Sunday, February 15, 2004

Canadian Sponsorship Scandal: The Donors

On Tuesday, February 10, 2004, Sheila Fraser, the Auditor General of Canada, released her damning report on the federal Sponsorship program. Ms. Fraser, during the press conference at the Old Train Station in Ottawa, called the program “…a blatant misuse of public funds…” (Canadian Press 10 Feb. 2004). No wonder, Ms. Fraser’s report noted that the two hundred fifty million dollars spent for this ‘program’ had very little paperwork to show where the money went and delivered very little in terms of results. Even worse, of the money spent, Fraser wrote that about one hundred million dollars went to commission fees for advertising firms. Many of these advertising firms just happen to be major donors to the Liberal Party, the party currently forming the government.

The Sponsorship program was designed to show the ‘Canada’ word mark at festivals, sporting events and other large gatherings of people. This program was being implemented by the Public Works Ministry following the near defeat of the federalist forces in the 1995 Referendum. However, by 2002 the program started to look a little fishy. The Auditor General, Sheila Fraser, noted in her 2002 Auditor’s report Sponsorship program, that the bureaucrats “broke just about every rule in the book.” Following her 2002 report, which only took a light look at the program, the Auditor General undertook a more thorough investigation which resulted in the report released in February 2004.

So how could the federal sponsorship program start looking so fishy? As Toronto Star columnist Chantel Hebert wrote, Prime Minister Paul Martin admitted “…that only political will at the highest levels of the government could have allowed the sponsorship program to function in defiance of every accounting rule, not to mention a number of laws.” (Hebert A1 & A7). In other words, within the political ranks of the government, someone or a group of politicos thought it would be a good idea -- even though it was broke the law, several financial practices and government policies -- to start funneling some of our hard earned taxpayers dollars to these communication companies associated with the Liberal party. Paul Martin’s admission of a certain ‘political will’ is only backed by evidence found in Fraser’s latest report.

An example of the funny financial dealings was what Ms. Fraser, “more than $100 million was paid to various communications agencies in the form of fees and commissions, Fraser found. In most cases the agencies did little more than hand over the cheques.” (“Auditor General’s Report 2004” CBC News). An example of one of the sponsorship contracts was the creation of a television series about former Montreal Canadians hockey great Maurice Richard which was to be produced by the private firm L’information essentielle. According to CBC News, this is how it happened:

…communication firms, including Lafleur, Media/I.D.A. Vision, Gosselin and Groupaction, received $440,000 in commissions without signing any contracts or doing any work. The program also used Via Rail as a conduit to transfer nearly $1 million to the television series through a "fictitious contract," reimbursing the Crown corporation for all but $160,000 of the money. Lafleur received $112,500 to handle the transfer. In addition, Canada Post paid $1.6 million to sponsor the series without any deal being signed or any documentation whatsoever, breaking the corporation's own rules. (Auditor General’s Report 2004, CBC News).

Basically, the communications firms like Lafleur and Groupaction were used to forward cheques to the Crown Corporations. How come bureaucrats within the Public Work’s Ministry wouldn’t merely send the Crown Corporation’s a cheque instead of funneling the money through a Liberal friendly communications company? This can only be determined by noting what Paul Martin admitted to, that some ‘political will’ was telling the bureaucrats how to dole out the money.

The question now is how to go about digging even deeper in order to lay criminal fraud charges, fire those responsible for scandal and try and recoup the money lost via the program. The Canadian Prime Minister, Paul Martin, right after the report’s release, responded in full attack mode like any seasoned political leader would. Prime Minister Martin quickly fired Alfonso Gagliano from his post as the Ambassador to Denmark within minutes of Sheila Fraser’s report. Gagliano was the Public Works Minister during the time of the Sponsorship program. Furthermore, the Prime Minister called in the RCMP, called a Royal Commission on the Sponsorship Scandal and invited the Public Accounts Committee to look into various aspects of the Sponsorship Program. Paul Martin seems to attempt to try and solve the issue by first figuring out who did what. However, Martin didn’t really read Ms. Fraser’s report to closely because Martin made more than one false move.

The RCMP has now found itself in a conflict of interest. The three communication companies, Lafleur, Media/I.D.A. Vision and Gosselin, received a cheque from the Sponsorship program of three million dollars. In turn, the communication companies forwarded to the RCMP a cheque for $1.3 million for the government of Canada to sponsor the police force’s 125th anniversary. In return the police force would display the ‘Canada’ word mark. Although, the Auditor General, Sheila Fraser, found that the RCMP should have never received the money since the RCMP is required by law to display the ‘Canada’ word mark anyway without compensation. So why sponsor the RCMP’s celebrations in the first place if the police force is already required to display the wordmark? Perhaps this was just the ‘political will’ trying to find an excuse to funnel money to the Liberal friendly ad firms. So it seems to me that RCMP will find themselves investigating themselves and, probably, finding nothing wrong with transactions. What Martin should have done was call in the Quebec Provincial Police force to investigate the Sponsorship in order to avoid the RCMP from appearing in a conflict of interest.

Martin has appointed Judge John Gommery to head the public inquiry into the scandal. But wait! Judge Gommery is currently the head of the Canadian Copyright Board, yet another Liberal party appointee. To make matters even worse, according to CTV News, the government had appointed Deloitte & Touche to perform an audit of the Liberal Party of Canada’s Quebec wing. However, it turns out that the Deloitte & Touche was a major campaign donator to the Liberal Party last year and audits the Liberal Party’s books on a regular basis. So as a way to get to the bottom of the scandal, Martin appoints a Liberal Party supporter to look into it? Seems to me the Deloitte & Touche will say there is nothing wrong as they are Liberal Party supporters. The same with Judge Gommery, he will find that there was not any political involvement at all and that the whole scandal was, as Martin put it, “rogue bureaucrats.” It seems even when the Martin and Liberals want to get to the bottom of the sponsorship scandal, they only make the situation even worse.

What’s worse, is Prime Minister Paul Martin has claimed he new absolutely nothing about the scandal. Martin’s claim is very hard to believe considering that during the sponsorship scandal Martin was a senior Quebec Cabinet Minister, Finance Minister and Vice-Chair of the Treasury Board of the federal government. However, Mr. Martin tried to paint a picture that since relations with then Prime Minister Jean Chretien were so frosty, that Martin was not informed. Martin has since amended the claim of a falling out with the former Prime Minister because a report in the National Post of a leaked letter that was sent to Martin about wrongdoings in the Sponsorship Scandal, to say he heard rumours. These rumours, had Martin bothered to dig deeper as Minister of Finance or Vice-Chair of Treasury Board, would have further evidence on the budget. As Minster of Finance, why did Paul Martin not demand the Finance Ministry investigate these rumours before approving further money for the Public Works Ministry and its Sponsorship program? It seems Paul Martin has some explaining to do. He may be able to dodge and weave the questions from the Opposition parties in Question Period in the House of Commons. However, if Paul Martin is hauled before the Royal Commission and asked what he knew, then Martin will have to come clean. If he does not come clean on the issue and continues to deny any knowledge, he will be politically lambasted for failing to have his bureaucrats to investigate.

Sheila Fraser spent one million dollars and a lot long hours on a report that horrified Canadians from coast to coast to coast. However, sadly to note, this is not the first scandal the federal Liberal party has suffered since taking office in 1993. Since 1993 the HRDC Billion Dollar Boondoggle and the Shawinigate Scandals have erupted. The Liberals keep holding onto power because the Liberals merely just waited for the scandals to blow over. In terms of “Shawinigate”, the government was able to withstand the barrage of questions from the Opposition by having cabinet minister like then Industry Minister Brian Tobin and then Government House Leader Don Boudria run intereference which meant then Prime Minister Jean Chretien did not have the answer the questions. In terms of the HRDC Billion Dollar Boondoggle, the government and the Human Resources Minister, Jane Stewart, only promised to hold a full investigation. However, eventually both of these scandals blew over and Canadians quickly forgot about them before going to the polls in the next election. This time, however, the Sponsorhip Scandal comes just before a possible spring election.

Now it is the voter’s chance to show Paul Martin and the Liberal Party that such fraud and money laundering with our hard earned taxpayers dollars will not be tolerated. According to the latest polls taken by CTV News, the Globe & Mail and Ipsos Reid, the Liberals popularity have dropped at almost ten percent. This poll was taken before the public inquiry and police investigations have even started into the Sponsorship Scandal. Thus, the polling numbers can only get worse as the Liberals head towards the next election as the public inquiry, parliamentary committees and the police investigation get underway. It would seem the Liberal Donors have cost the Liberals another majority government after the next election, but at least these firms will be well financed with over $100 million in their bank accounts.

Works Cited

“Auditor General’s Report 2004.” CBC News. 11 February 2004. Online. Internet. 15 February 2004. Available: http://www.cbc.ca/news/background/auditorgeneral/report2004.html

Canadian Press. “’Shocking’ misuse of public funds: Martin launches public inquiry.” Toronto Star. 10 February 2004 . Online. Internet. 15 February 2004. Available: http://www.thestar.ca/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&call_pageid=971358637177&c=Article&cid=1076411365455

Hebert, Chantel. “PM errs in first major crisis.” Toronto Star. 13 February 2004: A1 & A7.

“MP predicts charges in sponsorship scandal” CBC News. 14 February 2004. Online. Internet. 15 February 2004. Available: http://www.cbc.ca/stories/2004/02/14/public_accounts020414

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