Adscam Lawsuit is Treading on Precarious Territory

Liberals' Day of Judgement May be Nigh

Since losing the federal election to the upstart Conservative party in January, things have been looking rather bleak for the Liberals. The Conservatives have been surging in the polls to the point that surveys have indicated -- on a regular basis -- that if a federal election were held now, the Conservatives would be likely to win a majority government.

What ultimately led to the defeat of the Liberals is not great secret -- the multi-million (possibly multi-billion, according to forensic accountants) adscam that funnelled taxpayer dollars into Liberal party coffers in order to "save the country". Since their January 23 defeat, the Liberal party has been waiting for the other foot to drop.

Now, the proverbial shit has hit the fan.

During the election, Stephen Harper suggested that under his reign, the government of Canada may sue the Liberal party in order to recover up to $40 million in stolen taxpayer dollars that remain unnaccounted for. To date, the Liberal party has paid back a scant $1.4 million.

Naturally, a move like this has all sorts of implications. First off, it would demonstrate to the Canadian public that the Liberal party and the Government of Canada are indeed separate political entities. The lawsuit would seek to recover "all the dirty money", returning it back to government coffers -- where it should have remained to begin with. Finally, it would also set a legal precedent with severe implications for any governments in future that engaged in such activity -- or, at least those that got caught.

However, $40 million is a steep price for any organization -- especially a political party -- to pay. In a December 24, 2005 Sun Media column, former Liberal debuty leader Sheila Copps reported that the party was "$34,818,257.32 in debt by way of 13 bank loans". If not for Elections Canada rules (insituted in 2004) requiring all political parties to report their financial status, few in the public probably would have ever known this.

Imagine that this particular case goes to court tomorrow, and the Liberals lose -- this would put the Liberal party $74,818,257.32 in debt -- firmly at risk of complete bankruptcy.

Certainly bankruptcy wouldn't be the end of an organization like the Liberal party. However, it would put the party at a severe disadvantage for a considerable period of time. Under a Chapter 13 bankruptcy, the Liberal party would see their payments on their outstanding bank loans, as well as their newfound debt to the government of Canada restructured over a three to five year period -- more than enough time to place them at a considerable disadvantage during a federal election. Under a chapter 7 bankruptcy, some of these debts could be wiped clean, but the Liberal party would have to divulge itself of many of its assets in order to do this. Also, the $40 million figure won by the government under a lawsuit would not be discharged. Furthermore, a chapter 7 bankruptcy would be disastrous to the party's already-tattered credit rating.

This only adds to the political benefit the Conservative party could derive from such a lawsuit. Not only would it keep adscam fresh in voters' minds through the next federal election, it could also devestate the Liberal party and impede its operations (both day-to-day and election-time) well into the foreseeable future.
A question could be asked about how this bodes for the country. And while the relinquishing of the Liberal party's strangle-hold on federal politics has and will continue to be a positive thing, replacing that with a Conservative party garrote is not exactly what one should consider a positive alternative.

Healthy democracies require differing (and most importantly, fully-functioning) political parties in order to maintain a rich marketplace of ideas. Crippling the Liberal party may well mean allowing not only the Conservative party, but also the NDP and Bloc Quebecois to sieze a greater "market share", as it were. With the exception of an ulikely emergence of the Green Party, the marketplace of ideas would become a significantly smaller one, offering less variety.

Suing the Liberal party to recover stolen public funds may be the right thing to do, but it may have unforeseen consequences for the country as a whole. Prime Minister Harper had best tread carefully to ensure that no damage is done that can never be undone.