Corporate funds fuel election campaigns by Janet McFarland

by Janet McFarland

Preston Manning stood in front of an audience of Canada's business leaders at the posh Empire Club last year and minced no words.

The former Reform Party leader asked the Toronto audience why their companies gave such big political donations to other parties, when his party had such a pro-business message.

"It seems contradictory to ask for tax relief and then give money to a party that doesn't support it," he complained to the luncheon crowd.

It was a criticism that appears to be hitting home.

The Liberal Party still gets the largest proportion of corporate cash. But the amounts donated to the Canadian Alliance – Reform's successor – have been on a steady climb through the past six years to a blockbuster year in 2000. Observers say the party is attracting more corporate donations by becoming more sophisticated and aggressive in the hunt for support.

Barrick Gold Corp. spokesman Vincent Borg said the Alliance has become more organized in its fundraising. Barrick gave the Alliance $25,000 last year, compared with $31,000 for the Conservatives and $34,000 for the Liberals.

"We've given to Reform before, and we're giving increasing amounts as they've gotten increasingly effective at fundraising, frankly," Mr. Borg said. "They didn't come out and ask for it [previously], really."

Corporate donations are a critical source of funds for most of the major national parties.

(The New Democratic Party solicits few donations from business, but receives large donations from most of Canada's major unions. The Bloc Québécois does not accept corporate money.)

The federal Liberal Party got about two-thirds of its total donations from business last year, or $8.5-million out of total donations of $13-million. And despite its waning popularity, the Conservative Party received $2.2-million from business – about half its total donations.

The Reform Party had far more individual than corporate donations last year, earning $1.5-million from business of a total $4.8-million. But the party's total corporate giving has climbed steadily from just $570,000 in 1994.

And although the Canadian Alliance will not have to reveal 2000 funding levels until June 30 next year, it appears to be having a phenomenal year for fundraising. The leadership campaign in the spring generated increased interest from Bay Street, and the party successfully held a jam-packed $25,000-a-table dinner last month that raised about $1.7-million.

"The Alliance, at one single fundraiser a couple of weeks ago, raised as much money as it raised all of last year from corporations," said Aaron Freeman, a board member of citizen's group Democracy Watch who is writing a book about political contributions by business.

Bombardier Inc. began donating more to the Reform Party last year, said spokesman Michel Lord. It gave Reform almost $16,000 last year, up from $4,000 in 1998, but still less than the $63,000 it donated to the Liberals in 1999 and $30,000 to the Conservatives. Mr. Lord said the company's policy is to donate more to the party in power.

"It [Reform] was starting to be a factor, and we've seen with the creation of the Alliance that it's now a bigger factor," Mr. Lord said.

Many companies with formal donation policies say they are now donating to the Alliance at levels in line with their corporate guidelines.

"There was a period when the Alliance felt that Corporate Canada was not responding to their position as the Official Opposition," said Scott Mullin, vice-president of government relations for Toronto-Dominion Bank. "We certainly are now in line, and I think most companies have responded to that."

TD Bank and its brokerage subsidiary, for example, gave $83,000 to the federal Liberal Party last year, and about $60,000 to each of the Conservative and Reform parties. In 1998, by comparison, the bank gave just $24,000 to Reform.

Royal Bank of Canada continued to support the Conservative party after its devastating rout in 1992, and donated less to the Reform Party between 1993 and 1997, said Royal Bank senior vice-president Bryan Davies, who oversees the bank's political donation policy. But since the 1997 election, Royal Bank has increased its donations to reflect Reform's Official Opposition status.

"There was an anomaly created in the 1993 to 1997 period, in that we essentially made a policy decision that until the next election we would give treatment to the Progressive Conservative Party as though it was still in an Official Opposition capacity," Mr. Davies said.

"Quite honestly, that party was in dire financial straits then, and if everyone turned the tap off to them all at one time there was an obvious potential that the party would have totally disappeared at the time."

Last year, however, Royal Bank and brokerage subsidiary RBC Dominion Securities Inc. gave $116,000 to the Liberals and almost as much – $105,000 – to the Reform Party. The Conservatives got $88,000 – and that level will drop in future to half the amount of the party in power, Mr. Davies said.

The Big Five banks and their brokerage subsidiaries are the biggest donors to political parties. They gave Reform a total of $345,000 last year, compared with $321,511 for the Conservatives and $511,876 for the Liberals.

The banks say they donate to all national parties that request funds. Some, such as Bank of Montreal and Canadian Imperial Bank of Commerce, have policies to give roughly the same amount to each party. Others, such as Royal Bank, give equally to the party in power and the Official Opposition, and half the amount to other national parties. They typically double the contributions in election years, and say they will do so in 2000.

Across party lines, other big donors last year were telecommunications firms such as BCE Inc., broadcasters including CanWest Global Communications Corp., consulting firms such as KPMG, law firms like Bennett Jones of Toronto, and energy companies such as Jolliet Energy Resources Inc. and Imperial Oil Ltd.

Mr. Freeman of Democracy Watch says many of the biggest political donors come from industries that "live and die" by government regulations, such as banks and broadcasters. Democracy Watch advocates banning corporate and union donations to political parties because it argues that wealthy special interests should not have greater sway than ordinary voters.

"Intuitively in politics like everything else, he who pays the piper calls the tune," Mr. Freeman says.

Most companies, however, argue their donations do not support any political agenda.

"The philosophy behind giving is supporting the political process," said Bank of Montreal spokesman Joe Barbera. "You don't give in order to receive a benefit."

Although many companies say their donations are given for benign reasons, political donations are still a touchy subject for some.

BCE CEO Jean Monty refused to discuss his company's donation policy, saying only: "The basic statement is we support the democratic process." The company insisted no other officials were available for further comment, but provided a 1998 statement saying the donation policy stems from "sizable obligations to our Canadian community."

BCE and its subsidiaries donated $51,434 to the Liberals last year, $36,469 to the Conservatives and $10,000 to Reform.

A citizens' lobby group, Friends of Canadian Broadcasting, has called on political parties to stop taking donations from broadcasting companies like BCE, Rogers Communications Inc. or CanWest.

Ian Morrison, a spokesman for the group, argues that among all the federally regulated industries, broadcasters are the most influenced by federal decision making because of the licences they need, and should therefore remain politically neutral.

But Mr. Freeman concedes it will be difficult to convince politicians to change any funding rules or close any loopholes that benefit their parties and are widely embraced by the business community.

"Every MP – even opposition MPs – got to Parliament Hill on the current system," he said.

The largest business donors in 1999

Liberals

 1 Bank of Nova Scotia and Scotia McLeod                    $149,652
 2 Royal Bank and RBC Dominion Securities                   $115,598
 3 Bank of Montreal and Nesbitt Burns                        $99,044
 4 CanWest Global Communications Corp                        $87,173
 5 Toronto Dominion Bank and TD Securities                   $83,086
 6 CIBC and CIBC Wood Gundy                                  $64,496
 7 Bombardier Inc                                            $63,481
 8 KPMG                                                      $60,910
 9 Bennett Jones                                             $53,243
10 Canadian Occidental Petroleum Ltd. (Now Nexen Inc.)       $52,678
11 BCE Inc., Bell Canada and Bell ExpressVu                  $51,434
12 SNC Lavalin Engineers & Constructors Inc                  $48,437
13 Nortel Networks and Northern Telecom                      $47,816
14 Socodec Inc                                               $46,039
15 Imasco Ltd                                                $45,598
16 Rogers Group of Companies                                 $45,364

Alliance

 1 Royal Bank and RBC Dominion Securities                   $104,659
 2 Bank of Nova Scotia and Scotia McLeod                     $78,842
 3 Toronto Dominion Bank and TD Securities                   $59,504
 4 Bank of Montreal and Nesbitt Burns                        $58,280
 5 CIBC and CIBC Wood Gundy                                  $43,586
 6 Jolliet Energy Resources Inc                              $30,000
 7 Barrick Gold Corp                                         $25,000
 8 Imperial Oil Ltd                                          $25,000
 9 National Bank of Canada                                   $25,000
10 Nortel Networks Corp                                      $23,452
11 Telus Corp                                                $20,158
12 Sun Life Assurance Co. of Canada                          $20,000
13 TransCanada PipeLines Ltd                                 $19,608
14 Rothmans, Benson & Hedges Inc                             $19,180
15 Magna International Inc                                   $18,360
16 Molson Cos. Ltd                                           $18,336

Progressive Conservatives

 1 Royal Bank and RBC Dominion Securities                    $87,550
 2 Bank of Nova Scotia and Scotia McLeod                     $67,176
 3 Toronto Dominion Bank and TD Securities                   $58,251
 4 Bank of Montreal and Nesbitt Burns                        $55,932
 5 Imasco Ltd                                                $44,368
 6 CIBC and CIBC Wood Gundy                                  $43,168
 7 Power Corp. of Canada                                     $36,570
 8 BCE Inc. and Bell Canada                                  $36,469
 9 Dofasco Inc                                               $36,146
10 Rogers Group of Companies                                 $32,766
11 Newcourt Financial Ltd                                    $32,330
12 Barrick Gold Corp                                         $31,096
13 Bombardier Inc                                            $30,000
14 National Bank and Lévésque Beaubien Geoffrion             $29,970
15 Glenrose Investments Ltd                                  $25,000
16 Imperial Oil Ltd                                          $25,000
17 Jolliet Energy Resources Inc                              $25,000
18 Westcoast Energy Inc                                      $25,000

NDP*

 1 Bank of Montreal and Nesbitt Burns                        $25,000
 2 Remcon Ltd                                                $15,000
 3 March Canada Ltd                                          $10,784
 4 KPMG                                                      $10,000
 5 Luscar Ltd                                                 $6,444
 6 MacPherson Lslie & Tyerman                                 $6,568
 7 Cargill Ltd                                                $5,000
 8 Now Communications Group Inc                               $5,000
 9 UMA Engineering Ltd                                        $4,784
10 The Ellard Croft Design Group                              $4,284
11 Agra Inc                                                   $3,784
12 Anderson/Fast & Associates                                 $3,784
13 Mitchell's Gourmet                                         $3,784
14 Canadian Pacific Railway Co                                $3,500
15 Extendicare Inc                                            $3,500
16 Osler Hoskin & Harcourt                                    $3,500

*The NDP solicits few corporate donations. Its largest donors are all unions.

© Globe Information Services