16 Nov 2011

'Upstanding Citizens' Escape Justice
in Tory 'In-and-Out' Scandal

This is a story about illegal activities, deceit and lying involving an overzealous group of Canadians who seemed prepared to do just about anything to accomplish their mission – win a federal election. 

In their private lives, all have considerable achievements and are well respected citizens in their communities.

Doug Finley is a former businessman who held senior positions in several companies, including Rolls Royce Canada and Standard Aero.

Irving Gerstein has been a highly successful businessman, best known for being president of Peoples Jewellers. He is also the former Chairman of the Board of Mount Sinai Hospital, and a member of the Order of Canada.

Michael Donison played a prominent role in his church and has been a Senior Policy Advisor on Democratic Reform and Legislative Review. The fourth, Susan Kehoe, is a skilled and well regarded financial officer.

These highly-regarded citizens were named as the key players in a Conservative scheme to deceive Elections Canada and pump an extra, illegal $1.4-million in radio and television advertising into Stephen Harper’s 2005-06 election campaign.

The party and its advertising arm last week admitted as part of a plea bargain they had exceeded the $18.3-million spending limit imposed by the law and that they did not report all the expenses incurred. Maximum fines totaling $52,000 were imposed. As part of a plea bargain, charges were dropped against the four individuals.

Referred to as the “in-and-out scandal”, Conservative Party staff used a series of wire transfers to move money from head office into and immediately out of the accounts of 67 of their candidates and back to head office to try to evade the spending limitations on the national campaign. An advertising agency, later issued invoices to the local campaigns.  This tactic allowed the party to far exceed legal limits on campaign spending.

This is how the key individuals were involved:

Finley was the Party’s campaign manager and director of political operations but, in real terms, he was Harper’s “political pit bull” and a “bully.” He personally carried out a lot of Harper’s dirty deeds, such as removing Tory candidates Harper didn’t like even though they had been had democratically nominated. Finley, who is married to Cabinet Minister Diane Finley, admited he had proposed the 'in-and-out' scheme on the first day of the election campaign.

Gerstein was the party’s official agent and responsible under the Elections Act for ensuring the accuracy of the party’s election financial returns. He has primarily been a party fundraiser.

Donison was the party’s executive director, and one of the two “hands on” people most involved. He was involved in the advertising purchases at the centre of the affair. He wrote emails planning the financial transactions.

The other “hands on” person, Kehoe, was chief financial officer. Her name was printed on the invoices submitted by the party’s media buyer.

A number of things about this case are very troubling.

First of all, it is very possible that the well planned $1.4-million burst of advertising that was purchased in swing ridings helped change the course of Canadian political history.

The 2006 election ended the 12-year Liberal reign, allowing Harper and the Conservatives to win the slimmest minority ever in the House of Commons.  The Conservatives won 36.2 per cent of the popular vote and 124 seats, while the Liberals were held to 30.2 and 103 seats.

Later, a public interest group, Catch 22, calculated that the Conservatives won the election by just 4,502 votes in 11 ridings. How many of those votes were won because of the extra $1.4-million in ads?

Finley clearly knew the value of the extra advertising. He said well before the ads were placed that the party would “run a major slam dunk” over competitors in the final weeks of the campaign.

Liberal Leader Paul Martin resigned and the Conservatives have been in power in Ottawa ever since. Had Harper lost, perhaps he would not have remained as leader of the Conservative Party.

In terms of the morality of – or lack there of – this scandal, it would be interesting to know what discussions took place when the Conservatives realized that had more money at the national office than they could legally spend. The fact that the Crown withdrew the charge that the Tories knew they were violating the Elections Act is an indictment of the Elections Canada management. Was Prime Minister Harper, who normally controls just about everything that happens in the party, involved in making the decision to proceed with the deceitful plan?

Secondly, in view of the seriousness of the violations, it is surprising that the Crown decided not to proceed with charges against the four individuals involved. Crown Prosecutor Richard Roy told reporters that “the public interest does not require that we continue on these charges.”

Wait a minute! Not in whose public interest? Certainly it was in the interest of the four staffers and the Harper regime that the charges were NOT proceeded with.

But surely it was in the interest of maintaining integrity in our electoral process and to show the Conservatives that such behaviour will not be tolerated.

The Crown almost certainly found a smoking gun – even several smoking guns – in the hundreds of documents it seized from at the Conservative Party Offices. Duff Conacher of Democracy Watch said “the Crown should have pursued the case against the individuals, as there was a likelihood of conviction . . . .”    
If convicted of Elections Act violations, any one or all of the four could have faced fines and jail time. 

There could be other reasons why the Crown did not proceed with the charges against the four party staffers. The case reaches right inside the Prime Minister’s Office (PMO), and a thorough airing of all the events might have revealed whether Harper was involved in the 'in-and-out' scheme. Perhaps some people feared, that if Harper was involved, the findings might have a negative impact on the ability of the minority Tories to govern.

With the case closed and the files buried away in some Ottawa office building, we likely will never know the answers to these and other questions.

Well before a decision came down, Harper went into damage control mode. He reduced the PMO’s exposure to the scandal by moving out the four staffers who were charged. Remarkably, with charges still pending against them, Finley and Gerstein were appointed to the stately sanctuary of the Senate, where they continue to perform their fine work on behalf of the Conservative Party.

Donison now works for the Ottawa public relations and lobbying firm Crestview Public Affairs, and Kehoe is with the office of the Auditor General of Canada, serving as secretary of the Canadian Council of Legislative Auditors.

As usual, PR types and Cabinet Ministers began spreading the BIG lie about the case just as soon as the decision was released, saying that it was a “total victory” for the party.

Pierre Poilievre, Parliamentary Secretary to the Minister of Transport, interviewed by Carol Off on CBC’s As It Happens, stonewalled and lied during the interview, saying over and over again that there had been only “minor administrative problems”.  Somehow, Off stopped herself from laughing out loud.

More than anything else, this is a story about individual morality in the public domain. Yes, the charges against the four were abandoned – but many important facts were earlier admitted to. While the Conservative Party took the rap, we know that the transactions were carried out by real people – people who live in our neighbourhoods, attend our community churches and send their kids to our schools. If our institutions are to be respected, the individuals who run them should be held accountable for their actions.


JABS AND LEFT HOOKS: Further concerning this story: The mainstream media provided good traditional coverage of the case during the four years it unfolded. However, no columnist, no editorial, and no media organization expressed outrage – or even concern – over the final outcome of this case. . .

... Perhaps you have seen people carrying a black shopping bag with big white letters saying: Who is JOHN GALT? Well, this is a catchphrase from the 1957 novel Atlas Shrugged written by Ayn Rand. The book rails against government and advocates self-interest and greed as key ingredients of a better world.  The bag is being given out by Lululemon Athletica. Company founder Chip Wilson says he was inspired by the book when he read it when he was 18 years old.  Thumbs Down to Lululemon! 

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  1. This seems more like a story of individual & group immorality than just "individual maorality", Nick.

    Also, the Straight Goods notes that this is just the tip of the proverbial iceberg.
    There are another 2284 rulings(!) that Elections Canada has made since 2004 that have not yet come to light. Whether or not this one you cite is the most serious ... who knows? Only 53 situations have been detailed.

    Meanwhile, our government continues to lead by example, showing the kids that cheating and bullying are acceptable ways of achieving their goals.
    Occupy this(!) Mssrs Finley, Gerstein, Donison, Harper & Poilievre ... and Ms Kehoe too!

  2. This scam boils my blood. I know I'm right that millions of other Canadians -- if they knew -- would be outraged. Open Media had success in getting attention concerning access to the Internet. Another petition is in order (new site) for justice. If they whine about adscam, this new incident cannot be let go.

    Kitchener, ON

  3. "If you want a picture of the future, imagine a boot stamping on a human face—for ever."

    "Big Brother is Watching You."
    George Orwell

    People have to understand that it's okay for politicians to break the law. That's what they do!
    It pays to be a dishonest lying deceiving politician. Ask Gordon Campbell. End of story

  4. If anyone is looking for the PC press release mentioned - you won't find it on their website, of course. But I tracked it down:


  5. Is there a list of the 67 candidates involved in this?
    Was Tony Clement's ridding involved?

    1. I think Elections Canada has such a list, and they should make it public. Or Democracy Watch may have the information. I don't know if Clement's riding was involved, but he got $50-million of our money to help him win his seat!

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