Assemblée législative de l'Ontario

CONCURRENCE IN SUPPLY, MINISTRY OF CONSUMER AND COMMERCIAL RELATIONS

---

The House resumed at 8 p.m.

CONCURRENCE IN SUPPLY, MINISTRY OF CONSUMER AND COMMERCIAL RELATIONS

Hon. Mr. Gregory: Mr. Speaker, according to the orders of the day it was agreed with the House leaders that there would be an allocation of time among the parties. That allocation called for a reservation of 20 minutes for the minister at the end and the remaining time of one hour and five minutes to be divided between the opposition parties.

The Deputy Speaker: Is that agreed to?

Hon. Mr. Gregory: Apiece.

The Deputy Speaker: Apiece? Dealing, then, with the concurrences of the Ministry of Consumer and Commercial Relations, is it the pleasure of this House that --

It is not the pleasure of the House.

Mr. Breithaupt: I think, Mr. Speaker, there may well be some remarks on this concurrence.

We have had the opportunity over this last week to have a variety of exercises with respect to the matters that at the moment trouble the Minister of Consumer and Commercial Relations (Mr. Elgie) somewhat more greatly than do the matter of the boilers in this building and the other things that seem to wind up on his desk.

I think it is important, now that we have had an emergency debate and a statement at length from the minister, to look seriously into the sequence of events that has happened. We should see what we can learn from the questions that have been asked and the approach that has been taken in answering them.

In the context of the duty and obligations of the minister I first of all would suggest that we turn to chapter 274 of the Revised Statutes of Ontario for 1980. We find in that act that it is a ministry of the public service. We find that "the minister shall preside over and have charge of the ministry." Of course, we find in section 4 that the minister is responsible for the administration of quite a list of statutes, among which are the Loan and Trust Corporations Act and the Securities Act.

For nearly three months now we have been asking questions on nearly a daily basis. In addition, there have been five motions for emergency debate on the matters that have resulted in the takeover of three of the trust companies within our province and the two mortgage operations that are under the federal authority.

Between October 26 and November 16 the minister's position on the issue of the sale of the Cadillac Fairview buildings changed rather substantially. Here is a quotation from what he said on October 26: "I think our obligation is to make sure there are no collusive relationships between the people selling properties." That was responded to by my leader the member for London Centre (Mr. Peterson) when he suggested: "We have an opportunity to deal with this emergency situation now. Will the minister permit this matter to go before a committee of this Legislature.?"

On October 27, my colleague the member for Yorkview (Mr. Spensieri) moved in the standing committee on general government that the committee review the Cadillac Fairview sale to Greymac Credit. Of course, as has been the case so many times over this past year or so, the vote was six to five with the Conservative members defeating the opposition in this instance.

Today, nearly three months later, surely all members of the opposition and, indeed, not only major media outlets but many of the editorial writers across this province, are calling for a royal commission inquiry -- an independent inquiry into the series of events which has led us to where we are today.

In the context of the Astra and Re-Mor scandals, neither civil nor criminal proceedings have come to trial even though two years have gone by. The civil proceedings are subject to a ban on publication of the recently submitted report of the receiver, Deloitte, Haskins and Sells. The criminal trial could well be subject to a motion for dismissal under the grounds that the rights to a speedy trial under the new Charter of Rights had been violated.

Investors have not been compensated. That is two years after we came forward to what were called the realities of March 19, 1981. The minister will recall that only by a few moments was a committee of this Legislature able to have a report completed and in the hands of the Legislature before the writs were issued proroguing that Legislature and, as a result, calling for a new general election.

Two years have gone by. Virtually nothing has been accomplished. Investors have not been compensated. If there are to be criminal matters, the persons involved have not been brought to trial. Now here we go again.

On October 28 my leader asked why the minister would not allow an investigation. The minister's response was, "is the issue of whether there should be some large-scale investigation into the sale of property. Is he saying that Greymac Credit Corp. is acting improperly in some aspects of this transaction?"

Yet this very day the minister stands in his place and, while shuffling through a variety of nonanswers and other papers, advises us from a little note that has been sent to him that the Ontario Securities Commission has issued a press release announcing a section 123 cease-trade order against Greymac Credit Corp., and a section 16 freeze-property order. We well know this order is possible if there has apparently been some contravention of the Securities Act or of the Criminal Code.

So there is the period from October 28, when there was the innocence of response to a question, to this day when the minister stands in his place to find something which we have unfortunately all found out, that there may well have been improper acting in some of the aspects of these transactions.

The minister went on to say, "I think the minister should respond to matters that concern the public and should respond in accordance with their concerns." Since January 7, 1983, the concerns of the public have been overwhelming. The concerns really have only been two. The first is what happened and the second is how did it happen.

I suggest it may well take us some time to sort out all the aspects in those two concerns. But the minister certainly has a great and extensive knowledge and, in my view, could to a much greater extent reassure the public as to the concerns which they have. He could give answers not only to what happened, but also to how it happened.

8:10 p.m.

On October 29, 1982, my leader asked: "is the minister going to be investigating the recent acquisition of the control of Crown Trust by Greymac? Does the trust company or its takeover have any relationship to the deal in terms of its financing is the Ontario Securities Commission investigating?"

The answer at that time was: "However, if the member is really suggesting that the government should introduce special legislation to halt a private transaction in the absence of any knowledge that there is something fraudulent about it, I suggest that would be to deprive people in this society of a fundamental right."

On December 21, 1982, the minister introduced his special legislation. That special legislation was used to halt a private transaction, which the minister may have wished might not have happened. The legislation permitted the ministry to take over the trust companies without notice; certainly a requirement which was in place under the old unamended act. To date there has been no acknowledgement of any fraudulent activity. But certainly we have been led to believe there are a variety of investigations and activities involving not only the Ontario Provincial Police but the Royal Canadian Mounted Police -- various fraud investigations and other matters which are ongoing.

Let us go on to November 5, 1982, and November 8, 1982, when the Cadillac Fairview and Greymac deal closed some 11 days earlier than it otherwise was going to. The minister met with one Leonard Rosenberg on November 1. On November 4, he was unaware as to what the closing date would be. He certainly did not hear about the flips and yet these must well have been in the typewriters, on the copying machines or in the printing presses with the great variety of documentation that was clearly needed in order to have everything in place. But it was several days after that he had the meeting with Mr. Rosenberg.

On November 10, the minister released his announcement about the flips and on November 15, my leader asked: "I am asking the minister now, will he use section 151 of the Loan and Trust Corporations Act to stop this deal now and find out every single aspect about it before he lets anything proceed any further?" On November 16, we had a statement from the minister. It was a three-part effort involving not only amendments to rent review, but announcing the inquiry to be made by Stuart Thom QC, and also the Morrison inquiry under section 152.

In questioning, my leader and others of us went into the other matter. This included not only major purchases in my community of Kitchener and also in London, but also involved various other aspects not only of the principals and of Kilderkin, but of a variety of transactions that could well have been not at arm's length.

Again the question was asked: "Would the minister not agree we need a thorough investigation?" The next day, on the 17th, the minister announced the Morrison inquiry would be extended to deal with Greymac Mortgage. Two days later there again was a question from my leader, when he said: "The minister has to start now to look into all aspects of this deal." At that time, I might add, further examples were given of the involvement of Kilderkin and Seaway in properties in London.

From the time the minister appointed the Morrison inquiry, every question has been answered by a reference to the Morrison inquiry. We keep asking questions, we raise a variety of issues, and we are told by the minister, "This will all come in due course. This will be dealt with eventually. I will let you know information as soon as I receive it."

In the minister's statement on November 16, he said: ". . some of the companies involved in this series of transactions have offered to provide us with their full co-operation and I do not expect the section 152 review to be a lengthy matter."

Certainly, subsequent to the January 7 takeover, the comments in the Toronto Star alone were to the effect that there was "a lack of co-operation," and there was the failure of some trust companies to make documents available, These were apparently cited as the reasons behind the takeover.

In his statement on December 30, Leonard Rosenberg stated that he had been entirely co-operative with the Ontario Securities Commission in connection with disclosure requirements for the outstanding Crown Trust takeover hid. In fact he even said the OSC staff had substantially drafted the revised circular that the OSC subsequently rejected. As for the section 152 review, certainly Mr. Morrison has now been involved in that for two months. In an interview with the Globe and Mail he advised that he and a staff of 10 were at it nearly full time.

We must assume Mr. Morrison and his staff are certainly of average or above-average competence and, upon the minister's own admission that interim reports have been made, there seems to me to be absolutely no excuse why answers to a variety of the questions that have been asked have not been made available.

There is every reason to believe the Morrison inquiry was certainly entitled to look at, and ought to have looked at, certain documents relating to the Cadillac Fairview sale to Greymac.

Those would include at least three categories. The first would he the lease-back guarantees to Kilderkin which are apparently the basis of the valuation of the buildings at some $500 million. The second would be the participation agreement with Kilderkin and, at least, Seaway. Third, we would have the solicitors' documents, reporting letters and statements of adjustment that should clearly indicate who received the balance of the $125 million cash after Cadillac Fairview got its $40 million and also to whom the total mortgage advances of $145 million were made.

Those three themes should be developed and we should have the information, after two months, through the reviews of solicitors' reporting letters and a variety of other items that would make up such files. If those reviews are not complete by this point one wonders just when they may be completed. The questions we have asked are strongly based upon the need to know those themes of information I have set out. In my view, they should be reasonably easily available.

This information, had it been properly available from the outset, could have answered most of the questions on the deal and, certainly, should be readily available to Mr. Morrison and his staff. If the items were not immediately available then strong remedies should have been sought much sooner. If they were available, then the minister knew some very pertinent details which should have been disclosed long ago to this House, and through this House to the people of the province.

However, when we look at the Morrison inquiry, we see the minister's comments on November 26. He said then, "When I have such information I will be pleased to reveal it at the appropriate time." We wonder just whose idea of appropriate time we are using. On December 10, the minister admitted that the section 152 inquiry would extend to all the transactions and all the business of Greymac Trust and Seaway Trust. The minister was then asked how long he felt the inquiry would take with respect to Cadillac Fairview. That question went unanswered.

My leader, in pointing out the now somewhat widened scope of the inquiry, said, "Even the Premier said the object of the Morrison inquiry is to look into the valuation of some of the attendant properties with respect to the Cadillac Fairview sale." On December 9, my leader had set out the facts on the astonishing series of transactions surrounding the Greymac Credit Corp. head office. On December 10, the same day the minister commented on the expansion of the section 152 inquiry, the balance of the wild mortgaging on 49 Yonge Street was further set out through the activities of our research office.

The catalogue of events moves us on to December 20. The Legislature was still in session and the minister was advised by my leader that there was a proliferation of transactions to which the trust companies were party and that those transactions had been occurring over the past two years. The minister responded, "There have been practices that have arisen during the past few months." He added, "The kinds of transactions ... about which we all have some concern are, by and large, ones that have been taking place in the past few months."

8:20 p.m.

It is time to put on the record of the House that our research to date and the items we have released, particularly the one in Barrie that goes back to 1980, involve both Greymac Mortgage and Seaway Trust and mortgage financing of more than $3 million. I believe there will be further examples released that will also show these matters have been going on longer than just the past few months. If one looks at the operations with respect to the purchase of Crown Trust, the past few months would perhaps take us back to September or thereabouts, but these transactions go back much further than that,

In the context of these trust and mortgage companies, their assets, which are mortgage portfolios less their liabilities together with deposits and guaranteed income certificates, have grown phenomenally in two years. I would have thought the Ministry of Consumer and Commercial Relations would be particularly interested in those financial institutions whose balance sheets have shown the greatest amount of change over the period of time the review or investigation covers.

None the less, the deals which were done throughout 1981 and during the early months of 1982 are the ones which are of special interest to us, and would show the greatest change in the assets and liabilities of some of the companies which are involved in these investigations. It is equally remarkable that Seaway Trust assets increased by nearly $100 million between June 30, 1982, and its last financial filing.

Then we turn to December 21 last, which marked the end of the question periods that had gone on throughout the last few weeks of the fall session before its adjournment for the Christmas vacation. My leader asked the minister if an all-party committee, which would be reviewing the white paper to be submitted to it, would he permitted to take a look at the performance of the financial institutions division over the past two years. The minister was quite direct in his views that day. He said, "The answer to the second question is no, and I think it is impertinent to ask it."

There is a response -- a response which may not live in days of infamy like the events of Pearl Harbour, but certainly may well put a few holes in the ships of the navy of the Minister of Consumer and Commercial Relations.

This week in the House, now that we are back to complete in two or three or four weeks the work which we did not fully accomplish last fall, we have had indications from the minister that any review of the ministry will be an internal one. I put on the record of the House these various events because it is important that this sequence is clearly here for all the members to see.

This matter has been before this Legislature for several months. We have had the opportunities to seek inquiries. There have been questions asked. There have been revelations in this financial folderol not only during the past few months of last year. Indeed, they have blossomed during this past week.

Some of the people involved have been involved in other events of which the ministry would have been aware. We look at the situation with respect to the Ontario Securities Commission and wonder whether messages ever get across the street; whether they go from one office responsible for the operations of securities marketing and organizations in this province to the ministry itself, where the responsibility under the financial group does not seem to he very clearly understood.

There are a variety of these themes that I am sure members are going to come back to time and again over the next few months. I have only been able to highlight some of the circumstances and the questions asked over this period of time.

The answers given have been somewhat halting. The minister certainly has the reputation of being a forthright person, one who I believe would share with this House any information that would improve upon the securities legislation and the operations of companies within Ontario. But it seems almost as if the events of these last several weeks have overcome the strong attitude the minister has to be as open with us as he can possibly be.

There have been massive articles written in the press. Looking through today's clippings in the Toronto Star, I thought the last comment in one of the articles dealing with the trust companies was a somewhat poignant one. Again it recited the comments made by the minister with respect to Crown Trust. The article ended, after a review of the apparent interest some Alberta financiers have in the purchase of Crown Trust, with this comment: "Earlier this week Elgie told the Legislature Crown is no longer 'a viable, going concern.'"

I do not think Bud MacDougald would be very happy about that kind of approach. That is a company whose history goes back through virtually 100 years of financial activities within this province, a company that is one of the biggies. one of the largest traditional trust companies, one in which my city of Kitchener has $1 million and hopes it will be all right, as do we all. Looking at it, it makes you realize how quickly these financial institutions can be changed, not only in ownership but also in the direction in the use of their funds, their prestige and their name in the community.

I guess our own name is the most important asset any of us has. When that name unfortunately is soiled it takes a long time for that soil to wipe off. When a corporation like Crown Trust and its traditional position within the financial community is bruited about in the marketplace the resuscitation of that company will take a long time, if it ever is resuscitated. It will also take a long time for the sharing of the difficulties that every other financial institution will have, whether earned or not.

I thought I would use my time this evening simply to set out the sequence of events as I saw it. I regret that it happened. More particularly, I regret that some of the opportunities that had been suggested from this side of the House, which might have led to some earlier warning, were not followed through on.

I wanted most especially to suggest that the variety of internal guidelines do not seem to have been successful. I am referring to the things I mentioned during the debate on Monday afternoon: the internal operations through the financial institutions branch, through the Ontario Securities Commission, through the relationships for review of internal operations of the companies and the reporting mechanisms. I will not say they failed abjectly; that might be too strong a statement. But they certainly have not been successful and have not followed the tone that even the minister's predecessor told us was in place, the kinds of things upon which we could rely.

8:30 p.m.

I suppose the minister was correct today in saying, "You did not ask us about that in the last estimates." Surely if these things are in good order and discipline, we do not need to ask every year about every statute of the approximately 70 for which he is responsible. We expect things are going well unless they otherwise do not. In this instance, unfortunately, our expectations have not been entirely lived up to by the operations for which he is responsible.

That is my review of this circumstance as I have seen it. I've have a lot to build upon. Certainly the review, not only the public reviews but also the private and internal ones that are going to take place, are ones in which we are all going to be interested. Those are the questions that have been asked and those are the responses we have had to this very day. In the next few weeks I am sure we are going to see and hear much more of this ministry, because there is much to answer for.

The Deputy Speaker: Just to refresh members memories, we are in a time allocation I will ask for the chair to be reminded from time to time as the appropriate time is tied up by all parties.

Mr. Rae: Mr. Speaker, it is a great pleasure to follow the member for Kitchener (Mr. Breithaupt) who, if I may say so, has laid out some of the facts with respect to what has happened. As one might expect, I would describe it as slightly skewed towards a Whig view of events in terms of challenge and response. I still think there are some things that need to be said, not simply about this particular series of transactions and the investigation into these three companies but also about the difficulties that both the federal and provincial governments have had in regulating the financial institutions and some of the very difficult choices and decisions that still have to be made with respect to these matters.

My experience in dealing with these questions does not only stem from the last two months, which have been fairly hectic. November 15 was my first day in the House and, as the member for Kitchener has pointed out, that was the first day we met following the revelations with respect to the nature of the transaction that took place and the precise nature of the minister's plans with respect to that transaction.

In my previous experience as the Finance critic for our party in the federal House, I had occasion to deal not only with the Bank Act, which we reviewed for nearly two and a half or three years before it was finally passed, but also, naturally, with Astra Trust. I must say, whenever I hear members of the Liberal Party here complaining or raising questions about Re-Mor and Astra and expressing concern about the fact that the Conservative government has not done as much as it should have done -- views that I not only share but also have put forward in many different forums -- I cannot help but recall that we got absolutely nowhere and nothing from the federal Liberals with respect to the Astra investigation. To describe it as a stonewall would be to pay it a tribute.

Mr. Cunningham: It's a credit to our integrity.

Mr. Rae: My friend says it is a credit to his integrity. I am not sure whether he means it is a credit to the integrity of the Liberal Party or to what he is referring.

Mr. Cunningham: We are independent of our federal cousins.

Mr. Rae: All I can say is that it entitles us to view with some degree of scepticism the question as to who exactly is responsible for the situation we are in today with respect to these companies and these activities and the difficulties of regulation.

One could go back to the report of the 1964 federal royal commission on banking, which was chaired by a very distinguished former member of the Conservative cabinet in this province; it was appointed by Mr. Diefenbaker and chaired by Mr. Justice Porter. The minister may want to have a look at it, because it points out some real dangers and difficulties that many of us have been pointing to for a very long time.

These are the difficulties and dangers of having closely held corporations with few regulations and requirements with respect to financial disclosure; of having the right to raise deposits from the public and of having a significant degree of financial responsibility and financial trust placed in them, and having them covered, not by the Bank Act but by a piece of their own legislation, which in the view of the commission at that time was inadequate and which I think many of us who looked at it through the period of the review of the Bank Act this last time and during the Astra Re-Mor series of events feel is very inadequate today.

It would be foolish to pretend there is a magic solution to this problem of controlling and regulating trust companies in our credit industry in general without being too heavy-handed and without preventing some good and healthy competition taking place.

I know our party is not regarded as one with naturally close links with either the banking industry or the trust industry. Nevertheless, I have found a remarkable degree of openness by many individuals in both these industries in talking frankly about what they see as problems, what they see as challenges and what they see as realistic regulation.

I am convinced that the credit industry in this province needs to have a very healthy mix. I do have a concern, which I think is shared by a great many people, about the trust industry as a result of what has happened over the past couple of months and as a result of what may yet happen. I am not one who has ever believed in the usefulness of engaging in interesting speculation or otherwise, unlike some other people I could think of at the moment, but I think there are some very real problems ahead of us and ahead of the minister which could do further damage to the credibility of the trust industry.

I do not rub my hands at that at all. When I make the kind of remarks I have made with respect to the need to have widely held ownership in the trust industry and to establish rules limiting the ownership to 10 per cent and some of the other suggestions that we have been making for some time and the federal government put forward in its white paper with respect to federally chartered trust corporations, I know that the one group of institutions happiest with that scenario is the chartered banks.

The reason the chartered banks are the happiest with that scenario is that they are happy whenever they see their competition facing more stringent regulation and facing, if one likes, a more interventionist approach than they had otherwise.

That is why I stress the need for us to find a balance, because I do not think our credit industry benefits in the slightest if chartered banks are going to be given once again, or given in any sense, a greater monopoly over the allocation of credit.

I believe, and our party believes, very strongly that we need a healthy mix both federally and provincially between a co-operative sector, a private sector and a reinvigorated public sector able to provide credit to people, to enable people to get the kinds of services they want and to enable credit to perform for the benefit of the economy and for the benefit of people rather than as an instrument serving the advantages of a few as opposed to the advantages of everybody.

We are a long way from that in Ontario. We are a long way from having a healthy mix. No government has taken provincial savings banks seriously. The co-operative and credit union sector has expanded and is expanding and after having gone through a very difficult period because of the high interest rates, as I think the minister will agree, it now finds itself in a far healthier position than the one we knew it was in a year or a year and a half ago. But it still faces some statutory disadvantages. It is a shame that many credit unions in many provinces are not eligible to receive government funds on deposit. They do not get the benefit of receiving deposits from many other institutions, because of the nature of the guarantees and because of the nature of the legislation under which they work, both federally and provincially.

8:40 p.m.

With respect to the problems facing the trust industry, it is not simply, as the member for Kitchener has pointed out, that there are events with respect to these couple of trust companies that should have given rise to concern over the past two years and that somebody was asleep at the switch -- I think that is the phrase that has been used -- but it is more a question of the pattern that has developed over the past 17 years.

One can choose whatever watershed one wants, but this is the watershed that comes to my mind. Ever since the collapse of Atlantic Acceptance, there should have been a clear message to all our financial institutions and to the governments of the provinces that they had to get serious and tough with the question of regulating those institutions which were able to raise money from the public and which were able to manipulate other people's money, to use the classic phrase Mr. Justice Brandeis used in his famous book of 1913.

In a comment the minister made the other day, he proudly pointed to the fact that it was the Ontario government that led the way with the passage of the Ontario Deposit Insurance Corporation Act in 1967, which was followed by the federal act. While the provincial act is still on the statute books, there are no directors of the Ontario Deposit Insurance Corp., and in a sense it is a defunct or passive institution.

I suppose the Ontario government can take some pride in the fact that if one looks at the history of that legislation, the reason legislation was passed -- as the minister well knows -- is that there was a run on York Trust. I am not going to remind the minister or the members of the Conservative Party who was the major interest behind York Trust. He is now a very prominent, well-known Conservative in another jurisdiction. But that was the indication that something had to be done, and something was done.

Section 34 of the Ontario Deposit Insurance Corporation Act gives practically the same powers to the board of directors, to move in on a trust corporation incorporated in the province that appears to be having problems or whose assets appear to be questionable or that is in any difficulty whatsoever, as were established under the act we passed on December 21. The powers were there; they go back to 1967. In a sense, the government was aware of the difficulties involved and that there were problems with institutions that collected money from the public and that had to be more tightly regulated and more closely watched than they had previously been.

One could go through a number of other instances of bail-outs of companies facing problems and other companies agreeing -- one presumes after intervention of some kind on the part of the ministry -- to have other companies take them over to see them through a difficult period so there would not be a run.

Then we get to the question of Astra Trust and Re-Mor. The significance of the Astra Trust and Re-Mor situations is that they demonstrated how easy it is to get a licence in Canada, or at least in Ontario. If one cannot get a licence in Ontario, one can always get one in Ottawa; and if one cannot get one in Ottawa, one can always come back and try another kick at the can in Ontario. The minister is shaking his head as if to say, 'No, no, it could not happen in Ontario and it did not happen in Ontario." Re-Mor was licensed in Ontario. Let us not forget that.

Let us also not forget that in the legislation we passed on December 21, there are two aspects. The first aspect is the aspect the minister covered in his statement on Monday, and it is the aspect that has received all the attention of the media and all the attention and focus of this Legislature with respect to the takeover of the assets of the three companies involved.

I find it rather curious why the other aspect of the legislation apparently has been neglected by the minister in his statement on Monday and by other observers of the scene. Yet that other aspect of the legislation is just as important as the seizure of the assets aspect and has implications that are just as strong in the manner in which they reflect on the credit industry and what is happening to that industry in Ontario.

Since it all has been blabbed anyway and has been in the papers for the past three weeks, the minister will recall my colleague the member for Riverdale (Mr. Renwick) and I went to speak to him and the Premier (Mr. Davis). Both the minister and the Premier talked to us about the need for legislation. They had no trouble convincing us of the need for it. We were delighted they were finally moving in this area, an area in which we had wanted the government to move some time ago.

They were concerned that it was too easy to buy a trust company in the province. They were concerned that while the government had the means to check people who wanted to apply for a licence, it did not have the means to check people who wanted to take over, merge or acquire a company that was already in the trust business.

It subsequently emerged, and this all comes directly from the newspapers, that a certain individual who is 20 years old had made a bid on a trust company. The trust company's name is Dominion Trust. The only reason I bring this matter to the attention of the House, and I am sure it is a matter that will be raised again, is simply this: If the legislation passed by this Legislature on December 21 prevented this transaction from going through -- and the indications and the quotations from Mr. Thompson and other individuals who were quoted indicate that is exactly what happened -- as well as another takeover by Mr. Rosenberg of Vanguard Trust, one is inevitably led to ask a question.

I do not ask this in a hysterical way, because I try not to let that be my approach to this issue. How many acquisitions and mergers have taken place in the previous 10 years that the minister, the ministry or anybody was not able to stop because they did not have the legal power to stop it? That seems to me to be a logical question. We know who we got and we know who we stopped after December 21. Who were we not able to stop before December 21?

I am suggesting there is a lack of regulation in the sense that problems are clearly going to emerge because of the way in which this ministry has responded to concerns expressed to it about Seaway and Greymac; a lack of law with respect to takeover; a lack of law with respect to financial disclosure; and a lack of law with respect to diversity of ownership.

There are also the tremendous loopholes that exist with respect to foreign ownership so that, despite the provisions in the act that would appear to limit the amount of foreign ownership, we still have the situation where Branco Weiss is able through indirect means to control virtually half of Greymac Credit, which, as the minister knows, owns 99 per cent of Crown Trust and 99 per cent of Greymac Trust.

8:50 p.m.

If you look at the list of trust companies that was published in the past 10 days in the Financial Post and see who owns their shares, you are led to ask yourself, is it really appropriate to have one individual or one company with that much financial leverage, that much ability to manage and -- I say this not in any pejorative sense but simply in a technical sense -- to manipulate other people's money?

That seems to me to be the fundamental question which the government is going to have to address very directly, straight on in a white paper. because the government has to know that the federal legislation is moving in one direction towards the 10 per cent rule. They may grandfather some people -- we all know that various interests are going to find their way to the Senate and to those institutions that listen to those powerful interests -- and the legislation will not take the form it has taken in the white paper. But we know that this is the position they are going to take.

The very real question in this province, which is still the financial and economic capital of English Canada, that this government is going to have to decide and come up against very clearly is whether the rules that are developed in Ontario are going to be more relaxed, easier or looser? Is the regulation going to be less stringent or more stringent than it is federally? That is where you get into the nitty-gritty of the 10 per cent question, the diversity of ownership question, the financial disclosure question and questions involving conflict of interest.

I do not think I am telling the minister anything he does not already know or anything his ministry does not already know and is not putting its mind to in the white paper, but I simply want the minister to know that we in this party are very aware of that problem and are very aware that for all the scandal-a-day preoccupations of some people, that is not really the issue.

It is part of the issue, yes, in the sense of this transaction. But a much bigger part of the issue is that while we know what the tip of the iceberg is like, what is the rest of the iceberg doing? That is a much tougher question. If the minister ever has sleepless nights, he must be asking himself, "Are there any Leonard Rosenbergs out there whom I don't know about and whom we haven't found out about, because we did not find out about him until it was very late in the game?"

I guess this is the question that is in the back of my mind, and it gives me some sense of unease when I consider the difficulties and problems that are being faced now by a great many depositors with Greymac, Crown and Seaway Trust.

Yesterday in the House of Commons -- and I was not watching it out of any sense of nostalgia but simply because I had a gut feeling the Tories in Ottawa were going to start doing the number they usually do when an event starts taking place here: they were going to start asking questions about the trust company situation --

Hon. Mr. McCaffrey: No nostalgia at all? Not even a little nostalgia?

Mr. Rae: None at all.

I was interested to hear Mr. Wilson, who is the financial critic for the Conservative Party, say a number of things yesterday that I think must have given the minister some concern. First of all, he said we were on the verge of the biggest financial default in Canadian history. The second thing he said was that Mr. Cosgrove had known for more than a year about problems facing Seaway Mortgage and Greymac Mortgage.

The question that comes to my mind there is not simply a question of scoring points off a Liberal here and a Tory there. Having watched both of them from roughly the same vantage point in this part of the chamber, there is not a heck of a lot of difference, with great respect.

The following questions arise from that fact and from, not simply the title searching that was done h the research department of the Liberal Party for a time in November and December but also the information that all of us. with great respect, have been receiving from a great man' people in the industry and outside the industry, in financial circles and elsewhere, warning the ministry about the problems facing Seaway and Greymac.

The question that I think is on everybody's mind is, if Mr. Cosgrove's department, the Ministry of State, and the Department of Insurance in Ottawa knew a year ago that there were problems with Greymac and Seaway. Surely that must have been communicated to the ministry here. Conversely, if the ministry was facing difficulties with Seaway and Greymac here, we know that information must have been conveyed directly to the departments in Ottawa.

One has to ask -- these are the questions I was attempting to ask today, and the minister was saying he simply was not going to answer them, but surely they are questions that have to be asked -- what exactly the ministry did with the information it had. What internal memoranda went from Mr. Thompson to the deputy minister and the minister? Was the minister briefed at the time he became a minister that this was a problem area? Was it something the ministry saw as priority number one? Was it something the ministry saw as priority number two or priority number three?

It would be true to say that if any one of the minister's officials, or indeed he or anyone else, made a public statement saying such and such a company was under investigation, that would have an immediate consequence on the confidence any depositor would have in that corporation. If the minister were wrong, if there were no problem, then the minister would he not only being very unfair to the company but obviously also opening himself to the very real legal action that the company would certainly he entitled to take.

Similarly, if there were any allegation -- and I guess one comes to the question of criminal investigation which was confirmed today in the House by the Solicitor General (Mr. G. W. Taylor) -- if at any time it had been announced that these companies were under criminal investigation as soon the deal was closed, everybody knows that would immediately put a run on those companies and the situation would be extremely serious.

At the same time, there is another problem and one would like to know. The only way we can do it,! say with great respect to the minister, is not through an internal report on administrative procedures but through an inquiry by some independent person. That person would not be me -- I do not want to turn this into a political football -- but I say to the minister, unless a public inquiry is established, we are going to have to attempt to refer it to a select committee.

My preference, quite frankly, would be for a public inquiry where an independent person can ask very directly of the minister and his staff, "When did you know what you knew and, having got that information, what did you do with it?"

Those are the real questions. If there was no negligence, if there was no lack of vigilance and if there was vigilance all the way through and administrative decisions that can be justified all the way through. then all of us would feel much better and would have much more confidence in the ongoing work of the ministry, and we would all have much greater confidence in the reforms the ministry is going to be proposing.

But if that inquiry determines that there was a phone call or a letter, or a number of phone calls and a number of letters, from people in the industry or people associated with the industry or that things turned up in the ministry's own investigations and were not acted upon, then I think we are entitled to some real explanations and we are entitled to point a finger of blame.

9 p.m.

If there was an investigation of the books of Seaway, Crown or Greymac and there appeared on the face of it to be a problem of valuation, and if the problem was dealt with in the way in which the minister dealt with it in his statement of December 21, with his long, philosophical inquiry about what is value, then I would worry. For if the ministry had concerns about the problem of value and failed to act on those concerns, and if those companies continued to accept deposits from the public and to hold themselves out, and were held out by the ministry, as if they had the total imprimatur of the ministry and of the minister, then again the finger of blame, the finger of responsibility, could point in only one direction and that is directly at the government.

Yes, there have been signs on the wall. I disagree with the member for Kitchener, who said that they go back to 1980 or perhaps to Astra Trust. In my view they go back to long before that.

I know there have been a number of individuals in the financial community and elsewhere who have expressed concern time and time again with the way in which trust companies have been allowed to be established, with the blanket right they are given to raise money from the public, with the kind of leverage they are able to exercise and with the sorts of deals they have been allowed to make. All these are matters which I think it must be said go well beyond the questions of Greymac, Crown and Seaway.

These are questions which go hack a long way in the history of this province and to the failure of this province to respond to the economic, political and social realities of the world of money and the world of exchange.

I want to turn now to the broader future problem of where we go in this inquiry and where we go in this investigation. The minister has consistently said that the Morrison inquiry is going to provide the answers to many of the questions which we in this party have been asking, those which the members of the Liberal Party have been asking and those, indeed, which I know many members of his own party have been asking him privately. But I am not so sure that the Morrison inquiry can answer all the questions.

I have expressed some scepticism, both in committee and in this House, and will do so again, not with respect to the good faith or the ability of Mr. Morrison -- I would not dream of questioning that for a moment -- but rather whether he really has ample jurisdiction under the Loan and Trust Corporations Act to be able to ask all the questions and to get all the answers that he is entitled to and that we are entitled to, not only with respect to the ownership of the numbered companies but with respect to the management of the trust corporations themselves.

That is why, from the time the Morrison inquiry was set up, we in our party said we did not think that was adequate and that what was really required was a more broadly based public inquiry. We wanted one which would be able to examine not only the questions surrounding the transaction and what Mr. Rosenberg said he told the minister and what the minister said he told the ministry, but one in which we would be able to look into all aspects of the transaction, all aspects of Kilderkin's work, all aspects of the previous financial history of these organizations and of their dealings and, finally, all aspects of both federal and provincial regulation of these companies' dealings and this particular deal.

There are a number of facts that in my mind and to my way of thinking really remain questions that really remain terribly unanswered. This deal did not close downstairs somewhere in a basement. This deal closed, I understand, as I have read in the newspapers -- and I stand to be corrected -- in the corporate offices of Goodman and Goodman. It was attended not only by legal counsel for Greymac, Seaway, Kilderkin and the numbered companies but also, we understand, by Cadillac Fairview itself. All the parties to this transaction must have understood the nature of that transaction as it occurred.

What is remarkable to me and what in a sense is a political question I cannot answer, which I have shared with a couple of my colleagues, including the member for Riverdale, is this: How could those people, so many of them as close as they are to the Conservative Party, have possibly thought it was possible in the Ontario of 1983 for that kind of deal to stand up in the light of the implications it has for the tenants and for the people of this province?

I think we have seen a very healthy development in the politics of this province in the last few years and certainly a very healthy development in the last few months. That kind of speculation, when it is exposed, whether it is legal or illegal -- and I am not in a position to pass judgement on that, and none of us here is until all the investigations have been completed -- but whether it is legal or illegal we in this party are in no doubt at all as to its fundamental morality and as to how it responds to the commonsense view that people have of the acceptability of this kind of deal in 1983.

It is because the deal was in a sense consummated in a way that everybody knew about and everybody was aware of. The minister was apparently supposed to be told that the deal was going to go through. Mr. Rosenberg has stated that somebody from Cadillac Fairview -- he has not named that individual; we can all spend a basically fruitless but nevertheless interesting time thinking who that individual might be -- somebody either representing or close to or part of Cadillac Fairview was supposed to inform the minister of the deal.

Nevertheless, there is no doubt that all those individuals appear to have known about it. I have seen no denial from Cadillac Fairview that it was aware of the nature of the transaction and it acquiesced in the view that has been given to the whole transaction by Mr. Rosenberg that in this deal Cadillac Fairview was the wholesaler and both he and Mr. Player were simply the retailers putting the price up in a way that is perfectly legitimate in a market society.

What I am suggesting, and this is a difficult thing to say, is that when we look at all the things that have taken place -- and there is one other thing I want to touch upon and then I will sit down -- it becomes all the more clear why we have to have a public inquiry. It is not only a question of who was supposed to inform the minister, why did that person think the minister would know and why did Mr. Rosenberg think that person would inform the minister; it is also a question of what the response of the ministry has been right through.

We know what the published response has been. I certainly know what it has been at first hand since the time I was elected to this place, and I know what the minister has said in this House. I believe and feel that he has acted in good faith in telling this House what was going on.

But I also think there are questions that have clearly not been answered. Today, for example, the minister refused to answer any of the questions I put to him concerning when he knew certain information and when he was first aware of certain information, and he has said the only way we are ever going to find out is when there is some sort of internal, administrative, self-judging exercise which they will share with the public of Ontario once it has been completed.

9:10 p.m.

I have some other questions, the answers to which I think the public should have a right to know. Why was the firm of McMillan Binch retained when it was retained? What exactly was the work of McMillan Binch to be when it was retained? What was the involvement of the firm of McMillan Binch in the drafting of the emergency legislation, or was that legislation drafted within the government? Precisely what conversations took place between counsel for McMillan Binch and the minister with regard to the question of conflict of interest over Victoria and Grey?

Mr. Macdonald, who is the counsel to the minister, is a director of Victoria and Grey, a company that has expressed not only interest, because to describe it as interest would be to describe much too shy and retiring a view, but I think one could say has expressed desire with respect to the purchase of Crown Trust.

If I were a competitor of Victoria and Grey in the trust industry, which as the minister well knows I am not, I would have some questions. I would want to know why Victoria and Grey appeared to have the inside track during all that time. What kind of information was coming forward with respect to the assets and liabilities of Crown Trust? What sort of information did they have? Where did the government get its information? How was this conveyed to the government? What phone calls took place? What correspondence was there?

These are questions which cannot be answered. The minister is shaking his head, but it is just not possible to organize and conduct this kind of major intervention without these perfectly legitimate questions being asked. They are not being asked out of a sense of scandal or mischievousness, they are being asked because, on the face of the record, they have to be asked.

If I may say to the minister, once this event became public, which it did in and of itself on November 4 or 5 when this deal was closed, at that point the old boy network went into effect of phone calls, special understandings and saying: "We are going to bailout so and so. This is going to happen. This is not going to happen. We are going to do this or that."

As to the ways various establishments have devised over the history of the last 3,000 or 4,000 years to take care of their own, all those things go by the board because we are in a new and completely different ball game. We are in a situation where these events are public, where the public is involved, where the public has a right to know, and where the Legislature has a right to know and has to ask. I can tell the minister, we are simply not going to be put off.

Astra Trust and Re-Mor were referred to a select committee of this Legislature. That committee was able to get some important information because it was able to subpoena and cross-examine witnesses and to compel the production of documents.

I would say this to anybody, no matter who was in the ministry. JS Woodsworth could be the Minister of Consumer and Commercial Relations and I would be saying the same thing to him. He cannot be the judge in his own cause. He is not in a position to go back to the ministry and say, "I have asked the following people whether they had any phone calls or messages and this is a summary of the information they have given me."

If I may make an analogy, when the minister gave his statement today with respect to what happened with the trust companies, we did not have the correspondence tabled. We do not have an account or an indication as to exactly who was at the meeting. We do not know what the ground rules laid out at the meeting were.

We do not know what the minister said to those individuals. We do not know what those individuals said to the minister. We do not know what those individuals said when they left the meeting. We do not know who they phoned. We do not know who they wrote. We do not know what they did.

All we have are two little pieces of paper which are, in a technical, evidentiary sense, self-serving pieces of information. In a technical sense, all the minister is able to give us in response to a series of questions in the House has been self-serving information which comes from the source that is being challenged and questioned, and where we cannot get behind that to produce documents, compel the production of documents and evidence, cross-examine witnesses under oath, question their credibility, look at questions of consistency, internal and otherwise and to come up with some answers as to exactly what has happened, what is happening now today and what is likely to happen in the future.

That is the long and the short of the reasons there simply has to be a public inquiry. Not because any one party or another party has got on a high horse, not because there is -- certainly not on our part -- any' personal vendetta against the minister, the Premier or anybody else, but simply because some things have happened and certain questions have to be asked. It is not pleasant to have to ask them.

We would all like to have the utmost faith in the integrity of our financial institutions. We would all like to think that everybody who got involved in the trust business was a totally trustworthy individual who would never lie to anybody- -- his mother, his grandfather, the minister or anybody else -- but that is not the world in which we live. The world in which we live is one in which there are apparently in the trust business some pretty ruthless people, people who are clearly pretty unscrupulous, who do not see anything wrong with making fantastic sums of money for little or no work.

As I have said before, the Canadian Conference of Catholic Bishops suggested there was a moral disorder in our economy. When everyone may think of other views of the bishops, I think that is one thing which has been crystal clear and has been made crystal clear over the last few days, weeks and months. Of course there is a moral disorder in our economy when somebody like Leonard Rosenberg, a speculator, can get up and say, "The only problem I had in making $40 million for half a day's work was that I did not make $80 million." Apparently none of that money is taxed. We do not even know where it is. There is no speculation tax which would make that kind of speculation completely unprofitable, if not illegal.

That is why I tell the minister that whether he does it tonight, tomorrow, next week or the week after, he is going to have to call a genuinely independent public inquiry into all these transactions. He is going to have to call an independent public inquiry into the conduct of his ministry and a public inquiry into the information he had, other members of cabinet had and, if I may say so, even the Premier had with respect to these and other companies as to when they knew, what they knew, how they came to he informed and why they acted exactly as they did.

Unless such an inquiry is held, the inevitable question that will be left in the minds of every citizen in Ontario who cares to think about these things is, what does the government have to hide?

In closing, I would say to the minister that I know he was very critical of those of us who felt it was irresponsible of him, and I still feel it was, to announce the takeovers on a Friday night and then basically disappear -- not from working, but disappear in terms of contacting and being in touch with the public for the next 10 days. When governments are in power for too long, they forget. Civil servants in power, who have not seen a change in government for a long time, forget as well. People who are used to working behind closed doors as part of a closed network forget as well.

9:20 p.m.

Secrecy breeds many things. It breeds rumour. It breeds allegations of all kinds of misconduct. It breeds all kinds of idle speculation. The only way to deal with that is with the searchlight of information, of reassurance, of leadership. not simply in terms of actions that are taken with respect to some things but leadership in terms of bringing the public into the confidence of the government and into the confidence of the minister.

I know the minister, judging from the replies he has given to me and to other people in this House, feels he cannot respond, he cannot give us the answers we want. He may know them, he may not know them, I do not know, but he cannot give them to us because it would cause him legal difficulties. All sorts of things are going on in the back of his mind. He has clearly been told by his lawyers, "Don't say anything."

I would say to the minister that the cost of that approach, and this is something perhaps even some lawyers might not understand -- because I think there are some things the minister could say but the reason he is not saying them is not for legal reasons but for political and economic reasons -- the reason this government is not prepared to guarantee all the investors and all the depositors in the three companies, which would be the single message that I think would give the most reassurance to the public of Ontario, is because that would be an admission of its own lack of vigilance. That would be an admission that there has been a breakdown of the regulatory process and that would be an admission they had made a mistake, not just one mistake but a series of mistakes.

I want to suggest to the minister that his silence, his relative silence, the fact that he and the Premier -- and I hold the Premier as accountable as the minister for this -- have not taken the public into their confidence is having consequences on the confidence that people have in trust companies and the trust business and is having consequences, I believe, on people's credibility, people's belief, not simply in the Tory party or the Tory government, but in government itself.

That is why I say to the minister, and in his absence say to the Premier, if they are really concerned about the integrity of our financial institutions -- and I believe everything I have heard, that they are -- and if they are really concerned about the integrity of government, which they say again and again that they are, then all they have to do is call a public inquiry to demonstrate their own belief in that integrity. That is all it requires.

The failure to do so shows me that they are not proud or convinced of their own actions and convinced that everything they have done is right, that they have nothing to hide, that there is nothing wrong with any of our financial institutions and that there are no more Leonard Rosenbergs or others out there, that everybody else involved in the trust business is doing an A1 job and is absolutely A1, somebody who is totally a trusty trustee; the impression that is being left with the public is that of a government that has no confidence.

It has lost confidence in itself because events have got too big and have come too quickly and have been too surprising, too stunning and too upsetting, because they are too upset at some of the facts they have found about individuals who have long been closely associated with the Tory party. They may be upset with the possibility of other events taking place which could again have an impact on the confidence of the public, and that the ministry and the regulation process itself have shown signs of breaking down along the way.

They say: "That is just not true. You must not say those things. We are not really like that. Good heavens, you do not think we really are that kind of people?" All I can say to the minister is, show me. Show us all. Convince the people of Ontario. Their confidence has been shaken.

It has not been shaken by the National Inquirer-Jeanne Dixon version that we have had of events from the Liberal Party: "I know that something is going to happen next week. I do not know where I know it from, but I know it. I do not know where I got it, but I know it is going to happen. I cannot tell you where. I do not have any inside information but I know it is going to happen."

That is not what is shaking people's confidence. A little bit maybe, but what is really shaking confidence is events themselves. If the minister wants to restore confidence, he should take the people of this Legislature and this province into his confidence, and so should the Premier, and admit that there is a bigger problem out there than they had reckoned with in the first place, and that the only way to attempt to get at what exactly has happened and who exactly is responsible for the breakdown is to establish a public inquiry.

That is really what I wanted to say tonight. I have taken a little longer than I had anticipated. I have had the flu. As the minister will know from his previous training, this has an impact on metabolism. Therefore, my speech is a little slower than it would otherwise have been.

Hon. Mr. Elgie: It has not shortened the length.

Mr. Rae: No. I am saying it took me longer to give the same speech than it would have done otherwise. That is why the minister should pray for my health every day.

With those remarks, I will close. I just want to assure the minister that we will not be calling this one a day, either tonight or tomorrow, until the public inquiry is called. Even then we will still have some questions. It is now up to the minister to respond to what I think is a concern; not simply a partisan concern but one which is widely shared throughout the province.

Mr. Cunningham: Mr. Speaker, as I have reflected on the details surrounding the latest example of abject negligence, if not incompetence, in this ministry, I find it has been useful for my purposes to examine some of the documents that I have found in my Astra/Re-Mor files from the past. These are documents which I believe serve as an indictment of the operations of this ministry, which has an obligation to protect the public.

The first item that I came across in my file was a reference made not by Liberals, not by New Democrats, but by Mr. Justice Anderson of the Ontario Supreme Court in a decision dated February 8, 1979, commenting on the failure of C and M Financial Consultants. Mr. Justice Anderson, who was not partisan, of course, said:

"Indeed, it would not be too far to say that the evidence suggests that Mr. Montemurro dealt with the funds of the respondent C and M, comprising the investments made by various individuals, as he would have dealt with his own money and without in any way being inhibited by the fact that they were company moneys received by that company in the course of a transaction in which the investor thought he was investing in mortgages, and likewise uninhibited by his fiduciary obligations. All of the classic indices which have attended many a previous financial disaster are present in this case."

Not long after that, we were fortunate enough to get this matter of the failure of Astra and Re-Mor into the standing committee on administration of justice. This was due to the fact we had a minority government situation which allowed a much higher standard of protection for the public. The committee was ably chaired by my friend the member for Etobicoke (Mr. Philip).

At that time there was a great deal of press, I can recall, in what I am sure was an objective and well-intended column, my good friend Mr. Hugh Winsor indicating that perhaps we were involved in a witchhunt. He was saying our attention in this regard was ill-advised, in view of the fact that the matter was before the court. It did not take Mr. Winsor too long to come up with a different view, as reflected in his January 1981, column, where he said, in part:

"One of the purposes of this column is to congratulate the members of the justice committee for the careful way they have proceeded to uncover these shortcomings without disturbing the legal minefield that so concerned Attorney General Roy McMurtry and the Ontario Securities Commission." I remember the chairman at the time indicated he would resign before he would appear before our committee -- two years ago this very moment.

9:30 p.m.

"The material Mr. McMurtry's officers have deemed 'sensitive' to the criminal prosecution of Mr. Montemurro which is going on at this moment has not been made public by the committee, nor has there been any disclosure of confidential sources so that the concerns of the OSC investigators would be recognized.

"What has been disclosed, however, is the extensive evidence of shortcomings on the part of the government and the apparent breakdown of communication within its branches that stretch credibility to the breaking point.

"In retrospect, it seems clear the agonized opposition of Mr. McMurtry, and to a lesser extent the opposition of Consumer and Commercial Relations Minister Frank Drea, was not only prompted by their concern for the legal aspects of the case; they were hoping to avoid the obvious political flak as well as the not inconsiderable inconvenience the hearings and production of documents have caused to them and their officials.

"The hearings are far from over and it is too soon for a definitive assessment but it is possible to make some other general observations. One is to note the directness and precision of the two investigators who have testified in comparison with the mushiness of evidence given by the bureaucrats to whom they reported in that ministry, Allan Coleclough, former police detective, etc.. and Dennis Bigham." Tribute was paid, of course, to both of these men.

Mr. Winsor concludes his article by saying: "Without apparent concern to where the chips, in terms of bureaucratic or political careers of their superiors, may land, they spelled out in detail how they had assembled and presented the information about Mr. Montemurro's shaky financial footing. The ministry officials had warned against granting the Re-Mor licence. Moreover, they backed up their stories with notes, affidavits made at the time. Despite these warnings, Re-Mor got its licence and soon after 320 investors lost their money, many of them losing their life savings."

On February 2 or thereabouts, an election was announced. Moments before that election became reality and the work of this committee ceased, our committee was able to file our interim report. I think it is useful to get it on the record.

In part, the committee indicated: "The committee regrets it has been unable to complete its inquiry. It believes a great deal of information remains to be placed on the public record, information which would clarify what went wrong in the Montemurro affair and why. It believes on the basis of the documents available to it but not yet in the public record that this information would not place the government in a favourable light.

"The committee believes on the basis of evidence received thus far that serious maladministration of the relevant provincial laws has occurred with respect to protecting the public against the activities of Carlo Montemurro and his various associates and corporations. It notes that a wide-ranging criminal investigation is currently under way in this regard." It is yet to be concluded.

"While the administration of the relevant federal laws is beyond the jurisdiction of the committee, it has received evidence indicating that political influence was exerted on federal officials to incorporate and license Astra Trust as a federal trust company. The committee invites the Parliament of Canada to examine the transcript of its proceedings and to take such action as it deems appropriate."

Mr. Rae: The Liberals would not let us.

Mr. Cunningham: The Liberals here had the courage to do it. I say that to the member as objectively as I possibly can.

"The committee is also of the opinion, based particularly on the evidence of John Clement, former Minister of Consumer and Commercial Relations and former Attorney General of the province of Ontario, that political influence was exerted on provincial officials to obtain a provincial registration for Astra Trust.

"The committee has no hesitation reporting its view on the basis of evidence so far that the government of Ontario should compensate forthwith those members of the public who lost money in financial transactions arising from the licensing of Re-Mor Investment Corp. as a mortgage broker. This compensation should include appropriate legal costs such as persons have incurred up to the date compensation is paid.

"The committee recommends that its inquiry be continued and completed should the Legislature and committee be now dissolved either by mandating the standing committee on administration of justice constituted by the next Legislature or by constituting a royal commission of inquiry."

Not long after that, commenting in the Hamilton Spectator, the member for Burlington South (Mr. Kerr) said on March 4, 1981, speaking of the inquiry: "'You have not had so many people within a ministry admitting some mistakes,' the Burlington South MLA said. 'The government obviously has to look at its laws so that similar situations will never happen again. It has to do a lot of housecleaning in the ministry. The government also has to create some type of new apparatus to compensate people when similar situations do happen. For that reason the justice committee should be allowed to finish its work and make a proper report after the election.''

Perhaps Mr. Kerr is the Jeane Dixon of the Conservative Party, I do not know. Perhaps there was some sense of premonition on his part.

The harsh facts of reality are that as a result of the events of March 19 our committee work was stopped. Not only were we not able to comment on what went on and what events led up to the licensing of Astra and Re-Mor, but on what positive steps we could have taken, as a Legislature, as elected members in our constituencies, responsible to the municipalities who have deposited money in these corporations and to the individuals, to ensure it would never happen again. Too many of those speeches involved the famous phrase, "To see that it never happens again."

On March 12, 1981, Mr. Barry Brace, vice- president of Deloitte Haskins and Sells Ltd.. receivers for Re-Mor Management Corp., tabled in a press release their recommendations pertaining to their interim report. I am sure the minister has seen the attachment. Most certainly his deputy,. Mr. Crosbie, would have seen it because it included a letter dated February 24, 1981, addressed to Mr. Crosbie and to Richard Humphrys, superintendent of insurance in Ottawa at the time, and to Mr. John F. Close, president of the Canada Deposit Insurance Corporation. All three of these individuals were notified.

I will not bore the members with all the details of his report but I would quote some relevant parts in the hope that the minister will take note of them in the event that Mr. Crosbie has not favoured him with these comments. In part they said, "With respect to any allegations of negligence by the two levels of government in licensing and regulating Astra Trust and Re-Mor, we are led to conclude:

"1. There were facts available to various government officers which, if they has been properly integrated, would have suggested that neither Astra Trust nor Re-Mor should have been licensed.

"2. There were from the beginning repeated incidents, breaches of undertaking, breaches of license conditions which indicated a clear and present danger that the principals of the trust company were functioning without any concept of fiduciary obligation.

"Opportunities presented by these warnings to conduct a thorough investigation, rigidly control the operations, correct the improprieties or ultimately close the operations were not taken.

"Decisive action was not taken by any level of government in the face of these repeated opportunities until the depredations were too far advanced. There was jurisdictional confusion between the responsibilities of different levels of government as well as those of different departments and authorities. This confusion was a major contributor to the damage that occurred."

Then in this paragraph, which should he indelible in the mind of the minister, and very certainly I would think his deputy, Mr. Crosbie, Mr. Brace said:

"We are of the view that there is an urgent need to review both the legislative framework and the operating procedures concerning the regulation of these types of financial intermediaries." This is dated February 24, 1981, almost two years ago. These are the comments of the objective vice-president for the receiver for Re-Mor.

People are still waiting for their money, people are still waiting for the Premier to make good on his election promise that there would be a quick and expeditious and fair hearing to deal with their concerns.

After the election results of March 19, we returned to the Legislature and we asked the new minister in charge, the member for London South (Mr. Walker), who does not seem to be around too much any more, what he was going to do to straighten out some of these administrative difficulties. We asked how he would specifically deal with the promise that was made to these people.

The minister had some instant answers to everything. When questioned on this matter in the House on April 23, 1981, our answer to Ronald Reagan favoured us with this comment: "An alternative to more regulation that should be looked at is less regulation, coupled with fuller disclosure requirements. Would the Astra Re-Mar investors have been more cautious if there had been a requirement of a clear warning of risk.

9:40 p.m.

These were not investors, they were depositors; that distinction should be made to that minister and, I think, to the Premier. I am mindful, of course, of the Premier's comments in the House on Monday in which he chose not to distinguish between an investor in the stock market and a depositor in a trust company or a bank. He either lacks that understanding or chooses not to understand; I do not know which.

We were not assured by the comments of the then minister, he is now Minister of Industry and Trade (Mr. Walker), on June 11, 1981, in response to a question from my good friend the member for Ottawa East (Mr. Roy) on the subject of Re-Mor. He asked on that date:

"Finally, does the minister not feel he should give priority to protecting the citizens of this province against wasting of their life savings, rather than protecting the government or civil servants if these people have been negligent?"

The minister's reply is worth framing. He said: "Mr. Speaker, I think the government has demonstrated good faith by the fact that these matters are before civil courts" -- they are still before the courts wasting millions of taxpayers' dollars and millions of dollars on behalf of the depositors who are having to litigate to get their money back -- "that discussions are continuing between us and Ottawa" -- that is the minister's grammar "and that we ourselves within the Ministry of Consumer and Commercial Relations have taken a number of steps to attempt to rectify the situation that may have existed, imperfect though they may be. I think the fact we have been able to do that shows our good intentions.

"I should use this moment to tell the honour- able members some of the things that we have done within our own ministry in terms of improving areas that we thought were not perfect -- areas we thought should be rectified from the point of view of making for a better registration and licensing system.

"We now have much more extensive internal communications than we had before. This has been going on since last summer; so it has been in place for a good 10 or 12 months now. We are holding many joint meetings now between the financial institutions branch, the business practices branch and the Ontario Securities Commission, which previously was not the case." That came as a big surprise to us. "We feel that we have tightened up in that regard and that things are better there now because of the internal communications.

"We feel we have a new system in place for capturing potential problems and bringing them to the attention of top management and ensuring circulation wherever there is any kind of problem. So there is a lot of internal communication going on. We have much more frequent liaison with the police forces, and we find it is working well to turn up things and to share information. We have doubled our efforts in that regard. That has been going on since the spring of this year."

Next, the minister favoured us with something marvellous:

"We have something called a supplementary information list, which is a special computerized list of people who might be considered problem people. This is circulated and updated on a daily basis. We have a much more extensive investigation process today. We feel that we have done an awful lot of things and, frankly, many of the things the member" -- our good friend the member for Ottawa East, who unfortunately cannot be with us tonight---- "is suggesting are just not needed."

Isn't that a pip? That really is something. That is really profound -- the "supplementary information list," the special computerized list of people who might be a problem. Is Mr. Cowper on that list? Would our good friend John Clement, QC, be on that list, or Lyon Wexler, or our good friend Mr. Rosenberg; that is, Rosenberg of Florida as opposed to Rosenberg of the Ontario Municipal Board? Would they be on that special list?

We now have a habit of introducing what I would characterize as the barn-door legislation. This is the kind of emergency legislation that we ram through the House in the course of three readings to help the ministry out of a bit of a pickle.

The first, of course, was our famous Co-operative Health Services of Ontario barn-door legislation, which went through in one day to help us deal with the problem that the member for Scarborough Centre (Mr. Drea) categorized as the situation where the company had been taken over by sharks. The harsh reality -- I think I have one of the ministry's files on that matter -- is that it had been a problem since 1974-75.

I want to go through the chronology of events leading up to the Re-Mor/Astra matter because the situation is exactly the same.

On January 13, 1980, the member for Riverdale (Mr. Renwick) and I raised the matter in estimates. We were told by the minister they were looking into it and they wanted to wind things down. We were assured by our good friend Mr. Bray, now retired, that everything was more or less in good order; and by the way, the member for Scarborough Centre blamed the federal government.

When the House resumed on October 7, 1980, questions were raised to him on the subject, and he blamed the federal government. More questions were raised on November 4; the minister again blamed the federal government. Questions were raised again on November 6, and he again found it convenient to blame the federal government. There were questions again on November 7; he blamed the federal government.

On November 13 the House asked the minister to table the Re-Mor documents. The then minister said he would do so on Friday, November 14, the next day, or November 17. On November 17, not having received it, the government was asked to refer the matter to the committee. The minister refused and invoked his famous sub judice doctrine.

He said he would respond on November 18 to our request. On November 18 the government was asked to table all Astra/Re-Mor files. The minister refused, invoking sub judice. On a petition of 20 members of the Legislature, I believe from both parties, the matter was referred to the justice committee.

The justice committee passed motions deciding to begin the Astra/Re-Mor investigation, inviting ministry officials as witnesses and requesting a Speaker's warrant for production of the Astra/Re-Mor documents. On November 20 there was a House debate on the Speaker's warrant. The House voted in favour, and the government voted in opposition. On November 24 the Speaker issued his warrant.

On December 2 the Ontario Securities Commission informed the Speaker of the House that in the commission's opinion the Speaker's warrant, which was directed to the Minister of Consumer and Commercial Relations, did not include the Ontario Securities Commission. Is it not an absolute riot that they would be exempt from that, at least in their opinion?

On December 3 the justice committee moved to set a deadline for the production of documents pursuant to the Speaker's warrant. On December 4 in the House a motion was put to set a deadline on the Speaker's warrant, and it was debated. A last-minute, very tense compromise was reached so that the documents would be handed over to a tripartite subcommittee to screen the documents, and this was agreed on by the House.

From January 5 to February 2, 1981, the committee met and conducted the inquiry until it was interrupted by the election, and not one member violated the doctrine of sub judice. To this date I do not believe that any effort has been made by a solicitor for any of the accused or anyone involved in the criminal prosecutions to indicate that their rights and privileges in that regard had been abused in any way whatsoever.

On April 23, after the election, contrary to the promise made by the Premier, the government indicated that it would be using every legal defence available to the crown with respect to the Re-Mor investors' lawsuits. The government then indicated on April 27 that they would not allow the Astra/Re-Mor inquiry to continue; on it went.

That situation, of course, continues today. The efforts made by members of both parties to have this matter referred again to the justice committee, to get into the details of the failure and what events led up to it, were shot down by the majority Conservative government.

But in the press we had some comments by some people for whom I still have a great deal of respect, notwithstanding the fact that our political parties are not the same. On February 14, in the Financial Post, an article written by Miss Deborah Dowling says, "The Astra/Re-Mor reverberations raise sticky questions."

Our friend, who was the parliamentary assistant to the Attorney General and now is a superminister, the Provincial Secretary for Justice (Mr. Sterling), said: "I don't give a damn whether we are legally liable or not. If we are negligent, then we should pay." Of course, since that time the Ombudsman has found that we have been negligent and the receiver has found that we have been negligent, but the people who have been involved, the people who have required assistance, have not received the money to which they are entitled.

Indicated in that article were some rhetorical questions by the reporter: "Does the Ontario government have the power under the Loan and Trust Corporations Act to turn down an application for provincial registration from federally incorporated trust companies on the basis of public necessity or fitness?" A similar rhetorical question: "Similarly, can the Ontario government under section 137 impose terms and conditions on a federally chartered company?"

9:50 p.m.

The minister suggested today in the House that the matter has not been raised recently in the estimates. It has been raised many times by many individuals, inside this House, outside this House, by journalists, by the Ombudsman, in the courts, by Mr. Brace -- we have all spoken about the litany of failure in this ministry and the need to take a look at things.

My quotes in the article of February 14 were as follows on the subject of the Mortgage Brokers Act: "We must take an entirely new look at who gets the privilege of being licensed. We must toughen the tests and we must strengthen the auditing process." I also indicated that the Ontario Securities Commission no longer should be reviewed as a hands-off operation.

The Provincial Secretary for Justice told the Financial Post -- although I guess he was not minister at the time -- that tighter controls should be imposed on brokers who were syndicating mortgages and said the separation between mortgage broker activities and trust companies should be clear and unequivocal; and on it went.

The harsh reality is that the events leading up to the current situation did not happen overnight. The legislation, while I would say it is imperfect, certainly serves as a guidepost for the people within the ministry to maintain an introspective analysis of just what is going on in that ministry.

Our good friend the minister is taking the political flak for this, and I guess that is one of the reasons he has a car and driver and some extra emoluments. I do not deny him that. What I take exception to is the fact that this has gone on year after year, under the stewardship of the member for Brampton (Mr. Davis), who was able, as the captain of the ship, to take off to Fort Lauderdale. If he had an account down there, he would be given a great deal more protection under the Fort Lauderdale Loan and Savings Corp. than we have here.

Mr. Bradley: Was he in Fort Lauderdale? I thought only the Prime Minister was there.

Mr. Cunningham: He was on a working trip. The Premier was sitting on a large blue towel reflecting upon how nice it was that our good friend the doctor from York was taking all the political flak.

Mr. Rae: East York.

Mr. Cunningham: East York; well, I meant in the generic sense.

I happen to hold the minister in high regard, although his inability to deal with this matter in an open and objective way disturbs me no end. We have had the list, which includes Atlantic Acceptance, Argosy, Astra, C and M Financial Consultants, Re-Mor, Co-operative Health Services of Ontario -- and I should stop there. The minister's release today, dated January 20, says, "Financial sharks preying on desperate." It looks like the Minister of Community and Social Services (Mr. Drea) has gone back to writing press releases for the ministry. The sharks are at it again.

The Leader of the Opposition and the leader of the third party are absolutely correct when they advance the view that the minister cannot be expected to judge himself. The public requires that we have an open, objective, independent analysis of just what is going on in his ministry, and that can be accomplished only by a royal commission or by a public inquiry.

People are numb about these things. They have had enough of them. They are almost conditioned. They are as conditioned as I am to finding out the day after a game that the Maple Leafs lost. They are numbed by these things. There could he another one tomorrow, but they are numbed by these things.

It is simply not good enough for the minister to stand in his place, day after day, and say, "When I get the information, I will tell you;" or, "I don't really know at this moment, but when I find out I will let you know, and, by the way, thanks for dropping in." It is just not good enough. It is analogous to our friend Arthur Edward Martin Maloney commenting on the efficacy of the comments of our good friend Reid Scott and pronouncing that, in his own fine determination, everything is all right. It is simply not good enough.

There are more questions than there are answers in this. The minister, if he is going to discharge his responsibility, as we over here have been accustomed to have him do when we deal with him directly, will be well advised to establish that public inquiry and in the interregnum to endeavour to answer in this Legislature -- not in the scrum out in the hall, not on some leadership tour, or wherever he may happen to be, but in his place in this Legislature -- to discharge his responsibility and answer some of the questions that have been asked.

The minister should tell us just how often his registrar has been favoured with reports from directors under section 193 of the act. I know the minister, if he has not been brought up to date on the niceties of section 193, has been brought up to date through his attendance in the House. How often have directors of trust companies licensed in this province, who report to the registrar, written to that registrar and indicated their concern about the efficacy of some mortgage, bona fide or otherwise?

What is going on with Greymac Trust? I do not profess to have a great deal of expertise in this matter, but where is the money? Maybe that is too simplistic a question to advance. Where is it? If it is there, tell us. If it is not, when did it happen? As the leader of the third party indicated, when was the minister apprised of it? When did he know? How did it happen?

There are many trust companies that complain about being overregulated. They complain about visits when ministry people come in, set up camp for the better part of a week and go through five-gallon cans of coffee and the books. How is it that with these operations those people would not have spotted it? Most important, and finally, what administrative and legislative steps is the minister taking today to see that it never happens again?

I think there is a limit to the time that members of this House will endure the ministers stonewalling. I use the word advisedly, because if I said "coverup I believe there is a precedent based on some experience last year that would cause me to have to retract it or to leave the assembly, which I would not want to do. How long will the assembly or the public tolerate or endure the minister's stonewalling on this issue, notwithstanding the fact that we all hold him in very high esteem and warm regard? I would say there is a limit to just how long we will tolerate that.

The minister has a responsibility to stand in his place at the earliest opportunity and bring us up to date on just what Mr. Morrison has found. I have no argument with Mr. Morrison, but it is apparent to me that after only three or four days' visitation in those facilities, he was sufficiently concerned that he went back to the minister and said: "We need some legislation. We have to get our act together because there are some things that are wrong and not right in these situations." How could Mr. Morrison determine that in a very short period of time while the ministry officials, albeit with an act that needs to be updated, could not determine it?

That is something that must bother the minister profoundly, because he is taking the political heat for this. He is responsible. In my own way, I would prefer the first minister of this government to take that responsibility.

If the ship goes on the rocks, it is not the cook who answers for it, it is not even the navigator who takes the responsibility; it is the captain of the ship. Our captain sits there blithely, not able to distinguish the difference between an investment in the stock market and a deposit in a loan and trust corporation.

Mr. Chariton: Did you say Captain Bligh?

Mr. Cunningham: I did not say that.

I have nothing more I would like to add at this moment. I hope the minister has been listening. I know my good friend his deputy has been listening. Maybe the deputy will take the minister a copy of the interim report from the receiver for Re-Mor and let him go over those comments, or maybe even look at the final report, which members of the Legislature have not been able to see because there is a court order banning it.

We mere mortals over here have not been able to see that, but I am sure the minister has seen it. I am sure he has gone through the Ombudsman's report in great detail, and he must know in his own heart that his ministry is in deep trouble.

I hope by tomorrow, or Monday at the latest, the minister will stand in his place, announce a public inquiry and come clean on everything he knows to date about just what has gone wrong within his ministry and what immediate steps are being taken, legislatively and administratively, to ensure it does not happen again.

10 p.m.

The Acting Speaker (Mr. Cousens): Was there any sharing of time agreed on before this debate?

Interjections.

The Acting Speaker: I will recognize the member for Etobicoke. The third party has nine minutes left, and there are three minutes left for the second party, according to the table.

Mr. Philip: Mr. Speaker, only a few nights ago I spoke extensively on the topic we have been dealing with tonight. Therefore, I want to change the subject and deal with a matter that is of concern to me, a matter I have been dealing with over the past few years with the two previous ministers.

The minister is well aware of the controversy that surrounded the introduction of the Condominium Act and of the opposition our party had to certain sections of that act. It was only after a very long and prolonged threat of lawsuits by the Etobicoke condominium association and other condominium associations that certain parts of that act were not proclaimed. Indeed, they still remain on the books. In condominium circles there is still a concern by condominium owners that those sections have not been repealed. I suggest to the minister that he would relieve some of the anxieties among condominium owners and those who are managing condominiums were he to deal with that problem at least.

I am also concerned that there have been certain cases dealing with certain sections of the Condominium Act where the decisions have not been to the advantage of the condominiums or indeed consistent with the intent of the legislation. In particular, I am sure the minister will be concerned about some recent cases in November related to section 49 of the Condominium Act. Section 49 provided an expeditious manner for condominium boards or condominium owners to deal with conflicts in a way that usually was not as costly as other, more prolonged legal procedures. I suggest the minister will have to look at the act and bring in the necessary amendments so that those decisions that have been made on a technical basis do not thwart the intent of section 49 of the act.

I also want to deal with what may well be, it the minister is not very careful, the next scandal. We are now dealing with one that is a present problem, a problem that we predicted at the time of Re-Mor. on which the minister's predecessor unfortunately failed to act. In consequence, we are in the situation we now find ourselves with the trust companies and Cadillac Fairview. I want to go on record to predict that we are going to have a major scandal in the condominium field.

We are already seeing evidence of that in terms of time-sharing. Time-sharing is literally the condominiumizing of condominiums. In Maryland in the United States we already have the first major scandal of alleged fraud in the time-sharing area. It seems reasonable that if the minister is going to deal with the whole problem of regulation and management of condominiums, it is even more important to deal with it in an area that is more abstract and removed from the purchasers, as time-sharing is.

As the minister will well know, because I am sure at least he has read the Condominium and Timesharing Magazine, I was one of the speakers at the second national Canadian condominium conference. At that time, we dealt with three essential resolutions, and they bring to the minister three essential problems that we are facing in condominiums.

One of the problems deals with the whole issue of absentee landlords. Absentee landlords have increased substantially over the years, particularly in condominiums where the proportion of tenant-occupied units is high.

Of principal concern to delegates and managers at that conference was the question as to whether absentee landlords or owners should have a certain responsibility to the condominium corporation. An even more important concern, I guess. was whether tenants should be directly accountable to the condominium corporation. I am sure the minister is aware of legislation in Alberta that has dealt with that.

The minister is also aware that in this province, where condominiums have attempted to charge absentee landlords a fee, that has been thrown out by the courts. That is why I introduced my private member's bill, which would allow condominiums the specific power to charge a fee for those who buy condominiums and rent them out rather than occupy them.

The minister has not dealt with that problem. It has been brought to his attention and to the attention of his predecessors but, now that this court case has dealt with it for him, it is surely important that he deals with the issue.

Another matter that has been of concern is the whole issue of the condominium property management industry. It seems fairly obvious that there is a need for the registration and licensing of condominium managers. I have suggested one form in the private members bill I introduced; but whatever the form, when there is almost unanimous agreement that there is a distinct profession called the condominium manager, there is a need for licensing and bonding of those people.

We are talking about people who are handling millions of dollars in some cases. We are going to be facing a scandal of someone walking away with some of that money. Is it necessary, then, that legislation comes in only after there has been a major loss of funds or major errors because of inexperience or unknowledgeable people operating in this field?

Those are some of the issues that were dealt with at the conference, and those are the resolutions that were passed. Indeed, they were also passed by the North York condominium committee that recommended the Minister of Consumer and Commercial Relations should do a review and adopt some sort of regulation of management companies.

I trust the minister will look into this. We are going to have a major fraud in this industry unless he looks at its regulation, co-operating and working with the industry to develop appropriate changes to the Condominium Act or to other acts he may wish to bring in as parallel acts.

Mr. Bradley: Mr. Speaker, in the three minutes I have available I am not going to be repetitive of the excellent speeches that have been made by opposition members this evening on this entire matter. Rather. I will zero in on one or two aspects of it very quickly.

I want to re-emphasize a point well remembered by those of us in opposition who worked so very hard on the Re-Mor inquiry and attempted to have it reopened. We remember the then Minister of Consumer and Commercial Relations, the present Minister of Industry and Trade, indicating that all was to he fine, that the administrative changes were made and that in essence we could not have another Re-Mor and Astra Trust.

That is why we look with a rather jaundiced eye at the reports from the present Minister of Consumer and Commercial Relations when he says many of the same things that we as a committee said, and we as opposition members said, some time ago. The government obviously did not learn from its mistakes in the Re-Mor and Astra affair. It has not learned from mistakes previous to that. They characterize themselves as great managers, hut they have failed once again to manage the financial institutions through their supervision of them.

I must take issue with the Premier's remark about the stock market. Either it was a gaffe when he made that reference or it was a calculated effort on his part once again to insinuate as he insinuated about those who invested in Re-Mor and Astra that those who have invested in trust companies were somehow similar to those who took their chances on the stock market. That argument can be very compelling from those who do play the stock market, but it is entirely different. I plead tonight with the minister, just because he is dealing with the Greymac-Cadillac affair not to forget those people who are involved in the Re-Mor/Astra Trust affair, most particularly those strictly under his responsibility, the Re-Mor depositors.

10:10 p.m.

I received a letter that I will attempt to read into the record, not in a self-congratulatory manner but to indicate the strong feeling of those who have been affected. It says:

"One point which should be brought forward is the fact that the lawyer representing some of the St. Catharines investors is being paid by the province. To say the lawyers are satisfied with the progress in the matter does not mean that the investors are happy. The lawyers are young and have many years ahead of them. Time is running out for some of us. My husband was 83 on January 4. Because he had polio at age five, with resulting amputation of his right leg at age 23, he now walks with great difficulty and his sight has failed.

"When the rumour of the collapse of Re-Mor first came out to us in 1980, I wondered how we could live, how we would face up to Christmas and so on. Even minimal interest on the investment would help us to live better, and I am sure there are many Re-Mor investors who could make use of the money. Last fall we attended the funeral of one of the Re-Mor investors. Actually, he was young compared to us. Well, his worries are over, but ours are here."

She goes on to say in the final paragraph, and I am not quoting the whole letter: "I refuse to give up the fight. There will be another election and we hope that some of us live long enough to be once again heard. Thank you for going to so much trouble for us."

I just plead with the minister in my final sentence to provide for those people the justice they have sought for three long years.

Hon. Mr. Elgie: Mr. Speaker, my summing up remarks will be brief. I am glad that the heater is on that side of the room. It certainly blows the air around a little bit. I am pleased to see that members on this side are sturdier and do not need that extra heat supplied for them, but we felt that the additional hot air should be placed over there where it was needed.

First of all, if I may respond to some of the remarks by the member for Kitchener (Mr. Breithaupt), I will start by saying that I think once again he has approached the matter, as he always does, in a general way with the kind of stature he always tends to have. He strayed a little bit here and there; somebody gave him some notes, I suspect. He did not prepare them himself, did he? Really?

Mr. Breithaupt: I think most of them, as usual.

Hon. Mr. Elgie: Most of them. I thought not, because as I read the dates and all of that stuff I really did not think he intended to put it all the way it was written. Here at one stage he was saying, Here we are, from October 26 to November 16, the media and the opposition calling for a public inquiry." Yet on November 17, the day after I had appointed the Morrison examination, the Thom royal commission, all of those things, just what was said? "Usually the government appoints a royal commission or whatever," criticizing us for a habit we are supposed to have of appointing royal commissions -- November 17, his leader.

We are constantly being criticized, as my colleagues know, for trying to put everything under the cover of a royal commission. I remember when I appointed the Royal Commission on Health and Safety Arising from the Use of Asbestos in Ontario. My goodness, the hue and cry: "Why don't you just face the problems?" That is exactly what I am doing here. I am facing the problems in an expeditious way, which I say to the honourable member quite frankly --

Mr. McClellan: Whatever happened to the royal commission on asbestos?

Hon. Mr. Elgie: No, keep your foot in your mouth, where you had it this afternoon. You looked comfortable that way, and the room was so quiet for a while. I didn't understand it. Why didn't you speak up?

Mr. McClellan: If it was so righteous, why did they put the money back?

Hon. Mr. Elgie: Never mind. At least you didn't go outside and say -- no, I know. You didn't say anything, either. I understand that.

But here we are. We have the Morrison inquiry going on. We had the registrar with accountants, while they occupy these businesses, carrying out a total review of their activities and records. I would suggest that kind of documentation and record, the kind of factual account that I think it is important I bring to this Legislature, not a day-by-day flow of little tidbits, as some in this House have tried to encourage me to do and as others, I suggest, have done, but rather to come when I think there is information that is reasonably well documented and would be informative to the public and not simply there for some other reason that I do not understand and I suspect the members do not understand either. That has been the approach I have tended to take.

One other remark I wanted to draw to the attention of the members is that it was suggested that Greymac had been in this sort of business since 1980. Let me remind members that Greymac did not exist until late 1981. It was Macdonald Cartier Trust Co. before that and it was acquired in late 1981. Let us not try to stretch it any more than the member's leader is trying to do. Do not outdo him in that regard.

I think it is fascinating that, as the member said in estimates, clearly the area of concern is the activities of the government with respect to rent review. He saw that as the major issue at estimates. I do not say it critically, but let us be frank about it. Members came alive after this government appointed a special examiner to look into the affairs of these trust companies. From that point on, it was a daily revelation using a retro-spectroscope, but not a word was said about it before then.

There were no comments on the draft bill that was submitted over a year ago, no comments about a federal white paper and whether we were looking at anything all through the fall, and no questions about financial institutions from either party in estimates from November 17 until December, whenever.

Two things for sure occurred. We were criticized on November 17 for appointing a commission to look at something. They said: "You always try to cover things up with royal commissions. You should not be doing that." Now we have a different approach, they say, "You should be doing it." In spite of the fact that we have the Solicitor General (Mr. G. W. Taylor) reporting some endeavours, we have the registrar in possession of the companies carrying out a thorough review and we have the Morrison special examination, above all we need something more now even though we did not need anything before because it was not necessary.

We are being criticized as well in Hansard for investigating -- remember this, for investigating -- if we have no evidence of untoward or criminal activity. They said, "You should not have done it," and now they are saying, "You should have done more." I do not know. Really, sometimes one wonders if there is a political reason for these things, but I do not think so. I am not one of those who believes that this is a partisan arena we live in, neither is the member for St. Catharines. Is he? Or does he think there is some partisanship?

Mr. Bradley: I am never partisan.

Hon. Mr. Elgie: I thought that was right. Having said all that, because it has been mentioned several times that an internal review of administrative practices and procedures would not be acceptable, let us recall that is not quite what I have ever said. I have clearly said that the first step is an administrative review carried out internally by people not in the financial institutions division, to be followed by an external review if there is reason to do so.

If there is not, then there will be a report to this Legislature on the results of that internal review. I wish that those members, in their present desire to have a royal commission, which is opposed to their past desires not to have one, would understand that was the statement I have made on many occasions.

The member for York South (Mr. Rae) made many thoughtful remarks. He made them when we debated some of these issues in December. I indicated very clearly that those were issues that would be included in a white paper, a white paper which, quite frankly, is being given very high priority, the highest of priorities. There are many issues around in life, but I see this as a very important issue because it goes to the very heart of the integrity of financial institutions in this province and in this country.

We now have, and I say thank you to the two opposition parties for their co-operation, powers in our present act which exceed the powers that any other province or the federal government has. I do not say that critically of them, but it is a tribute to this Legislature that the leaders of the two opposition parties recognized that the government could conceivably need some powers to deal with problems and have responded to that.

10:20 p.m.

Mr. McClellan: We were just trying to bail you out.

Hon. Mr. Elgie: The member should not let anybody know he is helping me. That sometimes does me more harm.

I have heard so many times in the past few days that ever since the collapse of Atlantic Acceptance there should have been a message about tightening up. I do not profess to be the world's great authority on what happened following Atlantic Acceptance, but I do know there was a royal commission and I do know there were a fair amount of remarks about trust company legislation revision.

As a result of that there were changes in the borrowing multiples. There was added to the act the right to demand information from companies. There was the power to take possession and to rehabilitate a company, but really not much else came out of that. Indeed, there were no recommendations such as the recommendations we put before the two leaders of the opposition parties in December.

The interesting thing I found was that Mr. Justice Sam Hughes recognized the vast majority of companies were law-abiding and that we should not overreact to one or two bad people. Using that retro-spectroscope, we now have to realize one at least has to have the power to deal with one or two bad people.

Others have referred to the select committee on company law and its views about trust companies. There was no particular problem at the time and it is interesting. I admit I picked these out selectively and there may be very good things in the recommendations, but it is interesting their recommendations would have reduced the controls.

Mr. Renwick: No, they would not.

Hon. Mr. Elgie: No. Because of their concern about the discretion in granting letters patent, they wanted full and open hearings. To that extent, I say frankly, because that was the issue we dealt with in that bill last December --

Mr. Renwick: Read about the annual licensing provisions.

Hon. Mr. Elgie: They wanted a full and open hearing process. They wanted to free up the liquidity rules. It is true none of those things have been dealt with, but I would say to the member for Riverdale that neither did their recommendations deal with the problems now facing us.

Mr. Renwick: What about the resources part of the report; the need for additional staff, the need for additional resources?

Hon. Mr. Elgie: They did not deal with the recommendations we put before this House in December which allow us now to deal with the problems facing us.

The member for York South suggested that over the months I was neglecting the issue of acquisition of existing trust companies. I can only say that was not an issue that was dealt with in any of those reports, but it was certainly an issue that became apparent to us.

He also indicated I should show a great deal more openness about why we wanted that, and what companies we were after and what people we were after. I can say quite frankly we have had no one apply to us for registration and approval for transfer of a trust company since the bill was passed. If there is, I will give some thought to discussing it with the member in a more open way, but he would hardly feel I should discuss situations where there has not been an application. Do we really want to stretch the arm of the possible out that far, or shall we confine it to cases where people apply and consideration is given or refused?

On careful thought, I think that is probably what he wants and not speculative activity about things that never came to be or maybe never would have come to be.

We certainly agree about the need for a white paper. We agree about the need to have it cover a broad range of issues and I think the member will agree that we always do tend to try to follow and keep up with, and frequently be ahead of, other legislation.

Those involved with the Business Corporations Act last year know that in many cases we have kept a little ahead. I like to think in our Human Rights Code and our Securities Act we have been a little ahead. It does not give me any trouble to try to produce a white paper with recommendations that are in the forefront.

The member spoke quite honestly about some of the difficulties registrars must have and, without talking about any specific case, he spoke of the dangers of saying a company was in trouble -- the run and all those things -- and I agree with you. That is one of the problems that registrars have. But they also have the situation where they are right; there is something wrong that they feel can be corrected if it is not made public, because the very moment it is made public there is a problem. There is a run and the whole thing is over.

Often we find public disclosure of correctable, bad administration can be just as fatal as incorrect allegations of wrongdoing. I do not say that any of those are easy judgements. They are all very difficult judgements, but surely the member must acknowledge that at least they are decisions and problems that individuals involved in regulating institutions, whatever they be, have to carry as a burden. Certainly, our review that we are carrying out will help us to evaluate just how effectively we have been in walking that line and doing the right thing.

Again, I have outlined very carefully my views on the inquiries that are under way and my view that we will get good answers faster that will result in effective legislation in a much more expeditious way, in my view, than we would by holding a public inquiry.

I do not have much time left but I do want to comment on one aspect of the member for York South's comments when he referred to the role of McMillan Binch and the question of Mr. W. A. Macdonald and Victoria and Grey, because I hope it is a remark that is made out of a lack of knowledge about the relationships that certain people can have in life.

Mr. Macdonald and I have made it very clear at the beginning that he had advised me he had a potential conflict of interest that might arise some time in the future, because in those early days in December all of these things were never seen as ultimate ends.

We agreed that if it ever came to that, he would not take part in any of those discussions and, indeed, I believe it was early last week that I retained a separate and outside counsel to deal with matters related to any potential acquisition of the trust companies by any outside persons.

Let us not try to leave any suspicion around that we were not diligently trying to make certain that no conflict of interest ever was presented as a problem. Quite frankly, if one goes around this city today and talks to a law firm that may or may not want to take part in assisting the government in an endeavour like this, one will find very few who do not have some potential conflict with some of the parties somewhere along the line. I say that quite honestly.

In any event, I think I can conclude my remarks by saying I appreciate the remarks that have been made. I will review the member for Etobicoke's remarks about condominiums because I think we may have a common interest in looking at some of those issues. I assure the member for St. Catharines (Mr. Bradley) that I have not forgotten the Re-Mor depositors.

Thank you, Mr. Speaker, and may I move that the concurrence of these estimates be adopted.

Resolution concurred in.

The House adjourned at 10:30 p.m.