Martin Cleared in Canadian Scandal

Prime Minister Paul Martin was cleared Tuesday of wrongdoing in a kickback scandal that has dominated Canadian politics for more than a year, boosting his chances of staying in power through next year’s election.

But in a report, investigators chastised former Prime Minister Jean Chretien for the 1997-2001 campaign finance scandal that has tarnished the Liberal Party’s image and prevented it from having a firm grip on power.

The head of the investigation, Justice John Gomery, found that Liberal Party officials violated Canadians’ trust in government by channeling millions of taxpayer dollars to advertising firms that kicked funds back to the party. The ad campaign was promoting national unity in French-speaking Quebec at a time the province was threatening to secede.

“The public trust ... was subverted and betrayed, and Canadians were outraged, not only because public funds were wasted and misappropriated, but also because no one was held responsible for his misconduct,” Gomery wrote in the 686-page tome.

Although Martin was then finance minister and signed off on continuing the Unity Fund, the investigation concluded he was not aware of the scam or responsible for the money’s handling.

Martin moved quickly to endorse the report and distance himself from the corruption, declaring that he was the man to lead the cleanup of the party and vowing to make sure such misappropriation would never happen again.

“The story that unfolds in its pages is troubling,” Martin said of the report. “But it’s a story that needed to be told -- in full, in detail and in public. Canadians must be able to have faith in the integrity of government and in the people who administer it. In this case, that means finding out what went wrong and repairing the system to prevent it from happening again.”

He said the Liberal Party would pay more than $970,000 to cover the kickbacks Gomery said were channeled to its Quebec branch. Martin also banned from the party 10 officials named in the report and expanded lawsuits against some of the firms involved to recover public funds.

Most significantly, the prime minister reaffirmed his pledge of a new election 30 days after Gomery’s panel releases its final report in February to allow the public to decide whether it wants to keep his party in office.

Public disenchantment cost the Liberals a parliamentary majority in the June 2004 election, but they have retained control of the government via an alliance with the small New Democratic Party.

The head of the opposition Conservative Party, Stephen Harper, said the report showed that the Liberal Party used “stolen money” to finance its reelection and that it must be held accountable for the corruption the inquiry uncovered.

Nevertheless, Harper said the Conservatives would hold off on a no-confidence vote on Martin’s administration until after the holiday season. “I don’t think Canadians want an election over Christmas,” Harper told reporters. “But I do believe this government should be brought down.”

The New Democratic Party was also weighing its next move. If it were to withdraw its support for the Liberals, the government could fall. But the party could also use the situation to force the Liberals to agree to the NDP’s agenda limiting the privatization of healthcare.

Even as Martin was embracing the inquiry’s conclusions, Chretien said that the report contained serious errors and that he would ask a federal court to review it to clear his name.

The report concluded that Chretien was politically responsible for his associates’ scheme, although there was no proof that he was directly aware of it.

“I profoundly regret all the wrongdoing that took place in the mismanagement of the program,” Chretien said. But he added that Gomery was wrong to conclude that he should have known about the kickbacks and questionable ad contracts.

“Mr. Justice John Gomery drew conclusions that are completely unbased on the evidence put before him,” Chretien said.

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Times staff writer Farley reported from New York and special correspondent Guly from Ottawa.