Sponsorship scandal shakes Canadian election result

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[Montreal] Canadians decided it's better to go with the devil you know than the devil you don't last month, electing to a minority government the Liberal Party that's been rocked with an unprecedented sponsorship scandal.

Despite his emphasis on the need for better health care and other issues, Prime Minister Paul Martin was dogged throughout the election campaign with questions and complaints about $74 million of a $185 million sponsorship fund funneled to government-friendly advertising agencies for minimal or no work.

His payback was a loss of 33 seats, plunging Mr. Martin into governing with minority status, holding only 135 of the needed 155 for majority.

Chretien's gift

The sponsorship irregularities happened under former Prime Minister Jean Chretien, who was known to keep his rival Mr. Martin, then Finance Minister, out of the picture. Nevertheless, Mr. Martin had to shoulder the blame, whether or not he knew of the irregularities being handled under the Public Works Ministry.

The sponsorship program had originally been put in place to make the Canadian government more visible in Quebec following the 1995 referendum that kept the province in Canada. Through it, the Canadian flag was seen at many cultural and sporting events, and checks changed hands for such things as sponsorship of a film on hockey great Maurice Richard. Several Quebec agencies are alleged to have kept hundreds of thousands of dollars as middlemen for merely handing over a check or changing a couple of words in an advertisement.

The scandal became a millstone around Mr. Martin's neck shortly after he took office in early 2004 when Auditor General Sheila Fraser dropped a bombshell report about the missing funds and various other irregularities throughout the government's communications sector.

Since then, the fallout has included criminal charges brought by the Royal Canadian Mounted Police against the heads of two advertising agencies (Communications Coffin and Groupaction, both Montreal) as well as the retired civil servant who managed Canada's sponsorship program between 1997 and 1999. The Canadian Ambassador to Denmark who previously headed the Public Works Ministry was fired. The heads of VIA Rail and the Business Development Bank of Canada, both crown corporations (created by Parliament), are suing the government for illegal dismissal; the head of Canada Post was suspended. Also implicated have been numerous companies and groups from the RCMP itself to the Port of Montreal.

revised rules

In addition, the sponsorship program was canceled and the rules for the awarding of ad campaigns have now been revised, the latter essentially ignoring almost all recommendations of the Institute of Canadian Advertising.

Whistle-blowers appearing before a Public Accounts Committee on the topic included Olympic Gold Medalist Myriam Bedard and former employees of agencies implicated. But the prime minister closed off hearings prior to the federal election campaign, drawing more negative press, noisy opposition and angry Canadians, many of whom stayed away from the polls or voted for one of the opposition parties.

A formal judicial inquiry will resume public hearings in September; a formal report is due by December 2005. In the meantime, the RCMP is continuing its criminal investigation and a team of accountants is trying to track the missing millions.

In the prime minister's own province of Quebec, many voters turned their vote to the Bloc Quebecois, fueling that party's leader to again make noises about sovereignty for the province and more referendums on separation-the very thing that the sponsorship program was trying to avoid.


Canada's ad scandal

1997-2001: Agencies and government officials allegedly misspend $76 million of $190 million sponsorship funds

Sept. 2003: RCMP charges Paul Coffin, president of Communication Coffin, Montreal, with fraud

Feb. 2004: Auditor general issues damning report on sponsorship program

May 2004: Adman Jean Brault, president of Groupaction, Montreal, and Chuck Guite, the government official who managed program, are arrested

June 2004: Paul Martin wins election but loses seats as scandal dogs campaign

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