Stephen Harper has always had a difficult relationship with Elections Canada.

Remember when he was out of Parliament and leading the National Citizens Coalition in the late 1990s, he challenged Elections Canada restrictions on the amount that third parties, those issue groups not actually fielding candidates, could spend to advertise in election campaigns.

That created an obvious strain between the agency responsible for running Canadian elections and overseeing party financing, and the man who is today prime minister.

Now, this latest development — misspending charges by Elections Canada against the Conservatives stemming from the 2006 election — could make things even more difficult.

They might even cancel out an issue, public subsidies for political parties, which Harper had planned to use in the upcoming election.

Four high-ranking Conservatives from the 2006 federal campaign have now been charged with incorrectly reporting election spending on television advertising in the campaign that brought Harper his first minority government.

All of those accused have played key roles in recent Conservative elections as well. And two of them, former campaign director Doug Finley and the party's financial guru, Irving Gerstein, now sit in the Senate.

In and out

The charges were laid under the Canada Elections Act, five years after the alleged offences took place. But they also follow almost three years of manoeuvring between Elections Canada, the RCMP and the director of public prosecutions at Justice Canada.


An unidentified man opens the door for a plainclothes RCMP officer at the Conservative Party headquarters in Ottawa on April 15, 2008 during an RCMP raid on behalf of Elections Canada. (Tom Hanson/Canadian Press)

The allegations involve the shifting of $1.3 million  between local ridings and national party accounts to buy television advertising in the 2006 election.

And the dispute isn't over whether the money was actually transferred, but whether the transfers are allowed under the Canada Elections Act.

This is what happened.

Conservative campaign headquarters would transfer money to the accounts of certain candidates, with instructions for those candidates' campaigns to immediately transfer the money back to headquarters.

The campaign offices of 67 candidates, some now MPs and even in cabinet, were included in this so-called in-and-out scheme.

When the money was returned to headquarters, it was used to buy advertising that was national in scope and not specifically aimed at those candidates whose campaigns passed the money along.

Nonetheless, when filing out their election expenses, these individual candidates showed the transferred money as cash that they had spent and were therefore under the act eligible for reimbursement.

But Elections Canada says the money should have been reported as a national campaign expense, and since it wasn't, the Conservatives exceeded the $18.3 million the party was allowed to spend on that election.

Election appetite?

Canadians first became aware of this dispute in the spring of 2008 when the RCMP, acting on behalf of Elections Canada, raided Conservative party offices in Ottawa, seizing files, computers and other records.

Since then, the affair has been unfolding in slow motion.

The RCMP investigation for Elections Canada was completed in the spring of 2009.

But charges by the director of public prosecutions were not forthcoming and may have been delayed in part because of a civil law suit the Conservatives launched against Elections Canada as a kind of counterpunch.

So far, the Conservative's civil suit has found support in the courts, mainly because judges have been impressed by the argument that no charges, and thus no convictions, have been forthcoming after the April 2008 raid.

But now that charges have been laid, the landscape has changed.


Stephen Harper and family in Calgary on election night 2006. Never really a fan of Elections Canada. (Jeff McIntosh/Canadian Press)

The first court appearance for senators Finley and Gerstein, along with the two other party officials charged, Mike Donison and Susan Kehoe, is in Ottawa on March 18.

Where it goes from there is anyone's guess. But in the short term, they could well have an impact on the Conservative appetite for an election this spring.

Only the beginning

For the Harper government, these charges could be a bit like the Gomery inquiry was for the Liberals in 2005 (except the Conservatives were smart enough not to set it upon themselves).

Every court appearance will bring a recap of the allegations and the inevitable contrast with the Conservative's law and order, and good public management themes.

Against this kind of backdrop, and the now official allegation that his party has mismanaged public election money, will Prime Minister Harper want to take the chance of going to the polls this spring?

And if he does, can he legitimately raise the issue of the public funding of political parties as a campaign theme? 

There may be longer term implications here as well.

It has taken a long time for the director of public prosecutions to get to a court date on March 18th.

But what happens then is really only the beginning of what began with that police raid back in April 2008.