Thursday, November 12, 2009

OTTAWA - Last Friday, forced by a March 2009 Federal Court of Appeal ruling won by Democracy Watch, federal Commissioner of Lobbying Karen Shepherd finally set out an ethics enforcement Guideline that, if effectively enforced, will essentially mean she will rule that federal lobbyists violate Rule 8 of the Lobbyists' Code of Conduct if they give significant gifts to, or do significant favours (such as fundraising or campaigning) for federal politicians, staff, appointees and government officials they lobby or will lobby in the future.

The March 2009 Federal Court of Appeal ruling won by Democracy Watch completely rejected a guideline on Rule 8 of the Lobbyists' Code that was issued in 2002 by former lapdog Ethics Counsellor Howard Wilson and applied by his lapdog successor Registrar of Lobbyists Michael Nelson.  Together, Wilson and Nelson totally undermined enforcement of Rule 8 and federal lobbying ethics from 1997 (when the Lobbyists Code came into effect) until now.

The new Guideline complies not only the Federal Court of Appeal ruling, but also aligns with the 2008 Guideline on Gifts issued by federal Conflict of Interest and Ethics Commissioner Mary Dawson, and with United Nations, OECD and OAS conventions and guidelines on good government and prevention of conflicts of interest (See details below).

"While the Commissioner of Lobbying's new ethics guideline for lobbyists will help stop the unethical and undemocratic ways some lobbyists use to influence federal Canadian policymakers, closing loopholes that allow for secret lobbying, regular and comprehensive audits of the activities of all lobbyists, and new strong penalties are all needed to ensure all lobbyists comply with the guideline," said Duff Conacher, Coordinator of Democracy Watch.  "Recent scandals show clearly that closing lobbying disclosure loopholes, and similar ethics guidelines and enforcement measures, are also needed by provincial, territorial and municipal governments to reduce the undue influence of high-powered lobbyists across Canada." (To see some details, click here)

Currently, loopholes in the federal Lobbying Act (and similar provincial laws) mean that unpaid lobbyists, and part-time, in-house corporate lobbyists are not required to register and disclose their activities.  Aslo, according to federal Commissioner Shepherd's testimony in June before the Oliphant Commission of Inquiry into the Mulroney-Schreiber affair, the Commissioner does not effectively audit any lobbyist's activities and instead relies solely on media reports and complaints before she undertakes any investigation or other enforcement actions.

As well, federal lobbyists currently face no penalties for violating Rule 8 or any other rule of the Lobbyists' Code of Conduct.

Democracy Watch has five outstanding ethics complaints against federal lobbyists that the Commissioner of Lobbying acknowledged in her 2008-2009 annual report to Parliament are still under investigation and still awaiting rulings by her (because they were never ruled on fairly and impartially by either former Ethics Counsellor Howard Wilson or former Registrar of Lobbyists Michael Nelson -- both of whom were negligent lapdogs who delayed ruling on complaints for years, and let people off the hook, for reasons the March 2009 Federal Court of Appeal described as "deeply flawed"). 

The five outstanding complaints concern lobbyists who helped with campaigns, donated to campaigns or provided other services to various federal politicians including (among others) former prime ministers Jean Chrétien and Paul Martin, and former Cabinet ministers John Manley, Allan Rock, Sheila Copps.

Democracy Watch recently filed two new complaints with the Commissioner of Lobbying (and other federal enforcement agencies) that will also test the effectiveness of the Commissioner's enforcement of the new Rule 8 guideline.  A complaint was filed on October 16, 2009 concerning a fundraising event held by Conservative Parliamentary Secretary and MP Rick Dykstra at the Rogers Centre on September 4, 2009, and another complaint was filed on October 21, 2009 concerning a fundraising event held by Conservative Minister of Natural Resources Lisa Raitt at a restaurant in Toronto on September 24, 2009 (To see details about the two complaints, click here).

Legal background for the new Guideline for Rule 8 of the Lobbyists' Code of Conduct
Based on its very close review of the federal Conflict of Interest Act and federal Ethics Commissioner's 2008 Guideline on Gifts (including Invitations, Fundraisers and Business Lunches) under that Act, and relevant court rulings, Democracy Watch’s opinion is that the only gifts and/or contributions that are permitted to be given to federal Cabinet ministers (including Parliamentary Secretaries) under the Canada Elections Act exemption in clause 11(2)(a) of the Conflict of Interest Act are money, property or the use of property or services provided by an individual up to the contribution limit of $1,100 (or equivalent commercial value) annually, and volunteer labour provided by an individual outside of their area of work and outside of their working hours.

Based on its very close review of the federal Conflict of Interest Code for Members of the House of Commons (the MPs Code) and relevant court rulings, Democracy Watch’s opinion is that it is a violation of the MPs Code for an MP to accept any gift of money, property or the use of property or services (volunteer or otherwise, such as fundraising) from a registered lobbyist, as such a gift can reasonably be seen to be given to influence the MP’s exercise of their public duties.

And based on its very close review of the federal Lobbying Act and Lobbyists' Code of Conduct and relevant court rulings (including the Federal Court of Appeal's unanimous ruling in March 2009), Democracy Watch’s opinion is that it is a violation of Rule 8 of the Lobbyists’ Code for any lobbyist (whether legally and properly registered under the Act or not) to provide, directly or indirectly, to any public office any more money than is allowed to be contributed annually under the Canada Elections Act, or any more property or use of property the commercial value of which exceeds the annual contribution limits under the Canada Elections Act, or any services (whether paid or volunteer) that are significant enough to create within the public office holder a personal sense of obligation to the lobbyist.

Rule 8 of the 12-year-old federal Lobbyists' Code of Conduct (Lobbyists’ Code) states:

"8. 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 Federal Court of Appeal's March 2009 unanimous ruling stated that Rule 8 of the Lobbyists' Code simply "prohibits lobbyists from placing public office holders in a conflict of interest" because "Any conflict of interest impairs public confidence in government decision-making" (para. 48).

The Court of Appeal's ruling went on to clarify specifically that "A lobbyist's stock in trade is his or her ability to gain access to decision makers, so as to attempt to influence them directly by persuasion and facts.  Where the lobbyist's effectiveness depends upon the decision maker's personal sense of obligation to the lobbyist, or on some other private interest created or facilitated by the lobbyist, the line between legitimate lobbying and illegitimate lobbying has been crossed."

The Court of Appeal's ruling follows the same logic, and sets the same ethical standard, as the federal Conflict of Interest and Ethics Commissioner's 2008 Guideline on Gifts (including Invitations, Fundraisers and Business Lunches), which covers gifts of money, property or services as defined under the Conflict of Interest Act and strongly reaffirms that federal Cabinet ministers and other senior government officials (and their family members) essentially cannot accept any gifts or favours from anyone who is trying to influence, or will be trying to influence, or has or will have dealings with, the minister or government official, even if the lobbyist is a friend or a relative. (NOTE: the Ethics Commissioner's guideline is based upon the principles of the science of influence and persuasion -- for more details, click here)

The Ethics Commissioner's Guideline on Gifts offers examples of gift givers who the Commissioner views as giving gifts or doing favours in order to influence a minister or government official, including anyone who is associated with, or lobbying for, any entity that has or may have dealings of any kind with the government institution(s) that the minister or official directs (p.5).
   
"All together, and finally after 142 years of Canada being a country supposedly based in part on good government, the Federal Court of Appeal's ruling, the federal Ethics Commissioner's guideline, and the Commissioner of Lobbying's guideline, strongly reaffirm the standard that federal politicians and government officials and their family members cannot accept gifts or favours from people who lobby them or will lobby them, and that people who are lobbying cannot give gifts or do favours for politicians and officials or their family members," said Duff Conacher, Coordinator of Democracy Watch.

The Guideline on Gifts contains the following key statements (among others):

• "The purpose of prohibiting public office holders or their family members from receiving gifts is to preserve confidence in the integrity of public decision-making.  The determining factor is whether the gift might reasonably be seen to have been given to influence the public office holder's decision-making.” (pp. 4-5);
• "It is important to consider who is offering the gift and why it is being offered. The donor's existing, or future relationship to the public office holder is of particular relevance." (p. 5);
• "A public office holder or family member should consider why a gift is being offered. If a gift is being offered by someone whose interests could be affected by a decision the public office holder may be called upon to make, then the Act will likely apply and prohibit its acceptance." (p. 5), and;
  
• "If a friend is offering a gift in a context not normally associated with gift-giving and the friend is also doing or likely to do business directly or indirectly with the public service entity of the public office holder, then the gift should not be accepted." (p. 7)
  

The Preamble of the federal Lobbyists' Code states that together it and the Conflict of Interest Act and other ethics codes for public office holders (politicians, their staff and government officials) “play an important role in safeguarding the public interest in the integrity of government decision-making”.  Therefore, Democracy Watch has always argued that the interpretation of Rule 8 of the Lobbyists' Code must be based on public office holders' ethics rules.

There are rules that clarify what types of influence are improper and cause conflicts of interest in the two-year-old Conflict of Interest Act, and in the four-year-old Conflict of Interest Code for Members of the House of Commons and in the four-year-old Conflict of Interest Code for Senators and in the 12-year-old federal Values and Ethics Code for the Public Service.

Specifically, all of these codes state that it is improper to receive a gift of money, property or services that could influence a decision.  Given that lobbyists, by definition, try to influence the decisions of public office holders, Democracy Watch believes that a proper application of the Court of Appeal's interpretation and application of Rule 8 of the Lobbyists' Code  prohibits lobbyists from providing money, property or services to public office holders because that can create, in the words of the Court of Appeal, a “personal sense of obligation” by the public office holder to the lobbyist or a “competing private interest” (paras. 52-53).

The Commissioner of Lobbying's new Guideline for Rule 8 of the Lobbyists' Code of Conduct upholds this good government principle.