Sponsorship scandal

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The sponsorship scandal or "AdScam" is an ongoing scandal that may lead to the collapse of the current government of Canada. It has affected the government of Canada, and particularly the ruling Liberal Party of Canada, for a number of years, but rose to especially great prominence in 2004. The scandal involved the misuse and misdirection of funds that were intended to go to government advertising in Quebec over the preceding decade. The funds were apparently allocated to advertising firms that were allies of the Quebec branch of the federal Liberal Party, and evidence suggests that in some cases few or no services were rendered in return.

Contents

1 Background 2 Involved parties 3 Timeline 3.1 2004 3.2 2005 4 See also 5 External links

Background

The sponsorship program was originally conceived in 1996 and was a response to a referendum in 1995 in which Quebecers narrowly defeated a proposal to separate from Canada. Funds were allocated to promote Canada through cultural and sporting events in Quebec, where separatist sentiment was still strong. The program itself is seen by many as inefficient propaganda; it mainly consisted in buying publicity space at local events (festivals, sports stadiums, etc.) and showcasing Canada's flag.

Allegations of misuse of funds and Royal Canadian Mounted Police investigations, called for by Prime Minister Jean Chrétien, began in 1999, but little was known of what had occurred and the public showed little interest in the affair. In 2002, Alfonso Gagliano, the minister supervising the department responsible, was removed from cabinet and sent as ambassador to Denmark.

Misuse of funds had been known for a few years which led Prime Minister Jean Chrétien to ask the Auditor General Sheila Fraser to audit the program. Her report was a fuller account of the situation and was made public in early February 2004. In her report, Fraser revealed that up to $100 million of the $250 million spent on the sponsorship program from 1996 to 2001 had been paid to advertising firms for commissions or other fees. In some cases, work that was billed for was never performed. It is interesting to note that Fraser's report was originally scheduled to be released in November 2003, when Chrétien was Prime Minister. However, Chrétien prorogued Parliament and the report could not be tabled until Parliament reconvened in 2004. Late in 2003 Chrétien retired and Paul Martin was chosen as the new leader of the Liberal Party, thus becoming Prime Minister.

The scandal reemerged into the public spotlight in February 2004 when the Auditor General's investigation of the affair was revealed. She blamed not only Public Works and Government Services Canada, but powerful Crown Corporations including VIA Rail and Canada Post. As a result of the report, and given the scandal's breadth, questions were being raised as to what involvement, if any, the Prime Minister's Office had in the misuse of funds. Questions were then raised by the opposition as to how the then Finance Minister now Prime Minister, Paul Martin, could not have known of the problems with the program. Both Chrétien and Martin have denied ever being aware of any of these details of the contracting process for the program. Martin supports his argument by reminding people that Chrétien left him out of issues regarding national unity.

New Prime Minister Paul Martin responded to the report by immediately firing Alfonso Gagliano from his position of ambassador to Denmark and launching a public inquiry into the matter. Martin, who was Finance Minister from 1993 to 2002, has insisted the scandal was orchestrated by a very select group of individuals and that he had no knowledge of their actions. In a further attempt to distance himself from the scandal, he blamed the problems on the previous administration of Jean Chrétien, under which the spending occurred. A number of the people most closely embroiled in the scandal are Chrétien loyalists, such as Chief Executive Officer of Canada Post André Ouellet and head of VIA Rail Jean Pelletier. Opposition critics have alleged that Martin could not have been unaware of the activities, as he was Finance Minister, a senior Quebec cabinet minister and a member of the Treasury Board during the time of the scandal. Martin responded to these charges when he testified to the Gomery Commission, but that has not stopped the accusations.

In the weeks following the Auditor General's report, it became clear that the upcoming election would be affected in some way. Some argued that voters should know the outcome of the enquiry before going to the polls, in order to have an informed decision; others believed the Martin government should not continue for long without seeking a mandate. In the end, the election was called for June 28, 2004. The result of this election was a minority government.

Since that election, the Liberal government has been rocked by testimony of Jean Brault, a man charged with theft of over $30 million in the program. His testimony was originally under a publication ban due to the criminal charges, but Justice Gomery removed that ban when the testimony became widespread through Internet blogs. The following day, newspapers across the country printed sensational headlines on the basis of this man's testimony. Some other witnesses are now beginning to contradict Brault. The testimonies will continue until the end of May 2005, and a final report will be published in December 2005. Prime Minister Martin has pledged that he will call an election within thirty days of the release of Justice Gomery's final report, unless the opposition forces him to call it earlier.

Involved parties

• Jean Chrétien - Prime Minister of Canada at the time the Sponsorship Program was established and operated.
• Jean Pelletier - Prime Minister's chief of staff later head of VIA Rail which was accused of mishandling sponsorship deals.
• Alfonso Gagliano - Minister of Public Works, and thus in charge of the program, also the political minister for Quebec.
• André Ouellet - Longtime Liberal politician and later head of Canada Post, which was also accused of violating sponsorship rules.
• Chuck Guité - Bureaucrat in charge of the sponsorship program. Arrested for fraud by the RCMP.
• Jean Brault - Head of Groupaction Marketing, one of the companies to which deals were directed. Arrested for fraud by the RCMP.
• Jacques Corriveau - Liberal organizer and head of Pluridesign to which millions in sponsorship dollars were directed
• Paul Martin - Minister of Finance at the time of the Sponsorship Program. Current Prime Minister of Canada who stopped the sponsorship program as soon as he became Prime Minister and set up the Gomery Commission which has uncovered the details of the scandal
• Joe Morselli - Liberal Party fundraiser. Jean Brault testified that the money exchanges were with Morselli.

Timeline

2004

• February 10 - Auditor General Sheila Fraser's report reveals up to $100 million of the $250 million sponsorship program was awarded to Liberal-friendly advertising firms and Crown corporations for little or no work.
• Prime Minister Paul Martin orders a Commission of Inquiry into the Sponsorship Program and Advertising Activities. The Commission of Inquiry will be headed by Mr. Justice John H. Gomery. Martin fires Alfonso Gagliano from his post in Denmark.
• February 24 - Martin suspends Business Development Bank of Canada president Michel Vennat, VIA Rail president Marc LeFrançois and Canada Post president André Ouellet giving each an ultimatum to defend themselves or face further disciplinary action.
• February 27 - Past Olympic gold medallist Myriam Bédard reveals she was pushed from her job at VIA Rail for questioning billing practices. VIA Rail chairman Jean Pelletier publicly belittles Bédard and calls her pitiful.
• March 1 - Pelletier is fired.
• March 3 - Jean Carle, a close confidant of Chretien and his former director of operations, surfaces in close connection to the sponsorship initiative.
• March 5 - LeFrançois is fired.
• March 12 - Vennat is fired.
• March 13 - An unidentified whistle-blower reveals that high-ranking government officials, including Jean Pelletier, Alfonso Gagliano, Don Boudria, Denis Coderre, and Marc LeFrançois, had frequent confidential conversations with Pierre Tremblay, head of the Communications Coordination Services Branch of Public Works from 1999 until 2001. The claim is the first direct link between the scandal and the Prime Minister's Office. Coderre and LeFrançois denied the allegation. [1] (http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1079133610649&call_pageid=968332188492&col=968793972154)
• March 18 - Gagliano testifies in front of the Public Accounts Committee, a committee of the House of Commons chaired by a member from the Official Opposition. Gagliano denies any involvement by himself or any other politician; he points blame at bureaucrat Chuck Guité.
• March 24 - Myriam Bédard testifies at the Public Accounts Committee. In addition to repeating her earlier assertions, she also claims that Formula One driver Jacques Villeneuve was given a secret $12 million payoff to wear a Canadian flag logo on his racing suit (however, Villeneuve sharply denies this allegation, calling it "ludicrous"). Bédard also testifies that she once heard that Groupaction was involved in drug trafficking.
• April 2 - Previously confidential testimony from a 2002 inquiry into suspicious Groupaction contracts is made public. In it, Guité admits to having bent the rules in his handling of the advertising contracts but defends his actions as excusable given the circumstances, saying, "We were basically at war trying to save the country... When you're at war, you drop the book and the rules and you don't give your plan to the opposition." [2] (http://www.globeandmail.com/servlet/story/RTGAM.20040402.wxguite0403/BNStory/Front/)
• April 22 - Guité testifies. He claims Auditor-General Fraser is misguided in delivering the report, as it distorts what actually went on; he claims the office of then-Finance Minister Paul Martin lobbied for input in the choice of firms given contracts; and he denies that any political interference occurred, because his bureaucratic office made all final decisions. Opposition MPs decry his comments as "nonsense" and claim he is covering up for the government. [3] (http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1082671811880&call_pageid=968332188492&col=968793972154) The French language press gives a very different account of Guité's testimony; a La Presse headline states that Guité is involving the Cabinet office of Paul Martin. [4] (http://www.cyberpresse.ca/politique/article/1,153,1924,042004,655910.shtml)
• May 6 - An official announces the inquiry deadline is set for December 2005
• May 10 - Jean Brault, president of Groupaction, and Charles Guité arrested by the RCMP for fraud in connection with the sponsorship scandal.
• May 23 - Paul Martin requests that the Governor-General dissolve Parliament and call a federal election.
• September - First public hearings of the Commission of Inquiry into the Sponsorship Program and Advertising Activities begin in Ottawa. They will move to Montreal in February 2005 and conclude in the Spring.
• December - In a year-end media interview, Justice John Gomery refers to Chretien's distribution of autographed golf balls as "small-town cheap", which later prompts an indignant response from the former prime minister.

2005

• March 29 - A publication ban is imposed by the Gomery commission on Jean Brault's testimony.

• April 2 - The United States blog Captain's Quarters (http://www.captainsquartersblog.com/mt/archives/004220.php) discloses information about Brault's testimony, countervening the Canadian publication ban. Until the revocation of the ban five days later, the publication itself was a news event in Canada, with Canadian news media struggling to report on the disclosure without putting themselves at risk of legal action. (Edmonton Sun) (http://www.canoe.ca/NewsStand/EdmontonSun/News/2005/04/04/981827-sun.html)

• April 7 - The publication ban on Jean Brault's testimony is lifted by the Gomery commission. Brault's testimony triggers a rapid shift in the public opinion of the Liberal Party. Whether or not the government is defeated in the imminent confidence vote, most political pundits are predicting an election call this year - many predicting by this summer.

• April 20 - The official opposition party, the Conservatives, puts forward a non-confidence motion in the government. Due to procedural rules, this vote which was to be held May 3 was postponed. If a non-confidence motion passes, the government will be dissolved and a new election will be held.

• April 21 - A national televised appearance by Prime Minister Paul Martin discusses the scandal. This was highly unusual in Canadian politics. The Prime Minister announced that a general election will be called within 30 days of Justice Gomery's final report. Martin emphasised that he was trying to clean up the scandal and had not been involved. However, the Opposition still are ready to bring down the government and force an election before the summer.

• May 10 - The Conservatives and Bloc Québécois win a vote, by 153-150, in the House of Commons on what they argue is equivalent to a no confidence motion; three MPs are absent due to health reasons. The motion ordered a committee of the House of Commons to declare that the government should resign rather than being a direct motion on the House's confidence in the government. The opposition parties claim that the motion is binding and that the government had to resign; the government and constitutional experts suggest that this motion was merely procedural and therefore cannot be considered a matter of confidence. Ultimately, only the Governor General has the power to force an election, it is not clear what actions tradition would require her to take in such a case. See [5] (http://www.cbc.ca/story/canada/national/2005/05/10/confidence-vote050510.html).

• May 11 - The government tells the House that it will consider a vote to be held on May 19 on the budget to be a matter of confidence. However, the Opposition continues a policy of non-cooperation and disruption of the business of the House.

• May 17 - Conservative MP Belinda Stronach crosses the floor to the Liberals. For some time afterwards, media attention is focused away from Gomery testimony onto Stronach's move and its implications on the budget vote.

• May 19 - The government passes the first of two budget bills easily after the Conservatives promise support, but the second ends as a cliffhanger. Speaker Peter Milliken breaks a 152-152 tie in favour of the bill, keeping the government alive.

See also

• Canadian political scandals
• Politics of Canada
• Gomery Commission

External links

• CBC.ca Indepth: Federal sponsorship scandal (http://www.cbc.ca/news/background/groupaction/)
• 2003 Reports of the Auditor General of Canada (http://www.oag-bvg.gc.ca/domino/reports.nsf/html/03menu_e.html)
• Commission of Inquiry into the Sponsorship Program and Advertising Activities (http://www.gomery.ca/en/)
• Testimony from Jean Brault on the activities of the Government in the Sponsorship Program (http://www.captainsquartersblog.com/)
• Official transcripts of the hearings available on the website of the Gomery Commission (http://www.gomery.ca/en/transcripts/)
• In Defense of the Sponsorship Program opinion piece (http://earnedmedia.ca/Archives/2005april/sponsorship.php)fr:Scandale des commandites