MONTREAL—One of the juicier bits of political gossip before the election campaign began was about the budding romance between Conservative MP Peter MacKay, Canada's new minister of foreign affairs, and Sophie Desmarais, daughter of Montreal billionaire Paul Desmarais Sr.

She was seen in the opposition gallery during question period, she and MacKay were spotted together in Ottawa restaurants and, according to one report, she gave him a very public peck on the cheek.

Sophie Desmarais is said to have met MacKay at a dinner in October at the Montreal home of former prime minister Brian Mulroney, a long-time pal of her father's, whose personal fortune, through control of Power Corp., is estimated at more than $4 billion.

Where the relationship with MacKay might be heading isn't clear. But it was enough to set tongues wagging again about how the Desmarais family is never too far from the centre of influence in Ottawa.

The family has enjoyed close links with prime ministers in a period spanning more than 40 years.

Desmarais and many of his executives were friendly with Pierre Elliott Trudeau during his terms in office (Trudeau later served on Power's advisory council).

Mulroney was a business associate of Power's before entering politics, and his leadership campaign was bankrolled in part by Desmarais.

Jean Chrétien became part of the extended family when his daughter, France, married Paul Sr.'s son André.

And, before he became prime minister, Paul Martin owed his personal wealth almost entirely to a deal with Power Corp. in which he purchased Canada Steamship Lines on credit.

The extent to which Power Corp. has exercised real influence in Ottawa has been a matter of debate. What can't be denied is its proximity to power.

With the Conservatives back in government after an absence of more than 12 years, one of the more intriguing questions is whether the company and the wealthy Montreal family behind it will be able to maintain the best political connections in the land.

Political scientist Antonia Maioni, director of McGill University's Institute for the Study of Canada, says the Harper government will have a more "populist" tinge with its heavy representation from rural regions. That may limit corporate influence.

It's also possible that "corporate interests in the West" may displace the traditional influence of eastern elites, she adds.

But others who've watched Power over the years suggest it will try to influence the new government in key areas of self-interest, especially financial services and foreign policy.

Paul Sr., now 79, parlayed a small, family-owned bus company in Sudbury into a vast fortune in financial services, newspapers and international holdings. While remaining chairman of the executive committee, he turned active management of Power Corp. over to his sons André and Paul Jr., who've been brought along carefully and share fully in decision-making.

The family is "discreet, low-profile and very shrewd," says one Montreal investment executive. Power has rarely made the wrong bet, and shareholders have been big winners from its growth strategy.

The Desmarais family doesn't spout the kind of knee-jerk arguments for smaller government, less regulation and lower taxes often heard from corporate tycoons, notes one former media executive who knows them well. "These are people who are interested in social stability, because their business interests require it."

Among the companies within the Power empire are mutual fund giants Investors Group and Mackenzie Financial and insurance companies Great-West Life, Canada Life and London Life.

`The company has served as a springboard for many political careers'

Montreal source who knows the Desmarais family
Through investments in Pargesa Holdings SA in Europe and CITIC Pacific Ltd. in China, the company has forged alliances with key players in international industries.

In the media business, Power wields influence as a federalist voice in Quebec through a chain of newspapers that includes Montreal's La Presse and Quebec City's Le Soleil. (La Presse was a factor in the election campaign in Quebec when it endorsed the Conservative party.)

Behind the spread of Power's corporate holdings is a web of personal relationships carefully nurtured by the well-connected Paul Sr.

Indeed, Power has such pull in Montreal that it's hard to find anyone who will go on the record to discuss it. One Montreal public relations executive likens this to a "code of silence."

Over the years, Power's board of directors and its international advisory council have read like a Who's Who of political and corporate power brokers, including the likes of: William Davis, the former premier of Ontario; Don Mazankowski, who was minister of finance under Mulroney; Michael Pitfield, who headed the civil service under Trudeau; Helmut Schmidt, former chancellor of Germany; Paul Volcker, the former U.S. Federal Reserve chairman; and Sheik Ahmed Yamani, former oil minister in Saudi Arabia.

Meanwhile, past and present Power Corp. executives have taken a prominent role in politics and public policy .

Maurice Strong, a senior adviser to both Lester Pearson and Trudeau, was a top executive at Power in the 1960s, where he gave a young lawyer named Paul Martin his first job.

Daniel Johnson Jr. was a lawyer with the company before entering provincial politics for the Liberal party and becoming premier of Quebec in 1994.

Power's current executive vice-president, John Rae, was an executive assistant to Chrétien before joining the company and then was a top adviser in Chrétien's three successful election campaigns. Rae, brother of former Ontario premier Bob Rae, was also part of Chrétien's leadership defence team when Martin won a putsch against the leader in 2002.

André Desmarais has chaired the Canada China Business Council, an influential lobby group founded by Paul Sr. in 1978 to promote trade and investment ties between the two countries. (The current chairman is Power vice-president Peter Kruyt.)

"The company has served as a springboard for many political careers," says a Montreal source who knows the family. "But it's a mistake to assume Power is a monolith with a single agenda. This is a company with very different individuals.

"John Rae, for example, is extremely close to Chrétien and was his leading strategist, but he wasn't close to Mulroney and was extremely distant from Paul Martin.

"André, because of his marriage, is very much identified with Chrétien, but Paul Jr. is closer to the Conservative party."

Paul Sr. has not been shy to promote his own views. During the debate over the controversial Meech Lake Accord in 1990, he used his connections to both Mulroney and Chrétien to broker a deal between the two to save the accord from collapse, according to authors Anthony Wilson-Smith and Edward Greenspon in their book Double Vision. The effort failed.

He was an outspoken voice against sovereignty in the 1995 Quebec referendum, becoming a hero to federalists and an arch-villain to separatists. So enraged was former Parti Québécois premier Jacques Parizeau at Desmarais' role that he accused him of "spitting on Quebecers."

There's a common assumption that Power Corp. has "owned" Ottawa over the last 25 years. "I've been doing this a long time, says one corporate lobbyist in the nation's capital, "and no company has ever done a better job of managing the political relationship than Power Corp."

But the company has suffered its share of reversals.

Federal regulators turned down Power's efforts to buy satellite communications carrier Teleglobe Inc. in the late 1980s and also denied the company's bid for a satellite television licence a few years later. A bid to buy the Quebec television network Tele-Metropole was turned down by the CRTC.

`No company has ever done a better job of managing the political relationship than Power Corp.'

Ottawa lobbyist
Critics of the company's close relationship with government point to two areas where Power's interests are closely aligned with government policy: financial services and Canadian foreign policy on China.

As a heavyweight in the insurance and investment businesses, Power has lobbied against allowing banks to buy insurance companies. Some bankers have seen its positions as self-serving and have attributed Martin's decision to reject the banks to pressure from Power.

A consultant's report commissioned by Power two years ago slammed bank concentration in Canada and claimed that mergers would lead to higher prices and reduced services. (It's not alone in that view.) Another report Power submitted to the government concluded that mergers between banks and insurance companies have been a failure in places such as Australia, the United States and Europe.

There is speculation a Harper government might allow mergers to go ahead. Power spokesman Ted Johnson says the company has "no plans" to make a submission to the new government. "Our views are very well known."

On the China issue, Power is Canada's best-known investor in that country. And Ottawa has conveniently taken a business-as-usual approach to concerns about Beijing's human-rights abuses and repression of the pro-democracy movement.

While Ottawa has raised the human-rights issue with Chinese authorities, it has done nothing that might impede the bilateral flow of trade and investment.

That's just the line preached by the Power-backed Canada China Business Council. In fact, the council's president is Howard Balloch, a former Canadian ambassador to China who articulated Ottawa's business-friendly policy during his term.

"We know that (the council) are very influential and that they have access to both heads of state," says Tibetan activist Tenzin Dargyal, a defeated Tory candidate in the January election who heads a Canadian group that opposes China's occupation of Tibet.

Power's calling card in China is the connections it brings, he says, what the Chinese call Guan Xi. "They leverage those relationships to open doors in China."

Chrétien devoted extraordinary attention to China and led three Team Canada trade missions there that included Power Corp. But while business boomed, progress on the human-rights issue proved impossible, Dargyal says.

"Whenever we raised the human-rights issue, the prime minister would head off to China to promote business with his son in-law. There was always a perception that business came first."

How much influence Power has wielded can be debated, but the close relationships with past prime ministers clearly created at least an appearance of conflict.

The question now is whether the company will have the same kind of access in a Stephen Harper administration as it's enjoyed for the last 20 years under Brian Mulroney, Jean Chrétien and Paul Martin.

Rudyard Griffiths, executive director of the Dominion Institute, a Toronto-based think-tank, says the Conservatives will be wary of the kind of "overt corporate association" that hurt the Liberal image.

"The Harper team has had some success at giving the impression he's more of an average Joe, he's not a multimillionaire like Paul Martin was, he didn't practise with a big Bay St. or Montreal law firm, he came up through a very different system that doesn't carry the same baggage with it. "

With a couple of brief exceptions, Canada's prime ministers since Trudeau's days have come from Quebec and have taken much of their advice and direction from a small group of well-connected business people in Montreal.

Power Corp., as a place that attracted the best and the brightest, moved easily in that world.

Now that Canada's geo-political centre seems to have shifted to Calgary, it's a whole new game for the Desmarais family.

Peter Hadekel is a freelance journalist in Montreal.