The RCMP are looking into allegations the Harper government misappropriated funds in order to lavish $50 million on a cabinet minister's riding before last year's G8 summit.
The Mounties say, however, that they have not launched a formal investigation but are examining a dossier to see if there should be a probe.
The news Tuesday comes on the heels of an auditor general's report earlier this month, which concluded the government "did not clearly or transparently" explain how the money was going to be spent when it sought Parliament's approval for a G8 legacy fund for Tony Clement's riding.
The RCMP's involvement was prompted by a complaint from former Liberal MP Marlene Jennings. She was interviewed for an hour last week by three RCMP officers.
RCMP spokesman Greg Cox told CBC News the force "acknowledges that it has received a referral of this matter" and said the matter is with A Division in Ottawa. He would not comment further, and RCMP spokeswoman Suzanne Lefort said there is no investigation right now.
"My sense is that they're taking it very seriously," Jennings said in an interview Tuesday. "My sense is that they're looking at this to see if there are any elements of proof that there may have been wilful intention to mislead Parliament."
Draft report provokes questions
Jennings, who was defeated in the May 2 election, first sought an investigation during the election campaign. Her complaint was prompted by an early draft of the auditor general's report, which was leaked mid-campaign to The Canadian Press.
The draft was much more blunt than the final version released June 9, concluding the government "misinformed" Parliament about the G8 legacy fund and suggesting it may have acted illegally.
In an April 15 letter to the director of public prosecutions, Jennings said the government may have wilfully violated two appropriations acts and the Financial Administration Act, which stipulate that the government must disclose how it intends to spend the money when it seeks parliamentary approval for funding.
Jennings said she never heard back from the public prosecutor's office. But she did eventually receive a May 24 letter from the RCMP, advising her that "the matter is with A Division Commercial Crime Section."
The day after the final auditor general's report was released, she received a call from Cpl. Ray Warner asking her to meet with him. She was interviewed by Warner and two other officers last Wednesday.
The news broke just before question period in the House of Commons. The NDP's Charlie Angus, who previously dubbed former industry minister Tony Clement the "Muskoka fox" and the "Daddy Warbucks of cottage country" over the G8 spending controversy, referred to him Tuesday as "the missing Member for Muskoka" and urged Clement to "come clean."
"If he gets away with this $50-million scheme, then start counting your spoons and silverware dear public, because they've just given this man the keys to the Treasury Board," Angus charged.
Opposition accused of PR stunt
Clement did not rise to the bait. Instead, Foreign Affairs Minister John Baird dismissed the Jennings letter as well as Tuesday's opposition questions as another "public relations stunt," quoting the auditor general's report this month that found no evidence of a deliberate attempt to mislead Parliament about the G8 spending.
Baird also noted that rather than being an example of overspending, the legacy fund was underspent by more than $5 million.
Liberal MP Denis Coderre asked whether Clement or Baird had been approached by the RCMP, and whether they would co-operate with the investigation. Baird did not answer that question when he rose again to condemn opposition members for a public relations stunt.
NDP Leader Jack Layton says the government refused to answer the opposition's questions, so he hopes the RCMP can find something they couldn't.
"We don't have all the facts in front of us," he said. "It's evident it was a totally bizarre and unacceptable process, to have $50 million spent like that, with no defined process."
Liberal Leader Bob Rae says the fact the RCMP are looking into the matter suggests it isn't trivial.
"Whether in the end it produces more serious consequences, we'll just have to see. But I think when you look at something like this, funds that are allocated to one area that are then diverted to another, I think it's a legitimate area of inquiry," he said.
The issue revolves around the way in which the government won parliamentary approval to create the G8 legacy fund in 2009.
The government received approval for a $83-million border infrastructure fund, which was supposed to relieve congestion at border crossings. It did not disclose that $50 million of that fund was to be devoted to infrastructure projects in Clement's riding, 300 kilometres away from the border.
The legacy fund was supposed to help Clement's riding prepare for hosting the G8 summit last June. It was spent on 32 projects, including gazebos, parks, public toilets and other beautification projects, many of which were hours away from the summit site in Huntsville.
John Wiersema, the acting auditor general, said the word "misinformed" was deleted from the final report because auditors found no evidence the government was trying to deliberately mislead Parliament. Rather, he said it appeared the government had been motivated by "expediency."
"Having said all that, going to Parliament requesting money for one thing and using it for something else is a serious matter which we think deserves parliamentary attention," Wiersema told a news conference after releasing the final report.
As for dropping any reference to possible illegality, Wiersema initially said he's "not aware of any specific law that was broken."
Up to police to decide on crime
He later conceded, however, that the matter is not clear and suggested it's up to politicians, not the auditor general's office, to determine whether "anything illegal took place."
"I think the legal profession could have an interesting, long debate about the wording of the Appropriations Act and whether or not this was inside or outside of the Appropriations Act. We chose not to go there."
The final report also slammed the government for the unprecedented lack of a paper trail documenting how and why the 32 projects were selected to receive government largesse. It found public servants had no input into selection process, that projects were approved by Baird, then infrastructure minister, based strictly on the advice of Clement.
Wiersema called the complete absence of documentation "very unusual and troubling" and said he'd never encountered anything like it during his lengthy career as an auditor.
Baird, now foreign affairs minister, has acknowledged "administrative deficiencies" in the handling of the G8 legacy fund. But he has insisted there was no attempt to deliberately mislead Parliament.
With only a year to complete projects before the summit, Baird has said he accepted the advice of bureaucrats that it would be faster to lump the G8 legacy monies under the existing border infrastructure fund rather than create a separate new fund in the spending estimates.
Prime Minister Stephen Harper told the Commons that the border fund has been "frequently used for projects that are not in border communities."
Opposition parties, however, have accused the government of creating a secret "slush fund" for Clement to spray around his riding as he saw fit.