LIBERAL TROUBLE: THE SPONSORSHIP SCANDAL Introduction Prime Minister Paul Martin’s brief its awarding of government contracts to Focus honeymoon with Canada’s voters came Groupaction. In 2003, a Liberal activist This CBC News in to an abrupt halt on February 10, 2004, in Quebec warned Paul Martin, then a Review story exam- ines the sponsor- with the release of the report of Sheila backbench MP, that taxpayers’ dollars ship scandal that Fraser, the federal Auditor-General. were being diverted from the sponsor- rocked Ottawa in Fraser’s devastating audit of how ship program for politically partisan the wake of the Ottawa spends taxpayers’ dollars con- purposes in that province, and strongly Auditor-General’s tained sensational revelations about a suggested he investigate the affair. February 2004 controversial government advertising Fraser’s report not only detailed report. We look at its main details and and sponsorship program that the Public where and how the money had been players, and the Works Department ran in the 1990s. misused, but also named names. A potential implica- The program, which Prime Minister number of senior civil servants and tions for Paul Jean Chrétien’s government had estab- politicians were implicated, including Martin’s Liberal lished after the narrow federalist victory former public works minister Alfonso government on the eve of an antici- in the Quebec sovereignty referendum Gagliano and Jean Pelletier, chairman pated federal of 1995, was designed to promote of Via Rail. Gagliano, who had been election. Canada in that province and showcase appointed ambassador to Denmark after the benefits of federalism. But whatever leaving politics, was removed from that the intentions of the federal sponsorship position a day after the release of the Did you know . program were, Fraser’s report uncov- Fraser report. He was later called before The 1995 Quebec ered outrageous misuses of public funds a parliamentary committee convened to referendum results in its day-to-day operations. She found inquire into the scandal, where he were so close that that at least $100-million had been strongly denied any wrongdoing. An if only 50 000 more voters had sup- handed over to public relations and enraged and clearly rattled Paul Martin ported the referen- communications agencies in Quebec announced on March 1 that Pelletier dum, it would have with close ties to the Liberal Party. had also been fired as a result of his been won by Much of this money was never actually involvement in the misuse of public separatist forces? used for the purposes originally in- funds while managing Canada’s main This narrow victory is at the basis of tended for it; instead, it had given these rail network. the sponsorship firms large commissions, with very For the Martin government, the scandal. little in the way of concrete results to sponsorship scandal could not have show for it. come at a worse time. A federal elec- YV Allegations about questionable finan- tion was widely expected for spring Sections cial dealings and abuses of public 2004, and the sensational allegations marked with this symbol indicate money in the sponsorship program were arising from the Auditor-General’s content suitable for not new. In fact, in 2002, Fraser had report had caused the party to lose younger viewers. called for an RCMP investigation into considerable ground in public opinion how one Montreal advertising agency, polls. The opposition Conservatives, Groupaction Inc., had been the recipient fresh from their founding party conven- of $1.6-million in government con- tion that named Stephen Harper as their tracts. At that time, she charged the new leader, and the rejuvenated NDP Public Works Department with “break- under Jack Layton both smelled blood. ing just about every rule in the book” in Throughout Canada, there was a grow- CBC News in Review • April 2004 • Page 6 ing wave of public anger and disgust 2004 that the Liberals were in serious Quote over the taint of corruption and arro- trouble with the voters. It remained to “I am personally gance enveloping the Liberal govern- be seen whether Martin would proceed and profoundly committed to rapid ment. Despite Martin’s assurances that with his plan to go to the polls before and permanent the entire affair had occurred prior to June or delay the election call in the changes in the way his assuming the party leadership, and hope that public outrage over the spon- things are done in his promises to do whatever was neces- sorship scandal would diminish over Ottawa.” — Prime sary to get to the truth and punish those time. Minister Paul responsible, it was clear by early April Martin, Toronto Star, March 18, 2004 To Consider 1. In your own words, explain the sponsorship scandal. Why is it such a major political problem for Paul Martin’s government? 2. How has Martin responded to the scandal? 3. Do you think his actions will be enough to convince Canadian voters that his government deserves another term in office? 4. What was the original intention of the federal sponsorship scandal? Despite the evident misuse of public money in its operations, do you think it was a worthwhile government program nonetheless? 5. What advice would you give Paul Martin concerning the calling of the next federal election? CBC News in Review • April 2004 • Page 7 LIBERAL TROUBLE: THE SPONSORSHIP SCANDAL YV Video Review 1. How has the sponsorship scandal affected Paul Martin’s electoral future? View the video and respond to the questions on this sheet. Be sure to 2. What was the conclusion of Auditor-General Sheila Fraser to the investiga- take them up later tion? either with your peers or your teacher. 3. What event was the seed of the sponsorship scandal? Quote “Just pay the bill 4. How did some Quebec-based communications companies profit from . don’t ask sponsorship programs? questions.” — Huguette Tremblay commenting on the attitude in the Public Works Department, 5. How much money has been lost or wasted in the sponsorship scandal? Toronto Star, March 26, 2004 6. Why is Prime Minister Paul Martin in the political hot seat over the scan- dal? 7. What role did Alfonso Gagliano apparently play in the scandal? 8. What questions about the sponsorship scandal remain to be answered? 9. What impact do you think the scandal will have on the next federal election? CBC News in Review • April 2004 • Page 8 LIBERAL TROUBLE: THE SPONSORSHIP SCANDAL Great Canadian Scandals of the Past Like most countries, Canada has had within 10 years. Macdonald faced a more than a few political scandals in its difficult election campaign in 1872, history. But rarely have they been with his support slumping dangerously serious enough to topple the sitting in Ontario. He desperately needed government or force the removal of a major financial contributions to ensure major political leader. In the United that his Conservatives were re-elected. States, the Watergate scandal of the He turned for help to an old friend, Sir early 1970s led to the resignation of Hugh Allen, a Montreal shipping mag- President Richard Nixon, while the nate and president of the Canadian salacious sexual improprieties that Pacific Railway Company, a firm engulfed President Bill Clinton resulted bidding for the contract to construct the in his near-impeachment in 1999. transcontinental railway. Allen donated Canada’s political scandals of the past approximately one-third of a million have often been colourful and seized dollars to Macdonald’s campaign, a the attention of the media and the public substantial sum for the time, in return while they lasted. But for the most part for the guarantee that his company their long-term consequences have not would be awarded the railway contract. been too serious for the parties and The Conservatives just barely won, leaders caught up in them. It remains to and their majority in the House of be seen if the current federal sponsor- Commons was drastically reduced. ship scandal will follow this pattern in Bowing to nationalist opinion, Canadian history or become so serious Macdonald demanded that Allen’s that it will lead to the downfall of the company divest itself of U.S. control current Liberal government of Paul over its board of directors. But he did Martin. not know that Allen had actually drawn Here is a brief survey of some of this on U.S. funds as part of his contribution country’s main scandals, their major to the Conservative campaign. In the players and issues, and their short- and spring of 1873, the Liberal opposition, long-term political impacts. led by Alexander Mackenzie, broke the scandal to the public. Pro-Liberal 1. The Pacific Scandal (1872-74) newspapers published damning letters Canada was less than a decade old and telegrams exchanged between when it was rocked by its first big Macdonald and Allen. In one of them, political scandal, involving the Conser- Macdonald pleaded with Allen, “I must vative government of Sir John A. have another ten thousand at once! Do Macdonald, one of the fathers of Con- not fail me!” That fall, Parliament federation. A major objective of reconvened, with six new MPs from Macdonald’s was the building of a Prince Edward Island, which had joined railway linking the new country from Confederation that year. These new coast to coast. In 1871, British Colum- members quickly allied themselves with bia had entered Confederation with the the Liberals, and Macdonald’s govern- promise that the railway joining it to the ment fell on a motion of non-confi- rest of the country would be completed dence. Mackenzie’s new administration CBC News in Review • April 2004 • Page 9 quickly called an election for February Department, which controlled levies on Definition 1874, which they won handily, using goods moving between Canada and Motion of non- the Pacific Scandal to disgrace other countries, were mainly Liberal confidence is a motion designed to Macdonald and his Conservatives.