Just like a war, a public scandal adversely affects everything it touches. And it is difficult to control the damage a public scandal causes.

The ongoing income trust affair, which probably helped cost the Liberals the election last year, is a fine example of a public scandal taking on a life of its own.

A charge of breach of trust against a prominent bureaucrat at the Department of Finance was probably the last thing expected when the Opposition first sought an RCMP investigation into a spike of trading activity on the Toronto Stock Exchange before the Liberals announced there would be no taxes on income trusts on Nov. 23, 2005.

The Opposition wanted Liberal blood —even if it meant taking down one of the most highly respected members of Parliament ever to take office, Ralph Goodale, who was the finance minister at the time.

Well, they got blood — but far more than they bargained for. And there probably will be more as this affair continues to wind through the courts and take more casualties.

That the RCMP did not find evidence that anyone connected with the Liberals was involved in any form of insider trading or leaking information to financial markets should hardly be much comfort to the former governing party. Few people will be convinced that alleged trading by one public servant could be responsible for a huge volume of activity on the TSX.

The former government’s handling of the income trust file will always be under suspicion, even though the Liberals may be guilty only of sloppiness in the way they encouraged market speculation. Goodale may have been cleared, but his party has not.

A columnist in the Ottawa Citizen has concluded that if Serge Nadeau, the accused civil servant, had not been charged after the 14-month investigation, the Conservatives would have had to invent him.

Indeed, given all the noise the Conserv-atives have made about the Liberals being under criminal investigation during and after the 2006 election, the Harper government would have looked very foolish if no one was charged.

The Conservatives, however, are hardly off the hook. The same week that the charge against Nadeau was announced, the Tories were running television ads in Quebec that continued to link the Liberals to the RCMP’s investigation.

The public probably will understand how inflammatory rhetoric can get out of control during an election campaign. But continuing to link the Liberals to the investigation will be interpreted by many Canadians as a smear campaign by a government that still behaves as if it is in Opposition.

Prime Minister Stephen Harper’s handling of the investigation outcome has hardly been gracious. Harper claims he owes no apology to Goodale because the former finance minister assured Canadians at the time there was no leak from anywhere in his government or the Department of Finance. Yet, the criminal charge alleges Nadeau secretly traded on inside information only on his own account.

In other words, there was no leak.

As Canadians will remember for a long time, the RCMP publicly announced the existence of the criminal investigation at a time when the Liberals had a small lead in the final month of last year’s election campaign. As tenuous as that lead may have been, there is little doubt the RCMP’s actions were the tipping point that ended a 13-year political dynasty.

Since RCMP commissioner Giuliano Zaccardelli recently resigned in disgrace over the Maher Arar affair, the income trust investigation will be seen as a case in which, for political reasons, the beleaguered national police force had to find a perpetrator.

Although most Canadians will extend the presumption of innocence to Nadeau, the man who is formally charged, they won’t to the accuser. The RCMP stands to lose more than any political party in this affair.

Just as Nadeau’s career as a civil servant probably is destroyed, regardless of what the verdict will be, the RCMP has lost its franchise among politicians as an impartial police force. So, watch for a shakeup within the RCMP — no matter who forms the next government.

The income trust affair is very reminiscent of the scandal surrounding the May 1989 leak of the federal budget. In that case, then-prime minister Brian Mulroney publicly declared a crime had been committed before any investigation began in earnest. So, for the sake of the system’s credibility, a perpetrator had to be found.

@page_break@The RCMP charged the journalist who revealed the budget leak with theft. Then the RCMP was dealt a stinging rebuke in the courts, when a judge found the charge was laid purely for political purposes.

Guilt by association may not be part of our judicial system. But in the court of public opinion, it is political reality. Both Bay Street and the Department of Finance will be side-swiped by this ugly affair.

As a result, investment policy will be toxic to most federal politicians — in the short term, anyway — just as the national unity file was after the Quebec sponsorship scandal. IE