Canadian Prime Minister Paul Martin may have serious trouble on his hands on two separate fronts. Both the Gomery Inquiry and the Commons investigation into Earnscliffe produced testimony that placed the Liberal party leader squarely within the corruption of both cases, leading to a Liberal panic in Parliament late last night.

First, the Gomery inquiry heard that despite Martin's insistence that he never knew key Adscam player Claude Boulay, the PM wrote gushy notes to him nonetheless:

A Quebec ad executive and his wife, who was known as the "queen of ticket sellers" for Liberal fundraisers, declared more than $6.5-million in revenues after they reaped huge federal contracts at the time of the sponsorship program, documents filed yesterday at the Gomery inquiry indicate.

The documents, which set the stage today for the testimony of Claude Boulay, include a gushy "Dear Claude" letter that Prime Minister Paul Martin sent when he was finance minister in 2001, congratulating Mr. Boulay on his 50th birthday and praising his wife, Diane Deslauriers, for her "grace and beauty." ...

Mr. Harper said the letter betrays a closer relationship than what Mr. Martin has revealed.

"What the Prime Minister said here and also said under oath is that he did not know the Boulays very well. But his greetings, written on Claude Boulay's 50th birthday, are intimate. He tells Claude Boulay how good looking his wife is. He jokes that he wishes Mr. Boulay would age as well. He kids Claude Boulay about his golf game."

"Who writes a letter like that to someone he says he does not know?" Mr. Harper said.

And on another front, Martin's involvement in steering government contracts to Earnscliffe Strategy Group became clearer when his former aide, Warren Kinsella, testified that Martin took a personal interest in the contracts. The partner of his chief of staff ran Earnscliffe and Kinsella told the Commons that Martin knew their contracts did not adhere to legal policy:

Prime Minister Paul Martin Monday was drawn into the sponsorship scandal spotlight Monday with damaging testimony from a disgruntled former Liberal aide at a Commons public accounts committee hearing.

Warren Kinsella told the committee that Mr. Martin took a personal interest as finance minister in federal contracts that went to a communications firm with close political ties to him.

Mr. Kinsella, a former cabinet aide, said Mr. Martin had to know the Finance Department was skirting cabinet contracting guidelines in some of the work it awarded to Earnscliffe Strategy Group in the 1990s.

"In my opinion Mr. Martin was aware of the situation," said Mr. Kinsella, who served at the time as an aide to then-public works minister David Dingwall. "He knew of the problems with regard to contracts." ...

Ms. O'Leary told the Commons public accounts committee Monday that as Mr. Martin's chief of staff when he was finance minister, she had no role in decisions on contracts — something she has said before.

The committee is examining contracts for public opinion research awarded to Earnscliffe Strategy Group, a firm with close political ties to Mr. Martin during his time as finance minister. Among the senior partners in the company was Mr. Herle — Ms. O'Leary's companion and a long-time Martin adviser.

Martin has been personally unaffected by the Gomery inquiry up to now, and the Liberals have had the ability to argue that the corruption only occurred under previous PM Jean Chrétien. Martin, one of Chrétien's close aides, somehow has sold that approach despite his ties to the former PM's government as Finance Minister. But the two inquiries now have started to air testimony that demonstrates Martin may well have participated in the same schemes as his former boss as well as parallel corruption supporting his chief of staff's boyfriend.

It's these developments that pushed the Liberals into the desperate move of blocking Harper from controlling Parliamentary business on Opposition Days as scheduled yesterday in order to gain time to recover (see below). However, as these inquiries continue, it only appears more and more likely that the news will not improve for Martin and the Liberals and likely will get exponentially worse.

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