.

MR. SAMSON: Were you consulted before Mr. Fiske was hired?

DR. SAVAGE: Yes.

[Page 55]

MR. SAMSON: What qualifications were you aware of that Mr. Fiske possessed for this position?

DR. SAVAGE: Well, I did listen to Mr. Boudreau's testimony and I saw him nobly shouldering the entire responsibility. I would have to say that I was involved in that too, in the sense that we agreed that he was a person who had experience of casinos. He was a business person and the combination wasn't easy to find. He was on a list that was given to me and a recommendation from staff that he be the person and I spoke to Mr. Boudreau about it.

MR. SAMSON: Did Mr. Fiske himself ever approach you on the position of Chairman of the Gaming Corporation?

DR. SAVAGE: I don't think so. I can't absolutely guarantee that but I do not think that he and I spoke in that period from June, when I became Premier, until the time that he was appointed.

MR. SAMSON: Did any of your ministers or staff in your office ever indicate to you that they had been lobbied by Mr. Fiske, that he was seeking this position?

DR. SAVAGE: That is a pretty difficult question to answer, because the Premier's Office is besieged by people who recommend everybody to the dog catcher in Mabou to you name it. Most of those never get to the Premier's notice.

MR. SAMSON: If I could narrow it down more then to ministers, were you aware that any of the members of your Cabinet had been lobbied by Mr. Fiske for this position?

DR. SAVAGE: Not that I am aware of.

MR. SAMSON: You indicated earlier, to my honourable colleague, Mr. MacKinnon, that you were aware that Mr. Fiske had put forward a couple of proposals to build his own casino, which he would be given the franchise for. You were aware of that, were you?

DR. SAVAGE: I was aware because I had a phone call from Bernie Boudreau, just telling me, guess who just left his office.

MR. SAMSON: But Mr. Fiske himself never brought up these proposals to you?

DR. SAVAGE: Not that I am aware of.

MR. SAMSON: During Mr. Boudreau's testimony, he has indicated that following his appointment and in the later parts of the relationship with Sheraton, that Mr. Fiske had become uncompromising, unbending and that there was a hostile relationship between himself

[Page 56]

and staff at the Sheraton. What is your appraisal of Mr. Fiske's actions as chairman? Do you agree with Mr. Boudreau's assertion? What was your view of how he was handling the chairman's position?

DR. SAVAGE: We had no real complaints. Obviously, we thought Mr. Fiske could do the job when we recommended him to be appointed. We had no real complaints until, maybe, the scuttlebutt started in March and April 1997, when we began to hear from people who had been to the casino, people who had reported to me, staff, executive directors, et cetera, that the two of them couldn't talk to each other.

MR. SAMSON: Dr. Savage, there has been a lot made of the fact that the Premier's Office got involved in this deal, and it is beyond my comprehension why a lot has been made of it, but is it uncommon for the Premier's Office, in dealing with very large issues, very major decisions for the province, to get involved in the departments, and get involved with those issues, and for the Premier's Office to have a direct link with some of these major decisions?

DR. SAVAGE: No. It is very common. But it is, as a rule, for instance, when we were discussing, and some of the members opposite will remember the decision to introduce the Pharmacare Program, at that time, it was brought to my attention in a briefing, and we then met with the minister and with the department. Sometimes the minister would bring them up, sometimes the minister would ask for an appointment to come and see me privately about an issue and, sometimes, when things were not resolving within the department, the Premier's Office has the responsibility, not to intervene in a ham-fisted way, but to indicate that this is a matter which does not just affect that department, but which affects the government as a whole.

That was my responsibility. It is any Premier's responsibility. I accepted that responsibility.

MR. SAMSON: Dr. Savage, at any point, did you ever direct your deputy, Bob MacKay to negotiate a deal, "at any cost" as Mr. Fiske has alleged?

DR. SAVAGE: I never told him to negotiate. What I said was to Mr. Fiske, tell through Mr. MacKeigan, if necessary, negotiation is preferable to arbitration.

MR. SAMSON: At any point, Dr. Savage, did you ever tell Bob MacKay to give the Sheraton whatever they wanted, and to give those instructions to the Gaming Corporation?

DR. SAVAGE: Never.

MR. SAMSON: Mr. Fiske has claimed this political interference that has come from your office as the Premier's Office, and that this was unwarranted and unwanted, yet when Mr. MacKay was in last week, he indicated that in fact, Mr. Fiske had solicited his assistance

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in this matter, and in fact, it was Mr. Fiske himself who picked up the phone and called Mr. MacKay and asked him to get involved in this matter.

As far as you recollect, would this be an accurate statement as to how your office got involved in this matter, to try to assist with whatever, negotiation or arbitration?

DR. SAVAGE: Let me just give you an aside, I was going through my Rolodex last week as part of my, I forget what it was for, and I came across number, Fiske 2469, whatever it was. I had Mr. Fiske's number, Mr. Fiske did not have my private number, but he did call me on several occasions about issues, which were never of this magnitude in the sense that they affected a major policy decision. But on a few other things, he called me, and I had a good working relationship with Mr. Fiske, although most of my contacts were through the minister.

MR. SAMSON: Now back to this meeting of April 21, 1997, did you personally contact Mr. Fiske requesting this meeting?

DR. SAVAGE: No.

MR. SAMSON: Why was this meeting called, as far as you recollect?

DR. SAVAGE: As far as I recall, it was a briefing in keeping with the other briefings that I had in the period of days around that time. I have indicated that briefings were very common, and that I had them from a variety of people.

MR. SAMSON: During his testimony, Mr. Fiske has testified that when Mr. [Carl] Holm and Mr. Merrick, along with Mr. Fiske, arrived at the meeting, you clearly stated that you were under considerable pressure from some of your ministers to get the Sheraton deal settled without arbitration. Is that correct?

DR. SAVAGE: No.

MR. SAMSON: Mr. Fiske also claims that until this meeting, yourself and Mr. Boudreau fully supported the approach being taken by the Gaming Corporation. He claims that suddenly the government did a 180 degree turn at the meeting, and indicated, do whatever it takes to avoid arbitration. Do you agree that you actually took a 180 degree turn and, if so, why? Did you claim, do whatever it takes, don't go to arbitration?

DR. SAVAGE: You are referring to the April 21st meeting?

MR. SAMSON: Yes.

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DR. SAVAGE: At the April 21st meeting, I went in with some idea of the poisonous relationship between Mr. Fiske and Mr. Thomas. I did not have any further information, since there was nothing on paper for that briefing, that I recall. At that briefing, it became apparent to me that there was a significant - material was the word used by a lawyer - which I understand is a significant word, that we would lose this arbitration. I therefore suggested to Mr. Fiske that it would be better to negotiate than to go to arbitration. I then asked them if they would adopt this process, they retired, and then the meeting occurred the following morning at 6:30 a.m., when they brought the plan, which we said was fine. Then I took it to Cabinet, and it was agreed. Then I called Mr. Fiske back about 9:00 a.m. or whatever it was, that Tuesday morning.

MR. SAMSON: Dr. Savage, as you know, and as you alluded to in your opening statement, there have been some statements made and some allegations made about Bill Gillis's ability as a Minister of Finance in relation to this issue, and very unfortunate allegations. How long have you known Mr. Bill Gillis?

DR. SAVAGE: For 30 years. Well, wait a second now. Yes, it is 30 years, because he used to be in the same parish, St. Thomas More, when he was in the first government. So I have known him off and on.

MR. SAMSON: You have seen his abilities as a Minister of the Crown?

DR. SAVAGE: Well, I appointed him, the first non-lawyer to be Minister of Justice, because I had such a high opinion of his ability. When it became apparent that I needed Mr. Boudreau in Health, I then put Mr. Gillis as Minister of Finance. I have every confidence in Mr. Bill Gillis, and I think his record shows that.

MR. SAMSON: Now, Dr. Savage, as you know from the allegations made by Mr. Fiske, he claims that there was a clear intent by yourself and by your staff to intentionally keep Mr. Gillis, as he claimed it, out of the loop as regards the casino negotiations. Is that true?

DR. SAVAGE: Certainly not.

MR. SAMSON: Looking back on the whole situation, do you have any explanation as to why Mr. Fiske would even make such allegations?

DR. SAVAGE: I have no understanding of Mr. Fiske's motives for making many of the allegations that he has said in his testimony. I just can't comment on that.

MR. SAMSON: Dr. Savage, as you have probably heard from when Mr. Fiske first appeared before us, he made quite a few claims about political operatives and that people were working behind the scenes and that he was being cut out, and there was a conspiracy out there to eliminate his abilities as chairman, basically. In that, he alluded to the existence

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of an honourable gentleman who had given him assurances that there was a lead-in with the government, that the Sheraton would get whatever it wanted, and that the word of this honourable gentleman was quite reliable.

Unfortunately, with all of the witnesses who have appeared before us, no one has ever been able to say that they have heard about this honourable gentleman or who it might be. I submit to you, Dr. Savage, have you ever heard a reference made by Mr. Fiske about the existence of this honourable gentleman, and do you have any idea who this person might be?

DR. SAVAGE: None at all.

MR. LEBLANC: On a point of order, Mr. Chairman. On two occasions, Mr. Samson has made mention that Mr. Fiske had had an honourable gentleman say to him that it would happen. That is not what happened and he should clarify his statements. I believe it was - I am not sure who exactly referred that comment to him and if he is going to make these statements, he should do them very clear so that they go into the record properly and I would suggest that he correct his statements.

MR. CHAIRMAN: I think we all remember it was a third party who had suggested this to Mr. Fiske, according to the evidence he gave to us and I am sure Mr. Samson remembers that.

MR. SAMSON: I would be more than happy to ask it again. Dr. Savage, Mr. Fiske claimed that Mel Thomas, in a conversation with him, had alluded to the existence of an honourable gentleman. Is it your recollection, have you ever heard reference to this honourable gentleman and do you have any idea who this might be or that that person would even exist?

DR. SAVAGE: No. No.

MR. SAMSON: Now back to the June 5, 1997 meeting, Mr. Fiske testified that there was a shouting match between yourself and Mr. MacKay and that Mr. Fiske had some outbursts and that he used some language that he doesn't wish to repeat and that yourself replied with language that was not fit to repeat. Do you remember the meeting taking place in such an environment?

DR. SAVAGE: Well, as I said before, Mr. Fiske was certainly exercised.

MR. MACKINNON: A spirited debate.

MR. SAMSON: I want to go back to a passage of Mr. Fiske's testimony of July 8, 1998 at Page 35:

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

He said the casino was Bernie Boudreau's project and he could not risk public knowledge of the arbitration hurting Mr. Boudreau's chances to win the leadership race. He said he believed that any adverse publicity surrounding the arbitration might harm Mr. Boudreau's reputation if the public concluded that even Mr. Boudreau was incapable of negotiating a good deal.".

Dr. Savage, as far as you recollect, did you make any of these statements in the passage I have just read to you?

DR. SAVAGE: Yes, I see the passage. I do not recall him making anything like that statement.

MR. SAMSON: Did Mr. Fiske at any time indicate where he was getting this notion that you were doing this on behalf of Bernie Boudreau? Did he say, look, someone told me that you had said you are doing this to help Bernie or here is my theory and this is how I explain how I have come to this? Was there ever an explanation given why he felt you were doing this solely to help Bernie Boudreau?

DR. SAVAGE: No.

MR. SAMSON: Now the other question I have, Dr. Savage, was when Mr. Fiske was before us, he made allegations about the government having sold itself to Sheraton and taxpayers were on the hook for $27 million to $30 million. Of all the witnesses who have come before us, not one has agreed to that statement. In fact, a few have refuted it and said that it was not accurate. As far as you know, did the Government of Nova Scotia give away to Sheraton, $27 million to $30 million, as Mr. Fiske alleges?

DR. SAVAGE: No.

MR. SAMSON: At any time did you give any indications to Mr. Fiske or to anyone else in your staff that they were to settle this deal with Sheraton in order to protect Bernie Boudreau's reputation or his chances in the leadership race?

DR. SAVAGE: No.

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MR. SAMSON: Thank you.

MR. CHAIRMAN: Thank you. Back to Mr. Dexter.

MR. DEXTER: I just wanted to follow up on something that you had said earlier. Were you under the impression that the fate of the permanent casino hinged on the arbitration?

DR. SAVAGE: It was our impression that, were the arbitration to fail, we might lose the casino, yes.

MR. DEXTER: That the casino wouldn't be built?

DR. SAVAGE: Yes. That it would be seized upon as a reason not to proceed with the building of the sole standing casino, yes.

MR. DEXTER: That comes as quite a surprise to me because I think you would know from Mr. Merrick's evidence, that was never an issue in the arbitration. There was no question about the building of the permanent casino. That was not a matter before the arbitrator.

DR. SAVAGE: I can only tell you what our impressions were of the reasons that we had to negotiate.

MR. DEXTER: Mr. Merrick says in his testimony that, in fact, any misunderstanding by Sheraton would most likely be construed as a tactic to avoid the original construction deadline but not construction in its entirety.

DR. SAVAGE: That could be.

MR. DEXTER: I am interested in how you came to the conclusion that it was Mr. Fiske who was the intransigent party. I mean in order to negotiate, it takes two sides. It would appear, from everything that has come before this committee, that it was the Sheraton who were refusing to negotiate. It was their way or no way. That is what brought them to the arbitration.

DR. SAVAGE: Well, that certainly is not the impression that we had. The impression that we had was that the relationship between Mr. Fiske and Mr. Thomas so poisoned the discussions that neither party was happy to continue. In fact, somewhere it says that they asked for Mr. Fiske to be removed. I think that was a possible reflection of the way people felt.

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MR. DEXTER: The other interpretation of that is that they didn't like - Mr. Fiske's interpretation at least is that if you don't like - the regulator, you go around him and that is why they wanted to get rid of him.

DR. SAVAGE: That is, certainly, the other side.

MR. DEXTER: In the end, the negotiations end up giving Sheraton exactly the position that they took going into the arbitration.

DR. SAVAGE: That is not the impression that we have but there was some give and take on that.

MR. DEXTER: I think, when Mr. Merrick was questioned on this, he said that what you received in return was control over design?

DR. SAVAGE: That was one of the issues. I don't recall them all. It wasn't an issue that I spent a lot of time on. As I say, all I did was to bring to Cabinet the need to avoid arbitration. Quite simple.

MR. DEXTER: Just for the record, my understanding of this is the meeting took place on April 21st. The arbitration started on April 22nd. The first day of evidence in the arbitration took place on April 22nd. On the night of April 22nd, Mr. Merrick was contacted by Mr. MacKeigan. Mr. MacKeigan appears on April 23rd, on the second day of testimony and gets the adjournment on April 23rd. Is that your understanding of what happened?

DR. SAVAGE: My understanding was that it was postponed at noon on April 22nd, the Tuesday.

MR. DEXTER: If that is not the case, it is just a matter of your recollection of that failing.

DR. SAVAGE: I am sorry. I don't get the point.

MR. DEXTER: You don't just recollect that, exactly.

DR. SAVAGE: Which?

MR. DEXTER: What day the arbitration . . .

DR. SAVAGE: The arbitration date was supposed to be Wednesday, April 23rd. As far as I know, it did not continue because we had suggested negotiation.

MR. CHAIRMAN: I think I have to move along. It is Mr. Leefe's turn.

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MR. LEEFE: Mr. Chairman, I want to go back to the opening statement made by Mr. Savage. I am looking at the second paragraph, the beginning of the second sentence. "Suffice it to say that he . . .", that is Mr. Fiske, ". . . alleged that while I was Premier I used my office and authority as Premier in matters involving the arbitration between the Nova Scotia Gaming Corporation and the Halifax casino to ensure that Bernie Boudreau won the leadership race. That is absolutely false.".

Then we have, on the other hand, the testimony given by Mr. Fiske on July 8th in which Mr. Fiske states, under oath, as this morning's witness has stated under oath, "He . . .", that is the Premier, ". . . said the casino was Bernie Boudreau's project and that he could not risk public knowledge of the arbitration hurting Mr. Boudreau's chances to win the leadership race. He said he believed that any adverse publicity surrounding the arbitration might harm Mr. Boudreau's reputation if the public concluded that even Mr. Boudreau was incapable of negotiating a good deal.".

It is clear, Mr. Chairman, that what we have here is not a matter of hue, something grey between the opposites of black and white but, in fact, we could have two diametrically opposed statements, both given under oath by the witnesses, this morning by Dr. Savage and on July 8th, by Mr. Fiske. That leads me to conclude that somebody has misled the committee with a presentation of the facts other than what they, in fact, were. I am not a lawyer but the word perjury does come to mind. The question that I put to the witness today to give him his last one last final kick at the can with respect to this questioner, does he stand by his statement that he gave us today and in so doing, does he leave me to draw no conclusion other than that he believes that Mr. Fiske perjured himself before this committee in giving sworn testimony?

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

MR. CHAIRMAN: What is the point of order? It sounds like a proper question to me?

MR. JAMES CONNORS: Mr. Chairman, . . .

MR. CHAIRMAN: Well, excuse me, just a moment, Mr. Connors . . .

MR CONNORS: I have a comment, Mr. Chairman.

MR. CHAIRMAN: Well, I think the committee member has first right.

MR. MACKINNON: I will yield.

MR. CHAIRMAN: All right, so there is no point of order being raised. Mr. Connors.

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MR. CONNORS: I appreciate where the honourable member is coming from in his question but he asks it in a way that calls upon Dr. Savage to give the committee a legal opinion. It is a legal opinion as to whether or not Mr. Fiske, by virtue of the testimony that he gave, clearly contradictory to the testimony given by Dr. Savage, constitutes perjury or not.

MR. CHAIRMAN: I do not think the word perjure is exclusively a word that can be used in the context of the Criminal Code or is it the point that only a lawyer can answer that question. Dr. Savage has quite a variety of ways available to him to answer that question, one of which is to say, as you have just suggested to him, that he is not a lawyer and he can't answer it but I think, although it might have been slightly differently worded, it is a legitimate question and, again, Dr. Savage was being invited to give us his comments.

DR. SAVAGE: Let me answer the first part of what turned out to be four pages. I stand by what I said today. I have also recommended to you that there were four people at that meeting, three of whom have said that it was not said. It is not up to me to interpret that, neither is it up to me to interpret anybody's motives for saying anything different. That is up to somebody else. What I can tell you is that I watched this and the only time at which I have intervened since I resigned in July 1997 in any way, shape or form was when I felt so insulted and so incensed that somebody would say something that to me was patently untrue. I still feel that. I still think it was wrong and I will stand by what I said here today.

MR. CHAIRMAN: Thank you. Any further questions from members of the Liberal caucus? I will just check my notes for a moment. Dr. Savage, thank you very much for attending here today.

DR. SAVAGE: Thank you for the opportunity.

MR. CHAIRMAN: Before we leave we do have some procedural matters. Let me say first that you will recall that we had asked John Merrick to provide us with some written material from his files. I gather that material has been provided and is at the printers and copies will be distributed as soon as they are available to us which should be fairly soon.

Second, I think we, of course, have now to deal with the question of future hearings as to who and when and how we wish to proceed. That is, obviously, a question that is in front of us on all occasions. It is here now. Mr. Dexter had his hand up first, Mr. LeBlanc and Mr. MacKinnon.

MR. DEXTER: I would like to suggest to the committee that we proceed by bringing forward on the next occasion of our meeting, Ms. Butler and Mr. Gillis. I think both of these individuals have been - their role in this has been widely discussed over the last number of weeks and it is only fair to them that they be allowed to come and indicate what information

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they have for the committee's consideration. That would be my submission for the next meeting.

MR. CHAIRMAN: Any comments on timing? Are we talking about trying for next week?

MR. DEXTER: I would assume that we would go ahead next week.

MR. CHAIRMAN: Mr. LeBlanc, you were next.

MR. LEBLANC: I think that Mr. Gillis' comments would be appreciated. I think we are getting towards the latter part of this issue because there are other issues we would like to talk about but I think if you could bring the finale to it (Interruption) closure but I think Ms. Butler is the witness that I would very much like to bring forward because I think the fact of the matter is that we have been talking about whether this deal has cost the Province of Nova Scotia. She is the Chief Financial Officer of the Gaming Corporation and as such she was mentioned on numerous occasions and Mr. Fiske comments that she could shed light on the matter. I think all the so-called lawyers have been asked to come forward and I think I would like to have someone who is a chartered accountant who can speak in clear tones and quantifiable answers. So I think that would be appreciated because I think that is what people want. People want to know quantifiably what this cost and just not in generalities and I think that those two witnesses, even if they could come on the same day, I don't think Mr. Gillis' comments would be a long time. Maybe we could do it next week if that is possible.

MR. CHAIRMAN: Mr. MacKinnon, any comments on this.

MR. MACKINNON: I guess from our caucus point of view, we will invite as many witnesses as you want; if that is the will of the other two caucuses, fine, we will invite these two. Failing that, as the honourable member himself has suggested, they are becoming obsessed with it, failing finding what they are looking for that is not there after the next two witnesses, maybe we can go through the telephone book and start inviting people there.

[1:00 p.m.]

MR. CHAIRMAN: I think we are not exactly engaged in a frivolous process by any means which is the implication of what you are saying. People have been named. It has been suggested, quite correctly I think, that anyone who has been named be given an opportunity to come and speak. We had specific references by witnesses this morning to Mr. Gillis and, indeed, to Mr. Hayes. It was suggested to us strongly that we have an obligation, I think, to hear from other people who were present at other meetings. Mr. Fraser.

MR. HYLAND FRASER: Mr. Chairman, I am just wondering, I guess eventually we will have closure to this at some point in time when no further witnesses will come forward.

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The evidence provided by Mr. Fiske under oath and I guess over the past couple of months some holes have been shot into some of the things that he said but particularly today I think there is contrary evidence that has been given under oath, as the honourable member for Queens has indicated. What happens after it is over?

MR. CHAIRMAN: This is, in fact, a very good point and it is my last point that I would like to turn to procedurally. I can take it we have agreement now that we will invite Mr. Gillis and Ms. Butler. That's with the agreement of the committee. We will try for next week and subject to scheduling we will get on with that.

Mr. Fraser has raised a very good point which is, what is the result of the proceedings? There are several things - I think that's in some ways in the hands of the committee. The committee has a choice. The committee can say, our role is not like the role of a court, it's not like the role of a public inquiry. It's not our job to decide who is right or who is wrong, who spoke accurately who spoke inaccurately, and to award damages or to assign fault. That is a perfectly tenable position. We can use the words of an American political columnist, whom I might not normally quote, P.J. O'Rourke, It is not our job to stomp on every cockroach. We just turn on the lights and watch the critters scatter.

Now, that could be the function of this committee or if the committee decides that it wishes to issue a report in which it attempts to sort out the evidence and reach conclusions, that is a possibility but that's up to the committee to decide. We certainly haven't made that decision and looking back at the annual reports that have come out of previous Public Accounts Committees, it doesn't seem to me that that has really been what has happened in the past although it is not precluded. I think you are right to flag the issue for us. I will reinforce that and at some point we do have to make a decision but traditionally the main function of this committee has been to focus public attention on something and it is more a question of public accountability than it is a question of us attempting to draw our own conclusions or write a report that would somehow assign blame or sort things out at the end and unless directed by the committee otherwise, I don't think we have a mandate to do otherwise. So Mr. LeBlanc and then Mr. MacKinnon.

MR. LEBLANC: I think that is probably the right approach, Mr. Chairman. It is difficult to come up with recommendations. We talk about a variety of issues and I think my recollections of the Public Accounts Committee is basically to bring things to the forefront so that at least we as legislators are well informed and, hopefully, in deliberations and legislation in the House that we do the best job that we can.

I will make one other comment. We are talking about potential witnesses and I will bring this forward, that we contemplate perhaps asking Sheraton to come before the Public Accounts Committee to tell us where we are in regards to the construction. Those are the questions that Nova Scotians are asking. Is this casino going to be built? If it is not being built, why isn't it being built? What are the issues? This may shed some light actually on some

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of the testimony we have had here because there may be some things that haven't come forward that may also shed some light on what has transpired here in the last two months.

MR. CHAIRMAN: Yes, it is certainly the case that all witnesses have been government or government-related witnesses, that's true. Mr. MacKinnon.

MR. MACKINNON: Just one point, Mr. Chairman. I think we have to be mindful of the fact that Mr. Fiske has launched a lawsuit against the Province of Nova Scotia.

MR. LEBLANC: Dr. Savage is contemplating one.

MR. MACKINNON: So we have the possibility of other lawsuits forthcoming, at least being contemplated as I understand. So we have to be very mindful of that and not allow the focus and the intent of the Public Accounts Committee which is just public accountability of public funds. Unless I am missing something here, I think we have to be careful not to stray into other jurisdictions, other waters, and at the same time be careful of the fact that we could be getting ourselves mixed in the middle of a legal procedure.

MR. CHAIRMAN: Was that comment directed to the possibility of calling a witness from Sheraton?

MR. MACKINNON: Oh, no. (Interruptions) Just a general observation of the mere fact that we seem to be dealing with a lot of issues, and I am starting to have the impression that they are kind of going beyond the mandate of the Public Accounts Committee and public accountability in terms of dollars and cents, public monies. I could be wrong.

MR. CHAIRMAN: No, I think we have tried to steer clear of that.

MR. MACKINNON: But that is my opinion.

MR. CHAIRMAN: Mr. Dexter, can we finish up here?

MR. DEXTER: If we have an agreement on calling Ms. Butler and Mr. Gillis next week, perhaps we could talk about the other issues when we have some time. I have another meeting now, and . . .

MR. CHAIRMAN: Yes. I think all of us have other meetings, and this is spoken for. Mr. Samson, very quickly.

MR. SAMSON: Mr. Chairman, there have been some concerns raised about your position as chairman of this committee, both Mr. Fage and Mr. Leefe have raised similar concerns: Mr. Fage, with comments that you made as chairman regarding the laziness of the

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members of their caucus on this committee, and Mr. Leefe, on a couple occasions has questioned your impartiality with the allotment of time.

Mr. Chairman, I see here on your memorandum to us, which was dated September 1st, that somehow you went to the Department of Finance. I guess I am asking you, from what I understand, that you represented yourself as the Chairman of the Public Accounts Committee, and that you were appearing there on behalf of the Public Accounts Committee to solicit information. Is that correct?

MR. CHAIRMAN: No. You have it entirely backwards. First, I am Chairman of the Public Accounts Committee, but second, the Department of Finance official phoned me and requested to meet with me to discuss something that he hoped to put on the agenda of the Public Accounts Committee. Is there something that you find problematic with that?

MR. SAMSON: I question your going and meeting with people as chairman without having gotten our consent, or that the committee says, yes, we want you to explore this area.

MR. CHAIRMAN: Mr. Samson, I think you might have misinterpreted. If someone comes and wants to suggest something that could go on the agenda for the Public Accounts Committee, I hardly think I have to talk to the committee before I hear from them. What I did was, I heard this gentleman's suggestion that they would like to present something that is well within the mandate of our committee, and I immediately, after hearing from him, wrote a memorandum to all members of the committee, and spoke to him about the request that had been made. I offered him no promise of any sort that would have been improper.

MR. SAMSON: Do you recall what day he phoned you?

MR. CHAIRMAN: Yes, he phoned me half an hour before I met with him. He called up and we met within half an hour and I think my memorandum is probably dated the same day.

MR. SAMSON: Would this be, the person you are referring to, Mr. O'Connor?

MR. CHAIRMAN: Yes.

MR. SAMSON: He personally was the one who phoned you and spoke to you?

MR. CHAIRMAN: Yes, he did.

MR. SAMSON: Okay.

MR. CHAIRMAN: I cannot understand that this is problematic. In any event, this Chamber is spoken for, but other members of the committee wish to speak. Mr. Leefe.

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MR. LEEFE: With respect to the point of order, in this instance at least, I concur that the chairman acted appropriately in responding to the invitation of the official from Finance. I have no difficulty with that whatsoever.

MR. CHAIRMAN: Glad to hear that. Perhaps on that note, we can stand adjourned for today. Thank you.

[The committee adjourned at 1:09 p.m.]