Ottawa - The RCMP is looking into a controversial $4.8-million grant that was awarded to a pro-Canada group at the time of the 1995 referendum on Quebec sovereignty, officials have told The Globe and Mail.
The money went out more than 10 years ago in three disbursements to a little-known group called Option Canada, which has since been disbanded.
On Dec. 23, 2005, the RCMP quizzed two officials at the department of Canadian Heritage about the 1995 expenditure. It remains unclear to how the entire grant was used, but a source said that there are questions surrounding the distribution of an amount, believed to be $300,000.
The RCMP review is the latest bad news for the Liberal campaign. Last week, the Mounties launched a criminal investigation into whether the government's November announcement of a tax change favourable for income trusts was leaked.
The RCMP would not confirm or deny any activity on the file.
However, an official at Canadian Heritage said the department called in the police after hearing that Option Canada was the focus of an upcoming book by Quebec investigative journalist Normand Lester.
“Various information led us to believe that there were possible irregularities in the management of federal funds and it's in that optic that we asked the RCMP to look more closely at the matter,” Heritage spokesman Jean-Guy Beaupré said.
Mr. Beaupré said the RCMP has yet to determine whether it will launch a full criminal investigation.
The Canadian Unity Council, which is a non-profit organization devoted to “strengthening Canada”, is aware of the RCMP's interest in Option Canada, a group that the CUC set up shortly before the referendum to promote federalism in Quebec. The council couldn't undertake certain political activities because of its charitable status.
“A bit before Christmas, we were told that there had been a request for the RCMP to look to see if there were grounds for an investigation,” said CUC spokesman Peter Cowan. “That's essentially what we were told. We have not heard anything that changes that to this point.”
Mr. Cowan said no one at CUC has been contacted about the investigation. Option Canada was created on Sept. 7, 1995, and started receiving federal funds within a few weeks. It obtained a total of $4.8-million in three payments dated Sept. 24, Oct. 2 and Dec. 20.
An internal review at Canadian Heritage criticized the disbursements, saying the process “lacked the rigour and scrutiny one would expect for such large sums of money being given to an unproven client.”
Option Canada has been disbanded and its former president, Claude Dauphin, is on holiday and could not be reached for comment.
Still, Mr. Dauphin has hired a spokesman in advance of the publication of Mr. Lester's book, The Secrets of Option Canada, which is due to be released next week.
Through the spokesman, Mr. Dauphin said he is unaware of any allegations of wrongdoing, and that even though Mr. Dauphin signed the applications for funds, he did not oversee the federal money.
“He was not involved in the day-to-day management, so he does not know how the funds were distributed and to whom, other than what he read in the media,” said spokesman Jonathan Goldbloom.
Mr. Dauphin is a city councillor in Montreal and a member of the city's executive committee. Before going into municipal politics, Mr. Dauphin worked in the late 1990s as an aide to Prime Minister Paul Martin, who was minister of finance at the time.
In his report into the sponsorship scandal, Mr. Justice John Gomery said that an advertising agency called BCP Group Inc., which worked on the federalist side, received some of the Option Canada funds.
“From September 15 to October 5, 1995, shortly before the referendum, BCP invoiced Option Canada for a total of $2.6-million (including taxes) for media purchases and advertising related services,” Judge Gomery's report said. Senior government officials have asked for a briefing note from Canadian Heritage in anticipation of the RCMP interest in Option Canada becoming public, a source said.
Heritage Minister Liza Frulla said in an interview that she is unaware of any developments on the file. Ms. Frulla said she has recused herself from the Option Canada issue because she was involved in the NO campaign in 1995 as a provincial representative.
The Bloc Québécois has always been extremely critical of the grant to Option Canada, saying it likely bypassed Quebec's electoral law.