MOUNTIES AT THE DOOR
On June 13, 2013, the R CMP announced that it had launched a criminal investigation into Nigel Wright’s secret $90,000 gift to Senator Mike Duffy. According to their press release, the police were trying to “determine whether a criminal act has taken place. It [the investigation] must be meticulous and carefully examine all information.” Stephen Harper’s director of communications of the day, Andrew MacDougall, made clear that the PMO wasn’t volunteering anything but “would provide any possible assistance if asked.” It was a novel reaction from a law-and-order government: passive cooperation.
Since the RCMP was now involved, Ethics Commissioner Mary Dawson suspended her investigation into the propriety of Wright’s payment to Duffy. News of the criminal investigation broke just before Question Period in the House of Commons. The prime minister was in Europe attending the G8 and high-level trade talks, leaving heritage minister James Moore to take the heat from the opposition, and, if possible, change the channel.
The incoming from the enemy lines started early. NDP MP Megan Leslie launched the first rocket, telling the government to “stop hiding,” to produce Wright’s cheque, and to tell the House who else in the PMO was involved in the secret deal. The affable Moore parried with sarcasm, asking rhetorically why NDP leader Thomas Mulcair wasn’t in the House. “We know he is on the Hill,” Moore quipped, drawing laughter from the government benches. It had made the news earlier that day that Mulcair had driven his car through a security checkpoint on the Hill without stopping, a small act of petulance creating a minor dust devil that disappeared in the act of forming.
The big story just kept getting bigger. Given the new development, Nigel Wright may have wished he had gone into the priesthood after all. The announcement of a criminal investigation changed everything for both men at the centre of the affair. They were no longer dealing with a political scandal but with a serious and personal legal problem. One Canadian senator, Raymond Lavigne, was already collecting his pension in jail after being convicted of fraud and breach of trust. Senator Duffy hired respected Ottawa criminal lawyer Donald Bayne, whose advice to the senator was to keep his powder dry. Wright’s legal team took a very different approach.
On the very day the Mounties announced their criminal probe, one of Wright’s lawyers called the RCMP to say that they would be sending information to investigators. The next day police received a letter in which Wright claimed he had been unaware of any fraudulent expense claims by the senator at the time he had given Duffy the $90,000. It was an answer to a question no one had yet asked him face to face. Had someone tipped off the prime minister’s former chief of staff about what the Mounties were looking into? Had they found incriminating documents?
From the outset of the crisis, the Harper government claimed that there was no paper trail in the case. The outcome of twentythree access-to-information requests by the media seemed to bear that out. The Privy Council Office, the prime minister’s department, responded in every case that not a single piece of paper, letter, or email dealing with the Wright/Duffy affair existed. Nearly six months would pass before a red-faced PCO was forced to change its story, raising serious questions about how high the cover-up of the secret payment went.
Unlike the PMO and his department, Wright was the model of proactive cooperation, telling investigators he was willing to meet with them and provide whatever information they required. On June 19, 2013, Wright’s lawyers, Patrick McCann and Peter Mantas, huddled with RCMP supterintendent Biage Carrese and Staff Sergeant Jean Francois Arbour to talk over a future interview with their client. The lawyers told the Mounties that Wright’s role in the PMO was to manage the Conservative caucus members and handle any matters that could cause embarrassment to the prime minister or the party.
Then came the bombshell. Wright’s lawyers said that the Conservative Party Fund, controlled by Senator Irving Gerstein, was initially going to repay Duffy’s improper expenses. But that changed when the amount owing soared from $32,000 to $90,000. The Fund quickly closed its coffers to Senator Duffy. Then, and only then, did the prime minister’s chief of staff decide to retire Duffy’s expenses with a $90,000 personal “gift.”
It was an odd piece of information. If the Conservative Party Fund was willing to pay back $32,000, why not $90,000? It certainly didn’t seem to be a matter of principle. Was it the sheer increase in the amount of money owing that changed Senator Gerstein’s mind, or the nature of the other $58,000 in claimed expenses? And there was another question. Why hadn’t other Conservative senators with expense problems been bailed out? There were no “gifts” for Pamela Wallin or Patrick Brazeau—just invoices.
Wright’s lawyers explained that their client had personally covered the costs of the Duffy settlement because he thought that taxpayers should not be out the money, making it “the proper ethical decision.” It was a noble explanation even if it left another issue unexplained. Nigel Wright made it sound as if he were the only person who could make the public whole again. In fact, there was another person who could ensure that the taxpayers would get their money back and from whom a cheque made much more sense: Mike Duffy. Why hadn’t the senator who claimed the improper expenses paid them back, instead of depending on the kindness of Nigel Wright? He did, after all, raise the total amount at the bank. Or was there something more to the arrangement than remarkable generosity?
The lawyers told police that Wright had imposed two conditions on Senator Duffy in return for his very big plum: that the improper expenses be paid back immediately, and that the former TV star stop talking to the media about his expense problems. Through his lawyers, Wright denied that anyone had directed him to make the payment to Duffy, and insisted that the prime minister was not aware of the “means” of the secret arrangement.
But Wright provided a declaration, via his lawyers, that flatly contradicted Stephen Harper’s statement, on May 23, 2013, that the gift to Duffy “was a matter he [Wright] kept to himself until Wednesday, May 15.” According to Wright’s lawyers, several other unnamed people in the PMO knew about the deal with Duffy. The last thing McCann and Mantas told investigators in their meeting was that they “were not aware of any involvement this deal may have had regarding the altered Senate report draft.” It was an important point. CTV’s Robert Fife had reported the same two conditions that the lawyers told police Wright had attached to the $90,000 gift to Duffy. But Fife had reported a third—that if the senator acknowledged his improper expenses and repaid them, then the Senate committee looking into senators’ expenses would go easy on Duffy.
Two days after meeting with the RCMP, one of Wright’s lawyers, Peter Mantas, provided investigators with a letter in which his client gave the names of the four people, three of them in the PMO, who were told about the $90,000 deal: David van Hemmen, Nigel Wright’s executive assistant; Benjamin Perrin, the prime minister’s legal counsel; Chris Woodcock, the director of issues management; and Senator Irving Gerstein. There was also an interesting enclosure. Attached to the letter was a copy of the CIBC bank draft that NDP MP Megan Leslie had wanted to see. It was made out to Senator’s Duffy’s employment lawyer, Janice Payne, in the amount of $90,172.24 and dated March 25, 2013.
The investigation was now at the prime minister’s door and the police had possible fraud and breach of trust on their minds. In making requests for additional documents, investigators made public the names of the three PMO staffers and the senator who knew about the deal. The public was reminded once again of the lack of truth in what the prime minister had repeatedly said, and indeed said again on June 5, 2013: “It was Mr. Wright who made the decision to take his personal funds and give those to Mr. Duffy. Those were his decisions. They were not communicated to me or to members of my staff.”
Meanwhile, the Wright/Duffy scandal ended another career in the Senate leadership. On July 4, her seventy-third birthday, Marjory LeBreton announced she was stepping down from her post as government house leader in the Senate. Coincidentally, it was the same day the first batch of RCMP court documents regarding Mike Duffy were unsealed and became public. Just a few months earlier, LeBreton had insisted that Senator Duffy’s expenses did not rise to the level of a police matter and that the whole scandal was the result of over-hyped stories from the national media. It was an open secret in Ottawa that the PMO was disenchanted with the performance of top Tories in the Senate, including LeBreton. That became blatantly obvious when the prime minister announced in the wake of LeBreton’s “retirement” that the government house leader in the Senate would no longer have a seat in the Harper cabinet.
Harper’s anger toward the Senate was hypocritical. The Conservative majority in the Upper Chamber may have created an embarrassing situation, but it took operatives from the PMO to turn it into a police matter. Harper was now paying the price in the media, even with his base. As the PMO lurched from one version of the facts to another, even the pro-Conservative Globe and Mail ridiculed the amateurish cover-up by people with a reputation for tight political control. “It’s getting awkward to watch,” wrote columnist Tabatha Southey. “It’s like the whole exquisitely polite country is trapped at karaoke night with the guy who thinks his version of ‘Total Eclipse of the Heart’ is rocking your world.” The Conservative Party had been willing to pay $32,000, but decided to be “tough on crime over $90,000.”
The prime minister was beginning to look shifty. The sensational details laid out in the sworn RCMP affidavit blew out his story that no one but Nigel Wright knew about the secret deal with Duffy. Just hours before the Conservative leader was to attend a major fundraiser for his Calgary Southwest constituency association, Harper had to change his story, telling reporters, “When I answered questions about this in the House of Commons, I answered to the best of my knowledge.”
The real question was, had the prime minister made his best effort to find out? The answer was clearly “no” as far as the political opposition was concerned. Harper’s constant revisionism looked more like wilful blindness than the truth. “It’s really depressing to see the prime minister of Canada acting like the piano player in the bordello, saying he didn’t know what was going on upstairs,” NDP PM Nathan Cullen said.
Judging by an Ipsos Reid poll published in July 2013, NDP MP Charlie Angus wasn’t the only one who thought Harper was lying. Only 13 percent believed that the prime minister didn’t know about Wright’s payment to Duffy. A whopping 70 percent of respondents also disapproved of the prime minister’s handling of the scandal—a head-in-the-sand combination of evasion, halftruths, and confabulations.
And now there was a new accusation against the PMO. On July 17, 2013, CTV’s Ottawa bureau chief, Robert Fife, reported that the February 20 email sent by Senator Duffy to unspecified recipients—the document that broke the Wright/Duffy affair wide open—was being withheld from the police by the PMO. In another example of passive cooperation, the PMO responded by saying that investigators had not yet asked for the document.
The RCMP had not decided where Nigel Wright fit within their investigation. Was he a witness or a suspect? On July 18, 2013, Wright was interviewed under caution by Superintendent Carrese and Corporal Greg Horton. While Wright was answering questions, the Canadian Taxpayers Federation (CTF) was making a statement of its own. The scandal had angered the CTF’s 84,000 supporters, and 65 percent of them now wanted the Senate abolished. Senator Duffy became the symbol of their wrath and the affair moved into its circus phase. The CTF hoisted a giant hot-air balloon of Mike Duffy two-and-a-half stories high into the summer sky off Victoria Island.1 The senator was carrying a briefcase bulging with twenty-dollar bills—taxpayers’ money. When the wind blew in the right direction, the effigy of Duffy twisted eerily toward Parliament Hill.
By July 24, 2013, RCMP investigators officially asked for information from the PMO. Press secretary Julie Vaux confirmed that the Mounties had indeed made a formal request for information. Harper’s official story was modified again. He no longer said that no one else in the PMO knew of Wright’s secret payment to Duffy, only that the lone villain of the piece was Nigel Wright. “This file was handled by Nigel Wright and he has taken sole responsibility,” Vaux said.
If anyone were looking for a sign of Stephen Harper’s anger at the Senate, his new minister for democratic reform provided them one on July 31, 2013. Pierre Poilievre unveiled the federal government’s position for the Supreme Court reference on Senate reform. In keeping with Harper’s unilateral approach in constitutional affairs, Ottawa asserted the right to make changes to the Senate without consulting the provinces.
But the claim that sent a shiver down the spine of sitting senators was Ottawa’s position that it needed the support of only seven provinces representing 50 percent of the population to abolish the Upper Chamber of sober second thought. Within a month, Alberta, Saskatchewan, and British Columbia sided with the federal government.2
On August 26, Liberal senator Mac Harb briefly diverted the spotlight from the Wright/Duffy affair with his surprise resignation from the Senate. It was a dramatic about-face for a man who had insisted that his disputed housing allowance was in order and who had commenced a legal action against the Senate. He not only dropped the litigation but also repaid $231,649.07 in ineligible expenses. Harb predicted that the ongoing review by the auditor general would confirm that many other senators shared his understanding of the rule and had made similar expense claims. One of the “bad apples” was no longer in the barrel. The question now was whether Harb’s resignation and repayment would end his troubles. They would not.
By late summer, the RCMP had still not interviewed Senator Mike Duffy, but documents filed into court showed that investigators had been busily looking into the affairs of the senator from Prince Edward Island. (In fact, though no one knew it, the police had begun investigating Duffy back in early March.) The documents were published in the National Post on August 9, 2013, and alleged that Duffy had charged the Senate for travel and daily expenses while he had in fact been campaigning for the Conservatives in farflung parts of the country. Corporal Greg Horton, who was now in charge of the investigation, wrote, “I believe that Senator Duffy has demonstrated a pattern of filing fraudulent expense claims.”
All told, the police alleged that Duffy charged the Senate for expenses while campaigning for three defeated candidates and eight elected MPs between April 12 and April 21, 2011. The senator also allegedly double-dipped by sending bills to each campaign—bills that were then submitted to Elections Canada as election expenses. A report from FINTRAC (Canada’s independent financial intelligence unit reporting to the minister of finance) also revealed to investigators that Duffy changed the address on his personal bank account to his address in PEI on December 10, 2012—mere days after the Senate announced it was conducting an audit of housing claims.
Instead of fading away, the Senate expenses scandal settled in like a low-pressure zone over the Harper government. The headlines just kept coming. On September 14, Senator Pamela Wallin repaid the Senate nearly $114,000 for rejected expense claims, stressing that she had done nothing wrong. How strange it must have seemed for the woman who had introduced Stephen Harper when he made the keynote address at the party convention in 2011 to be fighting to keep her place in the Senate.
Two days after Senator Wallin wrote the cheque to repay expenses she still believed were legitimate, the RCMP sat down with one of the most powerful men in the Senate, Irving Gerstein, chair of the Conservative Party Fund. Under Senator Gerstein, the Conservative Party of Canada had built the most successful fund-raising operation of any political party in the country. Every weeknight, the party’s phone banks call people who have shown an interest in contributing, or who have given money to the Conservative Party in the past. The operation isn’t just to raise money. It’s also about keeping a visceral connection to the base— about seeking political intelligence, the mood of Conservative Party supporters, and the issues they care about.
The Conservative Party phone bank tracks it all, and the prime minister receives regular reports from Jenni Byrne, the former director of political operations for the party, now in the PMO. It goes to the heart of the Conservative formula for winning: holding the base at 30 percent and adding 7 to 8 percent more at election time equals a majority government—or at least for as long as the progressive vote is divided.
Money and politics is sometimes a shady combination. Gerstein and three other senior Conservatives—Michael Donison, Susan Kehoe, and the late Doug Finley—were all charged by Elections Canada with devising an illegal scheme that allowed them to spend a million dollars above the limit on advertising during the 2006 federal election.3 It also allowed local candidates to claim rebates for expenses they never incurred. The so-called in-and-out scandal was settled when the party pleaded guilty to a lesser charge in return for the charges against the individuals being dropped. In the end, the party paid a $52,000 fine and returned $230,000 to the government.
Just as Nigel Wright had already told investigators, Gerstein confirmed that he had spoken on a conference call with Wright in February 2013. The Mounties discovered that Conservative Party lawyer Arthur Hamilton was also on the line. Wright had told police that Gerstein had initially offered to help with the Duffy matter. Gerstein told investigators a slightly different story—that Wright had asked him to pay Duffy’s expenses and legal bill, and Gerstein had said “it was something he would consider.”
One of the concerns the party bagman had was that Duffy might not keep the arrangement confidential. If Conservative Party donors were to find out that their money had been used to bail out an expenses cheater, there would be outrage. And there were also tax implications, since donors get a generous tax rebate for political donations. Taxpayers as well as Conservative Party contributors would not be happy if they learned they were picking up the tab for Mike Duffy or any other senator, beyond what the rules allowed.
Gerstein explained that Wright had initially told him that the senator owed $32,000 but afterwards confirmed that the amount was $90,000. The chair of the Conservative Party Fund emphatically refused to write the cheque. Nigel Wright was apparently left holding the bag. When next Gerstein spoke to the PM’s chief of staff, on March 1, 2013, Wright surprised the senator by telling him that he had decided to personally repay Duffy’s expenses. According to what Gerstein told the RCMP, word was certainly getting around. The president of the Conservative Party of Canada, Dan Hilton, also knew about the secret payment.
Two weeks later, the Senate scandal widened to include someone very close to Stephen Harper. Carolyn Stewart Olsen had been the prime minister’s long-time press secretary and strategic communications advisor before Harper appointed her to the Senate in 2009. He can’t have been happy to see The Huffington Post reporting that Stewart Olsen had claimed per diems and other expenses when the Senate was not in session for a three-month period ending February 28, 2011. Stewart Olsen vigorously denied the allegation, but the new chair of the Internal Economy Committee, Senator Gerald Commeau, asked Senate finance officials to review Stewart Olsen’s expenses. Stewart Olsen chose this moment to step down from her spot on the committee, joining Marjory LeBreton and David Tkachuk as high-ranking Conservative casualties of what was now being described as the bloodbath in the Senate.
The narrative was about to turn pure Hollywood. Police and paramedics were called to Senator Patrick Brazeau’s house twice during the night of October 2, 2013. The calamitous senator who had been arrested eight months earlier and charged with violent assault and sexual assault was taken to hospital, possibly suffering from depression or other health issues. No further details emerged.
Just two weeks later, Senator Mike Duffy issued a press release about his health. With a long history of heart problems behind him, including open-heart surgery, he said that his doctor wanted him to take immediate medical leave because of his deteriorating condition.4 The press release came one week after court documents revealed that the RCMP was now investigating the senator for potentially new breach-of-trust and fraud charges related to contracts paid out of his Senate office budget to an old friend from his CTV days with no known experience as a consultant.
Duffy’s press release came just hours before the Harper government’s new leader in the Senate dropped a bomb of his own. Claude Carignan announced that he would be tabling a motion to suspend Senators Duffy, Brazeau, and Wallin without pay on the grounds of “gross negligence.” The warfare was now open and brutal, and no one was taking any prisoners.
On October 21, Senator Duffy’s criminal lawyer, Donald Bayne, held a packed press conference at which all the skills that made him a crack criminal lawyer were on display. As though he were playing to a skeptical jury, Bayne stated his client’s case energetically and eloquently. He read from the now-famous February 20, 2013, email giving details about the Wright/Duffy deal and emphasized that all roads in the scandal led back to the PMO. It was the PMO, he declared, that worked out the “lines” and “scenarios” to meet Duffy’s concerns, “including cash for payment.” The virtuoso performance also featured a tease. Protesting that he wasn’t about to try Senator Duffy’s case in the media, Bayne said that his client had information about what the prime minister knew about the deal that the press would find most interesting.
Bayne’s press conference was mere prologue. Over the next two days, the three senators showed up in the Red Chamber to personally challenge the motions to suspend them without pay. Though he was just weeks away from more open-heart surgery, Duffy made a remarkable speech. Forty years of communicating for a living—on radio, television, and countless stages across the country—were on display. Duffy was critical and contrite, painting a picture of ruthless schemers in the PMO who had forced him to do something that was against his will: “I allowed myself to be intimidated into doing what I knew in my heart was wrong out of fear of losing my job and out of a misguided sense of loyalty.” With his fellow senators, journalists, and a large part of the country listening to the famous voice, Mike Duffy lowered the boom: “I wish I’d had the courage to say no back in February when this monstrous political scheme was first ordered.”
The next day it was Pamela Wallin—another star Harper Senate appointee who had had her expenses forwarded to the RCMP—who took the stand. As falls from grace go, it was almost Shakespearean. A celebrated television personality and former diplomat, she had received the Order of Canada, once chaired the powerful defence committee, and served on the Foreign Affairs Committee. Then there were the corporate connections. As a senator, Wallin had been on the boards of several companies, including Bell Globemedia, Oilsands Quest Inc., Porter Airlines, and wealth management firm Gluskin Sheff & Associates. Since becoming a senator, Wallin had earned $1 million in fees and stock options from these connections, beyond her Senate salary of $132,300. Oilsands Quest was the most lucrative, earning Wallin almost $648,000 in cash and offered options between June 2007 and December 2011.
Although all this extra income was allowed under Senate rules, the connection with Oilsands Quest was not without controversy. The company filed for bankruptcy in an Alberta court in November 2011, and under Chapter 15 protection in the United States. Its assets in northern Saskatchewan were sold to energy giant Cenovus. In August 2013, a US court approved a multi-million-dollar settlement in a securities fraud case against Oilsands Quest and its directors. In a lawsuit filed in New York in 2011, investors alleged that the company overstated its assets by $136 million and fraudulently pumped up the stock price. The judge who signed off on the $10.2 million settlement had also presided over the case involving infamous ponzi schemer Bernie Madoff. Luckily for Wallin and the other directors, the insurer of the bankrupt energy exploration company paid the fine.
Wallin’s speech to the Senate was a passionate defence. She accused fellow Conservative senators Marjory LeBreton and Carolyn Stewart Olsen of having a personal vendetta against her. As for the audit that found her guilty of running up improper expenses, the former CTV television personality called it a “fundamentally flawed and unfair process.” Five days later, the RCMP laid out fraud and breach-of-trust allegations against Wallin in court documents. Investigators were seeking more documents from the Senate related to changes the senator had made in her daily calendars. They cited “inconsistencies and discrepancies” in the calendars that warranted further investigation. The RCMP also believed that Toronto, rather than Wadena, Saskatchewan, was Wallin’s primary residence.
With the Conservative leadership in the Senate flexing its muscles, the prime minister decided to personally join the effort to sink Duffy, Wallin, and Brazeau. On October 26, Harper took to the airwaves in Toronto on John Tory’s CFRB drive-home show in a carefully controlled event with a government-friendly host. The PM claimed that he had ordered Senator Duffy to repay his expenses because it was “beyond a shadow of a doubt” that Senate rules were broken over a long period of time. Harper also repeated a story that fewer and fewer Canadians believed—that he knew nothing about the $90,000 gift from Nigel Wright to Mike Duffy: “Look, John, obviously I didn’t know, and obviously had I known about this, I would have told Mr. Wright not to undertake these actions.” A new element was creeping into the PM’s account—a faint note of feeling aggrieved that would fully declare itself two days later, with serious implications for his former chief of staff. “I should have been told, I think I should have been consulted. I was not.”
The fact that the PM was doing radio interviews was a telltale sign that, far from losing momentum, the scandal was gaining traction by the day. The damage to both the party and the prime minister was showing up in the polls. Since it had taken four days for the prime minister to accept Nigel Wright’s resignation, it looked as though he was condoning what had happened. His false claims that no one else in the PMO knew about Wright’s secret payment were now almost laughable. The real issue seemed to be that Stephen Harper was the only one who didn’t know—despite being the most controlling prime minister Canada has ever had.
So on October 28, 2013, Harper changed his story again, casting himself as a decisive leader who wouldn’t put up with lies and deception. He told Jordi Morgan—a former Canadian Alliance candidate and host of News 95.7’s Maritime Morning show—that Nigel Wright “was dismissed.” This was a jarring departure from Harper’s previous statements: first, that Wright enjoyed his full confidence and would not be leaving his post, and then his reluctant acceptance of Wright’s resignation four days later. Now the PM was claiming for the first time that Nigel Wright had been fired.5
Wright had a cadre of longstanding supporters who were taken aback at the news, some of them openly doubting the credibility of the prime minister’s latest version of events touching the scandal. Praising Wright as one of the most able and ethical people he had ever met in politics and business, Preston Manning suggested he would be vindicated, noting, “I think it’s his [Wright’s] account, at the end of the day, that will be the most credible account of what actually happened.” Manning also suggested darker motives that might be behind Harper’s new claim. “I think the first story was the correct one,” he told Mark Kennedy of the National Post. “The deeper these things get, the more people are backed into corners.” It had been Manning’s experience that “Stephen doesn’t think words mean much.”6
Even Conservative cabinet ministers seemed uncomfortable with Harper’s latest version of events. Both Jason Kenney and Peter MacKay lauded Wright’s hard work for the party and vouched for his integrity. Charles McMillan, who had worked with Wright in Brian Mulroney’s PMO, delivered the sharpest rebuke of Stephen Harper’s scapegoating of his former chief of staff: “. . . to put the blame of this whole saga on Nigel is nuts. . . . I think there is a larger story here with a whole series of players. . . . It’s like an iceberg. There’s a larger story under the water.”
It was at that moment that the man nicknamed “the Killer Whale” by government insiders breached the surface again and rocked the government’s boat. Coming straight from Ottawa’s Heart Institute, Mike Duffy’s passionate voice rang out in the Senate chamber a second time. It was another headline event, occurring as it did just three days before the Conservatives held their national convention in Calgary on Halloween.
Not only had Nigel Wright paid $90,000 of Duffy’s disputed expenses, but Canadians learned that he had arranged a second cheque from the Conservative Party Fund for the senator’s legal fees—$13,560. The cheque had been sent by Arthur Hamilton to Duffy’s lawyer, Janice Payne. Duffy gave another masterful speech proving again that he was skilled in the art of the political knife fight. And just so there was no doubt the party had paid his legal bills, he tabled both the cheque and the transmittal letter in the Senate. Duffy knew that, in just a week, the Senate would be voting on Claude Carignan’s motion to suspend him from the Senate without pay, and he may have been trying to make clear that there would be consequences for the party if that happened.
Senator Wallin, also facing expulsion without pay and an RCMP investigation, paid back a total of $152,908.77 in improper expenses hoping that it would be enough to persuade her colleagues not to vote in favour of the motion. She insisted once more that she had been mistreated by the Senate and the auditors at Deloitte.
Senator Duffy’s revelation of a second cheque turned Question Period into an inquisition directed at the prime minister. Day after day, Opposition leader Thomas Mulcair skewered him. It was the NDP leader’s strongest performance, with Mulcair outshining the more reserved Justin Trudeau and showing brilliant flashes of a person who could be prime minister. When Harper tried to pass off the payment of Duffy’s legal bill as “normal,” Mulcair shot back, “The prime minister, therefore, sees nothing wrong with using the money of the Conservative Party to reimburse the legal expenses of someone he says has broken the law. That is the ethics of the prime minister. Duly noted.” Liberal leader Justin Trudeau had an observation of his own that was on a lot of people’s minds: “I think donors are beginning to wonder how this party administers their donations.”
On October 29, 2013, the opposition continued to grill Harper over Duffygate, and a hapless Stephen Harper stuck to his already discredited story that it was all Nigel Wright’s fault: “On our side, there is one person responsible for this deception and that person is Mr. Wright, by his own admission. For that reason, Mr. Wright no longer works for us. Mr. Duffy should not either.” Liberal MP Scott Andrews pounced on the PM’s hypocrisy. Why should Duffy be dumped from the public payroll? Conservative MP Dean Del Mastro was actually charged with violating election expenses laws and the taxpayers were still paying his salary. When Harper was asked if party lawyer Arthur Hamilton should be fired, the prime minister replied, “This individual is not accused of anything.”
The prime minister’s confabulations and contradictory stories were beginning to catch up with him. It was not true that no one in the PMO other than Wright knew about the secret payment to Duffy. Harper’s longstanding claim that no taxpayer money had been used to pay Duffy was not true. (Taxpayers remit a generous tax credit to donors to political parties, so they in fact paid a portion of the senator’s legal bill.) And if it were true that it was “normal” to pay the legal bills of caucus members, as the PM stated in the House of Commons, why hadn’t Pamela Wallin or Patrick Brazeau been treated normally?
Up until November 2, 2013, the only people Senator Irving Gerstein had spoken to about the Wright/Duffy affair were members of the RCMP. The senator was a very busy man and not only with Senate business. Gerstein collected $290,000 in director’s fees and attended dozens of corporate board meetings in 2012. He is chair of the board of Boston-based Atlantic Power Corporation, which has power generation projects in the United States and Canada. He is also on the board of Medical Facilities Corporation, whose specialty is private surgical hospitals in the US offering “five-star hotel” surroundings and service.
After it became public that the Conservative Party had paid Duffy’s legal bill, a fact Gerstein himself had never revealed, there was no way even a senator as busy as Gerstein could avoid the question about paying Duffy’s expenses. He gave his answer at the Conservative convention, where, with the exception of guard dogs and bouncers, the party did everything it could to keep the media away from the action.
In his explanation to delegates, Gerstein followed the prime minister’s line and laid it all on Harper’s former chief of staff. It was Wright who asked the party to pay for Duffy’s lawyer, he claimed, and Wright who asked the party to pay off his $90,000 in expenses. “I made it absolutely clear to Nigel Wright that the Conservative Fund of Canada would not pay for Senator Mike Duffy’s disputed expenses and never did.” It sounded like a principled position. But if the party wouldn’t pay as a matter of principle, why had Gerstein told the RCMP the Fund considered paying Duffy’s bills when the amount was $32,000? And why hadn’t he made it absolutely clear that the Fund wouldn’t pay Duffy’s legal bill if using party donations was truly a matter of principle?
The PMO would soon come up with an answer through Stephen Harper’s latest press spokesperson, Jason MacDonald. MacDonald wrote in an email, “The party was assured the invoice was for valid legal fees related to the audit process, and the party paid them on the basis of those assurances.” The mischaracterizations were getting silly. Not only did MacDonald’s story contradict the PM’s explanation that the party had paid because it was “normal” to do so. If that were true, why hadn’t senators Wallin and Brazeau had their bills paid? The PMO knew perfectly well that Janice Payne was an employment lawyer primarily looking after Senator Duffy’s negotiations with the PMO to secretly pay off his expenses. And then there was the most inconvenient fact of them all: how could the bill have been related to the audit? Senator Duffy never participated in it. And the PMO knew that because it was the PMO that advised him to stay away from it. Nigel Wright’s lawyer responded to the latest piece of PMO fiction with a few icy words that suggested the truth would come out later. “No comment at this time to the latest characterization of events.”
On November 5, 2013, the four hundred and eighth anniversary of the Gunpowder Plot to blow up the British House of Lords, two political explosions shook the foundations of Canada’s political establishment. Guy Fawkes would have been impressed with the panic they set off in the political establishment.
The mayor of Canada’s biggest city, Rob Ford, admitted after months of public denials that he smoked crack cocaine. The man who was the prime minister’s fishing buddy and the Tories’ key to suburban federal seats around Toronto assured his supporters he was not an addict or a liar; he merely used drugs and only responded truthfully to the “right” question. As for that pesky video in which he appeared to be smoking crack cocaine with fellows who were not Boy Scouts, he had simply been too drunk to remember it. It was not the most shining moment for the party of law and order and family values.7
Three hundred and fifty-three kilometres northeast of Toronto, the Senate of Canada carried out the prime minister’s wishes and voted to suspend Senators Duffy, Wallin, and Brazeau without pay. Although the rules said that such an action could be taken “to protect the dignity and reputation of the Senate and public trust and confidence in Parliament,” the motion to suspend had faced vocal opposition from some senior senators in the Conservative caucus.
Senators Hugh Segal and Don Plett (a former president of the Conservative Party) declared that the motion was in effect sentencing the three senators before they had been charged, let alone convicted, of anything. In Segal’s view, kicking the senators out and taking away their pay turned “the Senate Chamber into the Star Chamber.” Despite his eloquence, the Conservative majority in the Harper-stacked Senate did the deed in a lopsided vote: Wallin, fifty-two to twenty-seven; Duffy, fifty-two to twentyeight; and Brazeau, fifty to twenty-nine—all results in favour of suspension for two years without pay. Thirty-six senators abstained from the vote.
Among those sitting in the Senate Chamber looking down at the historic vote (only once before had a senator been suspended) was the journalist who had broken the story, Robert Fife. It was a wrenching moment. “I’d known two of these people for thirty years,” Fife told me. “Mike Duffy helped me a lot when I was a young reporter in Ottawa, a lot. People think doing these stories is easy. It isn’t. I felt sick to my stomach that night.”
Senator Patrick Brazeau sat stone still in his place as the results were announced. Earlier, he had pleaded with his colleagues not to believe all the things they had heard about him. “It is very important that you know that I am not a thief, a scammer, a drunken Indian, a drug addict, a failed experiment or a human tragedy.” The last items in his list were a direct dig at Senator LeBreton, who had used those terms to describe his appointment to the Senate.
There was a lot on Brazeau’s mind as he sat there dazed by what had just happened—the criminal charges he was facing, the $49,000 in expenses he had to repay, the loss of his Senate paycheque, and his banishment from the Senate. But there was also gratitude. He walked over to Liberal senator James Munson, a friend and supporter, and shook his hand. In just over three months’ time, Patrick Brazeau would be managing a strip club in the Byward Market. In April 2014, he was charged in another domestic assault, and with cocaine possession. Reporters arrived at the home to find his personal belongings thrown out in the snow—clothing, a violin, family photographs, his Indian Status card, a legal envelope from the Senate. Brazeau was sent to a rehabilitation facility in Saint-André-d’Argenteuil as a condition of his bail.8
As for the now-suspended Senator Pamela Wallin, she took a moment to talk to the retinue of reporters looking for a comment as she exited the Chamber for what was likely the last time. “I think it’s an extremely sad day for democracy. If we can’t expect the rule of law in Canada, then where on earth can we expect it?” There was no appealing the judgment that her Senate colleagues had brought down on her. She was now a senator in name only, without a paycheque or an office, though all three suspendees retained their health benefits. Wallin walked out into the dark November night and slipped into the back seat of a waiting car. Turning to the throng of reporters, she managed to pull up one last smile. Even through the window, it could not disguise her dismay at her stunning fall from grace. F. Scott Fitzgerald’s brilliant coinage came to mind: the rock of the world is built on a fairy’s wing.
As desperately as Stephen Harper wanted the Senate scandal to just go away, the suspension of the three senators under conditions that even some Tory MPs found unfair dominated Question Period the following day. The leader of the Opposition bluntly asked the prime minister if Jenni Byrne, the domineering and abrasive director of the Conservative Party at the time of the Wright/Duffy deal, knew about the plan to repay Duffy’s expenses using party funds. The question got under Harper’s skin. “Without proof, the NDP is making allegations against people. Clearly Mr. Wright acted alone and accepted responsibility for that.”9
Partisan help for the non-answering prime minister came from the Speaker’s chair. Andrew Scheer repeatedly warned Mulcair to stick to government business, not party business. Mulcair schooled the youthful Speaker on his mistaken premise, and he did it by playing on the most overused meaningless word in the prime minister’s vocabulary: “Just to be clear, perfectly clear, this is about a cover-up in the Prime Minister’s Office. This is government business. This is the public’s business.”
Just as Stephen Harper thought he was making progress on the Senate scandal with the removal of Duffy, Wallin, and Brazeau, Corporal Greg Horton filed his blockbuster Information to Obtain (ITO) to Justice Hugh Fraser on November 15, 2013. An ITO is an affidavit sworn by an investigator stating the grounds for seeking additional documents from their custodians. The contents of Horton’s eighty-one-page ITO provided a spectacular rebuttal to the prime minister’s assertion that the Wright/Duffy affair was not known to others in the PMO. According to the ITO, several senior staffers not only knew about it but were deeply involved in negotiations to settle the matter in a way that might prove illegal. The prime minister had either been misled or he himself had misled the House of Commons.
Often, ITOs remain sealed, but Horton’s was made public five days after he swore out his affidavit. As hard as the prime minister had tried to restrict the Senate scandal to a few bad apples in the Upper Chamber and one deceitful member of his staff (all handpicked appointees of Harper), this limited version of the story was obviously untrue. But the issue of Wright’s $90,000 secret gift to Senator Duffy was eclipsed by even more serious allegations. Corporal Horton alleged new evidence that the PMO interfered in an independent audit commissioned by the Senate, and conspired through multiple PMO staffers to have an official report of the Senate altered to accommodate the demands of Senator Duffy.
Outed by Corporal Horton’s ITO, the Harper government responded with monosyllabic answers or the Cone of Silence. The most important new fact that had been added to the public discussion was that the chair of the Conservative Party Fund, Senator Irving Gerstein, had been asked by the PMO to approach internal sources at Deloitte to find out if the Duffy audit could be shut down if Senator Duffy repaid his expenses. Gerstein, it was revealed, went to Michael Runia, who was a senior partner at Deloitte, which also audited the Conservative Party Fund. Was Runia the hidden source who supplied PMO staff with an answer to their question and a preview of what Deloitte would conclude about Duffy’s residency issue?
Although the members of the Red Chamber had the urgent duty to get to the bottom of a possibly illegal breach of an independent audit the Senate itself had commissioned, they opted instead to participate in a cover-up. The Conservative majority on the Internal Economy Committee refused to call either Senator Gerstein or Michael Runia. This was not the decision of a body interested in discovering the facts. It was the ignoble ploy of people who wanted to hide them.
Senate Speaker Noel Kinsella also ruled against a Liberal request to look into how the findings of the Deloitte audit got into the hands of the PMO weeks before they were presented to the Senate committee. Even Senator Gerstein got into the act. As chair of the Senate Finance Committee, he ruled out of order a motion calling for him to step aside while the RCMP was investigating a case in which he was involved. Since the Senate wouldn’t go after the facts, Liberal justice critic Sean Casey asked the RCMP to investigate Gerstein’s role in a scandal that had a very well-known centre but no known circumference.10
On November 28, 2013, the three Deloitte auditors who had reviewed Duffy’s expenses made a seventy-minute appearance in front of a Senate committee. It was as close as the public would get to knowing more about Gerstein and Runia’s dealings on the Duffy audit. Auditor Gary Timm confirmed that Ontario managing partner Michael Runia had indeed called him to ask about the audit, and Timm suggested in his testimony that the call was not appropriate. He told the senators, “It was a short call and it ended there,” with the auditor directing Runia to public information.
Asked about the fact that PMO staffer Patrick Rogers knew in mid-March that Deloitte would not reach a definite conclusion on Duffy’s primary residence, auditor Alan Stewart called the information “troubling” and testified, “I don’t know where that information came from, but it did not come from the investigative team.”
Peter Dent, the national leader of Deloitte’s forensic advisory practice insisted that independence was maintained throughout the audit. “At no time was confidential information shared outside of the forensic team,” he stated, “and Deloitte stands by the content, the quality and the objectivity of the information we provided.” Dent insisted that the call from Michael Runia prompted by Senator Gerstein’s intervention on behalf of the PMO had no effect on their conclusions. When Hill Times reporter Tim Naumetz asked Dent how Senator Gerstein could have known that Deloitte was unlikely to make a conclusive finding about the legitimacy of Senator Duffy’s residency claims, Dent replied, “We have no idea.”
Deloitte, which has received over $135 million in major contracts since the Conservatives came to power, was mindful of its international reputation. On June 18, 2013, New York governor Andrew Cuomo had announced that his administration had reached an agreement with Deloitte that would see the auditing firm make a $10-million payment to the state of New York and agree to a one-year voluntary suspension from consulting work at financial institutions regulated by the state.11 The firm would also agree to implement reforms designed to address conflicts of interest. In the US, Deloitte LLP consultants had hidden from regulators money-laundering details about Standard Chartered Bank’s transactions with Iranian clients. The New York State superintendent of financial services said, “At times, the consulting industry has been infected by an ‘I’ll scratch your back if you scratch mine’ culture and a stunning lack of independence. Today, we are taking an important step in helping ensure that consultants are independent voices—rather than beholden to the large institutions that pay their fees.”
In April 2014, Deloitte was ordered by the court to pay $84.8 million in damages to Livent creditors. Justice Arthur Gans of the Ontario Superior Court ruled that as auditors of Livent, Deloitte failed to detect fraud at the company, even though there were plenty of warning signs that something wrong was going on by the end of August 1997: “The red flags were certainly aflutter by that time.” Had Deloitte detected the fraud, the firm could have refused to sign Livent’s improper financial statements, which were in turn used to solicit funds from investors.12
Just when it seemed that the Harper government’s credibility couldn’t sink any lower, the PMO was caught in another false assertion. Since May, the office had insisted to the RCMP that the emails of the prime minister’s legal advisor, Benjamin Perrin, had been erased. Those emails were crucial to understanding how deeply others were involved in the Wright/Duffy affair. CTV ran an anonymously sourced story that Perrin was involved in the negotiations between the PMO and Senator Duffy’s lawyer that eventually led to the secret payment. Perrin called the story false and subsequently hired a lawyer. The RCMP wanted access to Perrin’s emails to confirm or deny the report that the PM’s lawyer may even have drafted a memorandum of understanding between the PMO and Duffy. In May 2013, the PMO explained to lead RCMP investigator Corporal Greg Horton that it was policy to delete emails of staff who left the office. Since Perrin had left the office in April, his emails no longer existed.
Fortunately the RCMP kept asking for them. The PMO, as it turned out, was wrong on both counts. It was not policy to delete all the emails of departing staff members, only the “casual communications” or transitional ones. Perrin’s emails were available.13 Privy Council Office rules require that information with “business value” that accounts for the activities of government be kept. The PCO took responsibility for misinforming the prime minister about Perrin’s emails, which had been retained because of an unrelated pending court case. (It was possibly the privacy breach of 583,000 students when an external hard drive went missing at Employment and Social Development Canada.)
Liberal deputy leader Ralph Goodale wasn’t buying the explanation and asked a question no one on the other side could answer. “Who ordered the retention of Perrin’s files? Who had custody of them? Has that person been unconscious for the last six months?” The prime minister burned what was left of his credibility—it was not a bonfire.
According to documents released in June 2014 to Tim Naumetz of the Hill Times under the Access to Information Act, Perrin actually left his job in the PMO on March 27, 2013, the day after Wright’s payment to Duffy. Perrin had a crucial role in the negotiations. After the PCO found the emails on November 29, 2013, RCMP commissioner Robert Paulson was informed within two hours. Harper’s national security advisor Stephen Rigby was emailed first about the newly found Perrin documents. Other than the emails in Corporal Greg Horton’s November 2013 court affidavit, Perrin’s emails have not been made public. A source close to the investigation told me that Mike Duffy has a cache of over eight hundred emails involving Perrin.
During the federal by-elections, on November 25, 2013, Stephen Harper was in Winnipeg at the opening of an expressway, and was asked by a reporter if either he or the PMO approved Irving Gerstein contacting Deloitte about the ongoing Duffy audit. “No,” he said, despite the fact that the whole country now knew that Nigel Wright had done exactly that. His director of communications later scrambled to once again “clarify” what the PM had said: “He had no knowledge of Gerstein’s efforts to contact Deloitte or that he had been asked to do it.” The leader who knew nothing continued to know nothing—evidence or no evidence.
For decades, the unelected Senate had been master in its own house, a rich pasture for party loyalists and more than a few Canadians of note. Now the anachronistic institution that costs Canadians $95 million a year was under the microscope of independent auditors, the RCMP, and the auditor general’s office. The results to date were disturbing. With all the revelations of corruption, and the fatal decision not to call principal witnesses to get to the bottom of the rot, the senators themselves guaranteed one thing: change was coming.
It exploded onto the political landscape on January 29, 2014. In a dramatic move that thrilled, angered, and befuddled, Liberal leader Justin Trudeau cut loose all Liberal senators from the parliamentary caucus. Henceforth, all senators who had been appointed as Liberals would sit as independents. Critics immediately speculated that Trudeau was trying to get in front of possibly damaging findings from the investigation of federal auditor general Michael Ferguson. According to the polls, most Canadians liked the idea, including voices from the West who saw Trudeau’s decision as a practical way to change the reformproof and unelected institution without starting a constitutional war.
Six days after Trudeau’s bombshell, the serpentine chain of events in the Senate expenses scandal snaked its way to a destination that had been inevitable from the moment investigators put a searchlight on an institution unaccustomed to outside scrutiny. On Tuesday, February 4, at just after 11 a.m., RCMP assistant commissioner Gilles Michaud announced that Senator Patrick Brazeau and retired senator Mac Harb were each being charged with one count of breach of trust and one count of fraud under sections 122 and 380 of the Criminal Code.
In May 2013, Stephen Harper had called the Wright/Duffy affair a “distraction” involving two men. Nine months later, the Conservative Party hierarchy, the PMO, and the Conservative leadership in the Senate had been decimated. The executive director of the party, Dan Hilton, gone. The prime minister’s chief of staff, Nigel Wright, gone and under criminal investigation. Four senior PMO staffers, including the prime minister’s legal counsel, his director of issues management and his manager of public affairs—all gone.
On the Senate side, the government house leader in the Senate, Marjory LeBreton—gone. Gone too was LeBreton’s policy advisor, Chris Montgomery, one of the few people who wouldn’t go along with the PMO’s intervention in the Senate audit or reports about Duffy’s expenses. Gone was the chair of the Internal Economy Committee, Senator David Tkachuk, as was fellow committee member Senator Carolyn Stewart Olsen. Senators Duffy and Wallin—gone. Senator Brazeau—gone and facing multiple charges. Three other Conservative senators, including Hugh Segal, resigned from the Senate. The only two people who retained their positions who played intimate roles in the Wright/Duffy affair were Senator Irving Gerstein, chair of the Conservative Party Fund, and Arthur Hamilton, lawyer for the Conservative Party of Canada. In April 2014, the RCMP ended its investigation of Nigel Wright, saying the evidence “does not support” criminal charges against him. No explanation was given. The federal opposition sent a letter to RCMP commissioner Bob Paulson on April 24, 2014, asking several important questions, including who made the decision not to charge Wright. NDP MP Charlie Angus wondered how the act of writing a secret personal payment to a sitting senator didn’t contravene the law: “If Mr. Wright’s actions did not cross this line, the average Canadian is justifiably left wondering where exactly the legal and ethical line is in Ottawa today.” In June 2014, Onex CEO Gerald Schwartz told Bloomberg News that Nigel Wright would be returning to Onex, posted to their London office.
The decision not to charge Wright was announced almost five months after the Perrin emails mysteriously appeared. In his November 2013 affidavit, Corporal Horton had attested that he believed Wright did, “without the consent in writing of the head of the branch of that government,” pay a reward or confer an advantage to Mr. Duffy. If the Perrin emails, or other documents that surface, contain written proof that the prime minister had consented to the deal, according to the law Nigel Wright has not committed an offence under the Criminal Code.
Mike Duffy was charged with thirty-one counts relating to fraud and breach of trust on July 17, 2014, and a press conference was called by the RCMP to lay out the charges. No questions were allowed from the media, “out of respect for the court process.” This was Stephen Harper’s Ottawa. Included in the charges was that Duffy “did for his benefit and without the consent in writing of the head of the branch of government of which he is an official, accept an advantage from Nigel Wright.”
Duffy’s lawyer, Donald Bayne, issued a statement that began with how difficult the last sixteen months had been for Mike and Heather Duffy, financially, emotionally, and for the senator himself, healthwise.14 Bayne was confident that when the full story was told, supported by many forms of evidence, “it will be clear that Senator Duffy is innocent of any criminal wrong-doing.” In his prepared statement, Bayne also said, “I am sure that I am not the only Canadian who will now wonder openly, how what was not a crime or bribe when Nigel Wright paid it on his own initiative, became however mysteriously, a crime or bribe when received by Senator Duffy.”
The prime minister might yet find himself in a place where you get to tell your story only once and under oath—should Senator Mike Duffy make good on his promise to call Stephen Harper as a witness for the defence. Harper’s office was already ahead of the curve on that possibility. His director of communications, Jason MacDonald, said the prime minister does not intend to testify because he has no useful information to offer. MacDonald also said, “We have assisted the RCMP throughout their investigation, and congratulate them on the progress they have made. . . . Those who break the rules must suffer the consequences. The conduct described in the numerous charges against Mr. Duffy is disgraceful. As this is now a criminal matter before the courts we have nothing further to add.”15
Duffy is scheduled to appear in court on September 16, 2014, the day after MPs return to the House from the summer recess. And that means parliamentary privilege for the prime minister— just in case someone dares to issue a subpoena.