The Harper government is refusing to approve an out-of-court settlement in a civil lawsuit that was designed to speed up an RCMP investigation into key players in the sponsorship scandal.
Public Works Minister Rona Ambrose said in an interview that the government is not ready to sacrifice its efforts to recoup wasted sponsorship funds in the case to facilitate the RCMP probe into the activities of a Liberal fundraiser and others, which began in 2002.
“There are two parallel tracks – one is civil and one is criminal – and I think it is important that both do their job,” Ms. Ambrose said.
Sources said a complex deal was put in place last summer in which Luc Lemay, one of the people who reaped large benefits from the sponsorship program, would reimburse taxpayers $8-million to $10-million. Mr. Lemay is among several individuals and firms who were sued by the Paul Martin Liberal government in 2005 in an attempt to recover up to $60-million.
As part of the settlement, Mr. Lemay would receive legal immunity from prosecution and become a state witness against other players in the sponsorship scandal, including former Liberal fundraiser Jacques Corriveau. This testimony is deemed essential to concluding the investigation speedily.
Mr. Corriveau was at the centre of major revelations involving cash payments and secret political donations at the 2005 inquiry into the sponsorship scandal, and was identified in the final report as a “central figure in an elaborate kickback scheme.”
However, the 78-year-old Mr. Corriveau has not faced any legal action.
Officials said the deal with Mr. Lemay has stalled in Ottawa because the government has decided to let the civil lawsuit play out in the Superior Court of Quebec, which could take months, if not years.
“On behalf of taxpayers, I hope that there is a resolution to this,” Ms. Ambrose said.
Ms. Ambrose said she wants to avoid any appearance of political interference in the file and is leaving the matter in the hands of the federal lawyers.
“From a public-office holder’s perspective, the end goal is to recover public trust. This was a huge violation of public trust,” Ms. Ambrose said. “I hope the end result in some way does restore that public confidence in the people that handle taxpayer dollars and departments like ours.”
Under the sponsorship program, the Liberal 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 that financially benefited firms that donated to the Liberal Party.
So far, four admen and one bureaucrat have been convicted over the waste of tens of millions of dollars in public funds. However, no political official has been charged.
Mr. Corriveau made $8-million out of the sponsorship program for little or no work, in part through the use of misleading invoices for jobs his design firm did on sponsorship contracts, according to the inquiry.
Mr. Lemay’s firms, Groupe Polygone and Expour, received $37-million in federal sponsorships from 1997 to 2002. However, the federal government alleges in the lawsuit that Groupe Polygone offered $6-million in kickbacks to Mr. Corriveau, court records show.
Government sources said Mr. Lemay, whose hunting-and-fishing shows and publications were among the recipients of sponsorship cash, has already made significant contributions to the RCMP case and could be an important witness in criminal proceedings.
“Lemay has provided excellent information, including previously undisclosed material,” said a government official who spoke on the condition of anonymity.
So far, Ottawa has recovered $7-million from 11 other groups involved in sponsorships through civil proceedings.