Conservative Election Spending Scandal: Party Cuts A Deal, Fined For Breaking Election Laws

First Posted: 11/10/2011 1:05 pm EST Updated: 01/23/2014 6:58 pm EST

OTTAWA - The Conservatives are being accused of buying victory in the 2006 election that brought Stephen Harper to power, after pleading guilty Thursday to exceeding their campaign spending limit and failing to report all advertising expenses.

The Conservative party and its fundraising agency both pleaded guilty to two counts of violating the Elections Act and agreed to pay maximum fines totalling $52,000.

In a plea bargain, the party pleaded not guilty to more serious charges of wilfully contravening the act and all charges were dropped against four top party officials who implemented the so-called in-and-out scheme to finance radio and television advertising during the 2006 campaign.

Conservative spokesman Fred DeLorey quickly issued a statement claiming the plea bargain is "a big victory" for the party in its five-year "administrative dispute" with Elections Canada over the legality of the in-and-out scheme.

"Every single Conservative accused of wrongdoing has been cleared today," DeLorey said.

Under the scheme, Elections Canada maintains the Tory party funnelled money for national ads through 67 local candidates, allowing the party to exceed its spending limit and allowing candidates to claim rebates on expenses they hadn't actually incurred.

In an agreed statement of facts, the Crown and the party essentially agreed to disagree on exactly how far over the spending limit the Tories went. The Crown said it was almost $1.4 million, the Tories said it was just over $563,000.

Opposition parties said Thursday's admission of guilt proves the Tories played fast and loose with the rules in order to eke out a slim minority victory in the 2006 campaign.

"The Conservatives tipped the scales and spent more than legally allowed in an election to get Harper elected," said interim NDP leader Nycole Turmel. "That's wrong. It undermines our democracy."

Interim Liberal leader Bob Rae said the extra money the Tories spent on advertising in the close-fought campaign "may have helped them to buy the election."

"They still broke the rules and paid a fine but, listening to their crowing (about the plea bargain being a big victory), it doesn't sound as if they've learned anything," he said, adding that Conservatives "should accept responsibility and say they're sorry. Period."

Rae was also critical of the plea bargain, saying "the punishment in this case hardly fits the crime" and that $52,000 in fines is "no disincentive to flout the law."

However, Crown prosecutor Richard Roy argued there was no point in sticking with the initial, more serious charges and dragging the matter out in court because the maximum fines allowed would have been the same.

As to dropping the charges against the four top Tory officials who actually carried out the in-and-out scheme —Tory senators Irving Gerstein and Doug Finley and party officers Mike Donison and Susan Kehoe — Roy told reporters that "the public interest does not require that we continue on these charges."

Elections Canada issued a statement expressing satisfaction that the resolution of the five-year dispute with the Tories "reinforces the importance of spending limits for ensuring fairness in our electoral system" and "confirms that there can be no transfer of expenses" from national parties to local campaigns.

In a brief court appearance where the plea bargain was accepted, Tory party lawyer Mark Sandler characterized the violations as "inadvertent and not deliberate."

He said the in-and-out scheme was designed to be perfectly legal but the timing of its implementation —before candidates or their official agents were in place in some ridings to authorize their part in it — pushed it out of legal bounds.

Roy countered later: "What the evidence proves is this was not an accident ... The evidence and agreed statement of facts shows that it was thought through."

The agreed statement of facts shows that even before the election campaign began on Nov. 29, 2005, campaign director Finley knew the party had more money than it could legally spend during the campaign. He asked Gerstein, chairman of the Conservative Fund, for authorization to transfer some of the cash to local campaigns, which through " a variety of perfectly legal artifices," could be sent right back to the party to ostensibly pay for regional advertising.

DeLorey repeated the Tory insistence that the scheme fell afoul of the law only because Elections Canada changed its interpretation of the law.

"When it became clear that Elections Canada had changed its interpretation of the law, the Conservative party adjusted its practices for the 2008 and 2011 election campaigns," he said. "Ultimately, Conservative candidates spent Conservative dollars on Conservative ads."

The dispute has been unprecedented. Elections Canada at one point raided Tory party headquarters and the Tories fired back with accusations that the internationally-respected, independent elections watchdog was biased against them and exceeding its authority.

In a related but separate civil case, the party has been trying to force Elections Canada to pay rebates to candidates who claimed the disputed advertising as part of their local campaign expenses. It won the first round in that battle but lost on appeal. Last month, the party won leave to appeal the matter to the Supreme Court of Canada.

DeLorey said that legal battle will continue, notwithstanding Thursday's plea bargain.

However, the Tories have dropped a second front in its war with Elections Canada over 2006 campaign expenses, involving the improper reporting of two regional campaign offices in Quebec as local expenses.

In Thursday's agreed statement of facts, the party admits it failed to report $116,000 in regional office costs as national party expenses. Elections Canada later said the party has now dropped all civil litigation related to that matter.

Figures released last March show Elections Canada has spent $1.3 million on legal matters involving the Conservative party since 2005.

By Joan Bryden, The Canadian Press
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Filed by Ron Nurwisah  |