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May 4, 2005
Guit: Gagliano Assured Gov't Revenue For Ad Agency

Here's a taste of what one can expect to read now that the publication ban has been lifted on Chuck Guit's testimony, just minutes after I received a good deal of it from a covert source. (UPDATE: The ban is back in place now.) Guit testified about the purchase of Vickers & Benson by American interests and how the buyers had concerns about maintaining the government revenue streams that existed at the time. Guit acknowledged that the contracts meant millions of dollars to V&B and that without some sort of guarantee, the sale might fall through. Guit knew who to call-- Alfonse Gagliano, who possibly reached out to Paul Martin:

CG: And then, not to take too much time, the same applies as we talked about this morning; there has to be a Canadian entity within V&B to maintain that. So I met with the V&B people. I discussed it with them and we had probably, I would estimate five, six, seven phone calls between Toronto sometimes I was in Toronto; sometimes I was at home and the buyer in the States to assure them that if this is done, you will maintain the Canadian business.

ROY: So how were you able to give comfort to the parties that the apple cart would not be upset and that the acquirer could expect basically the same revenue stream generated from government business?

CG: Because I met with Mr. Gagliano.

ROY: What exactly did you tell him and what did you get by way of an answer?

CG: I told him what was happening, and I wanted assurance that the volume of business that V&B had from the government would be maintained. We probably talked about it and so forth, and he said I will look after that. So I dont -- if he spoke to Mr. Manley -- I think he was at Tourism then ---

ROY: He was responsible for Tourism Canada ---

CG: --- and the Bank ---

ROY: --- as Minister of Industry.

CG: And I think Mr. Martin was at the Bank at that time.

ROY: In 2000?

CG: Yes, I would think so.

ROY: He was Minister of Finance?

CG: Minister of Finance.

ROY: Yes.

CG: And I got a call from Pierre Tremblay about a week later.

ROY: Saying what?

CG: Saying that It will be done.

ROY: What will be done?

CG: The interfe -- I dont want to use that word -- the Minister had spoken to both ministers and the volume of business would be maintained.

ROY: How could such an assurance be given if we are to start from the premise or operate from the premise that all advertising contracts are let out after a competition process?

CG: I think that the system could delay it.

ROY: Could delay what?

CG: The competition. It has been done in the past.

ROY: But short of that, what else can be done?

CG: Re-compete it and have V&B win it again.

ROY: In other words, arrange for V&B to win the competition?

CG: Definitely.

So Chuck Guit went to the Liberal Party fixer, Alfonse Gagliano, who had Pierre Tremblay get back to Guit and assure him that the American buyers of V&B would lose no money -- maximizing V&B's sale price. Guit understood that the Liberals could delay or even put the fix in for competitive bids, ensuring that only those firms which had the proper connections would get government contracts.

I'll be reviewing the testimony today and tonight and writing new posts as I go. Keep checking back.

UPDATE: Paul Martin's involvement in this episode did not escape notice of the Globe and Mail. Tu Thanh Ha reported it for Canadian readers, along with the startled PM's denial through his spokesman:

Martin spokesman Scott Reid dismissed the testimony as a third-hand and false allegation.

"The Prime Minister never involved himself in the contracting process never involved himself in the determination of contract awards. Period," Mr. Reid told The Canadian Press.

The Conservatives, meanwhile, jumped all over the testimony from Mr. Guit.

Tory MP Jason Kenney said the Prime Minister "has not been telling the whole truth" when he says he was unaware of what was going on in the 1990s.

"He was just some sort of hostage in this scandalous affair? Canadians don't buy it. Paul Martin's integrity is in tatters."

It seems that way, at least for now. Will Martin go on national TV again?

Sphere It Digg! View blog reactions
Posted by Ed Morrissey at May 4, 2005 1:43 PM

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