Canadian leader's ties to maritime industry causing him problems

Feb 28, 2007 12:00 AM

His selection marks the first time in Canadian history that someone from the maritime industry has become the country's top political leader. But industry observers say his potential influence on maritime issues will be neutral, at best, and perhaps negative, partly because of controversies stemming from his shipping ties.

"The fact that he was in the shipping business means he will have to be very careful to distance himself from any legislation related to transportation in general, and marine matters in particular," said Bob Ballantyne, president of the Canadian Industrial Transportation Association, which represents companies that move goods via ship, rail, air or truck. "It probably won't be negative that he had that experience, but it probably won't be very positive, either."

Image Credit: Courtesy government of Canada

Paul Martin is the former CEO of CSL Group Inc., the parent of Canadian Steamship Lines.

Martin was chief executive, director and principal owner of the CSL Group Inc., which owns and operates bulk carriers. That group includes Canada Steamship Lines, which owns and operates 15 Canadian-flagged bulkers that sail on the Great Lakes and St. Lawrence Seaway, and CSL International, which manages 18 self-unloading vessels, ranging from handysize to panamax.

His ties to the company date back to 1974, when he became president of Canada Steamship Lines. In 1981 Martin bought the company with Laurence Pathy; he assumed total control in 1988. In 1993, after he became minister of finance, Martin placed management of the company in a blind trust. In October 2002, Martin sought the leadership of the Liberal Party.

Critics said Martin would run into conflict-of-interest questions if he became prime minister and maintained ownership of CSL Group. In August 2003 Martin handed over all control of CSL Group Inc. to his three sons.

Since becoming prime minister, one of Martin's biggest controversies stemmed from his shipping connections. In January of this year, the government reported that Martin's shipping companies received $161 million in federal contracts, loans and grants between 1993 and 2002. In February 2003, the government reported that Martin's companies only did $137,000 worth of federal business in that time period. The wide difference between the two figures led to allegations of a cover-up on Martin's part, which he denied. Martin asked for an investigation into the discrepancies.

Controversies like this show how vulnerable Martin is to criticism concerning his ties to the industry. Martin's connections "make it more difficult because opposition parties will jump on any perceived bias towards his former company," said Marcel L. Rivard, president and chief executive of the Upper Lakes Group, which owns or manages 22 dry-bulk carriers that sail on the Great Lakes and the Seaway. "The flap that occurred this past winter over government contracts which his company supposedly benefited from is a typical example of facts that were totally distorted," Rivard said. "Unfortunately, in such cases, it is the whole shipping industry that suffers as a result."

John Logan, a senior manager at Irving Oil Ltd., said he has not noticed any effect on the maritime industry since Martin became prime minister. "It isn't evident that he's been doing anything, and that's probably why," he said, referring to that controversy.

The CSL Group has been the subject of other attacks. In the 1980s, Martin was criticized for putting Canadian mariners out of work when CSL transferred some of its Canadian-flagged vessels to foreign flags. And in April of this year, Joe Clark, leader of the Progressive Conservative Party, alleged that Martin, while serving as finance minister, failed to close tax loopholes that allowed foreign subsidiaries of Canadian companies to avoid paying Canadian taxes. Clark charged that Martin's companies benefited from these tax breaks.


Martin has also been attacked in Parliament this year by members from Quebec concerned that his government wants to enlarge the St. Lawrence Seaway to allow panamax vessels to transit the waterway. Martin's minister of transport said a maintenance study is underway but that there are no plans for expansion. The Great Lakes St. Lawrence Seaway Study began in May 2003 to assess the current and future needs of the Seaway commercial navigation system and evaluate the maintenance and capital needs of the waterway.

"Any issue that looks like it's going to give any advantage to Canada Steamship Lines at all, opposition parties will certainly jump on that," Ballantyne said. When it comes to issues such as the Seaway, "I think it will depend on how much support or advocacy is done by other groups," he said. "There are a lot of other players who will be interested in changes and improvements to the Seaway system."

Ultimately, when it comes to maritime issues, the arguments for or against a specific proposal are what's important, not Martin's background, according to Jim Campbell, general manager of the Chamber of Maritime Commerce, of which Canada Steamship Lines is a member. "Over the years, even when he was finance minister, we didn't see any difference," he said "There hasn't been anything you could put your finger on, pro or con."

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