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National Post
November 11, 2000

Fifth RCMP probe of grants in PM's riding
Police allege money was used to cover personal expenses

Andrew McIntosh, with files from Robert Fife
National Post

SHAWINIGAN, Que. - A fifth police investigation into the alleged misuse of federal grant money in the Prime Minister's riding may lead to new criminal charges against two businessmen who are already charged in connection with another grant.

The results of the newly revealed 12-month RCMP probe are in the hands of a Quebec Crown prosecutor.

Until now, the RCMP had acknowledged conducting only four grant-related investigations in Saint-Maurice.

The Prime Minister faced intense questioning about the probes during the leaders' debates this week.

In the latest case, RCMP commercial crime detectives have investigated allegations that Paul Lemire and Mario Pepin have since 1995 used up to $300,000 of federal grant money to cover personal expenses such as restaurant meals while they ran Groupe Forces, an umbrella business group set up to spur local economic development.

The two Shawinigan businessmen have since been dismissed from their jobs at Groupe Forces.

Mr. Pepin and Mr. Lemire were charged with theft and fraud in July for allegedly misusing $150,000 in federal job creation money that was awarded to the Canadian Institute of Tourism and Electronic Commerce (CITEC).

They have pleaded not guilty in the case of CITEC, which has since collapsed and left 20 people out of work. The case remains before the courts.

Since 1996, Groupe Forces has received at least 11 separate federal grants or contributions worth a total of $4.1-million from Human Resources Development Canada, Canada Economic Development for Quebec Regions and Industry Canada, according to documents obtained under the Access to Information Act.

Mr. Lemire and Mr. Pepin used their positions at Groupe Forces to create the defunct CITEC, which itself had received $7-million in HRDC money before it went out of business this fall.

Mr. Pepin is a veteran Liberal organizer and supporter of Mr. Chretien in St. Maurice, while Mr. Lemire is also a long-time supporter of the Prime Minister and accompanied Mr. Chretien on a trade mission to Asia in 1996.

The RCMP probe into how the men spent grant money given to Groupe Forces began in July, 1999, when an anonymous person claiming to be an employee at the business organization sent police a letter detailing alleged misuse of money by the managers, according to a sworn affidavit RCMP investigators used to obtain search warrants.

The anonymous tipster alleged that the two businessmen had created a system to divert federal grant money received by Groupe Forces and its related entities into a separate bank account at the the Canadian Imperial Bank of Commerce in Shawinigan, the sworn affidavit states.

The tipster said money in the CIBC bank account was then used by the two men to defray their personal expenses using credit cards linked to this account, the affidavit adds.

The tipster told police that the CIBC account was kept off-books and separate from Groupe Force's regular accounting ledgers, as well as entirely apart from its other regular bank accounts, which were all maintained with the Caisse Populaire Desjardins, the affidavit states.

The Mounties say that after getting the letter, detectives interviewed two unidentified witnesses to the irregularities and also worked with an investigator from the CIBC internal security branch. The two witnesses confirmed the allegations that were spelled out in the letter, the affidavit states.

The first witness said that when the monthly bill for the CIBC credit cards came into the Groupe Force offices, Mr. Pepin took it immediately and made sure it was paid, the affidavit states.

The RCMP said that, with the CIBC investigator's help, they confirmed the existence of the CIBC account in Shawinigan. The RCMP has also confirmed that credit cards were issued to Mr. Lemire and Mr. Pepin off the account, the affidavit states.

The first witness told the RCMP "there was no legitimate reason" for Mr. Pepin or Mr. Lemire to have credit cards linked to the CIBC account because each man had Desjardins Visa credit cards to cover their Groupe Forces work-related expenses, the affidavit states.

In their application for the search warrant to seize five years' worth of CIBC banking and credit card records belonging to the men, the RCMP says the records will be used "as evidence to demonstrate that Mario Pepin and Paul Lemire used the funds diverted to the CIBC bank account for personal ends."

In addition to the CITEC and Groupe Forces probes, the RCMP is also investigating whether Placeteco Inc., a company controlled by a friend of Mr. Chretien, misused a $1-million job grant by using it to pay down bank debt instead of creating new jobs.

The fourth RCMP probe involves another job grant worth $165,984 that was awarded to 3393062 Canada Inc. for a textile plant project in the Rosemont district of Montreal. The work was then transferred to another plant near Shawinigan called Confections St. Elie and no new jobs were created. A forensic audit of the grant was given to the police.

The final RCMP probe completed this summer examined unregistered lobbying for grants by Rene Fugere, an unpaid aide to Mr. Chretien, who helped 10 companies get more than $1-million in grants in exchange for a fee of 5% to 10% of the value of the grants.

Though the facts were documented, Mr. Fugere and his company, Quorum Corp., were not charged after an unidentified Quebec Crown prosecutor said the Lobbyists Registration Act was too vague and that a conviction was unlikely under the circumstances.

During this week's leaders' debates, Mr. Chretien responded to questions about the investigations by saying that mistakes happen in a big government and that the police should be left to do their work.

During a campaign appearance on a television station in Hamilton, Ont., yesterday, the Prime Minister defended federal job creation grants and said that if people have committed a wrongdoing in his riding, they will all be punished if proven guilty.

"If somebodies [sic] have committed some mistakes and they have tried to cheat the government and they face the courts and they are found guilty, I have no sympathy for them," he said. "These programs are there to the people have jobs and many jobs have been created."