Tuesday, March 10, 2015

I'm Convinced the Ontario Liberals Broke Ontario's Campaign Finance Laws

I'm convinced the Ontario Liberals broke Ontario's campaign finance laws, but Elections Ontario won't do anything about it.

You're limited by law as to how much you can give an Ontario political party in a year. However, you can give as much as you want to that party's leadership candidates. When the Liberals held their leadership campaign in 2013, one of the party's rules was that all candidates had to give 25% of all funds they raised to the party. The annual donation limit for contributions to a party at the time was $7500. But if you gave $7500 to the party, plus $10,000 to a candidate, 25% of your donation to the candidate went to the party. So your donation to the party was $7500 + (25% of $10,000=$2500) = $10,000. You clearly donated more than the $7500 limit to the party that year.

In law, there's only 2 ways to look at this: either the candidate was acting as a fundraising agent for the party, in which case the individual donated more than the legal limit, or the money became the property of the candidate upon donation, and therefore the candidate donated more than the legal limit to the party. Either way, it is a violation of the Ontario Election Finance Act to accept a donation from anyone that is in excess of the legal limits.

I wrote to Elections Ontario about this issue. At first, they wrote back saying they didn't understand the concern I was raising, so I wrote back and explained it again. They then wrote back and said there was nothing in the Elections Act that prohibited a leadership candidate from transferring funds to the party, so they didn't think there was any violation of the Act. I thought they were still missing the point, so in May, 2013 I wrote the following to try to make it crystal clear. I never heard back from them.

Section 28 of the Election Finances Act reads:


"28. No political party, constituency association or candidate registered under this Act and no person on its or his or her behalf shall knowingly accept any contributions in excess of the limits imposed by this Act."

Given the 25% transfer rule applied by the Ontario Liberal Party to its leadership contestants, in my view the leadership contestants were accepting contributions on behalf of the Ontario Liberal Party.Accordingly, the leadership contestants would be in violation of section 28 if they accepted any contribution which would result in a transfer to the party of an amount exceeding the contributor's annual limit as set out in the act. For example, if a leadership contestant accepts a contribution of $40,000, he or she would know that $10,000 was collected on behalf of the party, and that that amount is in excess of the limits set out in section 18. Accordingly, accepting the donation of $40,000 would be a violation of section 28.

Further, your position that transfers from leadership contestants to parties is not prohibited by the Act depends on determining that such transfers are not contributions. However, it is section 27 that sets out what transfers are not contributions. That section does not include transfers from leadership contestants to parties. It reads:

"27. A registered party and any of its constituency associations or official candidates registered under this Act may transfer or accept funds, goods and services to or from each other and all such funds,goods, other than goods held in inventory for any candidate for use during a campaign period, and services accepted by such political party, constituency association or candidate shall be considered notto be contributions or campaign expenses for the purposes of this Act but shall be recorded as to source and any funds accepted shall be deposited in the appropriate depository on record with the Chief Electoral Officer."

Since section 27 does not list leadership candidates, it must be assumed that transfers from leadership candidates to parties are contributions, and therefore are subject to the limits in section 18,and prohibition in section 28.

If your position were correct, that leadership candidates were permitted to transfer funds because there is nothing in the act that prohibits it, section 27 of the act would not be necessary.
The only provisions in the Act which directly authorizes monies to be paid over from leadership candidates to parties is subsection 42(5).This applies only to surplus following a leadership contest. Where 25%of monies collected are specifically for the purpose of transfer to the party, they cannot be considered surplus.

Please directly address these 2 issues, which in summary are:

1. Were the leadership contestants collecting money on behalf of the party, due to the application of the 25% rule?

2. What provisions of the Act state that transfers of funds from leadership contestants to parties are not contributions, and therefore exempt from the limits in section 18?


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