The Tory In and Out Scam

The "In and Out" Scam refers to a practice used by the Conservative Party during the 2006 election campaign. It is alleged the party’s national headquarters transferred money to local riding associations, who, through pre-signed bank transfers, immediately transferred the money back as payments for campaign advertising. Elections Canada has ruled that these ads expenses could not legitimately be claimed as expenses of the local candidates and the independent Commissioner of Elections is investigating whether this scheme allowed Stephen Harper's Conservatives to exceed national campaign spending limits by approximately $1 million. After the campaign, Conservative candidates who participated in the money transfers also attempted to claim taxpayer-financed refunds for 60 per cent of these national advertising costs, claiming they were "local" expenses.

In the course of routine audits of local campaign financing after the 2006 election, Elections Canada identified 67 campaigns that appeared to have participated in the scheme. In 2007, the audit led William Corbett Commissioner of Elections Canada to launch an investigation into the activities as it appeared that more that $1 million spent by the Conservative Party on national advertising had been transferred through local campaigns in an attempt to disguise the spending as local expenses.

In one example, the local campaign to elect now-Transport Minister Lawrence Cannon in his Ottawa-area riding of Pontiac appeared to partially underwrite television ads that ran in in the Quebec City market, nearly 500 kilometres away. As well, Elections Canada auditors interviewed numerous local Conservative campaign officials who said they did not know what type of advertising they had paid for, and that these transactions were arranged by the national party.

On April 15, 2008, the RCMP executed a search warrant at Conservative Party Headquarters on behalf of the Elections Commissioner in order to seize documents related to this investigation. Commenting on the raid in Question Period that same day, House Leader Peter Van Loan and Prime Minister Stephen Harper claimed the Conservative Party of Canada was “cooperating fully” and “provided every document that has been requested by Elections Canada…”.

The search warrant request states that the Elections Commissioner believes the Conservative Party of Canada and its official agent, the Conservative Fund of Canada, violated the Canada Elections Act. The warrant alleges that not only did the party exceed the maximum amount allowed for election expenses but the Conservative Fund may also have filed financial returns "that it knew or ought reasonably to have known contained a materially false or misleading statements."

Since August 2007, Conservative MPs have roadblocked all attempts by the House of Commons Standing Committee on Procedure and House Affairs to investigate the alleged "In and Out" activities. On July 15, 2008, after almost a year of filibustering, the House of Commons Standing Committee on Access to Information, Privacy and Ethics began studying the advertising scheme. Testifying before the Committee, Chief Electoral Officer Marc Mayrand said Elections Canada’s investigation showed the Conservative Party of Canada was alone in its “in and out” financing scheme taking them over the campaign financing limit. The Conservative party alone transferred money to local candidates and then back to the central campaign, often coupled with other factors including local candidates' lack of knowledge about the expenses and lack of documentation. With regard to the other political parties, Mr. Mayrand also confirmed Elections Canada had “not identified any other transaction or group of transactions in which all of the factors [evidence of campaign financing violations]... were at play."

In subsequent Committee hearings, Doug Finley, the Conservative campaign chair, was escorted out by security for appearing at a time in which he was not scheduled and after refusing to leave. Other Conservative witnesses, despite receiving summonses to appear, refused to show. Some witnesses claimed the Conservatives had contacted them and informed them they didn’t “have to come” or discouraged them from appearing. Critics slammed the Conservatives for their actions in Committee, calling them an attack on democracy. One former Conservative candidate testified: “When I joined that party, I believed its vision at the time. I came to the realization they don't have as much integrity as they claim."