Audit Report Finds More Problems With Di Ianni Campaign
October 27, 2005

Mayor Di Ianni.

A 10-page compliance audit report released this week identifies five additional illegal donations to the 2003 election campaign of Mayor Di Ianni, and confirms at least 24 other apparent contraventions of the Municipal Elections Act. Auditor Ken Froese of LECG Canada Ltd notes the improper donations have all been returned and expresses confidence that the mayor did not intentionally break the law.

"Had the five apparent contraventions been identified as such by [an earlier review]," Froese writes, "it is reasonable to expect that Di Ianni would have refunded the contributions prior to filing his final financial statement".

He notes that he met with the mayor during his audit. "We found Di Ianni to be open and frank in our discussions with him and on several occasions he advised us that he never intentionally contravened the Act."

Froese's report offers details only on the five new violations, including $750 donations each from the YMCA of Hamilton-Burlington, from a Quebec company controlled by Philip Fracassi, and from the estate of a deceased individual. Charities cannot make political donations, making the YMCA gift illegal. Neither can out-of-province corporations, nor the dead unless they made specific provision for this in their will.

A $300 donation from the Hamilton Bulldogs Hockey Club is also identified as illegitimate because the club is not a corporation. The five new donations totalled $3300 and bring to $22,750 the amount that has now been returned by the mayor. He reported spending a little under $19,000 for signs used in his election campaign.

City council was ordered to conduct the audit by Justice Timothy Culver of the Ontario Court of Justice. He ruled in May after an extensive court battle that council was wrong to have refused a request for the audit filed in June 2004 by businesswoman Joanna Chapman.

Chapman had reviewed the list of the mayor's campaign contributors filed by him in a sworn statement on March 31, 2004 and identified over 20 apparent violations and went to court when council voted 8-1 against her request. Froese, however, focuses his attention on a final campaign submission made by the mayor on March 1, 2005 nearly a year after the one complained about by Chapman.

Di Ianni's lawyers refused to allow this later financial statement to be presented to the court that ordered the audit. The statement reports the mayor returned 51 apparently illegal donations, including nearly all the ones first identified by Chapman. It also changes the names of numerous contributors listed on the earlier filing - attributing to corporations many donations that had previously been listed as coming from individuals.

Froese makes no comment on the latter activity and does not provide a list of all the donors who contributed more than the legal amount, although his report appears to confirm that at least "24 corporations or groups of associated corporations that had exceeded the $750 limit".

Froese makes a number of interpretations of the Municipal Elections Act including that donations can be made on behalf of other persons "where there is supporting documentation such as a letter". He also says the audit "was conducted on the basis of information reasonable available to Di Ianni when contributions were accepted."

With regards to the latter he decides that: "Prior to finalizing a financial statement, a candidate can also reasonably be expected to identify multiple contributions that result in an over contribution, contributions from different individuals or corporations that share a common address, or other commonalities that suggest a possible association."

Chapman identified seven corporations who had each made multiple contributions that totalled more than the maximum allowable amount. She also identifed numerous potentially associated corporations which shared the same address. Froese's report doesn't comment specifically on the failure of the mayor to identify these problems before submitting his March 2004 financial statement.

The auditor also reports that Di Ianni paid his campaign manager $12,000 instead of the $6,000 reported under "salaries & benefits / professional fees". But he accepts the explanation that the other $6000 was included under fund-raising which Froese decides is "an appropriate classification considering the functions performed by the campaign manager."

The report includes a recommendation for further investigation. "We have proposed to the City of Hamilton that the compliance audit be extended to address additional matters where the information provided by contributors either does not resolve the issue or the information raises further questions as to whether the contributions were appropriate."

The full report is available on the CATCH website at http://hamiltoncatch.org/pdfs/FroeseReport-DiIanni.pdf.