Angry in the Great White North

Here is what the relevant portion of the Act says:

405.3 (1) No person or entity shall make a contribution to a registered party, a registered association, a candidate or a leadership contestant or a nomination contestant that comes from money, property or the services of another person or entity that was provided to that person or entity for that purpose.

Well, that's clear as mud.

OK, there are two "persons or entities" here. Let's call one Mr X, and the other Mr Y.

Let's try to untangle this. First, a specific re-write of 405.3 (1) might help:

Mr X cannot make a donation to the CPC using money from Mr Y that was provided to Mr X to be used as a donation to the CPC.

To simplify again, this is a prohibition against indirect contributions. Joe Volpe got tripped up on this.

Let's say I know a mechanic who is an avid supporter of the Tories, and knows I am too. If I give him my business, and he donates the money he charges me for an oil change to the Tories, everything is fine. But if he told me that he donates all the money he charges me to the Tories, are we guilty of indirect donations? If I endeavour to maximize my business with that mechanic knowing that I'm essentially supporting the Tories beyond my personal annual limit, are we in contravention of the act?

I'm not sure. I doubt it, because I'm still getting the stated service for the money (oil change, rotated tires, tune up, whatever).

Now let's say I take my car in, and when the time comes to settle the bill, my mechanic friend and avid reader of the blog says, "Steve, your money is no good here. Keep your money and do something to help Mr Harper."

I go home, and realize that I've got an extra $150 that I had budgeted for car repair. I write a cheque for that amount to the Tories. Did we break the law? Maybe, but then I did get my car fixed. What price my mechanic charges is his business, isn't it? What I do with the money I save is mine, right?

What if my mechanic friend says he won't charge me for the service only if I donate to the party? What if he makes me write the cheque right in front of him? It certainly sounds off, but then I did get the car fixed. Just like in every previous situation.

The clear cut situations are easy to spot. But the others are trickier.

Consider the delegates who have to pay $500 for hotel rooms and meals while at the Tory convention in Montreal. The party says that it's a lot to ask people, especially those from outside of the Montreal area, to pay. So the party reimburses them their costs. In return, the grateful delegates donate the money they were willing to pay for room and board to the party. As a side benefit, they get a tax credit for making a political donation.

Phrased that way, it doesn't seem wrong. But if the delegates and party planned to do this, is it wrong? Collusion doesn't seem to be part of the statute. It just matters that the Mr Y gave Mr X money to make a donation.

Is that the case here? Technically, the party (Mr Y) gave each delegate (Mr X) funds for room and board. The party even has the bills to prove it. Then each delegate gave the money back, meaning the delegate is still out his or her own money. In other words, Mr X is not being used as a conduit for someone else's donations. Mr X is still donating his own money. Mr Y has made it easier for Mr X to do that by covering an expense related to an event hosted by Mr Y. But then covering expenses happens all the time.

That seems, to me, the crux of the matter. The only benefit to Mr X is that the money spent that weekend can now be used as a tax credit. Mr X is still out his own $500. Now the tax credit is significant for each delegate. What does Mr Y (the party) get out of this?

Not much, really. Money went out to pay for room and board, and then came back as donations. It's revenue neutral. The purpose of the scheme was to encourage more delegates to come to the convention by offering this tax benefit.

Did it achieve its goal? Who knows? It's like advertising -- people essentially assume it works, there is some circumstantial evidence it works, but at the end of the day, a purchasing decision is so complex, a function of so many factors, that it's impossible to tell. Did any delegates come to the convention who would not have had they not been given an opportunity to get a tax credit by converting their room-and-board expenses into a party donation? Maybe, and then maybe not.

But if the numbers did increase over what would have happened in the absence of this financial move, then some would argue that this is the point. A tax credit for a political donation exists to encourage people to participate in the political process. Mission accomplished.

The hotel bills were paid. The bar tabs were settled. All applicable federal and provincial taxes were paid. No one made a donation who was not entitled to make a donation. Every delegate making a donation was still subject to the annual donation limit, and the donations in question here would count to that limit. Any delegate who had reached their limit by the time of the convention certainly was not eligible to have their room-and-board bills converted into donations, and whether anyone in that situation did so is a fair question to ask. But even if that did happen, then it would show up in the donation tallies anyway, and that delegate would have to settle with Elections Canada in due course.

Of course, there is a difference. Because of the cheque swapping, hundreds of thousands of taxpayers' dollars went to Conservatives in the form of tax credits. That matters. If Elections Canada rules that the Tories broke this law (or some other), the party will have to write cheques in the amount of the donations and send them back. But back to whom?

405.4 If a registered party, a registered association, a candidate, a leadership contestant or a nomination contestant receives a contribution made in contravention of subsection 405(1), 405.2(4) or 405.3(1), the chief agent of the registered party, the financial agent of the registered association, the official agent of the candidate or the financial agent of the leadership contestant or nomination contestant, as the case may be, shall, within 30 days of becoming aware of the contravention, return the contribution unused to the contributor, or, if that is not possible, pay the amount of it or, in the case of a non-monetary contribution, an amount of money equal to its commercial value, to the Chief Electoral Officer who shall forward that amount to the Receiver General.

This is where things get twisted. Let's say I use my kid to hide a contribution in a clear violation of 405.3 (1). Section 405.4 says the money goes back to the contributor. That would be my kid right? Or is it me? Since it was an indirect contribution, am I the contributor? Makes sense if I was. The section is a bit vague on that point.

It matters though. Let's say the person who wrote the cheque is the contributor (who we called Mr X). The party will cut cheques to each delegate for the amount of the contribution (equal to the amount spent on room and board). How many of those delegates will simply cut a cheque and send it right back as a donation, especially in order to tweak the nose of Elections Canada? More than a few, I would wager, because the delegates could still enjoy the tax credit. But if the delegates can do that, what's the point of 405.4?

In this case, the Conservatives are not out of cash (or at least not too much).

If the person who provided the money in order to make the donation is the contributor (Mr Y in our example), and that makes more sense I think in the context of what 405.4 is trying to achieve, then the Conservative Party will have to write cheques to the...Conservative Party!

Remember, the party was the organization that provided the money for the donation cheques.

Again, the Conservative Party is not out of cash (in this case, only expense of writing and then cashing a cheque).

This seems bizarre. Section 405.4 does not provide any discretion. Money is paid to Elections Canada only if it is not possible to return the money to the contributor. That will not be the case here if the ruling is against the Conservative Party.

All this makes me think we're looking at the wrong law. And if there is no law to cover the situation, then it is legal. That's a basic principle in law -- if the law doesn't express an opinion, the action is presumed to be legal.

I'll think some more on this and see if something more sensible pops up in my head.