JUNE 2006

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					     LIMITING DONATIONS AND
     ELIMINATING CASH —
     PROBLEM SOLVED? NOT
     EXACTLY
     Heather MacIvor

     The Federal Accountability Act (FAA) is a signature piece of legislation for the Harper
     government. One of its less discussed aspects is the campaign finance reform, which
     would eliminate corporate and union donations altogether, while limiting
     individuals’ donations to parties and candidates to $1,000 each. “The ban on
     corporate and union donations and the lower ceiling on individual donations,”
     writes Heather MacIvor, “reduce the legal supply of money for constituency
     associations, while the demand for funding remains the same.” She also sees
     problems with enforcement provisions, and concludes that the “real-world effects of
     the FAA amendments to the election finance regime are difficult to predict.”
     Problem solved? Not exactly.

     La Loi fédérale sur la responsabilité fait figure d’emblème pour le gouvernement
     Harper. Mais l’un de ses éléments les moins débattus consiste en une réforme du
     financement des campagnes, qui interdirait les dons des entreprises et des syndicats
     tout en limitant à 1 000 dollars chacun les dons des particuliers aux partis et aux
     candidats. Or, cette interdiction doublée de l’abaissement du plafond des dons des
     citoyens « réduirait l’entrée de fonds légalement permise pour les associations de
     circonscriptions, écrit Heather MacIvor, alors que la demande de financement
     restera inchangée ». L’auteure juge en outre que les dispositions d’exécution
     poseraient problème, et conclut que les effets réels des modifications apportées par
     ce projet de loi au système de financement des campagnes sont très difficiles à
     prévoir. A-t-on réglé la question ? Pas vraiment.




     T
             o date, media and political reaction to the Federal         Treasury Board President John Baird boasted that “The days
             Accountability Act (FAA) has focused on whistle-            of kickback schemes and envelopes [filled] with cash are
             blowers, floor-crossers, and access to information.         over.” It is perhaps unnecessary to point out the fatuity of
     Little attention has been paid to the amendments to the             this claim: as long as there are hard-fought political con-
     Canada Elections Act (CEA). Those amendments promise to             tests, a few people will be tempted to break the rules. So the
     lower the ceilings on campaign donations, regulate political        real question is the extent to which the FAA might address
     trust funds and tighten up the enforcement of the entire            the problems uncovered by Justice John Gomery.
     election finance regime. The first of these items is an incre-
     mental change to the strict new regime introduced by the
     Chrétien government (as several Liberal MPs pointed out at
     second reading). The others are both new and long overdue.
                                                                        B     aird’s reforming zeal is nothing new. The history of
                                                                              election finance laws, in Canada and elsewhere, follows
                                                                         a recurring pattern. When alleged improprieties become
          Recovering Gomery addicts will most vividly recall the         public, politicians compete for the moral high ground.
     revelations about alleged violations of the party finance           Striking noble attitudes, intoning variations on the theme
     laws. (I analyzed those allegations in the June 2005 issue of       of “It is a far, far better thing I do than I have ever done
     this magazine.) The enduring impact of Jean Brault’s testi-         before,” they solemnly promise to clean out the stables.
     mony, particularly the anecdotes concerning cash-stuffed                 Alas, scandal-inspired amendments to election finance
     envelopes, is reflected in the Harper government’s rhetoric         laws are rarely as effective as they appear. In the first place, they
     about the FAA. On April 11, at the formal launch of the Bill,       often impose unrealistic demands on untrained volunteers,


34   OPTIONS POLITIQUES
     JUIN 2006
                                       Limiting donations and eliminating cash — problem solved? Not exactly

such as a requirement to record and dis-    especially those which aspire to govern  before and after the 1997 general elec-
close every penny raised and spent by a     — have an overwhelming incentive to      tion. As the election call approached,
local constituency association. Such laws   raise and spend as much money as         the LPCQ office in Montreal was broke
produce countless inadvertent infrac-       they can, by any means necessary.        and understaffed. Jean Brault was pres-
tions, which makes them impossible to       Given widespread public suspicion        sured to put three party workers on the
enforce properly. Their very complexity     toward politicians, they also have a     Groupaction payroll. He agreed, as he
makes them relatively easy to evade. The    strong incentive to conceal improper     did when he was asked to pay invoices
cumulative effect is to bring the entire    financial transactions. As Gomery        for a party fundraising event and a
regime into disrepute.                      remarked in his first report, apropos of promotional television series. After the
     Second, ostensibly tough laws          Jacques       Corriveau’s    testimony,  election, when the party was strug-
often contain hidden loopholes which        “Persons participating in corrupt prac-  gling to cover basic office expenses,
can be exploited by clever party opera-     tices usually take great care to avoid   Brault was tapped for illegal cash
tives. Some of these are the inadver-       documenting or recording their illicit   donations. This pattern recurred after
tent products of undue haste and            activities.”                             the 2000 election: the infamous din-
praiseworthy idealism; others may be             I do not mean to suggest that cor-  ner at Restaurant Frank, during which
deliberate. Either way, a law publicly      rupt practices are commonplace in our    Brault recalled leaving an envelope full
portrayed as a crackdown on corrup-         party politics, or that most partisans   of cash on the table, occurred in 2001.
tion ends up as little more than a polit-   are motivated by anything other than     Jacques Corriveau, whom Gomery
ical fig leaf.                              idealism and team spirit. Indeed, a sur- identified as the central figure in the
     Third, and most serious,                                                                 kickback scheme involving
“reforming” laws rarely address         Baird’s reforming zeal is nothing                     sponsorship contracts, assisted
three central problems in the         new. The history of election finance the LPCQ in the run-up to the
regulation of political finance:        laws, in Canada and elsewhere,                        1997 vote by providing at least
the ease with which money can
be hidden, despite strict disclo-
                                       follows a recurring pattern. When $100,000 in unreported cash
                                                                                              for disbursement in “orphan”
sure requirements; the weak-              alleged improprieties become                        Quebec ridings — i.e., those
ness of the enforcement                public, politicians compete for the without Liberal incumbents.
mechanisms; and the powerful           moral high ground. Striking noble Much of the money seems to
incentive to circumvent the
rules. In the absence of equally
                                      attitudes, intoning variations on the have gone (who, it “volunteer”
                                                                                              organizers
                                                                                                          to pay
                                                                                                                   may confi-
powerful disincentives to cheat,      theme of “It is a far, far better thing dently be assumed, did not
lofty platitudes about integrity      I do than I have ever done before,” report this income to the feder-
and transparency have no prac-        they solemnly promise to clean out al government).
tical effect whatsoever.
                                                         the stables.
     As the formal rules of elec-
tion finance become increasingly com-
plex and onerous, they diverge more
                                            vey of Canadian party members by
                                            William Cross and Lisa Young shows
                                                                                              C    ampaign finance is often
                                                                                                   described as “the mother’s
                                                                                     milk of politics.” Given the situation
and more widely from the informal           that the large majority have no inter-   just described, it might be more accu-
rules of the political game. Those          est in personal gain; instead, they are  rately likened to a river (with apologies
informal rules are simple: do whatever      driven by an attachment to party prin-   to Niccolò Machiavelli). During elec-
it takes to win as many seats as you        ciples and a powerful sense of “fami-    tion and leadership campaigns, partic-
possibly can. Although money is not         ly.” Importantly, however, the same      ularly those involving the party in
the only factor in electoral success, it    survey found that most constituency      power, the river rises and threatens to
can make a big difference in a tight        associations have few active members     overflow its banks. If the channels con-
race. British studies show that gener-      and little in the way of financial       structed to control and direct the flood
ous campaign spending is positively         resources. Under those circumstances,    are too narrow to contain it, the torrent
correlated with vote shares in con-         the informal rules of electoral compe-   will spill over into unmonitored chan-
stituency contests. All other things        tition will occasionally trump the best  nels. At other times, the river shrinks to
being equal, a campaign which can           intentions of dedicated volunteers.      a sluggish trickle. Those tasked with
hire full-time workers, paper the riding                                             maintaining       party    organizations
with signs and equip its headquarters
with the best available technology will
have a significant advantage over a
                                           T     he power of the financial incen-
                                                 tive is clearly evident in Justice
                                            Gomery’s first report, which describes
                                                                                     between elections take their little buck-
                                                                                     ets to the riverbank and come away
                                                                                     thirsty. If they cannot obtain water
cash-strapped effort with a few volun-      the desperate plight of the Liberal      from the proper source, what is to stop
teers. Therefore, political parties —       Party of Canada in Quebec (LPCQ)         them from divining elsewhere?


                                                                                                              POLICY OPTIONS       35
                                                                                                                       JUNE 2006
     Heather MacIvor

          It is certainly possible to contain  stituency associations and candidates     the opposite effect. Recall the earlier
     much, if not most, political finance      from those lush tributaries.              metaphor of a river: when the
     within the legal channels. But this            Bill C-24 also introduced ceilings   approved channels narrow, more water
     occurs only when the supply of and        on individual donations, including        spills over into illicit paths. The FAA
     demand for money are carefully bal-       those made by a political aspirant to     does not lower the legislated spending
     anced, and when the incentive to          his or her own campaign for a nomina-     limits for parties and candidates. Nor
     break the law is outweighed
     by strong disincentives. Put The ban on corporate and union donations and the lower
     bluntly, there was little to ceiling on individual donations reduce the legal supply of
     deter the participants in the money for constituency associations, while the demand for
     LPCQ sponsorship scheme
     from doing what they
                                      funding remains the same.
     allegedly did. They assumed that they     tion or party leadership. A given indi-   does it raise the annual allowances
     could get away with deliberately cir-     vidual could donate a combined total      paid to party headquarters or require
     cumventing the disclosure require-        of $5,000 per year to a registered party, that these be shared with the con-
     ments in the Canada Elections Act:        its constituency associations, candi-     stituencies. Consequently, the ban on
     either their machinations would go        dates and persons seeking nominations     corporate and union donations and
     undetected or, if they were detected,     under its banner. The FAA replaces the    the lower ceiling on individual dona-
     the persons involved would not be         universal $5,000 cap with specific        tions reduce the legal supply of money
     charged with criminal offences under      $1,000 ceilings on contributions to reg-  for constituency associations, while
     the Act. Eventually, of course, the       istered parties, constituency associa-    the demand for funding remains the
     “kickback scheme” did become public       tions, candidates and nomination          same. This is cause for concern, for at
     knowledge. Nonetheless, the second        contestants. This potentially reduces     least two reasons. First, constituency
     assumption still holds true: none of      an individual’s total yearly giving by    associations are the foundations of our
     the individuals identified by Gomery      $1,000. (The Act also lowers the ceiling  political parties. Should they atrophy
     has been prosecuted for breaking the      on personal contributions to leadership   further, our representative democracy
     election finance laws.                    contestants from $5,000 to $1,000,        will suffer. Second, the major benefici-
                                               including donations from the contes-      aries of the LPCQ “kickback scheme”

     A     s previously noted, those alleged
           violations drew more public
     attention than most of the other issues
                                               tant’s own funds; this provision could
                                               pose problems for contenders in the
                                               current Liberal leadership race and may
                                                                                         appear to have been local constituency
                                                                                         associations — the “orphan ridings” —
                                                                                         and candidates in Quebec. If con-
     raised at the Gomery Inquiry. After all,  already have forced at least one poten-   stituencies are indeed the primary
     allegations of political corruption are   tial candidate to withdraw.)              locus of improper financial dealings,
     easier to understand than, say, the            Finally, the FAA bans cash dona-     damming the flow of legal funds could
     division of responsibilities between a    tions greater than $20. The threshold     encourage undisclosed cash donations
     minister and a deputy minister. Under     for recording and disclosure of contri-   instead of deterring them.
     those circumstances, the relative lack    butions has been reduced from $25 to           A similar disjunction between
     of public and media reaction to the       $20, presumably to reinforce that par-    appearance and reality afflicts the FAA
     Canada Elections Act (CEA) amend-         ticular provision. Pity the poor con-     provisions concerning political trust
     ments in the Federal Accountability       stituency treasurer who has to meet       funds, notwithstanding the fact that
     Act is surprising. The changes to the     this unrealistic standard of disclosure,  regulating secret political bank
     contribution limits established in Bill   with little if any assistance from the    accounts is a very good idea. The fail-
     C-24 have received some scrutiny, but     well-funded national party office. NDP    ure to do so was a serious flaw in the
     not much. As I explained in my previ-     MP Irene Mathyssen offered another        CEA. The lack of disclosure makes it
     ous article, that Bill (enacted in 2003)  criticism of this amendment at second     impossible even to speculate about the
     prohibited corporate and union dona-      reading: she argued that many seniors     number or size of trust funds associat-
     tions to registered political parties and prefer to give cash donations, and that   ed with constituency associations,
     capped annual donations from these        the new ban could deter them from         incumbent MPs, defeated candidates
     sources to constituency associations,     contributing at all.                      and retired politicians. Anecdotal
     candidates, and leadership and nomi-                                                reports suggest that some trusts —
     nation contestants at $1,000 apiece.
     The FAA extends the ban on corporate
     and union donations to the local level,
                                               W       ith all due respect to the
                                                       Honourable Mr. Baird, the
                                               tighter contribution rules in the FAA
                                                                                         those held on behalf of long-serving
                                                                                         incumbent MPs and/or their con-
                                                                                         stituency associations — have held
     cutting off the last remaining legal      are unlikely to clean up political        tens of thousands of dollars in assets.
     channel of financial support to con-      finance. If anything, they could have     After an MP retires or is defeated, the


36   OPTIONS POLITIQUES
     JUIN 2006
                                          Limiting donations and eliminating cash — problem solved? Not exactly




                                                                                                                      The Gazette, Montreal

You get cash and it’s as good as money. Benoît Corbeil, former director-general of the Liberal Party of Canada’s Quebec wing, demonstrates
  to the Gomery Commission how cash was stuffed into envelopes and distributed to Liberal candidates in the 1997 and 2000 campaigns.


trust may be wound up and the money                 Part of this recommendation was           and I rather strongly suspect that those
used for personal expenses. The poten-         enacted into law in 2000, as part of an        trust funds are now in the hands of rid-
tial for improper political influence, if      omnibus package of amendments to the           ing associations.” This might be a refer-
not outright corruption, is troubling.         CEA. Only trust funds established by           ence to a long-serving Liberal MP who
                                               registered parties for explicitly electoral    lost his seat in January, and who had

T    o make matters worse, some trust
     funds have been used to circum-
vent the election finance regime. In
                                               purposes were required to file annual
                                               reports; funds associated with local can-
                                               didates and constituency associations
                                                                                              long been rumoured to have a trust fund
                                                                                              worth tens of thousands of dollars; the
                                                                                              fate of that money may never be known.
his 1996 report to Parliament,                 remained unregulated. Kingsley’s 2001
Strengthening the Foundations, Elections
Canada CEO Jean-Pierre Kingsley
argued that party and candidate trust
                                               report, Modernizing the Electoral Process,
                                               repeated the call for full disclosure of all
                                               trust funds. Instead, the weak 2000 pro-
                                                                                              O      nce the commissioner becomes
                                                                                                     aware of a trust associated with a
                                                                                              sitting MP, he or she can order the MP
funds made it impossible to determine          vision was repealed in 2003 — by Bill C-       to wind it up without profiting from
the true source of some political dona-        24, the legislation which supposedly           the proceeds. An MP who accepts “any
tions and the true extent of campaign          initiated a new era of transparency in         benefit or income from a trust estab-
spending. However, he did not call for         political finance!                             lished by reason of his or her position
the outright abolition of party trust               The FAA ostensibly requires MPs to        as a member of the House of
funds, because some — in particular,           disclose trust funds to the new conflict       Commons,” directly or indirectly, or
those dedicated to increasing the num-         of interest and ethics commissioner. It is     who takes any deliberate action to cir-
bers of female candidates — served a           worth pointing out that these provisions       cumvent that ban, “is guilty of an
useful purpose. Instead, he recom-             are framed as amendments to the                offence and liable on summary convic-
mended the appointment of an official          Parliament of Canada Act. Therefore, they      tion to a fine of not less than $500 and
agent for each trust fund associated           apply only to sitting MPs, not to con-         not more than $2,000.” Moreover, MPs
with a particular party, candidate or          stituency associations, defeated candi-        may not use trust funds “for the pur-
constituency association and the full          dates or retired politicians. As MP            pose of financing a nomination con-
annual disclosure of its assets, dona-         Mathyssen pointed out at second read-          test, a leadership contest or an electoral
tions and disbursements.                       ing, “The ship has sailed on trust funds       campaign.” Problem solved — right?


                                                                                                                        POLICY OPTIONS        37
                                                                                                                                  JUNE 2006
     Heather MacIvor

          Not exactly. Like most laws                 an elected candidate who fails to report      particularly in relation to a complex
     respecting political finance, these new          such a gift may be barred from sitting        statute like the CEA, is compounded
     trust fund provisions are premised on            in the Commons until such a report            by the fact that many of the people
     full disclosure. Trusts which are not            has been made.                                bound by the Act are volunteers with
     reported to the commissioner cannot                   In fairness, the provisions immu-        little or no formal training in the
     be policed. If there are MPs who might           nizing the FAA from section 126 of the        minutiae of election law, while the
     be tempted to conceal the existence of           Code may be poorly drafted. Perhaps           vast majority are citizens whose con-
     a fund, they must be given compelling            they were intended only to exempt the         tact with the electoral process is casual
     reasons to overcome that temptation.             new Act from section 126(2), as part of       and intermittent. Under these circum-
     Unfortunately, the provision requiring           the transfer of prosecutorial discretion      stances, it is proper to assume that
     the disclosure of trust funds is explicit-       from the attorney general to the new          most violations of the Act are inadver-
     ly exempted from section 126 of the              director of public prosecutions, and          tent — in other words, regulatory
     Criminal Code. This is in addition to            not from the criminal penalties provid-       offences.
     the general exemption of the FAA from            ed in subsection (1). But given the per-            The CCE usually resolves a regula-
     the effect of section 126, which reads           petual gap between the tough-looking          tory infraction by negotiating a com-
     as follows:                                      laws adopted in the wake of scandal           pliance agreement with the offender.
          (1) Disobeying a statute — Everyone         and the gentle effects of those laws on       The latter acknowledges the violation,
          who, without lawful excuse, contra-         politicians, the broad grant of immuni-       undertakes not to repeat it and often
          venes an Act of Parliament by wilfully      ty just might have been deliberate.           performs some community service; in
          doing anything that it forbids or by wil-                                                 return, the CCE closes the case.
          fully omitting to do anything that it
          requires to be done is, unless a punish-
          ment is expressly provided by law,
                                                      A     s I suggested in the June 2005 arti-
                                                            cle, the chief failing in our politi-
                                                      cal finance laws is not a lack of
                                                                                                    (Compliance agreements are posted on
                                                                                                    the Elections Canada Web site.) This is
                                                                                                    entirely appropriate for minor or unin-
          guilty of an indictable offence and         criminal offences or penalties. It is the     tentional infractions, such as a voter’s
          liable to imprisonment for a term not       failure to enforce those offences and         mistakenly removing a ballot from a
          exceeding two years.                        impose those penalties. Since 1977,           polling place. But compliance agree-
          (2) Attorney General of Canada              the Commissioner of Canada Elections          ments are not appropriate in cases
          may act — Any proceedings in                (CCE) has been responsible for enforc-        which directly engage “the integrity of
          respect of a contravention of or con-       ing the CEA. He and his staff of inves-       the electoral process,” as the CEO
          spiracy to contravene an Act men-           tigators operate separately from the          acknowledged in his 1997 report to
          tioned in subsection (1), other than        RCMP, which has no role to play in            Parliament, or in relation to offenders
          this Act, may be instituted at the          relation to election finance and other        who knew or ought to have known
          instance of the Government of               provisions in the CEA.                        that their actions broke the law. Some
          Canada and conducted by or on                    The procedure to be followed by          of the matters which have been
          behalf of the Government.                   the CCE in a particular case depends          resolved via compliance agreements
          The effect of exempting the entire          on the nature of the alleged offence.         raise questions about the willingness
     FAA from section 126 is to protect               The CEA defines two broad categories          of the CCE to enforce the election
     deliberate violators from prosecution            of infractions: (1) regulatory offences,      finance laws effectively.
     under the Code. This is appropriate in           which carry relatively light penalties,
     cases where the FAA itself provides for
     criminal or civil penalties. But the Act
     imposes no such penalty for wilfully
                                                      and (2) criminal offences, which are
                                                      punishable by large fines and/or jail
                                                      terms. The primary difference between
                                                                                                    A     more serious problem arises when
                                                                                                          the CCE declines to prosecute an
                                                                                                    apparently deliberate and widely publi-
     failing to disclose a political trust fund       the two types of offence is the pres-         cized criminal offence. The apparent
     — an infraction which, as just noted, is         ence or absence of the mental element         failure to investigate any of the indi-
     very specifically exempted from sec-             (mens rea). In general, regulatory            viduals named by Justice Gomery is
     tion 126. There are criminal sanctions           offences are defined in terms of strict       inexplicable. Prior to the FAA, the CEA
     for failing to comply with the commis-           liability: proof that the accused com-        allowed the CCE to initiate a prosecu-
     sioner’s order to terminate a trust and          mitted the act is sufficient to secure a      tion within seven years from the com-
     for using trust funds to finance politi-         conviction. Criminal offences, on the         mission of the offence — subject to an
     cal activities, but not for failing to dis-      other hand, require the Crown to              18-month maximum period between
     close the existence of the trust in the          prove beyond a reasonable doubt that          the first report of a possible infraction
     first place. The corresponding lack of           the accused deliberately and wilfully         and the initiation of the prosecution.
     civil penalties is in stark contrast to the      committed the act in the full knowl-          Surely the CCE and his staff are aware
     new ban on accepting gifts before and            edge that it was against the law. The         of the corrupt practices described at the
     during a campaign period (section 40):           difficulty of meeting this standard,          inquiry; indeed, it was difficult for any


38   OPTIONS POLITIQUES
     JUIN 2006
                                         Limiting donations and eliminating cash — problem solved? Not exactly

well-informed Canadian to miss the           alleged infractions. Once the CCE has        applied retroactively, and a substantive
details of Brault’s testimony (once the      concluded a compliance agreement,            offence (which cannot). Given the
embargo was lifted). True, some of the       the DPP has no role to play unless that      procedural nature of section 59, there
more egregious violations allegedly          agreement is breached. Yet again, close      is no reason to suppose that the courts
occurred in 1997 and 1998. By the time       scrutiny of a tough-looking law reveals      would block an attempt to prosecute
of the Gomery hearings in 2005, these        a potentially fatal loophole.                alleged violators of the CEA for infrac-
were shielded from prosecution by the             The second enforcement-related          tions which may have occurred almost
passage of time. Moreover, testimony         provision is section 59, which extends       a decade earlier.
given before a commission of inquiry         the statute of limitations for a prosecu-         The real-world effects of the FAA
may not be used as evidence in a crim-       tion under the CEA. The FAA gives the        amendments to the election finance
inal prosecution against the witness.        new DPP up to five years from receiv-        regime are difficult to predict. If the
But why is there no sign that the CCE        ing the first report of a possible offence   new offences and enforcement provi-
is conducting his own investigation          to launch a prosecution (as opposed to       sions are reinforced by the height-
into these well-publicized and appar-        18 months). The general statute of lim-      ened public concern about political
ently intentional infractions of the Act     itations is extended from seven to ten       corruption, the informal rules of elec-
which he is tasked with enforcing?           years after the alleged infraction was       tion finance might change. Should
     Two particular provisions in the        committed. This amendment may                that happen, more of the money
FAA appear to be intended to strength-       have been partly inspired by the             raised and spent in electoral competi-
en the enforcement regime, and there-        Gomery testimony, although it bears          tion will flow through the legal chan-
by to create real disincentives for those    repeating that some of the criminal          nels. But it bears repeating that the
who might be tempted to violate the          offences which came to light in 2005         official spending limits have not been
rules. The first is the transfer of prose-   occurred less than five years earlier. If    adjusted to compensate for the loss of
cutorial power under the CEA to the          the new DPP is established quickly, he       legal revenue at the constituency
new Director of Public Prosecutions          or she will have the legal capacity to       level. Nor is the CEA amended to per-
(DPP). While the power to investigate        pursue prosecutions against some of          mit a registered party to share its
possible violations of the CEA will          the individuals — both inside and out-       annual allowance with its constituen-
remain with the CCE, as will the             side the LPCQ — who were allegedly           cy associations (it is currently permis-
responsibility for resolving regulatory      involved in deliberate circumventions        sible to divide the allowance with a
offences, the DPP will assume the            of the CEA from 1997 to 1999. Of             provincial wing). Consequently, the
responsibility for initiating and con-       course, this would happen only if the        widening imbalance between the sup-
ducting prosecutions for alleged crimi-      CCE decided to conduct an investiga-         ply and demand for constituency
nal offences. The DPP will also handle       tion and to refer the fruits of that         campaign funds could induce some
breaches of compliance agreements.           investigation to the DPP.                    individuals to find or create illicit
On the surface, this looks like a prom-                                                   channels. The loopholes in the trust
ising step toward effective enforce-
ment of the election finance laws.           R    eaders might wonder if section 59
                                                  of the FAA will have any effect on
                                             the participants in the LPCQ “kickback
                                                                                          fund rules and the incomplete trans-
                                                                                          fer of prosecutorial discretion to the
                                                                                          new DPP raise serious questions about

S   cratch the surface, and a somewhat
    different picture emerges. The CCE
retains two crucial powers, on which
                                             scheme.” After all, the 1997 and 1998
                                             violations of the CEA were allegedly
                                             committed under the old statute of
                                                                                          the power of the new disincentives to
                                                                                          deter such conduct.
                                                                                               There is one final, depressing les-
the entire enforcement edifice rests:        limitations. To prosecute them now           son to be drawn from the Gomery
the decision to open an investigation,       would require the retroactive applica-       Inquiry, which is as relevant to the
and the discretion to withhold the           tion of the FAA, a highly irregular pro-     FAA as it is to all previous election
results of any such investigation from       cedure with serious implications for         finance laws: if new sources of money
the DPP. Section 132 of the FAA states       the rule of law. On my reading of the        do appear underground, it will likely
that the CCE “may” refer a case to the       jurisprudence, however, there is no          be a very long time before they are
DPP. Therefore, the CCE can block a          legal barrier to prosecution for alleged     uncovered — if at all.
prosecution by declining to inform the       infractions committed before 1999. In
DPP of a possible criminal offence. If       2004 the Supreme Court of Canada             Heather MacIvor, a leading authority
the government were really deter-            upheld the use of “investigative hear-       on campaign finance reform, is a pro-
mined to enforce the criminal offences       ings” — as established in the 2001           fessor of political science at the
in the CEA, it could have used the           Anti-Terrorism Act — in the prosecution      University of Windsor and author of
word “shall” in that section. As it          of the 1985 Air India bombing. The           Canadian Politics and Government
stands, however, the FAA does not            majority distinguished between a pro-        in the Charter Era (Toronto, Thomas
require the CCE to give up carriage of       cedural provision, which can be              Nelson, 2005).


                                                                                                                 POLICY OPTIONS       39
                                                                                                                          JUNE 2006

				
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