Thursday, May 23, 2002

OTTAWA - Today, Democracy Watch announced it is filing letters requesting investigations into 5 Senators [NOTE: Now only 4 Senators, see Note set out at top of this page] who are lawyers with provincial lawyer associations which have conflict of interest rules that apply to lawyers who are public office holders. Democracy Watch believes these Senators possibly violated conflict of interest rules by participating on committees reviewing legislation directly affecting a corporation in which the Senators have a financial interest because they sit on the board of the corporation (Please see below for summary chart of Senators and their alleged possible conflicts).

Democracy Watch also believes that several of the Senators are potentially violating the Rules of the Senate, applicable to all Senators. The Rules of the Senate set a much lower ethics standard than the provincial lawyer associations' rules, and are not effectively enforced by the Senate. Democracy Watch called on the federal government and Parliament to establish an ethics code that matches the higher ethical standard in the lawyer association rules, with a fully independent, fully empowered and effective enforcement system.

"Even if lawyer associations find that these Senators who are lawyers have broken the associations' ethics rules, many other Senators can do the same things without breaking any rules or facing any penalty," said Duff Conacher, Coordinator of Democracy Watch. "Ethics rules need to be much stronger for all Senators and MPs, and enforced independently and effectively with high penalties."

Democracy Watch is sending letters to the appropriate lawyer professional associations requesting that they investigate the conduct of 5 Senators [NOTE: Now only 4 Senators, see Note set out at top of this page] who appear to have violated each association's professional code of conduct. For example, The Law Society of Upper Canada's Rules of Professional Conduct state: "the lawyer holding [public] office who sees that there is a possibility of a conflict of interest should declare the possible conflict at the earliest opportunity, and not take part in any consideration, discussion or vote concerning the matter in question."

Democracy Watch also believes that the Senators have possibly violated the existing Rules of the Senate which state: "A Senator who has any pecuniary interest whatsoever, not held in common with the rest of the Canadian subjects of the Crown, in the matter referred to any select committee, shall not sit on such committee and any question arising in the committee relating to that pecuniary interest may be determined by the committee, subject to an appeal to the Senate." Democracy Watch believes that the compensation paid to corporate directors qualifies as a "pecuniary interest" and thereby creates a conflict. Also, it isn't clear whether Senators own shares in the corporations they direct as there is no effectively enforced system requiring Senators to disclose this information.

Since Democracy Watch's research focused only on Senators who are professional lawyers, it is quite possible that there are several other Senators who may also be in violation of the Rules of the Senate. Democracy Watch discovered one such instance involving Senator Nicholas Taylor who chaired meetings of the Senate Committee of Energy, Environment and Natural Resources on Bill C-3, An Act to Amend Eldorado Nuclear Ltd. Reorganization and Divestiture Act and the Petro-Canada Public Participation Act but only revealed that he holds shares in Cameco Corp. (which was created in 1988 out of the merger of Eldorado Nuclear and the Saskatchewan Mining Development Corp.) after Bill C-3 was discussed and passed by the Committee (Please see below for transcript of the Committee and Senate hearings for details).

Democracy Watch called for an end to such weak ethical standards that are so poorly enforced. Recent media reports have stated that the government is planning to establish an ethics code for Senators and Members of Parliament. If true, the code will likely be based upon the March 1997 report by the Special Joint Committee on a Code of Conduct (which unfortunately, but not surprisingly, sets out an even lower ethical standard compared to existing rules for Senators and MPs).

Also unfortunately, but also not surprisingly, the Senators and MPs on the Special Joint Committee recommended that a permanent Joint Committee be established to hold inquiries behind closed doors into conflicts that could not be resolved, behind closed doors, between a Senator or MP and a new office of a "Jurisconsult". The Committee recommended, among other things about the Jurisconsult, that the Jurisconsult have full investigative powers and report to Parliament.

Democracy Watch believes that Senators and MPs should have no role in enforcing their own ethics rules, and that instead of a Jurisconsult there should be a 3-person Ethics Commission. The Ethics Commission should have an investigation division (similar to many other administrative agencies) that conducts investigations in private, and then the Ethics Commission would review investigation results, publicly issue rulings, and penalize Senators or MPs who break the rules.

If a Senator or MP is found innocent by the Ethics Commission, the public ruling would not identify the Senator or MP but would establish the application of the rule to the situation so all would know the standard. Penalties should include fines, reprimands, and dismissal from office.

Such a system, and only such a system, will effectively ensure that ethics rules for MPs and Senators are followed. Such a system would have prevented Senator Mobina Jaffer from testifying before the CRTC in October 2001 on behalf of the proposed LM-TV (she was on the Advisory Committee of this proposed Rogers Communications outlet). Such a system would also be able to investigate and determine whether any of the secret donors to Stephen Harper's Canadian Alliance leadership campaign create a current conflict of interest for him as Leader of the Opposition.

Rule 94 of The Rules of the Senate states:

"A Senator who has any pecuniary interest whatsoever, not held in common with the rest of the Canadian subjects of the Crown, in the matter referred to any select committee, shall not sit on such committee and any question arising in the committee relating to that pecuniary interest may be determined by the committee, subject to an appeal to the Senate."

On May 29, 2001 the Senate Energy, Environment and Natural Resources Committee began hearings on Bill C-3 An Act to Amend the Eldorado Nuclear Ltd. Reorganization and Divestiture Act and the Petro-Canada Public Participation Act.

That meeting and subsequent meetings on Bill C-3, on May 31 and June 5, were chaired by Senator Nicholas Taylor.

Bill C-3 dealt with the limits on foreign ownership in Cameco Corporation, which is the largest producer of uranium in the world and was created in 1988 out of the merger of Eldorado Nuclear Ltd. and Saskatchewan Mining Development Corporation. The substance of the Bill was to raise the limit on individual foreign ownership in Cameco Corp. from 5% to 15% and to raise the maximum that non-resident shareholders could vote from 20% to 25%.

On May 29, the Committee heard from Mr. Bernard Michel, Chair and Chief Executive Officer of Cameco, who testified that the Act was necessary to allow Cameco Corp. to grow and would allow it to "raise equity in foreign markets from about $100 million at today's share price, up to $400 million based on the same value." He proceeded to state that "this is in the interest of Cameco and its shareholders."

At its June 5 meeting, the Committee agreed to dispense with clause-by-clause consideration of Bill C-3 and report the Bill without amendment. However, several minutes later, after the committee had already passed the Bill, the following exchange took place:

The Chairman (Senator Taylor): I would apologize for forgetting, when going through Bill C-3, to tell people that I own some shares of Cameco. I have held those shares for a long time. There was no vote on the bill today. However, I will make this fact public in the Senate chamber.

Senator Kenny: Did you send a letter to the Chairman?

The Chairman: I cannot remember if that holding is in my wife's name.

Senator Christensen: You are supposed to write a letter to the committee.

Senator Kenny: Mr. Chairman, we may require a motion to the effect that the clerk should be advised of anyone who has holdings that pertain to the draft legislation the committee is studying.

The Chairman: Does it have to be specific?

Senator Kenny: My guess is that it would not apply if it is a holding in a mutual fund, but if you have a significant holding of shares, I believe the Rules of the Senate state you have to declare your interest and refrain from voting. If the committee agrees, we will raise the matter in the steering committee and make a recommendation. I know other committees have adopted this transparent method, which is transparent.

The Chairman: I will write a letter.

On June 11, 2001 at 3rd Reading of Bill to Amend - Declaration of Conflict of Interest On the Order:

Resuming debate on the motion of the Honourable Senator Banks, seconded by the Honourable Senator Ferretti Barth, for the third reading of Bill C-3, to amend the Eldorado Nuclear Limited Reorganization and Divestiture Act and the Petro-Canada Pubic Participation Act.

Hon. Nicholas W. Taylor: Honourable senators, I wish to say that I will refrain from voting on this matter. I have already informed the clerk that I own chemical shares, so I cannot and will not and should not be voting on Bill C-3. Order stands.

Bill C-3 was voted on and passed by the Senate on June 12th, 2001.