Mountie probe of alleged leak on income trust tax hits almost $500,000
By Dean Beeby (CP) –
OTTAWA — The meter is still running on the RCMP's four-year-old probe into the alleged leak of an income-trust taxation measure, with costs about to hit a half million dollars.
The investigation - a political bombshell during the 2005-2006 election campaign - eventually fizzled: no one was fingered for any leak, though a civil servant was charged for allegedly profiting from inside information.
As of last month, the Mounties had spent $445,000 on their probe, including almost $60,000 on travel and related expenses, the force said in response to an Access to Information Act request from The Canadian Press.
More than 8,700 hours of staff time has been logged on the case so far, with more to come as the RCMP helps prepare the Crown's case against Serge Nadeau.
Nadeau, a senior official with the Finance Department, was dismissed without pay from his position after he was charged in February 2007 with criminal breach of trust, which carries a maximum penalty of five years in prison.
The RCMP allege the Orleans, Ont., resident used inside information about a Liberal government decision not to tax income trusts to make between $6,368 and $7,378 on the stock market.
Nadeau pleaded not guilty and has a trial date set for April 6 next year in Ottawa. None of the accusations against him have been proven in court.
Ralph Goodale, then the Liberal finance minister, announced on Nov. 23, 2005, a plan not to tax income trusts but to cut corporate dividend taxes instead.
The news caused an immediate rise in the stock value of income trusts as investors were caught off guard by the move, which was intended to help level the playing field between income trusts and traditional corporations.
Stock-market watchers, however, noticed unusual buy-sell spikes in the hours before the announcement, suggesting the move had been leaked to some players.
The episode quickly morphed into a political scandal when the RCMP released word on Dec. 28, 2005 - in the midst of a federal election campaign - that they were investigating a potential leak of insider information. The release included Goodale's name.
The damning news tarred the incumbent Liberals with suspicions of impropriety, even as they were fending off critics of the sponsorship scandal, and helped cost them the election in January 2006.
But after a laborious 14-month probe, the Mounties produced but a single charge, against a bureaucrat, with no evidence pointing to any leak outside the Finance Department.
Senior RCMP officers, including then commissioner Giuliano Zaccardelli, refused to speak to staff from the Commission for Public Complaints Against the RCMP, which investigated whether the Mounties acted inappropriately in releasing word of the income-trust probe during the election campaign.
Even so, the commission concluded there was no evidence Zaccardelli deliberately meddled in the campaign.
The RCMP has since developed a draft policy responding to the commission's recommendations to strictly limit public information about sensitive investigations, particularly during election campaigns.
"The draft is currently under review and once approved, it will be incorporated in the RCMP's overall communication policy," said spokeswoman Sgt. Julie Gagnon.
The case against Nadeau, in the meantime, continues.
"It's a complicated case with lots of material, voluminous material, to go over," said Raphael Schachter, Nadeau's Montreal-based lawyer.
The prosecution has turned over 18 full boxes of material, he said, adding that the case has been extremely difficult for his client.
"This has had a profound affect on his personal and professional life," Schachter said. "It's been devastating to him professionally and personally."
Nadeau declined an interview, referring all questions to his lawyer.
Under the Access to Information Act, The Canadian Press in May 2007 asked the RCMP for the cost of the income-trust probe. The Mounties responded a month later they were "unable to locate any information."
But the force relented more than two years later after a complaint to the Information Commissioner of Canada, releasing limited financial information.
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