Thursday, April 8, 2010

OTTAWA - Today, Democracy Watch criticized the federal Commissioner of Lobbying Karen Shepherd for failing to rule in the past fiscal year on five outstanding complaints that allege violations of the Lobbyists' Code of Conduct that were filed by Democracy Watch from 2001 to 2004.

Democracy Watch also criticized Commissioner Shepherd and federal Conflict of Interest and Ethics Commissioner Mary Dawson for taking months to rule on ethics complaints filed last October by Democracy Watch about fundraising events held by federal Conservative Cabinet minister Lisa Raitt and Parliamentary Secretary Rick Dykstra.

"Democracy Watch's opinion is that, like past ethics enforcement lapdogs, the current federal Commissioner of Lobbying and Ethics Commissioner are sitting on serious ethics complaints and continuing to let federal lobbyists and politicians off the hook for highly questionable actions," said Duff Conacher, Coordinator of Democracy Watch.

In July 2004, the Federal Court of Canada ruled that former federal Ethics Counsellor Howard Wilson was biased in part because he unjustifiably delayed ruling on complaints filed by Democracy Watch.  In March 2007, former federal Ethics Commissioner Bernard Shapiro resigned rather than face a court challenge of his lapdog enforcement record that was filed by Democracy Watch.

In 2008, federal Ethics Commissioner Mary Dawson issued a Guideline on Gifts (including Invitations, Fundraisers and Business Lunches) that made it clear that federal Cabinet ministers, staff, appointees and senior government officials cannot accept gifts of money, property or services from lobbyists.

In March 2009, the Federal Court of Appeal ruled unanimously that federal lobbyists who give or do anything for any federal politician, political staff or government official that creates a sense of obligation to return the favour violate Rule 8 of the federal Lobbyists' Code.  In the ruling, the Court of Appeal rejected the actions and decisions of past lapdog Registrars of Lobbyists Howard Wilson and Michael Nelson.  In November 2009, Commissioner of Lobbying Shepherd issued a new guideline on Rule 8 that complies with the Court of Appeal's ruling. 

"Democracy Watch's opinion is that given federal ethics rules for politicians and lobbyists, and federal political donation rules, and given related Canadian court rulings, the information known about the fundraising and other favours provided by lobbyists for past politicians and Conservative MP Rick Dykstra and Conservative Cabinet Minister Lisa Raitt raises serious questions that merit investigation and rulings by the federal ethics enforcement agencies," said Conacher.

In Commissioner Shepherd's 2008-2009 annual report which covered the period up to March 31, 2009, she wrote the following:

"A transitional provision set out in the Federal Accountability Act regarding pending investigations gave authority to the Commissioner to continue conducting investigations initiated by the Registrar prior to July 2, 2008.  In the past year, six investigations initiated by the Office of the Registrar of Lobbyists were transferred to the Commissioner of Lobbying.  One investigation report has been submitted for the Commissioner's consideration, with the remaining five still under review."

To see details about the five longstanding Democracy Watch ethics complaints, click here.

See below for details about the complaint Democracy Watch filed on on October 16, 2009 concerning a fundraising event held by Conservative Parliamentary Secretary and MP Rick Dykstra at the Rogers Centre on September 4, 2009, and the request for investigation it filed on October 21, 2009 concerning a fundraising event held by Conservative Minister of Natural Resources Lisa Raitt at a restaurant in Toronto on September 24, 2009.

• To see Democracy Watch's original October 16, 2009 news release and letters concerning the Rick Dykstra event, click here;
• To see Democracy Watch's original October 21, 2009 news release and letters concerning the Lisa Raitt event, click here;
  
• To see the November 3, 2009 letters to the federal Conflict of Interest and Ethics Commissioner concerning Rick Dykstra's event, click here, and concerning Lisa Raitt's event, click here;
  
• To see the November 3, 2009 letters to the federal Commissioner of Lobbying concerning Rick Dykstra's event, click here, and concerning Lisa Raitt's event, click here and;
  
• To see the November 3, 2009 letter to the Commissioner of Canada Elections concerning Rick Dykstra's event, click here.
  

New November 2009 information concerning the Rick Dykstra fundraising event at Rogers Centre
The new information concerning the fundraising event for Rick Dykstra is that, according to media report, Mr. Dykstra claims he has proof that his riding association paid the full costs of the fundraising event to Rogers Communications Inc. ($3,000 to rent the Owner's Box at Rogers Centre (which he claims can be rented by anyone), and $4,511.58 for staff and food and beverage services), and that therefore Rogers Communications Inc. did not make a contribution to him that causes a conflict of interest in violation of federal ethics rules, or that exceeds federal political donation rules.

Also according to media reports, Mr. Dykstra has claimed that no Cabinet ministers were at the event, and that the cost of a ticket for the event was a $400 donation to Mr. Dykstra's riding association.

However, Democracy Watch confirmed again on October 23, 2009 with a Rogers Centre staffperson that the Owner's Box is not offered for rent to anyone (and the Box is not offered for rent on the Rogers Centre website).

Democracy Watch also confirmed with the same staffperson that the rental cost for a Luxury Suite, which holds 20 people, is minimum $3,500, and for a Double Box (which holds 40 people) is minimum $4,500, and for the Executive Lounge (which holds 80 people) is minimum $6,500.  Therefore, given that Rick Dykstra invited 60 people to his fundraising event in the Owner's Box, by its own rental rates (which clearly establish the market value of renting boxes at the Rogers Centre), Rogers should have charged Mr. Dykstra minimum $5,500 to rent the Owner's Box.

In addition, neither Rogers nor Mr. Dykstra have provided information concerning the cost, and amount paid (if any), for the other perk offered to attendees of the event, namely attending batting practice before the baseball game between the Blue Jays and the New York Yankees (who are now leading in the Major League Baseball World Championship Series) that was held the day of the event, and meeting members of the Blue Jays team.

As a result, despite Mr. Dykstra's claims, Democracy Watch's opinion is that the three commissioners clearly have reasonable grounds to investigate the situation to determine whether federal ethics and political donations rules have been violated (and, in fact, the Ethics Commissioner has confirmed that she is investigating the event).

New November 2009 information concerning the Lisa Raitt fundraising event
The new information concerning the fundraising event for Minister Raitt is that she recused herself on October 9, 2009 under the Conflict of Interest Act from dealing with any matters concerning the Cement Association of Canada or its registered lobbyist Michael McSweeney (who played a significant role in the holding of the fundraising event for Minister Raitt).

By recusing herself, Minister Raitt has essentially admitted that the services provided to her by Mr. McSweeney are a prohibited “gift” under the Conflict of Interest Act (and, it is Democracy Watch’s opinion, also under the Conflict of Interest Code for Members of the House of Commons (MPs Code)) because the services could “reasonably could be seen to influence” Minister Raitt’s decisions and create a private interest that puts her in a conflict of interest. 
   
Therefore, Democracy Watch’s opinion is that it is reasonable for the Ethics Commissioner to conclude, and issue a ruling, that Minister Raitt has violated the Act and the MPs Code, and that it is reasonable for the Commissioner of Lobbying to conclude, and issue a ruling, that Michael McSweeney has violated Rule 8 of the Lobbyists’ Code of Conduct (which prohibits lobbyists from doing or proposing to do anything that puts a federal politician or government official in a conflict of interest).

In Democracy Watch's opinion, if the two commissioners do not issue these rulings, they will not be properly enforcing federal ethics rules (NOTE: the Ethics Commissioner has confirmed that she is investigating the event).
 
Legal arguments for investigations and rulings by the commissioners
Democracy Watch's opinion is that the fundraising events and other gifts and favours provided by lobbyists to politicians, their staff and/or goverrnment officials raise serious ethical questions for the following reasons (all of which are detailed in the above letters sent to the federal Commissioner of Lobbying, Ethics Commissioner and Commissioner of Canada Elections):

Based on its very close review of the federal Conflict of Interest Act and federal Ethics Commissioner's 2008 Guideline on Gifts (including Invitations, Fundraisers and Business Lunches) under that Act, and relevant court rulings, Democracy Watch’s opinion is that the only gifts and/or contributions that are permitted to be given to federal Cabinet ministers (including Parliamentary Secretaries) under the Canada Elections Act exemption in clause 11(2)(a) of the Conflict of Interest Act are money, property or the use of property or services provided by an individual up to the contribution limit of $1,100 (or equivalent commercial value) annually, and volunteer labour provided by an individual outside of their area of work and outside of their working hours.

Based on its very close review of the federal Conflict of Interest Code for Members of the House of Commons (the MPs Code) and relevant court rulings, Democracy Watch’s opinion is that it is a violation of the MPs Code for an MP to accept any gift of money, property or the use of property or services (volunteer or otherwise, such as fundraising) from a registered lobbyist, as such a gift can reasonably be seen to be given to influence the MP’s exercise of their public duties.

And based on its very close review of the federal Lobbying Act and Lobbyists' Code of Conduct and relevant court rulings (including the Federal Court of Appeal's unanimous ruling in March 2009), Democracy Watch’s opinion is that it is a violation of Rule 8 of the Lobbyists’ Code for any lobbyist (whether legally and properly registered under the Act or not) to provide, directly or indirectly, to any public office any more money than is allowed to be contributed annually under the Canada Elections Act, or any more property or use of property the commercial value of which exceeds the annual contribution limits under the Canada Elections Act, or any services (whether paid or volunteer) that are significant enough to create within the public office holder a personal sense of obligation to the lobbyist.

Rule 8 of the 12-year-old federal Lobbyists' Code of Conduct (Lobbyists’ Code) states:

"8. Lobbyists shall not place public office holders in a conflict of interest by proposing or undertaking any action that would constitute an improper influence on a public office holder."

The Federal Court of Appeal's March 2009 unanimous ruling stated that Rule 8 of the Lobbyists' Code simply "prohibits lobbyists from placing public office holders in a conflict of interest" because "Any conflict of interest impairs public confidence in government decision-making" (para. 48).

The Court of Appeal's ruling went on to clarify specifically that "A lobbyist's stock in trade is his or her ability to gain access to decision makers, so as to attempt to influence them directly by persuasion and facts.  Where the lobbyist's effectiveness depends upon the decision maker's personal sense of obligation to the lobbyist, or on some other private interest created or facilitated by the lobbyist, the line between legitimate lobbying and illegitimate lobbying has been crossed."

The Court of Appeal's ruling follows the same logic, and sets the same ethical standard, as the federal Conflict of Interest and Ethics Commissioner's 2008 Guideline on Gifts (including Invitations, Fundraisers and Business Lunches), which covers gifts of money, property or services as defined under the Conflict of Interest Act and strongly reaffirms that federal Cabinet ministers and other senior government officials (and their family members) essentially cannot accept any gifts or favours from anyone who is trying to influence, or will be trying to influence, or has or will have dealings with, the minister or government official, even if the lobbyist is a friend or a relative. (NOTE: the Ethics Commissioner's guideline is based upon the principles of the science of influence and persuasion -- for more details, click here)

The Guideline on Gifts offers examples of gift givers who the Commissioner views as giving gifts or doing favours in order to influence a minister or government official, including anyone who is associated with, or lobbying for, any entity that has or may have dealings of any kind with the government institution(s) that the minister or official directs (p.5).
   
"We believe that, together, the Federal Court of Appeal's ruling and the federal Ethics Commissioner's guideline strongly reaffirm the standard that federal politicians and government officials and their family members cannot accept gifts or favours from people who are lobbying them, and that people who are lobbying cannot give gifts or do favours for politicians and officials or their family members," said Duff Conacher, Coordinator of Democracy Watch.

The Guideline on Gifts contains the following key statements (among others):

• "The purpose of prohibiting public office holders or their family members from receiving gifts is to preserve confidence in the integrity of public decision-making.  The determining factor is whether the gift might reasonably be seen to have been given to influence the public office holder's decision-making.” (pp. 4-5);
• "It is important to consider who is offering the gift and why it is being offered. The donor's existing, or future relationship to the public office holder is of particular relevance." (p. 5);
• "A public office holder or family member should consider why a gift is being offered. If a gift is being offered by someone whose interests could be affected by a decision the public office holder may be called upon to make, then the Act will likely apply and prohibit its acceptance." (p. 5), and;
  
• "If a friend is offering a gift in a context not normally associated with gift-giving and the friend is also doing or likely to do business directly or indirectly with the public service entity of the public office holder, then the gift should not be accepted." (p. 7)
  

The Preamble of the federal Lobbyists' Code states that together it and the Conflict of Interest Act and other ethics codes for public office holders (politicians, their staff and government officials) “play an important role in safeguarding the public interest in the integrity of government decision-making”.  Therefore, Democracy Watch has always argued that the interpretation of Rule 8 of the Lobbyists' Code must be based on public office holders' ethics rules.

There are rules that clarify what types of influence are improper and cause conflicts of interest in the two-year-old Conflict of Interest Act, and in the four-year-old Conflict of Interest Code for Members of the House of Commons and in the four-year-old Conflict of Interest Code for Senators and in the 12-year-old federal Values and Ethics Code for the Public Service.

Specifically, all of these codes state that it is improper to receive a gift of money, property or services that could influence a decision.  Given that lobbyists, by definition, try to influence the decisions of public office holders, Democracy Watch believes that a proper application of the Court of Appeal's interpretation and application of Rule 8 of the Lobbyists' Code  prohibits lobbyists from providing money, property or services to public office holders because that can create, in the words of the Court of Appeal, a “personal sense of obligation” by the public office holder to the lobbyist or a “competing private interest” (paras. 52-53).

For all these reasons, Democracy Watch believes that is reasonable for the Commissioner of Lobbying, the Ethics Commissioner and the Commissioner of Canada Elections to investigate MP Dykstra's and Minister Raitt's fundraising events.