With a federal election call widely expected within the next week or so, two men at the centre of the Liberal sponsorship scandal were arrested and charged with fraud on Monday.
The RCMP has arrested former Public Works and Government Services Canada official Charles (Chuck) Guité, age 60. He headed up the controversial $250-million sponsorship program from 1997 to 1999.
The other man is Jean Brault, 51, president of Groupaction Marketing. Groupaction is the Montreal-based PR firm alleged to have benefited from millions of dollars worth of federal money funneled through the sponsorship program.
The two men are each charged with six counts of indictment for fraud and conspiracy by fraudulent means totalling $1,967,000. Each count carries a maximum prison sentence of 10 years.
"The charges laid in this case deal more specifically with three contracts related to the visibility program of the Government of Canada that have been identified as questionable and reported to the RCMP by the Auditor-General of Canada," the RCMP said in a statement.
The charges relate to three separate contracts awarded to Groupaction between 1996 and 1999. The total values of those contracts were $500,000, $550,000 and $575,000, for a total of $1.6 million. In three of the charges against each man, the RCMP alleges that, for that money, Groupaction provided less than $468,000 in value to the government.
Two other charges against each allege that two contracts worth a total of $480,000 awarded to Groupaction as part of Ottawa's gun-registry program provided no value at all to the government. The final charge against each man alleges that Groupaction was awarded a completely bogus contract worth $330,000.
Both Brault and Guite pleaded not guilty to the charges and were released on $20,000 bail Monday afternoon.
The RCMP said the charges are only "one facet" of a huge investigation that is still ongoing.
Last month, Guite testified before the Commons Public Accounts Committee and denied any wrongdoing during his time in charge of the sponsorship program. He acknowledged that on occasion rules were bent, but only to fulfill the program's mandate to help keep Canada united and derail the efforts of Quebec separatists.
During his testimony, Guite said a report filed by Auditor General Sheila Fraser in February that was critical of the sponsorship program was inaccurate and full of inconsistencies.
Brault was also called to testify before the committee but did not appear.
In 2002, a report by Fraser found that Groupaction had billed taxpayers three times for the same report. That discovery sparked the RCMP investigation of the entire sponsorship program and other federal advertising programs.
