On loopholes

Not surprisingly, the Cons are out to lunch in complaining that an extension for the payment of Libs leadership debts which is explicitly permitted by the Canada Elections Act somehow constitutes preferential treatment. But there is a serious question to be raised about the terms of any extension which seems to have escaped public notice so far.

The Chief Electoral Officer's authority to grant an extension is found in the following section:

435.26(1) On the written application of a leadership contestant, of the contestant’s financial agent or of a person with a claim to be paid for a leadership campaign expense in relation to a leadership contestant, the Chief Electoral Officer may, on being satisfied that there are reasonable grounds for so doing, in writing authorize the payment, through the contestant’s financial agent, of the amount claimed if
...
(b) the payment was not made in accordance with subsection 435.24(1).

(2) The Chief Electoral Officer may impose any term or condition that he or she considers appropriate on a payment authorized under subsection (1).

Section 435.24(1) requires that all expenses be paid within 18 months after the end of a leadership contest. As a result, it couldn't be much more clear that Elections Canada has the authority to permit leadership contenders to repay any outstanding loans after the end of the 18-month period if "reasonable grounds" for the extension are present. (And indeed I'd argue that it's likely better for Elections Canada to grant an extension to permit legitimate repayment, rather than simply allowing the original lender to write off the loan as uncollectable - especially when that results in a question of what Ken Dryden's "normal accounting practices" are in loaning money to himself.)

But there's a catch worth pointing out, particularly in the context of the Chief Electoral Officer's authority to impose terms and conditions on any repayment. Take a look at the provisions of the Canada Elections Act defining the contributions permitted in a leadership contest:

405. (1) No individual shall make contributions that exceed
...
(c) $1,000 in total to the leadership contestants in a particular leadership contest.

...

(5) For the purposes of this Act, contributions made to a leadership contestant within 18 months after a leadership contest are deemed to be contributions for that contest.

Note that the dollar amounts have been reduced since the Libs' leadership campaign started, so the actual contribution limit applicable to the contest is in fact slightly over $5,000. But the more important wording (from section 405(5)) hasn't changed since the bill which first imposed personal contribution limits in 2003.

From what I can tell, it's at least arguable that section 405(5) sets out a time limit as to when contributions to a leadership contestant are counted for the "contest" in question: donations made before that 18-month period are counted, and conversely donations made afterward are not.* Which would make sense to parallel the 18-month limit on paying claims associated with the contest, since it's assumed that all financial matters are cleared up by then.

But if an extension is granted without conditions, then donations made after the 18-month period wouldn't then count toward the statutory contribution limits. That means that by running out the clock on their outstanding loans and then seeking an extension, the Libs would be able to raise money to pay off their remaining debts without any regard for contribution limits.

Now, I'd think it would go without saying that an extension of time for repaying loans shouldn't serve as a back-door means of evading other requirements of the Canada Elections Act. Which is where the Chief Electoral Officer's discretion to add conditions to any repayment comes in, as it would hopefully be a fairly simple matter to attach a condition that future contributions used to repay the outstanding loans will continue to be counted for the purposes of the contribution limits.

Of course, there are still broader questions which should be asked about the rules which ought to apply to campaign loans - both in terms of the ability of campaign lenders to write off loans, and the availability of loans to begin with. But it's still worth making sure that the law as it now stands doesn't effectively offer the Libs' leadership candidates a get-out-of-debt-free card due to their own failure to repay their campaign loans on time.

*The other possible interpretation of section 405(5) - which I'd think is about equally plausible - is that it acts only a deeming provision which doesn't implicitly remove later donations from the scope of a contribution for a particular contest. If that's the case, then the extra conditions wouldn't be needed to maintain the usual contribution limits.