A senior SNP activist has spoken for the first time about how she and her colleagues made the brave decision to expose Natalie McGarry for embezzling more than £20,000 from a pro-independence group.

Kathleen Caskie said the jailed former MP used to be a close friend, but it gradually dawned on her that she was a fraudster who had ripped off Women For Independence (WFI).

In an exclusive interview, she has spoken about how senior WFI figures – Carolyn Leckie, Health Secretary Jeane Freeman and Kezia Kinder – failed to get answers from McGarry about the missing money and had no choice but to go to the police.

“We knew it would ruin her career and probably end up in a jail sentence. So that was a fairly monumental decision,” she says.

Caskie also says she will forgive McGarry, but only if she takes responsibility for her actions.

McGarry was the de-facto treasurer at the WFI group before she was elected as the SNP MP for Glasgow East in 2015. However, months after her election, McGarry’s former WFI colleagues contacted the police after becoming concerned about her financial stewardship of the organisation. She was later charged.

In court last week, McGarry was jailed for 18 months after admitting embezzling around £21,000 from WFI. She had transferred cash from fundraising events into her personal bank account and failed to pass on money intended for a foodbank and a justice group.

The former MP used part of the money for rent, a holiday to Spain, and transfers of cash to her husband, Tory councillor David Meikle. She also embezzled £4,661 when she was treasurer of the Glasgow Regional Association of the SNP. Although she pled guilty, she later tried to retract her plea, an attempt that was rejected.

Caskie, an SNP member since 1988 who was a central figure in WFI, has given the most comprehensive account yet of the decision to report McGarry to the police.

The 53-year-old says McGarry had been a “key driver” in the group when it was launched in a Stirling pub in 2012. At that point, and for the next 18 months, she says WFI was more of a committee than a movement. It had adopted a “simple” constitution, paid membership did not exist and there were no elections.

Caskie and McGarry became good friends. They lived close to each other during the referendum and spoke on the phone three or four times a day.

“I liked her. She was funny, she was witty, she was very clever. Always had the best gossip,” she recalls, in a cafe in central Glasgow.

A turning point for WFI came on International Women’s Day in March 2014, six months before the independence referendum. Groups all over the country were becoming active and women who had not been politically engaged were getting involved in unprecedented numbers. Money was also coming in.

“The first significant income was the first fundraiser in 2014, which was £15,000. That was the first indication that this was a much bigger thing,” Caskie says. She estimates that WFI turned over around £100,000 between April 2014 and April 2015.

She says the money was handled in two ways. One, a bank account that McGarry did not control. Two, a PayPal account through which most of the money flowed. McGarry had “full control” of the latter mechanism

“It seems that the money from the first fundraiser, which I had assumed had gone into this PayPal account that Natalie had control of, according to the Crown, actually went straight into Natalie’s bank account.

“That first PayPal account remains very unclear. Natalie claimed to WFI it had been closed in February 2015, but we had very good reasons to believe it hadn’t been closed ... It came to light that women who were members were still paying money into it.”

WFI continued to operate after the referendum and plans were discussed to professionalise the group. Reformers wanted WFI to hold annual general meetings, hold elections and become a company, which would mean filing accounts.

“Natalie fought back at that tooth and nail,” Caskie says. “In retrospect, you realise that’s because of the formality of having to do annual audited accounts and putting them in the public domain. That was an alarm bell.”

Caskie says WFI set up a second PayPal because McGarry had not handed over control of the original account: “We didn’t want to set up a new PayPal account. We wanted the passwords to the original PayPal account. Kezia [Kinder, another senior WFI figure] kept saying to me ‘you need to push Natalie on the PayPal’.”

Even at that point, Caskie and her colleagues believed it was more of a muddle than anything more serious. McGarry was still a “much loved WFI sister” and a chartered accountant was waiting to help her: “We expected a big pile of receipts. We’d worked out she wasn’t very good at it. The expectation was there would be a big folder dumped on the table and she’d go ‘look at this mess’ and our accountant would go ‘seen worse’.”

McGarry was elected in May 2015 and she distanced herself from her WFI friends. Caskie and Kinder were trying to get answers and former Scottish Socialist Party MSP Carolyn Leckie, another respected WFI figure, told Caskie the amount in the bank account was short by thousands of pounds. Caskie also says McGarry stopped replying to emails and started to block and unfriend people on social media.

Once she was pinned down, Caskie says McGarry’s initial responses were marked by “prevarication” and “deliberate evasion”. She says the accountant went to her house, but McGarry used the presence of newly-elected MP Mhairi Black to bat away questions: “The accountant had gone there to see the receipts, but she couldn’t sit down and talk about the money because she had put on a party. The accountant said ‘I am here to talk to you about the money’, but Natalie said ‘but Mhairi’s here and we are all going to the pub’.”

Leckie struggled to get McGarry alone. Caskie said Freeman, another vital cog in WFI, gave her a deadline to hand over paperwork and receipts. It wasn’t met. Caskie said Leckie tried again, after which McGarry offered to give WFI £6,500 that was in her bank account.

Caskie, Freeman, Leckie and the accountant were getting increasingly concerned and McGarry’s behaviour narrowed their options: either “ignore it and walk away”, or go to the police. The first option was a complete non-starter.

“It wasn’t our money. We were holding that money in trust,” Caskie says.

The women decided to pull together a dossier on the missing money and take it further. “Jeane took that information to the police,” Caskie says, explaining that Freeman was acting in a WFI leadership role. She is now Scottish Health Secretary and a potential future SNP leader.

The SNP activist also knew that making the complaint would mean that she and her colleagues would be witnesses in any trial: “We did not make that decision without understanding what the consequences would be.”

After news broke of the police complaint, Caskie says there was an “initial reluctance” within the SNP to believe them, and she had a “screaming fight” with party headquarters on the phone. She also says that a senior SNP MSP’s office was responsible for “slanderous and defamatory briefings”.

With the trial now over, and McGarry jailed, it is inevitable that Caskie reflects on their friendship in the hope of making sense of it all. On the night McGarry won Glasgow East, Caskie recalls congratulating her by text and receiving a very telling reply: “She messaged me back and said ‘yes, I deserved this’.”

She elaborates: “Entitled is the word I have used most to describe Natalie. She felt she was entitled to that money.”

McGarry’s vagueness on her employment status is one of the mysteries of this scandal. Caskie says she claimed to help “third sector” organisations bid for European funding, but many people suspect she did not have a job. Caskie also senses that McGarry’s financial problems pre-dated her WFI days. “She said she couldn’t have a credit card because when she was a student the girl she shared a flat with ran up catalogue debt in her name. So she said she had a bad credit history. It seemed a bit odd.”

WFI has survived McGarry’s crimes, but Caskie is no longer active in an organisation she put “sweat and blood” into. How does she feel about the group?

“I look back on that and think it was so wonderful, and then think it was tarnished because what I thought was happening turned out not to be true. There were lies being told and deception. That’s a really horrible feeling.”

Some commentators believe the 18-month jail sentence was harsh on McGarry. Caskie, while not defending the sanction, was not surprised: “That’s what people get for embezzlement under trust.”

She also believes the embezzled sum was nearly double the £21,000 the ex-MP was convicted of taking.

“If you were doing a civil action, on the balance of probabilities, we could go for £40,000. Beyond reasonable doubt? £21,000,” she says.

The Crown Office confirmed yesterday that Proceeds of Crime Act proceedings are now under way in relation to McGarry.

However, although McGarry hurt her and betrayed WFI, Caskie refuses to write her off. She says she hopes the former MP becomes a prison reform campaigner after her release.

But there’s a caveat.

Caskie says she must take responsibility for what she did: “She hasn’t admitted as much as a clerical error.

“I would love to get a letter from Natalie in prison, just saying ‘I’m sorry for the way things went down, when I get out can we go for a glass of wine and talk about it?’ I would say yes.”

She finishes: “I would love this to become a story of redemption. That would be wonderful.”

Kathleen Caskie was not paid for this interview