Audit finds Horizon Ottawa apparently violated campaign finance rules during 2022 municipal election

Ottawa City Hall is seen in this undated file photo. (CTV News Ottawa)

An election compliance audit into campaign spending of third-party advertiser Horizon Ottawa has found the organization appears to have violated campaign finance rules during the 2022 Ottawa municipal elections.

The audit, released on Tuesday, was ordered by the city of Ottawa's Election Compliance Audit Committee in July 2023 and conducted by BDO Canada LLP. The audit was called following a complaint accusing the group of benefiting from an event called "Horizonfest" in September 2022.

The audit period under examination related to Horizon Ottawa's spending between Aug. 24 2022, when the organization registered as a third party advertiser, to Jan. 3, 2023.

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Auditors found Horizon Ottawa appears to have contravened three campaign finance rules under the Municipal Elections Act (MEA) relating to expenses incurred outside of the allowable campaign finance period and the collection of ineligible donations, which were not returned to the city.

In addition, the audit found Horizon Ottawa's financial records "did not appear to be appropriately maintained and processes for maintaining advertising campaign records were insufficient."

"As a result, Horizon Ottawa appears to have contravened the campaign finances rules established by the MEA," the audit said.

In a statement to CTV News, Horizon Ottawa said it has reviewed the report and intends to defend itself.

"As stated in the report, the contraventions are apparent, not proven, and based on interpretations of the Municipal Elections Act that Horizon Ottawa has and continues to perceive differently," the statement said.

"We note that the report does not conclusively respond to the original complaints presented to the Elections Compliance Audit Committee (ECAC) on July 31st, 2023. We look forward to the upcoming ECAC meeting, where we will have the opportunity to clarify our interpretations of the Municipal Elections Act and defend our actions."

Audit finds three apparent contraventions

The audit looked into six categories relating to election spending, and the organization was found to have contravened three. Auditors did not find contraventions with rules relating to the opening of a separate bank account for election purposes, adhering to spending limits, and fundraising functions held during the election campaign.

Nine expenses relating "Horizonfest", described as a music festival by organizers, were reviewed by auditors. The event featured several council candidates, including Capital Ward councillor Shawn Menard and Somerset Ward candidate Ariel Troster, who would go on to be elected councillor.

Within the reimbursement, three expenses were identified that were incurred prior to Horizon Ottawa's registration as a third-party advertiser; a liquor license with an invoice dated June 17, 2022, a charge for a theatre stage with an invoice dated July 12, 2022, and a tarp purchase dated Aug. 17, 2022.

Horizon Ottawa confirmed to auditors that the expenses were incurred prior to the advertising campaign period; however, the items purchased were utilized within the allowable period.

The value of identified expenses incurred outside of the advertising campaign period amounted to $947.24, which also included a bank of phone credits found to have been made prior to the date of registration as a third-party advertiser.

A lawyer for Horizon Ottawa told councillors on the Election Complicate Committee last July that Horizonfest was not intended to be a primary fundraiser to purchase advertising, noting that Horizon Ottawa actually lost money on the event.

Auditors also found the anonymous cash donation jar that was used to collect money for the campaign during the event that totalled $448.15 and should have been returned to the City Clerk because Horizon did not meet the criteria as a fundraising event under the MEA.

"Based on the information reviewed, HorizonFest did not appear to meet the criteria of a fundraising function under the MEA, where a fundraising function represents an event or activity held by a registered third-party or under its direction for the purpose of raising funds in relation to third party advertisements," the audit found.

"Contributions received from an anonymous source (except for donations of $25 or less at a fundraising event) are considered ineligible and should be returned or paid to the clerk. As HorizonFest did not appear to meet the criteria of a fundraising function, and records were not kept nor receipts issued for every donation in this circumstance, the $448.15 from the donation jar should have been returned or paid to the City Clerk."

In addition, auditors found Horizon's financial records did not appear to be "appropriately maintained" and processes for maintaining advertising records were "insufficient."

"Ineligible expenses were incurred outside of Horizon Ottawa's advertising campaign period however, the organization's financial records indicated that the expenses were incurred within the applicable period," the audit says.

Meeting on Aug. 6 to determine next steps

The Election Compliance Audit Committee, the independent body responsible for reviewing and making decisions on applications for the municipal election campaign finance compliance audits, will hold a meeting on Aug. 6 to consider the findings and decide whether or not to commence legal proceedings against Horizon Ottawa.

The committee will have 30 days under a timeline prescribed in the Municipal Elections Act to consider and decide.

If the city does move to commence legal proceedings, the City Clerk will refer the issue to an independent prosecutor, who will be paid for by the City of Ottawa.