Angry in the Great White North

Michael Ignatieff is responding to allegations that Liberal fundraising is going to be enhanced by having donors donated the maximum to his leadership campaign fund.  Since the fund is already in surplus (according to Alfred Apps), and since there are no other candidates, and since a surplus is transferred to the party at the end of the leadership race, the suspicion is that the Liberals are using this one-horse race as a way of having people double up their donations.

Michael Ignatieff says it's not true:

Although there is only one candidate for the Leadership of the Liberal Party of Canada, Michael Ignatieff's campaign continues to incur expenses that remain his sole responsibility until the campaign concludes at the Biennial Convention in May.

All campaign donations and expenses will be made public through Elections Canada. The campaign does not expect to run a surplus.

His statement does not mention whether the fund is currently in surplus.  Right now we have Alfred Apps' email to wealthy Liberal donors in which he clearly states that the fund is running a surplus right now.

Let me correct a mistake, and then use that as a starting-off point.  In my last post, I suggested that the $90,000 deposit to be a contestant in the Liberal Party leadership race had to be paid by the time of vote.  That was based on a sloppy reading of the Liberal Party constitution.  What the clause in the constitution is saying is that the deposit must be paid on a date chosen by the National Executive, and that date must be before the actual vote.

Of course the deposit has to be paid before.  Sometimes things are so obvious that, when written down, they seem confusing.  You know, because why write it down unless it's tricky? 

So when was the deposit due?  As best as I can tell, it would have been due, in full, on February 27, the last day to throw a hat into the Liberal ring. 

So that means Michael Ignatieff is not raising funds to pay for his deposit, since he must have already paid, unless he took out a loan for the deposit, and he's looking to pay that loan off.

But Alfred Apps said in his email that the the fund was in surplus, so Michael Ignatieff must have paid the deposit out of donations he had raised for this 2009 race without taking out a loan, and that he had money left over (or that in the time between February 27 and today, any shortfall has been filled in with new donations).

Of all the leadership contenders coming out of the 2006 race that saw Stephane Dion win the leadership, Michael Ignatieff was one of the few to have paid off his hefty debt:

As of Dec. 31, Dion still owed $200,000 from his successful 2006 leadership campaign.

And, according to the latest financial statements filed with Elections Canada, he wasn't the only one still struggling to pay off his debts.

Seven contenders from the 2006 contest owed more than $1.4 million combined, the financial statements show.

Michael Ignatieff paid off his 2006 debt just in time to assume the leadership last December, when Dion stepped down.

Erstwhile rivals Bob Rae and Carolyn Bennett were the only contenders who were able to retire their debts within the initial 18-month repayment period, which ended last June. The rest, including Ignatieff and Dion, were granted extensions of a year to 18 months by Elections Canada.

According to the financial statements, Toronto MP Gerard Kennedy still owed $307,216 in loans and unpaid claims as of Dec. 31.

Toronto-area MPs Ken Dryden, Maurizio Bevilacqua and Joe Volpe owed $365,272, $275,730 and $140,090 respectively.

Nova Scotia MP Scott Brison owed $45,000 and Vancouver MP Hedy Fry owed $95,500.

Elections Canada has not yet posted the latest financial statement for Toronto MP Martha Hall Findlay.

Now each leadership race is counted as a separate race for the purposes of contribution limits.  A person who donated the maximum to Michael Ignatieff's 2006 campaign can donate another $1,100 to the 2009 campaign.  That is a one time donation for the entire race.  It is not an annual limit.

So Michael Ignatieff had his 2006 debt paid off in December.  That means everything he raised since then is going into the 2009 fund.  I have two emails from Michael Ignatieff dated January 10 and January 27 which included links to his 2009 leadership fund donation webpage.

Could Michael Ignatieff have raised the $90,000 and so avoid taking out a loan by the time the deposit was due on February 27?  Since he had no debts from 2006, it would not have been too hard to get that sort of cash together in the eight weeks he had.

And we still have Alfred Apps' email stating clearly that the 2009 fund is in surplus.

The Liberals are arguing, though, that there will be further expenses until the convention itself occurs.

Fair enough.  What other expenses are there?  Using Michael Ignatieff's 2006 campaign returns as a guide, we get these numbers for what Elections Canada calls commercial expenses:

• Advertising: $166,226.91
• Salaries and Wages: $1,046,578.91
• Office Expenses (rent, heat, light): $44,866.10
• Office Expenses (other): $179,060.86
• Miscellaneous Expenses: $712,944.43
• Contestants Personal Expenses: $69,236.80

This totals $2,218914.02.

What commercial expenses is Michael Ignatieff incurring in 2009?  Well, he's not actually running a leadership campaign, so he doesn't need advertising, or a large office, or significant staffing.  In this non-campaign, you'd expect commercial expenses to be a mere fraction of what they were in 2006.

That's about half of the spending.  Another $2,056,721.19 was paid to suppliers who provided direct material support for the campaign itself (everything from printing posters to providing consulting support to caterers).  The bulk of this money when to individuals who helped on the campaign (separate from salaries).  The Liberal Party got $50,000 as a deposit.   There are some printers and consultants.  Michael Ignatieff himself got just over $38,000 from this column (separate from his personal expenses).

The point is that I don't see why any of these people or organizations are going to have to be paid during this non-campaign.  The only real expenses left are those related to the convention itself, like the video, and maybe posters and thundersticks with "Ignatieff" written on them.  Some hotel expenses.  Peanuts, really.

There just doesn't seem to be that much, assuming that the deposit has already been paid and has been covered with donations already received.

The best rationalization for these mysterious ongoing expenses is related to expenses that the party will accrue to hold this non-leadership non-vote.  This is one of the emails I received when I checked into the reaction to Alfred Apps' original email:

Notwithstanding that the acclamation is virtually assured it is still a leadership campaign and there are costs incurred for the convention , since any surplus accrues to the party it is appropriate to send money to the MI campaign as there are still costs for delegates who may need some form of assistance, eg, students aboriginal etc

So let me get this straight.  The Liberal Party will incur expenses to hold the convention.  A loyal Liberal wants to help and donates $1,100 to the party.  But there are a lot of expenses.  To help out further, this Liberal will donate $1,100 to Michael Ignatieff's leadership campaign fund, knowing that the "any surplus accrues to the party" and so offsets the cost of holding the convention.

But...

This is exactly what has some people upset.  What this person is describing is exactly what Alfred Apps sounded like he was saying.  The Liberal Party needs lots of money, so give the maximum to Michael Ignatieff's leadership fund which is in surplus now and will remain in surplus go forward, so we can siphon the money back out and put it in the Liberal Party's bank account.

This person is equating party expenses for holding the convention with Michael Ignatieff's leadership expenses, suggesting that using the fund to funnel money to the party makes it OK.  But it doesn't.  Indeed, it's illegal for a candidate to subsidize the travel of a delegate.  That's not what's happening here directly, but through sleight of hand.

Alfred Apps and other Liberals can deny all they want.  They can argue that there will be no surplus by the time the convention is held, and this was not meant as a means to move money to the Liberal Party above what would be allowed by law based on personal contribution limits.

But Alfred Apps said there was a surplus, and said it after the $90,000 deposit would have been paid.

We know Michael Ignatieff has paid off his 2006 campaign debts.

It is hard to imagine what further expenses there will be that are significant in size.

And finally...Liberals seem to think exactly what the party is denying, and that is that their contributions to Michael Ignatieff's leadership campaign fund constitute a clever means of contributing even more to the Liberal Party than would be allowed by law for direct contributions.

One more thing.  All those other 2006 candidates are trying to pay off their debts.  Alfred Apps' efforts to vacuum up the maximum in contributions from these wealthy Liberals (regardless of whether he intended this to be a trick to flip these campaign donations to the party) are going to leave these 2006 candidates drowning in debt for quite some time to come.

Funny how he didn't suggest that these Liberals spare a thought, and maybe a big cheque, to help them out.  Just make the cheques out to Michael Ignatieff, sole contender, whose fund is already in surplus.

Check out other stories from the Liberal Leadership Fund Donations archive.