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Anonymous, limitless political donations from 'puppet organizations' continue in B.C.

Premier John Horgan and Green Party Leader Andrew Weaver shake hands as they speak to media following the legislation announcement banning union and corporate donations to political parties during a press conference at Legislature in Victoria, B.C..

Chad Hipolito/The Canadian Press

In the months before British Columbia's election this spring, a group of unidentified business leaders put together $2-million to sponsor attack ads that referred to the Leader of the B.C. New Democratic Party as "Say Anything John."

Because the ad's run finished before the election officially began, the people behind the group, Future Prosperity for B.C., were able to remain anonymous. John Winter, former CEO of the B.C. Chamber of Commerce, the only one to go public, made no apologies about the secretive tactics: "We feel we've done what we can do with what we had, without coming under the scrutiny of the Elections Act," he said. "Why would that be nefarious?"

Court rulings on the right to freedom of expression have helped such groups use limitless advertising dollars from unknown donors to influence politics at all levels across Canada. The organizations are similar to political action committees in the United States, which exist to influence the electoral system while circumventing financing rules. Such groups are proliferating in Alberta as an unintended consequence of the province's political financing reforms.

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B.C. Premier John Horgan, knowing Alberta's regulatory experiment is failing, this week introduced legislation designed to clamp down on these unbridled fundraising and advertising machines.

But while Mr. Horgan's proposed legislation related to groups such as Future Prosperity for B.C. is much more stringent than what his counterpart in Alberta introduced, that does not guarantee it will be more effective.

When Mr. Horgan delivered last week on a long-standing commitment to ban union and corporate donations to political parties, he said the legislation was designed to end the influence of "big money" in politics. His government estimates it will cost the province's two main parties $65-million over the four-year electoral cycle. That's the amount of money the two parties usually collect from sources that the new law would prohibit.

But the bill also included a pre-emptive strike against third-party organizations – such as the group that attacked him last spring.

"The concern that we had was that if we displaced $65-million in donations from political parties, that the corporations or the unions or very wealthy individuals would still be seeking to have that same level of influence," B.C. Attorney-General David Eby said in an interview after the introduction of his campaign finance reform bill.

"So we asked ourselves, where is that money going to go? The most obvious place would be with puppet organizations that could be funded to advance [their] interests."

The legal drafting team studying other Canadian jurisdictions concluded B.C. had reason to fear the rise of U.S.-style SuperPACs (political action committees) that operate at arm's length from politicians but function as their proxies to attack opponents and circumvent the spending limits.

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"We looked at Alberta's experience with these SuperPAC-type, third-party organizations … and we incorporated rules into this bill that would deal with these unanticipated issues," Mr. Eby said.

The most significant difference between B.C. and Alberta's legislation is the westernmost province intends to cap the amount of money a person can give to a third party each year, and has taken steps to prevent unions, corporations and other organizations from circumventing the spirit of the law by pouring money into such fundraising vehicles.

B.C.'s proposed legislation dictates that eligible individuals can donate a maximum of $1,200 per year to third-party organizations that advertise during an election campaign (or in the 60-days before). Donations over $250 must be disclosed. Donors can contribute to as many third-party outfits as they please. Unions and corporations are not allowed to contribute. The third-party groups must then adhere to advertising spending limits during writ periods.

But there is no spending limit during the 60-day pre-campaign stretch and the government does not regulate third parties outside the writ and precampaign period.

So if, for example, a group ran an attack ad before the regulated time frame and then closed up shop, the government could not compel disclosure or cap spending. Further, the caps are related to election advertising, meaning someone could donate more than $1,200 per year, so long as the extra money is not used for advertising costs during the regulated period. This could give unions, corporations and other ineligible organizations and individuals a way to influence politics through third parties.

Alberta last year banned corporate and union donations, reduced the amount of money people can donate to parties and candidates, and capped campaign spending. Ms. Notley, like her counterpart in B.C., wanted to get "big money" out of politics. But Alberta's revised regulations backfired.

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Third-party organizations blossomed because their activities remained unregulated. They could accept donations from corporations, for example, and spend without restraint. United Conservative Party leadership hopeful Jason Kenney capitalized on this last fall. (Mr. Kenney, while criticized for a lack of transparency and flouting fundraising regulations, operated within the rules).

Alberta then introduced rules to limit third-party disclosure and financing late last year, but contributors to third parties may still donate an unlimited amount of money and can mask their identities behind numbered companies. Individuals, corporations, unions and other organizations are all free to donate to these vehicles. Contributors do not have to reside in Alberta.

These organizations can co-ordinate with parties and candidates. Further, third-party entities can spend money on activities beyond advertising, such as conducting polls and research, and encouraging electors to vote. If contributors specify they want their money used for these types of activities, neither their identity nor donation amounts have to be revealed.

The Alberta Advantage Fund, which backs Mr. Kenney, raised $177,810 in the first half of 2017, according to its disclosure reports. Brad Shaw, chief executive officer of Shaw Communications, was its largest contributor, chipping in $30,000. By way of context, the government reduced annual individual donations to $4,000 a year to candidates and parties in its bid to get big money out of politics.

Meanwhile, third-party organizations advertising during campaigns in Alberta face stricter rules than they do at other times, although they can still co-ordinate with parties and candidates. Contributions over $250 must be disclosed, although donation amounts are not capped. Donors, which can include numbered companies, must live or operate in Alberta. However, should contributors demand their money be spent on activities like polls and research, their information does not have to be disclosed.

In Alberta elections, a third party may not spend more than $150,000 and may not direct more than $3,000 of that to oppose or promote a candidate in any given riding. The aggregate election spending cap drops to $3,000 for by-elections. This, however, is limited to the government's definition of advertising. These vehicles, for example, may conduct polls and other activities without the associated costs counting toward the spending cap.

Video: No more ‘hollow words’ on Indigenous reconciliation, Horgan says (The Canadian Press)
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About the Authors
B.C. politics reporter

Based in the press gallery of the B.C. Legislature in Victoria, Justine has followed the ups and downs of B.C. premiers since 1988. She has also worked as a business reporter and on Parliament Hill covering national politics. More

Carrie Tait joined the Globe in January, 2011, mainly reporting on energy from the Calgary bureau. Previously, she spent six years working for the National Post in both Calgary and Toronto. She has a master’s degree in journalism from the University of Western Ontario and a bachelor’s degree in political studies from the University of Saskatchewan. More

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