Election donation law on trial
October 11, 2006

Ontario's election financing law was under scrutiny in a Hamilton courtroom yesterday as Justice of the Peace Lillian Ross, the former Conservative MPP for Hamilton West, heard arguments about the donations of Paletta International Corporation and Tender Choice Foods to the 2003 election campaign of Larry Di Ianni. The case may decide if private corporations can get around the rule in the Municipal Elections Act that forbids associated corporations from making separate donations to candidates.

Tender Choice Foods and Paletta International Corporation of Burlington are accused by Dundas bookseller Joanna Chapman of contributing a total of $1650 to Di Ianni's campaign, far in excess of the $750 limit. The case is being prosecuted by Chapman's lawyer, Eric Gillespie, at Chapman's expense, after the Ontario Attorney General declined to take over the case.

Sixteen other companies charged by Chapman a year and a half ago subsequently acknowledged their donations were illegal and agreed to make charitable donations in return for Chapman withdrawing the charges. Tender Choice Foods and Losani Homes (1998) have decided to fight the charges. The Losani case will be heard on December 5.

Gillespie presented six lines of evidence to the court, including Chapman's original complaint and two sworn financial statements filed by Di Ianni in March 2004 and March 2005. Stephen Chisholm, acting on behalf of Tender Choice Foods, challenged the submission of the mayor's documents as “hearsay”, arguing that they could only be presented to the court if Di Ianni was in the witness box instead of Chapman.

Chisholm took the same position with regard to the report of compliance auditor Ken Froese. He said his company is “entitled to confront all those who generate such allegations”, and argued that his client had no control over Di Ianni's entries.

Gillespie countered that the documents were sworn statements required by law, and it would waste the time of public officials if “the maker of a document of this nature” had to come to court every time it was presented. His arguments that the material met the test of exceptions to the hearsay rule were accepted by the Justice of the Peace who agreed it was impractical to subpoena Di Ianni because “the mayor's a very busy man”.

The mayor's first financial statement showed a $750 contribution from Pasquale Paletta and a second $750 from Pasquale Smith, as well as a $150 donation from Paletta International Corporation, all of which had the same Burlington address shared by Tender Choice Foods.

Chapman's interest was piqued by Pasquale Smith, a person that the receptionist at Paletta told her she had never heard of. Di Ianni's March 2005 financial statement included dozens of corrections, including ones that indicated the cheque attributed to Smith was actually a corporate cheque from Paletta International, and that the Pasquale Paletta cheque was also not an individual donation but came from Tender Choice Foods.

Gillespie presented copies of two refund cheques issued by Di Ianni to Tender Choice Foods, and also offered copies of the original $750 donation cheques to the court. The latter were both written on the same day and appear to have been signed by the same two individuals. Chisholm noted that Di Ianni was not in a position to make decisions about the status of the two companies.

The compliance audit report of Di Ianni's campaign – also presented by Gillespie over objections by Chisholm – stated that “Pasquale Smith and Pasquale Paletta were incorrectly captured on the original financial statements and were correctly recorded as Paletta International Corporation and Tender Choice Foods in the final statements. They were associated companies and were refunded their over-contribution prior to the filing of the final financial statement.”

The court was also given copies of corporate searches conducted by Chapman on the two companies. Pasquale Paletta was chair of both companies, Paul Paletta was president of each. Anita Paletta was treasurer of both and Michael Paletta was vice-president. The four were the only directors listed on each form.

Chisholm argued that Gillespie had failed to present any evidence of the actual ownership of the two companies and therefore couldn't conclude they are associated within the definition of the elections act. He said many companies have common directors but that control rested with the shareholders who appointed them. He contended that there was also “no evidence that [DiIanni] conducted his own research” into the relationship between the companies.

Gillespie countered the it is not possible to obtain the shareholding information for private companies and that to accept Chisholm's argument would “lead to a legal absurdity” where it would be impossible to prevent associated companies from making multiple election donations. He said if his evidence was insufficient, then the section of the elections act forbidding such donations might as well be thrown out.

Justice of the Peace Ross said the case before her “is not a simple matter and court requires some time to review the legislation”. She reserved her decision until November 23.