Russell MacKinnon told his trial Thursday that he gave Nicole Campbell more money because she was underpaid for her secretarial duties at his Sydney River constituency office from January 2005 to June 2006.
"What I was doing was topping her up because she was earning considerably less than assistants on the mainland," MacKinnon told the Supreme Court of Nova Scotia in Halifax.
MacKinnon, 59, said he wanted to top up Campbell's salary because she was only making $12 an hour and was under "considerable financial stress" at the time. Constituency assistants elsewhere in the province, he said, were making between $20 and $25 an hour.
In her testimony earlier this week, Campbell said she was offered a $3,000 bonus in October 2005 to buy MacKinnon's mid-1990s Dodge Intrepid.
MacKinnon said Campbell was having troubles with her vehicle at the time and she approached him about the possibility of buying his car.
"My understanding was that she wanted me to put her top-ups in her constituency account until such time as she decided to buy the vehicle."
MacKinnon said the increases to Campbell's salary were reflected in receipts filed with the Speaker's Office in the fall of 2005.
He also denied Campbell's testimony that he had her sign blank expense receipts before they were submitted.
"No, never," he said.
Cheques were later issued to pay Campbell, including $2,000 in cash left in an envelope at the constituency office, MacKinnon said.
But in 2010, the $2,000 in cash was returned to him in a box of documents by a man who had bought a cottage from MacKinnon, the court heard. MacKinnon said some of his papers from his constituency office were stored at the cottage after he left politics in 2006.
MacKinnon said he went to Campbell's house on July 24, 2010, and paid her the $2,000 in cash along with another cheque for $400 that he said was for an overpayment she made when she bought his car in 2005.
When asked whether he ever personally benefited from any of the transactions, MacKinnon replied, "No. In fact, I lost."
Earlier in the day, George MacKeigan, who worked as an executive assistant for MacKinnon from May to August 2006, testified as a Crown witness. MacKeigan said he was asked to sign three blank receipts that were submitted to the Speaker's Office by MacKinnon.
When asked by Crown lawyer Mark Heerema why he signed the blank receipts, MacKeigan said it wasn't a problem for him.
"Me and Mr. MacKinnon had a good relationship. I trusted him and I figured he would fill out what he needed to."
Heerema said the three receipts totalled $9,900 for vacation pay and work at the Sydney River constituency office that included moving furniture and the packing and shredding of documents.
MacKeigan said he never got the money, but received a tax form in May 2010 informing him that he owed the provincial government for income he didn't claim in 2006.
He said after the RCMP interviewed him about the expense claims in June 2010, MacKinnon sent him two letters with cheques totalling $9,900.
MacKinnon has pleaded not guilty to fraud, breach of trust and uttering forged documents.
He is one of four politicians charged in February 2011 following an investigation by the province's auditor general into constituency allowance spending. He is the first to contest the charges.
Two of the three other politicians charged have been sentenced.
Former Liberal Dave Wilson was sentenced last April after admitting to defrauding the public purse of nearly $61,000. He was released from custody in August after serving four months of a nine-month sentence.
Richard Hurlburt, a former Progressive Conservative cabinet minister, was sentenced last July to a year of house arrest after pleading guilty to charges of fraud and breach of trust.
Independent member Trevor Zinck is charged with theft over $5,000, fraud over $5,000 and breach of trust. He is to go to trial in June.
Note to readers: This is a corrected story. A previous version said MacKeigan owed the government for income he didn't claim in 2010.Suggest a correction