Auditor general gives details of 'scandalous' sponsorship program
Date: Tuesday, February 10 2004
Topic: Canadian Politics
OTTAWA - Auditor General Sheila Fraser Tuesday released her long-awaited report on the federal government's advertising and sponsorship contracts in Quebec, finding that millions of dollars were mishandled.
Fraser called the affair "scandalous," and said she was "appalled" by how money was wasted with no one in government seeming to care. Many of the transactions involved false invoices and contracts, or no contracts at all.
"I am deeply disturbed that such practices were allowed to happen in the first place," she told a news conference in Ottawa. "I don't think anybody can take this lightly."
The sponsorship program was basically designed to generate commissions for private companies rather than to produce any benefit for Canadians, she said.
Between 1997 and 2001, $250 million went to the sponsorship program, ostensibly to boost the federal government's profile in Quebec in the wake of the 1995 sovereignty referendum.
More than $100 million was paid to a variety of communications agencies in the form of fees and commissions, Fraser found.
She also said five Crown corporations were tied to faulty money handling under the sponsorship program, including the RCMP, VIA Rail, Canada Post and the Old Port of Montreal.
In the case of the RCMP, for example, Public Works provided $3 million for the force's 125th-anniversary celebrations in 1999.
The money first went to three ad agencies (Lafleur, Media/I.D.A. Vision and Gosselin) that deducted $1.3 million in fees before handing the remaining $1.7 million to the RCMP for its events.
Prime Minister Paul Martin immediately announced a public inquiry into the mishandling of taxpayers' funds, which occurred while he was finance minister under former prime minister Jean Chrétien.
He said the auditor general's report painted a "disturbing picture," adding that there was an "intolerable" lack of accountability to the public during the administration of the program.
Asked why he did nothing to address the problem while he was finance minister, Martin said, "I had no idea what was going on here."
The House of Commons public accounts committee will convene early to begin dealing with the auditor general's report immediately.
A special counsel, André Gauthier, will be appointed to attempt to recover some of the funds already spent, by means of the courts if necessary.
His government will beef up protection for civil servants who blow the whistle on questionable spending in their departments.
On his way into a fiery Question Period Tuesday, Martin also confirmed that Alfonso Gagliano had been recalled as Canada's ambassador to Denmark an hour earlier.
As minister of public works during the time the money was channelled to firms with Liberal connections, Gagliano was tagged with the responsibility for the sponsorship scandal when Fraser first found evidence of bungling two years ago.
Chrétien quickly sent him to the ambassador's post in Copenhagen, despite protests from opposition politicians who said he was rewarding wrongdoing.
The auditor general's report was originally supposed to be released in November, before Chrétien stepped down as prime minister.
Now Martin must deal with it as he heads into a general election widely expected this spring.
Conservative MP John Williams was one of many opposition politicians who jumped on the scandal Tuesday, saying it was payback to Quebec companies for helping out the Liberals in the 1997 election.
"We have seen a money-laundering system that would make Saddam Hussein look proud," he said.
Written by CBC News Online staff