Accounting and networks of corruption

Description
This study examines the nature and role of accounting practices in a network of corruption
in an influence-market setting. The study focuses on the Canadian government’s Sponsorship
Program (1994–2003), a national unification scheme that saw approximately $50 million
diverted into the bank accounts of political parties, program administrators, and their
families, friends and business colleagues. Relying on the institutional sociology of Bourdieu,
the study demonstrates the precise role of accounting practices in the organization of a corrupt
network imbued with a specific telos and certain accounting tasks. The study illustrates
how accounting is accomplished and by whom, and it shows how the ‘skillful use’ of
accounting practices and social interactions around these practices together enable corruption.
In so doing, the study builds on a growing body of work examining criminogenic networks
and the contextual, collaborative and systemic uses of accounting in such networks.

Accounting and networks of corruption
Dean Neu
a,?
, Jeff Everett
a
, Abu Shiraz Rahaman
b
, Daniel Martinez
c
a
Schulich School of Business, York University, 4700 Keele Street, Toronto, Ontario, Canada M3J 1P3
b
Haskayne School of Business, University of Calgary, 2500 University Dr NW, Calgary, Canada T2N 1N4
c
HEC Paris, 1 rue de la Libération, 78351 Jouy-en-Josas, France
a r t i c l e i n f o a b s t r a c t
This study examines the nature and role of accounting practices in a network of corruption
in an in?uence-market setting. The study focuses on the Canadian government’s Sponsor-
ship Program (1994–2003), a national uni?cation scheme that saw approximately $50 mil-
lion diverted into the bank accounts of political parties, program administrators, and their
families, friends and business colleagues. Relying on the institutional sociology of Bourdieu,
the study demonstrates the precise role of accounting practices in the organization of a cor-
rupt network imbued with a speci?c telos and certain accounting tasks. The study illustrates
how accounting is accomplished and by whom, and it shows how the ‘skillful use’ of
accounting practices and social interactions around these practices together enable corrup-
tion. In so doing, the study builds on a growing body of work examining criminogenic net-
works and the contextual, collaborative and systemic uses of accounting in such networks.
Ó 2012 Published by Elsevier Ltd.
Introduction
Corruption—the ‘misuse of public of?ce for private
gain’—has been variously referred to as a cancer, disease
and scourge (Corell, 2003; INTOSAI, 2004; Transparency
International, 2005). Some authorities even consider it
the ‘‘single greatest obstacle to economic and social devel-
opment’’ (World Bank, 2005a, 2005b, 2005c), citing billions
in government resources lost on account of it—resources
that would otherwise be spent on education, health, and
other social programs (United Nations & World Bank,
2007, p. 2). Yet, and contrary to popular perception, the
problem is not limited to the developing world. In Ger-
many, for example, ex-Chancellor Helmut Kohl has been
subject to scrutiny about secret donations made to his
re-election campaigns. In the United States, complex and
problematic linkages continue to exist between govern-
ment of?cials and private, for-pro?t ?rms (see Scahill,
2007). And in Italy, recent allegations against billionaire-
turned-Prime Minister Silvio Berlusconi raise questions as
to how much has really changed since the Tangentopoli
(Bribesville) scandal of the mid-1990s (cf. Gundle & Parker,
1996). These examples illustrate that corruption also oc-
curs in countries that have well-functioning democratic
systems of government and seemingly strong anti-corrup-
tion institutional structures.
Despite the fact that corruption occurs within such
countries, very little is known about how it occurs, who
is involved, and why it persists in the presence of appar-
ently robust anti-corruption barriers. In part, this is be-
cause anti-corruption advocates such as Transparency
International (2005) and the World Bank (2005a, 2005b,
2005c) focus on developing world settings where weak
or non-existent barriers facilitate the direct selling and
buying of political in?uence. This focus has promoted a
functionalist view of accounting that emphasizes how
accountants help ?ght corruption by constructing institu-
tional barriers, a view that in turn normatively positions
accountants as virtuous actors in the anti-corruption ?ght
(cf., Dye & Stapenhurst, 1998; Elliot, 1997; Everett, Neu, &
Rahaman, 2007; USAID, 1999). This lack of knowledge also
persists because corruption is tremendously dif?cult to
study, as those involved do not want to draw attention to
it and its investigation tends to undermine the public’s
faith in government (Klitgaard, 1988, p. 30). As a result,
0361-3682/$ - see front matter Ó 2012 Published by Elsevier Ltd.
doi:10.1016/j.aos.2012.01.003
?
Corresponding author. Tel.: +1 416 736 2100.
E-mail address: [email protected] (D. Neu).
Accounting, Organizations and Society 38 (2013) 505–524
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very little is known about the processes of corruption
within developed world settings, and even less is known
about the role of accounting in these processes. It is this
gap in knowledge that motivates the current study.
The study focuses on the Canadian federal government’s
Sponsorship Program, an initiative aimed at fostering na-
tional unity in the face of a perceived separatist threat from
the province of Quebec in the mid- to late-1990s. While
approximately $322 million was devoted to this objective,
between $13 million and $50 million was diverted into
the accounts of political parties, program administrators,
and their families, friends and business colleagues (the ex-
act ?gure is unknown). This event not only captured news
headlines, it also led to a federal government inquiry and
prison sentences for a number of those involved. The in-
quiry’s $32 million budget and legal standing produced
background investigative research and a comprehensive
set of hearings where participants were legally compelled
to testify under oath. This combination of ?nancial re-
sources and legal powers made visible a number of de-
tailed, micro processes of corruption, processes which
would have otherwise remained hidden. In this study we
focus on these processes and their speci?c connections to
accounting.
Our starting point is the institutional sociology of Bour-
dieu (1990a, 1990b, 2005). Bourdieu’s work encourages us
to consider the context of corruption, and how democratic
systems of government within advanced capitalist coun-
tries are associated with speci?c types of accounting-based
anti-corruption barriers and characteristic games of in?u-
ence politics. In this context, accounting-based anti-corrup-
tion barriers organize the ?eld of in?uence politics by
channeling and limiting the exercise and sale of political
in?uence. However, while barriers such as internal govern-
ment controls, campaign ?nance regulations, and anti-brib-
ery legislation may make the practices of corruption more
complicated than the straightforward payment of a bribe
or kickback, they do not eliminate them. Rather, they
encourage forms of corruptionthat depend on collaboration
within networks of politicians, bureaucrats and business
actors. Additionally, it is the ‘skillful’ use of accounting
and accounting-implicated strategies that simultaneously
makes corruption possible and organizes the emergent
network.
Bourdieu’s conceptual tools are particularly useful for
examining how accounting practices organize such net-
works, drawing our attention to the mediating role of hab-
itus, the distribution of capital, and the spatial positioning
of in?uential social actors within networks. More precisely,
his work enables us to see how the initial con?guration of
the ?eld and political party network makes possible the
development of a corrupt network centered on a form of
accounting imbued with a speci?c telos and certain
accounting tasks (cf. Bourdieu, 1990a, p. 53, 2005, p. 200).
It illustrates howaccounting is accomplished and by whom,
and it shows how accounting helps establish a corrupt net-
work through particular patterns of accounting practices
and social interactions around these practices. Such prac-
tices are incorporated into the ?eld’s habitus and reper-
toires of its participants, and the skillful use of accounting
comes to be valorized as a form of symbolic capital. In this
way, the analysis demonstrates the precise role of account-
ing practices in the organization of a corrupt network.
The study makes two primary contributions to our
understanding of accounting. First, it illustrates how
accounting simultaneously limits and enables corruption
within advanced capitalist countries. Our identi?cation of
three types of accounting-based anti-corruption barriers
adds a degree of precision to the claims of pro-accounting,
anti-corruption advocates. Typically providing a template
for improving anti-corruption structures in both develop-
ing and developed-world settings, these advocates often
point to speci?c sites where accounting should be enlisted.
Unfortunately, our analysis reveals that social actors often
use accounting-implicated strategies as a second-order re-
sponse to work in and around the anti-corruption barriers
themselves (cf., Bourdieu, 2005, p. 196). In this way, the
analysis both challenges and extends the dominant per-
spective of anti-corruption commentators, showing how
accounting can ?ght corruption while also facilitating it.
Second, the study highlights the centrality of account-
ing within organized criminal networks. Organized crimi-
nal alliances involving corruption (Di Nicola, 2003, 2006),
money laundering (Beare & Schneider, 2007; Mitchell, Sik-
ka, & Willmott 1998; Reuter & Truman, 2004) and systemic
corporate fraud (Baker & Hayes, 2002, 2004) at times rely
on networks that are explicitly built around the accom-
plishment of a speci?c set of accounting transactions. For
example, in the case of Enron, a complex grouping of social
actors relied on the strategic use of ‘special purpose enti-
ties’ to manage the information that would appear in the
company’s ?nancial records. Similarly in the case of money
laundering, large-scale networks are often assembled to
circulate, hide and repatriate ?nancial ?ows to their origi-
nal owners (Beare & Schneider, 2007, p. 110). While prior
studies draw attention to the skillful use of bookkeeping
practices and how they might facilitate criminal activities,
they do not consider the broader ways that these practices
come to actually organize and constitute such networks.
The current study extends existing research by showing
how accounting organizes such networks, and by proble-
matizing and destabilizing what we think of as skillful
accounting practice. As the analysis highlights, the skillful
use of accounting is central to the organization and func-
tioning of criminal networks. At the same time, skillful
practice is not limited to accounting professionals; rather,
it appears to be an instrumental practice that can be ac-
quired and used by a variety of professionals. In these
ways, the study both illustrates the importance of account-
ing within criminal networks and suggests that accounting
may be a type of cultural capital (Bourdieu, 1990a) that can
be enlisted and utilized by a variety of social actors within
these settings.
The remainder of the paper is structured as follows. Sec-
tion two considers corruption within developed world set-
tings, where in?uence is commonly bought and sold
among political and business actors, and it examines three
types of accounting-based anti-corruption barriers that
complicate such exchanges. Correspondingly, the third sec-
tion proposes that the collaborative use of accounting al-
lows corrupt actors to circumvent these barriers and at
the same time organize their networks. Section four pre-
506 D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524
sents the data collection process and research methods.
Then, in section ?ve, we introduce and analyze the case,
focusing on the accounting practices and interactions of
two key business actors in the corrupt network: La?eur
Communications and Groupaction. Finally, section six
summarizes our ?ndings and discusses the implications
of the study.
Corruption within developed world settings
The current study starts from the observation that cor-
ruption involves the movement and ?ow of resources
across public and private domains. Government resources
move and circulate consistent with the business of govern-
ment; that is, revenues ?ow in and expenditures ?ow out
as governments set economic and tax policy, purchase
goods and services, and, occasionally, sell or privatize gov-
ernment assets. However, it is the modi?cation of these
?ows in ways that allow groups of private actors to appro-
priate a portion of them that is central to corruption. Such
modi?cations might change who pays taxes and how much
they pay (Ghuara, 2002, p. 371), who receives government
contracts and the value of the contracts (Rose-Ackerman,
1999, p. 29; Tanzi, 1998), and who is given the opportunity
to purchase government assets and the price of these as-
sets (Kaufman & Siegelbaum, 1997; Wiehen, 2004, p. 9).
In these interactions, corruption occurs when politicians
and/or bureaucrats use their in?uence in ways that are
not legally-condoned. This is typically the case when these
actors modify the ?ow of government resources, and when
a portion of this resource ?ow is subsequently returned to
individuals or groups connected to them. This de?nition is
consistent with both the idea that corruption involves the
misuse or abuse of public of?ce for private ends or gains
(Transparency International 2004; World Bank, 2005a,
2005b, 2005c, p. 4), and that it is about the illegitimate sell-
ing of government authority for private gain (Bukovansky,
2006, p. 181; Thomas & Meagher, 2004, p. 2).
While all corruption tends to involve the modi?cation,
movement and ?ow of government resources, it is ?eld-
speci?c (Bourdieu & Wacquant, 1992, p. 104) in that it is
in?uenced by context-based forms of political participation
and a variety of anti-corruption barriers. Nevertheless, it
appears that there are some family resemblances amongst
its various types. Johnston (2005), for example, proposes a
typology based on four different institutional settings:
in?uence-market, elite cartel, oligarch and clan, and of?cial
mogul. Each of these settings is characterized by speci?c
political processes, con?gurations of participants, institu-
tional structures and, hence, forms of corruption. In settings
characterized by weak institutional structures and non-
transparent political processes, the direct payment of
bribes or kickbacks to politicians or government bureau-
crats in exchange for some business advantage is the form
which corruption is most likely to take. However, in what
Johnston calls ‘in?uence market countries,’ such as Canada,
Germany, Japan, the United Kingdomand the United States,
relatively strong institutional structures tend to discourage
the direct payment of bribes, which encourages a more
complex form of corruption. In these cases, corruption is
about who gets to in?uence and shape the speci?c rules
that determine how government is enacted: ‘‘the stakes
are the details of policy—whether a programwill be funded,
a contract awarded, a group declared exempt from tax, or
the rules of a program changed’’ (p. 60, emphasis added).
Corruption is also about how monies ?ow back to politi-
cians and political parties in return for these favours (John-
ston, 2005). Thus, within in?uence-market countries, it is
politicians and political parties that often put ‘‘their con-
nections out for rent in exchange for contributions both le-
gal and otherwise’’ (p. 42). These observations lead us to
propose that such institutional features act as ‘‘objective
relations that organize the ?eld’’ (Bourdieu, 2005, p. 89),
shaping not only how political processes work but also
the types of opportunities that exist for private interests
to appropriate government resources.
Within in?uence-market countries, politicians, political
parties, and business interests are interdependent and
overlapping. Electoral success within democratic systems
is always expensive, which creates the need for resource
in?ows—what has been referred to as the ‘mother’s milk’
of politics (cf. Eagles, 1994, p. 117). Not surprisingly, elec-
toral success within in?uence-market countries such as
Canada and the United States is highly correlated with
the ability to raise funds (Eagles, 1993, p. 117; Alexander,
2005, p. 356). Furthermore, political parties cannot survive
without a committed core of party workers and campaign
consultants who are an important part of the political
machinery (Thurber & Nelson, 2000, p. 11). As Geddes ob-
serves, ‘‘in order to maintain their electoral machines, pol-
iticians need to be able to ‘pay’ their local party leaders,
ward heelers, precinct workers’’ (1994, p. 40). Without re-
source in?ows it is not possible to build and sustain the
electoral machine.
Corporations have been willing ?nancial contributors.
In Canada, for example, corporations have historically pro-
vided about 50% of the funding received by the country’s
two largest political parties (Elections Canada, 2011a). In
part, this is because political in?uence is potentially useful
to business. In its simplest sense, government is about the
management of economic activity and politicians are the
ones making decisions about how that activity will occur.
Political decisions about issues such as taxation and envi-
ronmental, health, and safety regulations structure how
business will be conducted and impact the overall pro?t-
ability of different industrial sectors (Johnston, 2005).
Moreover, governments are major purchasers of goods
and services, and are thus a signi?cant source of business
for businesses. For example, the Government of Canada
annually ‘‘purchases over $15B worth of goods and services
from companies across Canada,’’ making it the largest
buyer of goods and services in the country (Government
of Canada, 2011). These interdependencies between gov-
ernment and business produce a situation where in?u-
ence-based exchanges among political and business
actors may be mutually bene?cial.
While in?uence-market settings have these characteris-
tics, they also have relatively strong anti-corruption
barriers (Johnston, 2005). These barriers can be viewed as
impediments that control the ?ow of government
resources, and they often enlist accounting and other
administrative practices. However, they are not meant to
D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524 507
eliminate the ?ows but instead channel and structure the
quantity and manner in which they occur (p. 42). In
essence, these barriers are meant to de?ne the rules of
the game (Bourdieu & Wacquant 1992, p. 98) regarding
how political in?uence will be bought and sold. Three such
barriers are relevant to the discussion at hand (a fourth
type, an independent media, relies less directly on account-
ing practices).
The ?rst are internal control practices, and these pertain
to government purchasing and procurement. They attempt
to limit the amount of the potential ?ows by requiring a
competitive bidding process for government contracts over
a certain amount, stating who is eligible to bid on the con-
tracts, and indicating whether the contract price will be
determined by an open bidding process or whether it will
be some form of ‘cost plus’ pricing (cf., NASPO, 2008; Pitzer
& Thai, 2009). These practices are intended to decrease the
discretion of individual bureaucrats and politicians by, for
example, dividing duties pertaining to the writing of ten-
dering proposals; the handling of the bidding process;
the selection of the winning bid; and the subsequent pay-
ment for goods and/or services received. Ex-post monitor-
ing activities, including the activities of supreme audit
institutions (SAIs), such as the Auditor General’s of?ce
(Dye & Stapenhurst, 1998; Gilman & Stout, 2008; Siame,
2002), are also viewed as essential for both the detection
and deterrence of corrupt practices. These barriers simul-
taneously reduce the amount of government resources that
can be appropriated and limit bureaucratic and political
discretion regarding who receives such contracts. The
Canadian context includes all of the aforementioned types
of internal controls.
Campaign ?nance legislation operates as a second set of
barriers, directing and limiting howresources ?owthrough
political parties and af?liated organizations (Johnson,
2008, p. 326). At the time of the case, Canadian campaign
?nance legislation focused on the campaign expenditures
of individual candidates and political parties rather than
on the resources ?owing into campaigns. Speci?cally, the
1974 Election Expense Act imposed ‘‘limits on how much
parties and candidates could spend during election cam-
paigns’’ (Elections Canada, 2011b). This legislation also re-
quires that a public accountant audit any political donation
reports as well as the electoral campaign spending reports
of the political party and the individual candidates (Elec-
tions Canada, 2011b). For example, at the candidate level
an electoral campaign report that clearly identi?es all
monetary in?ows and out?ows (Elections Canada, 2005)
is required and must be accompanied by a public accoun-
tant’s audit report that states that the electoral return is
presented fairly (Elections Canada, 2011b). Elections Can-
ada also requires candidates to provide detailed support
for the information contained in the electoral campaign
report: ‘‘section 451 (2.1) of the Act requires the of?cial
agent to provide Elections Canada with documents evi-
dencing expenses set out therein, including vouchers, bank
statements, deposit slips, cancelled cheques and the candi-
date’s written statement concerning personal expenses.’’
These ‘rules of the game’ (Bourdieu & Wacquant, 1992, p.
98)—a combination of spending limits, the auditing of
campaign expenditures, and the public disclosure of con-
tributors—are expected to constrain the use of in?uence
monies in election campaigns.
The third set of barriers focus on business entities and
try to prevent illegal in?uence payments to political actors
and bureaucrats. Prior to 1996, Canada, the United King-
dom, and the United States were part of a very small group
of countries in which the payment of bribes was both ille-
gal and non-tax-deductible (OECD, 2011). This direct pro-
hibition against participation was supplemented by
other, more general ?nancial reporting regulations per-
taining to formal economic activity. Countries like Canada,
which have well-functioning ?nancial systems, usually
have extensive ?nancial reporting requirements for incor-
porated businesses. These include the need to maintain
?nancial records; ?le accounting-based reports such as
sales taxes, payroll source deductions, and income taxes;
and employ a public accountant if the company is a public
company (Neu, 2011). These ?nancial reporting require-
ments come to characterize participation in the formal
economy—the legitimate market—and make it more dif?-
cult for corruption to occur outside of the accounting re-
cords (cf. Transparency International, 2009a, p. 2). In
these settings the ability of a corrupt politician or bureau-
crat to receive a suitcase full of money in exchange for the
exercise of in?uence is more dif?cult, since the suitcase of
money has to both physically come out of a ?nancial insti-
tution, which has its own matrix of regulations regarding
the withdrawal of large cash amounts (Beare & Schneider,
2007, p. 148), and, ?guratively, come out of the ?nancial
records of the entity paying the bribe. This web of ?nancial
reporting requirements, along with anti-bribery legisla-
tion, constrains the movement of physical and ?gurative
?nancial ?ows from business entities to political actors
(cf. Transparency International, 2009b, p. 14).
The preceding proposes that there are three generic
types of anti-corruption barriers within developed world
settings that directly implicate accounting practices. This
situation contrasts with developing world settings where
internal government anti-corruption barriers are weak,
and where campaign ?nance and anti-bribery legislation
is mostly non-existent (Transparency International,
2009b; USAID, 2003, p. 30). These three sets of barriers
organize the ?eld of in?uence politics by circumscribing
how in?uence can be exerted and how monetary resources
can be repatriated to political actors. They do not, however,
change what is at stake in the ?eld (Bourdieu & Wacquant,
1992, p. 100), since political and business actors still have
compelling reasons to contemplate the selling and buying
of in?uence. Rather, these barriers encourage ?eld partici-
pants to structure their activities in relation to established
institutional rules (p. 130). As is the case in other domains
of economic life, these institutional rules formthe backdrop
against which social actors struggle to accumulate and con-
centrate their preferred species of capital (Bourdieu, 2005,
p. 12).
Accounting and corrupt networks
Within countries that have seemingly robust institu-
tional structures corruption is still possible, and while
internal controls within the public sector constrain bureau-
508 D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524
cratic and political discretion, such discretion always con-
tinues to exist (Bourdieu, 2005, p. 60; Johnston, 2005, p.
134). Political in?uence can still be exercised, but it must
be less obvious, more discrete, and it must enlist the active
or passive acquiescence of bureaucrats—political in?uence
is, as Johnston comments, in the details of government prac-
tice. Additionally, it may be possible to enlarge the space for
discretion or to ?nd a way for politicians and bureaucrats to
collaborate in the exercise of discretion. Likewise, the pres-
ence of barriers around political parties and around individ-
ual politicians creates a situation wherein it is dif?cult for
resources to ?owinto the political party to be subsequently
spent on political activities, though such barriers do not
prevent resources from?owing into different entities before
being spent on such activities (cf., Johnston, 2005, p. 65). Fi-
nally, while business actors are prohibited from paying
bribes, and while all economic transactions are expected
to ?ow through the accounting records of the involved par-
ticipants, ?exibility and space do exist regarding decisions
on how such accounting transactions will be structured
and recorded. Thus, through the exercise of discretion and
through the careful structuring of activities it is possible
to sell political in?uence and repatriate a portion of the re-
source ?ows. Such actions are not necessarily illegal,
though there is always the chance they will go beyond
the bounds of the acceptable and into the domain of the
illegal. It is these types of actions that are the focus of the
current study.
In these situations, corruption requires collaboration
among politicians, bureaucrats, and business actors. Unlike
in developing world settings where politicians and/or gov-
ernment bureaucrats can directly sell their in?uence, the
presence of institutional barriers within government and
around political parties and business entities makes it nec-
essary to structure the sale of in?uence in ways that cir-
cumvent existing barriers. Accounting practices help a
network of corrupt actors redirect government monetary
?ows through a series of apparently discrete legal and
accounting entities, thereby making it possible to return
a portion of the ?ows to the politician or political party.
Just as in the case of money laundering (Beare & Schneider,
2007, p. 110), these accounting-implicated strategies
(Hopwood, 1987, p. 229; Neu, 2012, p. 16) require the
enlistment of allies who administer the entity and receive
a portion of the monetary ?ow as it passes through. The
use of additional entities sometimes also makes it possible
to increase the proceeds of corruption—that is, the size of
the resource ?ow originating from government. For exam-
ple, the use of ‘cost plus’ pricing within procurement con-
tracts makes it possible to accumulate cost in ways that
in?ate the value of the contract (cf., Flower, 1966; United
States Attorney, 2010). In such situations, the insertion of
multiple accounting entities can be used to increase costs
and, consequently, amplify proceeds.
The preceding analysis suggests that a group of politi-
cians, bureaucrats and business actors can use accounting
to circumvent anti-corruption barriers; however, what
are the speci?cs of these processes? Following from Bour-
dieu, we propose that the role of accounting within the
processes of corruption needs to be examined and under-
stood in relation to the organization and ordering of both
the broader in?uence-market ?eld and the emergent cor-
rupt network itself (cf., 2005, p. 196). The habitus of the
?eld and the corruption network, along with the con?gura-
tion of capitals and social positions within the network in-
form and shape accounting practices. However, the
accounting practices themselves also have the ability to
transform the habitus and the con?guration of the net-
work. For these reasons, it is important to closely examine
these aspects of network functioning.
To illuminate these processes, we draw upon three of
Bourdieu’s concepts: habitus, social position, and capital.
Habitus refers to a form of practical sense and historical
institutional memory that is shared among participants
and that mediates ways of thinking, speaking and acting
(Bourdieu, 1990a, pp. 54–57; Bourdieu & Wacquant,
1992, p. 127). Social position is a relational concept that
denotes speci?c social spaces within the corruption net-
work and that can be characterized by the types of capital
that are accessible from that social space, the activities that
are expected of the ?eld’s members, and the modes of
interaction with other participants (Bourdieu & Wacquant,
1992, p. 229–230). Lastly, capital refers to the different
bases of in?uence that can be drawn upon by network
members. Bourdieu focuses on four types: cultural capital,
which refers to contextually-useful knowledge or skills;
economic capital, which denotes having access to ?nancial
resources; social capital, which is the ability to draw upon
the efforts and resources of a group of participants; and
symbolic capital, which is the pro?t obtained from pos-
sessing the type of capital that those in the ?eld deem
legitimate (Bourdieu & Wacquant, 1992, p. 119).
Accounting practices intersect with habitus, capital, and
social position in different ways and at different moments
of time. First, the ability to imagine using accounting as a
way to circumvent anti-corruption barriers is connected
to one’s habitus, and, further, it is the combination of hab-
itus and the actor’s speci?c social position that provides
the impulse for imagining certain accounting-implicated
strategies; as Bourdieu states, it is ‘‘the encounter of habi-
tus with the peculiar conjuncture of the ?eld’’ that drives
strategy (Bourdieu & Wacquant, 1992, footnote 83, p.
129). Second, the ability to enact these imagined account-
ing practices and make a corruption network functional
depends on having access to social capital (a group of po-
tential participants), cultural capital (the skill to use the
accounting appropriately) and symbolic capital (the ability
to convince other participants that the practices are legiti-
mate). As we will see in the subsequent case, the social and
symbolic capital necessary to enact such accounting-impli-
cated strategies and to develop a related, but distinct, net-
work of corruption was linked to senior-elected politicians
and important party members, such as those involved in
policy-making and fundraising. Third, different social posi-
tions within the emergent network of corrupt actors are
associated with different activities and imply different
types and amounts of capital. These distinctions among so-
cial positions condition the nature of the accounting prac-
tices, as well as the nature of the interactions in which
speci?c network participants are involved.
A key contention of the current study is that accounting
practices subsequently come to organize networks of cor-
D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524 509
ruption. On one level, this occurs because accounting
practices make possible the generation, circulation and
repatriation of the proceeds of corruption among network
actors. Accounting practices not only embody the telos of
the network, they also give it form, since it is the accom-
plishment of the accounting transactions that allows the
corrupt network to exist in the form that it does. On a sec-
ond level, this occurs because interactions among network
participants congeal around the accomplishment of the
accounting transactions. Much like the accounting cycle
within ?rms, accounting practices within corrupt networks
both encourage and presume patterned forms of interac-
tion. On a third level, the incorporation of these accounting
practices into the ?eld’s habitus means that they become
part of the repertoires of social actors, and are thus picked
up and used in different situations, which further ingrains
these practices and the embedded telos into the habitus of
the network (Bourdieu, 1990a, p. 55). Finally, the use of
accounting within corrupt networks may change the distri-
bution of capital. For example, it may create a situation
wherein an accounting-related form of cultural capital is
valorized and re-valorized as a type of symbolic capital.
It is in these speci?c ways that accounting practices might
come to organize networks of corruption.
While Bourdieu’s institutional sociology emphasizes
the importance of situating accounting practices in relation
to these other processes, it also encourages us to carefully
consider what is meant by accounting’s ‘skillful use’.
Accounting practice can be a skillful practice and thus a
form of cultural capital in that it helps network partici-
pants obtain what they value. However, this skillful prac-
tice depends less on one’s ‘institutional cultural capital,’
in this case the possession of an accounting credential,
and more on possessing ‘embodied cultural capital’, that
is, the knowledge of how to use accounting in ways that
facilitate corruption. One is reminded here of Beare and
Schneider’s (2007) observation that money laundering de-
pends on a new type of ?nancial expert, but not one who
necessarily has a formal accounting designation. As we will
see in the subsequent case, the successful generation, cir-
culation and repatriation of the proceeds of corruption
did not require that those involved actually be accredited
accountants; rather, it required only that they possess a
rudimentary knowledge of entity accounting and an
understanding of the basics of bookkeeping. This distinc-
tion between accounting as a form of institutional cultural
capital and a form of ‘in use,’ embodied cultural capital
simultaneously problematizes the notion of skillful
accounting practice and recognizes that this skillful use is
not limited to professional accountants.
The institutional sociology of Bourdieu stresses the
structured aspects of accounting practices within corrupt
networks; however, it also recognizes the role of agency
(Bourdieu, 1990a, p. 55). The act of assembling an illicit net-
work, for example, will be in?uenced by the wishes of social
actors occupying in?uential social positions or having close
network-proximity (Bourdieu, 1990b, p. 126), but it will
also involve the tentative and sequential working out of
strategy by a multitude of actors who are attempting to sat-
isfy their resource needs at a speci?c moment in time, just
as in other inter-organizational alliances (cf., Seal, Berry, &
Cullen, 2004, pp. 82–84). Once the network is assembled,
the wishes of important participants will continue to in?u-
ence accounting practices, but these practices will be idio-
syncratic as each participant struggles and strategizes to
accomplish his or her individual objectives within the con-
?nes of the network (cf., Free, 2007, p. 911, 2008, p. 646;
Mouritsen & Thrane, 2006, p. 262). In these ways, the emer-
gent accounting practices are shaped by the aforemen-
tioned con?gurations and are the result of a series of
diverse decisions made by a variety of social actors.
Data and method
As mentioned in the introduction, our theoretical fram-
ing as well as our mode of analysis and method is informed
by the institutional sociology of Bourdieu. This approach
encouraged us to divide the research process into three re-
lated phases. In the ?rst phase, we attempted to map the
?eld of study in order to understand the contours of the
?eld and its objective relations (Bourdieu & Wacquant,
1992, pp. 104–5). This initial mapping of the ?eld started
from existing research and focused on the nature of the
?eld, the role of institutional rules, and the idea of strategy
as a response to those rules (Bourdieu, 2005, pp. 89–126).
The discussion of in?uence-markets and anti-corruption
barriers, and the material on the role of discretion and
accounting-implicated strategies that were presented in
the previous sections, are the result of this mapping.
In the second phase, we reviewed the available public
materials on the sponsorship case. We used the materials
gathered by the Gomery Commission as our starting point,
since this government inquiry conducted public hearings
involving the testimonies of 172 witnesses (Gomery,
2005a, p. 3), numerous commissioned reports (Kroll
Lindquist Avey, 2005), and a ‘‘vast quantity of documentary
evidence,’’ including emails. The materials examined in-
cluded all of the major government reports as well as
reports prepared by Ernst & Young public accountants and
the forensic auditors at Kroll Lindquist Avey.
1
The forensic
audit report (Kroll Lindquist Avey, 2005) was of particular
interest, as it provided a way for our research team to follow
the ?owof money through a ‘‘complex web of ?nancial trans-
actions’’ (Gomery, 2005a, pp. 5–7). Our initial review of the
available documents indicatedthe importance of foreground-
ing several ‘notable’ mini-cases within the larger case as a
way of making sense of its overall complexity (cf., Bourdieu,
2005, pp. 42–43). This motivated us to focus on two
important business actors—La?eur Communications and
Groupaction—since they were the two largest recipients of
government sponsorship contracts, and because they illus-
trate different aspects of the network processes that are
involved in the accomplishment of the accounting transac-
tions. Appendix A provides a list of the key players.
1
Responding to an internal complaint, the Government’s internal audit
department hired Ernst & Young to conduct an audit of sponsorship
activities. This audit found evidence of anomalies, though the federal
government did not take action for approximately 7 years (Gomery, 2005b,
p. 262). The nature of these auditing practices and the politics underpin-
ning them (cf. Radcliffe, 1998; Radcliffe, 2008, 2011; Neu, Everett, &
Rahaman, 2011) warrant a separate study of their own.
510 D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524
In the ?nal phase of the research, we examined the so-
cial processes surrounding the accomplishment of the
accounting transactions involving La?eur Communications
and Groupaction. Transcripts and other previously gath-
ered research materials, consisting of approximately 3000
pages of documents that pertained to the two notable
cases, were collected in an electronic research folder. Each
member of the research team read the materials and added
their initial observations and coding suggestions. These
notes were then used to develop a list of thematic catego-
ries. One member of the research team did the initial cate-
gorization work based on the marginalia that other team
members had provided. Other team members then re-
viewed these categorizations and suggested changes and
re?nements. This theory-directed, yet emergent, process
(Everett, 2002, p. 74) continued in an iterative manner
throughout the research and manuscript review process.
The subsequent case analysis sections are organized
around these theoretically-informed categories.
The evidence gathered by the Commission offers an
excellent opportunity to examine the social processes
and networks through which the accounting was accom-
plished. The Commission’s ?nancial resources—it had a
budget of $32 million—allowed it to undertake background
investigative research and conduct a comprehensive set of
hearings where it could legally compel participants to tes-
tify under oath. Thus, the available materials are both more
in-depth and of broader scope than any information that
we, as researchers, could have independently gathered.
At the same time, it is important to acknowledge that the
outputs of the Commission—and especially the testimonies
of its participants—are not independent of broader games
of in?uence politics and political power, as they are born
of the same ?eld and dynamics (cf., Jacquemet, 1996, p.
189, 193).
2
These testimonies occur in a ‘?ghting arena’
and should be viewed as strategic utterances that attempt,
among other things, to retrospectively frame the events so
as to avoid legal liability, protect allies, and foreclose certain
interpretations on the part of the judge (Jacquemet, 1996, p.
190). The partiality of the transcripts not only requires us to
be sensitive to the context of the testimony (Maynard, 1983,
p. 217; O‘Barr, 1982), it also results in a case analysis that is
in some places incomplete. We return to these issues in the
discussion section.
The case
The separatist threat
The case begins with a story about two ?ags, one with a
red maple leaf and the other, four white lilies (a ?eur-de-
lis). The ?rst symbolizes the country of Canada, a nation
that is at once the second largest and 36th largest country
in the world (depending on whether you are looking at
land mass or population). The ?eur-de-lis, in contrast, sym-
bolizes the province of Québec, which, for many Franco-
phones living in Canada, means membership in a distinct
society, or membership in a nation within a nation (Sey-
mour, 2000). Since 1948, when the ?eur-de-lis was ?rst
?own, this symbol has inspired a nationalist yet ‘quiet rev-
olution’ (1948–1960); a less-quiet decade of robberies,
bombings, and attacks (which were followed by nearly
500 arrests) (1963–1971); the passing of a French-only
Of?cial Languages Act (1977); and a referendum aimed at
gauging the province’s receptivity toward sovereignty-
association (1980), which would grant the province inde-
pendence in most government functions.
Our analysis begins in 1994. The federal election of Octo-
ber 1993 changed the Canadian electoral map and, once
again, moved the topic of Quebec sovereignty to the fore.
A new, pro-sovereignty Quebec-based political party, the
Bloc Quebecois, received over 50% of the popular vote in
Quebec and won the second-largest number of seats in fed-
eral parliament, making it the Of?cial Opposition to the
newly elected Liberal Party. At the provincial level, in the
run up to the September 1994 election, the leader of the
pro-separatist Parti Québécois promised to hold a referen-
dum within 1 year if elected. The Parti Québécois won,
and tabled legislation to hold a second referendum on sov-
ereignty in October 1995. This combination of events
encouraged the federal government to initiate an advertis-
ing campaign aimed at swaying public opinion, a campaign
that eventually morphed into the Sponsorship Program.
3
As
then Prime Minister Jean Chrétien stated, ‘‘whatever Que-
bec’s Parti Québécois government was doing which, in our
view, directly or indirectly promoted separation, we, as the
Government of Canada, would at least match to promote a
united Canada’’ (Chrétien, 2005, pp. 12506–12507). For the
government, the hope was ‘‘that there would be no winning
conditions for the proponents of separation’’ (Chrétien, 2005,
p. 12502). On this level the federal government was barely
successful, as only 50.6% said no to the four white lilies. How-
ever, the close vote meant that continual vigilance on the
part of the federal government was necessary to ensure that
the conditions for separation would not emerge.
The public story began in early 2000. In January, a series
of newspaper articles and questions in the House of Com-
mons began to raise concerns about misspending in one of
the federal government’s largest departments, Human Re-
sources Development Canada (HRDC) (Sutherland, 2003, p.
187). The ensuing media and political frenzy did not abate,
with the Minister of HRDC at one point being called a liar
in the House of Commons (Sutherland, 2003, p. 195). Con-
sequently, in August and October 2000, a journalist from
one of Canada’s national newspapers, the Globe and Mail,
wrote a series of articles detailing how ?rms with strong
Liberal ties were charging commissions (for little or no
work) on sponsorship funds (Leblanc, 2000a, 2000b), and
these claims of misspending resonated with those follow-
ing the ongoing HRDC scandal. The combined media and
political attention regarding apparent government mis-
spending formed the backdrop to the November 2000 fed-
eral election, ‘‘where the opposition campaign was waged
2
Jacquemet analyzes the social process surrounding the testimonies of
participants in Italy’s organized crime trials of the 1980s.
3
During the referendum, the advertising programs were simply known
as ‘special programs,’ and it wasn’t until the spring of 1996 that these
became formally known as the Sponsorship Program (Gomery, 2005b, p.
325). Throughout our analysis we will refer to all of the programs as the
Sponsorship Program.
D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524 511
on corruption issues and character politics’’ (p. 195).
Although the HRDC scandal ?zzled away when subsequent
investigations did not ?nd any evidence of misspending (p.
214), the sponsorship activities of the Public Works
Department were more problematic. Reporters continued
to pursue the story, utilizing public access-to-information
laws to request internal government documents (Gomery,
2005b, p. 210, 431). Eventually this media attention bore
fruit; in 2002 the Of?ce of the Auditor General was asked
by the newly appointed Public Works Department Minister
to investigate the sponsorship program (Gomery, 2005a, p.
11). Around this time, ‘‘the problems associated with the
Program became the subject of daily questions in the
House of Commons and extensive critical media coverage’’
(p. 11). This combination of circumstances set in motion a
process that culminated in the referral of the case to the
Royal Canadian Mounted Police, the subsequent hiring of
forensic auditors, and the appointment of a Commission
by the federal government.
Exercising discretion
Our theoretical framing proposes that while the exer-
cise of discretion is an important part in the sale of political
in?uence, internal government controls are often con-
straining. In this section we consider how discretion is
accomplished; more speci?cally, we discuss how a space
for discretion is created, the practices through which dis-
cretion is exercised, and the participants in these pro-
cesses. This analysis helps us to understand the tentative
starting points from which a network of corrupt actors
may emerge.
Shortly after the 1993 election, the new Prime Minister
initiated a series of organizational changes to the govern-
ment bureaucracy that would make it easier to mount an
advertising campaign to sway public opinion (Guité,
2004a, p. 5691). One of the ?rst changes involved transfer-
ring responsibility for the government’s advertising to the
Public Works Department (p. 5627), a department that
was under the direct supervision of Warren Kinsella.
Kinsella had been a key strategist for the Prime Minister’s
1993 election campaign and was appointed Chief of Staff
for Public Works when Chretien won the election. At this
moment in time the Advertising Group was quite small,
consisting of ?ve staff members, a small budget, and limited
responsibility for advertising agency selection, as the actual
procurement activities were the responsibility of another
department. The placement of advertising under the super-
vision of a key Chretien con?dant was arguably meant to
ensure that advertising activities would be consistent with
the strategic vision of the newly-elected Prime Minister.
Starting in March–April 1994, then Director of the
Advertising Group—Charles ‘Chuck’ Guité—started to work
directly with Kinsella (p. 5628). Kinsella and Guité dis-
cussed, among other things, ways to ‘streamline’ the
bureaucratic rules pertaining to advertising, something that
Guité felt quite strongly about (p. 5740) and something that
was viewed as important by the federal government itself.
In December 1994 these discussions and other delibera-
tions culminated in the formation of a new Advertising
Department, which had control over both advertising
agency selectionandthe subsequent procurement activities
(p. 5632). Guité was appointed the Director of this new
department without formal internal competition and at
the same time saw his job classi?cation increase (p. 5638).
As the executive summary of Guité’s new job description
explicitly stated, some corners needed to be cut:
When events force the government into a reactive pos-
ture, the incumbent brings to bear a capacity for quick
response, cutting red tape, in?uencing key media and
other opinion leaders, delivering single messages
clearly, crisply and repeatedly. (Guité, 2004b, p. 6485,
emphasis added)
From the very beginning, and because his job straddled
the two ?elds, Guité understood how the bureaucratic ?eld
and the ?eld of politics were connected. He recognized, for
instance, that the awarding of government advertising
contracts had always been ‘150% politically driven’ under
predecessor governments, and would continue to be under
the Liberals (Guité, 2005, p. 19778). However, the transfer
of advertising to Public Works where Kinsella was Chief of
Staff, and the combining of advertising agency selection
and subsequent procurement activities within a single
department, not only signaled the importance placed on
advertising by the Prime Minister but also created an orga-
nizational space where discretion could be exercised, since
the two activities of selection and contract administration
were now combined. This creation of an enlarged space for
discretion is important because it facilitated the subse-
quent sale of political in?uence.
Within this enlarged space, discretion occurred through
the practices of sponsorship and advertising agency selec-
tion. Guité states:
LAWYER: I take it that the process that you used, you,
Mr. Guité, for sponsorships was that you prepared a list
which had events, the agencies for the events and the
amounts for the events; is that right?
MR. GUITÉ: Correct.
LAWYER: Who did you review those lists with?
MR. GUITÉ: With the Prime Minister’s Of?ce, Mr. Jean
Pellieter.
LAWYER: You reviewed the lists which contained the
events, the agencies and the amounts with Mr.
Pelletier?
MR. GUITÉ: That is correct. . .[later]. . .the three people
sitting at the table, which was myself and either Mon-
sieur Carle or Pelletier. So we went through the list.
The list could have contained more events than there
were funds to do it. So we would go through the list.
We would say ‘‘Okay, those we approve’’ and then we
would select the agencies and away we go. (pp. 5667–
5669)
This quote and the other transcript material illustrate
how the practices of preparing a list of potential sponsor-
ship events and attaching advertising agency names in?u-
enced what geographic areas and what advertising
agencies would receive the bene?ts of government spon-
sorship spending. It also highlights the sequential aspects
of discretion, in that Guité had partial discretion over the
initial list but the Prime Minister’s staff made the ?nal
512 D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524
decisions. It was through these bureaucratic/political prac-
tices involving the exercise of discretion (Bourdieu, 2005,
p. 130) that the modi?cation of government resource ?ows
occurred.
This mode of agency selection also made possible the
subsequent in?ation of resource ?ows. In the absence of
a competitive bidding process, the contract value of any
particular project and the commissions payable to the
advertising agency became a matter of negotiation
between Director Guité and the advertising agency. The
contracts speci?ed both the amount of agency commis-
sions (a percentage mark-up on the overall sponsorship
contract paid to the advertising agency to administer the
contract) and production expenses incurred by the agency
in undertaking the sponsorship. Thus, the bypassing of a
competitive bidding process had the effect of delegating
discretion over the contract details, including the ?nal va-
lue of the contracts, to Guité.
The preceding account illustrates how external events
provided the impulse and rationale for downgrading sup-
posedly strong internal government practices pertaining
to advertising agency selection and contract administra-
tion, which increased the space for discretion and hence
the possibility for corruption. This observation is consis-
tent with previous research on government procurement
activities during times of crisis, which suggests that exter-
nal events often allow politicians and bureaucrats to argue
for the downgrading of bureaucratic controls (Culver,
1984). It also reveals how discretion occurs through the
details of practice—the changing of government organiza-
tional structures, the selection of sponsorship events and
advertising agencies, and the decisions on the value of
the contracts (Johnston, 2005, p. 60). It also exposes the
speci?c high-level political actors who were involved in
the decision-making.
4
Thus, while the changes created a
space for discretion, this discretion was accomplished
through the collaborative practices of ‘biddable’ politicians
and acquiescent bureaucrats, as opposed to through the sol-
itary actions of a politician or bureaucrat, as often happens
in developing world settings (cf. Johnston, 2005, p. 42). Fi-
nally, the quote by Guité suggests that the awarding of gov-
ernment contracts to ‘friends of the government’ was
perhaps a normal and acceptable part of the habitus of the
in?uence-market ?eld, and thus one might naturally imag-
ine using accounting to circumvent the existing institutional
barriers in order to accomplish this.
Repatriations
As our theoretical framing proposes, a network of cor-
ruption cannot exist without a way of repatriating a por-
tion of the proceeds to the involved political actors. In
this section, we examine the key roles played by the social
position (Bourdieu, 1990a, p. 105) of political bagman in
these processes. We explore the way that symbolic capital
?rst makes the construction of a corrupt network possible
and, then, how the skillful use of accounting becomes an
important type of symbolic capital within the network it-
self. Etymologically, the term political bagman originally re-
ferred to someone who worked for organized crime and
was entrusted with the task of delivering payoffs to cor-
rupt police precincts (Wikipedia, 2011). However it later
came to refer, more generally, to individuals who collect
?nancial contributions from business people on behalf of
politicians and political parties (see the US Embassy
Cables, 2010).
Sometime in 1994–1995, Guité was summoned to the
of?ce of his political boss, the Minister of Public Works,
where he was introduced to Jean Corriveau:
On arrival, Mr. Dingwall told him that he was going to
meet a gentleman named Corriveau who was ‘‘a very
very close friend of the Prime Minister,’’ adding, ‘‘if ever
you ?nd somebody in bed between Jean Chrétien and his
wife, it will be Jacques Corriveau,’’ and that Mr. Guité
should ‘‘look after him.’’ This message was repeated on
other occasions: ‘‘look after this guy’’ and ‘‘look after this
?rm,’’ referring to Mr. Corriveau’s business.’’ (Gomery,
2005b, p. 284)
Accompanying Guité to this meeting was Jean La?eur of
La?eur Communications (p. 284), one of the advertising
agencies that were subsequently at the center of the cor-
rupt practices. Over the course of the sponsorship program,
Pluri Design received sub-contracts from La?eur Commu-
nications as well as from Groupaction, Groupe Everest
and other involved advertising agencies totaling more than
$7M (Kroll Lindquist Avey, 2005 p. 129).
The network of corruption could not have existed with-
out the involvement of a political bagman, since this social
position links together the activities of receiving and re-
circulating the proceeds that are associated with the sale
of political in?uence (cf. Noonan, 1987, p. 34). In this re-
gard, Corriveau was perfect for the position, since he was
the ultimate Liberal Party insider, having ‘‘been a Vice-
President of the Quebec Liberal wing in the early-1980s,
and the National Vice-President (Francophone) in the same
period’’ (Gomery, 2005b, p. 283). And, as the above quota-
tion highlights, he was also viewed as a close personal
friend and con?dant of the Prime Minister. Thus Corri-
veau’s social proximity to the Prime Minister and his
long-term involvement with the Liberal Party, along with
his position as political bagman, provided him with access
to the symbolic and social capital needed to lay the
groundwork for a corrupt network.
In its simplest form, the repatriations from the involved
business actors ?owed through Corriveau and his company
Pluri Design before a portion was returned to the Liberal
Party. Corriveau had arrangements with the different
advertising agencies. For example, with one group of agen-
cies he received a ‘‘17.5% commission on all the sponsor-
ships awarded by the Government of Canada for projects
proposed by Polygone and Expour’’ (Corriveau, 2005, p.
17912). With La?eur Communications, he was also paid a
retainer that would be charged against non-speci?c con-
sulting work (p. 18004). Corriveau buried these transac-
tions in the ?nancial records by billing the advertising
agencies for design and consulting services. This accounting
4
During this time period, internal audit activities also became increas-
ingly politicized, both for the sponsorship program (Gomery, 2005b, p. 209)
and for other government departments such as Human Resource Develop-
ment (cf., Sutherland, 2003, p. 199).
D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524 513
treatment not only concealed the lobbying that was going
on, it also allowed the advertising agencies to include
ostensive ‘design services’ as part of the contract, thereby
allowing themto charge an agency commission on the pay-
ments. When Corriveau was asked why the advertising
agencies would pay such commissions and fees, he stated
that the client ‘‘thought that I was really persuasive in
expressing such requests [for sponsorship work] to Mr.
Guité’’ (p. 17895).
Corriveau was also persuasive in convincing the adver-
tising agencies to cover other expenses of the Liberal Party.
For example, Brault recounts how Corriveau asked him to
put a Liberal Party worker on Groupaction’s payroll:
MR. BRAULT: the main point of the meeting with Mr.
Corriveau was to ask me to take on, for a period of
one year, a person who was highly thought of and
who was involved in a way that I cannot de?ne, that I
did not know, with the Liberal Party of Canada.
LAWYER: Had he spoken to you about Mr. Gosselin
before?
MR. BRAULT: Not in that kind of detail, but let’s say that
we were starting to sense that—we were starting to get
a feel for what the miracle recipe was to get lucky
[emphasis added].
LAWYER: And what was the miracle recipe, to use your
expression?
MR. BRAULT: With respect to the sponsorships, and I
want to stress that point, it meant to listen carefully
to certain requests made by the Liberal Party.
LAWYER: Would you say that you generally did listen
carefully and sympathetically to the requests made to
you?
MR. BRAULT: Yes. (2005b, p. 15739)
A similar request occurred in 1998 when Corriveau re-
quested that Brault ?nd a job for ‘‘Maria-Lyne Chrétien, a
niece of the Prime Minister, who was employed by one of
Groupaction’s subsidiaries for about eight months in
1998’’ (Gomery, 2005b, p. 256). Finally, in 1998, a request
was made that Brault give employment to John Welch, a
Liberal Party worker, who was unemployed. ‘‘Mr. Brault
did not know Mr. Welch at all but agreed to look after
him and supplied him with a small of?ce in Groupaction’s
premises’’ paying him a salary of ‘‘$7000 per month for a
year’’ (p. 255).
Once the monies entered Pluri Design, the company
functioned as a bank in that senior Liberal Party insiders
could come and request operating funds. For example, in
the lead up to the 1997 federal election, the Party identi?ed
over 30 ridings where it would be dif?cult to ?eld quality
candidates and raise the needed ?nancial resources. Beli-
veau, who was the director of the Quebec Liberal Party,
went to visit Corriveau and asked for $250,000–$300,000
to help fund activities in these orphan ridings (Beliveau,
2005, p. 20913). Several weeks later Corriveau provided
him with this money in a series of envelopes with small
bills. The small bills were subsequently distributed to indi-
viduals in 38 different ridings and were never recorded in
the ?nancial statements of the Party (p. 20917).
In this process, what is interesting is the way that
accounting not only connected together the emergent net-
work of corruption and the existing Liberal party network
but also became part of the symbolic capital of both of
these networks. Within the corrupt network, Corriveau’s
ability to both persuade business participants to make
repatriations and to structure the repatriations in a palat-
able form—that is, one that made the funds tax deductable
and that treated them as a sponsorship cost—was valued
by both the involved political actors and business partici-
pants (cf. Brault, 2005b, p. 15878). And within the political
network of Liberal insiders it was tacit knowledge that Cor-
riveau was the bagman who could deliver cash when
needed—in the words of Beliveau, Corriveau ‘‘had a certain
skill shall we say in terms of funding, and we knew that at
the Party level’’ (p. 20919, emphasis added). It was also ta-
cit knowledge among Liberal insiders that, for ‘‘certain
expenditures, sometimes cash is useful’’ (p. 20926). Corri-
veau was the person who converted notational resource
?ows (in the form of accounts receivable and bank depos-
its) into a suitcase full of cash that could subsequently be
distributed unencumbered by campaign ?nance regula-
tions. These conversion activities moved the repatriation
proceeds out of the formal accounting records of the busi-
ness entity and kept them out of the ?nancial records of
the Liberal Party and individual riding associations. Conse-
quently, these accounting practices made it easier to col-
lect contributions from business allies and provided the
Liberal Party and the individual riding associations with
much needed ?nancial in?ows. For these reasons, account-
ing was valorized as a type of symbolic capital within both
networks. As we will see in a subsequent section, the even-
tual replacement of Corriveau with a different political
bagman created problems in the network, since Corriveau’s
replacement was less adept at using accounting in ways
that lessened the after-tax cost of the kickbacks for the in-
volved business allies.
The preceding discussion suggests that the social posi-
tion of political bagman somehow depended on an ability
to use accounting skillfully; however, we use the term
‘skillful’ in a very particular sense. First, this accounting
ability was a purposive skill that helped the political bag-
man to achieve the speci?c objectives of the corrupt net-
work—to repatriate and redistribute the proceeds of
corruption. Second, it did not depend on the complex use
and manipulation of accounting—such as in the case of En-
ron, which involved the manipulation of ?nancial deriva-
tives—rather it depended on the mastery of a more basic
set of bookkeeping skills. Perhaps as a consequence of this,
the ability to imagine and implement these accounting
practices was not limited to professional accountants—that
is, those with institutionalized cultural capital in the form
of a professional accounting designation. Rather, a ‘skill in
use’ form of cultural capital could also be acquired and
used by anyone possessing both contextually-speci?c
knowledge (regarding the nature of the political game
and the existing anti-corruption barriers) and knowledge
about the basics of bookkeeping. Finally, it was simulta-
neously a technical and social skill. It was technical in that
it allowed the political network to acquire needed ?nancial
resources in a way that minimized costs to business partic-
ipants (both in terms of monetary costs and disruption).
Yet it was also social, in that the interactions with business
514 D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524
participants were, on the surface, friendly and frictionless
and there was no apparent con?ict over the payment of
kickbacks (cf., Brault, 2005a, p. 15822). In this sense, the
adroit use of accounting by Corriveau ‘greased the wheels’
of the corrupt network by providing the needed ?nancial
repatriations in a way that was economically and socially
acceptable to all participants.
5
These observations simulta-
neously highlight the importance of accounting to criminal
activity, illustrate the nature of skillful accounting use in
these contexts, and remind us that skillful practice is not
limited to professional accountants.
Many of the details of Corriveau’s activities are un-
known, as he was not only an evasive witness but also
?nancially adept at minimizing the accounting traces that
were available to the forensic accountants. For example, it
is not known how much of the $7M that he received was
re-distributed to the Liberal Party. We also do not know
how these ?nancial resources ?owed through the ?nancial
records of Pluri Design and were subsequently converted
to cash, since the majority of the ?nancial records went
missing and there were no peripheral ?nancial traces that
the forensic accountants could ?nd (Kroll Lindquist Avey,
2005, p. 133). At the same time, the information that is
available makes visible some key aspects of the corrupt
practices. For example, the available material illustrates
how Corriveau’s knowledge of the game of in?uence poli-
tics along with his positioning within the Liberal Party
made it possible for him to both imagine and put into prac-
tice a corrupt network. It also shows how his structural po-
sition as a political bagman enabled him to link together a
legitimate political network and an illegitimate corrupt
network by circulating and repatriating the proceeds of
corruption. Likewise, it illustrates the discrete practices
for which the bagman was responsible: brokering the
transaction between the buyers and seller of in?uence,
implementing and accomplishing the invoicing scheme
that made these payments legitimate business transac-
tions, converting the notational proceeds into cash, and
ultimately, distributing this cash to political actors and
activities. Finally, it highlights how the accomplishment
of these accounting activities came to be viewed by other
participants as a salient type of symbolic capital within
both the corrupt and the political networks.
Enlisting business allies
The building of large networks of corruption typically
requires the selection and enlistment of business partici-
pants, since ?nancial ?ows must pass through some form
of business entity prior to being repatriated. In this section,
we consider howJean Brault of the Groupaction advertising
agency came to join the network. Groupaction was one of
the most successful advertising agencies, participating in
$90M of sponsorship contracts over the life of the program
(Kroll Lindquist Avey, 2005, p. 11). Two other agencies were
also very successful—Groupe Everest ($65M in contracts)
and La?eur Communications ($67M in contracts)—but the
principal actors in these agencies were unwilling to testify
as to the circumstances that led to their participation. In re-
gards to Groupe Everest, we know that Claude Boulay was
an ‘‘overtly. . .strong supporter of the Liberal Party of Can-
ada’’ who had worked on the leadership and election cam-
paigns for key Liberal cabinet ministers (Gomery, 2005b, p.
389), whereas with Jean La?eur of La?eur Communications
few details are available.
In Brault’s case, it was a Liberal Party member who saw
an opportunity and who offered to get him some govern-
ment work in exchange for a commission. According to
Brault, Alain Renaud said:
‘‘Jean, you’ve got a good business going. It doesn’t make
sense that you have no business from the Canadian gov-
ernment. You make 50 percent of your sales outside of
Quebec. You create jobs here, you work in English and
French. I have an in or I have some alliances with the Lib-
eral Party of Quebec. . .I have an in there. I have had expe-
riences. I come from a tradition—we have been good
Liberals for a few generations.’’ He said, ‘‘I’m going to
see what we can do in Ottawa.’’ (Brault, 2005a, p. 15641)
Renaud continued on, stating: ‘‘I’ll do some soliciting. If
I have any expenses, I’ll ask you to cover them. Don’t pay
me. I’ll show you what I can do and then we’ll sit down.’’
This resulted in an agreement wherein Groupaction would
‘‘reimburse Mr. Renaud for the expenses he incurred in his
attempts to obtain government business, but no salary or
other remuneration would be paid to him until he pro-
duced results’’ (Gomery, 2005b, p. 250).
To properly position Brault within the Liberal Party so-
cial network, Renaud asked Brault to contribute in small
ways to Liberal Party fundraising activities, while Renaud
became more active in the grassroots activities of the Party
(Brault, 2005a, p. 15644). These ?nancial contributions,
along with Renaud’s activities, allowed the collaborators
to ask for a meeting with Jean Carle, one of the Prime Min-
ister’s key staff members. Brault recounts: ‘‘Alain said, in so
many words, ‘Jean, we have to make ourselves known at
the Prime Minister’s Of?ce.’. . . Then I got an appointment
with Jean Carle’’ (p. 15686).
Brault’s recollection of this meeting is informative in
that it highlights how Renaud expected that these ?nancial
commitments to the Liberal Party would generate sponsor-
ship work:
Mr. Carle invited us into his of?ce. Alain began with
what I would call his pitch, ‘‘We’re good Liberals. We
work hard. We’ve got skills. What are the needs? We
should do business.’’. . . He outlined, not in detail, my
company’s commitment, ?nancially, to the political
authorities and, in a respectful choice of words, sug-
gested it would be natural for there to be some kind
of opening. (p. 15687, emphasis added)
After some more discussion, Carle stated that: ‘‘Listen,
go see—go to Chuck Guité’s of?ce. . . They will all explain
to you what to do’’ (p. 15687). The meeting concluded with
Carle stating to Brault:
‘‘You know, doing business with the government is like
a large highway. There’s room for everybody. There are
5
The phrase ‘grease the wheels’ dates back to the mid 1500s, denoting
the act of ‘making things run smoothly’ by plying with bribe or protection
money (Etymology Dictionary, 2011).
D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524 515
big trucks. There are small trucks. There are big cars.
There are small cars. There are four-by-fours. There
should be room for everybody.’’ He let us go on that
note, which we considered positive, and we left. (p.
15688)
These speci?c comments, as well as the other transcript
material, illustrate some key aspects of the enlistment pro-
cess. For example they show how Brault, the businessper-
son, came to occupy a social position from which he could
potentially participate in the corrupt network. The kinship
ties (Bourdieu, 1990a, p. 167) of Renaud, plus the demon-
strated ?nancial commitment positioned Brault in a cer-
tain way. As Renaud comments, it was his kinship ties to
the Liberal Party—we had been ‘good Liberals for several
generations’—that put him in a position to vouch for a po-
tential business participant. Such kinship ties are impor-
tant because, in the words of Bourdieu, ‘‘one cannot call
on absolutely anyone for any occasion’’ (1990a, p. 168),
especially when potentially illegal activities are involved.
However, the tie also had to be ‘‘criminally exploitable’’
(Lampe, 2003, p. 11) in a way that was ?nancially useful
to senior Liberal political actors. In this regard, the initial
?nancial contributions demonstrated ‘investment in the
game’ (Bourdieu & Wacquant, 1992, p. 98) and signaled a
potential willingness to continue to support the Liberal
Party in the future. Yet, while these strategies created the
conditions of possibility for the entry of a business actor
into the corrupt network, they did not change the primacy
of kinship ties within the network. As subsequent sections
highlight, this primacy of kinship and the resulting hierar-
chy of social positions in?uenced the interactions that oc-
curred around the accounting transactions. It also resulted
in a situation where senior political actors were willing to
remove business participants from the network if their
?nancial commitment wavered or if there were con?icts
between a political clan member and the business actor.
Generating proceeds
The decisions to award sponsorship contracts to Liber-
al-friendly advertising agencies and to have the political
bagman persuade these participants to repatriate a portion
of the proceeds were important components of the emer-
gent network of corruption. But in many ways the poten-
tial to generate proceeds from these contracts remained
unrealized. In this section, we consider how the enlistment
of additional participants facilitated the introduction and
accomplishment of a series of accounting-implicated strat-
egies that helped to increase the size of the resource ?ows
from government.
Previously, we mentioned that the introduction of
additional accounting entities and transactions provided
a way to increase the value of the sponsorship contracts.
This was one of the strategies that La?eur put into prac-
tice with respect to promotional materials, in purchasing
these materials from a company that was controlled by
his son. The use of a family member to provide promo-
tional materials relied on a different set of kinship ties
than those previously discussed, but the effects were sim-
ilar in that it helped to keep the proceeds within the
family, so to speak, and also minimized the potential for
detection (Lampe, 2003, p. 20). The son’s company was
incorporated in 1993 and worked out of the same of?ce
as La?eur Communications. On sponsorship contracts that
included merchandise, La?eur would sub-contract the
merchandise purchase to a company owned by his son
(Kroll Lindquist Avey, 2005, p. 82), and that company
would purchase the merchandise, add a mark-up of
100%, and then bill La?eur Communications. La?eur Com-
munications would then add a commission of 17.65% to
the invoice amount and bill the federal government for
this amount. The ?nal invoice to the federal government
on an item that could be purchased for $50, for example,
would be $117.65.
In the case of professional services, it was Guité who
intervened and used his in?uence, asking La?eur to use
the services of Gosselin Communications, a company that
was owned by a former civil servant and acquaintance of
Guité (Gomery, 2005b, p. 354). As in the situation with
promotional merchandise, the lengthening of the transac-
tion chain through the addition of participants (by La?eur
and subsequently by Gosselin) ensured that the maximum
amount speci?ed by the contract for services such as crea-
tive work was billed. Since these contracts usually speci-
?ed a charge-out rate for each type of creative work, as
well as a total amount that could be spent on creative
work, incentives existed to accumulate chargeable hours
and upgrade these hours, if possible, to higher-level crea-
tive work. Thus, creative work was subcontracted from
La?eur Communications to Gosselin Communications
which, in turn, subcontracted the work to a company con-
trolled by Gosselin’s wife. At the end of this chain, the per-
son doing the work might receive $12–17 per hour (Kroll
Lindquist Avey, 2005, p. 81). The company paying this per-
son would then bill the next company in the chain $25–$35
per hour and this company would in turn bill La?eur Com-
munications $60 per hour. La?eur would then bill the fed-
eral government for between $125 and $150 per hour,
depending on what level of creative work they claimed
that the person was doing. In this way, La?eur was able
to accumulate suf?cient billable hours to use up the
amount of available production expense monies. In those
cases where there were not suf?cient chargeable hours in
the ?le, La?eur arbitrarily added his own hours to the ?le
to ensure that all of the monies were spent (Gomery,
2005b, p. 336).
These examples regarding promotional items and pro-
fessional services reveal that these strategies were predi-
cated on accounting. First, the insertion of multiple
accounting entities and multiple accounting transactions
made it possible to aggregate upward and bill the federal
government in excess for something that had a much low-
er cost. Second, this chain of transactions had the effect of
partially concealing the mechanics of the practices. For
example, if it was a La?eur Communications staff person
doing the work, the connection between the person’s
hourly wage and the amount billed would be much more
direct and, consequently, much more auditable. By insert-
ing intermediaries it was possible to at least partially con-
ceal these linkages—since in normal circumstances the
federal government had no way of entering the accounting
516 D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524
records of third-party limited companies—and argue that
the work being done was ‘specialized’ creative work and
not simply clerical work. Finally, these activities helped
to construct an appearance of normalcy and indeed, arm’s
length, because La?eur always had an invoice from another
company to support the purchase price. In these ways,
accounting solidi?ed and justi?ed a series of arbitrary
boundaries among elements of the transaction while par-
tially concealing the ‘real’ cost of the provided merchan-
dise and services.
Unfortunately, what the analysis does not show are the
origins of these accounting practices. Many of the involved
advertising agencies used, to a greater or lesser degree, sim-
ilar practices to in?ate the proceeds of corruption (cf., Kroll
Lindquist Avey, 2005, p. 38). However, what is uncertain is
whether the practices emerged through discussions with
the involved political and bureaucratic actors—an effect of
their social capital—or whether it was more spontaneous.
For example, the business participants might have simply
realized that there were no internal controls pertaining to
the value of the invoices, and thus, that it was possible to
in?ate the value of the contracts. While this is an important
question, all that the available testimony material allows us
to conclude is that the different business participants used
similar accounting practices to in?ate the proceeds of
corruption.
Decentralized requests
Although a centralized repatriation channel existed,
repatriation requests might also originate from elsewhere,
as other involved political actors use the in?uence associ-
ated with their social position in the political network to re-
quest repatriations. In this section we examine two of these
instances, including one where accounting was enlisted.
The Director of the Quebec Liberal Party, Beliveau, also
took the opportunity to solicit funds from Jean Brault.
The request was made through Renaud, who was by now
spending signi?cant amounts of time at the Liberal Party
headquarters and who was actively involved in the daily
activities of the Party. Perhaps because of this proximity,
Beliveau asked Renaud to approach Brault for a ?nancial
contribution to the Party. Interestingly, this was one of
the few times that Beliveau himself was directly involved
in the fundraising activities of the Party (Beliveau, 2005,
p. 20903).
Brault reluctantly agreed but said that he did not want
these donations to appear in his ?nancial records. Thus:
Mr. Brault was persuaded to have Groupaction remit to
Mr. Renaud’s company $63,500 in payment of two false
invoices, one for $55,000 and another for $8500, which
refer to services rendered that are pure inventions. The
sum of $63,500 was then paid by Mr. Renaud’s company
to the Liberal Party and properly recorded as a political
contribution. (Gomery, 2005b, p. 262)
In subsequent years, Brault received similar requests.
Once again these political contributions were paid through
intermediary corporations in order to disguise the fact that
they were political donations:
On January 6, 2000, and again on November 1, 2000,
Commando invoiced Groupaction for $10,000 for ser-
vices rendered but according to Mr. Brault, these
invoices and the cheques in payment of them are evi-
dence of political contributions that he was asked to
make, to pay unexplained expenses of the Liberal Party
in Quebec City. . .On October 1, 2000, Mr. Thiboutot
(the sole shareholder of Commando) sent a further false
invoice to a Groupaction subsidiary for $50,000, describ-
ing the services rendered by Commando as research and
analysis. On October 13, 2000, only a short time before
the federal election campaign commenced, the invoice
was paid, and Mr. Thiboutot acknowledges that the pro-
ceeds were used to pay ?ve employees of the Liberal
Party for their work in the forthcoming election cam-
paign. Each of the workers sent Commando an invoice
for the amount received. (pp. 263–264)
These examples once again illustrate how accounting-
implicated strategies involving multiple accounting enti-
ties and participants were used to move the proceeds
through the network and to thereby facilitate repatriation.
In contrast to the previous examples, these strategies did
not involve circumventing the barriers pertaining to polit-
ical contributions. Rather, they were intended to hide the
fact that it was Brault who was making the ?nancial contri-
bution. Thus the insertion of additional accounting entities
was meant to obscure and decouple the connection be-
tween the receipt of government contracts and the pay-
ment of political donations.
Alfonso Gagliano, the Minister in charge of Public
Works, also requested that Brault make ?nancial contribu-
tions. However, rather than making a direct request for
monies, he asked Brault to pay invoices on behalf of the
Liberal Party. One such invoice pertained to a community
television program that was doing interviews with Liberal
Members of Parliament. As Gomery (2005b) states:
Mr. Gagliano was very supportive of this project, and
when the ?rst invoices from Productions Caméo were
received at his of?ce, he had them paid out of his own
budget. When four later invoices totaling $45,837.47
arrived, his Executive Assistant, Pierre Tremblay, asked
Ms. Tremblay to redirect them to Groupaction for
payment. Since Mr. Brault was unwilling to have Grou-
paction pay bills addressed to the Liberal Party of Que-
bec, he asked Ms. Tremblay to reword and address
them to Groupaction. She was puzzled by this request
but agreed, and prepared new invoices which falsely
described the services rendered as ‘‘Analyses, recherches
et repérages projet video corporatif, Groupaction.’’ With
these modi?cations, Groupaction paid the invoices. (p.
257)
In this example, one can see that it was necessary to re-
write the invoice in order to make it appear to be a normal
business expense. As well, once rewritten, Brault could use
the invoice for tax purposes.
The repatriation requests of Beliveau and Gagliano illus-
trate that participants other than the political bagman may
implicitly or explicitly decide to participate in the corrupt
network by requesting repatriations—using the resources
D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524 517
and strategies that they have at their disposal—in an at-
tempt to satisfy their needs at a moment in time. This
observation is important because it hints at the seductive-
ness of corruption, in that participation often provides a
solution to immediate concerns, such as ?nding a job for
a family member, arranging a salary for a party worker,
or paying an outstanding party invoice. From this vantage
point, the possibility always exists that the illegitimate
network will become synonymous with the legitimate,
political one, as more and more members of the political
network succumb to the temptations and bene?ts associ-
ated with corruption. The preceding examples also hint
at the aforementioned hierarchies that exist within such
networks, speci?cally the dominant position that political
actors occupy within the corrupt network vis-à-vis their
business allies. This is especially obvious in the Gagliano
example, where he had his Executive Assistant call a fed-
eral government supplier (who was ironically working on
a documentary of Liberal Party politicians) to ask them to
re-write and falsify an invoice and to then send it to an-
other company for payment. The business ally who paid
the invoice understood these power relations and, thus,
the ‘magic recipe’ for continuing to receive sponsorship
work, especially since the request came from the Minister
in charge of the sponsorship program. For Brault the con-
tracts were ‘‘lucrative’’ as ‘‘long as there weren’t too many
claims on our 12%’’ from ‘‘individuals who presented them-
selves as representatives of the Liberal Party of Canada and
who asked me for contributions in different forms’’ (p.
16490).
Patterned practices
One of our key arguments is that these accounting prac-
tices come to organize the network of corruption. In this
section, we examine how accounting becomes a repetitive
and relatively stable practice within the corrupt network,
the forms of social interaction that develop around this
practice, and the ways that, within the network, account-
ing becomes a repertoire that is enlisted by individual par-
ticipants to resolve perceived constraints.
At the simplest level, the repetitive nature of the pro-
cesses internal to the network and the centrality of
accounting within these processes helped to normalize
corruption. As the theoretical framing suggests and the
preceding analysis illustrates, sponsorship contracts would
be awarded to participating advertising agencies, these
agencies would enlist other business allies to in?ate the
proceeds, and a portion of the proceeds would then be
repatriated to the Liberal party either through the payment
of commissions to the political bagman or through other
methods. These practices were repeated every year be-
tween 1996 and 2002. Over this 7-year period, the two fo-
cal advertising agencies received an average of $18M
annually in sponsorship work and their share of all spon-
sorship work during this period was 41 percent (Kroll Lind-
quist Avey, 2005). And, as the forensic evidence for
Groupaction illustrates, Groupaction repatriated a portion
of the amounts received back to the Liberal party or to
party activities in one form or another in each of the years
that it received sponsorship contracts. In addition, the
forensic evidence pertaining to the two focal advertising
agencies indicates that the majority of sponsorship con-
tracts involved some use of accounting to in?ate the pro-
ceeds and/or repatriate them. Thus, in these ways, the
accounting practices both made the corruption possible
and organized the network itself.
On a second level the accounting practices organize the
interactions within the corrupt network, since the major-
ity of the interactions are organized around accomplishing
the speci?c accounting transactions needed to generate
and repatriate the proceeds. In these situations, interac-
tions were never a simple two-way process involving
the participants; rather, they involved continuous collabo-
ration among the participants and a context-dependent
con?guration of habitus, telos and the practices of the net-
work (Bourdieu, 2005, p. 148). As a result, accounting
practices frame these interactions regardless of whether
they are an explicit topic of conversation within the
interaction.
More speci?cally we propose that within the network
two different types of interactions around accounting oc-
cur. First, there are interactions among participants that in-
volve the direct discussion of accounting. The idiosyncratic
requests for repatriations, such as when Gagliano asked
Brault to pay invoices that had been sent to the Liberal
Party, are the best examples of this. In these circumstances
the accounting was not something that had previously
been worked out, and so it was necessary to decide how
to make the accounting ‘work,’ given the desires of in?uen-
tial political participants. However, as the subsequent dis-
cussion of repertoires illustrates, these situations were not
that dif?cult to resolve because the use of such accounting
techniques to conceal the real nature of the transaction
had already entered into the habitus of the network.
The second type of interaction presumes but does not
explicitly refer to accounting since the accounting has al-
ready been worked out. In these situations, the interactions
are shaped by these tentative accounting arrangements as
well as by the positioning of the involved participants in
the corrupt network. For example, the testimony of Brault
illustrates how his interactions with Guité were qualita-
tively different than with Corriveau, since the interactions
focused on different aspects of the sponsorship-corruption
process. With Guité there were meetings at least once a
month, as well as frequent telephone conversations dealing
with the details of the sponsorship contracts (Brault, 2005a,
pp. 15793–95) but the two did not interact socially outside
of work (p. 15795). In contrast, interactions with Corriveau
were infrequent because Brault tried to avoid these meet-
ings, since the topic would be repatriations (p. 15822).
However, when they did meet, the pattern of interaction
was always the same; Brault recounts that requests for
repatriation were always prefaced by: ‘‘‘you know, Jean. . .’
[followed by Corriveau] saying that he was making requests
not for his personal bene?t but for the bene?t of the party
he was working for, the Liberal Party of Canada’’ (p.
15822). These examples hint at the ways that these interac-
tions both presumed a functioning corrupt network—one
that included a set of accounting practices to generate
and repatriate proceeds—and a certain con?guration of
activities, actors, and in?uence.
518 D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524
On a third level accounting organizes a corrupt network
by becoming part of the repertoires of its participants. The
incorporation of accounting practices into the habitus of
the network makes accounting available as an economical
basis for action that can be enlisted by network partici-
pants (Bourdieu, 2005, p. 213). Stated differently, the
incorporation of these accounting practices into the habi-
tus of the network results in a situation where it is possible
to produce an in?nite number of new practices and uses
that ‘‘are relatively unpredictable but that are also limited
in their diversity’’ (Bourdieu, 1990a, p. 55). This is most
evident in Guité’s activities, as he draws upon accounting
practices to both generate additional proceeds and work
around other, unrelated, bureaucratic constraints.
The existence of a functioning network of corruption
and a repertoire of accounting practices to in?ate the pro-
ceeds made it possible for Guité to route additional trans-
actions through the network, transactions that did not
follow the standard pattern of awarding a sponsorship
contract to an advertising agency. For example, Guité
decided to have one of the involved advertising agencies
bill for work that the Advertising Department had done.
Guité’s of?ce did the work involved in purchasing a series
of lithograph prints (for gifts) and directly received the
merchandise. However, the invoice for the merchandise
was sent to La?eur who added a commission of $30,000
and then re-invoiced the federal government (p. 6018).
Like the transactions discussed in previous sections,
accounting was used to arbitrarily lengthen the transaction
chain and insert extra participants into the transaction,
thereby increasing the proceeds. Moreover, since the phys-
ical movement of the invoice—from the supplier to La?eur
and ?nally to the federal government—did not have to
agree with the physical movement of goods—which went
from the supplier to the federal government—it was possi-
ble to at least super?cially conceal the fact that La?eur was
not really involved in the transaction.
In other cases, Guité used these accounting practices
and the network to work around bureaucratic rules that
he viewed as constraining. For example in October 1998,
Guité wanted to help sponsor a television series on the
hockey career of Maurice Richard. However, since he didn’t
have the monies in his budget, he contacted Marc LeFranç-
ois who was the Chairman of the Board of Directors of Via
Rail [an independent crown corporation] and who was well
connected to the Liberal Party. According to Gomery, Guité
assured LeFrançois that Guité would contribute ‘‘75% of a
$1 million contribution to the project by Via Rail; the funds
would be reimbursed to Via Rail only in the next ?scal
year, since Mr. Guité’s budget for the current year had been
spent’’ (Gomery, 2005b, p. 223). On the basis of this con-
versation, Via Rail advanced $910,000 to the television pro-
ducer showing this in their ?nancial records as an account
receivable from the federal government. When it came
time to reimburse Via Rail, the reimbursement was made
through La?eur Communications with La?eur earning a
commission of $112,500 for ‘‘simply delivering a cheque
to Via Rail’’ (Gomery, 2005b, p. 225).
These examples show how accounting structured the
practices of corruption. The introduction of repetitive
accounting practices, the patterning of social interactions
around accounting practices, and the sedimentation of
these practices within the habitus so that the practices
could be drawn upon as part of the participants’ repertoire
of action constituted the corrupt network in speci?c ways.
This is not to suggest that the practices, interactions and
the network itself were static and temporally stable;
rather, that these accounting practices and the associated
effects encouraged a conditioned and limited spontaneity
(Bourdieu, 2005, p. 211) on the part of network partici-
pants; participants acted and exercised agency, but always
within the bounds of the habitus and con?guration of the
network. However, as we will see in the next section, net-
works of corruption are always fragile accomplishments
that can change at a moment’s notice.
Re-con?guring the network
Corrupt networks, perhaps more so than other net-
works, change over time. While the network con?guration,
habitus and associated practices encourage stability, inter-
nal and external events may push in the opposite direction.
Bureaucrats retire, politicians change portfolios, business
arrangements change, and external events such as the
threat of legal proceedings intervene. These moments dis-
rupt the network, creating spaces where it may be recon-
?gured and where the accounting changes. In this section
we consider two episodes where this occurred.
Towards the end of the 1990s a series of changes all
came together at more or less the same time. Guité retired
and discretion around sponsorship activities became more
centralized in the of?ce of Gagliano, the Minister for Public
Works; responsibility for fundraising within the Liberal
Party of Quebec passed from Corriveau to Joseph Morselli,
a childhood friend of Minister Gagliano (Gomery, 2005b, p.
266); and in terms of business arrangements, Brault and
Renaud argued over the level of commissions payable to
Renaud, with these arguments leading to the discontinua-
tion of their agreement. As well, the Globe and Mail pub-
lished the ?rst in a series of articles that questioned the
payment of sponsorship monies to Liberal-friendly adver-
tising agencies for little or no work.
The retirement of Guité arguably changed the exercise
of discretion and in?uence within the network. Gosselin,
who had been recruited into the network by Guité and
who was not only apolitical but also unwilling to contrib-
ute ?nancially to the Liberal Party, suddenly found that
his share of sponsorship contracts was dwindling. When
he went to ask Guité’s replacement why this was happen-
ing, he was directed to go speak with Jean-Marc Bard, Min-
ister Gagliano’s executive assistant, who was now making
all of the decisions (Gomery, 2005b, p. 364). At this meet-
ing, Gosselin was told:
Listen, your opponents have punched you in the face.
Okay? And if you continue what you’re doing, they’re
going to rip it off. (Gosselin, 2005, p. 14817)
In the words of Justice Gomery, ‘‘Mr. Gosselin inter-
preted these words to mean that he was not a Liberal insi-
der, and that to be an insider he would have to be a
D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524 519
supporter of the Liberal Party, something that he had re-
sisted’’ (p. 364). This example highlights not only how
some network participants occupied protected positions—
on account of their social capital—and were thus allowed
to share in the proceeds without making repatriation pay-
ments, but also the precarious nature of such privilege.
Around this same time Corriveau decided to step down
as the primary fundraiser for the Quebec Liberal Party and
Morselli, a friend of Gagliano, assumed the role of political
bagman. One of Morselli’s ?rst acts was to arrange a lunch
with Brault. At this meeting:
Mr. Morselli expressed the appreciation of the LPCQ for
the past work of Mr. Renaud, its thanks for Groupac-
tion’s past contributions to the Party, and its hope that
its generosity would continue. He offered his assistance
to Groupaction in any way he could help. He stated that
he had assumed responsibility for the ?nancing of the
LPCQ, replacing Mr. Corriveau in that function, and gave
Mr. Brault his business card (p. 270).
This ‘help’ soon became necessary. When Brault and Re-
naud discontinued their commission arrangement, they
parted on less than amicable terms. Although Brault con-
tinued to receive sponsorship work, he was pressured by
a close friend of Gagliano to reconsider the decision to ter-
minate the relationship (p. 266), presumably because of
Renaud’s kinship ties to the Liberal Party. When Brault re-
fused he was subsequently informed that the government
was planning on calling for tenders on one of the major
sponsorship contracts that Brault held. This prompted Bra-
ult to arrange a meeting with Morselli and to offer to pay
$100,000 if the ‘‘call for tenders could be cancelled or post-
poned’’ (Brault, 2005b, p. 15877). A few days later:
I [Brault] went back to his of?ce. It was the only time I
went, and after a bit of small talk, he said, ‘‘The
$100,000, that’s $100,000 cash?’’ I said, ‘‘$100,000 cash,
that’s a lot of money, that’s $200,000 through normal
channels.’’ I don’t have that kind of money lying around.
It doesn’t grow on trees. He said, ‘‘No, it’s $100,000
cash.’’ Then he said, ‘‘Your problem is solved.’’ ‘‘My
problem is solved?’’ He said, ‘‘Don’t worry, there won’t
be any competition.’’ (p. 15878)
They agreed that the money was payable in two annual
$50,000 installments (p. 15879). However, while the ?rst
installment was paid, the second installment was not, as
the political heat resulting from the publication of articles
in the Globe and Mail made it dif?cult for the sponsorship
network to continue to conduct business.
This example further highlights the connection be-
tween the participation of business actors and the ongoing
?nancial commitment to the Liberal Party. Yet, it also illus-
trates how the accounting-implicated strategies pertaining
to repatriation may be idiosyncratic to the wishes of the
incumbent political bagman. With the replacement of Cor-
riveau, repatriations no longer ?owed through an account-
ing entity (Pluri Designs) and were no longer accomplished
through invoicing and accounting strategies, since Morselli
preferred to directly receive the repatriations in cash. Iron-
ically, this strategy is less sophisticated since the repatria-
tions now represent a tax rather than a cost for the
business allies, in that they cannot bill the government
for these costs and they are not tax deductable—hence
the comment of Brault that ‘‘$100,000 in cash is equivalent
to $200,000 through normal channels’’. Moreover, the con-
version of the repatriations into cash, much to the chagrin
of Brault, now becomes the responsibility of the business
participant rather than the political bagman. These
changes in accounting practices had participants such as
Brault wondering about the abilities—and symbolic capi-
tal—of the new political bagman.
Discussion
This study examines how accounting makes corruption
possible within an in?uence-market setting. The analysis
illustrates that while accounting-based anti-corruption
barriers attempt to limit and constrain how political in?u-
ence is bought and sold, the collaborative exercise of
discretion and the collaborative use of accounting-impli-
cated strategies help to modify and increase the ?ow of
government resources to business actors, as well as to sub-
sequently repatriate a portion of these proceeds back to
the involved political actors. These accounting practices
are informed and shaped by the ?eld’s habitus, its distribu-
tion of capital, and the spatial positioning of in?uential so-
cial actors. In turn, accounting comes to organize the
corrupt network through the emergence of particular pat-
terns of accounting practices and social interactions
around these practices; by the incorporation of such prac-
tices into the network’s habitus, and, hence, into the reper-
toires of its participants; and ?nally, through valorizing the
skillful use of accounting as a form of symbolic capital.
There are two themes that run throughout the study.
The ?rst pertains to the skillful use of accounting. The anal-
ysis illustrates how accounting helps accomplish speci?c
tasks within the corruption process, such as the construc-
tion of a space for the exercise of discretion, the lengthen-
ing of the accounting transaction chain to in?ate the
proceeds, and the fabrication of invoices that make unu-
sual accounting transactions appear normal. Such usages
are teleological in that they emerge from the habitus of
the in?uence-market ?eld and are imagined and imple-
mented to ful?ll speci?c purposes—one of these being to
allow the Liberal Party to satisfy some of its funding
requirements. These skillful uses did not involve esoteric
calculations of ?nancial derivatives or mark-to-market
rules, rather only a mastery of the basics of bookkeeping
and entity accounting. In this regard, these practices are
mundane, in that they do not appear complex, they occur
on a daily basis and, to outside observers, they appear so
taken-for-granted that they scarcely merit a second
thought (Bourdieu, 1990a, p. 180; Ahrens, 2009, pp. 31–
32). But this does not negate the fact that mundane prac-
tices are ‘‘skillful accomplishments’’ (Ahrens, 2009, p. 31;
see also Bourdieu, 1990a, p. 188). For these reasons, we
propose that the involved accounting practices were an
embodied or ‘in use’ type of capital that depended on a
deep understanding of the institutional context and the
ability to imagine and use bookkeeping and entity
accounting concepts in ways that facilitated corruption.
520 D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524
A second key theme pertains to the organizational
abilities of accounting. Throughout the study we have re-
ferred to the organizational aspects of accounting in two
distinct but related ways. First, we have proposed that
accounting-based anti-corruption barriers attempt to
organize the ?eld of in?uence politics. Internal govern-
ment procurement controls as well as campaign ?nance
legislation and anti-bribery regulations all enlist account-
ing to restrict how political in?uence can be bought and
sold. These accounting practices become part of the rules
of the game around which political, bureaucratic and
business actors structure their activities, and around
which they strategize about accounting and ways to work
around these barriers. This ?nding builds upon prior cor-
ruption-related research that suggests that accounting
can help prevent corruption (cf., Dye & Stapenhurst,
1998; Elliot, 1997; USAID, 1999), but at the same time
it moves beyond this research. For example, in the current
study we start by mapping the ?eld of corruption within
in?uence-market settings, an approach that illustrates the
salience of political and institutional structures in shaping
what is de?ned as corruption, exposes how accounting-
based anti-corruption barriers are constructed, and
consequently, reveals what strategies are available to ?eld
participants. This approach led us to examine networks of
corrupt actors and the ways that accounting-implicated
strategies allow these actors to systematically accomplish
the sale of political in?uence and the repatriation of a
portion of the proceeds. As a result, the study provides
a more institutionally grounded and complete analysis
of the positioning of accounting within the practices of
corruption, one that recognizes the ways that accounting
simultaneously limits and facilitates corruption within
in?uence-market settings.
We also illustrate how accounting practices come to
organize the emergent corrupt network. In these settings
accounting is something more than simply a barrier, as is
assumed in prior corruption research, and it is also more
than a strategy, as is assumed in the creative accounting
literature (cf., Grif?ths, 1986, 1995; de la Torre, 2009). At
the risk of overstatement, we suggest that accounting prac-
tices are the backbone of this type of corrupt network, giv-
ing shape and form to the practices and interactions within
the network and to the network itself. In these settings,
accounting practices are reproductive and generative. They
are reproductive in that the practices (and interactions) be-
come sedimented in the habitus and thus are available as a
repertoire to participants. They are also generative, be-
cause this incorporation into the habitus encourages a con-
ditioned and limited spontaneity on the part of
participants as they pick up and use these accounting tech-
niques in an in?nite number of new ways that are rela-
tively unpredictable, yet limited in their diversity
(Bourdieu, 1990a, p. 55, 2005, p. 211). Moreover, account-
ing practices have the potential to reproduce and/or gener-
ate a new network con?guration, as their repeated and
pro?cient use becomes valorized and re-valorized as a type
of symbolic capital within the network. It is in these ways
that accounting practices constitute and organize net-
works of corruption.
Criminal activities such as corruption, large-scale cor-
porate fraud and money laundering are, by their very nat-
ure, dif?cult to study. These activities depend on and are
organized around the premise of secrecy. Accounting
practices exploit the potential spaces for secrecy that ex-
ist within institutional regulations, acting to conceal the
?ow of resources through criminal networks. They also
take advantage of the reticence of professionals (such as
accountants, lawyers, and government regulators) to ex-
pose, challenge and investigate these practices (Beare &
Schneider, 2007; Mitchell et al., 1998; Sikka, 2010). The
Gomery Commission is a case where a government
decided to investigate corruption (see also the Mani Pulite
investigations undertaken by the Italian government in
response to the Tangentpoli scandal in the mid-1990s).
Yet, despite the Commission’s multi-million dollar budget
and its ability to legally compel the testimony of partici-
pants, many of the details of the skillful use of accounting
remain hidden, as important ?nancial documents ‘went
missing’. Similarly, the unwillingness of some participants
to speak truthfully and completely about their activities
(Gomery, 2005b, p. 630) means that the ways that partic-
ipants accomplished certain accounting transactions and
the ways that parts of the network were organized re-
main unknown.
These empirical dif?culties should not stop us from
investigating criminogenic networks since these are mul-
ti-billion dollar sites of economic activity that span the
globe, involving and affecting signi?cant numbers of
people. Studies of corruption in Canada, money laundering
in the United Kingdom (Gullkvist & Jokipii, 2012; Mitchell
et al., 1998), and systemic corporate fraud in Italy
(Gabbioneta, Greenwood, Mazzola, & Minoja, 2011) and
the United States (Lehman & Okcabol, 2005) illustrate that
these forms of accounting-implicated white-collar crime
occur in a variety of sites, including sites where, to a
greater or lesser extent, internal government auditors,
external public accountants and other accounting profes-
sionals are present (Gullkvist & Jokipii, 2012; Mitchell
et al., 1998; Neu et al., 2011; Norman, Rose, & Rose,
2010; Rezaee, 2005). The current study has focused on
how accounting organizes corruption, but additional work
is clearly needed on the social practices of preventing,
detecting, investigating and prosecuting white-collar
criminal activities. The irony, of course, is that while these
settings are dif?cult to study, they are also the very
settings where it is most important to understand how
accounting and auditing actually work. This reality adds
yet another dimension to Hopwood’s (2009, p. 798) asser-
tion that we need to better understand the complexities of
accounting (and auditing) in practice.
Acknowledgments
The authors wish to thank the Social Sciences and
Humanities Research Council of Canada for the ?nancial sup-
port needed to carry out this research. The comments of
Chris Chapman, David Cooper and the reviewers are grate-
fully acknowledged.
D. Neu et al. / Accounting, Organizations and Society 38 (2013) 505–524 521
Appendix A. Key individuals
Name Signi?cance
Michel
Beliveau
Executive Director at the Montreal
Headquarters of the Quebec Liberal
Party until 1997. Responsible for
distributing the cash received from
Jacques Corriveau
Jean Brault President of Groupaction Marketing Inc.
In May 2006, Brault pleaded guilty to
?ve counts of fraud totaling just under
$2 million. Sentenced to 30 months in
prison
Jean Carle Director of Operations of the Prime
Minister’s Of?ce and later senior vice-
president at the Business Development
Bank of Canada (in 1998). Testi?ed at
the Commission that he helped create a
phony paper trail to hide details of a
sponsorship deal
Jean
Chrétien
Prime Minister of Canada when the
Sponsorship Program was
administered. The Gomery Commission
held Mr. Chrétien and the Prime
Minister’s Of?ce staff responsible for
the defective manner in which the
program was carried out
Jacques
Corriveau
Campaign organizer, fundraiser and
political bagman for the Liberal Party.
He used his company Pluri Design
Canada Inc. to collect commissions from
the involved advertising agencies
Alfonso
Gagliano
Minister of Public Works and
Government Services during the
Sponsorship Program. The Gomery
Commission held Gagliano directly
responsible for millions of sponsorship
dollars paid for partisan purposes
rather than to promote the uni?cation
of Canada. In 2005, he was expelled
from the Liberal Party for life
John
Gomery
Quebec Superior Court Judge appointed
in 2004 to preside over the public
inquiry of the Sponsorship Program
Charles
Guité
Bureaucrat who oversaw the program
from 1996 to 1999, at which point
Pierre Tremblay took over. Arrested and
convicted on ?ve counts of fraud on
June 6, 2006, and sentenced to three-
and-a-half years in prison
Jean La?eur CEO and owner of La?eur
Communication Marketing Inc. He
initially ?ed to Belize but returned to
Canada in 2007, pleading guilty to 28
counts of fraud
Joseph
Morselli
A long-time acquaintance of Alfonso
Gagliano. He took over as fundraiser
and bagman for the Quebec Liberal
Party from Jacques Corriveau
Appendix A. (continued)
Name Signi?cance
Alain
Renaud
Liberal Party fundraiser with valuable
contacts with key public servants such
as Guité. He helped Jean Brault gain
sponsorship work in return for
commission payments
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