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OTTAWA (Reuters) - Charges that senior officials broke campaign financing rules are causing headaches for Canada's minority Conservative government as speculation about an imminent election grows.
The Conservatives, who took office in 2006 after a major scandal about kickbacks brought down the previous Liberal government, are trying to dismiss the affair as a difference of opinion over accounting.
But charges that top Conservatives broke spending limits during the 2006 election campaign are an embarrassment for a party that came to power on a promise to clean up Ottawa.
And it could cost the Conservatives the support of a key opposition party for its 2011 budget, due on March 22. Without backing from one opposition party, perhaps the left-leaning New Democrats, the government falls, and there will be a new election.
The New Democrats want more help for seniors, more family doctors and end to the federal sales tax on heating fuel. But leader Jack Layton also says he is unhappy about the financing charges facing Prime Minister Stephen Harper's government.
"More and more Canadians are coming to the conclusion that you can't trust Stephen Harper on an issue as fundamental as our democracy," Layton told the Canadian Broadcasting Corp.
"Right now it appears he's tolerating cheating by his own party. That's got to stop."
Elections Canada, the nonpartisan body that oversees federal votes, said the Conservatives illegally assigned national advertising cash to local candidates to circumvent a C$18.3 million ($18.9 million) spending cap on political parties during federal campaigns.
Opinion polls show that the Conservatives would easily be reelected, and that could dull talk of an early election.
But Layton still sounded gloomy on whether he could back the budget. Finance Minister Jim Flaherty says he is willing to consider measures to help seniors, but he has ruled out meeting the New Democrats' other demands.
"It sounds like thin gruel," said Layton. "It would be hard to see how a modest and a small measure (on seniors) ... addressing a big problem would do the trick for us."
The Conservatives are also under fire for two other alleged ethical lapses.
Last week an aide working for Immigration Minister Jason Kenney sent a letter on official ministerial stationery seeking funds for an advertising campaign aimed at ethnic minorities.
The official resigned, but opposition parties say Kenney should step down as well.
The opposition also wants International Aid Minister Bev Oda to quit for misleading legislators about cuts to funding for an aid group the government disliked.
Peter Milliken, the speaker of the House of Commons, is due to rule shortly on whether Oda misled Parliament.
If he says she did mislead Parliament, her position would become untenable, and it might tempt an opposition party to bring forward a nonconfidence motion ahead of the budget.
The main opposition Liberal Party said it had no plans to unveil such a motion, but was keeping all its options open.
"You're going to hear us talking quite a bit about 'Conservative abuse of power' this week," said a spokeswoman.
Reporting by David Ljunggren; editing by Janet Guttsman