Friday, May 23, 2003

OTTAWA - Today, Democracy Watch held a news conference to release details about its court challenges of federal Ethics Counsellor Howard Wilson's structural bias and rulings on four of eight complaints Democracy Watch has filed since April 2000 alleging that various lobbyists have violated the Lobbyists' Code of Conduct (the Lobbyists' Code) in various ways.  Democracy Watch is still waiting for rulings on the other four complaints, one of which is more than three years old, two of which are more than two years old, and one of which is more than six months old. (Please see Backgrounder 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.

Principles set out in the Lobbyists' Code require, among other things, that all lobbyists conduct all their relations with "integrity and honesty", and “observe the highest professional and ethical standards” including conforming “fully with not only the letter but the spirit” of all applicable codes and laws.  Rule 8 of the Lobbyists’ Code prohibits lobbyists from putting a public official “in a conflict of interest by proposing or undertaking any action that would constitute an improper influence”.

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 is biased in favour of the federal Liberals and cannot fairly, impartially, or effectively fulfill his legal duty to investigate lobbyists and uphold the Lobbyists' Code.

Most of Democracy Watch’s complaints allege that lobbyists violated Rule 8 of the Lobbyists’ Code by doing something for a Cabinet minister (for example, fundraising, organizing or strategizing) while also lobbying the same Cabinet minister.

Democracy Watch believes that the Ethics Counsellor has revealed his bias in favour of the Liberals by delaying ruling on Democracy Watch’s complaints for months and years, and through his rulings concerning Rule 8 of the Lobbyists’ Code of Conduct.  In January 2003, the Ethics Counsellor ruled that a lobbyist only violates Rule 8 if the lobbyist does something to "interfere with the decision, judgment or action" of a public official in a way that amounts to "a wrongful constraint” that overpowers the free will of the public official.”  In other words, a lobbyist has to enslave a public official in order to violate Rule 8.  None of Democracy Watch’s complaints are about lobbyists enslaving politicians, and so in his four rulings the Ethics Counsellor found that none of the lobbyists had broken Rule 8.

"The Ethics Counsellor believes that a lobbyist has to enslave a politician in order to put the politician in a conflict of interest, and Democracy Watch believes the courts will reject this ridiculously ineffective ethics standard," said Conacher.

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 all of the Ethics Counsellor’s past rulings are invalid and therefore all past ethics complaints would have to be re-examined by an independent ethics watchdog.

On April 30, 2003, the federal Liberals introduced Bill C-34 which proposes to replace the Ethics Counsellor with a more independent Ethics Commissioner who will enforce the Public Office Holders Code and a new ethics code for MPs, and proposes to shift responsibility for enforcing the Lobbyists’ Code to the Registrar for the Lobbyists Registration Act.  Bill C-34 still contains many loopholes that will undermine fair and impartial enforcement of federal ethics rules, and Democracy Watch is calling on the committees reviewing the bill to close these loopholes before passing the bill into law.

Democracy Watch filed its court challenges of the Ethics Counsellor’s four rulings in the Federal Court of Canada as follows:

• re: ruling on René Fugère, filed on April 23, 2003, Court File #T-641-03;
• re: ruling on lobbyists working for ministers, filed on April 23, 2003, Court File #T-642-03;
• re: ruling on John Dossetor, filed on April 30, 2003, Court File #T-690-03;
• re: lobbyists secret donations to ministers, filed on May 5, 2003, Court File #T-711-03.

Democracy Watch has withdrawn the three other court challenges of the Ethics Counsellor it had filed in the Federal Court in December 2001, December 2002, and February 2003 as the new court challenges encompass the issues in the past court challenges.  Democracy Watch expects that the Ethics Counsellor will soon rule on Democracy Watch’s four outstanding ethics complaints.

I. Background
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, mostly concerning things lobbyists have done for politicians (e.g. fundraising, organizing, strategizing) while also lobbying the same politicians.

Between April 2000 and September 2001, the Ethics Counsellor issued rulings in 3 of the 11 complaints.  Democracy Watch applied to Federal Court to review 1 of the 3 rulings.  Democracy Watch has withdrawn that court application for technical reasons (See summary of the 3 complaints in Section III, Part 2 below).

In December 2002, Democracy Watch applied to Federal Court for a review of the Ethics Counsellor's bias and failure to uphold legal duties because of the delay in ruling on the other 8 complaints.

In 7 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 violated the Lobbyists' Code of Conduct by failing to register as a lobbyist.

Rule 8 is as follows:

“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.”

Also in response to Democracy Watch's court application, the Ethics Counsellor ruled in March 2003 on 4 of the 8 complaints (See summary of the 4 complaints in Section II, Part 1 below).  The Ethics Counsellor has still not ruled on the other 4 complaints (See summary of the 4 complaints in Section III, Part 1 below).  Democracy Watch has withdrawn the court application concerning delay in ruling, as it expects the other 4 complaints to be ruled on in the near future.
 

II. Issues of the Court Challenges
1. The Rulings are Legally Inaccurate Interpretations of the Lobbyists' Code of Conduct and Lobbyists Registration Act
In January 2003, the Ethics Counsellor issued an interpretation bulletin of Rule 8 of the Lobbyists' Code of Conduct that stated that in order to violate Rule 8 a lobbyist would, among other things, have to "interfere with the decision, judgment or action" of a public official in a way that amounts to "a wrongful constraint whereby the will of the public office holder was overpowered . . . and induced to do or forbear an act which he or she would not do if left to act freely" involving "a misuse of position of confidence" or taking "advantage of a public office holder's weakness, infirmity or distress".

In this intrepretation bulletin, the Ethics Counsellor essentially ruled that in order to violate Rule 8 a lobbyist has to enslave a politician or other public official.

Using this intrepretation of Rule 8, the Ethics Counsellor proceeded through March 2003 to respond to 3 of Democracy Watch's complaints about lobbyists violating Rule 8.  As none of the complaints were about a lobbyist enslaving a politician or other public official, the Ethics Counsellor ruled that none of the lobbyists had violated Rule 8.

Democracy Watch believes the Ethics Counsellor's interpretation of Rule 8 of the Lobbyists' Code of Conduct is legally inaccurate because it contradicts usual interpretations of conflict of interest rules, and contradicts federal ethics rules.  In June 2002, the Prime Minister issued ethics guidelines stating, among other things, that lobbyists working for Cabinet ministers "is a situation that can give rise to the appearance of a conflict of interest."

Therefore, Democracy Watch believes that the actions undertaken by the lobbyists did violate Rule 8 of the Lobbyists' Code.  The 3 Democracy Watch complaints the Ethics Counsellor ruled on are summarized below:

1. On March 27, 2001, Democracy Watch petitioned the Ethics Counsellor to investigate René Fugère, who was investigated by the RCMP for failing to register as a lobbyist.  Fugère was not charged even though clear evidence exists that Fugère was lobbying.  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. (NOTE: The Ethics Counsellor ruled on this complaint on March 21, 2003; Democracy Watch's court challenge was filed on April 23, 2003, Federal Court File #T-642-03)
2. 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 while also lobbying the federal government.  (NOTE: The Ethics Counsellor ruled on this complaint on March 21, 2003; Democracy Watch's court challenge was filed on April 23, 2003, Federal Court File #T-641-03)
3. 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 the leadership campaigns of John Manley, Sheila Copps and Allan Rock. (NOTE: The Ethics Counsellor ruled on this complaint on March 31, 2003; Democracy Watch's court challenge was filed on May 5, 2003, Federal Court File #T-711-03)

1. 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 as its Vice-President, Government Affairs.  (NOTE: The Ethics Counsellor ruled on this complaint on March 27, 2003; Democracy Watch's court challenge was filed on April 30, 2003, Federal Court File #T-690-03)

2. 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 official in a conflict, the Ethics Counsellor must find that the public official 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.

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.  Bill C-34, which contains these and other changes to the federal ethics enforcement system, is currently being reviewed by Parliament.

3. 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.

Democracy Watch believes that 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 (Howard Wilson) 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.  Democracy Watch believes that 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.
 

III. Summary of Other Complaints Filed by Democracy Watch
Between April 2000 and October 2002, Democracy Watch filed 11 complaints with the Ethics Counsellor in his position under the Lobbyists Registration Act concerning alleged violations of federal ethics rules by lobbyists, mostly concerning lobbyists relationships and activities with and for politician.

Part 1 in Section II set out above summarizes the 4 complaints the Ethics Counsellor has ruled on that Democracy Watch has applied to the Federal Court of Canada to review.

Part 1 set out below summarizes the 4 complaints that the Ethics Counsellor has still not ruled on, even though the complaints are from 6 months to over 3 years old.  Part 2 set out below summarizes the 3 complaints the Ethics Counsellor ruled on during 2001.

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 not issued rulings (even though the complaints are 6 months to 3 years old)

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. 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 (and paying to golf with Cabinet ministers) at a federal Liberal Party golf tournament  held on August 19, 2002 in Chicoutimi, Quebec.

2. Complaints about which Ethics Counsellor issued rulings in 2001

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).  From his activities, it seemed clear that Johnston was required to register as a lobbyist, but he was not registered.  Also, given his position in Jaffer's office, and the fact that Jaffer publicly endorsed CanPRRI's positions on two issues, Democracy Watch believed 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 so the Lobbyists'Code did not apply).
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 ruled that there were no violations of either Code, and Democracy Watch launched a court challenge of that decision (Federal Court File #T-2136-01).  Democracy Watch has withdrawn this court challenge)