OTTAWA—Canada’s governing Conservative party has admitted to illegal campaign advertising tactics in the 2006 campaign that brought Stephen Harper to power.

The Conservative Party of Canada and its fundraising arm, the Conservative Fund of Canada, were fined $52,000 after pleading guilty to exceeding national advertising spending limits and improperly reporting the expenses incurred through a sophisticated “in-and-out” scheme.

Under it, Harper’s party shifted national advertising money, through wire transfers into and immediately out of local riding campaign accounts, in order to claim national ad spending as local. In the words of national campaign director Doug Finley, it would “run a major slam dunk” over competitors in the final weeks of the campaign.

Liberal Leader Bob Rae called it “an accounting scam” that arguably helped to “buy them the election.” NDP interim Leader Nycole Turmel demanded Harper apologize to Canadians and “explain himself.”

But the Conservative party, in its long-running and fierce legal and public relations battle with Elections Canada, shrugged off the guilty pleas and said the deal struck with the federal director of public prosecutions was a “big victory.”

“Every single Conservative accused of wrongdoing has been cleared today,” said spokesman Fred DeLorey, in a written statement afterwards.

Crown attorney Richard Roy replied “these are serious violations of the act,” and the party’s guilty plea was an admission that its scheme was “illegal.”

Yet he suggested to Judge Célynne Dorval it was in the “public interest” to strike the deal that withdrew charges against Conservative senators Doug Finley and Irving Gerstein, then-party director Michael Donison, and then-chief financial officer Susan Kehoe.

The judge agreed an expected six-month trial “would not have made any difference” even if there had been convictions because the fines amounted to the maximum penalties that could have been imposed.

Conservative party lawyer Mark Sandler said the party’s guilty plea is only an admission of “inadvertent negligence” and not an outright or deliberate attempt to flout the law.

In 2006, the law capped the national Conservative campaign spending at $18.3 million — a limit the judge said was “important to a fair and democratic process.”

But Conservative national organizers had access to $2 million more than that, the court heard, and decided to finance a large media buy — using the spending room local campaigns still had — for advertising on radio and television, unfettered by the national limit. Some 67 local campaigns agreed, partly based on promises that they could claim greater rebates. But local candidates had no say in the content, production, payment or broadcast of the advertising.

An agreed statement of facts laid out the twists and turns of how the “in-and-out” scheme was organized.

It states the Conservative party and the Crown still disagree on the exact amount that was involved. The Crown says the national party failed to report $1.24 million spent, while the Conservatives admit only to $680,000.

It says national campaign manager Doug Finley knew the party had access to funds that “could not be reasonably spent prior to the calling of the election,” and so he wrote Gerstein to outline how he could shift money to local riding associations who would then return money to him through “a variety of perfectly legal artifices.”

“This in effect would transfer TV and radio advertising costs from the party to local campaigns,” said the joint court statement. Gerstein agreed, but cautioned the transfers should “comport to all legal requirements.”

Conservative Party lawyer Mark Sandler told court the party followed legal advice to ensure ads reflected local campaigns’ approval with “taglines” and made sure the ads aired locally as well. The problem, he said, was one of “timing.” In 29 of 67 ridings where the party shifted money in and out of accounts, an official agent or candidate hadn’t yet been appointed.

Conservative spokesman DeLorey said only one thing mattered: “Ultimately, Conservative candidates spent Conservative dollars on Conservative ads.”

Loading... Loading... Loading... Loading... Loading... Loading...

Conservative candidates later claimed $841,000 in public reimbursements of expenses, some of which was paid out before Elections Canada began investigating in 2007.

Thursday’s plea deal brought to a close just one part of the high-stakes battle between Elections Canada and the federal Tories.

Although the Conservative party did not use the same tactics in the 2008 and 2011 campaigns, it continues to challenge Elections Canada in a civil lawsuit, seeking rebates for two local candidates. The Conservatives insist national-local transfers are standard practice by all parties, and that Elections Canada set out conflicting interpretations of the guidelines for political parties. That case will be heard by the Supreme Court of Canada.

Read more about: