Tuesday, March 27, 2001

OTTAWA - Today Democracy Watch released two open letters to federal Ethics Counsellor Howard Wilson, each calling for an investigation of an individual for possible violations of the Lobbyists' Code of Conduct. In addition, Democracy Watch appeared before the House of Commons Industry Committee to present the proposals of the 30-member group, nation-wide Government Ethics Coalition for changes to federal lobbying and ethics rules, and the enforcement system.

Both letters call on the Ethics Counsellor to investigate and determine whether the individuals involved violated the Lobbyists' Code when they failed to register as lobbyists as required by the Lobbyists Registration Act, and by putting a public office holder in a conflict of interest through their lobbying activities (Please see below for copies of the text of the letters). Principles set out in the Lobbyists Code require, among other things, that all lobbyists follow all laws, and rule 8 of the Code prohibits lobbyists from undertaking any action that would put a public office holder in a conflict of interest.

The first letter concerns 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.

The second letter concerns 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 (Contact Democracy Watch for copies of the letters). It seems 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.

Democracy Watch has filed three other requests for investigations with the Ethics Counsellor since last April that involve both a lobbyist potentially violating the Lobbyists' Code and a Minister or senior public officials potentially violating ethics rules.

The Ethics Counsellor is required by the Lobbyists Registration Act to investigate where he has a reasonable belief 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. However, his investigations of ministers and senior public officials are secret and fully controlled by the Prime Minister.

"The Ethics Counsellor is in a constant conflict of interest when investigating lobbyists and ministers who are involved in situations that potentially violate ethics rules," said Duff Conacher, Coordinator of Democracy Watch and Chairperson of the Government Ethics Coalition, "The Prime Minister's control of the Ethics Counsellor's investigations of ministers taints all his rulings."

In addition to calling for the replacement of the Ethics Counsellor with an independent commission that reports only to Parliament and has full powers to investigate allegations of all ethics violations (as in most provinces and territories), the Government Ethics Coalition is calling on the federal government to make the following key changes, among other things, to lobbying and ethics laws:

1. enact ethics rules for all MPs and Senators (every province and territory already has ethics rules that cover every member of the legislature) and also rules for their staff;
2. protect "whistleblowers" who report a violation of ethics rules or other wrongdoing by public officials or the government from retaliation;
3. prohibit Ministers from becoming lobbyists for 5 years after they leave government;
4. require Ministers and other senior public officials to disclose who they meet or communicate with, to ensure that the activities of powerful lobbyists are tracked;
5. prohibit lobbyists from having any business connections with anyone who does work with government; and
6. require lobbyists to disclose how much they and their clients are spending on their campaigns (as required in 33 U.S. states).

"Loopholes and lack of enforcement make the lobbying and ethics rules a licence to corrupt government in secret," said Aaron Freeman, a Board member of Democracy Watch, "The laws must be changed to bring lobbyists out of the shadows and to ensure public officials act ethically and in the public interest."

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

March 27, 2001

Dear Mr. Wilson:

We are filing this letter to request that you investigate situations that Democracy Watch believes raise serious questions concerning violations of the federal Lobbyists' Code of Conduct (the Lobbyists' Code) and the Conflict of Interest and Post-Employment Code for Public Office Holders (the Public Office Holders Code).

The Lobbyists' Code covers all lobbyists required to register under the federal Lobbyists Registration Act, CHAPTER L-12.4 (R.S., 1985, c. 44 (4th Supp.)) (the Act). The Public Office Holders Code covers all ministers of the Crown, ministerial staff and appointees such as deputy ministers and associate deputy ministers.

Media reports through 1999 and early 2000 covered the activities of René Fugère, who reportedly acted at the time as an unpaid aide to Prime Minister Jean Chrétien and as a member of the executive of the Prime Minister's local Liberal riding association. In addition, the media reported clear evidence that Mr. Fugère was involved in the following activities:

1. being paid at least $15,000 to represent Phillipe Clément and his company, Les Maisons Beam International, and its project to build modular homes in Grand-Mère, Québec (in the Prime Minister's riding) in its unsuccessful attempt to obtain over $1 million in federal grants;
2. being paid to represent the Opiticiwan sawmill in Obedjiwan, Québec in its successful attempt to obtain a $300,000 grant from the federal government (the government turned the grant application down twice, but then approved the grant after Mr. Fugère was hired to represent the mill); and
3. representing other companies seeking federal grants, including at least one other company in the Prime Minister's riding.

Mr. Fugère did not register as a lobbyist for any of these activities, even though the media has reported clear evidence that he was being paid to communicate with federal public office holders in an attempt to influence the awarding of grants, conditions under which the Lobbyists Registration Act requires registration as a lobbyist. Also according to media reports, staff of the Prime Minister's Office called Mr. Clément and were active in supporting his company's grant application, and possibly others.

Principles set out in the Lobbyists' Code require that all lobbyists follow all laws, including the Lobbyists Registration Act's registration requirements, and that lobbyists conduct all their relations with "honesty and integrity."

Rule 3 of the Lobbyists' Code states the following:
"3. Disclosure of obligations
Lobbyists shall indicate to their client, employer or organization their obligations under the Lobbyists Registration Act, and their obligation to adhere to the Lobbyists' Code of Conduct."

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 Public Office Holders' Code requires ministers and others covered by 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(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."

We believe that clear evidence exists that René Fugère's activities met the standard that triggers the requirement to register under the Lobbyists Registration Act, and that by not registering he broke the Lobbyists' Code. We also believe, given that he did not register, that he may have also not disclosed to his clients his obligations under the Lobbyists Registration Act and the Lobbyists' Code.

Furthermore, we believe that Mr. Fugère's close working relationship with Prime Minister Chrétien, including his doing favours for the Prime Minister as an unpaid aide and member of the Liberal Party riding association executive, and Mr. Fugère's clear interest in the official matters of the awarding of several grants, raise serious questions about whether his lobbying activities, at least concerning some of the grant applications, placed the Prime Minister in a conflict of interest.

Furthermore, we believe that the Prime Minister or his staff may have, by their own activities, violated various rules of the Public Office Holders Code, as set out above.

We know that you investigated Mr. Fugère for not registering as a lobbyist in 1999, but you did not rule on whether he had broken the Lobbyists' Code by failing to register. Further, you did not investigate whether his activities in any way violated other rules of the Lobbyists' Code, especially rule 8 concerning putting the Prime Minister or other public office holders in a conflict of interest.

As the Ethics Counsellor, 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, and you are required to report your ruling to Parliament.

We believe that a full and detailed investigation is needed to determine whether lobbyists' ethics rules were broken in these situations involving Mr. Fugère.

We therefore request that you use your full powers to investigate these situations and report your rulings on Mr. Fugère to Parliament, as you are legally required to do.

The standard for evaluating activities of public office holders under the Public Office Holders Code is whether "real, potential or apparent conflicts of interest" were 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

Howard Wilson
Ethics Counsellor
66 Slater St., 22nd Floor
Ottawa, Canada
K1A 0C9

March 27, 2001

Dear Mr. Wilson:

We are filing this letter to request that you investigate situations that Democracy Watch believes raise serious questions concerning violations of the federal Lobbyists' Code of Conduct (the Lobbyists' Code) and the Conflict of Interest and Post-Employment Code for Public Office Holders (the Public Office Holders Code).

The Lobbyists' Code covers all lobbyists required to register under the federal Lobbyists Registration Act, CHAPTER L-12.4 (R.S., 1985, c. 44 (4th Supp.)) (the Act). The Public Office Holders Code covers all ministers of the Crown, ministerial staff and appointees such as deputy ministers and associate deputy ministers.

We are concerned about the activities of Matthew Johnston, former Executive Assistant to Canadian Alliance MP Rahim Jaffer. While serving as Executive Assistant, Mr. Johnston 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 (Contact Democracy Watch for copies of letters).

Mr. Johnston did not register as a lobbyist for any of these activities, even though it seeems clear that he was being paid to communicate with federal public office holders in an attempt to influence laws and regulations, conditions under which the Lobbyists Registration Act requires registration as a lobbyist.

Mr. Jaffer publicly supported the position of CanPRRI at least twice, once by arguing in favour of CanPRII's application for charitable status in the House of Commons, and the other time by having an article published under his name in The Hill Times that included, word-for-word, CanPRRI's position on a particular piece of draft legislation.

Principles set out in the Lobbyists' Code require that all lobbyists follow all laws, including the Lobbyists Registration Act's registration requirements, and that lobbyists conduct all their relations with "honesty and integrity."

Rule 3 of the Lobbyists' Code states the following:
"3. Disclosure of obligations
Lobbyists shall indicate to their client, employer or organization their obligations under the Lobbyists Registration Act, and their obligation to adhere to the Lobbyists' Code of Conduct."

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."

We believe that clear evidence exists that Matthew Johnston's activities met the standard that triggers the requirement to register under the Lobbyists Registration Act, and that by not registering he broke the Lobbyists' Code. We also believe, given that he did not register, that he may have also not disclosed to his organization his obligations under the Lobbyists Registration Act and the Lobbyists' Code.

Furthermore, we believe that Mr. Johnston's close working relationship with Mr. Jaffer, who is a public office holder as defined by the Lobbyists Registration Act, and the fact that Mr. Jaffer publicly endorsed CanPRRI's positions on two issues, effectively placed Mr. Jaffer in a conflict of interest.

As the Ethics Counsellor, 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, and you are required to report your ruling to Parliament.

We believe that a full and detailed investigation is needed to determine whether lobbyists' ethics rules were broken in this situation involving Mr. Johnston.

We therefore request that you use your full powers to investigate this situation and report your rulings on Mr. Johnston to Parliament, as you are legally required to do.

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