Source: The Canadian Press

The Taseko Mines stock-trading controversy was referred Friday to the RCMP, which now has the task of deciding whether there’s sufficient evidence to warrant a full investigation into allegations of insider trading and government leaks.

The Vancouver-based mining company has been the focus of a political uproar amid questions about unusually heavy trading in its shares on Oct. 14 – about 2 1/2 weeks before the federal government blocked construction of its main mining project on environmental grounds.

Cpl. Julie Morel in Ottawa said the referral is being handled at this stage by the RCMP’s A division in Ottawa, rather than the more specialized branch that deals with stock market cases.

The Mounties can’t discuss the specifics of the case as a matter of policy, Morel said.

Opposition MPs have called for the RCMP to investigate what they claim is evidence of an apparent leak from government circles ahead of the formal announcement.

Liberal MP Mark Holland, representing the Ontario riding of Ajax-Pickering, sent a letter to the RCMP requesting an investigation.

“As the integrity of the federal government and cabinet is a matter of serious public concern, it is in the interest of all Canadians that this matter be resolved,” Holland said Friday in his letter.

“I, therefore, request that you look into this case and determine whether or not there are grounds to launch a formal investigation.”

Inside the House of Commons on Thursday, where MPs can speak without fear of being sued for defamation, the accusations were more inflammatory – with fingers pointing at the governing Conservatives.

There have been no allegations that the company was involved in the leak and Taseko has said it doesn’t know why there was such a high volume of trading in its shares – a total of 30 million in New York and Toronto – on Oct. 14.

There is no mystery about why, on Nov. 3, the company’s stock value was cut by 25%, the day after then environment minister Jim Prentice denied permission for Taseko to build the controversial Prosperity gold mine.

The shares have continued to trade well below the pre-announcement level and closed Thursday at $4.67 on the Toronto Stock Exchange.

Coincidentally, the shares dropped briefly to about the same level on Oct. 14 – opening at $6.97 and falling as much 34% to a low of $4.58 – before rebounding to close at $6.21 the same day.

The British Columbia Securities Commission said Thursday that it was investigating the unusual trading activity.

Insider trading is difficult to prove – last year, just 16 illegal insider trading cases were concluded by regulators across the country, compared with eight the year before and seven in 2007.

The first Canadian to be convicted under federal laws that came into place in 2004, Toronto lawyer Stan Grmovsek, was sentenced in January to 39 months in prison for his role in a massive scheme that netted him and a friend about US$9 million – the largest prison sentence for such an offence in Canada.

Illegal insider trading carries a maximum prison sentence of 10 years and requires the Crown to proved that the accused “knowingly used insider information.” Individuals may also be prosecuted under the Securities Act, which limits imprisonment to five years less and day and has a less onerous burden of proof.