06/07/2013 11:52 EDT | Updated 08/07/2013 05:12 EDT

Secret Fund: Conservatives Call CBC Story False

OTTAWA - The Conservative party called Friday for the retraction of a report saying the Prime Minister's Office runs a secret partisan fund.

The party called the report false and says it pays for all of the prime minister's political expenses — and not out of a hidden bank account.

"All Conservative party expenses are paid by one account, controlled by the Conservative party," the party said in a statement.

"All funds are properly reported to Elections Canada and audited annually."

The CBC alleged Thursday that a fund controlled by the prime minister's chief of staff and operating without oversight from Elections Canada was being run by Stephen Harper's office for partisan purposes.

The network also noted that Nigel Wright, Harper's ex-chief of staff, was running the fund at the same time he wrote a $90,172 cheque to Sen. Mike Duffy to cover repayment of wrongful expense claims.

The Conservatives insisted no party or taxpayer funds went to Duffy nor was Wright reimbursed. Canadians were misled by the story, the party said.

"They should retract this piece of shoddy journalism."

The CBC said the story holds up. "We stand behind the story," spokesman Chris Ball said.

The network posted a rebuttal Friday afternoon, saying neither the party nor the prime minister's office denied the existence of "the special discretionary fund" when they were asked about it prior to the story going to air.

"The party's denial two days after the exchange of emails makes a number of other claims not supported by fact," the CBC said in its Friday story.

The public broadcaster said it asked six specific questions about the fund, but only received a single answer from the party: "The prime minister at times incurs expenses that are best paid by the party."

CBC also attacked the party's assertion that the network falsely reported the fund was off-limits from Elections Canada.

The financial reports submitted by political parties to Elections Canada only detail donations, not expenses, and while they are audited, it is by a firm hired by the party itself.

For example, in 2011 the Conservative party spent $48.4 million in 14 different areas, but the audited report doesn't make clear how much of this involved the prime minister.

The party declined to provide that figure.

While the Conservative party said there was only one account used, the prime minister's spokesman did say Friday their office has a budget for partisan events.

The money is provided by the party and the budget was managed by the chief of staff as he knew which events the prime minister was attending, Andrew MacDougall said.

"He makes a judgement — is it government or political and if it's for the Conservative party, it's the Conservative party's funds that will be used," MacDougall said during an unrelated briefing Friday.

"The scandal would be if it was the other way."

The party said while the chief of staff would have been the one to sign the prime minister's political expense claims, only the party could sign the cheques.

"The Conservative party ensures that non-government activities undertaken by the prime minister are never billed to taxpayers," the party said.

The NDP said they want the Commissioner of Canada Elections to further investigate the Conservatives in light of the report.

"The NDP believes that the reports of this fund bring up serious questions with regard to the Conservative party's compliance with the Elections Act, in particular, whether this fund was being reported along with the other revenues and expenses of the chief agent of the party," the party wrote in a letter to the commissioner Friday.

Another way to solve the question of what the money could have been used for is to come clean about how Duffy got paid, suggested NDP Leader Tom Mulcair.

"Let's see the cheque," Mulcair said.

"It's the easier thing to do. We'll know the date, we'll know the provenance and we'll know whose signature is on it."

Officials for both the Liberals and the New Democrats have acknowledged their parties also pay for leaders' expenses that are partisan in nature.

While some of the money used for those expenses comes from donors, much also comes via taxpayers thanks to the per-vote subsidy each party receives from the government.

The subsidy is currently being phased out but how much oversight Elections Canada has over expenses is an issue the agency has raised before.

"Despite the considerable funding given to registered parties, the Chief Electoral Officer does not receive any documentary evidence of the expenses reported in the election expenses return," a 2010 report by the chief electoral officer said.

"Nor does the Act provide the Chief Electoral Officer with the authority to request that a party provide such evidence."

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