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28 avril 2004
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HALIFAX, WEDNESDAY, APRIL 28, 2004

STANDING COMMITTEE ON PUBLIC ACCOUNTS

8:00 A.M.

CHAIRMAN

Mr. Graham Steele

VICE-CHAIRMAN

Mr. James DeWolfe

MR. CHAIRMAN: Good morning, ladies and gentlemen. I would like to call to order this meeting of the Public Accounts Committee. We are very pleased to have with us this morning representatives of the Bluenose II Preservation Trust Society. What I would like to do is begin by introducing the Chairman of the Board, Senator Wilfred P. Moore, Q.C., and I would like, at this moment, to invite Senator Moore to introduce the other guests that we have with us this morning.

HON. WILFRED MOORE: Mr. Chairman and members of the committee, good morning. Thank you for responding to the request of our Trust to appear before you. My name is Wilfred Moore and I serve as the volunteer Chairman of the Bluenose II Preservation Trust Society, an office I have filled since our incorporation under the Societies Act of our province on November 17, 1994.

I am joined this morning by my fellow directors: Keith Maher, CA, formerly of Sydney now of Fall River, who serves as our Treasurer; Bob Downie, to my far right, of Chester, our Secretary; Delbé Comeau, to my left, of Meteghan River; and Karen Oldfield, in the middle here between these two guys, of Halifax. We all serve as volunteers and we receive no compensation for our service.

In this statement I will give you an overview of our Trust and its activities and I will speak to the funding that we receive annually from the Province of Nova Scotia to assist us in our work. The Trust is a not-for-profit organization and became registered as a charity under the Income Tax Act of Canada on November 17, 1994. Our mandate is to maintain or operate the schooner Bluenose II in a full sailing status on behalf of the people of Nova Scotia and to raise and hold in trust capital funds for the purpose of refurbishing the vessel.

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This is our 10th year of operating the Bluenose II. We do so under the terms of an agreement dated April 2, 1998, between her owner, the Province of Nova Scotia, and our Trust. Because of the nature of our Trust, we receive donations of funds and we receive very favourable treatment from suppliers in the form of preferred prices and rates. Those benefits would not occur if the Trust was a government agency or if it was controlled by government. Donors and suppliers know and respect the fact that we are volunteers and that all such benefits go to help keep Bluenose II sailing. We issue receipts for income tax purposes to donors. We raise funds through the operation of the vessel, donations, licensing the use of the image of this ship and her predecessor, both being the creation of the late William J. Roué and sales in the Bluenose II Ship's Company Store on Lunenburg's waterfront and on the Cable Wharf in Halifax.

On October 31, 1994, we received the keys to the Bluenose II from the Department of Tourism and so began our possession of this ship and our responsibilities for her. Prior to that date, the ship had been operated by the Nova Scotia Department of Tourism. When we took possession of Bluenose II, she was tied up at the wharf of the Fisheries Museum of the Atlantic in Lunenburg. She had been stripped of everything except her two Caterpillar diesel engines and generators. The ship's hull had been let deteriorate to the point that she was no longer certified to sail. The consumption of alcohol was permitted on board. She was known as a party boat. There were unsavory law cases involving her crew. Her reputation had been sullied. The Department of Tourism had decided to scuttle her.

Bluenose II became a dry ship under our watch. There is a zero tolerance regarding alcohol on board the ship. Unlike a private yacht, Bluenose II is a fully-licensed commercial vessel of just under 200 tons. She undergoes annual inspection and certification and qualifies for a home trade voyage Class IV certificate of Transport Canada under the Canadian Coast Guard regulations. The ship is permitted to carry a maximum of 90 passengers.

Over the winter of 1994-95, the Trust restored the ship's hull and she was recomissioned on May 28, 1995. I don't know if any of you members of the committee are sailors but I remember that day when the ship went in the water off a slip in Lunenburg and her bow was pointed to the east - out to sea - which was a good omen for us. It was interesting. It was a very rainy day and when the ship came alongside the museum wharf, there was like a little pinhole in the cloud and just a ray of sunlight shone on that ship for about maybe 10 or 15 seconds. That made us feel very good.

To commence its work the Trust borrowed $100,000, personally guaranteed by two of our directors, and raised the needed funds from government: ACOA, $300,000, which was 70 per cent federal and 30 per cent provincial; and donations from citizens and companies across Canada. For $90,000, the Province of Nova Scotia received a fully-restored and certified sailing ship. Built in 1963, Bluenose II is insured for $6 million today. Our Trust pays that annual insurance premium. Clearly, this represents a return of huge value on that $90,000 for Nova Scotian taxpayers.

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The crew complement of Bluenose II is 17, made up of five officers and 12 deckhands; eight male and four female. Since it began operating the ship, the Trust annually offers two berths to the Royal Canadian Navy as sail training berths. The Navy, which does not have a sail training vessel on the East Coast, has been pleased to provide enlisted personnel who receive a traditional seamanship training onboard Bluenose II. She is a living, working ship. Her dedicated officers and crew of young Nova Scotians comply with a standard of training and certification of watchkeepers' conventions, which is an international code, and are encouraged to enhance their certifications. Our Trust pays for those training expenses.

We encourage crew members to pursue seagoing careers. Many master mariners and officers got their start sailing on Bluenose II. More than a tourism symbol, this national icon is a home, and a feeder, and a tall ships leader. Our Trust is very proud of the ship's company and her shore support staff.

In her inaugural year, Bluenose II enjoyed a busy sailing season, visiting 20 ports in Nova Scotia and Boston. She also served as the host vessel for the 1995 Economic Summit of the Leaders of the G7 Countries in June, at Halifax. In establishing the ship's sailing schedule, our Trust is very sensitive to important events and festivals taking place in Nova Scotia, as well as those outside our waters.

For example, in the 2004 sailing season, Bluenose II will be participating in the Tall Ships 2004 Program, along the eastern seaboard of the United States of America, and then touring the Port of Halifax, and she will be attending numerous Acadian celebrations in our province. We know what a huge magnet the ship is and we know her power as an economic generator in the ports that she visits.

It costs $3,000 per day to operate Bluenose II in the sailing season. We try to generate $3,000 per day when she does public harbour sailings; it's a break-even enterprise. The math is easy: we do two sailings, 75 people per sailing, $20 a head, $1,500 a sailing. That is if we don't get rained out and that is assuming all passengers are adults.

I can assure the committee members and all Nova Scotians that we frugally use the funds provided to us annually by the province. When the Department of Tourism operated the ship it was costing taxpayers at least $1 million a year. Our Trust operates Bluenose II with a $650,000 funding per year from the province. Obviously, this has resulted in a substantial savings for taxpayers. In addition to those savings, our Trust has spent nearly $990,000 of its capital on the restoration of the ship's hull. Again, that expenditure by our Trust represents a benefit of large value to the taxpayers of Nova Scotia.

Under the terms of the agreement with the province, our Trust must provide to the province on an annual basis financial statements regarding the expenditure of $650,000 in the operation of Bluenose II. We have provided that accounting every year. Copies of those

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financial statements have also been deposited with the Office of the Registrar of Joint Stock Companies. Further, at our initiative - nobody else's, at our initiative - our Trust shall henceforth report annually to the people of Nova Scotia by delivering a report to the House of Assembly, including a copy of our complete, audited financial statements.

Earlier I mentioned the Bluenose II company store. We established our store in Lunenburg in May 1995, and this marks our 10th year in business. The store is open year-round, and the proceeds from there go to help keep Bluenose II sailing. More than simply running the store, our staff do all of the reservations for sailings on the ship and they answer countless enquiries about the original Bluenose and Bluenose II from all over the world. They do their work in a courteous, professional manner, and we are very proud of them. In April 2000, we established a seasonal store on the Cable Wharf in Halifax, and we are most appreciative of the work of the staff who run that store.

One of the most important activities of our Trust is the provision of free sailings on Bluenose II for school children. We believe that it's important for our youth to experience that great connection between man, a ship and the sea. To do so on a national icon is very special to our young people. It often results in their teachers doing worthwhile school projects about Bluenose and her place in the Maritime history and culture of Canada.

Our Trust has attempted to give profile to the surviving crew members of the original Bluenose, both fishermen and racers alike. In order to qualify to compete in the International Fisherman's Trophy Races, Bluenose had to be a working fishing vessel. Had all of those men not done what they did under their legendary skipper, Captain Angus Walters of Lunenburg, and Bill Roué's ship, there would be no Bluenose legacy and there would be no Bluenose II, and we would not be sitting here this morning.

It is for that reason that our Trust includes those Bluenose crew members in Bluenose II functions and ship sailings. Nova Scotians, indeed all Canadians, should regularly give thanks to Bill Roué, Captain Walters and his crew. Our Trust has tried to do our bit in that regard. Upon our representations, Canada Post Corporation issued a stamp in honour of William J. Roué on July 30, 1998. Also, following years of our representations, on March 15, 2002, the Royal Canadian Mint officially recognized Bluenose as the schooner on the reverse side of our 10 cent coin.

MR. CHAIRMAN: Senator, I just want to ask you to bring your remarks to a close within the next three minutes, please.

HON. WILFRED MOORE: Well, I'm trying to relate to you 10 years of work, Mr. Chairman, so I would ask your indulgence. I have about another five minutes to go.

MR. CHAIRMAN: The essence of this committee is the interchange between the members and the witnesses . . .

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HON. WILFRED MOORE: But you have to understand, sir, you've got to understand who we are and what we do.

MR. CHAIRMAN: Senator, if you prefer, you can table your opening statement, but the questioning will begin in three minutes.

HON. WILFRED MOORE: Our Trust also initiated the formation of the Bluenose II Alumni Association, a society made up for the men and women who formerly served as crew on this ship. It has a mailing list of some 175 former crew members. Our licensing activities have generated some funds for this ship. We charge licensing fees for commercial use of the image. We do not charge a licensing fee for a community not-for-profit use or an educational use, however, and most importantly, our work in this area has provided a structure to ensure that the image of Bluenose and our replica of Bluenose II are used accurately and appropriately, in keeping with the legacy that they represent.

We have had licensing arrangements with individuals, companies and governments. One of those arrangements of which we are most proud was with Cinémaginaire Incorporated, the film company of Denys Arcand of Montreal. His film, The Barbarian Invasions won the Academy Award last month as the best foreign film. Two scenes in that film were shot onboard Bluenose II and our Trust is listed in the credits. So the ship has a tiny piece of that Academy Award, but the important thing in this story is that Mr. Arcand would not have sought out Bluenose II for his film if the ship was not maintained in full sailing status and crewed by qualified people in a safe and good seamanlike manner. This is but another example of the benefits that our Trust has brought to the taxpayers of Nova Scotia.

Mr. Chairman, I have another page and a half here, and I would really like to finish this. It's very important.

MR. CHAIRMAN: Perhaps you would like to table your statement, and the clerk will circulate your statement to the members, Senator. As I said, the essence of this committee is not the opening statement, it's the interchange between the members . . .

[8:15 a.m.]

HON. WILFRED MOORE: But we asked to come here, and this is our opportunity to tell the taxpayers of Nova Scotia our story. With a little indulgence, Mr. Chairman, we can wrap this up. I think it's only fair that we have the opportunity to do this.

MR. CHAIRMAN: Senator, you're using up your time. You have 30 seconds left.

HON. WILFRED MOORE: Does the committee not . . .

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MR. DANIEL GRAHAM: Mr. Chairman, if I could just intervene. I'm wondering whether or not, with the indulgence of the other members of the committee, if we could extend - this is, I would agree, a longer opening statement than this committee is normally used to; however, I'm sure that the time of the committee members is not so pressed that we couldn't extend our time at the other end by 10 or 15 minutes, if that's the agreement of the committee members.

MR. CHAIRMAN: Is it the wish of the committee to extend the opening statement and that the time after 10:00 a.m. be extended correspondingly? Is that the wish of the committee? I will take that as a motion.

Would all those in favour of the motion please say Aye. Contrary minded, Nay.

[The motion is carried.]

Senator, you have the floor.

HON. WILFRED MOORE: Thank you, Mr. Chairman, committee members. Our Trust knows that the mandate of your committee is limited to funds which come from the province. Nevertheless, in the interests of transparency, we have provided your committee with information and financial data beyond your mandate. We have provided you with information and data regarding the participation of our Trust and the sponsorship program of the federal government.

On March 11, 2004, I appeared at the Public Accounts Committee of the House of Commons in Ottawa, with a view to speaking to those matters. My request was declined, but I am advised that I am on the list of witnesses scheduled for appearance. It will be in that forum that our Trust will speak to those matters. However, your committee, indeed all Canadians, can be assured that the funding that we received thereunder was properly spent by our Trust and has been fully accounted for in our financial statements.

Having said that, our Trust wishes to address one of those matters this morning, that of the $2.6 million expended by the sponsorship program through the Department of Public Works and Government Services in the 1997-98 fiscal year. That was the first year of Bluenose II's Canada Tour 1997-98. Our Trust issued invoices to the sponsorship program during that year totalling $680,000, and we received full payment. Our store issued an invoice for $17,812.20, for books sold, to the sponsorship program, and we received full payment.

In addition to that funding, the sponsorship program also paid for the acquisition, creation, staffing and movement of a mobile museum that accompanied Bluenose II to each port of call. The sponsorship program also paid for the staffing and movement of a mobile store that accompanied Bluenose II to each port of call. Further, the sponsorship program

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paid for the design and production of tour merchandise, which was offered for sale in the mobile store. Lastly, the sponsorship program paid for the preparation and distribution of all public relations and media releases on the tour. On April 22, 2004, I wrote to the Honourable Stephen Owen, PC, Minister of Public Works and Government Services, listing those items paid for by the sponsorship program.

Our Trust is not privy to the dollar value of those items; however, they are clearly substantial. During this first year of the tour, Bluenose II visited 23 ports, 161,200 people were able to walk her decks, 108,000 people visited the mobile museum, which told the stories of schooner, dory fishing and the racing exploits of the original Bluenose. The tour was a huge success. The sponsorship program enabled the tour to be put together and gave thousands of Canadians and visitors alike the opportunity to see and visit Bluenose II, Canadians' most-recognized tall ship.

As a supplement to the tourist story, during the winter of 1998-99, the Province of Quebec suffered that disastrous ice storm. Our Bluenose mobile museum had a very good generator, and the museum was hauled to a small town in Quebec which was without electricity. There it provided the power for a building which served as the dining hall for 250 residents per meal. I cannot think of a finer benefit of the sponsorship program and the Bluenose legacy than that assistance provided to those fellow Canadians in their hour of need.

In closing, when volunteers like us take on a community cause, we do not do so for the applause, rather we do so because we believe in the mission. The mission of our Trust is to maintain and operate Bluenose II. Our reward is watching her sailing from our harbours with her decks full of smiling, windblown passengers. In 1871 the great Nova Scotian, Joseph Howe, said, "A wise nation preserves its records, gathers up its muniments, decorates the tombs of its illustrious dead, repairs its great public structures and fosters national pride and love of country by perpetual reference to the sacrifices and glories of the past." Our Trust has attempted to honour those words as pertains to Bluenose II.

Mr. Chairman, we believe that Nova Scotians have been served well by our Trust, and that they and all Canadians can take comfort in the knowledge that their tall ship, Bluenose II, has been well cared for. The story of our Trust, and its maintenance and operation of Bluenose II, is one of success. You have been provided with copies of unsolicited letters of appreciation to that effect. We thank you for hearing from us. We are now prepared to attempt to answer any questions that you may have.

MR. CHAIRMAN: Thank you, Senator. I would like to ask the members of the committee to introduce themselves please, starting with Mr. Epstein.

[The committee members introduced themselves.]

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MR. CHAIRMAN: I note also we are joined in the Chamber by David Wilson, the MLA for Sackville-Cobequid. I am Graham Steele the MLA for Halifax Fairview, and the committee's chairman. The first round of questioning will be 20 minutes, commencing with the NDP caucus.

The honourable member for Halifax Chebucto.

MR. HOWARD EPSTEIN: May I ask the clerk to distribute a document to you, that is to the witnesses and to the other members of the committee. Senator, I have gone through the material that you have provided us with and had a look, I hope in some detail and I also hope correctly, at different categories of accounting for the funds of the Bluenose II Preservation Trust Society over the last number of years. You'll see from the document that I've put together an accounting from a number of different sources.

One source, of course, is the official records of Public Works Canada, which shows certain monies allocated to something generally just regarded as Bluenose, whatever that might mean in their records. Next is your press release from March 11th, of this year. Next are the tax returns that as a registered charity you're obliged to file. Next, are the financial statements that you mentioned in your opening statements, and finally we also looked at the documentation that was exchanged between the Trust and Public Works Canada, in terms of sponsorship money, and you accompanied that with copies of cheques that had been received.

If you look at these five different sources of information with respect to dollar amounts, you'll see that they are all different. You'll see as well that four of them are sourced in the Trust, that is in your society. One being your press release, the other being your tax return, the other being your financial statements, and the other being the documents that you provided to this committee. It's clear that these numbers are different, and range from $1.3 million, up to as much as $4 million. I'm wondering, of course, what accounts for the differences? I'm wondering if we can start first with the last column that is shown on the document.

Can we focus first on this question of the exchange of letters and applications with the federal sponsorship program? So far as we can see, you've actually received a little over $2 million under that. Is that correct, is there something missing at all?

HON. WILFRED MOORE: Sorry, what was your first figure?

MR. EPSTEIN: We're looking at the last column in the documentation that you supplied to this committee.

HON. WILFRED MOORE: Yes.

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MR. EPSTEIN: You gave us copies of various cheques that came from the federal government and the sponsorship program. When we add up the cheques, there's about $2 million and I'm wondering if this number is correct or whether there's anything that we should take into account in terms of variation that might affect that number.

HON. WILFRED MOORE: Did you take into account the money that we sent back?

MR. EPSTEIN: Yes, the $200,000 I think that was sent back. So this I think was taken into account on that. I'm very much aware that you had to cancel part of the tour in one of those years, I think in the 1997-98 year.

HON. WILFRED MOORE: I believe 1999.

MR. EPSTEIN: Maybe 1998-99 and, as a result, you had to send some money back?

HON. WILFRED MOORE: Yes.

MR. EPSTEIN: So that's the only item that you might think of that might account for a variation?

HON. WILFRED MOORE: Yes.

MR. EPSTEIN: So as far as you know, you sent us all the cheques, or copies of all the cheques?

HON. WILFRED MOORE: Correct.

MR. EPSTEIN: And just to be clear, those cheques were issued to you I think by various agencies on behalf of the federal government, is that correct?

HON. WILFRED MOORE: Correct.

MR. EPSTEIN: So you received cheques from Compass Communications, Lafleur Communications and Media IDA, is that correct?

HON. WILFRED MOORE: Correct.

MR. EPSTEIN: And was there anything that these companies did for the Trust?

HON. WILFRED MOORE: You're talking about the federal sponsorship program?

MR. EPSTEIN: I'm talking about the three companies . . .

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HON. WILFRED MOORE: These are matters that we're going to be dealing with when we appear before the Public Accounts Committee in Ottawa, okay, and I've explained that in my opening remarks, but we're prepared to talk about the tour monies, that particular project.

MR. EPSTEIN: I think what I asked you was whether these companies that gave you money did anything on behalf of the Trust?

HON. WILFRED MOORE: Well, they weren't employed by us.

MR. EPSTEIN: Did they do anything to help your activities associated with the Bluenose II and its tours during any of those years?

HON. WILFRED MOORE: Oh, absolutely, absolutely.

MR. EPSTEIN: What did they do?

HON. WILFRED MOORE: I mentioned that I had, and I want to stick to the matter involving the tour in 1997-98, and would you like me to itemize some of the things that were done?

MR. EPSTEIN: If you could quickly.

HON. WILFRED MOORE: Sure, I would be pleased to do that.

MR. EPSTEIN: Although you could certainly give us an overview of the kind of assistance they provided.

HON. WILFRED MOORE: No, I would like to be exact here. You've raised a good point and I want to share with the committee, this is the letter I wrote to Minister Owen on April 22nd. Again, it's the same figure as I mentioned here this morning, the $680,000 and so on. In addition to that information, we would also provide the following. The Bluenose II was accompanied on this tour by a mobile museum that told the stories of schooner dory fishing and the racing exploits of the original Bluenose. The sponsorship program was responsible for the following items respecting the mobile museum - acquisition of the 50-foot adjustable trailer to house the museum, design . . .

MR. EPSTEIN: No, I would like to ask this question. You're telling us that there were, as you said in your opening statements, items beyond the sponsorship money that came directly to the Trust that were handled by these intermediary agencies?

HON. WILFRED MOORE: I'm telling you what we have and I'm also trying to tell you items that we know were provided and funded by the sponsorship program.

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MR. EPSTEIN: But for which money did not actually flow directly to the Trust?

HON. WILFRED MOORE: No.

MR. EPSTEIN: That's what you're saying?

HON. WILFRED MOORE: But we were and certainly all Canadians were the beneficiaries of those expenditures. So I will just go through the rest of them so you will have a feeling for that.

MR. EPSTEIN: No, actually I don't think you will, no, I don't want to hear the details of that. I think that point is clear. You've made it well and it's clear, but I want to focus, if I could, on the other categories of finance. Let's go back, if you're still following me on the document that you were given, the next column in from the right is Financial Statements. These are financial statements that the Trust prepared and gave to the province under the contract that you have?

[8:30 a.m.]

HON. WILFRED MOORE: Yes.

MR. EPSTEIN: Because your main funders really over the years have been levels of government, isn't that right? Although you mentioned you're a registered charity and you give receipts, in fact, in terms of charitable money, you get very little each year. I think the sum is around $20,000 or $25,000 that you give receipts for each year?

HON. WILFRED MOORE: Yes.

MR. EPSTEIN: Yes, so the bulk of your funding is from the provincial and federal governments?

HON. WILFRED MOORE: Yes.

MR. EPSTEIN: So in the financial statements that you're obliged to give to the province under your contract you've listed monies that were received from the source of the federal government and what I've done in that column is I've taken out monies that were identified as coming from the federal government and this is the lowest of the categories. In your financial statements it only adds up to $1.3 million. So my first question is, when did those statements begin to be audited because unless we've only received partial statements, it looks as if those financial statements weren't audited each year. Is that correct or not correct? For example, in the early years it looks as if they were very much generated internally but weren't audited.

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HON. WILFRED MOORE: That's correct.

MR. EPSTEIN: And yet at some point later on an external auditor was brought in.

HON. WILFRED MOORE: That's correct, yes. We started out with nothing, ground zero, and were trying to make do with pretty skinny funding.

MR. EPSTEIN: No problem. The question was when did you start to use an external auditor?

HON. WILFRED MOORE: Two years ago.

MR. EPSTEIN: About two years ago?

HON. WILFRED MOORE: Audited statements, two years ago. We were prompted to do that with the whole Canadian context of the Enron situation in the United States. We thought it was time for us to do that and take on that expense.

MR. EPSTEIN: This column of the financial statements really is the most puzzling one in terms of a comparison between that number and the other number simply because it's so low compared with the others. Is there anything you can say, or your associates, that would help us understand why it is that $1.3 million is the sum shown as federal government sourced in the financial statement?

HON. WILFRED MOORE: Maybe, Mr. Epstein, I could ask our Treasurer, Keith Maher, to respond to that question.

MR. KEITH MAHER: Yes, this has been the subject of a lot of questions from the media and from other folks so I did a reconciliation and it's in tab four of the binder which attempts to reconcile the numbers in the financial statements to what was reported on the information returns, the Charity Information Returns filed with CCRA, Revenue Canada. What happens is in some years some of the funds we received, they were put in General Revenues because we were providing a service, a specific service, for those funds. For example, if we were required to have the ship in a particular place, we would receive funds for doing that and it was in lieu of what we would have made in harbour sailings and other events like this. So if you turn to that tab, tab four, it should be the first document you see.

MR. CHAIRMAN: And for the members' benefit, the binders that you have are slightly different than the ones as provided for the Trust. It's the page after the fourth green sheet. That's the way that it was tabbed. It's the document that I believe is the reconciliation and I believe, Mr. Maher, I'm right in saying that it's headed that it was done for the purposes of the committee this morning, is that correct?

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MR. MAHER: That's exactly right.

MR. CHAIRMAN: Please go ahead, Mr. Maher, and I believe Mr. Epstein knows very well which document you're talking about. So please go ahead.

MR. MAHER: So what we've tried to do there is identify the provincial funds received each year, where it showed up on the financial statements, and where it showed up on the Trust information returns. For example, in 2003 you can see we didn't receive any federal funding and the provincial funding is shown on the Financial Statements as an Operating Grant from the province and it's shown on, I have I think line 105, it's really line 4550 of the Trust information return. So you can track that through.

The federal funding in that year was zero. In the next year we have Federal Funding of $50,000. That is included in our revenues on our financial statement so you won't see, and it shows up in Revenues on the Charity Information Return. So you won't be able to track that as government funding on the charity return and that's because that was paid to us in lieu

of other revenues that we would have earned. I have added in the other revenues there too so that you can reconcile to the financial statements and then over to the Trust charity return.

MR. EPSTEIN: What is still striking is that the Trust charity returns show very large amounts, again, as Government of Canada amounts, compared with, say, the press release that was issued in March.

MR. MAHER: What year are you looking at here?

MR. EPSTEIN: The totals, although there are some years when the numbers are the same, 1996-97 and 1998-99, the big discrepancy is in 1997-98 and then from 1999 through to 2001-02.

MR. MAHER: Let me speak to 1997-98. As a result of the scrutiny we have been under, I went back and looked at 1997-98, our charity return was incorrect and what I've done since then, I sent in an amendment to Revenue Canada notifying them of that. What I've done on this schedule is reconcile the funds received and reported in our financial statements to the amended charity return. The amendment is in this file as well.

MR. EPSTEIN: I think we were using the amended numbers in calculating the tax returns column information from your reconciliation statement. There still seem to be differences. Can I ask if, for you, the bottom line is still the March press release in which you're suggesting that it's about $1.8 million that actually came to the Trust?

MR. MAHER: That's correct.

MR. EPSTEIN: And that's sponsorship money?

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MR. MAHER: No, some of that money was received as government grants in the early years for operations and for restoration, refurbishing, that's the total funds we've received throughout the year from the federal government, the $1.8 million.

MR. EPSTEIN: So, we should be able to go back through the tax returns, the corrected tax returns and the corrected financial statements and find that all federal source money should add up to about $1.8 million?

MR. MAHER: Yes, sir.

MR. EPSTEIN: Let me turn, if I may, to the process by which some of this money came to you. I was very interested in a letter that was sent I think by you, Senator, in December 1999, to Mr. Gagliano, who at the time was the Minister of Public Works, I think you suggested to us today that you were invited to seek some sponsorship money from the federal government, is that right?

HON. WILFRED MOORE: Yes, when we started out.

MR. EPSTEIN: Your view is that the Bluenose II as well as having a provincial also has a national dimension in terms of its support . . .

HON. WILFRED MOORE: There's no question. She's a ship that has represented Canada in the International Fisherman's Trophy Races, so there's no question about her national stature.

MR. EPSTEIN: That's right, and I don't think anyone here is questioning that at all. When did you first know that the sponsorship program had been established?

HON. WILFRED MOORE: I don't know, I'm not sure when I knew it was specifically called that. But I indicated in a release, which I issued back in March, where I stated - did you not get a copy of that?

MR. EPSTEIN: Your March 11th press release?

HON. WILFRED MOORE: Yes. It was prior to the 1996 sailing season, so the Spring of 1996.

MR. EPSTEIN: So you learned form Mr. Guité that the program existed? He was the source of your information?

HON. WILFRED MOORE: He called me and was impressed with the work that we did in restoring the ship and was wondering if we would be interested in taking the ship on a national tour.

[Page 16]

MR. EPSTEIN: But you wrote to the minister a year or two later, and I'm wondering if you have met with the minister over the interest that the Trust had in receiving federal sponsorship funding?

HON. WILFRED MOORE: No.

MR. EPSTEIN: Never met with him about this?

HON. WILFRED MOORE: No. Saw him once. In federal caucus, once. That was it.

MR. EPSTEIN: Did you have occasion to meet with Mr. Guité?

HON. WILFRED MOORE: Oh yes.

MR. EPSTEIN: And with Pierre Tremblay, his successor?

HON. WILFRED MOORE: I never met with him.

MR. EPSTEIN: How often did you meet with Mr. Guité, do you recall?

HON. WILFRED MOORE: Well, as required when we were doing the tour because our Trust had the sign-off, because Bluenose was involved on the design and makeup of the mobile museum. It was important that that was done right. We had people who had come to Nova Scotia, helped them with their research.

MR. EPSTEIN: Was there a reason that you wrote to the minister rather than Mr. Guité, although you already knew that the program existed? Mr. Guité had made contact with you and he was the one you seemed to have been dealing with before that.

HON. WILFRED MOORE: What was your question?

MR. EPSTEIN: Was there a particular reason that you wrote to the minister in December 1999, rather than continuing your contacts through the line administrator?

HON. WILFRED MOORE: I don't think there was any particular reason, no. He was the minister of the department in charge of the program - was as simple as that.

MR. EPSTEIN: You copied your letter to John Pelletier.

HON. WILFRED MOORE: Yes.

MR. EPSTEIN: Was there a reason for that? Why would you copy the letter to Mr. Pelletier?

[Page 17]

HON. WILFRED MOORE: At that time we were getting ready for the Millennium Tall Ships event and I was a volunteer member of the Nova Scotia Tall Ships Committee. I was pressing Ottawa to invest in our project - and we were successful in that - and I had met with him once about that.

MR. EPSTEIN: With Mr. Pelletier?

HON. WILFRED MOORE: Yes, sure. I was going after anybody in Ottawa I could get to give money to our province for this event. It was a huge international success. I wanted to make sure that we were considered.

MR. EPSTEIN: But you were only seeking $125,000?

HON. WILFRED MOORE: I, at the time, mentioned that I am going to be coming back for something for our Trust, and I sent him a copy of the letter so he would know.

MR. EPSTEIN: Did you expect him to be involved in the decision?

HON. WILFRED MOORE: No, I just wanted him to know.

MR. EPSTEIN: Did you meet with anyone else in the PMO or the PCO about this?

HON. WILFRED MOORE: No.

MR. EPSTEIN: Okay, all right.

MR. CHAIRMAN: Thank you, Mr. Epstein. Hold that thought, your time has expired. We will move on for the next 20 minutes to the Liberal caucus.

The honourable member for Halifax Citadel.

MR. DANIEL GRAHAM: I thank you for appearing today and providing your thoughts on this matter. I'm interested in pursuing the same line of questioning that Mr. Epstein was on. I recognize that we only have 20 minutes, followed by a 10-minute period - and it could take 20 hours to get to all of the details of this. Certainly, I'm not an accountant, but I think it's important that we reconcile some of the things that are on the record, given the documents that have been presented before us right now. The essential issue that I wanted to ask questions on relate to federal funding. I want to focus on four types of documents and I would like to focus, perhaps, in a different approach than the one that Mr. Epstein had taken, one by going by years and trying to reconcile, year-by-year, what the different documents are saying, one to the other.

[Page 18]

Perhaps I could begin by focusing first on the statement that has been referenced several times. First of all on March 11, 2004, Senator Moore, you issued a statement and the most significant paragraph of that is contained on Page 2, Paragraph 3, where you set out the various funding that you feel has been received from the sponsorship fund. Just to clarify it - you indicated in 1996-97 the Trust received $658,000; $699,000 in 1997-98; and in 1998-99 you received $432,000, but $186,000 was returned.

I would like to contrast what is contained in that paragraph with what appears to be contained in three different types of documents: the charitable return filed by Mr. Maher; the financial statements of the Trust; and the financial statements of the ship fund, which is something separate but rolled into the Trust, as I can see it. I would like to start with 1998. I have read through the reconciliation that has been done by Mr. Maher - and it may be entirely my fault - but I'm having difficulty reconciling the reconciliation with the documents that have been filed to date.

If we could start with a charitable return for 1998. On Page 4 of that document, about halfway down the page under the heading Government Grants it says Federal, and it states $294,000.

HON. WILFRED MOORE: Mr. Chairman, Mr. Maher will deal with Mr. Graham's question.

MR. MAHER: So you're looking at the original charity return for 1998?

MR. GRAHAM: Yes.

MR. MAHER: You know, of course, we did an amendment to that and that's behind the original return.

MR. GRAHAM: And the statement from Senator Moore on March 11th totalled $699,000 and I'm just wondering whether or not you can - I see the amendment with the additions that have been made - how is the $699,000 arrived at?

MR. MAHER: There is $350,000, which I think we have a cheque in there for . . .

MR. GRAHAM: Could you draw our attention to the line item for that?

[8:45 a.m.]

MR. MAHER: Okay, if you look at the reconciliation under Federal, it says Operating Grant, we have $455,389.

MR. GRAHAM: Okay, $455,389?

[Page 19]

MR. MAHER: Yes. That consists of two amounts - $350,000 as an operating grant plus $105,389 of inventory that we received that was left over after the tour and provided to the Bluenose II Preservation Trust for us to sell in our store. So the $350,000 we received as a grant plus the $105,389 we received as inventory, which we recorded as an additional operating grant and which we sold in our store, we added it to our inventory of our store. So those two numbers arrive at the $455,389.

The next number is donation of $202,800. That was when our tour was cut short and we went back to the agency and the Chairman can speak better to this, but they basically said . . .

HON. WILFRED MOORE: That was the donation.

MR. MAHER: I'm sorry. That was a donation from the federal government. So, the $202,800 and the $455,389, if you add those together. Then the $146,000 was, again, funds provided to us for the ship to be in certain places and to provide certain activities. So we included that in General Revenue. When you add those all together, then you subtract out the $105,389 and you'll get the $699,112.

MR. CHAIRMAN: Yes, Senator, do you wish to add something?

HON. WILFRED MOORE: I just want to add - there's another little item here, that $699,112.20 also includes money for, as I mentioned, sales by the store. We got the cheque, it came to the Trust, but we took that money and put it into the store's account. That was $17,812.20, but that was all in there.

MR. MAHER: That's in my $146,000.

HON. WILFRED MOORE: That's correct, yes.

MR. GRAHAM: I'd like to move to a different year, if you don't mind. I know that you've done the reconciliation. I'd like to move to the year 1999. Again, the statement of Senator Moore says that $246,000 was received - you would agree with me that in neither the Charitable Returns nor the Financial Statements of the Trust is that $246,000 reflected.

MR. CHAIRMAN: Mr. Maher.

MR. MAHER: That particular number isn't a one-line item in either of those two documents, you're right.

MR. GRAHAM: Well, is it buried somewhere else? I'd be happy to . . .

MR. MAHER: Yes. On the reconciliation again.

[Page 20]

MR. GRAHAM: Is it buried in the Financial Statements?

MR. MAHER: Yes, but you have to go to the reconciliation to find where it's in the Financial Statements.

MR. GRAHAM: Could we go to the Financial Statements? The reconciliation is a little more challenging to get to.

MR. MAHER: In the Financial Statements . . .

MR. GRAHAM: Of the Trust or of the . . .

MR. MAHER: Of the Trust, the combined financial statements. The $246,000 is included in donations.

MR. GRAHAM: Could you point specifically to the line item?

MR. MAHER: It's in the line item that adds up to $290,227, down near the bottom of the page in Other Income.

MR. GRAHAM: The figure that we have here, however, is $246,000 . . .

MR. MAHER: But we received other donations and that's why the reconciliation is important.

MR. GRAHAM: You'll see that there is a line item just three items below that where it says Government of Canada - in the Financial Statements - and to the right of it is a dash. Would it not have been, when preparing the Financial Statements under the heading Government of Canada, appropriate to put what came from the Government of Canada under the heading Government of Canada?

MR. MAHER: It was a donation. If we received operating or capital grants, we put them in the form of Government of Canada. If we didn't, if we received them for sailing revenue, if we were required to be in certain ports and we received revenues for that we put that in General Ship Revenues. If we received them as a donation, we put it in Donations.

MR. GRAHAM: So, the money that came from the sponsorship fund, you put under Donations?

MR. MAHER: In that particular year, that's the year we were required to go on a tour. We couldn't complete the tour and we incurred a great deal of expenditures as a result of our trip and through contact with the people who were giving us the money for the tour, they told

[Page 21]

us that we could keep that much of the money towards refurbishing the ship and towards the expenses we incurred. We considered that to be a donation.

MR. GRAHAM: I just want to be clear on the accounting rationale in a nutshell, if that's possible, for putting that money under the heading Donations and not under the heading entitled Government of Canada. When it came from the Government of Canada under the heading of Other Income, is there an accounting principle that was followed here?

MR. MAHER: I think there is, yes. You can receive funding from the federal government - if I'm providing a service to the federal government, I record those fundings in my revenue as General Revenue. If I get a grant from the government, I record that in as Grant and if I get a donation from the government, I would record that as a Donation. So there is a distinction, I think.

MR. GRAHAM: Going back to the year 1998, would you agree with me that in the original documents, at least, the Charitable Return indicated that the federal funds were $294,000? The Financial Statements of the Trust indicated that the federal amount was $455,000 and the Financial Statements of the Ship Fund - separate statements - indicated that the ship fund, separate statements indicated that the federal contribution was $350,000 - all in 1998.

MR. MAHER: Right.

MR. GRAHAM: Would you agree with me that, reconciliation aside - and I understand the reconciliation was done fairly recently - that would be confusing for anyone who's trying to pull together an understanding of what was received by the federal government in 1998 by the Trust Fund.

MR. MAHER: Let me speak to it. The $350,000 was towards the operation of the ship so it showed up in the Ship Fund. The $105,000 which you have to add to that to get to the $455,000, was a donation of product to our store for sale in our store. So that would be in the combined statements, but it wouldn't be in the ship statements. What we tried to do by having a separate ship statement was to provide the provincial government and to anybody else, with the true operations of the ship and we didn't want to cloud it with the store operations and donations we received otherwise for our legacy. So that's why the ship statement will have different funds from the federal government than would the total financial statement.

MR. GRAHAM: As reluctant as I am to go to that reconciliation couple of pages that you've prepared, I think you've pulled me in and I will do what I can to try to make sense of what's contained on those two pages. First, I want to be clear and I'm starting at the year 2002, you're reporting that you received $693,000 from the federal government, correct?

[Page 22]

MR. MAHER: No, I'm not.

MR. GRAHAM: What is the other revenue then?

MR. MAHER: That's just other sailing revenue, but because $50,000 was provided to us as revenue for services to be provided to the federal government, we put that in with our ship revenue in that year.

MR. GRAHAM: So all you received from the federal government was $50,000 in that year?

MR. MAHER: That's right.

MR. GRAHAM: And $100,000 the year previous?

MR. MAHER: That's right.

MR. GRAHAM: And $40,000 the year before?

MR. MAHER: That's right.

MR. GRAHAM: And just turning the page to the other side, going to the year 1999, you're saying that there were federal donations in the amount of?

MR. MAHER: Yes, $246,000.

MR. GRAHAM: That's the total. Now, there's the line indicating $319,000 and that was one of those figures that, frankly, threw me off. Was that general revenue?

MR. MAHER: That's right, and the reason I added those together is to reconcile to what's on the Trust return.

MR. GRAHAM: You're aware that at Public Works they have released and, in fact, it's on their Web site, statements that say that $2.3 million went in 1997-98 to what they call the Bluenose and then they also indicate that in the same year, 1997-98, $278,000 went to Gosselin Communications Strategic Inc. Correct? Are you aware of that?

MR. MAHER: I'm not aware of that, I can't speak to funds that the Bluenose did not get.

MR. GRAHAM: Perhaps for the next round, I will pass it on. I will make a copy of this in the event that we're able to pursue this line of questioning so that you're at least able to look at this at a later date.

[Page 23]

MR. CHAIRMAN: There's about four and a half minutes to go. The honourable member for Halifax Clayton Park.

MS. DIANA WHALEN: I would like to just shift gears away from some of the accounting for a moment and talk about the governance structure of the Preservation Trust. When we went though it, one point that came out was that it was indicated to have 15 directors, but on your statement, the charitable statement, it only lists two of them. Can you explain? It only lists in fact yourself, Senator Moore, and the treasurer. So I'm just curious about the governance structure and I would like to ask you questions about how often you meet and the composition of your board. So maybe you could start with the composition of the board?

HON. WILFRED MOORE: The five people here make up the board of directors. When we started out back in 1994-95, we had a number of people who lent their names to our enterprise who believed in what we were trying to do and they were honorary directors. They contributed, they had their name attached to the project and we were very grateful for that, but there have always been just the permanent directors. At one time it was as many as six, but there has always been the five of us. In terms of the return - I mean two people have to sign a document. So the tax return, I guess Keith and I must have signed that one if our names are there.

[9:00 a.m.]

MS. WHALEN: So that might have just indicated signing authority. On the form, it asks you to list your directors and then it just had the two, I thought perhaps it was for signing authority, but I was interested in knowing and I was not aware that this was a complete board right here. Have all your board members been active from the inception of the Trust?

HON. WILFRED MOORE: Yes.

MS. WHALEN: How were they appointed initially, or how did you come together?

HON. WILFRED MOORE: Well, it came together out of interest in the ship and in the project that we were facing. Only Keith Maher and Bob Downie were there with me at the start. Delbé served 24 years on the ship, is very knowledgeable of the ship, was first mate, a great teacher, and probably knows more about the ship, inside, outside and upside down, than anybody; a very appropriate person to have on our Trust, we thought, so we invited him to join us. That was in 1999, was it? Yes. And Karen, who I've had the pleasure of working with in another volunteer capacity, on the board of Saint Mary's University, and I've seen how hard she works, how she digs in on issues, I brought her name to the other members, and so we invited her to join us. When was that, Karen?

[Page 24]

MS. KAREN OLDFIELD: It was about 18 months ago.

HON. WILFRED MOORE: Yes, about 18 months ago.

MS. WHALEN: If I could ask then, the members, because you're a non-profit, charitable organization, you choose yourself, you have formed yourself, you have no government appointees to that board, and the government, either provincial or any other, doesn't influence you in any way?

HON. WILFRED MOORE: Correct.

MS. WHALEN: Within your governance structure, do you have any requirement that the board changes over time?

HON. WILFRED MOORE: No.

MS. WHALEN: I wonder if you could tell me how often you meet?

HON. WILFRED MOORE: As required. We certainly meet annually to go over financial statements. Everybody is pretty busy, we are spread out. We spend, I suppose, time on the phone discussing issues that are important, and that's basically how we operate.

MS. WHALEN: Could you give me some indication of how much time this Trust may take of your own time? It's obviously a labour of love, in many ways.

HON. WILFRED MOORE: I don't know what to say to that. I wouldn't know where to start.

MS. WHALEN: If you can.

HON. WILFRED MOORE: A lot of time. There are many other things that our Trust has done in the past 10 years, of a community nature and so on. I don't have . . .

MS. WHALEN: Another question, if I could . . .

HON. WILFRED MOORE: It was a lot of time, Ms. Whalen.

MR. CHAIRMAN: Order, please. The time for the Liberal caucus has expired. We will now move on to the Progressive Conservative caucus for the next 20 minutes.

The honourable member for Pictou East.

[Page 25]

MR. JAMES DEWOLFE: Senator Moore, it's obvious that you're passionately committed and very knowledgeable about the Bluenose schooner, and we appreciate you and your board appearing before this committee today. We are, however, concerned about the apparent contradiction between your comments, Senator, in the media and the testimony of Mr. Gotay . . .

HON. WILFRED MOORE: Who?

MR. DEWOLFE: Mr. Gutay.

MR. CHAIRMAN: It's Guité.

MR. DEWOLFE: Sorry, I didn't have the right pronunciation, Mr. Guité. Indeed, Senator, Nova Scotians deserve to know if their federal government actually gave money to the province's Bluenose II, and whether or not the money earmarked for that pride of Nova Scotia went to that ship and not in the pockets of communications companies. I wonder if you could comment on that, sir.

HON. WILFRED MOORE: I wanted to mention that earlier in response to a question from Mr. Epstein, and I think it's important that . . .

MR. DEWOLFE: I don't want long dialogue, I would like to have a fairly brief answer to that.

HON. WILFRED MOORE: This is not an easy issue. This is a very major event that was mounted. It took months to put it together, and I think you should know and the people of the province should know some of the things that were paid for by the sponsorship program. Would you like me to run through some of those?

MR. CHAIRMAN: Just for your guidance, Senator, the practice of this committee is that if the document is relatively long, it's tabled and a summary is given; if the document is relatively short, it can be read. I haven't seen the document you're referring to. I would ask you to take that into account in considering which way to go.

MR. DEWOLFE: Perhaps you could give us a brief reply to it.

HON. WILFRED MOORE: Mr. DeWolfe, somebody had to purchase that trailer. It's a 50-some-foot trailer with expandable sides, computerized and synchronized. It had a wheelchair lift at one end and it had a wheelchair access ramp at the other end. It had a canopy. It had to be designed, the interior, and it had to be built. It had to be hauled across the country, and somebody had to provide a tractor to haul it, a qualified driver. It had a staff of 16 young people, recruited from across Canada. Those people had to be trained, they had

[Page 26]

to be clothed, housed and fed, as did the driver. The truck had to be fuelled, it had to be insured. The trailer had to be insured.

The same with respect to the store. That had a truck, a qualified driver, it had staffing, all of those things. People had to be paid, they had to be fed, they had to be housed, they had to be clothed. The merchandise that was prepared by the sponsorship program and was sold in the store, the sponsorship program paid for that. In addition, in every port of call there was a media opportunity for the skipper and for officers of the ship. There was a ceremony held, there was public relations. All of that was done and managed by somebody other than our Trust.

MR. DEWOLFE: Mr. Guité indicated that $600,000 went to that project.

HON. WILFRED MOORE: To what?

MR. DEWOLFE: To the travelling roadshow.

HON. WILFRED MOORE: To the tour?

MR. DEWOLFE: To the tour.

HON. WILFRED MOORE: I know that the Public Accounts Committee said that $2.6 million was spent - Public Works and Government Services says that $2.3 million or $2.6 million was spent on the tour in that year. Those are the items, that I've just itemized for you, that I know money was spent on.

MR. DEWOLFE: What companies managed the Bluenose II sponsorship fund?

HON. WILFRED MOORE: That part of the tour was managed by Lefleur Communication in Montreal. The actual on-ground management on all the physical dealing with the staff logistics was done by Gosselin Communications.

MR. DEWOLFE: How often did you talk or phone or correspond with those companies?

HON. WILFRED MOORE: Once the tour got underway, I met with Gilles-André Gosselin a number of times. We had to make sure - you're moving a ship on water and you're moving people and equipment on land, there's a lot of coordinating. So, as required, I met with him.

MR. DEWOLFE: Senator Moore, I'm going to ask a very simple question. You referred in past remarks to when you took possession of the Bluenose II. Who do you think owns the Bluenose II?

[Page 27]

HON. WILFRED MOORE: Well, it's in the name of the province, but I think, spiritually, it probably belongs to all of Canada, but the province is the registered owner. Is that what you mean?

MR. DEWOLFE: It belongs to the people of Nova Scotia.

HON. WILFRED MOORE: They're the registered owner.

MR. DEWOLFE: Yes. The people of Nova Scotia own the Bluenose II, and you can go into any classroom and ask any child who owns the Bluenose II, and they say we do, it belongs to us, the people of Nova Scotia. I just wanted to make that clear. I wasn't sure that you felt that way, so I just wanted to clear that up. These companies, Lefleur, Gosselin and perhaps some others, did the companies ever suggest that they were funding Bluenose II projects, perhaps through sponsorship money, without your knowledge? Were these companies ever funding Bluenose II projects without your knowledge? Were you accounting for these monies that went through these companies, personally as a board?

HON. WILFRED MOORE: Monies they received, Mr. DeWolfe, you'll have to ask them. I'm here this morning addressing the matter of the tour, and I've itemized for you items that I know the sponsorship program paid for.

MR. DEWOLFE: But, as I say, this is the Public Accounts Committee of the Province of Nova Scotia.

HON. WILFRED MOORE: That's federal money. You should ask those companies, sir.

MR. DEWOLFE: Well, sir, I'm asking you . . .

HON. WILFRED MOORE: I don't have the information.

MR. DEWOLFE: . . . because you were in control of the monies once it leaves Ottawa.

HON. WILFRED MOORE: I mentioned to somebody else here in response, we didn't get that money. This is the whole confusion in the media, and mischievous people. We never got that money, we had the benefit of it, the tour did, the ship did, the province did, but we never got that money to pass it out, to distribute it.

MR. DEWOLFE: Let's talk about it.

HON. WILFRED MOORE: We weren't in charge of those things.

[Page 28]

MR. DEWOLFE: Let's talk about this, Senator. In April 22, 2004, Mr. Guité expressed his opinion that the Auditor General's Report was mistaken. He said that Sheila Fraser misled the public to think that $100 million of federal money went missing. I saw this, I heard him say it. Let's look at the facts. The federal Public Works Department records show that the sponsorship program spent $3.3 million on Nova Scotia's schooner from 1997 to 2002, $3.3 million. That's what their records show. Your records from the Bluenose II Preservation Trust, show you received only $1.8 million from Ottawa, during that same period.

Senator Moore, you also reportedly said to the media that you don't know what happened to the rest of the money. However, Mr. Guité . . .

HON. WILFRED MOORE: No, I said to the media, if you want to know what happened to the rest of the money, you should ask those companies that received it. Don't believe everything you read in the media, Mr. DeWolfe.

MR. DEWOLFE: Mr. Guité recently told the House of Commons Public Accounts Committee that this missing money was spent on projects relating to the vessel. I guess this is my question. Is there, in fact, missing money?

HON. WILFRED MOORE: I don't think there is.

MR. DEWOLFE: If not, how do you explain the comments made by yourself, Senator Moore, and the media to that effect as well as the comments by the federal Auditor General, during the current Public Works Ministers - he also confirmed that the money earmarked for the Bluenose II went missing. How do you explain that?

HON. WILFRED MOORE: I don't know that any money went missing.

MR. DEWOLFE: Do you know of any projects they spent that money on?

HON. WILFRED MOORE: You've mentioned this amount of money. We received the $1.8 million that you mentioned there.

MR. DEWOLFE: You received the $1.8 million?

HON. WILFRED MOORE: Yes, Mr. Maher itemized that for you.

MR. DEWOLFE: But you didn't receive the $3.3 million?

[Page 29]

HON. WILFRED MOORE: No. However, I've mentioned there were a number of things that monies were spent on, or the sponsorship program. They were very substantial. I was told at the time that the mobile trailer, just the trailer alone, because of its computerization and it's different features, cost $500,000, just bare bones.

MR. DEWOLFE: What year was that built?

HON. WILFRED MOORE: That was with respect to the tour of 1997-98.

MR. DEWOLFE: That's bizarre, that amount of money. In those days - but at any rate, that seems bizarre to spend that much money on that.

HON. WILFRED MOORE: Well, all I've . . .

MR. DEWOLFE: Somebody must have made some money on that. Going on to the testimony before the federal Public Accounts Committee last week, Mr. Guité claimed that someone from the Bluenose Trust Fund - I kind of assumed that he was probably talking to you, rightly or wrongly, assume that, anyway - has apparently said that there was approximately $2.5 million sponsorship money given to the Bluenose fund, but only $300,000 ended up in the Trust fund.

Can you can confirm the accuracy of Mr. Guité's testimony? I'm sure you've followed that testimony. How much money, in your mind is in fact missing?

HON. WILFRED MOORE: I don't know that anything is missing.

MR. DEWOLFE: Well, there's a discrepancy in the figures here. It's quite obvious.

[9:15 a.m.]

HON. WILFRED MOORE: Well, I know, but you're not hearing me. We received what we accounted for. Other monies were spent on tour matters. Do you want me to repeat this again? It costs money . . .

MR. DEWOLFE: It's an incredible amount of money that we're talking about that's allegedly missing here.

HON. WILFRED MOORE: Well, when you look at the work, the people, and the things involved, you'll have to go to those companies and ask them for the details, and I'm sure they, themselves, didn't work for nothing. You couldn't expect that.

[Page 30]

MR. DEWOLFE: Well, I'm a bit concerned about the apparent contradiction between your comments in the media regarding the Bluenose II sponsorship fund and the testimony of Mr. Guité. As I said earlier . . .

HON. WILFRED MOORE: I can't answer for him . . .

MR. DEWOLFE: I concur, as I said earlier at the onset, I can clearly see that you are committed to the Bluenose II and its heritage and legacy but perhaps - do you feel that you've been sort of indirectly accused of misleading the public in this matter? Is that a big concern of yours?

HON. WILFRED MOORE: In this life, we're all born equal. Time and your good name, we each have those starting points. We are volunteers here, doing a community task and it isn't very nice sometimes to be attacked mischievously, by bureaucrats or elected people, unfairly, who don't have all the facts and don't give us a chance to respond. That's why I wanted to make that statement this morning, Mr. Chairman, so that you would know who we are and what we've been doing.

MR. DEWOLFE: Well, you heard the testimony made publicly by Mr. Guité. Do you feel that he directly or indirectly was misleading the public on this matter? Perhaps his testimony, the tone of it, put you in an awkward situation.

HON. WILFRED MOORE: I can't speak for him. We've accounted to you for the funding that we've received in detail . . .

MR. DEWOLFE: He sort of indicated that perhaps you were misleading the public in this matter, that's what I got from it.

HON. WILFRED MOORE: Maybe he was mistaken. I thought he said something about he read it somewhere or somebody said something in the media or (Interruption)

MR. DEWOLFE: Mr. Moore, let's talk a little bit about the recent discussions and where the missing monies went. In his testimony Mr. Guité said that approximately $600,000 went to a travelling exhibit and the trailer, as we talked about, following the Bluenose II from Halifax to Thunder Bay. Do you have documentation to verify all those monies?

HON. WILFRED MOORE: We're responsible for the ship. What happened on land, the mobile museum, the mobile store, all that staffing, that was somebody else's responsibility. Our job was the ship on the water. Stop. Begin and end, that's what we do.

MR. DEWOLFE: You didn't have any discussions with Mr. Guité regarding the $600,000 funding for a travelling exhibit?

[Page 31]

HON. WILFRED MOORE: No.

MR. DEWOLFE: None. None whatsoever? No communications whatsoever?

HON. WILFRED MOORE: No. I don't know where that . . .

MR. DEWOLFE: So that was handled by a communications company, the monies were given to a communications company for that project?

HON. WILFRED MOORE: Yes.

MR. DEWOLFE: That's interesting. Back to the matter of the allegedly missing monies. Mr. Guité also claimed in his testimony, aside from the $600,000 for the travelling exhibit that we just talked about, there was another $1.6 million spent in that very same year, $1.6 million on mooring fees, operation of the Bluenose II on daily sail tours, special events in various cities that the Bluenose visited and travelled to and expenses for 12 vehicles and hotel bills. Do you have documentation that would verify these claims that Mr. Guité made?

HON. WILFRED MOORE: We weren't privy to that, Mr. DeWolfe. Our job . . .

MR. DEWOLFE: But that's directly with the Bluenose itself though, in its travels.

HON. WILFRED MOORE: No. You will have to talk to him, sir. Our job is the ship and with respect to what happened on land and so on . . .

MR. DEWOLFE: Well, mooring fees and travelling costs and so on, are they not part of the ship?

HON. WILFRED MOORE: I don't know what he was referring to with respect to mooring fees.

MR. DEWOLFE: Well, he's talking about $1.6 million. It's a lot of money in that same year and expenses for 12 people of vehicles and hotel bills and no documentation. Were there any discussions with Mr. Guité about that.

HON. WILFRED MOORE: No, that was not our responsibility. With respect to the ship's berthing and so on, we looked after that. We had our people go in advance and check out every port of call so that we could make sure the ship could safely get in and get out and be safely looked after and we were well received pro bono all along the way. People loved to have us there. They were delighted that we showed up.

[Page 32]

MR. DEWOLFE: It's $1.6 million that you normally wouldn't have in a given year for travel. What do you normally spend in travel on anchorage and that sort of thing in the course of a season with the Bluenose?

HON. WILFRED MOORE: What does the Trust spend?

MR. DEWOLFE: What would the Trust . . .

HON. WILFRED MOORE: It's in the statement, I don't know, it may be $10,000 or $12,000 a year.

MR. DEWOLFE: But we're talking $1.6 million?

HON. WILFRED MOORE: Yes, but you will have to ask him about that, sir.

MR. DEWOLFE: No, I'm just surprised there was never any conversation about that when, you know, it's $1.6 million and there's a communications company managing that amount of money and gosh knows how much money they are going to strip off that themselves. With regard to Mr. Guité alleging that $2.2 million went missing, that's the difference in the figures, are you aware how much of the sponsorship funding targeted for Bluenose II included agency fees, commissions and communications and so on?

HON. WILFRED MOORE: I'm not privy.

MR. DEWOLFE: So there's no accountability to this at all, is there, through your group?

HON. WILFRED MOORE: That was not our responsibility. So I think, you know, you will have to ask questions of those companies and that's what the committee in Ottawa will be doing. So I don't think you should say there's no accountability, that's not really a fair comment. I'm sure that there was accountability.

MR. DEWOLFE: The Auditor General thinks that there perhaps wasn't and Mr. Guité seems to think that there are missing monies and if you didn't receive it, it left Ottawa, where did it go? That's the crux of it. It appears that the level of documentation and the evidence doesn't seem to be there, at least from the point of view of the federal government and Mr. Guité's files.

HON. WILFRED MOORE: Well, that's the task of the Public Accounts Committee in Ottawa to pursue. That's their job. Those are federal . . .

MR. DEWOLFE: Were you ever asked to provide any documentation to Mr. Guité at all, any records?

[Page 33]

HON. WILFRED MOORE: Not to him, but we reported to the agencies.

MR. CHAIRMAN: The time for the Progressive Conservative caucus has expired. Senator, just for the benefit of the committee, I wonder if you could let us know one thing. I know that you've been seeking a date before the federal Public Account Committee. Has the committee scheduled a meeting with the Trust?

HON. WILFRED MOORE: Not yet, but we are definitely on the list of witnesses.

MR. CHAIRMAN: Thank you very much. The next round by my calculations can be 12 minutes apiece. We will go back then to the NDP caucus and I recognize the member for Halifax Chebucto.

MR. EPSTEIN: Mr. Chairman, I actually have some questions for Mr. Maher. Mr. Maher, you gave us a Reconciliation of the Financial Statements with the Charitable Tax Returns and thank you for that. I'm wondering if I could direct your attention to three of the fiscal years, I think these are the last three, 1999-2000 and the next two years after that. I'm looking at what you say about the 1999-2000 fiscal year. Under the general heading Federal you show $40,000 of Revenue and then Other Revenue of about $386,000. I take it you're telling us that the $386,000 is also federal but from a different source?

MR. MAHER: No, that's just other normal revenues.

MR. EPSTEIN: Are you saying that has nothing to do with the federal government?

MR. MAHER: Nothing.

MR. EPSTEIN: And why is it under the heading of Federal?

MR. MAHER: Well, my schedule is to show you where federal funds were and where provincial funds were. I was just showing you that the federal money went into just the revenue number on the financial statements and then I was trying to show you how much is revenue from federal versus revenue from others.

MR. EPSTEIN: So the label on this is not correct.

MR. MAHER: Well, maybe . . .

MR. EPSTEIN: It should be revenue in bold and federal underneath?

MR. MAHER: That's true. You're exactly right.

[Page 34]

MR. EPSTEIN: Okay. Now, is that also the case then for the next two fiscal years? For example, at the end of fiscal year 2001-02 where it shows in the first of those years Federal revenue of $100,000 and the Other revenue of $472,000 is not federal money?

MR. MAHER: That's correct.

MR. EPSTEIN: And, in the next year, 2002, $50,000 is federal money but $643,000 is not federal money?

MR. MAHER: That's correct.

MR. EPSTEIN: So all of those Other categories come from some other source than the federal government?

MR. MAHER: That's correct.

MR. EPSTEIN: That would be sales, for example?

MR. MAHER: Sales, yes.

MR. EPSTEIN: Okay. That doesn't help us with respect to the Public Works difference - is that right?

MR. MAHER: Oh, no, no, not at all.

MR. EPSTEIN: Okay.

MR. MAHER: I'm at least not trying to reconcile Public Works, I can tell you that. That's not my role, not my job.

MR. EPSTEIN: Okay, but this Other revenue is not federal money that came from, say, some other department so far as you're aware?

MR. MAHER: No, you're exactly right.

MR. EPSTEIN: Okay, so that's fine. Now, I would like to take you, if I could, to the financial statement. This is an audited financial statement for the end of the fiscal year as of March, 2003. What I'm looking for is whether you can help us understand how much money is actually put aside to ultimately replace the ship, if any. I'm looking to understand the different categories of how these financial statements are presented. I take it that items called Ship Fund, Donations Fund and Store Fund are subsets of the total revenue flow of the Trust - is that right?

[Page 35]

MR. MAHER: That's correct.

MR. EPSTEIN: Now, looking at the statement of financial position for that year, can you tell us which items, if any, are money that's put aside towards eventual replacement of the ship?

MR. MAHER: Yes, at the very bottom you would see Donations Fund - $984,000?

MR. EPSTEIN: This is under the Equity category?

MR. MAHER: Yes.

MR. EPSTEIN: All right - and this is the Donations Fund, $984,000?

MR. MAHER: Right.

MR. EPSTEIN: This is money that is being held and put aside as over against replacement of the ship?

MR. MAHER: Well, replacement of the ship or overhaul of the ship - whatever, to keep the ship going.

MR. EPSTEIN: Okay.

MR. MAHER: And hopefully, as a legacy.

MR. EPSTEIN: All right. Is there anywhere in the statement of financial position where a value is put on the ship itself?

MR. MAHER: No.

MR. EPSTEIN: So that doesn't show up as an asset?

MR. MAHER: No. We don't own the ship.

MR. EPSTEIN: Okay, so it's not part of yours - you manage the insurance, but it's not one of your assets.

MR. MAHER: That's true.

MR. EPSTEIN: Okay, fine, that's clear enough. Can you explain to me why it is that the Trust would receive grants from the federal government that would have added on to them a 15 per cent tax item?

[Page 36]

MR. MAHER: Yes, on some occasions - I wouldn't call those grants, I would call those fees - if the ship would have to be at a certain port or have to be committed to do something under an agreement with the federal government. They would give us 15 per cent HST and we would collect that and remit it along with our other HST.

MR. EPSTEIN: This is because you would expect to be paying expenses associated with that grant for which you would have to be paying tax yourself?

MR. MAHER: Because it's not a grant, it's a fee for us providing the ship to be available to do whatever. It's no different than if the government hires you to do something, I'm sure you will have to charge them HST as well.

MR. EPSTEIN: So you regard this as a service to the federal government and therefore taxable and that's why they paid the tax?

MR. MAHER: It's a service. That's why those things go in revenue as opposed to government grants and things like this.

MR. EPSTEIN: And what do you do with the tax portion?

MR. MAHER: We remit it to CRA - Revenue Canada.

MR. EPSTEIN: Ultimately it goes back to CRA.

MR. MAHER: Yes, as part of our HST remittance. Exactly.

MR. EPSTEIN: All right. Let's see if I've understood the financial picture correctly. The Trust brought in an auditor sometime in the last two or three years?

MR. MAHER: Yes.

MR. EPSTEIN: Prior to that, directors would sign the financial statements?

MR. MAHER: The directors still sign the financial statements.

[9:30 a.m.]

MR. EPSTEIN: No, sorry, I mean only the directors would sign the financial statements and there was no auditing done.

MR. MAHER: That's correct.

[Page 37]

MR. EPSTEIN: I just want to be clear, I'm not suggesting that's an infraction of anything because our Societies Act does allow for directors to sign financial statements and does not make it mandatory that there be an audited statement.

MR. MAHER: That's my understanding.

MR. EPSTEIN: Did you at any point have an agreement with the provincial government that would require audited statements?

MR. MAHER: Not to my knowledge we didn't. No. Our agreement with the province, to my knowledge, doesn't require audited statements.

MR. EPSTEIN: I couldn't find it either. They just required you to become a society under the Societies Act.

MR. MAHER: That's right.

MR. EPSTEIN: Senator, is there something you want to help us with?

HON. WILFRED MOORE: I just wanted to add we weren't required to be incorporated or anything. Nobody required us to do anything. We did this of our own volition. We were given a hulk and said, get at it boys. We did this to give our activities a structure.

MR. EPSTEIN: Yes, I understand that. Ten years ago . . .

HON. WILFRED MOORE: Okay? We did that, we had that done by my late dear friend Gerry Godsoe who was then the corporate secretary of our Trust. He did all that work pro bono. And did many other things pro bono. I wish he was here.

MR. EPSTEIN: In the letters from 10 years ago, you offered to incorporate as a society and I believe Mr. Harrison, as the minister, asked that you indeed be incorporated. That's all, it's not a major point, but you were incorporated as a society?

HON. WILFRED MOORE: Yes, we were.

MR. EPSTEIN: Good. Then started to audit the books. Was there a particular reason why the books started to be audited rather than otherwise a couple of years ago?

HON. WILFRED MOORE: I mentioned that earlier. That I think in view of the - it's a burden for societies and for volunteer organizations. I don't know if everyone in the province has their books audited every year, but it's an expense, it's time consuming. I can tell you that. But, I think on the advice of Keith Maher - in view of what was going on in the

[Page 38]

accounting world, as a fallout from the Enron experience in the United States and my own service on the Standing Committee in Banking, Trade and Commerce in the Senate of Canada, we did a special study on that - it became clear to both of us that we should do that. So we undertook and have had our affairs audited since then.

MR. EPSTEIN: It certainly seems prudent. Just following through the overall financial picture, again either for you Senator or for Mr. Maher - there were errors in the charity tax returns. Can you offer us any explanation for that?

MR. MAHER: There were errors in - I don't know if I'd call them errors, I guess I would - 2003 and in 2002. There were some adjustments made as a result of our audit. They were fairly minor, fairly immaterial, probably didn't even have to be adjusted from an audit point of view, but the auditors chose to adjust them so we filed amended returns to reflect those adjustments. In 1998, you're asking me to go back a long time, six years, I went back through my records. It looked to me like we had kind of an incomplete set of financial statements that was used to do the charity return and subsequently when we finalized our financial statements, which are the ones that are in the package here, they were different than what was used for the charity return and it was an oversight on my part not to go back to Canada Revenue Agency at that point in time and do an amendment.

When that came to light through this process or through this scrutiny that we've been under, I, as quickly as I could, filed an amended form for Revenue Canada, which is what the process would be.

MR. EPSTEIN: So far as you're aware, all errors have been corrected and the appropriate information has been filed with CRA?

MR. MAHER: That's exactly right.

MR. EPSTEIN: Okay. The financial statements are presented differently than your charitable tax returns.

MR. MAHER: That's true. I do one charitable tax return a year, which is this one, so it's possible someone else would have done it differently and had the numbers in different places.

MR. EPSTEIN: Okay, so the bottom line, I take it, for the Trust - I guess this question is to you, Senator, you've received $1.8 million from the sponsorship program, which you've accounted for. Is that right? (Interruption)

MR. CHAIRMAN: Senator Moore or Mr. Maher, which one of you wants to take that? (Interruptions)

[Page 39]

HON. WILFRED MOORE: Your question again, sorry....

MR. EPSTEIN: The bottom line is that the Trust has received about $1.8 million over the past number of years from the federal sponsorship program?

HON. WILFRED MOORE: I want to be clear here because I don't know when the sponsorship program began, but we received it from Public Works and Government Services, whether it was sponsorship or whatever it was called when it began, I'm not sure what it was, but the sum was correct.

MR. EPSTEIN: Okay, and your next position and an associated one, is that nonetheless there were other items associated with the Bluenose II and its various activities during those same years in which the sponsorship program existed, which were paid for by, ultimately, Public Works and Government Services Canada or other federal government agencies, but, which was money that didn't flow through the Trust?

HON. WILFRED MOORE: Correct.

MR. EPSTEIN: Okay.

MR. CHAIRMAN: Thank you, Mr. Epstein; your time has expired. The next 12 minutes belong to the Liberal caucus, starting off with the honourable member for Halifax Citadel.

MR. DANIEL GRAHAM: Thank you, Mr. Chairman. I just wanted to follow up on the line of the questioning that I asked before. I want to leave plenty of time for my colleagues. I'd like to turn to the fiscal year that ended in 1998. I'd like to compare the financial statements of the Trust in 1998, with the reconciliation. Mr. Maher, you may be the one best able to answer this.

First, turning to the reconciliation, and with the comments that were made in previous discussions, I think it's clear that the Trust is saying that it received $699,000, that year from the sponsorship fund, and that was made up of the $350,000, plus $105,000, plus $202,000, plus $146,000, minus the $105,000, for a total of $699,000. Am I correct in that?

MR. MAHER: That's correct.

MR. GRAHAM: Okay. Going to the reconciliation document, you have three amounts there that total $803,000 and again you back out the $105,000. They are indicated under operating grant of $455,000; $202,000 from a donation; and $146,000 going toward revenue. I think it's clear where this $455,000 came from, but, for example, with respect to the $146,000, where would that be found in this document is the A part? The B part is,

[Page 40]

what's the rationale for the sponsorship fund money being found in three different places on the financial statements?

MR. MAHER: Your first question is, where is which number found in which document?

MR. GRAHAM: It's $146,000 in the 1998 financial statements of the Trust.

MR. MAHER: Right. That's in the revenue line, the $558,000 on the financial statements.

MR. GRAHAM: Okay, which leads to the B question. We have those three amounts, all from the sponsorship fund that are in three separate areas. I want to be clear on why they're in those three separate areas if they all come from the same fund. Again, I'm not an accountant.

MR. MAHER: Back in 1998, sponsorship fund didn't mean anything to me and I don't even know if I heard the word back then. I was told that we'd gotten these monies from the federal government when we were doing the records and that. It meant, perhaps it's incorrect, but I concluded that the $350,000 was for operations. I concluded that $202,800 was for a donation, and the other $146,000 was for services we were providing to the federal government. So that's the rationale for separating them into different areas.

Think of it like this too, just before you say that. What we were trying to do too, don't forget we were trying to do a statement for the ship as well and we wanted ships's revenue earned in the ship fund. We didn't want donations in the ship fund because we wanted to show a true picture of the operation of the ship, so we were trying to discriminate between how the funds should have been recorded properly. That's the only explanation that I can give you.

HON. WILFRED MOORE: I'd just like to make one point here, Mr. Chairman. One thing you should keep in mind, Mr. Graham, and members of the committee. In our proposal, with respect to the tour, one of the objectives was to help finance our Trust. We were hopeful of coming out of this whole exercise with some money in the bank as a legacy to continue to refurbish the ship. Some of these monies were given to us, strictly for that purpose, as donations. That's why they ended up where they did.

MR. CHAIRMAN: The honourable member for Halifax Clayton Park.

MS. WHALEN: I'd like to be fairly quick with these questions. I think they're fairly straightforward, but I wanted to get an answer. I'm looking particularly at the $650,000 that the province gives to the Trust each year, for the work that you do. In the documentation it also indicated you have one employee, it appears somebody on secondment perhaps, that's

[Page 41]

paid in addition to that. Can you tell me what your staffing is to support the work of the Trust?

HON. WILFRED MOORE: When we started out we had a person who was working for the provincial government, Mr. Rick Moore, who had served on the ship, and was second officer. We had him seconded to our Trust, to be our operations manager, and he served in that capacity for three years, I can't remember. Then he returned to the provincial Department of Housing. He returned to the government full-time. We have an operations coordinator now, on staff who works in our office in Lunenburg. A young lady who started with us as a girl Friday when we were operating in a back room in the museum. She is our operations coordinator.

MS. WHALEN: Is that your only staff member?

HON. WILFRED MOORE: Aside from the store people, yes. And then the crew, of course.

MS. WHALEN: Outside of the ship and the store, you only have one person working. What hours of work would that person have? Is it full-time?

HON. WILFRED MOORE: Yes.

MS. WHALEN: Could you tell us where your office is in Lunenburg?

HON. WILFRED MOORE: Our office is at 120 Bluenose Drive.

MS. WHALEN: We weren't aware of the official office there. Very good. The salary and benefits would only be the one person. Where would that appear in the statements? It wasn't clear to us as we went through where that support function would be.

HON. WILFRED MOORE: It's in the wages line on the statement.

MS. WHALEN: Okay, we'll find it later.

I'd like to turn it over, if I could, to my colleague.

MR. CHAIRMAN: The honourable member for Glace Bay.

MR. DAVID WILSON (Glace Bay): Thank you, Senator Moore and board members for appearing here today. No pressure being a volunteer in Nova Scotia whatsoever. Our purpose here - in the little time that I have left - is to assure that Nova Scotia taxpayers get value for the dollars that are being spent in this province. That's our purpose as a Public Accounts Committee of the Nova Scotia Legislature.

[Page 42]

Let me ask you, Senator Moore, in this case, and everything that has been mentioned to you today here, whether it be sponsorship monies that went to public relations firms, or monies that went directly to the Bluenose II Preservation Trust. Did we get value for dollars, for those tax dollars, did we get value for those dollars in this instance?

HON. WILFRED MOORE: We certainly did. In my opening statement, I mentioned what it was costing to run the ship before, and what we are doing it for. I mentioned the monies that we have gathered in from across Canada, and that we have spent on the ship. With respect to the tour, that was a terrific value for the province. You have to remember where we started from, and the condition of the ship, and everything around her. It wasn't very nice. It was a great opportunity to get that reputation put back. This ship is one of the contributions that this province makes to this country. You just have to go and watch people on the wharf, and see the fathers and mothers pull out a dime and point to the back of it to show their kids.

[9:45 a.m.]

MR. DAVID WILSON (Glace Bay): Mr. Chairman, I think that Mr. Maher has indicated that he would like to say something as well in this instance.

MR. CHAIRMAN: Yes. Mr. Maher.

MR. MAHER: If you were to look at the notes to the 2003 audited financial statement Note, Page 5, it shows that the restoration and ship equipment costs were in excess of $1 million and the province contributed $90,000 to that. As well, if you look at the operating statement for the Trust itself, or even to the ship fund itself, the operating costs in 2003 were $726,000. In some prior years they were $1 million and the province's contribution financially is $650,000 a year.

MR. DAVID WILSON (Glace Bay): Let me return to the issue that I brought up, the issue of value for dollars, and let me suggest that perhaps to ensure that Nova Scotians - and I think we all agree here, this is our greatest icon, the Bluenose II is a symbol of Nova Scotia . . .

MR. MAHER: Yes.

MR. DAVID WILSON (Glace Bay): . . . we're all proud Nova Scotians, we're all proud of the Bluenose II - but to ensure that there's, without any hint of impropriety whatsoever, that an independent management and accounting audit perhaps of your operation would be in order? Do you agree, Senator Moore?

HON. WILFRED MOORE: We've had that done.

[Page 43]

MR. DAVID WILSON (Glace Bay): And you're saying that that's going to be now . . .

HON. WILFRED MOORE: We have provided audited statements.

MR. DAVID WILSON (Glace Bay): On a regular basis, you are reporting to the Nova Scotia Legislature from now on?

HON. WILFRED MOORE: Yes. Yes, sir.

MR. DAVID WILSON (Glace Bay): And that will be done on an annual basis?

HON. WILFRED MOORE: On an annual basis, with a reporting letter and audited statements.

MR. DAVID WILSON (Glace Bay): Let me ask you then a direct question - and we've heard today and we've seen some of the emotion that you're showing - do you feel that you or your board members have done anything wrong here?

HON. WILFRED MOORE: No. You know a friend of mine once said there's no good deed that doesn't go unpunished and here we are. You ask about the value. I mean, how do you put a value on our work and on this ship and our activities? I mean, I don't know how you would attach - it's perhaps priceless. If you want to quantify it one way, you would go to every newspaper and say what does it cost to buy a full page in the newspaper and there's a quarter page with a picture of this ship, well, I mean if you sat down and quantified all those things, in addition to our volunteerism, you know it would be a huge number I'm sure.

MR. MAHER: I have to speak to that. I did one thing wrong, I volunteered.

MR. DAVID WILSON (Glace Bay): That's a pretty sad state of affairs if we have a volunteer appearing before this committee who says that. Look, Senator Moore, I will give you one more chance, one more opportunity to answer some of the accusations that have been hurled at you here today. The connection between the Bluenose II Trust Society and the sponsorship and Mr. Guité and so on and so forth, you have said you're going to answer to that to the federal Public Accounts Committee?

HON. WILFRED MOORE: That's correct.

MR. DAVID WILSON (Glace Bay): Tell Nova Scotians right now, while you have the chance, do you think there was anything wrong with those dollars being spent on the Bluenose?

[Page 44]

HON. WILFRED MOORE: No, no. Look, this was a hugely successful event. I mean the numbers of people who came in from across Canada to see that ship in those 23 ports was phenomenal, our biggest days ever - ever - since we've been running this ship. In Quebec City we did 9,500 visitors in eight hours. We went to Montreal, we did 11,500 in nine hours. The ship was like an anthill. It was phenomenal. Now, we have had our ship's brochure done up in both official languages and it's kind of nice when those people from our French communities in Nova Scotia, or from other parts of Canada, step on-board and they get that piece of paper passed to them in their language. You know, we've done some pretty, maybe small things, but very important things in terms of the ship and the message and trying to observe and protect and, sustain the wonderful legacy that she represents.

MR. CHAIRMAN: Thank you, Senator. We will now move on to the Progressive Conservative caucus, and I recognize the member for Waverley-Fall River-Beaver Bank.

MR. GARY HINES: Thank you, Mr. Chairman, and thank you, ladies and gentlemen, for coming in. I would like to commend you on the presentation you've done with the Bluenose to citizens of Nova Scotia and the citizens of Canada. I want to go to the governance and it starts with the Foundation Act. In the Foundation Act it states that the boat is provincially owned and operated. Sections 11, 12 and 13 have to do with accountability, auditing and annual reports. When I look at the annual reports that come in, the funds that are audited in the annual reports or that are addressed in the audit are the $650,000 contribution from the province.

There's a statement that accompanies each of these that says, these financial statements do not include all of the activities of the Bluenose II Preservation Trust Society but do include those activities relating to the ship's fund. Now, is there any place that the other activities are audited, or that the public can determine what happens in the other departments, money in, money out, is there any accountability there?

MR. CHAIRMAN: Mr. Maher.

MR. MAHER: Yes, you're looking at the ship's statement alone. In our binder that we gave you, we gave you all of the statements for all of the activities of the Trust. The ones that were audited in 2003 and 2002 include all of the activities of the Trust.

MR. HINES: On February 13, 2001 and November 18, 2003, Minister MacDonald requested full accounting of the Trust's finances. In conversation with the minister, he's still not satisfied that he has gotten that information. Are you satisfied that you've given him that information that he requested in terms of accounting?

MR. CHAIRMAN: Senator Moore.

[Page 45]

HON. WILFRED MOORE: Yes, we have. Our agreement provides for him to get a statement every year with respect to the $650,000 that the province provides, and we've given that every year, sir, every year, faithfully. Now you have audited statements for the past two years.

MR. HINES: I realize that but it's the rest of the money that I'm talking about, the other activities, the ship's store and those activities.

HON. WILFRED MOORE: We operate at arm's length from government. We're responsible to account for the monies we receive. We've done that.

MR. HINES: I realize you operate at arm's length from the government, but in the agreements of April 19, 1995 and April 2, 1998, in both agreements it states that accountability for all of those things will be given to the provincial government. As Minister MacDonald says, and I feel the same way, that accountability hasn't been given. I want to move on to another issue.

I want to move on to the issue of ownership. In all of the agreements, right from the Foundation Act to the agreements of April 19th and April 2nd, it states that the Province of Nova Scotia and the people of Nova Scotia are the owner. My concern is - and I would like to know - why should the Province of Nova Scotia and the taxpayers of Nova Scotia pay to use images of their own asset? Can you tell me how that came about, that Nova Scotians have to pay to use the Bluenose image?

HON. WILFRED MOORE: I can speak to that. The image was created by the late William J. Roué. It's his property, and now it's the property of his estate. The province has only owned the ship since 1971. They ran her for 20 years, they ran her into the ground, and they tied her up. We've been operating her for the last 10 years. The Roué family came to us and offered us that intellectual property to assist us in raising some funds to help the ship. I thought it was very gracious of them. We took them up on that, and we had an assignment done and properly recorded at the Canadian Intellectual Properties Office, and we began licensing people.

Beyond the money, that's only a small part of it, what we have provided is a structure to make sure that the image is used accurately and appropriately. You get some weird requests, believe me. As I mentioned in my remarks, for commercial use, people should be prepared to chip in. If that ship was still tied up or was scuttled, they would have no interest. There would be nobody out there, being proud, saying listen, here's a picture of the Bluenose, buy my t-shirt, you can go see the boat. There's value in that, and they should be prepared to chip in for that. Now, we do not ask fees of any not-for-profit societies, community groups or educational uses. We don't do that.

[Page 46]

MR. HINES: I understand that, but I guess my biggest concern, and the request that was made for the Province of Nova Scotia to obtain intellectual rights to use that logo, do you feel that it's right that the people of Nova Scotia should have to, in fact, ask the Trust to be able to use that when they're the owners of the ship? That's the part that I don't understand, why Nova Scotians, through the governance, are being asked to . . .

HON. WILFRED MOORE: Somebody has to administer it. If it's out there in the public domain and it's a free-for-all, what are you going to get? I've had discussions with people in the provincial government and they don't want that. They like what we have done, they don't like the legal case, we don't like the legal case that's out there - for now it's in abeyance - but, I think that they also view the opportunity to raise a few dollars toward this ship is also a good thing.

MR. HINES: I still go back to my assertion that I don't think that the Province of Nova Scotia should ask, because I think what should have been happening is, you should have been asking the Province of Nova Scotia permission to acquire intellectual property rights. Did that ever happen?

HON. WILFRED MOORE: Did the province - do they own Bill Roué's property?

MR. HINES: No, but they own the Bluenose II, and I think only the Bluenose II would give them permission to use that in their logo and in their tourist manuals and so on. That's my opinion and certainly the opinion of a lot of Nova Scotians.

One more question before I pass, do you consider yourself a public authority?

HON. WILFRED MOORE: A public authority?

MR. HINES: Yes.

HON. WILFRED MOORE: Our Trust? Yes, inasmuch as we receive public monies and we account for those monies annually, yes. We're doing a public task in a very public way.

MR. HINES: So when you made the request from the federal government for official marks, then you were doing it as a public authority?

HON. WILFRED MOORE: Yes.

MR. HINES: Thank you.

MR. CHAIRMAN: The honourable member for Chester-St. Margaret's.

[Page 47]

MR. JOHN CHATAWAY: Thank you, Mr. Chairman. It's certainly a very interesting topic and I know time is running out. We can all talk for hours, I'm sure. If the Trust had been raising money for seven years to be used for the vessel's future capital needs, that's to operate the ship, what would happen if this money, if the contract expires? Will the Trust return the money to the people and the businesses that have made donations? Have you publically listed all the people giving donations? What will it give to the province because if this contract does not continue, will it give all the assets of the Bluenose II Trust to the province to be used to maintain the Bluenose II?

HON. WILFRED MOORE: Those matters are the subject of discussion with respect to the quality transition process that's underway.

MR. CHATAWAY: Do you have a critical path for the decisions made by that committee?

HON. WILFRED MOORE: I'm not in charge of that.

MR. CHATAWAY: In the Trust, who is in charge of that?

HON. WILFRED MOORE: In terms of setting the agenda and meetings and so on?

MR. CHATAWAY: Yes, exactly. I think we're talking about a problem we have but I mean . . .

HON. WILFRED MOORE: It's been coordinated - by the Department of Tourism, Culture and Heritage and our Trust, and they're hopeful of getting underway shortly.

MR. CHATAWAY: It seems, at least to me, I think many Nova Scotians feel that if you're not operating the ship, and you used that term, we operate the Bluenose II, if that contract does expire, then what would you do? The assets that you have right now, would it go to the province to continue to be used to keep up the Bluenose II?

HON. WILFRED MOORE: Well our mandate is the maintenance of the ship. I'm sure that will be a matter of discussion in the near future.

MR. CHAIRMAN: The honourable member for Pictou East, with about two and a half minutes left.

MR. DEWOLFE: Thank you. I would hope that the monies that my colleague was mentioning would go back to the ship for sure, if the current Trust was discontinued.

[Page 48]

Senator Moore, we fully expected that you would be able to account for all monies spent on the Bluenose II and its tour regardless of whether the money was spent through the Trust or through a communications firm, because it was spent in the name of the Bluenose II, which would be certainly a concern of yours. It was spent in the name of the Bluenose II,

which belongs to Nova Scotians, and Nova Scotians deserve to know where the monies destined for the ship went.

[10:00 a.m.]

As indicated, there appears to be over $2 million missing and unaccounted for at this time. If you don't know where all the money that was spent on the ship or in the name of the ship went, then who does, and why don't you? I have to say that it appeared in your early commentary that you're actually almost comfortable with the fact that communications companies spent dollars that were destined for the Bluenose II, in the name of the Bluenose II, without your knowledge, without your input, when in fact Nova Scotians have entrusted you with the job of overseeing their ship. I'm very concerned that this has taken place. You said that you had really no conversation with them regarding this money that was going to be spent in the name of the Bluenose II and on the Bluenose II, that it just happened, and the communications companies were taking the lead on this, without your knowledge.

HON. WILFRED MOORE: I didn't say that.

MR. DEWOLFE: I think the record will indicate that you said that you had no conversations with regard to this.

HON. WILFRED MOORE: I told the committee . . .

MR. DEWOLFE: We're not concerned with the money you spent, I think you spent wisely in many cases, but it's the monies that weren't spent, too, that we're concerned with.

HON. WILFRED MOORE: I tried to itemize for you the other items on which funds were spent with respect to the tour, and we did have input in that. I told you that, and the key item was the mobile museum. We had input in that, we brought the people of Lunenburg - we provided artifacts, we provided things gratis, we helped, we had input. It was very important to us. We had that input because of exactly what you're saying, because of what it represented.

MR. CHAIRMAN: That brings to an end the question and answer portion of our proceedings today. Senator Moore, I would now like to invite you, if you wish, to make a closing statement of up to five minutes.

[Page 49]

HON. WILFRED MOORE: Mr. Chairman, I guess I kind of reflect on all the work we've done here for the past 10 years, and I never thought I would end up sitting here for doing a public good. But that's okay. We have met every agreement we've been asked to, that we've been involved in. We've been open and transparent. We've given a full accounting of our dealings with the province. We've provided you with all the financial information. There are 10 years of records there. I know it may appear complicated, but I can tell you that everything we've done has been properly accounted for.

The big winner is the province. This is a very positive story. I would urge you people to champion it. Volunteers are working and turning around a sorry-looking public asset, putting her back on the pedestal where she belongs, and we've done that without compensation and we think we've done a good job. I don't have anything else. Does anyone else want to say anything?

MR. CHAIRMAN: Do any of the other guests wish to add to that closing statement? Ms. Oldfield.

MS. OLDFIELD: I would actually; thank you, Mr. Chairman, committee members. I would like to say what I said earlier today to Senator Moore, which is that I don't think that anybody can truly understand what he has done with the Bluenose and what he has done for the Trust but for the boat and the people of Lunenburg. The four-inch binder is just a reflection of the huge amount of time and effort and, what I think you saw earlier today, the love that he has put into this task. I would just like to formally recognize that for the record.

MR. CHAIRMAN: I would like to thank the Trust very much for being forthcoming with the documentary information that we had requested, and also the Department of Tourism, Culture and Heritage, which was equally forthcoming with the information this committee requested from them. Having such a complete set of background documents, I know, has helped this committee prepare for its work this morning.

Senator, I believe you did refer this morning, several times, to a document that is not in our binder, and if it is, I apologize, and that's your letter to Minister Owen. If it's not in our binder, I wonder if, before you leave today, you could leave a copy with the Committee Clerk, so that it can be distributed to the committee members. I think it would be helpful for them to see it.

HON. WILFRED MOORE: I would be pleased to do that, Mr. Chairman.

MR. CHAIRMAN: I was going to ask if there's any other business requiring the attention of the full committee. Mr. DeWolfe.

[Page 50]

MR. DEWOLFE: Mr. Chairman, I would like to suggest that perhaps we recall this witness at some point, perhaps after he testifies federally, and perhaps we could convene a special meeting for that purpose to investigate this matter further.

MR. CHAIRMAN: Certainly it's something that we will put on the agenda of our Subcommittee on Agenda and Procedures, certainly by no means something needing to be decided today. Is there anything else requiring the attention of the full committee?

I would like to remind committee members that our next meeting is next Wednesday, May 5th, 8:00 a.m., here in this Chamber, on the very important subject of user fees. The lead witness is Howard Windsor, the Deputy Minister of the Treasury and Policy Board.

May I have a motion to adjourn, please? Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

This meeting of the Public Accounts Committee is adjourned.

[The committee adjourned at 10:07 a.m.]