Conservatives Face New Set of Legal Hurdles in Dispute with Elections Canada
[Welcome, National Newswatch readers!]
In what may be the second shoe to drop in the so-called “in-and-out” election expense investigation, the Conservative Party of Canada last week filed an amended 2006 campaign financial return “under protest”, at the direction of Chief Electoral Officer Marc Mayrand, but is reserving all its legal rights to undo the requested corrections, PunditsGuide.ca has learned.
The issue being contested is whether the cost of running the party’s regional campaign offices in Montréal and Québec City should be counted as an election expense of the national party, or be shared between 15 of its candidates in the province’s two major cities. This is the same question currently under litigation in relation to the so-called “in-and-out” advertising expenses also incurred during the 2004 and 2006 elections.
The new case is expected to up the ante for both sides in the earlier dispute, as it suggests there was a pattern of transferring other election expenses besides advertising from the Conservative Party’s national campaign to certain of its riding campaigns, that were expected to have spending room under the ceiling, and who would be eligible to receive a rebate of those expenses with a vote share of 10% or more.
Earlier this fall on September 8, Chief Electoral Officer Marc Mayrand wrote to Senator Irving Gerstein as Chair of the Conservative Fund of Canada directing him to add election expenses of $107,401.11 to the Conservative Party’s campaign return for 2006, relating to salary, lease and office costs for the operations of the party’s Montréal and Québec City regional campaign offices; and to file a corrected 2006 campaign return, along with revised party annual returns for 2005 and 2006, before midnight of November 30, 2010. The Prime Minister subsequently called three by-elections for Monday, November 29, several weeks earlier than some observers had expected, thereby leaving one vacant Québec seat in Haute Gaspésie-La Mitis-Matane-Matapedia out of the call.
According to public documents obtained by PunditsGuide.ca, Party National Director Dan Hilton complied with Mayrand’s request on November 30, although he added the lesser amount of $106,283.61 instead, after deducting GST rebates the party obtained from the Canada Revenue Agency as a non-profit organization, further to a case it won at the Ontario Superior Court) last December. That case is currently under appeal, as is the so-called “in-and-out” case which came before the Federal Court of Appeal for several days of hearings two weeks ago.
On their own, the $107,000 in regional office expenses would have very nearly put the Conservative Party over its spending limit for 2006. But as Hilton reminded Mayrand in his November 30 reply, the party had already restated its 2004, 2006, and 2008 election returns to exclude GST rebates the party argues it won the right to deduct following the decision of the Ontario Superior Court in Conservative Fund Canada v. Canada (Chief Electoral Officer), [2009] O.J. 5574. The latest “under protest” version of the 2006 Conservative campaign return reports total registered party election expenses of $17,569,357.23, or 96.1% of the party’s $18,278,278.64 national expense ceiling for the 2006 election.
The Conservative Party needs every bit of room it can find under that expense ceiling in case it loses the bigger “in-and-out” case on appeal, which could place over $1 million in advertising on its books for the 2006 campaign, rather than the candidates’ expense returns, thereby pushing the party over its national spending limit for the 2006 campaign, in violation of the Elections Act.
The Chief Electoral Officer’s letter to Gerstein explains that evidence turned up during the course of an investigation by Commissioner of Elections William Corbett into the regional office expenses — possibly including documents seized during the raid on Conservative Party headquarters in April of 2008 — shows the 11 regional office staff had been paid by party headquarters, had titles and job descriptions consistent with work normally done in a party regional headquarters, made some 2,000 long distance telephone calls and sent courier packages to other cities besides the 15 Montréal and Québec City ridings who were billed for its full costs – including some outside the province itself – and showed that the costs for running the regional offices had been included in several earlier drafts of the party’s central campaign budget for the 2006 campaign.
Draft campaign budgets are never filed as part of registered party or candidate financial returns, and so would either have been obtained by the Commissioner as part of his investigation, or else may have been discovered amongst documents obtained during the April 15, 2008 raid on Conservative Party headquarters in downtown Ottawa.
Furthermore, candidates and official agents from the 15 ridings who were interviewed by the Commissioner had little detailed knowledge of what the regional offices were doing “for their benefit”, or to directly promote their own candidacy, and had never used the offices themselves, Mayrand noted. Nearly half of them declared separate expenses for their own local campaign offices as well.
In his letter Mayrand told Gerstein that he had requested additional information from the 10 candidates and official agents in the Montréal ridings who had declared a portion of those expenses, none of whom could provide supporting documentation of either the lease or the purposes for which the regional office was used to promote their candidates. Party Chief Financial Officer Ann O’Grady however provided supporting documentation for the lease and office expenses, and other supporting documentation said to reflect “details of the costs that were charged out to, and paid for by, the 10 ridings that benefited”.
Mayrand also wrote that he contacted a further 5 candidates and official agents from the Québec City ridings, and obtained some documents from the candidate and official agent in Portneuf—Jacques Cartier, including an invoice from the Conservative Party for their “share” of the total expense for the office. It was then that he questioned whether the expenses of the two regional offices might have been a transferred election expense from the party to the ridings, and referred the matter for investigation by the Commissioner of Elections.
“I trust the above will give you a sufficient understanding of the facts which have led me to conclude that the expenses under discussion are those of the Conservative Party of Canada and not of the local campaigns that reported them in their returns. Accordingly, these expenses should have been reported by the Party,” he wrote in the September 8, 2010 letter to Gerstein.
The 15 candidates and their official agents also received letters dated October 4, 2010 asking them to restate their 2006 campaign returns by November 12, and to refund any rebate they had received from Elections Canada for those expenses. To date, the party’s candidate in Portneuf—Jacques Cartier, Québec City lawyer Howard M. Bruce, has complied with the request, but last week the remaining 4 Québec City candidates, including MPs Daniel Petit and Sylvie Boucher, former MP Luc Harvey and former candidate Frédérik Boisvert filed a motion before the Québec Superior Court asking to have the finding overturned, according to a story in Friday’s edition of Le Soleil.
The 4 candidates are represented by the lawfirm Stikeman Elliott which told the court that Elections Canada’s claims were based on an incorrect assessment of the facts, according to Le Soleil’s story, and that the regional office in fact had been organized for the benefit of those candidates, many of whom had not originally been expected to win, had no local organizations, and were helped by party organizers to regroup and share a common office space.
Meanwhile Mr. Petit also filed a revised return “under protest” and pending legal remedies, after seeking through his attorney at Stikeman Elliott an extension of the November 12 deadline until December 15, which was refused by Elections Canada. Petit’s original campaign return reported both his $1,750 share of the Québec City regional office as “other office expenses”, along with $1,000 for office rent, heat and light. Two of the three other Québec candidates also originally declared separate office expenses, over and above their share of the regional office expenses.
It’s not known whether the Montréal areas candidates or the Conservative Party itself have also filed separate motions to challenge the Elections Canada demand for corrections in their returns, but they have until December 14 to do so, under s.434(2)(a) of the Elections Act.
Tags: Conservatives, Election Expenses
What would be the harshest penalty that might apply? Is anyone going to jail here? End of the Con party?
A number of people have written or commented asking about the legal next steps. I’ve been looking up the relevant provisions in the Elections Act.
On the registered party side:
s.422(1) of the Act sets out the method for calculating the national election expense limit for a registered party.
s.429 sets out the requirement of the registered party to file a return reporting its election expenses.
s.431 states that a registered party must not knowingly file a materially false or misleading return, nor an incomplete one.
As for the candidates/official agents:
s.440 sets out the method for calculating the election expense limit for candidates.
s.451 sets out the requirement of the official agent for a candidate to file an election expense return.
s.463 sets out the requirement for that the official agent must not knowingly file a materially false or misleading return, nor an imcomplete one.
There are also a number of provisions regarding how corrections of returns can be made or ordered.
s.432-3 sets out how registered parties’ returns might be corrected.
s.434 sets out how the judicial review of s.432-3 requests should unfold.
s.457-8 sets out the correction process in the case of candidates.
s.459 sets out how the judicial review of s.457-8 requests should unfold.
For candidates who become Members of Parliament, under s.463(2), they cannot continue to sit or vote as Members of Parliament until the ordered corrections to their returns are made.
Insofar as offences are concerned:
s.497(3)(m) makes it an offence for a chief agent of a registered party to wilfully contravene s.429 or s.431(a) (note that intent is required).
s.497(3)(r) and (r.1) make it an offence for an official agent for a candidate to wilfully contravene various sub-sections of s.451 (again, intent is required).
The penalties are outlined in s.500(5)(a) and (b), and depending whether the offence proceeds by summary conviction or indictment, include either maximum fines of $2,000 or $5,000, or else prison terms of a maximum of 2 or 5 years.
I’m not a lawyer, but that’s my lay review of the relevant Elections Act provisions.
To put it mildly, this is uncharted territory. As you would expect in litigation around laws that have not been tested in court.
If anyone pays a fine, its going to be a long time yet. But a lot could happen before then.
There are two things going on around the original ‘in and out’ around advertising that we knew about. There are the court cases, and the public record findings of Elections Canada that preceded those.
All that stuff gets fought on pretty narrow legal grounds. For all the POSSIBLE implications, its pretty narrow and specific stuff.
Then you have the ongoing broader investigation that is being carried on which in plain language is about whether there is a legal case that the Conservative Party can be found to have deliberatley circumvented the spending limits for national campaigns.
That proceeds very slowly and out of sight. All that even those of us watching know is that Elections Canada has neither taken it to the next steps, nor dropped it.
As far as I can tell this latest additional case is in a new category. On the face of it, its like the ‘in and out’ advertising costs stuff we’ve already seen in course: on a technical level being between Elections Canada and the various riding associations. [And the Conservative Party running and paying for the legal battles does not change that.]
But in this new case, unlike in the existing and long running court cases around allocating advertising costs, Elections Canada is making references to direct documentation of the Conservative Party’s purpose and intent.
In other words, from what I can tell, this is the first time Elections Canada has been willing to go public with even a piece of their ‘larger case’ around whether or not they want to charge that there is a deliberate attempt to circumvent spending limits.
That said, I expect that this business about allocating expenses for regional offices will be in court around the same kind of narrow legal battles we have seen over the advertising costs.
MAYBE this time around Elections Canada is going to try out entering direct evidence about plans and intent, as it did not in the existing cases.
But thats just a guess. I’m not a lawyer, and even lawyers with epertise in the field might just be making educated guesses.
Further to that court case now on appeal by both sides.
The Conservative Party initiated the civil action on behalf of some of the riding associations, that Elections Canada did not have the authority to determine whether the allocation of shared advertising expenses was legitimate.
The court found in favour of the Conservatives. But also explicitly stated that national parties cannot ‘arbitrarily’ allocate expenses.
In my plain language understanding, the court was leaving open that Elections Canada does have the clear authority in principle, to determine that allocations are driven by concerns over spending limits rather than actual benefits recieved by the riding campaigns. But that EC did not IN THAT SPECIFIC CASE offer direct evidence of ‘arbitrary allocarion of expanses’. [Because they were trying to stand on simply the authority they felt they had that seeing a pattern was sufficient to deny these as candidate [riding] campaign expenses.]
It would appear from what was reported of the documents that Elections Canada is required to make publicly available, that in this new case, EC will be offering direct evidence of ‘arbitrary allocation.’
If they succeed in defending their denial of the riding campaign expenses, and are able in the appeal of the existing case or through other means, to reinstate even a portion of their denial of the riding campaign advertising expenses; then the Conservative Party will have been found to have exceeded their spending limit.
And that is an infraction in itself- irregardless of whether EC succeeds at, or even tries, to prove that there was a plan to circumvent the limits.
Except that the underlying court cases around the legitimacy of the riding campaign expenses will be under appeal for who knows how long.
There will not be any resolution to this for at least two elections so it is pointless. The courts have been tossing this nonsense out and the Govt should be doing a full review of the Elections Act to make it completely clear and ensure that a partisan civil servants in Elections Canada are kept in check.
George, both the GST and in-and-out cases are currently under appeal. The only ruling that’s actually been made in the in-and-out case is on a technical issue relating to whether the Chief Electoral Officer is allowed to hold up issuing a rebate of expenditures while the Commissioner of Elections continues to investigate an issue. The ruling, if you’re interested in reading it in the original, can be found here:
http://decisions.fct-cf.gc.ca/en/2010/2010fc43/2010fc43.html
I’ve always found that “partisan”-ship is in the eye of the beholder. Most public servants I know do not behave in a partisan way, even those who have been active politically in our democratic system, as is their right.
I think some of the issues the Conservative Party has been raising before the courts have been interesting, and worth litigating. For example, I don’t think either party has yet proposed a good demarcation of what should constitute a national versus a candidate election expense for advertising. However, office expenses being charged to certain ridings in one province, that appeared to be working for other ridings in other provinces who didn’t contribute, is a valid question to raise.
Note that if the Conservative Party had accepted the CEO’s finding, and amended its return without going to court, the issue would likely never have seen the light of day in the media, as the difference would not have put the party over the national spending limit, nor any of the candidates over their local limits. Had the Conservative candidates in Québec City never filed a motion before the courts, and the reporter from Le Soleil never written a story about it, I would not have requested those documents, and they would not have been published.