South Bruce Peninsula’s Compliance Audit Committee says it appears Mayor Garry Michi may have breached the Municipal Act with regard to campaign financing.
Back in June, an application for compliance audit was submitted to the Town by a resident. It flagged a number of issues based on Michi’s financial statement.
Those included a corporate contribution to the campaign (which is not allowed) and raised questions about post-election day expenses. It also raised questions about events that may be interpreted as advertising opportunities and whether they were properly disclosed in Michi’s statement.
In response, the Town’s Compliance Audit Committee held a meeting July 20th where it heard delegations, accepted a report from staff and accepted an application for a compliance audit.
The staff report from the clerk outlined non-compliance with Section 88.9 and 88.8 of the Municipal Elections Act identified as a contribution by a corporation to a candidate, as well as a contribution to a candidate over the allowed limit of $1,200.
The committee agreed to accept the application for the compliance audit identifiying possible issues such as excessive after voting day expenses, allegations of not reporting advertising expenses and questions about exceeding the overall allowable spending limit for a campaign.
These allegations have not been confirmed by an independent auditor or been proven in court.
According to minutes of the committee’s July 20th meeting, a staff report says when Michi submitted his financial statement for the 2022 municipal election, it included an audit, which is required if a candidate spends over $10,000.
The staff report says the audit noted a contribution on the financial statement attributed to Michi was actually made by a corporation.
Michi explained during the July 20th meeting, the numbered corporation in question is an umbrella company for the two campgrounds he owns, Spry Lake Camp and Sauble River Family Camp.
The province’s website says a campaign spending limit for a candidate for head of council is $7,500 plus $0.85 per elector.
A staff report explains, the corporate contribution of at least $7,500 was over the maximum allowable amount of $1,200. It also noted that corporations are not permitted to contribute to a candidate’s campaign.
Michi says he does not have a personal account, only the business account which is also used for personal spending. According to Michi, he submits receipts for personal spending to his accountant who separates that from business spending and allocates expenses under his personal income tax.
The 2022 Candidates’ Guide to Ontario municipal council and school board elections says, “You must open a bank account exclusively for your campaign if you accept any contributions of money (including contributions from yourself or your spouse) or incur any expenses.”
An auditor noted additional issues in a letter to the clerk dated March 16th, 2023, saying two contributions from two individuals were in excess of $1,200, noting, “These were subsequently allocated to two other individuals,” The auditor added, “Furthermore cash contribution of $100 was received from an individual.” (The limit is $25).
The Compliance Audit Committee has directed the clerk to hire a prosecutor to launch legal proceedings in the Superior Court of Justice.
They also directed the clerk to hire an independent auditor examine Michi’s election finances.
The committee says the written reasons for its decision will follow.
The Town has declined to comment because the matter is before the court.
Michi tells Bayshore Broadcasting News, “I only had one bank account at the time. It’s my corporation, I’m 100 per cent owner of the corporation, so any money that personally, I ever needed I would take out of that account and allocate it on my personal income tax,” says Michi adding, “There was no ill intent.”
The Town’s website says the costs of a compliance audit which might include auditor fees, legal fees and court prosecution fees are paid by the Town. It also says, “Any applicant, candidate or third party advertiser who incur expenses as a result of a compliance audit are required to pay their own expenses.”
The province’s 2022 Candidates’ Guide to Ontario municipal council and school board elections says only a court can determine if a candidate has contravened the Act and, if so, which penalties should apply.
The guide does list three automatic penalties of forfeiture of office and ineligibility to run for a period of time for contravening the Municipal Elections Act 1996. One is if a candidate’s financial statement shows they exceeded their spending limit.