Auditor-General Sheila Fraser's report into the federal government's sponsorship program paints a picture of systemic rule breaking that extended beyond Public Works and Government Services Canada and into five major Crown corporations and agencies.
“Our findings on the government's sponsorship program from 1997 to 2001 are deeply disturbing,” Ms. Fraser said Tuesday. “Most significant was the widespread non-compliance with contracting rules, which extended beyond Public Works and Government Services Canada and into five major Crown corporations and agencies.
“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.”
The sponsorship program was created after the 1995 referendum on sovereignty, when Ottawa decided to increase its visibility in Quebec. Public Works placed flags and banners at cultural and sporting events in exchange for $150-million between 1997 and 2003.
The government hired advertising firms to oversee all of its dealings with the organizers of the events, receiving $100-million.
“In a small number of very troubling cases, sponsorship funds were transferred to Crown corporations by highly questionable methods,” Ms. Fraser said. “These methods were apparently designed to pay commissions to communications agencies while hiding the source of the funds. And the amounts were significant.
According to the report, public servants also broke the rules in selecting communications agencies for government advertising. Ms. Fraser said that in some cases her department could find no evidence that a selection process had even been used.
The sponsorship program was cancelled the day after Mr. Martin took office in December, but Ms. Fraser said many questions still remain.
“Even though the government has cancelled the sponsorship program, I am deeply disturbed that such practices were allowed to happen in the first place,” she said. “There has not been an adequate explanation for the collapse of controls and oversight mechanisms.”
Ms. Fraser also took aim at the March, 2002, purchase of two Challenger 604 aircraft for $100-million. She noted that the government bypassed its own procurement policies and procedures — a process that only took nine days as the purchase was rushed at the end of the fiscal year.
"I do not believe that the government demonstrated due diligence or due regard for economy in this purchase," she said.
The decision to buy the aircraft was made before any departments considered alternatives or looked at requirements.
“The government disagreed with our conclusion that policies and practices were bypassed and considered the procurement appropriately managed,” Ms. Fraser said. “I am concerned about this view because it leaves the door open for the same thing to happen again.”
The Privy Council Office told the National Defence and Public Works and Government Services Canada about the decision to make the purchase.
"The system exists to protect the public interest. If rules were ignored for a $100-million purchase, what kind of message does that send to the public servant spending $5,000?" Ms. Fraser said.
