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Chief electoral officer Marc Mayrand waits to appear before the Commons ethics committee on Parliament Hill in Ottawa, Oct. 4, 2011.

Adrian Wyld/The Canadian Press

The Harper Conservatives are demanding that Elections Canada impose penalties on deadbeat Liberals who've failed to pay back loans taken out during their 2006 leadership contest.

But they're curiously mum about 80 candidates – including 21 Conservatives – who are similarly in arrears on money borrowed to fight the 2004, 2008 and 2011 election campaigns.

Elections Canada has not fined or jailed any of those deadbeats either, although they owe some $3-million collectively and are long past the 18-month deadline for repaying loans.

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Chief electoral officer Marc Mayrand told The Canadian Press recently that it's virtually impossible to enforce the law on political loans because it is "not only overly complex, it's incoherent and ineffective." He has repeatedly urged Parliament to fix it.

The Tories introduced legislation almost a year ago that would resolve some of the problems and which former Liberal leadership contenders say would enable them to clear their debts almost instantly.

But the Harper government has let Bill C-21 – the Tories' fifth attempt at reforming the law on political loans – languish since introducing it last November.

A spokesman for government House Leader Peter Van Loan said there appears to be agreement with other parties to finish second-reading debate on C-21 on Friday so that it can finally proceed to a House of Commons committee for detailed examination.

But Liberals suspect the Harper government remains in no rush to fix a seriously flawed law until it has wrung the maximum amount of political mileage out of it.

"You'd like to believe in our system that it's not deliberate chicanery but, given Mr. Harper's track record, it is really hard to give them the benefit of the doubt when it comes to this," deputy Liberal leader Ralph Goodale said in an interview.

"They're clearly in a permanent campaign mode; it's all politics all the time. And it's hard to conclude it's anything other than deliberate (that C-21 has made so little progress so far)."

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In the meantime, the Tories are happily using the current law to humiliate the Liberals. And if they stall C-21 for another year, they may be able to do the same to the NDP, if any of its contestants from last March's leadership race fail to pay off their loans by next September (the 18-month deadline).

In a recent letter to Mr. Mayrand, Jenni Byrne, director of political operations for the Conservative party, noted that an Ontario Superior Court judge ruled recently that three candidates from the 2006 Liberal leadership contest – Vancouver MP Hedy Fry and former MPs Martha Hall Findlay and Joe Volpe – have broken the law by failing to repay their loans. The judge refused to grant them any further extensions for repayment.

A fourth contender, former MP Ken Dryden, is also in arrears but had previously received an extension.

"It is important that Elections Canada take action," Ms. Byrne wrote. "What will Elections Canada do to prevent circumvention of the law on political donations and what penalties will it impose on these candidates?"

Unpaid loans are, in effect, illegal donations and undermine "the effort to keep big money out of politics," Ms. Byrne argued.

Loan repayment is particularly troublesome for leadership contestants, who face an obstacle to fundraising that does not apply to anyone else in the federal political realm.

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Political financing reforms enacted by the previous Liberal regime in 2004, limited individual donations to a maximum of $5,000 per year to parties, riding associations and election candidates. But individuals were limited to a maximum of $5,000 per contest, rather than per year, in leadership races.

A contest is deemed to be continuing as long as debts remain to be paid. Hence, anyone who donated the max to any single or combination of Liberal candidates in 2006 was prohibited from giving a nickel in subsequent years to help retire any candidate's debt.

The Harper Conservatives complicated matters further by reducing the individual donation limit to $1,000 as of January 2007, several weeks following the Liberal leadership vote.

Had supporters been able to give yearly, Ms. Hall Findlay, Ms. Fry and Mr. Volpe all maintain they'd have paid off their debts long ago.

Ms. Hall Findlay, who wants to join the current Liberal leadership race if she can clear the final $20,000 or so left owing from 2006, said she's had to return at least $10,000 in the last couple of weeks from donors who'd already given the one-time maximum.

The Conservatives have recognized the problem and provided a fix in C-21, which would change the per-leadership-contest donation limit to a yearly limit, consistent with the annual donations allowed to all other federal political entities and in keeping with one of Mr. Mayrand's recommendations for overhauling the loans legislation.

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A spokesperson for Tim Uppal, minister of state for democratic reform, confirmed that the per-year rule would apply to "existing debts" of Liberal and NDP leadership candidates, once the bill comes into force.

"If that were passed tomorrow, three days from now I would have no debt," said Ms. Hall Findlay.

"And that's not lost on the current Conservative government," she added, predicting that the Tories will continue to stall the bill in order to continue making her and her fellow debtors "twist a little bit."

The recent Ontario court ruling has turned an already difficult situation for the Liberal debtors into one that's downright Kafka-esque.

According to Elections Canada spokesman John Enright, leadership contestants and election candidates can't close their campaign bank accounts until all their debts have been paid. But, under the current law, they lose authorization to make payments once a court denies any further extensions to clear their debt.

"They can continue to raise funds but the only option for making a payment is for creditors to pursue payment through the courts," Mr. Enright said.

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In the case of Ms. Fry and Ms. Hall Findlay, who gave personal loans to their leadership campaigns, that means they'd have to sue themselves in order to pay themselves back. And that's assuming they could find new donors who haven't felt moved to contribute the maximum to Liberal leadership contenders over the last six years.

"I am in a box with no doors nor windows," lamented Ms. Fry.

Under the law, deadbeat leadership or election candidates can be fined $1,000 and/or jailed for three months. But the law is so badly flawed, no penalties have been imposed.

"If you look at the provisions of the act with regards to offences, they are not very well constructed. I would argue they are very poorly constructed," said Mr. Mayrand.

"It's very difficult to see how someone could be convicted of failing to pay when they just want to pay but they can't get a court order (to extend their repayment period). So, there's a bit of a vicious circle in the act in this regard."

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