A MONTREAL advertising firm that received more than $40 million in AdScam sponsorship contracts paid huge kickbacks to both the federal Liberal party and the Quebec separatists, senior executives of the company have told Sun Media. "I remember seeing the cheques," one former Groupaction executive said of payments to the federal Liberal party in Quebec. The man spoke on condition that he not be identified until he testifies at the Gomery inquiry sometime over the coming weeks.

The exec said the president of Groupaction, Jean Brault, made no secret around the company about where the kickback cash was going and for what.

The $250 million in sponsorships that the previous Liberal government pumped into Quebec was supposed to help fight the separatists after the near-miss referendum in 1995.

But another former Groupaction executive, Alain Renaud, said that while the firm was getting millions of dollars in federal sponsorship money, it was secretly cutting cheques to the separatist Parti Quebecois.

Renaud said that in one transaction, a total of about $90,000 was given to the PQ as part of Groupaction's getting a $4.5-million advertising contract for the Quebec liquor board, called the SAQ.

One of those executives told Sun Media: "The bagman came by and said: 'Well, you won the bid, and all that's needed now is a signature, and the documents are on the minister's desk to be signed, and it's going to cost you fifty grand.' "

The leaders of the Parti Quebecois and its federal cousin, the Bloc Quebecois, both denied on Wednesday that their parties received such funds from Montreal-based Groupaction. Former Groupaction consultant Alain Renaud was quoted Wednesday saying the firm gave the Parti Quebecois $100,000 to secure a contract with the Quebec Liquor Corp.

But PQ Leader Bernard Landry said officials in his party's headquarters didn't know of such a donation and couldn't find any records to back up the claim.

However, Landry said it's impossible to know if individual employees may have contributed to the provincial party and were later reimbursed by the advertising company.

Duceppe said the Bloc has nothing to hide. He cited judge John Gomery who said earlier this week that nobody has suggested that sponsorship money has been given to the Bloc.

Meanwhile, a provincial Liberal cabinet minister said revelations about the sponsorship scandal are hurting Quebec politics.

"What is happening at the Gomery commission is making all politicians ill at ease," said Economic Development Minister Claude Bechard.

"It is clear that the big loser in this matter is the political class."

He added the Quebec Liberal Party has nothing to do with this matter.

If the provincial party is touched by the scandal, he said, it's the media's fault because they rarely make a distinction between the Liberal governments in Ottawa and in Quebec.

Yet, published reports suggested that Joe Morselli - an associate of former federal minister Alfonso Gagliano - organized fundraisers in 1998 for the Quebec Liberal election campaign. The activities conformed with the law.

Fourth, the danger now exists that Canadians outside of Quebec will see the corruption in both the Liberals and the PQ as proof that Quebec itself is a poisonous environment that corrupts all that exists within it. Fair or not, that characterization, if spoken aloud, will further inflame the animosity between the English Canada and French Canada.