Saturday, April 2, 2005

Maple Leaf Revolution, eh?

I read a piece over on instapundit called, “WILL THE CANADIAN GOVERNMENT FALL?” and followed the links, then the links within the links, then googled the key terms, and then just had to write. It’s different than when you are driving on the freeway and see an accident – this one is like having a front row seat to an accident about to happen.

This story is getting new life because of the culmination of hearings (the “Gomery Commission”) discussed here. A ruling is expected this Wednesday.

Here’s a good summary of claims and defenses from a Canadian blogger.

All of the events occurred on Jean Chretien’s watch (Nov 4, 1993 to Dec 11, 2003). According to the site linked immediately above, “Chretien shut down parliament to prevent the presentation of the report (reviewed below) in November and then quit.” Oh my.

So why is Paul Martin, the present PM in danger? According to his biography, “Liberals were returned to power in the 1993 vote and Martin was sworn in as Minister of Finance. He served in that role from November 1993 until June 2002.” Um, gulp, eh?

It seems that in 2003, the Auditor General of Canada (eh?) issued a report. Here (pdf format) is an Executive Summary equivalent of this writing entitled “Government-Wide Audit of Sponsorship, Advertising, and Public Opinion Research.” Apparently Chapters 3 and 4 of the broader report are the key sections.

The opening salvo: “ … federal government ran Sponsorship Program with little regard for Parliament, the Financial Administration Act, contracting rules and regulations, transparency, and value for money.” Oh my.

But wait, the opening paragraph continues: “These arrangements – involving multiple transactions with multiple companies, artificial invoices and contracts, or not written contracts at all – appear to have been designed to pay commissions to communications agencies while hiding the source of funding and the true substance of the transactions.” Gulp, eh?

It seems that the amount of money, um, pissed away is $100 million (Canadian). Contrary to popular belief, that is not a buck two eighty American. At current exchange rates, that is US$82.4MM. (I forget, how much money flowed through the Iran-Contra operation all those years ago? Oh yes, US$47MM (about half way down the doc).

This fuller writing provides more detail. You can almost picture a seated man weaving the end of a rope in and out as he fashions a noose.

The set-up (verbatim):

3.5 In November 1997, a new branch of Public Works and Government Services Canada (PWGSC) was created as a result of concerns about the federal presence and visibility across Canada,

3.6 One vehicle for delivering that mandate was the Sponsorship Program, created in 1997. Sponsorships were arrangements in which the Government of Canada provided organizations with financial resources to support cultural and community events. In exchange, the organizations agreed to provide visibility by, for example, using the Canada wordmark and other symbols such as the Canadian flag at their events, and on promotional material.

From 1997 until 31 March 2003, the Government of Canada spent about $250 million to sponsor 1,987 events … Over $100 million of that (40 percent of total expenditures) was paid to communications agencies as production fees and commissions.

Observations (verbatim):

3.14 When it created the Sponsorship Program, the federal government did not inform Parliament of the program's real objectives; nor has it ever reported the results. (Ed. – oh!)

3.17 We were informed that the program was promoted in Quebec but not elsewhere in Canada. As people outside Quebec became aware of the program, the government received some applications and approved some sponsorships of some events in other provinces. However, from 1997 to 2000, the vast majority of regional events sponsored were in Quebec. (Ed. – rather Q-centric, eh?)

3.18 We reviewed PWGSC's performance reports. None of them mentioned the program until 2001, even though sponsorships accounted for more than half of CCSB's annual spending. The 2001 Performance Report discussed the Sponsorship Program but made no reference to its objectives and its emphasis on events in Quebec. It simply stated that 291 events had been sponsored across Canada. Parliament was not informed that the primary focus of the program was on Quebec. (Ed. – but, why would such a thing be kept quiet?)

3.19 Given the importance of the objectives described to us by officials and the significance of the program's spending (more than $250 million from 1997 to March 2003), we would have expected the government to provide Parliament with at least a description of the program, its objectives, its expenditures, and the results it achieved. (Ed. – so European in their understatement!)

So what type of situations actually occurred? Here are detailed transactions complete with flow charts of where the money went. Verbal agreements, payments for past expenditures based on present faked invoices, “unusual methods of funding.”

Here is one of the more straight-forward sets of transactions (verbatim):

Old Port of Montreal—Sponsorship. Screen, Visibility Plan, and Production—2000-01

As part of its operations, Old Port of Montreal wanted to purchase a giant screen for its Science Centre but lacked sufficient funds. … Following a presentation by Old Port to the Minister of Public Works and Government Services Canada, CCSB offered verbally to provide $1.5 million in sponsorship funds in return for federal visibility.

Rather than make a direct payment, CCSB contracted with Lafleur Communication Marketing and Media/I.D.A Vision (CCSB's agency of record) to transfer $1.5 million to Old Port. The files contain nothing to support the selection of these agencies. CCSB paid the agencies $225,000 for facilitating the transfer. The files did not show what, if any, value the Crown received for the $225,000.

Although Old Port had not signed a contract with the agencies or with CCSB, it was informed by Lafleur that it would receive $1.5 million in April 2000. Old Port decided, with no involvement from Media/I.D.A Vision or Lafleur, to launch a process for issuing a $1.5 million contract to acquire a giant screen and related programming services. In August 2000—after it had issued the purchase order to the supplier—Old Port received $1.2 million as the first payment from Media IDA Vision. At the time of our audit, Old Port had not received the remaining $300,000 it had been promised.

CCSB awarded additional contracts to Lafleur to create visibility for the government on the giant screen—for example, $100,000 to develop a visibility plan and $57,000 to produce video clips, $40,000 of which work was subcontracted out. In total, CCSB paid Lafleur $297,000 in various fees to transfer money, to produce a visibility plan, and to subcontract production work. We found nothing in the file to show specifically what CCSB expected to receive from Lafleur or what it did receive.

In large part, the substance of the transaction was a transfer of funds from CCSB to Old Port of Montreal to buy a capital asset for Old Port. CCSB should have asked the Treasury Board for the authority to transfer funds to Old Port. By not doing so, CCSB violated the intent of the Treasury Board's transfer payments policy, which was designed to ensure that a grant or contribution is not used as a substitute for financing a Crown corporation's operating or capital requirements. The Treasury Board Secretariat was not consulted or given a business case to support this purchase.

In our opinion, CCSB did not have the authority to transfer money from PWGSC's appropriation to support the operations of a Crown corporation. It spent nearly a quarter of a million dollars on commission fees to two agencies for transfering money between two government entities. CCSB paid fees to the same agency for the transfer, for production, and for subcontracting work, with no supporting business case and no written agreement with Old Port of Montreal.

(Emphasis added)

So … who are the principals of Lafleur? Note that their name comes up with money attached in all but one of the detailed transactions. They are, afterall, the “agency of record.”

Well, Jean Lafleur seems to be integral to the present inquiry. This charming writing is a google translation from French. It opens, “Jean Lafleur Communication Marketing (JLCM) invoiced more of the double to the federal government for the creation and the installation of logos and flags of Canada on the fleet of Via Rail, in 1998-99, a possible case of surfacturation that the advertising executive could not explain, yesterday at the time of the audiences of the Gomery commission.” (Ed. – chuckle, eh?)

So much scandal, so little time. Time for a Maple Leaf Revolution, eh?

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