Ex-bureaucrat to be jailed for defrauding government

Ex-bureaucrat to be jailed for fraud against the government and agreed to go to jail, after channeling $70M to a foundation for kickbacks.

A former federal bureaucrat is going to jail for a year, after admitting that he got more than $200,000 in kickbacks for channelling millions of dollars to an addictions treatment centre.

Paul Cochrane was an assistant deputy minister with Health Canada and in charge of a $1-billion budget before he retired in 2001.

Cochrane, 58, pleaded guilty in an Ottawa court Friday on charges of fraud and breach of trust.

He admitted in court that he and his family received more than $200,000 in cash and gifts in exchange for funnelling more than $70 million in contracts to a native addictions foundation in Manitoba.

The kickbacks included nearly $30,000 in travel to Florida and the Caribbean, several SUVs and tens of thousands of dollars in cash, which he used to buy condominiums in Mont Tremblant, Que.

He alleged in court that they came from Perry Fontaine, the director of the Virginia Fontaine Addictions Foundation in Manitoba. It ran a 76-bed treatment centre located on the Sagkeeng reserve about 145 kilometres northeast of Winnipeg.

Pressured staff to fast-track millions: Cochrane

Cochrane said he repeatedly increased funding to the foundation, negotiating agreements with Fontaine before Health Canada officials could approve them and pressuring his staff to fast-track millions of dollars in payments.

"It seems to be a clear abuse of the tremendously important responsibilities he was given to assist some of the most vulnerable people in Canadian society," said Manitoba Conservative MP Brian Pallister.

Manitoba MP Judy Wasylycia-Leis expressed disappointment at the quick court settlement, saying she expected the investigators and prosecution to find out why Cochrane's superiors didn't step in sooner.

It also leaves "the wrongful impression that it's really the poor administration of the aboriginal community" that caused the fraud, the NDP politician said.

More than a 'slap on the wrist'

But both the Crown and Cochrane's lawyer agreed there was no proof that Cochrane was aware the gifts were paid for with money he gave to the foundation to treat native people addicted to drugs, alcohol and solvents.

Judge Lynn Rutshny said Cochrane allowed himself to be corrupted, and he had fallen from the grace of his high position. She agreed with the plea bargain that Cochrane should serve a year in jail.

"No civil servant working at their desk today would think that's a slap on the wrist," said Cochrane's lawyer, William Vanveen.

"That's a serious penalty."

Cochrane apologizes to public, department

Cochrane, who lives in Kanata near Ottawa, is also facing criminal tax-evasion charges, and is a defendant in a civil suit launched by the government to reclaim some of the money that went to the treatment foundation.

Before being taken to the Ottawa detention centre, Cochrane told the judge he was sorry he let down the public's trust and regretted the embarrassment he caused officials with the department.

With tears in his eyes, he turned to his wife to apologize.

He could serve as little as eight months in jail before receiving two years probation.

Others face charges in Manitoba

Vanveen said details are still being worked out for Cochrane to provide evidence in the continuing prosecution of the foundation's director and members of his family in Manitoba.

The police began investigating four years ago with an informant who told them the foundation's directors had bragged they'd bought a corrupt official.

They eventually confiscated more than 60,000 documents from dozens of banks, government offices and private homes in three provinces.

According to auditors, more than a million dollars Cochrane funnelled to the foundation for treating addicted native people ended up in one director's pocket.

Cochrane's testimony is to be used as evidence in a continuing investigation against six other people in Manitoba who have been charged in the scandal.

None of them have entered pleas and the allegations against them haven't been proven in court.