Eggleton resigns amid allegations of conflict

Prominent Toronto MP Art Eggleton was dumped from the federal cabinet Sunday amid allegations of corruption. The Prime Minister says the York Centre MP offered his resignation after it was revealed he gave a defence contract to a former girlfriend.

The federal ethics counsellor, Howard Wilson, concludes it was a breach of cabinet ethics guidelines. The defence minister post will now be filled by another Toronto-area MP, John McCallum, who represents Markham.

McCallum's move into the post came as a surprise to many, as he is known primarily for his knowledge of economics. He's the former chief economist of the Royal Bank and was most recently the secretary of state for international financial institutions.

Eggleton, who has been in cabinet since 1993, came under fire on the weekend after reports that he had approved an untendered contract given to a former girlfriend. Maggie Maier, president of One World Communications, had been hired to study post-traumatic stress disorder in the Canadian Forces. Maier produced a 14-page report for $36,500.

Word of the contract had been circulating in Ottawa for weeks, but it didn't get national attention until opposition MPs pounced on the federal government over some controversial advertising contracts in Quebec.

"Perhaps after almost nine years people got a bit too comfortable," Chrtien told reporters at a hastily arranged news conference. "So that will teach a lesson to all of us."

"We were having a few problems in public life there always are problems. We have to manage those problems as best we can do in everyone's interest, so I made these changes."

Eggleton denies breaking rules

Sunday morning, only hours before finding out he was being dropped from cabinet, Eggleton insisted that he had not broken any guidelines.

Maier got the contract last November strictly on merit, Eggleton said, and their personal relationship "should neither qualify her or disqualify her." But the federal ethics counsellor investigated and concluded that cabinet guidelines had been broken, Chrtien told reporters.

The prime minister said Eggleton "made a mistake" by helping a friend. Although the former defence minister disagreed that rules had been violated, he offered his resignation, Chrtien added.

On CBC Newsworld's Sunday Scrum, Tory MP Peter MacKay said Maier should never have been given the contract.

"That's a lot of money," MacKay said. "And there's a too close, too cozy relationship between the minister and this person who has received an untendered contract. So yes, I think it's wrong."

A surprise cabinet shuffle ensued Sunday night as allegations of conflict of interest continued to swirl around the federal government.

Public Works Minister Don Boudria was also moved, but will stay on in Prime Minister Jean Chrtien's inner circle. Boudria returned to his old position as House leader, switching titles with Ralph Goodale.