Ottawa — Pressure is mounting on the Liberal government to replace Alfonso Gagliano as Canada's ambassador to Denmark as federal officials aim to contain the fallout from the audit of a sponsorship program to be released Tuesday.
Officials are also reviewing the job of Pierre Tremblay, a former top Gagliano aide, as a vice-president at the Canadian Food Inspection Agency.
Mr. Gagliano, the former minister of Public Works, and Mr. Tremblay, his onetime chief of staff, were key players in planning and managing the scandal-plagued program from 1997 to 2002.
Senior sources say that political advisers, civil servants and at least one cabinet minister are urging that Mr. Gagliano be recalled from his posting. Foreign Affairs officials are wary of daily attacks in the House on issues of ethics against a serving ambassador.
The review of Mr. Gagliano's fate has been taking place in discussions at the highest levels of government. Prime Minister Paul Martin will make the ultimate decision, but he is expected to rely on advice from key cabinet ministers.
In addition, an administrative review is nearing completion that could remove Mr. Tremblay from his current job over alleged breaches of government rules during his time at Public Works.
There will also be pressure to punish officials in some of the Crown corporations that funnelled millions of dollars into the botched sponsorship initiative.
The Auditor-General's examination of the role of agencies such as Via Rail, Canada Post and the Business Development Bank is expected to be one of the major new revelations in the sponsorship audit.
Federal officials predict that Auditor-General Sheila Fraser will call the sponsorship program one of the biggest wastes of money ever when she releases her much-anticipated report. There is also much speculation within government that the report will reveal the previously unpublicized roles of senior federal officials in the program.
From 1997 to 2003, the Department of Public Works spent $250-million to put up flags and banners at sporting and cultural events, mainly in Quebec. But Ms. Fraser has determined that $100-million of that money went to a handful of advertising firms with close ties to the governing Liberals.
Ottawa said the program was designed in large part to increase the federal government's presence in Quebec after the 1995 referendum on sovereignty, but critics said it was used to reward generous donors to the Liberal Party of Canada.
The RCMP is investigating allegations that at least one advertising firm submitted $2-million in fake invoices to Public Works. Previous revelations were that federal funds were spent on a report that cannot be found and a hunting-and-fishing show that never happened.
Officials across the federal government are bracing for a major political storm starting Tuesday afternoon when the report is delivered to Parliament.
The government will have to persuade Canadians that new rules and controls have been put in place to ensure that similar mismanagement problems never recur.
The biggest problem, however, is dealing with the past problems.
Mr. Martin would like to distance himself from the sponsorship program and remind Canadians that it was created during the tenure of his predecessor, Jean Chrétien.
One crucial element of Mr. Martin's strategy is never to appear to be protecting those who were responsible for the problems.
It is in that context that there will be pressure to recall Mr. Gagliano and get him to explain publicly what happened to taxpayers' money when he oversaw Ottawa's communications machine.
But even if Mr. Gagliano is recalled, it is unclear in what venue he could be called on to testify.
Immediately after the release of Ms. Fraser's report, the opposition will call for a public inquiry. The government, however, is hesitant, given that it could conflict with the RCMP investigation.
Sources say Mr. Tremblay's fate is in the hands of senior officials at Public Works who are conducting an "administrative review."
The review determined last year that many of the contracts and deals under the sponsorship program broke the Financial Administration Act, and the officials are considering punishing those alleged to have committed breaches.
Mr. Tremblay was publicly identified in a 2002 report of the Auditor-General as having broken rules in relation to a sponsorship deal.
He was Mr. Gagliano's chief of staff until 1999. He then joined the bureaucracy, becoming the top civil servant in charge of Ottawa's advertising programs, including sponsorship. He moved to the food inspection agency in 2002.
