Section Five SUMMARY OF FINDINGS ......Table 18: Summary of SPS Contracts Managed by Agencies Section Five: Summary of Findings—Communication Agencies 31Agencies Chosen in 1995,

29

5

Section Five

SUMMARY OF FINDINGS—COMMUNICATION AGENCIES

5.1Agency Selection

5.1.1 SPS Agency Selection

In February 1995, five agencies, Groupe Everest, BCP, Compass, Palmer Jarvisand Vickers & Benson, were chosen on the second day of Heritage Canadaselection process. In an undated memo Mr. Guité indicated that these fiveagencies "will be included on the PWGSC/APORS qualified supplier listfor possible communication/advertising contracts on behalf of APORS."

In June 1995 Consortium Lafleur was selected. This consortium includedLafleur together with Compass, Natcom Publicité, Freeman Roger Battagliaand SKS Advertising.

In an April 1997 selection process ten agencies were chosen. The ten included:

• Communication Coffin with SOS Communications• Delta Media Inc.• Freeman Rodgers Battaglia Inc.• Goodman Communications Inc.• Gosselin• Groupaction• Manifest Communications Inc.• Publicité Martin Inc.• Scott Thornley & Company Inc.• Sparks Communications Inc.

In a May 2001 selection process, nine agencies were chosen to receive standingoffers including:

• Armada• Bristol Group• Coffin• Compass• Everest• Gosselin• Groupaction• Lafleur• TNC Multicom Inc.

Table 18 summarizes the percentage, by dollar value of contracts managedby the agencies chosen in the four agency selection competitions.

30 Who is Responsible? Forensic Audit

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Section Five: Summary of Findings—Communication Agencies 31

Agencies Chosen in 1995, 1997 and 2001 Total

Contracts Percentage Groupe Everest 67.67 22.18% Lafleur 65.46 21.46% Groupaction 60.83 19.94% Groupaction/Gosselin 23.06 7.56% Gosselin 21.21 6.95% Vickers and Benson 15.36 5.03% Compass Communications 15.11 4.95% Communication Coffin 8.70 2.85% Groupe BCP 6.35 2.08% Armada 4.60 1.51% TNC Multicom 3.48 1.14% Palmer Jarvis Advertising 2.83 0.93% Publicité Martin 1.51 0.49% Bristol Group 0.55 0.18% Delta Media 0.24 0.08% Communications Consultants 0.18 0.06% SOS Communications 0.02 0.01% Sparks - 0.00% Goodman - 0.00% Manifest - 0.00% Scott Thornley - 0.00% Total for Agencies Chosen in 1995, 1997 and 2001 297.16 97.40% All Other Agencies 7.94 2.60% Total Agency Managed Contracts 305.10 100.00%

5.1.2 Advertising Agency Selection

Sections 8 to 16 provide the details of the departmental selection competitionsas they relate to each agency.

5.2Cash Flow to Agencies

Based on our analysis of the flow of funds for those agencies and sub-contractors described in Sections 8 to 16 of this report, we can provide thefollowing summary comments:

i) The entities received from 23% (Vickers & Benson) to 100%(Gosselin) of their revenues from GOC business.

ii) For the periods in which the firms received GOC related revenues,profits from all sources of business totaled $46.0 million1,2.

iii) For the periods in which the firms received GOC related revenues,salaries and bonuses paid to their owners totaled $51.2 million2.

iv) For the periods in which the firms received GOC related revenues,contributions were made to or on behalf of political parties, totaling,at a minimum, $801,627. If the amounts identified by Mr. Braultas payments for a political purpose are included, this amount risesto $2.5 million2.

v) Payments were made to Oro Communications totaling $525,923.In addition, Société Immobiliére Alexsim (controlled by Jean Brault)paid $25,000 to Mr. Guité, Mr. Brault purchased a car for $35,000from Mr. Guité and Mr. Coffin purchased a boat for $27,000 fromMr. Guité.


1 Excludes net gains on sale of business by Groupe Everest and BCP.

2 Includes Groupe Polygone, Expour and PluriDesign.

Included in this section of our report are summary flow of funds charts forthose communications agencies and sub-contractors for which we have conducted financial analysis. These agencies and sub-contractor companiesinclude the following:


Table Communication Agency / Sub-contractors Year

Detailed Findings Section

19 Lafleur Communications 1993 to 2001 8

20 Gosselin Communications May 1997 to September 1998

9

21 Groupaction 1996 to 2001 10

22 Groupe Polygone and Expour 1997 to 2003 11

23 PluriDesign 1996 to 2004 12

23a Jacques Corriveau Designer Inc. 1996 to 2004 12

24 Groupe Everest 1995 to 2002 13

25 Communication Coffin 1996 to 2003 14

26 Vickers and Benson 1996 to 2003 15

27 BCP 1994 to 2003 16

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2003

), fo

r a to

tal o

f $53

,189

(199

3-2

003)

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9742

Polit

ical

Con

trib

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ns(L

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ral P

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of

Can

ada

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gone

and

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ur

$5.8

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enue

s as

soc.

w

ith J

ean

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$1.8

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upac

tion

$0.4

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er S

ourc

es

$0.9

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UES

$10.

1M

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NSE

S

$8.7

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S

$8.7

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1$2

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ry a

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tsO

ther

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ense

s

$1.4

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$0.3

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INC

OM

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XES

$0.3

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NET

INC

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$1.1

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iden

ds p

aid

to

Jacq

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Cor

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ner I

nc.

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me

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re ta

xes

$1.4

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sts

of $

0.5M

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s, $

1.8M

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et b

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es ($

1.6M

re-d

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ited

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nc.)

and

$2.1

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s pa

id o

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e bo

nuse

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er c

ontri

butio

ns in

clud

e: P

luriD

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,742

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Jacq

ues

Cor

rivea

u$2

,541

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3-20

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elei

ne C

orriv

eau

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igne

r Inc

. $90

5 (1

993-

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), fo

r a to

tal o

f $53

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ical

Con

trib

utio

ns(L

iber

al P

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e se

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e di

vide

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by

Jacq

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Cor

rivea

uD

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cque

s C

orriv

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wer

e re

-inve

sted

in th

e co

mpa

ny.

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iden

ds fr

omPl

uriD

esig

n

$1.1

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inve

stm

ent o

f di

vide

nds

rece

ived

by

Jacq

ues

Cor

rivea

u

$0.4

M1

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er a

dvan

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from

Ja

cque

s C

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eau

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cque

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orriv

eau

$0.4

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nova

tions

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er p

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ents

to

Jacq

ues

Cor

rivea

u

$0.1

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ICAT

ION

O

F FU

ND

S

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inve

stm

ent o

f afte

r ta

x bo

nuse

s re

ceiv

ed

by J

acqu

es C

orriv

eau

$1.6

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inve

stm

ent o

f afte

r ta

x bo

nuse

s re

ceiv

ed

by J

acqu

es C

orriv

eau

$1.6

M

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h an

d m

arke

tabl

e se

curit

ies

left

in

inve

stm

ent c

ompa

ny

$2.4

M

Cas

h an

d m

arke

tabl

e se

curit

ies

left

in

inve

stm

ent c

ompa

ny

$2.4

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$45.

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NSE

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ENSE

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DESL

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S

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ical

con

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rson

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se

& in

vest

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1B

ased

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nclu

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Med

ia I.

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. Vi

sion

TOTA

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1

$2.4

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$105

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IDEN

TIFI

ED P

OLI

TIC

AL

REL

ATED

EXP

ENSE

SPo

litic

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ontri

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ns(L

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)$1

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GO

C S

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ertis

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sO

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ical

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(Lib

eral

Par

ty)

Pers

onal

use

&

inve

stm

ents

$25.

5M$5

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$14,

192

$8,6

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$623

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$476

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$147

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NET

INC

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E

$45.

1M$3

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NSE

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SO

roC

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S &

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S

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ical

con

tribu

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(L

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al P

arty

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rson

al u

se

& in

vest

men

ts

1B

ased

on

com

bine

d fin

anci

al s

tate

men

ts, i

nclu

ding

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ia I.

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. Vi

sion

TOTA

L R

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1

$2.4

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,139

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AL

REL

ATED

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ENSE

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litic

al c

ontri

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ns(L

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)$1

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C S

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nd

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ertis

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ther

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$60,

000

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ude

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lay

and

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ne D

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ther

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reho

lder

s

$4.5

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ds p

aid

to s

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ers

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ical

con

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ns

(Lib

eral

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ty)

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onal

use

&

inve

stm

ents

$25.

5M$5

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$14,

192

$8,6

87


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GO

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$4,9

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$1,0

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$6,0

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NET

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$357

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id

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offin

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ily

$223

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aid

in 1

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rela

ting

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re-1

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earn

ings

.

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mun

icat

ion

$20,

600

$27,

000

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fin fa

mily

boa

t (p

urch

ased

from

J.C

. G

uité

)

$4,6

27,9

07

$29,

700

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TIFI

ED P

OLI

TIC

AL

REL

ATED

EXP

ENSE

S

$5,6

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10

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NSE

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litic

al c

ontri

butio

ns(L

iber

al P

arty

)$2

9,30

0

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ical

con

tribu

tions

(Con

serv

ativ

e Pa

rty)

$400

Sala

ries

paid

to C

offin

fam

ily$1

,012

,903

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finfa

mily

OPE

RAT

ING

EXP

ENSE

S

$1,0

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GO

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ues

$4,9

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$1,0

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82

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L R

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UES

$6,0

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INC

OM

E

$357

,573

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dend

s pa

id

to C

offin

fam

ily

$223

,095

1

1 $1

30,5

95 p

aid

in 1

996

rela

ting

to p

re-1

996

earn

ings

.

Oro

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mun

icat

ion

$20,

600

$27,

000

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fin fa

mily

boa

t (p

urch

ased

from

J.C

. G

uité

)

$4,6

27,9

07

$29,

700

IDEN

TIFI

ED P

OLI

TIC

AL

REL

ATED

EXP

ENSE

S

$5,6

70,5

10

EXPE

NSE

SPo

litic

al c

ontri

butio

ns(L

iber

al P

arty

)$2

9,30

0

Polit

ical

con

tribu

tions

(Con

serv

ativ

e Pa

rty)

$400

Sala

ries

paid

to C

offin

fam

ily$1

,012

,903

Cof

finfa

mily


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g R

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ues

$48.

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Oth

er R

even

ues

$146

.5M

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INC

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E

$3.0

M

$192

.2M

EXPE

NSE

S

$174

.8M

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RAT

ING

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SEm

ploy

eeco

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nsat

ion

and

adm

inis

trat

ion

$169

.1M

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anUs

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man

agem

ent f

ees

$3.0

M

John

Hay

ter

$8.7

M$1

7.3M

SALA

RIE

S AN

D B

ON

USE

STO

OW

NER

S

Libe

ral P

arty

of C

anad

a$1

41,4

04

TOTA

L R

EVEN

UES

Oth

er s

hare

hold

ers

$8.6

M

$117

,475

IDEN

TIFI

ED P

OLI

TIC

AL

REL

ATED

EXP

ENSE

SPo

litic

al c

ontri

butio

ns(L

iber

al P

arty

)$1

17,4

75

PacC

anU

sIn

c.$3

71,6

00

$20,

929

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mun

icat

ion

$3,0

00

VBC

L$1

17,4

75

$195

.2M

GO

C S

PS a

nd A

dver

tisin

g R

even

ues

$48.

7M

Oth

er R

even

ues

$146

.5M

NET

INC

OM

E

$3.0

M

$192

.2M

EXPE

NSE

S

$174

.8M

OPE

RAT

ING

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NSE

SEm

ploy

eeco

mpe

nsat

ion

and

adm

inis

trat

ion

$169

.1M

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anUs

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man

agem

ent f

ees

$3.0

M

John

Hay

ter

$8.7

M$1

7.3M

SALA

RIE

S AN

D B

ON

USE

STO

OW

NER

S

Libe

ral P

arty

of C

anad

a$1

41,4

04

TOTA

L R

EVEN

UES

Oth

er s

hare

hold

ers

$8.6

M

$117

,475

IDEN

TIFI

ED P

OLI

TIC

AL

REL

ATED

EXP

ENSE

SPo

litic

al c

ontri

butio

ns(L

iber

al P

arty

)$1

17,4

75

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anU

sIn

c.$3

71,6

00

$20,

929

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mun

icat

ion

$3,0

00

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L$1

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75


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llee 22

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$90.

7M$3

7.8M

1$5

1.3M

NET

INC

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E

$22.

8M$2

0.3M

2

$80.

3M

EXPE

NSE

S

$73.

1MO

PER

ATIN

G E

XPEN

SES

$1.6

M

SALA

RIES

AN

D B

ON

USE

STO

OW

NER

S

1Th

is a

mou

nt in

clud

es $

15.4

M o

f adv

ertis

ing

reve

nues

from

Cro

wn

Cor

pora

tions

.2

Of t

his

amou

nt, a

ppro

xim

atel

y $6

M re

late

s to

div

iden

ds p

aid

from

ope

ratio

ns d

urin

g th

e pe

riod

BC

P re

ceiv

ed G

OC

reve

nues

refe

rred

to a

bove

TOTA

L R

EVEN

UES

$97,

720

IDEN

TIFI

ED P

OLI

TIC

AL

REL

ATED

EXP

ENSE

SPo

litic

al c

ontr

ibut

ions

(Lib

eral

Par

ty)

$97,

720

GO

C S

PS a

nd

Adv

ertis

ing

Rev

enue

sD

ivid

ends

rece

ived

in 1

994

and

1995

Oth

er R

even

ues

$1.6

M

Divi

dend

s pa

id

to s

hare

hold

ers

$12.

4MG

AIN

S O

N S

ALE

GAI

NS

ON

SAL

E O

F IN

VEST

MEN

TS (1

996)

Sala

ries

paid

to Y

ves

Gou

goux

$1.6

M

$90.

7M$3

7.8M

1$5

1.3M

NET

INC

OM

E

$22.

8M$2

0.3M

2

$80.

3M

EXPE

NSE

S

$73.

1MO

PER

ATIN

G E

XPEN

SES

$1.6

M

SALA

RIES

AN

D B

ON

USE

STO

OW

NER

S

1Th

is a

mou

nt in

clud

es $

15.4

M o

f adv

ertis

ing

reve

nues

from

Cro

wn

Cor

pora

tions

.2

Of t

his

amou

nt, a

ppro

xim

atel

y $6

M re

late

s to

div

iden

ds p

aid

from

ope

ratio

ns d

urin

g th

e pe

riod

BC

P re

ceiv

ed G

OC

reve

nues

refe

rred

to a

bove

TOTA

L R

EVEN

UES

$97,

720

IDEN

TIFI

ED P

OLI

TIC

AL

REL

ATED

EXP

ENSE

SPo

litic

al c

ontr

ibut

ions

(Lib

eral

Par

ty)

$97,

720

GO

C S

PS a

nd

Adv

ertis

ing

Rev

enue

sD

ivid

ends

rece

ived

in 1

994

and

1995

Oth

er R

even

ues

$1.6

M

Divi

dend

s pa

id

to s

hare

hold

ers

$12.

4MG

AIN

S O

N S

ALE

GAI

NS

ON

SAL

E O

F IN

VEST

MEN

TS (1

996)

Sala

ries

paid

to Y

ves

Gou

goux

$1.6

M

5.3Agency Payments to or on Behalf of Political Parties

We reviewed the available books and records of the agencies and relatedcompanies and individuals and the Elections Canada website to compile alist of payments made by these communication agencies, companies andindividuals to or on behalf of political parties. Table 28 lists politicalcontributions made purportedly, both directly to the parties or indirectly,on behalf of a political party.

TTaabbllee 2288:: AAggeennccyy PPaayymmeennttss ttoo oorr oonn bbeehhaallff ooff PPoolliittiiccaall PPaarrttiieess(($$ mmiilllliioonnss))


Company and related parties Direct Indirect1 Total Lafleur 75,304 75,304 Gosselin 5,407 5,407 Groupaction 2 170,854 1,763,587 1,934,331 PluriDesign Canada Inc. 3 53,190 53,190 Expour/Groupe Polygone 23,361 23,361 Groupe Everest 4 194,832 194,832 Coffin 29,300 29,300 Vickers & Benson 4 151,659 151,659 BCP 97,720 97,720

Total $801,627 $ 1,763,587 $2,565,214

1 Per allegation by Mr. J. Brault, the actual amount paid to Liberal Party is unknown.

2 Includes Alleluia Design and Impact Splash.

3 Includes J. Corriveau and his family.

4 Includes related companies and individuals.

5.4Contract Management by Agencies

As noted in Sections 8 through 16 of this report, we have reviewed availableagency records with respect to specific events. Our review disclosed certainpotential irregularities, improprieties and contracting issues in the managementof contracts both by the government departments and by the agencies. Asmore fully described in the individual sections we noted agencies which:

• Billed more hours for professional services to PWGSC than wererecorded in agency records for a specific event;

• Billed PWGSC for fees that were already paid by PWGSC via theAOR;

• Billed PWGSC based on approved estimated costs (a fixed fee) whilethe contract required billing based on approved hourly rates and actualhours incurred;

• Billed costs incurred to PWGSC before a contract was in place;

• Charged 17.65% commission on work sub-contracted to related parties;

• Passed on to PWGSC a substantial mark-up on promotional itemspurchased from a related supplier;

• Billed sub-contractor labour costs at full agency contract labour ratesinstead of the actual cost plus 17.65%;

• Did not obtain competitive quotes for sub-contracted work in excessof $25,000; and

• Charged a finder's fee or commission to a sponsoree while collectinga commission from PWGSC for being the communication agency.



Documents

Section Five SUMMARY OF FINDINGS ......Table 18: Summary of SPS Contracts Managed by Agencies Section Five: Summary of Findings—Communication Agencies 31Agencies Chosen in 1995,