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Jean Carle was a former aide to then prime minister Jean Chrétien. (CP photo)

Jean Chrétien's former top aide said Friday he helped create a phoney paper trail to hide details of a $125,000 sponsorship deal.

Jean Carle made the comments while testifying at the Gomery inquiry into the federal sponsorship scandal.

"If this were a drug deal, it would be called money-laundering," said inquiry lead Justice John Gomery.

"You're not wrong," replied Carle.

Carle's lawyer later told reporters outside the courtroom that Gomery's assessment was an "inappropriate use of words."

A director of operations for Prime Minister Chrétien, Carle became a senior vice-president at the Business Development Bank of Canada when he left the Prime Minister's Office in 1998.

Pierre Tremblay, the department official then in charge of the sponsorship program, became involved in the deal while at the bank. The money involved a television series called Le Canada Millennaire, by producer Robert Scully.

Carle says the bank, which had already given $250,000 to the series, acted as a conduit in transferring $125,000 in government money to Scully's production company, Information Essentielle.

The additional $125,000 came from the Public Works Department, but Tremblay didn't want it to show up on the government's books, said Carle.

Tremblay proposed the money be channelled through the bank with the understanding the bank would receive advertising spots on the series, said Carle.

Public Works delivered the money via two cheques through two ad agencies: Lafleur Communication and Media IDA Vision. The agencies received a combined $18,000 for their part in the deal, he said.

"I felt it was a benefit for the bank to get an extra $125,000 in advertising without having to pay (its own money)," said Carle. "I did not do this in bad faith. We were kind of a transmission belt."

Carle didn't explain why Tremblay didn't want the transaction to show in the department' s books.

Tremblay died last October before he could testify at the inquiry. He had been ill for a long time.