Another day, more interesting developments in the Conservative In and Out Scandal. Today we learn that Conservative candidates who were likely to say “hey, this allegedly sounds like a blatantly transparent attempt to circumvent our election laws, and enrich ourselves at taxpayer expense, and I question its legality” were pre-screened from participating.
Louise O'Sullivan, Conservative candidate in the riding of Westmount-Ville Marie and a former member of Montreal's executive committee, said her background in business and in municipal politics would have immediately prompted her to question the transaction.
"I don't think they would have done it with me because they knew that I was tied in to municipal (politics). ... They would have been afraid of me."
O'Sullivan described the other west-end Montreal Conservative candidates who agreed to the transfers as "all the 'yes' people."
"I was not approached and I wouldn't have accepted it," said O'Sullivan.
As Elizabeth Thompson writes in the Montreal Gazette, O’Sullivan’s campaign and riding fit all the criteria the Conservatives were looking for in In and Out participants:
In an email Dec. 15, 2005, Michael Donison, national executive director for the Conservatives, suggested the party look at some suburban Montreal ridings.
"I have been speaking to Paul Lepsoe," he said, referring to the party's lawyer. "He has suggested that surely there are contiguous ridings that we could include on the list - for instance what about all the Montreal South Shore? None of those campaigns can or will spend very much and could make their caps available."
Throughout it all, O'Sullivan and riding president Sean Ahern say they never got a phone call - even though her riding encompassed the highly visible western half of downtown Montreal.
Perhaps this riding was missing one key ingredient after all: a pliable candidate either willing to overlook the dubious ethic and legal status of the In and Out scheme, or one too daft to notice.
However, Conservative Party spokesman Ryan Sparrow said the fact O'Sullivan wasn't asked is evidence that there wasn't a grand plan.
"It continues to prove that the Liberal accusations that ridings were simply chosen to participate in order to receive a rebate is ridiculous. All the ads that aired were properly 'tagged' and all the rules were followed."
Grand plan? No way. No master strategy. No intelligent, rational thought and consideration. We just pulled it out of our asses and made it up as we went along, Ryan seems to say. That would seem to put lie to the Steve Harper, strategic genius myth, but I’m not buying it.
Another interesting angle to the Conservative In and Out scandal coming from the Left Coast, and my old stomping-grounds of Vancouver Island.
One of the Conservative campaigns roped into participating in the ill-fated In and Out scheme was the Norm Sowden campaign in Nanaimo-Cowichan, a riding that has been conservative in the past but was won in the last election by NDPer Jean Crowder.
While they participated in the scheme, it seems Nanaimo Conservatives were pissed off because the ads attacked the Liberals, while they were in a fight with the NDP, making them essentially useless, if not counterproductive to their electoral efforts.
Nanaimo-Cowichan Conservative candidate Norm Sowden's campaign, in a fight against NDP incumbent Jean Crowder, took up the request from national headquarters and sent $8,089.20. … However, the Liberal attack ads didn't help Sowden because he was in a fierce fight with the NDP. Court documents cite an e-mail from Hallsor to party headquarters which relays the Nanaimo-Cowichan campaign was "really pissed off" its money was being wasted.
Several thousand dollars went back and forth between the national body and the campaign of Nanaimo-Cowichan candidate Norm Sowden, too, though there are indications the local Conservatives weren't happy with the result. The affidavit cites an e-mail from prominent Victoria Conservative Bruce Hallsor to Michael Donison, the party's then executive director, in which Hallsor says the Nanaimo-Cowichan people were "really pissed off" because the advertising bought with the money attacked the Liberals, not the NDP, who were seen as a much more dangerous opponent. Indeed, New Democrat Crowder won the seat.
First, they say the candidates really wanted those national ad campaigns to run. They recognized that they mattered less than the leaders and hoped the party effort would help them to victory.
But Elections Canada has evidence that contradicts that. Mostly, the local candidates and their volunteer agents just did what they were told. Sometimes, they said the national ads actually hurt them.
Here on Vancouver Island, the Nanaimo-Cowichan Conservatives complained they were made to pay for advertising that hurt their effort. The ads, directed at a national audience, attacked the Liberals. The local Conservatives' main opponent was New Democrat incumbent Jean Crowder. The attacks, by discouraging Liberal votes, might have helped Crowder to victory.
This all really puts to rest the myth that these were local ads, not national ads. If they were local ads, why were local campaigns so pissed off and why were they indeed unhelpful, if not counterproductive, to the needs of the local campaign?
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To that end, he mocked the Liberals and the Bloc Québécois in a speech to an evening party rally where he called the Liberals crooked and the Bloc impotent. About 400 party supporters, including two dozen area candidates, were in attendance.
"We spend our own money, the Liberals spend stolen money," he said in a speech that made no reference to current allegations of election spending irregularities by his party in the last election.
First of all, what stolen money Steve? I think we should serve him with a libel notice unless he can back that up because, as he knows, if he’s referring to sponsorship he knows the LPC returned to the taxpayers every penny that was identified by multiple independent investigations having ended-up in Liberal coffers. (And on a side note, interesting to compare the responses of the two parties to those incidents: The Liberals call in the AG, call in the RCMP, hire forensic auditors and appoint a judicial inquiry. The Conservatives stonewall committees, sue independent bodies, insult the RCMP, and vote no confidence in Elections Canada.)
And second, on his comment that the Cons spend their own money, I call bullshit. A key part of their in and out scheme was to enrich local Conservative campaigns with taxpayer money they’re not entitled to. By funneling this national spending through local campaigns, it allowed these local campaigns to increase the rebate of election expenses they’re entitled to from the taxpayers. This wasn’t a side benefit or an afterthought, it was spelled-out by the CPC to local campaigns as their carrot for participating in the scheme: we send you this money, you send it back, you get a bigger rebate.
In fact, this is such a central part to the Conservative scheme that, when Elections Canada rightly denied 67 Conservative candidates’ attempts to count this spending towards their taxpayer rebates, on the grounds national expenses aren’t eligible, the Conservatives launched a lawsuit against Elections Canada to fight for the money.
So Steve, this IS about the CPC wanting to spend taxpayer money it’s not entitled to. It’s about a scheme that, in addition to allegedly being an attempt to circumvent election spending laws, is also an attempt to squeeze another $720,000 out of the taxpayers for Conservative campaigns. Money that, told they’re not entitled to, they’re suing to get anyway.
Because, I suppose, they feel entitled to their entitlements.
People don’t generally get too upset about election spending limits. But a transparent attempt to grab nearly $1 million in taxpayer dollars? That’s another matter altogether.
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In the affidavit to support the search, an executive for Retail Media, the agency that purchased broadcast advertising on behalf of the Conservative campaign, is said to have raised doubts about the veracity of an invoice used to back up one Ontario Conservative candidate's expense claim for $39,991.
Marilyn Dixon, chief operating officer of the agency, "speculated that this invoice must have been altered or created by someone, because it did not conform to the appearance of invoices sent by Retail Media to the Conservative Party of Canada with respect to the media," according to the sworn affidavit of investigator Ronald Lamothe.
Mr. Lamothe also notes in his affidavit that invoices on Retail Media letterhead filed by nine Conservative candidates outside Quebec bear the same invoice number and each contain the same typographical error -- spelling "invoice" as "nvoice." A similar typo appears on other invoices, the affidavit says.
As Liberal MP Dominic LeBlanc says, that raises the possibility of criminal acts of fraud or forgery which, at the very least, merit an RCMP investigation. And a criminal investigation would be a whole other kettle of fish than the Elections Canada investigation the Conservatives are already facing.
"Our initial impression is that some of the allegations made by Elections Canada in the sworn affidavit lead us to a concern that there may have been forgery or fraud that could ultimately run afoul of the Criminal Code," said Mr. LeBlanc.
The Conservative response to these allegations, in my view, raises more questions than it answers:
The Conservatives maintain that the documents provided by candidates to Elections Canada were legitimate. A Conservative official, speaking on background, said the party received an invoice from Retail Media with totals for all the candidates listed together.
To simplify, party officials cut and pasted the amounts for each individual campaign onto individualized documents to show each campaign how much each had spent for the advertising, without showing every campaign the figures for other candidates. But these documents were not intended to be official receipts. The source compared the move to dividing up a restaurant check at the end of meal.
That seems to support the contention that this wasn’t really local advertising at all, but was actually, as the opposition and Elections Canada has insisted, national advertising funneled through local campaigns.
If, indeed, this was just local advertising, then why didn’t Retail Media invoice each campaign directly, instead of sending a group bill to the central party? Why did the CPC apparently need to create new invoices for each campaign? And why do it on Retail Media letterhead? If all was aboveboard, and this was just a group ad buy, why didn’t the CPC invoice the campaigns on its own letterhead, collect the money, and pay Retail Media?
I don’t know about you, but when I divide up the restaurant check at the end of the meal I don’t photo-shop new receipts for each person. I actually usually ask for separate checks, but then again I’m not trying to funnel by lunch through my co-workers to get around my meal spending limit, and get them more frequent flier miles on their credit card.
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There’s a few reasons for how this first round of coverage has shaken-out. For one, the way the Conservatives handled things yesterday, from secret media briefings to hotel musical chairs to fire escape retreats, was just too good not to be covered, and mocked. It will do them no favours with the public.
As well, until today the details of the warrants leading to the RCMP raid, ie. the new information, will not have been available to the media at large. The Conservatives made only redacted, partial information available to their handpicked media members. The rest of the media aren’t going to cite their competition at length in their reportage even if they had the full, not redacted by the Cons for spin purposes version.
So, today the full, unredacted warrant information leading to the unprecedented RCMP raid on Conservative Party HQ will be available to all and sundry, including the media.
Most media outlets, undoubtedly miffed from the CPC “select media” list, will be on the story, and all its salacious details, with a vengeance. And the “select media” the CPC did invite, no doubt a little embarrassed by all the attention they’re getting today, will be all over the full warrant today too, eager to prove they’re not anybody’s lackeys.
So I’m looking forward to a veritable typhoon of round two in-and-out coverage focused on the nuance of the alleged Conservative scheme, and what led to the RCMP raid. The inept CPC media strategy has guaranteed full and detailed coverage.
And despite the media sideshow, a lot of salaciousness is already emerging from the redacted information the CPC released:
* Barbro Soderberg, the official agent for Tory candidate Steven Halicki, says she spoke to senior party officials and was assured that "this process is legal."
Still, the cash shuffle rang alarm bells for Soderberg.
"I had contacted the Conservative party in Ottawa and was reassured that this was okay. As a bookkeeper, I know that sometimes you have to use creative accounting between small companies but I found this move was being a little too creative," Soderberg would later tell Elections Canada investigators.
*In the statement, Lamothe said that he has "reasonable grounds" to believe the party exceeded its election spending limit and that candidates "improperly" claimed expenses.
"I have noted a consistent pattern created by the Conservative Party of Canada or the Conservative Fund Canada to deposit funds into the accounts of various campaigns, only to have the same or similar amounts transferred, always under the control of the Conservative Party or the Conservative Fund Canada, back to the Conservative Fund Canada, the chief agent of the Conservative Party of Canada," he stated.
*The warrant says that the elections commissioner believes that the Conservative Party of Canada and its official agent, the Conservative Fund of Canada, violated the Canada Elections Act. The party and the fund are separately accused of exceeding the maximum amount allowed for elections expenses. The Conservative Fund is also accused of filing financial returns "that it knew or ought reasonably to have known contained a materially false or misleading statement."
And much more to come today. Stay tuned, this storm is still gaining strength.
For a party that continues to vehemently insist on its innocence, the Conservatives are certainly acting like they have something to hide. The events of Sunday afternoon, from secret clandestine meetings, to misleading the media, to sneaking out stairwells, certainly paint a picture of a Conservative Party running from accountability and transparency.
You’ll remember last week the RCMP, acting on behalf of Elections Canada, executed a search warrant on Conservative Party headquarters in Ottawa, carting out several boxes of documents. The raid was believed to be (and is) in relation to the so-called In and Out Scandal, which allegedly saw the CPC funnel national money through local riding campaigns to buy national advertising in an attempt to circumvent national spending limits, as well as increase the taxpayer refund each local campaign is entitled to. Elections Canada has denied the expenses as not being local spending and continues to investigate the scheme, the CPC is suing Elections Canada over the denied refunds (they want money from the taxpayers they’re not entitled to.)
Actually, the Conservatives don’t really contest how the scheme worked. They just don’t think it was against the law. Unfortunately for them Elections Canada, the body charged with interpreting and enforcing election law, disagrees with them. The Cons also claim all the parties do this; a claim again dismissed by Elections Canada. And, as we know, the Conservatives have had some difficulty with the nuances of election law in the past.
But back to the raids. The media successfully fought in court to have the 700-page search warrant released to the public; that will happen Monday. The Conservatives of course already had a copy of the warrant, after all, they were the ones being served and searched or, as they put it Sunday “stormed” by the RCMP. Imagine if the Liberals impugned the motives of our national police force in that way? The Conservatives would be up in arms. But I digress.
When one reporter asked in an e-mail about the news conference, Mr. Sparrow replied: “No conference, not sure where you got that from.”
The reporter then flipped Mr. Sparrow back an e-mail in which he had told another reporter who was on the list that the briefing would be at “4:30 Lord Elgin, Boardroom 800. Embargo until 7:30 pm Sunday night.”
To which Mr. Sparrow replied: “I meet with journalists privately all the time.”
As a journalist myself I’ll tell you one thing, we don’t like being lied to or misled, and we tend to react strongly when we are, so it’s generally not a good idea.
But it gets better. As the rest of the media pack got word of the secret briefings, and were understandably miffed to be shut-out, they decided to stake-out the Lord Elgin. This forced the Conservatives to beat a hasty retreat to the Shearton where, as Kady blogs, the media stake-out continued.
Finally, after conducting a few briefings, the CPC decided to call the whole thing off and get out of dodge, leading to my favourite bit of this story so far:
The first briefing for select television outlets took place but, by that time, the excluded reporters found out the new location and began to stake out the hotel.
That led the Conservatives to cancel all subsequent briefings, including the one they had planned with The Globe. And Mr. Sparrow, Mr. Finley and Mr. Lepsoe fled from the Sheraton down a back set of stairs.
Other reports indicate it may have been a fire escape which, all things considered, seems rather appropriate, given that their pants may well have been on fire. The chase actually continued into the parking lot however, as shown in this exclusive video:
But while this whole thing with the media at various Ottawa hotels today does indeed come off like a Benny Hill farce, the alleged Conservative actions in this in and out scheme, as outlined in the warrants, are anything but farce:
The document alleges the Conservatives violated the Elections Act "by incurring election expenses that exceeded the election expense spending limit" by $1.1 million. It also alleges that 67 Tory candidates "improperly" sought taxpayer-funded rebates on expenses they did not incur.
The third allegation comes under the obligation to file "true and complete reports." The allegation is that the party's official agent filed returns with Elections Canada "that it knew or ought reasonably to have known contained a materially false or misleading statement" on its expenses.
The range of penalties for exceeding the election expense limit for a party's chief agent is $1,000 fine, three months imprisonment or both. A registered party is liable to $25,000 fine.
According to the CTV report, the affidavit handed out by the party does not reveal much more about the case than was known already. But it does confirm that the search was not related to a lawsuit launched against Elections Canada by the Conservatives after the Elections Commissioner had begun an investigation of the scheme.
In the Commons, Harper linked the raid to the ongoing civil lawsuit launched by the Conservatives against Elections Canada's interpretation of the 2006 campaign advertising financing rules, and an alleged $1.2 million in campaign overspending.
The party insider, speaking on condition he not be identified, slammed the extraordinary raid that took place on the eve of a hearing during which Elections Canada officials were to be questioned by Conservative party lawyers…
"Is it a coincidence that they visited party headquarters today when tomorrow they fully knew that their officials were going to be examined (by Conservative party lawyers) as early as tomorrow morning? We see this as a PR stunt, a tactic of intimidation."
And it’s important to note the Conservatives only released partial information today; we’ll have to wait until Monday morning for the full warrant information to be released and to see what they didn’t want to show their hand-picked media contacts Sunday. It should make for interesting reading.
The word goes crazy and I’m out of the country. Still in Boston, at Logan Airport enjoying cheese and crackers in the United Lounge and waiting for my flight to San Francisco. But thanks to the wonders of PDAs, and Facebook, as I strolled (ironically enough) through the John F. Kennedy Presidential Library and Museum I was made aware of this cheery news:
Mounties raid Tory HQ The Canadian Press with Globe and Mail Update April 15, 2008 at 12:28 PM EDT
OTTAWA — The RCMP raided Conservative party headquarters in Ottawa on Tuesday at the request of Elections Canada.
A spokesman said elections commissioner William Corbett had asked the assistance of the Mounties to execute a search warrant, but he would not say why. (more)
Needless to say, everyone here and here is going bananas. Paul Wells is one of the rare voices of caution, reminding us of the presumption of innocence in our legal system and what not. Fair enough, but no matter what happens in the court of law, the more important verdict will be that from the court of public opinion. And there, the presumption of innocence doesn’t apply so much, and the burden of proof is a very different thing.
These headlines are going to be splashed all over the airwaves tonight, and all over the newspapers tomorrow. A raid on a political party HQ? It’s unprecedented. And if there’s good film to be had, then it’s the makings of some devastating campaign. Remember how much mileage the Cons got from Dingwall’s entitled to his entitled footage, even though it turns out he actually was entitled? A crapload.
The public doesn’t pay much attention to the ins and outs, if you will, of the day to day political goings-on. But this one will get their attention. And no matter what happens down the road, this is what they’ll remember. That’s politics. And that’s the people’s court. It’s their verdict that will count.
There are many reasons why, pronouncements to the contrary, Stephen Harper is likely eager to have Canadians trek to the polls this fall. Beyond the obvious motivations, there are also two lingering scandals that’d he’d rather not have erupt before the campaign.
*The first is a real ticking time bomb, and it’s the Conservative election advertising “in-and-out” scandal. It may have slipped out of the headlines but this situation is still developing, and is far from over.
Conservative uber strategist Tom Flanaghan, who is to Harper as Karl Rove is to Bush, is flogging a book and so has been all over the media, saying lots of interesting things. Today, he talked about the alleged ad laundering scheme:
Tom Flanagan says it was only a shortage of money in 2004 that kept the Tories from employing the "in-and-out" money transactions that were used by the party in the 2006 election and are now under investigation by the federal elections commissioner.
He adds:
"It looked to me as if this is in conformity with legislation, but I don't claim to be an expert on it."
No, Tom, you’re not an expert. You know who are experts on election legislation? Elections Canada. The guys your party have taken to court for refusing to sign-off on your little scheme.
This line from the same article was also of note:
Three of the candidates have told the Citizen they believed the payments to the party were for national advertising, and one former candidate has said his campaign was compelled by party headquarters to join in.
So, while Conservative apologists continue to maintain these ads were local and all is above board, three of the candidates have admitted the obvious: these were national ads. Which blows the Conservative defence right out of the water. The fact national campaign was pressuring ridings to participate in this scheme is also troubling.
Speaking of candidates, the LPC has released a list of the 66 Conservative candidates they allege were potentially involved in the ad scheme. There are 17 elected MPs on the list (and five cabinet members), namely:
Dick Harris, Ron Cannan, Jim Abbott, Stockwell Day, Colin Mayes, Jay Hill, David Anderson, Patricia Davidson, Maxime Bernier, Sylvie Boucher, Daniel Petit, Steven Blaney, Jacques Gourde, Luc Harvey, Jose Verner, Christian Paradis and Lawrence Cannon.
Quite a few on the list are from Quebec. Wouldn’t help Harper’s promised Quebec breakthrough to have this scandal explode between now and a spring election, now would it?
*The other lingering issue the Cons have been able to sidestep without Parliament sitting, and would likely be able to keep on the backburner if the throne speech triggers an election, is the suppression of information by DND relating to Afghan detainees.
If you haven’t been following, the government’s mishandling of the Afghan detainee was one of the final nails in the defence minister Gordon O’Connor, now put out of his misery in the revenue portfolio, where he may never be seen again.
Likely looking to save the government, and DND, further embarrassment CDS Gen. Rick Hillier decided all detainee information would henceforth be classified for highly dubious “national security reasons” denying the public’s right to know. Not one Conservative elected official has yet come forward to support or condone what would appear to be a decision outside of Hillier’s purview. O’Connor dodged it until he was put to pasture, I’ve not heard a peep on it from McKay.
Canada is still unable to account for at least 50 prisoners it captured and handed over to Afghan authorities, keeping alive concerns that some detainees could have been subject to torture.
This issue isn’t going away. The Liberals were out on front on this when it broke, and the NDP threatened to recall the defence committee over it, although they didn’t follow through on that threat.
If parliament were to resume this fall however and not be quickly dissolved for an election, I have no doubt the freedom of information issue will be the subject of heated hearings by the defence committee, which would no doubt call Hillier, O’Connor, Ward Elcock (since shuffled out of DND) to get an explanation into this mess, and figure-out just whom was running the show at DND. It would be an unhealthy media spectacle to say the least.
Two reasons why, no matter what he says in public, Harper may more than be happier to go to the polls this fall.
The Conservatives also launched damage-control tactics by "revealing" complicated transactions employed by Liberal Leader Stéphane Dion in the 2004 election that, upon examination, turned out to be typical transfers to pay for election-campaign lawn signs and reimburse debt.
I love how the Globe put quotes around the word revealing. It’s like the print equivalent of air quotes. And who says it’s hard to convey sarcasm in print? It’s dripping off that paragraph. As the Globe reports, even a cursory examination of the Conservative “allegations” easily proved them to be without merit:
In fact, Elections Canada filings show that the transfer was one of two that the party made in the same month to pay back $44,719.17 it owed Mr. Dion's riding association - a debt reported publicly six months earlier.
So, that Conservative-initiated diversionary sideshow dealt with, what were the Conservatives really up to yesterday?
The Conservatives successfully staved off attempts yesterday to launch a Commons probe into allegations that the party circumvented national election spending limits in last year's election by funnelling $1.2-million through local candidates.
Tory MPs used procedural tactics to delay a vote on opening a probe - after engineering similar delays in three hearings this week. That means that the probe cannot be launched before Prime Minister Stephen Harper prorogues Parliament this weekend, ending the current session of the Commons and delaying the return of MPs until a new session is opened Oct. 16.
Yes, they turned to their trusty old how to stonewall committee meetings handbook to stop Parliament from investigating their shady doings. Wouldn’t be unreasonable to conclude they have something to hide, wouldn’t it?
We'vealready seen that the Conservative Party leadership doesn't understand how to read election laws. Even the ones they wrote. Heck, they’ve already been caught violating election law at least once now. So it's no surprise that Conservative bloggers can’t understand the law either. Or just care not too.
In essence, the Conservative campaign hit its ad spending limit, so it used uncompetitive Conservative campaigns that hadn’t hit their spending limit to launder advertising money, transferring money into the ridings and invoicing them the exact same amount for the purchase of television advertising that Elections Canada has deemed as purely national in scope. The Cons also tried to claim this spending as a local expense to increase their taxpayer refund; Elections Canada called foul and the Cons are now suing them in court.
It’s appears to be a pretty egregious and transparent attempt to circumvent election law, and funnel tax dollars into Conservative campaigns. Numerous Conservative officials at the riding level have come forward to allege this was exactly what it looks like: a laundering scheme to circumvent spending limits, with a reward of taxpayer dollars to ridings that played along. It stinks, and it’s only a matter of time before it blows-up.
So, while the Con trolls have been running around pretending there’s nothing to see here, they’ve also been trying to find some way of diverting attention from the story. Salvo one was veil gate, which is also an attempt by Harper to discredit the Elections Canada head he himself picked after chasing-out the last one, Jean-Pierre Kingsley. He can’t discredit the guy he picked as a Liberal appointee, so he’s trying to discredit him in other ways so, when the ad scandal hits bigger, Elections Canada will be viewed as less credible. It’s transparent, and it’s pathetic.
If I had a dollar for every time Janke did a big investigative post professing some big Liberal wrongdoing, only to have to apologize in a day or two for being completely wrong, well, Imay not berich, but I could certainly go out for a very nice lunch. Perhaps a nice steak at The Keg, with a glass of cabernet. Domestic though, not imported.
Janke (we’ll assume he’s cooked this up on his own) has been pouring over Elections Canada returns, specifically for Stephane Dion’s 2004 election campaign in St. Laurent-Cartierville, and he thinks he’s found something damming.
He points to $12,200 transferred from Dion’s riding association to his campaign, which was immediately transferred back to the association for the purchase of advertising material, other than tv/radio, and then transferred on to LPC(Q). He posts screenshots of all this to make it look fancy. Then, interestingly without claiming any rules were broken, he calls it scandalous, I guess hoping a few screenshots will some how make it so.
But let’s look at what Janke has “uncovered”. First, a transfer from the riding association to the Dion campaign of $12,200. Nothing untoward there, its common practice for the riding to transfer money to the local campaign before/at the start of the election. Inevitably this is the proceeds of fundraising activities carried-out by the party since the last election to support the next campaign. That’s what riding associations do.
Next, Janke shows the same amount is transferred back to the riding association (and on to LPC(Q)) to purchase advertising. As Janke notes, this wasn’t tv/radio advertising, but was entered in the ‘other’ column. This likely means, and indeed the figure noted bares this out, that it was to pay for the riding services package bought by all riding associations from the national party. This is for lawn signs, brochures, technical support (a voter tracking database) and the like. A purely local expense.
Why was the exact amount transferred to the campaign from the riding that was needed to pay for the riding services package? Maybe that’s all the campaign needed at the time. The riding services package is a major expense and is often incurred before the campaign has its own fundraising underway, so perhaps the campaign asked the riding to pay for that through its fundraised funds.
Janke also notes a transfer by the LPC(Q) to the riding association of $12,200 as proof of further shady happenings. What he doesn’t mention, although its partially visible in his screenshot, is a second transfer a few weeks later of $32, 549.17, for a total transfer from LPC(Q) to the riding of $44, 749.17.
Why the transfer? Well, here’s something Janke missed in his super sleuthing. On the associations January 1, 2004 statement of assets and liabilities, it lists the following:
Yes, a $44k debt owed to the riding association. So, allow me to speculate the likely scenario here, based on all the facts. Prior to the 2004 campaign the LPC(Q) owes the riding association $44k and change, likely for local fundraisers. Prior to the campaign finance reform legislation, it was practice for fundraising expenses to be cycled through the party for tax receipt purposes.
With the election campaign coming-up the LPC(Q) transfers the money the riding association is owed for its fund raising to the riding in two installments: $32k plus $12k magically equals the $44k debt repaid.
The first $12k to pay for the riding services package, which went right back to the party as that’s who its bought from, the other $32k the rest of the debt owed. Ok, there is a $5 difference for some reason. Where’s the missing $5, maybe that’s the scandal!
As for it being listed in the discount column, when an item is gifted or transfered it's considered a non-monetary transfer. It still needs to be accounted for though, and counts against the riding spending limit, so its accounted for in the discount column. Likely scenario: the riding association chose to gift the riding services package to the campaign.
This all really doesn’t matter though, as Janke is blowing smoke. As I’ve shown these are perfectly benign and legitimate transactions, and is nothing at all like the money laundering scheme that the Conservatives have admitted they orchestrated.
For example, this wasn’t to purchase national advertising and circumvent spending limits, like the Conservatives did. This was to buy lawn signs and other materials for use in the riding, a purely local expense. And, as the riding services package was listed as a non-monetary expense that means it wasn’t even claimed by the campaign as a refundable expense. And the money transferred to the association was money it was owed for its own fundraising activities, not funds to launder and pay for national advertising.
So, let’s review this scoop here, shall we? Dion’s riding association transfers fundraising proceeds to the Dion campaign, which Dion uses to buy the riding services package (local advertising materials, lawn signs) from the party. What’s the scandal here, pray tell? Elections Canada signed-off and approved these returns years ago.
On the other hand, the Conservatives orchestrated a scheme in some 70ish ridings to, and they admit this, bypass national spending caps and improperly enrich riding associations with taxpayer dollars. Elections Canada recognized this as not allowable, and the matter is now before the courts.
Apples and oranges. Despite all Janke’s charts and graphs, nothing but an attempt to blow smoke. And a failed one at that. I'm sure the apology will come any day now.
A Conservative campaign manager admitted exactly that:
The campaign manager for Halifax Conservative candidate Andrew House said the federal party suggested the deal to that riding association.
"What the federal party did was it said, 'Look, it will benefit them through controlling the advertising, but it will also benefit the local association because you can maximize the spending,'" Jordi Morgan said yesterday.
"From our understanding of the legislation, it was totally straight up and there was nothing that was seen as underhanded or any of that."
Maximize the spending, and maximize the refund from the public coffers.
We’ve seen in the recent past that the Cons aren’t very good at interpreting election law; indeed, they’ve broken it before. Harper himself violated the donation limit. Remember this Conservative about-face last Christmas?
After months of heated denials, the federal Conservative party has quietly admitted it failed to publicly disclose hundreds of thousands of dollars worth of donations.
And the muddle over the disclosure meant that at least three party members -- including Prime Minister Stephen Harper -- donated more than the legal limit last year.
Last Thursday, the party filed a revised financial report for 2005 with Elections Canada, acknowledging that it did not report delegate fees collected for its national convention that year as donations, contrary to political financing laws.
So, as I said they’ve shown before they have either have no understanding of, or respect for, election and political financing law, so it’s unsurprising that they’re wrong here too. Don’t they have any lawyers in the Conservative Party? Or do they just not careto listen to them if their interpretation of the law gets in the way of their goals, by any means necessary?
The Daily News article also details the transfers to a number of local ridings for the purchase of national advertising :
The House campaign got a cheque for $4,733.48 from the Conservative Fund of Canada on Jan. 12, 2006. It transferred $4,736.48 back to the party's national fundraiser Jan. 23.
Rakesh Khosla's campaign in Halifax West shuffled $11,841.20 with the national party.
Robert Campbell's Dartmouth-Cole Harbour riding association exchanged $3,947.07.
That translates into ill-gotten refunds from the taxpayer of $2840 for the Halifax Conservatives, $7104.72 for the Halifax-West Conservatives, and $2368.24 for Dartmouth-Cole Harbour Conservatives. Their cuts for funneling money from the national campaign through their books to let the national campaign spend over its Elections Canada mandated advertising spending limit.
Naturally, although they’ve been caught with their hands in the cookie jar the Conservatives are still insisting they did nothing wrong. Although, before they finally admitted they broke the law in the donations case, they kept on protesting their innocence there too:
When The Canadian Press first reported Baird's comments and the apparent breach of the law, Tory officials angrily insisted they'd "fully complied'' with the law and that delegate fees could only be considered donations if the convention turned a profit.
TheTories persisted in this argument even after Elections Canada officials made it clear that profit had nothing to do with it and that the Tory interpretation of the law was incorrect.
"I can fax you scads of material on this. This is the way it's been done for time immemorial,'' Conservative party legal counsel, Paul Lepsoe, told CP last summer.
Then, fast-forward to their coming clean a few months later, conveniently during the holidays when they hoped no one would notice:
Harper spokesman Dimitris Soudas said that while the Conservative party continues to believe convention fees shouldn't be subsidized by taxpayers, it "has indicated from the beginning that it will comply with any requirements'' imposed by Elections Canada, and it has filed the revised financial report "to reflect this decision.''
So, how long will it be before the Conservatives admit they were wrong here too, and that the Conservative Party of Canada, once again, flagrantly abused Canada’s election laws? Christmas is a little ways ways off. Maybe Thanksgiving?
This is a hard story to wrap your heads around, which I think is why it has been slow to pick-up steam. But I think there’s an important angle here that’s being somewhat overlooked, both in the opposition and in the media coverage, and that’s around the refunding of taxpayer dollars.
In essence, the problem the Cons had was they were tapped-out on their national spending cap on advertising. But they still had lots of cash to burn in the national coffers, and a tight election to win. What to do? Well, many local campaigns had lots of room under their spending caps still. So, they said, why not transfer money from the national campaign to the local campaign, order more advertising and have it billed to the local campaigns, who pay for it with the money we just transferred to them? Then it counts against their spending limit instead of ours, and they still have space to burn. Presto-bango, problem solved.
Of course these weren’t local ads, they were the exact same ads that the national campaign ran. The Cons just added teeny-tiny, unreadable fine print saying the ad was authorized by the official agent for the candidate in riding X. The Cons say that makes the ad local, and therefore kosher. But even if you accepted that, and I don’t, that argument doesn’t hold water when you don’t run the ad paid for candidate X in riding X, but run it in riding Y instead, as the Cons did.
So, it becomes readily apparent what this was all about: a scheme to let the Cons spend more money on advertising then they were allowed by funneling money from the national campaign to the local campaign to buy advertising to run in other ridings.
Certainly seems like a no-no, and it seems Elections Canada agrees. A bit complicated though, so its hard to get too outraged yet though unless you’re a political nerd. Which I am, but here’s what would upset me anyway.
A perhaps not so unintended consequence of the Conservative scheme ispotentially hundreds of thousands of taxpayer dollars, if not much more, being funneled to local Conservative campaigns to fight the next election, money they’re really not entitled too.
That’s because the campaign expenses of every local election candidate, as long as they receive a certain 15 per cent of the votes, are 50 per cent refundable by Elections Canada, ie. the taxpayers of Canada. This money usually goes back to the riding association to seed the next local campaign, though IIRC it’s at the discretion of the candidate.
The news coverage says at least $1 million in advertising is in question here, so at a 50 per cent refund that means at least $500,000 in taxpayer dollars going to local Conservative ridings because they funneled these expenses through the local campaigns. Pretty nice cut just for being a money conduit, no?
By transferring thousands of dollars to local campaigns to pay for national ads, and by putting those ad expenses on the local campaign’s books, the Cons weren’t only circumventing national spending limits. They were also artificially increasing the local campaign’s expenditures with non-legitimate expenses, which serves to increase by thousands of dollars the amount of the refund the local campaign then can claim from Elections Canada, and the public purse.
That’s what’s at the heart of the legal case here. The local Conservative official agents tried to claim these ad buys as local expenses entitled for reimbursement and asked for a cheque from the taxpayers, but Elections Canada said no, these aren’t legitimate local expenses, so we’re disallowing the claim and not reimbursing you taxpayer dollars for them. In response, the Cons are taking Elections Canada to court to overturn that ruling, and claim the public money they’re not entitled too.
I think that’s a more important issue then national spending limits, although the free speech argument they’re making is totally bogus. But the fact the Cons are trying to claim taxpayer dollars for national expenses masquerading as local expenses is a disgusting display of entitlement and arrogance, and in my view is the real scandal here.
It’s like they want to have their cake (circumvent spending limits) and eat it too (artificially inflate their taxpayer refunds), and so they're fighting in court to get their hands on $500,000 from the taxpayers. This one is not over yet.
UPDATE: As Mark points out in the comments, my data on the Elections Canada refund program was out of date. The actual formula is a 60 per cent refund if at least 10 per cent of the vote is achieved. That puts the Cons' ill gotten refund figure at $600,000 or, if you use the $1.2 million advertising figure that has also been reported, as much as $720,000.
