[ Page 7585 ]

CONTENTS

Routine Proceedings

Ministerial Statement

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

Ms. A. Hagen

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

Introduction and first reading –– 7587

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

Introduction and first reading –– 7587

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

Third reading –– 7587

Private Members' Statements

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

Hon. Mr. Reid

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

Mr. Rose

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

Hon. Mr. Dirks

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

(Hon. Mr. Couvelier)

On vote 76: new programs –– 7593

Mr. Clark

Mr. Williams

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

Introduction and first reading –– 7605

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

Introduction and first reading –– 7605

The House met at 10:05 a.m.

Prayers.

MR. BLENCOE: Mr. Speaker, it's with sadness that I have to report the death on Wednesday night of a former colleague of mine, a British Columbian who received attention for his work on the Fisher commission. Dr. Bill Ross tragically died Wednesday night. With Dr. Norm Ruff, Bill Ross co-authored major reports and briefings to the Fisher commission, and was trusted by the commission for some excellent ideas and suggestions for redrawing the boundaries of the province of British Columbia.

Dr. Bill Ross, whom I knew well, was a geographer by profession. He had taught at the University of Victoria since 1974, and not only was he a dedicated geographer and resource geographer but he had a passionate interest in British Columbia and the issues of the day. That is why he put so much energy and time into looking at the boundaries, how we draw the boundaries and the representation that is available to British Columbians.

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

Ministerial Statement

NDP LETTER TO SCHOOLS

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

As conditioned as I have become to the realization that the NDP socialists will do anything to discredit this Social Credit government, duly elected by the people of British Columbia, and as aware as I am of how the socialists try to use the schools to manipulate the thinking of our young people, I cannot help but be shocked by their recent blatant disregard for any element of common decency.

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

MR. ROSE: On a point of order, Mr. Speaker, it was my understanding that the ministerial statement had to do with a policy statement or an administrative statement, rather than argument or debate from a minister. That's the definition and the reason for one. I think that this kind of tack — really a debate or an argument put forward against the opposition — is out of place in a ministerial statement. I could give you the citation: page 52 of that well-known authority, George MacMinn's Parliamentary Practice in British Columbia.

MR. SPEAKER: I thank the opposition House Leader.

The government House Leader on the same point of order.

HON. MR. RICHMOND: Well, Mr. Speaker, I haven't had the time to research MacMinn's Parliamentary Practice in British Columbia, but it would seem to me that this ministerial statement has everything to do with educational policy, and I think it's perfectly in order.

MR. SPEAKER: I would suggest that there could be some debate. If the member was to read pages 49 to 52, he would find that ministerial statements are very wide-ranging, but he will also see that the opposition has a chance to reply.

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

MR. LONG: Are you afraid of it?

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

Interjection.

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

MR. SPEAKER: Order, please.

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

It says here on page 51 of the citation that I mentioned earlier: "General arguments or observations beyond fair bounds of explanation, or too distinct a reference to previous debates, are out of order." What he's doing right now is clearly out of order.

MR. SPEAKER: I thank the opposition House Leader for his points, but I think the minister will continue with his statement. Then the opposition House Leader will have a chance to reply.

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

To go on. A letter to every student council president from the NDP on New Democrat letterhead, dated May 1989, has come to my attention. I could hardly believe its content, and I would certainly be remiss in my responsibilities as minister responsible for our schools if I let this type of thing pass without comment.

I will quote a few excerpts from this letter and table it in the House at the conclusion of my remarks. I expect that my NDP critic will understand — if not forgive — my decision for short notice about making this statement. I will, of course, be interested in the NDP defence of this tactic.

Let me quote:

"Dear Student Council President:

"I would like to take this opportunity, as youth organizer for the B.C. New Democrats, to inform you of a number of initiatives being planned over the next few months by our caucus and party.

[ Page 7586 ]

"First of all, a few words about the present situation in B.C. The present Social Credit government is undoubtedly an embarrassment for all British Columbians, and particularly for young people. Premier Vander Zalm's outdated attitudes on people's lifestyles and decisions are completely out of tune with how many of us feel. The Vander Zalm Socreds are out of touch; they would rather look back to the 1950s than look ahead to the 1990s."

Interjections.

MR. SPEAKER: Order, please.

HON. MR. BRUMMET: Mr. Speaker, it's interesting that the members opposite are applauding this tactic, which has been sent to the schools. I'm used to those kinds of comments in this House, but it's interesting that they're applauding their right to do this.

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

"The present government's response to concerns of young people is intolerable. Over the past few years the opportunity to attend post-secondary institutions has become more and more the exclusive privilege of a few people. The increases in tuition fees and lack of financial assistance is preventing students from furthering their education.

"The present government's lack of interest in preserving our environment, as so aptly shown by their inaction on the 'small' oil spill that reached the shores of Long Beach, shows their total contempt for the future that we must live in. This government simply doesn't care.

"Mike Harcourt and the New Democrats are in tune with youth. We are committed to affordable, accessible post-secondary education for everyone. Our caucus has introduced, during the most recent session, a series of measures to stop polluters from destroying our environment."

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

[10:15]

I'll just conclude very briefly with this quote; "Over the next year our MLAs, led by Emery Barnes, our member responsible for youth issues, will be visiting a number of secondary schools throughout this province."

Mr. Speaker, I will forever defend the right of any MLA to go into any school and speak to the students therein, and I think the principles of the member for Vancouver Centre would be a lot higher than to put this kind of sleaze before the students when he goes into the schools. We're talking about a captive audience in the schools, and there has to be some element of common decency when MLAs go into the schools.

I go into many schools, and maybe it's my professionalism as a teacher and my principles as a politician, but I try and stay entirely away from any partisan comments in those schools. Let me now go on now with my statement.

It's my sincere belief that our senior students are intelligent enough to see this for what it is: the NDP trying to use students for their own crass, selfish, partisan, political purposes. Those socialists preach to us about scruples and high principles, but when it comes to practising what they preach, they completely ignore those scruples and principles as they lust for power and the right to govern this province. Obviously they can't cope with the positive initiatives that we are taking in education, advanced education and on the environment. So in desperation, they resort to a new low in tactics. Their lust for power overrides their judgment and their principles.

They must believe that the end justifies the means and that young people are stupid. Can you imagine how the NDP might use the school system to their own socialist purposes if they ever did become government? In view of what this letter has indicated and the applause I have heard from that side for that tactic, it frightens me. I wish to table the letter to which I refer, so that everyone will know and in the hopes that something like this will never happen again.

MS. A. HAGEN: I find the minister's statement astounding. Language that refers to decency, to free speech — I find the minister's statement truly astounding. The party that I represent has sent a letter quite openly to the presidents of student councils in this province, to senior students, because presidents of student councils are grade 12 students on the verge of being able to vote. It has sent a letter that expresses a point of view about this government in a free country, expressing some concerns about the policies of this government on environment, public school education, post-secondary education and the direction that this government is taking.

This minister, on behalf of this government, has the audacity to suggest that it was inappropriate — in a free and democratic society. It is an outstanding statement to make, that a political party should, in fact, not be free to make statements about the policies of this government to the high school students of this province. Unlike the minister, I have every confidence that the students of this province, if they are in fact educated as well as the minister wants them to be, will make their own judgments and decisions about the MLAs, the parties and the policies represented by both sides of this House, and that those young people will exercise their franchise with an intelligent knowledge of the issues from both sides.

To suggest that that kind of discussion and perspective is in any way inappropriate in the schools of this province is to put in question the whole emphasis of this minister in respect to critical thinking and decision-making, which is the thrust that this government says it wants to have in place in the schools. Critical thinking and decision-making involve free debate, a knowledge of the issues, perspectives that come from both sides of this House, and the opportunity for those students to exercise their rights.

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

[ Page 7587 ]

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

Leave granted.

HON. MR. MICHAEL: I have the great pleasure today to introduce approximately 15 students from the little community of Seymour Arm, located on Seymour Arm at the north end of Shuswap Lake. They are accompanied by a teacher, Julia Armstrong, and a number of parents.

These students are from grades 1 to 7, and they learn through correspondence education in cooperation with the local school district and, of course, the teacher who visits the area. They are only served by a logging road and water access. A great little community, one which I am certainly proud to represent in this Legislative Assembly.... I would ask that all members give them a very warm welcome here today.

Introduction of Bills

FINANCIAL ADMINISTRATION
AMENDMENT ACT, 1989

Hon. Mr. Couvelier presented a message from His Honour the Lieutenant-Governor: a bill intituled Financial Administration Amendment Act, 1989.

Bill 37 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

PENSION (MISCELLANEOUS
AMENDMENTS) ACT, 1989

Hon. Mr. Michael presented a message from His Honour the Lieutenant-Governor: a bill intituled Pension (Miscellaneous Amendments) Act, 1989.

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

As you are aware, Mr. Speaker, there are four public sector pension statutes. These statutes provide pension coverage for employees who work for the provincial and municipal governments as well as teachers, college instructors, hospital workers and the non-teaching staff in school districts and regional colleges. In total, there are approximately 620 employers participating in these plans. The employers remit contributions on behalf of 148,000 contributors. In addition, records are kept for about 32,000 former public sector employees who have left their funds on deposit in the plans. Lastly, there are 48,000 pensioners who are currently in receipt of a monthly pension payment.

In describing the contents of this bill, I would like to start with those changes which are being made to all four pension statutes. These changes will provide uniformity under the plans, as this is a continuing objective of the government. The first change clarifies the definition of common-law spouse. It also provides that when paying survivor benefits, a legal spouse takes precedent over a common-law spouse in the absence of an agreement or court order to the contrary.

As a result of a recent court decision, this amendment clarifies entitlements under the survivor benefits and provides a pension plan member with the opportunity of nominating the estate as the beneficiary for a lump-sum refund of contributions plus interest. These changes also provide protection for a spouse or former spouse where there is an agreement or court order which provides for the distribution of pension credits as a family asset.

In 1988, we amended the pension statutes to provide that a monthly pension benefit would be paid to a pension plan member retiring within five years of his or her maximum retirement age, regardless of the amount of contributory service. This bill extends the same benefit to a spouse if the pension plan member dies within five years of maximum retirement age with less than ten years of contributing service.

Bill 35 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

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

WORKERS COMPENSATION
AMENDMENT ACT, 1989

Bill 27 read a third time and passed.

Orders of the Day

Private Members' Statements

MR. ROSE: I'd just like to make a point of order or explanation. My colleague wants to get on right away, because he has a plane to catch. I just want to say that we had a request this morning to change the topic of the final statement, No. 4. I think that while we have allowed changes in order, we have never permitted changes in topics from that of the order paper. Mr. Speaker, perhaps it's something we could discuss at the Select Standing Committee on Standing Orders, Private Bills and Members' Services or whatever committee is appropriate.

[10:30]

At the moment, I regret that I don't think we should allow that. I left mine out last week, and there were only three. Since the second member for Central Fraser Valley (Mr. De Jong) can't be here today, I would prefer not to have a substitute until we have a chance to study it.

HON. MR. RICHMOND: Mr. Speaker, I have no objection to us leaving that private member's statement off the agenda for today. But I do want to point out that from time to time we have accommodated

[ Page 7588 ]

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

MR. ROSE: I don't want to get into some sort of petulant quarrel over this. I said that we've changed the order from time to time to accommodate both parties. But we have never changed the topic, to my knowledge, and I think it's something we should discuss. That's all.

THE THREAT OF THE
ARYAN NATION PHILOSOPHY

MR. BARNES: I had intended to request leave to perhaps reschedule my statement due to the time that was taken up by the ministerial statement, because I was supposed to catch a plane at 10:40, which I'm going to miss now. I'll just make the most of it.

It is ironic that my subject, which has to do with the parameters that should be placed on free speech should be made this morning when we've just had the Minister of Education complain about students being involved in freedom of expression, and a political party attempting to have dialogue with them on this subject. That certainly will be one for the books.

My concern today should be addressed to the Attorney-General (Hon. S.D. Smith) and to the Solicitor-General (Hon. Mr. Ree) — both of whom are away. Since my concerns have to do with enforcement of law with respect to an organization calling itself the Aryan Resistance Movement, I regret that they are not here today. I have two pieces of hate literature that this organization has distributed in the province of British Columbia. One is a flier, and one is a newsletter.

The flier is entitled: "Fight Terror With Terror." The flier states: "We do not wish for law and order which means the continued existence...of the Jew system. We wish for anarchy and chaos in order to attack the system. Such chaos would allow us to...plunge the entire system to its death." The newsletter warns its members to avoid cooperation if confronted by police, because when engaging in a hate campaign — I emphasize that they are themselves recognizing their activities as a hate campaign — remember that it's completely legal to distribute literature as long as you stay off private property.

As you can see, Mr. Speaker, this is why I wish the Attorney-General or the Solicitor-General or both were here to address these matters. We're talking about the law, the enforcement of the law, the ability of the law to be enforced and those problems that may be involved therein from a legal point of view. I'm not sure who is going to be responding on behalf of the government, but this is a legal matter.

I know the former Attorney-General, the member for Oak Bay-Gordon Head (Mr. B.R. Smith), has addressed this matter in the past, and I'd be very interested in seeing whether he has become more enlightened over the years with respect to enforcement of the law.

But the important question must be asked: is the law helpless? We have two statutes: the Criminal Code of Canada and the Civil Rights Protection Act. The Criminal Code prohibits spreading of hate propaganda or false news against an identifiable individual or group. The Civil Rights Protection Act prohibits hatred or contempt of a person or class of persons, the superiority or inferiority of a person or class of persons with others based on colour, race, religion, ethnic origin or place of origin.

The present Attorney-General has been quoted in the Western Jewish News as saying that he would have no hesitation whatsoever in prosecuting the ARM, Aryan Resistance Movement, because he himself finds their literature offensive. This is the question I would like the government to respond to. It's not that they find the literature personally offensive, but does the literature in fact offend the Criminal Code or the Civil Rights Protection Act? If it does, then why are we not acting?

We've had this issue canvassed many times in the House. We had the Ku Klux Klan, the KKK, here in 1981, and this is how the Civil Rights Protection Act came into being under the former Attorney-General, Allan Williams. But that act was never implemented, never tried and never used. We all know full well the two infamous cases of Jim Keegstra and Ernst Zundel with respect to so-called freedom of speech and the limitations that should be placed upon it.

I am here to find out to what extent the government is preparing itself for this or is dealing with enforcing the law. It's that simple, and therein lies the case I'm trying to make. I'm not asking the government to express its abhorrence. I'm not asking it to state how repugnant it finds the language and rhetoric in hate literature. I'm asking the government: "How do you address the issue from the standpoint of it violating fundamental rights and freedoms in this country? How are we addressing it with respect to showing respect for the multicultural diversity within this society, the multiculturalism act, the human rights act of this country and all those ideals in a democratic society that we expect people to honour and obey within a society that depends on the enforcement of and respect for the law?

HON. MR. REID: I stand in my place today to respond to the member on behalf of the Attorney-General and the Solicitor-General. The Attorney-General advises me to inform the member that all the material that has been circulated and been made available to him has been turned over to the RCMP and that he has asked them to investigate post-haste and recommend actions relative to the material.

There is nobody in British Columbia who will accept and should accept the kind of material that's been circulated out there, and of course all the legal ramifications around it are being researched at the moment. The kind of material that the member talks about is not acceptable, and whatever legal recourse can be taken against the material will be taken. The investigation of that is currently going on by the

[ Page 7589 ]

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

I want to say to that member that it not only goes beyond material now. My ministry had an example just last week where four visitors from the United States were attacked by this same group in Vancouver, who call themselves Skinheads. One of the visitors is still in serious condition in a coma in Vancouver. Certainly the activities of this group, both in the kind of material they're producing and the activities they're conducting in the communities across this province, will not and cannot be tolerated.

MR. BARNES: I see that the member for Oak Bay was trying to get on his feet. He's gone. That's too bad. I would have loved to have heard what he had to contribute.

I just want to conclude, then, Mr. Speaker, by saying that there are those who think a free society, any democracy, means they are free to do just as they please, without responsibility for the consequences of their acts or behaviour. This is an attitude that is clearly incompatible with a democratic society and undermines the values that allow us to coexist peacefully, cooperatively, constructively and diversely as a multicultural society. Our anti-racist and anti-discriminatory laws are important to the coherence and sustainability of a society such as this, and must be upheld. I would therefore request that the government place this matter as vitally urgent, in light of the future changes that are taking place in our society and the vulnerability of our democratic processes.

I think that unless we can address the question of law enforcement much more diligently and with a great deal more determination and conviction than we have in the past, we are going to be seriously at risk as we move toward the twenty-first century and as we experience greater demographic changes with respect to more of a racial, multicultural mix. We are asking people to become good Canadian citizens. We are asking them to understand the law, to understand why we have the system we have and why it is essential and vital that they know how to participate in that system and support and defend the system.

I could conclude, Mr. Speaker, that although the Minister of Education (Hon. Mr. Brummet) in his statement this morning certainly was, I'm sure, sincere in his complaints about our party having introduced or at least made a representation to speak to students through their elected bodies, if upon reflection he doesn't understand that those students should be involved.... They should know something about the political parties. They should know that there are different opinions. And your government, your party, all parties, should be talking to students, should be telling them what's going on. They should be enfranchised.

This has been an issue for a long time in our society, where we have kept the young people out of the decision-making process. If it means that we are going to have to go into the schools and talk to them.... They are free citizens. They will learn to participate. They will learn to think for themselves.

They will accept or reject, based on their freedom of speech, their freedom of right, their free will. This is the value of our society. And we don't want them to wait until a certain period in the future when they become the age of majority. They should learn now. This is the value of what is going on, and I hope that all members of this House will respect the importance of this process.

THE LEGISLATIVE PROCESS
— A NEED FOR REVISION

MR. DAVIDSON: As I look up at the throngs in the press gallery, and the vast number of members who are sitting in the chamber, I must come to one inescapable conclusion: we have become boring beyond endurance. In other words, hon. members, we are talking too much and saying too little.

You know, Mr. Speaker, there was a time when members would never leave this chamber when the press gallery was full, because members had very meaningful things to say...

MR. WILLIAMS: Before Hansard.

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

Interjection.

MR. DAVIDSON: And radio.

But, Mr. Speaker, some things have changed dramatically, even in the last few years. With even the modest changes in rules that have taken place to date, we have seen this chamber work much better. A great deal of credit goes to the current opposition House Leader and the previous government House Leader, who worked very hard to bring some of those minor changes into effect. But the time has come now to revisit those rules, to take a look and see what can be done, now that we have more members and more desire to be more responsive to the needs of the province.

I would like to just dwell on one small matter, and that's the matter of estimates. Unfortunately, Mr. Speaker, the Social Credit government removed the 135-hour limit which was imposed on the total time that estimates could take; after that, all estimates were automatically passed. And that, in my humble opinion, was a very serious mistake. We haven't really expanded the quality of debate; we have only expanded the time that's available. Very little has been added to the substance of debates.

[10:45]

We also spent close to a million dollars to redo the Douglas Fir Room, hopefully so that members would be able to have a second committee, parallel to this one, so that we could deal with estimates, such as — and I cite this for one example — the estimates of the Minister of Highways. There isn't a member in this chamber who doesn't have Highways concerns, but those individual concerns don't impact on the rest of the province. What better setting, Mr. Speaker, than

[ Page 7590 ]

to have the estimates of the Minister of Highways conducted in the Douglas Fir Room at the same time that this committee sits, so that members could each have an opportunity to get their own points across, and at the same time have more provincial matters discussed in this chamber.

The danger we run in not having a time-limit and not being able to judge our time is that we tend to rush estimates as we head toward the latter part of the session — traditionally — and matters that have been discussed in detail are given a cursory glance. Unfortunately there are always members who don't want to go along with what the party Whips, House Leaders or caucuses have determined — and that is their right. But when we have a time-limit fixed in place and each member knows that there are only a certain amount of hours, that helps to focus debate as it should be.

It's not just enough to limit debate; the government must also make concessions. The government, for example, must indicate that it will respond to the wishes of the opposition and let the opposition call the first five estimates. The government will reserve the right, of course, to determine the order in which they are called, but the government must make that accommodation to the opposition if that kind of time-frame is to be reintroduced, as well as allowing the second committee room to serve at the same time.

There are many advantages that could be offered in that aspect. We need to have the committee sit again. The rules committee must be formed, and there are other matters that must be addressed.

We must, for example, start to somehow structure a permanent sitting time for the House. It's no longer acceptable to have the House start in either January or February or March and sit until either May or June or July or August. It's not fair to the members, not fair to the members' families and not fair to the people of the province ultimately, because they become very bored with tedious and repetitious debate, particularly in the warm months of July and August.

There is an opportunity if the committee were to restructure itself or be reformed and had an opportunity to sit down and come up with some recommendations that could be acceptable. All it takes is a spirit of cooperation, the kind of cooperation we've seen operating on the Board of Internal Economy. Again, credit goes to both the Premier and the Leader of the Opposition for making that work. If that same spirit of cooperation were carried forward and we started to look at the rules as they impact on all of us....

There is no better time than just before an election, because each party is convinced that it is going to form the government, and under that ideal situation you really come up with the optimum package to make this House work effectively.

With the greatest of respect, Mr. Speaker, we are not serving the interests of the people. When most of the media don't take any opportunity to sit in the House, there is a very strong message. When our colleagues absent themselves, when the quorum bells ring, these are very loud messages.

We have an obligation to try and clean up our own house to some degree. I would certainly hope that the government will give serious thought to reactivating a committee which has so dramatically proved its worth in the past and has so dramatically changed the tone and the level of behaviour in this chamber to date.

MR. ROSE: In my five minutes, or whatever I have allotted to me, I would like to say that this is part of the reform: the fact that we have statements every Friday morning, an opportunity for members to bring up matters of their own concern. I don't think we have enough of this stuff, and I will go into that in a little while.

First of all, let me say that I can agree with many of the things that my hon. colleague has had to say, especially the kind things he had to say about me. I'm all for that. I was part of the reform committee in 1985, and we learned a lot. Now that we've had these rules in operation for something like two or three years, I think we could revisit that reform committee, because there are a number of things we could talk about that need fixing up.

One of the things I think we need around here is to have more opportunities for private members or backbenchers to have their say on matters that concern them. I will go into that in a little while.

If you want to take any bill or estimate and send it to committee, we have 60A and 78A in Standing Orders right now. It could be done immediately. Any minister can send any piece of legislation or any part of his estimates to committee.

Standing order 35, though — a matter of urgency — is very difficult, because even if the Speaker agrees that the matter is urgent, the government can still overrule it. The government has supreme power on these, even including Friday morning, which is really an opposition day. There is a rule there too, 27 (3), which permits the Speaker to overrule the government on what they call Friday morning.

We used to have resolutions and bills around here. We don't any longer. I think that's something we could return to, because I think the average backbencher or private member who is not a cabinet minister needs much more time to deal with the things that concern him. I think we ignore that too much because.... I was going to say because of the tyranny of the cabinet majority, but that's a little inflammatory and I know the Provincial Secretary (Hon. Mr. Reid) wouldn't like that term.

I think we should set aside time for urgent matters and a number of other things. I think we need a calendar. We need a time when we're going to come here and a time when we're going to leave. Practically every legislature in the western world operates on some kind of a calendar. We're the only ones who talk ourselves into exhaustion. I don't really agree with that.

The House is dealing with estimates. A lot of time is spent on estimates — perhaps too much. We've now spent over 135 hours. You remember the big cry around ten or 15 years ago: "Not a dime without

[ Page 7591 ]

debate." When the previous NDP government tried to limit the estimates to 135 hours, they were shouted down. Consequently we even lost that time-limit.

I'd like to change a lot of things around here including the timetable. I'll give you some suggestions: on Monday, I'd like us to go from 1:00 to 5:30 p.m., with two resolutions between 5:30 and 6:00 p.m. — we have all these resolutions on the order paper and they're never called; Tuesday, 1:00 to 5:30 p.m. for debate, government business, two private bills from 5:30 to 6:00 p.m.; Wednesday, 1:00 to 5:30 p.m., two 25A statements — the kind that we're dealing with this morning; Thursday, 1:00 to 5:30 p.m., two 25A statements; and on Friday from 10:00 to 11:00 a.m. we could deal with urgent problems — covered in standing order 35. It would be a regular thing that we could bring up. We could have a draw to see which one was dealt with or the Speaker could decide.

I think that we need much more time devoted to the concerns of the average person who comes here. I'm not limiting the time of the government. I could go on and on about this, but I won't in case somebody else from the other side wants to answer. Those are my views, in general terms.

The committee needs to meet again. It was chaired by my hon. friend the courtly and portly member for Dewdney, and he did an excellent job. He needs to go to work again with the same kind of attitude that he had before — a positive one, one that makes this place work better.

MR. DAVIDSON: There's no question that there is a very strong will in this House to address some of the matters that have been canvassed both by myself and the opposition House Leader. The time to make those changes, as I said earlier, is when each party is convinced they're going to form the next government. You have an opportunity to put those into place for the next session, which could very well be the last session. Who knows, it could also be the first session. There's no way to make that kind of decision at this point.

What is important is that we try to make this place more responsive to the needs of the province. There is far too much time wasted with meaningless drivel from various members on each side of the House or from members who have strictly partisan little points that they want to make for their own individual riding. No one's denying these people that opportunity. Overriding all of this must be some form of constraint on our ability to govern ourselves in a meaningful and structured way. We must have more of that, and only through a joint committee that resolves these matters and comes forward with the kind of decisions that they have in the past can this place work better.

This is a better House today because of the work of the government and the opposition. It can be a better place tomorrow if the government and the opposition continue in that regard. We all wish them well in that endeavour.

PUBLIC LANDS, PUBLIC POLICY

MR. WILLIAMS: I indicated I wanted to talk about public land and public policy today. In the time involved it is only possible to focus in on a small area. I should apologize to the Minister of Crown Lands, who is here, I expect, to respond, because I wanted to talk about the Enterprise Corporation as one aspect of this. Certainly public land and public policy deserves some longer dissertation in the future, and I'm sure it will receive that treatment from us — specifically the Enterprise Corporation. I think it's interesting to reflect on the activities of land-selling by the Enterprise Corporation by this administration. You know this is a government that got elected on the grounds that they were good businessmen. That's what happened. Then you got into government and said that because government is incompetent in business, we should get rid of everything. That indeed is what has been happening under the Social Credit administration since you took the reins of power.

It's a sweet irony of politics that in the case of this administration it's all too true — that they are incompetent in business and so they are off-loading. I think we saw the classic example with the flip in the New Westminster harbour, where 2,200 feet of waterfront, downtown land went from $2.2 million to $10.5 million the same day and is currently probably worth $20 million. I think that that and other land sales by the Enterprise Corporation deserve the careful attention of the auditor-general. We can go into that at a further stage as well.

There are countless incidents in small ways. If you look at the long list of land sales out of the Enterprise Corporation, almost every one of them is interesting in itself, in terms of why the administration would have done it. Was it really a rational decision?

The small example I want to focus on this morning is the old New Westminster courthouse. It was owned by the Enterprise Corporation, and you might ask yourself: "Why would the Enterprise Corporation own the old New Westminster courthouse?" I think the answer is that the Enterprise Corporation got into so much trouble in its lending and other borrowing activities that it was able to make a deal with the Lands ministry within cabinet and get public lands transferred to it for a dollar. That's the history of the Westwood lands; that's the history of other lands transferred to the Enterprise Corporation. It was a means of fudging the books. Transfer land in at a dollar; transfer it out at something, hopefully, close to market value, and that would deal with the financial problems internally in a badly run public corporation under Social Credit. That had been the game plan for the last few years.

It's interesting that it seems to have gone unnoticed by the public who the minister responsible for the Enterprise Corporation was. The minister responsible — and I'd like to make it abundantly clear — was the venerable senior member for Little Mountain (Mrs. McCarthy), who has been in this House since 1966. These grotesque land deals and flips occurred

[ Page 7592 ]

essentially during the tenure of the member for Little Mountain.

[11:00]

Well then, the New Westminster courthouse. It's on an interesting site in downtown New Westminster. It's a site about 150 by 240, and it's a city block, albeit a small city block. It has a significant history. It's right across from the new courthouse, and at its back door is the SkyTrain. It's part of New Westminster's history, and I think it should have remained in the public domain. It's a significant site. In my opinion, just in terms of the urban space of downtown New Westminster, it should have remained in public hands one way or another. But it was sold through the Enterprise Corporation for a relatively small amount: some $415,000 for the old courthouse on a city block in downtown New Westminster. It was sold to a company called Koblunaq Construction. I think it's an Inuit name. It's a federal company, registered extraprovincially in Chilliwack, B.C.

The old building was sold by BCEC, and the documents were signed on February 4, 1988. The construction company obtained a building permit indicating renovations of about $1.6 million. Those renovations are complete, and the building is now for sale for $3.5 million. If it sells at that price, it will be for a profit of $1.5 million in a little over a year.

Well, who is the extra provincial company with offices in Chilliwack? It seems to be the same or very similar to the construction company that did the renovation work. If you go to the old courthouse, you'll see a plaque on the steps which reads: "Kerkhoff Construction Ltd." The directors of Koblunaq include Willem Kerkhoff and Dirk Kerkhoff. So be it. Remember, this was another negotiated sale, not a tendered sale by BCEC; and almost every last one of the sales by BCEC was a negotiated sale, not a tendered sale.

The provincial government rents property all over New Westminster at market rates from the private sector. Why on earth wouldn't the old historic building be kept? Why wouldn't the government rehabilitate it rather than rent private space in the same area? Why wouldn't the historic courthouse be used for government agencies in downtown New Westminster? New Westminster has always been a government service centre in the lower mainland. It makes no good business sense at all to sell off properties like this and rent other properties virtually across the street. It would even make sense to make a building like this available to community groups if you're not going to use it for government purposes. Instead it's a crash sale, one of far too many crash sales under the guise of privatization in terms of your many activities.

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

MR. WILLIAMS: Thank you, Mr. Speaker. The beneficiary is another prominent Socred supporter, and it's Social Credit business as usual in British Columbia.

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

Leave granted.

MR. PETERSON: Mr. Speaker, on behalf of the member for Chilliwack, the Minister of International Business and Immigration (Hon. J. Jansen), I would like to welcome to the galleries 47 grade 7 students from Yarrow Elementary School and their teacher, Mrs. L. Esau. Would the House please join me in giving them a very warm welcome.

HON. MR. DIRKS: First of all, I appreciate the member opposite giving that backhanded apology for what he was actually going to do. Basically I think what he is doing is looking back into history long before my time in charge of the Lands portfolio. But I can understand where he is coming from, because I too look back a little bit and can see that one of the basic problems we have here is that there is a philosophical problem. In spite of the Leader of the Opposition saying on the Rafe Mair show one day that he would make land available to developers, the philosophy of the party across the way has been to accumulate land.

The philosophy of our party is that the private sector is best positioned and experienced to carry out major land development. They have the skills, the expertise and the financial capability to remove the burden and risk of development costs from the taxpayer.

We believe in free enterprise; we don't simply pay lip-service to it. So we embarked on making land available to the private sector for development, unlike what they did when they were in power during those dark days between 1972 and 1975. They did accumulate land; they did amass land. In looking back at the files the other night, I found out about certain things like the Casa Loma Motel, which maybe I could talk to the member opposite about some time at length. We could probably talk about the Whistler acquisitions. We could talk about negotiated prices, because if you look back in Hansard of April 30, 1975 — now all of a sudden he wants open tender and whatnot — the Hon. R.A. Williams said: "The price established is one negotiated between my staff and those parties and is considerably below the appraisals carried out by the lands department." Now since I have taken over, since I have taken this position, we have gone to outside appraisals. There were no outside appraisals on that land, Mr. Member, none whatsoever. It was an in-house-type deal. This is just one of the many deals they did in those days. But let me quote a little further. He said: "We have outstanding qualified civil servants, some of whom we in fact inherited. They reviewed the question and were satisfied that the value was substantially above what the costs would be."

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

[ Page 7593 ]

House the appraisals he referred to that were done in-house — not by an outside appraiser — he said: "Well, Mr. Speaker, I'll consider the question. The material is in the hands of the civil service. I have simply accepted their word regarding this matter."

It's in Hansard. It was said by the hon. member — no one else. We could go on; there were other nice little deals that went on. What about the purchase of the Wallace farm? Wasn't that a very open deal?

MR. WILLIAMS: Which farm?

HON. MR. DIRKS: "Which farm?" the member asks. That was going to be a nice little cornerstone. That was the nice little purchase that was laundered through the Daon corporation over to Dunhill, which was another nice little corporation set up by the party opposite when they were in power. It was a nice little company that was set up. Let me tell you, that little laundering cost the taxpayers $52,000 simply to keep the thing secret — no other reason whatsoever — and for Daon simply to be the front for Dunhill Development Corporation to get that land.

It's all a matter of record, Mr. Speaker. But there is a philosophical difference. The opposition would say to the developers today: "We believe in free enterprise." Balderdash! If they were in power, they would revert to their old tactics.

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

MR. WILLIAMS: Mr. Speaker, I'm tempted to give the hon. minister my additional time, because he's doing such a job on the government that I'm almost wasting my time in responding. But you know, what the minister didn't talk about is whether we were buying or selling. If you end up buying under appraisal, the public's better off. That's what the minister doesn't understand: the difference in terms of whether you're the buyer or the seller. The difference is that when you guys are the sellers, you sell way under what it's worth. When we were the buyer, we often bought below what it was worth. One would think the people who claim to be free enterprisers would understand something as fundamental as that.

The element of free enterprise is supposed to be a level playing field. The only way you can be sure of a level playing field with equal access by all the players — not just the friends of government — is to have an open, public tendering process where bids are received, and it is all open and above board, and all the bidders see what the other bidders have proposed as a price for the properties.

Somehow this administration doesn't seem to understand that. The minister talks about Daon, which didn't exist in that time period. It was a different company.

AN HON. MEMBER: Dunhill, Daon.

MR. WILLIAMS: Dunhill. They're different companies, Mr. Minister. You have trouble with the names of companies, and whether it's buying or selling, and on it goes. The point is that it's just another example. It's in downtown New Westminster. It's the old courthouse, and it was sold to people who are supporters of this administration, and it was sold foolishly. That's very clear.

Interjection.

MR. WILLIAMS: The member says most people are, Mr. Speaker. But does he really know what the polling numbers are that they received the other night? I think the evidence speaks for itself.

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

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

ESTIMATES: MINISTRY OF FINANCE
AND CORPORATE RELATIONS

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

MR. CLARK: I thought that for the remainder of the morning we might canvass an issue which is near and dear to the heart of the Minister of Finance and Corporate Relations, and that is the Vancouver Stock Exchange and the government's regulation thereof.

I don't know whether any staff are coming in or are contemplated, but it might be worthwhile for them to take some notes on this matter. For the remaining two hours today I'd like to deal with some of the concerns the minister had with respect to some remarks that I and my colleague, the member for Esquimalt-Port Renfrew (Mr. Sihota), made in the House a while ago. The minister and I have had several exchanges on this.

Essentially I have made some allegations with regard to international criminals operating on the Vancouver Stock Exchange and with respect to money laundering taking place on the Vancouver Stock Exchange. Of course, the minister has denied that and sent me letters to that effect. He's indicated that there's no evidence. I think he said there is not one iota of evidence of either activity taking place. He also challenged me to come up with specific examples where that's the case. I thought I might do that today.

The minister may have seen this press clipping in the Vancouver Sun, the headline of which is: "Vancouver Known as Laundering Spot for Drug Money." This is an RCMP report released just a little while ago which talks about money laundering. It says: "Vancouver's sophisticated financial institutions" — that's an interesting point — "proximity to a port and an international airport and its active local drug trade make the city a major centre for the drug trade and for money laundering." It goes on at some length

[ Page 7594 ]

about money laundering known to be from Vancouver.

[11:15]

I think if you look in the international community, people would recognize that money-laundering, particularly drug money, is a major source of financial activity in Vancouver and in the Vancouver Stock Exchange.

I'll leave that for a minute. Rather than rehash a lot of what the minister might call old scandals on the stock exchange, I thought I would try and come up with a couple of new ones. The minister and his staff may want to take some notes, because it does appear that the one I'm going to talk about has been missed by government regulators. I just want to caution them.

The minister is aware of Forbes magazine. I think all of us in the House and the province are now aware of it. The article "Scam Capital of the World" obviously is not a very generous description of Vancouver or the VSE and of course we're all worried about its ramifications.

I draw the minister's attention to an article in the same edition of Forbes a little later on. Good, some staff are here to help respond. I'm glad Mr. Hyndman is here; I appreciate that. I thought I would draw the attention of the minister and the chief regulator of British Columbia to another Forbes article in the same edition — just a complete coincidence. It's called: "How Did I Know the Guy Was Calling from Jail?" by Richard Stern. Mr. Stern is not, of course, Mr. Queenan. We've all taken our shots at Mr. Queenan, but this is Mr. Stern's article. It doesn't deal directly with the VSE. You have to read it; it's kind of fascinating.

The story is about two con men: someone named Juan Carlos Schidlowski and his old buddy Joe "The Pig" Pignatiello. The story is about Jamie Darder and how he was swindled by Mr. Schidlowski and the Pig. I'll just read some excerpts. It says of Mr. Darder:

"He fell in with a crew of some of the cleverest stock hustlers at large today. These hustlers, one Juan Carlos Schidlowski and his old buddy Joseph Pignatiello, are masters at their craft. If you ever come across them, hold onto your wallet and give them a wide berth." 

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

"Schidlowski had a way with words and boasted of lots of financial contacts. He did not bother to tell Darder that he was living in Spain because he was on the lam, having fled the U.S. rather than serve a jail term for offences related to stock scams he ran out of a Denver-based penny stock firm called OTC Net that he owned in the early 1980s."

Darder says at one point he gave up on Schidlowski and then someone called him named Joseph "The Pig" Pignatiello, one of Schidlowski's partners in OTC Net. Unfortunately it was closed down by the Securities and Exchange Commission in 1982 amid a barrage of charges. Mr. Pignatiello spent two years in Fort Worth jail and Mr. Schidlowski went to Spain. The Pig was phoning and setting up Mr. Darder from jail. Hence the title: "How Did I Know the Guy Was Calling from Jail?"

I might say that Mr. Schidlowski and Mr. Pignatiello are currently being sued for $1.35 billion in the United States for another swindle — not the Denver swindle. This was Star Publications — a different swindle of major proportions. It was internal stock trading between them and a Las Vegas security firm, etc.

Being sued for $1.35 billion clearly, as the article suggests, qualifies Mr. Schidlowski as a world-class swindler, a world-class scam artist. When we talk about a world-class stock exchange, it's not our intention on our side of the House that it be defined in these terms.

That deals with Mr. Schidlowski and lays down some of his bio. You read that and you don't think anything of it, and then you start looking at the VSE, and where is Mr. Schidlowski now? He's connected to a VSE company; this is what he's doing now. It's a fascinating story. He's wanted by the SEC, he can't go to the United States, he's being sued for $1.35 billion and he turns up on the VSE.

Let me explain how. As I say, this seems to have escaped the regulators, so I'll go through this and maybe the chief regulator here today can help us with this. Mr. Schidlowski is the president of a company called Zurfinanz with offices in Zurich and Santiago, Chile; Chile is his basic home of operations. A company listed on the VSE called Napa Resources Inc. in early 1988.... This is a hot story; this has just happened. In early 1988 there was a reverse takeover agreement with Napa Resources and Zurfinanz. Just for the minister's understanding, he should know that the board of directors at Napa at the time of the reverse takeover included people like Assa Manhas. You know him; he has the entire twenty-fourth floor of the VSE building. He's associated with Peter Brown and Canarim. Michael Cytrynbaum — you might know him; he's associated with Nelson Skalbania. Stephen Funk — you might know him; he's currently bidding on the B.C. Lions and is president of First Generation resources, traded on the VSE. He has an approved investor immigrant fund that he runs, the Canadian Maple Leaf Fund, that the government of British Columbia approves.

Mr. Chairman, I think it's fair to say that Napa Resources at the time of the RTO consisted of three of the most prominent people in the Vancouver Stock Exchange operations. We're not talking about some people — Slichter and some of these minor criminals active on the VSE. We're talking about major players on the VSE.

What happened was that Napa took over Zurfinanz, through a reverse takeover, and renamed it Zurfund International. Now Zurfinanz is a subsidiary of Zurfund International. Zurfinanz is owned 96 percent by Zurfund.

Mr. Schidlowski, who was the principal of Zurfinanz, got 7.6 million shares of Zurfund, the VSE company. So Mr. Schidlowski became, if not the major shareholder, a major shareholder in the new Zurfund International. And Zurfund International owns 98 percent of Zurfinanz, of which Mr. Schidlowski is currently the president. After he got 7.6

[ Page 7595 ]

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

AN HON. MEMBER: How would that happen?

MR. CLARK: This is what they do, you see. They issue shares at 35 cents, drive the stock up to $3, and then most people cash out, and the stock goes down — as it did the other day to 50 cents. But I'll get to that in a minute.

I want the minister to know that the three names I mentioned are no longer on the board of directors. I don't want to say they're still involved; they were involved at the time of the takeover, and at various times got off. I find this an interesting side story: Mr. Funk got off and Mr. Geoffrey Lau got on. The members on the opposite side might know Geoffrey Lau; he's one of the principal real estate owners and developers in B.C. He owns Golden Properties Ltd., which owns 50 percent of the Canadian Maple Leaf Fund — that's the investor immigrant fund we talked about.

Mr. Lau got on the board for Mr. Funk, but he had to resign in March. You might know why he had to resign: because he's being sued by a Las Vegas casino for $500,000. He lost $500,000 in Las Vegas, and refused to pay them. He has an interesting defence. This is an aside, Mr. Chairman. His defence is that by bringing the action against him, the casino is seeking to promote gambling, and gambling is illegal in British Columbia. That's a criminal offence and contrary to public policy; therefore his $500,000 that he owes this Las Vegas casino should not be recognized or enforced by the court. Anyway, at the time he was being sued by the casino, Mr. Lau thought he'd better take a slightly lower profile on the VSE dealings, and he got off the board of Zurfund, so Stephen Funk was on. He got off; his partner and colleague Geoffrey Lau got on. He got off. I'm not currently aware of who the exact shareholders are at the moment, but most of the activity took place at that time.

The company, just by the way, is purportedly into mining ventures in Chile, which are arranged by Schidlowski. Now remember, Mr. Schidlowski can't go to the United States because he's under indictment and is being sued, so he operates completely by himself in Chile, on behalf of Zurfund in British Columbia.

Just so the minister knows that I have proof that he is the president and is operating out of Vancouver, I have a fax from another individual — I won't give this to you, because I don't want to impugn anybody. This is a completely separate scam that Mr. Schidlowski operated in California. I have a fax which Mr. Schidlowski sent to this individual in California, on the Zurfund letterhead, suggesting that they meet in Vancouver, because he can't meet in the United States, because they would arrest him. This is completely different: he's got the Dallas scam, the Star Publications scam and some other ones. This other one is in California. If the minister or the regulators want, I could show him the letter, which proves that he's not only the president of Zurfinanz but also that he's operating out of Vancouver, Zurich and Santiago, Chile.

MR. WILLIAMS: This is his favourite laundry.

MR. CLARK: One of his favourite laundries is Vancouver. Well, I think, currently it is his favourite laundry, because the penny stock market in the States is closed to him, because he's got all these criminal sanctions hanging over his head.

MR. WILLIAMS: I just want to underline that I think the points being made by my colleague from Vancouver East regarding the activities of this company on the exchange.... The minister has asked for details regarding new scams, new operations on the exchange, and we are now hearing about them. I hope he is listening carefully and will take the action that should have been taken in the past.

MR. CLARK: I just want to bring the minister up to date on this scandalous dealing. The stock went from 35 cents to $3, and then in a classic VSE venture most people got out, and the stock went down to 50 cents. I just got an update on this. On April 7 they issued 640,000 shares in an employee share option at 50 cents. What they do is issue stock to themselves at a cheap price, drive the price up and sell out. The price goes down and they start the cycle over again. And they are starting the cycle over again. They issued 640,000 in employee share option at 50 cents in April. In the first week of June this year, not very long ago, they issued 1,670,000 units at 45 cents. A unit is one share plus one warrant, and a warrant means you can buy a share at 45 cents any time in the next year. Essentially it's about 3.3 million shares at 45 cents, which they issued.

As well, on June 1, 1 think it was, they issued another 699,996 shares at 35 cents and a warrant for one year at 40 cents. If you double that, it's 1.4 million shares, so it's roughly 4.4 plus 640,000 — that's 5.1 million shares in the last couple of months they issued in the 35-cent to 50-cent range. I'm just doing it crudely here; I am sure the regulators can work this out better.

The price, of course, as you can suspect after issuing all these diluted shares to their friends, is now 80 cents and going up. In fact, the minister will know that it's in the top third trading volume on the VSE in the last couple of days. It was in the top ten yesterday again, I think, and today. It will be in the top ten this month, so it's a major volume trader.

One of the major volume traders on the VSE is Zurfund International. I wonder if the minister would like to comment on how in the world Mr. Schidlowski, one of the world-class swindlers, got involved with this VSE company and whether he would undertake to take some action, or maybe Mr. Hyndman here can tell us whether the regulators have stumbled across this connection to another

[ Page 7596 ]

international criminal doing business on the Vancouver Stock Exchange.

[11:30]

HON. MR. COUVELIER: The member raised a number of points, and I will attempt to deal with them as I was able to catch them. He first of all dealt with the subject of laundering and referred to a news story in which the RCMP....

Interjection.

HON. MR. COUVELIER: Well, you introduced it earlier. Did you forget? That was your opening line — laundering. With the permission of the House, Mr. Chairman, I am attempting to deal with the issues and queries that were put by the hon. member. I trust that's the appropriate way in an open society that you would want to learn more about the issues you mentioned.

You mentioned laundering, and you referred to an RCMP news story. While I don't have that news story with me this morning, my memory of it was that the Vancouver Stock Exchange was not the only suspect mentioned in the article. I thought I should just point out to the House the selective referencing that the hon. member is embarking on here. That's point one: selective material. The article, if I remember rightly, dealt with other stock exchanges.

As I have told the House in the past, the relative dollar volumes exchanged or dealt with on the Vancouver Stock Exchange would clearly reduce the risk of money-laundering on that exchange as compared to the opportunity to launder money on the Toronto Stock Exchange, where there is a far more significant volume of dollars changed.

My memory is that there is something like $250 million a day traded on the TSE, so clearly if money-laundering is a concern of law enforcement agencies around the world — and it is; we are well aware of that and we have discussions with law enforcement agencies on a regular basis in this respect — then the exchanges that have the larger dollar volumes and daily transactions would be the most likely target for a money-laundering operation.

The allegation by the members opposite that Vancouver has some unique distinction in this respect is unsupported, unproven. There is absolutely no evidence whatsoever to sustain that position. Furthermore, common sense would dictate that such an eventuality is less likely there than any other exchange in Canada, or any other exchange of size in North America.

The member then went on to discuss Forbes. I hear little asides from his running mate, also from this great bastion of democracy, Vancouver East. I'm being very timely here referring to Forbes, as the member did. I learned to my surprise that in 1974 Forbes did a similar slam of the operations of the Vancouver Stock Exchange, which had the consequence of the then Premier, who I think was of the socialist persuasion, going wild about the allegations and the unfounded attack on this bastion of British Columbian financial integrity. I found the article really interesting, because the government of that day, which as you remember was the very brief three-year period when the citizens of the province thought we were wealthy enough to take a gamble with the socialists....

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

HON. MR. COUVELIER: Yes, 1,200 dark nights. This was that very brief period. The very same people who today are trying to wrap themselves in some sanctimonious cloth of respectability failed to bring forward any legislation to regulate the Vancouver Stock Exchange, as opposed to this administration, which shortly after taking office introduced a regulatory authority into the operation of the securities market in British Columbia. We introduced the B.C. Securities Commission and gave them the authority to start tightening up and regulating the process.

I just can't resist the opportunity to point out that one of these same individuals, who today tries to sound so sanctimonious, had the glorious opportunity to start the process then and failed to do so, as opposed to this administration, which has clearly made dramatic progress in dealing with the obligations of government to provide effective regulatory control.

The consequences of the regulatory control — that is to say, the creation of the Securities Commission — had the effect of removing, by their regulatory actions, at least 60 players from operating on the Vancouver Stock Exchange, and the rate increases weekly. There is no evidence on the record to justify any claim that the Securities Commission is not effective in the operation of its function. Indeed, since it has been in place it has very systematically, and in a mentally disciplined way, tackled the problems that we inherited from your day, hon. first member for Vancouver East.

The Forbes article of 1974 confirms the truth of what I say. I'm not making any wild allegations here. I'm not using the privilege of the House. I'll be pleased to go outside and tell the media and the world exactly what I'm telling you. In 1974 Forbes blew the whistle, and you did nothing. We, taking office, not needing any whistle to be blown, immediately embarked on this campaign of cleanup. Immediately. Within months, my friends. Let's just make sure the record is straight in that respect.

Above all else, I think we should be introducing facts into the official record. I was surprised to be told by the Chairman just a few days ago, when we were considering my estimates, that facts have nothing to do with debates in this House. When I rose on a point of order to correct a misunderstanding or misrepresentation by one of the hon. members opposite on the basis of straightening out the factual claim or record, I was ruled out of order. I was told by the Chairman that facts have nothing to do with these debates. Each member has a wide-ranging option to

[ Page 7597 ]

use the privilege of the House to make the most outlandish accusations and get away with it. To my astonishment, those very same pronouncements can be repeated worldwide and given great publicity.

So I learn every day. Admittedly, that's something I hope I will continue to do and obviously will need to do as a growing, developing person. I'm not ashamed of the fact that it was a startling revelation for me to find out that the members opposite don't have to speak the truth; they just have to keep their lips moving and be critical, and be guaranteed of that day's headline. It's irrelevant, apparently, to the traditional parliamentary procedure that they can be mouthing statements that are representations or less than accurate.

In any event, on to the next point raised by the hon. member, which dealt with naming some specific individuals who are extremely high profile in the British Columbia financial community. Once again the hon. member resorted to slurs. By naming these individuals and wrapping them in this presentation about allegations in Forbes magazine and by naming some specific developing companies, he has implied that somehow these individuals have some accounting to do in the sense of public responsibility. I was struck by the fact that here again the hon. member uses the privilege of the House to wrap these individuals in this kind of cloak. I think it's incumbent upon all of us to remember that making statements here linking individuals with others with whom I sure they would not wish to be linked is not a desirable method of operation here.

The member also went on to talk about a specific instance. As I have said before, by virtue of my statutory obligations I am not in a position to confirm or deny who or what is being investigated at any point of time. There is an obligation upon a minister of the Crown to be factual and fair and to ensure that due process is followed and that the rights of individual human beings are protected until they're proven guilty — not with allegations of guilt, not with innuendos of criminal association, not with impugned, deliberate avoidance of legal requirements. It is the obligation on my shoulders to make sure that we follow the due process of law.

The member tries to imply that he has told us something with some startling revelations to it. I must point out to the member that in order to take action, any regulatory agency must have evidence. It is not sufficient to merely have a suspicion. It is a requirement of law to have evidence. It may well be that the socialists, in their madcap pursuit of power, might be prepared to start indicting people on suspicion, but I can tell you, my friends, you would be singularly unsuccessful in a court of law in making any suspicions or innuendos stick in terms of proving without a doubt anybody's guilt.

I have a constitutional responsibility to ensure that we follow the letter of the law and that all citizens of this province are given protection under that law until they're proven guilty.

To the suggestion that the Securities Commission has not been diligent in pursuing that objective, I must once again remind the House that they have in recent months taken out of the game at least 60 individuals. They took them out of the game on the basis of evidence and proof, not on the basis of innuendo or suspicion. It was done appropriately and did not abuse the legal rights of any citizen. Process had to be followed and it was. To suggest, therefore, that the Securities Commission are less than diligent in that respect is absolutely and totally refuted by the factual record.

The member closed with a small primer — Stock Exchange 101, 1 guess I would call it — on the utilization of warrants by the industry. I trust the member is aware of the fact that warrants are a common device used on every major exchange in the world by underwriters to help them cover the cost of introducing a stock. Warrants are available on the Toronto Stock Exchange, the New York Stock Exchange, the London, the Tokyo, or any other. The availability of those warrants is justified by the marketplace and accepted as a standard. So while the member might like to make much of the issue of warrants, the fact of the matter is that it is common to every major exchange in the world. There's nothing new or particularly perverse about that, and to suggest that there is strikes me as an injustice to the entire industry.

[11:45]

I suppose the last point I would make would be that the House and the people of the province should appreciate that this government created an arms-length agency to perform the regulatory function. The prime objective in its creation was, is and will always be to protect the consumer. Were the agency, the Securities Commission, to be manipulated by politicians — which seems to be the bent of so many of the philosophical maunderings I hear from members opposite — it strikes me that the very essence of stock market and stock exchange discipline and operation worldwide would be placed at risk. They are self-regulating organizations. I know the socialists like to believe that they can assume and have acquired the wisdom to allow them to make unilateral decisions from some central authority. Of course, that's great for those inside the citadel, but it's not so great for all of those thousands of people who are outside bearing the consequences of what this little, narrow band of socialists in the decision-making position might wish to take.

MR. CHAIRMAN: I'm sorry, minister, but your time has expired under standing orders.

HON. MR. COUVELIER: I was just getting warmed up. Thank you, Mr. Chairman.

HON. MR. VEITCH: I think the minister is just doing wonderfully, and I would like to hear him continue. I'd like to hear some more from the Minister of Finance and Corporate Relations.

HON. MR. COUVELIER: The very essence of how to inject discipline into a function or an industry is to

[ Page 7598 ]

create a sense of self-responsibility. Stock exchanges all over the world are created under the precept that they are self-regulating organizations.

To suggest that there should be political intrusion into that process, I think, illustrates a very basic philosophical difference between socialists and free enterprisers. To the suggestion that that self-regulating organization will be self-serving, free-enterprisers all over the world have created securities commissions, which is exactly what we did immediately upon taking office, as opposed to previous governments who failed to do exactly that.

I gather the socialists if 1974 must have had the philosophical attitude that they would attempt this self-regulating organization by injecting political considerations into its daily operations. That would not be in the interests of the citizens of this province, nor would it be in the interests of the function itself: that is to say, the existence of the Vancouver Stock Exchange.

We on our side quickly determined that we would bring in a regulating authority — the Securities Commission — to watchdog the operations of the Vancouver Stock Exchange. Since they have been in operation, they have taken at least 60 players out of the game, and they are adding to that list every week. I looked at two more releases this morning of decisions made by the commission involving individuals. They are clearly doing their job, but it's absolutely important that those individuals on the board of governors who manage the Vancouver Stock Exchange be permitted the flexibility and freedoms to develop their own degree of professionalism in that organization's operations.

MR. CLARK: I might deal, as the minister did, with his remarks in the order in which he presented them. I assume that Mr. Hyndman and his staff will be coming back; I wouldn't want the minister to be without his staff to assist him in his deliberations or record-keeping. I assume that Mr. Hyndman has gone to take a look at the trading volumes of Zurfund in the last little while, or maybe to see who the current players are, but I will leave that.

The minister accused the opposition of having a selective memory, which I always find kind of curious. It seems to me he is guilty of the thing that he is accusing the opposition of. He says that he wants the public to remember what they characterize as the NDP government, '72 to '75, and forget '75 to '86, that intervening period when Mr. Bennett was in power.

It was a savage attack the minister unleashed on the Bennett administration by saying that he had to come in and clean up the mess of the VSE after years of inaction on the part of previous administrations He also says there was an article in Forbes in 1974 trashing the Vancouver Stock Exchange. This is a minister who said, "Forbes doesn't know what they are talking about; the Forbes article is scandalous, " of the current one that attacks his administration; but he seeks to rely on the Forbes article of 1974 for his attack on the NDP administration. I can't think of any better examples of selective memory than that which the minister has outlined here today.

He said that Mr. Hyndman and the regulators have made dramatic progress. There is no question that they have made progress, but if this example that I raise is an example of startling progress, I think we have a ways to go. The minister then accused me of linking innocent people to international criminals. I would like to deal with it briefly, because it's not me who links some prominent Vancouver business people with this international criminal that I've discussed. The facts link Mr. Schidlowski in Chile with Mr. Assa Manhas, Mr. Steven Funk and Mr. Michael Cytrynbaum.

While the minister took great pains to accuse me of slandering people, all I have done is draw the attention of the House to the facts — not to any allegations that those prominent British Columbia businessmen were involved in anything illegal. I simply draw the attention, through the minister, of the regulators to the fact that an international criminal is running a subsidiary of a VSE company. I understand that they're looking for — just for the record — iodine nitrate. The minister should know that they haven't found any yet, but they're still looking.

This fact pattern of this VSE company illustrates the major problem, and that is: everybody recognizes that a venture capital market is a speculative one and has a function. The function is to raise capital for exploration or for research and development and the like. All too often what promoters are supposed to do is drive the price up so you get more money to do the exploration or the research and development. But what happens here is that they drive the price up, and they sell out. Then it comes down, and they issue more stock when the price is low. They don't try to sell more stock or raise more capital when the price is high.

It essentially becomes a kind of paper trade, where the game is to make money on the trading, rather than to raise capital to make money on a going venture; so the money is made. The whole game, in some respects — at least it appears in this case, but too often on the Vancouver Stock Exchange — is to make money on the paper and on the trading of shares. The purpose of the stock exchange is not to do that; that's an incidental part of the operation.

The purpose of the stock exchange is to raise equity capital to use in viable ventures. With people like Mr. Schidlowski running this kind of deal out of Chile with his track record, it's clear that the game is not to engage in legitimate business activities to raise money for those purposes. The game is to fleece investors. That is the game in which he excels — of which Forbes documents that he is a world-class member — to make paper transactions to make money. That's what we're dealing with here today.

I wonder if the minister could deal with the fact that, while I appreciate there is a due process, he must also recognize that.... I don't want to make an inference of wrongdoing on the part of major players on the Vancouver Stock Exchange, but I want to draw

[ Page 7599 ]

the attention of the House and the regulators to the facts.

The facts are that Napa Resources, who were controlled by prominent people on the VSE, conducted a reverse takeover with a company, Zurfinanz, controlled by a major international criminal. That's a fact. Maybe they didn't know he was a criminal. Maybe they didn't know that he's being sued for $1.35 billion in the United States. Maybe they didn't know that he spent the last two years in Spain escaping indictment from the Securities and Exchange Commission. Maybe they knew none of that, but the regulators should have known that Mr. Schidlowski has a trail which is 1,000 miles long behind him, and Mr. Schidlowski was a key player and owned 7.6 million shares in a VSE venture or owned it at that time. Mr. Schidlowski continues to do business in a subsidiary of a VSE listed venture. The regulators should have picked up that he is a world-class swindler now doing business.

He may be swindling those prominent people on the VSE. He may have sucked them in, so to speak. He may have conned them; he's very good at that. I don't want to say that those prominent players on the VSE participated in a fraud with Mr. Schidlowski, but I do want to say that Mr. Schidlowski should have no business — and the regulators should say that he has no business — doing business on the Vancouver Stock Exchange. He is not the kind of player that we want to see on the Vancouver Stock Exchange; he should be thrown off any organization that utilizes the talents of Mr. Schidlowski, which are not to promote legitimate businesses but to fleece investors. That's what we've seen.

I wonder if the minister could comment on the fact pattern that I've laid out — not on allegations or inferences — and that Mr. Schidlowski is currently doing business. Maybe he could tell us why the regulators would miss the minor fact that this international criminal is now doing business with a VSE company.

HON. MR. COUVELIER: I appreciate the opportunity to elevate the hon. member's understanding of life in the economic world.

He opened his second diatribe with reference to the fact that somehow or other the VSE is unique, in the sense that it tries to make money on paper. Mr. Chairman, every stock exchange has exactly that function. If we think about what they do, they merely buy and sell paper — that's all. That paper changes value by the degree of interest in acquiring ownership of it. It is a totally artificial function. Absolutely. If we're going to get into a philosophical discussion about the worth of stock exchanges around the world, then of course he must recognize, out of the generosity of heart or the firm-minded spirit.... Those may be naive ambitions on my part, but they are characteristics I'd like to believe members opposite have once in a while. If he had that sort of a generous heart, he would understand and agree that that's the basic function of stock exchanges around the world. They do trade paper.

If we're going to talk about what useful contribution they make in an economic sense, now we can focus in on the Vancouver Stock Exchange and its worth as a function. The Vancouver Stock Exchange, as opposed to any other stock exchange that I'm aware of in the world dealing with junior stocks or stocks with no track record, is a regulated exchange. As far as I know — and I'd be pleased to be corrected if I'm wrong — the Vancouver Stock Exchange is the only junior market in the world which is regulated. I've just had that confirmed by my resident expert. The fact of the matter is that NASDAQ is not a regulated market; it is probably one of the largest junior exchanges in North America, at least.

In terms of discussing the worth of the Vancouver Stock Exchange, as opposed to the worth of, say, other exchanges that deal with senior stocks — and therefore strictly paper, and therefore strictly an artificial expression of interest of ownership of paper, which contributes in itself no lasting economic benefit other than this issue of trading a piece of paper — the Vancouver Stock Exchange is a venture capital exchange formed for the purpose of getting new enterprises off the ground.

[12:00]

If we're going to talk about the value of an individual exchange, I would submit that the Vancouver Stock Exchange is probably placed in a position to provide the most benefit to the jurisdiction in which it resides. Indeed, by virtue of foreign interest in the operations of the Vancouver Stock Exchange, about 25 percent of the trading — if I remember rightly — comes from south of the border. There's a considerable interest in trading from foreigners; I think that that's something in the order of 10 percent offshore.

The worth, in an economic sense, of the existence of the Vancouver Stock Exchange is clearly, incontestably in B.C.'s favour, in the sense that we're the only jurisdiction that has a regulated stock exchange created for the purpose of raising capital for new ventures. This provides, in my judgment, a marvelous opportunity for the Vancouver Stock Exchange to expand its base of operations and expand its type of transaction that might be brokered in that situation.

The member opened, then, with a discussion about moving paper and seemed to imply that Vancouver was somehow uniquely guilty of some violation when, in fact, all stock exchanges do that. At least in Vancouver we are creating funding for new enterprises. The success of the Vancouver Stock Exchange in funding these new enterprises is legion. I could introduce into the record a long list of successful enterprises which started on the Vancouver Stock Exchange. That's a matter of historical record.

Then the member dealt with the issue of a specific individual. I make my point again, Mr. Chairman, that he uses the privilege of the House to make these statements. I'm not, by virtue of my statutory obligations, in a position to either confirm or deny what is presently under investigation. To do so would embark on a slur to a yet unproven allegation. I'm back to my point that I can't act on innuendos or allegations.

[ Page 7600 ]

We must have evidence. We must have proof. The record of the Securities Commission is clear: when that is at hand, they have taken action quickly. That's a matter of record. So you can take that to the bank.

The member seems to be making a suggestion that nothing is being done or will be done on the instances he describes, but I have to point out to the House that he makes an assumption that nothing is happening. I can't confirm or deny that nothing is happening, because, as I said, of the need for proof before public comment can be made.

Lastly, I want to close with this admonition to the member opposite. If he has a genuine desire to see anything done about a specific situation, he should accept my standing offer and the standing offer of the chairman of the Securities Commission to have a private conversation about those specifics. I have assured the member opposite, given the fact that I do believe, by virtue of holding elected office he can be trusted to receive confidential information on specific instances, that I am happy, to the extent that I am legally able, to share that information with him.

It's significant in my mind that never once.... No, that's not right. His predecessor once took the opportunity for a private conversation, but that didn't deal with specifics; it just dealt with generalities.

If there is a genuine desire by the members opposite to do anything about a specific situation, I challenge them to bring forward evidence and join us in a private conversation about those specifics. We are as keen to make sure that nothing is overlooked in the operation of the Vancouver Stock Exchange today as we were when we created the Securities Commission — the first government in the history of this province to create a Securities Commission.

MR. CLARK: There's the minister slandering the Bill Bennett regime again.

Maybe we could do with some generic questions for the minister. I would be interested in his view on this. He gave a rather confusing answer. Would the minister agree with me that the primary public purpose of the Vancouver Stock Exchange, theoretically at least, is to raise venture capital, not to make money on paper transactions?

HON. MR. COUVELIER: Mr. Chairman, that was my exact point. All other exchanges are dealing with established companies whose worth rises and falls on the stock exchange by the degree of interest of prospective purchasers of this piece of paper. But as opposed to those other exchanges, Vancouver not only has that attribute but has an added attribute which is the providing of start-up capital for entrepreneurs in this province and elsewhere in the world who need a first leg up. As I say, the catalogue of firms which have received that assistance and gone on to grow and prosper and create thousands of jobs is a matter of record.

Clearly I'm agreeing with the member when he says stock exchanges move paper. I point out to him that all stock exchanges do that; but we have an added benefit with the Vancouver Stock Exchange.

MR. CLARK: I won't pursue that. I did say, and I reiterate, that in too many of the ventures of the VSE the money is made on trading paper back and forth between parties. Very little of the money ends up going, in some cases, to genuine exploration or research and development. That's been the fact pattern. On our side of the House, we're interested in a genuine exchange that raises, as its primary purpose, venture capital for new ventures, and as a secondary.... [Applause.] I can see the applause from the legion of colleagues I have in the House here today.

The primary purpose of cleaning up the Vancouver Stock Exchange is to eliminate, as far as possible, paper transactions where individuals make money on changing of shares and no money has gone into new ventures, exploration or research and development.

Interjection.

MR. CLARK: That's not correct, Mr. Chairman. It's not correct that the transactions which transpire on senior exchanges are only paper transactions. There's a real company there with real assets, real profits and real losses, and that is what people invest in. It's not a simple paper transaction. What happens in the VSE is that there is no real company; there is an attempt to start up a company in some cases. What we on our side of the House want to see is money to be raised for venture capital and not to be siphoned off to promoters and to people like Mr. Schidlowski. That's what we're trying to see. The minister should recognize that that's the public purpose of the exchange that we all want to preserve on this side of the House, not promoters helping promoters.

I wonder if the minister would agree with me that people like Juan Carlos Schidlowski, people who are being sued for $1.35 billion for a stock swindle, people who are under indictment by the Securities and Exchange Commission, people who have escaped the law in the United States and aren't really allowed to go to the United States for fear of arrest.... He would agree with me, surely, that that is the type of person we do not want on the Vancouver Stock Exchange.

HON. MR. COUVELIER: I don't know the specifics of the case that the member describes. I don't know whether the individual has been found guilty or whether there is action pending in that respect, so I can't comment on that specific.

Every stock exchange around the world has those kinds of difficulties. Indeed, I believe even last week there was a pretty major scandal on the New York exchange, having the consequence of some firm employing 1,200 individuals having to be put out of business. I can well imagine how useful the member opposite might have been in the New York legislature dealing with some of their scams.

The fact of the matter is that it's not a perfect world. But I'm confident that the Securities Commission,

[ Page 7601 ]

under the able leadership of my colleague here in the House today, Mr. Hyndman, with the excellent staff he has put together, will continue to make significant progress. They've already accumulated an impressive record. They have earned the respect of not only press commentators on their performance but also the community which they are disciplining. I can't imagine any higher endorsement for a regulator than to have the respect of not only the critics — those who are close to the issue — but also those they are attempting to police. If you ever needed convincing evidence that it's being done and applied in an even-handed, fair, sensible and legal method, those commendations would indicate that truth.

MR. CLARK: I think we'll leave Juan Carlos for a while and see if the Securities Commission might review that case. I'll leave that for them, and maybe we can pursue that next week when we're in estimates and see what transpires — or a couple of weeks from now when we're still here discussing the stock exchange.

Before I move on to some evidence of money-laundering that I'll be pursuing, I think what we'll do for the last half hour or so is talk about Ferdinand Marcos, who is another interesting international player that turned up on the stock exchange in Vancouver — surprisingly enough. I know the minister would agree with me that Ferdinand Marcos was not here attempting to help venture capital companies, but was really here to launder some money he got through racketeering in the Philippines. There are many unanswered questions with respect to what transpired, so I would like to review the case with the minister and his chief regulator to see how they answer them.

As members of the House know, First Vancouver Securities Inc. was a company that bought a seat on the stock exchange. So we're not talking about a little venture listing on the exchange; we're talking about a registered brokerage house buying a seat on the stock exchange, which incidentally was the first foreign-owned security firm to apply for a licence under B.C.'s new relaxed ownership laws. It seems to me that the regulators missed this little tiny fact that the foreign company was owned by Ferdinand Marcos. I might say the Securities Commission has been doing a good job. I commend them for moving in some areas, but I think they might even agree that on this little case, they dropped the ball. I guess you can't win them all, but it seems to me that we can infer that we're not really up to speed in terms of dealing with international criminals or international foreign companies. It's extremely difficult to regulate them, and the fact that the Securities Commission missed the Ferdinand Marcos connection with this firm really tells us that we're not quite there yet in terms of our regulatory ability.

MR. WILLIAMS: Who's bigger than Marcos?

MR. CLARK: Yes. I thought maybe I'd canvass how....

MR. CHAIRMAN: I don't like to interrupt, but the second member for Richmond would like permission to make an introduction.

Leave granted.

MR. LOENEN: It gives me delight to welcome some residents from the great community of Richmond. First of all, there are some 70 grade 7 students from Grauer Elementary School here, together with some of the parents and their teacher, Mr. Siemens. Not all of the 70 are in the gallery; the other half are in the precincts somewhere. I would like to ask the House to make them welcome.

HON. MR. COUVELIER: I wondered, with the indulgence of the House, if I too might make an introduction.

[12:15]

Leave granted.

HON. MR. COUVELIER: Today it's a genuine pleasure for me to introduce to the House some very distinguished guests in the Speaker's gallery. Representing the B.C. Central Credit Union are Mr. Tod Manrell, chairman of the board, Mr. Phil Moore, chairman of the legislation committee, Mr. Wayne Nygren, chief executive officer, and Richard Thomas, director of government affairs. In addition we have with us Mr. Bob Minniss, chairman of the Insurance Brokers' Association; Mr. Brian Stanhope, regional vice-president of the Insurance Bureau of Canada, Mr. Stuart Cunningham, representing the Insurance Council, Mr. Bill Drake, representing the Institute of Chartered Accountants of B.C., Mr. Peter Lewis, representing the B.C. section of the Trust Company Association of Canada, and Mr. Dale Parker, chairman and chief executive officer of the Credit Union Deposit Insurance Corporation and, ultimately, the new Financial Institutions Commission.

Also in the gallery, from the Ministry of Finance and Corporate Relations, are Mr. Dan Perrin and Ms. Kim Thorau, and legislative counsel from the office of the Attorney-General, Mr. John Hogg. I'd like members of the House to join me in welcoming these distinguished guests; I'm sure they're finding our current discussions very illuminating.

MR. CLARK: I too would like to welcome the people here, representing various interest groups in B.C. It's unusual to have members in the gallery who might actually take an interest in this subject because, as the minister knows, we sometimes debate this in the House, and it's lost on most people. So I'm sure that they're enjoying this debate, and I appreciate that. I might just say, if I can, a little plug. The Financial Institutions Act, I assume, is partly why they're here. If anybody has any concerns about that, they may want to see the opposition. I certainly would like to invite them to make any concerns they have known to me, Mr. Chairman.

[ Page 7602 ]

I was talking about Ferdinand Marcos and the little fact that the regulators didn't realize that he owned this company. So I thought I'd go through how that was, to show the lapse, because it's rather interesting. Then there are some unanswered questions which we might pursue with the minister and through him, of course, to the head of the Securities Commission.

First Vancouver was the brainchild of two Vancouver brokers. One was George Delmas and the other was Fausto Tod Mabanta. Mr. Mabanta immigrated to Canada in 1972. Delmas and Mabanta testified at the hearing that the Securities Commission held. I know Mr. Hyndman is aware. They testified at the hearing that a Mr. Thomas Zita of New Jersey was essentially the financing vehicle. Mr. Mabanta referred to Mr. Zita as his uncle, although it doesn't appear that they have a blood relationship. So Uncle Zita was the one who arranged the two major investors around the world. One was Paradela Holding Corp., a Panamanian company that had a 40 percent interest in First Vancouver. Delmas, Mabanta and Doug Garrod, a lawyer who used to be in charge of listings on the Vancouver Stock Exchange, who became a director and eventually corporate secretary for First Vancouver.... The owner of Paradela was said to be Leandro Vasquez of Spain. Mr. Delmas, Mr. Mabanta and Mr. Garrod testified at the Securities Commission hearing that had they never met or talked to Mr. Vasquez; they had never met or talked to the principal shareholder, the person that was providing the funding.

I don't mean to suggest that I have any more knowledge than the Securities Commission, but it is curious that when Imelda Marcos used to travel to the United States, she used a pseudonym so people didn't know she was there buying 3,000 pairs of shoes and the like. The pseudonym she used was Mrs. Vasquez. Maybe that's just a complete coincidence.

It is interesting that no one has ever met Leandro Vasquez, who was apparently the 40 percent owner. I would think that when the first foreign company to buy a seat on the stock exchange says that their money comes from Mr. Vasquez, the Securities Commission might say: "Well, maybe we'd like to meet him or see where his money comes from." Apparently that never happened.

The other major shareholder was a company called Rio Grande Investment Corp., which also owned 40 percent of First Vancouver. Even Mr. Garrod, a former listings officer with the Vancouver Stock Exchange, said: "Rio Grande is of unknown origin." Mr. Garrod said that he did not even know where the company was registered. But it turns out that is owned by Uncle Zita. So Uncle Zita owned 40 percent through Rio Grande Investment Corp. — no one knew where it was registered — and the other 40 percent was owned by someone no one ever met, someone purportedly named Leandro Vasquez.

They then applied for registration as a broker — the first foreign-owned company. The stock exchange agreed to allow them to buy a seat on the stock exchange. That was in November 1987, under this administration, under this new regime. Just days after the firm started business, the capital structure changed quite dramatically. Paradela, purportedly owned by Mr. Vasquez, whom no one ever met, increased its ownership to 70 percent. Uncle Zita dropped his down to 10 percent. Mabanta took 15 percent, but he says he was funded by Uncle Zita, and Delmas went down to 5 percent.

We had a quite an interesting change of events there. What happened was Mr. Vasquez — whom no one ever met — was represented by a lawyer in New York. When the lawyer phoned Mr. Garrod and said, "Well, Mr. Marcos has been indicted, Mr. Benedicto has been indicted and First Vancouver's assets are frozen," how did our people in British Columbia react to that? Mr. Garrod, a former senior member of the VSE, said: "The freeze order has no effect in B.C." But just to be safe, he transferred all of First Vancouver's bank accounts to another financial institution. When the Americans indicted Marcos and froze the assets of First Vancouver, our people in B.C. — the principals here — knew how to react. They quickly took the money out of the bank accounts so that the freeze order would have no impact. It's very interesting that when the Securities Commission was informed that Mr. Marcos had been indicted and that the bank had frozen the assets of First Vancouver, it was the first understanding.... I'm sure the Securities Commission was shocked and amazed to learn that the assets of the first foreign-owned company to be registered as a broker in B.C. had had its assets frozen as a result of Ferdinand Marcos's indictment.

It's interesting to know that Mr. de Gelder phoned the U.S. attorney who indicted Mr. Marcos, Charles La Bella. By the way, the minister may want to know that I also phoned Mr. La Bella. He was very forthcoming on Ferdinand Marcos's involvement in Vancouver. The key man behind the indictment is Mr. La Bella, and he said there is a connection between Paradela and Benedicto. Benedicto is described as Mr. Marcos's alter ego. So Paradela was not owned by someone named Leandro Vasquez; it turned out to be owned by Roberto Benedicto, Marcos's front man. In fact, he said they are alter egos for Mr. Marcos and that Mr. Benedicto was involved in racketeering activities in the Philippines.

[Mr. Rabbitt in the chair.]

Then he said that Uncle Zita was Benedicto's nephew and that during Marcos's era they both worked together in the Philippines with National Sugar Trading Co. Mr. Zita was the president of National Sugar Trading Co. and Mr. Benedicto was the chairman. So Uncle Zita, Mr. Mabanta's Uncle Zita, turns out to be a major Marcos associate connected to Mr. Benedicto, although I must say Mr. Zita was never indicted in the United States.

Listen to what Mr. de Gelder had to say, and I want the minister to hear this. I know the minister is conferring with his staff.

[ Page 7603 ]

MR. CHAIRMAN: You may address your remarks to the Chair, as is the normal procedure.

MR. CLARK: This is extremely significant. Mr. de Gelder has this to say about Mr. Delmas: "There's one person in Vancouver who is supposed to be running the day-to-day operations but who doesn't really have effective control of the firm, because his capital is small and he depends on major capital infusions from these other sources. He didn't know who these people were, either, or else he did and wasn't telling anyone, and either of those is a rather alarming prospect." In other words, Mr. de Gelder said, in evidence at the commission hearings, that Mr. Delmas was a cheap front for someone whom he didn't know, who owned it, or if he did know him, wasn't telling anyone. He says that either of those is a rather alarming prospect. One of the questions I will be asking is why Mr. Delmas, in light of Mr. de Gelder's opinion, had no sanctions placed against him as a result of this rather scandalous adventure.

Joyce Maykut, lawyer for the superintendent's office, was less equivocal — if you can be less equivocal. She said: "I submit, from his evidence, that Mr. Delmas doesn't know who was behind Paradela and Rio Grande, and, quite frankly, I submit that it was apparent from his evidence that he doesn't care. I submit he is blinded by his own ambition to keep his own firm going and to make it a success, regardless of where the capital comes from."

Robert Brewer, a lawyer for the VSE, called Delmas, "nothing more than a 5 percent front, " and noted that Mabanta's 15 percent interest was also funded by Marcos crony Uncle Zita. With regard to Garrod, a former VSE vice-president of listings, Brewer said: "I suggest to you that he has been used simply as a conduit for Rosensweig's statement" — in other words, Mr. Vasquez's front man, and, it turns out, Mr. Benedicto's front man. "They have relied on Mr. Garrod's credibility in this jurisdiction to achieve what they have achieved in the sense of covering or hiding their true identities."

Forty-six days transpired between the time that the Securities Commission knew that Marcos was involved in this First Vancouver enterprise.... For 46 days the regulators knew about this, and nothing happened. No public statement was issued by the Securities Commission.

The questions are very simple to the minister. It's very clear that Mr. Mabanta, Mr. Delmas and Mr Garrod knew or ought to have known that Mr Ferdinand Marcos was behind this firm. If they didn't know, they're not fit, in my view, to be officers of a company on the VSE. If they did know, they're not fit to be officers as well, because very clearly the money was illicit, from racketeering in the Philippines by a corrupt dictator. Maybe the minister could tell us, first of all, why the three people who organized the financing from the Philippines have had no regulatory sanctions to this day against them by the regulators in British Columbia.

HON. MR. COUVELIER: Well, it's always helpful to replay the record. I guess the first point I'd like to make is that the hon. member has the dramatic facility to imply to the House that he's introducing some newly researched material. The fact is that he's merely reading from the transcript of the Securities Commission hearing. The fact that action was taken, in my judgment, indicates that the system works. The member seems to be confirming it, because as a consequence of the comments he read out, there was action taken.

I should expand a little on this, in order to help the lay persons to understand. The first point that needs to be made here is that the principals of this brokerage firm brought the issue to the attention of the superintendent. Members of the board of directors of the firm itself started the exercise. As for any implication here that those individuals associated with the firm — at least, on the board of directors — were involved in some sort of cover-up, the evidence is exactly the opposite. Mr. Delmas and Mr. Garrod were concerned enough to bring this to some sort of conclusion.

They brought to the attention of the superintendent an allegation in the indictment filed against Ferdinand Marcos of a connection between First Vancouver Securities Inc. and Mr. Roberto Benedicto, a co-accused of Ferdinand Marcos. There's no evidence anywhere on the record that indicates that Marcos knew anything about First Vancouver Securities. Indeed, if the worldwide opinion of Mr. Marcos's wealth is close to accurate, it's likely the firm was of relatively minor importance — if of any importance — in his asset base.

[12:30]

The U.S. Department of Justice attempted to freeze the assets of First Vancouver Securities Inc. As soon as the information came to the attention of the commission and the exchange, both agencies moved to have First Vancouver sever all ties and replace the capital allegedly provided by Mr. Benedicto. The matter was heard by the commission after settlement talks failed. The commission ordered the suspension of First Vancouver, but provided time for them to find replacement capital. Replacement capital was not found, and the commission's decision became effective. First Vancouver was placed into receivership, and its assets were sold to Georgia-Pacific, another Vancouver brokerage house.

Points that need to be made are that both the commission and the Vancouver Stock Exchange board of governors acted swiftly upon the information coming to their attention. Every effort was made to ensure that investors' money was not at risk and that any "dirty money" was isolated. This procedure proved 100 percent successful. So the system does work. The issue described by the hon. member is a matter of public record, and it's an indication of the fact that the Securities Commission is an effective device to monitor the operation of the Vancouver Stock Exchange.

[ Page 7604 ]

MR. CLARK: Mr. Chairman, to say that the members of the firm itself brought it to the attention.... To say that it's a defence is absolutely preposterous. The assets of the firm were frozen by an indictment in the United States, an indictment of Ferdinand Marcos, Adnan Khashoggi, Roberto Benedicto and company. The assets were frozen. First Vancouver Securities Inc. was listed on the indictment in New York. After they were told that their assets were frozen by a U.S. indictment, they then told the Securities Commission and the VSE. Well, that's hardly honourable, is it? After their assets were frozen and, by the way, after they moved the bank account, so they could get around the freeze order, they then informed the Securities Commission.

The questions I have have to do with why three people who organized the financing, either from known Marcos associates — they either knew it was Marcos or didn't know, either one of which clearly is grounds for individuals not to be engaged in this kind of business in Vancouver.... If we want to clean up the Vancouver Stock Exchange, we have to wonder why the people who arranged the financing for Ferdinand Marcos have borne no regulatory sanctions whatsoever and continue to operate on the Vancouver Stock Exchange. They've moved over to the new firm, Georgia-Pacific. How can you say that yes, it is Marcos money; yes, we have to get rid of that Marcos money; but the people who organized it through this Uncle Zita — a known Marcos associate — had no sanctions and continue to do business in Vancouver today? How can we expect the international community to say that we're serious about cleaning up the Vancouver Stock Exchange, when people who organized this are still doing business with no regulatory sanctions whatsoever?

HON. MR. COUVELIER: Well, I'll wait for that thundering applause to die down. The fact is, Mr. Chairman, that First Vancouver Securities Inc. was owned by this gentleman named Mr. Zita. At the time of all of these proceedings, that individual was registered with the commodities future exchange, which is the counterpart of the Securities Exchange Commission dealing with commodities futures.

To suggest that somehow we in Vancouver should be dealing with a U.S. citizen based on actions of the Securities and Exchange Commission, when their sister organization had that same degree of interest and failed to act, strikes me as an indication of the basic fact that regulators, in deference to the need for proof of evidence and proven guilt of wrongdoing, must follow due process. I just have to point out to the member that an initiative to freeze assets by the Securities and Exchange Commission is not an indication of guilt; it's merely an action to pause while issues are examined. The commodities future exchange had that same obligation — if the member is correct in his allegation. Clearly, they didn't see it as requiring any action as evidently contemplated by the member opposite.

MR. CLARK: It's not the Securities and Exchange Commission that froze the assets; it's an American grand jury indictment on people that froze assets. The reason they froze them was that the money came from illicit racketeering operations in the Philippines. Let's for a second give the benefit of the doubt to the Securities Commission. Let's assume they legitimately did not know, and it was therefore very difficult to find out in advance that this was Marcos money. Let's assume they did not know it was Marcos money, and the regulators who missed this point maybe legitimately missed it. Let's just say for a second that this happened.

Once it was found out that it was Marcos money, once they had the hearing.... Let's assume all that went before the hearing was accidental and couldn't be avoided and was not really the fault of the Securities Commission. Let's just assume that for a second. They had a hearing. Mr. de Gelder had this to say about Mr. Delmas: "There's one person in Vancouver who is supposed to be running the day-to-day operations but who doesn't really have effective control of the firm, because his capital is small and he depends on major capital infusions from these other sources. He didn't know who these people were, either, or else he did and wasn't telling anyone, and either of those is a rather alarming prospect." Further, the lawyer for the superintendent's office said: "I submit...that Mr. Delmas doesn't know who was behind Paradela and Rio Grande and...doesn't care. He's blinded by his own ambition...."

As a result of that evidence and those opinions of the regulators during that hearing, why would Mr. Delmas walk away unscathed if he was essentially found guilty by Mr. de Gelder, by both the lawyer for the VSE and the lawyer for the superintendent's office, of either not knowing, or knowing and not telling anyone, and castigated in the hearing by those regulators? Why would he walk away unscathed in either event and continue to do business in British Columbia today?

HON. MR. COUVELIER: As I understand it, Mr. Delmas didn't escape unscathed. He lost his firm. He had it taken away from him. I don't know how bloodthirsty members opposite are, but I shudder to think what they might be contemplating.

There's one other point that needs to be put on the record, which is that the U.S. Department of Justice has still not dealt with the issue; the trial has not been held. So we're merely dealing with allegations here. I think it's important for everyone to remember what the facts are, even though I understand that facts are not necessarily the order of the day for the members opposite.

In any event, Mr. Chairman, it's been a very pleasant discussion. I'd like to move that the committee rise, report progress and ask leave to sit again.

The House resumed; Mr. Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

[ Page 7605 ]

Introduction of Bills

CREDIT UNION INCORPORATION ACT

Hon. Mr. Couvelier presented a message from His Honour the Lieutenant-Governor: a bill intituled Credit Union Incorporation Act.

HON. MR. COUVELIER: The Credit Union Incorporation Act continues this province's recognition of the special cooperative character of credit unions and the important role credit unions play in the financial services marketplace. The present Credit Union Act will be repealed by the proposed Financial Institutions Act, which will now govern the regulation of credit unions, as well as other financial institutions. This bill will replace the corporate law provisions respecting credit unions that are presently contained in the Credit Union Act.

Mr. Speaker, together with the proposed Financial Institutions Act, this bill will enhance public protection without imposing additional administrative restrictions on credit unions.

Bill 50 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

FINANCIAL INSTITUTIONS ACT

Hon. Mr. Couvelier presented a message from His Honour the Lieutenant-Governor: a bill intituled Financial Institutions Act.

HON. MR. COUVELIER: This important piece of legislation will create a modern and efficient regulatory framework to govern financial institutions in our province. The Financial Institutions Act will provide a uniform regulatory framework for provincially regulated financial institutions by consolidating in a single act a number of provisions governing the operation of trust companies, insurance companies and credit unions. The existing Credit Union Act, the Trust Company Act and major portions of the Insurance Act will be repealed. This statute will merge the Credit Union Deposit Insurance Corporation with the office of the superintendent of financial institutions to create the Financial Institutions Commission, whose responsibilities will include both the regulation of financial institutions and the provision of deposit insurance for credit unions.

The Financial Institutions Commission will be an important new agency of the government able to intervene, when necessary, to ensure the stability of provincially regulated financial institutions without imposing a double regulatory burden on financial institutions. A lower overall burden will be placed on the industry, and at the same time, public protection will be enhanced. I commend this bill for your consideration and urge its passage.

Bill 51 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

HON. MR. RICHMOND: I wish everyone a very pleasant weekend. I hope you have a great time. See you back here on Monday. I move the House do now adjourn.

Motion approved.

The House adjourned at 12:43 p.m.