Controversial Liberal fund to form public policy institute

The Nova Scotia Liberal party said Saturday that it is divesting itself of controversial funds linked to decades-old political kickbacks and frozen by provincial legislation two years ago.

Party President John Gillis told the party's annual convention that the almost $2.3 million will be used to create an independent, public policy institute named after former deputy prime minister Allan J. MacEachen.

"We are finished with this money. It's being moved off our books and away from the party," said Gillis. "I think it will end once and for all any questions about where it came from and what its meaning was."

The NDP government brought in changes to political party financing in 2009 that banned the use of money or assets held in trust for any political purpose.

Although some Liberal party members argue there was never any taint to the money, it has long been tied to kickbacks the party received from liquor companies while in government during the 1970s.

Gillis admitted that questions about the controversial fund have been a distraction.

"I think some of it was attempts by our opponents to make it a big issue but the reality is it's not an issue any more," he said.

Using funds positively

After extensive debate and legal consultation about the new rules governing restrictions on the use of certain funds for political purposes, Gillis said they decided to do something "positive" with the money.

"We wanted something that had to do with government and public policy but not be specifically political, and to honour someone like Allan J. MacEachen, who worked his whole life for Nova Scotians and Canadians. Seemed like a fitting tribute."

Party Leader Stephen McNeil said it was the right call, a position he made clear two years ago during legislative debate on political financing.

"I said this money needed to move on and I'm very pleased that the party has responded in the way it has."

McNeil said the Liberals have had to live with the suggestion of tainted funds for a lot of years.

"It's been thrown back at us election after election but those days are over."

In 1992 the party gave $1.3 million to the provincial treasury after a review could not clearly determine how much was raised illegally.

The party kept $1.6 million and the fund and its earnings have been used to help cover operating expenses.

It is not yet clear just what form the new policy institute will take, whether it develops as a stand alone or will be part of a university.

Gillis said it will be up to interim directors to begin the process of independently creating the new organization.