Analysis of Financial Trends of Regulated Federal Political Entities, 2000–2014
6. Regulatory Compliance
The financial reports submitted by regulated federal political entities and third party election advertisers undergo an audit to ensure they are in compliance with the financial provisions of the CEA. Instances of non-compliance are addressed in a manner that reflects the seriousness of the non-compliance and its impact on the integrity of the political financing regime.
The Commissioner of Canada Elections is responsible for ensuring that the CEA and the Referendum Act are complied with and enforced. With the passage of Bill C-23 in 2014, the Commissioner is now part of the Office of the Director of Public Prosecutions, but the enforcement mandate remains unchanged.
In all cases, the Commissioner acts independently of the Chief Electoral Officer and the Director of Public Prosecutions. The Commissioner decides in what manner complaints and referrals will be handled, what investigations are to be carried out, the cases to be referred for possible prosecution and the charges to be recommended.
Referrals Sent to the Commissioner of Canada Elections
When dealing with cases of non-compliance, the Commissioner can choose to intervene through different measures, as appropriate, depending on the circumstances and the seriousness of the offending conduct. This can include issuing a simple caution letter; signing a formal compliance agreement, which is made public and may include terms and conditions; or forwarding the matter to the Director of Public Prosecutions for the laying of possible charges. As well, the Commissioner could decide it is not in the public interest to pursue a matter and close the case without any further action.
Further information in this regard can be found in the Compliance and Enforcement Policy of the Commissioner of Canada Elections.
The CEA contains a long list of offences, most of which relate to political financing. However, only a small proportion of these offences relate to misconduct that directly threatens the core values of the regime – fairness, transparency and preventing the undue influence of money. These core offences relate to the following:
- Ineligible contributions – instances where an agent of a regulated federal political entity does not return an ineligible or an excessive contribution or returns it past the prescribed deadline. In total, 8% of non-compliance cases relate to the acceptance of illegal funds into the regulatory system through ineligible or excessive contributions that are not returned in a timely manner.
- Spending violations – instances where a candidate, registered party, nomination contestant or third party advertiser exceeds the expenses limit in a general election, by-election or nomination contest. In total, 1% of instances of non-compliance relate to the exceeding of spending limits as prescribed by the CEA – either by a candidate, a registered party, a nomination contestant or a third party advertiser.
- Filing a false or misleading document – instances where an agent of a regulated federal political entity files a financial transactions return that contains a materially false or misleading statement or does not substantially set out the required information outlined in the CEA. A total of 1% of non-compliance cases relate to the filing of a false or misleading document.
- Late and non-filers – instances of not filing a financial document as required by the CEA and of late filing over the prescribed deadline. In total, 19% of all non-compliance cases are related to not filing a financial document or late filing over the prescribed deadline, thereby compromising an important core value of the political financing regime: that timely financial information regarding regulated federal political entities is made available to the public.Footnote 16
Other political financing offences in the CEA are of a less serious nature and may generally be considered "accessory" in that they concern requirements of the CEA that serve to support fundamental objectives of the system. These requirements include the opening of a bank account, the appointment of an official agent for a candidate and the issuing of a receipt for a contribution.
In total, 71% of all identified instances of non-compliance are categorized as "others." The vast majority are instances of minor regulatory non-compliance that do not imperil the integrity of the political financing regime.
In 2010, Elections Canada developed with the Commissioner of Canada Elections an Administrative Compliance Policy for Political Financing.Footnote 17 Pursuant to that policy, matters of a less serious nature are treated through administrative educational measures, rather than a referral to the Commissioner. In regard to "other offences," most cases of non-compliance are dealt with administratively, unless they occur in conjunction with other offences or in cases of repeat offenders. The more serious "core" offences are referred to the Commissioner, unless the situation involves a minor contravention (e.g. a small delay in filing or a minor over-contribution). Since the Administrative Compliance Policy was introduced in 2010, instances of financial non-compliance that were sent to the Commissioner are down on average, per year, by 54% compared to the annual average between 2004 and 2009. In this time frame (2010 to 2014), there have been 2,030 potential financial infractions identified; of this total, 983 fit the criteria for administrative compliance measures (48%) and 1,047 were referred to the Commissioner (52%).
Between 2010 and 2014, 1,047 cases of non-compliance were referred to the Commissioner. Of these cases, 19% related to ineligible contributions, 17% to late and non-filers, 1% to spending violations and the filing of false and misleading documents, and 63% to other potential financial infractions.
Return to source of Footnote 16 In addition to these categories of "core" offences, the CEA also prohibits candidates from accepting gifts or advantages that could be seen to influence the carrying out of their duties as a member of the House of Commons. Accepting such a gift is considered to be a "corrupt practice" under the CEA. Because issues concerning gifts to candidates are extremely rare, we have not included this offence in the four categories above.
Return to source of Footnote 17 The Administrative Compliance Policy for Political Financing is on Elections Canada's website.