Friday, November 10, 2006

OTTAWA - Today, Democracy Watch filed an open complaint letter with federal Ethics Commissioner Bernard Shapiro concerning the promises made not to tax income trusts by the Conservative Party and then-Opposition Leader Stephen Harper during the last election, and the Conservative government’s recent proposal to tax income trusts.  The letters raise questions about whether federal ethics rules requiring that all federal politicians act “with honesty” were violated by Prime Minister Stephen Harper and Finance Minister Jim Flaherty by taxing income trusts, and also claiming that they have not broken the Conservatives’ election promise (To see the letter, click here ).

“The Conservatives and Prime Minister Harper made clear promises in the last election not to tax income trusts, but then recently Finance Minister Jim Flaherty proposed to tax income trusts -- as a result the Ethics Commissioner should have no difficulty finding the Prime Minister and Finance Minister guilty of being dishonest in violation of federal ethics rules,” said Duff Conacher, Coordinator of Democracy Watch.

Democracy Watch’s complaint calls for an investigation of whether Harper and Flaherty violated the  rules that require all federal politicians to act “with honesty” and to increase the public’s “confidence and trust in the integrity” of the government, rules set out in both the Conflict of Interest Code for Members of the House of Commons (the MPs Code) which came into force in October 2004, and also in the 20-year-old Conflict of Interest and Post-Employment Code for Public Office Holders (the Public Office Holders Code).  Both codes are federal laws, and rulings on violations of the codes can be reviewed by courts.

In its complaint letter, Democracy Watch calls on the Ethics Commissioner to delegate his decision-making authority to review the complaint to a provincial ethics commissioner or similar ethics expert because Democracy Watch does not believe, based upon his record since he was appointed in May 2004, that the Commissioner can fairly, impartially or competently investigate and rule on ethics issues.  Democracy Watch filed an application in court in September 2005 challenging the federal Ethics Commissioner for bias, and will continue to pursue legal actions to ensure a fair, impartial ruling on its complaint, and to ensure effective enforcement of federal ethics rules (the Ethics Commissioner is opposing the court challenge and has filed a preliminary motion for dismissal of the court challenge -- September 29, 2005 news release about court application).

In Bill C-2 (the proposed, so-called “Federal Accountability Act”), the Conservatives are proposing to eliminate the “act with honesty” rule from the Public Office Holders Code -- the rule is the only rule in federal law that requires Cabinet ministers to be truthful with the public.  Beyond this government-accountability-undermining proposal by the federal Conservatives, it is currently a violation of federal law and the laws in every province to lie about an election candidate, while it is legal in every jurisdiction except B.C. for elections candidates to lie to voters.

“Politicians across Canada are addicted to lying, and perversely it is illegal for voters to lie about politicians while it is legal in many cases for politicians to lie to voters,” said Conacher. “Canadians need and deserve a strict, effective honesty in politics law with high penalties for violators to stop, finally, the cynicism-breeding, bait-and-switch dishonesty of politicians and government officials.”

In complete contrast, if any Canadian corporation lies in its advertising, only 6 Canadians need to sign and send a letter to the Competition Bureau and the Bureau must investigate and determine whether the corporation lied, and what corrective measures are required, and the Bureau has the power to penalize a corporation that lies in its ads.  For example, the Competition Bureau ruled that Sears Canada was guilty of lying in its advertising in 2005, and Sears was fined millions of dollars.

And if any corporation or corporate executive lies to their shareholders, the shareholders have the right to go to court and seek compensation for the damage done by the lies.  Thousands of shareholders have received compensation for losses caused by the lies of corporate executives in the past decade in North America.

“Democracy Watch is filing this complaint against Prime Minister Harper and Finance Minister Flaherty, and is requesting that the Ethics Commissioner step aside and have someone else rule on the complaint, as part of its ongoing 12-year-old struggle to establish fair, impartial and competent enforcement of federal ethics rules, and honesty in politics,” said Conacher.

Ethics Commissioner Bernard J. Shapiro
Office of the Ethics Commissioner
Parliament of Canada
P.O. Box 16, Centre Block
22nd Floor, 66 Slater
Ottawa, Ontario
K1A 0A6
Fax: 613-995-7308
Email: oec-bce@parl.gc.ca

November 10, 2006

RE: Request for investigation into the statements and actions of Prime Minister Stephen Harper and Finance Minister Jim Flaherty concerning taxing income trusts

Dear Dr. Shapiro:

Democracy Watch is filing this letter to request an investigation of what Democracy Watch believes is a violation of the Conflict of Interest Code for Members of the House of Commons (the MPs Code) by Prime Minister Stephen Harper, and a violation of the Conflict of Interest and Post-Employment Code for Public Office Holders (the Public Office Holders Code) by Prime Minister Stephen Harper, and Finance Minister Jim Flaherty.

Democracy Watch’s position is that serious questions are raised by Stephen Harper’s action during the most recent federal election campaign of promising verbally, and in the Conservative Party’s printed platform, that the Conservative Party would not, if elected as the ruling party, tax income trusts, and his government’s action of announcing taxes of income trusts on Tuesday, October 31, 2006 and his statements following this action.

Mr. Harper was a Member of Parliament (MP) at the time the promises were made, and it is Democracy Watch’s position that, in light of the government’s recent action to tax income trusts, the making of the promises violated the followingrules of the MPs Code:

• “2.  Given that service in Parliament is a public trust, the House of Commons recognizes and declares that Members are expected, . . . (b) to fulfill their public duties with honesty and uphold the highest standards so as to avoid real or apparent conflicts of interests, and maintain and enhance public confidence and trust in the integrity of each Member and in the House of Commons; (c) to perform their official duties and functions and arrange their private affairs in a manner that bears the closest public scrutiny, an obligation that may not be fully discharged by simply acting within the law”

• “3. Every public office holder shall conform to the following principles: Ethical Standards - (1) Public office holders shall act with honesty and uphold the highest ethical standards so that public confidence and trust in the integrity, objectivity and impartiality of government are conserved and enhanced; Public Scrutiny - (2) Public office holders have an obligation to perform their official duties and arrange their private affairs in a manner that will bear the closest public scrutiny, an obligation that is not fully discharged by simply acting within the law.”

The Conservative Party’s printed platform for the most recent federal election (which was made available to all Canadians online on the Party’s website) stated the following on page 32:

“Security for seniors
The Liberal track record for Canadian seniors is a sad story of unfair taxation, poor government services, and now an inexcusable policy blunder that has destroyed the retirement savings of Canadians invested in income trusts.

It is time for a government that respects those who have spent their lives raising families, saving for their retirement, and building this country.

The plan
A Conservative government will:
 . . . • Stop the Liberal attack on retirement savings and preserve income trusts by not imposing any new taxes on them.”

“We will preserve the public pensions programs that sustain so many of our parents, grandparents, and senior citizens, as well as help them benefit from their own savings and not monkey around with their income trusts.”

On November 1, 2006, in the House of Commons, Prime Minister Harper made the following statement about the Conservatives’ promise not to tax income trusts, and the decision to tax income trusts:

"Let us be absolutely clear.  The commitment of this party was not that we would have no taxes for Telus. It was not that we would have no taxes for BCE. It was not that we would have no taxes for foreign investors, or no taxes for major corporations. It was a commitment to protect the income of seniors."

Of course, a proper investigation of whether the honesty and integrity rules in the MPs Code and the Public Office Holders Code have been violated will involve a review of all of the relevant statements and promises made during the election campaign by Mr. Harper and Mr. Flaherty, a review of the effect of the decision, and a review of the statements made by Mr. Harper and Mr. Flaherty about the decision.

Democracy Watch’s position is that the following factors are irrelevant and cannot be considered in making the determination whether Mr. Harper and Mr. Flaherty have violated the honesty and integrity rules in the MPs Code and the Public Office Holders Code:

• effects of the decision on anything other than the public’s confidence and trust in the integrity of each MP, the House of Commons, or the government;
• whether conditions have changed in any way that was not predictable when the promise was made, and;
• the number of Canadians who agree or disagree with the decision, or consider the decision to be good public policy or bad public policy.

In December 2004, a spokesperson for you stated that you would not investigate complaints filed by the public.  However, on March 3, 2006, you stated that you were launching an investigation into David Emerson on your own initiative in part because of requests to do so by the public.  Democracy Watch’s position is that the statements made by representatives of the Prime Minister’s Office when the bill that created the position of Ethics Commissioner was under review by Parliament make it clear that you are fully empowered to review complaints filed by the public about violations of either the MPs Code or the Public Office Holders Code.

Democracy Watch’s position is also that it is a violation of right to freedom of association in the Canadian Charter of Rights and Freedoms to require the public to find an MP or senator who will file ethics complaints on their behalf, because it forces the public to associate with partisan politicians in order to file a complaint.  As a strictly non-partisan organization, Democracy Watch rights will be particularly negatively affected if you refuse to review this complaint, and Democracy Watch is fully prepared to defend its rights if necessary.

In addition, as you know, Democracy Watch has called upon you to resign and filed an application in September 2005 in the Ontario Superior Court of Justice alleging that you are biased against maintaining a reasonable standard of enforcement of the federal ethics codes.

Democracy Watch also has serious doubts about your competence and ability to enforce federal ethics rules properly in part based upon your self-admitted lack of experience and expertise in the area of ethics enforcement, and in part based upon your actions and statements between April 2004 and September 2005.  These doubts have only increased since Democracy Watch’s court application was filed given how you have handled (among other recent actions by you):

• the complaint filed against Conservative MP Deepak Ohbrai;
• the ruling in the complaint filed against Conservative MP Gurmant Grewal;
• the ruling in the complaint filed against Liberal MP David Smith, and;
• the decision not to initiate an investigation into the complaint filed against Liberal Cabinet minister Tony Valeri.

Democracy Watch’s position is that the federal ethics codes not only are very necessary, but also that the law requires that the codes be fairly, impartially, competently and strictly enforced.  Democracy Watch bases its position on the rulings of the Supreme Court of Canada in R. v. Hinchey, [1996] 3 S.C.R. 1128 (Supreme Court of Canada 1996 ruling), and the Federal Court in Democracy Watch v. Canada (Attorney General) (F.C.), [2004] 4 F.C.R. 83 (Federal Court 2004 ruling).

The ample evidence that you have not enforced the codes fairly, impartially, competently and strictly since you were appointed in May 2004, and your weak and incompetent enforcement record, has given cause for:

• representatives of two federal political parties to approve a motion of non-confidence in you in June 2005;
• representatives of all four federal political parties to approve a motion to find you in contempt of Parliament in November 2005,
• all four federal political parties to approve Bill C-2, the proposed “Federal Accountability Act” which eliminates and restructures your position to require that the Commissioner have expertise in the area of ethics enforcement (expertise which you did not have when you were appointed).

In the circumstances, we ask you to set a high standard of government accountability and address this complaint promptly and effectively.  Please let us hear from you on this matter within 30 days of the date of this letter.

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

1. Office of the federal Ethics Commissioner - http://www.parl.gc.ca/oec
Annual Report of the Ethics Commissioner on Activities in Relation to Public Office Holders for the fiscal year ending March 31, 2005 -
http://www.parl.gc.ca/oec/en/media/annual_reports/reports/AR_POH_EN_web.pdf

Annual Report of the Ethics Commissioner on Activities in Relation to Members of the House of Commons for the Fiscal Year ending March 31, 2005 - http://www.parl.gc.ca/oec/en/media/annual_reports/reports/AR_MP_EN_web.pdf

Annual Report on MPs Sponsored Travel for Fiscal Year ending March 31, 2005 -
http://www.parl.gc.ca/oec/en/media/annual_reports/reports/report_2004_en.pdf
 

2. Laws and Codes
Parliament of Canada Act - http://www.parl.gc.ca/37/3/parlbus/chambus/house/bills/government/C-4/C-4_4/C-4_cover-e.html

Conflict of Interest and Post-Employment Code for Public Office Holders (the Public Office Holders Code) -
http://www.parl.gc.ca/oec/en/public_office_holders/conflict_of_interest

Conflict of Interest Code for Members of the House of Commons (the MPs Code) -  http://www.parl.gc.ca/information/about/process/house/standingorders/appa2-e.htm
 

3. Transcripts of Parliamentary Committee Hearings at which the Ethics Commissioner and/or his staff have testified (in chronological order):
Standing Committee on Procedure and House Affairs on April 26, 2004 -  http://www.parl.gc.ca/InfocomDoc/37/3/haff/meetings/evidence/HAFFEV16-E.HTM

Standing Committee on Procedure and House Affairs on October 14, 2004 -  http://www.parl.gc.ca/InfocomDoc/38/1/proc/meetings/evidence/PROCEV02-E.HTM

Standing Committee on Access to Information, Privacy and Ethics on December 8, 2004 -  http://www.parl.gc.ca/InfocomDoc/38/1/ethi/meetings/evidence/ETHIEV07-E.HTM

Standing Committee on Access to Information, Privacy and Ethics on February 10, 2005 -  http://www.parl.gc.ca/InfocomDoc/38/1/ethi/meetings/evidence/ETHIEV10-E.HTM

Subcommittee on the Disclosure Statement under the Conflict of Interest Code for Members of the House of Commons of the Standing Committee on Procedure and House Affairs on April 14, 2005 -  http://www.parl.gc.ca/committee/CommitteePublication.aspx?SourceId=112190

Subcommittee on the Disclosure Statement under the Conflict of Interest Code for Members of the House of Commons of the Standing Committee on Procedure and House Affairs on April 21, 2005 -   http://www.parl.gc.ca/committee/CommitteePublication.aspx?SourceId=111744

Standing Committee on Access to Information, Privacy and Ethics on May 10, 2005 -  http://www.parl.gc.ca/committee/CommitteePublication.aspx?SourceId=116790

Standing Committee on Access to Information, Privacy and Ethics on June 2, 2005 -  http://www.parl.gc.ca/committee/CommitteePublication.aspx?SourceId=119710

Standing Committee on Access to Information, Privacy and Ethics on June 9, 2005 -  http://www.parl.gc.ca/committee/CommitteePublication.aspx?SourceId=120510
 

4. Radio Interviews of the Ethics Commisioner
On September 11, 2004 on CBC Radio’s show “The House” - http://www.cbc.ca/thehouse/audio.html (To listen to the piece, click on the "September 11" link under the heading "2004" on the page the link takes you to -- the piece starts 27 minutes, 50 seconds into the show, and ends 35 minutes, 12 seconds into the show)

On May 3, 2005, the Ethics Commissioner was interviewed on CBC Radio’s “The Current” show -  http://www.cbc.ca/thecurrent/2005/200505/20050503.html (Part 2 of the show)
 

5. Judy Sgro Situation
Ethics Commissioner's June 21, 2005 ruling on the Sgro situation: http://www.parl.gc.ca/sites/ethicscommission/en/media/inquiry_reports/reports/ReportS_EN3_web.pdf

Democracy Watch's news release about the ruling on the Sgro situation - Ethics Commissioner Ruling on Sgro Affair Biased, Flawed -- Avoids Many Key Issues (June 21, 2005)

Democracy Watch's news release about the Ethics Commissioner's investigation of the Sgro situation - Ethics Commissioner Process Biased, Flawed -- Impartial Inquiry Needed into Sgro Affair (May 10, 2005)
 

6. Gurmant Grewal Situation
Ethics Commissioner's June 22, 2005 ruling on the Grewal situation - http://www.parl.gc.ca/oec-bce/site/pages/ReportG_EN1_web.pdf

Democracy Watch's news release about the Grewal ruling -
Ethics Commissioner Again Ignores Rules in Grewal Ruling, Testifies at Illegal House Committee Hearing (June 23, 2005)
 

7. Democracy Watch's Past News Releases and Op-Eds about the Ethics Commissioner
Gaps in Ethics Enforcement Must Be Closed to Ensure Honest, Ethical Government (February 6, 2003)

Ethically Challenged Martin an Example of Systemic Problem with Parliamentarians (February 28, 2003)

Senators, MPs Trying to Protect Themselves from Ethics Accountability (April 17, 2003)

Fatal Flaws in Ethics Watchdogs Bill C-34 -- Watchdogs Lack Coherence, Independence, Transparency and Accountability  (May 20, 2003)

Public Will Be Banned From Complaining About Unethical Politicians, Or Challenging Ethics Rulings -- Fatal Flaws Undermine Bill C-34 (June 10, 2003)

Liberals Want New Ethics Watchdog To Be An Unaccountable Government Lapdog (June 11, 2003)

Democracy Watch Calls on Senate, and PM to Strengthen Bill C-4 and Other Measures to Ensure Effective Ethics/Spending Enforcement (February 17, 2004)

Democracy Watch Hails Passage of Bill C-4, Ethics Enforcement for Federal Politicians Closer Than Ever in Canadian History (March 31, 2004)

Federal Ethics Commissioner Continues Completely Ineffective Enforcement of Cabinet Ethics Rules (Hill Times, April 25, 2005)

Group Calls on Ethics Commissioner to Rule On Deal Making by Prime Minister, MPs and PMO Staffer (May 20, 2005)

Ethics Commissioner Must Rule on PMO Staffer, Fails To Fulfill Legal Duties By Refusing To Do So (June 7, 2005)

Group Files Court Challenge of Federal Ethics Commissioner, Registrar of Lobbyists (September 29, 2005) - Ethics Court Case 2005 Application (September 20, 2005)

Lobbying Laws Endanger the Public - Allow for Secret, Unethical Lobbying (Globe and Mail, October 12, 2005)

Dingwall and TPC Mess Could Have Been Avoided if Former Ethics Counsellor and Lobbyist Registrar Had Done Their Jobs Properly (October 17, 2005)

Federal Liberals' Lobbying Scandal is 11 Years Old (Hill Times, October 24, 2005)
 

8. Summary of Democracy Watch's Eight Outstanding Ethics Complaints