Sen. Gerstein: Intervened in Duffy audit,
Key Tory fundraiser contacted Deloitte Canada, RCMP documents show
Sen. Irving Gerstein, long the chief fundraiser for the Conservative party, intervened with Deloitte Canada to discuss the audit of Mike Duffy’s living expenses at the request of the Prime Minister’s Office, court documents from the RCMP show.
Gerstein, the chairman of the Conservative Fund of Canada since 2003, approached Michael Runia, the Ontario managing partner of Deloitte Canada, whom he knew as a result of Deloitte’s role as auditor of the party’s books.
At first, the Conservatives hoped to have the Deloitte audit into Duffy’s expenses dropped. When Deloitte told them that wasn’t possible, they expressed the hope that the audit would remain silent on whether Duffy’s primary residence was in Ottawa or Prince Edward Island.
In the end, the audit did not reach a conclusion on Duffy’s residence, although the retainer Deloitte received from the Senate had asked the company to “assess where the primary residence is located for Senator Duffy.”
Deloitte received $528,000 for auditing the expenses of Duffy, Pamela Wallin and Patrick Brazeau.
Duffy’s lawyer, Janice Payne, was insisting on the audit being discontinued as a condition of Duffy’s agreeing to pay back his disputed expenses because Duffy was concerned that if his primary residence was shown to be in Ottawa, it could undermine his appointment as a P.E.I. senator, emails made public by the RCMP on Wednesday show.
On Feb. 27, Wright emailed Benjamin Perrin, a PMO lawyer, stating that the Senate subcommittee overseeing the audit “has to do its work” on “withdrawal of Deloitte audit.”
On March 1, Wright emailed Sen. Carolyn Stewart Olson, who sat on the subcommittee, saying that he was “extremely frustrated” that the subcommittee and Deloitte wouldn’t agree that a repayment would end the audit.
“Once we know that repayment will permit the subcommittee and Deloitte to state that the matter is resolved, then the repayment will follow forthwith,” he wrote.
Stewart Olson, the former director of communications to Prime Minister Stephen Harper, wrote back that senators Marjory LeBreton and David Tkachuk were saying the audit would not be pulled.
“I think the only way to do this is to tell Deloitte that we are satisfied with the repayment and end the audit.”
Wright replied: “I agree that the auditors (it’s not really an audit) should report.”
Later, he let her know that he had asked Gerstein to work through back channels.
“Today I asked Sen. Gerstein to actually work through senior contacts at Deloitte and with Sen. LeBreton … the outcome we are pushing for is for Deloitte to report publicly that IF Kanata were the primary residence then the amount owing would be the $90 thousand figure and that since Sen. Duffy has committed to repay this amount then Deloitte’s work in determining primary residence is no longer needed.”
In an interview with the RCMP in September, Gerstein said he called Runia, the managing partner for Ontario at Deloitte, to inquire about the audit. Runia said he didn’t know anything about it but would inquire. Gerstein reported on that call to Patrick Rogers, then a parliamentary affairs staffer in the PMO.
On March 8, Rogers sent an email about Gerstein’s call.
“Senator Gerstein has just called. He agrees with our understanding of the situation and his Deloitte contact agrees. The stage we’re at now is waiting for the senator’s contact to get the actual Deloitte auditor on the file to agree. The senator will call back once we have Deloitte locked in.”
Gerstein and Runia told the RCMP that Runia told the senator the audit would continue in spite of the repayment.
On March 21, Rogers emailed Wright: “Any repayments will not change Deloitte’s conclusions because they were asked to opine on residency. However, they can’t reach a conclusion on residency because Duffy’s lawyer has not provided them anything.”
Later, Rogers suggested that Duffy continue to not give any information to the auditors.
“I would propose that the senator continue to not engage with Deloitte. I believe that we should make arrangements for repayment knowing that Deloitte will not say one way or another on his residency.”
Wright replied that he agreed with Rogers’ suggestion, and suggested “that since Senator Duffy has taken off the table the one issue Deloitte was asked to review, they do not see a purpose for that review.”
In the audit, released May 9, Deloitte concluded that because the Senate’s regulations “do not include criteria for determining primary residence,” the auditors were “not able to assess the status” of Duffy’s primary residence.
Gerstein declined to comment on his conversations with Runia on Wednesday when quizzed before he attended a meeting of the Senate banking committee.
Harper’s director of communications, Jason MacDonald, would not comment on Gerstein’s conversations with Runia.
“These are members of caucus,” he said. “There are conversations with members of caucus all the time, but I can’t to speak to any of these individual conversations that may or may not have happened.”
Vital Adam, a spokesman for Deloitte, said the auditors who worked on the Senate audits “established an ethical wall to prevent leakage of information.
“At no time was the ethical wall breached,” he said. “No information related to the audit was provided to anyone who was not entitled to receive the information.