The Prime Minister's Office is denying testimony by former bureaucrat Chuck Guite linking Paul Martin to an alleged plan to guarantee government business for a Liberal-friendly ad firm.

PMO spokesman Scott Reid is calling the testimony third-hand and false.

"The prime minister has never involved himself in the contracting process," Reid said.

Guite's testimony, which was given over the past week, became public Wednesday when the sponsorship inquiry's Justice John Gomery lifted his publication ban.

A Quebec Superior Court judge overseeing Guite's criminal trial also lifted his ban, and agreed to delay the trial until September.

Guite's testimony in a previous appearance before the Gomery inquiry was not as detailed, nor were his two appearances at the Commons Public Accounts committee last year.

This time, Guite testified that back in 2000, he was told that then-finance minister Paul Martin had intervened to ensure a Liberal-friendly ad firm wouldn't lose its lucrative contracts with the federal sponsorship program.

Guite had already left the civil service by then, and was lobbying the government on behalf of the Toronto-based advertising agency Vickers and Benson Ltd.

Hoping to secure the future of his firm's ad contracts with Ottawa, Guite said he had lunch with his former boss, Public Works Minister Alfonso Gagliano.

"He said he'd look after it," Guite told the commission.

A week later, Guite says he got a call from Gagliano's chief of staff, Pierre Tremblay.

"The minister had spoken with both ministers and the volume of business would be maintained," Guite testified. He claimed he was assured Vicker's contracts with two federal departments -- Industry under John Manley and Finance under Paul Martin -- were safe.

Tremblay died last year before he could testify.

Martin and Manley have issued statements denying the allegations.

The Prime Minister's Office issued this statment: ''There was never a discussion between Mr. Martin and Mr. Gagliano with respect to ensuring that any individual supplier receive contracts from the government of Canada. The prime minister never involved himself in the contracting process -- he never involved himself in the determination of contract awards. Period."

Manley issued a statement saying that as a cabinet minister, "I made it a matter of practice to rely on the advice of my Deputy Minister and his officials on operational matters."

Manley concluded by saying: "The evidence does not show any improper conduct by me, and I am deeply concerned that my reputation be harmed by these suggestions."

Gagliano, speaking to a Toronto-based Italian newspaper, also denied Guite's account.

Chretien and Corriveau

Guite also claimed ad contracts were routinely handed out to reward ad agencies that did election work for the Liberals.

"It was politically driven," he said, explaining that he was constantly being told to help out the party's friends, such as ad executive Jacques Corriveau.

Accused of exploiting a personal relationship with former prime minister Jean Chretien, Corriveau has denied the two were close.

But in his testimony, Guite said that in 1994, then-public works minister David Dingwall told him a different story.

"If you ever meet someone in bed between Jean Chretien and his wife, it'll be Corriveau," recalling Dingwall's remarks. "His comment was, you'll look after him."

Guite even suggested Chretien's wife wielded influence over the sponsorship program, saying that Aline Chretien chose some of the promotional items purchased by the government. Guite said she pointed out her favourite watch, that he promptly ordered.

Besides his sensational allegations, Guite also admitted breaking a lot of rules.

Despite a contract stipulation that he could not profit from government contracts in the first year after he left the civil service, Guite says Vickers paid him $100,000 to lobby his former boss.

"There are different ways to skin the cat," he told the commission, explaining how he advised the company on ways to skirt the rules.

Credibility challenged

Lawyers who cross-examined Guite questioned his credibility. When asked why he should be believed, Guite simply shrugged.

Despite the seriousness of Guite's allegations, CTV reporter Jed Kahane says the embattled Liberals might find one "saving grace" in his testimony.

"Guite says the system was even more political when the Conservatives were in power," Kahane said.

Liberal promises to change that, Guite said, wound up producing new ways in which the government could look after its friends.

Alongside Groupaction Marketing founder Jean Brault, Guite is facing trial on six fraud-related counts arising from sponsorship deals.

Jury selection in their trial was slated to get underway in June, but lawyers have won their bid to delay the trial until September.

With files from CTV's Jed Kahane in Montreal