OTTAWA — Former public works minister David Dingwall says he thought Chuck Guite-- the bureaucrat who ran the now discredited federal sponsorship program -- was the natural choice to oversee government advertising.

The reason was simple, Dingwall told a public inquiry Friday. Guite won "universal acclaim'' for his role in fighting separatism in the 1995 Quebec referendum.

It was shortly after that, in November 1995, that Dingwall's office dispatched a letter to Ran Quail, then the top bureaucrat at Public Works, recommending Guite for a new task.

It involved the review, reorganization and centralization of all federal contracts for advertising, opinion polling and communications.

Quail balked at the recommendation and has testified that he saw the letter as an unwarranted political intrusion on his turf.

But Dingwall insisted he never meant to throw his weight around.

"In view of hindsight, perhaps we could have had a different word or two in the letter,''he told the inquiry headed by Justice John Gomery.

"I can understand that (Quail) may have been offended.''

Still, Dingwall maintained he was only making a suggestion, not issuing an order.

"What we were doing was passing on some representations to the deputy minister about a particular employee who was universally acclaimed, subsequent to the referendum as doing an outstanding job.''

Guite, who had played a key role in federal ad strategy in the 1995 vote on separation, didn't get the precise post Dingwall envisioned.

But a year or so later he got a mandate, under Dingwall's successor Alfonso Gagliano, to run the ill-fated sponsorship program.

Ottawa spent $250 million on a wide range of initiatives aimed at raising the federal profile and winning the hearts and minds of Quebecers.

An estimated $100 million went to Liberal-friendly ad agencies and other middlemen who often failed to deliver quality work.

Guite faces fraud charges along with Montreal ad executive Jean Brault in connection with the program, and is awaiting trial in May.

The Gomery inquiry is taking a broader look at the scandal -- including the question of whether Guite and other public servants were merely carrying out the orders of their political masters.

The 1995 letter that sparked the conflict with Quail was sent on Dingwall's instructions but was written by his executive assistant, Warren Kinsella.

He too insisted Friday he was only making suggestions, not issuing instructions.

"I would not instruct Mr. Quail to do anything,'' said Kinsella. "It would not be proper to do that.''

Kinsella, a staunch ally of former prime minister Jean Chretien, also used his testimony to take a thinly-veiled shot at Chretien's successor Paul Martin.

Documents tabled at the inquiry indicate the Finance Department -- Martin was then minister -- tried in 1994 to issue a sole-source contract for advertising related to the federal budget to Montreal-based Everest Communication.

That ran counter to a campaign promise by Chretien to submit major contracts to competitive bidding, said Kinsella.

"We wanted to clean up the system,'' he said. "This was the kind of stuff we were trying to stop.''

Dingwall refused to sign the original proposal for a campaign costing up to $500,000, but Everest did get a smaller deal worth $30,000.

Martin, who is to appear before Gomery next month, is expected to face questions about his relations with Claude Boulay, the founder of Everest.

The prime minister has acknowledged that Boulay worked on his first, unsuccessful campaign for the Liberal leadership in 1990 but has said he's rarely seen him since.

The testimony on the 1994 budget advertising marked the latest skirmish in a long war between Chretien and Martin forces within the Liberal party.

Kinsella has helped keep the pot boiling with some harsh comments on his personal website about the Gomery inquiry, which was called by Martin to sort out the scandal that erupted on Chretien's watch.

The inquiry has turned into a "judicial circus'' that might better be called the "Gomery Pyle Commission,'' Kinsella wrote recently.

In another entry he predicted that inquiry counsel Neil Finkelstein would do all in his power to block the mention of "anything remotely positive'' about the Chretien years.

As it turned out, the exchanges between Kinsella and Finkelstein on Friday were civil, if not exactly cordial.

"I thought Mr. Finkelstein is a very accomplished barrister and a gentleman,'' Kinsella said as he emerged from the hearing.