Canadian PM promises early election over scandal

OTTAWA - Canadian Prime Minister Paul Martin, grappling with the Liberal government's worst crisis in a decade, has promised to call an election early next year once a probe into a cash-for-favour scandal is over.

But opposition parties, who seem likely to topple the minority government next month and trigger a June 27 election, reacted coolly to Martin's offer and questioned how long they could continue propping him up.

The inquiry is to issue its final report in mid-December and Martin promised in a rare national televised address to call an election within 30 days of its release.

The commission has heard startling allegations that Liberals in Quebec demanded big kickbacks in return for lucrative government contracts.

"I commit to you tonight that I will call a general election within 30 days of the publication of the commission's final report and recommendations," Martin told Canadians, acknowledging he could pay a price for having set up the probe in February 2004.

The official opposition Conservatives, who only last month kept the Liberals in power by not opposing their budget, said the ruling party was now "tarnished beyond redemption".

"I have some difficulty with a prime minister under a cloud picking his own election date," Conservative leader Stephen Harper told reporters, but said he had not taken a final decision on whether to try to bring down the government.

Two separate opposition measures are moving through Parliament that could provide opportunities for non-confidence votes next month.

A Decima poll released on Wednesday showed the Liberals at just 28 per cent support compared with 35 per cent for the Conservatives. The results suggest a minority Conservative government if an election were held now.

Martin took over as prime minister from fellow Liberal Jean Chretien in December 2003 but ran into immediate problems over the scandal. Public anger over the affair stripped the Liberals of their parliamentary majority in last June's election.

Relations between Martin and the opposition have soured considerably in the past week, and the political uncertainty has helped depress the Canadian dollar.

"I think most people are looking for a forced election here, despite tonight's speech, and I don't think people want to wait until January for an election on this," said Amarjit Sahota, chief currency strategist at HIFX Plc in San Francisco.

The separatist Bloc Quebecois demanded Martin resign over the scandal, which took place under Chretien. Martin, who was finance minister at the time, said he bore some responsibility for what had happened.

"Knowing what I've learned this past year, I am sorry that we weren't more vigilant - that I wasn't more vigilant," he said in the first such televised address by a prime minister since a 1995 referendum on Quebec independence.

The inquiry has heard that money from a sponsorship programme, designed to counter separatism in French-speaking Quebec in the wake of the failed referendum, was funneled to Liberal-friendly advertising firms, often for little or no work.

Martin's problems really started two weeks ago with the release of testimony by a former advertising executive who said he had been forced to pay kickbacks to the Liberals.

His account appeared to be partly corroborated on Thursday when a former leading Liberal party member in Quebec told the Globe and Mail newspaper that he had taken money from advertising firms and funneled it into Liberal election campaigns - a clear violation of electoral financing laws.

Benoit Corbeil said some of his superiors had approved the transactions and he alleged the money had been used to pay "fake volunteers" during elections.

- REUTERS