Shocking sponsorship details revealed
Former ad executive tells of phony bills and envelopes stuffed with money Justice Gomery lifts publication ban on testimony at sponsorship inquiry


MIRO CERNETIG AND SEAN GORDON
STAFF REPORTERS
MONTREAL—Bogus jobs were created, an envelope stuffed with cash was left on a restaurant table and a firm owned by an ally of former prime minister Jean Chrétien was paid $495,000 for work that was never done.

These are just a few of the potentially devastating details revealed yesterday when a publication ban was lifted on testimony by a former Montreal ad executive at the Gomery inquiry probing the federal government's sponsorship program.

Jean Brault, former president of Groupaction, outlined over six days at the inquiry how the Liberal Party of Canada extracted more than $1 million from his firm, funnelling money from the sponsorship program to fund the party's political activities in Quebec.

The testimony had been under a publication ban because Justice John Gomery was concerned that Brault's testimony could prejudice the former Groupaction president of a fair trial. Brault is charged with six fraud-related counts in connection with the sponsorship program. His trial begins June 6.

But Gomery said yesterday he found Brault's testimony had little to do with the accusations of fraud and conspiracy he is facing, and he imposed the ban as a precaution before knowing what Brault would say.

Gomery said "publication bans constitute a violation of constitutional rights and are to be imposed rarely, particularly in the context of a public inquiry."

What can now be revealed are Brault's allegations of a wide-ranging scheme to trade lucrative sponsorship contracts for political donations and favours to the party.

In addition to being required by senior Liberal officials to deliver envelopes stuffed with cash at secret meetings, Brault also alleges he was forced to use sponsorship money to pay hundreds of thousands in phony bills, presented by a close ally of former prime minister Jean Chrétien, for what was called "the cause."

In other cases, senior Liberal officials demanded that Liberal workers be put on Groupaction's payroll, where they did nothing, Brault said.

"We began to sense what the magic formula was to be lucky," testified Brault, whose company pulled in $61 million in sponsorship contracts, given to promote the federal government in Quebec after Ottawa's near-loss in the 1995 Quebec referendum on sovereignty.

"So what was the magic formula or the magic recipe?" asked commission lawyer Bernard Roy.

"Well for the sponsorships — and I want to emphasize this — it was to listen very carefully to some of the requests the party would make," said Brault, who also pulled in a salary of $3.4 million while running Groupaction from 1992 to 2001.

Those requests for money — which Brault testified often seemed more like orders — came from senior Liberals who were dealing with their party's precarious financial condition in Quebec.

In testimony, Brault said he helped out by paying more than $495,000 to a company owned by Jacques Corriveau, a longtime ally of Chrétien, for work that was never done. Brault said he did so because he understood that Corriveau, a key Quebec Liberal organizer, was an "ambassador for the party" who told him the money was to help "the cause," which he understood was for political purposes.

The money came from $4.2 million in commissions that Groupaction charged on a series of sponsorship contracts totalling $35 million that were sent to Groupe Polygone and Expour, companies that put on trade shows and published books to promote Canada. Brault testified that from 1997 to 2001, Corriveau's company, Pluri Design, took 10 per cent of Groupaction's commission by presenting phony invoices for work that was never performed.

Corriveau did so by creating false invoices — totalling $495,000 — that Groupaction paid out of its sponsorship contracts, Brault alleged.

There were also little favours demanded by Liberal organizers, Brault said, such as hiring Chrétien's niece. And bigger ones, such as hiring Liberal workers in need of jobs.

"Essentially this is false billing," said commission lawyer Roy. "Why over three years did you pay over $400,000 to Pluri Design as fees for service that were not provided."

"Because these amounts represented amounts asked of me — I would even say required of me — by Mr. Corriveau, destined to what he called the cause."

Under cross-examination by the Liberal party's lawyer, Doug Mitchell, however, Brault acknowledged he did not know for sure that the money actually made it to the Liberal party. Mitchell pointed out that official donations by Corriveau, his wife and company to the Liberal party totalled $66,000.


Asked if he knew if the rest of the money was also sent to the party, Brault said, "no idea."

"Before you brought that fact to my attention, I always was under the impression that it was destined for the cause. I deduced the cause was the party."

In his dealings with federal Liberals, Brault testified he:

Was told by top Quebec Liberal official Benoît Corbeil that if he donated $400,000 he would get the money back from a sponsorship contract for $3 million. A smaller contract arrived and Brault said he gave $60,000, though he could not say who got the money or how it was delivered.


Retained Montreal lobbyist Alain Renaud for a total of $1.1 million from 1997 to 2001. A longtime Liberal, Renaud was Brault's "door-opener" who promised to — and did — make Brault and Groupaction known within the Liberal government. He was also on loan to the party.


Delivered multiple envelopes stuffed with about $135,000 cash — in one case $35,000 taken from Groupaction accounts — to Liberal organizers.


Sent $50,000 to the Quebec Liberal party in the 1998 provincial election campaign. The money was sent via a cheque to Groupe Everest, a firm with close provincial Liberal ties.


Gave $50,000 in cash for the Liberal party to fundraiser Joseph Morselli. Brault says he offered $100,000 if it could be arranged that Groupaction wouldn't have to undergo bidding for a lucrative ad contract involving the federal gun registry program. Morselli, a former organizer for Gagliano, was the Liberal party's vice-president of finances in Quebec.


Put three Liberal workers on to Groupaction's payroll, even though in most cases they did no work for Groupaction. Brault said that Serge Gosselin, a former adviser to Stéphane Dion, who is now environment minister, rarely showed up at the office in 1996 while collecting a Groupaction salary of between $80,000 and $84,000. In 1997, Gosselin published a biography of Gagliano, who oversaw the sponsorship program.


As well, John Welch, a former adviser to one-time Liberal cabinet minister Denis Paradis, was paid about $8,000 a month in 1999 and given an office at Groupaction. Brault said he was asked to take him under his wing by a party organizer. "He was very active on the phone," said Brault. "We understood he was doing some sort of work with the party." Welch yesterday stepped aside as chief of staff of federal Heritage Minister Liza Frulla.

Liberal party lawyer Mitchell attacked Brault's credibility, noting that he admitted he overcharged taxpayers for services through phony bills. Brault, who had ranged from teary eyed to fiery and jovial on the stand, shot back instantly.

"Before I had your clients in my business, I never made any fake invoices," he said.

Mitchell responded that Brault actually camouflaged two $50,000 payments to the Parti Québécois, probably in 1997 and 1998.

Brault said the payments were to help ensure his contract continued with the provincial liquor board. He said he asked sovereignist-minded Groupaction employees to make the donation in their names, which were then repaid by the firm.

"For the cause?" asked Mitchell. "For the other cause?" he asked, referring to separatism.

"Let's leave it at that," said Brault.

According to Brault, his dealings with Liberals began after the 1993 election. It was then he hired Renaud, whom he first met in Montreal after the election, before the sponsorship program was in place.

At the time, Groupaction had few contracts with the federal government, but Brault said Renaud proposed reaching out to the federal Liberals to seek government contracts.

"Alain was a door-opener, basically," said Brault, who remembers the Liberal activist also telling him, "I have alliances. I've got a foot in the door with the Liberal Party of Quebec. ... There's a tradition behind me. We've been there for several generations back, we've been loyal Liberals. So I'm going to go see what I can do in Ottawa."


Brault initially decided to pick up Renaud's expenses to wine and dine Liberal contacts, to see if he really could open doors. It quickly became clear that he could open them up at the highest level of the party — as well as in the Prime Minister's Office.

In August of 1995, Renaud arranged for Brault to meet with Jean Carle, chief of operations for Chrétien.

"Alain, in simple terms, told me, `Look Jean, we have to be known by the prime minister, by his office.'" Brault testified. "I said `very well.' And I was able to obtain an appointment with Jean Carle. How he went about this, I couldn't say."

At first, the federal contracts were slow to come. It started with a $200,000 communications contract with the CRTC in 1994-95, followed the next year by a tiny $14,000 contract from Revenue Canada.

But Brault's desk diary, parts of which were presented at the inquiry, show his days were filling up with important Liberal players from 1993 on: Gagliano; Carle; Gabby Chrétien, the then-prime minister's brother; Corriveau, and even fundraising cocktail parties with Jean Chrétien himself at 24 Sussex Dr.

Brault did his best to ingratiate himself with Carle, who had a close personal relationship with Chrétien and was a powerful player. After noticing that Carle's office in the PMO was full of his hat collection, Brault said he arranged to have an associate follow Montreal-born Formula One racer Jacques Villeneuve from Florida to England, until he convinced Villeneuve to autograph one of his balaclavas for Carle. Brault said it wasn't meant to help with contracts.

"It couldn't hurt," said Brault. "It was just a nice gesture ..."

Renaud soon proved to be a rainmaker, said Brault. In 1996-97, his government contracts soared to $1.1 million. Documents show that over nine years, before becoming defunct, Groupaction pulled in about $173 million in contracts: $112 million in federal advertising contracts and another $61 million from the sponsorship program.

In 1997, Brault signed a contract with Renaud's company, called Les Specialistes, that would pay the lobbyist $1.1 million over the next four years, largely thanks to the lucrative sponsorship contracts that were soon streaming into Groupaction.

There were also repeated requests from Liberals to pay party costs for videos and meals, associated with campaigns and organizing efforts. In two cases, he was asked for $50,000 cash payments. They were given to Renaud or to Gagliano's longtime ally, Morselli, who told him he had taken Corriveau's place, Brault said.

Brault testified he couldn't say if the party got the money. But he says he was led to believe they did. After completing a $50,000 cash payment, Corbeil called him up within 24 hours to say thanks, said Brault.

Brault also testified he was asked to bring $5,000 in an envelope to a Montreal Italian restaurant, called Frank's, where he met Morselli along with a Liberal fundraiser from Montreal's Jewish community. When the latter man arrived, Brault said he left the envelope on the table and then went to the toilet. When he came, back, the money — the first of four monthly payments — was gone and never discussed.

Meetings with Liberals could also turn sour, with the threat of losing lucrative federal contracts hanging in the air if favours weren't done, said Brault.

In 2001, when he was just coming back to work after a heart attack, Brault said he received an invitation from Renaud, whom he had let go a few months earlier, to meet him at an Italian restaurant. Tony Mignacca, a Liberal organizer with close ties to Gagliano, joined them for grappa, even though, Brault said, he wanted to go home.

"He was singing Alain's (Renaud's) praises, he was telling me how important it was to take Alain back," testified Brault. "And in not so veiled words — there wasn't so much grappa, so my memory is good — he implied the VIA (Rail) account was in danger. ...

"It pissed me off as we say in Quebec," said Brault, beginning to cry. "The timing just wasn't good, I was just coming back, I was convalescing."

Things got worse, though, in May 2002. "It was a tormented time. It was a well-known fact the auditor general had started to do some work."

Morselli called him for a meeting, he said, to talk about the fact Brault thought he might be under investigation. Brault agreed, but made sure that he arrived early to the private dining room in Club Saint-Denis, where he had entertained many Liberals.

"I was afraid he was wearing a body pack (microphone), like I had seen in the movies," said Brault. "So I got there 30 minutes ahead of time and I turned up the heat, and when Mr. Morselli came in I was very polite and I asked him to take off his jacket so he wouldn't be too warm. So that reassured me.

"He said take it easy," said Brault. "Keep a low profile ... let the storm blow over and things will be fine."