French answers compliance audit questions
At the Midhurst Community Hall on Sunday, Springwater candidates Jim Sales (deputy mayor), Jack Hanna (Ward 5) and Bill French (mayor) met with community residents. -AWARE Simcoe photo
By Kate Harries AWARE News Network
Responding to questions at an election gathering this week, Mayor Bill French says he’s mystified by the legal costs run up by the Oro-Medonte Springwater compliance audit committee in its investigation of his 2014 election expenses.
As of July 31 2018, the committee’s lawyer has been paid $128,502 according to figures obtained from the township through Freedom of Information legislation. Total cost of the compliance audit stood at $265,332.
The committee rejected use of the township’s lawyer and chose instead to retain Jody Johnson of the Toronto firm Aird & Berlis, who attended all its meetings and represented it at two Osgoode Hall hearings. One was an action that complainant Dan McLean launched against Grant Thornton, the firm whose audit the committee refused to look at, the second a judicial review sought by French
Another $78, 812 was paid to the township’s lawyer who had to defend Grant Thornton on behalf of the township. The township recovered $15,000 in legal costs from McLean in that matter.
“I know what my legal expenses were,” French told residents at the Midhurst Community Hall. “I’ll round them off at $50,000.”
Midhurst resident Mike Bell was clearly frustrated. “You have been targeted,” he told French. “This is an audit committee that is practically untouchable.”
French agreed. He said when he was elected he had expected to be sued because of his stance on the Midhurst Secondary Plan. “But except for a few threatening letters, that was the end of it.”
French said he did not contest the first audit by Grant Thornton, appointed by the compliance audit committee. He had expected the committee to either accept the audit and take no action or to seek legal action – the choices under legislation in effect in 2015. He challenged the decision to seek a second audit on the advice of his lawyer, that the committee exceeded its authority. The township’s lawyer shared that opinion, he said, adding that he had been prepared to argue his judicial review case in early 2016 – any delays beyond that arose from legal actions by McLean and the committee.
Bell asked why there appeared to have been no curb on the compliance audit committee’s actions. “The residents should be able to step forward and say you either stop this now or somebody has to be accountable,” he said. French said the matter got “out of control,” but a new system has been put in place for the current election, with a seven-member compliance audit committee to be set up by Simcoe County. Eleven municipalities have signed up to participate.
The existing compliance audit committee was jointly appointed in July 2014 by Oro-Medonte and Springwater councils. Its members are Robert Barlow, an Orillia lawyer and management consultants George Wodoslawsky and Colin McLarty.
Other committee expenses comprise audit fees (a total of $52,562 – $12,860 for the first audit, $39,702 for the second), and remuneration and mileage for committee members ($5,456).
French said he has a court date next month. “It’s in the court’s hands now, not the committee’s hands. A judge will need to determine whether I am guilty of an offence or not.”
He said that when he engaged his lawyer in 2015, he told her, “I don’t know how they’re going to do it, but this is going to drag in to the next election. And it did.” The compliance audit saga has been election fodder – but behind the scenes. Sunday was the first time it was addressed at a public meeting.
Rival mayoral candidate Don Allen has highlighted the issue on his blog. He states that a prosecutor “has found 10 counts of election spending mis-reporting. This is scheduled to be heard in a Court hearing on November 2, 2018 to determine the penalty.”
This is misleading – giving the impression that French has been found guilty on 10 counts and the penalty is all that remains. Only a court can determine whether there have been contraventions of the Municipal Elections Act.
In a telephone interview Allen rejected the idea that his blog has skipped a step and made it appear that French has been found guilty. It’s a matter of interpretation, he said. French noted that neither of two audits ordered by the committee found that he tried to conceal expenses or donations and he remained well under his spending limit. The apparent infractions that were identified by the audits were book-keeping errors, he noted.
(They certainly weren’t the serious violations costing large sums of money first alleged by former deputy mayor Mclean, involving under-reporting of rent, election materials, website construction costs, and failure to declare re-use of signs – claims that were investigated and found not to have occurred.)
French had declared expenditures that came in at $5,000 under his $20,000-odd limit, and the first audit identified $1,175 in apparent non-compliances, with the second, forensic, audit finding $80 less in unreported expenses.
According to forensic auditor Ken Froese, three categories of contraventions that are of concern under the Municipal Elections Act are:
– whether a candidate had an unfair advantage, for instance by going over his spending limit;
– whether there has been transparency, for instance were contributions misapplied to different contributors to conceal influence from one party;
– whether a candidate acted with integrity.
The non-compliances in French’s case were not identified as falling into these categories.
Still, before sending the matter to an independent prosecutor in May, Chair Barlow stated that he assumed them to be contraventions of the act, appearing like Allen, to have an imperfect understanding of the act and the committee’s role.
“They are apparent contraventions of the act,” Froese corrected him.
A lawyer who’s good at his job can argue any position persuasively, and McLean’s lawyer Jack Siegel is recognized as a leading specialist in election law. (McLean has declined to say who assisted him in paying Siegel’s legal fees.)
In 2016, Siegel convinced the compliance audit committee of the enormity of the apparent contraventions and they ordered an audit. When the audit came back, Siegel decided there had been errors of process and persuaded the committee these were significant, lambasting the accountant who carried out the audit (a judge subsequently found her not to have been at fault). That’s when the second audit was ordered.
In the same time frame as his denunciation of the Springwater mayor, Siegel was defending Sudbury Mayor Brian Bigger, a professional accountant and the city’s former auditor general, against similar complaints that included an unreported campaign event that raised over $1,200.
Siegel said in that case that he had dealt with many election finances filings and had yet to see one without mistakes. Bigger was well under his spending limit and it would not be in the public interest “to spend thousands of taxpayer dollars on a compliance audit,” he said. The Sudbury committee decided not to pursue the matter.
Similarly, an auditor concluded that Toronto mayor Rob Ford’s 2010 campaign contained numerous apparent contraventions of the Municipal Elections Act and actually exceed his $1.3 million spending limit by over $40,000.
But his lawyer, Tom Barlow, told a compliance audit committee that these were insignificant and unintentional contraventions. “There is no such thing as perfection in life,” Barlow said. “There certainly is no such thing as perfection in election law. And there is also, generally speaking, no such thing as perfection in accounting.”
In this respect, Springwater’s mayor, who has paid his $50,000 in legal fees entirely out of his own pocket, has been held to a far higher standard than the one applied in Sudbury or Toronto.