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Martin says he was out of 
sponsorship loop 

[PoliticsWatch Updated 2:50 p.m. February 10, 2005]

Prime Minister Paul Martin in the witness chair at the Gomery inquiry. 

OTTAWA —In his appearance before the Gomery inquiry Thursday, Prime Minister Paul Martin distanced himself from the federal sponsorship program, the Chretien government's unity initiatives and people in the Chretien PMO who have been asked to appear at the inquiry. 

In a rare appearance by a sitting prime minister at a public inquiry, a low-key Martin also said that while he approved of a $50 million discretionary unity fund for former prime minister Jean Chretien in 1996 he was unaware that the money was used to fund the sponsorship program. 

Martin also testified that while he was aware the federal government was trying to increase its visibility in Quebec after the referendum with ministerial tours and giving away flags, he did not know that the sponsorship of events in the province was part of the government's overall unity strategy until after 2000. 

Martin said it was "very, very late in the piece" before he was aware of the sponsorship program. 

Martin testified that before 2001, the administration of sponsorships was never discussed at the weekly meeting of Quebec cabinet ministers, but the government funding of certain events was. 

"Didn't it occur to you that there must have been some program?" Justice John Gomery asked the PM.

"I think that program is too strong a word to be aware of," Martin said. 

While the Public Works department began its role in handing out sponsorship in 1996, an actual sponsorship program was not created until 2000. 

The PM said, as he has said in the past, that he first learned of problems with the program from newspaper articles in late 2001. 

Later the PM was challenged about his lack of knowledge about a sponsorship program when lawyers for the inquiry showed a document released by the inquiry in October. 

A 1999 letter from his riding office seeking a sponsorship was forwarded to Gagliano's office. The grant was for a sports organization chaired by Martin fundraiser Serge Savard. 

"Paul Martin's office telephoned us to find out why Les Internationaux du Sport de Montreal (Savard's group) hasn't had a response to their sponsorship request for $600,000," wrote Joanne Bouvier, an aide to former public works minister Alfonso Gagliano, in 1999. Government records show the group eventually received a $250,000 grant from the program. 

Martin testified he was not aware of the group's inquiry and the person in his office never spoke to him about it until it made headlines last year.

The PM compared the request for a more than half million dollar government grant as part of the routine business of his riding office. 

"If I got involved in everyone of these, I never would be able to do anything else," the PM testified. 

Martin, who had testified he wasn't aware Public Works operated a unity sponsorship program in Quebec, said the reason the letter was forwarded to Gagliano at Public Works was because the person made reference to Quebec receiving sponsorship grants. Gagliano was the minister responsible for Quebec at the time. 

Gomery is investigating how the program gave $100 million to advertising agencies which, in many instances, did little or no work for their services, often just passing a check from the program to an event. 

Although it has not been proven, opposition parties suggest the program was away to reward many of the heads of advertising and communication agencies, who had social relationships with senior Quebec Liberals. 

The PM's appearance was in stark contrast to the earlier appearance of Chretien. 

Chretien often gave short, terse answers to inquiry counsel questions, and the counsel seemed to treat him almost like a hostile witness. 

It was much less tense with Martin in the chair. The PM offered detailed explanations about his work as finance minister and on a number of occasions kidded with Gomery and counsel Neil Finkelstein. 

In the first hour of questioning, Finkelstein even allowed Martin to discuss at length things unrelated to the inquiry, such as the unfounded liability of the Canada Pension Plan, the Mexican Peso crisis and even his meeting with Japan's postmaster general.

Martin's purpose in discussing these items was to put into context how his duties as finance minister kept him so preoccupied that he could not focus on unity and sponsorship matters. 

Martin also explained in detail how government works in an effort distance himself from spending decisions. 

When asked what the role of the minister of finance is once a department has been allocated funding, Martin said: "He has no role whatsoever." 

"His responsibility comes to a total end," he said, later adding that doesn't mean that the finance minister is indifferent to how money is spent. 

Martin also discussed at length the unity fund, something he reauthorized in 1996, but forgot about until it made headlines when it was cancelled in last year's federal budget. 

The unity reserve was a $50 million discretionary fund for the prime minister, which Chretien used to set up a number of unity initiatives, including the sponsorship program and the Canada Information office. 

Martin testified that he did not know how this money was spent and the responsibility rested with the PM and the Privy Council Office. 

"A reserve is not the approval to spend money," Martin testified. "A reserve is simply a set aside in the finance minister's books or projections in case money is spent. It did not strike me as untoward." 

On Tuesday, Chretien testified that the decision to raise the visibility of the federal government in Quebec was approved unanimously by cabinet at a special retreat in 1996. 

At that retreat, a special cabinet committee headed by then cabinet minister Marcel Masse released a number of national unity recommendations, including a "substantial reinforcement of the organization of the Liberal Party in Quebec." 

Martin said he "barely" recalls the discussions on the unity file at that meeting. 

"I do remember that there were general discussions," he said. "I can't remember the exact details of the discussions."

He also said he did not discuss using sponsorships to gain visibility in Quebec at that meeting.

Martin told Gomery his involvement in unity matters was not asked for nor sought. 

He noted that he played the role of a "foot soldier" for the federalist forces in the 1995 Quebec referendum campaign trying to dismiss doom and gloom predictions put forward by separatists that Canada was headed for bankruptcy. 

Martin said he was never approached or asked to play a key role during the 1995 referendum, but did not see it as a slight given his responsibilities as finance minister. 

The PM also testified that he had little involvement with two of the top PMO officials who have appeared at Gomery, Chretien chief of staff Jean Pelletier and director of operations Jean Carle. 

"We didn't work closely together. I didn't have a lot to do with Mr. Pelletier," the PM said. "But whatever I did, the relationship was fine."

He said his contact with Pelletier was limited to two to four meetings a year about administrative matters, such as staffing guidelines and salaries. 

As for Carle, "I really had virtually nothing to do with Jean Carle."

Martin also distanced himself from one of the few ad agency executives mentioned in the auditor general's report that he knew, Claude Boulay of Groupe Everest. 

Martin had been linked with Boulay because of media reports that he had worked on his 1990 leadership campaign. 

The PM has downplayed this relationship since the sponsorship scandal erupted early last year and only said that Boulay left because there were differences. 

At the inquiry Thursday, Martin revealed that his campaign organizers told him Boulay left the campaign because he had wanted to be paid for his work on the campaign. 

Documents tabled at the inquiry showed that over the years, Boulay, his wife and his company had donated a total of $450 to his campaign fundraisers. 

"I do not know Mr. Boulay and (his wife) very well," Martin testified. 

"But the fact of the matter is they are active in the Liberal Party. They do have a place in the country about an hour and a half from mine. It would not surprise me at all if at various political or social occasions I would run into them."

Martin was asked about a letter he sent to Boulay in 1995

"Dear Claude," the then finance minister writes. "The services that you offer could interest my Federal Office of Regional Development for Quebec, for which I am the responsible minister. Your letter has been transferred to my office in Montreal for its information." 

Inquiry counsel Bernard Roy said the development office later rewarded a $50,000 contract to Everest. 

Martin said he was unaware that Boulay won the contract and said the letter he sent Boulay was a form letter. 

To further distance himself from Boulay the inquiry revealed a letter Martin sent to Boulay in 2000 turning down Boulay's invitation to his 50th birthday party. 

"I found that when I became finance minister, I got invited to a lot more birthday parties," the PM said. "It was impossible to attend them all. So I would have declined."

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