'It's the normal operation': PM Defends intervention in federal loan to inn; Clark would fire a minister for such conduct

Robert Fife and Andrew McIntosh, with files from Joël-Denis Bellavance,
Sheldon Alberts and Graeme Hamilton

SASKATOON and OTTAWA - Jean Chrétien has admitted he lobbied the head of the Business Development Bank of Canada to grant a large mortgage loan to a financially troubled hotel in his riding of which he was once part-owner.

The Prime Minister faced a deluge of questions yesterday at a news conference after the National Post revealed he made phone calls in 1996 and 1997 to François Beaudoin, then president of the Crown corporation that later approved a $615,000 loan to Yvon Duhaime, owner of the Grand-Mère Inn and a friend of Mr. Chrétien.

The Prime Minister insisted yesterday that he had done nothing wrong and he had acted as any Member of Parliament would.

"You call who you know and I know the president so I called him once or twice. He come to visit me at my home with a group one day. Fine. It's the normal operation," he told reporters in Saskatoon.

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Stockwell Day, leader of the Canadian Alliance, said Canadian voters have to decide whether Mr. Chrétien's actions were appropriate. "There are so many areas here that were inappropriate that people have to decide and people will decide, is this a smoking gun or is [it] not," he said in Vancouver. "It is very serious business when the Prime Minister uses his name, his office and the weight of that office.

"Canadians will have to decide how normal it is for a Prime Minister to go to bat for [someone] on securing a mortgage for a property that you had purchased from him."

Gilles Duceppe, the leader of the Bloc Québécois, accused Mr. Chrétien of placing himself in a conflict of interest and exerting "undue influence" on the bank president. "It's not just politics. It's the taxpayers' money used by the Prime Minster for a friend of his," Mr. Duceppe told reporters as he campaigned in Matane, Que.

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In a series of stories that began in 1999, the National Post revealed that the Grand-Mère Inn obtained $1-million in federal loans and job grants in 1997 even though it had already defaulted on its existing mortgages and had $300,000 in debts.

The Post also revealed that Mr. Duhaime had a criminal record for uttering death threats, assault, drunk driving and income- tax offences, and had not declared his criminal convictions on his loan application as required by the BDC.

The Post reported in December, 1999, that Mr. Duhaime had paid $11,500 to René Fugère, an unpaid aide and supporter of Mr. Chrétien in St-Maurice, for consulting services after receiving part of his job creation grant.

This week, it emerged that Mr. Beaudoin has launched a lawsuit against the BDC, alleging that he was forced from his job as president after he suggested the bank foreclose on the loan to the Grand-Mère Inn because of missed payments.

The BDC denies the allegation, saying his departure had nothing to do with the loan.

WHAT THE LIBERALS SAID:

"The BDC is an arm's length Crown corporation. The Government does not get involved in the lending decisions of the BDC. Decisions for that are made entirely by appropriate officials within the BDC." Peter Donolo, spokesman for the Prime Minister, January, 1999.

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"The BDC applies credit criteria similar to that of any financial institution to ensure projects are viable and can meet their financial obligations." Mr. Chrétien in a letter to the Post, April, 1999.

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"It's an organization independent of the government ... It's up to them to make [their own] decisions." Mr. Chrétien, Nov. 14, 2000.

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"You call who you know and I know the president so I called him once or twice. He came to visit me at my home with a group one day. Fine. It's the normal operation." Mr. Chrétien, yesterday.

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