The scandal's what's legal

With each passing day, the sponsorship scandal gets stranger. Which is to say that with each passing day it sounds more familiar, more like the Ottawa we know and love. On Friday we learned that the government was suing the advertising agencies on the receiving end of $39-million in public funds, presumably for having accepted the money. Apart from one individual, the government will not be suing itself for having distributed the money. Nor, one supposes, will it be suing the Liberal party for having accepted donations in turn from the advertising agencies. I want to be careful here. All we have heard is testimony before the Gomery inquiry to the effect that Jean Lafleur, owner of the advertising agency that bears his name, strongly encouraged his employees to contribute to the Liberal Party of Canada, to the point of reimbursing them for their donations. But we do not know whether this was true -- Mr. Lafleur says he can’t remember -- or whether there was any explicit quid pro quid. We know that Mr. Lafleur’s company cleared $12-million over the years on contracts with the government of Canada worth $30-million. And we know that he, his company and his associates gave the Liberals tens of thousands of dollars in the same period. But we cannot say whether the second was connected to the first. It might just be coincidence. Mr. Lafleur may have felt moved to contribute to the Liberal Party of Canada for reasons that were quite unconnected with the millions of dollars that were flowing his way courtesy of various ministers of the Liberal government, in the same way that his later hiring of David Dingwall, the former minister of Public Works, may have been. (His job: to lobby the federal cabinet to increase funding for Via Rail, a client of Lafleur’s.) In any event, who’s to say the circle of causation runs that way at all? Maybe, instead of the Liberals secretly handing out millions of dollars to well-connected advertising firms on the understanding they would funnel some of the loot back to the party, it was actually the other way around: maybe the firms gave the money to the Liberals in the hopes of receiving federal business. Not contracts for cash, but cash for contracts. Which you’ll agree is a totally different story. After all, the Liberals might have given them no reason to expect any such preferential treatment. But suppose it were established that amongst the many motives the Liberals had for showering millions of public dollars on their advertising industry friends -- saving the country, seasons tickets for the Canadiens, etc. -- was some elaborate scheme to fill party coffers. That would be an outrage and a crime: the use of public funds to finance a political party. Everyone agrees the discovery of such a link would be the proverbial “smoking gun” in the whole affair. Except... that’s what’s happening now. Every year, millions of dollars in public money finds its way into party coffers, sometimes by similarly circuitous routes, sometimes directly. That’s not just the Liberal Party we’re talking about: all the parties. And it’s all legal. Some of this -- the partial reimbursement of campaign expenses, the tax credit on political contributions -- is of longstanding. But a good chunk of the change the parties are now inhaling from the public spigot is a result of Jean Chretien’s campaign finance reform, itself a response to things like the sponsorship scandal. Classic Chretien: if there is anything illegal going on, we’ll soon put a stop to that -- by making it legal. The result? Look at the figures from the last election. All told, the parties spent about $51-million in the course of the campaign, with the Liberals and the Tories each accounting for about a third of that figure on their own. Reimbursement at a rate of 60% covered roughly $30-million of the total. But with each of the parties eligible, thanks to Mr. Chretien, for a further $1.75 per vote received -- and not just in election years, but every year -- they were collectively into the taxpayer for another $23-million and change. How much, then, did the last election cost the parties? Answer: nothing. In fact, they made a profit on it: $51-million out, $54-million in. Not quite sponsorship rates of profitability, but a tidy margin all the same. And that’s without even counting the tax credit for individual donations. (Theoretically, this benefits the contributor, but in practice it’s split with the parties, since the credit allows the contributor to increase the size of his donation -- indeed, that’s the point). You think these folks don’t want another election? It’s a business opportunity. So the taxpayer gives three ways: once on private donations, a second time through the public subsidy, and a third time to reimburse the parties for taking the trouble to cash the first two cheques. And you wonder where Lafleur learned his stuff?