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$2 million in hidden donations flowed to Liberals
The "black hole" of political fundraising - makes a mockery of the disclosure rules
By Aaron Freeman
One of the worst loopholes in Canada's disclosure system for political donations allowed Liberal candidates last year to collect more than $2 million in donations from anonymous sources.
Several candidates from the November election have not yet reported their donations to Elections Canada as required by law. (The law provides a generous four-month period for candidates to send their list in, but apparently, meeting this deadline is too much of a bother for some candidates.) But the available data show that a total of $2 million in hidden donations flowed from Liberal riding associations to the candidates' election coffers.
Canada's new elections law says that all donations to candidates above $200 must be publicly disclosed. If a party riding association transfers money to a candidate, the original donor must be disclosed, but loopholes allow donations to remain hidden if they result from a previous election campaign surplus, or if they were made before the new law came into effect on September 1, 2000. As a result, the original donors for many candidates in the November 2000 election remain anonymous, since the only name that appears on the disclosure form is the riding association that made the transfer.
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The "black hole" of political fundraising - makes a mockery of the disclosure rules |
Some candidates employed these loopholes to direct huge stealth sums to their campaigns. Among Liberal candidates, for example:
Defence Minister Art Eggleton enjoyed a $60,000 donation from his riding association.
Secretary of State (Asia Pacific) Rey Pagtakhan received a $55,000 loan from his riding association, more than double the amount received from all other sources combined.
Tom Wappel (Scarborough Southwest) had his entire $49,000 campaign budget provided by his riding association.
Outside of Cabinet, the largest transferred sum was from Gurbax Malhi (Bramalea-Gore-Malton-Springdale), who received $60,000- $1,400 more than he spent on his campaign.
Opposition members also moved considerable sums from their riding associations. Bloc québécois leader Gilles Duceppe's riding association gave $11,200 in hidden money to his campaign. And Canadian Alliance Leader Stockwell Day received $20,000 from his association.
In the 1997 election, Liberal Cabinet ministers funneled $401,608 from riding associations into their campaigns, about 15 percent of the $2.8 million they raised during the election. This time around, ministers raised $3.2 million, and again, 15 percent - or $490,569 - was transferred from riding associations. About three quarters of this money was undisclosed.
The loophole - which has been referred to as the "black hole" of political fundraising - makes a mockery of the disclosure rules. It means that the law requires disclosure only for those who don't mind having their name made public, while everyone else has a convenient way to remain anonymous when directing money to candidates and parties.
The problem is well known. The Lortie Commission on party financing recommended closing the riding association loophole more than a decade ago, and Canada's chief electoral officer has repeatedly highlighted the issue in his reports to Parliament. Yet MPs, comfortable with the rules that delivered them to office, keep hoping the issue will go away.
Under public and media pressure, the law was tightened somewhat last year. (Before the new law, riding associations didn't have to disclose anything at all.) However, key loopholes still remain, not only on the donations side, but also on the spending side. Riding associations, which often host fundraisers and conduct other partisan activities, do not have to disclose what they spend to help candidates get elected.
The loophole could easily be closed with a simple requirement that riding associations register. This is exactly what is done under the elections law in Ontario and Alberta. Or better yet, the feds should follow Quebec and Manitoba , which banned corporate contributions altogether, allowing only individuals to donate.
The only argument in favour of this loophole - that riding associations are private entities and therefore should not have to disclose their backers - is so ridiculous that people seldom make it any more. Riding associations are the agents of the party at the local level. They exist to further the interests of the parties and their candidates. Given the role that parties (and riding associations, as their agents) play in our political process, it is more than reasonable to require a consistent and comprehensive level of disclosure.
Citizens have a right to know the names of the wealthy special interests who are bankrolling the political process, especially when, as is invariably the case, these interests are those with the greatest stake in government decision-making.
An optional system of disclosure that allows millions of dollars in hidden donations to flow into election campaigns is profoundly undemocratic. The riding association loophole should be closed.
Aaron Freeman is a columnist with the Hill Times [www.thehilltimes.ca], Canada's parliamentary newspaper, and a board member of Democracy Watch. The opinions expressed are his own.
Posted: April 30, 2001
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