[Democracy Watch Logo][Op-ed]

Politicians' Secret Bank Accounts a Recipe for Corruption

(The following opinion piece, by Aaron Freeman, Board member of Democracy Watch, was published in The Montreal Gazetteon February 19, 2004)

For more information about all of Democracy Watch actions on money in politics and government ethics issues in Canada, go to Democracy Watch's Money in Politics Campaign and Government Ethics Campaign webpages

Prime Minister Paul Martin has promised to fix the systemic problems that led to the sponsorship scandal.  At the heart of this scandal was the influence that wealthy Liberal donors had in the awarding of contracts.  Cleaning things up will mean limiting that influence in the future, but Martin has been silent on one of the easiest ways that donors funnel secret money to MPs.

Last year, Parliament passed Bill C-24, a sweeping overhaul of Canadaís political fundraising rules.  Modeled after the Quebec elections law, Bill C-24 places a partial ban on corporate donations and a limit of $5,000 on how much individual donors can give in their efforts to gain access and influence over politicians.  However, the new law turns a blind eye to so-called "trust funds" controlled by MPs or parties.  These funds currently exist -- for example, a $260,000 fund managed by Liberal MP Tony Ianno -- and can be expected to multiply as more MPs learn to use them to circumvent the new lawís provisions.

If money moves from a trust fund to a campaign fund, Bill C-24's limits and disclosure obligations would apply.  But a fund could pay for an MP's personal expenses, or even boost his or her salary or retirement pension, without falling under these rules.  Canada has a long history of funds created for this purpose.  One such account, created for former prime minister John Turner, was quickly liquidated once the media exposed it, but most trust funds remain hidden.

A trust fund could even pay for election-related expenses.  It is, at best, unclear, whether the rules would apply if a trust fund pays for an expense that benefits a candidate or party leading up to an election.  For example, if a trust fund pays for an election poll that is then handed to a candidate, the law might consider this to be a donation.  But, especially if the poll was not specifically requested by the candidate, the candidate might just as easily not consider it a donation. 

When the Liberals passed Bill C-24 last June, they rejected an amendment proposed by Democracy Watch to close the trust fund loophole.  MPs then promised to deal with it in the code of conduct for MPs.  This code has now been drafted by MPs and prohibits the acceptance of any "gift or other benefit" that is not "within the customary standards of hospitality."  But it also states, "A Member does not breach this Code if the Member's activity is one in which Members normally and properly engage on behalf of constituents."  As a result, some MPs may argue that trust funds could still be allowed to pay for riding-based activities that boost the MPs' image, and thereís a fine line between such events and those that are designed to get the MP re-elected.

Moreover, there is no guarantee that the MP code, and the separate bill that would establish an independent ethics counselor to enforce it, will be passed anytime soon.  The current attempt to pass the code is the seventh such effort by Parliament.  The previous six efforts have been buried in parliamentary procedure, parliamentarians finding creative ways to stall and eventually kill the code each time.

But even without the new code, some senior MPs fall under existing rules.  The current Code of Conduct for Public Office Holders covers ministers, and also parliamentary secretaries.  Under this code, office holders must disclose all donations of gifts, including any "transfers of economic benefit."  The public office holders code adds that any gift "that could influence public office holders in their judgment and performance of official duties and responsibilities shall be declined."

Ianno could argue that we should simply trust that he is not being influenced by the secret money flowing into his slush fund, but the public office holders code implicitly rejects a "trust me" approach, setting a high standard that public officials must "arrange their private affairs in a manner that will bear the closest public scrutiny, an obligation that is not fully discharged by simply acting within the law."

In the case of a trust fund, it is hard to argue that an MP is acting "in a manner that will bear the closest public scrutiny," if the public cannot even know who the donors to the fund are, or whether the fund even exists.

If Paul Martin is serious about addressing the "democractic deficit" he should start by enforcing these rules and abolishing MPs' secret slush funds.  Anything less is a recipe for corruption.