Procedure and House Affairs Committee on May 28th, 2018

[Stéphane Perrault]

I'll start with the second point and come back to the first one.

I have made a recommendation. I do believe it would be preferable to have a clear anti-avoidance clause to deal with situations where an entity deliberately reaches out...or is offered money from a foreign source so that they can cover their regular expenses and then liberate some funds for the third party regulated activities. If that's the intent, if that's getting around the rules, then there should be a clear clause to that effect.

That would be an improvement.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Let me just ask you, any time there is foreign funding that comes through one of these organizations, could there not be at least a suspicion of that occurring? In fact, if they're receiving money to use for something else, whether it's one of those wink-wink situations—hey, use this for something else so you can use that for the election—or whether it isn't, it still enables that to happen. Have you thought about whether it would be advisable to suggest just not allowing foreign funding, period? That would avoid having to try to determine if it was someone's intent to do that.

[Stéphane Perrault]

I just want to clarify one point before I answer that question.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Certainly.

[Stéphane Perrault]

You talked about an audit. An audit is based on the information that we receive, and unless on the face of it something is screaming “foreign money”, it will not be seen by an auditor. What we're really talking about is an investigation by the commissioner in those cases. It's not something that would come out in an audit.

I have not made any suggestions in terms of altering the bill to deal with contributions. This is something you may want to consider, being sensitive that there are charter issues. If the concern is foreign money, it perhaps may not be necessary to have a full contribution regime. You may consider, for example, saying that if an entity receives a certain amount of foreign contributions within a certain period of time—and it would be for Parliament to decide what the amount of time would be—that entity should not use its general revenue. It could still form a third party. It would have to fundraise and pour that money into its bank account.

There is a range of options there, and that is an area the committee may want to consider without necessarily going to a full set of contribution limits.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Bottom line, what you're saying is that there are probably some options we could look at that would make this a little bit easier. I think it would even ease the burden on Elections Canada in terms of trying to sort these kinds of situations out, because this creates a situation where it does become quite difficult.

Would you agree with that characterization?

[Stéphane Perrault]

As I said, on an audit, unless there is a foreign address on the contribution, it's difficult to say on the face of it that it comes from a foreign source.

[Blake Richards, Conservative, Banff—Airdrie, AB]

At the end of the day what happens is that this kind of activity might occur, and maybe after the fact, we might be able to do an investigation and maybe figure out that it happened—or maybe not. Even if we were able to figure out that it happened, it would be too late because it would already have happened and would have affected the election. Is that accurate?

[Stéphane Perrault]

Yes. It's true of many issues around the Canada Elections Act, but I don't disagree with you.

[The Chair, Liberal, Larry Bagnell]

Thank you, Mr. Richards.

Now we'll move on to Mr. Cullen.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I like hypotheticals in order to understand what the impact would be. Say we're in 2014 and there's a right-wing think tank that's trying to affect Canadian environmental policy. Say they receive $500,000 from the Koch brothers in the States with a clear agenda and they then spend that money in the 2015 election in Canada trying to influence voters' thinking about environmental policies or the need to have fewer of them.

Would that be something that would fall under the purview of this act or would it not be caught by that? That's direct foreign influence, obviously, by the two richest men in the world.

[Stéphane Perrault]

There are a number of elements. If you go back in time, you're under the current rules, not the bill.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Yes, I know, but if we applied the rules that are being proposed here, would that be caught?

[Stéphane Perrault]

I'll show you how the rules improve the catching of that type of transaction.

Currently, a third party cannot seek funding from a foreign source for the purpose of third party regulated activities. Under the bill, they cannot use foreign funds for the purpose of their activities. If that entity is largely funded by a foreign source, as in your example, it would be very difficult for that third party to justify it.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I don't know what the Fraser Institute's annual budget is, but it's not $500,000. It's more than that. Then suddenly we're seeing these things: let's deregulate the environmental conditions on pipelines, an ad campaign directing people to vote a certain way. You at Elections Canada ask, “Hmm, how is the Fraser Institute operating right now?” They say, “We have a $2.5 million or $3 million budget; we're just using funds raised in Canada.” Would you not require the CRA or someone to help you understand actually how the organization works?

[Stéphane Perrault]

No. That would be doing an investigation. We would do an audit. We'd look at their contributions and they would say this is general revenue.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

That's right.

[Stéphane Perrault]

If there was suspicion that this is really money directed by a foreign entity, the commissioner could investigate that.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Yes, but to prove what?

[Stéphane Perrault]

If we at least have an anti-avoidance rule to show that in fact there was some form of collusion—

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

As the bill is right now, we don't have an anti-avoidance rule.

[Stéphane Perrault]

No, we don't. I think it should be added to the bill.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

That feels like a loophole. In 2019, or 2018 leading into 2019, the Fraser Institute could also take $500,000 from the Koch brothers on a very specific set of policies they're looking to push into the election, into the minds of voters. You launch your investigation, but they say, “This less than one fifth of our funding; we didn't use any of that $500,000 on any of the brochures or the ads that we ran.”

[Stéphane Perrault]

Correct.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Are they guilty of anything? Can they do that?