Adscam Reveals Deeper Government Mismanagement

WHEN JUSTICE John Gomery delivers his first report on the sponsorship affair next week, reaction likely won't follow the usual script. Opposition parties typically respond to a scandal by shouting as loudly as possible that there's never been such corruption.

Adscam Reveals Deeper Government Mismanagement

WHEN JUSTICE John Gomery delivers his first report on the sponsorship affair next week, reaction likely won't follow the usual script. Opposition parties typically respond to a scandal by shouting as loudly as possible that there's never been such corruption. The government, meanwhile, tries to play it all down. But watch for a role reversal this time. Expect Paul MARTIN to reprise the mad-as-hell routine he took on the road after Adscam exploded last year, while repeating his recent claim that the whole mess amounted to an "unacceptable aberration" - outrageous but unique. Opposition leaders might as well forget trying to sound angrier than the Prime Minister - their real task is to be more analytical. They need to sell the case that Gomery has uncovered not merely the misdeeds of a tightly knit cast of villains over a few years, but more evidence of a Liberal governing culture that has long fostered everything from brazen fraud to mundane misspending.

Showing that broad pattern will not be easy. The looting of sponsorship funds by Montreal advertising executives and apparently complicit federal officials has already led to criminal charges. The other big-ticket boondoggles of recent memory - the absurdly over-budget gun registry, say, or huge lapses in accountability over job grants doled out by the Human Resources Department - were clearly about mismanagement, not malfeasance. But auditor general Sheila Fraser, whose searing February 2004 report exposed the multi-million-dollar scope of the sponsorship scam, issued an early plea for attention to the big picture behind the sordid details. "It concerns me," Fraser said just a few weeks after her blockbuster report, "that the focus on wrongdoing of individuals could divert attention from the more serious pervasive problems that have a negative impact on how well programs are managed."

There is little doubt that Gomery, too, has come to see the scandal as a product of the system's flaws. His report next week will detail what happened in this particular high-profile case, and point the finger at individuals. "He could blame people for misconduct, he could name people, he could name organizations," said François Perrault, Gomery's spokesman. Conventional wisdom around Ottawa is that members of Martin's political circle will largely, or entirely, escape being singled out - leaving Chrétien-era insiders and bureaucrats with more to worry about. Still in the works, though, is Gomery's second report, set to be delivered on Feb. 1, 2006. It will contain recommendations for fixing the system that left the sponsorship program ripe for plundering, and Martin has promised to call an election within 30 days of receiving it.

That second report might cause him more long-term concern. Gomery is digging into the most sensitive aspects of the intimate relationships among political operators, public servants and the public purse. He has shifted from sorting out the sponsorship affair itself to dissecting the power structure behind it. Perrault confirmed the judge has ordered no fewer than 17 research reports into how Ottawa's machinery meshes. He would not reveal details of the studies, but Maclean's has learned that among them is a report on lobbying by Paul Pross, a Dalhousie University public administration professor emeritus, and an expert on pressure politics. Another potentially key report, by Ottawa consultant Liane Benoit, will examine the role of ministers' staffers. By turning his attention to players like lobbyists and ministerial aides, Gomery has signalled he's interpreting his mandate to get to the bottom of the scandal as broadly as possible.

The Liberals are already showing they see a need to prove they are making changes. Treasury Board President Reg Alcock and Public Works Minister Scott Brison last week announced changes to federal spending oversight. Even the sharpest critics generally applaud the improvements in bureaucratic checks and balances that are supposed to safeguard spending. "I'm very optimistic about the internal spending-control mechanisms," said Jason Clemens, director of fiscal studies for the conservative Fraser Institute. But while he welcomes better oversight of bureaucrats by bureaucrats, Clemens calls for more fundamental reforms, including mandatory public disclosure of how departments respond when audits discover waste - or worse.

That kind of forced transparency might well have put a stop to the sponsorship scam far earlier. Four years before Fraser's famous report, an internal audit flagged similar doubts about the program. But Alfonso Gagliano, who oversaw the program as public works minister at the time, finally responded to that audit with a three-paragraph letter to the Treasury Board, declaring that "the required corrective measures have been completed." They hadn't. Had Gagliano been required to, say, post what he'd done on a public website, he might not have tried to get away with such a flimsy follow-up. Clemens points out other examples where the lack of openness lets problems fester even after they have been discovered. In 1998, the auditor general reported serious problems in the way social insurance numbers are managed, including the issuing of millions more SINs than there are people; in 2001, another report found the problem had only worsened. "There should be continuing, very public follow-up until the problems are fixed," Clemens says.

Of course politicians and senior mandarins aren't often enthusiastic about being "very public" with updates about their most embarrassing files. Nor are they eager to talk about the relationship between political partisanship and public money. But the close connection is undeniable.

Gomery heard testimony about Liberal organizers in Montreal whose tangled activities involved the sponsorship program, party fundraising and lobbying the government. In fact, party strategists who toil on campaigns often cash in on their political ties between elections by lobbying for companies trying to win federal contracts or influence policy. That lucrative sideline made headlines again recently after Canadian Satellite Radio Inc., in pursuit of a federal licence, hired a squad of well-connected Liberals, including Richard Mahoney and John Duffy, two key members of what's called "the board," Martin's close coterie of supporters.

That sort of overlap is legal and routine. The question facing Gomery is whether new rules are needed to make sure such relationships don't metastasize into the sort of abuses perpetrated by the Liberal-friendly advertising executives who took advantage of the gusher of sponsorship cash. Duff Conacher, coordinator for Ottawa-based Democracy Watch, calls for much stricter limits on movement between politics and business, including a ban on lobbying by those who work on political campaigns. As it stands, he says, there is "zero enforcement" of the existing rules. The Lobbyists Registration Act, which requires lobbyists to register their activities, has been in force since 1988 - yet no one has ever been found to have failed to comply with it.

Fraser seems less concerned with those who try to influence government decisions than with holding the decision-makers to account. She criticizes fuzzy guidelines that make a minister "answerable," but not "accountable," for a predecessor's actions. "Let's say an audit reveals problems that arose under the leadership of a former minister," she has said. "It's not clear who - if anyone - is accountable." And deputy ministers are not answerable to Parliament, she says, but are required to give "an account of their stewardship of the department" to parliamentary committees - a "murky distinction." Gomery might well propose how to clear up those lines of accountability.

The problem with the solutions the government's critics tend to propose - more transparency, tougher lobbying rules, clearer accountability - is they are worthy but unexciting. Next week's report will feature more gripping stuff about who got the cash and how. The trick for those hoping Gomery's work will lead to real change is to turn that crime story into a policy manual.

See also GOMERY INQUIRY.

Maclean's October 31, 2005