Canada's Chretien cleared by ethics counselor

TRENTON, Canada (Reuters) -- Canadian Prime Minister Jean Chretien said Tuesday he was vindicated by a report from the federal ethics counselor that says he was only doing his job in pressing a federal bank for a loan for a constituent who was also a friend.

Chretien called his opponents "malicious" for having raised the issue in the first place, but the opposition Canadian Alliance of Stockwell Day said it would continue to pursue the issue with legal authorities.

The report by Ethics Counselor Howard Wilson, whom Chretien appointed and who reports to the prime minister, dealt with an issue that has dominated the last several days of the five-week campaign for the November 27 federal election.

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"I welcome the report of the ethics counselor, which unequivocally clears my name from the malicious and unfounded charges that have been directed at me in this election and which have received prominent attention and comment in the media," Chretien told a hastily convened news conference.

The right-wing Alliance and the minority Conservative parties had asked Wilson to rule on the issue but have also asked police or other authorities to investigate whether the prime minister had broken any laws.

"Mr. Wilson's ruling is another example of why we need an ethics watchdog not an ethics lapdog," said Day spokesman Phil von Finckenstein.

Day later said that if the Alliance won the election, it would ensure that the ethics counselor reported to parliament rather than the prime minister.

"We think it is an untenable situation when he has to report directly to the person who hired him with guidelines which we are not aware of," he told a rally in Cambridge, eastern Ontario.

The Chretien camp was plainly relieved, but the issue is unlikely to disappear completely. Numerous editorials in the past few days have said that even if Chretien had not acted illegally, his actions did not appear right.

Five police investigations are under way in Chretien's electoral district in Quebec over questionable jobs grants, which opposition parties charge show patronage, secrecy, arrogance and government waste.

Although Chretien's office indicated last year he had not intervened in the case, the prime minister conceded last week that he had urged the president of the Business Development Bank of Canada in 1996 and 1997 to urge him to grant a loan to an associate for a hotel in which Chretien had previously held an interest.

Chretien said he had no financial interest in the loan.

Conservative leader Joe Clark had written to the Royal Canadian Mounted Police asking if a crime had been committed.

The issue took the spotlight off Chretien's efforts to promote his vision of an activist government and blunted the Liberal attack on other parties, especially the Alliance.

"Elections can and should be hotly contested, but in this case both Mr. Day and Mr. Clark have overstepped the accepted bounds of fairness and decency which have been our tradition in Canadian elections," Chretien said. The news came as Day and Chretien battled for the 103 Ontario seats in Parliament's 301-seat House of Commons. Both made four or five stops in eastern Ontario Tuesday, some in the same electoral district.

The province is the key to whichever party will form the next government. At present, the Liberals hold 101 of the Ontario seats and Day has to make a major breakthrough in a province that soundly rejected the right-wing platform of the Reform Party -- the western-based Alliance's predecessor.

But the latest Reuters/Zogby Research Canada survey, released Tuesday, showed the Liberal lead over the Alliance in the period Nov 18-20 had narrowed to 13 percentage points nationally, one of the smallest margins of the campaign.

The Zogby poll showed support for the Alliance had edged up one point to 29 percent, while the Liberals had slipped two points to 42 percent from the Zogby poll last week.

Day told reporters Tuesday he had hopes of picking up 40 Ontario seats -- a goal that would require a surge in popular support in the final six days of the campaign.

"We could sweep the province. There is a large (number of) undecided in this province and we're respectfully appealing to all voters," he told reporters after a rally in Napanee.

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