Liberal Leader Stephane Dion is facing questions about whether he supports welcoming back in to the party one of the key figures from the sponsorship scandal.

Dion told Quebec newspaper Le Soleil in remarks published Wednesday that he has no objections to Marc-Yvan Cote being allowed to resume his Liberal membership.

Cote, a former party organizer in Quebec, was one of 10 members banned for life from the party by former prime minister Paul Martin in the wake of the sponsorship scandal.

Dion added that Cote's punishment was "exaggerated,'' and that he'd recognized his error and shouldn't be penalized for life.

Asked about his comments by reporters in Quebec City Wednesday following a meeting of the Liberal caucus, Dion insisted that no decision has been made on the matter and that it's up to the party president to decide.

"I have no recommendation to make on that at all," he said. "There's a procedure to be followed by the party, and we'll follow the party procedure."

Dion noted that he thought that Cote "recognized his mistakes."

Gerard Kennedy, Dion's special adviser on election readiness, says each case will have to be decided on its own merits.

During the Gomery inquiry into the sponsorship scandal, Cote testified that he received $120,000 in $100 bills from the executive director of the party's Quebec wing. He distributed that money to 12 Liberal candidates in the 1997 federal election.

Dion -- who was never implicated in the scandal -- was the unity minister when the Chretien government created the sponsorship program, which was administered through the public works ministry. It was designed to help raise the federal government's profile in Quebec but ended up funneling millions to Liberal-connected ad agencies for work of little or no value. Some of that money then made its way to the Quebec wing of the Liberals.

It appears that other Liberal members think that Cote was treated too harshly.

Montreal MP Marlene Jennings said the two men were expelled without being given a chance to defend themselves.

"I think that Mr. Dion is right,'' she told reporters on her way into the second day of a Liberal caucus meeting. "There are people we would like to see back in the party."

Jennings said the "public notoriety'' surrounding his testimony and expulsion from the party was punishment enough for Cote. "He's definitely paid for it."

The governing Conservative party seized on Dion's remarks.

 "A year ago, Canadians rejected Liberal corruption and Liberal scandal and Liberal waste and it's clear that Mr. Dion, and the Liberal party, just doesn't get it and didn't understand that,'' said Justice Minister Rob Nicholson.

 "He's made a decision to welcome back into the Liberal party disgraced organizers that were associated with the sponsorship scandal.''  

Dion told reporters Wednesday that none of the 10 expelled have applied for reinstatement.

Other MPs at the caucus meeting seemed uncomfortable with the prospect. Former interim leader Bill Graham snapped: "It's not my decision."

"We're a new party and we have to go forward with new people," said Francis Scarpaleggia, Dion's new Quebec lieutenant.

Scarpaleggia said that he doesn't personally favour readmitting Cote to the party.

With files from The Canadian Press