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Canada's Biggest Political Scandal You Never Heard Of

Big oil, taxpayers' millions, call girls and a 'mechanic' named Bruce Carson.

By Andrew Nikiforuk 5 Oct 2015 | TheTyee.ca

Andrew Nikiforuk's new book is Slick Water: Fracking and One Insider's Stand Against the World's Most Powerful Industry.

Nikiforuk is an award-winning journalist who has been writing about the energy industry for two decades and is a contributing editor to The Tyee. Find his previous stories here.

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Prime Minister Stephen Harper made convicted fraudster Bruce Carson a top advisor and point person on sensitive files including the oilsands and Afghanistan.

[Editor's note: On Nov. 17, 2015, Bruce Carson was found not guilty of the charge of influence peddling in relation to his attempts to promote the sale of H20 Pros' water purification systems. The charges related to EPIC and the University of Calgary are still making their way through the legal system.]

It's probably the biggest political scandal you've never heard of.

The tale involves Big Oil, millions of taxpayer dollars, call girls and someone the RCMP describes as "one of the prime minister's longest serving advisors": Bruce Carson.

And it largely took place at Stephen Harper's alma mater: the University of Calgary between 2009 and 2011 with a cast of industry CEOs as well as several Harper ministers and aides, including Nigel Wright.

The basic plan was to use $15 million in taxpayers' money for a university think-tank, chaired by Carson, to foster with industry and the federal government a plan to rebrand the oilsands mega-project as "responsible" and "sustainable" and "clean."

The name of that think-tank Carson would run: the Canada School of Energy and Environment (CSEE).

In addition to directing CSEE, Carson also served as the well paid "mind and pen" for the industry-funded Energy Policy Institute of Canada (EPIC).

Its chief goal was to lobby the government for a "common sense energy strategy" that would deliver "economic prosperity" with fewer regulations.

According to David Keith, then one of the University of Calgary's top energy and climate experts, Carson's thinly disguised political lobbying for both institutes promoted a one-sided perspective on the oilsands and climate change.

"What disturbed me most was that a university think-tank refused to do what a university should do: bring in diverse views and have strong debate. The government and industry didn't want that."

Largely squelched, says Keith, were issues such as oil price volatility; the darkening picture for oilsands investors; the fossil fuel divestment movement; and the growing global call for concrete action on climate insecurity and greenhouse gas emissions.

As things now stand, the RCMP have charged Harper's long-time confidant with three counts of lobbying the highest representatives of the Canadian government, including cabinet ministers, while strictly prohibited from doing so, along with one count of influence peddling. All four charges are related to Carson's work at the University of Calgary or EPIC.

These charges, which could result in a prison sentence, stem from a nearly two-year long RCMP investigation that began with a letter of complaint from the Office of the Commissioner of Lobbying of Canada. The 2012 letter concluded "that Mr. Carson may have engaged in registrable lobbying activities while subject to the five year prohibition."

Patrick McCann, Carson's lawyer (and one of the lawyers acting for another former Harper advisor, Nigel Wright) has denied that his client was lobbying government and says Carson will contest the charges.

Carson told the Globe and Mail last year that he wasn't lobbying but just gathering support for a national energy strategy in 2014.

The story sheds light on the Harper government's unrelenting pursuit of its pro-oilsands agenda, and the sketchy people and methods it has been willing to employ to make public policy shaped and approved by industry.

"The whole case shows clearly that [the] prime minister didn't care about the ethics of who worked for him as long as he thought they could help him win and stay in power," says Duff Conacher, co-founder of Democracy Watch and visiting professor at the University of Ottawa.

"And it shows clearly that the Conservatives broke their promises to clean up the federal government."

Carson's other charge and trial

But there is more. Carson, a long-time Ottawa power broker and Harper loyalist, is currently awaiting judgment in a separate trial for another charge of influence peddling.

That charge relates to a now defunct Ottawa-based water filtration company (H2O Pros). Between 2010 and 2011 it allegedly tried to sell its filters with Carson's help to First Nations communities struggling with bad water.

In return, the company offered a cut of sales to Carson's 22-year-old fiancée and "endearing love" at the time: Michele McPherson, who had worked as an escort in Ottawa and was 44 years younger than Carson.

After the Aboriginal Peoples Television Network first brought details of the arrangement with H20 Pros to light, the Office of the Prime Minister wrote to the RCMP in 2011 saying it possessed "troubling details about recent actions and claims made by Mr. Bruce Carson."

While serving as Harper's top senior aide, Carson had worked with Indian Affairs and Northern Development Canada (INAC). He even co-chaired a task force on how to handle First Nations land claims.

Carson, who has pleaded not guilty to the H20 Pro influence peddling charge, elected to be tried by a judge.

During a three-hour RCMP interrogation released during his brief Ottawa trial last month, Carson said altruism got the better of him and that he only wanted to help First Nations communities.

"There was nothing done here that was in my view untoward at all and to end up being in this situation where the time of a whole lot of people is being taken up because of this, I'm profoundly sorry, I am just sick over the whole thing," he told two police interrogators in a meeting arranged by his lawyer McCann.

"I never thought when Michele mentioned this to me we would ever be in this kind of a situation," said Carson, now unemployed. "The whole thing completely threw me."

Harper hires a mechanic

But the water filtration affair also threw the RCMP onto Carson's voluminous emails while serving as executive director of the Canada School of Energy and Environment.

And those incriminating emails, according to Keith, RCMP investigators and other sources The Tyee interviewed, including two Calgary academics and a former think-tank administrator who worked with Carson, tell a story that makes the Mike Duffy affair look trivial by comparison.

Carson, who looks like pugilist, long has had ties to Stephen Harper and the Conservatives. He served as director of policy and research for the federal leader of the Opposition from 2004 to 2006.

Harper liked what he saw. After the election Harper promptly elevated Carson to senior advisor from 2006 to 2008. In 2009, Carson also assisted the government with its federal budget.

The political power broker had a formidable reputation. He often described himself as the "mechanic," a political fixer who got things done in the corridors of power.

He also had a well-known criminal record. In the 1980s, the Law Society of Upper Canada disbarred Carson for defrauding clients for tens of thousands of dollars. And in 1990, Carson pleaded guilty to defrauding a car rental agency and a bank of thousands of dollars. The crimes appear related to extravagant living and later, a messy divorce.

According to Carson's book on the conservative movement in Canada, 14 Days, Harper knew about Carson's past and character including his flamboyant sexual life.

In fact, Harper often began conversations with his former top advisor "in his usual complimentary way," writes Carson, by saying since you are "familiar with every vice known to man," can you help me with this or that problem.

Harper, who dropped his vice expert and political confidant faster than a hot potato when the APTN story broke in 2011, says he knew about the first set of criminal charges but not the latter.

As senior policy advisor to the PM, Carson oversaw the government's most difficult and contentious files, including climate change, the oilsands and the war in Afghanistan. Despite his criminal record, as the point person briefing Harper daily on Afghanistan, his security clearance made him privy to the secrets of Canada's global allies.

A think-tank for Carson

In 2007, according to annual reports for the CSEE and Carson's own speeches (many of which have disappeared from the web), the federal government set aside $15 million for a university think-tank dedicated to smart energy research.

It did so after then University of Calgary president Harvey Weingarten and climate change scientist David Keith pitched the idea for an innovative energy think-tank directly to Harper's senior policy advisor -- Bruce Carson. (At the time, Carson had been seconded from the PMO to Environment Canada to help put out political fires started by then environment minister Rona Ambrose's refusal to pursue Canada's Kyoto Protocol climate change commitments.)

"Harvey and I went to Ottawa to lobby for the CSEE funding, and you can guess who the key guy to talk to was. It's hard to escape the conclusion that Carson was building himself a soft landing from government," Keith said.

A year later, Carson left the PMO. After allegedly conducting an international recruitment search, the University of Calgary appointed Carson as executive director of the school in August 2008. Months later he took two separate leaves of absence to help with the federal election campaign and another to work in the PMO during the so-called prorogation crisis in 2009.

He also worked repeatedly with then environment minister Jim Prentice and travelled with the minister frequently.

Yet Carson's appointment struck some energy experts as odd. Carson was a constitutional expert with no academic credentials in energy or the environment. But he did, however, have a checkered legal career and a criminal record, including five convictions in total.

When the Calgary Herald asked questions about Carson's criminal record in 2008, a University of Calgary spokesperson refused to talk about "second or third hand information."

In any case, the fortuitous academic appointment mightily pleased Harper's top former advisor. "It's just one of those opportunities that doesn't come along very often," Carson told the University of Calgary newspaper, On Campus.

Carson added that he hoped to make Canada and North America the go-to-place for "both the development of clean energy and the protection of the environment."

Carson also made it known that one of his jobs was to contest the dirty character of Alberta-mined bitumen, an asphalt-like hydrocarbon with a carbon footprint 17 per cent greater than conventional oil.

"One of the things that really upset me," he said, "is the slag on the oilsands that it's the production of dirty oil."

Conservative central

From the get-go, the school served as a largely unabashed partisan Tory operation. Carson's deputy director, Zoe Addington, previously served two cabinet ministers that Carson dealt with on a regular basis: Tony Clement and Jim Prentice.

Brian Heidecker, the former vice-president of the Alberta Progressive Conservative Party, also chaired the school's board of directors.

"We don't know how much of Carson's appointment to the school was pre-arranged or whether it was a payment for services rendered as advisor to the PMO," says Conacher of Democracy Watch.

Carson even posted partisan speeches on the school's website. One March 2010 talk to the Manning Centre admonished Conservatives to keep "faith in leader" and to "Be careful when responding to criticism or bad stories -- will a response kill it, will a response prolong it."

But associates and a variety of sources charge that what was supposed to be "a centre of excellence for Canada research, policy and advice" became a front for industry lobbying and government propaganda at taxpayers' expense.

Moreover, the majority of the money for the school never went to energy research.

When Carson took control of CSEE its focus shifted sharply away from developing clean energy technology and towards promoting public policy, says scientist Keith, echoing others interviewed by The Tyee.

Yet the University of Calgary already had two think-tanks devoted to public policy, including the Imperial Oil-funded School of Public Policy headed by Jack Mintz, an economist who sits on Imperial's board. (Carson was also cross-appointed to the School of Public Policy.)

The university also had the older and well-respected Institute for Sustainability, Energy, Environment and Economy, a policy-driven research think-tank. ISEEE's website says it seeks to become "Canada's leading source of valuable insights and critical analysis on how to best transform North American's energy systems."

But with Carson at the helm, CSEE's profile rose quickly at the university, its increasing focus on shielding the industry from the "dirty oil" label.

According to Keith, Carson may have had some genuine interest in the environment, but he really held "an industry driven point of view.... He was working for the PMO [on oilsands advocacy] and here at the same time. It was pretty outrageous."

In contrast to Carson's think-tank, ISEEE published peer-reviewed studies calling for public transparency and full-cost accounting on oilsands pollution. Under Carson, according to the school's corporate plan, only $6.5 million of Ottawa's $15 million for the program was allotted for real research.

"Useful work got done, but management was weak and the funding program unimaginative," said Keith. "It did little to drive clean energy innovation across universities."

In fact, most of the federal grant ($9 million) was slated for Carson's salary, operating expenses and multi-million dollar university site costs.

'I've got a new girlfriend'

Towards the end of 2009, Carson organized a conference dedicated to another of his former PMO responsibilities, the US/Canada Clean Energy Dialogue. He also attended the Copenhagen climate change conference "in the capacity of Senior Advisor to the Deputy Minister of the Environment." The school's 2009 corporate plan also says that Carson co-ordinated "a team of special advisors" for the environment minister, Jim Prentice.

Carson's think-tank also hosted a number of other conferences featuring Harper government officials and ministers.

Several of these events, such as a 2010 three-day Banff meeting with Prentice, were hosted by Barbara Lynn Khan, a former prostitute from North Carolina.

After being convicted of running a bawdy house ("the Sugar Shack") and money laundering in the United States, Khan, a 45-year-old native of Ontario, was deported to Canada in 2005. She met Carson in Ottawa in 2006. Banff attendees simply knew the well-dressed and elegant woman as "Kat."

Shortly afterwards, Carson's relationship with Barbara Lynn Khan ended. He then hooked up with McPherson.

"I've got a new girlfriend. She's real young. She's 28," Carson told friends, adding six years to her age. "She's really something, a real go-getter."

Harper connection continued: Carson

In his 2014 book, Carson doesn't say much about his think-tank duties. Nor does he deny that he ever stopped working for the Harper government: "I had left the PMO but still remained connected to government as I tried to assist with energy and environment policy development from my position as executive director of the Canada School of Energy and Environment," he writes.

While director of the CSEE, Carson also collaborated with and performed contracted work for the country's most powerful industrial lobbyists, including the Canadian Association of Petroleum Producers.

Carson even wrote a report for CAPP on the oilsands that was notable for its blatant omissions: it didn't flag the pace and scale of the project as an important issue, for example. Nor did it mention $20-billion pollution liabilities, or documented pollution of the Athabasca River by peer-reviewed science journals.

Carson's report, a rewrite of industry material, also didn't acknowledge the glaring need for socio-economic studies or cumulative impact assessments as strongly recommended by the Parliament of Canada in 2007. The Harper government has yet to honour these recommendations.

From his academic perch, Carson also insinuated himself into nearly a dozen organizations, many with Tory ties, designed to improve the image of the oilsands or paint fictions that Canada's government was prioritizing green energy development.

Energy lobbying related charges

While hobnobbing with the nation's most powerful executives, Carson was invited to join another a new industry lobby group with a $50,000 membership fee. In 2010 Carson became vice chair of the Energy Policy Institute of Canada (EPIC), an organization set up by Doug Black who would later become a Tory senator.

The RCMP's multiple charges of illegal lobbying mostly relate to Carson's involvement with EPIC.

EPIC was set up to write a new national energy plan, one primarily designed by three dozen of the country's largest energy companies such as Shell, Suncor, Enbridge, EnCana, Imperial Oil, Cenovus, ConocoPhillips and Canadian Natural Resources.

Carson served as EPIC's "mind and pen" and received a $60,000 honorarium a year for his work. But Carson never registered as an EPIC lobbyist.

A 2013 RCMP information order requesting access to Carson's bank records details the intensity of Carson's communication with public office holders while working on EPIC's agenda.

To promote EPIC's national energy plan, the Ottawa insider contacted Clerk of the Privy Council, Wayne Wouters; Deputy Minister of Natural Resources, Cassie Doyle; Marc Vallières, chief of staff to then NRCAN minister Christian Paradis; and many other public office holders.

In one email to Murray Edwards, the Calgary billionaire and founder of oilsands miner Canada Natural Resources, Carson explained how CSEE and EPIC were working together to advocate for a national energy plan.

"My view is that all these pieces can be pulled together and working with deputy ministers and eventually with ministers develop the elements of a National Clean Energy Strategy for Canada."

The RCMP 2013 information order also provides parts of an interview with Gerard Protti, who was registered as an EPIC lobbyist until he became chair of the Alberta Energy Regulator in 2013.

Protti described Carson "as a very knowledgeable very good policy head" who "seemed to know everyone in Ottawa and understand the Ottawa scene very well."

Protti added that Carson brought "a tremendous set of contacts in the federal government."

Carson also emailed Nigel Wright, then Harper's chief of staff, to forward EPIC's agenda:

"Nigel -- I don't think we have ever met -- but we have a few mutual friends -- so firstly good luck with the great adventure you have taken on and secondly thought I would share with you a report I just finished on energy... would love to meet with you at your convenience."

Wright replied, "I've heard a lot of good things about you. Feel free to give me a call at any time."

But Carson's pivotal role in directing the nation's energy policy from a federally funded university think-tank came to end in 2011 with a series of APTN stories about H2O Pros and McPherson.

Around the same time, Keith left the University of Calgary in disgust at Carson's operations there and accepted an offer to teach at Harvard University.

"It soon became clear that Carson was simply using his academic post to further the interests of the Conservative government and a narrow segment of the energy industry," Keith declared in a recent Toronto Star opinion piece.

"Documents released by the RCMP contain emails and interviews making it unequivocally clear that Carson worked closely with industry leaders to produce meetings and reports that had the patina of stakeholder representation, while in fact aiming to avoid meaningful public debate."

Worse than Duffy scandal?

Keith is not alone in decrying the government's behaviour and Carson's open collusion with industry on energy policy.

"The Duffy scandal was about trying to cover up an expenses scandal, but the Carson saga shows the rot goes much deeper," says Keith Stewart, head of the climate and energy campaign for Greenpeace Canada.

"Carson could lobby for the oil industry at the highest levels without anyone raising an eyebrow because the Harper government forgot that they work for Canadians, not oil CEOs."

The courts have yet to rule on any of the charges against Carson.

Stewart met Carson just once at an Energy Café organized by Shell in Calgary in 2011 before Carson's energy world came undone.

According to Stewart, when Stewart introduced himself, Carson blurted: "Will you take down that blog you wrote about me?"

Stewart's blog detailed EPIC's lobbying efforts. But Carson was most upset that Stewart had mentioned that the former advisor had been disbarred as a lawyer.

The blog remains.

But EPIC, CSEE and H20 Pros are now defunct institutions.  [Tyee]

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