The RCMP officer investigating the Senate expense scandal alleges former senator Mac Harb committed mortgage fraud related to the properties he claimed as his primary residence.
In a court document released Friday, RCMP Corporal Greg Horton alleged Mr. Harb held two mortgages against a home outside Ottawa that he owned just 0.01 per cent of – a home he had claimed as his primary residence, while billing the Senate expenses for a "secondary" residence in the city.
The RCMP say the remaining 99.99 per cent stake in the Cobden, Ont., home was sold by Mr. Harb to Magdalene Teo, a diplomat from Brunei stationed in Canada, hours after the first mortgage was secured. Ms. Teo told investigators she has a "personal friendship" with Mr. Harb, while Cpl. Horton wrote that the relationship "has not been determined" by the RCMP.
Both Mr. Harb and Ms. Teo have refused to speak with investigators, the RCMP say, prompting investigators to enlist the Department of Foreign Affairs, Trade and Development to seek co-operation from Ms. Teo.
The RCMP document was filed in court to obtain a warrant to obtain bank documents, with Cpl. Horton saying he has "reasonable grounds to believe" that Mr. Harb committed mortgage fraud. A similar document filed previously showed the Mounties believed Mr. Harb "did commit a breach of trust," a different charge. But no charges have been laid, and the allegations haven't been proven in court.
According to the latest document, dated Dec. 10, Mr. Harb bought a home in Cobden, outside Ottawa, on Dec. 2, 2003, a few months after being appointed to the Senate as a Liberal. On Oct. 12, 2007, he took out a $177,000 mortgage against the home, and hours later sold 99.99 per cent of the home to Ms. Teo for $567,000, keeping 0.01 per cent. According to the RCMP, RBC was not told Mr. Harb no longer was the sole owner of the home and "viewed these actions as fraud."
On. Nov. 10, 2010, Mr. Harb bought a home in Westmeath, Ont., and took out a mortgage for $240,000, the RCMP say. He and Ms. Teo still owned the other home, which the RCMP allege was listed as "a solely owned asset" to apply for a mortgage on the new home. The Mounties say RBC viewed that, too, as fraud, though acknowledged "there was no financial loss to RBC" through the transactions. The Cobden home was then sold altogether in 2011.
Mr. Harb represented a downtown Ottawa riding as an MP before being named to the Senate. Senators can claim expenses on a home if they live more than 100 kilometres from Parliament Hill. Cobden is 115 kilometres away, and Westmeath is about 130 kilometres away. Mr. Harb has insisted he followed the Senate rules.
A previously filed RCMP document said the Cobden home, which Mr. Harb was claiming as his primary residence, "was often empty," with the man who bought the house telling the RCMP he "was of the opinion that no one had lived in the house for a long time prior." But in one court affidavit, Mr. Harb says he "always considered" Cobden, then Westmeath, as his primary residence.
The Senate demanded he repay living expenses, and he initially pledged to fight it in court. But, on Aug. 26, 2013, he repaid $231,649 and resigned, saying he did not want to be the "poster boy" for an ongoing audit of all senators' expenses. Earlier that month, he'd sold the Westmeath home.
A request for comment from Mr. Harb's lawyer wasn't returned Friday. The RCMP are also investigating senators Patrick Brazeau, Mike Duffy and Pamela Wallin, each appointed as Conservatives but since suspended. No charges have been laid.