Inside the NDP’s hush-hush holding firm
Company guaranteed $6-million loan that helped fund 2014 election campaign
Ontario’s NDP set up a secretive union-financed holding company to help bankroll election campaigns and serve as its landlord at party headquarters, the Star has learned.
The Ontario Cornerstone Leadership Corporation, a privately held firm that owns the downtown Toronto office building housing the provincial NDP, has an elaborate corporate structure straight out of Bay Street.
It is unclear what impact the looming reforms to Ontario’s lax political fundraising laws — including a proposed ban on union and corporate donations — will have on Cornerstone.
But it is possible a ban on contributions to political parties from unions and corporations would lead to an unravelling of the arrangement. That would put extra pressure on the NDP, which still has a $5-million debt from the 2014 election campaign, to dig itself out of a deep financial hole.
The New Democrats support some revamp of the fundraising system though they have never specified exactly what they want.
They oppose the governing Liberals’ legislative approach, instead preferring a non-partisan public consultation.
While Cornerstone’s existence has been known for years, the NDP always maintained the corporation was separate from and had no direct financial connections to the political party or its campaigns.
The Star has obtained the previously secret shareholders’ agreement from Sept. 9, 2009 that shows Cornerstone, which owns 101 Richmond St. E., is a complex corporate entity where the NDP controls all of the Class A common shares.
All of the Class B common shares are owned by eight public-sector and private-sector unions or their locals. These shareholders have fewer powers than the NDP with its Class A shares.
Any dividends from the shares are reinvested into the company unless the unpaid board of directors decides otherwise.
Each union has a seat on the board, the NDP has one seat.
That corporate structure is not illegal. But it appears to challenge past assertions by the NDP that the party had an arm’s-length relationship with Cornerstone.
Requests for an interview with NDP Leader Andrea Horwath to discuss Cornerstone were declined by her office.
New Democrat House leader Gilles Bisson (Timmins-James Bay) insisted the party’s current concerns over Premier Kathleen Wynne’s reforms to political fundraising have nothing to do with Cornerstone.
Bisson implied Cornerstone is a bit of a mystery even to New Democrats at Queen’s Park.
“I don’t really understand how Cornerstone is set up. I thought it was to buy a building,” said Bisson, co-chair of the 2014 NDP campaign.
In a 2011 interview with journalist Jonathan Jenkins, then of the Toronto Sun, Horwath said Cornerstone “has no role whatsoever in our campaign.”
“None whatsoever. It’s a separate corporation, separate board of directors. There’s no financial connection whatsoever. It’s completely separate. Not a dime,” she said at the time.
“We have some unions that guarantee our loans, we have this separate, completely separate organization, a completely separate entity called Cornerstone that guarantees some of our loans.”
However, the shareholders’ agreement shows Cornerstone and the party are deeply entwined.
“The corporation shall, upon request from time to time by the ONDP and in compliance with applicable law, provide such guarantees, liens, and other financial assistance and such further assurances and instruments in respect thereof, as the ONDP may request from time to time to assist in financing its activities,” it states.
Ontario Secondary School Teachers’ Federation president Paul Elliott, whose union helped create the Cornerstone, said the company was launched to bolster the New Democrats.
“We wanted to ensure there was a progressive voice in the political landscape in Ontario. This was created when Howard Hampton was the leader of the NDP and at the time we (were) concerned about the ability of the NDP to compete against the Liberals and Conservatives,” said Elliott.
Elections Ontario data shows that during the 2014 provincial election, Cornerstone guaranteed a $6-million loan to the NDP to pay for the campaign.
The party in turn paid Cornerstone $273,904.56 for “office and equipment rent” that year. The corporation, which purchased 101 Richmond St. E. for $3.1 million nine years ago, does not have a listed phone number or a website.
Derek Johnstone, the Ontario regional director of the United Food and Commercial Workers, another Cornerstone shareholder, said “this was an investment that we made over a decade ago.”
“It’s an investment that we are active in — in terms of doing our due diligence for the members’ resources. We have one member on the board and in terms of any changes to the legislation here in Ontario we’re, of course, monitoring it,” he said, referring to the upcoming bill on political fundraising.
“UFCW, of course, will comply with any legislation that’s passed as we’ve done in every other province.”
Cornerstone board chair Anne Healy — who is also executive assistant to the national secretary-treasurer of the Canadian Union of Public Employees (CUPE), another shareholder in the corporation — said “we won’t know how any new legislation will affect us until it is tabled.”
“The Cornerstone board will look at any new legislation when details are available to see how it will affect our operations, but until then we don’t think speculation is a useful exercise,” said Healy.
Bob Gallagher, communications and political action department head of the United Steelworkers, Cornerstone’s largest shareholder, said the union is “proud of our support of the Ontario New Democratic Party.’
“We also strongly support reforms to the election financing legislation that would eliminate political contributions from corporations and unions,” said Gallagher.
“We support an open dialogue between all parties to determine the scope of any new legislation regarding election financing. Once consensus by all parties is achieved we will then be able to understand the future implications,” he said.
Political fundraising reforms have been on the front-burner since the Star’s March 29 story about Liberal cabinet ministers having party fundraising targets of up to $500,000 apiece.
Wynne scrambled to announce legislative changes in the wake of the exposé.
The Liberal bill expected to be tabled next month will ban corporate and union donations, reduce annual contributions to a maximum of $1,525 from $9,975, and close a slew of loopholes.
But the New Democrats — as well as the Progressive Conservatives and the Greens — oppose the way Wynne is revamping fundraising.
Horwath, backed by Conservative Leader Patrick Brown and Green Leader Mike Schreiner, tried unsuccessfully last week to strike a new non-partisan committee to design the changes.
Bisson emphasized there was no self-interest in the party’s bid to have a say in the fundraising reforms.
“If you want to ban union (and) corporate donations, we can live with that. But there’s got to be a process by which . . . everybody gets it, it’s transparent . . . ,” he said, arguing that Wynne is trying to rush through changes without adequately consulting opposition parties, stakeholders, or the public.
“The Cornerstone board will look at any new legislation when details are available to see how it will affect our operations, but until then we don’t think speculation is a useful exercise.” ANNE HEALY CORNERSTONE BOARD CHAIRWOMAN