November 1, 2005

Canada scandal inquiry blames Chretien

By Randall Palmer and David Ljunggren

OTTAWA (Reuters) - Former Canadian prime minister Jean
Chretien shares the blame for a government scandal laced by
greed, incompetence, carelessness and venality, but Prime
Minister Paul Martin, a fellow Liberal, is off the hook, an
official report said on Tuesday.

The report of an inquiry into a deeply flawed government
advertising program to promote Canadian unity also said senior
Liberal officials in French-speaking Quebec had engaged in an
elaborate kickback scheme and in illegal campaign financing.

In all, about C$100 million was funneled from the program
to pro-Liberal advertising firms.

Opposition politicians responded to the report with
outrage, and Martin, whose government has only a minority in
Parliament, immediately asked police to investigate.

Martin could face a confidence vote in Parliament as early
as November 14, but opposition parties expressed some
reluctance about the idea, saying that if they win the vote it
would trigger an election campaign during the December holiday

Even if Martin does survive the immediate threat, he still
faces an election next year in which he will find it hard to
win back enough Liberal seats in Quebec to give him a majority
government. The party's fortunes in the province plummeted last
year after the scandal broke.

Stephen Harper, leader of the official opposition
Conservatives, said Martin -- who was finance minister at the
time of the scandal -- had no option but to resign.

"I can't think of any other parliamentary democracy where a
scandal of this magnitude and of this nature ... could pass
without the fall of the government," he said.

The inquiry head, Judge John Gomery, found that advertising
firms in Quebec had received lucrative federal contracts and
then knowingly kicked some of the money back to the Liberal
Party's Quebec wing, enabling it to sidestep electoral
financing laws.

The scandal has dominated Canadian politics for the past 18
months and public anger cost the Liberals their majority in a
June 2004 election.

Martin has promised to call an election within 30 days of
Gomery's second and final report, due on February 1 next year.

The wrongdoing centers on a sponsorship program set up in
1996 after an referendum on sovereignty for Quebec failed
narrowly. The program paid for Canadian flags and posters at
Quebec events and aimed to boost the cause of federalism.

But Gomery, who has spent the last year investigating the
affair, said the program had backfired amid "a blatant abuse of
public funds" and he lashed out at "carelessness and
incompetence ... (and) greed and venality."

He apportioned some blame to Chretien, who ordered the
program to be established and ran it from his office. Gomery
also fingered former Public Works Minister Alfonso Gagliano,
several senior aides and bureaucrats and the heads of the
advertising agencies involved.

"Since Mr. Chretien chose to run the program from his own
office, and to have his staff take charge of its direction, he
is accountable for the defective manner in which the
sponsorship program and initiatives were implemented," he said.

Chretien's lawyers said they were considering whether to
launch a court case in a bid to restore his reputation.

Gomery spared Martin on the grounds that he had not known
what was going on.

"Mr. Martin ... is entitled, like other ministers in the
Quebec caucus, to be exonerated from any blame for carelessness
or misconduct," Gomery concluded.

Gomery praised Martin's government for scrapping the
program once Martin took over from Chretien in December 2003,
and said the original goal of keeping Canada together was no
excuse for the wrongdoings.

The two largest opposition parties, the Conservatives and
the Bloc Quebecois, failed in May to topple the Liberals after
Martin reached a deal with the left-leaning New Democratic

Martin is currently being kept in power by the minority New
Democrats, whose leader Jack Layton said he would decide soon
whether to join with other parties to try to defeat Martin.