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The Conservative Party’s fundraising arm has dismissed its executive director and is launching a review of how expenses are handled after revelations the party approved payments for the private school tuition fees of four of Andrew Scheer’s children.

Mr. Scheer resigned as leader of the party on Thursday as revelations of the payments came to light and prompted the Conservative Fund, driven by former prime minister Stephen Harper, to take action.

The seven directors of the Conservative Fund, which is chaired by former senator Irving Gerstein, held a conference call Friday morning and party lawyer Arthur Hamilton later informed executive director Dustin van Vugt that he was being dismissed, sources say.

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The Globe and Mail is keeping their names confidential because they were not authorized to speak publicly about internal party matters.

But the decision blindsided some members of the National Council, which is the party’s elected governing body. Sources say the council had not yet signed off on the firing.

Mr. van Vugt and the Conservative Party did not respond to requests for comment.

A source close to Mr. van Vugt said he is leaving and is negotiating a settlement. The source said Mr. van Vugt does not believe the Conservative Fund has the mandate to fire him but decided to leave for the good of the party.

Mr. van Vugt’s exit leaves the Conservatives without an executive director at a pivotal time for the party. The rules for the party’s second leadership race since 2015 haven’t yet been set and a timeline for the vote hasn’t been decided.

On Thursday, Mr. van Vugt defended the decision to have Conservative donors pay the private school tuition fees of four of Mr. Scheer’s five children.

In the Thursday statement, Mr. van Vugt said neither Mr. Scheer nor the party did anything wrong, and that the payments were “normal practice for political parties ... all proper procedures were followed and signed off on by the appropriate people.”

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The Conservative Fund, whose members say they did not know about the private school fees, has also ordered a review of how the party has been spending members’ money, sources say.

A source with direct knowledge said staff in Conservative Party headquarters were in shock and some were in tears when they learned about Mr. van Vugt’s dismissal. The source described him as a competent and caring individual, and said the fund needed to justify its decision.

According to the party’s constitution, the leader chooses who should be the executive director and the National Council must ratify the decision. However, the fund pays the director’s salary.

There is a precedent though of the Conservative Fund dismissing executive directors, but supporters of Mr. van Vugt say the timing, on the eve of a leadership race is questionable.

Mr. van Vugt has navigated the party through several tumultuous years. Appointed in 2014, he saw the party through the fallout of the 2015 election loss, conducted the resulting campaign review, oversaw the 2017 leadership race, was deputy campaign manager during the fall federal election and was part of the group reviewing the 2019 loss.

Mr. van Vugt was based in the campaign headquarters for the election and was responsible for day-to-day operations, including the party’s target seats.

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The staffing shakeup comes as some Conservative MPs are urging the party to conduct a speedy leadership race. On Parliament Hill on Friday, MPs were calling for a new leader to be in place as early as April and by September at the latest.

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