Graeme Hamilton
National Post
Wednesday, May 25, 2005
MONTREAL - A forensic audit tabled yesterday shows that Groupaction Marketing, one of the biggest beneficiaries of the federal sponsorship program, may have given more than $1.7-million to the federal Liberal party in unregistered donations.
CP file photo of Jean Brault former president of Groupaction
The sum is in addition to the $800,000 that nine advertising firms involved in the sponsorship program, including Groupaction, made in official donations to the Liberals, for a total of $2.5-million over the 10 years examined by Kroll Lindquist Avey, forensic accounting experts hired by the Gomery inquiry.
The accounting firm was unable to trace any cash payments made to the Liberals but unearthed more than $400,000 in cash that Groupaction president Jean Brault would have had at his disposal between 1996 and 2002.
Mr. Brault has testified that he was leaned on to help the Liberal "cause" as payment for the lucrative sponsorship and advertising contracts being sent his way. He said he provided envelopes of cash and put Liberal workers on his payroll.
Working with Kroll accountants, Mr. Brault identified 15 payments in Groupaction's books, totalling $1,713,587, that he said were destined for the federal Liberal party. (The Kroll report erroneously included in its tally a $50,000 payment that Mr. Brault said went to the provincial Liberals.)
The 15 payments identified by Mr. Brault include $965,000 to Alain Renaud, a lobbyist whom Mr. Brault said he paid while Mr. Renaud was working for the Liberals. Another $430,000 went to Jacques Corriveau, a Liberal fundraiser and friend of Jean Chretien, the former prime minister; according to Mr. Brault, Mr. Corriveau said the money was for the Liberal "cause," but Mr. Corriveau has insisted he was paid for legitimate lobbying work.
"While we can't state categorically that these are related to the Liberal party, we can state that we can identify these payments at least having come out of Mr. Brault's books and records," said Steven Whitla, a Kroll auditor. "It will be up to the commissioner to decide whether they are, in fact, politically related."
Doug Mitchell, the lawyer representing the Liberal party before Justice John Gomery's inquiry, said the $1.7-million identified by Kroll greatly overstates the amount of "improper or illegal payments" received by the Liberals.
Mr. Mitchell told reporters that the $750,000 placed in trust by the Liberals last week to reimburse the federal government for any improper payments is double what he believes will be needed when Justice Gomery delivers his conclusions.
"We're going to have to wait until Mr. Justice Gomery makes his decision as to what was inappropriate and what was, quote, appropriate," he said.
Mr. Mitchell said he was happy to see that Kroll's accountants found no evidence of sponsorship money profiting political figures or ending up in offshore accounts.
"I take some comfort personally from the fact that this does not appear to have been, from what Kroll is reporting, a great huge scam.
"It appears to be that some people profited unduly at the expense of the government. It appears that there were inadequate controls on the spending, but from what Kroll says it doesn't appear that there was a great criminal scheme here," he said.
What the Kroll report does spell out is how handsomely a handful of well-connected advertising firms profited from the federal government's initiative to foster national unity by increasing its presence in Quebec.
The accountants concluded that between 1994 and 2004, sponsorship contracts totalled $332-million, an increase of 33% from the figure of $250-million advanced by Sheila Fraser, the federal auditor-general.
Kroll said the increase resulted from its looking at contracts over a period three years longer than Ms. Fraser examined.
They found that nearly half the total paid out -- $147-million -- was eaten up by commissions and production costs, with only half going toward the actual sponsorship of events.
Ms. Fraser had established the cost of commissions and production at $100-million. More than half the sponsorship business went to three firms -- Groupaction, Groupe Everest and Lafleur Communications.
In addition to the sponsorship funding, Kroll found that Ottawa spent $1.1-billion on advertising during the period.
Advertising spending ballooned at the same time as the sponsorship program was in place, rising to $203-million in 2001-02 from $43-million in 1994-95.
Accountants as a group are not known for their sense of humour, but even Kroll could not resist a little levity after more than 200 pages of dry calculations.
On the final pages of its report, Kroll includes an example of taxpayers' dollars at work: a $2.9-million program to publish posters depicting Canadian wildlife and Formula One race cars in Quebec newspapers.
The creature chosen by Kroll to illustrate the project is a skunk, best known for "the jet of nauseating liquid it shoots at its aggressors," the poster notes.
© National Post 2005
