In and Out scandal

The "In and Out" scandal was a Canadian political scandal involving improper election spending on the part of the Conservative Party of Canada during the closely contested 2006 federal election. Parliamentary hearings into the issue led to a deadlocking of various committees, and then to the snap election in 2008. On 6 March 2012, charges were dropped as part of a plea deal in which the Conservative Party of Canada and its fundraising arm pleaded guilty to exceeding election spending limits and submitting fraudulent election records, and agreed to repay $230,198.00 for its role in violating Canadian election spending laws.

The basic "in and out" scheme involves transfers of money between different levels or organizations within a political party. Elections Canada places strict limits on campaign budgets in order to provide an even playing field between the parties. They also directly fund political activity through per-vote financing, as well as reimbursing a major amount of campaign expenses for any riding where the candidate wins over a certain percentage of the votes. In recent elections the per-vote payout has been around $2, while between 50 and 60% of campaign expenses are re-paid if the candidate wins over 10 to 15% of the riding.

It is the second of these two funding sources that is used in the in-and-out scheme. In the 2000 federal elections the Bloc Québécois organized a system to inflate apparent campaign spending at the riding level, and thereby receive much higher refunds from Elections Canada. The Bloc organized "La Méthode In & Out" prior to the elections, having each candidate agree to certain spending numbers in order to inflate the overall cash flows. In exchange, Bloc leader Gilles Duceppe would sign their nomination papers, a requirement for running as a party candidate in the election.

Large amounts of cash were transferred from the party organization to the individual riding associations that are in charge of running one candidate's election campaign. The money was then distributed to the volunteers as payments for various expenses. The volunteers then donated that money back to the party. On the surface it appeared that the ridings were spending much larger amounts of money than normal, enough to drain the party war chest. In fact, a considerable portion of the money was being returned directly to the party's coffers.

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