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Martin's finance office interfered: Guite

(PoliticsWatch posted April 22, 2004) OTTAWA - The former director of the sponsorship program has told the Public Accounts committee that he has documents that will show that Prime Minister Paul Martin's office tried to interfere with Public Works in its contracting process for Finance department contracts in the 1990s. 

Guite recalled a phone call he received from Martin's former chief of staff, Terrie O'Leary, who said to him that "Paul would prefer." Guite said he asked "Who's Paul?"

The former public works boss was speaking about O'Leary in reference to the 1994 Canada Savings Bond advertising campaign. 

In a May 1994 memo to finance department officials, O'Leary said she and the minister wanted to add a number of firms to the list of bidders for work on the project. 

The prime minister has repeatedly stated that all this memo proves is that O'Leary wanted the bidding process opened up. 

"What the memo says to the department is 'Okay, we're a new government, we've inherited Everest-Ginko, but we want to see the process opened up.' If you read the bulk of the memo, (you'll see) she says here are a whole list of firms we would like to see who will bid on this." 

But Guite inferred that O'Leary's memo and phone calls were interference. 

"She asked me to come and meet with her which I did and then we discussed the competition, how it was being held," explained Guite.

"She had asked for certain changes and I said I can't do that. You can't be three-quarters of the way through a process and change the rules. In one instance which my legal counsel I think has a copy, I did receive a memorandum from somebody from the staff."

Guite also recalled his many run ins with Martin's office over contracts involving the Earnscliffe Strategy Group, a lobbying and communications firm which is run by many of his senior advisers. 

"There were many contracts with a local company, Earnscliffe," Guite said. "And I had interference from a minister's office - the finance Department, which was Mr. Martin's office at the time. 

"[They] tried influencing the decision. I think that if someone today would ask through access to information for all the contracts awarded to that company, you would have some surprises," Guite informed the committee and all the reporters in the room. 

He also implicated Finance Minister Ralph Goodale's office for interfering when Goodale was at agriculture. 

"I think I said earlier this morning, the minister, being Minister Dingwall, received a letter from Mr. Goodale asking to exempt him from the policy, and we said no," recalled Guite. 

Guite's testimony involving Earnscliffe appears to corroborate documents leaked to TVA earlier this week. Two of those memos were exchanges between Guite to then public works minister David Dingwall's executive assistant Warren Kinsella. 

In a July 24, 1995, memo from Kinsella to Guite, Kinsella raised questions to Guite about seven contracts between finance and Earnscliffe and its then polling subsidiary Anderson valued at $452,000. 

"None of these procurements were conducted through (Public Works), contrary to cabinet-approved guidelines," wrote Kinsella. "This is simply unacceptable." 

Four days later, Guite gets back to Kinsella and explains the problems with each contract, including four that were conducted "without the knowledge of my sector." 

"Finally, having commented and quoted the guidelines/policy, it is felt that immediate action must be taken to correct the situation," writes Guite. "As you are well aware, the industry at large is not satisfied with the current process and if escalated it could become embarrassing to the government." 

PoliticsWatch has also seen a new document tabled with the committee, which appears to be talking points from Nov. 2, 1995, defending Earnscliffe's relationship with the federal government. 

"FYI, following are some things I thought you might want to know," the memo begins.

The talking points emphasize that all but one of Earnscliffe's contracts with the federal government were awarded through competitive tendering processes. And in all but one of those cases other companies bidded against Earnscliffe. 

Some of these talking points are familiar, as they have been used in recent weeks by Martin and his advisors to defend Earnscliffe's contract history. 

"Earnscliffe's relationship with the Department of Finance predates the 1993 federal election," says one point. 

"The structure of the finance contract (which was done on a retainer against the advice of Public Works whistleblower Allan Cutler) results in significant savings to the government," explains another. 

But it also explains a partnership Earnscliffe had with Ekos Research, the firm at the top of the list of O'Leary's memo, which the PM describes as a call for more competition regarding the Canada Savings Bond campaign. 

"Speak to clients and inquire as to whether they are satisfied with the work performed by Earnscliffe," the talking points conclude. 

Guite's testimony is both exonerating and incriminating for the Liberals and appears to put the Liberals on the committee in a bind. 

While he flatly states there was no political direction with his meetings with former public works ministers Alfonso Gagliano and David Dingwall and the PMO regarding the $100 million sponsorship program, he at the same time freely accuses the people surrounding the current Liberal Party leader of interference. 

The early Liberal spin appears to be that Guite is confused or defence about his turf.

"I'm not a lawyer, but I find the assumptions made are not born out by the documents that have been presented," Liberal MP Alan Tonks said to reporters after reading the O'Leary memo. 

"Somebody doesn't get it. Here we have a document where the suggestion is the agency competition should be wide open. I don't think that the criticisms that have been levied here are born up by at least my reading of those documents." 

He suggested that Guite had such a grip over his department and was "so mesmerized by his sense of power" that when O'Leary stepped forward and suggested he open up the bidding on the savings bonds he took exception to that.

"I think he felt threatened by it." 

Liberal MP Dennis Mills said he believed Guite's overall testimony.

"I think he was just there to tell the truth," he said. "His candour to me was pretty evident." 

But what about his testimony implicating the prime minister's inner circle? 

"I think if you read the memo, clearly, from Terrie O'Leary, she was putting suggestions forward," explained Mills. 

"There's a difference between suggesting and ordering somebody to do something."

Meanwhile, for the Conservatives, Guite's finger pointing at Martin's people raises more questions. 

"I'd like to know if Paul Martin knew about that," said Conservative MP Jason Kenney. "Did he ask his chief of staff to interfere in the administration of this program. That's a critical issue." 
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