The RCMP is looking into allegations that the Harper government misappropriated funds in order to lavish $50-million on a cabinet minister's riding prior to last year's G8 summit.
The probe comes on the heels of an Auditor-General's report earlier this month, which concluded the government "did not clearly or transparently" explain how the money was going to be spent when it sought Parliament's approval for a G8 legacy fund for Tony Clement's riding.
The Mounties' involvement was prompted by a complaint from former Liberal MP Marlene Jennings. She was interviewed for an hour last week by three RCMP officers.
"My sense is that they're taking it very seriously," Ms. Jennings said in an interview Tuesday.
"My sense is that they're looking at this to see if there are any elements of proof that there may have been wilful intention to mislead Parliament."
Ms. Jennings, who was defeated in the May 2 election, first sought an investigation in the midst of the election campaign. Her complaint was prompted by an early draft of the Auditor-General's report, which was leaked mid-campaign to The Canadian Press.
The early draft was much more blunt than the final version released on June 9. It concluded the government "misinformed" Parliament about the G8 legacy fund and suggested it may have acted illegally.
In an April 15 letter to the director of public prosecutions, Ms. Jennings said the government may have willfully violated two appropriations acts and the Financial Administration Act, which stipulate that the government must disclose how it intends to spend the money when it seeks parliamentary approval for funding.
Ms. Jennings said she never heard back from the public prosecutor's office. But she did eventually receive a May 24 letter from the RCMP, advising her that "the matter is with 'A' Division Commercial Crime Section."
The day after the final Auditor-General's report was released, she received a call from Corporal Ray Warner asking her to meet with him. She was interviewed by Cpl. Warner and two other officers last Wednesday.
The RCMP confirmed that it has "received a referral" on this matter but refused to comment on the status of its investigation.
The issue revolves around the way in which the government won parliamentary approval to create the G8 legacy fund in 2009.
The government received approval for a $83-million border infrastructure fund which was supposed to relieve congestion at border crossings. It did not disclose that $50-million of that fund was to be devoted to infrastructure projects in Mr. Clement's Parry Sound-Muskoka riding, 300 kilometres away from the border.
The legacy fund was supposed to help Mr. Clement's riding prepare for hosting the G8 summit last June. It was spent on 32 projects, including gazebos, parks, public toilets and other beautification projects, many of which were hours away from the summit site in Huntsville.
John Wiersema, the acting Auditor-General, said the word "misinformed" was deleted from the final report because auditors found no evidence the government was trying to deliberately mislead Parliament. Rather, he said it appeared the government had been motivated by "expediency."
"Having said all that, going to Parliament requesting money for one thing and using it for something else is a serious matter which we think deserves parliamentary attention," Mr. Wiersema told a news conference after releasing the final report.
As for dropping any reference to possible illegality, Mr. Wiersema initially said he's "not aware of any specific law that was broken." He later conceded, however, that the matter is not clear and suggested it's up to politicians, not the Auditor-General's office, to determine whether "anything illegal took place."
"I think the legal profession could have an interesting, long debate about the wording of the Appropriations Act and whether or not this was inside or outside of the Appropriations Act. We chose not to go there."
The final report also slammed the government for the unprecedented lack of a paper trail documenting how and why the 32 projects were selected to receive government largesse. It found public servants had no input into selection process, that projects were approved by John Baird, then infrastructure minister, based strictly on the advice of Mr. Clement.
Mr. Wiersema called the complete absence of documentation "very unusual and troubling" and said he'd never encountered anything like it during his lengthy career as an auditor.
Mr. Baird, now Foreign Affairs Minister, has acknowledged "administrative deficiencies" in the handling of the G8 legacy fund. But he has insisted there was no attempt to deliberately mislead Parliament.
With only a year to complete projects before the summit, Mr. Baird has said he accepted the advice of bureaucrats that it would be faster to lump the G8 legacy monies under the existing border infrastructure fund rather than create a separate new fund in the spending estimates.
Prime Minister Stephen Harper told the Commons that the border fund has been "frequently used for projects that are not in border communities."
Opposition parties, however, have accused the government of creating a secret "slush fund" for Mr. Clement to spray around his riding as he saw fit.
With a report from Daniel Leblanc