Allan Cutler

The sponsorship scandal, AdScam or Sponsorgate, was a scandal in Canada that came as a result of a federal government "sponsorship program" in the province of Quebec involving the Liberal Party of Canada, which was in power from 1993 to 2006.

The program was originally established as an effort to raise awareness of the Government of Canada's (then led by Prime Minister Jean Chrétien) contributions to Quebec industries and other activities in order to counter the actions of the Parti Québécois government of the province that worked to promote Quebec independence. The program ran from 1996 until 2004, when broad corruption was discovered in its operations and it was discontinued [citation needed ]. Illicit and even illegal activities within the administration of the program were revealed[citation needed ], involving misuse and misdirection of public funds intended for government advertising in Quebec[citation needed ]. Such misdirections included sponsorship money awarded to Liberal Party-linked ad firms in return for little or no work, in which firms maintained Liberal organizers or fundraisers on their payrolls or donated back part of the money to the Liberal Party[citation needed ]. The resulting investigations and scandal affected the Liberal Party and the then-government of Prime Minister Paul Martin[citation needed ].

Though an ongoing affair for years, it rose to national prominence in early 2004 after the program was examined by Auditor General Sheila Fraser, who found significant concerns. Her revelations led to the Martin government establishing the Gomery Commission, formally the Commission of Inquiry into the Sponsorship Program and Advertising Activities, headed by Justice John Gomery for the purpose of conducting a public inquiry and filing a report on the matter The Commission concluded that $2 million was awarded in contracts without a proper bidding system, $250,000 was added to one contract price for no additional work, and $1.5 million was awarded for work that was never done, of which $1.14 million was repaid. The Commission found that a number of rules in the Financial Administration Act were broken. The overall operating cost of the commission was $14 million.

In the national spotlight, the scandal became a significant factor in the lead-up to the 2006 federal election when, after more than 12 years in power, the Liberals were defeated by the Conservatives, who formed a minority government that was sworn in February 2006.

The Gomery Commission, formally the Commission of Inquiry into the Sponsorship Program and Advertising Activities, was a federal commission of inquiry, with Justice John Gomery as the sole commissioner, established for the purpose of investigating the sponsorship scandal, which involved allegations of corruption within the Canadian government.

The commission was called by then-Prime Minister Paul Martin in February 2004 soon after a report by the Auditor General of Canada found unexplainable irregularities in the government's Sponsorship Program. The Commission held public hearings from 7 September 2004 to 17 June 2005, hearing from 172 witnesses.

Gomery released his Phase I Report[21] on the scandal on 1 November 2005 and Phase II Report[22] on 1 February 2006.

In 2008, Federal Court of Canada Judge Max M. Teitelbaum set aside Gomery's conclusion that Jean Chrétien and Jean Pelletier shared blame for the mismanagement of the program to boost the federal government's profile in Quebec.[23] Teitelbaum's decision was appealed to the Federal Court of Appeal where it was upheld.[24]

The commission had a broader mandate, more power and greater resources than the Auditor General, and most importantly could look beyond government to the advertising agencies that had received the Sponsorship dollars. The terms of reference allowed the commissioner to question witnesses, hire experts and adopt any procedures or methods that he considers expedient for the proper conduct of the inquiry. The purpose given was to "investigate and report on questions raised, directly or indirectly" by the Auditor General's report. However, as is typically the case in commissions of inquiry, he was specifically directed not to make any conclusions or recommendations on criminal charges or civil liability.

Commissioner Gomery was given a two part mandate with power issued to him under the Inquiries Act. The first part of the mandate was investigate and report on questions and concerns addressed in the "2003 Report of the Auditor General of Canada" relating to the sponsorship program and advertising activities of the Government of Canada. These concerns included the program's creation, the selection of agencies, the program's management and activities, the receiving and use of funds and disbursement of commissions, and anything else that Gomery feels relevant.

The second part of the mandate was for Gomery to make any recommendations that he considers advisable, based on his findings. Specifically requested of Gomery were the following: to prevent mismanagement of sponsorship or advertising programs in the future, taking into account legislation to protect "whistleblowers"; to recommend changes to legislation to change the governance of Crown corporations to ensure that audit committees are strengthened, that public access to information is increased, that there is a consistent application of the provisions for each organization, that compliance and enforcement be enhanced, and finally that respective responsibilities and accountabilities of Ministers and public servants as recommended by the Auditor General of Canada.

The Gomery Commission began holding public hearings on 7 September 2004 in Ottawa, meeting in the Old City Hall. The first to testify was Auditor General Sheila Fraser who reported the findings of her earlier investigations. The first part of its investigation was of the political direction of the project. Most of the top officials involved were called to testify.

Testimony confirmed the Auditor General's conclusion that advertising firms submitted invoices for work that had not been done. Witnesses also reported that companies were asked to make cash contributions to the Liberal Party of Canada's Québec wing and to put Liberal workers on company payrolls.

In an unprecedented event, the inquiry saw the testimony of two Prime Ministers in February 2005: then-Finance Minister Paul Martin and then-Prime Minister Jean Chrétien. The latter's testimony was much anticipated as this was the first time in over a century that a sitting Canadian prime minister testified before a public inquiry.

Chrétien defended the program as an important component of the government's efforts to raise federal visibility in Québec. Prior to his testimony, Chrétien's lawyers moved to expel Justice Gomery in December 2004 due to several comments he had made to a National Post reporter before the hearings that demonstrated Gomery's bias against Chrétien. These included Gomery commenting that golf balls marked with Chrétien's name, which had been paid for by the sponsorship program, were "small town cheap." Gomery rejected the calls to recuse himself setting up a confrontation between him and Chrétien. At the end of his day of testimony Chrétien closed his statement by pulling out a series of golf balls bearing the name of American presidents and the law firm Ogilvie Renault (which at the time employed former Prime Minister Brian Mulroney, Gomery commission counsel Bernard Roy and Gomery's own daughter) asking whether each of them was "small town cheap." The stunt was the focus of all the media reports.

Martin appeared a few days following Chrétien, and denied any involvement in the program.

After the prime ministers testified, the hearings moved to Montreal to investigate where the money had gone. The hearings in Ottawa had uncovered little more than what was in the Auditor General's report. The AG did not have the authority to investigate outside of the government, and the look into the advertising companies in Montreal uncovered a great deal of new and explosive allegations. The most important of these were by Groupaction executive Jean Brault who recounted a series of crimes committed to direct government money to Liberal party supporters. These caused a sharp fall in the support for the governing Liberals, and put their government in jeopardy.

On 1 November 2005, Gomery released the Phase I Report.[21] Gomery criticized Chrétien and his chief of staff Jean Pelletier but cleared them of direct involvement in kickback schemes. While people such as Alfonso Gagliano, Chuck Guité and Jacques Corriveau took advantage of the programme, Gomery argued that abuses would not have occurred had Chrétien set the programme with safeguards in place. Gomery said that Pelletier "failed to take the most elementary precautions against mismanagement – and Mr. Chrétien was responsible for him."

Gomery also exonerated Prime Minister Paul Martin, the minister of finance during most of the sponsorship programme. Gomery specifically said that Martin "is entitled, like other ministers from the Quebec caucus, to be exonerated from any blame for carelessness or misconduct," as the Department of Finance's role was not oversight, but setting the "fiscal framework."

On 1 February 2006, Gomery released his final report consisting mostly of recommendations for changes to the civil service and its relation to government.[22]

The recommendations suggested include:

Shortly after Justice Gomery held a press conference, Prime Minister-designate Stephen Harper, elected on January 23, 2006, told the press that some of the commission's recommendations matched his proposed first bill, the Federal Accountability Act. Other recommendations went further than what Harper promised, while some other recommendations (dealing with the public service) would not be enacted in the short term.

Many commentators criticized the report for various reasons: alleged bias on the part of the commission, the terms of reference with which it was set up, and the use of evidence in the report. Several, including former Prime Minister Jean Chrétien, Warren Kinsella, and former cabinet minister Sheila Copps, criticized the commission as being little more than an extension of Liberal party infighting.[25]

Gomery was accused by some as being friendly to Paul Martin, and hostile toward Chrétien. In the spring of 2005, Chrétien's lawyers attempted unsuccessfully to have Gomery removed due to his alleged bias. Subsequent to the release of the first report, Chrétien took action in Federal Court to review the commission report on the grounds that Gomery displayed a "reasonable apprehension of bias," and that some conclusions did not have an "evidentiary" basis.[26]

On 26 June 2008, Federal Court ruled that Gomery had in fact displayed bias in several comments made before the hearings had closed and that his remarks showed that he had prejudged the issues. According to the Court, Gomery had insulted Chrétien when he described the distribution of golf balls bearing the prime minister's signature as "small-town cheap." The court voided those sections of Gomery's report dealing with Chrétien and Pelletier. Other comments by Gomery that Chrétien's lawyers argued as being indicative of bias included Gomery referring to the management of the sponsorship program as "catastrophically bad" and calling Chuck Guité a "charming scamp."

Other allegations of bias concern the commission's chief counsel, Bernard Roy, a former Chief of Staff to former Progressive Conservative Prime Minister Brian Mulroney. Roy is also a partner in Mulroney's law firm where Gomery's daughter works. Chrétien's lawyers stated that the appointment is a conflict of interest. Roy is a longtime personal friend of the former prime-minister's.[27] Brian Mulroney and Jean Chrétien have had an adversarial personal relationship in recent years since the Airbus affair. The choice of counsel may account for the failure to call some Chrétien friendly witnesses.

Conservative leader Stephen Harper was sympathetic to Chrétien's complaints of bias, stating that the main problem was that the commission's terms of reference did not allow it to investigate Paul Martin's contracting habits as finance minister. Other criticisms concern the lack of powers the commission had to investigate criminal matters, which were being investigated by the RCMP.

Chrétien's lawyers have indicated they are concerned about conclusions which are not based on evidence, but mere extrapolation. Chrétien, on the day the report was tabled in the House of Commons, objected to the findings of the commission, commenting that Gomery believed the wrong witnesses. "Personally, I believe Jean Pelletier, a man who dedicated his life to the service of his city, his province and his country," said the former Prime Minister, dismissing Chuck Guité's testimony. Chrétien believes that Gomery's conclusion that the programme was run out of the Prime Minister's Office is wrong.

Subsequent to the release of the first report, Chrétien's lawyers took action in Federal Court to invalidate the report and clear his name. They want the court to review the commission report on the grounds that Gomery showed a "reasonable apprehension of bias", and that some conclusions didn't have an "evidentiary" basis.[26]

On 26 June 2008, Federal Court ruled that Gomery had in fact displayed bias in several comments made before the hearings had closed and that his remarks showed that he had prejudged the issues. According to the Court, Gomery had personally insulted Chrétien when he described the distribution of golf balls bearing the prime minister's signature as "small-town cheap." The court voided those sections of Gomery's report dealing with Chrétien and Pelletier.

The Federal Court also quashed the Gomery Inquiry's conclusions that Chrétien and Pelletier bore responsibility for the sponsorship scandal.[23] Justice Max Teitelbaum criticized Gomery for having a preoccupation with the media spotlight that led him to give interviews he should have eschewed, making comments that indicated he judged issues before all evidence was heard, exhibited bias against Chrétien, and trivialized the inquiry proceedings. For instance, Teitelbaum pointed out that Gomery's remark halfway through the hearings that "juicy stuff" was yet to come made it appear that evidence of wrongdoing was expected before it was heard.[24]

The federal government was ordered to pay Chrétien's legal costs. Chrétien and his aides have described it as vindication. Teitelbaum's decision was appealed to the Federal Court of Appeal where it was upheld.[24]