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Martin defends grant under RCMP review 

[PoliticsWatch Updated 4:16 p.m. January 6, 2006]

OTTAWA  — In a move reminiscent of his predecessor, Prime Minister Paul Martin used the national unity issue to defend a $4.8 million government grant that the RCMP is now examining. 

The Globe and Mail reported Thursday evening that the RCMP has been asking questions about a $4.8 million grant given to a group called Option Canada shortly before the 1995 referendum campaign. 

The RCMP is not conducting a criminal investigation, but was asked to look at the grant after officials with the Heritage department called the force because a book is about to be published about Option Canada. 

The paper said the RCMP is focusing on only part of the $4.8 million, perhaps $300,000. 

The revelation is the second bombshell to hit the Liberal campaign over the last two weeks. 

Last week, the RCMP announced they were conducting a criminal investigation into a possible leak of the government's November income trust announcement.

The latest news about the RCMP interest again took the PM off message as he campaigned in Ontario on Friday morning. 

After making an announcement about helping seniors, Martin was asked almost exclusively about the $4.8 million grant. 

"My understanding is the accounting was done on a proper basis," the PM said in his only comment specifically about the grant. 

The PM chose instead to answer most questions by defending the existence of Option Canada in the context of national unity. 

"The Bloc has been attacking this particular group for 10 years. And they've been attacking it because it was promoting national unity," he said. 

"I will fight for Canadian unity. I fought for it 10 years ago and I will fight for it today."

While Justice John Gomery exonerated the PM for what happened in the sponsorship program, Option Canada hits closer to home with the PM as its former president is Claude Dauphin, a former aide to Martin at finance, and Option Canada was set up by the Council for Canadian Unity where some friends of the PM were at the time.

Martin defended Dauphin's character when asked by reporters about his relationship with him. 

"Claude Dauphin was appointed by (former Quebec premier) Robert Bourassa as the Quebec delegate to Boston. When (former Quebec premier Jacques) Parizeau came to power Mr. Parizeau asked each and every Quebec delegate to perform an act of faith in sovereignty in the separation of Quebec from Canada. And Claude Dauphin refused to do so and he resigned. 

"That's Claude Dauphin."

While Option Canada was not part of the sponsorship program, the Bloc Quebecois has long alleged that the federal money was used to help the No side during the referendum campaign. 

That suspicion resulted in the little-known initiative becoming the subject of an investigation by Quebec's chief electoral officer. That investigation was disbanded after a court ruling struck down Quebec's referendum law.

A report by the electoral officer suggested Option Canada might have been a "bogus firm," set up by the Unity Council to allow it to get involved in the referendum campaign. 

The Unity Council was set up in the 1960s as a non-partisan think tank that is funded by federal money and donations from individuals and corporations. 

Its involvement in the referendum campaign would have affected its tax-exempt status. 

Option Canada was incorporated by executives with the Unity Council, including Dauphin, on September 7, 2005 shortly before the launch of the referendum campaign and eight weeks before the vote. 

The group originally asked for $10 million from the department of Heritage but instead was given $4.8 million 

Heritage listed the funding under "Grants to organizations representing official-language minority communities, non-federal public administrations and other organizations for the purpose of furthering the use, acquisition and promotion of the official languages."

The $4.8 million was paid out in three installments, including $1 million just 17 days after Option Canada was incorporated. The final installment was paid in late December. 

A 1998 internal auditor's report for the Heritage Department criticized the speed that the money was disbursed to Option Canada. 

"In most cases, it was a matter of several days to receive (applications) and approve funds with little justification being asked for in regard to the funds already advanced," said the report. "In all, only thirty-three days were needed to receive, consider, recommend and approve three submissions totaling $4,810,000 ... the whole process suffered from a lack of sufficient attention to detail."

In a 1997 interview with the Montreal Gazette, Dauphin described Option Canada's as the Unity Council's "political arm."

However, he said he was unaware of the group's activity during the referendum campaign.

``Just because I lent my name as president doesn't mean I ran the company," Dauphin said. 

In a 1997 report, an investigator for Quebec's chief electoral officer wrote the following about Option Canada: "One cannot help but wonder whether Option Canada was ever in fact operational, instead of merely a bogus firm whose sole purpose was to assume expenses already incurred by the Council for Canadian Unity, thereby providing the accounting loophole that would calm Revenue Quebec and Revenue Canada."

The Bloc Quebecois has mentioned Option Canada numerous times during question period. 

In 2004, Bloc Quebecois MP Caroline St. Hilaire suggested the Unity Council's involvement with Option Canada linked the controversy to Martin. 

"When $4.8 million disappeared without a trace from Option Canada in 1995, several people very close to (Martin) were directly involved," St. Hilaire said during question period in March 2004. "Claude Dauphin was president of Option Canada. Francis Fox sat on the Canadian Unity Council, as did Rémi Bujold, who is closely connected to the Prime Minister."

Fox later worked in Martin's PMO and last summer was appointed to the Senate by Martin. Bujold is a known Martin supporter who is senior partner at the lobbying firm GPC. Bujold's long-time involvement with the unity council culminated when he was named chair in 2000 and 2001. 

"How can the prime minister claim that he was kept on the sidelines and in the dark when his now close advisers held key positions at the time?" St. Hilaire said. 

On the campaign trail Friday, Conservative Leader Stephen Harper said Dauphin's involvement in something that is now being looked at by the RCMP hurts Martin's arguments about being out of the loop for most the government's scandals.

"The argument that was raised since the very beginning is not credible," Harper said. 

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