Monday, June 12, 2006

TD Executives' Political Donations

The Globe and Mail, Sinclair Stewart & Paul Waldie, 12 June 2006

Ten of the most senior officials at Toronto-Dominion Bank, including chief executive officer Ed Clark, met just weeks before the last federal election and agreed to make nearly $100,000 worth of personal contributions to the Liberal and Conservative parties, according to recently filed documents with Elections Canada.

This is believed to be the first time since 2004, when the federal government overhauled its political contribution rules, that one company's executive team has made such a concerted effort to donate money as a group.

The new rules prohibit companies from giving money to political parties, and were designed to ward off the possibility of influence-peddling. TD's actions, however, have sparked concern companies may be able to bypass new rules by organizing donations from employees.

Only two of these TD officials had previously donated to a political party, according to election records, but their collective contribution this year was nearly double what the entire bank gave in 2003, the last year companies were allowed to make donations.

Mr. Clark said the bank was not trying to buy influence with these payments, and pointed out that each of the senior executives agreed to fund both parties.

"I guess we made a principled decision that with the new funding rules, that meant that the democratic system was getting deprived of what had been historically a source of funds, and therefore we ought to contribute to the democratic process but not choose a political stance," Mr. Clark explained, adding that people who earn as much as bankers do are obligated to become involved.

"I obviously favoured the idea, or we wouldn't have done it. I do think it's the right idea."

Mr. Clark said he held a meeting with his senior managers before the Jan. 23 election and discussed how they could participate in financing the political process. Most of the team, including the heads of the bank's main operating units, agreed to donate $5,000 apiece to each party, close to the $5,200 maximum for individuals. Chief financial officer Colleen Johnston was an exception, giving $2,500 to both the Liberals and the Tories, while a couple of others gave $4,000.

In total, the group contributed over $93,000, split evenly between the Liberals and Tories. The bank gave a total of $53,802 to these parties, along with the defunct Canadian Alliance party, in 2003.

Although Mr. Clark stressed that this was a non-partisan exercise, his group only backed the two most powerful parties. He conceded that there may have been some people amongst his executive team that would have liked to support the New Democratic Party, but said in general terms it was difficult to back a party that "doesn't like anything to do with the financial services business."

Mr. Clark said he was not concerned by the optics, much less by the fact that other bank CEOs have not made similar efforts.

"Go ask the other people why they don't think they should support the political process," he said. "That would be my question."

A handful of executives at other financial institutions did make individual contributions to a single party during the recent election campaign. But none of the banks held meetings amongst their top brass to co-ordinate a funding effort. Indeed, some observers in the banking industry suggested many senior executives might feel compelled to join in an effort that was being pushed by their CEO.

Canadian Imperial Bank of Commerce, for example, issued an internal memo to staff last December outlining its political contribution policy. The bank said that while individuals could make donations, they were barred from any political activities at work.

"Further," the memo warned, "employees must not pressure other employees (especially subordinates) to make a political contribution and must not try to influence any vote or political activity."

Mr. Clark countered that there was no pressure at TD for other executives to take part, citing a few members of the team who opted not to contribute.

"We have exactly the same discussion every year on United Way," he said. "And there's some people that don't contribute at the level that I think is appropriate, but I obviously am not averse to saying to people: 'I think if you want to be a leader, in general, you have obligations beyond your own personal consumption habits.' "

But other banks said they draw a clear line between charitable giving and politics.

"When we organize this kind of activity we do it for United Way, for instance, but not for political parties," said Denis Dubé, a spokesman for National Bank of Canada. "The bank prefers to stay neutral and we don't want to be involved in any political activities."

Fundraisers for both major parties mounted an aggressive campaign this winter, according to sources, who said they sought lists of executives they could contact directly.

Bank of Montreal, for example, has a policy against handing out names, to guard against privacy concerns. It also steers clear of the kind of meetings organized by TD.

Ralph Marranca, a spokesman for BMO, said the bank would not "direct any employees, or even suggest, that they make personal political donations -- again, because of our obligation to adhere to the Canada Elections Act and out of respect for the personal privacy of our employees."

TD executives donations
Contributor's nameTitle/ DivisionLiberal Donation (Jan 6)Tory Donation (Jan 13)
Ed Clark Chief Executive Officer $5,000 $5,000 (n/a)
Bob Dorrance CEO, TD Securities$5,000 $4,000
Bernie DorvalCo-Chair Retail Bank $5,000 $5,000
Bill Hatanaka CEO, TD Waterhouse $5,000 $5,000
Tim HockeyCo-Chair, Retail Bank$5,000 (Jan 12)$5,000
Mike MacBainPresident, TD Securities$5,000 $5,000
Rob MacLellanChief Investment Officer$5,000 $5,000
Bharat Masrani Chief Risk Officer $5,000 $5,000
Fred TomczykVice Chair, Operations$4,000 $5,000 (Jan 30)
Colleen JohnstonChief Financial Officer$2,500 $2,500