--------------------------------------------------------------------------------

'$100,000 CASH, YOUR PROBLEM IS SOLVED'

--------------------------------------------------------------------------------

A one-time adviser to former public works minister Alfonso Gagliano participated in a scheme with ad man Jean Brault to delay a bidding process related to the gun registry, the sponsorship inquiry has heard.

Brault, president of Groupaction Marketing, told the inquiry he paid $50,000 in cash to Joseph Morselli, a former adviser of Gagliano's. The conspiracy is just one of several allegations to emerge during Brault's six days of testimony at the inquiry. Brault said he was frustrated at repeated demands by top Quebec party executives for large, secret cash donations.

By the summer of 2001, Groupaction had been facing stiff competition from other firms for an upcoming bidding process for the lucrative gun registry contract, he said. The agency had held the contract since 1996 as part of Justice Department contracts worth $35.7 million.

WANTED BIDDING DELAYED

Brault said he phoned Morselli and asked him to delay the bidding process. "I told Mr. Morselli, 'I have done a lot, and you told me you could help me.' " Brault recalled last week. "I said, 'I need for the competition for the (contract) not to happen before the spring (of 2002).' "I proposed $100,000 to Mr. Morselli if the competition was delayed." A few days later, the two men met at Morselli's east-end Montreal office on Sept. 26, 2001, and Morselli's answer was immediate, Brault testified. "He said, '$100,000 cash, your problem is solved.' "

Brault said he and Morselli agreed that Brault would hand over $50,000 by the end of 2001 and another $50,000 the following April on condition the request was granted.

$25GS CASH DELIVERY

The semi-retired ad man said he paid some of the money directly to Morselli in the form of a $25,000 cash delivery, in an envelope, at a Christmas fundraiser in December 2001 that was hosted by Gagliano. Brault eventually paid only $50,000 to keep the contract, but he said Pierre Tremblay, Chuck Guite's successor as the bureaucrat in charge of the sponsorship program, confirmed in a subsequent conversation the bidding process had, in fact, been delayed. It wasn't clear whether Gagliano, Tremblay's and Morselli's boss, had intervened on Brault's behalf.

Brault and Guite face a joint trial, beginning with jury selection on June 6, in relation to alleged fraud worth $2 million, including alleged irregularities involving the gun registry. The Mounties allege a $330,000 contract awarded to Groupaction was entirely bogus and a $150,000 contract was also a vehicle for fraud.