Western Standard

The Shotgun Blog

« Calling John Rae | Main | As I Please »

Friday, May 13, 2005

Paul Martin's ghoulish tactics and the tainted blood scandal

Pmceo_lo This week Paul Martin said Stephen Harper’s accusation--that he, the Prime Minister, was waiting for the health of certain MP to deteriorate before a confidence vote was called—was “beyond the pale.” Martin was seconded in this by his ennabler Jack Layton who is quickly proving that the only thing he stands for really is spending more government money. But every Canadian knows in their heart that what Harper said is true and to pretend otherwise is just hypocrisy.

The ghoulish Liberal tactic should not surprise anyone. After all, at the Gomery inquiry we are now hearing testimony from Liberals who actually feared for their safety, if not their lives, because of their testimony against their own party. Gee, how caring can the Liberal Party be?

That Paul Martin would engage in the ghoulishness (that Harper accuses him of) should not surprise anyone either if you recall his role in Canada’s tainted blood scandal--stretching back to the early 1980s and onward into the ensuing cover-up leading to his leadership. You see a pattern of an ugly and corrupt political entity led by a man willing to do anything to get to power and hold on to it. The more you read about Paul Martin, the more you wonder--Why on earth is this man leading our country?

For the record, and for those of you not familiar with the Martin’s role in the tainted blood scandal, I present what others have told me is one of the best explanations of the affair, an excerpt from Murray Dobbin’s book, Paul Martin: CEO for Canada? Pages 26-35. It's long, but for those who wish to understand:

Paul Martin: CEO for Canada?
Murray Dobbin, 2003, pages 26-35


In 1981, the Liberal government chose Paul Martin to be one of its four nominees to the board of the Canada Development Corporation (CDC). During the six years Martin sat on the CDC board, a company in which the CDC held a controlling interest would play a central role in Canada's tainted-blood scandal.

The Canadian Hemophilia Society estimates that through the 1980s, 1,100 Canadians were infected with HIV through the blood supply: hundreds died after subsequently developing AIDS, and thousands more contracted hepatitis C. Andre Picard's book, Gift of Death chronicled much of the story, but also repeatedly brought readers back to what is central to this tragedy: the horrific and mostly avoidable suffering many Canadians endured because they were treated with blood containing the HIV virus and other infectious agents.

Paul Martin's connection to this tragedy was through Connaught Laboratories, one of fifteen in the CDC's stable of companies. The federal government established the CDC in 1971 as a holding company to foster leading-edge Canadian businesses and create profit-making opportunities for Canadians. The investment in Connaught was an effort to nurture a domestic health-care industry.

The contaminated blood products that were linked to so much Suffering and death were Supplied by Connaught Laboratories to the Canadian Red Cross during the years that Paul Martin sat on the CDC board. In his 1997 report on the causes of the tainted-blood tragedy, Justice Horace Krever revealed that those responsible for Canada's blood supply could have reduced the scale of the disaster. Working from the findings of the Krever Inquiry, the RCMP created a special unit, the Blood Task Force, and launched its own five-year investigation. This investigation has so far resulted in thirty-two criminal charges, with the possibility of more in the future. To date, Connaught has escaped criminal charges, but it is named in a billion-dollar lawsuit by hemophiliacs who contracted hepatitis C from tainted blood products.

Two years after Krever published his report, it was revealed that Paul Martin had a connection to the issue. Opposition claims of a conflict of interest were investigated by Ethics Counsellor Howard Wilson. Martin's response to the claims was essentially a denial of any responsibility. He maintained his role on the CDC board did not involve the details of Connaught's operations and he had "no recollection'' of tainted-blood problems ever being mentioned. Martin himself asked Wilson to investigate, promising complete cooperation and the provision of all documents related to the issue. While Wilson concluded there was no conflict, the details surrounding the scandal and actions by Martin's political staff raise serious questions about Paul Martin's role on the CDC board.


One contributing factor to Canada's tainted-blood tragedy was political pressure to have a Canadian manufacturer of blood products, but little comparable commitment to ensure that high safety standards were met. Another possible factor was the coincidental drive to create a commercially successful health business out of what had been a non- profit Canadian research institution.

Between 1914 and 1972, Connaught Medical Research Laboratories (as it was known after 1946) was a self-supporting, non-commercial part of the University of Toronto. In 1972, the university sold Connaught, famous for its development of insulin, for $24 million to the CDC. The Red Cross had reservations about the sale: "The transfer of [Connaught to the private sector placed the Red Cross in the position of answering one million volunteer blood donors as to why profits should be made on their gift."

One reason the University of Toronto sold Connaught was that its laboratories had become antiquated and required expensive upgrades. There were problems in particular with Connaught's blood facilities, which separated blood into its components for different therapeutic uses. These problems would plague Connaught right up until the CDC sold the company in 1987.

When Martin joined the CDC board in 1981, Connaught had already generated nearly a decade of headaches for the CDC that should have been part of any file Martin received as a new director. Right from its very first years under CDC ownership, Connaught repeatedly got negative evaluations from government health inspectors. A CDC insider commented to the Globe and Mail, "Crowding, exposed piping and peeling paint ... It is no wonder that contamination has been a recurring problem with our plasma product.'' In 1976, investigative journalists at CBC-TV'S The Fifth Estate did a major expose on Connaught, documenting how the company made $500,000 exporting a blood derivative at a time when the Red Cross said it was in short supply in Canada.

In the two years just before Martin joined the CDC board, Connaught was engaged in a very public fight with the Red Cross over a contract for factor VIII concentrate, a blood product used to treat hemophiliacs. The Red Cross wanted to build its own factor VIII plant in Canada, but in the interim had hired a US company to do the job.

The Ontario government intervened and forced the Red Cross to contract part of the work to Toronto-based Connaught. Red Cross officials objected to a commercial lab like Connaught being given a central role in what was supposed to be a non-profit blood system. Connaught argued private industry would view the creation of non-profit factor VIII facilities as a government "nationalization," making Canada less attractive to pharmaceutical companies. Paul Martin could have scarcely missed the widespread media coverage of this battle.

By the time Martin began serving on the CDC board, Connaught was a high-profile, controversial company with a public record of serious problems. This hardly fits with Martin's later description of Connaught as a "subsidiary of a subsidiary'' as though it barely hit the radar screen of CDC board members. While Connaught's deficiencies were certainly not the only factor in the tainted-blood tragedy, the Krever Inquiry would document specific defects in the way Connaught operated during Martin's tenure on the CDC board that played a role in the disaster.


The Krever Inquiry revealed that, in the early 1980s, "Connaught was unable to achieve a reasonable yield of factor VIII concentrate, and, as a consequence, large volumes of domestic plasma were wasted." The company's inability to make efficient use of plasma provided by the Red Cross meant it had to buy additional plasma on the international market. In making purchases from international blood brokers, Connaught would be both undermining the non-profit character of the Canadian system and relying on riskier sources of blood.

Unlike Canada, where the Red Cross had stopped collecting blood from prisoners in 1971 due to their high rate of hepatitis B infection, the US still was meeting part of its blood supply needs from prison sources up until 1982. But, in March 1983, the US Food and Drug Administration (FDA) informed Connaught of the new guidelines it had established for American blood suppliers. These guidelines recommended against collecting prisoners' blood because of concerns about HIV contaminations. In August, Connaught discovered one of its main suppliers, Montreal-based Continental Pharma-Cryosan, had been buying plasma that came from Arkansas prisoners. Connaught alerted the Red Cross to this discovery, and the charity immediately cancelled Connaught's contract. Although the Red Cross would subsequently reinstate the contract, its cancellation in September 1983, two years into Martin's appointment, created a major crisis for Connaught.

Connaught's apparently unintentional use of prison blood was not the only problem, however. Connaught had stopped doing its own inspections of blood collection centres in the US, and instead was supposed to be relying on FDA reports. Except, as the Krever Inquiry discovered, nobody at Connaught actually looked at the reports: "The Food and Drug Administration inspection reports were obtained, but they were not reviewed.'' The result was that US blood rejected as too risky for use by Americans was being supplied to Canadians through Connaught.

Connaught had assured the Red Cross in March 1983 that none of its US suppliers were collecting blood in areas with a high incidence of AIDS. Connaught officials claimed in a letter to the Red Cross that they were ''keenly aware of the potential risk of AIDS for the hemophiliac.''

However, around the time it was offering this assurance, Connaught was getting supplies from a blood bank in San Francisco, a city that was on the FDA'S warning list because it was located in one of the world's highest-risk areas for HIV infection. Connaught supplied the Red Cross with blood products from this source until 1985.

The conclusion of the Krever Inquiry was unequivocal: many of the lots of commercial factor VIII concentrate made by Connaught during 1983 and 1984 contained plasma that came from prisons and the Irwin Memorial Blood Bank [in San Francisco]. Those lots had a higher risk associated with them than would have been the case if plasma from those sources had not been used.''

In his April 2000 report on Martin's alleged conflict of interest, Ethics Counsellor Howard Wilson shifted the blame for the prison blood fiasco from Connaught--and by extension, the members of its CDC parent board--to Continental Pharma-Cryosan. Wilson said that while Continental Pharma was informed by the FDA in June 1983 of potential problems with plasma it had supplied to Connaught, it did not initiate a recall and did not inform Connaught until two months later.

Wilson concludes in his report that if Continental Pharma had acted more promptly, ''subsequent difficulties for Connaught and the Canadian Red Cross might have been avoided or at least minimized.''

However, Wilson's focus on the 1983 prison blood incident ignores the underlying problem, identified by Krever: Connaught did not read FDA inspection reports about any of its US sources. This included high-risk blood banks, which were supplying it independently of Continental Pharma. Furthermore, if directors at Connaught and the CDC were shocked by Continental Pharma's purchases of prison blood and failure to recall potentially contaminated supplies, their subsequent behaviour did not show it. Instead of severing relations with Continental Pharma, mere months after the prison-blood revelation Connaught entered into negotiations to launch a multi-million-dollar joint venture with the company's president, Thomas Hecht. Connaught President Alun Davies wrote a letter on February 2, 1984, addressed to "Tom,'' informing him that Connaught was ''prepared to enter into a long term arrangement'' with Continental Pharma, and would consider a "joint venture company." The CDC board would almost certainly have been involved in planning this new venture, as it involved a significant new investment.

Perhaps CDC board members, including Paul Martin, were never provided with the federal health department report on Canada's blood brokers. This 1977 report had warned, "It is evident we are dealing with more than technical violations, but rather a calculated and deliberate business designed to take advantage of legal loopholes providing possibly hazardous products on the world market, which could include the Canadian market.'' Perhaps health officials had never passed on the information they had received about an FBI investigation that found Continental Pharma had ''violated the law.'' And perhaps they had never heard about the RCMP investigation that resulted in Continental Pharma pleading guilty in 1980 for falsely labelling blood as coming from Swedish donors when it had actually been extracted from Russian cadavers.

Yet, as shown earlier, Continental Pharma was not an unknown quantity for CDC board members. In 1982, Continental Pharma President Thomas Hecht joined longtime CDC Director Murray Koffler on the board of an Israeli bank's Canadian subsidiary. When Connaught was developing its joint venture plan with Continental Pharma, Hecht and Martin sat on the board of Concordia University together. It is possible, of course, that Martin had no knowledge of the long-simmering blood story. But it seems unlikely.

As well, CDC board members could hardly have been unaware of the prison blood incident, since this discovery had resulted in the cancellation of Connaught's all-important Red Cross contract, on which its blood business depended. As well, articles about AIDS and the possibility of infection through the blood system started appearing in Canada in the spring of 1983; Martin was a CDC director until the end of 1987. A concerned and alert CDC director might have raised the issue at a board meeting, asking whether its subsidiary, Connaught, was doing all it could to avoid transmitting HIV through its blood products-such as avoiding any blood supplied from sources that did not meet the FDA's guidelines.

When asked about his role on the CDC board during the time of the tainted-blood tragedy, Paul Martin's response is that the issue never came up while he was a director. Given Connaught's central role in the Canadian blood system, the question is, "Why not?"


Connaught abandoned the blood business joint venture it had discussed with Continental Pharma, and the CDC sold the company in 1987. Martin quit the CDC board that same year and ran for office in 1988. A decade later, Martin had to deal with the blood scandal when the federal cabinet learned that Justice Krever intended to assign blame in his final report. Krever had sent notices to Connaught, the Red Cross, and health department officials informing them that they would potentially be cited for wrongdoing; if they were, criminal or civil prosecution was a possibility. Martin participated in the cabinet decision to pursue Krever all the way to the Supreme Court of Canada to block him from assigning such blame, but was cleared of conflict-of-interest charges by Ethics Counsellor Wilson. Krever ultimately won the court case, but was cautioned on the extent to which his report could identify instances of criminal negligence.

Martin was also cleared of conflict-of-interest charges when he participated in the 1998 cabinet decision that denied compensation to those who contracted any blood-born disease before 1986 or after 1990--total of between 20,000 and 39,000 victims. Justice Krever had recommended that all those infected by the blood supply be compensated on a no-fault basis. The government justified its decision to limit compensation by saying that there was no effective blood test for hepatitis C before 1986. But this decision ignored evidence in the Krever Report that Connaught failed to take available measures to ensure its blood products were not contaminated. Government compensation of victims who were infected before 1986 might have been perceived as official acknowledgment that organizations linked to the government-including Connaught--had done something wrong. In short, compensation could have been used in lawsuits against Connaught and/or the CDC.


It was not until May 25, 1999 that Martin's connection with the blood scandal was revealed in the media. Opposition MPs immediately charged that Martin had been in a conflict of interest because of his past connections with Connaught. They pointed to the two tainted blood-related decisions that Martin had to participate in as a cabinet minister.

Martin responded to the accusations in the House of Commons with this statement: "I was a director of the Canada Development Corporation. Connaught Laboratories was a subsidiary of a subsidiary of the Canada Development Corporation. Each of the companies had their own independent boards of directorship I have already stated, I have no recollection of any discussions at the CDC board level on this matter.'' However, as annual reports for the companies show, the governing bodies of the CDC and Connaught overlapped. To ensure CDC supervision, CDC directors and officers sat on the board of each of its major companies, with Connaught's board having several CDC representatives. These overlapping appointments would have given CDC directors ample opportunity during board meetings to get answers about what was going on at Connaught. Martin had opportunity to question any of the CDC members on the Connaught board, and despite his effort to downplay the company's importance, it was far from an obscure sideline. The CDC owned 100 per cent of Connaught, and Connaught accounted for 85 per cent of the CDC'S revenues from its health sector division. Connaught's blood business was the key component of its growth strategy and was described by company executives themselves as a "major operation.''

Ethics Counsellor Wilson backed Martin's description of his role when the Opposition asked for a conflict of interest ruling. In his April 2000 statement, Wilson said he did not see a conflict, citing the 1983 CDC annual report that described the CDC as not being involved in the "day-to-day management'' of its companies.

Yet Wilson could have selected other descriptions of the CDC'S mandate that would have given a different perspective on the role of directors like Paul Martin in overseeing CDC companies. For example, the annual report for 1981, the year Martin became a CDC director, stated clearly, "To be successful itself, CDC has never hesitated to take full responsibility for the policies and major operating decisions of the companies it controls." In 1991, the Kingston Whig Standard did an in-depth profile of Connaught based on extensive interviews with CDC and Connaught directors. The CDC is described as "actively involved in strategy. CDC was never a passive holding company; it worked on business plans and financial plans and marketing plans and research plans and budgets."


Unfortunately, Canadians may never know the whole story of the tainted-blood tragedy, despite all the effort that went into the Krever Inquiry and the subsequent RCMP investigation. Unidentified persons have gone to extreme lengths in an apparent attempt to destroy documents related to the story. On May 18, 1999, the Montreal offices of the Canadian Hemophilia Society were burglarized. A computer and all the materials relating to the blood tragedy were taken. On that same evening in Pine Bluff, Arkansas, the medical clinic owned by US tainted-blood whistleblower Michael Galster was fire-bombed, destroying all his tainted-blood files. Galster had written an expose based on his work at the Cummins Prison in Arkansas, a major source of the contaminated blood purchased by Continental Pharma and sold to Connaught.

Less dramatic, but perhaps more effective, has been the stonewalling of Access to Information requests. When Paul Martin's connection to the scandal was revealed in the media, the Hemophilia Society's vice-president Mike McCarthy and others requested the CDC board minutes from the government. The finance department claimed "a thorough search'' turned up no such records. Unsatisfied with this response, McCarthy filed a letter of complaint to Federal Information Commissioner John Reid.

What follows is the chronology of events as described in the Information Commissioner's annual report for 2001-02. In July and August, all requests for the CDC board minutes received the same reply: "I must inform you that after a thorough search, no records were found to respond to your requests.'' There the matter would have rested had Reid not come across a memo referring to a conversation between finance officials and the Ethics Counsellor's office. Finance had obtained a set of CDC minutes as a result of shadowing the Ethics Counsellor's staff, who found them while investigating the conflict of interest complaint against Martin.

The memo indicated senior finance officials--including the deputy minister and two assistant deputies--reviewed the minutes and then tried to give them back to the Ethics Counsellor's staff, who refused to take them. According to Reid, "It is the Commissioner's view that senior officials of Finance Canada were concerned about the 'optics' of being in possession of records obtained by the Office of the Ethics Counsellor....''

The Information Commissioner's annual report is devastating in its assessment of the behaviour of finance department officials: "The commissioner ... concluded that the answers given to the requests for CDC board minutes were so bereft of helpful information that he found them to be intentionally misleading.... The most senior officials of the department were aware of the 'disconnect' between the facts and the responses.... Finance Canada was neither embarrassed nor apologetic when these facts came to light." Reid later discovered that, in fact, the finance department had two sets of CDC board minutes: one from the Ethics Counsellor and one they had all along in their own tiles.

In his full report on the matter, leaked to the Canadian Press, in March 2002, Reid went even further, directly blaming Martin's political staff for drafting the misleading responses: "The Minister's senior exempt staff, Ms. Thorkelson and Mr. [Scott] Reid, knew of and were involved in the preparation of the 'no records' responses.'' Scott Reid subsequently denied the "no records'' response was his decision. He later became one of Paul Martin's senior campaign organizers.

The minutes McCarthy was finally able to obtain from the finance department were incomplete, missing out the crucial years when the tainted blood tragedy unfolded. McCarthy has spent years trying to track down these documents, but his efforts have so far been unsuccessful. Unless copies of the missing CDC minutes finally get unearthed, Paul Martin will always be able to say that he has "no recollection'' of the board discussing the tainted-blood tragedy.

It is worth noting that not all politicians connected to the blood scandal were eager to deny responsibility. Monique Begin, Minister of Health and Welfare under Pierre Trudeau, was granted immunity by Justice Krever. Begin waived her immunity, however, noting in a letter to Krever: "I consider it my duty to take my share of the responsibility.''

The story is not over. The search for CDC minutes and other documentary evidence of Paul Martin's knowledge of the tainted-blood tragedy continues. The billion-dollar lawsuit against Connaught and Continental Pharma is ongoing. Eventually, people will be called to testify under oath about who knew what, and when.

Posted by Kevin Steel on May 13, 2005 in Canadian Politics | Permalink


TrackBack URL for this entry:

Listed below are links to weblogs that reference Paul Martin's ghoulish tactics and the tainted blood scandal:

» “Cut the check and don’t ask questions.” from Colbert's Comments
While the publication ban on Jean Brault’s testimony from the Gomery Commission is still on, we are left with reviewing some of the interesting stories of the past. We have the February 2, 2005 tragic “suicide” of Yvon DesRochers who was found dead ... [Read More]

Tracked on 2005-05-14 5:17:20 PM


Why do Canadian commissions last so long. The Brits and Americans wrap things up in a year or less, assign blame, people resign, charges are laid, the matter is debated and changes are made. Here in Bananada it is almost like the persons involved seem to see a commission as a life-time job. Perhaps there is some disilliusionment because of the lack of change after the reports are made. Justice Krever's fight to the Supreme Court surely indicated to everyone the results of a real investigation. Keep your head low, drag it out and collect your overtime cheque. Oh Bananada, we stand on guard for thee.

Posted by: rebarbarian | 2005-05-13 12:43:34 PM

CEO of Canada? Maybe, ASO of Canada. Too harsh?

OTOH, a risk assessment would have to painfully carried out when Martin sends his application(s) out for an Errors & Omissions insurance policy, including ten urine tests (over a ten-week time span) plus one with a mid-stream specimen (applicant can choose time).(CSL owned ships excluded).

OTOH, he could apply to join a Group policy with the Librano$ Off Shore Mutual Benefit Society Director's Liability Inc. (Stress on the liability).

Posted by: maz2 | 2005-05-13 2:39:24 PM

Had this damning report come from anyone else other than Dobbin, I might repeat it as a credible source to cast doubt on Martin's integrity....however this research comres from the same authgor that tried to convince us Preston Manning had neo nazi ties.

Nice try Murray but no cee-gar. Once a hysteric always a hysteric.

Posted by: WLMackenzie redux | 2005-05-13 5:47:24 PM

Why did the Red Cross take my husband's father and then his mother with their obvious disregard of the loss this will cause to my husband and his brother?
They lost both of their parents at a very young age. My father in law wasn't even able to retire and collect his rightfully earned pension and enjoy the fruits of his labour.
All becuase of WHAT?
This was very TRADGIC to two young men, their wives and children who never got to know their grandparents.
All I can say is WHY, WHY, WHY?

Posted by: Laurie Wright | 2005-06-07 2:19:19 PM

The comments to this entry are closed.