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Luc Lemay, former president of Groupe Polygone, listens to a question during testimony at the Gomery Commission of Inquiry into the Sponsorship Program, in Montreal April 13, 2005. \Christinne Musch/Reuters

The RCMP is closing in on its first major Liberal operative after a decade-long probe into the sponsorship program, as it nears cutting a deal with another player in the scandal to become a state witness and testify about millions in alleged political kickbacks, government sources said.

It is the bookend to a story that, until recently, The Globe and Mail has been prevented from investigating. Only after a winning a lengthy battle at the Supreme Court last year against Groupe Polygone could the newspaper continue to press on in the public interest. Polygone was attempting to force the newspaper to reveal the identity of a key source as part of its defence against a federal lawsuit aimed at recouping money the former Liberal government paid the firm. As part of its ruling, the top court struck down a contentious publication ban preventing The Globe from reporting on negotiations to settle the federal lawsuit.

Now, a series of ongoing secret negotiations in Ottawa, Montreal and Quebec City are paving the way for the Mounties to go after Jacques Corriveau in the coming weeks, senior sources said. The one-time friend of former prime minister Jean Chrétien and prominent Liberal organizer in Quebec made $8-million out of the sponsorship program for little or no work, in part through the use of misleading invoices, according to a public commission into the sponsorship scandal.

Mr. Corriveau was at the centre of major revelations involving cash payments and secret political donations at the 2005 Gomery inquiry, where he was identified in the final report as a "central figure in an elaborate kickback scheme." However, the 78-year-old has not faced any legal consequences for his actions, as police have yet to go beyond four admen and one bureaucrat in their bid to punish those responsible for the waste of tens of millions of dollars in public funds.

According to information obtained by The Globe, recent breakthroughs in the RCMP's Operation Carnegie are related to the promised collaboration of Luc Lemay. The Montreal businessman's firms, Groupe Polygone and Expour, received $37-million in federal sponsorships from 1997 to 2002, all the while offering alleged kickbacks of $6-million to Mr. Corriveau, according to a federal lawsuit.

Mr. Lemay is nearing an immunity deal that has been months in the works with Crown prosecutors in Quebec, sources said. Simultaneously, federal sources said, Mr. Lemay will be expected to pay $8-million to $10-million to settle a civil lawsuit that was launched by Ottawa in 2005 to recoup wasted sponsorship funds.

Freed from the possibility of criminal charges or a civil trial, Mr. Lemay would then be expected to act as a Crown witness if the RCMP lays charges in coming months against Mr. Corriveau.

The complex criminal and civil negotiations involving Mr. Lemay constitute a key point in the police investigation into the sponsorship scandal, which contributed directly to the Liberal government's defeat in 2006 and the party's subsequent decline. After years of apparent stagnation on the file, the RCMP has set its sights on political officials involved directly in the scandal, which was a priority for the Canadian public after a series of crooked dealings were exposed by the media, the Auditor-General and the Gomery inquiry.

In particular, evidence at the Gomery inquiry showed Mr. Corriveau made six-figure cash payments to senior Liberal officials in Quebec ahead of the 1997 federal election, among a series of secret donations to the then-governing party.

Government sources said Mr. Lemay, whose hunting-and-fishing shows and various publications were one of the biggest recipients of sponsorship cash, has already made significant contributions to the RCMP case.

"Lemay has provided excellent information, including previously undisclosed material," said a government official who spoke on the condition of anonymity.

Under the sponsorship program, the federal government offered hundreds of millions of dollars to sporting and cultural organizations in the late 1990s and early 2000s in exchange for the placement of federal advertising at the event sites. The program was marred by fraud and mismanagement, which financially benefited firms that made donations to the Liberal Party.

Court records show that in June, 2005, the RCMP raided Groupe Polygone's offices, and arrested Mr. Lemay for questioning, before releasing him on the same day. Mr. Corriveau's house was raided by the RCMP in 2007, with the search warrant alleging that Mr. Corriveau and Mr. Lemay "committed fraud and a conspiracy to commit fraud against the government of Canada" in conjunction with Jean Brault, the president of Groupaction Marketing Inc.

Mr. Brault pleaded guilty to five counts of fraud in relation to sponsorship contracts in 2005. An RCMP search warrant shows Mr. Brault is now collaborating with the RCMP, attending eight interview sessions with Mounties in which he provided explanations on payments of $500,000 to Mr. Corriveau.

Mr. Lemay has always publicly denied any wrongdoing.

"It was the Government of Canada which freely and of its own volition decided the amount to be paid for each sponsorship," Groupe Polygone said in a statement of defence against the federal lawsuit.

Still, the fact Mr. Lemay has been involved in negotiations related to an immunity deal suggests the RCMP built a case against him. Mr. Lemay's lawyers could not be reached for comment on Friday.

Sources who spoke to the Globe about the ongoing legal negotiations involving Mr. Lemay expressed frustration at the slow pace of the proceedings, which have been years in the works. The RCMP investigation into the sponsorship scandal started in 2002, and the raid against Mr. Corriveau's house was carried out more than four years ago.

Sources said the 2005 federal civil lawsuit contributed to delays in the criminal proceedings – without an immunity deal, any statement from Mr. Lemay to the RCMP could potentially be used against him in the civil matter. Mr. Lemay's proposed immunity deal was recently reviewed by Louis Dionne, the director of prosecution services in Quebec, and it is expected to be finalized by the end of the summer, government sources said.

If Mr. Lemay ends up paying $8-million to $10-million to settle the civil lawsuit, it would be the largest payout obtained by federal lawyers. Public Works Canada reports having so far recovered a total of $7-million from 11 other groups involved in sponsorships.

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