RCMP Watch

Daniel LeBlanc and Steven Chase, Ottawa (Globe and Mail) - The RCMP was preparing to charge at least one federal official for leaking Liberal government plans for income trusts in 2005 but was foiled when the official secrets law was gutted by an unrelated court ruling, documents and sources say.

This new information appears to undermine the former Liberal government’s assurances that there was no advance leak of their market-moving decision to forgo a tax on trusts in late November of 2005.

The Liberals were sideswiped during the last federal election when the RCMP announced a politically explosive probe into allegations of a leak midway through the campaign. The party claimed vindication when the investigation concluded in February of 2007 without laying any charges for leaking information.

In the end, the Mounties only charged Finance bureaucrat Serge Nadeau under the Criminal Code with breach of trust for allegedly purchasing securities for his own benefit using advance knowledge of the government’s trust plans.

However, a draft internal RCMP communications plan from August, 2006, showed they also planned to charge at least one other person – under the Security of Information Act.

At the time, the act included strict provisions that criminalized the leaking of federal secrets.

“The [two sets of] charges relate to the inappropriate dissemination of information and the use to which that was put. The charges differ because of differences in what we believe the individuals who are charged did with the information they had,” the document obtained by The Globe and Mail said.

The RCMP communications plan does not indicate whether the person they were preparing to charge for breaching official secrets law was a civil servant or Liberal political staffer.

A federal official, speaking on condition of anonymity, said at least one person can be thankful that the Ontario Superior Court struck down the provisions against leaks in the Security of Information Act on October 19, 2006.

“That launched a series of unfortunate events or, rather, unfortunate for some and fortunate for others,” the official said.

In a landmark ruling, Madam Justice Lynn Ratushny of the Ontario Superior Court concluded that the provisions against leaking government data in the Security of Information Act were unacceptably broad and vague. The judge ruled against the RCMP seizure of documents belonging to Ottawa Citizen reporter Juliet O’Neill over articles written with leaked government information.

Given that the government didn’t appeal that ruling, University of Ottawa law professor David Paciocco said, the provisions against leaking secret information were effectively “struck down.”

The controversy over the Liberals’ handling of changes to income trust policy began in late November of 2005. At about 5:45 pm on Nov. 23, then-finance-minister Ralph Goodale revealed that the Liberals would not impose a tax on income trusts – a measure they had contemplated.

But trading of income trusts and related stocks spiked in the hours before the policy announcement, sparking allegations that Ottawa’s decision had been leaked in advance.

The RCMP launched a criminal probe about a month later, news of which likely helped defeat the Liberals in the January of 2006 election.

The investigation initially looked at potential breaches of the Security of Information Act and the RCMP only took an interest in Mr. Nadeau’s alleged trading after later receiving information from Quebec’s securities regulator.

RCMP documents released by the court after Mr. Nadeau was charged last year show that the scope of the Mounties’ investigation extended far beyond the civil servant’s alleged trading activity.

Transcripts of RCMP interviews with Mr. Goodale and his staff show that, among other things, the Mounties scrutinized consultations between his office and private-sector investment players in the days and hours leading up to the trust announcement.

Mr. Goodale told the Mounties in a March of 2006 interview that two of his staff were tasked in the days before the announcement to “get some private-sector feedback” on the idea of a tax on trusts and other options.

He told the RCMP that his staff later assured him they didn’t disclose or signal which option the government would ultimately take.

“They would know having worked through budgets and other very confidential matters within the Department of Finance that there is no definitive information that is to be disclosed,” Mr. Goodale told the RCMP.

Mr. Goodale has repeatedly emphasized he made inquiries among his staff and department and was satisfied that no advance notice was given.

The RCMP also quizzed Mr. Goodale about former Liberal cabinet minister Scott Brison, who’d already admitted to e-mailing a bank official days before the trust announcement, saying the recipient would be happy with the outcome. The Mounties declined any comment on the 2006 internal communications plan.

Mr. Nadeau’s legal team said he will be pleading not guilty to the charge of breach of trust and that a preliminary inquiry is set to proceed in June.

The RCMP communication lines were released under the Access to Information Act to researcher Ken Rubin.