1989 Legislative Session: 3rd Session, 34th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

FRIDAY, JUNE 16, 1989

Morning Sitting

[ Page

7585 ]

CONTENTS

Routine Proceedings

Ministerial Statement

NDP letter to schools. Hon. Mr. Brummet –– 7585

Ms. A. Hagen

Financial Administration Amendment Act, 1989 (Bill 37). Hon. Mr. Couvelier

Introduction and first reading –– 7587

Pension (Miscellaneous Amendments) Act, 1989 (Bill 35). Hon. Mr. Michael

Introduction and first reading –– 7587

Workers Compensation Amendment Act, 1989 (Bill 27). Hon. L. Hanson

Third reading –– 7587

Private Members' Statements

The threat of the Aryan nation philosophy. Mr. Barnes –– 7588

Hon. Mr. Reid

The legislative process - a need for revision. Mr. Davidson –– 7589

Mr. Rose

Public lands, public policy. Mr. Williams –– 7591

Hon. Mr. Dirks

Committee of Supply: Ministry of Finance and Corporate Relations estimates.

(Hon. Mr. Couvelier)

On vote 76: new programs –– 7593

Mr. Clark

Mr. Williams

Credit Union Incorporation Act (Bill 50). Hon. Mr. Couvelier

Introduction and first reading –– 7605

Financial Institutions Act (Bill 51). Hon. Mr. Couvelier

Introduction and first reading –– 7605

The House met at 10:05 a.m.

Prayers.

MR. BLENCOE :

Mr. Speaker, it's with sadness that I have to report the death on

Wednesday night of a former colleague of mine, a British Columbian who

received attention for his work on the Fisher commission. Dr. Bill Ross

tragically died Wednesday night. With Dr. Norm Ruff, Bill Ross

co-authored major reports and briefings to the Fisher commission, and

was trusted by the commission for some excellent ideas and suggestions

for redrawing the boundaries of the province of British Columbia.

Dr.

Bill Ross, whom I knew well, was a geographer by profession. He had

taught at the University of Victoria since 1974, and not only was he a

dedicated geographer and resource geographer but he had a passionate

interest in British Columbia and the issues of the day. That is why he

put so much energy and time into looking at the boundaries, how we draw

the boundaries and the representation that is available to British

Columbians.

I hope the House will, with me, send condolences to his family and to all those who worked with him.

Ministerial Statement

NDP LETTER TO SCHOOLS

HON. MR. BRUMMET : Mr. Speaker, I rise to make a ministerial statement.

conditioned as I have become to the realization that the NDP socialists

will do anything to discredit this Social Credit government, duly

elected by the people of British Columbia, and as aware as I am of how

the socialists try to use the schools to manipulate the thinking of our

young people, I cannot help but be shocked by their recent blatant

disregard for any element of common decency.

A letter to every student council president from the NDP....

MR. ROSE :

On a point of order, Mr. Speaker, it was my understanding that the

ministerial statement had to do with a policy statement or an

administrative statement, rather than argument or debate from a

minister. That's the definition and the reason for one. I think that

this kind of tack — really a debate or an argument put forward against

the opposition — is out of place in a ministerial statement. I could

give you the citation: page 52 of that well-known authority, George

MacMinn's Parliamentary Practice in British Columbia .

MR. SPEAKER : I thank the opposition House Leader.

The government House Leader on the same point of order.

HON. MR. RICHMOND : Well, Mr. Speaker, I haven't had the time to research MacMinn's Parliamentary Practice in British Columbia ,

but it would seem to me that this ministerial statement has everything

to do with educational policy, and I think it's perfectly in order.

MR. SPEAKER :

I would suggest that there could be some debate. If the member was to

read pages 49 to 52, he would find that ministerial statements are very

wide-ranging, but he will also see that the opposition has a chance to

reply.

MR. ROSE : Quoting from page 51, just briefly, Mr. Speaker....

MR. LONG : Are you afraid of it?

MR. ROSE : No. We welcome it, because it's a matter of....

Interjection.

MR. ROSE : Well, it would be very difficult for us to make a ministerial statement, wouldn't it?

MR. SPEAKER : Order, please.

MR. ROSE : Mr. Speaker, would you mind muzzling the Minister of Tourism (Hon. Mr. Reid)?

says here on page 51 of the citation that I mentioned earlier: "General

arguments or observations beyond fair bounds of explanation, or too

distinct a reference to previous debates, are out of order." What he's

doing right now is clearly out of order.

MR. SPEAKER :

I thank the opposition House Leader for his points, but I think the

minister will continue with his statement. Then the opposition House

Leader will have a chance to reply.

HON. MR. BRUMMET : I can understand the chagrin of the opposition House Leader.

go on. A letter to every student council president from the NDP on New

Democrat letterhead, dated May 1989, has come to my attention. I could

hardly believe its content, and I would certainly be remiss in my

responsibilities as minister responsible for our schools if I let this

type of thing pass without comment.

I will quote a few

excerpts from this letter and table it in the House at the conclusion

of my remarks. I expect that my NDP critic will understand — if not

forgive — my decision for short notice about making this statement. I

will, of course, be interested in the NDP defence of this tactic.

Let me quote:

"Dear Student Council President:

would like to take this opportunity, as youth organizer for the B.C.

New Democrats, to inform you of a number of initiatives being planned

over the next few months by our caucus and party.

[ Page 7586 ]

"First

of all, a few words about the present situation in B.C. The present

Social Credit government is undoubtedly an embarrassment for all

British Columbians, and particularly for young people. Premier Vander

Zalm's outdated attitudes on people's lifestyles and decisions are

completely out of tune with how many of us feel. The Vander Zalm

Socreds are out of touch; they would rather look back to the 1950s than

look ahead to the 1990s."

Interjections.

MR. SPEAKER : Order, please.

HON. MR. BRUMMET :

Mr. Speaker, it's interesting that the members opposite are applauding

this tactic, which has been sent to the schools. I'm used to those

kinds of comments in this House, but it's interesting that they're

applauding their right to do this.

The letter goes on to try to manipulate the minds of the young people. I quote from their letter:

"The

present government's response to concerns of young people is

intolerable. Over the past few years the opportunity to attend

post-secondary institutions has become more and more the exclusive

privilege of a few people. The increases in tuition fees and lack of

financial assistance is preventing students from furthering their

education.

"The present government's lack of

interest in preserving our environment, as so aptly shown by their

inaction on the 'small' oil spill that reached the shores of Long

Beach, shows their total contempt for the future that we must live in.

This government simply doesn't care.

"Mike

Harcourt and the New Democrats are in tune with youth. We are committed

to affordable, accessible post-secondary education for everyone. Our

caucus has introduced, during the most recent session, a series of

measures to stop polluters from destroying our environment."

This is not a quotation; it's an observation: they can't even spell environment.

[10:15]

I'll just conclude very briefly with this quote; "Over the next year

our MLAs, led by Emery Barnes, our member responsible for youth issues,

will be visiting a number of secondary schools throughout this

province."

Mr. Speaker, I will forever defend the right of

any MLA to go into any school and speak to the students therein, and I

think the principles of the member for Vancouver Centre would be a lot

higher than to put this kind of sleaze before the students when he goes

into the schools. We're talking about a captive audience in the

schools, and there has to be some element of common decency when MLAs

go into the schools.

I go into many schools, and maybe it's

my professionalism as a teacher and my principles as a politician, but

I try and stay entirely away from any partisan comments in those

schools. Let me now go on now with my statement.

It's my

sincere belief that our senior students are intelligent enough to see

this for what it is: the NDP trying to use students for their own

crass, selfish, partisan, political purposes. Those socialists preach

to us about scruples and high principles, but when it comes to

practising what they preach, they completely ignore those scruples and

principles as they lust for power and the right to govern this

province. Obviously they can't cope with the positive initiatives that

we are taking in education, advanced education and on the environment.

So in desperation, they resort to a new low in tactics. Their lust for

power overrides their judgment and their principles.

They

must believe that the end justifies the means and that young people are

stupid. Can you imagine how the NDP might use the school system to

their own socialist purposes if they ever did become government? In

view of what this letter has indicated and the applause I have heard

from that side for that tactic, it frightens me. I wish to table the

letter to which I refer, so that everyone will know and in the hopes

that something like this will never happen again.

MS. A. HAGEN :

I find the minister's statement astounding. Language that refers to

decency, to free speech — I find the minister's statement truly

astounding. The party that I represent has sent a letter quite openly

to the presidents of student councils in this province, to senior

students, because presidents of student councils are grade 12 students

on the verge of being able to vote. It has sent a letter that expresses

a point of view about this government in a free country, expressing

some concerns about the policies of this government on environment,

public school education, post-secondary education and the direction

that this government is taking.

This minister, on behalf of

this government, has the audacity to suggest that it was inappropriate

— in a free and democratic society. It is an outstanding statement to

make, that a political party should, in fact, not be free to make

statements about the policies of this government to the high school

students of this province. Unlike the minister, I have every confidence

that the students of this province, if they are in fact educated as

well as the minister wants them to be, will make their own judgments

and decisions about the MLAs, the parties and the policies represented

by both sides of this House, and that those young people will exercise

their franchise with an intelligent knowledge of the issues from both

sides.

To suggest that that kind of discussion and

perspective is in any way inappropriate in the schools of this province

is to put in question the whole emphasis of this minister in respect to

critical thinking and decision-making, which is the thrust that this

government says it wants to have in place in the schools. Critical

thinking and decision-making involve free debate, a knowledge of the

issues, perspectives that come from both sides of this House, and the

opportunity for those students to exercise their rights.

I am absolutely astounded that the minister would make this representation in the House today. It is a sad day for this House.

[ Page 7587 ]

MR. SPEAKER : The Minister of Government Management Services seeks leave to make an introduction.

Leave granted.

HON. MR. MICHAEL :

I have the great pleasure today to introduce approximately 15 students

from the little community of Seymour Arm, located on Seymour Arm at the

north end of Shuswap Lake. They are accompanied by a teacher, Julia

Armstrong, and a number of parents.

These students are from

grades 1 to 7, and they learn through correspondence education in

cooperation with the local school district and, of course, the teacher

who visits the area. They are only served by a logging road and water

access. A great little community, one which I am certainly proud to

represent in this Legislative Assembly.... I would ask that all members

give them a very warm welcome here today.

Introduction of Bills

FINANCIAL ADMINISTRATION

AMENDMENT ACT, 1989

Hon. Mr. Couvelier presented a message from His Honour the Lieutenant-Governor:

a bill intituled Financial Administration Amendment Act, 1989.

Bill

37 introduced, read a first time and ordered to be placed on orders of

the day for second reading at the next sitting of the House after today.

PENSION (MISCELLANEOUS

AMENDMENTS) ACT, 1989

Hon. Mr. Michael presented a message from His Honour the Lieutenant-Governor:

a bill intituled Pension (Miscellaneous Amendments) Act, 1989.

HON. MR. MICHAEL : It is my pleasure to move first reading of the Pension (Miscellaneous Amendments) Act, 1989.

you are aware, Mr. Speaker, there are four public sector pension

statutes. These statutes provide pension coverage for employees who

work for the provincial and municipal governments as well as teachers,

college instructors, hospital workers and the non-teaching staff in

school districts and regional colleges. In total, there are

approximately 620 employers participating in these plans. The employers

remit contributions on behalf of 148,000 contributors. In addition,

records are kept for about 32,000 former public sector employees who

have left their funds on deposit in the plans. Lastly, there are 48,000

pensioners who are currently in receipt of a monthly pension payment.

describing the contents of this bill, I would like to start with those

changes which are being made to all four pension statutes. These

changes will provide uniformity under the plans, as this is a

continuing objective of the government. The first change clarifies the

definition of common-law spouse. It also provides that when paying

survivor benefits, a legal spouse takes precedent over a common-law

spouse in the absence of an agreement or court order to the contrary.

a result of a recent court decision, this amendment clarifies

entitlements under the survivor benefits and provides a pension plan

member with the opportunity of nominating the estate as the beneficiary

for a lump-sum refund of contributions plus interest. These changes

also provide protection for a spouse or former spouse where there is an

agreement or court order which provides for the distribution of pension

credits as a family asset.

In 1988, we amended the pension

statutes to provide that a monthly pension benefit would be paid to a

pension plan member retiring within five years of his or her maximum

retirement age, regardless of the amount of contributory service. This

bill extends the same benefit to a spouse if the pension plan member

dies within five years of maximum retirement age with less than ten

years of contributing service.

Bill 35 introduced, read a

first time and ordered to be placed on orders of the day for second

reading at the next sitting of the House after today.

HON. MR. RICHMOND : Mr. Speaker, I move third reading of Bill 27.

WORKERS COMPENSATION

AMENDMENT ACT, 1989

Bill 27 read a third time and passed.

Orders of the Day

Private Members' Statements

MR. ROSE :

I'd just like to make a point of order or explanation. My colleague

wants to get on right away, because he has a plane to catch. I just

want to say that we had a request this morning to change the topic of

the final statement, No. 4. I think that while we have allowed changes

in order, we have never permitted changes in topics from that of the

order paper. Mr. Speaker, perhaps it's something we could discuss at

the Select Standing Committee on Standing Orders, Private Bills and

Members' Services or whatever committee is appropriate.

[10:30]

At the moment, I regret that I don't think we should allow that. I

left mine out last week, and there were only three. Since the second

member for Central Fraser Valley (Mr. De Jong) can't be here today, I

would prefer not to have a substitute until we have a chance to study

it.

HON. MR. RICHMOND : Mr. Speaker, I have no

objection to us leaving that private member's statement off the agenda

for today. But I do want to point out that from time to time we have

accommodated

[ Page 7588 ]

the opposition in private members' statements. Perhaps that's also something we will have to reconsider in the future.

MR. ROSE :

I don't want to get into some sort of petulant quarrel over this. I

said that we've changed the order from time to time to accommodate both

parties. But we have never changed the topic, to my knowledge, and I

think it's something we should discuss. That's all.

THE THREAT OF THE

ARYAN NATION PHILOSOPHY

MR. BARNES :

I had intended to request leave to perhaps reschedule my statement due

to the time that was taken up by the ministerial statement, because I

was supposed to catch a plane at 10:40, which I'm going to miss now.

I'll just make the most of it.

It is ironic that my

subject, which has to do with the parameters that should be placed on

free speech should be made this morning when we've just had the

Minister of Education complain about students being involved in freedom

of expression, and a political party attempting to have dialogue with

them on this subject. That certainly will be one for the books.

concern today should be addressed to the Attorney-General (Hon. S.D.

Smith) and to the Solicitor-General (Hon. Mr. Ree) — both of whom are

away. Since my concerns have to do with enforcement of law with respect

to an organization calling itself the Aryan Resistance Movement, I

regret that they are not here today. I have two pieces of hate

literature that this organization has distributed in the province of

British Columbia. One is a flier, and one is a newsletter.

The

flier is entitled: "Fight Terror With Terror." The flier states: "We do

not wish for law and order which means the continued existence...of the

Jew system. We wish for anarchy and chaos in order to attack the

system. Such chaos would allow us to...plunge the entire system to its

death." The newsletter warns its members to avoid cooperation if

confronted by police, because when engaging in a hate campaign — I

emphasize that they are themselves recognizing their activities as a

hate campaign — remember that it's completely legal to distribute

literature as long as you stay off private property.

As you

can see, Mr. Speaker, this is why I wish the Attorney-General or the

Solicitor-General or both were here to address these matters. We're

talking about the law, the enforcement of the law, the ability of the

law to be enforced and those problems that may be involved therein from

a legal point of view. I'm not sure who is going to be responding on

behalf of the government, but this is a legal matter.

know the former Attorney-General, the member for Oak Bay-Gordon Head

(Mr. B.R. Smith), has addressed this matter in the past, and I'd be

very interested in seeing whether he has become more enlightened over

the years with respect to enforcement of the law.

But the

important question must be asked: is the law helpless? We have two

statutes: the Criminal Code of Canada and the Civil Rights Protection

Act. The Criminal Code prohibits spreading of hate propaganda or false

news against an identifiable individual or group. The Civil Rights

Protection Act prohibits hatred or contempt of a person or class of

persons, the superiority or inferiority of a person or class of persons

with others based on colour, race, religion, ethnic origin or place of

origin.

The present Attorney-General has been quoted in the Western Jewish News

as saying that he would have no hesitation whatsoever in prosecuting

the ARM, Aryan Resistance Movement, because he himself finds their

literature offensive. This is the question I would like the government

to respond to. It's not that they find the literature personally

offensive, but does the literature in fact offend the Criminal Code or

the Civil Rights Protection Act? If it does, then why are we not acting?

We've

had this issue canvassed many times in the House. We had the Ku Klux

Klan, the KKK, here in 1981, and this is how the Civil Rights

Protection Act came into being under the former Attorney-General, Allan

Williams. But that act was never implemented, never tried and never

used. We all know full well the two infamous cases of Jim Keegstra and

Ernst Zundel with respect to so-called freedom of speech and the

limitations that should be placed upon it.

I am here to

find out to what extent the government is preparing itself for this or

is dealing with enforcing the law. It's that simple, and therein lies

the case I'm trying to make. I'm not asking the government to express

its abhorrence. I'm not asking it to state how repugnant it finds the

language and rhetoric in hate literature. I'm asking the government:

"How do you address the issue from the standpoint of it violating

fundamental rights and freedoms in this country? How are we addressing

it with respect to showing respect for the multicultural diversity

within this society, the multiculturalism act, the human rights act of

this country and all those ideals in a democratic society that we

expect people to honour and obey within a society that depends on the

enforcement of and respect for the law?

HON. MR. REID :

I stand in my place today to respond to the member on behalf of the

Attorney-General and the Solicitor-General. The Attorney-General

advises me to inform the member that all the material that has been

circulated and been made available to him has been turned over to the

RCMP and that he has asked them to investigate post-haste and recommend

actions relative to the material.

There is nobody in

British Columbia who will accept and should accept the kind of material

that's been circulated out there, and of course all the legal

ramifications around it are being researched at the moment. The kind of

material that the member talks about is not acceptable, and whatever

legal recourse can be taken against the material will be taken. The

investigation of that is currently going on by the

[ Page 7589 ]

RCMP relative to the position the Attorney-General can take.

want to say to that member that it not only goes beyond material now.

My ministry had an example just last week where four visitors from the

United States were attacked by this same group in Vancouver, who call

themselves Skinheads. One of the visitors is still in serious condition

in a coma in Vancouver. Certainly the activities of this group, both in

the kind of material they're producing and the activities they're

conducting in the communities across this province, will not and cannot

be tolerated.

MR. BARNES : I see that the member for

Oak Bay was trying to get on his feet. He's gone. That's too bad. I

would have loved to have heard what he had to contribute.

just want to conclude, then, Mr. Speaker, by saying that there are

those who think a free society, any democracy, means they are free to

do just as they please, without responsibility for the consequences of

their acts or behaviour. This is an attitude that is clearly

incompatible with a democratic society and undermines the values that

allow us to coexist peacefully, cooperatively, constructively and

diversely as a multicultural society. Our anti-racist and

anti-discriminatory laws are important to the coherence and

sustainability of a society such as this, and must be upheld. I would

therefore request that the government place this matter as vitally

urgent, in light of the future changes that are taking place in our

society and the vulnerability of our democratic processes.

think that unless we can address the question of law enforcement much

more diligently and with a great deal more determination and conviction

than we have in the past, we are going to be seriously at risk as we

move toward the twenty-first century and as we experience greater

demographic changes with respect to more of a racial, multicultural

mix. We are asking people to become good Canadian citizens. We are

asking them to understand the law, to understand why we have the system

we have and why it is essential and vital that they know how to

participate in that system and support and defend the system.

could conclude, Mr. Speaker, that although the Minister of Education

(Hon. Mr. Brummet) in his statement this morning certainly was, I'm

sure, sincere in his complaints about our party having introduced or at

least made a representation to speak to students through their elected

bodies, if upon reflection he doesn't understand that those students

should be involved.... They should know something about the political

parties. They should know that there are different opinions. And your

government, your party, all parties, should be talking to students,

should be telling them what's going on. They should be enfranchised.

This

has been an issue for a long time in our society, where we have kept

the young people out of the decision-making process. If it means that

we are going to have to go into the schools and talk to them.... They

are free citizens. They will learn to participate. They will learn to

think for themselves.

They will accept or reject, based on

their freedom of speech, their freedom of right, their free will. This

is the value of our society. And we don't want them to wait until a

certain period in the future when they become the age of majority. They

should learn now. This is the value of what is going on, and I hope

that all members of this House will respect the importance of this

process.

THE LEGISLATIVE PROCESS

— A NEED FOR REVISION

MR. DAVIDSON :

As I look up at the throngs in the press gallery, and the vast number

of members who are sitting in the chamber, I must come to one

inescapable conclusion: we have become boring beyond endurance. In

other words, hon. members, we are talking too much and saying too

little.

You know, Mr. Speaker, there was a time when

members would never leave this chamber when the press gallery was full,

because members had very meaningful things to say...

MR. WILLIAMS : Before Hansard .

MR. DAVIDSON : ...and that was before Hansard , as the member comments.

Interjection.

MR. DAVIDSON : And radio.

But,

Mr. Speaker, some things have changed dramatically, even in the last

few years. With even the modest changes in rules that have taken place

to date, we have seen this chamber work much better. A great deal of

credit goes to the current opposition House Leader and the previous

government House Leader, who worked very hard to bring some of those

minor changes into effect. But the time has come now to revisit those

rules, to take a look and see what can be done, now that we have more

members and more desire to be more responsive to the needs of the

province.

I would like to just dwell on one small matter,

and that's the matter of estimates. Unfortunately, Mr. Speaker, the

Social Credit government removed the 135-hour limit which was imposed

on the total time that estimates could take; after that, all estimates

were automatically passed. And that, in my humble opinion, was a very

serious mistake. We haven't really expanded the quality of debate; we

have only expanded the time that's available. Very little has been

added to the substance of debates.

[10:45]

We also spent close to a million dollars to redo the Douglas Fir

Room, hopefully so that members would be able to have a second

committee, parallel to this one, so that we could deal with estimates,

such as — and I cite this for one example — the estimates of the

Minister of Highways. There isn't a member in this chamber who doesn't

have Highways concerns, but those individual concerns don't impact on

the rest of the province. What better setting, Mr. Speaker, than

[ Page 7590 ]

have the estimates of the Minister of Highways conducted in the Douglas

Fir Room at the same time that this committee sits, so that members

could each have an opportunity to get their own points across, and at

the same time have more provincial matters discussed in this chamber.

The

danger we run in not having a time-limit and not being able to judge

our time is that we tend to rush estimates as we head toward the latter

part of the session — traditionally — and matters that have been

discussed in detail are given a cursory glance. Unfortunately there are

always members who don't want to go along with what the party Whips,

House Leaders or caucuses have determined — and that is their right.

But when we have a time-limit fixed in place and each member knows that

there are only a certain amount of hours, that helps to focus debate as

it should be.

It's not just enough to limit debate; the

government must also make concessions. The government, for example,

must indicate that it will respond to the wishes of the opposition and

let the opposition call the first five estimates. The government will

reserve the right, of course, to determine the order in which they are

called, but the government must make that accommodation to the

opposition if that kind of time-frame is to be reintroduced, as well as

allowing the second committee room to serve at the same time.

There

are many advantages that could be offered in that aspect. We need to

have the committee sit again. The rules committee must be formed, and

there are other matters that must be addressed.

We must,

for example, start to somehow structure a permanent sitting time for

the House. It's no longer acceptable to have the House start in either

January or February or March and sit until either May or June or July

or August. It's not fair to the members, not fair to the members'

families and not fair to the people of the province ultimately, because

they become very bored with tedious and repetitious debate,

particularly in the warm months of July and August.

There

is an opportunity if the committee were to restructure itself or be

reformed and had an opportunity to sit down and come up with some

recommendations that could be acceptable. All it takes is a spirit of

cooperation, the kind of cooperation we've seen operating on the Board

of Internal Economy. Again, credit goes to both the Premier and the

Leader of the Opposition for making that work. If that same spirit of

cooperation were carried forward and we started to look at the rules as

they impact on all of us....

There is no better time than

just before an election, because each party is convinced that it is

going to form the government, and under that ideal situation you really

come up with the optimum package to make this House work effectively.

With

the greatest of respect, Mr. Speaker, we are not serving the interests

of the people. When most of the media don't take any opportunity to sit

in the House, there is a very strong message. When our colleagues

absent themselves, when the quorum bells ring, these are very loud

messages.

We have an obligation to try and clean up our own

house to some degree. I would certainly hope that the government will

give serious thought to reactivating a committee which has so

dramatically proved its worth in the past and has so dramatically

changed the tone and the level of behaviour in this chamber to date.

MR. ROSE :

In my five minutes, or whatever I have allotted to me, I would like to

say that this is part of the reform: the fact that we have statements

every Friday morning, an opportunity for members to bring up matters of

their own concern. I don't think we have enough of this stuff, and I

will go into that in a little while.

First of all, let me

say that I can agree with many of the things that my hon. colleague has

had to say, especially the kind things he had to say about me. I'm all

for that. I was part of the reform committee in 1985, and we learned a

lot. Now that we've had these rules in operation for something like two

or three years, I think we could revisit that reform committee, because

there are a number of things we could talk about that need fixing up.

One

of the things I think we need around here is to have more opportunities

for private members or backbenchers to have their say on matters that

concern them. I will go into that in a little while.

If you want to take any bill or estimate and send it to committee, we have 60A and 78A in Standing Orders

right now. It could be done immediately. Any minister can send any

piece of legislation or any part of his estimates to committee.

Standing

order 35, though — a matter of urgency — is very difficult, because

even if the Speaker agrees that the matter is urgent, the government

can still overrule it. The government has supreme power on these, even

including Friday morning, which is really an opposition day. There is a

rule there too, 27 (3), which permits the Speaker to overrule the

government on what they call Friday morning.

We used to

have resolutions and bills around here. We don't any longer. I think

that's something we could return to, because I think the average

backbencher or private member who is not a cabinet minister needs much

more time to deal with the things that concern him. I think we ignore

that too much because.... I was going to say because of the tyranny of

the cabinet majority, but that's a little inflammatory and I know the

Provincial Secretary (Hon. Mr. Reid) wouldn't like that term.

think we should set aside time for urgent matters and a number of other

things. I think we need a calendar. We need a time when we're going to

come here and a time when we're going to leave. Practically every

legislature in the western world operates on some kind of a calendar.

We're the only ones who talk ourselves into exhaustion. I don't really

agree with that.

The House is dealing with estimates. A lot

of time is spent on estimates — perhaps too much. We've now spent over

135 hours. You remember the big cry around ten or 15 years ago: "Not a

dime without

[ Page 7591 ]

debate."

When the previous NDP government tried to limit the estimates to 135

hours, they were shouted down. Consequently we even lost that

time-limit.

I'd like to change a lot of things around here

including the timetable. I'll give you some suggestions: on Monday, I'd

like us to go from 1:00 to 5:30 p.m., with two resolutions between 5:30

and 6:00 p.m. — we have all these resolutions on the order paper and

they're never called; Tuesday, 1:00 to 5:30 p.m. for debate, government

business, two private bills from 5:30 to 6:00 p.m.; Wednesday, 1:00 to

5:30 p.m., two 25A statements — the kind that we're dealing with this

morning; Thursday, 1:00 to 5:30 p.m., two 25A statements; and on Friday

from 10:00 to 11:00 a.m. we could deal with urgent problems — covered

in standing order 35. It would be a regular thing that we could bring

up. We could have a draw to see which one was dealt with or the Speaker

could decide.

I think that we need much more time devoted

to the concerns of the average person who comes here. I'm not limiting

the time of the government. I could go on and on about this, but I

won't in case somebody else from the other side wants to answer. Those

are my views, in general terms.

The committee needs to meet

again. It was chaired by my hon. friend the courtly and portly member

for Dewdney, and he did an excellent job. He needs to go to work again

with the same kind of attitude that he had before — a positive one, one

that makes this place work better.

MR. DAVIDSON :

There's no question that there is a very strong will in this House to

address some of the matters that have been canvassed both by myself and

the opposition House Leader. The time to make those changes, as I said

earlier, is when each party is convinced they're going to form the next

government. You have an opportunity to put those into place for the

next session, which could very well be the last session. Who knows, it

could also be the first session. There's no way to make that kind of

decision at this point.

What is important is that we try to

make this place more responsive to the needs of the province. There is

far too much time wasted with meaningless drivel from various members

on each side of the House or from members who have strictly partisan

little points that they want to make for their own individual riding.

No one's denying these people that opportunity. Overriding all of this

must be some form of constraint on our ability to govern ourselves in a

meaningful and structured way. We must have more of that, and only

through a joint committee that resolves these matters and comes forward

with the kind of decisions that they have in the past can this place

work better.

This is a better House today because of the

work of the government and the opposition. It can be a better place

tomorrow if the government and the opposition continue in that regard.

We all wish them well in that endeavour.

PUBLIC LANDS, PUBLIC POLICY

MR. WILLIAMS :

I indicated I wanted to talk about public land and public policy today.

In the time involved it is only possible to focus in on a small area. I

should apologize to the Minister of Crown Lands, who is here, I expect,

to respond, because I wanted to talk about the Enterprise Corporation

as one aspect of this. Certainly public land and public policy deserves

some longer dissertation in the future, and I'm sure it will receive

that treatment from us — specifically the Enterprise Corporation. I

think it's interesting to reflect on the activities of land-selling by

the Enterprise Corporation by this administration. You know this is a

government that got elected on the grounds that they were good

businessmen. That's what happened. Then you got into government and

said that because government is incompetent in business, we should get

rid of everything. That indeed is what has been happening under the

Social Credit administration since you took the reins of power.

It's

a sweet irony of politics that in the case of this administration it's

all too true — that they are incompetent in business and so they are

off-loading. I think we saw the classic example with the flip in the

New Westminster harbour, where 2,200 feet of waterfront, downtown land

went from $2.2 million to $10.5 million the same day and is currently

probably worth $20 million. I think that that and other land sales by

the Enterprise Corporation deserve the careful attention of the

auditor-general. We can go into that at a further stage as well.

There

are countless incidents in small ways. If you look at the long list of

land sales out of the Enterprise Corporation, almost every one of them

is interesting in itself, in terms of why the administration would have

done it. Was it really a rational decision?

The small

example I want to focus on this morning is the old New Westminster

courthouse. It was owned by the Enterprise Corporation, and you might

ask yourself: "Why would the Enterprise Corporation own the old New

Westminster courthouse?" I think the answer is that the Enterprise

Corporation got into so much trouble in its lending and other borrowing

activities that it was able to make a deal with the Lands ministry

within cabinet and get public lands transferred to it for a dollar.

That's the history of the Westwood lands; that's the history of other

lands transferred to the Enterprise Corporation. It was a means of

fudging the books. Transfer land in at a dollar; transfer it out at

something, hopefully, close to market value, and that would deal with

the financial problems internally in a badly run public corporation

under Social Credit. That had been the game plan for the last few years.

It's

interesting that it seems to have gone unnoticed by the public who the

minister responsible for the Enterprise Corporation was. The minister

responsible — and I'd like to make it abundantly clear — was the

venerable senior member for Little Mountain (Mrs. McCarthy), who has

been in this House since 1966. These grotesque land deals and flips

occurred

[ Page 7592 ]

essentially during the tenure of the member for Little Mountain.

[11:00]

Well then, the New Westminster courthouse. It's on an interesting

site in downtown New Westminster. It's a site about 150 by 240, and

it's a city block, albeit a small city block. It has a significant

history. It's right across from the new courthouse, and at its back

door is the SkyTrain. It's part of New Westminster's history, and I

think it should have remained in the public domain. It's a significant

site. In my opinion, just in terms of the urban space of downtown New

Westminster, it should have remained in public hands one way or

another. But it was sold through the Enterprise Corporation for a

relatively small amount: some $415,000 for the old courthouse on a city

block in downtown New Westminster. It was sold to a company called

Koblunaq Construction. I think it's an Inuit name. It's a federal

company, registered extraprovincially in Chilliwack, B.C.

The

old building was sold by BCEC, and the documents were signed on

February 4, 1988. The construction company obtained a building permit

indicating renovations of about $1.6 million. Those renovations are

complete, and the building is now for sale for $3.5 million. If it

sells at that price, it will be for a profit of $1.5 million in a

little over a year.

Well, who is the extra provincial

company with offices in Chilliwack? It seems to be the same or very

similar to the construction company that did the renovation work. If

you go to the old courthouse, you'll see a plaque on the steps which

reads: "Kerkhoff Construction Ltd." The directors of Koblunaq include

Willem Kerkhoff and Dirk Kerkhoff. So be it. Remember, this was another

negotiated sale, not a tendered sale by BCEC; and almost every last one

of the sales by BCEC was a negotiated sale, not a tendered sale.

The

provincial government rents property all over New Westminster at market

rates from the private sector. Why on earth wouldn't the old historic

building be kept? Why wouldn't the government rehabilitate it rather

than rent private space in the same area? Why wouldn't the historic

courthouse be used for government agencies in downtown New Westminster?

New Westminster has always been a government service centre in the

lower mainland. It makes no good business sense at all to sell off

properties like this and rent other properties virtually across the

street. It would even make sense to make a building like this available

to community groups if you're not going to use it for government

purposes. Instead it's a crash sale, one of far too many crash sales

under the guise of privatization in terms of your many activities.

MR. SPEAKER : I regret to inform the member that his time is up under standing orders.

MR. WILLIAMS :

Thank you, Mr. Speaker. The beneficiary is another prominent Socred

supporter, and it's Social Credit business as usual in British Columbia.

MR. SPEAKER : Before the minister responds, the second member for Langley seeks leave to make an introduction.

Leave granted.

MR. PETERSON :

Mr. Speaker, on behalf of the member for Chilliwack, the Minister of

International Business and Immigration (Hon. J. Jansen), I would like

to welcome to the galleries 47 grade 7 students from Yarrow Elementary

School and their teacher, Mrs. L. Esau. Would the House please join me

in giving them a very warm welcome.

HON. MR. DIRKS :

First of all, I appreciate the member opposite giving that backhanded

apology for what he was actually going to do. Basically I think what he

is doing is looking back into history long before my time in charge of

the Lands portfolio. But I can understand where he is coming from,

because I too look back a little bit and can see that one of the basic

problems we have here is that there is a philosophical problem. In

spite of the Leader of the Opposition saying on the Rafe Mair show one

day that he would make land available to developers, the philosophy of

the party across the way has been to accumulate land.

The

philosophy of our party is that the private sector is best positioned

and experienced to carry out major land development. They have the

skills, the expertise and the financial capability to remove the burden

and risk of development costs from the taxpayer.

We believe

in free enterprise; we don't simply pay lip-service to it. So we

embarked on making land available to the private sector for

development, unlike what they did when they were in power during those

dark days between 1972 and 1975. They did accumulate land; they did

amass land. In looking back at the files the other night, I found out

about certain things like the Casa Loma Motel, which maybe I could talk

to the member opposite about some time at length. We could probably

talk about the Whistler acquisitions. We could talk about negotiated

prices, because if you look back in Hansard

of April 30, 1975 — now all of a sudden he wants open tender and

whatnot — the Hon. R.A. Williams said: "The price established is one

negotiated between my staff and those parties and is considerably below

the appraisals carried out by the lands department." Now since I have

taken over, since I have taken this position, we have gone to outside

appraisals. There were no outside appraisals on that land, Mr. Member,

none whatsoever. It was an in-house-type deal. This is just one of the

many deals they did in those days. But let me quote a little further.

He said: "We have outstanding qualified civil servants, some of whom we

in fact inherited. They reviewed the question and were satisfied that

the value was substantially above what the costs would be."

As far as letting the public know what they were doing, in that same Hansard on that same day when the hon. member was asked about tabling in this

[ Page 7593 ]

House

the appraisals he referred to that were done in-house — not by an

outside appraiser — he said: "Well, Mr. Speaker, I'll consider the

question. The material is in the hands of the civil service. I have

simply accepted their word regarding this matter."

It's in Hansard .

It was said by the hon. member — no one else. We could go on; there

were other nice little deals that went on. What about the purchase of

the Wallace farm? Wasn't that a very open deal?

MR. WILLIAMS : Which farm?

HON. MR. DIRKS :

"Which farm?" the member asks. That was going to be a nice little

cornerstone. That was the nice little purchase that was laundered

through the Daon corporation over to Dunhill, which was another nice

little corporation set up by the party opposite when they were in

power. It was a nice little company that was set up. Let me tell you,

that little laundering cost the taxpayers $52,000 simply to keep the

thing secret — no other reason whatsoever — and for Daon simply to be

the front for Dunhill Development Corporation to get that land.

It's

all a matter of record, Mr. Speaker. But there is a philosophical

difference. The opposition would say to the developers today: "We

believe in free enterprise." Balderdash! If they were in power, they

would revert to their old tactics.

MR. SPEAKER : I would quickly inform the minister that his time is up under standing orders.

MR. WILLIAMS :

Mr. Speaker, I'm tempted to give the hon. minister my additional time,

because he's doing such a job on the government that I'm almost wasting

my time in responding. But you know, what the minister didn't talk

about is whether we were buying or selling. If you end up buying under

appraisal, the public's better off. That's what the minister doesn't

understand: the difference in terms of whether you're the buyer or the

seller. The difference is that when you guys are the sellers, you sell

way under what it's worth. When we were the buyer, we often bought

below what it was worth. One would think the people who claim to be

free enterprisers would understand something as fundamental as that.

The

element of free enterprise is supposed to be a level playing field. The

only way you can be sure of a level playing field with equal access by

all the players — not just the friends of government — is to have an

open, public tendering process where bids are received, and it is all

open and above board, and all the bidders see what the other bidders

have proposed as a price for the properties.

Somehow this

administration doesn't seem to understand that. The minister talks

about Daon, which didn't exist in that time period. It was a different

company.

AN HON. MEMBER : Dunhill, Daon.

MR. WILLIAMS :

Dunhill. They're different companies, Mr. Minister. You have trouble

with the names of companies, and whether it's buying or selling, and on

it goes. The point is that it's just another example. It's in downtown

New Westminster. It's the old courthouse, and it was sold to people who

are supporters of this administration, and it was sold foolishly.

That's very clear.

Interjection.

MR. WILLIAMS :

The member says most people are, Mr. Speaker. But does he really know

what the polling numbers are that they received the other night? I

think the evidence speaks for itself.

HON. MR. PARKER : Mr. Speaker, I call Committee of Supply.

The House in Committee of Supply; Mr. Pelton in the chair.

ESTIMATES: MINISTRY OF FINANCE

AND CORPORATE RELATIONS

On vote 76: new programs, $45,000,000 (continued).

MR. CLARK :

I thought that for the remainder of the morning we might canvass an

issue which is near and dear to the heart of the Minister of Finance

and Corporate Relations, and that is the Vancouver Stock Exchange and

the government's regulation thereof.

I don't know whether

any staff are coming in or are contemplated, but it might be worthwhile

for them to take some notes on this matter. For the remaining two hours

today I'd like to deal with some of the concerns the minister had with

respect to some remarks that I and my colleague, the member for

Esquimalt-Port Renfrew (Mr. Sihota), made in the House a while ago. The

minister and I have had several exchanges on this.

Essentially

I have made some allegations with regard to international criminals

operating on the Vancouver Stock Exchange and with respect to money

laundering taking place on the Vancouver Stock Exchange. Of course, the

minister has denied that and sent me letters to that effect. He's

indicated that there's no evidence. I think he said there is not one

iota of evidence of either activity taking place. He also challenged me

to come up with specific examples where that's the case. I thought I

might do that today.

The minister may have seen this press clipping in the Vancouver Sun ,

the headline of which is: "Vancouver Known as Laundering Spot for Drug

Money." This is an RCMP report released just a little while ago which

talks about money laundering. It says: "Vancouver's sophisticated

financial institutions" — that's an interesting point — "proximity to a

port and an international airport and its active local drug trade make

the city a major centre for the drug trade and for money laundering."

It goes on at some length

[ Page 7594 ]

about money laundering known to be from Vancouver.

[11:15]

I think if you look in the international community, people would

recognize that money-laundering, particularly drug money, is a major

source of financial activity in Vancouver and in the Vancouver Stock

Exchange.

I'll leave that for a minute. Rather than rehash

a lot of what the minister might call old scandals on the stock

exchange, I thought I would try and come up with a couple of new ones.

The minister and his staff may want to take some notes, because it does

appear that the one I'm going to talk about has been missed by

government regulators. I just want to caution them.

The minister is aware of Forbes

magazine. I think all of us in the House and the province are now aware

of it. The

article "Scam Capital of the World" obviously is not a very

generous description of Vancouver or the VSE and of course we're all

worried about its ramifications.

I draw the minister's attention to an

article in the same edition of Forbes

a little later on. Good, some staff are here to help respond. I'm glad

Mr. Hyndman is here; I appreciate that. I thought I would draw the

attention of the minister and the chief regulator of British Columbia

to another Forbes

article in

the same edition — just a complete coincidence. It's called: "How Did I

Know the Guy Was Calling from Jail?" by Richard Stern. Mr. Stern is

not, of course, Mr. Queenan. We've all taken our shots at Mr. Queenan,

but this is Mr. Stern's article. It doesn't deal directly with the VSE.

You have to read it; it's kind of fascinating.

The story is

about two con men: someone named Juan Carlos Schidlowski and his old

buddy Joe "The Pig" Pignatiello. The story is about Jamie Darder and

how he was swindled by Mr. Schidlowski and the Pig. I'll just read some

excerpts. It says of Mr. Darder:

"He fell in

with a crew of some of the cleverest stock hustlers at large today.

These hustlers, one Juan Carlos Schidlowski and his old buddy Joseph

Pignatiello, are masters at their craft. If you ever come across them,

hold onto your wallet and give them a wide berth."

It talks about how Mr. Darder was set up by Mr. Schidlowski:

"Schidlowski had a way with words and boasted of lots of

financial contacts. He did not bother to tell Darder that he was living in Spain

because he was on the lam, having fled the U.S. rather than serve a jail term

for offences related to stock scams he ran out of a Denver-based penny stock

firm called OTC Net that he owned in the early 1980s."

Darder says at one point he gave up on Schidlowski and then someone called

him named Joseph "The Pig" Pignatiello, one of Schidlowski's partners

in OTC Net. Unfortunately it was closed down by the Securities and Exchange

Commission in 1982 amid a barrage of charges. Mr. Pignatiello spent two years

in Fort Worth jail and Mr. Schidlowski went to Spain. The Pig was phoning and

setting up Mr. Darder from jail. Hence the title: "How Did I Know the Guy

Was Calling from Jail?"

might say that Mr. Schidlowski and Mr. Pignatiello are currently being

sued for $1.35 billion in the United States for another swindle — not

the Denver swindle. This was Star Publications — a different swindle of

major proportions. It was internal stock trading between them and a Las

Vegas security firm, etc.

Being sued for $1.35 billion

clearly, as the

article suggests, qualifies Mr. Schidlowski as a

world-class swindler, a world-class scam artist. When we talk about a

world-class stock exchange, it's not our intention on our side of the

House that it be defined in these terms.

That deals with

Mr. Schidlowski and lays down some of his bio. You read that and you

don't think anything of it, and then you start looking at the VSE, and

where is Mr. Schidlowski now? He's connected to a VSE company; this is

what he's doing now. It's a fascinating story. He's wanted by the SEC,

he can't go to the United States, he's being sued for $1.35 billion and

he turns up on the VSE.

Let me explain how. As I say, this

seems to have escaped the regulators, so I'll go through this and maybe

the chief regulator here today can help us with this. Mr. Schidlowski

is the president of a company called Zurfinanz with offices in Zurich

and Santiago, Chile; Chile is his basic home of operations. A company

listed on the VSE called Napa Resources Inc. in early 1988.... This is

a hot story; this has just happened. In early 1988 there was a reverse

takeover agreement with Napa Resources and Zurfinanz. Just for the

minister's understanding, he should know that the board of directors at

Napa at the time of the reverse takeover included people like Assa

Manhas. You know him; he has the entire twenty-fourth floor of the VSE

building. He's associated with Peter Brown and Canarim. Michael

Cytrynbaum — you might know him; he's associated with Nelson Skalbania.

Stephen Funk — you might know him; he's currently bidding on the B.C.

Lions and is president of First Generation resources, traded on the

VSE. He has an approved investor immigrant fund that he runs, the

Canadian Maple Leaf Fund, that the government of British Columbia

approves.

Mr. Chairman, I think it's fair to say that Napa

Resources at the time of the RTO consisted of three of the most

prominent people in the Vancouver Stock Exchange operations. We're not

talking about some people — Slichter and some of these minor criminals

active on the VSE. We're talking about major players on the VSE.

What

happened was that Napa took over Zurfinanz, through a reverse takeover,

and renamed it Zurfund International. Now Zurfinanz is a subsidiary of

Zurfund International. Zurfinanz is owned 96 percent by Zurfund.

Mr.

Schidlowski, who was the principal of Zurfinanz, got 7.6 million shares

of Zurfund, the VSE company. So Mr. Schidlowski became, if not the

major shareholder, a major shareholder in the new Zurfund

International. And Zurfund International owns 98 percent of Zurfinanz,

of which Mr. Schidlowski is currently the president. After he got 7.6

[ Page 7595 ]

million shares at 35 cents, the stock — this is a surprise, I know, to everyone in the House — was driven up to $3 a share.

AN HON. MEMBER : How would that happen?

MR. CLARK :

This is what they do, you see. They issue shares at 35 cents, drive the

stock up to $3, and then most people cash out, and the stock goes down

— as it did the other day to 50 cents. But I'll get to that in a minute.

want the minister to know that the three names I mentioned are no

longer on the board of directors. I don't want to say they're still

involved; they were involved at the time of the takeover, and at

various times got off. I find this an interesting side story: Mr. Funk

got off and Mr. Geoffrey Lau got on. The members on the opposite side

might know Geoffrey Lau; he's one of the principal real estate owners

and developers in B.C. He owns Golden Properties Ltd., which owns 50

percent of the Canadian Maple Leaf Fund — that's the investor immigrant

fund we talked about.

know why he had to resign: because he's being sued by a Las Vegas casino

for $500,000. He lost $500,000 in Las Vegas, and refused to pay them. He has

an interesting defence. This is an aside, Mr. Chairman. His defence is that

by bringing the action against him, the casino is seeking to promote gambling,

and gambling is illegal in British Columbia. That's a criminal offence and

contrary to public policy; therefore his $500,000 that he owes this Las Vegas

casino should not be recognized or enforced by the court. Anyway, at the time

he was being sued by the casino, Mr. Lau thought he'd better take a slightly

lower profile on the VSE dealings, and he got off the board of Zurfund, so Stephen

Funk was on. He got off; his partner and colleague Geoffrey Lau got on. He got

off. I'm not currently aware of who the exact shareholders are at the moment,

but most of the activity took place at that time.

The

company, just by the way, is purportedly into mining ventures in Chile,

which are arranged by Schidlowski. Now remember, Mr. Schidlowski can't

go to the United States because he's under indictment and is being

sued, so he operates completely by himself in Chile, on behalf of

Zurfund in British Columbia.

Just so the minister knows

that I have proof that he is the president and is operating out of

Vancouver, I have a fax from another individual — I won't give this to

you, because I don't want to impugn anybody. This is a completely

separate scam that Mr. Schidlowski operated in California. I have a fax

which Mr. Schidlowski sent to this individual in California, on the

Zurfund letterhead, suggesting that they meet in Vancouver, because he

can't meet in the United States, because they would arrest him. This is

completely different: he's got the Dallas scam, the Star Publications

scam and some other ones. This other one is in California. If the

minister or the regulators want, I could show him the letter, which

proves that he's not only the president of Zurfinanz but also that he's

operating out of Vancouver, Zurich and Santiago, Chile.

MR. WILLIAMS : This is his favourite laundry.

MR. CLARK :

One of his favourite laundries is Vancouver. Well, I think, currently

it is his favourite laundry, because the penny stock market in the

States is closed to him, because he's got all these criminal sanctions

hanging over his head.

MR. WILLIAMS : I just want to

underline that I think the points being made by my colleague from

Vancouver East regarding the activities of this company on the

exchange.... The minister has asked for details regarding new scams,

new operations on the exchange, and we are now hearing about them. I

hope he is listening carefully and will take the action that should

have been taken in the past.

MR. CLARK : I just want

to bring the minister up to date on this scandalous dealing. The stock

went from 35 cents to $3, and then in a classic VSE venture most people

got out, and the stock went down to 50 cents. I just got an update on

this. On April 7 they issued 640,000 shares in an employee share option

at 50 cents. What they do is issue stock to themselves at a cheap

price, drive the price up and sell out. The price goes down and they

start the cycle over again. And they are starting the cycle over again.

They issued 640,000 in employee share option at 50 cents in April. In

the first week of June this year, not very long ago, they issued

1,670,000 units at 45 cents. A unit is one share plus one warrant, and

a warrant means you can buy a share at 45 cents any time in the next

year. Essentially it's about 3.3 million shares at 45 cents, which they

issued.

As well, on June 1, 1 think it was, they issued

another 699,996 shares at 35 cents and a warrant for one year at 40

cents. If you double that, it's 1.4 million shares, so it's roughly 4.4

plus 640,000 — that's 5.1 million shares in the last couple of months

they issued in the 35-cent to 50-cent range. I'm just doing it crudely

here; I am sure the regulators can work this out better.

The

price, of course, as you can suspect after issuing all these diluted

shares to their friends, is now 80 cents and going up. In fact, the

minister will know that it's in the top third trading volume on the VSE

in the last couple of days. It was in the top ten yesterday again, I

think, and today. It will be in the top ten this month, so it's a major

volume trader.

One of the major volume traders on the VSE

is Zurfund International. I wonder if the minister would like to

comment on how in the world Mr. Schidlowski, one of the world-class

swindlers, got involved with this VSE company and whether he would

undertake to take some action, or maybe Mr. Hyndman here can tell us

whether the regulators have stumbled across this connection to another

[ Page 7596 ]

international criminal doing business on the Vancouver Stock Exchange.

[11:30]

HON. MR. COUVELIER :

The member raised a number of points, and I will attempt to deal with

them as I was able to catch them. He first of all dealt with the

subject of laundering and referred to a news story in which the RCMP....

Interjection.

HON. MR. COUVELIER :

Well, you introduced it earlier. Did you forget? That was your opening

line — laundering. With the permission of the House, Mr. Chairman, I am

attempting to deal with the issues and queries that were put by the

hon. member. I trust that's the appropriate way in an open society that

you would want to learn more about the issues you mentioned.

You

mentioned laundering, and you referred to an RCMP news story. While I

don't have that news story with me this morning, my memory of it was

that the Vancouver Stock Exchange was not the only suspect mentioned in

the article. I thought I should just point out to the House the

selective referencing that the hon. member is embarking on here. That's

point one: selective material. The article, if I remember rightly,

dealt with other stock exchanges.

As I have told the House

in the past, the relative dollar volumes exchanged or dealt with on the

Vancouver Stock Exchange would clearly reduce the risk of

money-laundering on that exchange as compared to the opportunity to

launder money on the Toronto Stock Exchange, where there is a far more

significant volume of dollars changed.

My memory is that

there is something like $250 million a day traded on the TSE, so

clearly if money-laundering is a concern of law enforcement agencies

around the world — and it is; we are well aware of that and we have

discussions with law enforcement agencies on a regular basis in this

respect — then the exchanges that have the larger dollar volumes and

daily transactions would be the most likely target for a

money-laundering operation.

The allegation by the members

opposite that Vancouver has some unique distinction in this respect is

unsupported, unproven. There is absolutely no evidence whatsoever to

sustain that position. Furthermore, common sense would dictate that

such an eventuality is less likely there than any other exchange in

Canada, or any other exchange of size in North America.

The member then went on to discuss Forbes . I hear little asides from his running

mate, also from this great bastion of democracy, Vancouver East. I'm being

very timely here referring to Forbes , as the member did. I learned to my surprise

that in 1974 Forbes did a similar slam of the operations of the Vancouver Stock

Exchange, which had the consequence of the then Premier, who I think was of

the socialist persuasion, going wild about the allegations and the unfounded

attack on this bastion of British Columbian financial integrity. I found the

article really interesting, because the government of that day, which as you

remember was the very brief three-year period when the citizens of the province

thought we were wealthy enough to take a gamble with the socialists....

AN HON. MEMBER : Twelve hundred nights. Dark ones.

HON. MR. COUVELIER :

Yes, 1,200 dark nights. This was that very brief period. The very same

people who today are trying to wrap themselves in some sanctimonious

cloth of respectability failed to bring forward any legislation to

regulate the Vancouver Stock Exchange, as opposed to this

administration, which shortly after taking office introduced a

regulatory authority into the operation of the securities market in

British Columbia. We introduced the B.C. Securities Commission and gave

them the authority to start tightening up and regulating the process.

just can't resist the opportunity to point out that one of these same

individuals, who today tries to sound so sanctimonious, had the

glorious opportunity to start the process then and failed to do so, as

opposed to this administration, which has clearly made dramatic

progress in dealing with the obligations of government to provide

effective regulatory control.

The consequences of the

regulatory control — that is to say, the creation of the Securities

Commission — had the effect of removing, by their regulatory actions,

at least 60 players from operating on the Vancouver Stock Exchange, and

the rate increases weekly. There is no evidence on the record to

justify any claim that the Securities Commission is not effective in

the operation of its function. Indeed, since it has been in place it

has very systematically, and in a mentally disciplined way, tackled the

problems that we inherited from your day, hon. first member for

Vancouver East.

The Forbes

article of 1974 confirms the truth of what I say. I'm not making any

wild allegations here. I'm not using the privilege of the House. I'll

be pleased to go outside and tell the media and the world exactly what

I'm telling you. In 1974 Forbes

blew the whistle, and you did nothing. We, taking office, not needing

any whistle to be blown, immediately embarked on this campaign of

cleanup. Immediately. Within months, my friends. Let's just make sure

the record is straight in that respect.

Above all else, I

think we should be introducing facts into the official record. I was

surprised to be told by the Chairman just a few days ago, when we were

considering my estimates, that facts have nothing to do with debates in

this House. When I rose on a point of order to correct a

misunderstanding or misrepresentation by one of the hon. members

opposite on the basis of straightening out the factual claim or record,

I was ruled out of order. I was told by the Chairman that facts have

nothing to do with these debates. Each member has a wide-ranging option

[ Page 7597 ]

use

the privilege of the House to make the most outlandish accusations and

get away with it. To my astonishment, those very same pronouncements

can be repeated worldwide and given great publicity.

So I

learn every day. Admittedly, that's something I hope I will continue to

do and obviously will need to do as a growing, developing person. I'm

not ashamed of the fact that it was a startling revelation for me to

find out that the members opposite don't have to speak the truth; they

just have to keep their lips moving and be critical, and be guaranteed

of that day's headline. It's irrelevant, apparently, to the traditional

parliamentary procedure that they can be mouthing statements that are

representations or less than accurate.

In any event, on to

the next point raised by the hon. member, which dealt with naming some

specific individuals who are extremely high profile in the British

Columbia financial community. Once again the hon. member resorted to

slurs. By naming these individuals and wrapping them in this

presentation about allegations in Forbes

magazine and by naming some specific developing companies, he has

implied that somehow these individuals have some accounting to do in

the sense of public responsibility. I was struck by the fact that here

again the hon. member uses the privilege of the House to wrap these

individuals in this kind of cloak. I think it's incumbent upon all of

us to remember that making statements here linking individuals with

others with whom I sure they would not wish to be linked is not a

desirable method of operation here.

The member also went on

to talk about a specific instance. As I have said before, by virtue of

my statutory obligations I am not in a position to confirm or deny who

or what is being investigated at any point of time. There is an

obligation upon a minister of the Crown to be factual and fair and to

ensure that due process is followed and that the rights of individual

human beings are protected until they're proven guilty — not with

allegations of guilt, not with innuendos of criminal association, not

with impugned, deliberate avoidance of legal requirements. It is the

obligation on my shoulders to make sure that we follow the due process

of law.

The member tries to imply that he has told us

something with some startling revelations to it. I must point out to

the member that in order to take action, any regulatory agency must

have evidence. It is not sufficient to merely have a suspicion. It is a

requirement of law to have evidence. It may well be that the

socialists, in their madcap pursuit of power, might be prepared to

start indicting people on suspicion, but I can tell you, my friends,

you would be singularly unsuccessful in a court of law in making any

suspicions or innuendos stick in terms of proving without a doubt

anybody's guilt.

I have a constitutional responsibility to

ensure that we follow the letter of the law and that all citizens of

this province are given protection under that law until they're proven

guilty.

To the suggestion that the Securities Commission

has not been diligent in pursuing that objective, I must once again

remind the House that they have in recent months taken out of the game

at least 60 individuals. They took them out of the game on the basis of

evidence and proof, not on the basis of innuendo or suspicion. It was

done appropriately and did not abuse the legal rights of any citizen.

Process had to be followed and it was. To suggest, therefore, that the

Securities Commission are less than diligent in that respect is

absolutely and totally refuted by the factual record.

The

member closed with a small primer — Stock Exchange 101, 1 guess I would

call it — on the utilization of warrants by the industry. I trust the

member is aware of the fact that warrants are a common device used on

every major exchange in the world by underwriters to help them cover

the cost of introducing a stock. Warrants are available on the Toronto

Stock Exchange, the New York Stock Exchange, the London, the Tokyo, or

any other. The availability of those warrants is justified by the

marketplace and accepted as a standard. So while the member might like

to make much of the issue of warrants, the fact of the matter is that

it is common to every major exchange in the world. There's nothing new

or particularly perverse about that, and to suggest that there is

strikes me as an injustice to the entire industry.

[11:45]

I suppose the last point I would make would be that the House and

the people of the province should appreciate that this government

created an arms-length agency to perform the regulatory function. The

prime objective in its creation was, is and will always be to protect

the consumer. Were the agency, the Securities Commission, to be

manipulated by politicians — which seems to be the bent of so many of

the philosophical maunderings I hear from members opposite — it strikes

me that the very essence of stock market and stock exchange discipline

and operation worldwide would be placed at risk. They are

self-regulating organizations. I know the socialists like to believe

that they can assume and have acquired the wisdom to allow them to make

unilateral decisions from some central authority. Of course, that's

great for those inside the citadel, but it's not so great for all of

those thousands of people who are outside bearing the consequences of

what this little, narrow band of socialists in the decision-making

position might wish to take.

MR. CHAIRMAN : I'm sorry, minister, but your time has expired under standing orders.

HON. MR. COUVELIER : I was just getting warmed up. Thank you, Mr. Chairman.

HON. MR. VEITCH :

I think the minister is just doing wonderfully, and I would like to

hear him continue. I'd like to hear some more from the Minister of

Finance and Corporate Relations.

HON. MR. COUVELIER : The very essence of how to inject discipline into a function or an industry is to

[ Page 7598 ]

create

a sense of self-responsibility. Stock exchanges all over the world are

created under the precept that they are self-regulating organizations.

suggest that there should be political intrusion into that process, I

think, illustrates a very basic philosophical difference between

socialists and free enterprisers. To the suggestion that that

self-regulating organization will be self-serving, free-enterprisers

all over the world have created securities commissions, which is

exactly what we did immediately upon taking office, as opposed to

previous governments who failed to do exactly that.

gather the socialists if 1974 must have had the philosophical attitude

that they would attempt this self-regulating organization by injecting

political considerations into its daily operations. That would not be

in the interests of the citizens of this province, nor would it be in

the interests of the function itself: that is to say, the existence of

the Vancouver Stock Exchange.

We on our side quickly

determined that we would bring in a regulating authority — the

Securities Commission — to watchdog the operations of the Vancouver

Stock Exchange. Since they have been in operation, they have taken at

least 60 players out of the game, and they are adding to that list

every week. I looked at two more releases this morning of decisions

made by the commission involving individuals. They are clearly doing

their job, but it's absolutely important that those individuals on the

board of governors who manage the Vancouver Stock Exchange be permitted

the flexibility and freedoms to develop their own degree of

professionalism in that organization's operations.

MR. CLARK :

I might deal, as the minister did, with his remarks in the order in

which he presented them. I assume that Mr. Hyndman and his staff will

be coming back; I wouldn't want the minister to be without his staff to

assist him in his deliberations or record-keeping. I assume that Mr.

Hyndman has gone to take a look at the trading volumes of Zurfund in

the last little while, or maybe to see who the current players are, but

I will leave that.

The minister accused the opposition of

having a selective memory, which I always find kind of curious. It

seems to me he is guilty of the thing that he is accusing the

opposition of. He says that he wants the public to remember what they

characterize as the NDP government, '72 to '75, and forget '75 to '86,

that intervening period when Mr. Bennett was in power.

was a savage attack the minister unleashed on the Bennett

administration by saying that he had to come in and clean up the mess

of the VSE after years of inaction on the part of previous

administrations He also says there was an

article in Forbes in 1974 trashing the Vancouver Stock Exchange. This is a minister who said, " Forbes doesn't know what they are talking about; the Forbes

article is scandalous, " of the current one that attacks his administration; but he seeks to rely on the Forbes

article of 1974 for his attack on the NDP administration. I can't think

of any better examples of selective memory than that which the minister

has outlined here today.

He said that Mr. Hyndman and the

regulators have made dramatic progress. There is no question that they

have made progress, but if this example that I raise is an example of

startling progress, I think we have a ways to go. The minister then

accused me of linking innocent people to international criminals. I

would like to deal with it briefly, because it's not me who links some

prominent Vancouver business people with this international criminal

that I've discussed. The facts link Mr. Schidlowski in Chile with Mr.

Assa Manhas, Mr. Steven Funk and Mr. Michael Cytrynbaum.

While

the minister took great pains to accuse me of slandering people, all I

have done is draw the attention of the House to the facts — not to any

allegations that those prominent British Columbia businessmen were

involved in anything illegal. I simply draw the attention, through the

minister, of the regulators to the fact that an international criminal

is running a subsidiary of a VSE company. I understand that they're

looking for — just for the record — iodine nitrate. The minister should

know that they haven't found any yet, but they're still looking.

This

fact pattern of this VSE company illustrates the major problem, and

that is: everybody recognizes that a venture capital market is a

speculative one and has a function. The function is to raise capital

for exploration or for research and development and the like. All too

often what promoters are supposed to do is drive the price up so you

get more money to do the exploration or the research and development.

But what happens here is that they drive the price up, and they sell

out. Then it comes down, and they issue more stock when the price is

low. They don't try to sell more stock or raise more capital when the

price is high.

It essentially becomes a kind of paper

trade, where the game is to make money on the trading, rather than to

raise capital to make money on a going venture; so the money is made.

The whole game, in some respects — at least it appears in this case,

but too often on the Vancouver Stock Exchange — is to make money on the

paper and on the trading of shares. The purpose of the stock exchange

is not to do that; that's an incidental part of the operation.

The

purpose of the stock exchange is to raise equity capital to use in

viable ventures. With people like Mr. Schidlowski running this kind of

deal out of Chile with his track record, it's clear that the game is

not to engage in legitimate business activities to raise money for

those purposes. The game is to fleece investors. That is the game in

which he excels — of which Forbes

documents that he is a world-class member — to make paper transactions

to make money. That's what we're dealing with here today.

wonder if the minister could deal with the fact that, while I

appreciate there is a due process, he must also recognize that.... I

don't want to make an inference of wrongdoing on the part of major

players on the Vancouver Stock Exchange, but I want to draw

[ Page 7599 ]

the attention of the House and the regulators to the facts.

The

facts are that Napa Resources, who were controlled by prominent people

on the VSE, conducted a reverse takeover with a company, Zurfinanz,

controlled by a major international criminal. That's a fact. Maybe they

didn't know he was a criminal. Maybe they didn't know that he's being

sued for $1.35 billion in the United States. Maybe they didn't know

that he spent the last two years in Spain escaping indictment from the

Securities and Exchange Commission. Maybe they knew none of that, but

the regulators should have known that Mr. Schidlowski has a trail which

is 1,000 miles long behind him, and Mr. Schidlowski was a key player

and owned 7.6 million shares in a VSE venture or owned it at that time.

Mr. Schidlowski continues to do business in a subsidiary of a VSE

listed venture. The regulators should have picked up that he is a

world-class swindler now doing business.

He may be

swindling those prominent people on the VSE. He may have sucked them

in, so to speak. He may have conned them; he's very good at that. I

don't want to say that those prominent players on the VSE participated

in a fraud with Mr. Schidlowski, but I do want to say that Mr.

Schidlowski should have no business — and the regulators should say

that he has no business — doing business on the Vancouver Stock

Exchange. He is not the kind of player that we want to see on the

Vancouver Stock Exchange; he should be thrown off any organization that

utilizes the talents of Mr. Schidlowski, which are not to promote

legitimate businesses but to fleece investors. That's what we've seen.

wonder if the minister could comment on the fact pattern that I've laid

out — not on allegations or inferences — and that Mr. Schidlowski is

currently doing business. Maybe he could tell us why the regulators

would miss the minor fact that this international criminal is now doing

business with a VSE company.

HON. MR. COUVELIER : I appreciate the opportunity to elevate the hon. member's understanding of life in the economic world.

opened his second diatribe with reference to the fact that somehow or

other the VSE is unique, in the sense that it tries to make money on

paper. Mr. Chairman, every stock exchange has exactly that function. If

we think about what they do, they merely buy and sell paper — that's

all. That paper changes value by the degree of interest in acquiring

ownership of it. It is a totally artificial function. Absolutely. If

we're going to get into a philosophical discussion about the worth of

stock exchanges around the world, then of course he must recognize, out

of the generosity of heart or the firm-minded spirit.... Those may be

naive ambitions on my part, but they are characteristics I'd like to

believe members opposite have once in a while. If he had that sort of a

generous heart, he would understand and agree that that's the basic

function of stock exchanges around the world. They do trade paper.

we're going to talk about what useful contribution they make in an

economic sense, now we can focus in on the Vancouver Stock Exchange and

its worth as a function. The Vancouver Stock Exchange, as opposed to

any other stock exchange that I'm aware of in the world dealing with

junior stocks or stocks with no track record, is a regulated exchange.

As far as I know — and I'd be pleased to be corrected if I'm wrong —

the Vancouver Stock Exchange is the only junior market in the world

which is regulated. I've just had that confirmed by my resident expert.

The fact of the matter is that NASDAQ is not a regulated market; it is

probably one of the largest junior exchanges in North America, at least.

terms of discussing the worth of the Vancouver Stock Exchange, as

opposed to the worth of, say, other exchanges that deal with senior

stocks — and therefore strictly paper, and therefore strictly an

artificial expression of interest of ownership of paper, which

contributes in itself no lasting economic benefit other than this issue

of trading a piece of paper — the Vancouver Stock Exchange is a venture

capital exchange formed for the purpose of getting new enterprises off

the ground.

[12:00]

If we're going to talk about the value of an individual exchange, I

would submit that the Vancouver Stock Exchange is probably placed in a

position to provide the most benefit to the jurisdiction in which it

resides. Indeed, by virtue of foreign interest in the operations of the

Vancouver Stock Exchange, about 25 percent of the trading — if I

remember rightly — comes from south of the border. There's a

considerable interest in trading from foreigners; I think that that's

something in the order of 10 percent offshore.

The worth,

in an economic sense, of the existence of the Vancouver Stock Exchange

is clearly, incontestably in B.C.'s favour, in the sense that we're the

only jurisdiction that has a regulated stock exchange created for the

purpose of raising capital for new ventures. This provides, in my

judgment, a marvelous opportunity for the Vancouver Stock Exchange to

expand its base of operations and expand its type of transaction that

might be brokered in that situation.

The member opened,

then, with a discussion about moving paper and seemed to imply that

Vancouver was somehow uniquely guilty of some violation when, in fact,

all stock exchanges do that. At least in Vancouver we are creating

funding for new enterprises. The success of the Vancouver Stock

Exchange in funding these new enterprises is legion. I could introduce

into the record a long list of successful enterprises which started on

the Vancouver Stock Exchange. That's a matter of historical record.

Then

the member dealt with the issue of a specific individual. I make my

point again, Mr. Chairman, that he uses the privilege of the House to

make these statements. I'm not, by virtue of my statutory obligations,

in a position to either confirm or deny what is presently under

investigation. To do so would embark on a slur to a yet unproven

allegation. I'm back to my point that I can't act on innuendos or

allegations.

[ Page 7600 ]

must have evidence. We must have proof. The record of the Securities

Commission is clear: when that is at hand, they have taken action

quickly. That's a matter of record. So you can take that to the bank.

The

member seems to be making a suggestion that nothing is being done or

will be done on the instances he describes, but I have to point out to

the House that he makes an assumption that nothing is happening. I

can't confirm or deny that nothing is happening, because, as I said, of

the need for proof before public comment can be made.

Lastly,

I want to close with this admonition to the member opposite. If he has

a genuine desire to see anything done about a specific situation, he

should accept my standing offer and the standing offer of the chairman

of the Securities Commission to have a private conversation about those

specifics. I have assured the member opposite, given the fact that I do

believe, by virtue of holding elected office he can be trusted to

receive confidential information on specific instances, that I am

happy, to the extent that I am legally able, to share that information

with him.

It's significant in my mind that never once....

No, that's not right. His predecessor once took the opportunity for a

private conversation, but that didn't deal with specifics; it just

dealt with generalities.

If there is a genuine desire by

the members opposite to do anything about a specific situation, I

challenge them to bring forward evidence and join us in a private

conversation about those specifics. We are as keen to make sure that

nothing is overlooked in the operation of the Vancouver Stock Exchange

today as we were when we created the Securities Commission — the first

government in the history of this province to create a Securities

Commission.

MR. CLARK : There's the minister slandering the Bill Bennett regime again.

Maybe

we could do with some generic questions for the minister. I would be

interested in his view on this. He gave a rather confusing answer.

Would the minister agree with me that the primary public purpose of the

Vancouver Stock Exchange, theoretically at least, is to raise venture

capital, not to make money on paper transactions?

HON. MR. COUVELIER :

Mr. Chairman, that was my exact point. All other exchanges are dealing

with established companies whose worth rises and falls on the stock

exchange by the degree of interest of prospective purchasers of this

piece of paper. But as opposed to those other exchanges, Vancouver not

only has that attribute but has an added attribute which is the

providing of start-up capital for entrepreneurs in this province and

elsewhere in the world who need a first leg up. As I say, the catalogue

of firms which have received that assistance and gone on to grow and

prosper and create thousands of jobs is a matter of record.

Clearly

I'm agreeing with the member when he says stock exchanges move paper. I

point out to him that all stock exchanges do that; but we have an added

benefit with the Vancouver Stock Exchange.

MR. CLARK :

I won't pursue that. I did say, and I reiterate, that in too many of

the ventures of the VSE the money is made on trading paper back and

forth between parties. Very little of the money ends up going, in some

cases, to genuine exploration or research and development. That's been

the fact pattern. On our side of the House, we're interested in a

genuine exchange that raises, as its primary purpose, venture capital

for new ventures, and as a secondary.... [Applause.] I can see the

applause from the legion of colleagues I have in the House here today.

The

primary purpose of cleaning up the Vancouver Stock Exchange is to

eliminate, as far as possible, paper transactions where individuals

make money on changing of shares and no money has gone into new

ventures, exploration or research and development.

Interjection.

MR. CLARK :

That's not correct, Mr. Chairman. It's not correct that the

transactions which transpire on senior exchanges are only paper

transactions. There's a real company there with real assets, real

profits and real losses, and that is what people invest in. It's not a

simple paper transaction. What happens in the VSE is that there is no

real company; there is an attempt to start up a company in some cases.

What we on our side of the House want to see is money to be raised for

venture capital and not to be siphoned off to promoters and to people

like Mr. Schidlowski. That's what we're trying to see. The minister

should recognize that that's the public purpose of the exchange that we

all want to preserve on this side of the House, not promoters helping

promoters.

I wonder if the minister would agree with me

that people like Juan Carlos Schidlowski, people who are being sued for

$1.35 billion for a stock swindle, people who are under indictment by

the Securities and Exchange Commission, people who have escaped the law

in the United States and aren't really allowed to go to the United

States for fear of arrest.... He would agree with me, surely, that that

is the type of person we do not want on the Vancouver Stock Exchange.

HON. MR. COUVELIER :

I don't know the specifics of the case that the member describes. I

don't know whether the individual has been found guilty or whether

there is action pending in that respect, so I can't comment on that

specific.

Every stock exchange around the world has those

kinds of difficulties. Indeed, I believe even last week there was a

pretty major scandal on the New York exchange, having the consequence

of some firm employing 1,200 individuals having to be put out of

business. I can well imagine how useful the member opposite might have

been in the New York legislature dealing with some of their scams.

The fact of the matter is that it's not a perfect world. But I'm confident that the Securities Commission,

[ Page 7601 ]

under

the able leadership of my colleague here in the House today, Mr.

Hyndman, with the excellent staff he has put together, will continue to

make significant progress. They've already accumulated an impressive

record. They have earned the respect of not only press commentators on

their performance but also the community which they are disciplining. I

can't imagine any higher endorsement for a regulator than to have the

respect of not only the critics — those who are close to the issue —

but also those they are attempting to police. If you ever needed

convincing evidence that it's being done and applied in an even-handed,

fair, sensible and legal method, those commendations would indicate

that truth.

MR. CLARK : I think we'll leave Juan

Carlos for a while and see if the Securities Commission might review

that case. I'll leave that for them, and maybe we can pursue that next

week when we're in estimates and see what transpires — or a couple of

weeks from now when we're still here discussing the stock exchange.

Before

I move on to some evidence of money-laundering that I'll be pursuing, I

think what we'll do for the last half hour or so is talk about

Ferdinand Marcos, who is another interesting international player that

turned up on the stock exchange in Vancouver — surprisingly enough. I

know the minister would agree with me that Ferdinand Marcos was not

here attempting to help venture capital companies, but was really here

to launder some money he got through racketeering in the Philippines.

There are many unanswered questions with respect to what transpired, so

I would like to review the case with the minister and his chief

regulator to see how they answer them.

As members of the

House know, First Vancouver Securities Inc. was a company that bought a

seat on the stock exchange. So we're not talking about a little venture

listing on the exchange; we're talking about a registered brokerage

house buying a seat on the stock exchange, which incidentally was the

first foreign-owned security firm to apply for a licence under B.C.'s

new relaxed ownership laws. It seems to me that the regulators missed

this little tiny fact that the foreign company was owned by Ferdinand

Marcos. I might say the Securities Commission has been doing a good

job. I commend them for moving in some areas, but I think they might

even agree that on this little case, they dropped the ball. I guess you

can't win them all, but it seems to me that we can infer that we're not

really up to speed in terms of dealing with international criminals or

international foreign companies. It's extremely difficult to regulate

them, and the fact that the Securities Commission missed the Ferdinand

Marcos connection with this firm really tells us that we're not quite

there yet in terms of our regulatory ability.

MR. WILLIAMS : Who's bigger than Marcos?

MR. CLARK : Yes. I thought maybe I'd canvass how....

MR. CHAIRMAN : I don't like to interrupt, but the second member for Richmond would like permission to make an introduction.

Leave granted.

MR. LOENEN :

It gives me delight to welcome some residents from the great community

of Richmond. First of all, there are some 70 grade 7 students from

Grauer Elementary School here, together with some of the parents and

their teacher, Mr. Siemens. Not all of the 70 are in the gallery; the

other half are in the precincts somewhere. I would like to ask the

House to make them welcome.

HON. MR. COUVELIER : I wondered, with the indulgence of the House, if I too might make an introduction.

[12:15]

Leave granted.

HON. MR. COUVELIER :

Today it's a genuine pleasure for me to introduce to the House some

very distinguished guests in the Speaker's gallery. Representing the

B.C. Central Credit Union are Mr. Tod Manrell, chairman of the board,

Mr. Phil Moore, chairman of the legislation committee, Mr. Wayne

Nygren, chief executive officer, and Richard Thomas, director of

government affairs. In addition we have with us Mr. Bob Minniss,

chairman of the Insurance Brokers' Association; Mr. Brian Stanhope,

regional vice-president of the Insurance Bureau of Canada, Mr. Stuart

Cunningham, representing the Insurance Council, Mr. Bill Drake,

representing the Institute of Chartered Accountants of B.C., Mr. Peter

Lewis, representing the B.C.

section of the Trust Company Association

of Canada, and Mr. Dale Parker, chairman and chief executive officer of

the Credit Union Deposit Insurance Corporation and, ultimately, the new

Financial Institutions Commission.

Also in the gallery,

from the Ministry of Finance and Corporate Relations, are Mr. Dan

Perrin and Ms. Kim Thorau, and legislative counsel from the office of

the Attorney-General, Mr. John Hogg. I'd like members of the House to

join me in welcoming these distinguished guests; I'm sure they're

finding our current discussions very illuminating.

MR. CLARK :

I too would like to welcome the people here, representing various

interest groups in B.C. It's unusual to have members in the gallery who

might actually take an interest in this subject because, as the

minister knows, we sometimes debate this in the House, and it's lost on

most people. So I'm sure that they're enjoying this debate, and I

appreciate that. I might just say, if I can, a little plug. The

Financial Institutions Act, I assume, is partly why they're here. If

anybody has any concerns about that, they may want to see the

opposition. I certainly would like to invite them to make any concerns

they have known to me, Mr. Chairman.

[ Page 7602 ]

was talking about Ferdinand Marcos and the little fact that the

regulators didn't realize that he owned this company. So I thought I'd

go through how that was, to show the lapse, because it's rather

interesting. Then there are some unanswered questions which we might

pursue with the minister and through him, of course, to the head of the

Securities Commission.

First Vancouver was the brainchild

of two Vancouver brokers. One was George Delmas and the other was

Fausto Tod Mabanta. Mr. Mabanta immigrated to Canada in 1972. Delmas

and Mabanta testified at the hearing that the Securities Commission

held. I know Mr. Hyndman is aware. They testified at the hearing that a

Mr. Thomas Zita of New Jersey was essentially the financing vehicle.

Mr. Mabanta referred to Mr. Zita as his uncle, although it doesn't

appear that they have a blood relationship. So Uncle Zita was the one

who arranged the two major investors around the world. One was Paradela

Holding Corp., a Panamanian company that had a 40 percent interest in

First Vancouver. Delmas, Mabanta and Doug Garrod, a lawyer who used to

be in charge of listings on the Vancouver Stock Exchange, who became a

director and eventually corporate secretary for First Vancouver.... The

owner of Paradela was said to be Leandro Vasquez of Spain. Mr. Delmas,

Mr. Mabanta and Mr. Garrod testified at the Securities Commission

hearing that had they never met or talked to Mr. Vasquez; they had

never met or talked to the principal shareholder, the person that was

providing the funding.

I don't mean to suggest that I have

any more knowledge than the Securities Commission, but it is curious

that when Imelda Marcos used to travel to the United States, she used a

pseudonym so people didn't know she was there buying 3,000 pairs of

shoes and the like. The pseudonym she used was Mrs. Vasquez. Maybe

that's just a complete coincidence.

It is interesting that

no one has ever met Leandro Vasquez, who was apparently the 40 percent

owner. I would think that when the first foreign company to buy a seat

on the stock exchange says that their money comes from Mr. Vasquez, the

Securities Commission might say: "Well, maybe we'd like to meet him or

see where his money comes from." Apparently that never happened.

The

other major shareholder was a company called Rio Grande Investment

Corp., which also owned 40 percent of First Vancouver. Even Mr. Garrod,

a former listings officer with the Vancouver Stock Exchange, said: "Rio

Grande is of unknown origin." Mr. Garrod said that he did not even know

where the company was registered. But it turns out that is owned by

Uncle Zita. So Uncle Zita owned 40 percent through Rio Grande

Investment Corp. — no one knew where it was registered — and the other

40 percent was owned by someone no one ever met, someone purportedly

named Leandro Vasquez.

They then applied for registration

as a broker — the first foreign-owned company. The stock exchange

agreed to allow them to buy a seat on the stock exchange. That was in

November 1987, under this administration, under this new regime. Just

days after the firm started business, the capital structure changed

quite dramatically. Paradela, purportedly owned by Mr. Vasquez, whom no

one ever met, increased its ownership to 70 percent. Uncle Zita dropped

his down to 10 percent. Mabanta took 15 percent, but he says he was

funded by Uncle Zita, and Delmas went down to 5 percent.

had a quite an interesting change of events there. What happened was

Mr. Vasquez — whom no one ever met — was represented by a lawyer in New

York. When the lawyer phoned Mr. Garrod and said, "Well, Mr. Marcos has

been indicted, Mr. Benedicto has been indicted and First Vancouver's

assets are frozen," how did our people in British Columbia react to

that? Mr. Garrod, a former senior member of the VSE, said: "The freeze

order has no effect in B.C." But just to be safe, he transferred all of

First Vancouver's bank accounts to another financial institution. When

the Americans indicted Marcos and froze the assets of First Vancouver,

our people in B.C. — the principals here — knew how to react. They

quickly took the money out of the bank accounts so that the freeze

order would have no impact. It's very interesting that when the

Securities Commission was informed that Mr. Marcos had been indicted

and that the bank had frozen the assets of First Vancouver, it was the

first understanding.... I'm sure the Securities Commission was shocked

and amazed to learn that the assets of the first foreign-owned company

to be registered as a broker in B.C. had had its assets frozen as a

result of Ferdinand Marcos's indictment.

It's interesting

to know that Mr. de Gelder phoned the U.S. attorney who indicted Mr.

Marcos, Charles La Bella. By the way, the minister may want to know

that I also phoned Mr. La Bella. He was very forthcoming on Ferdinand

Marcos's involvement in Vancouver. The key man behind the indictment is

Mr. La Bella, and he said there is a connection between Paradela and

Benedicto. Benedicto is described as Mr. Marcos's alter ego. So

Paradela was not owned by someone named Leandro Vasquez; it turned out

to be owned by Roberto Benedicto, Marcos's front man. In fact, he said

they are alter egos for Mr. Marcos and that Mr. Benedicto was involved

in racketeering activities in the Philippines.

[Mr. Rabbitt in the chair.]

Then

he said that Uncle Zita was Benedicto's nephew and that during Marcos's

era they both worked together in the Philippines with National Sugar

Trading Co. Mr. Zita was the president of National Sugar Trading Co.

and Mr. Benedicto was the chairman. So Uncle Zita, Mr. Mabanta's Uncle

Zita, turns out to be a major Marcos associate connected to Mr.

Benedicto, although I must say Mr. Zita was never indicted in the

United States.

Listen to what Mr. de Gelder had to say, and I want the minister to hear this. I know the minister is conferring with his staff.

[ Page 7603 ]

MR. CHAIRMAN : You may address your remarks to the Chair, as is the normal procedure.

MR. CLARK :

This is extremely significant. Mr. de Gelder has this to say about Mr.

Delmas: "There's one person in Vancouver who is supposed to be running

the day-to-day operations but who doesn't really have effective control

of the firm, because his capital is small and he depends on major

capital infusions from these other sources. He didn't know who these

people were, either, or else he did and wasn't telling anyone, and

either of those is a rather alarming prospect." In other words, Mr. de

Gelder said, in evidence at the commission hearings, that Mr. Delmas

was a cheap front for someone whom he didn't know, who owned it, or if

he did know him, wasn't telling anyone. He says that either of those is

a rather alarming prospect. One of the questions I will be asking is

why Mr. Delmas, in light of Mr. de Gelder's opinion, had no sanctions

placed against him as a result of this rather scandalous adventure.

Joyce

Maykut, lawyer for the superintendent's office, was less equivocal — if

you can be less equivocal. She said: "I submit, from his evidence, that

Mr. Delmas doesn't know who was behind Paradela and Rio Grande, and,

quite frankly, I submit that it was apparent from his evidence that he

doesn't care. I submit he is blinded by his own ambition to keep his

own firm going and to make it a success, regardless of where the

capital comes from."

Robert Brewer, a lawyer for the VSE,

called Delmas, "nothing more than a 5 percent front, " and noted that

Mabanta's 15 percent interest was also funded by Marcos crony Uncle

Zita. With regard to Garrod, a former VSE vice-president of listings,

Brewer said: "I suggest to you that he has been used simply as a

conduit for Rosensweig's statement" — in other words, Mr. Vasquez's

front man, and, it turns out, Mr. Benedicto's front man. "They have

relied on Mr. Garrod's credibility in this jurisdiction to achieve what

they have achieved in the sense of covering or hiding their true

identities."

Forty-six days transpired between the time

that the Securities Commission knew that Marcos was involved in this

First Vancouver enterprise.... For 46 days the regulators knew about

this, and nothing happened. No public statement was issued by the

Securities Commission.

The questions are very simple to the

minister. It's very clear that Mr. Mabanta, Mr. Delmas and Mr Garrod

knew or ought to have known that Mr Ferdinand Marcos was behind this

firm. If they didn't know, they're not fit, in my view, to be officers

of a company on the VSE. If they did know, they're not fit to be

officers as well, because very clearly the money was illicit, from

racketeering in the Philippines by a corrupt dictator. Maybe the

minister could tell us, first of all, why the three people who

organized the financing from the Philippines have had no regulatory

sanctions to this day against them by the regulators in British

Columbia.

HON. MR. COUVELIER : Well, it's always

helpful to replay the record. I guess the first point I'd like to make

is that the hon. member has the dramatic facility to imply to the House

that he's introducing some newly researched material. The fact is that

he's merely reading from the transcript of the Securities Commission

hearing. The fact that action was taken, in my judgment, indicates that

the system works. The member seems to be confirming it, because as a

consequence of the comments he read out, there was action taken.

should expand a little on this, in order to help the lay persons to

understand. The first point that needs to be made here is that the

principals of this brokerage firm brought the issue to the attention of

the superintendent. Members of the board of directors of the firm

itself started the exercise. As for any implication here that those

individuals associated with the firm — at least, on the board of

directors — were involved in some sort of cover-up, the evidence is

exactly the opposite. Mr. Delmas and Mr. Garrod were concerned enough

to bring this to some sort of conclusion.

They brought to

the attention of the superintendent an allegation in the indictment

filed against Ferdinand Marcos of a connection between First Vancouver

Securities Inc. and Mr. Roberto Benedicto, a co-accused of Ferdinand

Marcos. There's no evidence anywhere on the record that indicates that

Marcos knew anything about First Vancouver Securities. Indeed, if the

worldwide opinion of Mr. Marcos's wealth is close to accurate, it's

likely the firm was of relatively minor importance — if of any

importance — in his asset base.

[12:30]

The U.S. Department of Justice attempted to freeze the assets of

First Vancouver Securities Inc. As soon as the information came to the

attention of the commission and the exchange, both agencies moved to

have First Vancouver sever all ties and replace the capital allegedly

provided by Mr. Benedicto. The matter was heard by the commission after

settlement talks failed. The commission ordered the suspension of First

Vancouver, but provided time for them to find replacement capital.

Replacement capital was not found, and the commission's decision became

effective. First Vancouver was placed into receivership, and its assets

were sold to Georgia-Pacific, another Vancouver brokerage house.

Points

that need to be made are that both the commission and the Vancouver

Stock Exchange board of governors acted swiftly upon the information

coming to their attention. Every effort was made to ensure that

investors' money was not at risk and that any "dirty money" was

isolated. This procedure proved 100 percent successful. So the system

does work. The issue described by the hon. member is a matter of public

record, and it's an indication of the fact that the Securities

Commission is an effective device to monitor the operation of the

Vancouver Stock Exchange.

[ Page 7604 ]

MR. CLARK :

Mr. Chairman, to say that the members of the firm itself brought it to

the attention.... To say that it's a defence is absolutely

preposterous. The assets of the firm were frozen by an indictment in

the United States, an indictment of Ferdinand Marcos, Adnan Khashoggi,

Roberto Benedicto and company. The assets were frozen. First Vancouver

Securities Inc. was listed on the indictment in New York. After they

were told that their assets were frozen by a U.S. indictment, they then

told the Securities Commission and the VSE. Well, that's hardly

honourable, is it? After their assets were frozen and, by the way,

after they moved the bank account, so they could get around the freeze

order, they then informed the Securities Commission.

The

questions I have have to do with why three people who organized the

financing, either from known Marcos associates — they either knew it

was Marcos or didn't know, either one of which clearly is grounds for

individuals not to be engaged in this kind of business in Vancouver....

If we want to clean up the Vancouver Stock Exchange, we have to wonder

why the people who arranged the financing for Ferdinand Marcos have

borne no regulatory sanctions whatsoever and continue to operate on the

Vancouver Stock Exchange. They've moved over to the new firm,

Georgia-Pacific. How can you say that yes, it is Marcos money; yes, we

have to get rid of that Marcos money; but the people who organized it

through this Uncle Zita — a known Marcos associate — had no sanctions

and continue to do business in Vancouver today? How can we expect the

international community to say that we're serious about cleaning up the

Vancouver Stock Exchange, when people who organized this are still

doing business with no regulatory sanctions whatsoever?

HON. MR. COUVELIER :

Well, I'll wait for that thundering applause to die down. The fact is,

Mr. Chairman, that First Vancouver Securities Inc. was owned by this

gentleman named Mr. Zita. At the time of all of these proceedings, that

individual was registered with the commodities future exchange, which

is the counterpart of the Securities Exchange Commission dealing with

commodities futures.

To suggest that somehow we in

Vancouver should be dealing with a U.S. citizen based on actions of the

Securities and Exchange Commission, when their sister organization had

that same degree of interest and failed to act, strikes me as an

indication of the basic fact that regulators, in deference to the need

for proof of evidence and proven guilt of wrongdoing, must follow due

process. I just have to point out to the member that an initiative to

freeze assets by the Securities and Exchange Commission is not an

indication of guilt; it's merely an action to pause while issues are

examined. The commodities future exchange had that same obligation — if

the member is correct in his allegation. Clearly, they didn't see it as

requiring any action as evidently contemplated by the member opposite.

MR. CLARK :

It's not the Securities and Exchange Commission that froze the assets;

it's an American grand jury indictment on people that froze assets. The

reason they froze them was that the money came from illicit

racketeering operations in the Philippines. Let's for a second give the

benefit of the doubt to the Securities Commission. Let's assume they

legitimately did not know, and it was therefore very difficult to find

out in advance that this was Marcos money. Let's assume they did not

know it was Marcos money, and the regulators who missed this point

maybe legitimately missed it. Let's just say for a second that this

happened.

Once it was found out that it was Marcos money,

once they had the hearing.... Let's assume all that went before the

hearing was accidental and couldn't be avoided and was not really the

fault of the Securities Commission. Let's just assume that for a

second. They had a hearing. Mr. de Gelder had this to say about Mr.

Delmas: "There's one person in Vancouver who is supposed to be running

the day-to-day operations but who doesn't really have effective control

of the firm, because his capital is small and he depends on major

capital infusions from these other sources. He didn't know who these

people were, either, or else he did and wasn't telling anyone, and

either of those is a rather alarming prospect." Further, the lawyer for

the superintendent's office said: "I submit...that Mr. Delmas doesn't

know who was behind Paradela and Rio Grande and...doesn't care. He's

blinded by his own ambition...."

As a result of that

evidence and those opinions of the regulators during that hearing, why

would Mr. Delmas walk away unscathed if he was essentially found guilty

by Mr. de Gelder, by both the lawyer for the VSE and the lawyer for the

superintendent's office, of either not knowing, or knowing and not

telling anyone, and castigated in the hearing by those regulators? Why

would he walk away unscathed in either event and continue to do

business in British Columbia today?

HON. MR. COUVELIER :

As I understand it, Mr. Delmas didn't escape unscathed. He lost his

firm. He had it taken away from him. I don't know how bloodthirsty

members opposite are, but I shudder to think what they might be

contemplating.

There's one other point that needs to be put

on the record, which is that the U.S. Department of Justice has still

not dealt with the issue; the trial has not been held. So we're merely

dealing with allegations here. I think it's important for everyone to

remember what the facts are, even though I understand that facts are

not necessarily the order of the day for the members opposite.

any event, Mr. Chairman, it's been a very pleasant discussion. I'd like

to move that the committee rise, report progress and ask leave to sit

again.

The House resumed; Mr. Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

[ Page 7605 ]

Introduction of Bills

CREDIT UNION INCORPORATION ACT

Hon. Mr. Couvelier presented a message from His Honour the Lieutenant-Governor:

a bill intituled Credit Union Incorporation Act.

HON. MR. COUVELIER :

The Credit Union Incorporation Act continues this province's

recognition of the special cooperative character of credit unions and

the important role credit unions play in the financial services

marketplace. The present Credit Union Act will be repealed by the

proposed Financial Institutions Act, which will now govern the

regulation of credit unions, as well as other financial institutions.

This bill will replace the corporate law provisions respecting credit

unions that are presently contained in the Credit Union Act.

Mr.

Speaker, together with the proposed Financial Institutions Act, this

bill will enhance public protection without imposing additional

administrative restrictions on credit unions.

Bill 50

introduced, read a first time and ordered to be placed on orders of the

day for second reading at the next sitting of the House after today.

FINANCIAL INSTITUTIONS ACT

Hon. Mr. Couvelier presented a message from His Honour the Lieutenant-Governor:

a bill intituled Financial Institutions Act.

HON. MR. COUVELIER :

This important piece of legislation will create a modern and efficient

regulatory framework to govern financial institutions in our province.

The Financial Institutions Act will provide a uniform regulatory

framework for provincially regulated financial institutions by

consolidating in a single act a number of provisions governing the

operation of trust companies, insurance companies and credit unions.

The existing Credit Union Act, the Trust Company Act and major portions

of the Insurance Act will be repealed. This statute will merge the

Credit Union Deposit Insurance Corporation with the office of the

superintendent of financial institutions to create the Financial

Institutions Commission, whose responsibilities will include both the

regulation of financial institutions and the provision of deposit

insurance for credit unions.

The Financ