A Clear Voice: Background on AdScam - Info for Confused Americans

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April 04, 2005

Background on AdScam - Info for Confused Americans

I've been reading blog articles about this Canadian AdScam scandal. As an American I find the news interesting, especially because of it's political consequences, but I’m not really sure what they’re talking about when it gets down to details. For instance, what on earth is the “sponsorship program?”

I did some research into the matter, and I’m starting to understand somewhat. Information and quotes following are from the 2003 Report of the Auditor General of Canada. Information was also found at Wikipedia.

In 1995 Quebec separatists were nearly successful in passing a secession referendum. Shortly thereafter, in 1997, the Communications Co-ordination Services Branch of Public Works and Government Services Canada was created. Their purpose was to "co-ordinate, promote, advise, and facilitate federal communications initiatives." The created the Sponsorship Program which made arrangements to support cultural, sporting, and community events in exchange for advertising for the government. This amounted to displaying the Canadian flag and wordmark at events and on promotional material. The webpage of the Sponsorship Program lists the events sponsored. Over six years $250 million was spent through the program which sponsored 1,987 events.

For the first four years of the program it was mainly promoted in Quebec and the majority of sponsorships were located there. It seems that people in other provinces basically heard about the program by word of mouth. The auditor's report implies that there was some pretty sneaky behavior on the part of CCSB. The program was set up without any written direction from any other part of the government and they never revealed to the Parliament that the program was mainly for Quebec, even though that was obviously its main focus. Parliament was never provided with any description, objectives, expenditures, or results.

So basically this was “Gosh, isn’t Canada great!” advertising being paid for by Canadian tax dollars with hardly any oversight. In American this would be a scandal even without the dirty money and the kickbacks and the political abuse. I wonder what reaction Canadians have had to this idea in general.

Each sponsorship was managed by a communications agency choosen by CCSB. Groupaction, whose president Jean Brault is the one testifying right now, was one of the communications agencies that was often used by CCSB.

More will appear below the fold as I read...

Charles Guité was the Executive Director of CCSB. The 2003 Audit found that all decisions as to what events were to be sponsored and which communications agency would get the contract were made by the Executive Director. The decisions were capricious and little to no written information was found in files as to what the basis of the deicisons were. The audit says

Most of the 53 files in our audit sample contained no assessment of the project's merits or even any criteria for assessing merit. No file contained the rationale supporting the decision to sponsor the event. Furthermore, in 64 percent of the files we reviewed, there was no information about the event organizers, no description of the project, and no discussion of the visibility the Government of Canada would achieve by sponsoring the event.

Now the testimony at Captain's Quarters by Jean Brault in front of the Gomery Commission begins to make sense. Brault said he was referred by Jean Carle (an aide to the Prime Minister at the time, Jean Chretien) to Charles Guité, who then set up the sponsorship program which guaranteed that five Liberal connected communications agencies would get all of the contracts. Brault's company, Groupaction, was one of the five. It seems from the wording that this conversation actually took place before the Sponsorship Program was set up in 1997, meaning that the thing was a scam from the beginning.

Groupaction skimmed lots of money off of these contracts while providing very little service. For instance, see this 1999 email complaining that “Just this week, [Groupaction] attempted to charge $700 for concept work, even though we provided camera-ready material.”

In return, according to Brault, they kicked back a portion of the profit to the Liberal party by putting Liberal Party workers on Groupaction's payroll, paying other companies for work done for the Liberal Party, and donating to the Liberal Party.

The audit also said that CCSB has given sponsorship money to Crown corporations. According to Wikipedia a crown corporation is a state-controlled company whose budget and chairpersons are controlled by the government. Since these corporations are already required "to apply the Canada wordmark prominently on all their corporate identity applications," it is questionable as to what value the government recived in advertising by including these companies in the Sponsorship Program. The audit said that money was also used for other purposes. "As the case studies show, it was also used for funding certain other events, television series, commercial activities, and capital acquisitions by Crown entities, including Crown corporations."

There is little evidence that the government recieved much value at all for any of the money spent.

Almost half the files in our sample contained no visibility plan describing in any detail the visibility the government could expect to gain. In one case, for example, a member of Parliament received a request for $5,000 from a college in Quebec for financial support for its foundation. The MP forwarded the request to the Minister of Public Works and Government Services. A special assistant in the Minister's office sent the request to CCSB, which entered into a contract with a communications agency for $5,600 that included commission fees of 12 percent. CCSB approved a visibility plan by the agency that consisted solely of putting the name of the member of Parliament on a mural in the college. In this case, the Government of Canada did not receive any visibility for the $5,600 it paid, but the member of Parliament did.
There was little evidence that any communications agency had analyzed the results of sponsored events in our sample. Communications agencies were required to submit post mortem reports summarizing the visibility benefits, with relevant documentation, photos, and examples of visibility such as brochures and press clippings. In 49 percent of our files, there was no post mortem report and therefore no evidence that the government had obtained the visibility it had paid for.

In December 1996, for example, PWGSC's Advertising and Public Opinion Research Sector (APORS)—which subsequently became CCSB—signed a $330,000 advertising contract with Groupaction to develop a communications strategy related to the new firearms legislation. APORS received invoices for the full amount of the contract and approved the payments. However, there was no evidence that APORS received anything for the money it paid to Groupaction under this contract. The contract said this was a Justice Canada project, but Justice officials have stated that they had not requested the contract and received none of the services outlined in it.

In conclusion, it seems to me that the whole Sponsorship Program was a great big scam and a waste of Canadian taxpayers' money (not that that never happens.) This certainly does have the ability to break the Canadian government wide open. Reports of the testimony to come should be quite interesting. The second installment has been posted tonight to Captain's Quarters and talks about the links of the AdScam to the current prime minister, Paul Martin. This is important because Martin up until now has been claiming that his faction had nothing to do with the scandal. If it comes out that it has, that's more bad news for the Liberal Party.

I find it interesting that the fact that the judge ordered the testimony sealed is probably what will make it more widely reported in the US.

Posted by illuminaria at April 4, 2005 03:56 PM

Comments

Well it's like good old PORK BARREL. You cut a lot of ribbons, do a lot of flag waving, naturally give out a lot of checks for stupid events and people are supposed to stay attached to the country. What is nice with the gimmick you hire organizer, naturally your liberal rat bunch, ans you fill your pockets in big fat juicy commissions and kickbacks. And then you play the great Canadian patriot while you are screwing the taxpayers with their own money. Vive Jean Chrétien. He is even more clever than Tony Soprano.

Posted by: Marc Authier at April 4, 2005 08:26 PM

I live in Ottawa. I am a big supporter of the U.S. and have family there. It is interesting to see our biggest and best friend's take on the Gomery Inquiry.

Like many Canadians, I get extremely upset at some of the things our government does or does not do. Canada is a "big" country in terms of history, past influences, etc. and we historically have been "hitting" way above our weight class. Like many Canadians, I am downright dismayed sometimes at what we're doing these days, and especially some of the stupid things our government has done and some of the stupid things government members have said re: the U.S., etc.

In terms of the Gomery Inquiry, it is the #1 news item in all of Canada, on almost a daily basis. Your take on what has and what is happening is very accurate and insightful. Couple of things: any mob connections, I believe, are peripheral or minor; the amounts of money in question are not in the $billions, but about $50 to $100 million - the 'Sponsorship program' itself did spend $hundreds of millions, and perhaps on dumb or questionable things, but what really pisses us taxpayers off is that a) it looks like some money was funnelled back in to the Liberal Party, b) Liberal-friendly ad agencies in Quebec were making big obscene commissions for merely distributing money for some of the events ex. an event or program to receive funds of, say, $250K, would receive the grant from one of the ad agencies, with the agency pocketing $50-$75K, simply for receiving a cheque (check) from the government in the morning for $300-$325K, and issuing a payout cheque to the event for $250K in the afternoon, c) some political and bureaucratic persons did personally and significantly benefit, d) when this all was going on a few years back, and when it first became public, the government and the then-PM J.Chretien were very arrogant, flippant, and downright ignorant to their employers, the taxpayers, about this whole issue. I guess, too, what bothers many is that this was not a "one-of" or a extremely small isolated scam; it was systematic, went on for years, and even sections within the politically independent bureaucracy were involved (our bureaucrats, bless them, are professional, hardworking, honest people, over 250,000 of them) and how this Sponsorship program could happen within the bureaucracy stuns many of us.

Finally, yes it could bring down the government and cause an election. As the PM, Martin, has claimed from the start, that he knew nothing of this.

As well, the investigation, the Gomery Inquiry, is headed by Justice Gomery. He's been a real pit bull, he's his own man and %100 beyond undue influence, etc. His is a legitimate judicial investigation, he's caused great embarrassment to the current PM and government, and the previous PM, J.C., has tried to have him fired, with no success.

The current publication ban is for three witnesses only and is because they face criminal charges about the whole affair in May; the idea of the pub.ban is so that these three witnesses can be, theoretically, completely forthcoming with their testimony at this hearing, and then not have it bite them back,when they undergo a criminal trial.

Publication bans on court cases, inquiries, etc. are more common than most Canadians would like, but not to the extent of being, in general, to cover-up wrongdoing.

I have no problem with you or any other outside, out of country, source disclosing this information. However, penalties in Canada for breaking any such ban are very very severe. Thus, domestic journalists, bloggers, news org., etc. are extremely reluctant to break this law. You can be sure, there's still enough backbone in the majority of Canadians, that were this pub.ban a part of a cover-up, the crap would hit the fan and any such information would become public, ban or no ban.

I just thought I'd comment and thanks for listening.

Ed D
Ottawa

Posted by: Ed D. at April 4, 2005 11:39 PM

I'm probably in the minority, but personally I support the sealing of the evidence of the three current witnesses IF it ensures that fraud and corruption charges, currently scheduled for next month, go ahead without challenges relating to a "tainted jury pool". The so-called "freedom lovers" to the south of the border just don't understand that their bull-in-a-china-shop attitude, all in the name of "freedom of speech" (an over-abused freedom if ever there was one) greatly increases the risk of some shyster lawyer convincing a trial judge that his client can't possibly get a fair trial because the public has already heard the evidence and made up its mind. As usual, the "defenders of freedom" are really trashing it.

Posted by: Nigel B. at April 5, 2005 01:11 AM

The sponsorship program is nothing new. Orwell called it the Ministry of Truth. Most tyrannical regimes have a propoganda arm, which is what this is. Just another item to add to the list of cites I respond with whenever a Canadian or European claims they are just as free as we are in the USA.

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People who voted Liberal are either stupid or bastards. You choose.

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