Friday, November 24, 2000

OTTAWA - Today, Democracy Watch released irrefutable evidence that Canada's disclosure law for political donations is easily circumvented by federal political parties and their donors.

Democracy Watch decided to test the integrity of the fundraising rules by making donations to political parties through hidden sources. The results are disturbing:

1) Despite the prohibition on foreign donations in the Elections Act, the Liberals accepted an illegal donation from a U.S. corporation, even though the donation arrived with a U.S. return address, with U.S. postage. The U.S. address even appeared on the receipt and thank-you letter, and was sent to the corporation in California. The corporation, Nick Morgan & Associates, is listed in the 1999 party filings with Elections Canada.

2) The Reform Party took money from a fictitious organization called "People for the Status Quo." The organization, which does not exist, is listed in the 1999 party filings with Elections Canada. Since the donation was made, the party and its successor, the Canadian Alliance, have sent seven fundraising letters addressed to "People for the Status Quo."

3) A donation was also made to an NDP riding association for a candidate's campaign, which never appeared in the party's annual filings with Elections Canada. When the donation was made, a spokesperson said that the party had a policy of disclosing all donations to riding associations, although the party now denies that this policy exists.

"Democracy Watch purposefully chose to make the donations in ways that should have raised red flags at the parties. Yet these parties still accepted the donations, no questions asked," said Democracy Watch board member Aaron Freeman (Please contact Democracy Watch to obtain copies of the donation receipts).

The donations were each small, just over the $100 legal threshold for disclosure. But given how easy it was to make these donations, they illustrate just how easy it is to donate anonymously, and how wealthy special interests can routinely use loopholes to hide the money they are donating to party coffers.

"The scandal is not merely that the parties accepted these donations," said Freeman, "The scandal is the system that allows wealthy special interests to hide their donations."

In the last federal election in 1997, nearly one quarter of the $2.8 million in campaign money raised by cabinet ministers came from numbered companies, riding associations and other sources that mask the true donor. Nearly $150,000 raised by the Tories in 1997 came from just two numbered companies.

The disclosure regime fails to track donations to riding associations (which are often then transferred to candidates and parties at election time), to MPs between elections, and to party leadership candidates. In addition, what is disclosed is not released for public scrutiny until up to 18 months after the donation is made.

"Citizens have a right to know the names of the wealthy special interests who are bankrolling the political process, especially when, as is invariably the case, these interests are those with the greatest stake in government decision-making," said Freeman. "Instead, our politicians have chosen an optional system -- disclosure for donors who don't mind having their contributions made public, and a smorgasbord of loopholes for donors who prefer to remain anonymous."

Democracy Watch called on all parties to commit to closing the Election Act's disclosure loopholes, banning corporate and union contributions, and placing a limit on all other donations at a level that is affordable for the average Canadian.

Receipts for each of the donations, and other accompanying documentation, are available from Democracy Watch. Disclosed donations are available at the Elections Canada web site, www.elections.ca.