Ethics report finds Tory minister Diane Finley broke conflict-of-interest rules

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A nearly three-year ethics investigation has revealed cabinet-level discussions about the connection between public infrastructure projects and winning political support from Jewish voters in the Greater Toronto Area.

Federal Ethics Commissioner Mary Dawson released a detailed, 46-page report on Tuesday that concludes the actions of Conservative minister Diane Finley were "improper" and violated the Conflict of Interest Act when she awarded federal money to an infrastructure project backed by a rabbi with close ties to prominent Conservative politicians, including the Prime Minister.

The investigation was launched in 2012 after The Globe and Mail reported that Ms. Finley, who was minister of human resources at the time, overruled federal public servants to award funding to the $1-million project to make a Jewish community centre in Markham, Ont., accessible for the disabled. The application for the funding was made by the Canadian Federation of Chabad Lubavitch.

Although the project was in Markham, it was the subject of an extensive lobbying campaign by Ottawa-area Jewish leader Rabbi Chaim Mendelsohn, who has described former Conservative minister John Baird as "a very dear friend."

The commissioner's report said public servants had rejected Mr. Mendelsohn's application to an accessibility fund because the project scored poorly on the program's criteria, but Ms. Finley overruled the department and placed it among the finalists for funding after Mr. Baird spoke to her about about it. It said then-environment minister Peter Kent, whose riding included the project, also advocated for the funding.

The report reveals that in 2011, Ms. Finley had a private conversation with Nigel Wright, who was then chief of staff to Prime Minister Stephen Harper, just outside the cabinet room.

The report said that, according to Mr. Wright, the minister asked him whether the Markham proposal was important. Mr. Wright replied that the Prime Minister had asked him to "sort it out."

Ms. Finley replied that the project had not scored as well as other applications, but had elements that made it an appropriate candidate.

"According to Mr. Wright, he did not intend to suggest to Ms. Finley that funding should be approved for the Markham project, only that it was important that the matter be considered carefully and fairly," the report states.

NDP Leader Thomas Mulcair asked the Prime Minister on Tuesday to explain what he described as a "dirty insider deal involving his office, three cabinet ministers and a dear friend of the Conservative Party."

Mr. Harper supported Ms. Finley, who is now Minister of Public Works.

"I had no specific knowledge of these applications nor any preference in what was chosen," he said, adding that Ms. Finley acted "in good faith."

The Conflict of Interest Act does not include sanctions for breaches of its key provisions. Its administrative penalties generally relate to failure to meet reporting deadlines.

"The commissioner believes that a public report is in itself a sanction," said Jocelyne Brisebois, a spokesperson for the office.

The commissioner's report suggests the internal debate took place as the Conservatives were seeking ways to secure the political support of Jewish voters in the Greater Toronto Area.

The project is in the riding of Thornhill, Ont., which is represented by Mr. Kent, who is still a Conservative MP. The report said he spoke to Mr. Wright about "political issues" involving the Greater Toronto Area Jewish community.

"Mr. Wright suggested that the Prime Minister was aware that there was a political issue raised by some members of the Greater Toronto Area Caucus regarding how one or more grant applications by groups within the Jewish community were being handled. Mr. Wright wrote, however, that he did not think that the Prime Minister was focused on any individual project or organization," the report states.

The report describes Mr. Mendelsohn as a "well-known" figure on Parliament Hill who advises the Prime Minister's Office on protocol related to Jewish customs, including a Hanukkah celebration at the Prime Minister's official residence. He accompanied the Prime Minister to Israel in January, 2014.

In a statement, Mr. Mendelsohn said the report makes clear "that neither I, nor anyone associated with Chabad-Lubavitch, conducted themselves in anything but a proper manner, both legally and ethically."

The commissioner notes in her report that some of the people she interviewed said they could not remember what occurred.

The government ultimately reversed its decision to fund the Markham project, although some money had already been spent.

Liberal Leader Justin Trudeau described the incident as "regrettable" and said it shows a lack of concern for issues of ethics or accountability.

"It also is consistent with the culture within this government that prefers to cut corners and play favourites in its approaches," he said. "And I think Canadians are growing extremely weary of the way this government behaves."