Naheed Nenshi's dilemma on how to cover legal fees in defamation case

City council voted to pay the legal fees racked up as Mayor Nenshi defended himself against a lawsuit. But it's also requiring him to pay back that cash. It could be a minefield, depending on how he decides to raise that money. There are no rules governing this kind of fundraising.

Council requires him to cover costs, but how he'll do that is the question

Calgary home builder Cal Wenzel, right, settled a defamation lawsuit against Mayor Naheed Nenshi in December. (CBC)

Calgary's mayor is about to enter an ethical minefield — and there's no roadmap to guide him.

In March, city council voted to cover the legal fees racked up by Naheed Nenshi when he hired his own lawyer to defend him against a defamation lawsuit filed by businessman Cal Wenzel.

The case was settled out of court in December.

But after making the decision to cover his fees, council also voted to require Nenshi to repay the amount to the city — something he himself suggested.

He can either pay up himself or solicit donations.

[The bill] will come eventually. I can tell you — it's a big number.'- Calgary Mayor Naheed Nenshi

The amount Nenshi has to pay back hasn't been settled.

The city is negotiating with the law firm on the final bill — expected to be north of a quarter of a million bucks, according to sources.

The city's legal department isn't talking.

Calgary City Hall

"That'll come eventually. I can tell you — it's a big number," said Nenshi.

The mayor confirms that as the lengthy case proceeded, he reached into his own pocket to the tune of $100,000.

His goal is to raise enough money to reimburse the city every penny and hopefully get back the cash he's already fronted.

There's just one problem: there are no rules to cover any of this.

Wild West

Under provincial law, municipal politicians can legally raise money for only one purpose — their election campaigns.

This dictates that whatever method Nenshi uses to gather donations, that money will be collected for the City of Calgary — not Naheed Nenshi.

But who can donate? And what is the maximum? Can Nenshi promise to meet donors at an event if they chip in $1,000?

To each of these points, there are theoretically no rules, but how might Nenshi's choices look to Calgarians? Could it damage him politically?

A policy studies professor at Mount Royal University, Lori Williams, points out that the Local Authorities Election Act doesn't cover any of this.

"Funds raised to repay legal fees are not campaign contributions, and so disclosure of donor names is not required," said WIlliams.

Mount Royal University political science professor Lori Williams (CBC)

Nenshi does say there will be some parameters but he wants to be as hands-off as possible. 

"If it could all be done without my knowing the names of the donors, that would be terrific. I'm not sure that's going to work. But those are things we're going to sort out," said the mayor.

Nenshi openly admits he has already heard from two wealthy people, each of whom offered to pay off the entire bill. He rejected their offers as being generous but inappropriate.

Picking a mechanism

The mayor tells reporters he's working on the fundraising mechanism. Perhaps a trusted friend or someone outside the city hall environment will take on the task for him so it doesn't distract the mayor from his daily duties.

Nenshi has been a staunch advocate of election campaign finance reform.

[Ethics advisor] Alice Woolley will be earning her paycheque in this regard and many more I'm sure.- Coun. Gian-Carlo Carra

Under current rules, politicians are allowed to fundraise after they register as a potential candidate for the next election. Donations are limited in each year prior to the vote. So the farther ahead of an election they register, the more cash they can raise.

Nenshi himself promises to only raise donations for a possible re-election bid once voting day is less than 365 days away. It limits his fundraising but meets his concern about the ever-growing need to have deep pockets to get a council seat.

"My philosophy is the fairest system possible," he said.

Williams said trying to keep donors anonymous — at least to the mayor — could blunt any fears of people having undue influence.

But she adds: "Without transparency, questions could emerge about whether it enables donors and elected representatives to avoid public scrutiny."

It raises the question of how someone can take donations to pay the mayor's bill and report publicly to ensure no single donor has too much influence later — but without anyone actually telling the mayor. It doesn't sound like a realistic proposition.

Blame Nenshi?

This may be the one and only time this situation happens.

Coun. Gian-Carlo Carra is glad that his colleagues voted to cover legal fees for council members who get into legal hot water during the course of their duties. For the record, Nenshi himself didn't take part in the decision because it was triggered by his legal case.

But Carra is not happy that unlike any future lawsuit targets, Nenshi has been given no choice but to fundraise to pay back the city.

"I wasn't super excited about his insistence that... he be made to pay it back, but he insisted," said Carra.

Coun. Gian-Carlo Carra (Kate Adach/CBC)

Whatever model Nenshi comes up with, expect that it will also be passing by council's new ethics advisor. Alice Woolley was appointed last month to assist council members with ethical issues they come across.

"Alice Woolley will be earning her paycheque in this regard and many more, I'm sure," said Carra.


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