TORONTO (AP) – An investigative report on a corruption scandal that nearly toppled Canada’s minority government cleared the prime minister Tuesday of any wrongdoing but held his predecessor accountable for misspending tens of millions of dollars in public funds.

There is no evidence that former Prime Minister Jean Chretien was personally aware of a kickbacks scheme orchestrated by Quebec businessmen, Justice John Gomery concluded in a report released after a 20-month investigation. But Chretien must bear political responsibility for a program he created that allowed senior members of his Liberal Party to funnel millions of dollars into their Quebec coffers, Gomery said.

“The public trust … was subverted and betrayed, and Canadians were outraged, not only because public funds were wasted and misappropriated, but also because no one was held responsible for his misconduct,” Gomery said.

The scandal paralyzed dealings in Parliament for months earlier this year. Prime Minister Paul Martin survived a confidence motion by a single vote in May after he pledged to dissolve the House of Commons and hold new elections after Gomery’s final report is released, now scheduled for February.

Although he was exonerated in Tuesday’s initial report, the scandal has severely damaged Martin’s Liberal Party, and the opposition Conservative Party is likely to make even more gains in the next general election.

Canada’s auditor general in 2002 determined that about $127 million from Chretien’s national unity fund went to Liberal-friendly advertising firms for little or no apparent work in return. The program was designed to promote national unity in Quebec, following the narrow defeat of a separatist referendum in the French-speaking province.

Investigators have determined that the Liberal Party also funneled millions of dollars from the slush fund into their own campaign accounts in Quebec, infuriating Canadians who liken the “sponsorship scandal” as their own version of Watergate.

The scandal left a deep rift in the Liberal Party, particularly between Chretien and Martin, and the Liberal Party’s minority standing after losing Parliament seats in elections in 2004.

Martin was never implicated and has reminded Canadians that the first thing he did when he took office was scrap the unity program and demand a federal inquiry. But his opponents have said he surely was aware of the problems.

in the program, and they say new elections must be held to give Canadians a chance to choose new leaders and start with a clean government slate.

“The Liberal Party used the sponsorship program to funnel tax money into its partisan operations … all to fund the Liberal Party’s election war chest,” Stephen Harper, head of the Conservative Party, told a news conference in Ottawa.

“High-ranking Liberals cynically manipulated the sponsorship program to enrich their party and their friends,” Harper said. Yet, he said: “The Liberals are still in office; no Liberal is still in jail. Political accountability will have to rest with the voters.”

Martin, who scheduled a news conference for later in the day, immediately referred the Gomery report to the Royal Canadian Mounted Police for possible criminal investigations. The government also said it would expand a civil suit seeking the return of national unity cash from a number of ad firms, boosting the total sought to $49.2 million.

Chretien, meanwhile, met with lawyers to decide whether to take action to clear his name. David Scott, a member of Chretien’s legal team, said one possibility would be a Federal Court challenge to Gomery’s conclusions.

Gomery found that Chretien chose to keep tight control of the sponsorship program under the prime minister’s office and ignored warnings from a senior adviser that it would be better to shift the program to another department.

As Chretien’s chief of staff, Jean Pelletier “failed to take the most elementary precautions against mismanagement” in a program that Gomery called an “open invitation” to profiteering by unscrupulous contractors.

“Mr. Chretien must accept responsibility for the actions of his (political) staff such as Mr. Pelletier,” the judge said.

He was more generous toward Martin, declaring him free of “any blame for carelessness or misconduct.”


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