OTTAWA (CP) - Paul Martin said there was widespread knowledge in the Liberal government of the murky national-unity fund that pumped at least $35.8 million in initial funding to start up the sponsorship program.

The prime minister's statement flew in the face of claims from some of his own officials earlier this week, and of opposition members who spent years struggling to learn whether a unity fund even existed.

The National Unity Reserve was cancelled in last week's budget - which was the first time a federal budget ever contained a reference to the save-Canada fund estimated to have spent $500 million over the last decade.

"Everyone was aware of its existence but as far as I'm concerned, obviously we were looking for places to cut," Martin told a Winnipeg news conference.

[. . . .] The cancellation of the reserve has prompted widespread confusion with government officials unable to offer some of its basic details and still struggling to compile a list of inititatives it funded.

[. . . .] Friday's statement from the prime minister came one day after Eddie Goldenberg, a top aide to predecessor Jean Chretien, said Martin as finance minister was kept aware every single year that the fund existed.

It was that reserve that provided seed money for the infamous sponsorship program - $17 million in 1996 and $18.8 million the following year.

That government authorized, among other things, five different advertising agencies to develop logos for the federal government at a cost of about $500,000.

At least another $100,000 went to "focus-group testing of logos."

[. . . .] "(Martin is) lying. It's simple. He's lying," said Bloc Quebecois MP Michel Gauthier.

"Nobody knew this existed. Maybe the government did, but not anyone else. It didn't appear in the public accounts, we were absolutely not informed so it's false to say what he's saying.