HANSARD

Printed and Published by Nova Scotia Hansard Reporting Services

Ms. Maureen MacDonald (Chair)

Mr. James DeWolfe (Vice-Chairman)

Mr. Mark Parent

Mr. Gary Hines

Mr. Graham Steele

Mr. David Wilson (Sackville-Cobequid)

Mr. Keith Colwell

Mr. Wayne Gaudet

Mr. Michel Samson

[Mr. Gary Hines was replaced by Mr. Peter Christie.]

In Attendance:

Ms. Mora Stevens

Legislative Committee Clerk

Mr. Jacques Lapointe

Auditor General

Mr. Roy Salmon

Former Auditor General

Mr. Gordon Hebb, Q.C.

Chief Legislative Counsel

Ms. Lisa Manninger

PC Caucus

HALIFAX, WEDNESDAY, MARCH 8, 2006

STANDING COMMITTEE ON PUBLIC ACCOUNTS

9:00 A.M.

CHAIR

Ms. Maureen MacDonald

VICE-CHAIRMAN

Mr. James DeWolfe

MADAM CHAIR: Good morning. I'd ask the members to take their seats, please. I'd like to call the committee to order. Happy International Women's Day, everyone. I should just remind you that you should show some appreciation to the women in your lives today. I guess now that I'm in your lives, that includes me, too.

This morning we have Mr. Fage as our witness. We will be proceeding in the normal way. I would like to welcome Mr. Fage before the committee. We will start, first, by having introductions - which, really, are as much about doing a sound check for Hansard as anything - of everybody who is on the committee, our witnesses, our Auditor General and former Auditor General. Then there will be a brief period of time, an opportunity for Mr. Fage to make some opening remarks, if he so wishes, two to three minutes is generally what we provide. Then we will proceed with a round of questions.

Before we do the sound check, I would like to table the documents that the subcommittee has reviewed. At this point, they will become available to the media and to the public. We'll start now with the sound check.

[The committee members and witness introduced themselves.]

MADAM CHAIR: Mr. Fage, the floor is now yours for two to three minutes, if you wish to make some opening comments.

MR. ERNEST FAGE: Good morning, members of the committee. As you know, I am appearing here today voluntarily, and with your indulgence I would like to make a few brief opening statements, which I've been invited to do. As committee members are aware, I resigned as Minister of Economic Development on February 15^th. I resigned because I failed to disclose to my colleagues a situation where it could have been seen that I was in a potential conflict of interest regarding a loan to S&J Potato Farms of Prince Edward Island and Nova Scotia.

For me, the failure to disclose my family's indirect interest in this venture undermined the trust that every member of Cabinet must have with each other. For this reason, and I emphasize this reason alone, I apologized to my colleagues in Cabinet and resigned my position. I am also sorry that this situation has harmed the reputations of S&J Potato Farms, its employees and all companies that conduct business with the Government of Nova Scotia.

I did not resign because the loan was unjustified. The loan was absolutely justified, and I would recommend it again, tomorrow. I would venture to suggest the loan would be agreed to by any member of any government that understood and cared about the realities of operating a resource-based business in rural Nova Scotia, in this case an agricultural enterprise. S&J Potato Farms deserves fair consideration for its operation to receive some government support, particularly considering it was government regulation that has placed an undue economic burden on the operation and the status of its 25 employees.

For me, as MLA, like each of you, I am bound to try to help this operation, or any operation that we represent in this province, adjust to these situations. I did that by referring the file to my department for consideration. During this time, my family's long-standing and small, indirect relationship with S&J Potato Farms never entered my mind. Obviously it should have, and for that I am also sorry.

To members of this committee, I appear before you today voluntarily, as a former minister who resigned on a matter of personal principle. I understand and appreciate the partisan nature of this forum. In your questions, I would ask that you respect my decision to resign. I would also ask that you consider the effects of your questions and comments on the company involved, as well as its employees. They are hard-working Nova Scotians. Neither they nor anybody else involved with this file have done anything wrong. They do not deserve to have their reputations harmed in any way.

Finally, as difficult as the last couple of weeks have been for me personally, my family and my staff, I would like to say how heartened I have been by the more than 500 calls, e-mails and letters I have received from throughout Nova Scotia and around the globe. Most important to me has been the outpouring of appreciation from my constituents for my efforts on their behalf. For those sentiments and the honour of serving the people of Cumberland North, I will always be grateful and proud.

Madam Chair, I will attempt to answer any questions members may have within my ability to answer. Thank you.

MADAM CHAIR: Mr. Fage, would you provide the text of your statement to the clerk for the members, please.

We will start with Mr. Steele. The opening round of questions, 20 minutes per caucus. The floor is now yours.

Mr. Steele.

MR. GRAHAM STEELE: To paraphrase Shakespeare, I haven't come to bury you but to praise you, because you are the four-times elected member for Cumberland North. You win by very large margins. Clearly you have the confidence of the people of Cumberland North. You've served with a heavy load in Cabinet since the Progressive Conservative Government entered office in 1999. You are, if I may say, a respected - always have been respected - member of Cabinet. That's why I think it's particularly important that we know more about exactly why you resigned, because until we know the facts of the situation, we don't know if your resignation was necessary; until we know the facts of the situation, we don't know if or when you should be readmitted into Cabinet; and until we know the facts of the situation, we don't know how to make sure that it doesn't happen again. There still is too much mystery around exactly what happened and exactly why you resigned.

So my first question for you is this, exactly what provision of the Ministerial Code of Conduct did you violate?

MR. FAGE: Madam Chair, my resignation was prompted, on reflection, after the loan was made public. That reflection involved examining, did I fully disclose my family's interest in a lease with a company called S&J Potato Farms? Upon that reflection, as I've previously stated here this morning in my opening statement and in the press, I took it as a personal point of honour, the oath I took, the ministerial oath, that I hadn't fully fulfilled that, and I stepped down as Minister of Economic Development.

MR. STEELE: Now, as far as I know, your letter of resignation has never been made public. Is there any reason you know of why it should not be made public? Will you table it with this committee?

MR. FAGE: My letter of resignation, as everyone would understand, when you resign, was presented to the Premier. I didn't make any copies of it.

MR. STEELE: The only person who has a copy of that letter is former Premier John Hamm?

MR. FAGE: That's correct.

MR. STEELE: It appears from the documentation provided to us by the Office of Economic Development that the S&J Potato Farms proposal was presented to Cabinet at its meeting on February 7^th, although it's not entirely clear because the document has different dates in different places. Can you confirm that it was the February 7^th Cabinet meeting at which the S&J Potato Farms proposal was discussed and approved?

MR. FAGE: Again, I'm not a member of Executive Council. I appear here as an MLA and former minister. Anything relating to dates, documentation, all those things are covered under Cabinet confidentiality. I'm not in a position to respond to that question directly.

MR. STEELE: Okay, you and I are going to disagree on that. If you think that Cabinet confidentiality even covers the date of the meeting at which this proposal was considered, we're going to have a fairly large difference of opinion this morning about that. Now, there is an e-mail from Andy Hare of the Economic Development Office, sent on the morning of February 7^th to Alice Harnish and Kathy Lajoie, who both work for Paul Taylor that says the following, "Attached are notes for Minister baker (sic) as requested by Minister Fage. Minister Baker will be presenting this files (sic) to Cabinet this afternoon." And a briefing note on S&J Potato Farms is attached.

Is it correct that it was Michael Baker who presented the S&J Potato Farms proposal to Cabinet on February 7^th?

MR. FAGE: Again, the business case for S&J Potato Farms, as I've stated, stands on its own. The loan was issued because a rural Nova Scotia company that employees 25 people was suffering undue hardship because of government regulations.

MR. STEELE: Mr. Fage, before you go any further down the road, that's not what I asked you. I asked you, did Michael Baker present the S&J Potato Farms proposal to Cabinet on February 7^th?

MR. FAGE: Again, as I stated previously, I am not a member of Executive Council. Cabinet confidentiality has been a tradition of the British parliamentary system for centuries. Certainly I can't comment on that question.

MR. STEELE: The advice that we have from our legal counsel is that we're entitled to ask these questions, and you're required to answer them. You can't hide behind Cabinet confidentiality for such simple questions as what date Cabinet made the decision or who made the presentation. My question to you is, was it Michael Baker, and if it was Michael Baker, why did he present it to Cabinet rather than you?

MR. FAGE: Again, as I previously stated, Madam Chair, Cabinet confidentiality and the convention of centuries of the British parliamentary system prevents me from answering that question. Certainly the member has the right to pursue that with the government, as well as the Department of Justice. I'm not in control of those answers or that convention, so there's nothing more that I can add.

MR. STEELE: Mr. Fage, your version of what happened at that meeting was first presented in The Halifax Daily News on Tuesday, February 14^th. At the time, you seemed to have no hesitation in talking about what happened in the Cabinet Room that day. I'm going to read back to you what was reported in the newspaper on February 14^th. "Fage said he is not in a conflict of interest. He dropped his department's case for an interest-free 'forgivable' loan to S&J Potato Farms Inc. on the Tory cabinet table. Then he left the room while his colleagues decided if the company deserved public money." Is this version of events true? Is that what happened that day?

MR. FAGE: Madam Chair, again, in dealing with matters pertaining to Cabinet confidentiality, I'm not in a position to answer such questions. I think the important fact here is that by my actions, stepping down, I felt, on a personal point of honour, that I had violated my ministerial code. My absence or presence during discussions isn't the issue here. The important point to me is that I failed to disclose to my Cabinet colleagues the nature of the land lease with S&J Potato Farms. That's the real issue.

MADAM CHAIR: With all due respect, Mr. Fage, I would ask you to respectfully answer the questions that are being put to you. You've asked the members here to be respectful of you, and I would hope that we will all do that, but I would say that you need to be respectful of the committee and the legal advice we've had and the process that we are engaged in is one of looking for answers to questions that deserve answers. So I would like to direct you to answer the questions that the witnesses are bringing forward.

MR. FAGE: Respectfully, Madam Chair, I have answered the question to the best of my ability.

MADAM CHAIR: Mr. Steele.

MR. STEELE: It's my intention at the conclusion of the meeting to put a motion to the committee, seeking the committee's concurrence that these are proper questions. That is the advice we're receiving from our legal counsel, that if the committee concurs the question can be put to the witness, then the witness is obliged to answer. Mr. Fage, this is not what I expected this morning. I'm very taken aback at your stance, that you're hiding behind the cloak of Cabinet confidentiality for very straightforward, factual questions.

Now, I'm going to ask you again, when you spoke to The Daily News on the afternoon of February 13^th, you gave Brian Flinn of The Daily News a version of what

happened in the Cabinet Room that day, which I've just read to you and I won't read it to you again. So my question to you is this, is that version of events true? Is that what happened that day in the Cabinet Room?

[9:15 a.m.]

MR. FAGE: As I said earlier, the statements that I made on that day or any day previous are true. Cabinet confidentiality prevents me from expounding in any direction.

MR. STEELE: You're wrong, Mr. Fage, it doesn't. You misunderstand Cabinet confidentiality. Cabinet confidentiality is intended to protect the public. We're in a situation here where the public interest, in our judgment, requires that we know more about what happened. We can't know whether you ought to have resigned, whether you should get back in Cabinet, or how to avoid this happening again, if you continue to refuse to answer these straightforward questions. So my question to you, one more time, is, is the version of events that you presented to Brian Flinn of The Daily News true, or is it not true?

MR. FAGE: Madam Chair, I've already answered that question, previously. I have nothing to add.

MR. STEELE: Well, I think what is clear is that you are refusing to answer the question. By no stretch of the imagination have you answered it. Now your version of events has never really made sense, because if your Cabinet colleagues that day were not previously aware of your conflict, and they found out about it for the first time right there at the Cabinet Table, one would think they would slam on the brakes, find out more about it before making a decision on the proposal. The only thing that makes sense is that either you didn't leave the room at all, contrary to what you told that reporter, or that you did leave the room but you didn't tell your colleagues why you were leaving the room, and it never occurred to them that the reason you were leaving the room was because of the conflict. Now, Mr. Fage, which one of those is true?

MR. FAGE: The straightforward facts, as I've identified publicly, in the press and in my statement this morning and in my statement when I resigned, I did not disclose to my colleagues that there was a lease in place. On my personal honour, upon reflection, I decided that if I respected the oath to be in Cabinet, I had to respect it and do the right thing and step down. That's the pure and simple truth.

MR. STEELE: Now, the Ministerial Code of Conduct, and the Members and Public Employees Disclosure Act require a member who is in a conflict of interest to declare the conflict to his colleagues and leave the room. Did you do that?

MR. FAGE: Again, Madam Chair, I've clearly articulated it and answered the question on numerous occasions here and in the press. The reason I stepped down from

Cabinet was because I did not identify the conflict, meaning the lease of land to S&J Potato Farms from a company I hold shares in. By not disclosing that to my colleagues, I found myself in a situation where I had not honoured the code of conduct or my ministerial duties, by not disclosing that relationship; pure and simple.

MR. STEELE: Mr. Fage, I'm going to move on for now, but I don't want you to think that we're not coming back to this question later in the meeting. We have the right to ask the question, you are obliged to answer it. We will return to this at the end of the meeting.

One of the striking things about the documents that we've been given is that not a single one is from you or to you. There is, in all the documents we've been given, no e-mail from you or to you, no letter from you or to you, no memos from you or to you. Is it correct that your involvement with the S&J Potato Farms file was entirely verbal, or are there documents to you or from you that still haven't been disclosed to the committee?

MR. FAGE: Madam Chair, to the best of my knowledge all documents relating to the file have been given to the members. I have not personally reviewed them, but I would see no reason why you don't have them all.

MR. STEELE: You haven't reviewed them, and yet you assert that we have all the relevant documents?

MR. FAGE: If you re-examine what I just said, I said I have no reason to doubt that you have them all. I don't assemble the documents. I really can't . . .

MR. STEELE: In the eight months that the S&J Potato Farms file was under consideration by your department, is it correct that not a single document was written to you or from you, through the whole eight months?

MR. FAGE: Well, the department, which you can see by the documentation, properly handled the file. I have no recollection that I would have needed to sign anything, forward anything. There isn't anything that I know of.

MR. STEELE: We also know that your department's consideration of the file started with an e-mail from your executive administrative assistant. We also know, because you've said so to the media, that she sent that e-mail at your request. After sending the initial e-mail on June 22^nd, Ms. Reardon also contacted the staffer in OED on July 22^nd, July 26^th, August 3^rd and August 23^rd, asking Mr. Hare to call Mr. Ellis, and then asking whether he had made contact yet. Was it you who asked Ms. Reardon to engage in this persistent follow-up?

MR. FAGE: Certainly in my experience as minister, in dealing with businesspeople and opportunities throughout the entire Province of Nova Scotia, it is absolutely normal that you would request your secretary, when you're dealing with multiple files, for updates on an

ongoing basis. That's normally how you would conduct business, and that's what was done in this case.

MR. STEELE: Now, what's unusual about this case is that the first meeting between the OED staffer and Mr. Ellis occurred on September 7^th. At that meeting, Mr. Ellis made clear to Mr. Hare that he had already reached a deal with you. In fact, two weeks later Mr. Ellis put this in writing in a letter, "To Whom it May Concern" stating that we, meaning you and he and Don Stonehouse from the Department of Transportation and Public Works, "came up with a plan to do some upgrading of the highway and for me to upgrade my trailers with partial assistance from the Economic Development program."

So, I just want to make it clear what happened here. At the first meeting of a staffer with Mr. Ellis, he makes it clear that he has already reached a deal with the minister. Now, is that normal, would you say? Is that something that has happened before? Or is it unusual for a minister to have personally reached a deal with an applicant before a staffer has even looked at the file?

MR. FAGE: Madam Chair, I think it's extremely important for the record that I do answer this question forthright, but it's also extremely important for the record that quotes misinterpreted or taken out of context don't stand as questions. For the entire committee's benefit, "To whom it may concern, My name is Steven Ellis . . .

MR. STEELE: Mr. Fage.

MR. FAGE: . . . I am the owner and operator . . .

MR. STEELE: Mr. Fage, do not read the letter in this committee.

MR. FAGE: . . . of S&J Farms . . .

MADAM CHAIR: Order, order.

MR. STEELE: Madam Chair, this is . . .

MADAM CHAIR: Order, order.

MR. FAGE: I'm here as a guest.

MADAM CHAIR: Order. Mr. Fage, we have that letter. That letter has been tabled. We do not need the reading of that letter in its entirety. If there is a point you need to make, please make it quickly so that questioning can proceed.

MR. STEELE: Mr. Fage, I want you to focus on the question that I'm asking, and not give answers to questions that I haven't asked. My question is, is it the norm in your department, has it happened before, that the minister has personally reached a deal for the payment of Economic Development money before staff has examined the file?

MR. FAGE: Madam Chair, there was no deal reached with this individual. This letter, if it's examined and read in its entirety instead of misinterpretations taken out of it, one can clearly see the gentleman has written a letter to the Department of Economic Development, describing who he has met with. Obviously he would meet with me, he is a constituent of mine. As MLA, I referred him to the department. Clearly the record shows that the member has previously asked in other questions, e-mails had gone back and forth, requesting a meeting with this individual.

This individual has met with the Department of Transportation and Public Works, over a number of months previous to that, dealing with the road situation. I referred him on to staff to have discussions with him to see if there was an opportunity to support this rural agricultural business. The letter, taken in its proper context, clearly outlines, to whom it may concern, that he is making an initial inquiry, and, clearly, I and no one else had made any deal with him.

MADAM CHAIR: Mr. Steele, you have one minute.

MR. STEELE: Mr. Fage, the quote is from Mr. Ellis himself. It's him who says that he has reached a plan with you and Don Stonehouse. That's not me saying that, that's Mr. Ellis saying that. This letter was written at the request of Andy Hare, of the OED, who asked him to put in writing what they had discussed at their meeting on September 7^th. So I beg to differ with you when you say there was no plan. Mr. Ellis was clearly under the impression that he had reached a deal with you and the Department of Transportation and Public Works, because that's what his letter says.

Now my time is nearly up, but I do want to say, Mr. Fage, that I had not anticipated that you would come to the committee this morning with the approach that you have come with.

MADAM CHAIR: The time has now expired.

Mr. Samson, from the Liberal caucus. You have 20 minutes.

MR. MICHEL SAMSON: Basically, Mr. Fage, as Mr. Steele has indicated, we're here to figure out what took place here, what went wrong, and how to make sure it doesn't happen again. The decision by you not to disclose information, and by your government - both the previous administration and the new administration - not to give us information leaves us no choice. I would submit to you, sir, that your answers this morning leave us no

choice but to bring you back, if you wish to continue avoiding basic questions that there is absolutely no legal basis for you to claim Cabinet privilege on. So, I would submit to you that it is now in your hands. I realize this has probably been difficult for you, for your family, for S&J Potato Farms and for your department, but it is now you, sir, who will decide how long we are going to continue.

MR. MARK PARENT: Madam Chair, on a point of order. Our committee cannot force an MLA to come to this meeting. He's here voluntarily, because he's an ethical man who wants to do the right thing. So, that statement that we'll force him back is clearly out of order.

MADAM CHAIR: That's not a point of order.

Mr. Samson.

MR. MICHEL SAMSON: Madam Chair, we will request of you, again, to appear before this committee, and I guess if your colleague wishes to have you refuse, then that will be your option and we will react accordingly. Let me bring you back to that initial meeting. Do you admit today that you met with Steven Ellis to discuss the problems he had, and the possibility of his obtaining financial assistance from the Government of Nova Scotia through your department, yes or no?

MR. FAGE: Madam Chair, as I've previously stated, as the MLA for Cumberland North, this particular company, for several years, has had a serious situation on the marketing side of their business pertaining to being able to move seed potatoes, which can only be moved and shipped during the months of April and May, and that's the majority of its production, the weight restrictions caused him considerable problems. As for doing the right thing, representing constituents, I recommended him to the Department of Transportation and Public Works. He dealt with Don Stonehouse, the gentleman in charge of weights and measures, who dealt with him in regard to how long and what type of dollars would be involved in upgrades. Given that information, which was that it would be four to five years to get that upgrade done, and that it would be an approximate estimate of $2.6 million, he then approached me. The next five years are the years that are going to be very difficult, until those roads are upgraded to be able to put that forward.

MR. MICHEL SAMSON: When did he approach you?

[9:30 a.m.]

MR. FAGE: We had been dealing in the constituency, I've been dealing with this individual for probably at least two and a half years.

MR. MICHEL SAMSON: In his letter he specifically states that he met with you, and there was apparently a discussion about the possibility of obtaining funds through your department. Now he went so far as to say a plan was developed. Did you discuss with Mr. Ellis the possibility of obtaining funding through your department?

MR. FAGE: I met with Mr. Ellis on a number of occasions, outlining programs that the department and government could offer.

MR. MICHEL SAMSON: Let me stop you there.

MR. FAGE: Please let me finish my statement. Then I directed him, as the documentation clearly shows, to the department. The department officials had those discussions with him.

MR. MICHEL SAMSON: Is it your statement that Mr. Ellis is incorrect in stating in his letter that he worked out a plan with you for government funding? Is that your statement, yes or no? There's no need for a long answer to that.

MR. FAGE: Madam Chair, since the statement in question is a paragraph in the letter, I think it's important to examine it openly and clearly.

MR. MICHEL SAMSON: With all due respect, Madam Chair, I'm asking you a simple question, Mr. Fage. You've already objected to the statement that a plan was worked out, so I'm asking you, for the record, is it your statement that no plan was reached by you in discussion with Mr. Ellis to obtain government funding for his business? Yes or no.

MR. FAGE: Madam Chair, when you read the letter, the paragraph involved, "Together we came up with a plan to do some upgrading of the highway . . ." I submit to you that that 'together' does not refer to me. I'm mentioned in the paragraph that refers to Mr. Stonehouse . . .

MR. MICHEL SAMSON: Mr. Fage, with all due respect, he goes on to say . . .

MADAM CHAIR: Mr. Samson, we'll just let Mr. Fage finish, quickly.

MR. FAGE: I am attempting to answer forthright and deal with the facts.

MADAM CHAIR: We can see that. Please finish.

MR. FAGE: Also, in the next paragraph, if members examine, Mr. Ellis goes on in his statement, asking for assistance, "I am hopeful that this project will be approved . . ."

MR. MICHEL SAMSON: The statement goes on, he says he reached a plan with Transportation and with MLA Ernie Fage to get government funding. I'm asking you, for the record, is it your statement that a plan was not reached to get government funding, yes or no?

MR. FAGE: Mr. Ellis arrived at a recommendation with staff at OED, not myself.

MR. MICHEL SAMSON: It's interesting that you said that you're trying to be honest and forthright. I guess we'll let Nova Scotians judge that, Mr. Fage . . .

MR. FAGE: I look forward to that.

MR. MICHEL SAMSON: . . . at the end of the day, as to what has taken place here. When you met with Mr. Ellis, were you aware that he did business with your family company?

MR. FAGE: Yes, I was.

MR. MICHEL SAMSON: Mr. Ellis came to see you, talked about his problems, you talked about loans, programs in your department, the possibility of obtaining government funds. At any time, did you think that you might be in a conflict of interest?

MR. FAGE: Madam Chair, as I previously stated, the issue and business case in dealing with this company was related to the export and marketing side of his business, not his production side of the business. I've stepped down from Cabinet, because I felt that I was in a conflict of interest because of the lease and that I didn't identify it. I stand, and my actions prove I've done the right thing, and, yes, there was a conflict there. I'm sorry, I admit it, and I do apologize.

MR. MICHEL SAMSON: Let me just stop you right there. The day you met with Steve Ellis and you talked about government loans and government programs, it is your statement today that on that day you were in a conflict of interest as Minister of Economic Development. Is that a proper assessment of what you just said?

MR. FAGE: Certainly on that day I was in no conflict of interest.

MR. MICHEL SAMSON: Let's go from there.

MR. FAGE: Every MLA in Nova Scotia has a duty to help his constituents address their concerns. Any Minister of Economic Development in this province has an obligation and, indeed, a duty to retain and attract new businesses, to support - I'm proud to be a member of government and proud to be a minister that supported - those principles, the agricultural industry and jobs in rural Nova Scotia. I make no bones about it.

MR. MICHEL SAMSON: Okay. Let me tell you what bone we make about it, sir. You met with a gentleman who you did business with. You met with him not only as MLA for Cumberland North, you met with him as the Minister of Economic Development. In that meeting, knowing you did business with this gentleman and that you stood to continue to do business with him, you offered him the possibility of government funding, taxpayers' dollars, hard-earned taxpayers' dollars, for his business. You, as minister, would be the one who would be approving that money for him, which at the end of the day is what you did. That is where there is a conflict, and that is why we are brought here, Mr. Fage. That is the issue.

So, if you weren't in a conflict on that day, you sent this over to your department, your department looked at it. Mr. Taylor, who, when appearing before the committee, I believe, indicated that he met with you a number of times to update you - I believe it was six separate occasions he indicated - on this file, along with other files. Then the report and recommendation was brought to you. Can you explain to us why, at no time, on all these different opportunities that you had to declare a conflict of interest or the possibility of a conflict of interest, you chose not to do so with either your staff or, from what you're telling us today, with any of your colleagues?

MR. FAGE: Again, Madam Chair, the conflict that I'm involved in, and the reason I stepped down, is because, as I previously stated, I did not fully disclose the relationship to my Cabinet colleagues. I stepped down as minister on a personal point of honour. There is no situation in my view other than - excuse me, let me rephrase that, the situation before us does not present a conflict when staff are dealing with the individual or the opportunity. That's what has taken place, and that's what the record clearly shows. Due diligence - I would submit, and congratulate staff on the proper job they always do in relationship to any file. I think it's clearly evident when you look at the amount of due diligence represented there, that staff put forward in this, in a professional manner.

MR. MICHEL SAMSON: It's unfortunate, because I agree, your staff did their due diligence. The failure here, after hearing from your staff and having after hearing today, is you, sir, you failed to do your due diligence in disclosing what relationship you had. You caused great embarrassment to your staff. You being here today is because of your choice not to disclose that. Our point is you were given various opportunities to disclose that, yet, if I'm summarizing correctly, you don't feel you did anything wrong in not disclosing this conflict to your staff. You're telling us you resigned because you didn't disclose the conflict to your colleagues.

Let me ask you this, the conflict of interest guidelines that were brought in, how were those presented to you as a minister? Can you disclose that, or are you going to claim Cabinet confidentiality for that as well? How did you become aware of that when they were first brought in?

MR. FAGE: The Premier of the day made a statement in this House, in this very Chamber, announcing those guidelines.

MR. MICHEL SAMSON: If you were to be in a conflict of interest, who are you supposed to report to, under the guidelines?

MR. FAGE: You would report it, obviously, to government, i.e. Executive Council.

MR. MICHEL SAMSON: Who in Executive Council; the Premier, the Clerk of the Executive Council, the Attorney General, who is it? Who do you report it to?

MR. FAGE: All of them would suffice.

MR. MICHEL SAMSON: All of them. So, if you're in a conflict, you're going to have to call all of them and tell them, look, I'm in a conflict. Is that the procedure that's followed?

MR. FAGE: Madam Chair, again, I don't think I can be much more clear. I read a statement. The reason I stepped down . . .

MR. MICHEL SAMSON: No. No.

MR. FAGE: . . . pure and simple, Madam Chair . . .

MR. MICHEL SAMSON: With all due respect . . .

MR. FAGE: . . . is because I did not disclose a relationship between a company I have shares in, although a minor relationship, I had a duty to do that, to my Cabinet colleagues. That is when there is a deal in place or an opportunity, would it be approved or disapproved.

MR. MICHEL SAMSON: Under the government's - when you were a minister - conflict of interest guidelines, if you are in a conflict, what do you do about it? What's the procedure? Can you tell us today?

MR. FAGE: Again, Madam Chair, those questions are more properly addressed to other individuals.

MR. MICHEL SAMSON: Such as?

MR. FAGE: Members of the Executive Council, the clerk. I'm sure if the honourable member wants to address those questions, they will entertain them.

MR. MICHEL SAMSON: You pretty much leave us no choice but to bring those people in or ask those people to appear before, because of your refusal to answer those questions. When you were a member of Executive Council, if you or any of your colleagues were in a conflict of interest, for whatever issue, what was the procedure to be followed in declaring that conflict of interest with your colleagues - because we don't know, there's apparently no one appointed to take care of this - and what steps would be taken if a conflict of interest was declared by a minister?

You were a minister, sir, for many years. You have the ability to answer that question, if there is an answer. I would ask you again, if, hypothetically, any of your colleagues were in a conflict of interest, what procedure did the government's guidelines require you to follow in declaring that, and what takes place after that?

MR. FAGE: Madam Chair, as the honourable member said, it's a hypothetical question. Obviously he and anyone in . . .

MADAM CHAIR: Order. It's not a hypothetical question. It's a direct question, and I would respectfully ask the witness to answer the questions that are being put here today, respectfully.

Mr. Fage.

MR. FAGE: Madam Chair, I apologize. The member opposite was the one using the word hypothetical, and I'm a little averse to hypothetical questions. What I can tell you, and I've said before, is I stepped down because I contravened in my view, and did it on my own personal honour, the ministerial code. I handed my resignation in - because I felt I contravened that - to the Premier of the Province of Nova Scotia. That's the fact. That's how the process worked.

MR. MICHEL SAMSON: Let me put this to you, what we're trying to figure out, Mr. Fage, is, we know there are conflict of interest guidelines, we would assume that there is someone you report to, we would assume - it's not abnormal for ministers to be in conflict. That's not like the boogeyman thing. It happens. Sometimes you can be in conflict with different issues that are going to come about, whether it's through the employment of family members or a whole host of issues. It's not uncommon.

The question is, what was the procedure, what is the procedure today, and what takes place? Your not telling us doesn't answer our question of what went on here. Second of all, your statement pretty much says that Nova Scotians should thank Ernie Fage for doing the honourable thing, because under our system there was nothing to make you resign, and there was no means of compelling you or even requesting you to do so based on the response you've given us. With all due respect, if that's the case, there's something wrong with our system. I'm not questioning your honour or the honour of other members, but one would

think that the code would have much better abilities to detect conflicts of interest and to be able to deal with them. Your refusal to disclose that leads us to question whether this is just, in theory, a procedure and that there's actually nothing to follow up on that.

Let me ask you this, from the day you gave the interview in The Daily News, which I believe was February 14^th, you indicated there was no issue at that time. From that date to the date you suddenly decided to do the honourable thing, in your words, and step down, were you given any sort of legal advice or direction from either the Executive Council, the Premier's Office or the Office of the Attorney General?

MR. FAGE: Madam Chair, on the previous question, as a member of the Executive Council, I submitted all holdings to full disclosure. When I resigned, under the ministerial code, I handed my resignation to the Premier of the Province of Nova Scotia, because I felt I had contravened it. On the second question, as I've said previously and in my statement, after the issue was raised, I reflected upon it, personally, and again, only members of Executive Council know, with the oath you take, what goes on in the Cabinet Room.

I chose to resign of my own volition, because I had, in my mind, forgotten to disclose to my Cabinet colleagues that there was a lease in place, even though I do not manage or operate the company involved, and to step down. There was no intent to gain, no gain was received, but I would have known that I hadn't fully honoured my commitment to the oath I swore. I resigned my ministership on that basis.

MR. MICHEL SAMSON: Let me ask you, yes or no, did you receive advice from the Premier's Office, Executive Council or the Office of the Attorney General prior to your decision to resign? Yes or no.

MR. FAGE: Madam Chair, all ministers receive advice on an ongoing basis.

MR. MICHEL SAMSON: Did you receive advice regarding whether you should or should not resign as minister from the agents I've listed, yes or no?

MADAM CHAIR: Mr. Fage, would you please answer the question.

MR. FAGE: Madam Chair, as I previously stated, and I stated when I stepped down, I resigned of my own volition, and I stand by those words.

[9:45 a.m.]

MR. MICHEL SAMSON: That's a great answer to a yes-or-no question. Mr. Fage, I find it interesting, just in wrapping up this round, that in your opening statement you indicated, "I resigned because I failed to disclose to my colleagues a situation where it could have been seen that I was in a potential conflict of interest regarding the loan to S&J Potato

Farms . . ." Today, you're still telling us you believe it might have been a potential conflict of interest. Is it still your belief, after all of this, knowing your relationship, knowing your failure to disclose that relationship to either your staff or to your colleagues, that this is just an appearance of a conflict and not a direct conflict of interest, for you as minister to be handing out money from your department to someone your family does business with?

MR. FAGE: Certainly, I've never handed out money from a department. The business case is sound here. As I said, I think any government, and I certainly would, as minister, recommend the loan today, tomorrow or any day.

MADAM CHAIR: The time has now expired for the Liberal caucus.

Mr. DeWolfe. You now have 20 minutes.

MR. JAMES DEWOLFE: Good morning, Mr. Fage. Thank you for being here this morning. Mr. Fage, the loan to S&J Potato Farms, was it handled any differently than any other file that was handled by the Office of Economic Development?

MR. FAGE: The file with S&J Potato Farms, the only difference was the supporting work done by the Department of Transportation and Public Works, because their problem was a transportation marketing issue. The handling of the file within OED was handled the same, according to guidelines and procedures, as any other loan would be.

MR. DEWOLFE: I'm surprised, personally, having reviewed the files on the due diligence by the staff of Economic Development, if this is any indication, the thickness, as the press has reported it, a metro phone-book-sized assembly of documents. It amazes me that so much work goes into a loan and a review of an industry in this province. Is that uncommon?

MR. FAGE: Madam Chair, the honourable member points out a very important fact, that some members of the Opposition have been ignoring, that due diligence was properly done here. Staff and documents all indicate that. It also points out a critical factor, I think, in what our government here in Nova Scotia stands for, that is that business is difficult, much more difficult to attract and retain in some communities, especially rural Nova Scotia. This government, and it's a government I'm proud to be a member of, has always supported rural Nova Scotia, particularly agriculture, and looks at any opportunity to keep families working in rural Nova Scotia, so that there are young people, that there are striving businesses and those communities can move into the future the same as larger communities. I make no apologies for it. The business case here is absolutely sound, and very strong.

MR. DEWOLFE: Incidentally, senior members of the Department of Economic Development had indicated that this file was not handled any differently than previous files.

MR. FAGE: Exactly.

MR. DEWOLFE: For your information. Many of these senior officials have been around through previous governments as well. This is their job, and hopefully they'll be around for a long time because they've done a great job in this province. When you look at the employment rate in Nova Scotia compared to other provinces, we've come a long way. Obviously the department is playing a major role in that and doing a good job for all Nova Scotians.

Mr. Fage, I would like to ask you when and how you came to meet with Mr. Ellis? When was your first contact with Mr. Ellis?

MR. FAGE: Mr. Ellis, approximately two to two and a half years ago, contacted my constituency office over the issue of Spring weight restrictions. At that time, on his behalf, we approached the Department of Transportation and Public Works to see if there was any possibility of an exemption during that Spring period; because of the nature of the seed potato business, it's just April and May that are the primary shipment months, it's not year-round. Because of the physiological situation of the potato you're going to plant, you can't pull it out of storage too soon or too late, and the practicality of his customers being able to plant it, it has to be those two months.

There was no consideration for an exemption. It doesn't happen in Nova Scotia. Then over the subsequent year and a half, two years following that, I had Mr. Ellis contact the Department of Transportation and Public Works. They worked closely with him, through Don Stonehouse, who is the gentleman responsible for weights and measures. They looked at the cost of upgrading that road to an all-weather road, and the cost estimate was $2.6 million. The five years to get that project done puts a huge amount of hardship upon this operation. One of the things that Mr. Stonehouse did with Mr. Ellis was look at the type of trailers he's using during that Spring weight restriction to haul his seed potatoes to market. They didn't match the best configuration, wheel alignment, spacing and those types of things, or the weight in construction materials.

They came up with proposals, that, given new trailers that were lightweight and proper configurations, he would be able to haul much closer to tolerance during that period and still not exceed the guidelines. The department staff dealt with Mr. Ellis from that point forward. You see the loan that was granted to S&J Potato Farms, in my mind, and I think most Nova Scotians', a proper type of loan, given the opportunity and the situation. The taxpayer - up to $250,000, on the trailers, and cannot exceed that amount no matter how much he buys. Obviously the trailers are expensive and he has to invest his own money in them to acquire them, along with his support.

The responsibility on him, of course, if that loan is going to be forgivable, is that he has to maintain his present employment for a period of five years. Failing to do that, to

protect the taxpayers' money, those trailers are the collateral, and would be there to reimburse taxpayers in the case of default.

MR. DEWOLFE: Mr. Fage, I believe you're a good man. You've been a good, honourable minister. You've done the honourable thing with regard to this file and this ministry. Those of us on this committee who are not totally out trying to grasp at straws and trying to make political hay out of this situation, I believe, and most Nova Scotians feel this was a good loan. It's a good loan for rural Nova Scotia, it's good for the 25 families that are involved with S&J Potato Farms. At this point in time, Mr. Fage, do you still feel that this loan to S&J Potato Farms was justified?

MR. FAGE: As I said in my opening statement, Madam Chair, this loan stands on its own merit. It's fully justified. It's fully protected for the taxpayers. It provides opportunity for 25 rural Nova Scotian employees and their families. It's fully secured for the Province of Nova Scotia. I would support it again tomorrow, and I certainly would think, or hope, that any government in the future would support the loan as well.

MR. DEWOLFE: In light of everything that has happened to date, in light of all the negativity that surrounds this case, if you had to do it over again, Mr. Fage, as an honourable person, would you recommend this loan?

MR. FAGE: I have absolutely no hesitation in recommending this loan - as I said earlier - this afternoon, tomorrow or next week. This loan, given the opportunity and the challenge, is fully justifiable. If we want to ensure that there's employment and opportunities and families in rural Nova Scotia, we all should be supporting efforts that retain jobs there.

MR. DEWOLFE: I guess it's coming from rural Nova Scotia myself and dealing with businesses and organizations and, indeed, individuals in rural parts of the province, in my mind it's different because there are different challenges facing rural industries and businesses. I would suggest that the Office of Economic Development is moving in a great, positive direction in dealing with some of these rural organizations, to help develop, and I'm really, truly afraid that this meeting that we're having here today and the ones that are coming up during the weeks to come may have a negative impact on rural development in the future in Nova Scotia. It may jeopardize rural development. We've moved ahead with the Office of Economic Development in such a positive way in rural Nova Scotia over the past four or five years. I have this fear, as a rural MLA, that this may put the brakes on it to a certain extent. Is this fear justified?

MR. FAGE: There have certainly been huge strides made forward, I believe, in the last six years. When we look at the distribution of opportunities around this province, we still have lots of challenges out there. But when you look at programs that I'm exceedingly proud to support and have championed through Economic Development, through NSBI, through the Film Development Corporation, through the small business guaranteed loan program,

through the credit union co-op movement that we support, and we look at the unemployment rate adjustment in six years, if what we're doing is wrong, why are we the envy of Atlantic Canada and most provinces across this country? If what we're doing is wrong, why has the unemployment rate dropped from over 11 per cent, when we assumed government in 1999, to the national average, something just a little over 7 per cent, pick any given week?

We have strengthened a number of agencies that support economic development with private sector boards that bring business expertise and strength to it. Every one of those organizations, including OED, works in co-operation and partnership on many projects. They all have their expertise, but for the first time in two generations, there's a comprehensive effort to attract and retain business in Nova Scotia.

[10:00 a.m.]

When you look at why RIM would come here, it's because of that. If you look at why a homegrown business like Ocean Nutrition, on bio-science is going to employ 1,000 employees and was supported and developed through InNOVAcorp, our research and development through university, and then supported by NSBI and OED, and other agencies, it really is working. Your fear is justified. For the short-term, political, partisan games that are being played on the situation, I too have strong concerns that people, in their zeal to play simple partisan politics, may and will damage the economy of this province. That's certainly a fear and concern of mine, as well.

MR. DEWOLFE: Thank you, Mr. Fage. Your actions only show me that you're a man of integrity and I'm proud to be associated with you, and I thank you for your time.

I'll now pass to my colleague.

MADAM CHAIRMAN: Mr. Parent. You have the floor until 10:07 a.m.

MR. PARENT: I want to begin by agreeing on the importance of the difficulty in supporting agriculture and rural industry, and I take a back seat to no MLA in fighting for agricultural industry as you well know. Sometimes I've been successful, sometimes not, but that's a different story for a different place.

The issue that we're looking at right now is the loan to S&J Potato Farms, and I think there are four important things that we need to determine: (1) was the loan justifiable; (2) was the business case for the company sound, were they a sound company; (3) was the loan handled any differently than it would have been if it had been an MLA such as myself pushing it? All three of those, the fact that the loan was justifiable, we've received your confirmation, and that of Paul Taylor last week; that the business case was sound, we've received confirmation from Paul Taylor and yourself and from the financial data in here that the company was sound and that the business case was sound; and we received confirmation

from Paul Taylor last week, and again from yourself this week, that the loan was not handled differently than any other loan would be handled.

So I guess we come, then, to the fourth question which Nova Scotians are interested in, and that is, why then did you resign? You've stated categorically here that the reason you resigned is that on reflection you failed to disclose to your Cabinet colleagues the business association, albeit indirect, that you had with S&J Potato Farms.

A very quick question. What is a minister's salary on top of the MLA's salary?

MR. FAGE: This may sound a little contrite, but I don't know.

MR. PARENT: It's probably about $40,000 more, would that be fair?

AN HON. MEMBER: $38,000.

MR. PARENT: About $38,000 more.

MR. PARENT: In the papers it stated that any benefit that might have accrued - it's very clear that the papers and the Opposition have stated that no benefit to you did accrue from this, but any that might have accrued - would be in the range of $2,000 to $3,000. Is that a fair statement?

MR. FAGE: The newspapers, and certainly Stephen Ellis and all sources, have absolutely confirmed that there are two to three dozen landowners who rent/lease land to his operation on his potato rotation. The going rate, which our company received, which was no different, is $30 an acre. As I previously stated - I checked with the manager - approximately 180 acres of farmland were involved.

MR. PARENT: I guess the question that I have, and I can use religious terms, the punishment doesn't seem to fit the sin - or the oversight - is what most people are saying. Do you think it's fair what has happened to you - your resignation - as a result of what really was, in comparison to the price you've paid - losing your ministerial salary - a very small, sort of possible gain that really didn't materialize anyway?

MR. FAGE: As I said in my opening statement, and have said to the press and Nova Scotians, I was very much looking forward to coming here today and answering the questions that I have the right to answer. I can certainly say to you and all members present, it was my decision, on my personal honour, because I respect the office, I respect the integrity and what the government I was a member of has attempted to do in Nova Scotia, and the renaissance we've seen in the economy and the optimism of the people.

No one had to know but my colleagues, I would have always known, and I did not want to have to deal with that for the remainder of my life. I entered the business of politics because I believe in my community and I believe in my province. I made one commitment to myself, I always wanted to look that fellow in the eye . . .

MADAM CHAIR: Order. The time has expired. We will now have a second round, 15 minutes per caucus.

Mr. Steele.

MR. STEELE: Mr. Fage, I know that you and the government would like to re-frame the issue as being whether the loan to S&J Potato Farms was justified and you'd like to re-frame it as an issue about rural economic development, but you didn't resign because the loan had no merit, you resigned because you were in a conflict of interest. So let's bring it back to why we're here.

The land that you lease to S&J Potato Farms is owned by Fage Farms Limited, which is a company that you jointly own with your brother. Is that correct?

MR. FAGE: Fage Farms Limited is the registered owner of the property and I am a shareholder in that company.

MR. STEELE: And the land that is leased to S&J Potato Farms is owned by Fage Farms Limited, correct?

MR. FAGE: That's correct.

MR. STEELE: How actively involved are you, or have you been while a Cabinet Minister in the business of Fage Farms Limited?

MR. FAGE: When I joined Cabinet, I did my ministerial declaration, and certainly anything that I have an interest in or ownership of is properly filed there. I have not participated actively, in the last six years, in the company. My brother, who is also a shareholder in the company, manages and operates Fage Farms Limited.

MR. STEELE: But on December 1, 2004, you had incorporated another private company. Now presumably you are still actively engaged in personal business interests?

MR. FAGE: That particular company, again, is a private company that was incorporated, that deals with my personal family's financial interests.

MR. STEELE: But it's your statement today that for six years you have had no personal involvement with the business of Fage Farms Limited?

MR. FAGE: That's correct. I do not manage it, I do not operate it. E&S is a completely different company, the new one.

MR. STEELE: When is the first time that you or your brother or Fage Farms Limited had business dealings with S&J Potato Farms?

MR. FAGE: Again, I don't manage it or operate it, so it will be an approximation. I think the initial lease would be in the range of four or five years ago.

MR. STEELE: Exactly how much land does Fage Farms Limited lease to S&J Potato Farms and where is it located?

MR. FAGE: Approximately 180 acres. It's located in Hastings, Nova Scotia, the community of Hastings.

MR. STEELE: What exactly are the terms of the lease arrangement that Fage Farms Limited has with S&J Potato Farms?

MR. FAGE: All I know is it's the going rate of $30 an acre.

MR. STEELE: Do you or any other family members have any business dealings with S&J Potato Farms other than the lease that we've already talked about?

MR. FAGE: None that I'm aware of.

MR. STEELE: Now the conflict of interest that you had as a lessor to S&J Potato Farms and as Minister of Economic Development loaning money to S&J Potato Farms came to light as a result of the story written by Brian Flinn of The Halifax Daily News. We have to presume that the matter would not have come to light had he not made his inquiries and written his story. So I'd like to give you the opportunity, now, to declare whether on any previous occasion, while a member of the Executive Council, you have been in an undeclared conflict of interest?

MR. FAGE: In relationship to the lease, as I've previously stated, it was a total omission, an oversight on my part, and I've resigned because of that. The land that Fage Farms would lease is absolute common knowledge in that area of Cumberland County, and certainly no secret in any way. In dealing with S&J Potato Farms, the focus of the department and myself, in the company's request, was dealing solely with the marketing side of the company, not the production side.

MR. STEELE: I just want to point out to you that you're not answering the question that I asked. The question that I asked is, I want to give you the opportunity today to state to

this committee whether on any previous occasion, while a member of the Executive Council, you have been in an undeclared conflict of interest?

MR. FAGE: I can state, categorically, no, I haven't been.

MR. STEELE: When you were the Minister of Agriculture and Fisheries from August 16, 1999 to December 19, 2002, did you have any personal involvement in the Farm Loan Board's consideration of S&J Potato Farms' loan application?

MR. FAGE: During that period, I wasn't even aware of it. It didn't come to light until Mr. Ellis, in his conversation in my constituency office, said he had a loan with them. That's the first time I knew about it.

MR. STEELE: One of the things that's striking about this whole affair, as we learn more, is how easy it would have been for you to avoid the conflict, and how many opportunities you had to declare it. When you first asked Noella Reardon to raise the issue with OED, you could have told her. Paul Taylor says he discussed the file with you at least six times over the course of eight months. On any one of those occasions, you could have told him. You personally met with the Department of Transportation and Public Works officials, and according to documentation you were due to speak with Transportation and Public Works Minister Ron Russell about it. You could have told them.

You signed the report and recommendation to Cabinet on February 7^th. The documentation shows that the report and recommendation went through multiple drafts before it was finalized. The documentation appears to show the file was presented to Cabinet by Michael Baker. You could have told him. According to the documentation, you personally approved the news release that was put out by Communications Nova Scotia, for which, ironically, you were also the minister, and you could have told them.

The fact that you had all of these opportunities between June 22, 2005 and February 7, 2006 to declare the conflict but you didn't, leads one to the conclusion that it was a conscious decision on your part not to declare it. Why did you make that decision?

MR. FAGE: Madam Chair, as I previously stated, the issue, in dealing with S&J Potato Farms, was their marketing issue, related to transportation. The conflict with the lease was on the production side. As I've stated quite simply and truthfully, it did not occur to me, I forgot. That's why I stepped down.

[10:15 a.m.]

MR. STEELE: In response to a previous question this morning, you said that when you were dealing with Mr. Ellis you were aware that Fage Farms Limited had business dealings with them, and yet over the course of the eight months that this worked its way

through OED, you've also said this morning that you simply forgot to tell anybody. It's just difficult to understand how you could be aware of the business relationship and yet forget to tell anybody about it when you had all of these opportunities to tell somebody, anybody. How can you explain that that happened?

MR. FAGE: Well, obviously in northern Cumberland County, in the agricultural and general rural population, certainly everybody is aware when they see potatoes growing, seed potatoes growing in fields that would be owned by people who they know own them, it becomes common knowledge. It becomes maybe everyday. Certainly, there was no conscious, contrived, or any other, situation from me personally. As I previously stated and apologized for, I forgot.

MR. STEELE: One of the things that struck me this morning about the words you've used is that you've said that you did not fully disclose the conflict, and you emphasized the word "fully". I just want to explore whether there were, indeed, any people also involved in the process who did know. Did Noella Reardon know about your conflict?

MR. FAGE: Certainly you would have to ask Noella Reardon, but I'm not aware that she would have. As I said previously, I never said anything to her or anyone else.

MR. STEELE: Did your political staff know about the conflict?

MR. FAGE: No.

MR. STEELE: Are you prepared to say, this morning, to this committee that not a single one of your Cabinet colleagues, not one knew about your business interests with S&J Potato Farms until they read about it in the newspaper on February 14^th?

MR. FAGE: It's always difficult to answer on behalf of other people, but what I can categorically state is it was an omission on my part and I didn't inform any of them. I have no reason for thinking they would know otherwise.

MR. STEELE: One can only draw the conclusion that when you said to The Daily News, on the afternoon of February 13^th, that you put the file on the table and left the room that that is not exactly what happened that day.

MR. FAGE: Again, I think it goes back to the basic principle of why I resigned. I resigned because I found myself in a conflict of interest by omission. As I've stated previously, I purely and simply forgot to identify it to my Cabinet colleagues. Even though it was not related to the exact business transaction of the marketing situation, they had a right to know. I had a responsibility to inform them. I did not. Upon reflection, I stepped down. Discussions of Cabinet, again that's convention of centuries, and I am not in a position to disclose what takes place in Cabinet.

MR. STEELE: But if you put the file on the table, as you told The Daily News, but didn't tell anybody why you were leaving the room, your Cabinet colleagues could have drawn the conclusion that you were going for a bathroom break, you were going for a smoke break. All they would know is that Ernie Fage had left the room, and they wouldn't know why. There would be no reason for them to be aware of the conflict. It didn't exactly happen the way you told The Daily News reporter, did it?

MR. FAGE: Again, the issue here is why I stepped down. I stepped down because I was honouring my ministerial code. It was a point of personal pride and principle that I would honour that code. I stepped down. What takes place inside Cabinet is purely Cabinet confidentiality.

MR. STEELE: I have two minutes left and it's not enough time to deal with the issues of the road, so I'm going to deal with it very briefly. We learned last week that part of the discussion that you had with Mr. Ellis involved upgrades to certain roads, part of the Greeno Road, the Chapman Settlement Road and Route 366, or part of it. I suggested last week that it was possible that that entailed a personal benefit to you. I now know that's wrong. I've learned, over the last week, a great deal about the geography of northern Cumberland County. I jumped to the wrong conclusion last week, and I'm sorry I did that. I think it's a perfect example of why documents shouldn't be dropped in the committee members' laps in the middle of a meeting. If we had received them a couple of days before, it wouldn't have happened.

But I do want to put the question to you so that you can clarify it for the record. Do you or a family member or any of your companies own any property along those roads that I've just mentioned?

MR. FAGE: Madam Chair, I guess it's always important, whether one's in a court of law or in public life, to be sure of the facts. I do accept the member's apology, that he did not do the due diligence to get a road map out or check the registry of properties. I'm pleased that he has acknowledged that. I or my company, the company I have shares in, have never owned farmland, production land in that area.

MADAM CHAIR: Order. The time has now expired for the NDP caucus.

Mr. Colwell. You have 15 minutes.

MR. KEITH COLWELL: On the February 7^th report and recommendation to Executive Council, did you sign that document personally?

MR. FAGE: Could you repeat the question, please, sir?

MR. COLWELL: On the February 7, 2006 report and recommendation to Executive Council, did you personally sign that document?

MR. FAGE: Yes.

MR. COLWELL: You also stated that you didn't perceive a conflict initially because this was not on the production side of the business. Is that correct?

MR. FAGE: The situation that the province was dealing with, Mr. Ellis and S&J Potato Farms, was on the issue of a marketing problem, the transportation. The issue or the conflict arises for myself on leasing land to the production side of the operation.

MR. COLWELL: How many years had you personally been in business, prior to going into politics?

MR. FAGE: That's always difficult to say, you identify your age and how young you started working or whether it was gainful employment. Out of university, probably 25 years.

MR. COLWELL: Twenty-five years in business. You did admit already that approximately 180 acres at $30 an acre, which amounts to about $5,400 a year as a benefit to the company. Is that correct?

MR. FAGE: Yes.

MR. COLWELL: Okay, 25 years in business, and after 25 years in business you can't draw the conclusion between a conflict of interest between a delivery problem a company has and a production problem? It's one thing. If you are running a business and a benefit happens anywhere in the business, it's a benefit to the whole business. It's not part of the business, a little bit of the business, it's all of the business. You should know that as a business owner, in the past. Any business owner in this province would know that. It adds to the bottom line of the business and helps.

You also indicated, and we are not going to discuss the financial situation of the company here, that you would recommend this grant - because it is a grant, an outright grant over five years - to the business, and you would do so again. Is that correct?

MR. FAGE: Madam Chair, again, I think the honourable member and I would differ on the terms of forgivable loan and grant. There are obligations on this company to continue to employ at least the 25 people, and they must do so for five years. If they default, then the province has the note on the trailers and would receive their money back. That's quite a stretch to make it a grant.

MR. COLWELL: You did state, however, the company is in a very strong financial situation.

MR. FAGE: Certainly, the staff, last week, when I reviewed the questions, made that comment. I'm in no position to know that. I personally don't review financials of companies that come forward, as minister.

MR. COLWELL: That's very unusual, because in order to make a case to Cabinet, which you would have to do at some time as you went through this - and there are many reports here to Cabinet, in this blank book we have here, I would like to see what it is because I may totally concur with your decision to move forward with this, but without the information, we can't do that - you would have had to have that kind of information, because that's one of the questions fellow Cabinet Ministers would have wanted. Isn't that true?

MR. FAGE: The majority of any business case that a minister would recommend and move forward with, staff do the analysis on it. They're experts at that. They would make comments that the bottom line is strong, the business case is strong, and you rely on their expertise to take that forward. Reviewing individual tax form numbers and those would not normally be what a minister would be involved in.

MR. COLWELL: Under a normal process in Cabinet, if you did indeed step out of the room, which it has been reported that did happen when this went through, even though you did sign the report and recommendation to Cabinet, it's not normal that a Cabinet Minister, another Cabinet Minister, in this case I believe it was the Attorney General, brought this forward on your behalf, and on your department's behalf, without letting him know why. Did you let him know why before you stepped out of the Cabinet Room?

MR. FAGE: Again, issues pertaining to Cabinet confidentiality have been the basis of British parliamentary government for centuries. I can't answer that question.

MR. COLWELL: Well, I beg to differ. This is an issue of information. We're not talking about the actual R&R, we're talking about the process used within Cabinet to get this moved forward. It's process we're talking about, not Cabinet confidentiality with the client in case here. Did you indeed discuss this with the Attorney General?

MR. FAGE: Madam Chair, I've answered that question on a number of occasions.

MADAM CHAIR: Mr. Samson.

MR. MICHEL SAMSON: Mr. Fage, you've indicated, and I think Mr. Steele has tried to clarify that for your Tory colleagues on this committee, that had any other minister brought this loan forward, we might not find ourselves here today. You've indicated that you would do it all again, given the opportunity. My question to you is, would you have declared

your conflict to your staff the minute you suggested they make contact with Mr. Ellis, if you could do it all over again? All your comments seem to say you wish you had told your Cabinet colleagues. Would you have even told your staff?

MR. FAGE: Madam Chair, I don't think I made the statement quite in that alignment. The personal pressure and sorrow I put myself, my family and staff through because of my oversight - I certainly wouldn't want to be inflicting that much pain on all the people involved. My comments pertain to the business case of S&J Potato Farms and the loan, that I would support that and move that forward again, on every occasion.

MR. MICHEL SAMSON: I think it's safe to surmise then that your answer to my question was that if you could do it again, you would have told your staff right off the bat, about your potential conflict. Let me put this question to you, I know that Mr. Steele has asked you, have you ever been in a situation of conflict that you didn't declare? Let me turn that question around and say, during your time as minister, Mr. Fage, on any file or on any matter, did you as minister declare yourself to be in a conflict of interest?

MR. FAGE: Again, it gets to specific files. I've previously stated that I have not been in conflict of interest before. This is the first time I've put myself in this position. I've done my official declaration as minister and all of those things are there for public viewing.

[10:30 a.m.]

MR. MICHEL SAMSON: During your time as minister, you've never declared a conflict of interest on any issues, either in your department or brought before Cabinet? That is your statement today?

MR. FAGE: Again, Madam Chair, as I previously stated, I have not found myself in a conflict of interest before. Finding that I was, I took the appropriate action as I saw it, I resigned my seat on the principle that disclosure was not fully done and properly done to my colleagues, and I stand by that decision. It was the right one to do and it was honourable.

MR. MICHEL SAMSON: Just again, officially for the record, even prior to anything getting to Cabinet, we have a document indicating that Minister Baker requested notes on this file. So it hasn't gone to Cabinet yet, it's still just a file. Let me ask you again, why was Minister Baker, as Attorney General, asking for notes on the S&J Potato Farms file? This is before Cabinet, so there's absolutely no way you can leap this into Cabinet confidence. Why did he ask for a copy of the S&J file prior to it even coming to Cabinet?

MR. FAGE: Again, Madam Chair, I've answered that question on a number of occasions and Cabinet confidentiality doesn't allow me to answer that.

MR. SAMSON: I want to turn the question a little bit to the issue of the Magic Valley situation. As you know, this company was given money. We know that it was previously in the hands of NSBI. It made its way to your department, we're not sure why. We now know that apparently they were given money without a business plan or indication as to how they were going to spend the money.

I'm wondering if you could tell us, during your time as Minister of Economic Development, did you make it a habit of giving companies money that didn't have a business plan or didn't actually know what they were going to spend the money on?

MR. FAGE: Madam Chair, certainly I gave no companies money - loans, forgivable loans, equity investments, payroll rebates, venture capital, research and development funds are key tools that our government has used to support companies throughout Nova Scotia . . .

MR. MICHEL SAMSON: Have you given loans . . .

MR. FAGE: . . . and virtually every community, certainly I gave no money . . .

MR. MICHEL SAMSON: Have you given loans . . .

MADAM CHAIR: Order. Mr. Samson.

MR. MICHEL SAMSON: Have you given loans to companies that didn't have a business plan or didn't indicate what they were going to spend the money on?

MR. FAGE: In the situation - and I assume you're asking about Magic Valley or any company . . .

MR. MICHEL SAMSON: Or any others.

MR. FAGE: . . . certainly any business plan would stand on its own merits and obviously one stipulation to protect taxpayers' money is to ensure that a proper business plan that the department would agree with would be in place before it's disbursed.

MR. MICHEL SAMSON: Is it your position that that was done with the Magic Valley loan?

MR. FAGE: In regard to the Magic Valley loan, one of the things to ensure taxpayers' money is that a business plan that the department approves of would have to be signed off by them.

MR. MICHEL SAMSON: Were you lobbied by the former Premier, John Hamm, now MLA for Pictou Centre, at any time in regard to the loan given to Magic Valley?

MR. FAGE: In regard to the loan from Magic Valley, there was certainly broad support throughout Pictou County. I received a request from the local development associations, tourism associations, letters from several MLAs and calls from that area to support it. The Premier, being a good supporter of Pictou County, was one of those who supported the request that the Department of Economic Development have a look at their opportunity.

MR. MICHEL SAMSON: Specifically, in regard to the then Premier, what discussions or correspondence did you receive in regard to the Magic Valley loan?

MR. FAGE: Certainly from the MLA for Pictou Centre, I recall on several occasions that he mentioned to me that he received letters from the member for Pictou West supporting it, the local RDA petitioned him to support it and he relayed that information on to me.

MR. MICHEL SAMSON: Looking at the situation, information that we're getting that the business plan was incomplete, what monies the loan was going to be spent on was incomplete, we're left with the impression that this loan was pushed forward as a means of getting it through before the Premier officially stepped down. Is that a fair statement in looking at the facts that have been brought to light right now, and the government's certainly not giving us everything. But the fact that it's still unclear as to what Magic Valley will spend this money on and that their business plan is incomplete, was this rushed, to get it through before the Premier was out the door?

MR. FAGE: Again, from my perspective, I deal with the facts and that's a speculative question. The proper due diligence was done, the same as every other business case . . .

MADAM CHAIR: Order. The time has now expired for the Liberal caucus.

For the PC caucus, Mr. Parent. You have 15 minutes.

MR. PARENT: Thank you very much, Mr. Fage, and I was going to follow up as we were, in my questions last time, on the issue of the distance from the road that was potentially to be upgraded, and your landholdings, but that has been clarified for us. How far apart would the land that you have shares in be from the upgrading that was proposed?

MR. FAGE: Madam Chair, if I may make a request. Visuals are so much easier for everybody. I brought a map along with me that shows the two communities in Cumberland County. Would it be okay to show it and it would answer all of the questions?

MADAM CHAIR: It's not the practice of the Legislature or of the committees, to the best of my knowledge, to use props. I think that's problematic.

MR. PARENT: Could it be tabled? (Interruptions)

MR. DEWOLFE: On a point of order, Madam Chair. I think it's a practice to table, as long as all members get a copy, it would be proper to table a document that clarifies a situation for all of us.

MADAM CHAIR: Certainly, if there's a map that needs to be tabled, it can be tabled. The witness is free to make reference, but not as a show. This is not a show, and we do not use props in our proceedings and we will not use them here today.

MR. FAGE: Madam Chair, if I could ask you to reconsider, the map is not a hand-drawn map, it's the official Canadian standards version of the map showing road routes and community names. It is strictly a factual piece of material . . .

MADAM CHAIR: Order. I'm sure it's a lovely map, but that's not the point. The point is we do not use props and we will not be using them today. I have made my decision. Certainly if you want to talk about the geography, if you need to use it yourself, but it will be tabled in the usual practice. Could we please proceed.

MR. PARENT: I ask that it be tabled and copied to all the members, as is our usual practice.

MADAM CHAIR: It certainly can be tabled and I see it's quite a large document and in terms of copying, that's something that the clerk will look into.

MR. PARENT: Just a ballpark figure then, how far apart are . . .

MR. FAGE: It's approximately 30 kilometres distance between Hastings, where the lands of Fage Farms are located, and the warehouse in Chapman Settlement, the S&J facilities.

MR. PARENT: So there would be absolutely no benefit to the land that you own for this road upgrading?

MR. FAGE: The roads are not the same roads. They do not connect. Pure speculation on somebody's behalf.

MR. PARENT: I go to, and this is more a comment than a question - I'll come back to a question at the end - again, the financial loss and the potential gain just seem out of whack with each other. It's really more a comment. In law, usually the misdemeanour fits

what's done. Here you've paid a very heavy price. So I just commend you on your courage in taking the stand that you took, voluntarily, as you stated to us.

A question, and then I'll turn it to my colleague, the member for Bedford. In the September 22^nd letter, and you've clarified this, that the word together refers to meetings that Mr. Ellis had with Mr. Stonehouse. I would submit to you, and to your response to this that the word plan is a very interesting word, the word is not deal, which would indicate that some arrangement had been arrived at, but the word plan is that there's some course of action. That would be what I would do as an MLA. I would sit down and say, okay, listen, is there some solution to this, Mr. Ellis? And the department people would say, well, there's two ways of handling this, one is lighter trailers, because we looked at wheel configurations on trucks, and the other is road upgrading. Road upgrading, according to e-mails that we have, would have been $2.6 million, a long-term fix. Let's look at the short-term fix, and here is a plan that we'll go forward with and see if we can get it approved.

Now it's really a moot point, because this word plan refers to comments that he had with Mr. Stonehouse, but it seems to me that the word plan and the word deal are very different words. Any comments on that?

MR. FAGE: I think, first of all, it's important to take the letter in the context that it is. It's to whom it may concern, and it's an initial contact requested by department staff, what are you looking at? He's done a fine job of outlining the parameters, the opportunity and the problems and the challenges. I think it is also important to point out, because there seems to be some misconception around the we part, he's the author, not I as minister, and certainly I was no part of any conceived plan or any of those things. The we, in my view, comes from Don Stonehouse meeting and working with Steven Ellis.

I would also like to make sure that people understand I did not attend any of those meetings. They were working on this issue, because it's primarily a Transportation issue, which becomes a marketing issue.

MR. PARENT: Thank you, and I'll turn the questions over.

MADAM CHAIR: Mr. Christie, the floor is yours.

MR. PETER CHRISTIE: Good morning, Mr. Fage. It's good to see you here, and to have a chance to ask some questions and share some information. Firstly, I'd like to come back to a couple of things. The member for Halifax Fairview raised a question about your being the member for Cumberland North and your large majority. I'm just wondering if you would share with us your view of what an MLA's role is, if you could briefly share that.

MR. FAGE: Madam Chair, as I stated earlier, I entered public life because the community I grew up in and worked in was always very supportive of me, and through their

support and our efforts, we were able to run and grow a successful business. I wanted to give something back to that community, as well as this province. One of the ways you can do that is running for public life. It has been very rewarding. It has been pleasing to see the area I represent, indeed, many communities in rural Nova Scotia see a rebirth, a growth, an opportunity for families to stay instead of moving away.

[10:45 a.m.]

I view my job as an MLA as representing all your constituents' concerns, whether they be opportunities, challenges, problems, whatever they are, with government departments. I would take their point of view forward for them and work with them to see if we could achieve a resolution.

MR. CHRISTIE: How would you see it changing your job as an MLA, once you become a Minister of the Crown? Do things change in that regard? How do you then view the distinction between an MLA and a minister?

MR. FAGE: Well, the obvious one is the workload. You certainly have to make the effort to make sure you're in the community as much as possible and that you're accessible as the MLA, because your MLA duties continue on, regardless if you're a Minister of the Crown. As a Minister of the Crown, I view it that your responsibility to work with opportunities, challenges for people and businesses just went from your own constituency to the entire province. In the case of Economic Development, it's a key ministry where the minister is responsible for promoting the interests of all businesses and employers in the province, retaining, through challenges, as many as possible, as long as there's a business case, and taking every opportunity abroad to point out what a wonderful place Nova Scotia is to live and to do business, and to ensure that you follow up with your colleagues on programs and opportunities that address the real world of other jurisdictions competing with you.

We have put a sound plan, as a government, in place, and it is bearing a lot of very positive opportunities for us. I always like to go back to comparing the new jobs. There are over 41,000 new jobs in this province since 1999. The unemployment rate is down from 11 per cent to just over 7 per cent. In the last 14 months alone, let alone jobs retained, there are over 7,500 new jobs in Nova Scotia, good-paying jobs for young Nova Scotians, a reason to stay here. If we're doing something wrong, the results are all coming out right.

MR. CHRISTIE: My last question, I'm just reading from your statement of this morning, and much has been made of your statement, different comments and indeed different interpretations that I've heard committee members making. Could you just quickly summarize for the record, again, why is it you came here today, and why is it you stepped down as a minister?

MR. FAGE: I voluntarily came here today, knowing it's a partisan forum but wanting to do it in an official manner, to put out the facts of the case. The facts - there are two questions in my mind, why did I resign, and is S&J Potato Farms a sound business case? Today's forum provides an opportunity to let the people of Nova Scotia know it's a sound business case, and the reason I stepped down was because I had failed to disclose a lease arrangement with S&J Potato Farms to my Cabinet colleagues. Upon reflection, I decided, on my personal honour, whether it's public or not, it was going to be public to me, and I resigned my Cabinet post.

MR. CHRISTIE: So after two hours of deliberation, it's just that simple.

MR. FAGE: It's that simple, sir.

MADAM CHAIR: Mr. DeWolfe. You have until 10:52 a.m.

MR. DEWOLFE: Mr. Fage, I know, and I can expect, you went through a lot of stress over this. I hope that having aired this publicly, in this forum, that you can walk out of here holding your head high. When you look over the conclusions of this meeting, the loan, S&J Potato Farms was a reputable company, due diligence by the staff, it was handled, by all accounts, no differently than any other file. We had that confirmed by senior members of Economic Development. Mr. Fage, this was a good loan, a good loan for rural Nova Scotia, it was good for the 25 families associated with S&J Potato Farms who still have jobs in your area. You did the right thing, Mr. Fage. The loan was indeed as pure as the driven snow. I don't think anyone has any question about that.

With regard to you doing the honourable thing, I think you paid a heavy price. I really do. Nevertheless, you did the honourable thing. As I said prior, I think your actions speak volumes to your integrity. Your resignation, as a matter of principle, not a matter of whether the loan was presented properly, because it was strictly a matter of principle, it was a good loan. As for Cabinet confidentiality, it was a time-honoured tradition, and that came up in the House, and it has never been challenged in 250 years. I was really appalled that a cornerstore of our democracy in Nova Scotia was addressed in the way it was. I thank you for protecting that integrity and that honour.

MADAM CHAIR: Order. The time has now expired for questions. It is the practice of the committee to offer the witness an opportunity to make some closing remarks. So I would ask, Mr. Fage, if you wish to make some closing remarks, you have an opportunity to do so now.

MR. FAGE: Madam Chair, I do wish to make a few closing remarks. Again, I want to thank each and every member of the Public Accounts Committee for their time and indulgence today. I want to thank them for allowing me the opportunity to appear here before the Public Accounts Committee to factually tell my side of the story. One could be a bit

contrite or say many things, but the one message that I came here to deliver today was that politics is an honourable business for us all, we are our own principle and moral calendar unto ourselves.

The two questions in my mind that people wanted more elaboration and answers on were, why did I step down and was the loan a sound loan? I hope that with today's proceedings I've been able to convince people here in the committee room and all Nova Scotians that I have nothing to hide. I've honoured the principle of why I stepped down, it's because I believe in democracy, I believe in this Legislature, and I believe in this province. It would be a personal stain and hurt to me, to my entire existence, if I was in a conflict of interest, didn't identify it and then did not act upon. I've done that, and that's the sole answer to that question. The business case, I would do it again tomorrow, and I think all Nova Scotians would do that.

So with those brief remarks, besides saying a couple more thank yous to support staff here, I want to make the comment, also, that it was an absolute pleasure to work with the staff of Economic Development. Those individuals are some of the best economic promoters and assets this province has. They do us all proud, day in and day out. I think it's important that we honour and appreciate their efforts on making this province better for us. So with those few brief remarks, Madam Chair, I want to thank everyone for allowing me to appear.

MADAM CHAIR: Mr. Steele.

MR. STEELE: Madam Chair, the advice this committee has previously received from Legislative Counsel, the legal adviser to the committee, is that when a witness refuses to answer a question, the proper procedure is for the member putting the question to seek the concurrence of the committee that it is a proper question. If that's the committee's decision, then the question is put to the witness, and the witness must answer.

Therefore, I move that the committee concur that the following three questions are proper questions to put to the witness:

• Can you confirm that it was the February 7^th Cabinet meeting at which the S&J proposal was discussed and approved?
• Is it correct that Michael Baker presented the S&J file to Cabinet on February 7^th, and if so, why?
• Mr. Fage's version of what happened at the meeting was first presented in The Halifax Daily News, the article reads as follows, "Fage said he is not in a conflict of interest. He dropped his department's case for an interest-free, 'forgivable loan' to S&J Potato Farms Inc. on the Tory cabinet table. Then
• [Page 37]
• he left the room while his colleagues decided if the company deserved public money." Is this version of events true?

I further move that if the committee concurs that those are proper questions, that the committee move in camera to put the questions to the witness and receive the answers, subject to a future decision of the committee as to whether the transcript should be made public or not.

MADAM CHAIR: There's a motion on the floor. It's now open for discussion. Is there any discussion with respect to that motion? It is a motion that is in order.

Mr. DeWolfe.

MR. DEWOLFE: As I previously stated, Cabinet confidentiality, Executive Council confidentiality are time-honoured policies and traditions, not only with the Nova Scotia Government but with other governments in Canada. I don't believe it has ever been challenged in 250 years in this province, and here we are effectively challenging this time-honoured policy. So I do not agree with the motion.

MADAM CHAIR: Is there any further discussion?

Mr. Christie.

MR. CHRISTIE: Madam Chair, the assumption of this motion is that the legal interpretation is that questions must be answered. I am reading from a letter that you received May 3^rd from Douglas Keefe, the Deputy Minister of Justice, which takes a different view than that. I do not agree with the assumption the mover made, that all of this information should be made available. I ask you to refer to Douglas Keefe's letter of March 3^rd. Also, to have a motion which asks us, and somebody, to confirm a newspaper paper, in my mind, is ludicrous. What the newspaper would write and what the actual facts might be could be at odds. I'm not suggesting they are, but they might be at odds. To introduce a third party into this information, to me, is absolutely ludicrous. Consequently, I'll be voting against the motion.

MADAM CHAIR: Mr. Parent.

MR. PARENT: I guess I just find it slightly ironic that the Opposition has, and rightly so as Mr. Fage has resigned, called for a resignation because of conflict of interest, not adding ethically to the code of ethics of ministers, and now we're asking him to violate the code of ethics of ministers once again by divulging what he swore an oath not to divulge, what goes on within Cabinet confidentiality. So there seems to be an irony here. How can we say that he broke ministerial confidentiality by stating that he should have disclosed, and now

we're asking him to break ministerial confidentiality and his oath once again? I don't understand why - I think you have a real ethical conundrum here.

[11:00 a.m.]

On reflection, Mr. Fage decided he should have fully disclosed to his Cabinet colleagues and he didn't, so he stepped down. He did the honourable thing, and now we're asking him, as a committee, to break the oath that he made as a minister. It puts Mr. Fage in a Catch-22 situation. I find it appalling that we would put him in that position. Ethically, he made an oath as a minister that he would not divulge what went on in Cabinet. How can we as a committee ask him to break an ethical code at the same time as we are making the claim that he broke one in the conflict of interest and should pay the price for that, which he did?

MADAM CHAIR: Mr. Steele.

MR. STEELE: I do want to make clear to my colleagues who have spoken that we understand and accept the need for the principle of Cabinet confidentiality. That is not what is at issue today. What is at issue is whether the claim for Cabinet confidentiality properly covers the subject matter into which the committee is inquiring. We believe the government has cast the net far too wide, and we want to remind the government members that the purpose of Cabinet confidentiality, which is also known as public interest immunity, is to protect the public interest. It is not to protect individual Cabinet Ministers. So the motion on the floor is whether in the judgment of the committee these questions are in the public interest to be answered.

MADAM CHAIR: Mr. DeWolfe.

MR. DEWOLFE: I concur with my colleagues to my right. I cannot support this. At least one of the questions was dealing with whether he was present or not present, or who presented the loan for discussion to Cabinet. In my mind, his resignation was a matter of principle. I think we've seen that. It was a matter of principle, it was not a matter of whether he was present or not present. I think it's terrible, the way this committee is behaving. It's obviously all about political hay. I think the former minister paid a heavy price to do the honourable thing. And that is that. The company is a very honourable company, and well-deserving of this loan. All this is about is political hay, at this point.

MADAM CHAIR: The floor is now closed for debate.

Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

I would now like to table a copy of the report from the Subcommittee on Public Accounts. I would ask for a motion for adjournment - sorry, Mr. Steele.

MR. STEELE: Madam Chair, I'm sorry, but I had intended that the motion would be that we move in camera now and pose those questions now, right now.

MADAM CHAIR: I'm sorry, I didn't understand that. We will take a five-minute recess, and then we will resume in camera. (Interruptions)

I will confer with the clerk and Legislative Counsel about that. We will come back in five minutes.

[The committee adjourned at 11:04 a.m.]