Monday April 24th, 2017 - 03:03:06 PM
 

Compliance Audit Results Presented
Austin Wright, October 30, 2007, 7:08 AM

Jump to article on Randy Hope's results
Mary Lee

The Auditor has presented his report to council detailing the findings of his audit into the campaign finances of Mayor Randy Hope and mayoral candidate Mary Lee. Despite some serious allegations, no evidence of wrongdoing was found. However, there were several instances where the respective candidates were not in compliance.

Mary Lee withdrew from the race for mayor, and endorsed Randy Hope. She purchased some advertising that supported Randy Hope's campaign, and claimed the spending on her campaign. The audit application suggested that the endorsement was part of some concerted strategy between the candidates. It was further alleged that by spending $890.42 promoting Hope, Mary Lee had exceeded Hope's campaign contribution limit of $750. The auditor rejected these allegations.

  • The advertising was actually considered to be 3rd party advertising because the expenses "were incurred and paid personally by the candidate Mary Lee, not through candidate Mary Lee's campaign."

  • A misunderstanding of the Act caused Lee to claim the $890.42 expense on her campaign return, when it should have shown zero expenses and zero contributions. This was considered a personal expense, not a campaign expense.

  • It was found that Mary Lee was personally in favour and support of the Randy Hope campaign, not the Lee campaign. Election expenses constitute only those costs that are wholly or partly for use in the candidate's own campaign to promote themselves.

  • Randy Hope stated that "he had no pre-existing knowledge of [Mary Lee's] plan to withdraw from the campaign and support his campaign."

  • Lee claimed that she did not ask Hope for permission to act on his behalf when she purchased her advertising.

  • There does not appear to be any sanction against a third party from independently purchasing advertising in excess of the $750 contribution limit to support a candidate, provided the endorsed candidate claims to be unaware and has not consented.

  • Lee claimed no contributions, but did not have to, because the claimed expenses should not have been claimed in the first place.

  • Mary Lee did not record her nomination fee as an expense. The Municipal Elections Act is ambiguous with respect to including this fee in the claimed expenses. Because of the ambiguity that exists in the Act, and the debate provoked by the subject in jurisdictions across the province, no determination of compliance was made.

While there was some justified cause for concern that sparked the request, all actual findings of non-compliance were trivial. Much of that result hinged on Randy Hope's denial that he was aware that Mary Lee was purchasing advertising to promote his campaign.

Notwithstanding the determination that there was no form of collusion between the candidates, the applicant had honest reason to believe that there was a premeditated strategy for Lee to drop out late in the campaign and endorse the candidate with the best chance of defeating Diane Gagner. The applicant based this on a telephone conversation with Mary Lee, where she pressured Wright not to run for mayor so their candidate could win. While the findings of the Auditor must be respected, the applicant takes issue with the finding that Hope was completely surprised by Lee's endorsement, and that allegations of an arrangement between them were incorrect. Although not requested by the Auditor, that telephone conversation was recorded when the answering machine happened to pick up simultaneously when the phone was answered. That allegation wasn't pulled out of the blue - it can be verified, so there were reasonable grounds to suggest that such a strategy might have been employed when the audit application was submitted.

A major goal in requesting the audit was the revision of the Municipal Elections Act where ambiguity, grey areas, and loopholes seemed apparent, and were cited as the reason that Mary Lee's campaign was found to be largely compliant. The auditor did find instances where no wrongdoing could be attributed because there are no laws addressing the particular issue. The auditor also read interpretations of the Law's meanings that were interpreted differently by the applicant. Council raised many questions while debating the Compliance Audit request that they were unable to answer, which is why the audit proceeded in the first place. The Provincial Government ought to examine the report closely and determine whether these issues need to be addressed in legislation:

  • This report opens a Pandora's Box of 3rd party advertising issues. It was made clear that any person could purchase advertising to promote their political choice without being subject to any spending limits, and that it is a fundamental democratic right. This could be open to abuse if a candidate is able to convincingly deny having any knowledge of such spending. There is no provision to attribute such costs to a candidate's campaign, nor is there any requirement that the promotion be attributed to anyone.

  • Had all the election advertisements been properly attributed, many of the concerns that triggered the Compliance Audit request in the first place would have been negated.

  • There is currently no responsibility by the media to ensure that advertising conforms to the laws, or that the purveyor of political advertising is clearly identified.

  • The strategy of fielding multiple candidates for a political office, then withdrawing to support a leading contender while reaping considerable media coverage is not expressly prohibited. Once withdrawn, a candidate has the Act's blessing to spend as much as they want endorsing their choice, as long as it is personal spending not campaign spending, and campaign contributions can't be used for that purpose. This represents a serious potential to go down the slippery slope towards undemocratic behaviour during an election if such practices are not forbidden or regulated. It is unlikely that this scenario was envisioned nor condoned when current legislation was drafted, but it could certainly be exploited by enterprising candidates.

  • A very fine line is evident where a permitted act becomes non-compliant, and such boundaries are not entirely clear to the candidate or even a professional auditor. Compliance with applicable legislation and rules should not be a matter of opinion open to broad interpretation.

The Applicant brought the Compliance Audit request to council in good faith, without malice, and was confident that the concerns raised were not trivial. Important issues were identified by the Auditor which should be addressed in appropriate legislation. No wrongdoing by Mary Lee was found, with only small inconsistencies being attributed mainly to weaknesses and confusion in the regulations.

In view of the auditors findings, this is a complete vindication for Mary Lee. Austin Wright will be issuing an appropriate public apology in the coming days.




Mayor Randy Hope

Randy Hope filed campaign statements listing $8,884.56 on advertising, $76.85 on office costs, and $1,497.92 for campaign signs. Questions were raised as to whether the advertising figures were accurate, particularly where 3rd party advertising was concerned. The eligibility of certain contributors was also unclear. Auditor Bernard Nayman rendered his opinion that 3rd party spending does not have to be accounted in spending documents. The report concluded that there were "a few minor incidents where the candidate was found to be in non-compliance with and/or in contravention of the Act."

  • Randy Hope's website costs were found to be correctly reported.

  • Invoices and cashed cheques reconciled with the print advertising noted in archived copies of local newspapers. Hope maintained proper records of advertising expenses.

  • Political advertisements placed and paid for by John Cryderman did not mention the Hope campaign, and were irrelevant to the compliance audit. The applicant had questioned the boundary between a campaign volunteer acting on behalf of the candidate and acting in his own interest as a 3rd party. It was made clear that if the advertising didn't promote Hope's campaign, or if it was placed without his knowledge, then the costs were excluded from reporting requirements regardless of his capacity within the campaign team.

  • Hope was found to have claimed the cost of 3rd party advertising placed by John Cryderman, even though such costs did not have to be reported under current rules.

  • The right of any 3rd party to place political advertising without the consent of the candidate was affirmed as an important democratic concept. There are no requirements for such advertisements to be attributed to the author. Anonymous 3rd party advertisements placed by Cryderman that allegedly libelled the applicant were irrelevant to the audit and were not attributable to Randy Hope's campaign.

  • Testimonial-style radio advertisements with ambiguous or non-existent attributions had been costed to Hope's campaign. There was no mention in the report of the additional advertisements that promoted Randy Hope, so these were presumably 3rd party ads that weren't required to be claimed, or else they were properly claimed by Hope as well.

  • Campaign sign spending was not in compliance with the Act. A minor accounting error was detected where the value of signs in inventory after the election had been deducted from the full cost. The amount was apparently reported, but was improperly split and reported in two different places. This error was attributed to the difference between standard business accounting practices, and the election finance requirements.

  • Randy Hope manufactured his sign stakes at home from 2x4 boards. Hope failed to report the $275 expense in his finances, resulting in a contravention of the Act. Hope stated this was simply an oversight.

  • Legislation defines a campaign expense as a cost or service incurred "on behalf" of a person for use in his election campaign. The auditor interpreted this as meaning the candidate must have prior knowledge and consent of such spending for it to be claimed. It was determined that Mary Lee placed her ads endorsing Hope on her own volition, and Hope satisfactorily convinced the Auditor that he knew nothing about it, therefore, it was 3rd party spending.

  • An individual must reside in Ontario to be eligible to contribute to political campaigns. Matthew Liang contributed $750 to Hope, but several published media reports stated that Liang lived in British Columbia. Liang reported that during the year 2006, he lived "on and off" for a combined amount of several months in Chatham. The Act does not define the criteria for being deemed a "normal resident in Ontario," so the contribution was ruled to be eligible.

  • Ascent Investments Ltd. was registered as a British Columbia Corporation. A company must carry on business in Ontario to be eligible to contribute. The auditor discovered that Ascent Investments owns property in Chatham-Kent and is therefore a compliant contributor.

  • An accounting error improperly listed some campaign contributions as "receivable" without applicable provisions in the Act supporting this designation, resulting in non-compliance with the Act.

  • A "Thank-You" advertisement was found to be non-compliant in that it was not subject to the campaign spending limit, but was included in the category of expenses that were subject to the limit.

  • Hope was found to have used his home as campaign office, and did not record any cost for this space and telephone. This contravention of the Act tacked on $500 to campaign expenses and personal contributions from Hope.

  • The actual form used by the municipality was found to be non-compliant. Any candidate using such a form would be in contravention. This caused Hope to incorrectly report that he owed the municipality $11,759.57. Hope filled out the form as provided by the municipality.

All of the contraventions and compliance issues were relatively minor. Ambiguity and misinterpretation resulting from the use of incorrect figures contributed to the concerns that prompted the audit request. The Applicant reasonably and without malice believed that contraventions to the Municipal Elections Act had taken place. Problems were found of a minor and trivial nature, but weaknesses in the governing legislation were also identified.

  • The absence of any controls or guidelines governing 3rd party advertising is bound to be problematic in future elections. Council initially granted the audit request because enough ambiguity existed in the definitions that the Applicant had successfully shown reasonable grounds existed to conduct an investigation.

  • During investigations in support of the audit request, the Applicant attempted to obtain some of the material that was available to the Auditor, but was thwarted and obstructed. Had specific details been made available to the public, the need for educated guesses and hypothetical estimates could have been eliminated and replaced by facts.

  • The application was not a fishing expedition, rather, a methodical and conservative approach was taken. A great deal of research was conducted, and every word was thoroughly scrutinized by a lawyer before submission.

  • A determination on what actually constitutes 3rd party spending, and what spending a candidate is responsible for reporting was required. The application raised legitimate questions of law that council was unable to resolve.

  • Placing expenses in the wrong category, such as campaign signs, contributed to the appearance of non-compliance and helped trigger the request.

  • The Applicant's allegations were made based on honest interpretations of the issues raised. In many cases, the Auditor concurred that the legislation was weak.

  • It was very apparent that all candidates for municipal election need better guidelines. The Auditor described many situations where expenses ought to be claimed on a campaign, such as running shoes, gasoline, office space at home, clothing, volunteer labour, and the like. Requirements are so convoluted that virtually all candidates can be unintentionally in violation of one provision or another.

  • The Audit report appears to legitimize the practice of individuals running around advertising and promoting various candidates in an unapproved capacity. If regulations are not put in place restricting this practice and holding people accountable for their content, those wishing to exploit this freedom could prove very problematic and spoil it for those using their rights responsibly.

Every allegation was made based on sound research and honest interpretations of the regulations concerned. Many rules can be interpreted different ways, so the Auditor chose to apply a very liberal approach. The fact that any ambivalence in interpretation exists at all suggests that changes are needed to the relevant legislation. Instead of focusing on vindictive motions designed to recover the cost of the audit from the applicant, council should resolve to identify and lobby the province for changes.

This was a learning experience for everyone. It proves that the democratic systems work, whether the results were anticipated or not. A test of the checks and balances provided in our laws is appropriate, particularly when many problems were found that could have been averted if the rules provided proper directions and interpretation in the first place. Now, the rumours have been put to rest, issues have been identified, and we can get on with business. Put in the proper context, and with the direction of a council resolved to learn from this and press for appropriate changes, the audit cost could be considered a wise use of municipal resources.

During the course of the audit procedure, we have tried to provide a fair and balanced position. It's time to put this behind now, and learn something from it. In the course of preparing the audit, several individuals had to be named in the allegations. Everyone but the applicant was vindicated by the report. No wrongdoing was found. Austin Wright will be issuing a formal public apology to Mayor Randy Hope, Matthew Liang, John Cryderman, and anyone else offended by the audit process.

Postscript: In a private meeting, the Auditor confirmed each of my allegations and asserted that additional items of concern were discovered. Nayman stated that he thought unclaimed funds had financed the campaigns, and speculated foreign money was involved. The last thing he said after our meeting was an expression of serious concern for his own reputation if he made findings that resulted in sanctions against a sitting mayor. Nayman voiced fear that the media and the public were not going to believe what he found. Consequently, the final report was kept confidential, contrary to the Municipal Act. In it, the Auditor admitted that both candidates were not in compliance, but he altered this finding when reporting the results to council, and trivialized the discrepancies that were reported. In one case, Nayman completely invented his own interpretation of the law to let Hope off the hook.

Council then proceeded to defame the whistleblower in an illegal public session. Furthermore, there is credible evidence that both candidates misled the audit. It seems that Mary Lee's ads that Randy Hope claimed he "didn't know about" were placed by somebody authorized to place ads on behalf of the Hope campaign. I'm not sure how that could be interpreted as anything other than an intentional misrepresentation to an inquiry conducted under the Municipal Elections Act, which leaves the audit findings tainted. The Chatham Daily News, council, the CAO and municipal solicitor were advised, but all have taken steps to keep this information from the public.

 
 

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