OTTAWA—Auditor-General Sheila Fraser flushed deep red yesterday under grilling by Liberal MPs, who suggested her sponsorship program findings fed a public "misperception" that Liberals funnelled money "out the back door" into friendly ad firms.

Liberal MP Dennis Mills (Toronto Danforth) called it "the big lie" fuelled by her report.

Fraser found that of $250 million spent on the sponsorship program about 40 per cent, or $100 million, was spent on commissions and fees that went to a small group of hand-picked ad agencies, mostly in Quebec.

Fraser did not point out what public documents confirm — that the ad agencies were also generous contributors to the federal Liberal party.

But MP Beth Phinney (Hamilton Mountain) suggested yesterday Fraser jumped to conclusions, without enough documentation, about how the $100 million was spent.

Maybe, Phinney said, it's "like the HRDC billion-dollar boondoggle, which turned out to be $600 or something they couldn't find the paper for. There wasn't a billion dollars lost, but the opposition still uses those quotes."

[. . . .] Is it absolutely a fact that $100 million has disappeared illegally into somebody's pocket?"

"No," Fraser replied, "that was not a finding of the audit."

[. . . .] A visibly irritated Fraser responded: "Well, the point that we've said is that of a program of $250 million, $100 million went to communications agencies. We did not make an assessment of what would have been an appropriate amount for the management and production fees.... I would question that 40 per cent of the program is not a little high, but we are not saying it is or it isn't."

Phinney suggested Fraser stepped beyond her bounds as an auditor in concluding 40 per cent was "high" without having documents to help decide whether the government got value for its money.

Mills said he had difficulty understanding how an auditor could "judge the appropriateness or inappropriateness of a political intervention on a file."

[. . . .] But Fraser pointed out that even the government's own database did not track expenses and costs.

And in the case of hundreds of thousands of dollars in "production fees," work was further sub-contracted out and more commissions were paid, so it was impossible to get a clear picture what actual work was done for the money.

She offered "a personal comment" that everyone with a role in spending taxpayers' money has "a responsibility to do the right thing."

[. . . .] The challenges to Fraser's findings prompted Conservative MP Vic Toews (Provencher) to object to what he called a "full-scale attack" on Fraser and her report.