Complaint of Garth Turner’s trust fund forwarded to Elections Canada

About a year ago, I wrote of Liberal MP Garth Turner collecting money in a unconventional way. Garth Turner was asking contributers via his website to donate to “Garth Turner Campaign, in trust”. We learned then that this may run afoul of the Elections Act because of a recent Federal Accountability Act amendment.

Here is what Turner asked of his website visitors:

Two days ago, I learned from Will Stewart, President of the Conservative Halton electoral district association, that a resident of Halton lodged an official complaint with Elections Canada via registered mail regarding Turner’s request for money to be donated in a trust fund.

Regarding the incident, here’s what I wrote on October 28, 2007,

From Elections Canada, we learn that:

…as of June 12, 2007, as a result of changes made by s. 44(2) of the Federal Accountability Act to s. 404.2 of the Canada Elections Act, transfers of trust funds to candidates from registered parties and registered associations will be prohibited.

It seems that when an election is called, the federal accountability act prohibits the transfer of money from an electoral district association’s or party’s trust fund to a candidate. If this is so, who holds this money in trust? Is it “Garth Turner campaign” (whatever that entity is) or “Garth Turner”? If the account is to be used to elect Garth Turner, it would be useless for the EDA to hold it because of the new changes governed by the FAA. But yet, outside of an election, all funds must be donated to the EDA.

furthermore (from Elections Canada),

A contribution made from a trust fund is treated as a contribution from the trustee.

When a registered party, registered association, candidate, leadership contestant or nomination contestant receives a contribution paid out of funds held in trust, the trustee is reported as the contributor and the contribution counts towards his or her contribution limit.

Therefore, only a trustee who is an individual may make a contribution from a trust fund.

So, Garth is encouraging people to write cheques to “Garth Turner campaign, in trust”. What does this mean? As is the general understanding, and confirmed by Elections Canada, funds held in trust become the property of the trustee. Contributions from trust funds are treated as contributions from the trustee. So, if a candidate were to able to transfer money out of a trust fund to fund their campaign, the maximum they could withdraw would be the maximum contribution amount allowable by an individual (ie. the trustee) per year, which is $1,100. If Garth collects $50,000 into a trust fund from donors, it becomes the property of that trust’s trustee and subsequently, that trustee can only give $1,100. But, can money even be transferred out of a trust (with many contributors) for the purpose of an election campaign?

Trusts are dubious because of the exchanging of money through an intermediary (the trust/trustee). For example, if I wanted to give a political party $100, I couldn’t give it to my friend to donate that money for me. My friend would have to do that in his name because he is the one handing over the money. Again, the nature of trusts is that the money held in trust becomes the property of the trustee and therefore contributing from that trust becomes a donation from the trustee and not the variety of individuals who gave money to put into that trust.

But, as we read on, this becomes clearer. Elections Canada states that indirect contributions are prohibited,

An individual may not collect funds from others in a trust for the purpose of making contributions to registered parties, their associations, candidates, leadership contestants or nomination contestants. (s. 405.3 Canada Elections Act)

This is because individuals cannot make contributions from funds given to them by others for the purpose of making contributions. This rule cannot be avoided by the individual collecting funds in a trust from which to make contributions.

The Liberals have been going on and on about money transfers from parties to candidates and from candidates to parties. Money transfers of this sort happen all of the time. However, according to section 404.2(2.2) of the Elections Act, this may not occur with respect to trusts.

A transfer of funds, other than trust funds, is permitted and is not a contribution for the purposes of this Act if it is

(a) from a registered party to a candidate endorsed by the party; or

(b) from a registered association to a candidate endorsed by the party with which the association is affiliated.

and according to Elections Canada,

A registered party, registered association, candidate, leadership contestant or nomination contestant may not avoid Canada Elections Act controls by collecting contributions directly in a trust fund.

Any such contributions remain contributions. They must be accepted by the relevant agent, put into the campaign account (*** ie. during a campaign, for a candidate as recognized by a returning officer during a writ period — Stephen ***) (if received by a candidate, leadership or nomination contestant) and reported as contributions.

Outside of a campaign, donations for the purpose of eventually electing somebody must be made to the Electoral District Association.

Why is Garth collecting money from his supporters into a trust?

Who owns (and therefore controls) the money in that trust since an EDA cannot transfer money from a trust to a candidate during a campaign?

How would a candidate expect to get more than $1,100 a year out of such a trust?

If a trust is made up of pooled money from a number of people, how can money be transferred to a campaign since indirect contributions are prohibited?

If during a writ period, only a campaign can issue tax receipts and if outside of a campaign, only an EDA can issue tax receipts, how can “Garth Turner campaign” hope to give tax receipts to donors as his website claims?

How much money has Garth Turner collected in trust?

Here’s what Garth had to say about this:

Mr. Taylor has written a blog of copious length after looking at my fund-raising web site (www.garthturner.com). He saw that in addition to credit card donations, I was accepting cheques, made payable to “Garth Turner Campaign, in Trust.” From that he made the assumption (since he did not call me) that I had opened a trust account, and wondered then how the new election financing rules would allow donors to get a tax receipt. I won’t trouble you with all the grinding details, since you can read them on Mr. Taylor’s blogette for yourself (www.stephentaylor.ca). But you can see from his effort on this that he thinks it’s a big deal. Maybe it is. Beats me.

…I did not think to change the wording on my website from the Garth Turner campaign to the Halton Liberal Association, so cheque-writers would face no delays or hassles in getting tax receipts. Whoops. Screw up. Enter Stephen Taylor and his “clean government” buddies to shoot my butt off.

So, what have I learned in the last twelve hours?

First, the website wording was changed. I learned not to ignore that. Second, I spent lots of time talking to a flinty-eyed party regulatory guy about campaign financing. I learned I do not want to be a regulatory guy. Third, I learned that even if the Lib riding association was dysfunctional, I had to turn over the meager amount of money in my indie campaign account. Fourth, I learned this will take some days, weeks maybe, to sort out since every donation of five or ten bucks, made over PayPay, by credit card, or cheque, will have to be reviewed. After all, the guardians of Clean Government are out to bury me &emdash; once they dig themselves out. I have learned there’s a big controversy raging about whether or not political candidates can even raise money online through portals like PayPal. It’s the Internet thing, you know, the devil’s invention.

And I’ve learned I am apparently not dead yet.

For that, Mr. Taylor, I thank you.

Turnergate synopsis

It all started quite innocently enough. CPAC, the Canadian parliamentary channel which provides an incredible service to Canadians by providing a unbiased tracking of politicians on the campaign trail, was trailing Progressive Conservative-turned-broadcaster-turned-Conservative-turned-Independent-turned-Green tease-turned-Liberal MP Garth Turner door-to-door as part of a hustings profile they were making for the riding of Halton.

As I’ve alluded above, Turner is a controversial figure who has been forced to shop around for a party that would take him after – the governing Conservatives allege – he violated caucus confidentiality by posting private discussions on his blog. There is no doubt that Turner and his Halton seat are being specially targeted for re-capture by the Tories.

As part of the CPAC profile, reporter Martin Stringer followed Turner door-to-door to get a snapshot of the typical candidate experience. The report was produced, taped, cut and aired on CPAC a short while later. As it aired, conservative blogger Matt McGuire snipped the video from CPAC showing Turner trying to sell Dion’s Green Shift to a constituent. McGuire wanted to make the point that Turner lacked confidence in pushing the plan.

An eagle-eyed viewer of this video noticed something else, however. The random constituent that Turner was door-knocking was the son of Esther Shaye, Garth Turner’s right hand and current campaign manager. The viewer emailed popular Conservative blogger Steve Janke and Janke got to work.

This caused quite a stir in the blogosphere and enraged the good people of CPAC. This supposed random door-knocker was the “last person” CPAC wanted to film because they wanted to show a typical constituent, not someone with a direct or indirect involvement with the campaign. CPAC’s reputation was on the line. The cable network prides itself on telling the story as straight as it can and here was this photo-op that it presented as non-staged. Looking for answers, CPAC’s anchor Peter van Dusen caught up with Turner on the phone while he was campaigning and pressed him to explain himself and why his campaign set up CPAC.  Turner was taken by surprise and squirmed during the call as he was prompted to explain why his campaign offered a family member rather than a random sample for CPAC to film.

CBC reporter Susan Ormiston is tracking how the internet is shaping this election campaign and to her this story had relevance since Steve Janke busted Turner’s campaign.  Ormiston produced a story for The National and, to her credit, provided some balance not immediately apparent in the Conservative blogosphere: the Halton Conservative candidate took CPAC to a friend’s store.  As Garth Turner tried to explain himself on his blog he lashed out at Ormiston and the process by which she took to produce the story.  Ormiston hit back at Turner expressing that his accounting of the story’s production wasn’t accurate.

This story, of course, goes to credibility.  In the age of the blogosphere and pushback on unfair reporting, the mainstream media is now very sensitive to demands that their reports are unbiased and fair.  CPAC alleges that Turner manipulated what was supposed to be a typical day in the life of a candidate.  CBC alleges that Turner’s accounting of their process was untruthful.  If nothing else, this shows the MSM’s intent on showing their effort to fulfill their new contract the blogosphere to go that extra step to report accurately.  However, as far as credibility goes, Turner has run into trouble before with those that have cried foul to his recounting of events.  If he is re-elected, as the Canadian public we may have more opportunities of witnessing such incidents as they unfold on the national stage and within the blogosphere.

Ormiston vs. Turner

From Garth Turner’s comment section, CBC’s Susan Ormiston describes how she tried to get to the bottom of the Turnergate story,

The facts Mr. Turner are as follows.

Our producer called you around 11 a.m. Monday morning. He identified himself as calling from CBC News. You spoke with him for a time, and then the producer asked if you would speak with me.. and said we’d like to call you back from a studio where we can record. You agreed.

We called you back within 10 mins. We were delayed a few more minutes as we tried to connect the phone call with the record booth, which we told you.
Then you and I began to talk. I started by saying we were trying to “drill down on the bloggers claims” and you responded as I reported “well I hope you are going to drill down on the kind of gutter politics that creates this crap”.

We talked for roughly 10-15 minutes. At one point you said and I am quoting from the interview transcript:

Garth Turner: “It’s one thing to have it on YouTube, you put this on CBC… ahh, I can’t prevent you, and you can do it if you want and I’ll do your little interview here.”

It is clear to us that you knew you were speaking to a CBC journalist and agreed to do so, and that you acknowledged you were doing an interview.

I might remind you when I tried to further clarify further the events of the doorknocking , you hung up on me.

At the end of the day, Mr. Turner, in your email to Peter Van Dusen of CPAC, copied to us, you were still putting blame on CPAC.
“The bottom line seems to be that CPAC was informed, prior to shooting, that the home in question was that of the son of my associate.”

CPAC has categorically denied that claim. We represented both your side and CPAC’s rebuttal, on our story Monday night.

Regards,
Susan Ormiston
CBC News

Well, Susan, there are two sides to all stories and I’m flattered you feel it necessary to use my blog to get your message out, when a national TV network is insufficient. Actually, I was asked if I wished to be interviewed by you, but before agreeing, I wanted a conversation. When you became argumentative, the futility of speaking with you further was apparent. So, I did something useful. I went door-knocking. At no point did you indicate our words were being taped. You did not ask me, as Peter Van Dusen did, if you could record. In fact, I sent you the following email after our encounter, “Re: Our Conservation. It was not on the record, as you did not indicate so. Regards, Garth.” I copied Keith Boag, which he confirmed. BTW, you never offered an on-camera interview with me, as you did with Conservative blogger Janke and CPAC’s Stringer. But, whatever. You win. Now can we talk about issues affecting Canadians? — Garth

Garth Turner gets caught

CPAC is probably my favourite place to turn for election coverage on television. They do a top job and it is virtually impossible to determine a particular bias towards one ideology or another. The cable channel prides itself on being a straight shooter and when Garth Turner’s campaign seemed to pull a dirty trick on them as revealed by Steve Janke, Peter van Dusen made sure to try to set the record straight.

Garth Turner is of course the Conservative-turned-Independent-turned-Green teaser-turned-Liberal that is never more than a few steps away from controversy. Here is the exchange from CPAC.

First, anchor Peter van Dusen interviews CPAC reporter Martin Stringer on being deceived by Turner’s campaign. Then, so that Garth can explain his actions, van Dusen catches the Liberal MP on the phone while he’s doorknocking and an awkward Turner tries to find excuses.

Of course, this isn’t the first time Garth has been caught playing outside of the truth. Flashback to my exposing of Turner fibbing about violating caucus confidentiality and the reason why he’s now trying to push a carbon tax for Stephane Dion.

Not enough room for Garth in parade

It appears that there will only be one jolly bearded man in a suit spreading cheer to the little ones in this year’s Milton Santa Claus Parade. That is, there will only be one that was invited.

My hometown’s local newspaper (full disclosure: years ago I was once a paperboy for the outfit), had the following story about Halton MP Garth Turner and the latest controversy he’s involved in.

Controversial Halton MP Garth Turner is butting heads with the Milton Santa Claus Parade Committee after learning the only politician allowed in the festive event this year is Mayor Gord Krantz

One of the parade organizers, Mike Ricker, had the following to say:

“It’s got to the point where I want to quit the parade. I’ve volunteered 200 or 300 hours this year. To throw our credibility down the drain… He just wants to promote himself rather than the well-being of the whole parade.”

Turner, Halton’s controversial [Liberal] MP, was told that there’s not enough room for him, for PC MPP Ted Chudleigh or for Regional Chair Gary Carr. Garth’s planned crashing of Milton’s Santa Claus parade will ruin the credibility of parade organizers with the other politicians that they’ve turned down, according to Ricker.

Isn’t this supposed to be for the children?

UPDATE: Garth has sent out this press release:

Garth Turner , MP Constituent Help Centre
Parade Day Open House

For immediate release

Milton – The office staff of Hon. Garth Turner, P.C., MP for Halton will be serving up hot apple cider and holiday greetings from their constituency office along the Milton Santa Parade route.

“Many businesses and services along Main Street have an Open House tradition where they invite family and friends to drop by during the parade. My office, thinks this would be a great way to celebrate the launch of the holiday season.” said Turner.

Parade watchers young and old are invited to drop by Garth Turner’s Help Centre at 86 Main Street East from 2:00 to 3:00 pm on Sunday, November 25th to warm up with a cup of cider.

-30-

Questions for Garth Turner

Sunday night, I broke the story that Garth Turner, Liberal MP for Halton was collecting funds from donors into a trust. As specified by Elections Canada, trusts are generally forbidden as one cannot pay out of a trust the many donations that went into a trust. Check the full story here.

Garth’s response was both predictable and unpredictable. Predictably, he alluded to some well-organized conspiracy that was out to get him and immediately claimed victim status. Unpredictably though, he acknowledged his mistake and has taken steps to significantly reconfigure how he will be collecting money in the future. However, there are significant questions that remain.

  • Since this comes on the heels of Liberal questions in the House about election spending, they have much to do to get their own campaign finances in order. This week, we’ve seen apparent campaign finance discrepancies by Bonnie Crombie (more on that soon), Blair Wilson and now Garth Turner. How can they criticize the Conservatives before they sort out their own affairs?
  • Since many cheques to Garth Turner were made out to “Garth Turner Campaign, in trust”, does this mean that he’ll have to return all of that money? All cheques should have been made out to the “Halton Federal Liberal Association”.
  • In April of this year, Garth held a fundraising event with former Liberal leadership candidate Ken Dryden. Garth wrote:

    “Tonight was also an important milestone in my local election campaign. We exceeded our fundraising goal and, in the past three weeks, have raised five times more funds than the local Conservatives did in an entire year. All those bag signs, arterials, stakes, wire frames, ties and pounders in my garage are now paid for in full. We have cash in the bank � enough to get seriously and immediately ballistic the moment the writ is dropped.”

    Ballistic or busted? Were these fundraising efforts for naught? If that campaign materials was purchased by a private account and not the one held by the Federal Liberal Riding Association, Garth cannot use these campaign materials.

  • This represents a huge oversight by Dion’s new czar of fundraising. Does this represent poor judgment on behalf of the Stephane Dion? Will Garth resign this position? What can be said of the fundraising health of the Liberal party if Garth has been directing it?
  • Garth claims that he transferred money from a business account to the Liberal Electoral Association. Last time I checked, this is not allowed. Ironically, Garth criticizes the Conservatives for transferring money between EDAs and the federal party (which is allowed). “In and Out” is it called? Or is this “Out to In”? I’ve lost track.
  • If the Liberal Electoral Association accepted money from this business account (as Garth claims) they would also seem to be in violation. Could this association become de-registered by Elections Canada?
  • Garth is right in that being an independent can be tough. Independents do not have riding associations (EDAs). They can raise money, but they cannot issue tax receipts. Garth writes:

    “When Mr. Harper threw me out of caucus, I sat as an indie for a number of months, during which people sent me money because they took pity on my soul”

    I hope these people don’t expect to get tax receipts. But really, now that Garth is a Liberal, what is the status of this money? He can’t transfer money from this “business account” (in trust) to the Liberal EDA.

  • What are the consequences of this oversight? If this gets investigated, will Garth step aside? Will Dion ask him to step aside?
  • In a past life, wasn’t Garth a finance guru? Wasn’t he Minister of National Revenue? Is this mistake oversight or a sophisticated financial operator pushing the envelope?

What is Garth Turner doing?

As Halton MP Garth Turner stands in the House of Commons and acts offended by the so-called “In and Out” scandal with which the Liberals are trying to tar the Conservatives, he may want to check his own behaviour as his own financing may be in question.

On Garth’s website, where you can donate, the following information appears:

garth-donations.jpg

There are two questionable items in this information, particularly:

  • Cheques are to be made out to “Garth Turner campaign, in trust
  • Garth is promising tax receipts for donations made in this way

From Elections Canada, we learn that:

…as of June 12, 2007, as a result of changes made by s. 44(2) of the Federal Accountability Act to s. 404.2 of the Canada Elections Act, transfers of trust funds to candidates from registered parties and registered associations will be prohibited.

It seems that when an election is called, the federal accountability act prohibits the transfer of money from an electoral district association’s or party’s trust fund to a candidate. If this is so, who holds this money in trust? Is it “Garth Turner campaign” (whatever that entity is) or “Garth Turner”? If the account is to be used to elect Garth Turner, it would be useless for the EDA to hold it because of the new changes governed by the FAA. But yet, outside of an election, all funds must be donated to the EDA.

furthermore (from Elections Canada),

A contribution made from a trust fund is treated as a contribution from the trustee.

When a registered party, registered association, candidate, leadership contestant or nomination contestant receives a contribution paid out of funds held in trust, the trustee is reported as the contributor and the contribution counts towards his or her contribution limit.

Therefore, only a trustee who is an individual may make a contribution from a trust fund.

So, Garth is encouraging people to write cheques to “Garth Turner campaign, in trust”. What does this mean? As is the general understanding, and confirmed by Elections Canada, funds held in trust become the property of the trustee. Contributions from trust funds are treated as contributions from the trustee. So, if a candidate were to able to transfer money out of a trust fund to fund their campaign, the maximum they could withdraw would be the maximum contribution amount allowable by an individual (ie. the trustee) per year, which is $1,100. If Garth collects $50,000 into a trust fund from donors, it becomes the property of that trust’s trustee and subsequently, that trustee can only give $1,100. But, can money even be transferred out of a trust (with many contributors) for the purpose of an election campaign?

Trusts are dubious because of the exchanging of money through an intermediary (the trust/trustee). For example, if I wanted to give a political party $100, I couldn’t give it to my friend to donate that money for me. My friend would have to do that in his name because he is the one handing over the money. Again, the nature of trusts is that the money held in trust becomes the property of the trustee and therefore contributing from that trust becomes a donation from the trustee and not the variety of individuals who gave money to put into that trust.

But, as we read on, this becomes clearer. Elections Canada states that indirect contributions are prohibited,

An individual may not collect funds from others in a trust for the purpose of making contributions to registered parties, their associations, candidates, leadership contestants or nomination contestants. (s. 405.3 Canada Elections Act)

This is because individuals cannot make contributions from funds given to them by others for the purpose of making contributions. This rule cannot be avoided by the individual collecting funds in a trust from which to make contributions.

The Liberals have been going on and on about money transfers from parties to candidates and from candidates to parties. Money transfers of this sort happen all of the time. However, according to section 404.2(2.2) of the Elections Act, this may not occur with respect to trusts.

A transfer of funds, other than trust funds, is permitted and is not a contribution for the purposes of this Act if it is

(a) from a registered party to a candidate endorsed by the party; or

(b) from a registered association to a candidate endorsed by the party with which the association is affiliated.

and according to Elections Canada,

A registered party, registered association, candidate, leadership contestant or nomination contestant may not avoid Canada Elections Act controls by collecting contributions directly in a trust fund.

Any such contributions remain contributions. They must be accepted by the relevant agent, put into the campaign account (*** ie. during a campaign, for a candidate as recognized by a returning officer during a writ period — Stephen ***) (if received by a candidate, leadership or nomination contestant) and reported as contributions.

Outside of a campaign, donations for the purpose of eventually electing somebody must be made to the Electoral District Association.

Why is Garth collecting money from his supporters into a trust?

Who owns (and therefore controls) the money in that trust since an EDA cannot transfer money from a trust to a candidate during a campaign?

How would a candidate expect to get more than $1,100 a year out of such a trust?

If a trust is made up of pooled money from a number of people, how can money be transferred to a campaign since indirect contributions are prohibited?

If during a writ period, only a campaign can issue tax receipts and if outside of a campaign, only an EDA can issue tax receipts, how can “Garth Turner campaign” hope to give tax receipts to donors as his website claims?

How much money has Garth Turner collected in trust?

UPDATE 10/29, 11am: Garth has changed his website. It now asks cheques to be made out to “Halton Liberal Association – Garth Turner Campaign”.

garth-donations-2.jpg

Will Garth have to return all of the cheques made out to the trust fund?

How will any donor to the trust receive a tax receipt?

What if he has already cashed the cheques and the money has already accrued interest?

Why was a trust fund set up in the first place?

Garth the Grit

Garth Turner just switched over to the Liberals.

A few quick notes

  • He’s Dion’s problem now
  • Doesn’t change the balance of power since Garth was independent
  • Garth should have gone Green Party if he believed in action on the environment instead of Dion’s fiction.
  • Another alpha personality who has a fixation on leadership lines up behind an unlikely man who isn’t one but has that title. That dam is going to break soon.
  • No more “will he or won’t he” speculation
  • from Garth’s townhall last year when he polled his constituents on what he should do:
    1. Resign your seat – zero
    2. Negotiate back into caucus – 17
    3. Join the Liberals – zero
    4. Go Green – 17
    5. Stay independent – 31
  • PromisesKept.ca – Page not found (and never launched past the “coming soon” phase)
  • Garth is releasing a new book in a few weeks. Sure to be a hot seller!

UPDATE: Blogging Tory RepoCreepo had advanced intel of Garth’s flirtation with the Halton Liberal riding association.