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July 7, 2005
Gomery Financial Analysis: Corruption Includes The RCMP And Privy Office

The Fraser Institute has performed a financial analysis of the financial analysis of the Sponsorship Program, which shows that the corruption and graft runs far deeper than previously thought. The amounts of money and the scale of its laundering dwarf earlier estimates:

The numbers of people and amounts of money involved in the Gomery inquiry are larger than previously known. Problems with federal government sponsorship and advertising programs can be understood using an economic theory of incentives and institutional structure.

This study finds that at least 565 organizations and individuals are identified in reports and testimony related to the Gomery inquiry. The original 2003 Auditor General sponsorship and advertising report cited only 71 organizations. The activities under investigation are therefore quite widespread.

The people identified in these reports and testimony are politicians and bureaucrats (government insiders), and political party members and business people(government outsiders). This paper finds that almost all of them have an exclusive financial link to the Liberal Party of Canada (hereafter referred to as the Liberal party). They donated at least 40 times more to the Liberal party than to all of the other main political parties combined from 1993 to 2003.

This paper finds that these individuals privately donated at least $3.9 million to the Liberal party and received at least $7.4 million in private payments from the Liberal party from 1993 to 2003. The Gomery inquiry forensic report found only $2.5 million in Liberal party donations.

Fraser found that those participating in Adscam by paying the entry fee of a Liberal Party donation wound up getting a hell of good ROI for their effort. The "economic rent" of those donations -- unearned financial benefits -- amounted to a whopping 50 times their initial donation, on average. Furthermore, Fraser found that Liberal government insiders took advanatge of their access to the $120 million in public funding. Liberal cronies did much better than that, however. They had access to $1.2 billion in contracts, almost all of that given to those with Liberal connections, which generated $190 million in "private benefits".

But that will not be the biggest blockbuster of the report. In its full report (PDF file here), FI flatly states that the Liberal Party co-opted the RCMP and the Privy Office by demanding money for access to the Prime Minister:

First, the Royal Canadian Mounted Police (RCMP) and the Privy Council Office (PCO) were charged $112,000 and $44,000, respectively, for seats accompanying the prime minister during the 2000 election campaign. These revenues were not recorded for the 1997 campaign, a notable omission.

It is an apparent conflict of interest for government agencies, especially those engaged in law enforcement, to pay a governing political party for services rendered during an election. This financial entanglement can impair perceptions of independence and due process that are essential to the proper functioning of those agencies.

At the time when the Liberal Party used the Sponsorship Program to launder money back into its own campaigns, they charged the RCMP and the Privy Council Office for their services, putting them in an extraordinary position. The RCMP should have remained independent of the Liberals as the only check on their power and potential for corruption. Just when Canada needed a strong law-enforcement agency to detect the theft that took place, the RCMP had entered into a financial relationship with the Liberals instead. Neither organization paid any money to any other Canadian political party.

I wonder why that was. A lot of Canadians might wonder at that as well.

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Posted by Ed Morrissey at July 7, 2005 10:13 PM

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