Canadian scandal inquiry recommends crackdown

OTTAWA - The inquiry into a corruption scandal that brought down Canada's Liberal government has recommended that an array of tough new rules be introduced to prevent wrongdoing by unelected officials.

Prime Minister-elect Stephen Harper, whose Conservatives take over power on Monday, backed the findings and said he was determined to track down the roughly $C50 million ($65.04 million) he said was still missing as a result of the wrongdoing.

The inquiry, under judge John Gomery, examined how $C100 million from a government sponsorship fund supposed to boost Canadian unity was in fact funneled to Liberal-friendly firms in the late 1990s. The fund was run from the office of then Liberal Prime Minister Jean Chretien.

In his second and final report into the affair, Gomery said the office of the prime minister had become too powerful and called for Parliament to keep a closer eye on the government.

"Parliament's capacity to exercise its traditional roles of watchdog of the public purse and guardian of the public interest will have to be reinforced," he wrote.

Gomery later told a news conference that Canadians "feel profoundly betrayed and revolted by what has transpired".

His first report, released last November, said some Liberals had used the money to run a kickbacks scheme to illegally fund election campaigns.

Those running the fund ignored regulations about how money should be spent, while bureaucrats aware of the problems largely remained silent for fear of getting into trouble.

"A general lack of transparency about government spending and a reluctance by the public service to call attention to irregularities because of the increased concentration of political power in the prime minister's office are weaknesses in the present-day system of Canadian government," Gomery said.

Harper says the first thing he will do when he takes power is to bring in legislation designed to boost accountability in federal politics. He said he liked the Gomery report but did not commit to enacting any of its recommendations.

"We will hold people accountable who committed wrongdoing and we will act to find what happened to the missing money ... I don't think we're going to drop the matter when $C40 to $C50 million is still missing," he told a separate news conference.

The bureaucrat who ran the fund has been charged with fraud and is due to go on trial this year.

Gomery's first report exonerated Prime Minister Paul Martin, who was federal finance minister at the time. But opposition parties quickly brought down the government over the findings and in last Monday's national election Martin lost to the Conservatives, ending 12 years of Liberal rule.

Gomery said Parliament's public accounts committee -- which in theory oversees government spending but was never told about the sponsorship fund -- needed more staff and funding.

The Liberals have already introduced new measures to prevent similar abuses but Gomery said they did not go far enough. Some in the federal bureaucracy fear Harper's proposed legislation would flood the system with so many new checks and balances that the machinery of government would stall.

Gomery, saying the vast majority of bureaucrats were honest and diligent, expressed frustration that no one had ever come forward willingly to accept blame for what had happened.

"The commission has received a deluge of emails from Canadians expressing outrage that no one has yet been put in jail for the sponsorship scandal," he said.

- REUTERS