12/05/2013 11:23 EST | Updated 02/04/2014 05:59 EST

Mike Duffy Expense Audit: Liberals Try New Tack To Explore PMO Interference

OTTAWA - Liberal senators tried a new tactic Thursday to get to the bottom of allegations that the Prime Minister's Office interfered in an independent audit of Mike Duffy's expenses.

James Cowan, Liberal leader in the Senate, asked Senate Speaker Noel Kinsella to rule that the interference, on its face, constitutes a breach of senators' privileges.

Kinsella reserved judgment.

If Kinsella determines there was a breach of privilege, the matter would be referred to a Senate committee for further study.

That could give Liberals another opportunity to try to call two key witnesses alleged to have been involved in the audit interference: Conservative Sen. Irving Gerstein and Deloitte managing partner Michael Runia.

Two previous Liberal attempts to get Runia to testify at the Senate's internal economy committee were defeated by the Conservatives, who hold a majority in the upper house.

And Gerstein ruled out of order Wednesday a Liberal attempt to have him step aside as chairman of the Senate banking committee until he's cleared by the RCMP or agrees to testify at internal economy about his role in the matter.

Cowan said he was forced to raise a question of privilege on the matter because "all other reasonable avenues of redress have been blocked."

According to witness statements and emails obtained by the RCMP and filed in court, Prime Minister Stephen Harper's former chief of staff, Nigel Wright, enlisted Gerstein's help in concocting a deal in which Duffy would repay $90,000 in questionable living expense claims.

Duffy agreed to the deal on condition that he would be reimbursed the full amount, that a Senate report on his conduct would not be critical of him and that there would be no question about his eligibility to sit as a senator from Prince Edward Island, although he lived primarily in Ottawa.

Gerstein, who heads the Conservative party's fundraising arm, initially agreed that the party would reimburse Duffy — when the tab was thought to be $32,000 — but balked when it became clear it was more than $90,000. Wright eventually reimbursed Duffy out of his own pocket.

At Wright's behest, Gerstein also talked to Runia, who audits the Conservative party's books, to ensure the audit would make no finding as to whether Duffy's primary residence was in Ottawa or P.E.I. — which it did not.

"Why should the chief of staff to the prime minister be sending emails discussing the desired outcome of an independent audit ordered by the Senate? If this is not evidence of interference, I don't know what would be," Cowan told the Senate.

Gary Timm, lead auditor on the Duffy file, last week told a Senate committee that Runia called him to find out how much Duffy owed in questionable expenses. But he and two other members of his audit team maintained they imparted no information about the confidential audit and that their findings were not influenced by anyone.

However, Cowan noted that the RCMP documents show Wright and other top PMO aides knew — one month before the findings were disclosed to the Senate which ordered and paid for the audit — that it would make no finding about Duffy's primary residence because the senator was refusing to speak to auditors.

Indeed, Cowan argued that PMO interference "began virtually from inception," even before the internal economy committee announced its decision to order an external audit of expenses claimed by Duffy and two other senators — Patrick Brazeau and Mac Harb.

The RCMP documents say Wright called committee chair David Tkachuk, asking that the wording of the audit announcement "differentiate" Duffy's case from that of Brazeau and Harb, a request which was accommodated by adding an extra line that the committee was seeking legal advice about Duffy's residency.

Claude Carignan, the government leader in the Senate, dismissed Cowan's arguments.

"Adding one line to a press release, that constitutes interference? ... That's unbelievable. I'm awestruck," he scoffed.

As for Runia's call to Timm, Carignan characterized that as one associate calling another associate about an inconsequential matter that in no way interfered with the integrity of the audit.

He argued there's "not a shadow of proof" that the audit findings were leaked to anyone in the PMO. But even if PMO did have some advance knowledge, Carignan put that down to a normal "exchange of information" between a party leader's office and members of his caucus.

A spokesman for Deloitte, meanwhile, did not answer when directly asked if the firm still has confidence in Runia or whether he's been disciplined or sanctioned in any way.

Rather, Vital Adam reiterated Deloitte's insistence that "the utmost confidentiality of all forensic examination information was maintained at all times."

"Deloitte has co-operated fully with the ongoing investigations into this matter and it would be inappropriate for us to provide further comment while these investigations continue," Adam said in an email.

The alleged audit interference was also fodder in the House of Commons on Thursday, with New Democrats and Liberals demanding to know why the government is refusing to call Runia and Gerstein as witnesses.

"Why, if the Conservatives have nothing to hide, do they have an interest in blocking Runia's testimony?" NDP Leader Tom Mulcair demanded.

Harper responded that "the auditors who performed the audit have already testified before the Senate and they testified to the integrity of their audit."

"All of them, except for one," Mulcair shot back.


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