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"I definitely met Madam O'Leary"

(PoliticsWatch posted April 23, 2004) OTTAWA - The star witness in the Adscam hearings today maintained his allegation of political interference in the awarding of contracts by officials in the office of Prime Minister Paul Martin when he was minister of finance. 

Liberal MPs on the committee challenged his story that Martin's former aide, Terrie O'Leary, called him and arranged a meeting with him regarding the contract selection process for finance. 

Yesterday the PMO vehemently denied the calls. 

"She never called to indicate the minister's preference for Earnscliffe or any other firm," PMO spokesman Scott Reid, who once worked at Earnscliffe, told the Ottawa Citizen. "She never phoned. It's absolutely false."

But today, Guite said he would not deviate from what he said yesterday. 

"No, that's incorrect. I definitely met Madam O'Leary at the office," he said. 

And he maintained that O'Leary was interfering. 

"Any interference or any communication between a minister's office and a contracting authority is interference by a minister's office."

Liberal MPs, who claim O'Leary only wanted to open up competition, questioned Guite suggesting that he misread one of O'Leary's memos which lists a number of companies that she wanted to be included into a finance department bidding competition for the Canada Savings Bond campaign in 1994. 

Guite said O'Leary's memo was interference because it was "from a minister's office." 

"It's not the process of opening up that you found challenging, it was where it came from?" asked Liberal MP Alan Tonks.

"The process was already opened up," answered Guite. "If you go on the open bidding system, how much more open can you go? Why didn't Ms. O'Leary call those firms and say there's a system on, there's a bid going on, apply?

"I have a memo here from a minister's office listing firms they want to be considered, to add to the list." 

"And you take that as interference?" asked Tonks.

"I sure do," responded Guite. 

But late this afternoon, O'Leary weighed in by releasing a statement calling Guite's claims about her false "on every count." 

"Mr. Guite's allegations are false and I deny them absolutely," she said. "The only request we or the Department of Finance ever made in relation to the contracting of services was to move to a full open bidding competition where any firm that wanted to bid was allowed to do so."

O'Leary said that "at no time" did she ever raise Earnscliffe with Guite and she only recalls meeting Guite once "at his request." 

"Mr. Guite left the impression in his testimony that this was an open bidding process," O'Leary said. "It was not. Bids were restricted to a pre-determined list developed by Public Works." 

Some Liberal MPs tried to block the committee from questioning Guite about the Earnscliffe contracts described in a memo from former Public Works official Warren Kinsella and the O'Leary memo regarding advertising. 

"We are now out of order," said Tonks, who had described the line of questioning "totally beyond the terms of reference for this committee." 

However, just two days ago when the Guite-Kinsella memos regarding the breaching of contract tendering guidelines with seven files related to Earnscliffe and a polling affiliate were raised in question period, Public Works Minister Stephen Owen suggested they be brought to the committee. 

"We have had various documents brought forward to our attention in this House," said Owen in question period. "Instead of raising in the House, and unshared with the public accounts committee, a memo which expresses a particular opinion, it should be put to the public accounts committee and to the author of that document. That is where these questions should be construed."

But Conservative chair John Williams allowed questioning today and said the committee was not constrained by the Auditor General's terms of focus and the committee has to ask about "the concept of the stewardship of the fund." 

Guite was asked to provide clarity about a $219,000 contract Earnscliffe won to provide communications advice to Finance on a retainer. In a 1995 memo he wrote to Kinsella, Guite complained about the scope of work for the contract being "written in a way that favoured (Earnscliffe)." 

"If you put out a tender, and the scope of work would have been prepared by the department, not by my group, and you have one bidder replying, I think that the rest of the industry out there got the message, we know where it's going to go, so let's not waste our time bidding," said Guite. 

In question period, the government defended a volley of questions from the opposition about Guite's allegations. 

"This has nothing to do with sponsorship," said Deputy PM Anne McLellan. "What we are talking about here is an issue around advertising in the Government of Canada at a period of time between 1994 and 1995."

Nonetheless, Guite's testimony and leaked documents this week have opened up a number questions about whether the high-powered lobbying and communications firm which houses many of the prime minister's top advisors has unfairly benefited from their relationship with Martin. 

Since 1993, Earnscliffe has won over $6 million in contracts with various government departments and agencies. 

In addition to that, last month The Forest Products Association of Canada (FPAC) revealed that Earnscliffe received $800,000 of $17 million given to FPAC in 2002 from the Department of International Trade for "polling, research and advice" regarding an advocacy campaign to promote the Canadian softwood lumber industry in the U.S.

At the time, Ruth Thorkelson, who is now the prime minister's deputy chief of staff for parliamentary affairs, was FPAC's vice-president of government relations. Previous to that, Thorkelson served as Martin's chief of staff until Oct. 2001. 

The $17 million grant to FPAC was announced on May 27, 2002, just days before Martin was dumped from cabinet due to a dispute with Prime Minister Jean Chretien, who that week banned cabinet ministers from fundraising and organizing for the leadership of the party. 

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