April 4/2005

A political scandal involving the Public Works Ministry, a government effort called the Sponsorship Program, and allegations of corruption in the ruling Liberal Party has Canada abuzz with rumours of payoffs, Mob ties, and snap elections. For the last two years, Canadian politics has been gripped by the so-called sponsorship scandal tens of millions of dollars in government contracts which were funnelled into advertising firms closely connected with the Liberal government for little or no work, but with shadowy rumours that much of the money found its way back into Liberal coffers. Prime Minister Paul Martin, himself a Liberal, appointed the Gomery Commission to investigate these charges and determine whether to bring charges against government officials for corruption and malfeasance. (See the blog Small Dead Animals for some excellent background on the case.)

Most of the testimony heard by the Commission has been public, but Judge Gomery has decided to create a publication ban on the testimony of three key witnesses: Jean Brault, president of the ad agency Groupaction, Charles Guit, an officer of the Public Works ministry who worked on the Sponsorship Program, and Paul Coffin, president of the ad agency Coffin Communications. The potential damage of their testimony has so unnerved the Liberal Party that they have reportedly started working towards a snap election so that they will not have to face the voters once the facts surface from the record.

And well they might, if Braults testimony gives any indication of what they will face. Thanks to a friend of mine, CQ readers can get a taste of what Brault has already told the Gomery Commission. For obvious reasons, I cannot reveal this persons name or position, but this person is in a position to have the information. Bear in mind that this comes from a single source, so while I have confidence in the information, you should consider the sourcing carefully.

Payoffs And Kickbacks

On Thursday, Jean Brault began his testimony, subject to the publication ban, and revealed a massive pattern of corruption going to the highest levels of the Liberal party and government. Brault testified to hundreds of thousands of dollars of bogus transactions designed to benefit the Liberal Party of Canada over a period from 1994 to 2002.

Most of the illegal campaign contributions involved Brault either hiring employees who were in fact working full time on Liberal Party activities or paying invoices for Liberal Party campaign expenses (which were never declared as such) or making untraceable cash donations to Liberal officials. In exchange for helping the federal Liberals in Quebec, Brault received millions of dollars in federal advertising contracts.

Brault said he met with Jean Carle, a key aide to then Prime Minister Jean Chrétien to propose a more direct way of ensuring that Groupaction got a large share of federal advertising dollars in Quebec. Carle referred Brault to federal bureaucrat Charles (Chuck) Guit and told him that there was room for everybody. Guit later put together the sponsorship program, in which five Liberal connected firms including Groupaction were guaranteed a monopoly on government sponsorship advertising (e.g. federal
advertising at sporting or cultural events) and related work. The sponsorship program eventually became a huge slush fund into which over $250 million was poured, over $100 million of which was paid in fees and commissions to these five advertising firms, with little or any evidence of work done or value for money.

In exchange for these large contracts for little or no work, Brault kicked back generously to the Liberal Party, putting Liberal organizers on his payroll while they continued to perform party work (including, at one point, Prime Minister Jean Chrétien's brother, Gaby Chrétien), paying invoices to other companies for work actually done for the Liberal Party, and giving large donations in cash to the Liberal Party through Renaud or Liberal Party organizer (and close associate of Public Works Minister Alfonso Gagliano) Joe Morselli.

Protection Racket?

Towards the later part of the sponsorship program, the friends and associates of Public Works Minister and former ambassador to Denmark Alfonso Gagliano, some of whom have been linked to organized crime, played a larger role in the schemes.

At one point, Gagliano associate Tony Mignacca told Brault that if he didn't rehire Renaud (who had left Groupaction to start a new company), he would lose his newly acquired contract with Via Rail Canada's state-run passenger rail service. Brault broke down in tears after he recounted this testimony. At a meeting in 2001 with Joe Morselli, Brault said that he arranged to have the meeting in an overheated room in a restaurant so that Brault could ask Morselli to take off his coat and ensure that he wasn't carrying a body pack.

This is just the beginning of Braults testimony. If the Gomery Commission can corroborate Brault, then the reek of corruption goes through all levels of the Liberal party and may explain their ability to out-campaign the Conservatives. After all, theyve siphoned off hundreds of millions of government dollars to promote their own party and to guarantee their monopoly on power. They hijacked the Canadian tax base to fund their own campaigns and hide the financial trail.

More will be forthcoming, but it isn't difficult to understand why Liberal politicians have begun to panic already.
 

BY GREG B. SMITH -  DAILY NEWS STAFF WRITER

      Alfonso Gagliano has held titles in Canada that include labor minister, deputy House leader, ambassador to Denmark and minister of public works.

      In New York he held a different kind of title, according to secret FBI documents obtained by the Daily News: "made" member of the Bonanno crime family.

      Gagliano was identified as a long-time soldier in the Bonanno crime family by Frank Lino, a former Mafia capo-turned-informer.

      Lino is now cooperating with the FBI and federal prosecutors as they slowly take apart the mob family to which he once swore allegiance.

      Gagliano's name surfaced as Lino described the Bonanno family's operations in Montreal, which has served as an outpost for the Brooklyn-based group for decades.

      He said he and a group of top Bonanno gangsters traveled to Montreal in the 1990s to let the northern branch office know the family had a new boss, Joseph Massino.

      The group met at a catering hall, and during the meeting, a Bonanno gangster, Joseph Lopresti, introduced Gagliano to Lino as a made man in the family, FBI documents state.

      Lino made a point of telling the FBI that only actual members of the Bonanno family were allowed to attend the meeting at the catering hall. Associates were banned.

      Gagliano attorney Pierre Fournier did not return calls seeking comment yesterday.

      For years, Gagliano was a fixture in Canada's national politics, rising through the ranks of the Liberal Party.

      But his most powerful position was undoubtedly Canada's minister of public works and government services, the office that oversees the Canadian mint and awards most of Canada's government contracts.

      In that capacity, Gagliano found himself embroiled in a growing scandal over potential corruption in the awarding of contracts for government advertising.

      In February, he was dismissed as ambassador.

      There is an ongoing investigation into allegations that government funds were funneled to large contributors to the Liberal Party for no-work contracts.

      Lino was shown an array of photographs and identified Gagliano, the FBI documents state.

      When he began cooperating with the FBI, Lino admitted he was involved in six murders, several attempted murders, loansharking, extortion and gambling.

      Originally published on November 18, 2004
 

Graeme Hamilton
National Post


May 10, 2005

MONTREAL - A former high-ranking Liberal who yesterday offered more evidence of sponsorship cash being diverted to the governing party said Alfonso Gagliano called him three weeks ago and warned him not to come clean with the Gomery inquiry.

Benoit Corbeil, director-general of the federal Liberals' Quebec wing from 1998-2001, testified that Mr. Gagliano, the former public works minister, told him ''people would come out against him'' if he implicated the Liberals in the sponsorship scandal.

Mr. Corbeil said he phoned Mr. Gagliano at his home after receiving a message on his cellphone. He said during the three- or-four-minute conversation, Mr. Gagliano said he had heard Mr. Corbeil was planning to reveal how sponsorship cash helped fund the Liberals' election campaigns. ''He said, 'Listen, I've just learned you are going to reveal things to the commission that are false and that could implicate the [Liberal] electoral commission,' '' Mr. Corbeil recalled.

After acknowledging he planned to link the commission, the Liberals electoral readiness committee over which Mr. Gagliano had presided, to the scandal, the former minister issued a threat, according to Mr. Corbeil: ''Listen Benoit, people are going to come out against you, and you are going to lose your reputation and you are going to lose several friends.''

Yesterday, Mr. Corbeil disregarded the warning and testified that immediately before the 2000 federal election campaign, Mr. Gagliano's chief of staff, Jean-Marc Bard, sent him to Groupaction's Jean Brault, one of the sponsorship program's biggest beneficiaries, to ease a serious cash crunch.

In total, he said, Mr. Brault provided $100,000 in October, 2000, that the party never registered as official donations. Half of it came in cheques written by a Groupaction subsidiary and the other half came in two cash payments.

Mr. Corbeil testified that the Quebec wing was in serious financial difficulty in 2000 and he was facing a mutiny from so-called volunteers -- many of them aides to ministers on leave during the campaign -- who wanted to be paid for their work.

''I would have much preferred an official donation, and we would have paid people by cheque. Then maybe I wouldn't be here today. Unfortunately that's not what happened,'' he said. ''I can tell you, after having done many, an election campaign is very difficult at times. There is a high level of stress and pressure. And when the political aides are coming every day saying they want to be paid, at a certain moment I paid them.''

He testified that the $50,000 in cheques issued through Groupaction affiliate Commando Marketing went to five Liberal organizers. Mr. Brault had told him he had already given enough to the party officially and did not want his name tied to additional donations because of the large volume of federal contracts Groupaction received.

Mr. Corbeil also described receiving $35,000 in $50 bills from Mr. Brault at the Groupaction offices. A week later, Mr. Brault provided another $15,000 cash. The cash, he said, was distributed among nine workers, ''people who had more experience and a lot more know-how in terms of organization and how an election works.'' He admitted the donations contravened election law.

After hesitating briefly, and noting that he lost his job at the Universite du Quebec a Montreal after his name was tied to the sponsorship scandal, Mr. Corbeil named the recipients of the cash.

They included Daniel Dezainde, who replaced Mr. Corbeil as party director-general in 2001 and is now press secretary to Jacques Saada, federal Minister of Economic Development for Quebec. He received $3,000. Mr. Corbeil said Irene Marcheterre, now press secretary to Transport Minister Jean Lapierre, got $5,000, Pierre Lesieur, an aide to Mr. Gagliano at the time, received $6,000 and Claude Lemieux, also from Mr. Gagliano's office and now in the office of Quebec Premier Jean Charest, got $6,000. Another $15,000 went to Bruno Lortie in Quebec City to be distributed among workers there, and the remaining $15,000 was distributed among Luc Desbiens, Richard Mimeau, Michel Joncas and an unnamed worker, he said.

Mr. Corbeil said he informed the co-presidents of the Quebec wing's electoral commission Mr. Gagliano and Claudette Tessier-Couture, that the workers in question had been paid. He said he did not specify where the money came from, but said it would have been clear to them that the money did not come from normal channels. ''People in the electoral commission knew very well that we had financial difficulties,'' he said. Ms. Tessier-Couture has since been named a Superior Court judge.

Last week, Michel Beliveau, Mr. Corbeil's predecessor as director-general, testified that before the 1997 campaign he gave Mr. Corbeil between $75,000 and $100,000 cash to distribute among key ridings. Mr. Corbeil testified yesterday that he only received $9,000, which he divided among two Montreal ridings.

During a break in yesterday's proceedings, Mr. Corbeil received a letter from a lawyer representing Ms. Marcheterre, Mr. Desbiens and Mr. Mimeau denying they ever received cash payments for their work on the 2000 campaign. The letter threatened legal action if Mr. Corbeil does not retract his allegations within 24 hours. Guy Bertrand, Mr. Corbeil's lawyer, called the letter and the earlier phone call from Mr. Gagliano attempts at ''intimidation.''

© National Post 2005
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