Phantom jobs and wads of cash dropped off in unmarked envelopes were part of a culture of corruption that reached high up in the governing Liberal party, according to testimony at the Gomery inquiry.
Paper trails were obscured, billings were altered to bamboozle watchdogs and those reluctant to comply were strong-armed into co-operation, according to bombshell testimony by advertising executive Jean Brault.
The inquiry was must-see TV for many Canadians in 2005, with tears, shouting matches and a litany of dramatic revelations presided over by Justice John Gomery.
His dry wit and willingness to challenge powerful witnesses made him a sort of folk hero.
Seeds of scandal
The top political scandal of the decade unfolded slowly at first, spurred on by an intrepid Globe and Mail reporter and a Quebec-born auditor general who became hopping mad at the flagrant abuse of taxpayer funds under the auspices of national unity.
The sponsorship program had been created in 1996 under then-prime minister Jean Chretien following the No side's razor-thin victory in the referendum the previous year.
An existing national-unity fund got a cash infusion of millions of dollars to brand the Maple Leaf at a vast array of public events.
Nearly all of them were in Quebec.
From the late 1990s onward, Canadian logos were plastered across the province at everything from the Canadian Grand Prix to rural hunting and fishing shows.
The flow of cash was not direct -- Liberal-friendly middlemen were in on the game from the beginning, pocketing millions of dollars and billing taxpayers for thousands of hours of work that, in many cases, was never done.
Public Works bureaucrat Charles (Chuck) Guite was in charge of doling out the cash to the Montreal and Ottawa-based ad executives, and he had an especially close relationship with Montreal adman Jean Brault of Groupaction Marketing, who received $60 million in government contracts under Guite's watch.
The relationship between the two men was much deeper than most people realized at the time, and it would form the sordid centre of the scandal.
In 1999, the Globe's Daniel Leblanc noticed the aggressive use of the Canadian flag in federal advertising in Quebec.
That piqued his interest because other advertisers weren't doing the same.
Leblanc and fellow reporter Campbell Clark followed the money trail, filing access-to-information requests and looking through internal government documents and the sponsorship program's audit from 2000.
Those documents gave Leblanc a sense something was wrong, but it was the response to each subsequent story that kept him going.
"Every time I wrote a story that got close to this, I would get some anonymous calls and letters telling me to go forward," he told the Globe in 2005.
His first story was published on Dec. 31, 1999, and told of how Ottawa paid $324,000 to rent a $100,000 balloon in the shape of a Mountie on a horse to tour the country.
Blows wide open
His bombshell story came on March 11, 2002, when he revealed that Ottawa couldn't find a $550,000 Groupaction report, raising questions about whether it had ever existed. It turns out that Jean Brault and Chuck Guite had falsified the report, billed taxpayers for inflated costs and pocketed cash.
Both later admitted to fraud and were sent to jail.
The Gomery Inquiry
Auditor General Sheila Fraser elevated the scandal to a new level on Feb. 10, 2004 when she issued a scathing report that revealed Ottawa mismanaged $250 million in taxpayer dollars between 1997 and 2001. She said bureaucrats broke nearly "every rule in the book" in awarding contracts without calls for tenders or proper oversight.
Prime Minister Paul Martin, in a move that infuriated his predecessor Jean Chretien, called a public inquiry headed by Quebec Superior Court Justice John Gomery.
In February 2005, Martin become the first sitting prime minister since John A. MacDonald to testify at a public inquiry, and Chretien also took the stand that month in a memorable exchange with Gomery.
The judge had earlier riled Chretien by describing the PM's tax-funded, self-monogrammed golf balls as "small-town cheap." Chretien's response was to show off the customized balls on the witness stand, holding court as a bemused Gomery just sat and watched.
Brault's bombshell
The inquiry moved to Montreal for a second phase in the spring of 2005.
It was there that Brault's testimony elevated the sponsorship inquiry to high drama while exposing the seedy side of politics.
Gomery, perhaps mindful of the threat that Brault's revelations posed to Martin's minority government, imposed a publication ban on his testimony.
For six days in early April, journalists and spectators at Complexe Guy-Favreau were the only ones privy to Brault's startling tales of hushed-up payments to Liberals in Italian restaurants, money re-routed through Chretien's older brother Gaby and reluctant contributions bullied out of intimidated Groupaction employees.
Gomery lifted the ban after Brault left the stand, and the explosive story was headline news for months.
Brault said top Liberal officials had browbeat him into forking over more than $1 million in secret payments to the Liberal party's Quebec wing in exchange for sponsorship contracts.
The scheme went on for nine years and involved onetime Chretien confidant Jacques Corriveau, as well as top officials in the office of former public works minister Alfonso Gagliano.
It was unprecedented in modern federal politics, and Gomery's final report later in 2005 said Brault's story was credible.
Fallout
Gomery ultimately recommended limits on prime ministerial powers, better oversight of reserve funds and more prime ministerial accountability to Parliament.
But the report came too late to save Paul Martin's career, and his short-lived government fell to the Conservatives in January 2006, less than three months after the final report was tabled.
Martin's successor, Stephen Harper, passed the Federal Accountability Act in the wake of the Gomery report.
It gave more powers to the auditor general and the ethics commissioner, offered whistleblower protection and imposed a mandatory five-year break before former ministers and other senior public officials could lobby government.
Crime didn't pay
Meanwhile, RCMP investigations that lasted nearly a decade finally resulted in charges against other key players in the scandal.
Aside from Brault and Guite, ad men Paul Coffin and Jacques Paradis were charged with fraud and pleaded guilty. Ad executive Jean Lafleur, who had angered Gomery with his frequent memory lapses on the stand, was sentenced to nearly three years in jail after pleading guilty to defrauding taxpayers of $1.5 million.
Gilles-Andre Gosselin, a former advertising executive and onetime Radio-Canada reporter, was recently charged with 19 sponsorship-related fraud counts.
The Gomery inquiry found that Gosselin had billed Canadian taxpayers for more than 3,600 hours of work in 1997 alone.
