07/20/2012 03:31 EDT | Updated 09/19/2012 05:12 EDT

Penashue still owes campaign funds to Innu firm

Newfoundland and Labrador MP and federal cabinet minister Peter Penashue had close financial ties to a controversial Innu development company concerning his campaign expenses that continued for months after the May 2, 2011, federal election, according to documents filed by Penashue's campaign and obtained by CBC News.

Penashue is minister of intergovernmental affairs and president of the Queen's privy council for Canada.

Penashue's filings to Elections Canada for his riding of Labrador, he was granted a $25,000 loan from the Innu Development Limited Partnership to cover campaign expenses on June 1, 2011, after several cheques written by his campaign officials bounced.

The company's CEO at the time was Paul Rich, Penashue's brother-in-law.

Correspondence between the IDLP and an auditing firm on Sept. 8, 2011, said Penashue paid back $10,000 of the loan on Aug. 24, 2011, with the $15,000 balance to be repaid in September 2011.

There was no mention of an interest payment, as per Election Canada guidelines.

After prompting from Elections Canada, another letter from the IDLP dated Dec. 8, 2011, stated that the $25,000 loan "will be repaid in lump sum and will bear a simple interest of seven per cent over the life of the loan."

The IDLP is at the centre of a controversy in the two Labrador Innu communities for paying its former CEO Rich about $1 million in salary over two years, and giving other Innu leaders large bonuses.

Airfare deal also reached

Another document shows Rich requested that a deal be brokered with Innu Mikun airlines and Provincial Airlines to provide Penashue and his family with unlimited air transportation for the election period ending May 2, 2011, for a lump sum of $7,000.

Elections Canada states that campaigns must pay fair market value for transportation expenses or treat any discount as a campaign contribution.

Innu Mikun is co-owned by the IDLP and Provincial Airlines.

The documents also show that Penashue exceeded his Elections Canada campaign expense limit of $84,468.09 by almost $4,000.

When CBC News contacted Penashue's office about this story, a spokesperson said, "We realize the volunteer Official Agent may have made some errors in the return. We've been in contact with Elections Canada to work on making needed amendments."

Earlier this week, when Penashue was asked about the IDLP loan, he said he paid half of the loan back, and was in the process of paying the rest of it.

Under Elections Canada rules, Penashue himself is only allowed to contribute $2,100, and the latest balance in his campaign account is only 3,963.53, but the rules also indicate Penashue has until November 2012 to close the book on his election expenses.