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Liberal leader Stéphane Dion reads his speech in reaction to the prime ministers televised speech to the nation from his office on Parliament Hill in Ottawa Wednesday Dec. 3, 2008.Adrian Wyld/The Canadian Press

The head of Elections Canada is urging the new Minister for Democratic Reform to give him the power to bring down the hammer on candidates, including those for party leadership, who fail to repay campaign loans.

Seven years after the 2006 campaign to lead the federal Liberals, four of the candidates have not fully repaid the money they borrowed to finance their bids. Surprisingly, they include Stéphane Dion, the man who won that race and who was earlier declared to have cleared all his debts.

Marc Mayrand, the Chief Electoral Officer, has said repeatedly that, even though the law that requires candidates to repay their debts within 18 months of their election includes penalties of $1,000 and up to three months in jail, it is essentially "toothless." In addition, he has said, the political loans regime is overly complex and difficult to understand.

Mr. Mayrand turned the problem of the unpaid Liberal leadership debts over to Yves Côté, the Commissioner of Canada Elections, who reported back on Tuesday saying the election law, as currently drafted, "lacks sufficient clarity to support enforcement action in the criminal courts with respect to loans or claims that remain unpaid following the expiry of an extension."

As a result, said Mr. Côté, "no enforcement action can be taken against the leadership contestants in relation to their unpaid debts."

With that report in hand, Mr. Mayrand issued a statement calling on Pierre Poilievre, the new Minister for Democratic Reform, to do what his predecessor could not: Reform the election law.

"It is clear that the leadership contestants who continue to have unpaid debts from the Liberal Party of Canada's 2006 leadership contest are not in compliance with the Canada Elections Act," Mr. Mayrand said in the statement. "However, the Act, as currently drafted, does not provide a means by which these contestants can be sanctioned or compelled to repay their outstanding debts."

Tim Uppal, the previous minister for democratic reform, attempted last year to revise the law but Mr. Mayrand said his proposals would have created even more confusion in an already complicated system, while leaving loopholes for candidates. Faced with flawed legislation, the government has left the matter on the back burner.

Meanwhile, the 2006 Liberal leadership loans go unpaid.

Mr. Dion, who apparently owes $7,500, expressed some surprise Tuesday that he was on the list of those with debts from that race.

"For a year I have lived with the idea that my debt related to the Liberal leadership race of 2006 had been reimbursed and that we even had a surplus," he said in a statement. "Elections Canada tells me that might not be the case. As always, we will work with Elections Canada."

The other candidates with outstanding debts include Joe Volpe who owes $97,800, Hedy Fry who owes $69,000 and Ken Dryden who owes $225,000.

But it is not just leadership candidates who have failed to pay back campaign debts. Hundreds of past candidates, including many of those who now hold seats in Parliament, collectively owe millions of dollars.

In the case of the 2006 Liberal leadership contestants, they are caught in a bind created by the Conservative government when it changed the law partway into 2006 campaign to prevent any donor from giving more than $1,100, in total, to candidates in a single leadership race. That means that a donor who has already given $1,100 to a candidate to help with expenses from the 2006 race is not permitted to make any further donations related to that campaign.

With the pool of regular Liberal donors already tapped, it has not been easy for the candidates to raise funds to pay for a contest they lost seven years ago.

The legislation introduced by Mr. Uppal would have restored donors' ability to contribute a maximum annual amount to contestants in the same leadership campaign year after year.