Ford campaign broke spending rules, audit finds

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Rob Ford spent $40,168 more than allowed in his mayoral race and broke election rules dozens of times, an audit released Friday found, setting the stage for another round of legal battles for the city's leader.

The report found that Mr. Ford spent 3 per cent more than the $1.3-million cap in the 2010 election campaign. Beyond the dollar amount, the 52-page audit cites a number of "apparent contraventions" of the Municipal Elections Act. These include taking donations from corporations, using family companies to finance campaign expenses and describing promotional events where little or no money was collected as fundraisers – a move that allowed the campaign to classify the cost of these events as an expense.

The complaint about the mayor's election spending was made in spring 2011 following an investigation by The Globe and Mail that uncovered Mr. Ford used a family holding company to finance election expenses, rather than a financial institution as required by law. A three-person compliance audit committee will meet Feb. 25 to discuss the audit prepared by Bruce Armstrong and Glen Davison. If the committee votes to commence legal proceedings, the city will retain outside counsel to press charges.

The report is the latest setback for Mr. Ford, who is struggling to move forward with his agenda in a divided city council. The audit, which could result in fines, or the mayor potentially losing his job if it's subsequently proven he broke the law, was released exactly one week after the mayor won an appeal in an unrelated conflict-of-interest case that also could have driven him from office.

Councillor Doug Ford, the mayor's brother and campaign manager, said the auditors' report shows there is "absolutely nothing to hide whatsoever."

The audit makes a point of noting the mayor and his campaign team co-operated with auditors and their records generally complied with the act.

Doug Ford chalked up the 3 per cent in overspending to a difference in "interpretation" of election law, specifically the definition of a fundraising event.

He said the audit is the result of a "left-wing activist group" out to get his brother.

"Whether it was sloppy or stupid or deliberate or conniving, he didn't follow the rules, and when you play in this game, if you don't follow the rules, you're a cheater," said Councillor Adam Vaughan, a critic of the mayor, citing the audit.

A statement sent on behalf of Max Reed and Adam Chaleff-Freudenthaler, the Toronto residents who filed the complaint, said they will be requesting the compliance audit committee "proceed with prosecution in a timely manner."

Few Ontario municipal audit cases have resulted in stiff punishment. Former Hamilton mayor Larry Di Ianni, who had been accused of accepting improper donations during the 2003 election, eventually pleaded guilty. He agreed to make a charitable donation and write an essay on why it was important for candidates to strictly monitor their campaign accounting practices.

At the heart of the audit's findings are the way that the campaign accounted for the costs of four events it organized and eight others set up by third parties. They included an event on June 5, 2010 advertised as an opportunity to meet Mr. Ford, that cost $27,796.29 and raised only $2,920, the report finds. Since so little money was raised, the audit finds the cost of the event cannot be written off as fundraising. The events cited by the audit include gatherings arranged by private individuals at no cost to the campaign, such as a dinner that the audit finds was not reported, set up by former premier Mike Harris in which real estate developer Robert DeGasperis and others met Mr. Ford. The report finds that 10 cheques totalling $25,000 were forwarded to the campaign from Mr. DeGasperis after the event.

Also in this category is a $9,151.69 dinner for 28 at the exclusive Harbour 60 restaurant, with the tab picked up by owners Lisa and Steve Nikolaou. Mr. Ford's campaign raised $27,000 in the evening.

The audit also finds the campaign used two family companies – Doug Ford Holdings and Deco Labels and Tags – to cover campaign costs. Doug Ford Holdings paid $77,722.31 in expenses and Deco invoiced the campaign for $119,372.06. Both amounts were repaid in April 2011.

As well as detailing campaign spending, the document provides a rare window into Mr. Ford's long-shot campaign, which gained momentum through the summer of 2010. Even before he filed his nomination papers Mr. Ford spent $5,805.09 on items such as 500 "Ford for Mayor" signs, 55 T-shirts, and a bus charter.

A victory bash on election night cost came with a bill of $71,167.40, but Doug Ford refused to pay more than $35,000. "I'm not going to get shafted by a vendor that tells me one thing, and gives me an invoice for another," he explained Friday.

With files from John Lorinc and Marcus Gee

SOME FINDINGS

The compliance audit report found Mayor Rob Ford's 2010 election campaign exceeded the authorized spending limit by $40,168. The audit cited dozens of "apparent contraventions" of the provincial Municipal Elections Act, including:

-Family companies DFH and Deco gave "generous credit terms," although the companies do not meet the definition of a bank or recognized lending institution.

-Eleven cheques totalling $6,000 were accepted from corporations.

-Several cash contributions exceeding $25 were accepted for deposit. (The audit noted the cash was later returned to contributors and replaced by cheque, or forfeited to the city.)

-Three money orders totalling $4,400 were purchased using cash contributions.

-A bus was chartered for the campaign launch in May, 2010. The campaign did not record the $840 cost.

-The campaign rented an RV for $1,808, far less than the market value of $3,892.

-Contributions were raised at various fundraising events, but expenses were not attributed to the events.

-Mr. Ford spent $5,805.09 before he filed his nomination papers on, among other things, 500 "Ford for Mayor" signs and 55 T-shirts.

With files from Marcus Gee

and John Lorinc