Tuesday, November 08, 2005

Judge Gomery & PM Martin: The CSL Connection

Based on the Canada Free Press article Martin loan syndicate runs surveillance on Justice John Gomery, I have found some interesting facts I believe Canadians should know about Justice John H. Gomery and Prime Minister Paul Martin and Martin's now-held-by-his-sons Canada Steamship Lines.
Read the article for yourself.
Here I'll try to make some sense of what exactly is the big deal and leave it to readers to formulate their own questions about the relationships and the circumstances surrounding Gomery and Martin (All emphasis mine).
Of course, Justice Gomery is a Liberal who was chosen by Martin to head the Commission of Inquiry into the sponsorship program and advertising activities.
The other names we need to know are:
-Raymond Garneau: special investor, CAI Private Equity Group (loan syndicate involved in Martin's 100% takeover of CSL equity and liabilities)
-Laurence Pathy: former CSL co-owner, sponsored the $182 million loan to Martin to take over CSL in 1990
-Paul Desmarais, Chairman, Power Corp.
-Frank McKenna, former Premier, New Brunswick, and currently Ambassador to the United States, appointed by Martin, and also a special investor in CAI Group, plus former chairman of CanWest Global, which owns the National Post
1973: Desmarais appointed Martin as President of CSL
From the article:

It seems that in June 1981, Desmarais needed a buyer, who wouldn’t tip the markets to his off-book debt-for-equity swaps, to take CSL off his hands. Martin stepped up to the plate. The CSL price tag was $195 million. Martin, who had scant money of his own, went to his sometime golfing buddy, Laurence Pathy, whose tightly held Fednav commanded Canada's biggest ocean-going fleet and assets of at least $500 million. Pathy agreed to ante up $35 million in preferred shares and to foot the cost of three new ships as collateral allowing Martin to borrow the rest. Martin turned to Desmarais's long-time backer, the Royal Bank, whose chairman sat on Power's board. Power received $30 million in preferred CSL shares. Martin has never revealed the amount of his loan from the bank or Desmarais. By the time the deal closed, the price was down to $178 million: Power kept $17 million in CSL's cash and liquid assets but did not oblige Martin to remortgage his Montreal house.

June 22, 2005: Justice Gomery appointed Raymond Garneau as chairman of an "Advisory Committee of distinguished Canadians" to "provide guidance for Phase II .. to prevent mismanagement of sponsorship programs .. in the future".
The article points out that the CanWest Global paper National Post, the day of the release of the first Gomery report, declared Martin "cleared" "before its contents could be digested".
It also points out McKenna's positions at CanWest, his involvement with the loan syndicate CAI, and his appointment as Ambassador by Martin.
The final question the article asks is:

Who dictated that Canadian Order in Council, which made Raymond Garneau–one of 28+ special investors in Paul Martin’s loan syndicate–the watchful chairman of the Justice John H. Gomery Advisory Committee?

Fascinating facts and interrelationships, are they not?
One must wonder...