Angry in the Great White North

a heat-seeking missile in the Conservative arsenal

During Paul Martin's tenure as finance minister from 1993 to 2002, Earnsliffe was one of firms used for polling purposes. At the time, though, there was little interest at the use of this firm. In 2002, Martin was no longer finance minister, either quitting Jean Chretien's cabinet or being fired. The debate continues today. Whatever the truth, it was the culmination of years of bad blood between Chretien and Martin. It also kicked off Paul Martin's second run for the Liberal leadership, a campaign that ran through 2002 to the fall of 2003, when the Liberal Party leadership convention would be held.

Paul Martin's links with Earnscliffe were apparent during that time, as Earnscliffe was one of top donors to Paul Martin's campaign.

In January 2003, the donations seemed small:

Paul Martin has reported another $800,000 in donations to his Liberal leadership campaign, bringing the total disclosed since July to a little over $2 million.

Another $1,000 came from Mike Robinson, a senior partner of Earnscliffe Strategy Group, a consulting firm that is home to many of Martin's senior backroom strategists.

Robinson managed Martin's unsuccessful bid for the Liberal leadership in 1990.

That doesn't include additional cash that has been flowing into a blind trust since 1998. That money won't be made public until 30 days before the party leadership convention in November.

Since Paul Martin was not in cabinet, he was not covered by the rules that covered other leadership contenders concerning revealing donors. By the end of the campaign, though, the donations from Earnscliffe to Paul Martin's campaign were revealed to be quite substantial:

Paul Martin has amassed more than $1 million since September for his Liberal leadership aspirations, more than 10 times what he had previously disclosed.

Martin's latest leadership donation figures, released Friday, revealed that he pulled in $1,159,789 in the past two months alone. The amount includes $750,000 drawn at a single Toronto fundraiser on Sept. 24.

It's more than 10 times Martin's last disclosure of about $110,000 garnered in July and August.

Critics said the figure doesn't come anywhere near the total held in a secret war chest by Martin, who is the overwhelming favourite to succeed Prime Minister Jean Chretien when he retires in February 2004.

"One of the reasons Martin doesn't want to (fully) disclose is that he has been raising money for a long time. . . . He's deep in the seven figures, and it suggests he's been plotting all along (to win the leadership), which he has," Aaron Freeman of Democracy Watch, a non-profit ethics watchdog, told The Canadian Press.

The largest contributors listed by Martin on Friday were contributions of $25,857.66 from Earnscliffe Strategy Group for services and $19,616 from McCarthy Tetrault for salaries.

Paul Martin was sworn in as prime minister in December of 2003, and his transition team began to work. Not surprisingly, Earnscliffe was represented on that team:

Martin and his transition team have been meeting behind closed doors to discuss their strategy for the new government, as well as who will stay and who will go in cabinet, and how to pay for an ambitious agenda.

The technical transition team -- in charge of how the cabinet and committees will be structured and parliamentary reform -- is being headed up by Mike Robinson of Earnscliffe Consulting, former senior deputy minister Arthur Kroeger, former solicitor-general Francis Fox and Terrie O'Leary, Martin's former executive assistant.

The team in charge of arranging policy priorities, the Throne Speech and the agenda for the House of Commons is headed up by former Martin executive assistant Ruth Thorkelson, former BCE executive Peter Nicholson and Martin strategists John Duffy and Mark Resnick.

Though this CTV report only identifies Robinson as part of Earnscliffe, Terrie O'Leary was David Herle's common-law partner. Herle was a senior partner of the Earnscliffe team.

By February 2004, Democracy Watch started to make waves about Earnscliffe's close relationship to the newly minted prime minister:

With ethics in government under even greater-than-usual scrutiny, a complaint about the close relationship between one powerful lobby group and the Prime Minister's Office has both Paul Martin and ethics advocates uneasy.

Citizen advocacy group Democracy Watch is set to file an ethics complaint suggesting Ottawa lobbyists, Earnscliffe Strategy Group, have ties to the Liberal Party that scream conflict of interest.

"Earnscliffe has essentially become a shadow cabinet," Democracy Watch coordinator Duff Conacher told CTV News.

The complaint focuses on the roles of Michael Robinson and David Herle -- two senior lobbyists who were part of the prime minister's transition team.

According to Conacher, going from a key member of the prime minister's inner circle back to a position of lobbying him on issues is inappropriate.

"We will be filing a complaint against all of the lobbyists who were in the transition team and now have gone out and are back lobbying Paul Martin," Conacher said.

See, the problem is that it is hard to, on the one hand, advise the government on what to do, and on the other hand, to advise clients on how to best land government contracts, not without using inside information on what the government is looking for to give your clients the inside track. Earnscliffe maintained that it had set up a Chinese Wall:

[Earnscliffe Strategy Group] has two sides: government relations, and research and communications. There were times when the government relations side was lobbying departments that the communications side was advising.

The company's partners have said they maintain a "Chinese wall" between the two sides of the business, so the advisers on the communications side are not influenced by the lobbying side, and vice versa. The company has recently sold its research and polling division to Burson-Marsteller, an international public relations company.

That sell-off was supposed to happen in 2004. But, in fact, it did not happen as planned, and instead, by July 2004, Earnscliffe remained a single company -- sort of:

The new name for Earnscliffe's research arm, Veraxis Research and Communications, supposedly means "truth seeker" in Latin. The company is now legally separate from Earnscliffe Government Affairs. However, after an unsuccessful round of negotiations with consulting giant Burson-Marsteller, "there are no plans to sell Veraxis," according to Veraxis's David Herle.

Of course, the problem was not what Earnscliffe was going to be doing, but what it had done. In November 2003, the Auditor General had reported on problems with the sponsorship program and with the manner in which advertising contracts had been issued by the federal government. It also dealt with how polling research was done. The Auditor General's report prompted the creation of the Gomery Inquiry, but the polling-related issues were not part of the Gomery mandate. That one section of the Auditor General's report, Chapter 5 "Management of Public Opinion Research", was explicitly deemed forbidden territory by Paul Martin when he set up the inquiry.

People have suggested that Paul Martin wanted the Inquiry to delve deeply into the Sponsorship Program, which was entirely Jean Chretien's creation, but avoid dealing with the polling questions because that's where the Earnscliffe contracts existed, contracts approved by Paul Martin when he was finance minister.

This is what the report said concerning polling contracts:

5.1 We found that public opinion research activity was managed with a certain degree of transparency. For the most part, roles, responsibilities, and procedures were clear.

5.2 However, in some cases departments did not establish a clear statement of the need for undertaking public opinion research. In a small number of troubling cases, we noted that the government had failed to follow its own guidelines in effect at the time and had paid for syndicated research that monitored, among other things, voting behaviour and political party image.

Doesn't sound too bad, right? The problem is in using government funds to do what is essentially partisan popularity polling that ought to be paid for out of party funds. It is the difference between asking whether the government is doing something right, and asking whether you would vote for the Liberal Party if the government did something in particular.

When you think about it, it really is a big deal.

5.15 Based on our review of a sample of transactions and management practices, we found that the government managed its public opinion research activities adequately. The activities were centrally co-ordinated, as required by policies. Roles and responsibilities in the majority of activities were sufficiently clear; Communication Canada had issued an orientation guide outlining procedures for public opinion research and had developed a research guide to assist departments. In 2001-02, it published an annual report showing the number and value of government contracts awarded to each supplier.

5.24 We found no analysis in Communication Canada's files to support the need for carrying out the Listening to Canadians survey three times a year, and no evaluation of the survey's effectiveness over the last five years. Communication Canada's files did not demonstrate that the survey provided good value for the cost, as called for in policy guidelines.

So there was a question on whether the polls were valuable to the government. But then there were troubling questions about the usefulness of the polls to the Liberal Party:

5.25 The 1995 guidelines to the Policy on the Management of Government Information Holdings stated that "public funds should not be expended on Public Opinion Research concerned with monitoring voting behaviour or party image."

5.26 In May 2001, the Canada Information Office and the Intergovernmental Affairs Secretariat of the Privy Council Office paid a total of about $150,000 to obtain a new syndicated survey that included questions about the voting intentions and images of provincial and federal party leaders, among other topics. The survey also asked about voting intentions in two provincial by-elections.

5.27 In 2002-03, Communication Canada, the Privy Council Office, and Canada Economic Development for Quebec Regions subscribed to the same syndicated study dealing, among other topics, with voting intentions and approval ratings of the provincial and federal party leaders. The three organizations shared the total cost of about $158,000.

5.28 In 2002-03, the government subscribed to a syndicated survey whose questions covered many topics, including the approval ratings of the federal and provincial party leaders. Communication Canada's records showed that eight departments purchased the survey at a cost of about $21,000 each.

5.29 Under the common services policy, Communication Canada has a mandate to not only co-ordinate public opinion research activities but also advise and inform departments about effective practices and policies. We saw no evidence that Communication Canada took any steps to prevent or advise against the purchase of syndicated surveys that monitored, among other things, voting behaviour and party image.

With the Gomery Inquiry not checking into these questions, Canadians would have to wait until April 2005 for some answers. But before that would happen, an election would happen. With the Sponsorship Scandal gaining traction in public opinion, Paul Martin called a general election in May 2004, perhaps hoping to be given a mandate before the worst of the Sponsorship Scandal became public knowledge. In June, the Liberals were returned to power, but with a minority.

So what happened in April 2005, now with a Liberal minority trying to hold on to power? Warren Kinsella dropped a bombshell on the Public Accounts Committee looking into the contracts.

First, the Auditor General summarized her findings:

We are pleased to appear today before the committee to further discuss chapter 5 of our November 2003 report. As you mentioned, I am accompanied by Louise Bertrand, principal.

We found the federal government was managing its public opinion research activities adequately. For the most part roles, responsibilities, and procedures were clear.

The activities were centrally coordinated, as required by policies. Selection of suppliers for standing offers followed the competitive process. The program coordination and contracting activities for public opinion research were managed as two separate functions with appropriate segregation of duties.

However, Public Works and Government Services Canada needed to improve its management of standing offers and call-ups for public opinion research. This would better ensure consistency with the rules in place for documenting the rationale for existing standing offers, establishing call-up limits, calling for bids from the list of qualified suppliers for large contracts, and documenting the rationale for awarding a contract to any one supplier of the several on the list.

We found that Communication Canada and departments did not always establish clear objectives for the results of public opinion research projects. For about 20 per cent of the projects in our sample, departments did not demonstrate why they needed the research or how they would use the results. We are also concerned about the use of public funds in some cases to acquire syndicated studies on voting intentions and party image. This was clearly in violation of the guidelines then in place.

We also concluded that Communication Canada needed to continue working with departments to make public more reports on custom public opinion research within the required timeframe.

Then Warren Kinsella delivered his astounding statement. It deserves to be reproduced in full:

At the outset, I'd like to state that it was not my preference, nor I presume the preference of the members of the committee, that I would appear here under subpoena. I did not wish to anger members of Parliament or show them any disrespect, and I regret angering members of the committee in any way. My reasons for declining earlier invitations to attend were genuine and are contained in the letter that I sent to you dated April 7.

There's another reason why I did not wish to appear before you today. While I am not enthusiastic about Prime Minister Martin, or many of the people around him, I'm very enthusiastic, as are my wife, my business partners, and my clients, that I maintain as great a distance as possible from political controversies such as the one you are now investigating.

Now that I'm here before you, however, I'll endeavour to answer your questions to the best of my ability. I brought with me a number of documents that were sent to the clerk last week, which he indicated would be covered by the summons that I received. I understand that those have not been translated, so I cannot rely upon those. I will attempt to answer whatever questions you have. All of the documents, save one, were sent to the Gomery commission. But to my surprise, I did not receive any questions about any of them. I hope you will forgive me if my recollection of events of a decade ago is not as precise as we would all like.

Here is my statement, which I have timed as five minutes.

In 1990, while practising law in Ottawa, I was recruited to the staff of Jean Chrtien, who was then the newly elected leader of the Liberal Party of Canada. As special assistant, one of my duties was helping to prepare Liberal members of Parliament for question period, including the member for Lasalle--mard, with whom, I might add, I had a professional relationship. During the national election campaign of 1993, I helped to manage the Liberal Party's so-called war room. In that capacity, I assisted prominent Liberals like Mr. Martin and cooperated with many of the people who worked for him. Following that campaign, I was offered a number of positions and accepted one as the executive assistant to David Dingwall, Minister of Public Works and Government Services. I became Mr. Dingwall's EA on the day the new government was sworn in, in November 1994, and stayed with him until February 1996, shortly after he became the Minister of Health. We generally enjoyed a good relationship with the office of the Minister of Finance.

Mr. Dingwall had an enormous department, one of the largest in government. Along with PWGSC, he was the minister responsible for a regional development agency, Canada Post, CMHC, the Mint, and many other agencies. We were very busy. Among my responsibilities, as Mr. Dingwall's EA, was dealing with advertising and polling matters. As members of this committee will be aware, the Liberal Party made a number of commitments with respect to advertising and polling in the 1993 election campaign. On the day the new government was sworn in, in fact, Mr. Chrtien reaffirmed those commitments at Rideau Hall. On December 20, 1993, the Prime Minister sent a letter to his cabinet telling them to minimize expenditures for polling and advertising until new guidelines were in place.

In another letter the Prime Minister sent to his cabinet on May 9, 1994, he stated that contracting procedures must follow a competitive process similar to procurement of other services purchased by the government. Those two letters then became our mandate in 1994 and 1995: first, cutting spending on polling and advertising; and second, creating a competitive process for those things for the first time in Canadian history. With the assistance of a dedicated team of public servants at PWGSC, Treasury Board, and PCO, I believe we did that.

By the summer of 1994, all of cabinet, including Mr. Martin and Mr. Chrtien, had passed guidelines to govern a competitive and a cost-effective process for the procurement of polling and advertising. By June of 1995, we were proud to report to Treasury Board that we had radically cut spending on ads and polls. In the last full fiscal of the previous administration, for example, advertising spending was $117 million. In our first full fiscal, we reduced spending on advertising to $30 million, an $87 million reduction. In the last fiscal of the previous regime, public opinion research was at least $14 million. The public servants told us that many projects were not accounted for, so the figure may be higher. In our first full year, we reduced polling spending to $4 million, a $10 million reduction.

We also decided to place polls in the National Library so anyone could read them without having to go through an access to information process.

We dismissed the Conservative Party representatives who oversaw advertising procurement and who actually physically worked alongside bureaucrats, and we aggressively policed the guidelines with the help of Treasury Board, PCO, and the PMO.

I want to stress that we acted against many departments, not just Finance. These included Justice, Health, Industry, and Agriculture.

I also stress that we did not do these things on our own. We did them with the assistance of many public servants, including our deputy minister, Ranald Quail; his ADMs, Rick Neville, Jim Stobbe, and Mike Church; and yes, Chuck Guit.

While it may be contrary to the conventional view, we found that Mr. Guit did a good job--as good a job as he had done under the previous Conservative administration. And if it matters, I can tell you that his name never appeared on any of the confidential reports I received from Public Works' internal police force.

Following competitions for the procurement of goods and services, we would typically receive complaints. Often the complaints made by losing bidders would go nowhere. Sometimes they would be leaked to the opposition or to the media or result in litigation, or they would come to us through other departments or PMO or PCO or Treasury Board. In every case, every official complaint was thoroughly investigated.

I was at PWGSC for all of 1994 and 1995. In both those years, we received a number of complaints about the procurement of polling and advertising services by and for the Department of Finance. Those complaints related to the Earnscliffe Strategy Group.

This binder, which some of you have, relates to the 1995 situation, and the letter within relates to the 1994 situation. It's a confidential letter from me to Ms. O'Leary, and this section sums it up best:

Terrie, all of this spells trouble, and you know it. The competition was flawed, the payment is excessive, the work probably is not needed, and the research community can be fully expected to blow the whistle on the political connections here.

Those two sentences best describe, in my view, too much of the relationship between Finance and Earnscliffe in 1994 and 1995: flawed competitions, excessive payments, unnecessary work, and political connections.

That is my statement. I apologize that it was so long.

In conclusion, I will only say that it is well known that I am not enthusiastic about Mr. Martin or the people around him. However, I state on the record and under oath that I did not participate in the investigations of Earnscliffe and Finance because I disapproved of Mr. Martin and his people; in fact, I came to disapprove of Mr. Martin and his people because of what I learned in those investigations.

I am not here to rehash old battles. I am here today because this committee compelled me to be here, under subpoena. I can assure you that I did not and do not wish to be here today.

By way of conclusion, in the case of Earnscliffe and Finance a decade ago, we were asked to investigate, we did investigate, we substantiated many of the complaints we received, and we made a report, which is now ten years old, and which you will have before you shortly.

You will forgive me now for being cynical as to whether anything will happen now, ten years after the fact. Despite that, I look forward to your report and to your questions.

Thank you.

At this point, Terrie O'Leary, Warren Kinsella, and Conservative MP Peter MacKay get into it:

Mr. Peter MacKay: Thank you, Mr. Chair, and to all the witnesses.

I'd like to begin by asking Ms. O'Leary a few questions, if I might. I expect all of you will be giving very forthright and clear testimony in response to questioning.

Ms. O'Leary, in your role within the office of the Minister of Finance you were involved in contracting, and in fact I would suggest you were very much front and centre in the decision-making that went on as to which firms would be contracting with the office of the Minister of Finance, that is, Paul Martin, at the time. Is that correct?

Ms. Terrie O'Leary: No, that is not.

Mr. Peter MacKay: You at no time had any decision-making authority or discussed contracts with the now Prime Minister during your tenure at the ministry?

Ms. Terrie O'Leary: Absolutely. I had no decision-making authority and no involvement in contracting with the Department of Finance.

Mr. Peter MacKay: All right.

You did not meet regularly with the minister? You did not meet regularly with other officials from other departments with a view to determining which firms would receive contracting business?

Ms. Terrie O'Leary: No, I did not.

Mr. Peter MacKay: I'd like to turn to Mr. Kinsella.

Mr. Kinsella, are you in agreement with Ms. O'Leary, to the best of your knowledge?

Mr. Warren Kinsella: I can't describe what her authority was, properly given to her by her minister, but I certainly met with Ms. O'Leary on different occasions to deal with problems associated with suppliers for services to her department.

After that, Warren Kinsella helps the committee understand a document entered into the record. It was entitled "Re: Leakage -- Finance", dated July 24, 1995, sent to Chuck Guite from Warren Kinsella:

Mr. Peter MacKay: Mr. Kinsella, are you familiar with this document? Can you tell us who the author of this document is?

Mr. Warren Kinsella: I am.

Mr. Peter MacKay: You're the author of this document.

Would you read from that document, please, beginning with Mr. Guit?

Mr. Guit,

I was advised by the ADM Corporate Services on July 21, 1995 of the following figures. They were provided to Mr. Neville by a colleague at Finance.

None of these procurements were conducted through PWGSC, contrary to Cabinet-approved guidelines. This is simply unacceptable.

Would you like me to read the columns?

Mr. Peter MacKay: Yes, please.

Mr. Warren Kinsella: Number one,

Dec. 94 - Oct. 5/95
$219,000 value
91,000 spent

And I think the corresponding column is under Anderson on the right-hand side of the page:

Dec. 15/94 - March 31/95
$74,000 value
73,000 spent

Number two,

Sept. 93 - June 94
$29,900 - TBS issued

--which would be Treasury Board Secretariat--

50,000 - amendment
75,000 spent

The second column:

April 19/93 - March 31/94
$35,000 value
33,000 spent

Number three, on the second page:

July 12 - Aug. 15

--without a corresponding year--

$29,900 value
27,000 issued

The second column:

Jan. 10/94 - Jan. 31/94
$27,000 value
21,000 amendment
48,000 spent

Number four,

Sept. 1/94 - Oct. 31/94
$45,000 value
40,000 spent

I require an immediate explanation as to how the department in question was permitted to breach the guidelines in this way, and what is being done to remedy this situation.

Thank you.

And it was copied to Ran Quail, Jim Stobbe, Rick Neville, and Art Silverman.

The Chair: And that was the memo dated July 24, 1995.

Mr. MacKay.

Mr. Peter MacKay: Mr. Kinsella, this is just so we're clear. You stated these were contracts awarded to Earnscliffe and Anderson that you describe as having been conducted through Public Works and Government Services Canada contrary to cabinet...and not conducted through the proper procurements, to use your words.

Mr. Warren Kinsella: I think what it says--if I'm interpreting my own words correctly--is that they weren't conducted through Public Works, nor, as a consequence, were they done as per the cabinet-approved guidelines.

Mr. Peter MacKay: Now, it's noted at the top, in quotation marks, "Leakage"--Finance, so these are contracts, presumably, that were awarded in reference to the Department of Finance. Is that correct?

Mr. Warren Kinsella: Yes.

In one of the bizarre twists in this story, Warren Kinsella revealed that he had received a disturbing phone call ahead of his testimony. He tells the committee of the call when asked whether the Department of Finance had made threats to other government agencies who were demanding that Finance stop delivering contracts to favoured firms. Benot Sauvageau is the Bloc Quebecois member of the committee (he has since passed away, killed in a car crash):

Mr. Benot Sauvageau: It is a known fact that the Department of Finance is a central agency with a great deal of influence, including influence on the budgets provided to other departments.

Were you witness to any threats or references from Ms. O'Leary similar to the following: "Let us choose our agencies if you want to keep your budget?" Is this an urban legend or have you ever heard any remarks to this effect?

Mr. Warren Kinsella: For example, I received a phone call from an individual a few minutes before I came here indicating that Mr. Dingwall would disavow everything that I had to say here today. So that wasn't from Ms. O'Leary, but I would consider that to be an inappropriate statement.

The Chair: If he didn't know what you were going to say, how could he disavow it before you said it?

Mr. Warren Kinsella: Perhaps people are nervous, sir.

Warren Kinsella then dropped this all in Paul Martin's lap:

Mr. Benot Sauvageau: Mr. Kinsella, last Thursday, the Prime Minister told the House of Commons that he had always followed procurement rules and that he was not aware of any occasion where his department or staff were told that they were not respecting contracting rules. Do you consider that the Prime Minister was telling the truth when he made this statement in the House last April 14?

Mr. Warren Kinsella: In my opinion, Mr. Martin was aware of the contract situation and the problems.

He was aware of the situation, of the problems that were taking place.

David Herle testified after Warren Kinsella. David Christopherson is the NDP member of the committee:

Mr. Warren Kinsella: The communication I was referring to is best articulated in this letter that I sent to her, dated November 25, 1994, which is before you, but which I can only make partial reference to. She had been phoning me. My wife and I had been attending her grandfather's funeral and there had been a number of calls, plural; I can't tell you how many.

I called her back and was unsuccessful in reaching her, so.... "I thought I would put my thoughts to paper today, because time is of the essence", and then the letter goes on for two pages, approximately, to describe the concern that we, defined as the minister and the Prime Minister's Office, had about the nature of the contracting relationship between the Department of Finance and the Earnscliffe Strategy Group.

Mr. David Christopherson: Thank you.

Now, Mr. Herle, your role with Earnscliffe is what exactly?

Mr. David Herle: I'm not with Earnscliffe.

Mr. David Christopherson: Oh, you're with...?

Mr. David Herle: I'm a partner in a company called Veraxis Research and Communications. I was with Earnscliffe for 11 years.

Mr. David Christopherson: During the time in question?

Mr. David Herle: Yes.

Mr. David Christopherson: And what was your role there?

Mr. David Herle: Initially I was an employee, and at a certain point I became a partner in the firm.

Mr. David Christopherson: At what point was that?

Mr. David Herle: 1997.

Mr. David Christopherson: If I understand this--and I'm new to this, so please jump in, anybody, chair included, to correct me if I'm wrong on my factual base--the concern is that there's just too cozy a relationship between public polling that was done and....

I should ask one other question to lay the foundation. What was your role in Paul Martin's leadership campaign?

Mr. David Herle: I was the chair.

Mr. David Christopherson: You were the chair.

So we had a lot of polling going on, with questions raised by other people working for ministers, other Liberals, I would presume colleagues, concerned about processes with relation to Earnscliffe. You're sort of the key point here, because all of these questionable issues relate to Earnscliffe and getting contracts from the Ministry of Finance at the same time that the fellow who's the head of finance is running to be the Prime Minister, and you're chairing that campaign. The issue becomes whether your firm was receiving contracts because there was favouritism there. We'll bring in Ms. O'Leary as part of this, just to round it out-and I'm a little cautious about going there, because you were a couple at the time.

I like how David Herle suggests he has nothing to do with Earnscliffe. Recall that in the announcement in the Hill Times, Herle said that Veraxis was legally separate from the Government Affairs branch of Earnscliffe, but he still described it as "Earnscliffe's research arm", just under a new name.

Despite the concerns raised, David Herle maintains that the Auditor General cleared everyone, and that this was a politically motivated witchhunt:

Mr. David Herle: It would be good to go back piece by piece. It was quite quickly done.

First, you used the term "complaints from departments and ministers", plural, and I'm not aware of that. I'm only aware that Mr. Kinsella had problems. Those are the only problems or concerns I'm aware of.

Your fundamental question is how are you to satisfy the public that questionable polling and contracts were in the public interest. First of all, I'm not sure what you mean by questionable polling, because all the polling we have ever done for the Department of Finance is a matter of public record. You're free to examine it and judge for yourself whether it was in the public interest, but it certainly was not in aid of Mr. Martin's leadership campaign. At the time in question that Mr. Kinsella is making his allegations about, Mr. Martin was not a leadership candidate. This was a newly formed government. Mr. Martin was the Minister of Finance in that government. There might have been a leadership campaign going on in Mr. Kinsella's mind, but certainly not in anybody else's.

The work we did, as I said, is publicly available. Anybody can view it. As I read your own committee's report on chapter 5 of the Auditor General's report, you referred to an Ernst & Young audit that gives--as I read it--a complete clean bill of health to the way public opinion research was conducted throughout that period of time. The Auditor General, in her examination of a later period of time, raises none of these questions. So in my view there's been extensive auditing done of the contracting process, with no concerns raised, and the work itself is readily available publicly.

And later:

Mr. David Herle: My testimony today is that I was a supplier to the Government of Canada. I'm not in a position to comment on any of those things. I never saw those memos; I wasn't privy to the discussions between officials.

You do have at your disposal the Auditor General of Canada, who has examined this. You have at your disposal Peter Daniel, who was the assistant deputy minister of the finance department through that period of time, to speak quite authoritatively on that subject.

If you ask me about Mr. Kinsella's motivations, he's as strong a political adversary of Mr. Martin and of myself and of Ms. O'Leary as exists in this country.

Despite David Herle's comments, various bureaucrats then testified that contracts were designed with Earnscliffe in mind. Memos were entered into evidence in which these bureaucrats revealed their concerns about the lack of true competition. Again, Warren Kinsella summarizes it:

Mr. Warren Kinsella: I agree with Mr. Cutler in some of his observations. For example, there was an instance that we were aware of. We received a complaint from Joe Thornley, who is a well-known Liberal consultant in Ottawa, as well as others, that the mandatory requirements for a contract regarding strategic communications advice to the Department of Justice in the summer of 1995 had been designed for Earnscliffe.

Getting on to what Mr. Cutler is saying, the mandatory requirements-those are the things in the contract that are not allowed to be removed, that are there as conditions of the RFP-stipulated that one of the suppliers had to be a senior consultant with a minimum of ten years experience working for the news media industry. Well, that was Elley [sic] Alboim. Another one said it would be desirable that one of the team members should have a legal background. Well, that was Mr. Herle. So as Mr. Cutler has pointed out, it was no surprise to any of us that when that RFP went out, only one firm responded.

The Prime Minister has said many times, and I heard today in the House of Commons, that there was a competitive process. If you want to define that as a competitive process, I suppose it is, but that wasn't our definition. That is setting up the terms of reference in such a way that only one firm can win. That's not fair.

Of course, this investigation into potential Liberal Party wrongdoings wouldn't be complete without a Liberal MP explaining how this was not important or relevant or interesting. Thankfully, Ajax-Picking MP Mark Holland stepped in to fill this role. Mark Holland talks alot:

Mr. Mark Holland (Ajax-Pickering, Lib.): Thank you, Mr. Chair.

I have a lot of questions, so I've asked to go twice.

I'm going to start with a very quick preamble. What we've heard, I think, is that we had a process prior to 1993 where essentially there was sole-sourcing, a tremendous amount of money was spent on advertising, and there were a lot of questions. In the period following 1993, there was a period of reform. Although some of the people involved, such as Mr. Guit, were still at the table, the reform did take place such that by the time the Auditor General did her report on this chapter, she had found that, in large part, this area of government was being conducted in a satisfactory manner that was transparent.

As we look at this, and we see that this is the case, and that all the polling data done at that period of time was public--one can take a look at it quite readily, and easily see what was done--we can say, well, why are we going back to this chapter?

I think it's important to say, as a preamble, that currently this committee has an enormous number of chapters, and I refer to the Auditor General on this, that are not being dealt with. This committee, in this process, in its pursuing of a chapter that essentially had previously been dealt with--

The Chair: I'm sorry to interrupt there, Mr. Holland, but as you know, the committee decided to investigate this chapter.

Mr. Mark Holland: I don't deny that, but it's important--

The Chair: You know, we're here to discuss with the witnesses, not discuss the decision of the committee. The committee decided they would look at chapter 5 of the November 2003 report.

Mr. Mark Holland: Mr. Chairman, I don't deny the committee's right and ability, if they so choose, to go down any track they wish. Absolutely. And instead of trying to find out information, they try to make points. This is why we're in a partisan circus right now, and why, in my opinion, when we're dealing with this particular matter, we're calling in witnesses to try to create some kind of...or to relive a rivalry that existed.

I think we're seeing it quite readily in front of us here today. I think the opposition can delight in the fact that they're trying to bring adversaries to thrash it out with one another, and to abuse the power of this committee to try to do that. I have some serious problems with that.

The Chair: Mr. Holland, we're not going to go down this road of abusing the committee and all that stuff. You're part of this committee. The committee made a decision to bring these people here today, and they are here today. Now, we don't need this harangue to the committee. You can ask your questions to the witnesses or I'll move on.

Mark Holland went on the attack, accusing Warren Kinsella of being motivated by revenge:

Mr. Mark Holland: I'm going to try to come back to this, but the concern I have is in the statement you made in the opening, in which you said, "while I am not enthusiastic about Prime Minister Martin". That's an incredible understatement, probably one of the largest understatements I've ever heard. You are a stated adversary, you've fought alongside.... And what I think we're hearing right now, and I'll get a chance to question this later, because I have very limited time now, is--

The Chair: It's your last minute.

Mr. Mark Holland: Yes. I need the time to come back to this. I have a lot of concerns with the adversarial nature and relationship that exists between the two of them in letters and what not being presented in the context of that adversarial relationship. I will come back to this when I have more time.

Later we learn that Warren Kinsella's fight with Paul Martin and Finance over the Earnscliffe contracts ended Kinsella's career in Ottawa:

Mr. Peter MacKay: Was Mr. Martin prepared to do anything in response to the concerns you raised, and do you believe that Mr. Martin had direct knowledge of these discrepancies in the contracting practices? If you do believe that, what's it based on?

Mr. Warren Kinsella: He absolutely had knowledge of these things. And as Ms. O'Leary has said--and she's right--it's a matter of opinion. Our opinion was that these things were inappropriate. Finance's opinion was that they were appropriate. It's your job, obviously, to determine what the facts are.

In the fall of 1995 this issue escalated to the Prime Minister's Office--

The Chair: Excuse me, are you talking about Mr. Chrtien or Mr. Martin when you say the Prime Minister?

Mr. Warren Kinsella: It was definitely Mr. Chrtien in 1995.

There was a meeting, I understand, involving a number of people, including Mr. Sharp and Mr. Pelletier. There was a recommendation, I understand, that Ms. O'Leary be dismissed as a consequence of the lack of disclosure, and Mr. Martin said he would quit before that ever happened. At that point I received a phone call from somebody in the Prime Minister's Office saying that they were sorry, and I phoned my wife and said, "It's time to leave Ottawa."

I don't think Warren Kinsella has been given enough credit for the role he has played in bringing the Earnscliffe problems to light, and the steep price he has paid (and continues to pay) for having stood up to those vested interests and demanding that contracting rules designed to protect the public purse be respected. Of course, you might think Warren Kinsella is weaving an elaborate web of lies to enhance his own reputation, but I don't think so. I don't think it for a minute.

In any case, things turned ugly at the Committee meeting. Recall the links between Paul Martin and Earnscliffe during the leadership campaign. Warren Kinsella brings those links up and we learn that David Herle didn't appreciate these things being discussed:

Mr. David Christopherson: Thank you very much, Chair.

Mr. Kinsella, you made some very strong statements earlier in your opening remarks. Given all the discussions we've had, I'd like you to just expand on your last statement at the bottom of the second page. I'll just read it out to set the stage:

These two sentences best describe, in my view, too much of the relationship between Finance and Earnscliffe in 1994 and 1995: flawed competitions, excessive payments, unnecessary work, and political connections.

There's not a lot of detail attached to that. Little bits have come out in some of the questions. Given that damning statement--that's pretty powerful, coming from someone who was in the position you were in--can you add a little bit of detail and flesh to that? Exactly what did you mean when you talked about political connections?

Mr. Warren Kinsella: I guess I would define that as meaning that pretty much everybody in this town above the age of five knew that Earnscliffe was the place where Mr. Martin's leadership campaign was conducted and there was political activity on his behalf. That's fine, but I and perhaps others would consider it inappropriate to cross-subsidize that political activity using the public treasury.

Mr. Herle said earlier that all of the reports--and he just provided you with some of those--were available. Well, they're not in fact available. The Auditor General's report from November 2003 cites Finance specifically as a department that was not providing them. So the bad behaviour that we found in 1994-1995--

Mr. David Herle: Point of privilege, Mr. Chairman. He's made an allegation I have to respond to.

The Chair: Okay, let's hear from Mr. Herle.

Mr. Warren Kinsella: Can I respond to the fact he called me a piece of dirt?

We'll just leave it there. No doubt there will be more of this when Daniel Paill starts his work.

But in the days after Warren Kinsella testified, political observers debated the significance of the testimony.

Andrew Coyne:

Item: Another memo surfaces accusing officials in Paul Martin's office at Finance of rigging the bidding on communications contracts to favour Earnscliffe Strategy group, where many of his senior advisers were -- and are -- employed. To compound the embarrassment, the scolding is at the hands of Warren Kinsella -- the conscience of the Liberal party, then executive assistant to Dave "Stonewall" Dingwall at Public Works -- in a memo to that crusader against misspending, Chuck Guit.

"I require an immediate explanation as to how the department in question was permitted to breach the guidelines in this way," Kinsella writes, listing seven contracts worth $525,900 awarded to Earnscliffe and an affiliated company. "This is simply unacceptable." Guit agrees, writing back that the situation "could become embarrassing to the government and certainly our minister." Coverage: Globe, page 4; Post, page 10, Star, page 6.

How those memos came to light is an interesting question in itself. Kinsella staunchly denies he leaked them, even feigning unfamiliarity with the one above his signature ("The memo sounds genuine, although I still haven't seen it yet. It certainly sounds like something I would say..."). Actually, I believe him. My theory is that the Martin people leaked it, in anticipation of Guit's appearance before the committee tomorrow. The theory is buttressed by Monday's Globe piece ("Guit expected to bare old feud with Finance"), which heavily quotes Martinites. The strategy is signalled by the headline: make everything Guit says seem like part of an "old feud," an obscure bit of bureaucratic rivalry mixed with partisan infighting, where everyone says things they regret later. And rely on the fact that the story has already been leaked -- twice -- to make Guit's testimony seem stale by the time it is delivered.

Adam Daifallah:

The Earnscliffe people are claiming this is bunk, and that they've been cleared in a report done by Ernst and Young. Neverthelss [sic], this looks and smells awfully bad.

But not much came of this. The country was still reeling from the Jean Brault testimony at the Gomery Inquiry. The ban was only lifted on April 7, and the news was dominated by speculation of just how deep the scandal would reach. Mismanagement of funds was one thing, but kickbacks to the Liberal Party was something else entirely.

The questions of favouritism shown to Earnscliffe seemed like small potatoes, and in any case, no one was alleging that Earnscliffe didn't do the work that was asked of them, just that too much was paid for the work because of the lack of competitive bidding, and that the work was inappropriate (though given the complex links between Paul Martin's Liberal Party and Earnscliffe, it isn't clear who would have noticed the impropriety).

In any case, Paul Martin was still in charge, but not for long. From April, the weeks passed quickly, the Liberal government lurching from crisis to crisis, until November 28, when a motion of non-confidence passed and the government fell. David Herle took on his job on the Liberal Party campaign team, but this time, the Liberals lost, and Stephen Harper and the Conservatives took over.

Which brings us to today. The Conservatives have initiated the investigation Paul Martin refused to undertake:

The Conservative government has appointed a former Parti Qubcois cabinet minister to search for broken rules and inflated billing related to 13 years of public opinion polling and research, a probe that opposition parties have called a "witch hunt."

Daniel Paill, Quebec's industry minister from 1994 to 1996, has six months to look into polling purchased by the federal government from 1990 to 2003, with a focus on problems revealed in Auditor General Sheila Fraser's report on the sponsorship program.

"If you look at the costs today ... they went up almost sevenfold," said Public Works Minister Michael Fortier.

In 1993-94, for example, the federal government spent $4 million on 90 opinion polls. By 2004-05, there were 621 polls at a cost of $29 million.

Fortier said Paill has been asked to determine how contracts were awarded and why some resulted in verbal contracts that had no paper trail. He is also asked to identify any breaches of Treasury Board contracting policies.

Fraser found some problems with opinion polling from 1999 to 2003 and said the finance department, under Paul Martin, had commissioned some polls for which only verbal reports were delivered. Those contracts were conducted by Earnscliffe Strategy Group, and top Liberal strategist David Herle, a Martin confidant. Herle, who now runs the Gandalf Group polling company, declined comment yesterday. Calls to Earnscliffe were not returned.

So there we have it. Earnscliffe helping out Paul Martin win the Liberal leadership after years of close work with him as finance minister, the questions around the role of Earnscliffe in the transition team, the lingering questions from the Auditor General's report, the omission from the Gomery Inquiry, the allegations that Earnscliffe was a taxpayer-paid pollster for the Liberal Party, the first attempts to get to the bottom of what happened at the Public Accounts Committee, the raw emotion between factions of the Liberal Party on very public display, and now a new inquiry devoted to the Earnscliffe problem specifically.

I hope this primer helps you understand the who the players are and what questions are going to be answered by the upcoming investigation. It has been over ten years developing. I bet there's a lot more we'll be finding out over the weeks to come.

A Liberal blogger, James Bowie, offers a rebuttal.