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Keeping track of scandals du jour

(PoliticsWatch posted February 9, 2004) OTTAWA - With the Auditor General's report touching on the controversial federal sponsorship program to be released tomorrow at the same time question period is filled with questions about CSL and spending at Health Canada, one can get confused following all the scandals du jour. Politicswatch.com offers a simple explanation of the current big three scandals, who's been charged and what's the prime minister's role, if any. 

Sponsorship Program

After the 1995 Quebec referendum, the federal government decided that it needed to raise the profile of the federal government and the Maple Leaf in Quebec, so it decided to launch a program to sponsor sporting and cultural events. 

Since 1997, the program spent $793-million on media advertising and $250-million on sponsorships of events. It is the sponsorship aspect that is the target of much of the criticism and is the one that could be politically explosive. According to media reports, $100 million of the $250 million will be the focus of the AG report, because it went to what are being described as "politically connected" ad firms in Quebec, which acted as intermediaries between the government and the events and added questionable value. 

Has anyone been charged?

Paul Coffin, president of Coffin Communications, is so far the only person who has been charged in the case. He faces 18 counts of fraud in the RCMP investigation into government sponsorship contracts for "submitting and collecting on false invoices for a total of nearly $2 million." 

This includes an allegation of defrauding the government of $540,000 through the sponsorship of the CASCAR stock-car race series between 1997 and 2001 and an alleged $15,000 false invoice for an event relating to the 250th anniversary of the city of Mascouche. 

What is the prime minister's link to the sponsorship program?

Some will argue that the sponsorship controversy took place under the Chretien government, with Alfonso Gagliano at the helm of public works, so it wasn't under Martin's watch. Martin has already begun to inoculate himself against the scandal by cancelling the sponsorship program within the first 24 hours he was sworn in as PM. There is also speculation that the government could recall Gagliano from his post as ambassador to Denmark. 

But Tory MP Peter MacKay notes that Martin, as finance minister, was the "gatekeeper" when the sponsorship program spending was occurring. 

"He cannot absolve himself of this simply by virtue of saying he wasn't prime minister at the time," he explains. "He was a senior member of that government." 

"These government sponsorship programs are under criminal investigation," he notes. "The Auditor General's report is going to cause a flurry of activity and I think you're going to see the government, once again, simply try to sidestep responsibility for their spending practices." 

Health Canada 

"We're talking about one of the biggest scandals ever to hit this government," says NDP MP Judy Wasylycia- Leis of the wild reports of lavish spending of money earmarked for a native addiction centre in Manitoba known as the Virginia Fontaine Addictions Foundation. She has called for a public inquiry into the scandal. 

A recent Health Canada forensic audit of the centre discovered a number of discrepancies, including payments to board members, no contracts to support payments, no invoices to support payments, little or no evidence of deliverables and unusual transactions occurring after an October 2000 cruise for employees.

What is most shocking about this scandal? 

"How do you pick between money earmarked for health care for aboriginal people going toward cruises, SUVs and other fancy cars, jewellery, tickets to hockey games and theatre productions, hockey clubs and condos in Quebec?" asks Wasylycia-Leis, when discussing what the media and the audit has unearthed. 

"I think the most serious finding was they've identified at least $6 million that flowed without a signature required," says Wasylycia- Leis. "It would appear that we're looking at tens of millions of dollars." 

Has anyone been charged?

The RCMP investigation of the Virginia Fontaine Addictions Foundation has resulted in charges against nine individuals including three former Health Canada employees: former Assistant Deputy Minister Paul Cochrane, Aline Dirks, and Patrick Nottingham.

What is the prime minister's link?

Very little. But the NDP is trying to raise questions about Bank of Canada Governor David Dodge, who was deputy minister at Health Canada while the scandal was going on. "How in the world this could have ever happened right under of the nose of the government?" asks Wasylycia- Leis. "I'm suggesting (Dodge is) either incompetent or was indifferent to what was going on around him." 

Canada Steamship Lines

Before he entered politics, Prime Minister Paul Martin established himself as owner of the shipping firm Canada Steamship Lines. When he became finance minister in 1993, Martin placed CSL in a blind management, which means that only the ethics counsellor could brief him on matters in the company. 

However, since he entered the race to lead the Liberals last year, CSL has become the centre of much controversy. And now that he is prime minister, questions that have been raised about CSL are now being asked of Martin daily in question period. Here is a sample of some of these issues and questions.

The government originally claimed that CSL's dealings with the federal government totalled just $137,000, but last month upped that figure to $161 million, citing clerical errors in government accounting. The opposition wants to know why did it take so long for Martin to correct the error? They also want to know whether the current $161 million is correct, as they have uncovered new errors and an oversight of the Canadian Wheat Board and subcontracts. Other clerical errors have been found regarding Martin's holdings. Since 1996, his disclosure of assets to the ethics counsellor failed to included an Ottawa firm that specialized in contract procurement with the government. 

On the policy side, the Bloc Quebecois is raising questions about the prime minister's company benefiting from tax havens and Martin failing to close loopholes for companies conducting business in such tax havens when he was finance minister. The NDP is beginning to focus its attack more on the principle involved and whether Martin will have to recuse himself from important matters that could raise a conflict. For example, the NDP suggests that the restructuring of steel company Stelco may be an issue that Martin could not take part in because Stelco is a major client of CSL's. 

Has anyone been charged?

No, as CSL isn't a criminal scandal, but more of an alleged conflict of interest issue. 

What is the prime minister's link?

His sons. In an effort to end opposition allegations of Martin being in a conflict, the prime minister officially divested the company to his three adult sons in August. However, that has not ended the controversy. "The ethical guidelines indicate that the financial interests of parents, spouse and children are to be equated with the financial interests of the minister," notes NDP Leader Jack Layton. "The prime minister and the ethics counsellor always have to look now at the assets of the children in order to determine whether the prime minister can be involved in an issue." 

The NDP and Layton are focusing on the bigger picture here and are questioning whether CSL will impair Martin's ability to be involved in a range of matters that could be considered a conflict. "The connections of his family could prevent him from actually performing his job as prime minister.

"What he has to do is enable himself to participate in the important issues that are facing Canadians and the rules in place now say he's not allowed to do that if his sons could experience a financial impact," adds Layton.

"We need to know what percentage of our prime minister's time is going to be spent outside the cabinet room because of the ownership of his sons of CSL? I think Canadians need to know an answer to the question." 

For his part, the prime minister doesn't mind answering questions about CSL outside of the House of Commons. At a recent CBC News town hall meeting, a woman from Calgary asked the PM pointed questions about CSL and whether it was fair that his family company received over $160 million in federal contracts while parts of its fleet pay two per cent corporate tax rates offshore. 

"I'll tell you what's very good about this," said Martin, "for instance, the question from the woman from Calgary or yours, I get a chance to explain it. Problem with question period is you've got 35 seconds to stand up and give a quick answer. So I really do welcome this opportunity."

Check out these related links:

arrow-trans.gif (111 bytes) Scandal-ridden summer

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Scandal Watch

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