Tories dismiss election spending charges as 'accounting dispute'

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A long-simmering battle has reignited between Stephen Harper and Canada's election watchdog after four Conservative officials were charged with "willfully" exceeding spending limits in the 2006 campaign that vaulted the Tories to power.

It's an embarrassing and potentially damaging development for the Harper Conservatives, who campaigned five years ago to clean up federal politics and could face a spring election if opposition parties vote down the 2011 budget.

Those charged include two sitting Conservative senators: Doug Finley, a former party campaign manager, and Irving Gerstein, a major Tory fundraiser who is also accused of providing a "materially false and misleading statement."

The charges, filed in an Ontario court this week, were laid by the independent Commissioner of Canada Elections, and carry a maximum penalty of $2,000 or one year in jail, or both.

Opposition parties say the controversy boils down to whether parties with more money should be allowed to circumvent spending caps in the battle for votes. "No one is supposed to be able to buy an election in this country just because you have deeper pockets and a fatter chequebook," New Democratic MP Pat Martin said.

The Conservatives, who've amassed a reputation for battling federal watchdogs - from the nuclear regulator to the Veterans Ombudsman - are defiant. They say that a January, 2010, legal victory in a case they brought before federal court on campaign spending should have given the Commissioner of Canada Elections pause before laying charges.

"This is a five-year-old accounting dispute," said Pierre Poilievre, Parliamentary secretary to Prime Minister Stephen Harper. "For Elections Canada to ignore a federal court decision and lay administrative charges is puzzling at best and unfair at worst."

Mr. Harper told reporters on Friday the Conservatives always respected campaign finance rules.

It's rare for the Commissioner of Canada Elections to take a political party to court.

The dispute over the so-called in-and-out financing scheme stretches back to 2008 when the Mounties raided Conservative party headquarters over the matter.

Elections Canada alleges the Tories broke federal law in the 2006 election campaign, skirting an $18.3-million spending cap, by shifting extra advertising expenses to candidates, who have separate expenditure limits.

The federal elections agency said this was a tactic to claim national campaign expenses as local expenses in 67 ridings and exceed the national campaign-spending limit by more than $1-million.

Liberal Leader Michael Ignatieff rejected the notion this is merely a dispute over accounting methods. "This is a million-dollar scam. This is not small potatoes."

Also charged are Michael Donison, the Conservative Party's former executive director, and Susan Kehoe, a senior Tory staffer - as well as the Conservative Party of Canada and the Conservative Fund of Canada.

Ipsos Reid pollster Darrell Bricker said he doesn't foresee the charges resonating with voters. "Pushing a wad of money over a checkered tablecloth at an Italian restaurant? People get that and know that's bad. The in-and-out scheme? It's a little harder to explain to Canadians how it worked and why it's bad."