Mr. Marc Mayrand (Chief Electoral Officer, Elections Canada):
Good morning, Mr. Chair and members of the committee.
I am accompanied today, as the chair indicated, by Mr. François Bernier, the legal services director at Elections Canada.
I was requested by the chair of this committee to assist members in the study of the review and treatment of election financial returns and the key considerations involved in the review of these returns. In discussions prior to my appearance, the chair requested that I provide a detailed explanation of the aspects of the legislative and administrative framework that relate to political financing under the Canada Elections Act and, more specifically, of the treatment of election expenses.
This will be the subject of the first part of the presentation. I hope it will provide the committee with a better understanding of the operating context in which decisions are made regarding reimbursement of electoral expenses. I will then turn to the subject of particular decisions of interest to the committee and explain how they relate to the legislative and administrative framework.
The mandate of Elections Canada is to administer the Canada Elections Act in a fair, consistent, transparent and impartial manner. As an officer of Parliament, my first duty is to serve Parliament and Canadians. While the committee is reviewing the activities of public office holders, I trust it will understand that in my capacity as Chief Electoral Officer of Canada, I can only speak to electoral matters. I will not comment on ongoing investigations of the Commissioner of Elections Canada, or the specifics of the case currently before the Federal Court. As well, I will not deal with any individual cases.
Mr. Chairman, with your concurrence, I will now proceed with the first part of my presentation. The committee has already received a presentation that extends to a number of pages—42 pages, I believe. So I won't read each of those pages, but I will simply make the main comments on the essential aspects of the presentation.
The presentation will contain four parts: first, the objective itself, as well as a part dealing with the key principles underlying the legislation and the administration of that legislation, the key aspects of the legislation, and, lastly, the aspects of the administration of that legislation. I will also provide a brief conclusion.
I think it's fair to say that the first hundred years of federal democracy in Canada have been focused almost exclusively on the conduct of elections and on progressively expanding the franchise--the right to vote--to all Canadian citizens. In fact, the right to vote became a fundamental right protected by the Constitution and the Canadian Charter of Rights and Freedoms in 1982.
This focus continues today, as the agenda of the 39th Parliament attests. For example, Bill C-2, the Federal Accountability Act, dealt with the appointment of returning officers, who are now the responsibility of the Chief Electoral Officer. It also dealt, under Bill C-31, with the integrity of voting. It also dealt with the issue of proof of residence, under Bill C-18. And it is considering, currently, Bill C-6, which deals with visual ID; Bill C-16, which deals with advanced polling; and Bill C-20, an important piece of legislation that deals with the appointment of senators. This is all to show that there is still a focus on the electoral process and the conduct of elections.
However, over the last 40 years, growing concerns have been expressed with regard to the influence of money in the electoral process. These concerns have led Parliament to incrementally design a regulatory regime to govern the use of money during electoral campaigns. We are now at the point at which Canada is at the forefront among mature democracies in how it regulates the influence of money in election campaigns. This regulatory regime of political financing was initially built in the seventies, and it has since witnessed repeated legislative reform that continues today. Again, this Parliament passed Bill C-2, which deals with contributions and gifts and which banned contributions from corporations and unions. It is also considering another important aspect of the financial regime, under Bill C-29, with regard to loans.
My purpose today will be to deal with a particular and key aspect of our political financing regime, that of election expenses and their treatment by Elections Canada under the Canada Elections Act. More specifically, I will touch on the legislative framework, the administrative framework, and the compliance and enforcement program.
There are certain principles underlying the legislative and administrative framework. First, to maintain public trust, are transparency and fairness. These principles are expressed through various provisions in the act that deal with public disclosure, expense limits, public funding, compliance and enforcement, and, something that is often forgotten, the distinctiveness of political entities. Each has its own regime, with distinct rights and obligations.
Transparency is about disclosure. It's about providing information to electors on candidates, parties, and other entities. It involves, with regard to financial matters, reporting revenues and expenses and the sources of those.
Fairness is the key principle of a healthy democracy. In our democracy, fairness is about allowing political parties' candidates to have an opportunity to present their visions, their policies, and their values to electors. What those are and how they are communicated to electors is the exclusive domain of political parties and candidates. However, legislation seeks to ensure that the competition among political parties and candidates to secure the vote of electors be conducted within certain rules designed to create and maintain a level playing field. One area of legislation, again, over the last 40 years, has been the adoption of rules that will foster this level playing field. These rules deal specifically with how money can be raised and how it can be spent in order for them to present ideas and reach out to electors.
The Canada Elections Act passed it to the CEO to administer these complex rules, with a view to ensuring that key principles are maintained at all times. In doing so, Elections Canada must act fairly and impartially and exercise due diligence at all times. When it finds evidence of non-compliance and possible offences, it must exercise the authorities provided by the legislation in accordance with all the requirements of fairness and due process, within the strict limits of the law. To do otherwise would undermine not only Elections Canada as an institution but also the democratic process itself.
Let me turn now to the key aspect of the legislative framework as it relates to the treatment of election expenses and the role these key principles play in the electoral law.
The relevant aspects of the legislative framework involve key definitions, a brief discussion of duties of official agents, the notion and concept of election expense limits, the concept of transfers among political entities, reporting requirements for those political entities, entitlement to reimbursement, and key differences between parties and candidates. Note that some misunderstand the system and tend to view parties and their candidates as a single entity, yet the law makes clear distinctions and establishes distinct responsibilities, benefits, and obligations for parties and candidates. For the most part, these are treated independently of one another. This is particularly true in disclosure and reporting requirements, which are different for parties and candidates. Access to public funding is different. Spending limits are set differently for candidates and parties. To some extent, rules governing the raising of contributions are different for candidates and parties.
Let's first look at key definitions. Under candidate electoral campaign expenses, there are three key definitions that need to be considered: candidate electoral campaign expenses; candidate election expenses; and candidate personal expenses.
Electoral campaign expenses are expenses reasonably incurred in the election and include election expenses themselves and personal expenses. There are electoral campaign expenses that are neither election expenses nor personal expenses. An example is the audit expense in excess of the subsidy. It is an electoral expense, but it is not an election expense. There is also the rent of an office outside the rent period. For example, when a candidate rents an office before the writ is dropped or carries the office after the polling date, these are electoral campaign expenses, but they are not election expenses.
An election expense includes any cost incurred or non-monetary contribution received to the extent that the property or service for which the cost was incurred or non-money contribution received is used to directly promote or oppose a candidate during an election period. The expression “directly promote” does not refer only to expenses incurred to expressly urge voters to vote for or against a particular candidate. It has a much broader meaning that encompasses all expenses that directly assist in getting a candidate elected. For example, it includes the rental of office space, equipment in that office, the computers, the supplies, and the remuneration of campaign workers during the election period. All such expenses directly promote the candidate and are thus election expenses for the purpose of the act.
The third definition has to do with personal expenses. Personal expenses of a candidate are his or her electoral campaign expenses other than election expenses reasonably incurred in relation to his or her campaign. Personal expenses include travel and living expenses, child care, and similar expenses.
It's important to note that there are three categories of expenses, each with its own definition and standards. Election expenses must generally be disclosed. They are subject to a reimbursement, and they are subject to spending limits. Personal expenses must be disclosed, and they are subject to a reimbursement. Residual expenses that are neither personal nor for an election must be disclosed, but they are not subject to a reimbursement. Again, I mentioned previously the subsidy for audit.
Another key concept in looking at election expenses is the notion of transfer. The act allows specific political entities of the same political affiliation to move resources amongst themselves without being subject to the restriction on the source and amounts of contributions set out in the act. A contribution is the amount of money received that is not repayable; otherwise it would be a loan. It is the amount of money received that is not repayable, or the commercial value of a service or a property, or the use of property or money to the extent that it is provided without charge or at less than commercial value.
Again, this is a new, essential concept--commercial value. How is commercial value defined? It's the lowest amount charged for a property or service by the person who is in the business of providing that good or service. Alternatively, it's what another commercial provider charges for the property or service who is not in that business.
At the end of the electoral campaign, candidates must file an electoral campaign return. That return is an account of all financial transactions for an election. It consists of a form that has 15 pages and is divided into four parts. It's a bit longer than even a tax return, so there's a level of complexity attached to filing those returns.
Let me give you an example of how these concepts can come together. Let's assume that a party pools the purchase of lawn signs for its candidates and offers those lawn signs to candidates. They have the option of accepting the package or turning it down. Let's say one candidate agrees to purchase 1,000 signs for his campaign and that those signs have a value of $10,000; however, the candidate can only afford $2,000. Provided the signs are used during the campaign to promote the candidate, the return will have to show the transaction as follows. First of all, the election expense will be $10,000 for the candidate, because he received those 1,000 signs and used them during the campaign. That's the amount shown as the expense. Within that he will show the paid expense as $2,000. He will show a non-monetary transfer of $8,000, which is the commercial value of the signs that were transferred from the party to the candidate. The amount shown as the expense will be counted against the spending limit and it will be eligible for reimbursement. The amount shown as non-monetary will count against the spending limit, but it will not be reimbursed since nothing was paid for that amount.
This is a very simple example of how those transactions have to be reflected in the return.
To emphasize the critical role of money and the need to rigorously control inflows and outflows and ensure that financial activities are strictly within the constraints of the legislation, the legislation provides or requires that each candidate appoint an official agent. In fact, a candidate cannot officially run as a candidate without having appointed an official agent. This is a must under the legislation.
An official agent is much more than a bookkeeper. In fact, if we can do an analogy, he or she could be seen as a treasurer or a financial comptroller. You have on slide 9 the key duties of an official agent.
Generally, the official agent is responsible for controlling all electoral campaign expenses; that is, for a candidate's campaign, only the official agent or the candidate or someone authorized in writing can incur an electoral campaign expense. So you will understand that to fulfill his or her duties, the official agent must of course be familiar with all the concepts and the definitions I mentioned earlier and must develop a good understanding of the underlying principles of the legislation.
Let me talk briefly about expense limits. The first point to note is that there are separate limits for parties and candidates and that those limits apply to election expenses, whether paid or unpaid, and include the commercial value of non-monetary contributions or transfers.
Elections Canada calculates those limits for each in accordance with a formula set out in the act. I will not go through the specifics of the formula, except to say that, for candidates, that formula takes account of the number of electors, the population density in the riding, and the geography of the riding, and provides an adjustment for inflation.
Spending limits for parties are a little bit simpler to calculate. It's the number of electors in the ridings for which candidates are presented by the party.
For the 39th election—that's slide 13—the average expense limit for candidates per electoral district was a bit over $81,000, and for a registered party that endorsed a candidate in all 308 ridings, the limit was set at a bit over $18 million. What does that mean? One may be tempted to say that in total a party having 308 candidates could spend altogether up to $18 million for the party and up to $24 million, almost $25 million, given the limits of each and every candidate, for a total of $43 million. However, to look at it in this manner would be mistaken, as the law does not consider the political family as one entity but rather, in this case and this example, as 308 distinct, separate entities with their own rights and obligations.
Let me talk briefly about transfers. The Canada Elections Act recognizes the organic link that exists in the family of political entities, allowing them to move funds, goods, and services among themselves without treating those movements of resources as contributions. The provision of resources from one political party to another, which is not specifically provided for under the act, constitutes a contribution and is subject to the eligibility and limits set out in the act.
Transfer of expenses is not permitted, as this would render the distinct limit of parties and candidates meaningless. As you can see, it is absolutely essential to keep all those definitions and concepts as we look through various returns provided at the end of electoral campaigns.
You will find on slide 15 a table showing the transfers, what is allowed and what is not allowed. Clearly, you will see that transfers between parties and candidates are perfectly allowed by the Canada Elections Act. It has some standards, but they can move resources freely between entities.
You will note that for candidates, these movements of resources can start only after they've been officially declared candidates, meaning that their candidacy has been registered with the returning officer. You will also note that transfers to candidates after polling day are allowed only to pay for unpaid claims and for nothing else.
You will find again at slide 16 another way of looking at it. There is a triangle on that slide that shows the relationship between the party, the candidates, and the EDAs, and the respective rights and obligations for each. You will see clearly that the transfer of money, goods, and services among all three entities is allowed. You will also note that the transfer of expenses is not allowed, and you will see that Elections Canada is overseeing, through various programs, how the money flows among entities.
I should point out that for the 39th election, Elections Canada dealt with 15 registered parties that had over 1,200 electoral district associations, and with over 1,600 candidates, each with their respective agents.
On page 17 you will find a table of the transfers reported in Canada through returns for the 39th election. You will see that all parties represented in the House have transferred resources with their affiliated entities. These have taken place between candidates and parties, between candidates and EDAs, and between parties and EDAs.
Mr. Marc Mayrand:
Now, regarding reporting requirements for candidates, slide 18 indicates that in support of the principle of fairness and transparency, the act sets out a number of standards and requirements touching on disclosure, reporting, and publication of financial affairs of political entities.
The candidate's campaign return is to be filed with Elections Canada within four months of the polling day, but many are filed late. That return must be accompanied by a declaration as to the accuracy and completeness of the return, signed by both the candidate and the official agent.
The campaign must also retain an independent auditor to examine the accounting entries of the candidate's electoral campaign return and to report on the finding of the audit. The auditor must provide an opinion on whether the return presents fairly the information contained in the financial records on which it is based.
I'm often asked, why audit the audit? Well, the independent audit that's provided with the return attests to the reliability of the entries in the books and records of the campaign. However, it does not attest to the compliance of transactions with the requirements of the act, which is the role and responsibility of Elections Canada.
So these requirements are preconditions for candidates or parties to secure public funding. Failure to meet these standards for electoral campaign returns may trigger the operation of penal or administrative sanctions, which I will discuss a little bit later in the presentation.
The expenses reported must be incurred by the official agent, the candidate, or someone authorized in writing. Again, that's a clear requirement of the act. As well, under the act, the candidate's official agent must receive all campaign contributions, deposit them in a designated bank account, and make all disbursements. All expenses must be reported at their commercial value in the return. These are critical, as they often constitute issues that come up during the review by Elections Canada auditors.
In fact, the next slide presents the requirements for parties' returns, which are somewhat different from those for candidates. Parties file their returns on election expenses within six months of polling day, as opposed to four months for candidates. Their returns are also accompanied by an auditor's report. However, there are no vouchers required for political parties' returns. Expenses must be incurred by the chief agent, as is the case for candidates.
I guess the fundamental difference here is that the returns for parties are considered to be accurate, unless there is an obvious error in them. It means that the in-depth review conducted for a candidate does not occur to the same extent for parties, as Elections Canada does not have the information, the tools, or the statutory authority to do so. The act does not provide Elections Canada with audit or inspection powers for parties' books and records, nor the authority to order the production of documents by parties.
Now, on reimbursement, there are formulas set out in the act, but let me simply stress that to be eligible for reimbursement, a candidate must have secured 10% of the valid votes cast in the riding. If the candidate achieves that 10%, the expenses that meet the requirements of the act will be eligible for reimbursement up to 60% of the expense limit.
Again, in order to determine the amount of reimbursement, Elections Canada will verify the returns provided by the candidate and the agent and will ensure that the returns are in compliance with the act. In carrying out that review, we will be reviewing the candidate's documentation and will be looking at payment of reimbursements while identifying potential and actual issues of non-compliance.
I want to stress here that in order to issue final reimbursement of election expenses and auditor subsidies, the CEO must be satisfied that certain provisions of the Canada Elections Act have been complied with. This assurance is achieved through the review and audit of those returns.
Let me turn for a moment to party election expenses. Again, these are set according to a certain formula set out in the act, which allows parties to receive 50%--not 60%--reimbursement of paid election expenses per candidate. The threshold of votes to have access to that reimbursement is 2% of the national vote, or 5% of the vote in the ridings for which a candidate was endorsed by the party. It's paid in only one instalment.
On the next page, page 24, you'll find a table showing the key differences between parties and candidates. These differences concern: the election expense limit, which is different and is established differently for parties and candidates; the reimbursement of expenses that are subject to a different percentage; the fact that expenses must be incurred by the chief agent, in the case of a party, or by the candidate, in the case of the candidate, or by the official agent or person authorized in writing. Once again, with regard to review, you can see that no supporting documentation is required of the parties, whereas supporting documentation is required from candidates.
The level of popular support varies depending whether the entity is a party or a candidate. Lastly, election expenses eligible for reimbursement differ as well, since the party can only be reimbursed for general election expenses, whereas a candidate may be reimbursed for general election and by-election expenses, and, lastly, expense reports vary between parties and candidates.
On pages 26 and 27 of the presentation, you will also find certain statutory offences and penalties that are provided for by the act, for candidates, on page 26, and for parties, on page 27. This, of course, is a summary and overview of possible penalties. As you'll also see, in addition to criminal penalties, there may also be administrative penalties. For example, a candidate who fails to file an election return would forfeit the nomination deposit and, obviously, would lose eligibility for a refund. A candidate elected to the House of Commons could, in certain circumstances, be unable to sit and, lastly, could lose the right to be a candidate in a subsequent election.
Similarly, you have a fairly general presentation of the statutory offences and penalties for parties. Here again, in addition to the criminal penalties provided for by the act, there may also be administrative penalties, which are deregistration of the party and liquidation of its assets, which may be required by the CEO or by a judge.
This type of legislative framework could easily remain a dead letter if no institutions were responsible for ensuring its administration. In fact, if we do a historical review, we can see that this is one of the essential reasons why the Office of the Chief Electoral Officer was established: to ensure the act is administered and complied with in accordance with the requirements set out therein. Moreover, it is for that reason that the Office of the Commissioner of Canada Elections was first created in 1970. The name of that office was changed in 1974.
Elections Canada has thus put an administrative framework in place to ensure the sound administration of the statutory provisions. In that framework, we have to two priorities. The first was to recruit qualified staff, to ensure we retain that staff as far as possible and to provide it with continuing training to update its knowledge, which reflects the changes in the environment and in the act. Lastly, we ensure we instill the values of fairness, impartiality and independence in all Elections Canada employees.
On another front, we have put in place a compliance strategy based on three essential pillars. Our first objective is to ensure promotion and prevention. We do that through numerous education, information and technical support activities with the political parties. The legislation obviously gives a mandate to monitor compliance with the act, which we do through a rigorous and impartial review of the election returns of candidates and parties.
Lastly, under the act, we are responsible, through the Office of the Chief Electoral Officer, for ensuring that non-compliance cases are handled in a manner consistent with the act.
Let me discuss more specifically three primary components of the administrative framework.
First, let's talk about prevention programs. Elections Canada offers political parties all possible information and assistance measures to ensure they are informed and clearly understand the requirements of the act. We hold information sessions for political party representatives across the country on a regular basis. In 2006, before the federal election, we held 40 of these sessions across Canada, involving more than 500 financial agents. In 2008, without knowing the exact date of the next election, we held 26 sessions involving 333 political party representatives across the country.
We also offer the political parties the opportunity to have specific training sessions. At political meetings, a party may occasionally wish to take the opportunity to update the knowledge of financial agents, and, provided we receive the request within a reasonable timeframe, we are eager to respond to it.
Since it is hard to reach all interested persons in this enormous country, we have also developed electronic tools: videos, online reports, telephone support lines, software and electronic presentations enabling all official agents and interested persons to get informed and acquire training in the field of election expenses. Elections Canada's website also provides multimedia kits and relevant information that can be useful to candidates and their agents.
Lastly, during an election period, there is a hot-line service for parties' legal counsel to address issues emerging during a campaign with electoral law expert counsel for Elections Canada.
Apart from these training, information and prevention activities, we also have compliance monitoring functions. It should be noted that, before being satisfied that the candidate and official agent have complied with the statutory requirements, the CEO must conduct a detailed review of reimbursements and election returns.
It should also be recalled here that this review of election returns must be conducted in light of the fact that public funds are involved, since the refunds come from funds paid by taxpayers. We have therefore introduced a review of returns program and have organized qualified staff to ensure that this review of returns is conducted in an impartial, objective and entirely independent manner.
Our audit staff are organized into three audit teams, each consisting of seven to nine auditors, one team leader and ultimately by an overall audit director. The teams are organized on a regional basis, not by party or political family. The regions are East, for Quebec and the Atlantic provinces, Ontario, and Central and Western Canada. This organization enables us to ensure that all returns filed with us are handled fairly and enables us to provide the service based on Canada's time zones and the official language of users.
This review of returns program does not necessarily involve a review of all documents filed. I have a brought a return with me, which all members have no doubt seen at one point or another, since they have had to sign it. This return is accompanied by a declaration, the auditor's report and the documents supporting what is written in the report. Sometimes this involves boxes of documents.
So it goes without saying that we won't take a close look at every piece of information submitted to us. We'll proceed on the basis of certain factors, in particular whether or not the candidate is near the limit and certain other factors of that kind. But, generally, the auditors rely on the declarations made by the candidates.
Occasionally, certain questions arise in the review of a return. Auditors will then talk to the candidates or their agents to clarify certain information contained in the returns. Most of the time, that clarification is enough to ensure a return is processed. Occasionally, certain questions remain unanswered or without an adequate answer. In those cases, the auditor will increase the level of scrutiny of the documentation and will have to report to his or her supervisor.
When, upon review, the auditor is satisfied with the return, the review is submitted to the supervisor or the supervisor's supervisor to ensure that the file has in fact been handled in accordance with our program requirements, and, if it has, reimbursement is authorized. In some cases, the auditor may detect non-compliance questions or issues. Those issues are, once again, brought to the attention of the supervisor and of the supervisor's supervisor to ensure that they have indeed been clearly defined and that there is indeed a compliance issue.
If, following that review by the political financing directorate, the directorate considers that there is a non-compliance issue, the matter does not stop there. There will be another review, this time by a senior internal committee at Elections Canada, which will also assess the nature of the non-compliance, if it indeed seems apparent, and determine whether or not a file will be referred to the Commissioner of Elections. So you can see that there is an internal process at Elections Canada that ensures that the assessment of files and the decision to refer a file to the Commissioner is not a capricious or arbitrary decision, but one that is the subject of a rigorous internal process at Elections Canada. In fact, I would like to emphasize to committee members that the Office of the Auditor General found, in a performance audit of Elections Canada in 2005, that Elections Canada staff applied the method consistently in all cases.
As regards the timing of reimbursements, this entire process is designed to ensure that candidates can receive their reimbursements within a reasonable period of time. As you can see on page 36 of the presentation, for 540 of the 884 files that were submitted to us for the 39th election and that were eligible for reimbursement, we were able to process and issue reimbursement cheques within the six months following the filing deadline. If you asked me for the breakdown among the parties, I would tell you that it is entirely fair and shows that all parties and candidates were treated in the same way in this respect.
On page 37, you have a statistical overview of the number of candidates in the 39th general election, a total of 1,636 candidates who were required to file election expense returns. Of that number, you will note that 517 were unable to do so within the four-month deadline and therefore had to request a deadline extension, which was granted either by the Chief Electoral Officer or by the court, as provided by the act. It is therefore not unusual for returns to be filed late.
As you will also note, 540 candidates requested amendments to their returns after filing them with us. Those amendment requests were the result of discussions, which I mentioned a little earlier, between the auditors and candidates' official agents, in which both sides agreed that the best way to present the information would be to amend the return to more accurately reflect the transactions. Those requests were made at the time of the 39th general election in the case of 540 candidates.
In fact, as you will see, 884 candidates were able to receive a refund, and those candidates received a total of $24 million in reimbursements out of public funds.
Furthermore, a little earlier I outlined the situations of non-compliance. I would like to point out that, in accordance with Canada's Elections Act, the Chief Electoral Officer is responsible for appointing the Commissioner of Canada Elections. This is an independent senior public servant appointed under the Canada Elections Act by the Chief Electoral Officer.
I would also like to note that, even though the Chief Electoral Officer appoints the Commissioner and determines his compensation, he does not have the power, except in vary unusual cases, to direct the Commissioner to conduct an investigation. In fact, the only case in which the Chief Electoral Officer may direct the Commissioner to conduct an investigation is where an allegation has been made that an electoral official, a returning officer or a member of the returning officer's staff has committed an offence. In all other cases, the power of the Chief Electoral Officer is limited to referring a matter to the Commissioner, who must then exercise professional judgment and discretion, and use his or her expertise to assess the file and decide the best way to handle the non-compliance situation. In some cases, he may decide on his own, based on the information forwarded to him, to conduct an investigation in accordance with the appropriate terms and conditions dictated by the circumstances of the matter.
Once again, I draw committee members' attention to the fact that the Office of the Auditor General of Canada also examined the Commissioner's investigation process and found that he had followed it consistently.
As I just briefly noted, when a complaint is received or when a file is referred to the Commissioner by the Chief Electoral Officer, the Commissioner assesses the file to determine whether the facts, as alleged, would constitute an offence under the act. He also determines what measures should be taken. Not all complaints necessarily warrant an investigation. Once again, everything depends on the circumstances, the facts alleged and the nature of the complaint. If he decides that there must be an investigation, he will determine the scope of that investigation and the best way to compile the potential evidence of that offence. If the Commissioner determines, following an investigation, that, an offence has been committed and that it is in the public interest to lay charges, he may then make a recommendation to the Director of Public Prosecutions.
However, the decision to proceed cannot be made by a single individual. The Director of Public Prosecutions in turn conducts his own assessment of the circumstances of the facts adduced, determines whether, in his view, the evidence as gathered by the Commissioner would be likely to convince a competent court that an offence had been committed and, if so, proceeds to lay charges. A judge will obviously have to hear the parties, the charges and the evidence, determine whether an offence has in fact been committed and possibly find the accused guilty on the evidence adduced. A fourth, entirely independent party determines whether an offence has been committed and the nature of the penalty to be imposed.
Mr. Chairman, committee members, I would like to emphasize that the mandate of Elections Canada is to apply the legislative framework in as impartial and transparent a manner as possible. The legislative framework regulating election expenses is an important element in maintaining a level playing field for all election participants.
The administrative framework goes together with actual compliance with and enforcement of the act. Compliance and enforcement are essential to maintaining public trust in the electoral process.
I hope this presentation will help you acquire a better understanding of the key aspects of the framework governing federal elections as they relate to the treatment of electoral expenses.
It is clear that the mandate and the role of Elections Canada and of the Chief Electoral Officer has been incrementally expanded over the last 40 years. It now encompasses much more than the preparation and conduct of an election, which of course remains a central core function of any electoral body. Today, the Chief Electoral Officer is tasked with the responsibility of maintaining trust in our electoral democracy by ensuring that the financial regime that is designed to ensure fairness, transparency, and a level playing field is properly understood, maintained, and complied with, and all this in accordance with the prescription of the law.
In carrying out its responsibilities, Elections Canada is committed to act fairly, consistently, and impartially, and to abide strictly by the principle of the rule of law and of due process. In doing so, Elections Canada focuses the bulk of its efforts on the promotion of compliance; on raising awareness of the duties, obligations, and entitlements of all participants; and on always seeking to assist them in meeting the requirements of the act.
Thank you, Mr. Chair. That will conclude this part of my presentation.
Mr. Marc Mayrand:
Thank you, Mr. Chair.
As you requested, I will now make a statement on the decision I made in the spring of last year in relation to transactions reported in the returns of a number of Conservative Party of Canada candidates in the 39th general election.
In doing so, it is important to note that this decision is currently the subject of a judicial review before the Federal Court. As well, the circumstances surrounding the regional media buy program are under investigation by the Commissioner of Canada Elections.
I will not interfere with either of these processes and intend to limit my remarks to circumstances that are in the public domain. I will give the committee a general overview of my decision in relation to the regional media buy program and the factors that led to it.
In 2005, the Conservative Party of Canada initiated what it termed a regional media buy program. Under this program, the party facilitated the purchase of radio and television advertising time from the agency Retail Media. These purchases were described by party officials as involving commitments or contributions from candidates who later claimed an expense in their returns. Sixty-seven campaigns reported advertising expenses in amounts up to $50,000 related to this regional media buy program. Seventeen returns of participating candidates were processed in accordance with the procedures that I just described to you a little earlier, that is in accordance with the usual verification procedures, and the expenses in question were reimbursed.
However, when we examined other returns, a statement by an official agent led Elections Canada to review the transactions related to the regional media buy program. When asked a routine question about the regional media buy expense reported in his candidate's return, that official agent replied that he thought the candidate had contributed to national television advertising. He added that, as it was impossible for the candidate to spend the limit, the party had asked him if he could contribute. This uncertainty on the part of an official agent about a significant expense—in this case, it represented 40% of the total election expenses of the candidate's campaign—raised a red flag. It prompted a review of all returns that included a regional media buy expense. The information arising from that review raised doubts as to whether the regional media buy expenses were those of the candidates.
In November 2006, my predecessor requested that each of the 11 campaigns whose returns had reached the final review stage provide additional supporting documentation for the regional media buy expense. On January 12, 2007, the same request was made of another three campaigns whose files had also reached the final review stage. These 14 requests were made pursuant to section 451(2.2) of the Canada Elections Act and sought additional information to establish that the claimed expenses were those of the campaigns that had claimed them. This included a request for a copy of any contract or other written agreement, a copy of the advertisement or script, documentation indicating the date of broadcast and the documents stating the date on which the official agent authorized the expenditure in accordance with his responsibility and obligation under the act. The candidates were invited to communicate with Elections Canada if they had any questions or needed clarification in relation to this request. Of course, the candidates concerned were also free to provide any other information that could serve to remove doubts as to the claimed expense.
From December 2006 to March 2007, there were numerous exchanges, both written and verbal, between officers of the Conservative Party of Canada and Elections Canada officials. The information provided on those occasions failed to dispel the doubts that had arisen. On April 5, 2007, after careful consideration of all of the information available to me at that point in time, I made the decision not to reimburse expenses relating to the regional media buy program. All other eligible expenses were reimbursed at that time. It was also decided to refer the circumstances surrounding the regional media buy issue to the Commissioner of Canada Elections.
On April 11, 2007, a meeting was held at the request of the Conservative Party of Canada. On that occasion, party officials reiterated their position on the regional media buy program. They also indicated that the candidates concerned would not be in a position to provide anything other than the material they had already provided.
In the course of that meeting, party officials were informed of the decision not to reimburse the regional media buy expenses and that the matter had been referred to the Commissioner of Canada Elections.
The committee should know that official agents and candidates who were identified as having participated in this program were also informed that the circumstances surrounding the regional media buy program were under review by the Commissioner of Canada Elections.
I also wrote the official agents and candidates whose expenses had not been reimbursed at that time to advise them of my decision to exclude the amount of claimed expense from the total of election expenses. Official agents and candidates were also informed that the decision to exclude this expense could be reassessed if they provided additional supporting documentation that satisfied me that the claimed expense was incurred by the campaign. No official agent or candidate provided any additional information.
I wish to return briefly to my decision not to certify the reimbursement of regional media buy expenses.
There was no single deciding factor leading to my decision. In fact, rather, it was an aggregate of factors that precluded me from being satisfied that this expense was an election expense warranting a reimbursement.
In addition to the statement by an official agent to which I have already referred, other statements were made by other official agents or candidates also disclosing a lack of detail and knowledge of the regional media buy expense.
The second factor was the absence of documentary evidence that would assist in establishing the existence of a contractual agreement by any of the participating candidates with the supplier retail media.
The third factor was representations of party officials that all arrangements for the purchase were made by the party and that invoices were sent to the party.
The fourth factor was particulars of the arrangements whereby invoices were provided to candidates by the party rather than by retail media as the supplier and the fact that moneys were transferred by Conservative Fund Canada, which maintained control of the money throughout the process by means of prearranged bank wire transfer instructions.
Finally, the fifth factor was the important and unexplained discrepancies in the amounts charged to various candidates for the same advertising, so the expense claimed by each candidate did not reflect the commercial value—which we discussed before—of the ad placement.
Having considered those factors, I would have decided to exclude those expenses for reimbursement.
I did consider other contextual elements that might have dispelled my doubts with regard to the nature of those expenses. These included the advertising in question and the fact that the party had spent close to the election expense limit in the 39th general election. With regard to the advertisements themselves, they were of no assistance in dispelling the doubts as to whether the regional buy expenses were those of the candidates.
It has been said that transactions of this kind are usual and engaged in by all registered parties and their candidates. I did ask Elections Canada staff to review the returns of all the major registered parties and their candidates in both the 38th and 39th general elections. Elections Canada has not identified any other transaction or group of transactions in which all of the factors I mentioned earlier were at play.
As was mentioned earlier, in order for the final instalment of the reimbursement to be made, I am required to certify to the Receiver General that I am satisfied a candidate and his or her official agent have complied with the requirements set out in the legislation. In a situation where an expense appears not to have been incurred by a candidate or where an expense has not been reported at commercial value, I cannot be satisfied the expense is reported in compliance with the act.
The same factors that led me to refuse reimbursement of the regional media buy expenses as being those of the candidates also led me to the referral of the matter to the Commissioner of Canada Elections. The commissioner's investigation is ongoing at this time, and given the arm's-length relationship that I seek to maintain with the commissioner, I am not in a position to answer questions that are within the scope of his investigation.
Members of this committee are also aware that the decision to exclude the regional media buy from the total election expenses eligible for reimbursement is the subject of a judicial review application brought before the Federal Court, and that was made on May 14, 2007. The position of Elections Canada has been stated in an affidavit filed before the Federal Court. It includes a full explanation of the circumstances and factors that led to the decision that is challenged.
In closing, I trust the earlier review of the political financing regime would have been useful to committee members. Similarly, my purpose in making this statement was to reiterate for the benefit of members of the committee the key factors involved in the regional media buy program.
I still have decisions to make in relation to this file. New information has emerged that is in the public record. In due course I will need to take all available information into consideration in making further decisions required to bring closure to this matter. Until such time, I intend to defer to the process currently under way with the Commissioner of Canada Elections and before the Federal Court.
Thank you, Mr. Chair.