The corrosive influence of
money on the democratic system is the subject of a new book by Aaron
Freeman, 30, a founding director of Democracy Watch, an Ottawa-based
advocacy group. In this excerpt from Cashing In, he looks at one of the
most potent and best-financed lobbies in the capital, the "Tobacco Dream
Team." These tobacco lobbyists have had considerable success in the fight
to protect their business from lawsuits and antismoking laws. Although the
percentage of Canadians who smoke has been declining for a decade, the
industry's profits keep climbing -- to $1 billion a year.
An organized crime syndicate succeeds when it uses illegal acts to
ensure that people comply with whatever it is that the syndicate desires.
Control over people is the source of the syndicate's power. Illegal
activity is the tool used to obtain it.
The tobacco lobby is no different. It controls the lives of millions of
people by addicting them to the product. It controls governments through
sophisticated lobbying. And it controls public policy by manipulating
public discourse. This extensive control, in turn, transforms what would
ordinarily be an influential lobby into the most powerful shakedown artist
in Canada.
The tobacco syndicate has even engineered a $1-billion tax cut for
itself. It took U.S. tax authorities until December, 1998, to uncover how
tobacco companies had duped the Canadian government on the tax cut.
One tobacco company, Northern Brands International, owned by
RJR-Nabisco, the U.S. parent of RJR-MacDonald, admitted selling 1.3
million cartons of Export A cigarettes to smugglers in 1994 and 1995 with,
as the charge read, "wilful blindness to or conscious disregard of the
fact that these cigarettes would be fraudulently diverted" from their
declared destinations, Russia and Estonia.
In exchange for the company's admission, the U.S. attorney's office for
the northern district of New York state agreed not to bring further
charges against the company. (The bargain does not bind other
jurisdictions.)
Northern Brands was described by RJR-Nabisco's lawyer as "an entirely
Canadian operation," despite being incorporated in Delaware. The company
is no longer active.
Meanwhile, the tobacco lobby in Ottawa pushed the Liberals for a
tobacco tax cut on the grounds that Canada's relatively high cigarette
taxes were creating an incentive to smuggle cigarettes from the United
States, resulting in a major law-enforcement problem. They succeeded in
1994, in reducing taxes. In Ontario alone, government revenue from
cigarette taxes fell from $1.1 billion to $300 million.
Not bad work if you can get it. Reap millions of dollars through an
illegal smuggling ring, then go to government for a tax cut to help fight
illegal smuggling.
In 1999, U.S. courts demanded a $5 million (U.S.) fine and the return
of $10 million (U.S.) in customs that should have been paid on the
Canadian cigarettes. By that year, the tax cut, a lower Canadian dollar
and price increases in the United States -- the result of
multibillion-dollar settlements between tobacco companies and state
governments, which sued the companies to recoup the health costs
associated with smoking -- meant that cigarettes were actually up to $15 a
carton higher in U.S. border states than in Canada. Nearly a year after
the U.S. government fined the tobacco companies, the Canadian government
finally launched a lawsuit against the same companies over the Canadian
smuggling ring. The government sued in U.S. courts, using the Racketeer
Influenced and Corrupt Organizations Act, which allows for triple damages
against defendants found guilty of making money from criminal activity.
Needless to say, a foreign-controlled industry that kills 40,000
Canadians a year and replenishes the deceased by addicting newer,
particularly young, customers has a major image problem on its hands.
Especially in the face of a federal government and provincial governments
that have been making efforts to force the industry to account for the
massive health and economic impact of its product.
In recent years, the federal government has greatly tightened
restrictions on tobacco advertising and sponsorship. A new federal Tobacco
Act allows for tobacco advertising, but only in "adult" venues. It further
limits promotion of cigarettes in the places where they are sold, and bans
certain sales promotions such as coupons, gifts and the use of tobacco
logos on clothing. And the most contentious provision limits promotion of
tobacco products through sponsorship.
The industry's public relations response is multi-pronged. The first
strategy involves connecting the industry to as many political offices as
possible. This keeps the industry informed about political developments
and provides a potential avenue to influence these decisions, making the
fight against new health measures easier.
In cabinet, Finance Minister Paul Martin was a director at Imasco,
owner of Imperial Tobacco, before entering politics. Treasury Board
president Lucienne Robillard's riding is St-Henri-Westmount, where a large
Imperial Tobacco plant is located. Her campaign director and riding
association president is Simon Potter, a tobacco industry lawyer and
lobbyist for the Canadian Tobacco Manufacturers Council.
In the Senate, Liberal senators Michael Kirby and Roch Bolduc were both
directors at RJR-MacDonald until 1998, while Conservative senator William
Kelly is chairman of the Rothmans board. Rothmans also has connections to
the senior levels of the bureaucracy. Pierre Gravel, a former deputy
minister of National Revenue, and Paule Gauthier, chairman of the Security
Intelligence Review Committee, both joined the board in 1998.
And then there are the party connections. One of the newer members of
the Imperial executive is Quebec lawyer Pierre Fortier, who joined the
company in October, 1998, as vice-president, corporate affairs. Fortier
helped Joe Clark emerge from his campaign debt after he lost the party's
leadership to Brian Mulroney in 1983. He then went on to become president
of the lobbying firm Public Affairs International, a Tory-connected firm
that flourished under Mulroney. After the Tories were decimated in the
1993 election, Fortier helped rebuild the party and eventually became the
party's national president. He stepped down from the post to take the
position at Imperial.
Guy Cote, a well-known CBC journalist before becoming the press
secretary for Ontario premier David Peterson from 1985 to 1989, serves on
the RJR-MacDonald board. Judy Erola, a former Liberal minister of consumer
and corporate affairs who left politics to become the head of the
Pharmaceutical Manufacturers Association of Canada, left the PMAC in 1998
and now serves on the Imasco board.
Several of Brian Mulroney's former staffers now work for tobacco
companies. Former chief of staff Norman Spector is vice-president of
Imperial Tobacco, and another former Mulroney chief of staff, Bernard Roy,
is an Imasco director. Mulroney's former press secretary, Marie-Josee
Lapointe, is communications director for the Canadian Tobacco
Manufacturers Council.
Big Tobacco's second strategy is to ensure that key politicians hear
from them constantly. The companies have more than 20 registered
lobbyists, and this figure does not include the lobbyists employed by
their allies -- the groups they fund, such as the Alliance for Sponsorship
Freedom, as well as groups that share their lobbying platform (for
example, advertising groups such as Gallop & Gallop and event
organizers such as Grand Prix Management, both of which lost major revenue
sources when the tobacco advertising restrictions were implemented).
Bruce Murdock is a former aide to former immigration minister Sergio
Marchi and former chief of staff for the B.C. Liberal party. Liberal
staffers who play on the True Grit softball team in Ottawa widely respect
Murdock's performance as their third baseman. He's never afraid of taking
a ground ball on the body for the team. Fortunately for the tobacco lobby,
this loyalty is for sale, and Murdock now lobbies for Imasco.
Mark Resnick, who heads the lobby group Parallax Public Affairs and is
president of the lobbyists' guild, the Government Relations Institute of
Canada, is a lead lobbyist for the CTMC. He was also part of Paul Martin's
inner circle in his 1990 leadership bid.
The CTMC is headed by Rob Parker, a veteran lobbyist and former
Conservative MP. CTMC lobbyists include David Small, who worked on Joe
Clark's 1998 Tory leadership bid, and Bill Neville, one of Ottawa's
best-known and most established lobbyists. Neville, one of Joe Clark's
closest advisers, was a member of Brian Mulroney's brain trust.
Other lobbyists on the Tobacco Dream Team include Marc Lalonde, a
high-level Trudeau-era cabinet minister, who later became a hired gun for
Alfred Dunhill; Herb Metcalfe, a Chretien loyalist and former executive
director of the Liberal Party Fund, who heads the Capital Hill Group,
which represents RJR-MacDonald; Jean-Francois Thibault, a Capital Hill
Group lobbyist and former secretary of the Quebec wing of the Liberal
party; Torrance Wylie, head of the influential lobbying firm Government
Policy Consultants and an Imasco director; Brian Levitt, president and
chief executive officer of Imasco, who was an adviser on the 1997 Liberal
campaign and was a leader in the No campaign during the Quebec referendum;
and Jodi White, who was a chief of staff for both Joe Clark and Kim
Campbell and also campaign chairwoman for Jean Charest in the 1993
election. White then became vice-president, corporate affairs for Imasco,
a position she recently left.
Through the many tools of influence it has developed, the tobacco
industry has been very successful in staving off regulation of its
hazardous product. If there is a way to thwart government efforts to
regulate tobacco, the Tobacco Dream Team will find it, if not through its
political connections or frontline lobbying efforts, then through its
stable of high-priced lawyers.
Moneyed interests play by different rules than the rest of us. When
they don't like how the world is treating them, they invest large sums of
money in lobbyists, political advertising, and political donations to
change things. They rely on revolving-door incentives to ensure that both
elected officials and bureaucrats remain friendly and compliant. And, if
all else fails, they use their size and influence to bully the government
into giving them what they desire or to ignore their excesses.
A system that allows these abuses to occur is not clean, especially
when preventive measures would be easy to implement. The abuses are simply
the logical, predictable outcome of a regime that makes it almost as easy
to do things under the table as to do them aboveboard.
Sponsorships: Buying Access and Influence
Located in London, England, at fashionable Trafalgar Square, Canada
House is responsible for the Canadian High Commission's cultural program,
hosting exhibitions, concerts, performing arts presentations, literary
events and film screenings. In promotional material, it is described as "a
home away from home for Canadians abroad and an introduction to Canada for
thousands of visitors."
Before Canada opened the facility in 1925, Prime Minister Mackenzie
King said: "Canada has now been fortunate to secure what may well be
regarded as the finest site in London, and being London, the finest in the
world." Over the following seven decades, Canada House served diplomatic,
public affairs and academic functions, and served as the Canadian military
headquarters during the Second World War.
In May, 1998, Canada House threw an extravagant gala to celebrate a
$15.5-million make-over. The grand reopening reception featured Prime
Minister Chretien, the Queen and Prince Philip, as well as 400
high-society guests, including rock star Bryan Adams, film director Atom
Egoyan, supermodel Linda Evangelista, writer John Ralston Saul, arts
commentator Adrienne Clarkson (now Governor General), author Michael
Ignatieff, television mogul Moses Znaimer, senior cabinet ministers Lloyd
Axworthy and Sergio Marchi, as well as senior Canadian political staffers
and diplomats to various countries. The invitees snacked on cod tongue and
pigeon breast, and sipped Canada's finest wines as they schmoozed and
worked the crowd.
If the party's $260,000 price tag had been on the Canadian taxpayers'
tab, there would surely have been headlines back home. So Canada House
offered sponsorship opportunities to Canadian businesses. Companies jumped
at the chance to be associated with such a prestigious event, so much so
that the money they poured in exceeded Canada House's expectations. Many
sponsors paid between $50,000 and $100,000, including the Bank of
Montreal, Royal Bank, CIBC, Northern Telecom (now Nortel Networks Corp.),
Sun Life Assurance Co., and Canadian National Railways -- all top donors
to the Liberals, and all major lobbyists. Even a major Ottawa lobby firm,
the Capital Hill Group, was a sponsor of the event. Other companies, such
as Bell Canada, Air Canada and Canadian Pacific Hotels, provided services
for the party. For their contribution, companies could invite guests to
the gala, were given space to display their logos at related high
commission functions, were mentioned in media kits, and could later rent
the facilities of Canada House at reduced rates.
While the Canada House reopening in London was perhaps the most opulent
embassy event of recent years, other Canadian missions have similar
corporate-sponsored functions. In March, 1999, Canada's consul general in
Los Angeles, former prime minister Kim Campbell, hosted a Hollywood
gathering at her residence for Canada's Oscar nominees, including Norman
Jewison. Guests included Hollywood stars and executives, but also on hand
were the sponsors, including Air Canada and Roots.
Is saving a few taxpayer dollars a more important principle of
governing than maintaining integrity and impartiality? Is the government
sending a positive message to the public when it makes it clear that if
you have enough money, you will gain access, influence and recognition? If
these events are too expensive to be funded by taxpayer dollars, maybe the
tastes of our senior government representatives are simply too rich.
Reprinted with permission from Cashing In, copyright Aaron Freeman,
published by McClelland & Stewart Ltd., Toronto.