Wednesday, December 1, 2010

Brown Envelopes Stuffed with Cash Are Not Illegal!

You've hit it big, you've won the Lotto and are a multi-millionaire. It's a bit strange being so rich, especially around your friends and family who come from modest means, so you decide to help them out with some cash donations. You give your Mom and Dad enough money to pay off their mortgage and have a comfortable retirement.
Your sister, a single mom, is struggling to make ends meet, so you write her a check for half a million dollars.
You give your best friend $75,000 dollars to start that business he's always dreamt about. You start a college fund for your brothers kids and fund it with $200,000.

All of this is done with no strings attached. The transferred money isn't a loan, it's an outright gift. Nobody is expected to pay you back. You tell those who have benefited, not to declare the money on their income tax statement and you don't mention the gifts to the Canadian Revenue Agency at all.

In a different case, a fabulously wealthy businessman is friendly with a Member of Parliament who he has supported politically over the years, forging a close friendship along the way.

The politician is not rich, those who make public service a career never are, and so when the politician tells his friend that he'd like to renovate his house and add an extension, but can't afford to, the industrialist tells him not to worry.
He writes a check for $10,000 dollars and collects another $100,000 in cash and cheques from other like minded friends.
He gives the money to the politician. Nobody declares the money transfer to any government organization.

Another politician, who is in the midst of a heated re-election campaign meets a donor friend over coffee. The donor and his wife have both already contributed to the political campaign to the tune of $3000 each, the maximum allowed by law.
The donor friend tells the politician that after the campaign, he'd like to send the politician and his family on a vacation. He takes out an envelope stuffed with $10,000 in cash and turns it over, "Bon Voyage!"
The politician doesn't declare the money to the Canadian Revenue Agency or to the Election commission.

So who broke the law?


You see, giving gifts in Canada has no tax consequences, either to the giver or the receiver and using cash is completely legal, even in large amounts. Although it may look fishy, it remains completely within the law.

Here's what the law says;
"A contribution refers to any gift of money to a party or to an independent candidate, any service rendered or goods furnished free of charge, for political purposes. Any money, goods or service furnished by the candidate himself in view of his election is also considered a contribution.:

Yup... Brown envelopes stuffed with cash can be given to politicians quite legally, even in the middle of a political campaign!
It happens every day and takes place in many other forms. Cash, cheques, blank traveller cheques, free travel, complimentary goods and services, etc., etc.

Ah, you may ask.
"But why did Brian Mulroney get in trouble for accepting hundreds of thousands of dollars in cash from Karl-Heinz Schreiber?"
Brian Mulroney told authorities that the money was payment for consulting services, for that infamous 'pizza' business.
It was therefore income, subject to taxes which had to be declared.

The reality is that the onus is on the politician not to use gifts for political ends. If a 'gift' is used to pay for campaign expenses, it is the politician who has broken the law, not the donor. If a benefit is exchanged in consideration of the gift, then both parties have broken the law. 

Simply put, it boils down to this.
There's no law against giving politicians brown envelopes stuffed with cash, be it $5, $5,000 or $50,000, but there is a law against using the gift for political purposes or providing a political benefit to the donor in return, but go prove intentions in court. That's the real issue.

A case in point is the current situation with the matter of Laval mayor Gilles Vaillancourt who is alleged to have offered $10,000 in cash to Serge Menard, then running in an election for the PQ in a Laval riding.
Since the money was never actually handed over, no crime was committed. Even if the transaction had taken place, the statute of limitations has long run out.  Even then, it would have to be proved that the money wasn't a straight up gift.

And so it remains that gift transactions that require no disclosure almost always go unreported.
That's the way it is. Sorry to tell you.

There always has been and always will be those who offer money to politicians. Like drug dealers in the bathroom of the night club, it's up to the individual to refuse.

Too many politician say Yes.

As a fund-raiser and political organizer I've seen my fair share of 'transactions,' but I must say the story of the mayor of Laval and the city manager of Mascouche allegedly offering or giving cash to a politician that he didn't know personally is something remarkable.
Brown envelope transactions are usually conducted between people who know and trust each other, where a wink and a nod is par for the course.
The level of perceived invincibility displayed here (if it did happen) is stunning and demonstrates a level of unprecedented arrogance.

Another revelation that floored me, is the accusation by defeated Liberal candidate David Grégoire, who claimed that the city manager of Mascouche gave him an envelope of cash, which he claims that he accepted.
Consider that Grégoire was a "poteau," a derogatory term for a candidate who runs in a riding which is a lost cause, why on Earth would the city manager make an illegal campaign contribution to someone who was, without a doubt,  going to lose?
Do the people he represents have so much money to spread around that they'd subsidize someone bound to lose on the if-come that he'll become a somebody one day? 

This week the Liberal party announced with great fanfare that the personal limit on political donations will be lowered to $1,000 from the previous $3,000, an obvious and lame attempt to be seen doing something about influence.
All this will accomplish is to push underground those intent on giving money and increase the use of those infamous brown envelopes.

Let me tell the readers a little about influence. Contrary to popular belief, giving $3,000 to a political party doesn't buy influence, it's small potatoes, nothing more than loose change. The idea that attending a fundraiser and bringing a cheque of three grand will buy you something other than a handshake is ludicrous.

The people who really have influence are the professionals who can raise big money. They are the organizers of the organizers who hold cocktail parties and the receivers of brown envelopes containing large amounts of cash. Someone who can arrange a cocktail party where twenty or thirty thousand is raised is considered a friend of the party. Someone who can arrange twenty or thirty cocktail parties is a player. He is the one with influence and within each party, there are only a few.

Political parties and individual candidates need money to run campaigns. The legal limits are a farce and actually turn honest people into crooks.

Let's not blame politicians, they are no more corrupt than you and I. If cheating is easy and expedient, than cheating it will be.
Whether you are a doorman at a hotel taking a rake off from cabbies for a fare to the airport, or someone paying a doctor to move themselves up the operating room waiting list, we are all corrupt.

Cheating unemployment insurance or workman's comp, while vacationing in Mexico, boosting an insurance claim, goldbricking at the office, paying a contractor or hairdresser cash for a discount, makes us all cheaters.

Get over it. Let's not be holier than thou!

To the tiny minority of you people out there who are shaking their heads in disbelief, all I can say is it's worse than you thought.


  1. Mississauga Guy said...

    Actually, collecting Work Comp or EI while out of the country is now easy to catch. I heard on the news several years ago that customs now turns over the info on declaration forms to the tax authorities and EI people...and WC too, I'm sure.

    My f---ing ex got caught collecting while out of the country as SINs have to be placed on the customs declaration card upon return to Canada. She obviously was ordered to pay back the E.I. benefits she got while on vacation (served her right). Actually, you can still get away with collecting E.I. while on vacation, but just make sure you're vacationing in Canada--no declaration to file!

    As for the politicians, they should be under the scrutiny of the CRA, but they're not; in fact, their tax returns are filed separately from the general population (inside knowledge from a former CRA auditor).

    Part of the reason Spiro Agnew had to resign his vice presidency under Nixon in the 70s was because of tax evasion. Did Mulroney have to pay a penalty for suppressing his Karlheinz bribe until his activities had the spotlight shining on him? One said $100 thousand, another said $75 thousand...what was the REAL figure?

    I learned a few months ago that a former Laval city counselor for decades (with whose son I went to school) is living high off the hog in retirement. Did Laval city counselors get THAT well paid? Kickbacks to be sure!

    And to think McLean's was admonished for its articles on corruption in Quebec! Hmmmph!

  2. This is far away from Mississauga news isn't it ? I believe you deserve Hurricane Hazel winning a 12th term as your mayor to put you at your place, once in a while. With people like you you need a solid woman.

  3. Eric Duhaime wrote a blog piece on a parallel subject regarding the easily demonized Tony Accurso:’accurso/

  4. Mississauga Guy said to Anon @ 3:24PM:

    Hazel McCallion: Mississauga mayor for 32 years straight, 12 straight terms elected mayor, 89 years old. HANDS CLEAN AS A WHISTLE!

    Don't you wish there was one single politician in Quebec, ANYWHERE IN QUEBEC, that had a corruption-free record and has carried NO DEBT for the taxpayers under whom she serves? Eat your heart out. Jealousy gets you NOWHERE!

    BTW, Hazel McCallion was born in Port Daniel, QC, in the Gaspésie region! Mississauga 1, Quebec 0! Politics in Ontario is about as interesting as watching paint dry on walls, and I'm very grateful for that. Quebec politicians semm to paint themselves and miss the walls!

    Now shut up and pay your confiscatory taxes!

  5. Its not because there is no law about this kind of issue that we need to shut the fuck off and just let it go....