It's not the sexiest of political scandals, as such things go. Nobody got rich. Nobody ended up in bed with a smile on his face.

Still, the so-called "in-and-out" affair, in which a couple of Vancouver Island ridings play a leading role, suggests Canada is being run by a party that is, at best, quite willing to dive through a loophole in the law.

In fact, one disillusioned former Victoria Conservative insider claims the party has been playing fast and loose with the rules for years. Eugene Parks, who once sat as a director of the party's Victoria constituency association, says he quit the post in 2005 rather than go along with practices more suitable to "a Banana Republic." Parks says he has complained to both Elections Canada and the RCMP. Fiddlesticks, the Conservatives say, we're just following the rules.

It was Elections Canada that was behind last week's RCMP raid on Conservative party headquarters in Ottawa. Basically, the federal watchdog alleges the party played a shell game that let it bypass advertising-spending rules and made the Conservatives eligible for more money from the taxpayers.

It works like this: In the run-up to the 2006 federal election, the party had a national campaign spending limit of about $18 million. That was separate from the individual candidates' spending limits. Elections Canada says that when the national ceiling was reached, the party funnelled money in and out of 67 local campaigns that still had spending room.

An affidavit filed by Elections Canada says that allowed the Conservatives to buy an extra $1.1 million in advertising. The money shuffle also made the local campaigns -- including Esquimalt-Juan de Fuca and Nanaimo-Cowichan -- eligible for more federal money (candidates who earn at least 10 per cent of the vote get 60 per cent of their expenses rebated by the taxpayer), though Elections Canada has now thrown a monkey wrench into those plans.

The Conservatives contend that this "in-and-out" scheme is perfectly legal and that other parties do it, too. No we don't, says NDP MP Jean Crowder. Nor us, says the Liberals' Keith Martin, adding that he didn't recall it happening when he was in the Reform Party, either.

The affidavit says among the transactions was one that saw the campaign of Esquimalt-Juan de Fuca Conservative candidate Troy DeSouza send $9,997 to the national party in the first week of January 2006, with $10,016 returned to the local campaign a week later. DeSouza ultimately lost to Martin, the incumbent, later that month.

Several thousand dollars went back and forth between the national body and the campaign of Nanaimo-Cowichan candidate Norm Sowden, too, though there are indications the local Conservatives weren't happy with the result. The affidavit cites an e-mail from prominent Victoria Conservative Bruce Hallsor to Michael Donison, the party's then executive director, in which Hallsor says the Nanaimo-Cowichan people were "really pissed off" because the advertising bought with the money attacked the Liberals, not the NDP, who were seen as a much more dangerous opponent. Indeed, New Democrat Crowder won the seat.

That the local campaigns went along with the in-and-out exercise is not a surprise. Martin says grassroots operations rely on the election-law advice they get from farther up the political food chain. Sowden, the longtime Baptist pastor who ran in Nanaimo-Cowichan, acknowledges not being steeped in the nuts-and-bolts financing issues. Likewise, the Elections Canada affidavit quoted DeSouza as saying he did not know of the "media buy" at question until contacted by investigators.

In the future, candidates might want to exercise less trust. Parks says the in-and-out scheme is just one example of what he considers money-laundering by the Conservatives. In 2006, he went public with a complaint that the party and some of its members engaged in "cheque-swapping" that allowed the members to claim tax credits they had not earned. He said the party covered the expenses of members attending a 2005 policy convention, with the members then making a tax-deductible "donation" to the party for the same amount.

Parks also said that in 2005 he was asked to take the lead with Blogging Tories, an on-line, pro-Conservative web log that could operate outside election rules. After the issue came to light on Sean Holman's Publiceyeonline website, the Conservatives stated that the Blogging Tories initiative was independent of the party

Whether this stuff is illegal or not, it doesn't paint a pretty picture of the party that came to power by dancing on the corpse of the scandal-ridden Liberals. The Conservatives' foes shouldn't take joy in any of this, though. As Crowder said, these are the sort of shenanigans that just reinforce the public's sour view of politics in general.

jknox@tc.canwest.com