Multiple sources, not authorized to speak publicly about the matter, say a proposed deal was almost sealed but was nixed by the prime minister, who didn't want to condone what he sees as an abuse of taxpayers' money.
Sixty-eight former and current New Democrat MPs were ruled two years ago to have improperly used $2.75 million from their parliamentary office budgets to pay the salaries of staff working in satellite party offices in Montreal, Quebec City and Toronto.
NDP Leader Thomas Mulcair and Justin Trudeau appear at a panel discussion on youth voting, Wednesday, March 26, 2014 in Ottawa. (Photo: The Canadian Press)
The board of internal economy — the secretive, multi-party body that polices House of Commons spending — ordered the MPs to reimburse the money. But the New Democrats, maintaining they were victims of a partisan gang-up by Conservatives and Liberals on the board, launched a court challenge and the matter remained unresolved through last fall's election.
After the election, both the victorious Liberals, who now hold a majority of seats on the reconstituted board, and the much-diminished NDP initially seemed willing to settle the matter out of court.
PMO puts kibosh on deal
Rather than seek reimbursement from the 68 individuals, the majority of whom lost their incomes when they were defeated in the election, sources say a settlement was proposed that would have seen the NDP accept a reduction in its annual parliamentary research budget. That reduction would have amounted to a reimbursement of less than half the $2.75 million.
The Prime Minister's Office declined to explain why Trudeau put the kibosh on the deal, referring questions to government House leader Dominic LeBlanc, the Liberals' lead member on the board of internal economy.
In an emailed statement, LeBlanc suggested Trudeau had nothing to do with it, although multiple sources have confirmed that the prime minister put an end to negotiations.
"The board of internal economy is the only body responsible for addressing the NDP's satellite offices and this misuse of public funds," LeBlanc said.
"We have always been of the view that the NDP misused public funds and should therefore reimburse taxpayers."
He further suggested the Liberals never contemplated settling the matter out of court.
"It is the NDP who decided to begin frivolous judicial proceedings and subsequently asked for settlement negotiations," he said. "We have always been of the view that the NDP misused public funds and should therefore reimburse taxpayers."
The matter will now have to be resolved in Federal Court, where the NDP's suit to overturn the board's ruling has been languishing for almost two years.
The suit was suspended almost immediately after it was launched at the request of both sides as they took a first stab at negotiating an out-of-court settlement. Those talks went nowhere and the board's lawyer, Guy Pratte, asked last May that the suspension be lifted.
Pratte has since filed a motion to dismiss the case on the grounds that the court has no jurisdiction to second-guess decisions of the board. A hearing was scheduled for this May but, at the request of the NDP's lawyer, that has been delayed until Sept. 13.
Former MP effectively exonerated
In the meantime, sources say the Commons administration has refused to pay some expense claims defeated NDP MPs have submitted to cover the costs of moving and shutting down their offices.
Just how much money has been recovered in that manner is unclear. NDP insiders suggest it's around $40,000 but others say it's considerably more than that.
New Democrats have maintained from the outset that administrators wildly inflated the amount of money each MP contributed from their office budgets to the salaries of the satellite office employees.
That appears to have been borne out in about half a dozen cases where New Democrats have challenged the amount they'd been told to repay.
Former Toronto MP Dan Harris was ordered to repay $141,467 but was effectively exonerated by the Commons' chief financial officer shortly after the election. Harris has said his initial bill included three years of salary for an employee who'd spent only 13 days working out of a short-lived party office in Toronto.
Similarly, former Montreal MP Isabelle Morin was initially ordered to repay $169,117 in salary paid to an employee. Her bill has been reduced to just less than $30,000 because the employee worked most of the time in her riding office, not the Montreal party office.
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