Financial scandal leads to Canada crisis

CANADA: A financial scandal in Canada has developed into a full-blown political crisis for the Prime Minister, Mr Paul Martin, and led to a slump in support for the ruling Liberal Party and a sudden resurgence of nationalism in Quebec, writes Conor O'Clery

The scandal erupted a week ago when Auditor General Sheila Fraser disclosed that 100 million Canadian dollars (€59.5 million) from a federal fund set up to combat Quebec separatism had been funnelled to agencies in Quebec province which cannot account for it.

A poll published yesterday by the Toronto Globe and Mail showed that support for the Liberal Party, which was seen as coasting to an early general election win after a decade in office, has plummeted as a result to 35 per cent, down 13 points from January 15th.

The survey revealed deep scepticism about the role in the affair of Mr Martin, who was finance minister during the period in question, and who succeeded Mr Jean Chrétien as prime minister in December.

Two in three Canadians say they believe he knew something about the scandal, which the auditor general described as "a blatant misuse of public funds". The prime minister, who has denied knowing anything about the scheme, has called for a judicial inquiry and sacked Mr Alfonso Gagliano, the public works minister at the time, as ambassador to Denmark.

"I am sick and deeply, deeply troubled about what happened, heads will roll," said Mr Martin, who came to office promising to repair Canada's strained relationship with the US and who recently had to answer embarrassing questions about the large amount of federal money received by his family shipping firm, CSL.

Mr Chrétien, who may be summoned to testify at an inquiry, refused to talk to reporters, saying testily: "When I was in government I answered all of your questions. Now, if you have questions, ask them of the government." Mr Martin is not close to Mr Chretien and initially blamed a group of rogue government officials, acting under the former prime minister in violation of regulations, for making the payments between 1997 and 2001.

Canadians have been stunned by the affair, which involves fake invoices and fictitious contracts for money issued under a so-called sponsorship programme created to promote Canadian unity - such as providing Canadian flags at sporting events - following a 1995 referendum in which Quebec narrowly rejected independence.

The recipients, which included agencies connected with Canada Post, Via Rail, the Business Development Bank of Canada, the Old Port of Montreal and the Royal Canadian Mounted Police, made large donations to the Liberal Party.

"Canadian politics has become unhinged for the first time in more than a decade", said columnist Jeffrey Simpson in the Globe and Mail.

The poll showed that Conservative Party support had risen from 19 to 27 per cent and that 29 per cent of voters blamed Mr Chrétien for the scandal.

In a result with more ominous implications for Canadian unity, the almost moribund Bloc Québecois surged to 45 per cent support in Quebec compared to 31 per cent for the Liberals, who must win big in the province to secure a majority in a general election.

"People are getting weary of the party's heavy-handed approach to national unity," said Miro Cernetig, Montreal-based correspondent of the Toronto Star, recalling the 1995 airlift of federal supporters organised by key Liberals to swell a rally against separatism in Montreal.

"The sponsorship scandal has only reinforced the cynicism of Quebec nationalists," he said. "The rest of Canada should start worrying." The idea of public money going to promote federalism has angered many Quebecers, while for pro-Canada nationalists in Ontario and the west it confirms their suspicions of government largesse favouring Quebec.

Two Liberal ministers have stoked Quebec nationalist resentment by blaming the scandal on simply the way politics is run in the province.

Compounding the resentment of people in Quebec and elsewhere in Canada is a US comedy show Late Night with Conan O'Brien, which was brought to Canada last week with federal government funds to promote tourism and ended up insulting Quebecers.

It featured a sock puppet telling one passer-by: "So you're French and Canadian, so you're obnoxious and dull", and another: "You're in North America, learn the language."