RCMP, Finance Dept. drop probes into 2013 federal budget leak

OTTAWA, Ont. -- The RCMP and Finance Department have dropped their probes into a leak of information from 2013 federal budget -- a leak critics say was likely orchestrated by the government itself.

Two news outlets, the National Post and the Globe and Mail, reported the evening before the March 21 budget that tariffs were being cut on imported sports equipment, likely leading to retail price reductions for consumers.

The RCMP's investigation, launched at the behest of the New Democratic Party, drew on financial market experts as well as its own officers, but could neither identify the leaker nor demonstrate that anyone might have benefited financially.

The Finance Department conducted a parallel probe on the orders of the deputy minister, but also determined it was unlikely anyone could have used the leaked information to make money on the stock markets.

The Finance Department made its market experts available to the RCMP as well.

NDP deputy finance critic Guy Caron wrote to RCMP Commissioner Robert Paulson four days after the budget, requesting the investigation.

"The leak and availability of this information, prior to it being made public in the budget, gave those with this information an opportunity for personal financial gain," Caron said in his letter.

Assistant Commissioner Gilles Michaud responded Aug. 13, explaining the decision to close the file. Michaud said the Mounties also considered breaches of the Security of Information Act, but noted that some sections have been declared unconstitutional and so did not pursue charges.

Caron said the Harper government itself may have been behind the leak, in an effort to highlight positive elements of the budget and distract from any bad news.

"We suspect it's from the government," he said in an interview from his riding office in Rimouski, Que.

"These leaks might be used as a communication tool by the government. ... as a way to distract and disorient the media towards preferred messages."

Stories drawing on the leak highlighted the potential cost savings for hockey parents, who pay much more than their American counterparts to equip kids for the game. Media coverage of the budget itself also focused in part on the sports-equipment tariff cuts.

Only days later did it become clear the Harper government had also raised tariffs on imports from 72 countries -- a move with the potential for hiking retail prices on a broader range of other consumer goods.

The government estimated the higher tariffs would eventually generate $333 million per year in new revenues for the treasury.

"The fact that the tariff initiative on consumer goods is scheduled to take effect on April 1, 2013, narrows the possible scenarios under which an importer could have changed its behaviour to benefit from the information," says a March 27 Finance report for Michael Horgan, deputy minister.

"Given the limited information published ahead of the budget, notably the fact that the measure is only effective on April 1, on what is a relatively narrow initiative, it's difficult to see how one could have benefited from advance information on the stock market."

The Finance Department officials also checked the March 21 trading in shares of Canadian Tire Corp. (TSX:CTC.A) and Bauer Performance Sports Ltd. (TSX:BAU). Volumes were low and stock prices barely moved.

Documents related to the twin probes were obtained by The Canadian Press, some through the Access to Information Act.

Caron says he remains concerned.

"We've seen an increasing number of instances prior to budgets where information is actually leaked," he said. "The process itself should be reviewed."

He added that because such leaks also impair the privileges and work of members of Parliament, the NDP is now considering whether to raise the matter with the Speaker.

One of Canada's most infamous budget leaks occurred in 1989 when Doug Small of Global News was given a copy of the "Budget in Brief" pamphlet, and reported on it the day before the budget was to be tabled.

Then-finance minister Michael Wilson was forced to hastily release the budget that evening. Charges against Small were later dropped.