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: John 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.

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.

Towards the later part of the sponsorship program, the friends and associates of former Public Works ministry official and 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.

Thanks for the comments and encouragement. I'm used to hearing the type of far-left rhetoric like you stated. In the province of British Columbia we not only have the Liberals to battle, but the NDP (New Democratic Party) which is the furthest left bordering on communist.

I find it interesting when lefties only talk about money spent, not product delivered, cost-benefit-analysis, or any management concept to speak of. The NDP screams about proposed cuts to health care to replace 25 year old equipment for the military. If the slightest bit of research or rational thought had gone into those comments they would have found that funds dispersed are not connected to higher performance in health care. Of all countries with "universal health care" Canada spends more that all and has the worst performance than all, showing that it is in fact management and not funding. Again, the left has been left behind on the empirical data train. I laughed my head off when in the last election the Liberal leader told the NDP leader that everything he wants to do "begins with a dollar sign and ends with a bunch of zeros". And every Conservative was sitting back laughing at the left argue with itself about spending, of all things.

We are keeping the faith and moving forwards to victory. Good will prevail and sound management will triumph in parliament once again.

Yes, he did apoint this inquiry, because one, it is his job to do so, and because two, canadian inquiries are for the most part independent of political affiliation. Gomery himself has already critizied the liberals in public, so to say that his opinion is biased favoring liberals is ignorant. Paul Martin has said a number of times that if it comes out that he knew anything, he would resign, well, why can conservatives not wait for the inquiry to be finished and then begin there political postering? There is a publication ban because the men being questioned have a criminal trial directly ahead of them, if this information was allowed to be reported, the chance of these men getting a fair trial would be zero. Once their trials begin, reporters can report everything that was said in as much detail as they want. A canadian publication ban is to be respected by all media, even if that media is based in a foreign country. Next time a reporter from the CBC reports from Iraq about US troop movements, and gives this defense, "well, it's not my counrty thats a war, so i can say and write whatever i want" american media will be receiveing there just deserts.

Hi y'all!
I just saw on the news that this site is the first to publish the information.
Altough I am glad the info is out, I am afraid it might cause the criminal court case to be dropped.
We could have waited a few days ...
Ok, yes, Canada is not what it seems to be.
Remember the "IMAGE IS EVERYTHING" motto?
Our society has become so superficial, it makes me want to puke.
Anyways, what is surprising to me is the fact that people complain that somebody stole the government's money (our money) but no one complains about the fact that it was meant to be a secret plot to manipulate Quebecers.
I guess I should be happy that the government resorts to such peaceful tactics, they used to do a lot worst.
Yes, the Liberal party is corrupt, but aren't the conservatives too?
Is corruption a caracteristic of the Liberal party or is it just human nature?
The NPD is just utopic, and the Bloc Québécois will never form the government.
We don't vote for the best, we vote for the less worst.
We might be complaisant, but the Americans are gullible.
And we don't spend most of our time trying to put down our neighbors just to feel better, unlike some.
Maybe we should investigate the leak, and I bet we would realize that it came from the accused themselves.
Who else would have an advantage to do it?
And who could know what was said in there?
Please don't be manipulated into helping out the con artists who pocketed millions.
Don't you want the guilty to be charged and punished?
Freedom of speech shouldn't mean we should encourage lies and propaganda.
For some, freedom means the liberty to screw the next guy.
How about my freedom not to get screwed?
How about my freedom to see justice take it's course?
And my freedom to see the guilty punished?

By the way, Bush used the argument
"They have weapons of mass destruction and have used them" to invade Irak.
The funny thing is, the only country I know who has weapons of mass destruction and have used them in the past is the U.S.

Yes, we are living times where the hidden truth slowly comes out. And we are happy as long as this truth doesn't implicate us.

I tell you, the problem is not a country, a party, or any group of people except the human race.
I am not defending the Liberal party, and I am glad the truth is coming out, but we have to use our brains and realise the truth that realy hides underneath these so called revelations.
And finaly, I think the hypocritical tactics we see in Canada are copied on British traditions.

Il n'y a aucune vérité qui ne sera dévoilée.
- La Bible
Excuse my french, I don't have a Bible written in English.

"successive Liberal governments have continually entrenched soviet-style management in the executive branch"

I can never understand conservatives who accuse the centrist opposition of "soviet-style management" and power grabbing. In the United States and Canada (with the Republicans and PC/Conservatives, respectively), the so-called conservative party has shown itself every bit as willing to grab power, extend its reach, and run an authoritarian, top-down system.

Conservatives are supposed to value good economic policies, balanced budgets, etc., but are all too willing to turn a blind eye when partisan politicians abandon these values for pure cronyism (see: Tom DeLay).

Love 'em or hate 'em (I lean towards "hate 'em" for various reasons), the Liberal government of Canada has run large surpluses for several years running, cut personal and corporate taxes, and reduced the debt-to-GDP significantly. Canada has the second lowest taxes in the G-7.

In the past four years, the Republican government of the United States has extended its legislative reach over individual liberties, run massive government deficits, presided over the highest current accounts deficits in history ($600 billion last year, a predicted $700 billion this year), and been associated with scandals, cronyism and corruption on the order of billions of dollars.

In Canada, about half of voters vote Liberal again and again because they perceive it as the least of several evils. Think about it: after 12 years in continuous power, they've managed to run a $250 million scandal. That works out to less than a dollar a year in wasted tax money per Canadian. It's a slimy business however you look at it, but miniscule when you consider the larger picture.

Again, note that I'm not a Liberal supporter and have never voted for them. I just like to see the facts straight. When the Mulroney Conservatives were in power, plenty of scandal ripped through Parliament Hill. No less than 8 PC Cabinet Ministers and MPs had to step down over corruption, influence peddling, bribery, conflicts of interest, etc. A quickly-buried report found that the Conservative Ontario government under Mike Harris engaged in an advertising pork barrel similar to the Sponsorship scandal and about the same relative scale.

I know someone's going to mention the gun registry here, so let me get the jump: this was a classic case of a P3 gone horribly wrong. When governments and corporations partner up to develop programs, the government assumes the risk and the corporation writes itself a blank cheque. It's a recipe for over-billing, poor oversight, and mismanagement. Again, there's not a government in recent history that hasn't made a similar bungle (Halliburton, anyone?), and right-leaning governments are actually more willing to do this, becuase they're more willing to indulge in these sorts of quasi-free market transactions.

save me your sanctimony.

comparing Tories to the Liberals is a bit like comparing a J-walker to a serial rapist.

People make the Mulroney resignations out to be huge 'scandals"...give me a break. You didn't mention that the Liberals had to apologize to Mulroney, or that Sinc Stevens was just exonnerated recently for "tainted tuna". Your "influence peddling" - which sounds terrible - refers to Charest, who called a judge and then apologised? oooh!!!

Considering the mess Mulroney inherited from Trudeau, not to mention ridiculous inflation and an Opposition that cried bloody murder every time the Conservatives tried to do anything (de-indexing pensions?), it is amazing what he accomplished. To be sure, the GST and Free Trade led to the conditions where a grade-school kid could balance the books in the 90's. Not to mention the gall the Liberals had in down-loading their deficits onto the provinces.....bravo!

Unreal...

Let's consider e few Liberals screw-ups and scandals over 12 years:

- Shawinigate
(most PM's would be in jail)
- APEC pepper spray incident
(PMO's interference in RCMP efforts)
- HRDC boondoggle
(Liberal slush fund...$billion wasted...."what is a billion $?" - Chretien)
- Tainted Blood
(scnadalous, and heartless...they refused to pay compensation to a whack of people who got Hep C from the socialist health system)
- Mulroney lawsuit
( the Liberals had to apologize and pay damages for falsely accusing the previous PM of receiving kickbacks for an Airbus deal....ironic that the Liberals appear to have been caught in a kickback scheme, no?)
- Pearson Airport deal
(ridiculous waste of money for partisan purposes)
- Helicopter deal
(ditto...plus, they have endangered the Canadian military unnecessarily)
- GST
(promised to scrap it to win an election, then not only kept it, but expanded it and reaped the financial rewards for a tax that they professed to loathe...typical)
- Free Trade
(said they would scrap the deal unless it was renegotiated...won election partly based on this promise....not only did not review or scrap it, but expanded Canada's involvement in NAFTA)
- Gun Registry
(registry program was to cost $2 million....is approaching $2 billion with no end in sight, and has solved nothing)
- Challenger Jets
(the Conservatives were crucified for the purchase of a luxury jet for the PMO...Chretien elected after saying Canadian politicians don't need "Cadillacs"....decided once entrenched in power to buy two luxury jets - which were not needed - at a cost of $100 million via untendered contract)
- CSL Grants
(the PM's company received grants from taxpayers....think about it.....all the while, CSL flew flags of convenience)
- Irving weekends
(self explanatory, I hope)
- flags to fight separatists
($30 million for flags with no eyelets; untendered overseas contract for "patriotic" display)
-"he is not a moron, he's a friend of mine"
(how to apologize for offending your best friend)
-“ damn Americans, I hate those bastards”
(how to diplomatically disagree with your best friend)
- Iraq war
(Canada didn't go to Iraq because "it was not sanctioned by the UN"...funny, but the same Liberals opposed the first (UN sanctioned) Gulf War, and sent assets to Kosovo for a (non-UN sanctioned) War........plus, we had soldiers in Iraq under US command)
- SGRO stripper
(the Immigration Minister allowed queue-jumping for help in an election campaign)

And the Mother OF All Scandals...ADSCAM.

Kickbacks for free election work.

wow.

And that's just off the top of my head.

So please spare me the "they're all the same" bullshit.

LIBERALS are the problem.

"the media have successfully promoted the Conservative Party as scary much to my dismay"

I'd say the Conservative Party has done that pretty well for themselves. Libertarians have plenty to worry about with the strange bedfellows snuggled up under the Conservative blanket.

The more centrist elements in the party have made a faustian bargain with the fundamentalist fringe, as evidenced by the recent convention: you guys keep your mouths shut, and we'll convince the public we're less corrupt than the Liberals.

Discipline might be better during the next election cycle, but last year, the fundamentalists kept opening their mouths and freaking people out with their medieval views on marriage, women, minorities, gays, drugs, immigrants, etc. The Conservative candidate in my area talked about how men are the head of the household and women fulfil themselves by nurturing and supporting their men.

Most Canadians really do have liberal views when it comes to individual rights: they don't want a heavy-handed government regulating people's private lives and telling people what they are allowed to do. At the same time, Canadians consistently support a society that provides help for people most in need so that everyone has opportunities and people aren't destroyed by misfortune.

Candians don't want a system that brags of being laisssez-faire while children grow up malnourished and a serious illness can drive a family into poverty. They don't want unregulated markets at the expense of falling life expectancy and rising infant mortality rates. There's nothing socialist about this - it's common sense and fairness as policy.

I consider myself in some ways a conservative - I believe in preserving good traditions, pursuing incremental rather than radical change, maintaining balanced budgets and prudent fiscal policy, constraining government power to those functions where it can do good and private entities don't work.

The problem is that the Conservatives, like the Republicans south of the border, aren't conservative. They're radical statists, owing more to Lenin than to Burke.

I there
I'm not really a Canadian, but my passport’s still say that I am. I’m from Quebec. I'm not a liberal like you guys from USA says. But when I read you, I am shocked. I tough that Canadians and United-State-rans (you are not the only Americans in America…) had fought together in World War II against that kind of ideology. We are not a communist country, but we think in human being and in the right to live in happiness and to have good life conditions. Like you said in 1776 in the Virginia declaration of right. « That all men are by nature equally free and independent, and have certain inherent rights, of which, when they enter into a state of society, they cannot, by any compact, deprive or divest their posterity; namely, the enjoyment of life and liberty, with the means of acquiring and possessing property, and pursuing and obtaining happiness and safety »

For your information, we are all, Canadians, Queébecois and United-State-rans people from immigration.

With my respect.

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