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Wirecard: the scandal spreads to German politics

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In September 2019, Angela Merkel’s top economic adviser, Lars-Hendrik Röller, met a delegation from payments group Wirecard, which at the time was still seen as one of Germany’s most successful tech companies.

One of Mr Röller’s visitors in the chancellery in Berlin was Burkhard Ley, a strategic adviser to Wirecard and its former chief financial officer. A year later, Mr Ley is in police custody, accused of fraud, embezzlement and market manipulation. He denies any wrongdoing.

The get-together highlighted the extraordinary access the payments group enjoyed to Germany’s top decision makers until shortly before its collapse this summer — access which has shone an unforgiving light on the influence of lobbyists over German politics.

Wirecard has gone down as the most spectacular case of financial misconduct in postwar German history. But it is now fast becoming a political scandal too. Earlier this month the Bundestag decided to launch a full parliamentary inquiry into the affair, ensuring that it will continue to capture headlines well into 2021 — a year when Germans go to the polls to elect a new parliament — and potentially cast a shadow over Angela Merkel’s final months as chancellor.

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One key area of interest for MPs is why the authorities seemed so slow to recognise the gravity of the situation at Wirecard. The Röller-Ley meeting took place months after whistleblowers had raised serious concerns about fraud at the payments processor that triggered a police probe in Singapore. Members of the German government — including Ms Merkel herself — continued to lobby for Wirecard, despite mounting doubts about its accounting practices.

The scandal has also exposed the weaknesses of Germany’s system of financial regulation, and in particular the toothlessness of its markets watchdog BaFin. Opposition MPs are still incredulous that instead of investigating the substance of the allegations against Wirecard, BaFin and criminal prosecutors in Munich went after the very journalists and short-sellers who had highlighted suspicious activities at the payment provider.

“With the knowledge we have today, this is an utterly hair-raising situation for us,” a senior German official told the Financial Times, conceding that “the level of [alleged] criminality at Wirecard by far exceeded the power of my imagination”. Government bodies as well as private-sector institutions such as auditors had, he said, all failed miserably.

For Germany’s opposition parties, it is the political failures which are particularly egregious. Many MPs single out Olaf Scholz, finance minister and Social Democrat candidate for chancellor in next year’s Bundestag elections, who oversees both BaFin and the Financial Intelligence Unit, Germany’s anti-money laundering agency. The FIU has come under fire for failing to pass on dozens of Wirecard-related suspicious activity reports to the German public prosecutor’s office.

The links between German finance minister Olaf Scholz, centre, and deputy finance minister Jörg Kukies and Wirecard are being scrutinised in the wake of the scandal © Tobias Schwarz/AFP/Getty

“No government agencies played any role in uncovering the crime — neither BaFin, nor the FIU, nor the public prosecutor,” says Florian Toncar, an MP for the pro business Free Democratic party. “The state made zero contribution to getting to the bottom of the Wirecard affair.”

The Bundestag’s committee of inquiry is not yet constituted, its remit still unclear. But it is already obvious what kind of questions might interest MPs.

Why, for example, did Ms Merkel lobby for Wirecard while on an official trip to China in September last year when her own finance minister was aware of continuing investigations into the company? Why did deputy finance minister Jörg Kukies visit Wirecard boss Markus Braun at his Munich headquarters last November, on the day of the chief executive’s 50th birthday?

Why did BaFin appear so reluctant to investigate a company that had been generating negative headlines for months? Why were BaFin employees able to trade Wirecard shares while the agency was investigating the payments group?

And why did BaFin respond to FT articles alleging accounting fraud by banning investors from betting against the company’s shares for two months, and later filing a criminal complaint against two FT journalists who had authored the reports?

Fabio De Masi, an MP from the hard-left party Die Linke, who was one of the few lawmakers to take an early interest in Wirecard, says the signal Bafin’s actions sent was “just terrible”. “It was a message to all critics of the company that they were spreading malicious rumours,” he says. “And it was a message to German journalists to be very, very careful before you write anything negative about Wirecard.”

The German police’s wanted poster, pictured last month, for Jan Marsalek, the fugitive former Wirecard COO © Clemens Bilan/EPA/Shutterstock

‘Fig leaf’ inquiry

Wirecard was once seen as a rare German tech success story. In 2018 it replaced Commerzbank in the prestigious Dax index and a year later dreamt of taking over Deutsche Bank. But that fantasy unravelled in June when it admitted that €1.9bn in cash was missing from its accounts. Within a week Wirecard had collapsed into insolvency, and €13bn in stock market value had been wiped out.

At least seven of its former top managers are suspected of running a criminal racket that defrauded creditors of €3.2bn. Four people are in police custody and Jan Marsalek, Wirecard’s fugitive former second-in-command, is on Interpol’s most wanted list.

For Lisa Paus, MP and finance spokesperson for the opposition Greens, there is a pattern to this. “Wirecard is the latest in a whole series of financial scandals in Germany that BaFin failed to uncover,” she says. “You need a really tough watchdog with proper investigative skills to identify fraud, and that’s the opposite of what we have right now.”

She cited the “Cum-Ex” fraud scheme, the controversial share trades which exploited a design flaw in Germany’s tax code to rob the country’s exchequer of billions of euros in revenues. Then there are the various misconduct scandals at Deutsche Bank, which were unearthed by US and UK regulators, and the Volkswagen diesel affair, which was uncovered not by German authorities but by the US Environmental Protection Agency.

Some suspect that the German authorities were motivated by a desire to shield a national tech champion from external criticism. “You have the impression the regulators said — hey, we have this model German company, . . . it’s a victim of attacks by foreign hedge funds, and the FT is their tool,” says Mr Toncar. “And that was a grave miscalculation.”

Asked by the FT if it was true that the government and BaFin deliberately sought to protect the payments processor, Mr Scholz said there was “no evidence” of that.

He also brushed off the claim that the government could have done more to uncover wrongdoing at Wirecard — implicitly pointing the finger instead at EY, the accounting firm that gave the disgraced tech group unqualified audits for more than a decade.

Mr Scholz drew parallels between the Wirecard debacle and the Enron scandal in the US. There was not only a “gigantic accounting fraud”, but in both cases, “auditors who checked the company every year failed to identify this manipulation”.

That is why, he said, he was pushing for reform of the accounting industry. One finance ministry proposal would force large companies to switch auditors more frequently, and for accountancy firms to better separate their audit units from their consultancy businesses.

BaFin, too, has tried hard to fend off criticism that it failed to act. Felix Hufeld, its president, has argued that German capital markets laws left the agency no alternative but to act as it did. The authority, he told the German parliament, lacked a legal mandate to supervise Wirecard as a whole and instead oversaw only Wirecard Bank, a small subsidiary of the group.

Meanwhile, he argued, under German law BaFin did not itself have the right to launch a special audit of Wirecard’s accounts. All it could do was to turn to a body called the Financial Reporting Enforcement Panel, a private sector organisation which monitors the accounting practices of listed companies on behalf of the government, and ask it to investigate Wirecard. This is what happened in mid-February 2019.

BaFin then hunkered down for a long wait. Under Germany’s so-called “two-tier procedure”, the regulator cannot initiate its own investigation into a company until it has received the results of a Frep probe. Yet Frep, which has only 15 employees and an annual budget of just €6m, is ill-equipped to conduct the kind of forensic investigations required to uncover fraud.

Felix Hufeld, president of BaFin, argues that Germany’s capital markets laws left the watchdog agency no alternative but to act as it did © Hayoung Jeon/EPA/Shutterstock

When Wirecard went bust, the Frep probe was still continuing. Only after the company’s insolvency did Frep formally conclude that its financial statements were inadequate, according to a person with first-hand knowledge of the situation.

The slowness of Frep’s work had far-reaching consequences. Over the summer of 2019, Wirecard was able to raise €1.4bn in new debt from external investors. While the cash was partly needed to fund the company’s cash-burning operative business, prosecutors also suspect that hundreds of millions were siphoned out of the group.

In any case, critics dispute the assertion that BaFin’s only option was to request a probe by Frep: they argue that the Wirecard situation was so serious that BaFin should have considered more drastic action — and that it had the option to do so.

“BaFin did not take the allegations seriously,” says Rudolf Hübner, a capital markets lawyer at Quinn Emanuel Urquhart & Sullivan in Hamburg. “Commissioning Frep was just a fig leaf, as that body has neither the remit nor the resources for a forensic audit.” He argues that German law provides BaFin with several options to intervene decisively to uncover accounting fraud. “The problem wasn’t a lack of power,” says Mr Hübner.

Just days after Wirecard filed for insolvency, the government announced sweeping changes to the way accounting is policed in Germany. It terminated its contract with Frep and promised to give BaFin more investigative and forensic powers.

“[BaFin] used the powers that it had at the time [when it commissioned a Frep probe] — but they weren’t enough,” Mr Scholz tells the FT. “That’s why we now want to give [it] the capabilities it needs to act with more bite.”

Former defence minister Karl-Theodor zu Guttenberg. His advisory firm Spitzberg Partners counted Wirecard as a client © Michael Dalder/Reuters

Chinese move

It is not only Mr Scholz and the finance ministry who have come under scrutiny over the Wirecard affair. Ms Merkel, too, is in the spotlight.

On September 3 last year she received a visit from a former colleague, Karl-Theodor zu Guttenberg, according to a timeline of contacts provided by the chancellery. He had once served as German defence minister, but was forced to resign in 2011 over a scandal about plagiarism in his doctoral thesis. He now works for an advisory firm, Spitzberg Partners: one of its clients was Wirecard.

Mr zu Guttenberg brought up Wirecard in his chat with the chancellor and shortly afterwards emailed her adviser Mr Röller to say Wirecard was planning to enter the Chinese market by acquiring a Chinese payments company, the Beijing-based AllScore Financial, and needed the approval of the regulator, the People’s Bank of China.

A couple of days later, Ms Merkel flew off on a state visit to China, and, while there, brought up Wirecard and the planned acquisition. After the trip, Mr Röller wrote to Mr zu Guttenberg promising “further political support”, according to the chancellery’s timeline. Wirecard announced the acquisition of AllScore, which came with a price tag of up to €109m, in early November 2019.

Ms Merkel has defended her lobbying for Wirecard. “It’s common practice, not only in Germany, to bring up the concerns of companies on foreign trips,” she said in August. Wirecard was, after all, a “Dax 30 company”, and at the time of the China trip she had “no knowledge” of irregularities at the payments provider.

But that argument does not wash with the opposition. “She essentially did her former cabinet colleague zu Guttenberg a favour by bringing up Wirecard during the China trip,” says Mr Toncar. “And she did it without checking what was happening at the company.”

Some are now calling for a sweeping reform of lobbying in Germany. “The question is: who has access to the chancellor?” says Ms Paus, the Green MP. “There doesn’t seem to be any sensible criteria. No one is checking who knocks on the door and who’s let in.”

Mr zu Guttenberg was not the only ex-government member lobbying for Wirecard. On September 11, Klaus-Dieter Fritsche, a former chancellery official who co-ordinated the work of the German intelligence services, introduced Mr Röller to Wirecard’s current and former CFOs — Alexander von Knoop and Burkhard Ley. According to the chancellery timeline, the meeting was a “getting-to-know-you session” and a chance for Wirecard to inform Mr Röller about its “business activities in the Far East”.

Others were more circumspect when it came to the payments company. Mr zu Guttenberg approached the German embassy in Beijing in late 2019, asking it to help Wirecard win Chinese regulatory approval for the AllScore acquisition.

But in November of that year a financial attaché at the embassy emailed the ambassador, Clemens von Goetze, warning him not to support Wirecard “at the present time”. He said it would be better to wait until the accusations of accounting fraud had been “cleared up unreservedly”, according to a copy of the email seen by the FT.

“[The attaché] clearly had a better sense of what was up at Wirecard than almost everyone who was dealing with the issue at BaFin,” says Mr Toncar.

Angela Merkel with Premier Li Keqiang on a state visit to Beijing last year. During the trip the chancellor brought up Wirecard’s planned acquisition of a Chinese payments company © Roman Pilipey/AFP/Getty

Beefing up BaFin

Since early September, an army of experts from Roland Berger, a management consultancy, has been sweeping through BaFin’s headquarters in Bonn.

Commissioned by the finance ministry in Berlin, they have been asked to figure out the lessons that Germany’s financial watchdog needs to learn from the Wirecard affair.

Critics say BaFin was asleep at the wheel, targeting short-sellers and journalists who raised concerns about Wirecard rather than investigating the substance of the allegations they made.

One thing that is already clear is that in any future reform, BaFin will be given the power to launch its own investigations into potential balance sheet manipulations by any listed company in Germany.

A member of the financial committee of the Bundestag in Berlin, Hans Michelbach, during a press briefing in July © Felipe Trueba/EPA/Shutterstock

However, according to people familiar with the discussions, it is increasingly unlikely that the country’s two-tier regulatory system, in which Frep, the private-sector institution, played a semi-official role, will be abolished completely. Frep is likely to negotiate new arrangements, though its role will be limited to conducting routine checks of corporate annual reports to ensure they are in line with legal requirements and accounting standards.

The big change is that BaFin will have greater freedom to launch its own forensic audit of a company at any time without being required to wait for the outcome of any Frep investigation.

In addition, BaFin is considering the creation of a new internal unit better able to identify unsound banks and insurance companies. This would pay special attention to institutions that have particularly risky clients, have grown extremely fast over a short period of time or are part of a larger, complex group that faces allegations of accounting fraud.

A third focus of reform is possible changes to the way BaFin deals with information from whistleblowers. People familiar with the matter say that the authority needs to improve its capacity to analyse data and connect the dots between separate pieces of information provided by different whistleblowers.

The German finance ministry is already making progress on another key reform — restricting BaFin employees from trading in shares of companies they supervise. The revelation that many of them had been dealing in Wirecard shares in the months leading up its downfall has only added to the political scandal around the company.

Source: – Financial Times

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Michael Taube: How a eulogy for a father made one political career — and perhaps another – National Post

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The similarities between Caroline Mulroney’s eulogy for her father and Justin Trudeau’s homage to his ‘Papa’ were impossible to ignore

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There were many heartfelt tributes to former prime minister Brian Mulroney during his state funeral at Montreal’s Notre-Dame Basilica on March 23. One that caught significant attention was the eulogy by his daughter, Caroline, a cabinet minister in Ontario Premier Doug Ford’s government.

The legion of family, friends and political cohorts that day had a good laugh over a particular remark that Mulroney made. “Speeches were such a major part of his life,” she said, “that he told us that when it was his turn to go up to what he called that great political rally in the sky, he wanted us to bury him with his podium.”

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Indeed, it’s a great line — and it rings true in every fibre of its being!

That’s not what struck me about Mulroney’s speech, however. Rather, it was the passionate words, raw emotion and cadence she employed when describing her late father. She had lived in his massive (and unavoidable) shadow. His formidable presence followed her in every step she took — but in a good way. What he specifically meant to her, the family and our country was mapped out on one of the biggest stages she’ll ever encounter in her life.

So much so, that one person sitting in the Basilica — who also gave a eulogy — may have felt, if but for a fleeting moment, that he was experiencing déjà vu: Prime Minister Justin Trudeau. (We’ll get to him shortly.)

“There was a destiny attached to my father, that even in his youth, no one could deny,” Mulroney said in one poignant moment. “Even prime minister (John) Diefenbaker at the peak of his powers, wrote a letter to my grandfather, extolling his son’s potential after his first encounter with my dad.”

She continued, “My dad saw the world in a bigger way than most. His humanity defined him. Which is why he transcended politics and connected with people in a way that left an indelible mark on their hearts and souls. In our grief, our family is comforted and so grateful for the universal outpouring of affection and admiration for what my father meant to them and to Canada.”

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Her concluding lines tugged at the heartstrings of one’s soul. “We are heartbroken by our loss. We adored him. I miss you daddy.”

It was a wonderful eulogy that her father — who I knew, admired and respected — would have been proud of. Words mattered to him. He loved language and prose, and mastered them to perfection. The art of writing, speaking and storytelling were gifts from God.

When I watched Mulroney speak at the state funeral of her beloved father, I was instantly reminded of Trudeau’s eulogy at the state funeral of his beloved father.

The man who would become Canada’s 23rd prime minister was a relatively unknown figure when he walked to the lectern on Oct. 4, 2000. There had been various images of him in the media, but he had largely avoided the spotlight. His father’s massive shadow and formidable presence, much like Caroline Mulroney’s father, was always there — but in a good way.

When Trudeau spoke that day, it was the biggest audience of his young life. He did extremely well. His speech was emotional, powerful and deeply personal.

“Pierre Elliott Trudeau. The very words convey so many things to so many people,” he said. “Statesman, intellectual, professor, adversary, outdoorsman, lawyer, journalist, author, prime minister. But more than anything, to me, he was dad. And what a dad. He loved us with the passion and the devotion that encompassed his life. He taught us to believe in ourselves, to stand up for ourselves, to know ourselves and to accept responsibility for ourselves. We knew we were the luckiest kids in the world. And we had done nothing to actually deserve it.”

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  1. Prime Minister Brian Mulroney with his wife Mila and Mikhail Gorbachev, at 24 Sussex Drive on May 29, 1990.

    Michael Taube: From trade to personal liberties, Brian Mulroney stood for freedom

  2. Caroline Mulroney speaks during the state funeral of her father, late former Canadian Prime Minister Brian Mulroney at Notre-Dame Basilica in Montreal on March 23, 2024.

    ‘There was a destiny attached to my father’: Read Caroline Mulroney’s eulogy for Brian Mulroney

There’s also this passage which perfectly encapsulates Trudeau’s love for his father and what he believed he did for the nation. “My father’s fundamental belief never came from a textbook. It stemmed from his deep love for and faith in all Canadians and over the past few days, with every card, every rose, every tear, every wave and every pirouette, you returned his love … He left politics in ’84, but he came back for Meech, he came back for Charlottetown, he came back to remind us of who we are and what we’re all capable of.”

And finally, this concluding sentiment. “But he won’t be coming back any more. It’s all up to us — all of us — now. The woods are lovely, dark and deep. He has kept his promises and earned his sleep. Je t’aime, Papa.”

Mulroney and Trudeau, much like their fathers, are different people with different strengths, weaknesses and political ideologies. The similarities are equally impossible to ignore. Scions of two impressive public figures. Children who walk in the giant footsteps their fathers left behind. Two impressive eulogies at different points in their lives and careers that will be remembered forever.

There’s one other similarity that could be on the horizon. Trudeau used his eulogy to springboard into the public eye, politics and leadership. Mulroney is already in the public eye and politics. She unsuccessfully ran for the Ontario PC leadership in 2019, but didn’t have the presence, confidence or speaking ability that she did during her eulogy. That moment has finally arrived, and it’s up to her to use it as wisely as Trudeau did.

National Post

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Holder bows out of politics ahead of election – Telegraph-Journal

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Former cabinet minister is the latest Tory rebel to exit politics

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Progressive Conservative stalwart Trevor Holder, the province’s longest-serving MLA in the legislature, is bowing out of politics, becoming the latest Tory rebel to make that call ahead of the provincial election.

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In the legislature Thursday, Holder, who has served the Saint John riding of Portland-Simonds for the last 25 years and was a cabinet minister under three premiers, made the announcement, thanking all his colleagues “regardless of political stripe” who later rose in the House to give him a round of applause.

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“All I ever wanted – along with all of you – was a chance to help make (New Brunswick) better than it already is,” said Holder, who described himself as a “north-end kid” from Saint John.

Holder didn’t make himself available to the media after his announcement. He also didn’t formally resign on Thursday, sending a note out to reporters that he “won’t be back in May” but hasn’t “set the official date yet” for his resignation.

News of his exit comes less than a year after Holder resigned as the province’s minister of post-secondary education, training and labour, citing the impact of Premier Blaine Higgs’s top-down leadership style on caucus decision-making.

Holder was the second minister to resign from cabinet last June amid Tory caucus infighting over changes to the province’s gender identity policy for public school students.

Fellow Saint John MLA and Tory stalwart Dorothy Shephard was the first to resign from cabinet last summer, giving up her post as minister of social development before announcing last week she won’t reoffer in the upcoming election this fall.

Shephard also cited Higgs’s leadership style in her decision to leave cabinet.

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During his speech Thursday, Holder made a point to thank Higgs “for the conversations over the last number of days leading up to my decision here.”

Higgs later told media he didn’t know Holder’s exact plans for the future but knew the Saint John MLA had “opportunities.”

“He’s a great statesman in the legislature and certainly his care for his community is genuine,” the premier said.

When asked if he had addressed Holder’s concerns about caucus decision-making, Higgs said he thought so but acknowledged he’s “always struggled with things not getting done at a certain level of pace.”

“It’s rare if you ever come out of caucus or cabinet with unanimous decisions,” he said.

“There’s always a degree of differences, and that’s not going to change, but leadership requires real decisions and you’re not everything to everybody, so you do what you believe is right and you do with it conviction and you hope it’s just the right thing to do.”

Holder ‘a truly progressive conservative’: Coon

Both opposition leaders spoke glowingly of Holder’s commitment to provincial politics.

“He was a real asset to the legislature, he was a real pleasure to work with, so it’s a loss to see him leaving the legislative assembly,” Liberal leader Susan Holt told media Thursday.

That was echoed by Green leader David Coon.

“(Holder’s) very committed to improving our system of government and he’s made real contributions to doing so,” Coon said. “I’m sad to see him go. He’s truly a progressive conservative in the truest meaning of that term.”

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In his 16-minute speech, Holder spoke of the importance of bipartisanship, describing his relationship with former Liberal cabinet minister Victor Boudreau.

They used to “tear each other” up in the House, Holder recalled, but “when I was in opposition, (Boudreau) helped me with my constituents, and when I was in government, I did my best to do the same for him – and this is how this legislature needs to work.”

First elected at the age of 25 in June 1999, Holder has won a total of six elections over the course of his 25-year provincial political career. He’s a former minister of environment and local government, tourism and parks, wellness, culture and sport, and tourism, heritage and culture. He also served as deputy speaker.

Holder thanked his wife Brenda Thursday, along with their two daughters, Margaret and Katherine, for their support over the course of his political career.

Holder’s and Shephard’s departure announcements are the latest in a string of changes within the Tory caucus ahead of the election.

In February, fellow Saint John colleague Arlene Dunn abruptly resigned from her ministerial and MLA duties. Meanwhile, colleagues Daniel Allain, Jeff Carr and Ross Wetmore – who were part of the Tory rebels who supported a Liberal motion on Policy 713 changes – have announced they won’t reoffer in the next election.

Wetmore had announced his retirement intentions before the Policy 713 kerfuffle.

Fellow rebel Andrea Anderson-Mason, MLA for Fundy-The Isles-Saint John West, has yet to announce her plans.

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Opinion: Canada's foreign policy and its domestic politics on Israel's war against Hamas are shifting – The Globe and Mail

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The vote in the House of Commons last week on Israel’s war against Hamas represents a shift in both Canada’s foreign policy and its domestic politics.

The Liberal government is now markedly more supportive of the rights of Palestinians and less supportive of the state of Israel than in the past. That shift mirrors changing demographics, and the increasing importance of Muslim voters within the Liberal coalition.

Both the Liberal and Conservative parties once voiced unqualified support for Israel’s right to defend itself from hostile neighbours. But the Muslim community is growing in Canada. Today it represents 5 per cent of the population, compared with 1 per cent who identify as Jewish.

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Although data is sparse prior to 2015, it is believed that Muslim Canadians tended to prefer the Liberal Party over the Conservative Party. They were also less likely to vote than the general population.

But the Conservative Party under Stephen Harper deeply angered the community with talk about “barbaric cultural practices” and musing during the 2015 election campaign about banning public servants from wearing the niqab. Meanwhile, Liberal Leader Justin Trudeau was promising to bring in 25,000 Syrian refugees to Canada if elected.

These factors galvanized community groups to encourage Muslims to vote. And they did. According to an Environics poll, 79 per cent of eligible Muslims cast a ballot in the 2015 election, compared with an overall turnout of 68 per cent. Sixty-five per cent of Muslim voters cast ballots for the Liberal Party, compared with 10 per cent who voted for the NDP and just 2 per cent for the Conservatives. (Telephone interviews of 600 adults across Canada who self-identified as Muslim, were conducted between Nov. 19, 2015 and Jan. 23, 2016, with an expected margin of error of plus or minus 4 percentage points 19 times out of 20.)

Muslim Canadians also strongly supported the Liberals in the elections of 2019 and 2021. The party is understandably anxious not to lose that support. I’m told that Foreign Affairs Minister Mélanie Joly often mentions the large Muslim community in her Montreal riding. (According to the 2021 census, 18 per cent of the people in Ahuntsic-Cartierville identify as Muslim.)

This is one reason why the Liberal leadership laboured so mightily to find a way to support last week’s NDP motion that would, among other measures, have recognized the state of Palestine. The Liberal caucus was deeply divided on the issue. My colleague Marieke Walsh reports that dozens of Liberal MPs were prepared to vote for the NDP motion.

In the end, almost all Liberal MPs ended up voting for a watered-down version of the motion – statehood recognition was taken off the table – while three Liberal MPs voted against it. One of them, Anthony Housefather, is considering whether to remain inside the Liberal caucus.

This is not simply a question of political calculation. Many Canadians are deeply concerned over the sufferings of the people in Gaza as the Israel Defence Forces seek to root out Hamas fighters.

The Conservatives enjoy the moral clarity of their unreserved support for the state of Israel in this conflict. The NDP place greater emphasis on supporting the rights of Palestinians.

The Liberals have tried to keep both Jewish and Muslim constituencies onside. But as last week’s vote suggests, they increasingly accord a high priority to the rights of Palestinians and to the Muslim community in Canada.

As with other religious communities, Muslims are hardly monolithic. Someone who comes to Canada from Senegal may have different values and priorities than a Canadian who comes from Syria or Pakistan or Indonesia.

And the plight of Palestinians in Gaza may not be the only issue influencing Muslims, who struggle with inflation, interest rates and housing affordability as much as other voters.

Many new Canadians come from societies that are socially conservative. Some Muslim voters may be uncomfortable with the Liberal Party’s strong support for the rights of LGBTQ Canadians.

Finally, Muslim voters for whom supporting the rights of Palestinians is the ballot question may be drawn more to the NDP than the Liberals.

Regardless, the days of Liberal/Conservative bipartisan consensus in support of Israel are over. This is the new lay of the land.

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