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Canada's Chief Electoral Officer Stephane Perrault waits for the Procedure and House Affairs committee to begin on Parliament Hill, in Ottawa, on March 2, 2023.Adrian Wyld/The Canadian Press

Canada’s Chief Electoral Officer Stéphane Perrault says he doesn’t have the authority to examine whether some donors were encouraged to provide campaign contributions in the 2021 election to candidates favoured by China – donations for which they allegedly received a tax credit from the federal government.

Caroline Simard, the Commissioner of Canada Elections, which investigates electoral wrongdoing, also complained to the Foreign Interference Commission Thursday about the difficulties of investigating foreign meddling. Her position came under criticism from lawyers representing Conservative and NDP MPs who were allegedly affected by foreign interference.

Lawyers for the public inquiry pressed Mr. Perrault on a report by The Globe and Mail in February, 2023, that outlined a funding scheme to help elect politicians who would be uncritical of China.

Diaspora groups outline breadth of intimidation by hostile foreign states

Mr. Perrault said his agency looked into the allegations but could not find enough evidence to forward the matter to Ms. Simard’s office, which has the mandate to investigate and enforce election laws.

Documents drawn from a series of Canadian Security Intelligence Service operations illustrated how an orchestrated Chinese state machine was operating in Canada with two primary aims: to ensure that a minority Liberal government was returned in 2021, and that certain Conservative candidates identified by China were defeated.

According to a CSIS report from Dec. 20, 2021, sympathetic donors were urged to make donations to favoured candidates. Those political campaigns later quietly, and illegally, returned part of the contribution – “the difference between the original donation and the government’s refund” – back to the donors.

Mr. Perrault said his office looked into such alleged behaviour.

“There were allegations about money that were considered as contributions and then that was spent to reimburse a political expenditure,” Mr. Perrault told the inquiry. “We made an analysis to see if there was not a very close relationship between the monies coming from a donor to someone who receives compensation for services but we did not see anything to justify a reference to the commissioner.”

He conceded it was difficult to track hidden transactions because Elections Canada is limited by the information available in financial returns, the lack of detailed expense reporting by riding associations and its inability to seek supporting documents.

“We asked for that from Parliament on many occasions but we don’t have access now,” he said.

A timeline of events that led to the public inquiry into foreign interference

Justice Marie-Josèe Hogue, who is heading the Foreign Interference Commission, then asked if it was fair to say the audits they conducted were limited.

“That is what we are saying,” Mr. Perrault replied.

Other tactics that The Globe reported on included undeclared cash donations to political campaigns or having business owners hire international Chinese students and “assign them to volunteer in electoral campaigns on a full-time basis.”

Yves Côté, the former commissioner of Canada Elections who ran the investigative agency in the 2019 and 2021 elections, said it is very difficult to discover and prosecute people who receive money from foreign states and then make donations to a favoured candidate.

“The candidate will have no way of suspecting the money comes from a contaminated or even illegal source. Such circumstances are very unlikely to be discovered by people like us,” he said, because these types of transactions are “secret and covert.”

Mr. Côté's successor, Ms. Simard, said it is often difficult to investigate and prosecute cases of foreign interference because they need concrete evidence.

The inquiry learned CSIS provided intelligence briefings to election investigators but they could not use it as evidence and were not even allowed to take notes of the conversations.

Summaries of in-camera testimony by Ms. Simard and her senior staff that were submitted to the inquiry revealed the election watchdog is “engaged in an ongoing review of an electoral contest in the Greater Vancouver Area” and another review of “allegations related to the 2019 Liberal Party nomination contest in the Don Valley North riding.”

In the case of Don Valley North, which is held by Han Dong, a former Liberal MP now sitting as an Independent, Ms. Simard said the review does not involve foreign interference.

Explainer: Foreign interference FAQs: What to expect from the public inquiry and how we got here

Another incident that came under scrutiny by the federal election watchdog was a banquet held during the 2021 federal election campaign for the Liberal candidate for Vancouver East – Josh Vander Vies, the inquiry heard. The complaint was that the lunch was paid for by an individual connected to a prominent Chinese community organization.

“There was an allegation in the complaint that the community organization was supportive of the PRC regime,” according to the transcript of an interview with the Commissioner of Canada Elections staff tabled at the inquiry.

After NDP MP Jenny Kwan, whom CSIS said was a target of Chinese state foreign interference, won re-election, her campaign complained to the Office of the Election Commissioner about the lunch.

Investigators recently levied a fine over the failure of the candidate’s campaign to declare expenses related to the lunch, which had been paid for by Chinese-Canadian community leader Fred Kwok.

“When asked whether the events in question could constitute foreign interference given the alleged influence by China over the organizing individual’s association, the witnesses stated that other agencies are better placed to make this determination in the broader context,” said the summary of an interview the inquiry recently conducted with Ms. Simard and a colleague.

Ms. Kwan’s lawyer, Sujit Choudhry, asked commission staff how her office concluded there was no foreign interference since they made no attempt to learn if the Chinese consulate had contributed to the cost of the lunch.

“No one provided specific information that the money paid for lunch was from anyone other than Mr. Kwok,” replied Mylène Gigou, director of enforcement in the office of the Commissioner of Canada Elections.

“I would like it noted for the record that I posed a question about whether payments from a foreign government to host a luncheon for a political candidate would violate the Canada Elections Act and I did not get an answer,” Mr. Choudhry responded.

The summaries said election investigators also looked into allegations that agents of the Chinese Communist Party had targeted former Conservative MP Kenny Chiu in the 2021 election over his calls for a foreign-agent registry. Investigators could not find the complainant and they were unable to find “tangible evidence” of undue foreign influence.

Conservative Party lawyer Nando De Luca suggested election investigators appear to have spent less time on foreign-interference probes than they did pursuing Rebels News for unregistered campaign-style lawn signs promoting a book in the 2019 election.

“For breaches of the Election Act by domestic actors, OCCE has allocated far greater resources and spent far more time in its enforcement activities than it has in support of alleged breaches of the act by foreign operators,” he said to Ms. Simard.

Ms. Simard said she could not answer him precisely but said she’s taken foreign interference seriously since she became commissioner in August, 2022.

In his testimony before the inquiry, Mr. Perrault also acknowledged that CSIS had alerted his office in 2019 to a “fact situation that could involve foreign interference related to voting in the nomination contest in the riding of Don Valley North.”

The nomination was won by Mr. Dong, who went on to capture the riding in the 2019 election.

Mr. Perrault said the matter was referred to the Commissioner of Elections but he also told the inquiry that the allegations were not related to foreign interference.

In his May, 2023, findings on foreign interference, Special Rapporteur David Johnston ruled that “irregularities were observed with Mr. Dong’s nomination in 2019,” and “there is well-grounded suspicion that the irregularities were tied to the PRC consulate in Toronto, with whom Mr. Dong maintains relationships.”

But Mr. Johnston said his team did not conclude that those “strange practices” could be attributed to the Chinese consulate in Toronto despite “well-grounded suspicion.”

Mr. Dong left the governing Liberal caucus to sit as an Independent last year after Global News reported, citing sources, that he discussed China’s detention of Michael Kovrig and Michael Spavor with China’s consul-general in Toronto and advised Beijing to delay freeing the two men. Mr. Dong has strongly denied the report and is suing Global News.

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