Angry in the Great White North

Check this and this.

Can anyone find anything that distinguishes a loan from any other kind of donation? Note that on a candidate's return to Elections Canada, there is a page for listing loans, but loans are not counted in the overall summary for some reason. If loans are different from donations, they are essentially a backdoor, and don't seem to be covered by the new financing rules.

For instance, can Belinda Stronach lend herself enough to outspend everyone?

Good question. I decided to check it out. Recall that in 2004, Belinda Stronach ran as a member of the Conservative Party of Canada against Martha Findlay of the Liberal Party. We all know the rest of the story.

So did Belinda lend herself money? Yes. In fact, both Belinda and Martha used loans to lend themselves large amounts of money, well in excess of the $5000 limit that applies to candidates when it comes to making donations to themselves.

Belinda used her good name to get an $84,000 loan from the Bank of Nova Scotia (she was the guarantor) at 5%. She added that to the $100,000 in individual donations, and $22,000 in corporate donations. When you add up all the odds and ends, that loan put her almost at a quarter of a million dollars in her war chest.

As for Martha Findlay, she had three personal loans totalling $33,500. The lender in each case: Martha Findlay!

She didn't report an interest rate, but we can guess it was a number between nothing and nada. Add that to the $67,000 she already had from donations, and she had over $100,000 to battle it out with Belinda.

The spending limit in Newmarket-Aurora was $76,613.27 in 2004.

Why did either of these candidates need with all the extra money? They wouldn't be allowed to spend it. As I considered in the previous post, maybe this is bridge money, to help with cashflow issues. But then when you look at Belinda's expense sheet, that doesn't wash.

She spent $71,141.74 on expenses "subject to the limit". That's fine, because the limit is $76,613.27. So what about all that other money? Did it go back to the Royal Bank? No. It was spent on "Commericial goods and services" under the heading "Amounts not included in election expenses". The total: $177,239.25.

Over twice the amount that is supposed to be the limit spent on a campaign. For instance, $75,000 went to Atlantis Creative Group, an expense that has already garnered the attention of the media. Stephen Harper even said that Belinda "had trouble adhering to spending rules".

Now Belinda ended up $25,996.52 in the hole, meaning that she still owed money to the Royal Bank. Now she can pay that much off just by selling off the contents of one of her shoe closets, but doesn't it seem odd that for all the rules around limiting donations from individuals and corporations, a candidate has no trouble getting into thousands of dollars of debt via loans from people who might be looking for a favour sometime down the road?

Update: Made a mistake. The loan appears in the inflows, but not in the outflows. I'm not an accountant. So when Belinda ended up $25,996,52 in the hole, it means that she accrued nearly $26,000 in bills in excess of the money she raised. But that is in addition to the $84,000 that she needs to pay back to the Royal Bank, at 5% interest. So not only must she come up with $26,000 to pay back creditors (without breaking finance or ethics rules), she must also maintain the debt repayment schedule for the Royal Bank loan. As I said, for Belinda, this might not be a problem, but for another candidate this might be an issue.

I think there is something seriously weird about these laws that are supposed to protect the integrity of the election process. Seems like if you have the personal means, the good name, or the right connections, essentially unlimited amounts of money can be moved around as long as they are called "loans", even at 0% interest. Definitely an advantage for certain candidates. At the same time, a candidate can get into some serious debt if he or she is not careful. Worse yet, the limits on donations ($5000 per individual, $1000 per corporation) means that candidate can't easily tap into his support base for money to get out from under a debt.

That can lead to even worse abuses. For example, I can't find anything at Elections Canada that requires the loan to be paid back within a specific period of time, or even at all! As far as I can tell, the day after the election, the lender can just forgive the loan.

"Forgive" might be the wrong word. Maybe the loan isn't forgiven, or forgotten. Maybe it's more accurate to say that repayment doesn't have to be monetary.