|
| THE AUDITOR-GENERAL'S REPORT: Money misused - Wednesday, February 11, 2004 at 10:34 |
|
PUBLICATION GLOBE AND MAIL ------------------------------------------------------------------------ The report, and Ms. Fraser's subsequent comments, made it clear that she does not believe this is a simple matter of incompetence, but rather a systematic abuse of taxpayers' dollars by a small group of powerful government officials. "The pattern we saw of non-compliance with the rules was not the result of isolated errors. It was consistent and pervasive," the report said. The biggest revelation in the report was how the government gave millions to advertising firms to perform the simple task of transferring funds from Public Works to a handful of Crown corporations. Given that this could have easily been done for free, she concluded the goal was the enrichment of outside firms, although she could not understand why the Liberal government would do this. "It's a blatant misuse of public funds," she said at a news conference. The audit concluded that the government broke its own rules to hire the advertising firms, which were generous donors to the Liberal Party of Canada. Overall, the advertising firms reaped a total of $100-million in commissions and fees between 1997 and 2003. "Rules were broken or ignored at every stage of the process for more than four years and there was little evidence of value received for the money spent," Ms. Fraser said She said she thought she had become immune to scandal in recent years, but as she read the report, "I got angry all over again. This is so outrageous." The report raised serious questions over the appropriateness of the frequent contacts between senior bureaucrats and Mr. Gagliano, the minister of public works from 1997 to 2002. The report said that the "direct access" between Mr. Gagliano and the top bureaucrat in charge of the sponsorship program, Chuck Guite, "further reduced normal control and oversight provisions." "It is not necessarily inappropriate for a minister to deal with bureaucrats, but usually there is documentation," Ms. Fraser said. She travelled to Denmark last year to interview Mr. Gagliano, who was recalled yesterday as Canada's ambassador for his role in the boondoggle. During the interview with Ms. Fraser, Mr. Gagliano said that neither he nor his office "decided which events" received sponsorship funding from his department. But the Auditor-General's report pointed out that there is written evidence that Mr. Gagliano's office was involved in specific funding decisions, in particular to reverse decisions made by bureaucrats. The story of the sponsorship program starts in the mid-1990s. Officially, the initiative was born after the 1995 referendum on sovereignty, as Ottawa decided it needed to increase its visibility in Quebec. The goal was to provide funding to the organizers of sporting and cultural events in exchange for the placement of federal banners and Canadian flags at the event sites. The advertising firms were hired to act as intermediaries between Public Works and the recipients of the sponsorships. While the Office of the Auditor-General has wide-ranging investigative powers, it could not find any record of the birth of the sponsorship program in Ottawa. "It is not clear to us how the decision to create the program was made, and by whom," the report said. To manage the program, tremendous power and money was placed in the hands of one bureaucrat, Mr. Guite, who retired in 1999. According to the report, Mr. Guite had the authority to pick the advertising firms that acted on the sponsorship program, as well as which events received funding and how much. In addition, Mr. Guite signed off on payments to the advertising firms. Mr. Guite as under little supervision from his deputy minister. Apart from his frequent consultations with Mr. Gagliano or senior staffers in the office, Mr. Guite was given full control over $50-million a year, with little accountability. "Roles and responsibilities were not segregated to eliminate, as far as possible, any opportunities for fraud and misstatement or an override of controls by management," the report said. Mr. Guite was known within government for his ability to get things moving, and the sponsorship program quickly got off the ground in 1997. In the first year, $46.3-million was spent, putting up flags and banners at events such as the Ottawa Winterlude festival and the Quebec City Carnaval. By 2003, the government had spent $250-million on the program. Year after year, money was engulfed in highly questionable deals, often with no documentation on file to explain how the public funds had been spent. There is no record, for example, detailing what Groupaction Marketing Inc. produced in return for a $330,000 deal that called for a communications strategy related to the firearms legislation. The sponsorship program also turned to Crown corporations for funding. Ms. Fraser said it was "highly inappropriate," but Mr. Guite himself called the heads of Crown corporations to spend funds on sponsorships, bypassing normal procedures. Most of the Crown corporations reported directly to Mr. Gagliano, who was aware of their involvement. In one circumstance, Public Works created a "fictitious contract" to allow for the transfer of funds between VIA Rail and an advertising firm, the report said. Through it all, the report said that Parliament was kept in the dark, as MPs were not informed about the program that was supposedly designed to fund a wide variety of sporting and cultural events. The problem was not a lack of rules, but the fact that they were ignored, Ms. Fraser said. The report said many of the problems that affected the sponsorship program also applied to Ottawa's advertising program, which was worth a total of $800-million over the past six years. After Mr. Guite retired, he was replaced by Pierre Tremblay, who up until then had been Mr. Gagliano's chief of staff. |