Monday, June 17, 2002

OTTAWA - At a news conference today, eight years after the Ethics Counsellor's first full day in office, Democracy Watch filed an open letter with Ethics Counsellor Howard Wilson requesting that he investigate and determine whether 9 lobbyists who have reportedly worked with either the Prime Minister, a Cabinet minister or opposition MP are breaking ethics rules for lobbyists (Please see letter set out below).

"You cannot have democratic government when lobbyists are working for politicians or political parties," said Duff Conacher, Coordinator of Democracy Watch. "Lobbyists represent private interests and politicians are legally required to uphold the public interest and tying the two together creates a clear conflict that is destructive to the public interest."

In his recently released so-called "ethics package, Prime Minister Chrétien set out a new ethics guideline for Cabinet ministers which states that a lobbyist cannot work for a minister on a personal political intitiative and also be a lobbyist.

Democracy Watch believes that this guideline is a legally incorrect, and very weak standard for conflicts of interest. Rule 8 of the Lobbyists' Code of Conduct states that: "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" and "public office holder" is defined as including all MPs and Senators. Among other rules, part II, sub-section 23(1) of the Conflict of Interest and Post-Employment Code for Public Office Holders states that "A public officer holder shall take care to avoid being placed or the appearance of being placed under an obligation to any person or organization, or the representative of a person or organization, that might profit from special consideration on the part of the office holder."

As a result of these rules, Democracy Watch believes that a conflict of interest exists when a lobbyist works with any minister (whether or not the lobbyist actively lobbies the same minister) because every minister is involved, through behind-closed-door Cabinet decision-making processes, with every Cabinet decision and therefore cannot have ties to any private interest without creating a conflict. Democracy Watch also believes that a conflict of interest exists when a lobbyist works with any public office holder because Democracy Watch believes that the common law definition of conflict of interest means that no public office holder can have ties to any private interest.

In other words, Democracy Watch believes that lobbyists cannot work with a public office holder in any way without causing a conflict of interest, and that Rule 8 of the Lobbyists' Code in effect means that lobbyists must choose between being a lobbyist and working with public office holders, political parties or candidates for public office.

"The ethics rules clearly draw a line that requires lobbyists to choose between being a lobbyist and working for a political party or politician," said Conacher. "The problem is that the rules are not being enforced strongly or fairly by a fully independent, fully empowered ethics commission. Instead, the rules are being weakly enforced by the Ethics Counsellor who has no independence because he is under the thumb of the Prime Minister."

In its letter to the Ethics Counsellor, Democracy Watch has filed a complaint about the following lobbyists working in the past for the following public office holders (Please see letter set out below for details):

1. David Smith working with Prime Minister Jean Chrétien (Smith currently represents 2 clients lobbying the Privy Council office);
2. Michael Robinson working with former-Minister of Finance Paul Martin (Robinson has for several years and still currently represents 16 clients lobbying the Department of Finance);
3. Richard Mahoney working with former-Minister of Finance Paul Martin (Mahoney has for a couple of years and still currently represents 3 clients lobbying the Department of Finance);
4. Dennis Dawson working with former-Minister of Finance Paul Martin (Dawson has for several years and still currently represents 9 clients lobbying the Department of Finance);
5. Randy Pettipas working with Minister of Industry Allan Rock (Pettipas has for several years and still currently represents 37 clients lobbying the Department of Industry);
6. Warren Kinsella working with Minister of Industry Allan Rock (Kinsella has for over a year and still currently represents 3 clients lobbying the Department of Industry);
7. Isabel Metcalfe working with Minister of Heritage Sheila Copps (Metcalfe has for over a year and still currently represents 3 clients lobbying the Department of Heritage);
8. Herb Metcalfe working with Deputy Prime Minister John Manley (now also Finance Minister, and formerly Minister of Foreign Affairs and Minister of Industry) -- (Metcalfe has for several years and still currently represents over 12 clients lobbying the departments of Industry, Foreign Affairs and Finance); and
9. Timothy Powers working as senior strategist and communications advisor on Grant Hill's campaign for the leadership of the Canadian Alliance (Powers has for a couple of years and at the time of Hill's campaign still represented 6 clients lobbying the federal government).

PLEASE NOTE: Democracy Watch is filing these complaints without prejudice to the application it 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.

PLEASE ALSO NOTE: Democracy Watch filed a complaint on April 13, 2000 with the Ethics Counsellor under the Lobbyists Code of Conduct about a lobbyist, Barry Campbell, organizing a fundraiser for a minister Campbell was registered to lobby, Secretary of State Jim Peterson. The Ethics Counsellor has neglected to rule on this complaint despite Democracy Watch's repeated requests for a ruling and the passing of over two years.

Howard Wilson
Ethics Counsellor
66 Slater St., 22nd Floor
Ottawa, Canada
K1A 0C9
Fax: (613) 995-7308

June 17, 2002

Dear Mr. Wilson:

We are filing this letter to request that you, in your legal position as enforcer of the federal Lobbyists' Code of Conduct (the LobbyistsÕ Code), investigate situations that Democracy Watch believes raise serious questions concerning violations of the federal LobbyistsÕ Code.

Democracy Watch believes that you personally are biased in fulfilling the role of enforcing the Lobbyists' Code because you also hold the separate legal position of compliance officer for the Conflict of Interest and Post-Employment Code for Public Office Holders (the Public Office Holders Code), and as a result you personally cannot fairly and impartially uphold the Lobbyists' Code. As you know, Democracy Watch has filed an application in Federal Court challenging, among other things, the legality of you holding both these positions. However, Democracy Watch is still filing this letter without prejudice to that court application because it believes that, if you are replaced by another person in the legal position of enforcer of the Lobbyists' Code, the position has sufficient independence and powers to fairly and impartially uphold the Lobbyists' Code as set out in sections 10.1 to 10.5 of the federal Lobbyists Registration Act, CHAPTER L-12.4 (R.S., 1985, c. 44 (4th Supp.)) (the Act).

The Lobbyists' Code covers all lobbyists required to register under the Act. Recent media reports have confirmed that the following 9 lobbyists, all of whom are registered under the Act to lobby the federal government, have been in the past for various lengths of time (and, in some cases, are still) working with the following ministers and public office holders on at least one private initiative of each minister or public office holder (and possibly other initiatives), namely running for the leadership of a political party:

1. David Smith working with Prime Minister Jean Chrétien (among current clients are the following for which David Smith has been lobbying the Privy Council Office: W.A. MacDonald Associates Inc. (since April 3, 1998) and Ontario Teachers' Pension Plan Board (since May 1, 2002) ;
2. Michael Robinson working with Minister of Finance Paul Martin (now no longer the Minister of Finance) -- (current clients for which Michael Robinson has been lobbying the Department of Finance are Ernst & Young Chartered Accountants, Canadian Institute of Chartered Accountants, Duke Energy Gas Transmissions, MDS Health Group Ltd., Canadian Pacific Railway Company, Foothills Pipe Lines Ltd. (all since March 29, 1996), Nexen Inc. (since November 25, 1997), Clarica Life Insurance Co. (since February 26, 1998), Petro Canada (since December 21, 1998), Microsoft Canada (since February 5, 1999), the Canadian Gas Association and the Forest Products Association of Canada (both since October 5, 2000), Business Software Alliance (since October 24, 2000), CIBC World Markets (since May 1, 2001), and Mirant Americas Inc. (since October 23, 2001), Encana Corporation (since November 2, 2001);
3. Richard Mahoney working with Minister of Finance Paul Martin (now no longer the Minister of Finance) -- (among his current clients, clients for which Richard Mahoney has been lobbying the Department of Finance are Borealis Funds Management Ltd. (since September 19, 2000), MDS Proteomics (since July 17, 2001), and First International Asset Management (since November 23, 2001);
4. Dennis Dawson working with Minister of Finance Paul Martin (now no longer the Minister of Finance) -- (current clients for which Dennis Dawson has been lobbying the Department of Finance are Ethyl Corporation (since February 19, 1996), Amex Canada Inc. (since November 9, 1996), Eurocopter Canada Ltd. (since July 18, 1997), Service de paie desjardins (since December 16, 1999), Desjardins-Laurentian Financial Corporation (since March 15, 2000), Department of Revenue (State of Alaska - since March 16, 2001), The Mining Association of Canada (since November 30, 2001), Westjet Airlines (since November 30, 2001), and Association des clubs de tennis interieur du Québec (since January 28, 2002);
5. Randy Pettipas working with Minister of Industry Allan Rock (among current clients are the following for which Randy Pettipas has been lobbying Industry Canada: Canwest Alberta Television Inc., United Parcel Service Canada Ltd., Canadian Courier and Messenger Association, Alliance Pipeline Limited Partnership (all since June 4, 1997), Great Canadian Railtour Company Ltd. (since June 18, 1998), Sun Life Assurance Company of Canada (since December 22, 1998), Council of Forest Industries (since March 5, 1999), B.C. Cancer Foundation (since July 13, 1999), Timberwest Forest Corporation (since July 13, 1999), Aliant Telecom Group (since August 31, 1999), Irving Oil Ltd. (since November 8, 1999), Cement Association of Canada (since November 8, 1999), Manitoba Telecom Services (since November 10, 1999), Telemedia Communications Inc. (since November 18, 1999), Sasktel (since December 6, 1999), Canadian Association of Petroleum Producers (since January 18, 2000), Omnitrax Inc. (since May 24, 2000), De Agro Science (since May 24, 2000), BP Canada Energy Company (since May 24, 2000), Ballard Power Systems (since October 4, 2000), Blastradius (since January 9, 2001), Free Trade Lumber Council (since March 28, 2001), Alaska Gas Producers Pipeline Team (since April 10, 2001), Canadian Hake On-Shore Coalition (since July 11, 2001), Encana Corporation (since July 3, 2001), Canadian Association of Oilwell Drilling Contractors (since January 17, 2002), Quest Air (since January 24, 2002), Hemosol Inc. (since February 4, 2002), Fireworks, and B.C. Ferries Corporation, and Merck Frosst Canada & Co., and Air Canada (all since February 25, 2002), Iter Canada, and Metrophonics Inc., and Capital Health (all since March 8, 2002), Chevron Canada Resources (since April 12, 2002), The Mining Association of Canada (since April 30, 2002), and The Region of Halton (since May 21, 2002);
6. Warren Kinsella working with Minister of Industry Allan Rock (among current clients are the following for which Warren Kinsella has been lobbying the Department of Industry: Competition Policy Group (a group of 14 corporations -- from January 8, 2001 to May 16, 2002), Micheline North America Inc. (since January 8, 2001); Labatt Breweries of Canada (since December 27, 2000), and United Airlines (since January 8, 2001);
7. Isabel Metcalfe working with Minister of Heritage Sheila Copps (current clients for which Isabel Metcalfe has been lobbying the Department of Canadian Heritage are Canadian Independent Film Caucus (since January 4, 2001), Writers Guild of Canada (since December 11, 2001), and Banff Television Foundation (since December 11, 2001);
8. Herb Metcalfe working with Deputy Prime Minister John Manley (now also Finance Minister, and formerly Minister of Foreign Affairs and Minister of Industry) -- (among his current clients for which Herb Metcalfe has lobbied the Department of Industry for several years are Frontier Duty Free Association, and the Canadian Recording Industry Association, and Molstar Sports & Enterntainment, and the Northwest Cruiseship Association, and Aventis Pasteur, and Canadian Tire Corporation Ltd. (all since February 27, 1996), Cineplex Odeon Corporation, and the Music Copyright Action Group, and Lockheed Martin Electronic Systems Canada (all since March 29, 1996), Sony Retail Entertainment, and Loews Cineplex Entertainment (both since October 29, 1997), AOL Canada (since February 16, 1999), GE Aircraft Engines Canada (since March 14, 2000), Strategic Relationships Sourcing Inc. (since March 22, 2000), Alliance Atlantis Communications Inc. (since May 17, 2000), Astrazeneca Canada Inc. (since May 17, 2000), Canadian Association of Broadcasters (since November 2, 2000), Bridgestone Firestone Canada Inc. (since November 14, 2000), and Trans Canada Trail (since May 8, 2000); -- clients for which Herb Metcalfe has been lobbying the Department of Foreign Affairs are AOL Time Warner (since August 14, 2001), Yukon Economic Development (since August 27, 2001), Canadian National (since August 27, 2001), and Canada Bank Note (since October 23, 2001); -- clients for which Herb Metcalfe continues to lobby the Department of Finance are Frontier Duty Free Association (since February 27, 1996), Northwest Cruiseship Association (since February 27, 1996), Canadian Tire Corporation Ltd. (since February 27, 1996), Primerica Financial Services (since February 26, 1997), Barclay's Global Investors Canada Ltd. (since February 3, 1997), RBC Dominion Securities (since August 15, 1997), GE Aircraft Engines Canada (since March 14, 2000), Strategic Relationships Sourcing Inc. (since March 22, 2000), Edulink Canada Corporation (since April 20, 2000), Canadian Association of Broadcasters (since November 2, 2000), Trans Canada Trail (since May 8, 2000), Yukon Economic Development (since August 27, 2001), Canadian National (since August 27, 2001), and AT&T Corp. (since January 23, 2002); and
9. Timothy Powers working as senior strategist and communications advisor on Grant Hill's campaign for the leadership of the Canadian Alliance (clients for which Timothy Powers was lobbying the federal government while working for Grant Hill are Government of Yukon, International Fund for Animal Welfare, CGI Information Systems and Management Consultants Inc., Emera Inc, and Mounted Police Members' Legal Fund.

By "working with" Democracy Watch means doing anything that benefits the minister or public office holder in any way.

Recent media reports have confirmed that most of these lobbyists have been working with a minister who heads a government department the lobbyist is lobbying (or recently stopped lobbying), as indicated in each lobbyist's registration in the registry of lobbyists.

Principles set out in the Lobbyists' Code require that all lobbyists follow "not only the letter but the spirit" of the Lobbyists' Code and all relevant laws, including the Lobbyists Registration ActÕs registration requirements, and that lobbyists conduct all their relations with "integrity and honesty" and "observe the highest professional and ethical standards."

In addition, Rule 8 of the Lobbyists' Code states the following:
"8. Improper influence 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 Act defines public office holders, including all members of the House of Commons and the Senate (subsection 2(1)).

The Public Office Holders' Code requires ministers and others covered by the Code to adhere to the following rules (NOTE: "Every public office holder" (including, Democracy Watch believes, all members of the House of Commons and the Senate) is required to conform with the principles set out under Part I, section 3 of the Code, while only specific public office holders (defined in section 4 of the Code) are required to adhere to the other rules contained in the Code):

• under Part I, sub-section 3(1), "to uphold the highest ethical standards so that public confidence and trust in the integrity, objectivity and impartiality of government are conserved and maintained."
• under Part I, sub-section 3(2), "to perform their official duties ... in a manner that will bear the closest public scrutiny, an obligation that is not fully discharged by simply acting within the law."
• under Part I, sub-section 3(4), "Public office holders shall not have private interests, other than those permitted pursuant to this Code, that would be affected particularly or significantly by government actions in which they participate."
• under Part I, sub-section 3(5), "to arrange their private affairs in a manner that will prevent real, potential or apparent conflicts of interest from arising but if such a conflict does arise between the private interests of a public office holder and the office duties and responsibilities of that public office holder, the conflict shall be resolved in favour of the public interest."
• under Part I, sub-section 3(7), to "not step out of their official roles to assist private entities or persons in their dealings with the government where this would result in preferential treatment to any person."
• under Part II, subsection 23(1), to "take care to avoid being placed or the appearance of being placed under an obligation to any person or organization, or the representative of a person or organization, that might profit from special consideration on the part of the office holder."
• under Part II, subsection 23(2), in the formulation of government policy or the making of decisions, to "ensure that no persons or groups are given preferential treatment based on the individuals hired to represent them"; and
• under Part II, subsection 23(3), to "not accord preferential treatment in relation to any official matter to family members or friends or to organizations in which they, family members or friends, have an interest."

Democracy Watch believes that a reasonable interpretation and application of these rules in the Lobbyists' Code and the Public Office Holders Code, along with a reasonable interpretation of the common law standard for finding that a public office holder is in a "conflict of interest", would result in the conclusion that the 9 lobbyists named above have violated Rule 8 of the Lobbyists' Code.

Democracy Watch believes that the conclusion that a lobbyist has violated Rule 8 should be reached for any lobbyist that is working with any public office holder, whether or not the lobbyist is working with a minister whom the lobbyist is also lobbying, and whether or not the public office holder is a minister of the government.

Democracy Watch believes that a conflict of interest exists when a lobbyist works with any minister (whether or not the lobbyist actively lobbies the same minister) because every minister is involved, through behind-closed-door Cabinet decision-making processes, with every Cabinet decision and therefore cannot have ties to any private interest without creating a conflict. Democracy Watch also believes that a conflict of interest exists when a lobbyist works with any public office holder because Democracy Watch believes that the common law definition of conflict of interest means that no public office holder can have ties to any private interest.

In other words, Democracy Watch believes that lobbyists cannot work with a public office holder in any way without causing a conflict of interest, and that Rule 8 of the Lobbyists' Code in effect means that lobbyists must choose between being a lobbyist and working with public office holders, political parties or candidates for public office.

In your legal position as Ethics Counsellor enforcing the Lobbyists' Code, you are required under the Lobbyists Registration Act to investigate if you have a reasonable belief that a violation of the Lobbyists' Code has occurred. You have the full powers of a judge in your investigation (including the power to subpoena witnesses and compel evidence), and you are required to report your ruling to Parliament (via the Registrar General of Canada).

We believe that a full and detailed investigation, using all of your investigative powers, is justified and needed to determine whether the 9 lobbyists named above have violated Rule 8 of the Lobbyists' Code.

We therefore request that you use your full powers under the Act to investigate these situations, determine if any of the named lobbyists have violated Rule 8 of the Lobbyists' Code, and report your rulings on these lobbyists to Parliament, as you are legally required to do.

We also request that if you learn of other registered lobbyists working with ministers, meaning doing anything that benefits the minister in any way, that you initiate investigations into whether they are violating Rule 8 of the Lobbyists' Code.

The standard for evaluating activities of public office holders under the Public Office Holders Code is whether "real, potential or apparent conflicts of interest" have been created (emphasis added). This standard creates an affirmative obligation on all public office holders to avoid even potential or apparent conflicts of interest.

We look forward to your investigation of this matter, and await your reply.

Sincerely,
Duff Conacher, Coordinator
On behalf of the Board of Directors of Democracy Watch