DRUGS ON MARTIN-FAMILY SHIP

Police Say Neither Prime Minister Nor His Sons Are Under Suspicion

International drug smugglers used a cargo ship owned by Paul Martin's
three sons to transport $10-million worth of cocaine across the Atlantic.

News of the cocaine bust left the family-owned company red-faced
yesterday, but police were quick to dispel any suggestions that the
Prime Minister's children, or any of their employees, are linked to
the underground drug trade.

The Sheila Ann -- named after the Prime Minister's wife -- was docked
in Nova Scotia's Port of Sydney on Wednesday morning when authorities
discovered two duffel bags full of the white powder hidden inside an
underwater compartment.

The freighter belongs to CSL International, a sister company of Canada
Steamship Lines Inc., the huge shipping empire Mr. Martin was forced
to hand over to his sons last year.

Authorities believe organized criminals, unbeknownst to the ship's
crew, planted the 83 kilograms of cocaine inside the vessel while it
was stopped in Venezuela this week.

The drugs were found inside the so-called sea chest, a section of the
ship where ocean water enters and cools the engine.

Police believe that divers -- far away from the glare of 24-hour
security cameras -- unscrewed the grille that leads to the
compartment, inserted the drugs and bolted the grate back in place
before the vessel left for Canada.

Exactly who was supposed to retrieve the cocaine once it arrived here
is now the focus of an RCMP investigation. U.S. authorities will
likely be contacted, as the freighter was scheduled to stop in Florida
after its stop in Sydney.

"This is typical of a criminal enterprise, piggybacking on legitimate
business," said Sergeant Wayne Noonan, a Nova Scotia Mountie. "We have
seen this many times in the past."

The Sheila Ann, a 225-metre vessel built in 1999, was hauling a load
of low-sulphur coal from Maracaibo, Venezuela, to a customer in Sydney
when Canadian border agents conducted a routine examination.

For reasons authorities refuse to disclose, RCMP divers were later
called to the port. They discovered that the grille leading to the sea
chest had been tampered with. The divers later surfaced with the two
bags of coke.

The ship's 29 crew members, all Ukrainian, were questioned, but by
Wednesday night officials allowed them to continue their journey. None
of them is expected to be charged, Sgt. Noonan said.

"It's not uncommon for legitimate companies to be exploited by
organized crime with the movement of contraband," said Michel Proulx,
a spokesman for the Canada Border Services Agency. "This is something
that happens regularly. They use somebody else's vehicle or ship."

Martine Malka, a spokeswoman for Canada Steamship Lines, said the firm
does not suspect its crew of any wrongdoing because they could not
have known what was happening underwater.

"That section of the boat cannot be accessed from inside the boat,"
she said yesterday. "Divers went under the boat, removed some bolts
from that section, put the packages inside and closed up."

She said although this is CSL's first cocaine bust, the company plans
to beef up security, especially in parts of the world where drug
cartels are widespread.

In regions such as Venezuela and Colombia, where security cameras
already keep constant watch on CSL vessels, divers will now conduct
mandatory inspections before every boat departs. Also, the grilles
that surround the underwater compartments will now be welded shut
instead of simply bolted.

In the meantime, Ms. Malka said, she can only hope Canadians realize
the company has nothing to do with illegal activities. "It is the
first time that this kind of an incident happened on one of our
vessels," she said. "We have absolutely no involvement in this."

Founded more than 150 years ago, CSL is based in Montreal and has
offices in Halifax, Winnipeg, Burlington, Ont., Boston, Singapore and
Sydney, Australia.

In 1981, seven years after he was appointed president of CSL, Mr.
Martin and a partner purchased the company for $189-million. The
would-be prime minister took full control in 1988 after buying out his
partner's shares.

When he became finance minister in the early 1990s, Mr. Martin placed
his company in a blind trust, which meant he was still the sole owner
but no longer involved in day-to-day operations.

In August, 2003, amid calls from the Opposition, Mr. Martin
relinquished full control of the $700-million shipping firm, signing
over his shares to his adult sons, Paul, James and David.

Nevertheless, conflict-of-interest allegations continued to follow Mr.
Martin after he became Prime Minister. In February, he was forced to
admit that his company received $161-million worth of federal
contracts, grants and contributions over the past 11 years -- well
more than the $137,000 estimate the government offered the year before.

The Prime Minister's Office would not discuss the drug bust yesterday,
saying it was "a point of recusal."