Jean Carle, a senior aide to Jean Chretien during his tenure as prime minister, gave explosive testimony Friday, telling the sponsorship inquiry he helped create a phony paper trail for a deal.
Carle, described as almost a son to the former PM, admitted he approved a $125,000 payment to a film producer as a favour so it wouldn't appear on the books of the sponsorship program.
Justice Judge Gomery seemed shocked.
"If this were a drug deal, it would be called money-laundering,'' Gomery said.
Carle agreed. "You're not wrong,'' he said.
Gomery's comments drew the ire of Carle's lawyer, Pierre Latraverse, who said they were "inappropriate use of words by the judge."
Carle's startling admission came after former public works minister Alfonso Gagliano wrapped up his testimony at the inquiry Friday by complaining that the scandal had unfairly ruined his life.
"It affected my family, it affected my career," Gagliano said.
But it was Carle's testimony that grabbed headlines Friday night.
Carle, who became the senior vice-president at the Business Development Bank of Canada after he left the Prime Minister's Office, testified Friday that the bank agreed to act as a conduit.
He said the BDC agreed to transfer $125,000 to Robert Scully, who was producing a TV series called Le Canada Millennaire. The bank had already given $250,000 of its own money to support the series.
The additional money had originated with the Public Works Department, but Pierre Tremblay, who was in charge of the sponsorship program, didn't want the transaction on his books, Carle testified.
"He told me that they owed (Scully) $125,000,'' said Carle. But Tremblay added that Public Works had already "given too much'' that year to the producer.
Carle said Tremblay offered to later use the money to provide the bank with additional advertising spots on the series, in exchange for channeling it through the BDC.
At the time, Tremblay was chief of staff to then public works minister Alfonso Gagliano. There was no explanation Friday as to why Tremblay might want to conceal the money.
"I did not do this in bad faith. We were kind of a transmission belt," Carle said.
Life ruined, says Gagliano
In interviews outside the inquiry Friday, Gagliano said that he can't find a job, his family has suffered, and the news media have to share the blame.
"Definitely you guys (in the media) had fun with this for a few years."
Gagliano was shuffled out of federal cabinet three years ago and fired as ambassador to Denmark last year.
"It's a year (since) I'm back from Denmark, I couldn't find a job."
During three days of testimony, Gagliano stuck with his story that he only gave input while sponsorship boss Chuck Guite made all the decisions.
There was one apparent contradiction. Gagliano testified that the two men met about a dozen times a year, more often than he admitted before. He explained that the extra meetings were on other issues.
"My story hasn't changed -- I still say I met him three or four times a year on the sponsorship," Gagliano said.
Earlier in the week, the sponsorship inquiry heard how an advertising agency that worked on the 1997 Liberal election campaign later won a $5.6-million sponsorship deal after a personal pitch to Gagliano.
In other testimony Wednesday, Gagliano said he heard rumours in the summer of 2000 that some ad agencies were double-dipping and charging more than one commission for work under the program.
Gagliano didn't name the agencies, and it wasn't clear whether the allegations were ever backed up with solid proof.
But he said he was concerned enough to bring in a departmental rule specifically forbidding double-dipping from then on.
The Gomery inquiry is investigating $250 million in sponsorship spending that was aimed at raising the federal profile in Quebec and fighting separatism.
An estimated $100 million of that money went to Liberal-friendly ad firms and other middlemen who sometimes failed to deliver quality work.
The big show everyone has been waiting for comes next week, when Chretien will face off against the judge his lawyers tried to get rid off.
And when he's done, Prime Minister Paul Martin will follow.
With a report from CTV's Roger Smith, and files from The Canadian Press
