On potential recovery

CanWest reports that 17 Con candidates received reimbursements from Conadscam expenses which may eventually be rescinded if the scheme is found to be illegal. But on a closer look at the Canada Elections Act, I have to wonder if there may be far more money at stake.

In particular, the Canada Elections Act's rules for national party reimbursements are found in section 435:

435. (1) On receipt from a registered party of the documents referred to in subsection 429(1), the Chief Electoral Officer shall provide the Receiver General with a certificate that sets out the amount that is 50% of the registered party’s election expenses that were paid by its registered agents as set out in the return for its general election expenses, if
(a) the Chief Electoral Officer is satisfied that the registered party and its chief agent have complied with the requirements of sections 429 to 434;
(b) the auditor’s report does not include a statement referred to in subsection 430(2); and
(c) candidates endorsed by the registered party received at least
(i) 2% of the number of valid votes cast at the election, or
(ii) 5% of the number of valid votes cast in the electoral districts in which the registered party endorsed a candidate.

(2) On receipt of the certificate, the Receiver General shall reimburse the amount set out in it to the registered party by paying that amount out of the Consolidated Revenue Fund.

All major parties received reimbursements under this section - with the Cons' ranking as the highest at over $9 million. But what happens if the Cons had never validly complied with section 435 when they submitted their election returns to Elections Canada?

The "requirements of sections 429 to 434" referred to in the above section include a requirement to accurately describe a party's expenses (s. 429(2)) and a requirement not to submit material that the party's chief agent "knows or ought reasonably to know contains a materially false or misleading statement" (s. 431). If the Cons end up losing their legal arguments regarding Conadscam, then there's little plausible basis for the Cons to argue that either of these requirements were met - such that they would never have been entitled to be paid the reimbursement amount based on the information submitted.

Which isn't to say the Cons wouldn't have at least some argument to keep the reimbursement money from 2006. There's at least a plausible case to be made that the purpose of s. 435 is to facilitate a final payment rather than permit later attacks, such that there's no ability to recoup the payment once the Chief Electoral Officer certifies the information required in the section.

At the same time, though, it's at least equally arguable that s. 435 is intended to reflect substance rather than form - in effect, that a party shouldn't benefit from successfully misleading Elections Canada into believing it had complied with the law. In that event, any party which was later found to have substantially failed to comply with its reporting obligations would apparently be disentitled to a refund (at least until it submits accurate information).

Needless to say, if that interpretation is accepted, then the Cons' financial risk arising out of Conadscam might well be large enough to put a serious dent in their much-trumpeted financial advantage over Canada's other political parties.

Moreover, the significance of the section may not be limited to the 2006 reimbursement. Even if Elections Canada doesn't plan on pursuing money which may have been wrongly paid to the Cons, the Chief Electoral Officer will have the ability to decline to certify any future Con election return which includes more Conadscam-style manipulations.

Which means that Conadscam has the potential to both take a bite out of the Cons' current bottom line, and prevent them from taking advantage of public reimbursements in the future if they insist on flouting the law. And that may explain why the Cons are so willing to launch kamikaze attacks on Elections Canada in hopes of avoiding the consequences of their actions.