Inside Politics

PMO staff tried to use party ties to Deloitte to derail Duffy audit

One of the many minor, but still fascinating subplots threading its way through the latest batch of Duffy/Wright-related court documents is what appears to be an unsuccessful attempt by PMO staffers to call off the then still active Deloitte audit into Duffy's expense claims, on the putative grounds that full repayment of those funds would render the matter closed.

What is particularly noteworthy about the failed gambit, however, is just who they decided to approach, and why.

In an interview with the RCMP, Senator Irving Gerstein confirmed that he had "received a call from Mr. Wright who appeared frustrated and annoyed by not knowing what was happening with the Senate sub-committee investigation relating to Senator Duffy."

According to Gerstein, Wright had "asked him to contact Deloitte to try to ascertain the status of the audit," a request that he apparently accepted, and that's where the RCMP summary starts to get interesting:

As the chair of the Conservative Fund, Senator Gerstein knows one of the partners at Deloitte, Michael Runia. He called Mr. Runia and asked if there was anything he could share with him regarding the status of their audit. Mr. Runia advised him that he did not know anything about it, but would inquire. Senator Gerstein relayed this Patrick Rogers;

During the second call with Nigel Wright and Patrick Rogers, he was asked to contact Deloitte and ask if repayment of the $90,000 would result in conclusion of the audit. Mr. Runia told him that the audit would continue.

The Mounties subsequently confirmed that a conversation had taken place between Gerstein and Runia, a managing partner at Deloitte, who noted that the two "have regular contact" due to Deloitte's involvement as auditor of the Conservative Fund.

(According to Elections Canada records, Runia is also a loyal party supporter, who regularly maxes out the donation cap with his contributions to the coffers.)  

The RCMP summary of that interview states that Runia "was not involved in the audit of any of the Senators," but confirmed that Gerstein had, indeed, called him to ask "what would be the result if Senator Dufy repaid the money."

Runia's response, according to the documents, was that he believed the auditors would still report, "and note the repayment in their findings."

Now, here's how Nigel Wright characterized that conversation with Gerstein in a March 1 email to then-PMO legal advisor Benjamin Perrin:

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. .. . The nub of what I said to Mike is that his expenses would have to be repaid, so his choice was between having that plus a finding that they were inappropriate or that without such a finding. That is what we are working towards.

A few days later, in response to a proposal from Duffy's lawyer that she advise Deloitte, in writing, that her client had decided to "resolve the matter" by repaying the funds, and ask for confirmation that he would be "withdrawn" from the ongoing review, Wright wrote the following to unspecified "PMO employees" :

I would like this checked with Irving.. . .I would support taking the approach below IF I can be satisfied that Deloitte will accept the proposal. I do not trust that Sen. Tkachuk has ascertained that with Deloitte before making the suggestion to Sen. am reluctant to have her ask Deloitte to specify the amount of expenses owing because that would give Deloitte an excuse to ask for documents."

On March 8th, during an email exchange related to the Deloitte mandate, PMO aide Patrick Rogers reported that he had just heard from Senator Gerstein:

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.

That burst of optimism at the prospect of having Deloitte "locked in", however, turned out to be premature.

On March 21, Rogers told "Wright and others that he heard from Senator Gerstein with an update on his inquiries with Deloitte":

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. This is despite their attempts use "public information" about residency. Their report will state that Duffy's lawyer did not provide information when requested. They were asked to complete the work by the end of March and plan to.

So, as noted above, it appears that PMO's efforts to persuade Deloitte to drop the Duffy report ultimately failed -- although not, it's fair to say, for lack of trying.

At the very least, though, it would seem that senior PMO officials saw nothing remotely potentially inappropriate in getting the chair of the party's multi-million dollar war chest to use his relationship with Runia to "get the actual Deloitte auditor on the file to agree" to drop the Duffy review once the money was repaid, which may not be exactly what most people would expect from an ostensibly independent auditing process. 

In any case, It's worth pointing out - again - that Gerstein and Runia's recollection of the discussion differs sharply from that put forward by Rogers in email to his PMO colleagues.

Given those discrepancies, I've sent a query asking Runia for his take on the situation, and I'll update this post if and when he replies.

UPDATE: I asked Deloitte for a statement on the latest developments. Here's what I got in response: 

The forensic review of the Senate was conducted by a team of highly professional and objective forensic accountants. We have established systems and policies/guidance to support our work by identifying potential conflicts of interest, putting in place appropriate ethical walls where necessary and protecting confidential client information. The Senate audit team established an ethical wall to prevent leakage of information. At no time was the ethical wall breached. No information related to the audit was provided to anyone who was not entitled to receive the information.

 

In a follow-up email, I asked how that would apply to providing an answer to Gerstein's question on the status of the audit -- and, specifically, what, if anything, would result if the money was repaid, as Runia confirmed having done in response to questions from the RCMP.  
I'll let you know what, if anything, I find out. 

Tags: blackberry jungle, conservative party, duffy/wright affair, irving gerstein

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