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MARCH 25, 2004

A little scandal in Canada...

In February Canada's Auditor General Sheila Fraser released details of a explosive report on government advertising and sponsorship programmes. Fraser concluded that huge fees and commissions were paid to PR agencies without there being any real benefit for Canadians. It is alleged that the payments was used to reward supporters of the Liberal party. The report said that the scandal dates back to 1995 when the government began a pro-federalism advertising campaign in the French-speaking Quebec province. The scandal first broke in 2000 when Public Works Minister Alfonso Gagliano ran into trouble after it was revealed that the firm his son was working for benefited from these advertising contracts. This resulted in the first investigations but in 2001 Gagliano was cleared by Federal Ethics Counsellor Howard Wilson.

The scandal re-emerged in 2002 when it was revealed that a PR agency supplied the same report twice to the Public Works Ministry and was paid for both. The result was a police investigation and called for a judicial inquiry into Gagliano, who was by then Canadian ambassador in Denmark. In recent months there have been calls for criminal charges to be laid against those involved.

One of those who has been dragged into the scandal is Jacques Villeneuve who, it was claimed this week by former Olympic gold medal-winning biathlete Myriam Bedard, received $12m in sponsorship for wearing the Canada flag on his overalls. The allegation was made to the Commons Public Accounts Committee.

Most racing drivers have their national flags on their overalls as a matter of course. Bedard said that her agent told her about the Villeneuve deal during a conversation at the Grand Prix in Montreal in either 1997 or 1998. The agent denies it.

John Williams, the chairman of the Public Accounts Committee, said that he considered Bedard to be an "extremely credible witness."