06/10/2015 12:24 EDT | Updated 06/10/2016 05:59 EDT

Mike Duffy Trial: 'Creative' Contracts Not Uncommon, Ex-Aide Says

OTTAWA - "That's just the way we do things here."

That explanation might no longer be politically correct for senators as they adjust to life in the aftermath of the auditor general's report on their expenses.

But at Sen. Mike Duffy's trial Wednesday, veteran Parliament Hill aide Diane Scharf was making no bones about it — lawmakers found "back door" ways of getting things paid for, and not just in the Senate.

"This is a common practice at the House of Commons, and I am quite accustomed to this," said Scharf, referring to an unnamed politician she worked for on Parliament Hill.

"We had staff people working in our office who were paid by a businessman in Toronto. You had to be creative a bit to get bills paid."

A case in point: Scharf's cellphone bill. She worked for Duffy for six months in 2011, and was given a mobile device. But Duffy's office had maxed out the number of phones that the Senate rules allowed for.

No problem — Scharf was paid several hundred dollars to cover her phone bills by an Ottawa construction firm run by Duffy's friend Gerald Donohue. Donohue himself had received $65,000 in research contracts, which in turn served to reimburse or pay others.

"Maybe the money for my cellphone came from selling tomatoes at the end of his laneway, I had no idea, and I didn't care," Scharf said flatly.

"I had a job to do, and needed that cellphone, and he was ready there to reimburse me. It was a simple matter for a small amount of money."

Duffy has pleaded not guilty to 31 charges of fraud, breach of trust and bribery, in connection with his office, living and travel expenses.

Just as Duffy's pre-signing of stacks of travel claims didn't faze Scharf, neither did the contracting arrangement set up with Donohue.

Over four decades, Scharf has worked for figures include Prime Minister Pierre Trudeau, Conservative minister Rona Ambrose, former Liberal MP Dennis Mills and at least three Tory senators.

When she was interviewed by the RCMP, she offered an example of a cabinet minister holding a major event. She said an individual might take photos at the event, even though such photography is not a valid expense under Commons rules.

A "little contract" would be set up, Scharf said, without mentioning any specific office.

"They don't pay for photographers, but you're given a little contract and so that's how things like that happen, and they have up there for 100 years," Scharf said during the RCMP interview.

"It's a sort of a back-door way of getting things done."

In a major audit report released Tuesday, auditor general Michael Ferguson decried a culture in the Senate that has shirked accountability and run roughshod over the best interests of taxpayers. He argued for more rigorous oversight — while not necessarily more rules.

Scharf insisted that what she saw inside Duffy's office was legitimate Senate business — nothing that personally benefited the senator, and nothing that was deliberately kept secret.

She also complained that Senate finance officials seemed to be changing their mind on expense matters "every week."

Under defence lawyer Donald Bayne's cross-examination, Scharf said that while the numbers on travel and living claims she filed were sometimes "altered," it was never because someone was evaluating the principles behind Duffy's claims.

"I had great difficulty understanding why the Senate finance office did what they did," Scharf said.

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