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Sunday, October 15, 2000

Canadian 'soft-money' going to U.S. parties By ROBERT RUSSO-- The Associated Press

WASHINGTON (CP) -- Canadian companies may be courting controversy over their U.S. campaign donations after handing out hundreds of thousands of dollars in the run-up to the most expensive U.S. presidential election ever.

U.S. subsidiaries of Seagram, Nortel and Barrick Gold are among the companies that have provided so-called "soft money" political contributions, according to the Centre for Responsive Politics, a U.S. campaign research group.

The figures come from reports made to the U.S. Federal Elections Commission.

The law prohibits corporations, banks, and labour unions from contributing money to individual candidates -- except via strictly regulated political action committees -- and prevents them from making independent expenditures on behalf of a candidate's election.

But it is permissible for donors to give vast sums to the parties. And they did: lots of it since 1984.

This form of donation is called "soft money," which is a corporate or individual gift to party machines that falls outside the strict limits on political contributions to individual candidates.

Soft-money contributions are legal, but increasingly they have become a focus of political debate and unflattering criticism.

Some U.S. corporate executives have begun to tire of writing six-figure cheques to the political parties, convinced that their donations might be buying more bad publicity than political goodwill.

The backlash against soft-money donations has already prompted five major American companies -- including General Motors, Time Warner and Monsanto -- to stop such contributions.

One reason is that soft-money donations are often used to purchase and air controversial attack advertising in political campaigns.

The fight against soft money fuelled John McCain's maverick campaign for the Republican nomination for president earlier this year.

Soft money raised by fellow Republican George W. Bush was behind an attack ad aired earlier this year that falsely accused McCain of voting in Congress to cut funds for breast cancer research -- a move that would have killed his chances of winning women's vote.

McCain's battle is a lonely one. It has led to his being ostracized by some members of his own party. Bush eventually edge out McCain and won the Republican nomination.

Other critics have described soft money in harsh terms.

"The soft-money system is a corrupt form of legalized bribery," said Jeff Cronin, spokesman for Common Cause, a non-partisan campaign reform group.

"Corporations give money to gain influence. It's also a legalized form of extortion where members of Congress shake down corporations for cash in exchange for influence."

In some cases, companies seem to be hedging their bets by contributing to both leading parties.

Northern Telecom's Washington- and Nashville-based subsidiaries have pumped $237,950 US of soft money into the campaigns, with 51 per cent going to the Republicans and 49 per cent to Democrats.

Barrick Goldstrike Mines, a Nevada-based U.S. subsidiary of Toronto's Barrick Gold Corp., contributed $105,000 to the Democrats and $90,000 to the Republicans.

Though various subsidiaries, Joseph E. Seagram & Sons, controlled by the Bronfman family of Montreal, provided $779,220 to the Democrats and $326,769 to the Republicans, for a total of $1,105,989 -- the largest soft-money contribution among companies with a Canadian connection.

Vince Borg, spokesman for Barrick Gold, said the giant mining company views the donations as support for the U.S. democratic process.

He said the company also usually contributes between $100,000 and $200,000 to various Canadian political parties in an election year.

"I don't think you can support a democratic process and then say you should have your own rules for what the money is used for," Borg said. "Is it any different in Canada? Once you make a donation here, you have no say if it's used media polls or attack ads."

Attack ads such as those seen in the United States have rarely been tried in Canadian politics so far.

Borg drew a parallel with the millions of dollars Barrick CEO Peter Munk has contributed to universities and hospitals.

"We don't say that money should be used on a particular doctor's procedures as opposed to the physical maintenance of an operating room," Borg said.

Senior employees of CIBC World Markets have contributed hundreds of thousands of dollars in soft money to the Democrats, but the company has made it a policy not to donate to political causes in the United States.

"There's too much controversy associated with it," said CIBC World Markets spokeswoman Katherine Gay.

David Chamberlin, spokesman for Nortel Networks, was asked whether the donations were needed to gain influence in Washington.

"Pretty much," he replied. "It's a necessary cost of doing business in the U.S."

He called back later to clarify his response. "It allows us to support party-building activities and it's another tool to participate in the political process," he said.

Christopher Shays is a Republican congressman from Connecticut who has sponsored legislation to ban soft money.

"It guarantees you a place at the table," Shays said. "They know you are a friend and you don't hurt your friends, but in order to be a friend, you've had to buy that protection."

The use of soft money has become a significant issue in two of the most compelling races in this U.S. election year.

Hillary Clinton and Rick Lazio, battling for a Senate seat in New York this fall, agreed to halt solicitations of soft money three weeks ago.

Vice-President Al Gore offered to abide by a similar set of restrictions in the race for the White House if Bush would agree. Bush rebuffed the offer.

Bush, who is governor of Texas, had raised a record $170 million by the end of August and should close in on $200 million by the election on Nov. 7.

Over half his campaign funding is hard money -- individual donations subject to a limit of $1,000 given directly to his campaign coffers. These donations are often bundled together by firms or interest groups in the names of their members or employees.

The rest is soft money which can be given to each party's national committee to promote issues. These issues are not supposed to be directly related to the election campaign, and so are not subject to cash limits. But it is a transparent veil. The money and the advertising it funds frequently goes to support the presidential candidates.

Gore has raised more soft money than hard, but altogether he has little more than half the financial resources of his Republican opponent.

Their totals have already surpassed the record $250 million in soft money raised by Bill Clinton and Bob Dole in 1996.

In Canada, there are several restrictions on the amount of money that can be contributed during a federal election, said Pierre Blais, spokesman for Elections Canada.

No individual candidate for Parliament can spend more than $62,000 Cdn, Blais said. Political parties running candidates in all 301 ridings are limited to a total of $11.3 million in campaign spending.

All Canadian contributions must be reported.

-- viewer (, October 16, 2000

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