Search warrants and a sworn affidavit to support last week's police raid on Conservative Party headquarters spell out an alleged "in and out" scheme under which the party allegedly funnelled $1.1-million through the local election campaigns of individual Tory candidates so they could spend more on their national campaign.
The party is also accused of filing a return with Elections Canada that "it knew or ought reasonably to have known contained a materially false or misleading statement," a warrant states.
As expected, the affidavit alleges that in the 2005-06 election campaign, the Conservatives' national headquarters transferred money to 67 local candidates - who immediately transferred it back as "payment" for campaign advertising. Amounts ranged from just over $2,000 to $52,000, it states.
The "scheme" had two significant consequences, the affidavit states: First, it allowed the Tories to spend $1.116-million over and above the spending limit on election expenses. Secondly, it allowed 65 of the 67 local candidates to claim a 60-per-cent rebate on the amounts, totalling $777,000, to which they weren't entitled.
Essentially, Ronald Lamothe, the assistant chief investigator of the Office of the Commissioner of Canada Elections, alleges in the affidavit that the party was trying to get around the election spending limit of $18,278,278.64 by getting local candidates to pay for national ads - and then asking Elections Canada to reimburse the candidates for those costs.
"The media buy was known to and implemented by the most senior officials of the Conservative Party of Canada and the Conservative Fund Canada," Mr. Lamothe states in the affidavit. "None of the regional media buy advertising time was a cost incurred by the candidates or their official agents."
The Tories have suggested the raid was payback for the party's lawsuit against Elections Canada, which was launched after Election Commissioner William Corbett began probing the alleged scheme. The Conservative candidates are suing for reimbursement of those questionable expenses.
Government House Leader Peter Van Loan said Monday the matter boils down to a legal dispute over electoral advertising.
"We say that a local campaign should be free to advertise on national messages if it wishes and that Elections Canada shouldn't get into controlling the content," he told CBC Newsworld.
"We always encourage our riding campaigns to spend as fully as they can to make our campaign as a party as strong as possible, and that's exactly what happened in the last election," he said, adding everything was fully disclosed to Elections Canada.
None of the allegations has been proven in court.
The affidavit says the scheme came to light during a review of an invoice submitted by Vancouver East candidate Elizabeth Pagtakhan. Asked to explain a $29,999.70 election expense, Ms. Pagtakhan's official agent, Denny Pagtakhan, told an auditor "I think we contributed to TV national advertising. There was no way we can spend our limit so we were asked by the Party if we can help contribute," the affidavit says.
Altered invoices?
As the probe expanded, Elections Canada reviewed other questionable invoices that were provided by Conservative candidates and related to Retail Media, the Toronto-based firm that made the ad buys for the national party. Of these invoices, 15 allegedly included the names of individual candidates on Retail Media letterhead, even though Retail Media told Elections Canada it dealt only with the party and "did not generate invoices to candidates or electoral districts."
For instance, one invoice in the amount of $39,999.91, filed on behalf of Steve Halicki, candidate for the Ontario riding of York South-Weston, was on Retail Media letterhead, the affidavit states.
When executives with the company were shown the invoice, one said "the invoice must have been altered or created by someone, because it did not conform to the appearance of invoices sent by Retail Media to the Conservative Party of Canada with respect to the media buy," the affidavit states.
Barbro Soderberg, Mr. Halicki's official agent, told investigators she did not provide written authorization to anyone to incur expenses on behalf of the campaign and that she had no knowledge whatsoever of Retail Media, the affidavit states.
Ms. Soderberg said she was approached by Conservative Party campaign manager Rom Cimaroli, who proposed a deposit of about $40,000 into Mr. Halicki's campaign account. The funds would be immediately transferred back to the party and recorded as an advertising expense, the affidavit states. Despite some misgivings, Ms. Soderberg said she was reassured by party officials that the transaction was legal.
"I had contacted the Conservative Party in Ottawa and was reassured that this was okay," Ms. Soderberg told investigators, according to the affidavit.
"As a bookkeeper I know that sometimes you have to use creative accounting between two small companies, but I found this move was being a little too creative."
Refused to co-operate
The affidavit also notes that officials with the Election Commissioner interviewed 14 of the 67 candidates. But when investigators tried to interview another 18 people last summer, 16 of them refused on advice of a Conservative Party lawyer. Many citied the civil litigation, the affidavit states.
Ned Franks, professor emeritus of political studies at Queen's University, said he expects the allegations will taint the Conservative brand.
"Really, it's a loss of face issue because the Conservatives campaigned on being purer than the driven snow and then they get brought up in their tracks by Elections Canada who say you've misinterpreted the act," Mr. Franks said.
"You can't both claim that you are purer than the driven snow, have a lawsuit against Elections Canada, get your offices raided where possibly some incriminating material is found, and appeal to the electorate on consistency and superior moral principles."
Liberal Leader Stéphane Dion accused the Conservatives of cheating and suggested the tactics may have changed the outcome of the election.
"The allegation is that the Conservative Party cheated at the last election, the Conservative headquarters of the campaign cheated at the last election, tried to cover it up after and (were) caught," he told reporters in Montreal on Monday.
"Yes, it may have had an effect," Mr. Dion said. "We'll never know for sure, but you don't cheat for nothing. You cheat because you want to have an effect. You want to have more voters for you in an illegal way."
Media strategy questioned
The affidavit and the search warrants that were used by Elections Canada to conduct the three-day search of the Conservative headquarters, with the help of RCMP, were unsealed on Friday. The court would not release them to news media because there was not enough time to photocopy all 700 pages.
However, the Tories released the affidavit Sunday to select media in a communication strategy that went awry as competing journalists demanded access to the documents and threatened to crash private briefings.
Liberal House Leader Ralph Goodale said the media strategy smacks of desperation.
"They certainly look guilty in the way that they were trying to pre-spin the release of these documents," Mr. Goodale told CBC Newsworld.
"This is a serious problem for them, they know it's serious, and they're scrambling desperately to control the spin, but it's not working."
Bloc Québécois Leader Gilles Duceppe called Prime Minister Stephen Harper a "control freak" Monday over the Tories' attempts to selectively release the information. Mr. Harper is obsessed with manipulating the public, Mr. Duceppe said.
"It shows the real nature of Stephen Harper," he said in an interview with The Canadian Press.
"It's a contempt of Parliament … this is a control freak, the old Reformist Stephen Harper is reappearing, the real nature of Stephen Harper is clear now."
With reports from Gloria Galloway and Canadian Press