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City hall bombarded with requests for campaign expense audits

Toronto city Councillor Doug Ford, Mayor Rob Ford's brother, in his business office in Etobicoke Feb. 16, 2011.

Peter Power/Peter Power/The Globe and Mail

In what could lead to a sharp escalation of partisan tensions at City Hall, a group calling itself Fair Elections Toronto has filed detailed compliance audit requests against four right-of-centre councillors, alleging they improperly excluded thousands of dollars in campaign expenses from their statutory spending limits during last fall's municipal election, the Globe and Mail has learned.

In a flurry of finger-pointing, 14 compliance audit requests were filed on Wednesday and Thursday, according to city spokesperson Rob Andrusevich. At least two were aimed at left-leaning councillors, Maria Augimeri and Ana Bailao.

Roger Brook, a veteran Parkdale activist, alleged that Ms. Bailao accepted corporate donations. Gus Cusimano, who ran a close race against Ms. Augimeri, claimed that his rival paid only $1,100/month in rent for a campaign office that would ordinarily lease for $9,300. Long-time former councillor Howard Moscoe also filed a compliance audit request against Mr. Cusimano.

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Meanwhile, Fair Elections Toronto, which says it is aiming to clarify the province's municipal election finance laws through litigation, submitted its requests late Wednesday afternoon, a day before the filing deadline.

The documents have also been posted at

The group's spokesman is Adam Chaleff-Freudenthaler, a member of the Toronto Public Library board and a former candidate for school trustee. He is one of two city residents - Max Reed is the other - pursuing a broader action involving Mayor Rob Ford's campaign expenses. "We want to make the point that there's a culture of non-compliance with [municipal]election laws," he said in an interview.

The group has spent "a few hundred dollars" on the filings, but has been approached by a number of individuals offering to contribute, added Mr. Chaleff-Freudenthaler. He rejected the suggestion that these moves are politically motivated. The targets of the audit requests, however, are three of the mayor's closest allies - his brother Doug Ford, Giorgio Mammoliti and Michael Thompson - as well as council rookie James Pasternak, a former school trustee. The group has also filed requests against four unsuccessful candidates, including Peter Li Preti. The long-time former North York councillor is alleged to have accepted $14,000 in corporate donations. Toronto council has banned corporate and trade union contributions.

In interviews Thursday, some of the named councillors dismissed the claims and insisted they'd followed the rules. "We spent an enormous amount of time and expense to make sure we conformed fully with the Municipal Elections Act," said Mr. Pasternak.

Mr. Mammoliti, who stressed he's not worried about the allegations, denounced the requests as "a huge conspiracy" against right-leaning members of council. He added yesterday that he will speak to his colleagues about a lawsuit against the applicants. "I think we've got a good case to prove it's conspiracy," he said. "When they feel it in their wallets, they'll understand."

The requests - written in the form of legal briefs - will be vetted by the same three-person compliance audit committee that ordered a forensic review of Mr. Ford's campaign expenses earlier this spring.

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No meeting date has been set. The allegations have not been reviewed by an auditor or proven in court.

At issue in all four requests is the question of what kinds of expenses can be legitimately excluded from candidate spending limits. Provincial law allows candidates to exclude the costs associated with holding fundraising events. Candidate guidelines describe such events as "functions" that are intended to generate revenue through ticket sales, auctions or merchandise.

The claims made against the councillors include:

• The group contends that Mr. Mammoliti "improperly excluded" $17,196.94 in relation to an unnamed fundraising event. Those expenses include $15,280 in salaries and consultation fees. With a spending limit of $27,464.65, Fair Elections alleges that Mr. Mammolitti's campaign overshot that cap by more than $15,000, or 50 per cent.

• Doug Ford allegedly excluded $6,000 in fundraising commissions paid to his campaign manager. Such commissions, the request argues, are not listed on provincial candidate guidelines, which note that fundraising event expenses that may be excluded from the spending cap "may include advertising, brochures, printing, catering, entertainment, postage, refreshments, hall rental, etc."

• Mr. Thompson's filings exclude $14,500 in salaries for fundraising personnel, say the requests, which question whether the "fundraising activity campaign" expenses incurred between January and July, 2010, and cited in his campaign documents, can be considered a cost associated with a fundraising event. If these salaries were included, Mr. Thompson would have exceeded his $36,426.20 limit by almost a third, the documents allege. "Allowing campaigns to engage unlimited paid fundraising staff creates an unequal playing field," the request contends. "Moreover, allowing salaries to be excluded from the limit creates an alternative method to pay campaign staff."

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• According to the group, Mr. Pasternak allegedly held six small-scale fundraising events between April and September that "resulted in no successful fundraising whatsoever. The events cost $4,067.11, according to campaign documents cited in the filings. By excluding them from his campaign expenses, Mr. Pasternak remained just within his $34,564.70 spending limit. The request was submitted by Rami Tabello, who pushed hard last term for a ban on illegal signs.

Mr. Pasternak describes the claims as "fictitious."

"We held events during the campaign period with hosts at specific locations. There were costs associated with those events and they were totally legitimate," he said.

After the 2006 election, another citizens' group launched a compliance audit action against left-leaning Scarborough councillor Adrian Heaps. The resulting audit turned up nothing, but Mr. Heaps spent over $45,000 on legal and accounting fees.

Council under former Mayor David Miller passed a bylaw reimbursing both him and Mr. Mammoliti for such expenses. Doug Holyday, now the deputy mayor, challenged that decision in court.

An Ontario divisional court justice last summer sided with Mr. Holyday, ruling that taxpayers shouldn't be reimbursing such costs. Last February, council voted to reverse the 2010 decision to reimburse the two politicians. The amounts now owing are $74,402.00 for Mr. Mammoliti and $64,757.70 for Mr. Heaps. They have two years to pay.

Special to the Globe and Mail

With a report from Patrick White

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