Mike Duffy auditors face grilling at Senate committee

The Senate committee that dealt with Mike Duffy's ineligible expense claims now under RCMP investigation questioned Deloitte auditors this morning about potential interference in their audit - but it voted against hearing from a Deloitte partner who took a call from Conservative Senator Irving Gerstein.

Committee votes against hearing from Deloitte partner who took Conservative senator's call

NDP leader Tom Mulcair speaks with CBC's Evan Solomon about the Senate expense scandal and Monday's federal byelections 13:30

The Senate committee that dealt with Mike Duffy's ineligible expense claims — claims that are now the subject of an RCMP investigation — met Thursday morning to question three Deloitte auditors about potential interference in their audit.

But two of the main players in the controversy weren't there.

Allegations in RCMP documents released last Wednesday suggest Conservative Senator Irving Gerstein tried to manipulate the Duffy audit by directly calling Michael Runia, a partner at Deloitte.

Gerstein and Runia weren't invited to Thursday's internal economy committee meeting, however.

"The people from Deloitte who are appearing (Thursday) at the Senate hearing are the ones who were invited," said Vital Adam, Deloitte senior manager, in an email to CBC News.

The committee instead heard from auditors Alan Stewart, Peter Dent and Gary Timm, who wrote the Deloitte report on Duffy's expenses.

The auditors told the committee Thursday morning that Gerstein's call to Runia had no influence on the audit. They said they did not have contact with anyone outside of the Senate committee and Duffy or his lawyers during the audit process.

But while none of the auditors would comment on what they thought of Gerstein's call to Deloitte, they conceded they did discuss it.

After the three auditors' testimony wrapped up, Liberal Senator George Furey argued the committee needs to hear from Runia, but outgoing committee chair Gerald Comeau overruled Furey's motion.

"Consider this a challenge of your ruling, chair," Furey said.

Senators voted to sustain Comeau's ruling, meaning the committee won't hear Runia explain the call he got from Gerstein.

Gerstein runs the Conservative Party's fundraising arm, which is itself audited by Deloitte. Runia is also listed on the Elections Canada website as the party's auditor.

Comeau said earlier this week the committee wants to know whether there was interference in the auditing process, and if so, who did it and what was the nature of the interference.

The audit went ahead as planned. But Conservative senators on the internal economy committee changed a report prepared by Senate staff to soften the language and entirely remove criticism of Duffy for his spending.

A spokeswoman for Deloitte said the review "was conducted by a team of highly professional and objective forensic accountants."

'Work through senior contacts at Deloitte'

The RCMP affidavit says Gerstein called a contact at Deloitte on behalf of the Prime Minister's Office to try to have Deloitte drop Duffy from the investigation.

Referring to emails between PMO staff, RCMP Cpl. Greg Horton alleges they argued the issue would be closed once Duffy repayed the approximately $90,000 in inappropriate expenses.

"Today I asked Sen. Gerstein to actually work through senior contacts at Deloitte and with Sen. [Marjory] LeBreton," Nigel Wright​, then-chief of staff to Prime Minister​ Stephen Harper, wrote on March 1, 2013.

In an email to then-PMO lawyer Benjamin Perrin, Wright went on to say he and the senators were pushing for Deloitte to find there was no longer a need for an audit into Duffy's primary residence.

Duffy was one of four senators who had expense and travel claims referred to Deloitte for investigation. The long-time Ottawa resident was claiming secondary housing expenses for his home in a suburb just west of Ottawa.

"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 $90,000 figure and that since Sen. Duffy has committed to repay this amount then Deloitte's work in determining the primary residence is no longer needed," Wright wrote.


Senator James Cowan, Liberal leader in the Senate, said Tuesday he wants Gerstein to to appear before the committee on Thursday.
The Senate committee that dealt with Mike Duffy's ineligible expense claims meets Thursday to question three Deloitte auditors about potential interference in their audit. But two main players, including Senator Irving Gerstein, won't be there. (Adrian Wyld/Canadian Press)

"I think the more troubling thing from my point of view with respect to Senator Gerstein was that he would have contacted the audit firm that was conducting the audit on behalf of the Senate," he said.

Liberal Senator George Furey said he'll wait to hear from the auditors, but noted there are allegations in the affidavit that raise questions.

"There are concerns raised that I find very troublesome," Furey said.

In the House of Commons Wednesday, the opposition grilled Harper about Gerstein's involvement.

"The RCMP says Irving Gerstein called Deloitte twice to interfere with their audit of Mike Duffy's expenses. He tried to back-channel audit information and then pressed on hoping that Nigel Wright's $90,000 payment would make the audit go away. So will the prime minister please explain to Canadians why Senator Gerstein still enjoys his complete confidence?" Liberal Leader Justin Trudeau said.

Harper returned to familiar lines, pointing out only two people are known to be under investigation by the RCMP.

"What is at issue here is that Mr. Duffy made claims to repay inappropriate expenses when he in fact had not done that. That was actually done by Mr. Wright ... and that information was not properly disclosed to me or to others," he said.

Seven times the opposition asked why Gerstein is still a senator and why he's still in the Conservative caucus and seven times the Prime Minister gave a similar answer: "two individuals are under investigation as it should be."

The committee's executive met late Tuesday and agreed to open the normally closed-door meeting to the public.


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