Politics: Buying power

Corporate donors may have less pull with politicians

Was it backroom wheelin' and dealin' that allowed some Bay Street brokerages to make a killing off Finance Minister Ralph Goodale's November income trust announcement? Or, did both sides follow the rules, with a few investors merely making lucky bets on imminent new government policy? Regardless of what an RCMP investigation turns up, allegations that only “Liberal-friendly” firms were tipped off have put the issue of big businesses' access to, and influence over, politicians back in the spotlight.

Public outcry over the income trust announcement fiasco–which, on the surface, appears to be a case of relations between bankers and legislators getting a wee bit too cozy–is hardly shocking. After months of being bombarded with details about the Gomery Commission, and the questionable contracts and kickbacks associated with it, skepticism regarding business-government relations abounds. What many don't realize, however, is that thanks to Bill C-24, an act that came into force on Jan. 1, 2004, and severely limited contributions from unions and corporations to political parties and leadership contestants, financial ties between companies and politicians have been substantially reduced. “People don't understand how important an impact Bill C-24 has had,” says Goldy Hyder, who was chief of staff to Progressive Conservative leader Joe Clark in 2000-01. “It has really changed the culture of things,” concurs longtime Liberal strategist John Duffy.

Even before Bill C-24, drawing direct connections between the dollars donated by a corporation to a political party and subsequent benefits received was iffy. For one thing, companies, accustomed to spreading risk, generally doled out cash to several major players. In 2003, for example, the last year corporations were free to make unrestricted contributions, the Bank of Nova Scotia gave $55,462.46 to the governing Liberal party, $45,073.90 to the Progressive Conservatives and $42,140 to the Canadian Alliance.

As well, donating large sums may actually make it more difficult for companies to gain political influence. “If it is on the public record that you have donated hundreds of thousands of dollars,” says Shaun Francis, CEO of Medcan Health Management Inc. and a volunteer fundraiser with the Conservatives, “any candidate or government with common sense would be very careful in how they dealt with you, if you were to do business with them.”

Now that Bill C-24 caps corporate contributions at a measly $1,000 annually (and that's $1,000 in total–not per candidate, or per party), concerns about the link between giving and getting should diminish even further. “It is silly to think that because someone gave a donation, they would get access to a meeting,” says Hyder. “They would probably get access because they are the CEO of a bank or an airline or an oil and gas company. It is not the cash.” Hyder scoffs at the notion that there are Liberal-friendly firms, suggesting a company “might appear to be Liberal-friendly, because there has been a Liberal government for 12 years,” but the very same firm “will become Conservative-friendly if there is a Conservative government, and NDP-friendly if there were an NDP government.” Hyder adds that, by and large, business execs are relieved by the easing of pressure to donate corporate money to political efforts.

Bill Andrew, CEO of Penn West Energy Trust, agrees. Last year, he donated the individual maximum of $5,000 to the federal Liberals; his wife gave $5,000 to the Conservatives. “The personal contribution route is better than the corporate route because it makes individuals accountable,” he says. “Our donations reflect a belief in a democratic system, rather than partisan beliefs.”

Obviously, not everyone supports the radical changes Bill C-24 has brought about. Holdouts like Rod Love, former chief of staff to Alberta Premier Ralph Klein, argue it's “dumb” legislation. “I don't think the campaign finance system was broken,” says Love, who senses frustration among business colleagues who can't donate as much as they want to the party of their choosing. Moreover, Love is appalled that taxpayers now foot the bill, to a much higher degree, for election campaigns. (As a result of Bill C-24, Elections Canada distributes about $1.75 per vote received, per year, to each party.)

There are other complaints, too. With the new law largely putting an end to splashy cocktail party fundraisers, “the informal cultural connection between Bay Street and Ottawa has diminished somewhat,” says Duffy. “They don't hang out together as much as they used to and, as a result, I think it is a little bit harder for people to put themselves in each other's heads.” He says you no longer see dozens of VPs of public affairs pressing the flesh at political fundraising events since companies can no longer cut cheques and pay for their employees to attend.

Still, the new campaign finance laws haven't completely obliterated all communication between business people and politicos. Just look at the controversy surrounding Liberal MP Sam Bulte. Involved in drafting tougher copyright legislation just before the election was called, Bulte is facing harsh criticism for accepting campaign contributions from key players in the Canadian music, software, publishing and television industries. Although Bulte hasn't broken any laws and is adamant that there is no conflict of interest, critics say her actions smack of influence peddling.

That controversy aside, Bill C-24 has removed the focus on organizations as a whole, and put the emphasis on individuals instead. As a result, some corporate leaders now raid their own piggy banks to fund the political process. Lynn Adams, a co-owner of Edmonton-based Voice Construction Ltd. and a board member at the Alberta Business Family Institute, made political contributions through her firm for years. If she could, she still would. “We would prefer to do it corporately, because that is before-tax dollars,” she says. But Adams says that donating $5,000 to the Liberals last year, which gained her admittance to a private gathering with Prime Minister Paul Martin, was worth it. She says she would donate to the Conservatives, too, if asked.

The link between corporate donations and political pull has always been a tenuous one. Few doubt the link exists, but nailing down the specifics of it is rather challenging. It seems unlikely that Goodale's office would have tipped off brokers who had added to the Liberal pot, while leaving others in the dark. But would brokers with a better understanding of how government works be better equipped to read the minister's signals and, therefore, make better bets? Sure.

Bill C-24 aims to level the playing field for companies, take the boardroom out of the equation and place the onus of political donations on individuals. “It really takes the wind out of the sails of those who argue that there is something rotten in Canadian politics,” says Duffy. “It is very hard to argue that when corporate fundraising has been banned.”

Political fundraisers

Larry Tanenbaum
Heading the Liberals' national fundraising campaign is high-powered business executive Tanenbaum, CEO of Kilmer Van Nostrand and chairman of Maple Leaf Sports & Entertainment Ltd. (owners of the Toronto Raptors basketball team). Tanenbaum has also served on the boards of Mount Sinai Hospital, the Canadian Council of Christians and Jews and the Baycrest Centre for elderly patients.

Irving Gerstein
The former chair of Peoples Jewellers leads the Conservative national fundraising drive. Previously a director of CTV Inc., Confederation Life Insurance Co. and Scott's Hospitality Inc., among others, this member of the Order of Canada, who attended the Wharton business school in Pennsylvania, also served as chair of Mount Sinai Hospital.

Drew Anderson
Unlike the Liberals or the Conservatives, the NDP doesn't have a figurehead from the business community chairing its fundraising campaign. Instead, the party relies on a team of four dedicated staffers, led by Drew Anderson, a recent import from the non-profit sector.