RCMP investigators looking into Senator Mac Harb's travel and housing expense claims believe he has committed breach of trust and are further investigating a curious mortgage transaction involving one of his former properties.
The RCMP's lead investigator in the case, Cpl. Greg Horton, filed a production order request with the court that lays out the investigation to date and why he believes that Harb didn't live in two different properties he claimed as his primary residences over the past decade.
Senate rules allow senators to collect a housing allowance for a residence in Ottawa if their primary residence in more than 100 km away from the National Capital Region. An external audit was done for the Senate on Harb's expenses, along with those of senators Mike Duffy and Patrick Brazeau, and the Senate then asked Harb to repay some of the money he had claimed. He has repaid $51,000 but says he has done nothing wrong and is challenging the Senate in court.
The Senate has also advised Harb that he could pay back $231,649 if he wants to avoid a more extensive audit of his expenses dating back to 2005. The first audit only covered 18 months.
Harb has explained in an affidavit why he believes he was allowed to claim the expenses. In his affidavit, filed last month, Harb said he was told by the Senate clerk in 2003 that he could claim his new home in Cobden, Ont., as his primary residence.
Horton says in his court document that his team of investigators checked with the clerk, Paul Belisle, who said he doesn't recall the conversation with Harb and that he would have referred questions about residences to Senate legal counsel.
Harb claimed houses in Cobden and Westmeath, Ont., as his primary residences over the last 10 years, but Horton states that based on evidence gathered so far, he believes Harb "resides primarily in the NCR [National Capital Region], and as such is not entitled to collect a housing allowance" for the Ottawa residence he designated as "secondary."
Harb, a former Liberal MP, was appointed to the Senate in 2003 and bought the house in Cobden three months later. It's about 123 km away from Ottawa. He renovated the old house and put an addition on it over the course of about three years.
Mortgage same day
In 2007, Harb transferred 99.99 per cent of the ownership of the home to Magdeline Teo, who was an Ottawa-based diplomat for Brunei at the time. The court document says that on Oct. 12, 2007, Harb was granted a mortgage on the property for $177,000 and later that day the property was sold to Teo. He maintained a 0.01 per cent interest in the property.
"Obtaining a mortgage on the property and then transferring 99.99 per cent ownership of the property to Teo on the same day potentially put the bank at risk," it says. "Additional investigation will be conducted relating to this transaction."
The investigator also said the RCMP has not determined the relationship between Teo and Harb and that she has only agreed to answer questions by email. She now lives in China. She told investigators in writing that she lived in Canada from 2004 to 2007, is personal friends with Harb and that he lived at the property after he sold it to her, paying the mortgage as rent from 2007 until 2011.
She told them there is nothing else investigators need to be aware of and didn't explain when asked why she won't speak to them and will only answer questions by email.
Horton says that without further details from Teo, the rent arrangement explanation "lacks credibility."
The RCMP also contacted a number of other people, including neighbours, contractors, insurance agents and real estate agents. Some described the Cobden home, located at 62 Durack Line, as "sparsely furnished," "unkempt," and "not lived in full time."
The house was put up for sale in 2010 and a woman hired to clean it said it took her a week because it was so dusty and dirty and that it looked like it hadn't been lived in for a long time. She told the RCMP that Harb told her he was selling it because his wife and kids didn't like the area and that he also had a cottage in Quebec and property in Florida.
Harb's gift rejected by neighbour
After the Cobden house was sold in 2011, Harb bought another property in Westmeath. The RCMP says it appears as though it was used as a secondary residence, not his primary one. A neighbour, Linda Crosbie, said she's never met Harb and that before the media attention she only saw him drive by on occasion. Now he's there more often and this past Christmas Crosbie found a bottle of wine at her door with a note from her unknown neighbour: "Dropped by to see you, sorry I missed you, Mac."
"She returned the bottle with a note that said 'No thank you' as she does not believe that Harb actually lives at the residence and did not appreciate the gesture," the court document states.
But Crosbie's nephew, Leroy Behm, contradicts her account and told the RCMP that Harb spends the weekends in Westmeath and if people don't see him it's likely because he arrives late and leaves early in the mornings. Behm noted that his relatives are not Liberal party supporters. Harb bought the house from his mother.
Multiple insurance and real estate documents list Ottawa homes as Harb's contact address. "He even notified the insurance company when he had an address change in Ottawa. The file also references an explanation of Harb staying in Ottawa during the week, while his wife stays at the residence full time," the court document says in its conclusion.
Horton says based on the information so far it appears as though the Westmeath home is somewhere Harb goes on weekends but it is "not indicative of a primary residence."
The RCMP requested documents from the Senate to support its case, including all travel expense claims filed by Harb since 2003, credit card bills, cell phone bills, and Senate attendance records.
The court granted the request and has ordered the Senate to supply the information within 21 days.
The RCMP also has a separate investigation into Duffy's housing and travel claims and a similar production order sought by Horton lays out that he believes Duffy has also committed breach of trust. Horton also believes Duffy has committed fraud on the government. That investigation includes an examination of the $90,000 cheque that Nigel Wright, Prime Minister Stephen Harper's former chief of staff, wrote to cover Duffy's expenses that he was asked to repay by the Senate.