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Justice John Gomery smiles after delivering a statement on his first report on the sponsorship scandal in Ottawa, Nov. 1, 2005. (CP PHOTO/Tom Hanson) |
INDEPTH: SPONSORSHIP SCANDAL
Federal sponsorship scandal
CBC News Online | November 1, 2005
There had been rumours and whispers about a fund that had been set up in the wake of the 1995 referendum on Quebec sovereignty to help promote federalism. The money was supposed to be used to raise Canada’s profile in Quebec.
The fund was run by the Public Works Department, headed at the time by Alfonso Gagliano, then Prime Minister Jean Chrétien’s Quebec lieutenant.
But it wasn’t clear how the money was handed out: there were no application forms for this fund that was supposed to help pay the costs of social and cultural events and programs. There were rumours that the money was little more than a vehicle to reward loyal Liberal supporters.
By the early spring of 2002, Chrétien was forced to address the issue. The Globe and Mail – under the Access to Information Act – tried to find out why the government paid $550,000 to Groupaction Marketing for a report that could not be found. No one at Public Works or the company could explain it.
Chrétien asked Auditor General Sheila Fraser to see what she could find out. She learned enough to launch a full investigation – and to ask the RCMP to get involved as well.
On Feb. 10, 2004, Fraser released her audit of the federal sponsorship program.
The scathing report used words such as "scandalous" and "appalling" to describe how the Liberal government abused the system.
She found that $100 million was paid to a variety of communications agencies in the form of fees and commissions and said the program was basically designed to generate commissions for these companies rather than to produce any benefit for Canadians.
 Justice John Gomery watches as Prime Minister Paul Martin testifies before the inquiry, on Thursday, Feb 10, 2005. (CP Photo/Tom Hanson)
Prime Minister Paul Martin ordered a public inquiry into how the sponsorship program was handled. He fired Gagliano, who had been appointed ambassador to Denmark. Five days later, Martin promised to resign if there was evidence that he knew about fraud in the program.
Two weeks after Fraser’s report was released, Martin suspended the heads of three Crown corporations: Michel Vennat, president of the Business Development Bank of Canada, Via Rail president Marc LeFrançois and Canada Post president André Ouellet. The report showed that five Crown corporations and agencies – the RCMP, VIA Rail, the Old Port of Montreal, the Business Development Bank of Canada and Canada Post – played a role in transferring money through questionable means.
All three men would eventually be fired.
The revelations from the unravelling scandal would cost the Liberals dearly in the election of June 28, 2004: their majority evaporated and – for the first time in 25 years – Canada had a minority government.
By September, Justice John Gomery would begin hearing testimony at the inquiry into the scandal.
On Feb. 8, 2005, former prime minister Jean Chrétien appeared before the Gomery inquiry. He vigorously defended the federal sponsorship program as an important part of the battle against Quebec sovereigntists in the wake of the 1995 referendum.
Mistakes were made, Chrétien conceded, and people who stole money should be punished.
Two days later, Prime Minister Martin – the man who called the inquiry – gave his testimony. He appeared a year to the day after he ordered the inquiry. It was the first time since Canada was six years old that a sitting prime minister testified before a public inquiry.
After Chrétien and Martin completed their testimony, the inquiry shifted to Montreal, where it would get to the "meatier" side of the story. Witnesses would include some of the people at the heart of sponsorship scandal.
Among them would be Jean Brault who ran Groupaction, an advertising company that was paid millions doing work for the government under the sponsorship program; Paul Coffin, who ran another advertising company that did well under the program; and Chuck Guité, who ran the program for the government.
But there would be complications – all three men faced criminal charges, accused of defrauding the government out of millions of dollars under the sponsorship program. Gomery would order a ban on the publication of their testimony because their appearances before the inquiry were scheduled for a few weeks before the beginning of their trials.
Coffin would later plead guilty to six counts of fraud. The trial of Guité and Brault would be delayed until the spring of 2006 and eventually the publication bans would be lifted.
Gomery’s Nov. 1, 2005, report is the first – and probably the more interesting – of two reports to come from his inquiry. The “who-knew-what-when” document will be followed by a “how-do-we-prevent-it-from-happening-again” report. That one is due in February 2006.
Prime Minister Martin has promised to call an election within 30 days of the release of that report.
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