Catching Crooked Candidates
July 11, 2004

How do you catch illegal campaign donations to city council candidates? With a great deal of effort and quite a bit of luck, thanks in large part to Ontario's Municipal Elections Act. In theory, the Act prevents illegal activities, but in practice it's another story.

The Act requires candidates for municipal office to submit a campaign financial statement, including a list of the names and addresses of all donations over $100, and it makes it illegal to accept more than $750 from any single donor. But no one checks to see if the law has been followed! The enforcement is left up to ordinary citizens. There isn't even any provincial official that you can turn to ensure compliance.

For example, former councillor Anne Bain submitted her statement without any addresses at all, and got away with it. Only when a citizen complained to the city clerk, was Bain asked to correct the omission. But she took three months to do so and handed in the list on the last day that it would be possible for a citizen to challenge her donations. The Act does not allow for extensions to the compliance audit deadline.

If candidates do provide the donor addresses, there is no assurance they are correct. Mountain councillor Tom Jackson listed a donation from Parks Transportation at 165 Barton Street E. Hamilton. He didn't provide a postal code for this or any other donation. It turns out there is no such company and 165 Barton East is the address of the city jail!

Jackson may have been referring to Parko Transportation at 165 Burton Street (no East). When you phone that company, they answer "Blue Line Taxi", which was another of Jackson 's donors, but with an address on John Street not Burton. Since the two donations didn't exceed $750, none of this apparently violates the Municipal Elections Act.

Even where donor names and addresses are correct and complete, a citizen doesn't have enough information to determine who this money came from. This is especially true for numbered companies. In many cases, these are listed at the same address as other donor corporations. If two or more of these donations exceed $750 has the candidate broken the law?

You can't be sure. If these companies are "associated" as defined in the federal Income Tax Act, then they are treated as one donor and mustn't give a total of more than $750. But "association" is determined by who owns the companies, and that information is not provided in the candidate's statement.

For a stiff fee, a citizen can do a corporate search and obtain the names of the directors of the companies, but that only gives you a clue, not the final answer. The directors may not be the same as the shareholders, and even if they are, there is no way to determine which person owns what percentage of the company.

Joanna Chapman, the citizen who has asked for compliance audits of nine candidates including mayor DiIanni, spent over $1500 doing corporate searches. In the process she discovered another tricky part of enforcing the Act. Many of the companies were not incorporated. It appears that some of them are merely buildings.

For example, three companies give 240 Main Street East as their address. Two of them can't be traced as corporations. More than a dozen donors list 242 Main Street East as their address. Most can't be traced. However, Effort Trust is listed at both addresses, and many of the mysterious companies appear to be buildings owned or managed by Effort Trust.

It's bad enough that an individual can give $750 from himself, $750 from his wife, $750 from each of his kids, and $750 from his company. But the law thankfully doesn't allow him to donate $750 on behalf of his house, garage, dog house and any other structure he may own. The Act says that only individuals, corporations or unions can make contributions.

But without doing a corporate search, how is a citizen to know that "Carling Building Co" or "Village Green Denture Clinic" are not corporations? Presumably the Ontario government could determine this, but as noted, neither the Ontario government nor even the local government are actually required to check. And they don't.

So how did Chapman conclude that the Act had been violated by Larry DiIanni and eight other council candidates? She got some serious help from candidate stupidity. DiIanni's list of contributions, for example, lists eight corporations that gave two or more donations totalling more than $750. The violations are obvious to anyone who looks carefully at DiIanni's campaign submission.

Mind you his 484 donations are not listed in alphabetical order and you need a magnifying glass to read the tiny typeface. But if you enter them all into a database, you can start to see the patterns. If you sort them by address, for example, you find that Pasquale Paletta of 4480 Paletta Court in Burlington gave DiIanni $750 and that Pasquale Smith of exactly the same address gave him another $750. You'll also notice that five different donors, including three numbered companies, all have the same address.

Subsequent corporate searches may then increase your suspicions, especially if you find that all the directors live in the same house, but for some reason have slightly different last names. Other research is possible but the citizen is still deeply handicapped by not having access to most of the necessary information. That can only be revealed in a compliance audit.

To get that to happen, the citizen has to convince city councillors to order it, or failing that a judge. It helps that the accused councillors are excluded from this decision, but that doesn't mean the remaining ones don't have some interests in the outcome.

The majority of the companies cited in Chapman's allegations also made donations to some of the councillors who will decide whether further investigation is warranted. Remember that the citizen is alleging wrongdoing by both the candidates AND by their donors. The potential fine for a corporation is $25,000 per offence - five times higher than for the candidate.

These councillors are thrust into a very difficult position by a law that is obviously deeply flawed. Will they bite the hand that feeds them? And citizens are obviously put into an even worse situation. That's why demands to reform the Municipal Elections Act are now working their way through Toronto City Council.

The Toronto council established a task force last year and will debate a series of recommendations on July 20. One calls for a total ban on corporate and union donations - something that is already law in Quebec and Manitoba , and has largely been adopted by the federal government. You can read more about the Toronto proposals at http://www.votetoronto.ca/reform.html.