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Manitoba Legislative Building scandal — lawyer accuses Norris of participating in $50,000 deal
Apr 03, 2009

Construction of the legislative building, southeast corner, October 11, 1915

(Foote Collection/Manitoba Archives).

 

 

by Bruce Cherney (part 3)

Contractor Thomas Kelly’s subsequent trial in Manitoba was somewhat anti-climactic to all that had preceded it, such as his flight to the United States to avoid testifying at the Mathers Commission and his fight against extradition to Canada. 

While Kelly was battling to stay in the U.S., a grand jury in Manitoba on March 29, 1916, delivered a “true bill” against ex-premier Sir Rodmond Roblin and ex-cabinet ministers James H. Howden and George R. Coldwell, saying they had conspired to defraud the province and conspired to corrupt and corrupted a witness (William Salt). Roblin was also indicted for destroying and conspiring to destroy documents. 

The grand jury also indicted Kelly, charging him with theft, receiving and obtaining money under false pretenses and perjury — the latter charge stemming from his testimony to the public accounts committee in 1915. Since Kelly was then in the U.S., a bench warrant was issued for his arrest.

Kelly’s trial was presided over by Court of King’s Bench of Manitoba Judge James Emile Pierre Prendergast. When the judge ruled against a delay to allow Kelly’s lawyers to review the mountain of evidence accumulated against their client, they withdrew their services and Kelly was forced to act on his own behalf.

 

Manitoba Premier Tobias Crawford Norris (Manitoba Archives).

 

The Crown called 38 witnesses with most of their testimony being a repeat of what was told to the Mathers Commission. 

In his summary, Crown attorney Bonnar said, “I cannot expression myself adequately — the thing stinks.”

Kelly maintained his innocence while in court, but called no witnesses in his defence, nor did he appear on the stand on his own behalf. 

After an 11-day trial, Kelly was found guilty of defrauding the provincial government of more than $1.2 million in money, property and securities.

In July, the Manitoba Court of Appeal rejected his appeal. Following the rejection, Kelly turned to the Supreme Court of Canada to hear his case, but the court upheld the jury verdict against Kelly.

“So overwhelming is the proof furnished by the evidence ... that no honest jury could have returned other than a verdict of guilty of obtaining money by false pretenses had the case been free from all the alleged errors of omission and commission,” the Supreme Court ruled. 

As a last resort, Kelly wrote to Canadian Minister of Justice Charles Joseph Doherty, a Conservative MP, claiming unfair treatment by the Mathers Commission, newspapers and the Norris Liberal government.

He said Winnipeg’s Liberal newspapers (the Free Press was the Liberal organ in the city) “made it impossible for me to obtain a fair trial,” and the Mathers Commission conducted its investigation in a “grossly partisan way.”

He accused Lieutenant-Governor Cameron of refusing to allow Roblin to name any members of the Mathers Commission and not appointing any Conservatives to the commission. These were blatantly false accusations as all the commissioners were appointed by the Roblin government. The only pressure exerted by Cameron was forcing Roblin to call the Royal Commission Appointed to Inquire into Certain Matters Relating to the New Parliament Buildings,” which was its official title.

In addition, Hugh John Macdonald had been the Conservative premier of Manitoba prior to Roblin, a Conservative MP and the son of former Conservative Prime Minister Sir John A. Macdonald. 

Chief Justice Thomas Graham Mathers and Justice Daniel Alexander Macdonald were both prominent lawyers before their appointments to the Court of King’s Bench by the federal Liberal government of Prime Minister Sir Wilfrid Laurier. Despite their well-known Liberal affiliation, it would have been difficult for Roblin to exclude the highest-ranking judges in Manitoba from the Royal Commission.

The only real quarrel Kelly could have with Mathers was his refusal to accept the alleged backroom deal made between the Conservatives and Liberals which would have ended the Royal Commission. In return for the Roblin government’s resignation, the Norris Liberals allegedly promised to have the commission hearings stopped, a civil suit launched only against Thomas Kelly & Sons and a more compliant government inquiry convened. 

As rumours spread of the alleged deal, Kelly, who had deep roots in the Conservative organization, must have felt betrayed and ill-rewarded for his schemes to fund the party machine. At this stage, Kelly would have known that he was being thrown to the Liberal sharks by so-called Conservative friends as they hastily abandoned his sinking ship.

Meanwhile, the deal was made without Mathers’ consent and he allegedly refused to accept the political compromise, so the commission hearings continued. 

It’s possible Mathers and Daniel Macdonald were appointed with the view that as “good” Liberals, they would willingly accept the deal made by Norris with Roblin, but there is no evidence to support this speculation. Whatever the perceived circumstances, Mathers’ refusal to end the commission hearings clearly showed he was not a willing partner to the political backroom deal. 

It is interesting to note that Manitoba Attorney General Albert B. Hudson would later deny any knowledge of the “deal” when the matter was brought before the Mathers Commission by lawyer Charles P. Fullerton, who represented “private Conservative members of the legislature.” The lawyer claimed $50,000 had been handed over to Dr. R.M. Simpson, the Conservative Party treasurer, by the Liberals to seal the pact. Chief Justice Mathers ruled the commission could not extend its power to investigate the allegations, despite Liberal government counsel C.P. Wilson saying he had “no objection to questioning witnesses regarding the alleged deal.”

Using hearsay evidence lacking verification, Fullerton alleged a former housekeeper of Dr. Simpson told him she saw the doctor count out $50,000 on a table in his home, but she didn’t know who it was from nor where it was eventually conveyed. Fullerton was so persistent in his claim that with the help of a petition from Conservative MLAs he finally pressured Premier Norris into appointing a Royal Commission to investigate the allegations. According to Fullerton, Norris was directly involved in the deal-making.

The three-member Perdue Commission, named after Manitoba Court of Appeal Judge William Edgerton Perdue, on July 30, 1915, ruled Fullerton’s charges against the Liberal premier were unfounded and that Norris’ account of a meeting with Howden was more believable. 

Howden testified to a “saw-off” agreement first negotiated between Conservative Party worker G.M. Newton and Liberal Party worker William Chambers. Neither Chambers or Newton held an official position in their respective parties, but “they and Howden were all personal friends,” according to the Free Press. Chambers appears to have had a business relationship with Newton and Howden.

The gist of the first part of the agreement was that the Conservatives and Liberals would abandon their respective “petitions” or “protests” against opposition candidates — 10 against Liberal candidates and seven against Conservative candidates — contesting the 1914 election results in the courts in return for $50,000. Howden became involved, but Chambers said he didn’t have Norris’ authority to act on the deal nor had he informed the premier of the meetings.

Chambers testified that he sought $50,000 from the Conservatives to remove their protests, which contradicted Fullerton’s claim that the Liberals paid off the Conservatives. Later testimony supported Chambers’ recollection of events.

Howden testified he picked up $50,000 in bank notes contained in a valise at the Carlton Club placed there by Dr. Simpson. Howden put the money in a safety deposit box at the Union Trust Company on March 29.   

When the legislature prorogued, Howden said the negotiations between the two parties continued,

Howden said he arranged a meeting with Norris to determine if Chambers could negotiate on behalf of the Liberals. The premier said he made no promises during the meeting and the conversation was entirely about  the Mathers Commission. 

Howden apparently continually referred to the commission as “very vindictive” in its dealings with Conservative MLAs. According to Norris, Howden expressed the opinion only Kelly should be the object of its investigation. Howden then asked what position the Liberals held on the matter. 

“I said: ‘Well, Mr Howden, we have no idea about persecuting anyone. We have no desire to do that, but the commission must go on. We must make good our charges, and I think I said the law must take its course.’ Our whole conversation was in connection with the conduct of the commission.”

Norris insisted that Chambers’ name never came up during his meeting with Howden.

Chambers testified that three or four days after the meeting he received $25,000 from Newton. Chambers said he held a conversation with Norris during which the election protests were mentioned, but he did not tell the premier what had transpired between himself, Newton and Howden. He claimed he only wanted to ascertain Norris’ opinion on the protests.

Chambers then allegedly took the money back to Howden who refused to accept it, telling him to keep the $25,000. In addition, Newton refused to accept the money’s return from Chambers. Finally on May 26, Chambers took $22,000 to Newton’s house — he had loaned $3,000 to his partner Stonehouse who was going to Ontario, and Chambers promised to pay back the money when Stonehouse returned — where it remained. The commission determined that the balance of $25,000 was repaid to Dr. Simpson prior to May 2, “a week before there was any suggestion made of suspending the labours of the Mathers Commission.”

The Perdue Commission sided with Norris’ recollection, saying Howden’s account was “improbable.” The commission cited Howden’s acknowledgement “that he had accustomed himself in making communications to suggestions rather than statement and to drawing inferences from indefinite phrases or mere gestures.” The commission was highly critical of Howden for engaging in suspect practices while he was the attorney-general of the province.

The commission also took into account Roblin’s testimony: “I never knew Mr. Norris to do a dishonourable thing in his life or suggest one.” 

The Free Press called the accusation a “cunningly devised scheme by the ex-attorney general of the province, J.H. Howden,” designed to deflect criticism away from the Conservative Party plagued by alleged wrong-doings with Kelly. The commission found that Howden had “spread false rumours” in a “conspiracy” to implicate Norris in the money deal.

A common comment at the time was that the money Dr. Simpson had been seen counting out on the table actually came from Kelly.

While the Perdue Commission ruled Norris had no knowledge of a deal, the belief in a Conservative-Liberal pact persisted and is now widely thought of as true, although the money portion of the allegation is rather suspect. The evidence that at least some Liberals and Conservatives were involved in some form of deal is too overwhelming to be ignored. But what role the deal played in the transfer of power from the Conservatives to Liberals is not entirely clear.

With Mathers stubbornly refusing to disband the commission he headed, Kelly in 1915 decided to challenge the constitutionality of the body, arguing in court that it had no right to compel witnesses to attend or testify, but the court ruled against him and a subsequent appeal also failed.

In his letter to the federal justice minister, Kelly claimed the commission sought to discredit the Conservative Party, “and of getting evidence to convict me of fraud and conspiracy in connection with the said contracts, the rules of evidence were not adhered to, counsel for the government were permitted to ask leading questions and bully witnesses into telling a story consistent with what they wanted, and from the whole attitude of the commission it was evident that it was determined to find a verdict of guilty.

Furthermore, Kelly claimed he had been prepared to surrender in Minnesota, but the reason he fought extradition was to allow sufficient time to elapse so that public judgement “would have ceased to be inflamed against him.”

A more plausible reason for a new trial was Kelly’s assertion that he had not allowed sufficient time to prepare his defence, although it was something he should have realized would be necessary as news of the evidence presented at the Mathers Commission was extensively reported across North America. 

On May 18, his counsel was advised that the Crown intended to proceed with his trial at the assize starting May 31, but he still believed the trial of the ex-ministers would precede his day in court, so he thought he would have more time to prepare his case.

He retained Edward Anderson to defend him during the civil suit, but had no counsel to defend him against the criminal charges. It took time to hire H.H. Dewart and have the criminal trial lawyer come to Winnipeg. Once in the city, Dewart decided he lacked time to prepare Kelly’s defence so he withdrew, leaving Kelly to fend for himself. 

“I have been persecuted and unfairly prosecuted and dealt with by the government of Manitoba,” alleged Kelly. “The government has refused practically unlimited bail. While under arrest in Chicago the government interfered with the authorities in the state of Illinois to make my confinement more irksome to me than the authorities were disposed to make it, and in every way the government has shown the utmost vindictiveness toward me from the beginning of the proceedings up to the present time.”

Kelly seems not to have understood that he was taken from his luxury accommodations in a hotel to a “proper jail” at the request of the American solicitor-general, who recognized that Kelly remained a flight-risk based upon his earlier behaviour of fleeing to the U.S. to avoid testifying at the Mathers Commission. It is undoubtedly true the Manitoba government had relentlessly pursued Kelly and pressed their case with the American authorities, but this was a result of fearing he would elude answering for the charges by escaping to South Carolina where the “lax” extradition laws would hinder his return to Canada. If Kelly escaped to South Carolina, the U.S. solicitor-general correctly inferred it would create an international incident.

In addition, the American courts recognized the gravity of the charges and that the evidence was heavily weighted against Kelly, which enforced their ability to accede to the Manitoba government’s request for extradition. Based upon the evidence, no American court could find a treaty between the two nations which would prevent Kelly’s return to Canada.

In closing his petition to the justice minister, Kelly said his firm was prepared to complete its contracts with the government but there had been no reply to this offer. Given the circumstances, the government’s failure to continue the contract for the new Manitoba Legislative Building with Kelly was not overly surprising.

His petition to the justice minister had no effect. Prendergast sentenced Kelly on November 18, 1916 to 2 1/2 years in Stony Mountain Penitentiary. Kelly began serving his sentence on November 28.

At the trial of Roblin, Coldwell and Howden, the main witness was Victor Horwood. The former provincial architect was on the stand for 60 hours alleging documents had been destroyed and the contracts had been tampered with and padded. The Crown called 50 witnesses with evidence taken from civil servants, construction experts and Kelly’s bankers.

The defence counsel sought to emphasize the intimacy between Horwood and Kelly, contending the ex-ministers were busy men and had no knowledge of technical matters so they relied upon their technical advisers. 

“From expert witnesses they sought admissions that changes in construction were made necessary through defects in the original plans of architect F.W. Simon,” reported the Free Press on September 6, 1916. “and it was intimated throughout that there was nothing to show that proper deductions would not have been made at the end of the job on account of extras substituted for work covered in the original contract. 

“An attempt was made to discredit the evidence of Horwood as one of the alleged co-conspirators and due attention was paid to the fact he has been in government pay at $4 a day for a year as an expert witness.”

In his address to the jury prior to their deliberations, Judge Prendergast said: “The case is one of the most important that has ever come before a court of justice in this province, and I do not think I will be very far wrong if I add in the whole Dominion. It is made so key the very prominent position which the accused occupied. They have all been men who were in high positions and one of them in particular has received very high honours (Roblin). The case is also important on account of the magnitude of the sums which are alleged to have been diverted from the provincial treasury ...”

Prendergast said the trial could not have taken place without the misappropriation of funds originally designated for the legislative building construction. “I understand this is not contested. But whether admitted or not, it is a fact to which you cannot close your eyes.”

The judge said there was not the same level of evidence against Roblin’s involvement — the implication being that the ex-premier was an unwitting partner — as was the case with James H. Howden and George R. Coldwell. Despite the lack of direct evidence implicating Roblin in the formation of the scheme, Prendergast earlier ruled the three defendants could not be individually tried as they allegedly acted in consort in the overall conspiracy to divert funds slated for the legislative building construction to party coffers.

After 15 hours of deliberations, the jury returned to the courtroom announcing they could not agree upon a verdict. Prendergast then told the jury to take more time. After just an hour of additional deliberations, the jury returned to a courtroom crowded to capacity. The over 150 people in attendance awaiting the jury’s verdict became “dead silent.”

“Gentlemen of the jury have you agreed upon a verdict?” asked the court clerk. “If so, who will speak for you?”

Jury foreman Percy Webb was said to have risen “somewhat nervously,” and said, “Your Lordship the jury cannot agree.”

Judge Prendergast asked, “Is there any possibility of your coming to an agreement?”

“I believe absolutely none, my Lord.”

“Well gentlemen, I will discharge you ... Of course, you regret you cannot agree, but that cannot be helped.”

The announcement of a “hung” jury resulting in a mistrial was greeted with relief by the three defendants. It was reported they laughed and shook hands with each other while people surged forward to congratulate them. Roblin’s “many friends viewed the verdict as a technical acquittal” and swarmed over the rail to grasp the ex-premier’s hand.

They “strode out of the courtroom in apparent jubilation.”

While they received a “technical acquittal,” the Crown still had the right to retry the defendants. Prendergast announced a new trial would be held, although it would be months before it began. 

In June 1917, the three defendants again appeared before the Court of Assizes. It was a very brief appearance as Roblin was deemed seriously ill with “a heart that was badly affected.” Since all three were being tried for a shared role in the alleged conspiracy, the illness of one had a direct bearing on the fate of the others.

With the approval of Crown attorney Bonnar, Prendergast said it was too “dangerous to proceed” with the trial due to Roblin’s illness, and ruled that the case against the three defendants be dismissed. Furthermore, Prendergast dropped the individual charges against Roblin for destroying documents, ending the “most remarkable case” in Manitoba’s history.

Roblin, Coldwell and Howden did not spend a single day in jail throughout the nearly two years they awaited their fate. As well, none of the three defendants ever appeared in the witness docket.

As said in The Voice and undoubtedly recognized by the Norris government, “It is freely stated that it would be impossible to secure a jury in which there would be no partisan who would not be swayed by his predilections or the calculated utterances of counsel.”

The Labour newspaper went on to claim it wouldn’t matter if the defendants were Liberals or Conservatives, as the existing ingrained political “partisanship” would “secure immunity for political offenders.” 

It was reported that nine jurors had wanted to convict the ex-ministers, while three had voted for acquittal.

(Next week: the final installment of the series)