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A gap in transparency has allowed millions of dollars in taxpayer-funded contracts to be awarded to friends and allies of political operatives in Ontario without the checks, balances and disclosures that accompany a public tendering process.
A Globe and Mail review has found a pattern of payments, about which little information is available, involving a tight circle of advisers that surrounded former premier Dalton McGuinty during his time in office. Among them were payments of more than $50,000 in the same year to two different companies in the name of the former premier's campaign director; money repeatedly directed to a high-profile strategist through his then-wife's business; and more than $300,000 paid to a former chief of staff shortly after he was pushed out of his job.
While there is no indication that any of the transactions were illegitimate, the lack of transparency makes it difficult to determine what services were provided at taxpayers' expense.
During The Globe's review, sources who previously worked as senior political staff said they were offered "top-ups" to their salaries through contracts that would never have to be made public.
The Globe review follows a criminal probe that helped bring to light the fact that nearly $160,000 in public funds were paid through a numbered company to Peter Faist, the boyfriend of a deputy chief of staff to Mr. McGuinty, for IT services that police believe led to the destruction of government records. (Mr. Faist was not the subject of the investigation, and police have not accused him of any wrongdoing.) Multiple sources told The Globe and Mail the contract was not an isolated incident.
Such arrangements have been hidden from view because they have been paid out of legislative funds given to each party for spending on the needs of their caucuses, which are not subject to freedom-of-information rules or other transparency measures that apply to government expenditures. Nor are they subject to conflict-of-interest rules.
Through a formula unique to Ontario, "caucus appropriations" are distributed to government and opposition parties proportionate to how many seats in the legislature they hold, and are intended for research, communication and administrative services. But there are virtually no checks on how that money, which amounts to about $5.5-million annually, is spent.
A similar situation exists with the "global budgets" given to MPPs primarily for their office and staffing needs, which vary slightly depending on the size of their ridings, but tend to be about $300,000 each. When members do not need to use their entire budgets, they are able to pool them together with their colleagues – in some cases effectively adding them to the funds for caucus. That adds to the money entrusted to a select few officials in the premier's or leader's office, with minimal accountability.
When contracts awarded with that money are worth less than $50,000, as most are, they are all but impossible to track. It is with contracts below that threshold, sources say, that salary top-ups were offered.
However, payments to an individual or company that total more than $50,000 in any given year are listed on Ontario's public accounts – albeit with no information about what they are for.
Public accounts for 2013-14, the first year in which Kathleen Wynne was in the premier's office, have not yet been released. However, by reviewing the public accounts from 2003-04 through 2012-13, and speaking with sources in or around government during that time, The Globe and Mail has gained insight into how the funds were spent during Mr. McGuinty's time in office.
In 2011-12, for example, $55,935 was paid to Artisan Research, a company owned by Liberal campaign director Don Guy. The same year, the exact same amount was also paid to Cardinal Creative Services, a company name registered to a numbered entity directed by Mr. Guy.
Between 2004-05 and 2008-09, contracts adding up to $383,249 were paid to SEAK Communications – a company registered to Suzanne Amos, who was then the wife of Liberal campaign strategist Warren Kinsella. In 2009-10, around the time the marriage of Mr. Kinsella and Ms. Amos ended, payments that cumulatively totalled $262,355 started being made to West Bay Communications – a company registered to Mr. Kinsella, but not the one through which he usually does business.
In 2003-04, $320,484 was paid to the Excelsior Group, a company founded that year by Philip Dewan after he left as Mr. McGuinty’s chief of staff – a departure that multiple sources have said was not voluntary.
Others whose companies received payments included veteran Liberal adviser Gordon Ashworth and former premier’s office staffer Charlie Angelakos.
$50,850 was paid to Willistead Communications Services in 2010-11. That company, which does not have a website and has no record of receiving other government work, is registered to Charlie Angelakos, a former director of operations for Mr. McGuinty who since 2005 has been an executive at Labatt Breweries.
A cumulative total of $305,405 was paid between 2007-08 and 2010-11 to Devon Group, a government relations and PR firm. Gordon Ashworth, a former Liberal national campaign chair who played an advisory role on provincial campaigns, is Devon Group’s chairman. Mr. Ashworth said the payments were for “a number of activities” that included “keeping abreast of issues across the province,” providing advice to caucus members and staff, and training.
$100,000 was paid to Christine McMillan, the Ontario Liberal Party’s vice-president for communications and a former staffer in the Premier’s office, in 2009-10. Ms. McMillan, who worked in the premier’s office until 2007, told The Globe and Mail the contract was for help with communications and training.
Payments cumulatively totalling more than $2.1-million, including $447,480 in 2012-13 alone, were made to Arrow Communications. That company is owned by Marcel Wieder, who plays a leading role with Working Families Coalition, the union group that has run anti-Conservative advertising campaigns during recent Ontario elections. Sources indicated that Arrow printed flyers and other materials for Liberal caucus members. Mr.Wieder told The Globe and Mail his company does not comment on the work it does for its clients.
$368,000 was paid to Perspective Canada Ltd., for which Pollara vice-chair Angela Marzolini is listed as a director, in 2008-09, a year in which Pollara received $167,500.
There is nothing to suggest these or other recipients of contracts did anything wrong, and the services delivered in return are less ambiguous in some cases than others. For instance, Pollara Strategic Opinion and Market Research Group – a company in which Mr. Guy played senior roles before and after he was in government, and which received $3.4-million in legislative funds – served as the Liberals’ pollster under Mr. McGuinty, and is said to have conducted riding-specific research for MPPs.
Because of the lack of transparency, however, there is little way of identifying what each payment was for, and whether it was delivered. It is also difficult to determine if caucus spending was directed toward election expenses, which would violate campaign-finance rules.
The fact that opposition parties have done little to raise questions about how the Liberals spend their legislative funds may have to do with their own use of them. While fewer entries in the public accounts can be traced to New Democrats and Conservatives, which reflects the oppositions’ smaller caucus budgets, the same lack of transparency applies – because of the $50,000 threshold, it is unclear how many smaller contracts they awarded.
All parties, as well, may have benefited from the fact that public accounts lumps all caucus contracts over $50,000 together, rather than specifying which party paid for them. That leaves some payments - such as $50,850 in 2011-12 to “Strategeme,” a company for which no ownership is available and which sources in all three parties could not identify - completely cloaked in mystery.
Jim McCarter – Ontario’s Auditor-General from 2003 until 2013 – told The Globe he was unaware of any issues with misuse of caucus budgets during that period.
A senior official in Ms. Wynne’s office declined to speculate on how legislative funds were spent under Mr. McGuinty, but suggested that a closer eye is now being kept on the Liberal Caucus Service Bureau.
Through Mr. McGuinty’s time in office, sources say, deputy chief of staff for operations Dave Gene had strong control over how many of the caucus funds were spent. Laura Miller, another deputy chief of staff (and Mr. Faist’s partner), also had a strong hand toward the end of Mr. McGuinty’s tenure. Ms. Miller did not have signing authority, according to a source close her. But with the exception of Mr. Guy, who ran the premier’s office during Mr. McGuinty’s first term, other chiefs-of-staff were relatively hands-off in how the money was spent.
Mr. Gene did not respond to requests for comment. Ms. Miller replied through her lawyer, Brian Shiller, that “caucus budgets are spent by all three parties in a way that is open, transparent and audited.”
In an e-mail, Mr. Guy stressed that while in government, he was not engaged in awarding contracts to companies with which he had a prior relationship. He also said that while at Pollara, he was not personally the contractor for Liberal caucus contracts.
Ontario Information and Privacy Commissioner Ann Cavoukian said she does not have jurisdiction over such spending, but expressed concern that if a “commitment to transparency is absent, then accountability cannot be assured, and the public’s trust may completely erode.” Ms. Cavoukian said she would support bringing such activities under the Freedom of Information and Protection of Privacy Act.
Research from Stephanie Chambers Graphics by Tonia Cowan