A Quebec advertising executive whose former firm earned tens of millions of dollars in sponsorship fees and other commissions from the federal government was the first to testify as the Gomery inquiry entered a new stage Monday.

The public inquiry was told that nearly 40 per cent of the revenues reported by Jean Lafleur's company, Lafleur Communication Marketing, between 1994 and 2001 came from the federal Public Works Department. Add in revenues from federal Crown corporations and the proportion rises to 78 per cent.

Public Works was the department in charge of administering the $250-million sponsorship program, designed to raise the federal government's profile in Quebec after the 1995 sovereignty referendum.

Jean Lafleur, former head of Lafleur Communication Marketing.
Jean Lafleur, former head of Lafleur Communication Marketing.

Documents tabled at the inquiry Monday showed that Lafleur's company took in $31.9 million in sponsorship and advertising contracts involving the federal government between 1994 and 2001, and another $28.5 million from federal Crown corporations over that same period.

That's a total of $60 million in public funds.

Lafleur personally earned more than $9.3 million while at the helm of Lafleur Communication Marketing between 1994 and 2000, his salary rising from just over $100,000 to $2.5 million.

Gilles-André Gosselin in April 2004.
Gilles-André Gosselin in April 2004.

During the same period, Lafleur's wife, daughter and son earned a total of $2.8 million, though they had earned nothing before the sponsorship contracts started to flow in.

Lafleur defended those payments by saying they weren't really a salary. The money "includes the business profits paid, in my name, as salary," he said.

In 2000, Lafleur sold his company to Jean Brault of Groupe Action. Brault is one of three ad executives now facing criminal charges in connection with the sponsorship program, along with the ex-bureaucrat who ran the program.

Inquiry looking into $100 million in fees

Four advertising agencies billed Ottawa $100 million for services tied to keeping Quebec in Canada, charging commissions of about 18 per cent on almost everything they did and billing the government for strangely large amounts of staff time.

For example, in past testimony before the parliamentary public accounts committee, Gilles-André Gosselin of Gosselin Communication was asked how his firm accumulated 3,600 billable hours in one year alone.

He replied, "Is there a law in Canada that prevents someone from working seven days a week?"

Auditor General Sheila Fraser has questioned what value, if any, the federal government got for money doled out through the sponsorship program.

A 2003 audit showed that some firms were paid for services not rendered and that ad executives pocketed about 40 per cent of the sponsorship dollars between 1997 and 2003.

The 2003 audit also found that some of the contracts were awarded without being placed through a competitive process.

The advertising and communications firms are said to have made large donations to the Liberal party and Liberal politicians, raising opposition allegations of political favouritism and corruption.

Lafleur in particular has been closely tied to the Liberal party. He was known to wine and dine former cabinet ministers and had close friends in the upper echelons of Jean Chrétien's government.

For example, the prime minister's former chief of staff often joined Lafleur in the advertising firm's box to watch NHL hockey games in Montreal.

Privy Council clerk testifies again

Another prominent witness who testified Monday was Alex Himelfarb, the clerk of the federal Privy Council and Canada's top civil servant, called back to clarify a point from Chrétien's testimony earlier this month.

Inquiry lawyers asked him what kind of briefing Chrétien would have received about Fraser's damning report on the sponsorship program in late 2003.

Himelfarb repeatedly said it wasn't Privy Council policy to brief a prime minister on a draft report.

Chrétien's lawyer, Peter Doody, later told the inquiry that his team considered Himmelfarb's recall to address the point as further evidence of anti-Chrétien bias on the part of commission chair Justice John Gomery.

Montreal stage of inquiry to last 10 weeks

Hundreds of subpoenas have been issued to potential witnesses for the upcoming 10-week Montreal stage of the Gomery inquiry into the sponsorship affair.

Running nearly 20 pages long, the subpoenas demand every conceivable document that could establish a money trail: bank account statements, income tax returns from 10 years back, and phone records linked to hundreds of companies and Quebec ad executives.

Some former Quebec ad company employees were still receiving inquiry subpoenas on Friday.

The Ottawa stage of the inquiry heard from more than 100 witnesses, including Chrétien and his successor as prime minister, Paul Martin.