Canada, among the 10 least corrupt
countries in the world the past six years according to rankings
by Transparency International, is mired in scandals.

Montreal Mayor Michael Applebaum was arrested by Quebec’s
anti-corruption task force yesterday over fraud allegations,
adding to controversies rocking political circles in Toronto and
Ottawa that have taken the shine off Canada’s image as a
squeaky-clean nation.

The scandals risk putting a dent in Canada’s reputation as
a largely corrupt-free country. Canada hasn’t fallen below the
top 10 of Transparency International’s corruption perception
index since 2006 and rose to as high as sixth in 2010.

“We do not have as pristine a reputation internationally
as we once did,” said Richard Leblanc, a law professor at York
University in Toronto. “There seems to be a culture of
entitlement and lack of controls and lack of oversight, which
needs to be addressed.”

In Toronto, the mayor of Canada’s biggest city, Rob Ford,
is surrounded by allegations he was caught on camera taking
cocaine. In Ottawa, a controversy over Senate expenses is the
first scandal to touch Prime Minister Stephen Harper’s inner
circle, costing him his chief of staff last month.

Applebaum faces 14 criminal charges linked to two real
estate transactions that involved “tens of thousands of
dollars” in illegal payments between 2006 and 2011, Robert
Lafreniere, head of Quebec’s anti-corruption unit, told
reporters in Montreal yesterday. Applebaum was arrested at his
home, police said in a statement posted on the provincial
government’s website.

Applebaum told reporters he wouldn’t comment.

Piling Up

While “not any one of these stories would have been a big
deal,” said Nelson Wiseman, a political science professor at
the University of Toronto, “all of a sudden, when you get three
piled on in a couple of weeks, people start saying, ‘Hey what’s
going on in Canada?’”

Applebaum, the city’s first anglophone mayor in a century,
became interim city head in November after his predecessor,
Gerald Tremblay, quit amid reports that his party received
illegal contributions. Tremblay denied the allegations.

Harper’s government is facing its lowest popularity ratings
in four years as it struggles with the fallout from the
departure of his chief of staff, Nigel Wright, and two of his
senators over questions about expenses.

Wright left after the disclosure he paid about C$90,000
($88,339) to Senator Mike Duffy to settle ineligible expenses.
Lucy Shorey, a spokeswoman for the Royal Canadian Mounted
Police, said June 13 in an e-mailed statement the agency is
investigating to determine whether it needs to lay charges in
the matter.

Held Accountable

Adding to Harper’s woes, Saulie Zajdel, a former electoral
candidate for his Conservatives in Montreal was also arrested
yesterday as part of the same investigation as Applebaum.

Heritage Minister James Moore, who Zajdel worked for in
2011 and 2012 as a special assistant, told lawmakers that if
laws were broken he should be held accountable. A call to
Zajdel’s home in Montreal was not immediately returned.

It was calls for more accountability in government that
helped bring Harper’s Conservative Party into power in 2006.
Harper’s main competition, the former Liberal government, at the
time was mired in a scandal in which fundraisers accepted
kickbacks in exchange for government advertising contracts.

Harper’s first piece of legislation after taking power was
the country’s Federal Accountability Act that ended political
donations by companies, required public servants to record all
contacts with lobbyists and eliminated contingency fees in the
lobbying industry.

Construction Probe

In Quebec, the charges against the Montreal mayor come
against a backdrop of investigations into corruption in the
construction industry. A government-appointed commission
investigating the granting of contracts is being televised
daily.

The public scandals may simply reflect newly applied
transparency rules and growing demand for accountability in
Canada, said Kathy Brock, a professor at Queen’s University in
Kingston, Ontario.

“Some things that might have floated underneath the radar
are now becoming much more apparent,” Brock, a political
scientist, said in a telephone interview. “As things open up
and as more rules get applied, it means you will have much more
things come to light.”

Gilles Vaillancourt, former mayor of Laval, Quebec’s third-largest city, was among 37 people arrested last month and
charged with crimes including fraud and gangsterism. Laval is
now under the trusteeship of the province.

SNC-Lavalin

SNC-Lavalin Group Inc. (SNC), Canada’s biggest construction and
engineering company, had one of its subsidiaries and more than
100 affiliates debarred for 10 years by the World Bank following
“misconduct” in relation to a bridge project in Bangladesh,
according to a World Bank statement dated April 17. The
misconduct “involved a conspiracy to pay bribes and
misrepresentations” when bidding for World Bank-financed
contracts, in violation of the lender’s procurement guidelines,
according to the statement.

The scandal enveloping Toronto’s mayor may be the most
spectacular. The Toronto Star reported May 16 two of its
reporters viewed a mobile-phone video which allegedly showed
Ford smoking drugs from a pipe. Ford has said he does not use
crack cocaine and is not an addict.

Bloomberg News hasn’t seen the video and can’t verify its
authenticity.

The Globe and Mail Newspaper alleged separately in May 25
story that Rob’s brother Doug Ford, a city councilor, was a
hashish dealer in the 1980s. Doug denied the allegations to
various media outlets and also during a two-hour radio show that
Doug and Ford regularly host, when Rob called the media
“maggots.”

“Is there a common theme? Politics in Canada is more
interesting,” the University of Toronto’s Wiseman said.

To contact the reporters on this story:
Theophilos Argitis in Ottawa at
targitis@bloomberg.net;
Frederic Tomesco in Montreal at
tomesco@bloomberg.net

To contact the editor responsible for this story:
David Scanlan at
dscanlan@bloomberg.net

Article source: http://www.bloomberg.com/news/2013-06-18/-pristine-canada-mired-in-scandal-after-montreal-arrest.html

Prime Minister Stephen Harper will
conclude his eight-day European trip unable to complete a trade
agreement with the European Union, just as the opening of EU-U.S. talks raises the risk that Canada will be left out.

Harper, who met German Chancellor Angela Merkel and Italian
Prime Minister Enrico Letta on the sidelines of the Group of
Eight leaders’ summit in Northern Ireland, couldn’t persuade his
European peers to drop their remaining objections in the talks.
One of the biggest sticking points for Canada is access for the
country’s beef and pork producers, a concession that faces
resistance from France and Ireland, two of Europe’s biggest meat
suppliers.

Failure to ultimately reach an accord would undermine
Harper’s efforts to diversify Canada’s trade away from the U.S.,
its largest trading partner. While Harper has made free trade a
key plank of his economic agenda, completing six accords since
2006, none have been with major economies.

“The longer the matter is not brought to a conclusion, the
more likely it becomes that the European Union will turn its
attention to the U.S.” said Lawrence Herman, a lawyer at
Cassels Brock Blackwell LLP in Toronto who specializes in
trade issues, by telephone June 7. If a pact isn’t reached in
the next few weeks, it would represent “a rather serious
setback for Canadian trade policy, given all the efforts of the
Harper administration,” he said.

Harper returns to Ottawa tonight after the summit’s
conclusion, a day after Merkel joined U.S. President Barack Obama, U.K. Prime Minister David Cameron and European Commission
President Jose Barroso in announcing that talks will begin next
month on what Cameron called “the biggest bilateral trade deal
in history.” Harper has no announcements scheduled today.

Leapfrog Canada

The risk is that the U.S. will leapfrog Canada in talks
with Europe, as it did in finishing a trade pact with South
Korea last year. Negotiations between Canada and the Asian
nation reached an impasse in 2008 after 13 rounds of
discussions.

Harper’s chief spokesman Andrew MacDougall said this month
he didn’t expect the prime minister to sign a pact with the EU
on the week-long trip, where he met Cameron, French President
Francois Hollande and Irish Prime Minister Enda Kenny.

“We are not going to set a timeline or fixed date on which
we’re going to have an agreement, because it is essential that
we be driven by the contents of the discussion,” Harper told
reporters in London June 12. “We will not arrive at an accord
until such time as we think we have the best accord we can get
for the Canadian people.”

U.S. Reliance

Former Bank of Canada Governor Mark Carney has said the
nation’s poor export performance since 2000, the second worst in
the Group of 20 after the U.K, is due to the country’s reliance
on the U.S. economy.

Canadian companies such as Toronto-based insurer Manulife
Financial Corp. (MFC) and Montreal’s commercial-jet maker Bombardier
Inc. (BBD/B) have backed an agreement, while European companies
including engineering conglomerate Siemens AG (SIE) of Munich and
London-based miner Rio Tinto Plc (RIO) are supportive.

“A Canada-EU agreement can serve as a strategic and
important step towards the eventual creation of a comprehensive
transatlantic trade and investment area,” senior executives of
more than 100 European and Canadian companies said in a joint
declaration supporting a deal.

Canada has relatively more to gain from a deal, according
to a joint study released in 2008 by the Canadian government and
the European Commission. An agreement would increase annual
Canadian gross domestic product by 8.2 billion euros ($10.9
billion), equivalent at the time to about 0.77 percent of the
country’s output, the study found. The EU economy would increase
its annual output by 11.6 billion euro, or 0.08 percent.

Export Shares

While the EU bought 8.9 percent of Canadian exports in
2012, Canada represented 1.9 percent of total EU exports,
according to Statistics Canada and Eurostat data. The U.S.
received almost three-quarters of Canada’s exports in April.

The EU is seeking more access to Canada’s protected dairy
market, while Canada wants its beef producers to be allowed to
export more than 40,000 metric tons to Europe, according to
Matthias Brinkmann, the European Union’s ambassador to Canada.

Brinkmann said May 9 in Ottawa that while the EU is willing
to meet and potentially exceed the 40,000 metric ton figure, the
two sides remain apart. “There’s a certain limit that we
cannot go above, because then our own producers in some
countries depend very much on that, like Ireland and France,”
he said.

Canada is seeking more benefits for its cattle farmers at a
time when live cattle prices have dropped 8.9 percent this year.

Politically Sensitive

The beef impasse is politically sensitive for Harper’s
Conservative Party because Alberta, Canada’s largest cattle-producing province, has Conservatives holding 26 of its 28
districts in the federal legislature, including Harper’s.

Securing more access for beef and pork is “extremely
important” to Canada, Canadian Agriculture Minister Gerry Ritz
told reporters on a conference call June 7.

The country’s biggest federal opposition party is worried
the government may compromise Canadian interests in pushing for
a deal. “Desperation is a singularly bad adviser,” Tom Mulcair, leader of the New Democratic Party, told reporters at a
news conference in Ottawa on June 7.

The agreement may increase the cost of prescription drugs
by expanding patent protection for European pharmaceutical
companies, harm Canadian dairy farmers and take away power from
cities and provinces to choose suppliers for procurement
projects, according to the NDP.

For its part, the EU wants to use a Canadian free trade
agreement as a template for other talks. “It will help us in
the negotiations with the U.S. and other developed countries if
we can show we managed this and we can do such a comprehensive
agreement,” Brinkmann said.

To contact the reporters on this story:
Andrew Mayeda in Enniskillen, Northern Ireland at

amayeda@bloomberg.net;
Theophilos Argitis in Ottawa at
targitis@bloomberg.net

To contact the editor responsible for this story:
Chris Wellisz at
cwellisz@bloomberg.net

Article source: http://www.bloomberg.com/news/2013-06-18/harper-ends-trip-unable-to-win-canada-eu-trade-deal.html

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