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Bulletin | Federal Election 2019

Take Note: Heightened Scrutiny and Enforcement During Election Season May Catch Organizations and Individuals Off-Guard

Fasken
Reading Time 5 minute read
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With Canada's 2019 federal election campaign now underway, individuals and corporations that are involved in the election or in the business of engaging public officials must be aware of the risk that comes with pursuing these opportunities. The following is an overview of the serious compliance and enforcement issues that arise during election season

Non-political organizations must be more vigilant than ever when advertising

This is Canada's first general election in which third parties (roughly equivalent to independent expenditure committees under U.S. federal law) are subject to regulation during both the pre-election and election campaign periods if they engage in advertising (including, during the election period, issue advertising) or they engage in non-advertising activity that supports or opposes a party or candidate. While these statutory obligations are broader than before, they are not new, and many of these third parties are no strangers to political involvement – unions, for example, have a long history of political advocacy in Canada.

Many other organizations – including trade associations, businesses and not-for-profit entities – are unaware that they, too, must register with Elections Canada if they engage in “issue advertising” during the election period. They are also subject to strict spending limits, both nationally and at the riding level.

An organization may be engaging in issue advertising without even knowing it. All that is required is the paid transmission of a message to the public that takes a position on a federal policy or issue. This could include a topic as general as taxation, the environment, poverty, the military or procurement. To emphasize a crucial point: organizations do not need to endorse any candidate or party by name to be ensnared by this law.

For his part, the Chief Electoral Officer acknowledges that the third party regime is, in his words, “complex.” Any business or organization that has questions or is unsure of its obligations should seek advice from a political law expert. Proactive regulatory compliance is always less costly and time consuming than responding to enforcement activity after the fact.

Avoid illegal contributions – especially non-monetary ones

Many organizations are unaware of the risks associated with illegal political contributions. Making an unlawful contribution can result in a heavy fine, and even prison time.

Only individuals (Canadian citizens and permanent residents in Canada) can make federal political contributions. Corporations are prohibited from doing so.

The prohibition obviously includes direct, monetary contributions to candidates and political parties. Some companies and organizations do not realize that their non-monetary contributions are unlawful as well. The Canada Elections Act defines a non-monetary contribution as:

“the commercial value of a service other than volunteer labour or of property, or the use of property or money, to the extent that it is provided without charge or at less than commercial value.”

The list of possible non-monetary contributions includes but it not limited to:

  • Use of company vehicles to support a party or candidate
  • Use of employer IT equipment (e.g., phones, computers) to support a party or candidate
  • Phone bills and data charges related to work for a political party or campaign, when paid or reimbursed by the business
  • Paid labour (that is, working for a party or candidate on the employer’s paid time)
  •  Making phone calls or sending emails on behalf of a party or candidate while on one’s employer’s paid time
  • Food, refreshments or catering, purchased by a business and benefitting a political party or candidate
  • Free use of a corporation’s office or property for a party’s or candidate’s event, meeting, reception, or other activity (e.g., phone-banking)
  •  And many other examples

The making or acceptance of a non-monetary contribution, other than one provided by an individual using the individual’s own resources, is unlawful.

Expense reimbursement is another area of risk. If the employer unknowingly processes an employee expense claim related to the costs of partisan (that is, party or candidate) activity then an unlawful contribution results.

Employers should take active steps to ensure that employees getting involved in campaigns do so on their own time, without using company assets, resources or time. Corporations should adopt strong election-period compliance policies, actively communicate them to employees, monitor, and enforce.

Lobbying after campaigning: Beware a new prohibition

Companies and associations, and their employees, should also consider the restriction on lobbying of public office holders on whose behalf one has engaged in political activity. The Lobbyists’ Code of Conduct prohibits an individual from lobbying a public office holder if the individual’s past “political activities on behalf of a person … could reasonably be seen to create a sense of obligation.”1

If that sense of obligation is reasonably perceived to exist then for an entire election cycle (four years) the individual is prohibited from lobbying that public office holder.

Employees must be cautious and use judgment in determining whether their political activities will give rise to a perception of obligation. Certain activities are likely to attract greater risk than others; sitting on an Electoral District Association board is more likely to establish a perception of obligation than occasional door knocking, for example. The legal test that the Commissioner of Lobbying will employ is objective and defies broad categorization: it asks whether a reasonable person would think an obligation exists.

In some cases, a reasonable perception obligation might arise even though the lobbyist had minimal contact with the public office holder.

Where engagement with public office holders is a critical employee function, it is prudent for the employee to avoid partisan campaign activity until the implications are known. A four-year lobbying restriction could have a significant impact on both the employee and the employer. Advice from a legal expert in lobbying law is best sought before campaign activity is undertaken.

The path of least resistance (and risk)

In the case of each restriction described above, the consequences of a finding of non-compliance are significant and would greatly outweigh the modest costs of prudent compliance during this election season.

Canada’s federal lobbying and election regulators have strong enforcement tools at their disposal. Penalties for offences can be severe. Other grave consequences include reputational harm and potential debarment from Government of Canada contracts.

Early engagement of experts in political law will help to mitigate these serious risks.

 

[1]   Canada, Commissioner of Lobbying, Lobbyists’ Code of Conduct, Rule 9.

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