The Bloc Québécois is demanding the federal government launch an inquiry into reports that the 'No' side spent half a million dollars illegally during Quebec's 1995 sovereignty referendum.

"Will the government immediately establish a public inquiry so that we can shed light on all of this matter?" Bloc Leader Gilles Duceppe asked in the House of Commons Tuesday afternoon.

On Tuesday morning, Quebec Judge Bernard Grenier released a report that concluded two independent pro-federalist organizations — Option Canada and the Canadian Unity Council — illegally spent $539,000 in federal government money to support the "No" campaign during the referendum.

The organizations also spent $11 million before and during the campaign to help the "No" side counter those who wanted Quebec to separate from Canada, the report concluded.

Bloc MP Vivian Barbot said the allegations are unacceptable.

"Does the prime minister not recognize that the federal government acted unacceptably in the referendum campaign?" she asked in the House.

Prime Minister Stephen Harper was quick to distance himself from the allegations.

"Those events took place 12 years ago under a previous government," Harper said, referring to former Prime Minister Jean Chrétien's Liberal government.

Tory Transport Minister Lawrence Cannon, who represents a Quebec riding, added that the Conservative government has worked hard to deal with the issue, including cutting funding to the Canada Unity Council.

"The results have been clear," he said. "The Bloc Québécois should recognize that."

Bloc MP demands federal apology

Barbot was not convinced.

"The prime minister has repeatedly said he respects provincial jurisdiction. now he has a chance to walk the talk and uphold his promises. Will he apologize on behalf of Canada to Quebec and Quebecers?"

Quebec's director general of elections asked Grenier to investigate allegations of misspending in 2006. The allegations were made by two Montreal writers — Robin Philpot and Normand Lester — who claimed millions were funnelled to the "No" camp from the federal government.

Official implicated in report relieved

Grenier chastised five federalists in particular, including Claude Dauphin, the past president of Option Canada. Grenier said Dauphin failed to exercise vigilance by receiving an unreported and unauthorized salary, although he did not act in bad faith.

On Tuesday, Dauphin, now a member of the City of Montreal's executive committee, said he's relieved by and satisfied with Grenier's report.

"I had nothing to do with managing money at Options Canada," he told reporters in Montreal. "I was just an honorary president."
 
He said he thought his $6,000 salary was declared.

"I wasn't hiding in the basement and getting a paycheque," he said. "I was convinced my salary for that specific month was declared."