The Sixth Estate

CBC has been doing superb work researching financial improprieties with respect to the election campaign of the Harper regime’s Intergovernmental Affairs Minister, Peter Penashue of Labrador, for some months now. I avoided commenting because there didn’t seem like anything I could add to the record, but in light of the fact that it’s become clear the Harper regime will not be investigating or punishing wayward ministers anyways, unless they’re women, I might as well put the allegations here, too, on the record. Plus, I’m thinking of putting together a set of pages to memorialize allegations of election misconduct. Sixth Estate is a poor substitute for an Elections Canada investigation, but, well, we all know how effective those are.

The Penashue accusations which emerged over the summer were kind of scattershot, but with the latest entry in CBC’s investigation, I think it’s possible to see what happened.

First, we should review the campaign spending rules. The law sets limits on how much individuals can donate to a campaign ($1100 for individuals, and $0 for corporations and other organizations), and on how much a politician’s campaign can spend during the election (typically around $90,000-$100,000, but it varies depending on the size of the riding). Campaigns can borrow money, but they have to pay market interest rates, and it has to be paid off in several years’ time, or else it counts as a donation. The same applies to goods and services purchased: if you get a discount, the discount counts as a donation. They can also receive transfers from other riding associations of the same party. Once it’s all over, all the expenses have to be submitted to Elections Canada. If you’re over your spending limit, or you hide expenses, that’s an offence.

The usual end result is a compliance agreement, under which the guilty party confesses (but usually insists it was unintentional), and promises not to do it again, in exchange for no charges being laid. The list of people who have signed compliance agreements for previous election offences is online, and you will recognize a few of the names who are implicated. They include the campaigns of Science Minister Gary Goodyear (for an illegal $2000 kickback on their campaign office) and Government House Leader Peter Van Loan (for exceeding his spending limit). You won’t see on the list the Conservative Party of Canada, because its money laundering scheme went to court rather than being settled through a compliance agreement. You also won’t see Public Safety Minister Vic Toews, because his court conviction for election irregularities fell under Manitoba law, not federal law.

All of which brings us back to Mr. Penashue. I should say, I don’t know of anyone who has pieced together the whole record as a narrative the way I’m about to do. It hasn’t been officially confirmed. There could be errors. But I’m going off of previous press reports here, and everything has been linked accordingly.

First of all, Penashue ran in Labrador, and won by a very narrow margin. Elections Canada expense reports show that he over-spent his rivals by a considerable margin. The NDP reported about $14,000 in expenses, $12 less than their donation income. The Liberals spent $37,000, about $15,000 less than their donation income. And Penashue spent $118,279, about $900 less than his income and transfers. A lot of that was written off as personal expenses (which don’t count towards the limit), so actually Penashue only “spent” $82,385, squeaking him in under the expense limit of $84,468.09.

This money came from a variety of sources. The campaign received $25,000 in transfers from the federal Party. It also allegedly received $106,000 in donations, altough if you check out the donations page on Elections Canada, it’s plainly riddled with errors. Two donors are listed as anonymous, one of whom donated $1100 — an obvious impropriety if I ever saw one. That number also includes a $20,000 transfer from the riding association, and a $2500 contribution from “Loan IBN.” I assume that’s actually supposed to be a loan, misfiled, from IBN. Whatever that is.

That’s what it looked like on paper, anyways. Actually there were more serious problems going on, safely out of sight. An Elections Canada audit of the books revealed that the reportable expenses were somewhat higher than what was listed, and that Penashue actually exceeded the spending limit by around $4,000.

More seriously, Penashue was also in trouble with his charter airline. During the campaign, he and his campaign personnel flew on $24,711 worth of flights. The candidate’s own travel is exempt from the cost calculations, so CBC estimates that only $18,163 should have gone towards the spending limit. The campaign only reported around $7000 in payments to Provincial Air. More on that later.

As the campaign was finishing up its final payments in May 2011, it ran into trouble: several cheques bounced, and they realized their financial agent had blown it with the bookkeeping. (Or at least that’s who’s officially getting the blame for all this.) To make ends meet, they rushed over to the Innu Development Limited Partnership, a for-profit company which is owned by, and provides development grants to businesses within, the Innu nation. Election campaigns seem somewhat outside the organization’s remit, but the boss at the time was Penashue’s brother-in-law, Paul Rich. They agreed on a $25,000 loan to tide the Penashue campaign over.

Now, according to the Elections Canada website, the $25,000 loan came with a 0% interest payment — contrary to the obligation of campaigns to pay market interest rates, and somewhat unusual given that IDLP is a for-profit company. Documents that fall also “made no mention of an interest payment,” according to CBC. This raised obvious questions, and in December IDLP and Penashue announced that in fact the documentation posted by Elections Canada was in error, and there was actually a 7% interest rate on the loan.

Even with the loan, the Penashue campaign appears to have had some trouble making its various payments. Which brings us to today’s CBC report. Now, the relevant section is somewhat confusing. Either that’s because it’s not well written, or because it’s evidence that the Penashue campaign submitted bogus documents to Elections Canada. You can be the judge of which of those two outcomes is more likely. I’m just going to quote the relevant section here, and let you be the judge:

A letter from the lawyer for Provincial Airlines, sent to Elections Canada, says… “We understand that our client was advised in the fall of 2011… that the campaign was only financially capable of paying the sum of $7,000 for air travel. Accordingly, our client… wrote off the remaining balance.”

Penashue’s campaign submitted documents to Elections Canada showing his official agent worked out an agreement with Provincial Airlines Ltd. in Labrador on April 4, 2011. The airline would supply unlimited travel to Penashue and his family during the campaign for $7,000, the agreement said…

The new records, incluing an invoice for the $7,000 charge, show the agreement wasn’t negotiated and finalized until Sept. 16, 2011, more than four months after Canadians cast their ballots.

Like I say, you can be the judge of what’s going on here.

As of this writing, Penashue has not been dismissed from Cabinet, nor has he been formally accused (in public) of any wrongdoing by Elections Canada.