Item - 2024.EA7.1

The Compliance Audit Committee:

Has decided not to commence a legal proceeding against Chen Chen.

1. The Compliance Audit Committee met on March 5, 2024, to hear Item EA7.1 – Chen Chen - A contributor in the 2022 Municipal Election who appears to have contravened Contribution Limits under Section 88.9 of the Municipal Elections Act, 1996.

2. Section 88.34(2) of the Municipal Elections Act, 1996 requires the City Clerk to prepare a report identifying each contributor to a candidate for office on a council who appears to have contravened any of the contribution limits under Section 88.9.

3. Section 88.9(3) of the Municipal Elections Act, 1996 states that the maximum total contribution that a contributor may make to a candidate for the office of Mayor in the City of Toronto is $2,500.

4. The report dated February 13, 2024, from the City Clerk identified Chen Chen as a contributor that appeared to have exceeded the $2,500 contribution limit to the election campaign of Tony Luk. The report (February 13, 2024) from the City Clerk identified Chen Chen to have contributed $2,680.

5. The auditor, BDO Canada LLP, explained their February 12, 2024 report, attached as Attachment 1, to the report (February 13, 2024) from the City Clerk, setting out the audit process and the findings with respect to Chen Chen.

6. The contributor, Chen Chen, appeared via the web portal, and provided information to the Committee. The Contributor explained that they were unaware of the contribution limits and was following the information provided by the Candidate.  The Committee also received written submissions from the Contributor and the Candidate.

7. For the reasons stated below, the Compliance Audit Committee has decided not to commence a legal proceeding against contributor Chen Chen for the contravention of Section 88.9 of the Municipal Elections Act, 1996.

8. There was a contravention of the contribution limit because the individual made a contribution of $2,680 which exceeded the applicable limit of $2,500.

9. After considering the entirety of the circumstances, the Committee has discretion to determine whether to commence a proceeding even in circumstances where there are reasonable grounds that a breach has occurred. This has been recognized by the courts in Lancaster v. Compliance Audit Committee et al., 2012 ONSC 5629. In that case, after consideration of the evidence provided, the Committee concluded that there were breaches of the Act but exercised discretion not to proceed.

10. In the Committee's view, the responsibility rests with the Candidate to fully understand their legal obligations with respect to the receipt of contributions and contribution limits. When a candidate chooses to seek office, they accept that they must understand and comply with the rules including campaign finance rules. A candidate should seek professional or legal advice in order to ensure that they meet their obligations in the Municipal Elections Act, 1996.

11. The Contributor's evidence is that the Candidate provided the information to the Contributor via the phone about the contribution and its use in his campaign. The Committee raises concerns about the nature of this communication in that it appears to be the basis for the over-contribution. In the future these sorts of errors could give rise to applications against, and potential prosecution of, the Candidate.

12. Consequently, the Committee has determined it is not in the public interest to commence a proceeding against the Contributor.

Katrina Amodeo, BDO Canada LLP gave a presentation on Chen Chen - A contributor in the 2022 Municipal Election who appears to have contravened Contribution Limits under Section 88.9 of the Municipal Elections Act, 1996.

The Compliance Audit Committee recessed its public session to meet in closed session to deliberate in private on Item EA7.1 - Chen Chen - A contributor in the 2022 Municipal Election who appears to have contravened Contribution Limits under Section 88.9 of the Municipal Elections Act, 1996 and to receive advice that is subject to solicitor-client privilege.

This report transmits the external auditor's report for consideration. The external auditor completed its review of initial and supplementary financial statements filed for the 2022 municipal election and identified Chen Chen as a contributor who appears to have exceeded the contribution limits in the Municipal Elections Act, 1996. Within 30 days of receiving this report, the Compliance Audit Committee is required to decide whether to: (1) commence legal proceedings against the contributor for an apparent contravention; or (2) not to commence legal proceedings against the contributor for an apparent contravention. The Committee must also provide brief written reasons for its decision.

The Municipal Elections Act, 1996 requires the City Clerk to review all contributions reported in financial statements submitted by candidates and registered third party advertisers in the 2022 municipal election and to prepare a separate report for each contributor who appears to have exceeded any of the contribution limits. The City Clerk retained an external auditor, BDO Canada LLP, through a competitive procurement process, to review all candidates and registered third party advertisers' financial statements and to report on each apparent over-contribution.