Liberals have refused to withdraw allegations against Stephen Harper regarding an alleged financial offer to a dying MP, even after the prime minister sent a notice of libel on the matter.

Pressed by reporters outside of the House of Commons, Stephane Dion stood by his allegations Monday afternoon.

Statements on the Liberal Party website mentioned in the libel notice question Stephen Harper's alleged involvement in financial "offers'' made to Independent MP Chuck Cadman to sway his vote in a crucial 2005 Commons showdown.

Harper's lawyer, Richard Dearden, called the statements "false and devastatingly defamatory.''

"These malicious and reckless defamatory statements impugn the reputation of Prime Minister Stephen Harper,'' Dearden wrote in a letter of notice.

Harper spoke of the matter in question period Monday. "The truth is that this will prove to be, in court, the biggest mistake the leader of the Liberal party has ever made."

None of the allegations about Harper or the Conservative party have been proven in court.

The Liberal continued on the offensive in the House of Commons, and outside after question period. Comments inside the House of Commons are privileged and are not subject to legal repercussions.

"Well, Mr. Speaker, it's going to take a lot more than the threat of lawsuits to stop us from getting to the truth," Dion said.

• Read the notice of libel here (.pdf)

The exchange came after a morning in which Dion was served with the notice at his Stornoway residence in Ottawa.

Deputy Leader Michael Ignatieff; House Leader Ralph Goodale; and The Liberal Party of Canada were also served with the notice.

Harper said in the House that the Liberals had published "false and unfounded allegations of criminal misconduct on my part."

Harper had asked for an immediate retraction.

The notice asks for two allegedly defamatory articles to be removed from the liberal.ca website and provides wording for an apology to be read out by Dion in the House of Commons. The notice requests the apology be given in English and French.

If the Liberals don't provide an apology, Harper wants them to preserve all records and email traffic.

Last week, a new book made the claim that former Conservative MP Chuck Cadman was essentially offered financial inducements by Conservative party officials to vote down the Liberal government's 2005 budget.

According to an interview with the book's author Tom Zytaruk, then-opposition leader Harper said in 2005, "The offer to Chuck was that it was only to replace financial considerations he might lose due to an election."

The Conservatives have said there is no truth to the million-dollar life insurance allegation and that they simply wanted Cadman to rejoin their caucus. The Liberals are pushing for the RCMP to investigate the matter.

In a statement, the Liberal party described Harper's actions as "libel chill" -- an attempt to shut down debate through threatened legal action.

Cadman's widow backs up Harper

Chuck Cadman's widow has said her late husband told her about the offer. Two other family members say Cadman told them the same thing, although the Conservatives argued in the House that Cadman made no such claims in media interviews.

However, Dona Cadman, who will be running for the Tories as a candidate in B.C.'s Surrey North riding, weighed into the debate today with a written statement.

She said she raised the issue of the alleged million-dollar life insurance offer to her then-terminally ill husband with Harper about two-and-a-half years ago.

"He looked me straight in the eyes and told me he had no knowledge of an insurance policy offer. I knew he was telling me the truth; I could see it in his eyes," Dona Cadman said in the statement released Monday.

"He said, yes he'd had some discussions with two individuals about asking Chuck to rejoin the party, but he'd told them they were wasting their time trying to convince Chuck.

"From that point forward, I didn't regard it as a 'party' initiative, but rather the overzealous indiscretion of a couple of individuals whose identity Chuck never revealed to me."

Chuck Cadman didn't rejoin the Tories, voted to support the budget and then died a few weeks later of cancer.

Dona said she liked, respected and trusted Harper.

Robert Fife, CTV's Ottawa bureau chief, told Newsnet that Harper never volunteered information about that exchange when the story broke last week.

Open questions

Fife said senior Conservatives have told him they feel the Liberals are getting too much traction from the Cadman controversy.

"They're going to get tough with him (Dion) and this is one instance where they're fighting back," he said.

Fife said he's covered national politics for about 30 years, and he can't recall another time where a sitting prime minister has threatened to sue an opposition leader for libel.

Some Liberals are wondering why the Tories aren't suing members of the Cadman family who made the allegations, he said.

Fife also raised the issue of whether the items on the website simply quoted things said in the House of Commons, "which would be fair game."

The Conservatives may have information that the Liberals said something in a scrum outside the House of Commons, which wouldn't be protected by parliamentary privilege. But that still isn't clear, he said.

Fife said the Tories should come clean on what went on with Cadman, but there are questions about Liberal behaviour too.

"Apparently they knew about this in 2007 ... and they kept it, probably waiting for an election campaign," Fife said.

"There's no clean hands in this sort of thing."

Fife said the tone in the House of Commons is getting increasingly vicious.

Environment Minister John Baird yelled at Dion, "Say it outside. You're a sleazy wimp."

Liberal MP Susan Kadis told Harper: "You're on tape like Nixon."