OTTAWA — Controversial bureaucrat Chuck Guite was hand-picked by the Liberal government to overhaul federal advertising policy after the 1995 Quebec referendum, evidence at a public inquiry shows.

A memo tabled Wednesday made it clear Guite was recommended for the job by the office of Dave Dingwall, then federal public works minister. Warren Kinsella, who served as Dingwall's chief of staff, wrote on Nov. 23, 1995 -- less than a month after the referendum -- that "recent experience" had shown the need to centralize federal ad strategy.

The same centralized approach should apply to public opinion polling and other communications programs, he said.

Public Works was the logical department to review past practices and put new procedures in place, Kinsella wrote.

"In my view Mr. J. C. Guite ... should be assigned to carry out this review on a full-time basis," he told Ran Quail, the deputy minister at Public Works.

"It is requested that he (Guite) be assigned to a position that will allow him to carry out these tasks."

Guite eventually went on to run the federal sponsorship program, which spent $250 million between 1997 and 2002 to raise the federal profile in Quebec and fight separatism.

Auditor General Sheila Fraser has estimated that about $100 million went in fees and commissions to ad agencies and other middlemen with Liberal party connections.

Guite, who has since retired form the public service, currently faces fraud charges along with Montreal ad executive Jean Brault. Both are awaiting trial.

Justice John Gomery is heading the inquiry into the wider program to find out what went wrong.

Much of the evidence presented to Gomery this week has dealt with the political lines of authority for advertising and other elements of national unity policy.

Kinsella, in his memo to Quail, indicated that Dingwall wasn't acting on his own in revamping federal strategy. There had been consultation with the Prime Minister's Office and Privy Council Office, he said.

Quail replied a day later, saying it was the prerogative of then-prime minister Jean Chretien to modify the "machinery of government" if he wanted to.

Quail asked for assurance, however, that Chretien's office and the Privy Council had indeed delegated authority for that task to Dingwall.

There was no indication whether that official assurance was ever given.

Other documents tabled Wednesday showed Chretien had come to office with the hope of opening up advertising and other government contracts to competitive bidding.

In a memo to cabinet ministers on May 9, 1994 -- less than six months after the Liberals replaced the previous Conservative regime of Brian Mulroney -- Chretien wrote of the need to "ensure integrity in the contracting process and to contain overall expenditures."

He said there would be a $65-million ceiling that year on federal spending for advertising, polling and research, a cap that was later abandoned.

Chretien also insisted that "contracting procedures for polling, advertising and communications must follow a competitive process similar to the procurement of other services purchased by the government."

The bidding should be open to "all qualified suppliers based on clear criteria," he said.

Cabinet members should not intervene unless two bids came in at essentially the same level - in which case ministers could use their discretion to choose a winner.

The rules were supposedly aimed at reducing political interference in the contracting process, something the Liberals had denounced Mulroney's Conservatives for doing.

It appeared, however, that the new rules were forgotten when the Chretien government launched the sponsorship program following Ottawa's narrow victory over separatist forces in the 1995 referendum.

"Despite the fact that he (Chretien) said there should be a competitive process based on clear criteria ... none of that subsequently happened in the sponsorship and advertising area," declared Neil Finkelstein, co-counsel for the Gomery inquiry.

Jim Judd, the senior bureaucrat at Treasury Board, the federal financial watchdog, needed only one word to agree with that assessment.

"Correct," he said.