N.S. Liberal Party officials say they dealt with employee theft by following legal advice

A former president of the Nova Scotia Liberal Party Association told a committee of the legislature on Wednesday that the decision to focus on internal efforts to recover thousands of dollars stolen by an employee rather than pursue criminal changes followed legal advice.

"Legal counsel basically advised us that it would be very difficult to recoup the money, you know, if legal charges are pursued," Joseph Khoury told members of the public accounts committee.

"The whole purpose was to recoup the donors' and taxpayers' money."

Khoury was part of a group of past and present party officials, including Liberal Leader Zach Churchill and former leader and Timberlea-Prospect MLA Iain Rankin, testifying about a recent auditor general's report that examined the theft of thousands of dollars from the party by a former employee and party officials' response.

Auditor General Kim Adair's report found that the party recovered more than $194,000 from the former employee, which included the money stolen and costs related to the recovery. But Adair's report was critical of the party's decision not to go to police right away, the way it disclosed the theft and efforts she said that made her investigation more difficult and appeared to be intended to conceal or delay revealing the situation until after the 2021 provincial election.

Rankin, who was the party's leader and premier in the lead up to the last election, disputed the suggestion. It was his decision alone when to call the election, he told the committee.

"This issue had nothing to do with the timing of that election," he said.

"I didn't have any conversation with anyone at the association about whether or not this issue would have any impact on an election at all."

Rankin and Churchill both stressed that while the leader can give the association's board and president advice and share their opinions, they cannot order action on the part of the board.

Tories question timing of call to police

Rankin said he was satisfied with the facts as they were presented to him first when he was running for the party leadership in 2020 and later that year during a subsequent briefing to all caucus members.

Churchill, who was part of that caucus briefing, said that by the time he became leader in 2022, all of the money had been recovered and he considered the matter settled until the auditor general's report was presented to him earlier this year.

But Tory MLA Nolan Young repeatedly pressed Churchill and Rankin on why they did not go to the police as soon as they learned of the theft. Churchill reported the matter to the RCMP 24 hours after getting a recommendation to do so from the auditor general.

"I really fundamentally can't understand why the first phone call wouldn't have been to the authorities," said Young.

"I mean, that's what Nova Scotians really would be expecting."

Khoury went to great lengths to defend the process the party used, saying they relied on the advice of legal and accounting experts. He criticized Adair's approach, saying she waited months to talk to him and did not talk to the executive director of the party who uncovered the theft.

AG stands by process

In an interview, Khoury said there should be a code of conduct applied to the auditor general's office so people who have issues with the process can pursue them.

"She basically did a drive-by smear," he said.

Adair told reporters that she stands behind the findings of her report and remains confident in the evidence she brought forward to the RCMP, although she would not elaborate.

"We did what we absolutely needed to do to produce the report that has been produced," she said.

Along with cooperating with the police, Adair's other recommendation was for greater powers to be granted to Elections Nova Scotia so the chief electoral officer can investigate the general expenses of registered political parties and publicly report instances of significant misuse of public funds. It would also require parties to report suspected misuse of funds in a timely way.

Chief Electoral Officer Dorothy Rice told MLAs that an advisory committee with all-party representation has agreed to work on drafting language for changes to the Elections Act that it will present to the Department of Justice at a later date.

Tories want another meeting

Rice said she thinks that work can be completed in time for changes to be tabled at Province House for consideration ahead of the next scheduled election in July of 2025.

"There has been a receptiveness to make the changes," she told the committee.

Tory MLA Tom Taggart made a motion at the conclusion of the meeting to revisit the topic again with Churchill, Khoury and auditors who worked on the file present as witnesses.

Taggart told reporters that because so many of the witnesses' answers referred to advice they received from lawyers and auditors, and those people could not be present for Wednesday's meeting, he still had questions he wanted answered.

"If you take the politics out of it, it's a significant theft," he said.

The committee meeting ended before the motion could be voted on, although Liberal and New Democrat MLAs said they think the committee should move on.

"The government members are upset that they didn't unveil and reveal the massive scandal they hoped to see," Liberal MLA Braedon Clark told reporters.

New Democrat MLA Lisa Lachance said their caucus is interested to see what happens with the RCMP complaint, but revisiting the issue is not a priority in the absence of new information.

"Obviously it's probably to [the Tories'] benefit to discredit the Liberal association of Nova Scotia."

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