Senate leaders caught up in AG expenses audit

The three most powerful figures in the Senate are among those flagged by the auditor general to repay inappropriate expenses.

Senate Speaker Leo Housakos, government leader Claude Carignan and Opposition leader James Cowan have confirmed they are among 21 senators who have been found to have filed ineligible expenses.

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Another nine senators were found to have "big problems" with ineligible expenses and their cases will be referred to the RCMP for criminal investigation following the auditor general's exhaustive two-year review.

CBC News has learned that 50 copies of the auditor general's report will be handed over to the Senate today as well as to the Prime Minister's Office. The report won't be made public until next Tuesday, giving staff the weekend to craft talking points in response to the auditor's potentially damaging findings.

Housakos and Cowan are vowing to fight the auditor general's conclusions on their expenses. Carignan said the auditor's findings in his case related to expenses by one of his staff, who has already reimbursed about $3,000.

But multiple sources tell CBC News the revelation that the current leadership are among those with inappropriate spending has left other senators fuming about a recent change in the Senate's handling of the audits.

Arbitration process

Housakos (Wellington, Que.), Carignan (Mille Isles, Que.) and Cowan (Nova Scotia) took over as the Senate's liaisons with the Auditor General's Office earlier this spring, replacing three other senators — after letters from the auditor general went out to all of the 30 senators identified as having problematic spending.

The three Senate leaders then decided an outside arbiter would be appointed to adjudicate disputes over expense claims and the auditor's findings. Housakos named former Supreme Court justice Ian Binnie to the role on May 26, saying Binnie would arbitrate all disputes over repayment of funds, including those cases referred for criminal investigation.

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Cowan told reporters Thursday he has been told to repay "a little more than" $10,000, all of it for travel-related expenses in 2011. He said the auditor general asked for documentation for the expenses, which "four years later … I simply do not have.

"On the basis of that, his conclusion is that they were private rather than parliamentary. I respectfully disagree and I'm going to have this determined under the arbitration process that we have set in place."

Housakos has confirmed to CBC News that he has been found to owe about $6,000 related to a contract. Like Cowan, Housakos said he will seek arbitration on the finding.

Housakos defended the decision to appoint Binnie to settle those disputes.

"I think we brought in an arbitration process that is completely arm's-length, an arbitration process that's completely independent precisely for reasons like that," Housakos told reporters Thursday afternoon.

"I hope no one questions the credibility of that arbitrator — I certainly don't and I don't think anybody who knows the background of the gentleman would either," Housakos added.

In an interview later Thursday with CBC's Rosemary Barton, Housakos said he feels the auditor's findings will ultimately strengthen the Senate, but that transparency comes with risks.

"There's two choices here: We can whitewash things as they have been done in the past, or we can come clean and we can level with the Canadian public," he said.

"Obviously, when you are airing your dirty laundry as publicly as we've decided to do as an institution, it becomes messy."

But one source told CBC News it is troubling that three of the Senate's over-spenders will be presenting the findings to the public, saying it should have been left to the previous members of a subcommittee handling the matter: Larry Smith, Beth Marshall and George Furey.

The spending of those three has been found to be beyond reproach.

B.C. Liberal Senator Larry Campbell said Thursday that anyone responding to the auditor general's report must be free of any spending issues.

"I've always said if anyone has an issue they should be stepping back, stepping back from the process, and let it take place. And once it's concluded, then we can see where we're at," he said.

What is 'parliamentary business?'

There is another perspective, offered by some senators, that may explain the Senate's urgency in appointing an independent arbiter: That Auditor General Michael Ferguson and his team don't fully understand the work senators do.

Specifically, they say there could be disagreement between the Senate and the auditors over what constitutes "parliamentary business." The late Senate speaker Pierre Claude Nolin was among those who pointed to the definition as a potential sore spot.

The term is significant because senators are allowed to bill travel costs and other expenses when undertaking parliamentary business. If the Senate and the auditor general disagree on that definition, hundreds of thousands of dollars in otherwise properly claimed expenses would suddenly be up for debate.

The auditor general was called in nearly two years ago to review spending by senators, including travel and living expenses. Auditors looked at spending by 116 current and former senators over several years.

Senators have been preparing themselves for the results of the audit since RCMP launched investigations into the spending habits of suspended Senator Mike Duffy and three of his Senate colleagues: suspended senators Patrick Brazeau and Pamela Wallin and retired senator Mac Harb.

Duffy's trial on 31 charges of fraud, breach of trust and bribery resumed on Monday. He has pleaded not guilty to the charges. Trials for Brazeau and Harb have not begun, while Wallin has never been charged.