HALIFAX 鈥� Nova Scotia Liberal Party officials told a legislature committee Wednesday that their handling of a case in which thousands of dollars in public funds were misused by a former employee was 鈥渁bove board鈥� and legal.

Several top officials, including party leader Zach Churchill, appeared before the all-party public accounts committee to speak to a February report on the matter by the province鈥檚 auditor general, Kim Adair. In her report, Adair called on the RCMP to investigate the party's 鈥渁pparent concealment鈥� of the misuse of funds.

Joseph Khoury, who was party president when the theft was discovered in December 2020, told the committee the employee 鈥� not the party 鈥� is the 鈥渨rongdoer in this matter.鈥�

鈥淥ur priorities were to protect taxpayers and donors, judiciously deal with the human resource elements of this matter and fully understand the depth of this fraud,鈥� said Khoury, who added 鈥渨e did everything above board.鈥�

The auditor general鈥檚 report said the theft was the result of the employee鈥檚 misuse of travel claims and party credit card. Khoury said the Liberal association quickly obtained legal counsel when it learned money was missing.聽

Khoury said the party followed the advice of its lawyers and forensic auditors and was able to successfully recover $194,000 鈥� a figure that includes the missing funds and the investigative and legal costs.

He said the auditor general misinterpreted the facts of the case, adding that he wasn鈥檛 interviewed by Adair's office until 13 months into the investigation.

Had she interviewed him earlier, Khoury said, "she may have gotten things right."

But Adair told reporters after the hearing that she stands behind her report.

鈥淲e were looking for preliminary information and it took many months and many hurdles to get that information,鈥� Adair said. 鈥淭he report stands for itself and I fully support the contents of it.鈥�

The report said the auditor's office was aware of 鈥渃oncerning information鈥� that the party tried to delay revealing the matter until after the 2021 election. It wasn鈥檛 until the spring of 2022 that the public was made aware of the theft in a note included in the party鈥檚 financial statements, the audit said. As well, Adair said there were delays in receiving information from the party.

Paul Doucette, who was Liberal party president during Adair鈥檚 investigation, recognized that it did take time to get some documents requested by the auditor general because they were being held by 鈥渙ther parties鈥� who were concerned about client-solicitor privilege.

鈥淲e were following legal advice that was provided to us by our external legal counsel and doing as much as we could to comply with the auditor general鈥檚 request,鈥� Doucette said.

Under questioning from Progressive Conservative committee member Nolan Young, Churchill said he first learned about the misappropriation of funds along with other caucus members in 2021. He became party leader in July 2022.

Churchill said he contacted RCMP 24 hours after receiving Adair鈥檚 report in February; Young wondered why the Liberal leader waited so long.

鈥淚 think the party who was dealing with this issue at the time had a priority of recouping the funds, which I think there was very good rationale for, it was a substantial amount,鈥� he said.

Churchill added that he called in police because it was among the recommendations in the auditor general鈥檚 report.

鈥淲e recognized the consequential nature of the auditor鈥檚 recommendations and we followed through on them as swiftly as we could.鈥�

Meanwhile, the Tory majority on the committee gave notice that it intends to keep the Liberals' feet to the fire by pushing for another committee hearing on the subject. Tory member Tom Taggart said he wants to hear from the Liberal party鈥檚 auditors, who weren鈥檛 available to appear Wednesday.

鈥淭here were so many comments that they did this on the advice of their auditor or their legal advice, so I鈥檇 just like the opportunity to ask questions,鈥� Taggart told reporters.

NDP committee member Lisa Lachance said her party was satisfied with the answers it heard on Wednesday and is now interested in the outcome of the RCMP complaint rather than another committee meeting.

This report by The Canadian Press was first published April 3, 2024.

Keith Doucette, The Canadian Press