Thanks to a reader for the heads up on this story in the Ottawa Citizen:

Ex-MP's firm was a conduit for federal hiring report

An audit report shows how a company founded by former Liberal MP David Smith was paid to serve as a middleman in 13 government contracts, even though the company had "no relationship" with the government departments issuing the contracts and "little knowledge" of the consultants hired to do the work.

The December 2005 report by the international auditing firm KPMG found evidence that Mr. Smith's company, Abotech, was used as a conduit through which government departments hired the consultants they wanted for contracts, effectively circumventing the competitive bidding process.

David Smith represented the Quebec riding of Pontiac for the Liberal Party until January 23 (on election night, he finished third behind following the Conservative candidate Lawrence Cannon, now Minister of Transport, Infrastructure and Communities, and the Bloc candidate Christine emond Lapointe).

Followers of this blog know that I spent a great deal of time researching the Abotech affair. It was here where it was first revealed that the two ends of this conduit, David Smith of Abotech and Frank Brazeau of Public Works, were first cousins, a fact since confirmed and now part of the story:

All 13 contracts -- as well as two more discussed in the report -- were awarded to Abotech by a single government contracting officer. The officer's name is blanked out in the KPMG document, released through Access to Information, but Mr. Smith has previously confirmed the contracts were awarded to him through his cousin, Frank Brazeau. Mr. Brazeau and Smith grew up together in Maniwaki.

So what does David Smith have to say about this? David Smith seems to have disappeared, but Kate Jaimet got this quote back in December during the election:

Mr. Smith could not be reached for comment yesterday, but has previously said he did nothing wrong.

"I respected the procedures. If there was some things which were done in non-conformity, me, I don't know," he said in December.

The KPMG Report suggests that David Smith knew much more than he has admitted. In the National Post, there is an extended version of the story in which we learn that Abotech was a favoured firm:

Two of the the 31 contracts were awarded to Abotech, but the KPMG auditors questioned the scoring method that allowed Abotech to win over its competitors, stating that nothing in Abotech's file "suggests procurement or contracting experience."

What actually happens is that a Consulting and Audit Canada (CAC) officer would enter search terms into a database to pull up firms likely to be able to do the work. In some of the cases checked by KPMG, Abotech beat out better firms, or worse, appeared on the list despite not matching the search terms.

The KPMG report describes how the government agency Mr. Brazeau worked for, Consulting and Audit Canada (CAC), would manipulate the bidding process to "facilitate contracts to a desired resource."

The KPMG audit began as a review of 31 contracts, all handled by the same CAC employee and all involving work for the RCMP pension plan. The employee's name is blanked out in the document, but Frank Koziol, a consultant who won some of the contracts and was interviewed by KPMG for the audit, confirmed yesterday that Mr. Brazeau was the person who handled the contracts.

There is that RCMP Pension Plan again.

Now this favoured treatment of Abotech doesn't prove David Smith knew anything. You could argue that he was blissfully ignorant of why his firm was doing so well. But then there's this:

The report describes how consultants, "typically former public servants," would be referred to Abotech by CAC. "The consultant would indicate they wished to contract through Abotech and that a contract would be forthcoming." Abotech, agreeing to the arrangement, would add the consultant's resume to its entry in the CAC database. Soon, CAC would send Abotech a request for proposal and Abotech would bid on the contract, offering the services of the original consultant.

So David Smith and Abotech would work the scam in both directions. Abotech would act as a referral service for former public servants (connected Liberals, I would not be surprised to learn). Remember, these people already have work lined up from their friends in government. They just need a means by which to bypass the checks built into the CAC process. Abotech was part of that means. David Smith is contacted by a contractor telling him the work is ready to be awarded. David Smith would use Abotech to enter the contractor into the database. David Smith's cousin Frank Brazeau, working on behalf of the government department trying to direct work to their favoured contractor, would fake a search and award process knowing full well that the work would go to that contractor. The contract would be structured so as to require the services of Abotech to manage it, so David Smith would get his cut. The contractor gets the work, the paper trail looks legitimate (at first glance, anyway), and all the palms are greased.

What did Frank Brazeau get out of this? That's still an unanswered question. One possibility is a kickback from David Smith and Abotech, but to find out would require examination of bank records, and for that you need a warrant. Another possibility is favoured treatment and promotions inside of CAC, but that would would implicate his supervisors. In that scenario, how far up would the trail go? To David Marshall, the Deputy Minister? To his former boss and Liberal leadership hopeful, Scott Brison? Would they involved in the scam, or if not, a subsequent coverup? We might never know.

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