Thread: Canadian Sponsorship Scandal

It seems the Canadian Liberal Party is in the midst of a huge scandal that touches the far reaches of it's party. As I understand, there is a publication ban on details of secert testimony on our Canadian friends and bloggers, therefore I'm going to post details I've copied from other blogs:

• * The locus of the corruption is the Jean Chretien faction of the Liberal Party (so much for his legacy)
  
  * The Paul Martin faction, however, is clearly connected.
  
  * Groupaction made $250,000 in legal contributions, and $450,000 more in illegal contributions, laundering tax money through the Sponsorship Program and sending the funds back to the Liberal Party (keeping a cut for themselves)
  
  * Two key Quebec organizers in the Martin faction, Jacques Olivier and Jacques Corriveau, knew what was going on.
  
  * Money was sent to Minister for Intergovernmental Affairs Lucienne Robillard's riding for a construction project, despite known problems with the project. Questions were suppressed and the funds made available under the direction of Martin lieutenant Yvon Desrochers. Desrocher committed suicide over another (unrelated) corruption scandal. It is not mentioned if Robillard knew any of the details.
  
  * Among the ghost staff Brault hired in order to launder money were Georges Farrah, later Paul Martin's Parliamentary Secretary, and John Welch, chief of staff to Heritage Minister Liza Frulla.

If you want more on the scandal you can visit:
http://www.captainsquartersblog.com/mt/

Update: a story on it

April 02, 2005

Canada's Corruption Scandal Breaks Wide Open

A political scandal involving the Public Works Ministry, a government effort called the Sponsorship Program, and allegations of corruption in the ruling Liberal Party has Canada abuzz with rumors of payoffs, Mob ties, and snap elections. For the last two years, Canadian politics has been gripped by the so-called "sponsorship scandal" - tens of millions of dollars in government contracts which were funneled into advertizing firms closely connected with the Liberal government for little or no work, but with shadowy rumours that much of the money found its way back into Liberal coffers. Prime Minister Paul Martin, himself a Liberal, appointed the Gomery Commission to investigate these charges and determine whether to bring charges against government officials for corruption and malfeasance. (See the blog Small Dead Animals for some excellent background on the case.)

Most of the testimony heard by the Commission has been public, but Judge Gomery has decided to create a publication ban on the testimony of three key witnesses: Jean Brault, president of the ad agency Groupaction, Charles Guité, an officer of the Public Works ministry who worked on the Sponsorship Program, and Paul Coffin, president of the ad agency Coffin Communications. The potential damage of their testimony has so unnerved the Liberal Party that they have reportedly started working towards a snap election so that they will not have to face the voters once the facts surface from the record.

And well they might, if Brault's testimony gives any indication of what they will face. Thanks to a friend of mine, CQ readers can get a taste of what Brault has already told the Gomery Commission. For obvious reasons, I cannot reveal this person's name or position, but this person is in a position to have the information. Bear in mind that this comes from a single source, so while I have confidence in the information, you should consider the sourcing carefully.

Payoffs And Kickbacks

On Thursday, Jean Brault began his testimony, subject to the publication ban, and revealed a massive pattern of corruption going to the highest levels of the Liberal party and government. Brault testified to hundreds of thousands of dollars of bogus transactions designed to benefit the Liberal Party of Canada over a period from 1994 to 2002.

Most of the illegal campaign contributions involved Brault either hiring "employees" -- who were in fact working full time on Liberal Party activities -- or paying invoices for Liberal Party campaign expenses (which were never declared as such) or making untraceable cash donations to Liberal officials. In exchange for helping the federal Liberals in Quebec, Brault received millions of dollars in federal advertising contracts.

Brault said he met with Jean Carle, a key aide to then Prime Minister Jean Chretien to propose a more direct way of ensuring that Groupaction got a large share of federal advertising dollars in Quebec. Carle referred Brault to federal bureaucrat Charles ("Chuck") Guité and told him that "there was room for everybody." Guité later put together the sponsorship program, in which five Liberal connected firms -- including Groupaction -- were guaranteed a monopoly on government "sponsorship" advertising (e.g. federal
advertising at sporting or cultural events) and related work. The sponsorship program eventually became a huge slush fund into which over $250 million was poured, over $100 million of which was paid in fees and commissions to these five advertising firms, with little or any evidence of work done or value for money.

In exchange for these large contracts for little or no work, Brault kicked back generously to the Liberal Party, putting Liberal organizers on his payroll while they continued to perform party work (including, at one point, Prime Minister Jean Chrétien's brother, Gaby Chrétien), paying invoices to other companies for work actually done for the Liberal Party, and giving large donations -- in cash -- to the Liberal Party through Renaud or Liberal Party organizer (and close associate of Public Works Minister Alfonso Gagliano) Joe Morselli.

Protection Racket?

Towards the later part of the sponsorship program, the friends and associates of Public Works Minister and former ambassador to Denmark Alfonso Gagliano, some of whom have been linked to organized crime, played a larger role in the schemes.

At one point, Gagliano associate Tony Mignacca told Brault that if he didn't rehire Renaud (who had left Groupaction to start a new company), he would lose his newly acquired contract with Via Rail -- Canada's state-run passenger rail service. Brault broke down in tears after he recounted this testimony. At a meeting in 2001 with Joe Morselli, Brault said that he arranged to have the meeting in an overheated room in a restaurant -- so that Brault could ask Morselli to take off his coat and ensure that he wasn't carrying a body pack.

This is just the beginning of Brault's testimony. If the Gomery Commission can corroborate Brault, then the reek of corruption goes through all levels of the Liberal party and may explain their ability to out-campaign the Conservatives. After all, they've siphoned off hundreds of millions of government dollars to promote their own party and to guarantee their monopoly on power. They hijacked the Canadian tax base to fund their own campaigns and hide the financial trail.

More will be forthcoming, but it isn't difficult to understand why Liberal politicians have begun to panic already.