‘Pristine’ Canada Mired in Scandal After Montreal Arrest

Photographer: Mario Beauregard/The Canadian Press via AP Images

Montreal Mayor Michael Applebaum is taken away by police after being arrested at his home in Montreal on June 17, 2013. Close

Montreal Mayor Michael Applebaum is taken away by police after being arrested at his... Read More

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Photographer: Mario Beauregard/The Canadian Press via AP Images

Montreal Mayor Michael Applebaum is taken away by police after being arrested at his home in Montreal on June 17, 2013.

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. Applebaum quit today, saying he plans to focus on defending himself against the “unfounded” accusations.

The scandals risk denting Canada’s reputation as a largely corruption-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.

Photographer: David Vilder/Bloomberg

Montreal Mayor Michael Applebaum exits the stage after speaking at the International Economic Forum Of The Americas, on June 10, 2013 in Montreal. Close

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Photographer: David Vilder/Bloomberg

Montreal Mayor Michael Applebaum exits the stage after speaking at the International Economic Forum Of The Americas, on June 10, 2013 in Montreal.

Illegal Payments

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.

“I have never taken a cent from anyone,” Applebaum told reporters today at City Hall. “I have the profound conviction of having always acted in the best interest of Montrealers, and I will do everything to demonstrate to them that the accusations against me are unfounded.”

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.

‘What’s Going On?’

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?’”

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.

“Mr. Wright has been very clear that he will answer questions from authorities and he will be held accountable for his actions,” Harper told reporters today. “This matter is between Mr. Wright, Mr. Duffy and the authorities.”

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 employed Zajdel 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.

Calls for more government accountability helped bring Harper’s Conservative Party to power in 2006, after the ruling Liberal Party of Canada became 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 Ford’s brother Doug Ford, a city councilor, was a hashish dealer in the 1980s. He denied the allegations.

“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

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