Friday, April 22, 2005

The Real Adscam: Outsourcing

Beside the shady backroom deals funding the Quebec Liberals from sponsorship kick backs the real source of the vast overpayments to the private sector ad companies in Quebec is, wait for it, contracting out.

Outsourcing rather than doing the work in house is a policy that the Liberals have had for the past decade, and it has led to the Billion Dollar Boondoggles of P3's, computer outsourcing scandals in the Defense and Justice Depatments. Now it has come home to roost in the Public Works department. It gives new meaning to Reinventing Government.

Now thats a scandal the Conservatives won't be bringing up in the house since they support contracting out the government.

Yep remember that the next time the neo-cons claim the private sector is more efficient than the public sector....we can all chant Adscam Adscam....take that Fraser Institute.

Gomery told how companies raked in double commissions

CBC News
MONTREAL - The Gomery inquiry continued hearing testimony on Wednesday from Claude Boulay whose company Group Everest and its subsidiaries received $67 million in federal sponsorship contracts. Boulay testified there's a reason he collected two commissions when his advertising company did business with the federal government. Unlike some companies that handle public relations and marketing in-house the federal government decided to contract out the service to the private sector. Boulay said that made it possible for Group Everest to bid on sponsorship contracts. The contracts, he said, included a commission paid by Ottawa for finding marketing opportunities for the 'Canada' brand.

One man's false invoice is another man's...
Globe and Mail
A teenie part of one of those contracts was for "promotional items," with one of Mr. Boulay's companies (Sensas) in charge of securing the items, and then billing another of the subsidiaries (Everest Publicité, which in turn billed the federal Public Works Department).
Inquiry documents show that Sensas billed Everest Publicité $186,200, of which $105,506, or 57 per cent of the price, was pure profit. Everest billed Ottawa $243,313, of which $57,113, or 23 per cent was additional pure profit.
Mr. Boulay attempted to compare this by saying that when General Motors orders a part from a supplier, the supplier will charge a markup, and when GM then sells it, it too will add a markup.
"But Sensas is a subsidiary of Everest," Judge Gomery noted. "To compare it to GM is a bit weak . . . they go outside. You bought within your own organization . . . it all happened within Groupe Everest."
"Yes," said Mr. Boulay.
As inquiry lawyer Marie Cossette said, "I'm reiterating my argument, Mr. Boulay -- these are public funds, and there are two commissions to the same agency?" Mr. Boulay, who was not nearly so smiley yesterday as during his first in the stand, merely shrugged and said, "Look, Public Works . . ."
In other words, the government set the rules, so who was he not to take advantage of them?