The sponsorship scandal is an ongoing scandal that has affected the government of Canada, and particularly the ruling Liberal Party of Canada for a number of years, but rose to especially great prominence in 2004. The scandal involved the misuse and misdirection of funds that were intended to go to government advertising in Quebec over the preceding decade. The funds were apparently allocated to advertising firms that were allies of the Quebec branch of the federal Liberal Party, and evidence suggests that in some cases few or no services were rendered in return.

While information on the misuse of funds had been known for a few years, a fuller account of the situation was made public in early February 2004 by Auditor General Sheila Fraser. In her report, Fraser revealed that up to $100 million of the $250 million spent on the sponsorship program from 1996 to 2001 had been paid for little or no work. It is interesting to note that Fraser's report was originally scheduled to be released in November 2003, when Jean Chrétien was Prime Minister. However, parliament prorogued and the report could not be tabled until parliament reconvened in 2004. Late in 2003 Chrétien retired and Paul Martin was chosen as the new leader of the Liberal Party, thus becoming Prime Minister. The fall-out from the scandal now landed squarely in Martin's lap.

The sponsorship program was originally conceived in 1996 and was a response to Quebec's nearly successful secession referendum in 1995. Funds were allocated to promote Canada through cultural and sporting events in Quebec, where separatist sentiment was still strong.

Allegations of misuse of funds and RCMP investigations began in 1999, but little was known of what had occurred and the public showed little interest in the affair. In 2002 Alfonso Gagliano, the minister supervising the department responsible, was removed from cabinet and sent as Denmark.

The scandal reemerged into the public spotlight in February 2004 when the Auditor General's investigation of the affair was revealed. She blamed not only Public Works, but powerful Crown Corporations including VIA Rail and Canada Post. Given the scandal's breadth, the report also raised questions as to what involvement, if any, the Prime Minister's Office had in the misuse of funds. The report found that over $100 million (Canadian) was misused.

New Prime Minister Paul Martin responded to the report by immediately firing Alfonso Gagliano from his position of ambassador to Denmark and launching a public inquiry into the matter. Martin, who was Finance Minister from 1993 to 2002, has insisted the scandal was orchestrated by a very select group of individuals and that he had no knowledge of their actions. In a further attempt to distance himself from the scandal, he blamed the problems on the previous administration of Jean Chrétien, under which the spending occurred. A number of the people most closely embroiled in the scandal are Chrétien loyalists, such as CEO of Canada Post André Ouellet and head of VIA Rail Jean Pelletier. Martin also put his job on the line by stating, "Anybody who is found to have known that people are kiting cheques, that people are falsifying invoices -- me or anybody else -- should resign." [1] (http://www.theglobeandmail.com/servlet/story/LAC.20040216.MARTIN16/TPStory) Opposition critics have alleged that Martin could not have been unaware of the activities, as he was Finance Minister, a senior Quebec cabinet minister and a member of the Treasury Board during the time of the scandal.

In the weeks following the Auditor General's report, it became clear that the upcoming election would be affected in some way. Some argued that voters should know the outcome of the enquiry before going to the polls, in order to have an informed decision; others believed the Martin government should not continue for long without seeking a mandate. In the end, the election was called for June 28, 2004. The result of this election was a minority government.

Timeline

• February 10, 2004 - Auditor General Sheila Fraser's report reveals up to $100 million of the $250 million sponsorship program was awarded to Liberal-friendly advertising firms and Crown corporations for little or no work.
• Prime Minister Paul Martin orders a Commission of Inquiry into the Sponsorship Program and Advertising Activities. The Commission of Inquiry will be headed by Mr. Justice John H. Gomery. Martin fires Denmark.
• February 24 - Martin suspends Business Development Bank of Canada president Michel Vennat, VIA Rail president Marc LeFrançois and Canada Post president André Ouellet giving each an ultimatum to defend themselves or face further disciplinary action.
• February 27 - Past Olympic gold medallist Myriam Bédard reveals she was pushed from her job at VIA Rail for questioning billing practices. VIA Rail chairman Jean Pelletier publicly belittles Bédard and calls her pitiful.
• March 1 - Pelletier is fired.
• March 3 - Jean Carle, a close confidant of Chretien and his former director of operations, surfaces in close connection to the sponsorship initiative.
• March 5 - LeFrançois is fired.
• March 12 - Vennat is fired.
• March 13 - An unidentified whistle-blower reveals that high-ranking government officials, including Jean Pelletier, Alfonso Gagliano, Don Boudria, Denis Coderre, and Marc LeFrançois, had frequent confidential conversations with Pierre Tremblay, head of the Communications Coordination Services Branch of Public Works from 1999 until 2001. The claim is the first direct link between the scandal and the Prime Minister's Office. Coderre and LeFrançois denied the allegation. [2] (http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article-Type1&c=Article&cid=1079133610649&call-pageid=968332188492&col=968793972154)
• March 18 - Gagliano testifies in front of the Public Accounts Committee, a committee of the House of Commons chaired by a member from the Official Opposition. Gagliano denies any involvement by himself or any other politician; he points blame at bureaucrat Chuck Guité.
• March 24 - Myriam Bédard testifies at the Public Accounts Committee. In addition to repeating her earlier assertions, she also claims that Formula One driver Jacques Villeneuve was given a secret $12 million payoff to wear a Canadian flag logo on his racing suit (however, Villeneuve sharply denies this allegation, calling it "ludicrous"). Bédard also testifies that she once heard that Groupaction was involved in drug trafficking.
• April 2 - Previously confidential testimony from a 2002 inquiry into suspicious Groupaction contracts is made public. In it, Guité admits to having bent the rules in his handling of the advertising contracts but defends his actions as excusable given the circumstances, saying, "We were basically at war trying to save the country... When you're at war, you drop the book and the rules and you don't give your plan to the opposition." [3] (http://www.globeandmail.com/servlet/story/RTGAM.20040402.wxguite0403/BNStory/Front/)
• April 22 - Guité testifies. He claims Auditor-General Fraser is misguided in delivering the report, as it distorts what actually went on; he claims the office of then-Finance Minister Paul Martin lobbied for input in the choice of firms given contracts; and he denies that any political interference occurred, because his bureaucratic office made all final decisions. Opposition MPs decry his comments as "nonsense" and claim he is covering up for the government. [4] (http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1082671811880&call_pageid=968332188492&col=968793972154) The French language press gives a very different account of Guité's testimony; a La Presse headline states that Guité is involving the Cabinet office of Paul Martin. [5] (http://www.cyberpresse.ca/politique/article/1,153,1924,042004,655910.shtml)
• May 6 - An official announces the inquiry deadline is set for December 2005
• May 10 - Jean Brault, president of Groupaction, and Charles Guité arrested by the RCMP for fraud in connection with the sponsorship scandal.
• May 23 - Paul Martin requests that the Governor-General dissolve Parliament and call a federal election.
• September - First public hearings of the Commission of Inquiry into the Sponsorship Program and Advertising Activities begin in Ottawa. They will move to Montreal in February 2005 and conclude in the Spring.

See also

• Canadian political scandals
• Politics of Canada

External link

• CBC.ca Indepth: Federal sponsorship scandal (http://www.cbc.ca/news/background/groupaction/)
• 2003 Reports of the Auditor General of Canada (http://www.oag-bvg.gc.ca/domino/reports.nsf/html/03menu_e.html)
• Commission of Inquiry into the Sponsorship Program and Advertising Activities (http://www.gomery.ca/en/)