Wednesday, December 18, 2002

OTTAWA - Today, Democracy Watch held a news conference to release details about its court challenge of federal Ethics Counsellor Howard Wilson's structural bias, delay and failure to fulfill his legal duties with regard to eight complaints Democracy Watch has filed since April 2000 alleging that various lobbyists have violated the Lobbyists' Code of Conduct (the Lobbyists' Code). Wilson has not ruled on any of the complaints, even though three of the complaints are more than two years old, and two complaints are more than one year old (Please see Backgrounder set out below).

"We believe the Ethics Counsellor is himself in a conflict of interest when reviewing conflict of interest situations involving lobbyists and politicians, or lobbyists with ties to the Liberal Party, and we expect the court will agree," said Duff Conacher, Coordinator of Democracy Watch.

Howard Wilson holds two legally separate positions, both called "Ethics Counsellor". Under the Lobbyists Registration Act, the Ethics Counsellor is required to investigate where he believes there are reasonable grounds that a violation of the Lobbyists' Code has occurred. He has the full powers of a judge in his investigation, and is required to report his ruling to Parliament.

Seven of Democracy Watch's eight complaints involve situations in which a lobbyist is possibly in violation of the Lobbyists' Code because of something a lobbyist has done that puts a Minister or senior public officials in a conflict of interest. Principles set out in the Lobbyists' Code require, among other things, that all lobbyists conduct all their relations with "integrity and honesty", and Rule 8 of the Lobbyists' Code prohibits lobbyists from undertaking any action that would put a public office holder in a conflict of interest.

In order to find a lobbyist guilty of violating Rule 8, the Ethics Counsellor must also find a Minister or other public official guilty of violating the Conflict of Interest and Post-Employment Code for Public Office Holders (the Public Office Holders Code). However, for Wilson's Ethics Counsellor position under the Public Office Holders Code, his investigations of ministers and senior public officials can be in secret and are fully controlled by the Prime Minister, and the Prime Minister can (under section 24 of the Public Office Holders Code) overrule the Ethics Counsellor. As a result, Democracy Watch's court challenge claims that the Ethics Counsellor cannot fairly, impartially, or effectively fulfill his legal duty to investigate lobbyists and uphold the Lobbyists' Code.

Democracy Watch's other complaint, filed on April 12, 2001, alleges that John Dossetor, former senior policy adviser to then-Health Minister Allan Rock, violated the Lobbyists' Code and the Public Office Holders Code when he left Rock's office and immediately began working for Monsanto Canada as VP government relations and failed to register as a lobbyist. Through the time period he served as advisor to Rock, Monsanto Canada was seeking approval from Health Canada for genetically modified foods.

Democracy Watch believes the Ethics Counsellor's behaviour concerning Democracy Watch's eight complaints clearly reveals his bias and failure to uphold his legal duty. Since April 2000, when Democracy Watch filed its first complaint, the Ethics Counsellor has ruled on several other conflict of interest situations, sometimes within days of receiving a complaint. Many of these complaints involved much more complex situations than most of Democracy Watch's complaints.

A win in the court would force the federal government to replace Howard Wilson with another person in the role of enforcer of either Public Office Holders Code or the Lobbyists' Code, to eliminate the conflict caused by one person holding both positions. A win in the court would also mean that the person replacing Wilson would be ordered to rule on Democracy Watch's eight outstanding complaints.

In October, the federal Liberals proposed to replace the Ethics Counsellor with an independent Ethics Commissioner who would enforce the Public Office Holders Code, and to shift responsibility for enforcing the Lobbyists' Code to the Registrar for the Lobbyists Registration Act. A House of Commons Committee and a Senate Committee are currently holding hearings on the proposal. The Liberals promised in the 1993 election campaign to make the code watchdogs independent of the Prime Minister and the Cabinet, then broke that promise while the Prime Minister repeatedly claimed the promise had been kept, and as a result Democracy Watch seriously doubts that the Liberals will act on their October proposal.

Democracy Watch filed its challenge in Federal Court on December 11th (Court file #T-2077-02). Martin Doane of the Toronto law firm of Paliare Roland Rosenberg Rothstein LLP is representing Democracy Watch in the case. The Department of Justice has until January 11th to respond to Democracy Watch's application to the Federal Court, and a hearing should be held by next spring.

Democracy Watch is also currently appealing the dismissal on a technicality of the court challenge of the Ethics Counsellor it filed in the Federal Court on December 3, 2001. That case challenged the federal Ethics Counsellor's structural bias and his ruling under the Lobbyists' Code that Bell Canada Enterprises Inc. (BCE Inc.) did not put Prime Minister Jean Chrétien in a conflict of interest when it gave him the gift of an invitation to participate in the September 2001 Bell Canadian Open Pro-Am tournament with top professional golfer Tiger Woods. Democracy Watch hopes that its appeal will be heard by the Federal Court of Appeal within a few months.

PLEASE NOTE: See details about Democracy Watch's application filed on December 3, 2001 in the Federal Court of Canada challenging, among other things the Ethics Counsellor's lack of independence that, Democracy Watch believes, means that the Ethics Counsellor cannot fairly or impartially uphold the Lobbyists' Code of Conduct.

I. Summary

Between April 2000 and October 2002, Democracy Watch filed 11 complaints with federal Ethics Counsellor Howard Wilson concerning alleged violations of federal ethics rules by lobbyists in relation to politicians (See summary of the 11 complaints in section III below).

The Ethics Counsellor has only issued rulings in 3 of the 11 complaints, while 8 complaints are outstanding.

In seven of the 8 outstanding complaints, the complaint is based upon activities of a lobbyist which Democracy Watch believes violate Rule 8 of the Lobbyists' Code of Conduct which prevents lobbyists from undertaking any activity that constitutes improper influence and puts a public office holder in a conflict of interest situation.

The eighth complaint, filed on April 12, 2001 and concerning John Dossetor, alleges that Dossetor has violated the Lobbyists' Code of Conduct by failing to register as a lobbyist.

Democracy Watch has filed an application in the Federal Court of Canada (Democracy Watch v. The Attorney General of Canada (Office of the Ethics Counsellor) -- Court file #T-2077-02) requesting first that the court judicially review the Ethics Counsellor's position. Democracy Watch claims that the two, legally separate Ethics Counsellor positions, one of interpreting the ethics code for politicians (he reports in private to, and is controlled by, the Prime Minister in this position), and the other of interpreting and enforcing the ethics code for lobbyists, put the Ethics Counsellor in a conflict of interest and mean that the Ethics Counsellor cannot fairly and impartially rule on alleged conflicts of interest involving lobbyists and politicians. Democracy Watch is therefore asking the court to rule that one of the roles of the Ethics Counsellor must be given to another person.

Secondly, Democracy Watch is requesting that the court order the person replacing the Ethics Counsellor to end the unjustifiable delay and rule immediately on the 8 outstanding complaints filed by Democracy Watch.

The Ethics Counsellor has ruled on many other complaints filed by other entities and other conflict of interest situations that have arisen since April 2000, in some cases within days even though the situations were much more complex than most of the situations about Democracy Watch has complained.

In its June 2001 report on the federal lobbying law, the House of Commons Industry Committee recommended (for similar reasons) that the Ethics Counsellor be replaced in his role as enforcer of the ethics code for lobbyists by a new, completely separate office. In his November 9, 2001 response to the Industry Committee report, Industry Minister Brian Tobin stated that the government did not agree with the Committee's recommendation, claiming that the system has "worked well."

On October 23, 2002, the federal government proposed that the federal Ethics Counsellor be replaced in his role of interpreting the ethics code for politicians by a new "Ethics Commissioner" who would, in contrast to the Ethics Counsellor, not be controlled by the Prime Minister in private but instead publicly report to Parliament. The government also proposed that the Ethics Counsellor be replaced in his role of interpreting and enforcing the ethics code for lobbyists by the existing Registrar for lobbyists.

II. Issues of the Court Challenge

1. The Ethics Counsellor Holds Two, Legally Separate Positions (both called "Ethics Counsellor") that are in Conflict and Create Bias

A. Position 1: Administrator and Compliance Advisor under the Public Office Holders Code
In June 16, 1994, the Conflict of Interest and Post-Employment Code for Public Office Holders (the Public Office Holders Code - which covers Ministers, ministerial staff, and other senior government employees and does not have the force of a statute) was re-introduced with amendments by Prime Minister Jean Chrétien.

One of the amendments to the Public Office Holders Code was subsection 5(1) which created a new position called "Ethics Counsellor". Howard Wilson was appointed by the Prime Minister as the first Ethics Counsellor. In this Ethics Counsellor position, the mandate is to administer and apply the compliance measures of the Code.

The Ethics Counsellor reports in private to the Prime Minister and Cabinet in this role, and the Prime Minister has final decision-making power concerning violations of the Public Office Holders Code (under section 24 the Code) if a public office holder disagrees with Wilson's determination. The Prime Minister also has sole power to determine the penalty for violating the Code (under section 25 of the Code).

B. Position 2: Investigator and Decision-maker under the Lobbyists' Code
Following changes to the federal Lobbyists Registration Act in 1995, Howard Wilson was appointed to a position also called "Ethics Counsellor" through Order in Council (P.C. 1996-266, February 26, 1996). The position was created by the new section 10.1 of the Act.

In this Ethics Counsellor position, Wilson was first mandated (under section 10.2 of the Act) to draft, consult with stakeholders, and then finalize a Lobbyists' Code of Conduct (the Lobbyists' Code), which was completed in March 1997. The Lobbyists' Code is not a statutory instrument, but all lobbyists registered under the Act are required to comply with the Code.

Under section 10.4 of the Act, the Ethics Counsellor is empowered to be the investigator and inquiry holder for alleged violations of the Lobbyists' Code, and has the full powers of a court to conduct investigations. The Ethics Counsellor is required under section 10.5 of the Act to report the findings, conclusions and reasons for his conclusions of his investigations to the Registrar General of Canada, who then tables the report in Parliament.

C. The Conflict Between the Two Positions Creates Structural Bias
In order to find, in his position as Ethics Counsellor for lobbyists, that any lobbyist has broken Rule 8 of the Lobbyists' Code and put a public office holder in a conflict of interest, the Ethics Counsellor must find that the public office holder is in a conflict of interest.

However, the Ethics Counsellor, in his position as Ethics Counsellor for public office holders, is effectively controlled by the Prime Minister when making the determination about whether the Prime Minister, other ministers, and other public office holders are in a conflict of interest.

As a result, Democracy Watch believes that the structure of the Ethics Counsellor's two positions mean that he lacks independence and is therefore biased and cannot rule fairly and impartially on conflict of interest situations involving lobbyists and public office holders, or lobbyists with ties to the Liberal Party.

Democracy Watch believes that decision-makers such as the Ethics Counsellor in his position under the Lobbyists Registration Act are required by law to be independent and free of bias.

2. Violation of section 2(e) of federal Bill of Rights

Section 2(e) of the federal Bill of Rights restricts federal laws from infringing the right to a fair hearing in accordance with the principles of fundamental justice.

The appointment by the Governor-in-Council (the federal Cabinet) under section 10.1 of the Lobbyists Registration Act as Ethics Counsellor of the same individual who was appointed Ethics Counsellor under the Public Office Holders Code deprives complainants under the Act of a fair hearing in accordance with the principles of fundamental justice: the Ethics Counsellor in those two roles is subject to a disabling conflict of interest and lack of independence which raises an appearance of bias.

Democracy Watch therefore is requesting that the court remove the Ethics Counsellor from his position under the Act and order the Governor-in-Council to appoint a different person as the Ethics Counsellor under the Act.

3. Bias Creates Unjustifiable Delay with Democracy Watch Complaints Compared to Other Complaints

While the Ethics Counsellor has delayed ruling on 3 of Democracy Watch's complaints for more than 2.5 years, and on 2 of Democracy Watch's complaints for more than 1 year, and for months on 3 complaints made in 1992, the Ethics Counsellor has ruled much more quickly on complaints filed by other entities about situations much more complex than the situations about which Democracy Watch has complained.

For example:

1. NDP MP Lorne Nystrom wrote to the Ethics Counsellor on March 19, 1999 alleging a violation of the Conflict of Interest Code by the Prime Minister (see letter at: http://strategis.ic.gc.ca/SSG/oe01111e.html) and the Ethics Counsellor responded on May 16, 1999 with a finding that the Prime Minister did not violate any ethics rules (see at: http://strategis.ic.gc.ca/SSG/oe01115e.html)
2. On November 17, 2000 Progressive Conservative Party leader Joe Clark and Canadian Alliance Party leader Stockwell Day both filed complaints with the Ethics Counsellor about an alleged violation of the Conflict of Interest Code by the Prime Minister, and the Ethics Counsellor responded to both on November 20, 2000. Three follow-up letters were answered by the Ethics Counsellor within days or weeks. In every case, the Ethics Counsellor found that the Prime Minister did not break any ethics rules (see links to letters on following webpage: http://strategis.ic.gc.ca/SSG/oe01196e.html)
3. Senator Michael Kirby (who according to the Ethics Counsellor is not required to comply with the Conflict of Interest Code) wrote to the Ethics Counsellor on November 14, 2001 about a conflict of interest allegation made against him (See letter at: http://strategis.ic.gc.ca/SSG/oe01190e.html), and the Ethics Counsellor responded in 9 days on November 23, 2002 with a finding that Kirby did not break any ethics rules (See letter at: http://strategis.ic.gc.ca/SSG/oe01191e.html)

III. Eleven Complaints Filed by Democracy Watch

Between April 2000 and October 2002, Democracy Watch filed 11 complaints concerning alleged violations of federal ethics rules by lobbyists in relation to politicians with the Ethics Counsellor in his position under the Lobbyists Registration Act.

Although the complaints date back to April 13, 2000, the Ethics Counsellor has only issued rulings in 3 of the 11 complaints.

The complaints are summarized below (please note, Democracy Watch has also filed one other ethics complaint not summarized below on March 20, 2000, and is still awaiting rulings from the Ethics Counsellor concerning this complaint -- that complaint concerns only politicians violated the politicians' ethics rules).

Details about each complaint can be found on the Government Ethics Campaign webpage of Democracy Watch's website. The date of each complaint corresponds to a news release with the same date on that webpage.

1. Complaints about which Ethics Counsellor has issued rulings

1. A letter dated December 5, 2000 calling for an investigation into a September 2000 meeting between Kevin Lynch, Deputy Minister of Finance and other Department of Finance officials and Peter Dey, Chairman of Morgan Stanley Canada Ltd. and other representatives of Morgan Stanley Canada. According to newspaper reports, a summary memo of the meeting prepared by Dey and distributed to the Morgan Stanley's clients, including Canada's big banks, reported among other things that Lynch had stated at the meeting that the government was willing to "work with the banks" to ensure proposed bank mergers are approved. (NOTE: In January 2001, the Ethics Counsellor ruled that neither Lynch nor Dey had violated ethics or lobbying rules).
2. A letter dated March 27, 2001 called for an investigation into Matthew Johnston who, while serving as Executive Assistant to Canadian Alliance MP Rajim Jaffer, also served as Executive Director of the lobby group, the Canadian Property Rights Research Institute (CanPRRI). Among other lobbying activities, Johnston signed two letters on behalf of CanPRRI to federal officials concerning two different laws. It seemed clear that Johnston was required to register as a lobbyist, but he did not. Also, given his position in Jaffer's office, and the fact that Jaffer publicly endorsed CanPRRI's positions on two issues, Democracy Watch believes that Johnston's activities put Jaffer in a conflict of interest. (NOTE: In August 2001, Wilson ruled that Johnston activities did not cross the threshold requiring registration as a lobbyist, and therefore the Lobbyists' Code did not apply to his activities).
3. A letter dated September 6, 2001 called for an investigation into possible violations of the Public Office Holders Code and the Lobbyists' Code arising from the participation of the Prime Minister in the Bell Canadian Open Pro-Am Golf Tournament on September 5, 2001. (NOTE: on November 6, 2001, the Ethics Counsellor rendered a decision holding that there were no violations of either Code, and Democracy Watch has launched a court challenge of that decision which is still before the Federal Court of Canada (Federal Court File #T-2136-01).

2. Complaints about which Ethics Counsellor has not issued rulings

1. A letter dated April 13, 2000 called for an investigation into whether lobbyist and former Liberal MP Barry Campbell violated the Lobbyists' Code of Conduct, and whether junior finance minister Jim Peterson violated the Public Office Holders Code, when Campbell organized a fundraising event in September 1999 that raised about $70,000 for Peterson (at the time, Campbell represented 10 corporations that were lobbying the Department of Finance); the letter also called for an investigation of other similar events for other ministers.
2. A letter dated September 25, 2000 called for an investigation into whether then-Industry Minister John Manley and senior public office holders at Industry Canada violated ethics rules by having Industry Canada join and participate in BIOTECanada, the registered lobbying association for biotechnology companies, and whether BIOTECanada violated the Lobbyists' Code by allowing the participation.
3. A letter dated November 9, 2000 called for an investigation into the Liberals' Transitional Jobs Fund (TJF) grant approval process in Quebec, which involved ministers, Liberal party officials and party members and raises serious questions about whether the ministers and others involved have broken the Public Office Holders Code and the Lobbyists' Code.
4. A letter dated March 27, 2001 called for an investigation into René Fugère, who was investigated last year by the RCMP for failing to register as a lobbyist. The RCMP dropped the investigation even though clear evidence exists that Fugère was paid by various clients to communicate with public office holders in an attempt to influence the awarding of federal grants, conditions under which the lobbying law clearly requires a person to register as a lobbyist. Given that Fugère is an unpaid aide to Prime Minister Jean Chrétien, and that the Prime Minister's office was involved in at least one of the same grant decisions, Democracy Watch also believes that Fugère's lobbying activities put the Prime Minister in a conflict of interest.
5. On April 12, 2001, Democracy Watch petitioned the Ethics Counsellor to investigate possible violations of the Public Office Holders' Code and the Lobbyists' Code arising from the employment of John Dossetor, former Senior Policy Advisor to the Minister of Health, by Monsanto Canada.
6. On June 17, 2002, Democracy Watch petitioned the Ethics Counsellor to investigate possible violations of the Public Office Holders' Code and the Lobbyists' Code arising from activities of nine particular lobbyists who have worked with either the Prime Minister, a Cabinet minister or opposition MP.
7. On September 26, 2002, Democracy Watch petitioned the Ethics Counsellor to investigate possible violations of the Public Office Holders' Code and the Lobbyists' Code arising from the activities of numerous lobbyists paying to attend a federal Liberal Party golf tournament held on August 19, 2002 in Chicoutimi, Quebec.
8. On October 17, 2002, Democracy Watch petitioned the Ethics Counsellor to investigate possible violations of the Public Office Holders' Code and the Lobbyists' Code arising from secret donations of lobbyists to certain Cabinet Ministers.