Politics

Mike Duffy trial: Gerry Donohue's Senate contract deal avoided tax 'disadvantage'

Gerald Donohue, who received contracts worth thousands of dollars from Senator Mike Duffy, said he had cheques made out to his wife's company because direct payment would have put him at a "disadvantage" with Canada's tax agency.

Friend and former colleague had cheques for Duffy go to wife's company to avoid tax 'disadvantage'

The trial of Mike Duffy resumes in Ottawa 0:54

Gerald Donohue, who received contracts worth thousands of dollars from Senator Mike Duffy, said he had cheques made out to his wife's company because direct payment would have put him at a "disadvantage" with Canada's tax agency.

Testifying on Day 47 of the criminal trial against Duffy, Donohue told those assembled at the Ontario court in Ottawa he was tasked by the senator, a long-time friend, to carry out research on issues, including Canada's aging population and a project about "Why I'm a Conservative."

"He said maybe he could get me some money," Donohue testified.

Donohue, who was testifying via video link from his home in Carp, Ont.,because of health issues, noted that he had always provided advice on a variety of ideas and subjects to his friend. The men first met while working at CJOH television station in Ottawa in 1989.

He said he wanted cheques for work made out to Maple Ridge Media and Ottawa ICF because the income would have put him at a "disadvantage" with Canada Revenue Agency.

Donohue said about $65,000 in payments went to the two companies, even though he has never been an employee, officer or shareholder in the companies. He also testified that he signed cheques to various individuals and companies for work related to Duffy, including Jiffy Photo, Ashley Caine and Jackie Lambert, even though he didn't have cheque-signing authority for the companies.

"Many times my wife would be busy," he said.

Cheque questions

Donohue said he signed cheques using just the first initial "G." and his last name. His wife's name is Gail.

As for who to pay and how much, he said he would go by invoices, some marked with the name "Duffy" in the corner, or in other cases: "I would be instructed by Senator Duffy."

The Crown has alleged the contracts were set up so Duffy could funnel cash to favoured contractors, some of whom provided services that were not allowable under Senate budget rules.

Gerald Donohue, who received contracts worth thousands of dollars from Senator Mike Duffy, said he had cheques made out to his wife's company because direct payment would have put him at a "disadvantage" with Canada's tax agency. (Greg Banning)

Donohue's testimony wrapped up because of technical difficulties but is set to resume on Monday. The trial continues Friday when former Senate finance head Nicole Proulx is expected to return to testify.

Earlier in the day, court heard from two Senate staffers.

Gillian Rokosh, former assistant to retired senator Trevor Eyton and current assistant to Senator Linda Frum, testified that it was common practice to give expense claims to senators to approve and that she never filled out pre-signed forms. 

James Cooke, a 25-year employee of the Senate's information services directorate, also testified Thursday about requests from Duffy's office to obtain extra mobile device resources in the fall of 2011 that would have exceeded Senate telecommunication plan limits.

Before the start of the day's testimony, Judge Charles Vaillancourt tabled two rulings, including one declaring an internal Senate audit inadmissible. Duffy's lawyer, Donald Bayne, had asked that it be admitted, but the judge determined it was protected by parliamentary privilege.

Vaillancourt also ruled that previous testimony from forensic accountant Mark Grenon, who had said Duffy appeared to live beyond his means, is admissible.

Duffy on paid leave from the Senate

Duffy, now on a paid leave of absence from the Senate pending the outcome of court proceedings, has pleaded not guilty to 31 charges of fraud, breach of trust and bribery related to expense claims and office budgets.

Some of the charges relate to expenses Duffy charged as a senator and later repaid with a $90,000 personal cheque from Nigel Wright, who was chief of staff to then Prime Minister Stephen Harper at the time.

The trial has featured a parade of Ottawa's political elite, including Wright and other top officials from Harper's office, as well as forensic accountants and back-room Senate staffers.

After the Crown wraps up, which could be some time next week, it will be the defence's turn. Bayne has said in the past that his client intends to testify in his own defence.

Nigel Wright spent six days in an Ottawa courtroom testifying at the trial of Senator Mike Duffy.

The political stakes of what he has to say may be lower now that the Conservatives are no longer in power.

But Penny Collenette, a law professor at the University of Ottawa, said even if Duffy doesn't drop a "bomb" that implicates Harper in the scandal, his testimony could still put Conservatives and interim leader Rona Ambrose back on the defensive.

"It will start it all over again, and it could be messy, really messy," she said.

Duffy has maintained he was pressured by the Prime Minister's Office into repaying expenses even though he did not believe he had done anything wrong. And in foreboding speeches to the Senate in 2013, Duffy said he would have more details to divulge.

The outcome of Duffy's case also remains hugely significant for other senators in trouble over questionable expenses, as well as the future of the red chamber as an institution, Collenette said.

"At the end of the day, depending on the findings of this trial, how does the Senate move forward? Under what rules? This could really change the nature of it," she said.

For Duffy, a former high-profile broadcaster who became a celebrated member of the Conservative caucus after his appointment to the Senate, the stakes couldn't be higher as he could face imprisonment if convicted.

Jacqui Delaney, spokeswoman for Senate Speaker Leo Housakos, said if he is, ultimately, cleared of criminal charges, Duffy could return to his job in the Senate with full salary and office resources. But if he is found guilty of even one of the charges, he faces automatic suspension without salary and resources.

That suspension would remain in place even if he appeals his conviction, she said.

The Senate could ultimately move to have him permanently expelled, but the exact process is unclear because it's unprecedented.

"It's uncharted territory. We've never had someone expelled from the Senate because of a criminal conviction," she said.

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