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Last Updated: Thursday, 10 February, 2005, 22:57 GMT
Canada PM quizzed over lost funds
Paul Martin
Paul Martin tried to distance himself from the spending scandal
Canadian Prime Minister Paul Martin has told an inquiry he had nothing to do with a scandal involving millions of dollars of misspent government funds.

Mr Martin was finance minister at the time when funds earmarked for promoting national unity ended up with companies with close ties to his Liberal party.

He told the inquiry, set up by him, that he had been too busy rescuing Canada's financial reputation abroad.

He is the first sitting prime minister to appear at an inquiry since 1873.

Advertising campaign

His predecessor as prime minister, Liberal colleague Jean Chretien, defended himself before the same commission on Wednesday.

The BBC's Lee Carter says Mr Martin's deferential behaviour before the inquiry was in contrast to that of Mr Chretien, who showed it more contempt.

An auditor's report released a year ago discovered that at least half of some $188m of a special government fund had been handed over to companies linked to the Liberal government, often for no apparent reason.

The advertising and communications agencies that received the money had ostensibly been employed to promote national unity in Quebec, the largely French-speaking province whose citizens narrowly voted against seceding from Canada in 1995.

Mr Martin called for the inquiry - being held in Ottawa - after the auditor's report was released.

Repeated denials

He told the commission that, as finance minister, he had been too preoccupied with Canada's budget crisis and its image as a fiscal "banana republic" to get involved in the national unity campaign.

Asked repeatedly about his ties to key figures in the scandal, Mr Martin said he never spoke to any of them about the advertising funds.

He told the commission more than 30 times on Thursday that he did not know how the money was being spent.

The leader of the opposition, Stephen Harper, told parliament: "The prime minister continues to say he saw nothing, heard nothing and did nothing... Does the prime minister really believe the Canadian public believes his alibi?"

Voter anger over the scandal is believed to have cost the Liberal Party its parliamentary majority in federal elections in June.

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