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Martin bombshell: Another O'Leary memo 

(PoliticsWatch posted April 2, 2004) OTTAWA - The NDP has dropped another bombshell in Adscam today when MP Lorne Nystrom tabled in the House another 1994 memo from then finance minister Paul Martin's chief of staff Terrie O'Leary listing ad agencies. 

"In light of this, will the government agree to expand the standing committee's terms of reference to include a probe into the activities of the prime minister?" Nystrom asked. 

The memo is dated April 19, 2004 and Martin is listed as one of its recipients. It's relatively brief, just two pages. 

"The following firms have expressed an interest in the (Canada Savings Bonds) competition," it reads. 

Six firms are listed, including McKim Communications, which Nystrom says assisted Martin in his 1990 leadership bid. The memo concludes with the caveat of "if there are any other firms that have indicated an interest to the Department in this contract, please include them in the bidding process." 

According to Nystrom, the contract was worth "several millions of dollars" and went to one of the firms listed on the O'Leary memo, Vickers and Benson, which this year was among the firms mentioned in Auditor General Sheila Fraser's scathing report into the sponsorship program. 

"The now Prime Minister Paul Martin did know way back in '94 that his chief of staff was recommending a number of firms including Liberal firms for a huge government contract," said Nystrom to reporters later. 

"So he did know that there was favouratism, that it was being urged by the federal government by his own department, his own chief of staff.

"So I suspect Paul Martin knows an awful lot more than he's admitted about the Liberals expecting their friends should be rewarded through public contracts." 

He said a memo from the minister of finance's office sends "a pretty strong signal" to officials that they should look favourably upon the firms.

The prime minister was not in the House to respond today, but Deputy Prime Minister Anne McLellan was confused about the memo, thinking it's a May 1994 O'Leary memo that was mentioned in the House last month. 

In the first memo, Groupe Everest, another firm mentioned in Fraser's report, was recommended for the retail debt strategy. The memo states that the recommendations were "suggestions from myself and the minister." 

The Conservatives said that memo showed the PM knew about the genesis of the sponsorship scandal. But Martin, who has denied knowledge of any wrongdoing with regards to sponsorship spending prior to 2002, said the May memo, which also lists a number of ad agencies, was a way to "see the process opened up."

But a closer look at the memo shows that O'Leary and Martin suggested the bidding be opened "with regards to Ontario," and not the national campaign. Also it eliminates other firms from bidding on the Canada Savings Bond Market Research Program because they were "small and relatively modest firms in their abilities." Four other firms were added by Martin and O'Leary for that segment of the memo.

Conservative MP Jason Kenney said the latest memo is not surprising because Martin was known as running a "very political office" when he was in Finance. "He had a preferential operation going for Earnscliffe and his kitchen leadership campaign running out of the Earnscliffe Strategy Group that got untendered contracts. 

"Clearly Paul Martin knew about some of those practices that were breaking the rules."

Another Martin confidante's name came up in the House today as Bloc MP Caroline St. Hilaire raised questions about a Globe and Mail column from this morning that suggested Richard Mahoney, who is currently the Liberal nominee for the riding of Ottawa Centre, "had a conversation with a person who can be trusted" in 2002 about Chuck Guite, the executive director of the sponsorship program. 

"Mr. Mahoney was very unhappy about Chuck Guité, and had been unhappy with him for some time," the Globe story explained. "Mr. Martin's people had urged then-prime minister Jean Chrétien's people to get rid of Mr. Guité, and appoint someone with a less partisan approach, Mr. Mahoney said. Those warnings had been ignored, and now look what had happened."

Mahoney, who is known as a Martin advisor and was a Martin staffer when he was an opposition MP, was not interviewed for the Globe story. 

In the House, St. Hilaire asked, "How can the prime minister, who knew, and who is now telling people if you know what went on talk, how can explain that his entourage stopped there and they decided to keep the problem secret and that they simply let the sponsorship scandal carry on?" 

The deputy PM said she had no intention of responding to "gossip and hearsay." 
Nystrom said the Globe article is "a bit more evidence" that the prime minister knew and was part of recommending that Liberal-friendly firms receive federal contracts. 

"I don't think he's quite as innocent as the driven snow." 

"I think it's very interesting," said Conservative MP Jason Kenney of the Globe article, who said it shows that a top, senior Martin insider was well aware of this going back several years. 

A front-page Ottawa Citizen story last month suggested that relations between Guite and finance department officials were not great. 

Guite criticized senior officials in Paul Martin's finance department in 1995 for handing out lucrative contracts without a competitive bidding process. According to the Citizen "insiders close to the contracting issue" said a "significant majority" of those deals went to Earnscliffe. 

"Mr. Martin's officials were ordered to a meeting of senior Privy Council and Treasury Board officials and told to stop the practice," the Citizen reported.

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