Smoking Gun on yet another potential CPC breach of the Elections Finance Act.

Nearly broke a major story

I really really enjoy reading the Hill Times. It is informative, and I have learned much about how Parliament, and indeed politics works in Canada through their site. I just read an article there about some very aggressive Conservative Party activities, which I believe may constitute a breach of the Elections Act, and should be investigated.

The crux of the story is about how a number of very rich Conservative Party EDA’s (Electoral District Associations), channelled significant resources towards swing ridings in Ontario, Quebec, and the Maritimes. So far so good. There’s nothing wrong with transferring a pot of money to a ‘poor relation’. It makes a lot of sense for the CPC to ensure that every EDA where they have a chance gets every penny they can legally spend, and then go about spening it to win their local contest. The money gets properly recorded by the recipient, whose financial agent carefully records and reports the spending, and the spending limit is approached, but not quite exceeded. The really meaty bit of the story wasn`t picked up on by Tim Naumetz, the author. I feel kind of sorry for him, because he could have had a really great story here. It`s not too late for him though.

So here`s the smoking gun:

“Prime Minister Harper’s (Calgary Southwest, Alta.) riding association, along with those of Immigration Minister Jason Kenney (Calgary Southeast, Alta.) and Conservative MP Rob Anders (Calgary West, Alta.) in Calgary, also set up massive phone banks with hundreds of volunteers in an attempt to sway voters in swing ridings in central Canada, Mr. Anders and his former riding association president say.”

Do you respond, ‘Big Deal’? Well, it almost certainly IS a big deal if the facts line up the way I suspect. First off, these massive phone banks, with hundreds of volunteers cost money to set up. Actually, quite a lot of money. Even if every volunteer is on a crappy old computer, with VOIP service, the computer has to be recorded on the campaign books at the cost to purchase it. Then there’s the costs per call. Then there’s the proportion of campaign office expenses dedicated to NON-LOCAL election expenses. I had the opportunity to study Accounting as part of my MBA program. I’ve also been a businessman for several decades, so basic accounting principles are not strange turf to me. Based on the principle of materiality, if some casual calls were made, that amounted to a few dollars being spent in the wrong place, because the amount is insignificant, no true breach of anything has occurred. That’s why, if you expense a cup of coffee that wasn’t actually business related, you aren’t guilty of anything inappropriate. You are only guilty of something if you systematically went about expensing thousands of cups of coffee, because at some point the error becomes a material breach. Do you see where I am going here yet?

I see at least 3 potential breaches of the act that will require investigation by EC auditors.

First problem: Did Rob Anders, Steven Harper, and Jason Kenney file for, and recieve a 60% rebate on these local election expenses? If so, they should give the damned money back, at a minimum, because these were clearly NOT local election expenses, and thus do not qualify. This is the flip side of the in-and-out scheme wherby the CPC appeared to bilk taxpayers out of large sums of money. The CPC allegedly took advantage of poor language in the act to create local expenses in ridings where the spending limit would not be reached by the local campaign. That way, the Party could spend money above and beyond the legally mandated national elections expense limit, and the local EDA’s that participated would receive a 60% bonus on the backs of the taxpayers. Based on Rob Anders quote, the very purpose of these phone banks was to direct resources at other electoral districts, and I am betting that the $ amounts were non-trivial.

Second Problem: In which of the ridings targetted in this way did the local campaign spend right up to the legally mandated maximum? Let us make a guess, and say that $40,000 worth of phone bank was equally divided up between 10 out-of-riding campaigns. That works out to $4,000 per recipient riding. I will guess that this would put at least half of the recipients over their legal spending limit. What, I wonder, are the penalties for buying an election?

Third Problem: The spending was either authorised by the Financial Agent for the recipient campaign, or it was illegal. That’s it, plain and simple. If the recipient were unwitting, which is theoretically possible, then the offense was committed by the donor campaign. Hey, wait a minute! That was our beloved Prime Minister’s campaign wasn’t it? Third Party advertising rules could apply if the donor wasn’t a political campaign, but the donors were, so that’s not much of an escape hatch. The Financial Agents for the donor campaign may already be on the hook for claiming the rebate, but there are a bunch of counterparties to be called to account too.

I know that many would say it`s too hard to quantify, and that allocating the funds will be impossible. Well, I`m happy to say that any CA, or CMA can easily conduct the audits that will NAIL the contributors to the wall. Whether the phone banks were voip, or landlines, or whatever, there will be electronic records of exactly which phone calls were made to where. Once it`s established how much of the office spaces, and expense were dedicated to these non-local campaigns, it will be a simple matter to allocate the spending proportionally to the recipients. They will argue like hell in the courts, over a few hundreds of dollars, but the basic facts will be inescapable.

There are many twists and turns that add interest to this story. There is the fact that EC ‘lost’ their chief the last time EC tried to challenge this kind of sleazy shafting of the taxpayer, and manipulation of the Elctions Act. (In-and-Out scandal, appropriately so named because the appearance that the taxpayers were screwed). There is the fact that the CPC so very loudly screamed and hollered about the clear and transparent per vote subsidy, whilst at the same time they manipulated and schemed to screw the taxpayers wholesale with these kind of sleight of hand tricks. And then there’s the interesting fact that even when caught overspending, nobody ever seems to lose their seat over it. I mean, w.t.f. is the point of spending limits, and a finance act if Rob Anders can publicly crow about it? Has the culture of corruption spread so far, and so quickly that the CPC believes they are immune to the law?

Anyhow, I suggest that, like myself, you get on the phone to elections Canada, and ask them if they are going to dare to beard their Tory masters? I feel sorry for EC if they actually attempt to enforce the law. They are legally bound to try, but oh the consequences! More careers will be abruptly terminated, and obviously the CPC will immediately sue them. Still, we must use the tools at our disposal, or else the contempt of our political masters for the law will remain unchecked, and these kinds of sleazy practices will continue to be rewarded by electoral success.

Authors note: I just made a few judicious edits. A little heavy on the hyperbole, as I was all steamed up. Sorry if it morphed into something a little softer.

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10 Responses

  1. I’m afraid I’m going to have to throw some cold water on some of this.

    I noticed this early in the week and started a Babble thread on it.

    I am equally outraged. But I seriously doubt that using the EDAs to double up on max contributions is prosecutable. I won’t repeat my reasons here. But if you want to read and argue the point, by all means.

    And there is no reason anyone should be so fatalistic about calling Elections Canada. [My explanation of what would be a violation might be more straigtforward, or linear.]

    I hadn’t thought about the specific business of the phone banks. Thats a matter of seeing if any of the recipient campaigns were close enough to their spending limits. If so, whether the phone bank cost shows up as paid for by the other campaign.

    I’m pretty certain these would not have been claimed as election expenses by the donor campaigns [“Second Problem”], because I doubt the fundraising was done during the actual campaign. If any was done during the campaign it would be difficult to track because the campaign can only transfer to its own EDA or the party. And even a transfer to the party showing it possibly went on would be effectively untrackable.

    But its certainly a grotesquely cynical exercise. The Conservatives kneecapped the Liberal Party by lowering the donation maximum from $5500 to $1100, and turn around and construct end runs so they can violate the new limits.

  2. By the way- housing the phone banks in EDAs is also at least potentially another skirting of the national spending limit.

    Though the actual practice of this actually gets complicated. I’m sure there is little consistency in how national and regional phone bank expenses are reported… even when no one is trying to skirt spending limits. So it might be about impossible to make an issue of something that is commonly allowed.

    But as you said, declaring phone bank costs for another campaign as your own cannot be a [riding] campaign election expense.

  3. Ken,
    There is a big difference between fundraising expenses, and election expenses, and I think you may be conflating the two. Simply encapsulated by the fact that fundraising expenses are exempt from spending limits. Actually, that could be the loophole they drove this bus through. If the phone banks actually pretended to be soliciting donations, then the spending would be exempt. If they were IDìng the vote, with no $$asks, then they`re pooched.
    I didn`t even consider fundraising aspects. To me it`s all about a local ED paying for election expenses directed at another ED. If it were the National Party running the phone bank, it would actually still be a breach of LOCAL spending limits.
    The get out of jail free card is when Rob Anders changes his tune and says; `we were simply putting our fundraising expertise to work for our fellow Conservatives. All those volunteers and calls were actually intended to raise money, not to ID and GOTV`. A patent lie, but how to prove it without a witness or two? NOW, since Anders is in the midst of a minor sh*t storm in his EDA, it`s quite possible that a handful of phone bank volunteers could be found to swear on a stack of bibles that there were no fundraising asks, so this could theoretically get pretty nasty for the CPC.

  4. Ken,
    I just quickly browsed the Rabble thread, and now the disconnect between your language in comments, and the actual post is explained. You were focused on the movement of cash, while I was looking at the location, and purpose of the activity being funded. If this were a ploy to raise excessive contributions, then shovel them around, it`s not really news. It could easily be legal, with perhaps the ocasional venal breach. That`s not what the significance is though. This is about writ period expenditures for campaign expenses, that deliberately circumvented election spending limits at the local campaign level. If it was systematic, and well targetted, then there will probably be bucket loads of evidence to support a clear breach of the act.

  5. Bluegreenblogger,

    Elections Canada actually released a memo last election explaining Fundraising costs. There are very few expenses during the writ period that would not count towards the spending limits. Phone banks are not one of them.

    With rare exceptions, Elections Canada counts all election expenses related to fundraising towards the campaign spending ceiling. The have specified that any expense that promotes or assists in promoting the candidate or party must be included within the spending ceiling. The only fundraising expenses that do not count towards the expense ceiling are those logistical expenses for fundraising events, expense that do not promote the candidate. For example; the commercial value of renting a room, hiring a master of ceremonies, purchasing food and drink or purchasing good to be sold at a fundraising event.

    The following are examples of fundraising expenses that ARE to be counted as campaign expenses towards the ceiling:

    • The commercial value of producing and distributing invitations sent out to a ticketed social event, such as a fundraising dinner or cocktail reception

    • The commercial value of producing and mailing a letter or pamphlet that solicits funds

    • The commercial value of preparing a script for use in soliciting funds by telephone, and any costs incurred, such as installation of phone lines, long distance charges and payments to telephone canvassers, for conducting the telephone solicitation

    Candidates and registered parties must record and report all election expenses whether or not they count within the ceiling.

    Furthermore, the location of a fundraising activity held during the election period does not affect whether the cost of the activity is an election expense. Meaning fundraising outside of your riding is still an election expense subject to the ceiling if it directly promotes the election of the candidate.

  6. Tyler,

    I know that EC has in the past issued guidelines that were not fully supported by the letter of the act. I now wonder if they have done their homework on this guideline, or if they are trying to make sense of impossible language. I`m curious about what the judge had to say about the in-and-out scandal now. I doubt not that it will be very instructive indeed.
    My bad for not being up to date. I missed one election, and am now way behind the curve.
    If you are right, then Rob Anders, Stephen Harper, and Jason Kinney have some `splainin to do :-)
    I think that what is needed is a THIRD PARTY to prosecute it. Elections Canada will be stifled, and crammed into a dark corner if they try to carry the torch on this one, so what`s needed is somebody who cannot be muzzled. Could it be that I have finally blogged on something generally useful?

  7. It really depends on how they filed their forms.

    From what I gather, the proper way for the Cons to do this is to have the Calgary riding bill the Ontario riding for the costs of the phone bank. Calgary riding still claims the cost, but it would not count towards their spending total rather the Ontario riding…

    Might not have been done this way, but as long as the costs don’t put the Ontario riding over the spending limit than it’s just an accounting error.

    I still think it should be looked into… who knows if they did anything wrong… and even if they didn’t it could help Elections Canada setup transparent reporting procedures so it can’t be abused in the future.

  8. Tyler! You are obviously both partisan, and reasonable!

    It is going to take a ton of jurisprudence, and precedent to properly establish and define the problems within our elections act(s). I agree wholeheartedly that this investiation would serve any non-CPC partisans interests, and serve the Canadian electorate as well.

  9. What if, in fact, the actual cost of the phone banks was never paid by any campaign? What if they did not contribute to any election limit anywhere? Wouldn’t we, as Canadians, want to know if there were undeclared election expenses?

  10. I`m curious about what the judge had to say about the in-and-out scandal now. I doubt not that it will be very instructive indeed.
    My bad for not being up to date. I missed one election, and am now way behind the curve.

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