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Many more hot scandals and scams

(PoliticsWatch updated March 23, 2004) OTTAWA - The scandals are coming out  so fast these days that our scandal sheet is becoming a weekly feature. Our list is growing so rapidly that our site is at risk of crashing from the overwhelming weight of bandwith. Just last week we added two new scandals to our list -- DND-HPscam and Adrienne Clarkscam. Only a week later, we have three more that we find warrant attention -- problems with the Immigration and Refugee Board, a loan to a softwood firm owned by a prominent Liberal in B.C. and Flagscam. Find out what the scandal is, who's been charged and what is the PM's link, if any, in our latest edition of hot scandals and scams. 


On Mar. 16, Immigration Minister Judy Sgro announced measures to end cronyism in the appointment of judges to Canada's Immigration and Refugee Board. 
So what was wrong with the current appointments? Plenty. Just three days later, the RCMP announced it was laying charges against an IRB judge and 10 others who were part of a "very well-structured criminal organization" to obtain between $8,000 and $15,000 from immigrant applicants in exchange for positive rulings. 

What was wrong with the appointment process? Well, a little digging by the Montreal Gazette discovered that the judge at the centre of the scandal, Yves Bourbonnais, was selling the bench both literally and figuratively speaking. He was a former lawyer with the Quebec Justice Department who lost his job after he was convicted of breach of trust for selling furniture from two courthouses and a prosecutor's office in 1988. Bourbonnais was granted a pardon before he was named to the IRB in 1996 by then immigration minister Lucienne Robillard. 

Has anyone been charged?

Just eleven people: Bourbonnais and 10 others face a total of 278 charges, including breach of trust, forging a Canadian passport and four firearms offences. 

What's the PM's link?

Well the problems could be linked to Liberal patronage. A Montreal Gazette investigation found "32 of 58 IRB appointments had ties to the federal or Quebec Liberal parties, and were often defeated candidates or relatives of Liberal office holders." 

<i>Prem Vinning</i>Jackpine-scam

Like the mountain pine beetle epidemic that is affecting Canada's forests, our softwood industry has now become infested with scandal. CBC News in Vancouver reported last week that a struggling B.C. lumber company owned by a prominent B.C. Liberal was given a $2 million loan to build a new mill as part of a federal softwood aid package. 

Jackpine Forest Products' majority owner is Prem Vinning, a federal Liberal who sat on the province's party executive. Jackpine received the money just as it was preparing to seek protection from its creditors. 

Has anyone been charged? 


What's the PM's link?

None. And B.C. MP Stephen Owen, who was the minister responsible for western economic diversification, denied knowing anything about Vinning's Liberal connections. 


Phoney invoices used by ad agencies involved in a federal Liberal campaign to increase Canada's visibility with the goal of enshrining national unity. Sound familiar? Well, this is a new scam regarding the federal government's flag program. 

Former Heritage Minister Sheila Copps' plan to hand out a million free flags in 1996 over looked one little thing. The Canadian market could not create that many flags. A B.C. Liberal, Doreen Braverman, is alleging that rules were bent to get the flags and the process was handled by Lafleur Communications and a Public Works official, Chuck Guité, both who are mentioned in Auditor General Sheila Fraser's report on the sponsorship scandal. The government got around the rules on competitive bidding by faking invoices from small suppliers all over Canada - each one under the limit where bids would be required. 

Has anyone been charged? 

No. So far the only cops mentioned in this story is Sheila Copps.

What is the PM's link? 

Martin knew about it, according to Braverman. CBC News reported: "She said she complained to members of Parliament, including then-finance minister Paul Martin but was told nothing can be done. She said in a phone call with Martin, he told her he couldn't do anything because 'Sheila does her own thing.'" As far as we know, no one has yet asked the prime minister whether he remembers receiving a call from Braverman. 


What's criminal, sophisticated, 10-years-old and is worth $160 million? If you say the Olsen twins you'd be wrong. If you say the DND-HPscam you'd be right. 

This scandal was unearthed after auditors discovered National Defence had paid $160 million for military computer hardware and support services it never received. The contracts were with Hewlett-Packard. 

This is a case of "He said, HP said." Hewlett-Packard denies any wrongdoing and blame subcontractors the government instructed them to use for unspecified work. On the other hand, the government is saying HP picked the subcontractors themselves. HP denies that and accused the Defence department of refusing to provide it with particulars about the subcontracted work on the grounds of national security. 

Has anyone been charged?

So far no charges have been laid and only one person working at DND has been fired, Paul Champagne. But, the unemployed Champagne landed comfortably on his feet. Champagne's most recent tax return showed he earned about $58,000 from DND and about $3-million from private business interests, particularly his stock portfolio. Mr. Champagne, who is retired and living in Turks and Caicos Island, says his wealth was accumulated through lucrative investment decisions in the stock market. 

But some are now questioning why Champagne would continue to work as a mid-level manager in the bureaucracy while he was living in a home more fitting for a high-tech CEO. 

The pertinent question in this case was posed in the House of Commons by Conservative MP Jay Hill last week: "Why did someone, anyone, not get suspicious when DND employee Paul Champagne was living in a mansion, with a gym, an indoor pool and a tennis court, on billionaires' row? Did anyone think to ask him how he could afford all that on a director's salary?"

"The RCMP is looking into this matter," says Defence Minister David Pratt. "There are a lot of details that will be forthcoming, in terms of the actions that are taken subsequently. I fully expect that this matter will end up in the courts. At that point, a lot of information will come forward. However, I go back to the point that we cannot jump to any sort of conclusions, with respect to the final outcome of this."

What is the prime minister's link?

None and Pratt has effectively taken all the heat in the House. 

Adrienne Clarkscam

"Governor-General Adrienne Clarkson's words, in defence of a burgeoning budget - more than doubled in recent years - reveal a distressing gap between her values and those of most Canadians," says a recent Toronto Star editorial.

New attention has been focused on the GG and her spouse - His Excellency John Ralston Saul -- since the Commons government operations committee was informed that Clarkson's universal budget - a figure that takes into account all government department spending on the Governor General - was $41 million, about half of what the Queen of England spends per year. 

Has anyone been charged?

No, but a lot of people are charged up about this. 

What is the prime minister's link?

While that figure is astonishing to many, it appears that it is the Governor General's travels that have raised the eyebrows of many politicians, including Prime Minister Paul Martin who has said that his government plans to conduct a "line by line" review of the spending. 

Bad trip #1: Last year, Clarkson drew fire for participating in a circumpolar tour of Russia, Iceland and Finland with 59 distinguished Canadians to promote culture that her office estimated at $1 million. This prompted the government ops committee to probe the GG's spending while she was on tour. Last month, the bill for the trip came in at a whopping $5.3 million. 

Bad trip #2: While news of the cost overrun broke, Clarkson had been scheduled to lead a delegation of prominent Canadians to Sweden, Norway, Denmark and Greenland. But Foreign Affairs Minister Bill Graham canned that idea within a week of the Auditor General's sponsorship report. 

Bad trip #3: Just a month later, the National Post reported that the Governor General and her husband used government aircraft to fly to their summer cottage on Georgian Bay, rather than face a seven-hour drive. A spokesman for Clarkson says the Governor General used government aircraft for national security reasons.

Then there is the damage control that requires damage control. Ralston Saul granted a testy, combative and defensive interview with Pulse24 in Toronto in which he asked more questions than the interviewer. "When is the last time you were in Moose Jaw?" he asked. "When is the last time you were in an Arctic community?" The anchor responded that she was not the Governor General. 

However, not all corners of Canadian society are offended by the Governor General's ever-expanding budget. "Of course, $41-million seems like a lot of cash in anyone's language, but when spread over 31,362,000 Canadians it works out to only $1.31 per person," wrote the Globe's Hugh Winsor this week, without a scintilla of sarcasm. 


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 has been explosive. The Auditor General has released a report finding that $100 million of the $250 million went to  "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." 

And there have been firings. Lots of firings. Prime Minister Paul Martin has gone on a firing spree as of late, axing executives in Crown corporations, including Via Chair Jean Pelletier and Via president Marc Lefrancois. There was also the recall of Gagliano from his post as ambassador to Denmark. 

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

Before the Auditor General's report it appeared that this would be a game of pin the tail on the Gagliano. But somehow, Prime Minister Paul Martin has been so out front on this scandal that he is now the spokesperson for it. 

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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