Party of One (18 page)

So where did Ottawa come up with the $12-billion figure for economic benefits? From the same place they got their plywood F-35: Lockheed Martin. In the wake of the auditor general’s skeptical report, Industry Canada lopped off US$2 billion from the value of the government’s contract estimate that had come straight out of a Lockheed Martin database. Perhaps they had taken to heart Michael Ferguson’s observation that “only the most optimistic projections” on economic benefits were given by the Harper government.

That is the opposite, for example, of what happens when the finance minister produces a budget. The FM makes his financial “targets” realistic by basing them on an average of forecasts by economists, not on the rosiest projections. Overestimating the economic benefits of the F-35 may be good salesmanship, but it is bad practice,
especially at a time when the US military is facing deep budget cuts in a period of austerity. Prudent planners always consider the “what if ” question. If the US government seriously cut back its own order of F-35s, there would be no “sweet spot” where Canada could make its purchase when the price for the stealth fighter would be at its lowest during so-called “maximum production.” Even worse, Congress could cancel the F-35 program as simply unaffordable, the same way another Lockheed Martin product, the F-22, had been shuttered over rising costs and insoluble problems.

But changing warplanes in mid-jetstream is fraught with complications for the Harper government. Canadian industry and the military are deeply embedded in the F-35 program. It is worth noting that two of the Canadian companies that won F-35 contracts also have direct ties to the prime minister. It was announced at the Paris Air Show on June 17, 2013, that Magellan Aerospace signed a potentially billion-dollar deal to produce over a thousand tail assemblies for the Conventional Take-Off and Landing variant of the F-35. Magellan is owned by N. Murray Edwards, the chair of Canadian Natural Resources.
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Edwards was one of the key figures outside of cabinet who had the prime minister’s ear in December 2012, when Stephen Harper was formulating Canada’s new policy on foreign takeovers. It was the Calgary billionaire who warned the prime minister that the $15-billion Nexen takeover by China’s state-controlled CNOCC Ltd., a controversial deal that the Harper government approved, would be “the first of many” if Ottawa didn’t move to put conditions on state-owned entities buying into the Canadian resource sector. As reported by Shawn McCarthy in
The Globe and Mail
, the prime minister’s ultimate policy decision on foreign investment “closely mirrored” the tycoon’s views.

And then there was Nigel Wright. Before becoming Stephen Harper’s chief of staff on January 1, 2011, Wright had been a
high-powered executive with Onex Corporation, dealing specifically with the aerospace industry. Wright was the face of Onex in Wichita, Kansas, when the company purchased Boeing’s commercial aircraft division in 2005. Renamed Spirit Aerosystems, the company is now run by Larry Lawson, former program manager of the F-35 at Lockheed Martin, and chief executive of the company’s aeronautics division.

Wright had also worked with investment bankers Goldman Sachs in the purchase of Raytheon aircraft for $3.3 billion in 2006. The company was renamed Hawker Beechcraft Corporation, and has partnered with Lockheed Martin on projects for the F-35. After a few corporate transformations, including a bankruptcy and a failed attempt to sell itself to the Chinese, the company reemerged as Beechcraft Corporation. Its senior vice-president of military programs is Jim Grant, who spent the last seventeen years at Lockheed Martin as vice-president of new business.

Nigel Wright’s answer to the built-in conflict of interest of having worked for Canada’s largest private equity company with a finger in many pots, including the F-35, was to erect a selfimposed “ethical wall.” This wall would theoretically prevent him from participating in any discussions touching the procurement of the F-35 by the Harper government, an important assurance since the PM’s chief of staff was merely on leave from Onex Corporation and intended to return to the private sector. The then industry minister, Tony Clement, came up with an even better defence against allegations about Wright regarding the F-35. “That’s baloney,” Clement told
The Globe and Mail
. “He’s never been involved and he’s not involved in this. There’s nothing to influence. We’ve already made the decision.”

Giving out contracts to foreign companies whose governments were potential buyers has become a key part of the sales pitch for the F-35. Lockheed Martin held out the allure of becoming
part of the supply chain as a way of cushioning the disappointing performance of the JSF, its runaway costs, and chronic scheduling delays. Former DND procurement chief Alan Williams believes that the main reason Stephen Harper supports the F-35 is not the requirement of the military for a stealth fighter but the possible bonanza of contracts for Canadian industry.

There was money to be made by sticking with the program, as Norway learned. In return for placing an order for just two F-35As, the same variant of the aircraft Canada decided on, Norway got a letter from US secretary of defense Leon Panetta, agreeing to integrate Norway’s so-called “Joint Strike Missile” into the JSF design. It was a deal that could be worth as much as US$4 billion to Oslo.

But what was an effective marketing tool for the F-35 did not necessarily mean good things for the overall program. With the aircraft being manufactured by Lockheed Martin, the engines being produced by Pratt & Whitney, and some weapons systems coming from foreign countries in order to get those countries to invest, critics fear that it could leave the development process more unstable than ever. And Lockheed Martin is worried about consortium partners getting cold feet. Although industrial partners in the joint effort, such as Canada, paid $100 million for the right to bid on F-35 work, the reality is that only countries who fly the jet can reasonably expect to cash in on contracts. “If in fact the Canadian government were to decide not to select the F-35, we will certainly honor the contracts that we have here with the Canadian industry,” Lockheed Martin’s executive vice-president, Orlando Carvalho, told reporters in Montreal. “But our approach in the future would be to try to do business with the industries that are in countries that are buying the plane.”

Though an albatross for the Harper government, the troubled F-35 program has been blood in the water for Canada’s
opposition parties, who for years have been unable to penetrate “Teflon Steve’s” political coating. Harper’s choreographed brushoff of Parliamentary Budget Officer Kevin Page, and his rhetorical acceptance of the auditor general’s damning report, merely sharpened their attack. Two senior parliamentary watchdogs—the auditor general and the parliamentary budget officer—had made clear that the government had not just bungled the F-35 program, it had put out deceitful numbers to cover it up. Both the NDP and the Liberals accused the Harper government of misleading Canadians about the true cost of acquiring the F-35.

Short of admitting gross incompetence, defence minister Peter MacKay had no option but to confirm the government’s connivance in fudging the numbers on the F-35. As reported by Lee Berthiaume of Postmedia, MacKay eventually admitted that the Harper cabinet had signed off on the $25-billion cost of the F-35 but had kept the information secret. On April 30, 2012, he told the Senate defence committtee, “It ultimately goes to cabinet.” There were instant demands for the prime minister and his defence minister to resign for misleading Parliament, and a myriad of questions that the government had no stomach to answer. The biggest question was whether the Conservatives had committed political fraud by misleading Canadian voters in the 2011 election about the cost of the F-35.

One politician had no doubt about the answer. After Thomas Mulcair gave a speech in Ottawa to the Economic Club, the leader of the Opposition had this to say: “We have clear and convincing evidence that the government intentionally provided false information to Parliament and that’s serious. This is a basic question of respect for our institutions.”

Nor were the Liberals mollified by Stephen Harper’s obvious reversal on his previous statements touching the F-35. After listening to him evading the crucial issue of when he became aware of
the true costs of the F-35, and then watching him cover his pivot during Question Period by promising more “supervision” of furtive bureaucrats in the DND, interim Liberal leader Bob Rae remembered how Harper had treated critics of the F-35 in the 2011 election: “The numbers did not add up. The numbers were not real numbers. We knew it, we said it. What was Mr. Harper’s answer then? He called us liars. He said we were unpatriotic. . . . He cannot now pretend that he was just the piano player in the brothel who didn’t have a clue as to what was really going on upstairs.”
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With his credibility in tatters, defence minister Peter MacKay took no questions on the day the auditor general’s report was released. Effectively cutting loose a department that was now humiliated, he confined his remarks to a lame promise: the government would “move forward” with a proper acquisition process to replace the aging CF-18s. MacKay’s parliamentary secretary (now immigration minister), Chris Alexander, came up with the stinker of the day in the aftermath of the AG’s report. He blamed the media for misleading the public on the F-35, claiming that the government had yet to spend a nickel on a replacement for the F-35.

It was an embarrassing moment for the ambitious Alexander. He was pleading innocent to a charge that had never been made, in order to sidestep the real offence: barefaced and repeated duplicity from the government of Canada. Both the prime minister and his minister of defence had talked about a signed “contract” to acquire the F-35 and a total commitment to the project. It was the government, not the media, that had put out the false cost of doing that, as the auditor general reported. Alexander’s bloviating aside, the point wasn’t that Canada’s cheque for the F-35s hadn’t been cashed; it was that the government had committed to writing it, and had lied about the amount. The only saving grace between Canadians and a duplicitous mega-procurement was the work of parliamentary watchdogs Page and Ferguson.

A revealing fact was buried in Chris Alexander’s attempt to pretend the Harper government had not already chosen the F-35. He referred to the government’s seven-point plan as having an “options analysis” component—clearly stating that more than one aircraft was being considered to replace Canada’s F-18s. His statement clashed with the parliamentary record. The year before, the DND had reported to Parliament that the F-35 program had entered the “definition” phase, which comes after the “options analysis” phase. So how could Alexander now claim that the choice hadn’t been made?

History had simply been rewritten. Two weeks after Auditor General Michael Ferguson released his report, DND officials retroactively amended the department’s report to Parliament from the previous year. Where it had once reported the status of the F-35 program as in the “definition” phase, it changed that designation to the “options analysis” phase. Either the DND was assisting the Harper government or someone in the DND had apparently checked the wrong box on a purchase worth $25 billion.

In addition to the political consequences for the government of being outed by the auditor general, there was also a constitutional implication. Under the Westminster model of parliamentary democracy, which Canada ostensibly follows, the practice has been that if waste, corruption, or gross mismanagement in a government department becomes public, the minister himself is responsible—whether or not he was aware of the particulars of the case.

Under the doctrine of ministerial responsibility, Peter MacKay should have resigned as the Opposition demanded. Instead, Stephen Harper followed what would become a pattern for his leadership. The minister was left in place, bureaucrats were blamed, and the prime minister refused to answer any questions about his knowledge of the program.

Claiming to embrace the recommendations of the auditor general, Stephen Harper was left with only one course of action: to smother further debate about the disgraced program before it began to resonate with voters and the party base. The Conservatives moved swiftly to shut down hearings by the public accounts committee into the auditor general’s findings.
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They did this before the committee had heard from ministers and defence department officials who disputed the auditor general’s findings—though, paradoxically, they accepted his recommendations. Gerry Byrne, a Liberal MP on the committee, excoriated committee chair NDP MP David Christopherson for letting the government members move the motion: “This is outrageous. We can’t shut this committee down. To shut this committee down is a scandal. It means the government is desperate to hide something.”

Suddenly, government communications officers began in earnest to spin a whole new narrative for the F-35. The government now insisted that the decision to buy the F-35 had not been made—a breathless reversal given that the prime minister himself was on record multiple times extolling the purchase and arguing that the F-35 was the “only” fighter that met Canada’s requirements. The government’s position had been best articulated in November 2011 by former associate minister of defence Julian Fantino on CTV’s
Power Play
: “Yes, there’s a plan A, there’s a plan B, there’s a plan C, and there’s a plan Z; and they’re all F-35s.”

Suddenly, there was no commitment, and there was no signed contract, despite Peter MacKay having said in the House of Commons on December 13, 2010, “Mr. Speaker, let us look at the actual contract. What the Canadian government has committed to is a $9-billion contract for the acquisition of sixty-five fifth-generation aircraft. This includes not just the aircraft, but also includes the on-board systems, supporting infrastructure, initial
spares, training simulators, contingency funds. This is a terrific investment for the Canadian Forces.”

As if that weren’t enough, this is what Julian Fantino added for good measure in Fort Worth, Texas, in the early days of the Harper majority on November 8, 2011: “We will purchase the F-35. We’re on record. We’re part of the crusade. We’re not backing down.”