CBC News Indepth: Federal sponsorship scandal

Accessibility Links

Skip to CBC accessibility page

INDEPTH: SPONSORSHIP SCANDAL
Gomery Inquiry: A summary of the testimony
CBC News Online | Updated June 03, 2005

John Gomery

Prime Minister Paul Martin called the public inquiry into the sponsorship scandal in February 2004 with the mandate of identifying those responsible for creating and managing the program, and of documenting how certain agencies were selected to get money from the federal government.

The inquiry, led by Justice John Gomery, will file its final report in December 2005.

Testimony highlights:

Week of May 30: Corriveau, Pelletier return
Week of May 23: Accountants report on the money trail
Joe Morselli's testimony
Week of May 16: Ad boss denies he sought cabinet assurances
Week of May 9: Benoit Corbeil's tales of secret payments
Week of May 2: Chuck Guité names more names
Week of April 25: Paul Coffin's phoney invoices
Week of April 18: Claude Boulay, Diane Deslauriers and their children worked for Martin in his 1993 campaign
Week of April 11: Jacques Corriveau's failing memory
Week of April 4: Jean Brault's tale of cash for contracts
Week of Mar. 28: Gilles-André Gosselin pressured to donate to Liberals in exchange for contracts
Week of Mar. 14: Masking donations
Week of Mar. 7: Two bills for the same job
Week of Feb. 28: Jean Lafleur's sponsorship gold mine
Week of Feb. 7: Jean Chretien and Paul Martin testify
Week of Jan. 31: Alfonso Gagliano: I never approved contracts
Week of Jan. 24: Cabinet ministers past and present say they weren't involved
Week of Jan. 17: David Dingwall crossed the line
Week of Jan. 10: François Beaudoin pressured to buy a box at Molson Centre

Week of May 30

The final week of testimony began with the return of two previous witnesses – Jacques Corriveau and Jean Pelletier – that got the week going.First up was Corriveau who denied telling former party director general Daniel Dezainde that he masterminded a kickback scheme to funnel sponsorship money to Liberal party headquarters in Montreal.

Corriveau admitted that he paid almost $100,000 to Liberal workers by putting them on his payroll, but denied it was a way of diverting sponsorship profits to the Liberal Party of Canada's Quebec wing.

Later, Pelletier – Jean Chrétien's former chief of staff – testified he warned the former prime minister, to "be wary" of his good friend Jacques Corriveau. Pelletier said it was his "political intuition" that told him Chrétien should keep his distance from Corriveau.

Pelletier also denied former bureaucrat Chuck Guité's allegation that he intervened to give a Tourism Canada contract to BCP – a Quebec ad agency that worked on Liberal campaigns – back in 1994. Pelletier told the inquiry he first met Guité in 1996.

John Parisella, a top official at the ad firm BCP, denied charges that his firm was given preferential treatment because of its ties to the Liberal party. Justice Gomery was skeptical because BCP had most Canada Post ad contracts after 1994, and there were close ties between BCP founder Jacques Bouchard and Canada Post head André Ouellet. Parisella also couldn't explain why Coffin Communication billed the government for work on the Clarity Act that BCP completed.

A bomb threat delayed proceedings on the inquiry's last day of testimony. Former public works minister Alfonso Gagliano took the stand again and denied there was ever a covert parallel system of fundraising at the Liberal party's headquarters in Montreal. He said he would have been the first one to clamp down on illicit activity.

Justice Gomery dismisses a motion by Chrétien's lawyer, Peter Doody, that inquiry lawyers should not be allowed to give advice to Gomery because it may influence the final report. "Only one person will write this report and that's me," said Gomery.

Week of May 23

Follow the money trail. It's what the accountants tried to do. A panel of three forensic accountants appeared before Justice John Gomery on the morning of May 24, 2005. With them, a report with the innocuous title, Kroll Lindquist Avey Report.

Kroll Lindquist Avey Report

No smoking gun here. It did find that the total amount the federal government spent on sponsorships and special projects was more than the $250 million reported by the auditor general's report in February 2004. The report says the real amount was closer to $355 million – mainly because its audit covers a longer period. The report suggests the program did not begin in 1997 as Sheila Fraser found, but in 1994 – before the last Quebec referendum.

Of that money, $147 million, or 44 per cent, went to advertising companies for commissions and production costs.

The audit also found that many of the ad executives involved in sponsorships became very rich over this period. Among them:

Claude Boulay (of Groupe Everest) and his wife, Diane Deslauriers, who earned a combined total of $29.8 million in salaries and dividends.
Jean Lafleur and his family, who earned $ 14.1 million.
Luc Lemay, owner of Groupe Polygone: $13.5 million.
Jacques Corriveau earned $5.5 million, mostly from sponsorship subcontracts.
Jean Brault and his wife: $4.9 million in personal earnings.

The Kroll audit found that sponsorship contract recipients donated a total of $801,000 to the Liberal Party of Canada. Add to that $1.8 million in "indirect" or unaccountable donations allegedly made by Brault. The audit was unable to determine how much of that money actually went to the party.

Party officials have confirmed receiving envelopes full of cash but forensic experts say the "actual amount is unknown."

Later in the week, it was the turn of Joe Morselli, a longtime friend and supporter of former public works minister Alfonso Gagliano.

Earlier, Morselli was identified as the "real boss of fundraising" by a former director general of the party's Quebec wing, Daniel Dezainde. Dezainde testified he found out Morselli was organizing undeclared funding activities without his consent or approval.

He said he feared Morselli, who threatened him when he fired Beryl Wajsman, one of Morselli's trusted friends and fundraisers, for alleged unscrupulous funding activities.

Morselli told the inquiry he was angry at Dezainde for firing Wajsman, and called him a "racist." He said he lost his cool, his blood pressure went up. "If I would have had a club, I would have hit him. Did I declare war on him? Probably," he said.

Morselli told the inquiry that said he never solicited cash payments or cheques from Quebec advertising firms but he met them frequently to sell them tickets to fundraising events.

Week of May 16, 2005:

A panel of top bureaucrats appears at the inquiry, telling Justice John Gomery how Ottawa has brought in tighter fiscal controls, more oversight and greater transparency in the awarding of government contracts. All of it, they said, since the revelations of the sponsorship scandal.

Gomery said some public servants who "disregard the law" through mismanagement don't appear to lose their jobs. He told one of the bureaucrats – Stephen Wallace from Treasury Board – he couldn't find any evidence in the Financial Administration Act allowing managers to weed out bad seeds in the bureaucracy.

Wallace said managers do have the power to suspend, demote or fire employees who break the rules. He added more than 800 bureaucrats have been fired in the last six years, including several accused of financial mismanagement. But he admitted that people who should be fired sometimes are not.

Later in the week, John Hayter, CEO of Vickers & Benson – an ad firm that had longstanding Liberal connections – denied he lobbied ministers to ensure his company would not lose its lucrative government contracts if it was sold to a foreign conglomerate.

Hayter said Chuck Guité made up the allegations.

Earlier, Guité told the inquiry that he got assurances from former Public Works minister Alfonso Gagliano that Vickers & Benson would not lose its share of government contracts if it was sold to Havas, a French company. Gagliano allegedly discussed it first with John Manley, then the Industry minister, and Paul Martin, who was Finance minister at the time, Guité had told the inquiry.

Hayter said thats not what happened.

I would never ask anyone to go ask Manley or Martin for that guarantee, he told the inquiry.

Hayter hired Guité as a consultant to make sure the Havas deal would respect the 100 per cent Canadian-owned rule. In March 2000, less than a year after he left his government job as head of the sponsorship program, Guité was paid $14,000 a month to help structure the deal.

Week of May 9, 2005:

More tales of secret payments and cash in envelopes as Benoit Corbeil, once the executive director of the party's Quebec wing, tells the inquiry he distributed $50,000 in secret cash payments to eight party organizers for the 2000 election.

Corbeil says he received the money from Jean Brault, the former head of Groupaction Marketing. Corbeil said those receiving cash donations were Daniel Dezainde, the current press secretary for Minister of the Economic Development Agency of Canada for Quebec Jacques Saada, and Irene Marcheterre, director of communications for Transport Minister Jean Lapierre.

Later, Corbeil told the inquiry that Alfonso Gagliano ran a team of 30 "fake volunteers" during the 2000 election when Gagliano was public works minister. Corbeil said the Liberal party had two election teams, one on the payroll and the other on loan to the party. The people on loan included some whom he had earlier identified as having received money from the $50,000 that Brault gave to him.

Following Corbeil was Marc-Yvan Ct, a Liberal organizer for 21 eastern Qubec ridings. He told the inquiry he received $120,000 cash in three installments from former executive director Michel Bliveau to cover the expenses of candidates in the 1997 election. A huge envelope containing two smaller envelopes of $30,000 in $100 bills, was handed over to him in Montral, Ct testified. He received two more payments, one for $40,000 and the other for $20,000.

Ct's revelations add weight to Bliveau's testimony. A week earlier, Bliveau said he sought between $250,000 and $300,000 in April 1997 from the former head of Pluri Design, Jacques Corriveau, a friend of former prime minister Jean Chrtien. The party was broke and the money was badly needed to organize ridings where there was no incumbent Liberal MP.

Bliveau said Corriveau handed him between $75,000 and $100,000 cash in an envelope. The balance went, he assumes, to Marc-Yvan Ct. Ct's testimony still doesn't account for the full amount Bliveau claims he solicited from Corriveau.

On Wednesday, May 11, 2005, Daniel Dezainde told the inquiry that when he took over from Corbeil as director of the party's Quebec wing, Alfonso Gagliano told him that as director, he would "no longer have to take care of party financing." Dezainde said he found that very strange.

Dezainde said he met with Corbeil to make the transition into his new job. Corbeil introduced him to Joe Morselli, a close friend of Gagliano and told him "This is the real boss." It was also made clear that Morselli would be in charge of financing.

Dezainde testified he was extremely uncomfortable with Morselli, and his role in a "parallel" organization within the party.

He went on to testify that Jacques Corriveau, a long-time Liberal organizer and friend of Jean Chrtien, told him he set up a kickback system to funnel sponsorship money to the party's Quebec wing.

He told the inquiry he remembered Corriveau saying: "In the past, I set up a system of kickbacks with communication agencies and I kept part of it for my expenses and I made the rest available to the party."

Dezainde, who is now press attach for the minister of the Economic Development Agency, said he was speechless and cut off all contact with Corriveau.

Corriveau has repeatedly denied in earlier testimony that he had any involvement in an alleged scheme to funnel taxpayers' dollars to the Liberals through sponsorship contracts.

Wrapping up the week, was former Liberal fundraiser, Beryl Wajsman. He denied Jean Brault's story that he took an envelope stuffed with $5,000 that Brault left on a chair at a Montreal Italian restaurant.

There was no money exchanged, there was no envelope, Wajsman said. "I don't take cash."

Wajsman also described his relationship with Dezainde as strained. Dezainde fired Wajsman ands refused to take him back when Gagliano asked him to.

Wasjsman described Dezainde as a racist who was totally opposed to members from ethnic communities sitting on the Liberal party's finance commission.

Week of May 2, 2005:

Yet another publication ban comes and goes as Chuck Guit – the bureaucrat in charge of the sponsorship program – makes his second appearance before the Gomery inquiry.

When he last appeared – in November 2004 – Guit maintained that in the 1990s, the final say on all matters related to sponsorship contracts rested with Alfonso Gagliano and Jean Pelletier, who was chief of staff to then prime minister Jean Chrtien.

» More on Chuck Guit's testimony

Six months earlier, he said his political masters had some say. When word first leaked that there may have been irregularities in the process back in 2002, Guit said he made all the important sponsorship decisions.

This time, he named more names – from Alfonso Gagliano to Paul Martin and John Manley. Guit suggested that Martin and Manley had assured Gagliano that a Liberal-friendly advertising company would continue to receive government contracts if it were sold to a foreign-owned company, despite rules that said ad firms doing business with the government had to be Canadian owned.

All three men denied the conversation ever took place.

The program was "politically driven" from the start to reward Liberal-friendly ad firms, which handled the party's Quebec campaign, Guit told the inquiry.

Guit said rules were loosely defined to give flexibility to ministers to pick the firms they wanted to hire. And Pelletier and Gagliano made extensive use of them, he said.

The system "was 150 per cent politically driven," Guit told the inquiry.

Guit's dust had barely settled when another witness – long-time Liberal organizer, Michel Bliveau – admitted he solicited between $250,000 and $300,000 in cash from the former head of Pluri Design, Jacques Corriveau, to help the party during the 1997 election campaign. The cash, he said, was stuffed in envelopes.

Béliveau said the transactions did not appear on the books and only three people knew about them: himself, Jacques Corriveau, a good friend of former prime minister Jean Chrétien, and Benôit Corbeil, an official in the party's Montral offices.

Béliveau was Chrétien's organizer in his riding of St-Maurice. He told the inquiry that the former prime minister knew nothing about the cash payments.

He said he took full responsibility for this "irregularity."

"I made an error in judgment," he said. "I assumed this money had been given voluntarily."

Week of April 25, 2005:

Another publication ban, another partial lifting of that ban. Paul Coffin, head of Coffin Communications told the inquiry how he sent in phoney invoices to Public Works Canada, billing the government for sponsorship contracts – even when little or no work was done.

» More on Paul Coffin's testimony

It wasn't his idea, he told the inquiry. After being prodded by Justice John Gomery, Coffin said Chuck Guité, the man who ran the program, told him to send in the phoney invoices.

In 1999-2000, Coffin earned $75,600 in commissions and $571,000 in production fees from sponsorship contracts. The federal government was Coffin’s biggest customer by far.

Coffin is charged with 18 counts of fraud on 32 sponsorship-related contracts worth almost $2 million. His trial starts in early June in Montreal.

Earlier in the week, the inquiry heard how Groupe Everest made an easy commission of $68,000 on a $390,000 sponsorship deal. The testimony came from a former executive director for Everest Estrie, Vincent Cloutier.

Cloutier said he received a call in the spring of 1999 from his boss, Claude Boulay, head of Groupe Everest, telling him a federal sponsorship contract was on its way and all the details were already settled.

He told me all I had to do was send in the order and signIts not everyday that you make $68,000 on a phone call, he told the inquiry in his brief appearance.

Groupe Everest charged $68,000 in commission fees for sending an order form and passing along two cheques to Artellier to produce items bearing the Canada wordmark. Cloutier admitted no other work was done.

In this case, the contract was granted to Artellier, Benoit Renauds firm. Benoit Renaud is Alain Renauds brother. Alain Renaud was a well-connected lobbyist hired by Groupaction to secure sponsorship contracts.

Everest Estrie is a division of Groupe Everest based in Sherbrooke.

This is a week in which the inquiry will hear from Paul Coffin, ad executive from Coffin Communications, and Chuck Guit, the former Public Works bureaucrat in charge of the sponsorship program. A publication ban has been imposed on their testimony.

Week of April 18, 2005:

Claude Boulay, the head of Groupe Everest and Media IDA Vision, the firm retained by Ottawa in 1998 to co-ordinate its advertising purchases, was part of Paul Martin's 1993 election campaign team in his Montreal riding, the inquiry heard this week.

But what really sent the prime minister's minority government into a tailspin were Benot Corbeil's troubling allegations. A former executive director of the Liberal party's Quebec wing, Corbeil confirmed a former ad executive's testimony, that he made illegal payoffs to the Liberal Party of Canada in the 2000 federal election campaign.

The party was broke, Corbeil told Radio-Canada and the Globe and Mail in interviews, and it desperately needed funds to fight a tough election campaign.

Corbeil recalled that he got in touch with high-ranking party officials in Ottawa who told him he would get $100,000 from Jean Brault, head of Groupaction. The firm got millions of dollars in lucrative sponsorship contracts. Corbeil said he accepted the money without giving it much thought. The money, which was never declared as an election expense, was used to pay "volunteers." He promised to reveal more when he testifies before the sponsorship inquiry in early May.

Corbeil also said that several election workers, lawyers and accountants were rewarded for their efforts. Some Liberal lawyers were made judges, he said.

Corbeil's allegations came after new revelations put Martin in the spotlight.

The inquiry also heard this week that Diane Deslauriers, Boulay's wife and a prominent fundraiser, and their children also worked for Martin in his 1993 re-election campaign. Boulay also helped in the 1997 Liberal national campaign.

A well-connected party member who donated at least $174,000 to the federal Liberals, Boulay was a good friend of former minister Denis Coderre, his wife said. His firm, Groupe Everest, got a lot of sponsorship contracts and did work for the Finance Department when Martin was finance minister.

When he was in the witness box, however, Boulay minimized his ties to Martin. After 1993, he said he never had "one-on-one" meetings with Martin and only saw him at party events.

Boulay and Deslauriers were apparently a winning combination. Deslauriers testified that she managed sponsorship projects for Everest Commandites, Groupe Everest's division in charge of sponsorship projects.

For this, she charged her husband's company $783,321 from 1996 to 2002. She took a cut of 3 per cent on the 12 per cent commission fees her husband charged the federal government on sponsorship contracts. That amounted to an annual salary of about $150,000 a year, Deslauriers testified.

Dubbed the "queen of ticket sellers" by Transport Minister Jean Lapierre, Deslauriers had a working relationship with Martin during the 1993 election campaign, she testified. As part of the communications team that delivered his key messages and speeches, she saw him every day of the campaign. She also organized a golf tournament for Martin in 1994.

She testified that she wanted to surprise her husband by inviting Martin to her husband's 50th birthday party in 2001. Martin declined the invitation in a friendly "Dear Claude" letter in which he praised Deslauriers' "grace and beauty." Denis Coderre did attend.

Deslauriers said Martin went to a victory brunch at her house after the 1993 election campaign, along with a dozen election workers. She never had a one-on-one meeting with Martin, she testified.

Martin told reporters Boulay was an acquaintance.

The federal government is trying to recoup almost $1 million from Groupe Everest.

Week of April 11, 2005:

A week of he said, he said as more of the key figures in the sponsorship scandal testify.

First up is Alain Renaud, who offers a different version of some events than Jean Brault – his former employer at Groupaction. Renaud tells the inquiry he never funnelled cash from Groupaction contracts to the Liberal party.

» More on Alain Renaud's testimony

He told the inquiry he did his job as a lobbyist and secured government contracts for Groupaction. He also said the prime minister's office was involved in the sponsorship contract process. Renaud described a telephone conversation between former prime minister Jean Chrétien and Jacques Corriveau that involved sponsorships.

Later in the week, Luc Lemay, whose companies were awarded $36 million in sponsorship contracts, told the inquiry he paid Corriveau nearly $7 million in commissions over the years. Lemay said Corriveau did little or no work for the money. Lemay said Corriveau's invoices charged for alleged work "organizing space in Olympic stadiums" for fairs in Rimouski, Trois-Rivieres, Chicoutimi, and Sherbrooke – cities that don't have Olympic stadiums.

The week closes with Jacques Corriveau, who prefaces his testimony with an apology. He's been battling poor health and is on medication. His long-term memory is much better than his short-term memory these days.

» More on Jacques Corriveau's testimony

One thing he does remember, though, is that he and former prime minister Jean Chrétien never discussed sponsorship deals. Yes, he was a friend, but not an intimate friend.

Corriveau also denies ever asking anyone to divert sponsorship commissions to the Liberal party to pay campaign expenses.

As for the hunting and fishing shows at the Olympic stadiums in Rimouski, Trois Rivieres and Sherbrooke? It was a misprint, Corriveau said. An invoice for a hunting and fishing show at Montreal's Olympic Stadium was used as a template, but the phrase "Olympic Stadium" was not replaced with the name of the local venue.

Week of April 4, 2005:

Justice John Gomery lifts the publication on most of Jean Brault's testimony. The former head of Montreal ad company, Groupaction, told the Gomery inquiry that he was repeatedly asked to give cash donations to the Liberal party and put election workers on his payroll in exchange for federal sponsorship contracts. He testified that taxpayers' dollars were funneled to the Liberal Party's Quebec wing to help pay campaign costs in the 1993, 1997 and 2000 federal elections.

» More on Jean Brault's testimony

The paper trail suggests Brault made $1.1 million in contributions to the Liberal party that never appeared on the books – they were covered up by fake invoices. Brault also said he paid 10 per cent of the 12-per-cent commissions he collected on sponsorship contract, to the Liberal Party's Quebec wing.

Brault also said he felt pressured to keep a key Liberal on staff. Alain Renaud had left Groupaction in September 2000, but wanted to return six months later. At first Brault refused, but he says he received a phone call from an aide to former Public Works Minister Alfonso Gagliano, who hinted Groupaction's contract with Via Rail might not be renewed if Reneau was not taken back.

Week of March 28, 2005:

Justice John Gomery orders a publication ban on the testimony of former Groupaction president, Jean Brault testimony and that of two other key witnesses, Chuck Guit and Paul Coffin. Lawyers for these three key witnesses have argued that public release of their testimony would taint potential jurors in these men's criminal trials, scheduled to begin in early May 2005. The ban will last until the jury retires to consider a verdict. Media will be able to ask Justice Gomery every day to overturn the ban on the testimony of the day.

An ad executive testifies that he never participated in any scheme to get federal government contracts. The former head of Gosselin Communications stratgiques, Gilles-Andr Gosselin, says he was pressured to donate to the federal Liberals in exchange for sponsorship contracts. But he made it clear he wasn't going to play that game.

A former vice-president at the same company, Wendy Cumming, says entertaining public officials linked to the federal sponsorship program at Ottawa's Corel Centre, was just part of doing business. Cumming says the firm hosted social events for Chuck Guit, the man who ran the sponsorship program, his family, ministers, and public officials. She described the outings as relationship building and denies there was a conflict of interest.

Week of March 14, 2005:

A former ad executive testified he blindly signed paperwork that led to huge commissions for his boss's firm.

Former Lafleur Communication vice-president Stephane Guertin said he doesn't remember finalizing a deal related to a television series on hockey great Maurice Richard. That series brought in a commission of $112,500 for the advertising company.

A 2004 auditor general's report found Lafleur Communication took the commission for simply delivering a $750,000 cheque to Via Rail in early 2000 related to the rail carrier's sponsorship of the series.

Guertin was confronted with his signature on documents that closed the deal. But he couldn't remember signing the paperwork and said he didn't remember working on the project.

A former Montreal advertising executive loses his cool on the stand when asked he if profited from insider trading.

Gilles-Andre Gosselin, who ran Gosselin Communications Strategiques Inc. and Gosselin Relations Publicque Inc. until they were bought out by Groupaction, is questioned about meeting an official with Ottawa's tulip festival in April 1997. The meeting took place before he was awarded a federal contract to promote the event.

Gosselin, who has a history of heart problems, grows irritated, says he is exhausted and having trouble concentrating, and he ends his testimony abruptly. He is not scheduled to take the stand until later in March 2005.

A former Quebec advertising executive tells the inquiry he masked payments to the Liberals by funnelling five cheques worth $57,000 to Liberal party organizers through an employee's consulting company.

Bernard Thiboutot worked for Groupaction advertising executive Jean Brault, who made millions through the sponsorship program.

Thiboutot, who ran his own agency, Commando Communication Marketing, says he sent the cheques through his company and then Brault paid him back.

Radio-Canada says the five people who received the cheques – Michel Monette, Jacques Roy, Guy Bisson, Franco Iacono and Louis Pichette – were all Liberal party organizers. Iacono was a lobbyist who worked for then Public Works Minister Alfonso Gagliano.

Brault faces criminal charges related to the sponsorship scandal and has been named in a $41-million government lawsuit.

Week of March 7, 2005:

The federal government launched a $39-million lawsuit against four Quebec advertising firms involved in the sponsorship program.

The lawsuit was filed in Quebec Superior Court and will name Lafleur Communications, Groupaction, Everest and Polygone.

The civil suits have nothing to do with the criminal fraud allegations launched against Chuck Guit, the former federal bureaucrat in charge of the sponsorship program, and advertising executives Jean Brault, Paul Coffin and Jacques Paradis.

The son of Lafleur Communication Marketing head Jean Lafleur testified at the inquiry that one of the bills submitted by his father to the government was for work by an employee who never worked for his father.

Eric Lafleur said the employee, Michel Octeau, worked for him and not his father.

"It's a problem," said Eric Lafleur. "I don't consider it to be appropriate. I don't remember seeing Mr. Octeau working on sponsorship projects."

When asked who was in charge of billing matters at Lafleur Communication, Eric replied: "Jean Lafleur."

Jean Lafleur told the inquiry about a 1998 contract to place the word "Canada" and the Canadian flag on Via Rail cars.

Lafleur turned the job over to his creative director, Pierre Davidson, billing the federal Department of Public Works more than $140,000 to pay Davidson for work done as a sub-contractor.

Then came another bill for 209 hours of work that Davidson had done on the same job.

Lafleur had difficulty explaining why there were the two bills for the same work.

Week of Feb. 28, 2005:

Documents tabled at the inquiry in Montreal show that Lafleur Communication Marketing earned 78 per cent of its revenue between 1994 and 2001 from the federal Public Works Department and Crown corporations.

During that same time period, company head Jean Lafleur earned more than $9.3 million, his salary rising from just over $100,000 to $2.5 million, and members of his family earned a total of $2.8 million. "This money doesn't just include salaries. It also includes the business profits paid, in my name, as salary," Lafleur says.

A Liberal party audit of its Quebec wing is presented showing that Lafleur, his company and his staff donated nearly $100,000 to the party from 1996 to 2003.

Lafleur admits that he socialized with prominent Liberals, including Chrtien cabinet ministers Martin Cauchon and Alfonso Gagliano, but denies discussing the sponsorship program with them or getting political direction from the government. Lafleur says he received direction of sponsorship contracts from Chuck Guité, the bureaucrat who ran the program.

When questioned about specific sponsorship contracts, Lafleur says he can't remember the details of those contracts. He says "I don't remember" at least 22 times in response to these questions. Justice Gomery becomes frustrated with Lafleur's failing memory and imprecise answers. "If you please, stop using the word 'probably,'" he says.

Lafleur says he cannot remember the details without referring to specific documents that he lost access to when he sold his company to Groupaction in 2001.

Alex Himelfarb, the clerk of the Privy Council, testifies that problems in the sponsorship program were known as early as 2002. Himelfarb says then Prime Minister Chrétien knew about the general problems, but preferred not to be briefed on the details.

Week of Feb. 7, 2005:

The week that everyone was waiting for: former prime minister Jean Chrétien tells his side of the story. Two days later, he was followed by Prime Minister Paul Martin, marking the first time in 130 years that a sitting prime minister testified before a public inquiry. Martin looked relaxed and confident.

Martin said he only found out that sponsorships were being funded through the unity reserve fund after the year 2000.

» More on Paul Martin's testimony at the inquiry

He said former prime minister Jean Chrétien became preoccupied with increasing the federal government's visibility in Quebec after the federalists' slim referendum victory in Quebec.

Two days earlier, a feisty Jean Chrétien had remarked that he and Martin had always "agreed to set aside $50 million a year for expenditures related to national unity."

» More on Jean Chrétien's testimony at the inquiry

Martin said he was not consulted on sponsorship events by Jean Pelletier, Chrétien's chief of staff, or the former public works minister, Alfonso Gagliano.

Chrétien had begun his testimony by reading a prepared statement for half an hour, in which he said he was ready to go to great lengths to avert another referendum in Quebec after the close referendum results in 1995.

He said the sponsorship program was just one part of a strategy to raise Canada's profile in Quebec.

Chrétien said he "regrets any mistakes that might have been made in the course of this program." He said mistakes that were made in good faith can be excused. Those that were made in bad faith, he said, are inexcusable.

Capping off the day, Chrétien takes a dig at Mr. Justice John Gomery, who – in media interviews – had called the former prime minister's decision to hand out golf balls with his initials on them as "small town cheap."

Chrétien produced several golf balls from his briefcase, which all bore the signatures of influential people from small towns, including three American presidents. The last ball was from the law firm Ogilvie Renault, which counts among its staff former prime minister Brian Mulroney, Gomery Inquiry lead counsel Bernard Roy as well as Gomery's daughter.

The week began with the testimony of Chrétien's former chief of staff.

"My conscience is clear," Jean Pelletier tells the inquiry. He says Chrétien made the program "a priority." The goal was to give the federal government "visibility" in Quebec after the close results of the 1995 referendum.

Forthright and more relaxed, Pelletier says he gave "political advice" and made recommendations on the selection of sponsorship events in Quebec. But he never gave direction on the selection of advertising agencies.

"Never has the prime minister's office been involved in one way or another in the management of sponsorships. I will make it clear right now: we never touched it. If the funds were spent before they were formally authorized, I wouldn't have known about that."

Pelletier adds that Chrtien is fully prepared to defend the establishment of the sponsorship program.

The first phase of public hearings in Ottawa ends. The inquiry moves to Montreal for the second phase beginning Feb. 28.

Week of Jan. 31, 2005:

David W. Scott, lawyer for former prime minister Jean Chrtien, says Gomery should recuse himself because he has shown "a reasonable apprehension of bias" in his comments to the media in December. In newspaper interviews, Gomery described Chuck Guit, as a "charming scamp" who had his department "mesmerized."

Former public works minister Alfonso Gagliano agrees with Chrtien's arguments, but lawyers for the auditor general's office, the federal government, the Conservative Party of Canada and the Bloc Qubcois argue against the judge's removal.

"If you recuse yourself, we start over and that would be a colossal waste of taxpayer money," says lawyer Richard Dearden, representing the auditor general.

Gomery acknowledges he made "ill-advised and inappropriate" comments to the media, but adds there's a difference between "committing errors and being biased." He refuses to step down as head of the inquiry.

Former public works minister Alfonso Gagliano says he never approved any sponsorship projects, and only made "suggestions" about events to sponsor. Gagliano's statement contradicts Chuck Guité's testimony. Guité said Gagliano made the final decisions on projects. "I know what Mr. Guité said and I totally disagree," says Gagliano.

Gagliano also denies he met weekly with Guité to discuss sponsorship of events, saying he had 10 meetings with him a year and, at most, three or four discussions with him on sponsorship issues.

In the second day of his testimony, Gagliano says he was unaware that Pluridesign, the company that provided publicity materials for Liberal election campaigns in 1997, went on to earn millions under the sponsorship program.

Pluridesign supplied publicity materials for the campaign, but six months after the election, the Liberal party still hadn't paid for the work. That same month Gagliano was called to a meeting with Jacques Corriveau, who owned Pluridesign and Jean Pelletier, Jean Chrétien's chief of staff. Gagliano testifies that they did not discuss federal sponsorship at that time.

In January 1999, Chuck Guité, head of the sponsorship program, sent Gagliano a list of seven events with a note reading, "I'm certain we'll have pressure to participate." The sponsorship for the events totalled nearly $4 million and Pluridesign was the subcontractor for the ad companies given the contracts. "This is the first time I hear that they were subcontractors," Gagliano says.

Bernard Roy, lead counsel for the inquiry, goes through a list of projects that Gagliano apparently approved. Gagliano insists he only gave suggestions. A computer log is presented showing Gagliano agreeing to give $10,000 to a ski marathon in the riding of former minister Denis Coderre. Gagliano says, "My arguments were convincing," but "the final decision was always taken by the executive director" of the program, Guité.

John Gomery interrupts Gagliano, saying, "So, it's not a suggestion, it's an argument. This time you've succeeded in convincing Chuck, so it's no longer a suggestion."

In his third day of testimony, Gagliano says he never approved a $1.5-million sponsorship to fund a giant screen for the science centre at the Old Port of Montreal.

However, the Old Port of Montreal Corporation produced meeting minutes stating that executives met with Gagliano twice in 2000 and that the chair, André Lamarre, was confident Gagliano had committed funds in exchange for government "visibility."

Gagliano insists he made no such decision and that he referred the executives at the Old Port to Pierre Tremblay, the head of the sponsorship program in his department.

"We've provided documents to help you jog your memory," says Gomery, "and it would seem that for $1.5 million, it might be possible to remember."

Gagliano also says he didn't know that Lafleur Communication Marketing and Media I.D.A. Vision were paid $225,000 to transfer the $1.5 million to the Old Port of Montreal, as stated in Auditor General Sheila Fraser's report.

Wrapping up four days of testimony, Gagliano says the sponsorship scandal has “ruined his life”. He says he can’t find a job and the ordeal has been hard on his family.

Closing out the week was Jean Carle, a close aide to Jean Chrétien and a former vice president at the Business Development Bank. He confirmed he agreed to conceal details about a $125,000 sponsorship deal.

Gomery compared the arrangement to money laundering:

Gomery: “If this was about drugs, it would be called money laundering. Don’t you agree? Am I mistaken?”

Carle : “No, you’re not mistaken.”

Carle testifies that the now-deceased Pierre Tremblay asked for his help because he didn’t want a $125,000 sponsorship deal «to show up on his books.» At the time, Tremblay was running the sponsorship program within Public Works.

Week of Jan. 24, 2005:

Stéphane Dion, who was appointed intergovernmental affairs minister after the 1995 referendum, tells the inquiry he knew nothing about the program and questioned its relevance to sway voters in Quebec.

Jean-Marc Bard, former chief-of-staff to Public Works Minister Alfonso Gagliano, says the sponsorship program was well-known in political circles. He says Gagliano kept close tabs on the program as a tool to fight separatism in the aftermath of the 1995 referendum. Bard says he learned about the program from Gagliano and the bureaucrats who ran the program, Pierre Tremblay and Chuck Guité.

The tug-of-war between the Gomery commission inquiry into the sponsorship scandal and the Paul Martin government intensifies.

Gomery indicates that he may turn to the Federal Court to get access to cabinet documents on the sponsorship program. In a letter to Alex Himelfarb, clerk of the Privy Council, the head of the inquiry says he is not satisfied that the government has provided all relevant cabinet documents.

In an earlier letter, Himelfarb released some portions of cabinet confidences, but he refused to disclose some edited portions, saying this information was not relevant to the mandate of the commission.

Gomery says he should have the last word about what is relevant as he is the "ultimate and independent arbiter" in this matter. Gomery renewed his request for access to cabinet documents. He says he will then make a "final decision as to whether or not the public interest would be better served by having the Federal Court make a decision on this issue."

Intergovernmental Affairs Minister Lucienne Robillard says she was surprised to learn that in 1995 Jean Chrétien's director of operations, Jean Carle, was put in charge of Treasury Board policies on communication, public opinion polls and advertising. Robillard says it's up to the deputy minister and the minister, not "political staff," to make sure advertising policies are followed.

Former justice minister Martin Cauchon testifies that he and Jean Lafleur, head of Lafleur Communication Marketing, shared a "passion" for salmon fishing and fished together a few times. Cauchon says it would have been easy for Lafleur to push for sponsorship contracts during those trips, but he never did.

Week of Jan. 17, 2005:

Bernard Roy, lead counsel for the inquiry, charges that the former head of Canada Post, André Ouellet, rigged a contract tendering process to favour three Liberal-friendly ad firms.

When ad agencies were invited to bid on a contract for Canada Post, Ouellet insisted that the firms show their ability to arrange a stamp launch, Roy says. Roy suggests that the change would favour three firms with ties to the Liberals that had previously organized stamp launches.

Alain Guilbert, vice-president of communications at Canada Post, testifies that Ouellet did make the change, but denied the tendering process was biased.

Ouellet testifies that although court documents show that Lafleur Communication received $275,000 in sponsorship money to organize a stamp launch in 1997, Canada Post never received any of the money.

Ouellet also denies charges that he favoured Tremblay-Guittet Communications, an ad firm with close Liberal ties that was awarded over $2 million in contracts over seven years.

Ouellet says Tremblay is a very professional company that earned all the money it charged.

Ouellet is a lifelong friend of Michelle Tremblay, head of Tremblay-Guittet, and was also a friend of Jean Lafleur of Lafleur Communication, whom he met in 1996 at the Montreal Forum.

Ouellet also says Auditor General Sheila Fraser was too critical of Canada Post in her report, saying the corporation's funding of a TV series on Maurice Richard gave it "exceptional visibility."

David Dingwall, the former minister of public works and current CEO of the Royal Canadian Mint, admits he crossed the line in 1995 when he insisted to his deputy minister, Ran Quail, that Chuck Guité be promoted to review all advertising and communications activities of the government.

Dingwall testifies that Guité came highly recommended. "He was universally acclaimed," he says.

Dingwall's chief-of-staff at the time, Warren Kinsella, wrote a letter at Dingwall's request to Quail asking that Guité head the review. In hindsight, Dingwall acknowledges that ministers shouldn't interfere in the hiring process of public servants.

Week of Jan. 10, 2005:

François Beaudoin, former head of the Business Development Bank of Canada, tells the inquiry that Jean Carle, an aide to Jean Chrétien, and Jean Lafleur, head of Lafleur Communications, pressured him to buy a box at Montreal's Molson Centre in 1999.

Beaudoin says he was reluctant to buy the box seats with public funds. He says Carle and Lafleur suggested using "dry-cleaning methods" to cover up the purchase: Lafleur Communications would buy the box, charge the BDC consultant fees and nothing would appear on the bank's books.

Beaudoin tells the inquiry he refused, but that a box at the Molson Centre was bought using the "dry-cleaning" method after he resigned in 1999.

He also testifies that Jean Pelletier, Chrétien's chief-of-staff, strongly recommended that Beaudoin hire Carle at the BDC.

» More: 2004 testimony

^TOP

MENU

MAIN PAGE TIMELINE OF RECENT EVENTS
GOMERY REPORT: PHASE TWORESTORING ACCOUNTABILITY HIGHLIGHTS FAQs FULL REPORT REACTION QUOTES
GOMERY REPORT: PHASE ONEFULL REPORT MAJOR FINDINGS HIGHLIGHTS WHO KNEW WHAT REACTION KEY QUOTES ANALYSIS: Liberals' worst fears ANALYSIS: How did it go so wrong?MONTREAL REACTS: Tracey Madigan's Online Diary
GALLERIES:Who's who photo gallery Cartoon gallery: Phase One report Cartoon gallery: Auditor general's report
GOMERY INQUIRY:Gomery: The players Gomery: Key Companies Gomery by the numbers A summary of the testimony Testimony 2004 Follow the money Kroll report (pdf)
PLEA TO THE NATION:Paul Martin's televised address Stephen Harper's response Jack Layton's response

Gilles Duceppe's response (RealVideo runs 5:59)
KEY WITNESSES:
CHUCK GUITÉ'Not all my fault'From bureaucrat to lobbyist 'No phoney invoices'
PAUL COFFIN'Phoney invoices'
JACQUES CORRIVEAU:At the centre of the storm
ALAIN RENAUD:Lobbyist extraordinaire
JEAN BRAULT:Cash for contracts Paper trail
PAUL MARTIN:Not in the sponsorship loop
JEAN CHRETIEN:Economics and golf balls Editorial reviews
VIEWPOINT:Rex Murphy: Sell the Peace Tower to Wal-Mart?Ira Basen: Watergate, the sponsorship scandal and the press
HISTORY:Ad firms and liberals In their own words
RELATED:The top 10 Canadian government scandals Public inquiries Auditor General's report 2004 Jean Chrétien Paul Martin

EXTERNAL LINKS:

CBC does not endorse and is not responsible for the content of external sites. Links will open in new window.

Gomery Inquiry into the Sponsorship Program

Public Works internal audit on sponsorship program, August 2000 [PDF file]

MORE:

Print this page

Send a comment

Indepth Index