Earlier this week, RCMP commissioner Giuliano (Zack) Zaccardelli got thrust into the unenviable position of seeing his RCMP investigators are indeed conducting an investigation in the midst of an election campaign into the possibility that senior government officials may have inappropriately disclosed some market-moving financial information. This has come to be known as the income trust scandal.
So today, for a report I prepared for tonight’s national newscast, I asked Norman Inkster, the RCMP commissioner from 1987–1994, to give us some colour and background on the RCMP and their role and decision-making processes in all of this. My interview notes are reproduced below. Not all of the interview aired and this is an edited and shortened version of our discussion.
Background: On November 23, Finance Minister Ralph Goodale announces a new policy outlining how his department plans to tax distributions from income trusts and how it will tax dividends. Prior to that point, income trusts enjoyed a more favourable tax regime. Goodale had earlier signalled that he might be inclined to raise the taxes paid by income taxes. That hint caused a broad sell-off earlier this year of shares of income trust corporations. But on Nov. 23, Goodale announced that, rather than raise taxes on income trusts, he would eliminate the disparity between income trust and dividend taxes by lowering the effective tax rate on dividends. His announcement was made at 6 pm while stock markets were closed. But in the last couple of hours of trading that day, there was heavy activity of income trust issues — many more millions of shares traded hands than on an average day and the value of the shares was driven up.
Some took this to be coincidence. Others cried foul — and suggested that some Bay Street insiders got a tip ahead of Goodale’s announcement. The NDP felt that way and they wrote to the RCMP asking for a criminal investigation. Until this week, the RCMP would only say they were reviewing the request to see if an investigation was warranted. This week, they informed the NDP that an investigation was underway.
AKIN: What’s the trigger for moving from a review to an investigation?
INKSTER: Anyone can make a complaint to the police about something or someone else. The police have an obligation to accept that complaint but the police also have an obligation to make a determination whether or not those allegations are frivolous or vexatious. That is part of the review process. They look for corroboration of evidence that might have been given to them or information that might have been given to them to see whether there's some substance to the allegation.
In this particular case, of course, they’ve gone through that and they have made a determination that indeed there is some unexplained market activity and the allegations are sufficiently serious because they go to an issue of market trust and public trust that they feel there is sufficient information there that warrants a full-blown investigation.
It doesn’t mean that the police have concluded the outcome will ultimately be criminal charges — there may be several explanations for why that market activity occurred and they’re just going to do their bestto get to the bottom of it, to seek an explanation.
AKIN: Some have said the RCMP are off on “a wild goose chase” with this investigation. What do you make of that?
INKSTER: Anyone who makes a comment like that is really someone who doesn’t understand the seriousness of the allegations that have been made and the depth to which the RCMP or any other police force would go into something like this before launching an investigation. They’ve got far too much work to do to be going on wild goose chases.
AKIN: Given the sensitive nature of this investigation — its focus and timing — would it merit some special attention within the RCMP, perhaps from the commissioner himself? How is this handled within the RCMP?
INKSTER: Well, you’ve really asked two questions. I’d like to deal with the first one. It’s the worst possible situation for the commissioner of the RCMP to be called upon to do an investigation at such a sensitive time in our political history with an election going on. In that respect, in terms of the timing issue, the RCMP are damned if they do and damned if they don’t. I think they’ve made the right decision and that decision is, based on the materials they’ve received, they think this subject merits further investigation and they’re going to do it now rather than wait for the election to be over. If they waited until the election was over, then there would be allegations against the RCMP that they did not move expeditiously; that sensitive information was lost; memories have lapsed and so on. So I think that they’ve made the right decision to do it now.
Within the RCMP, because it is a sensitive matter, you can rest assured that the senior officers, including the commissioner, will be keeping a close eye on the outcome.
It’s a difficult one for the RCMP to handle and the only way they can do it it is just to go about it as thoroughly and objectively as they can setting aside any political considerations and certainly not being distracted by political events.