Thursday, October 31, 2002

OTTAWA - As Parliament awaits the political finance reform proposals promised in June by Prime Minister Chrétien's as part of his so-called ethics package, Democracy Watch today released a study revealing links between top federal government contractors and their lobbying and donation activities (Please see chart set out below).

"The study reveals a clear pattern of large donations to the Liberals, and significant lobbying efforts, by most of the corporations that receive the most federal government contract dollars," said Democracy Watch board member Aaron Freeman.

The study examines the lobbying and donation activities of the Top 25 federal government contractors (ranked by dollar value of total contracts). The key conclusions of the study are that:

• 17 of the 25 contractors (68%) are significant donors to the Liberal Party (Please note: only 1-2% of Canadian corporations donate to any federal political party);
• Contractors donated 6.5 times more money to the Liberals than to all opposition parties combined in 2001, and 3 times as much as to opposition parties in 2000;
• The donations divide is even more pronounced at the riding level -- contractors donated $30,814 to Liberal ridings and candidates in 2000-2001, but just $1,000 to opposition parties during those years (Please note: not all donations to ridings are required by law to be disclosed);
• None of the contractors donated to an opposition party without also giving to the Liberals; and
• 16 of the 25 contractors (64%) have a lobbying presence in Ottawa, with a total of 72 lobbyists in 2000, and 84 lobbyists in 2001.

The donation and lobbying patterns of the Top 25 federal government contractors match the patterns of many industry sectors which are regulated by the federal government, and as a result have a great stake in federal government policy-making. For example, Canada's big banks, large telecommunication corporations, construction and engineering corporations, and oil and gas corporations have consistently been the largest industry-sector donors to the federal Liberals for the past several years. In 2000, for example, CanadaÕs big 5 banks and their subsidiaries gave the Liberal Party a total of $700,972.95.

"Corporate executives often claim that they make political donations to support the general democratic process," said Freeman. "But their donation patterns reveal that they consistently donate much more money to the ruling party, raising the suspicion that they are really donating to try to influence the ruling party's decisions."

The study illustrates the need for an overhaul of Canada's undemocratic political finance law, and for more restrictions on the activities of lobbyists. Prime Minister Chrétien has promised changes to the system to require disclosure of donations made to riding associations, trust funds, MPs between elections, party leadership candidates, and to riding nomination candidates. The Prime Minister's promised measures do not go far enough, and the following additional measures are needed to make the federal political finance system democratic:

• full disclosure of the full identities of original donors, and disclosure of the amounts of all donations above $100 made for any reason to any nominee for a riding, candidate for public office, MP, riding association, party, candidate for party leadership, or Senator;
• full disclosure every 3 months and also before a party nomination vote, election or vote for a party leader is held (similar to the U.S.);
• a ban on donations from corporations, unions and other organizations (as in Quebec and Manitoba);
• a limit of $1,000 on donations from individuals;
• an increase in public financing of candidates and parties;
• prohibition on the use of Stornoway or 24 Sussex Drive for fundraising purposes;
• disclosure of the key terms of bank loans made to parties and candidates, including the amount, interest rate and repayment schedule; and
• enforcement by Elections Canada, with all donations available in searchable format on the Elections Canada website.

And the changes to the federal lobbying law proposed last week should be strengthened by including the following measures:

• lobbyists should be required to disclose how much they spend on a lobbying campaign, and past work with candidates, political parties and governments;
• lobbyists should be prohibited from working in senior campaign positions for any party, politician or candidate, and from working for the government or having business ties to anyone who works for the government; and
• the prohibition on lobbying the government for ex-Ministers and ex-senior public officials should be increased to 5 years.

"Canadians have a right to know how much lobbyists are spending to influence the government," said Freeman. "And the revolving door of private interest lobbyists moving in and out of government and political parties must be closed before the government will ever consistently protect the public interest."

Democracy Watch's nation-wide, 50-member group Money in Politics Coalition, and its nation-wide 30-member group Government Ethics Coalition, will push for these stronger and more comprehensive measures to be included in the changes that are finally made to the federal political finance law and federal lobbying law.

The chart set out below outlines the donation and lobbying activities of the top federal government contractor corporations.

Explanation of the Format of the Chart
The top 25 government contractors are ranked according to dollar value of their sales with government.

The number of lobbyists for each contractor is listed by year and type, using the classification system in the Lobbyists Registration Act. "In-house" lobbyists are those directly on staff with a corporation. "Consultant" lobbyists are those hired from outside the corporation (often they work with a lobby firm). "Other" refers to instances in which a lobbyist is working for a coalition or consortium of interests that includes the corporation.

Donations for each company are listed in subsequent columns. Donations to the Liberal party and to ridings (the latter includes donations Liberal candidates) are listed for the 2000 election year and the subsequent year. This is followed by donations made to opposition parties and ridings (including candidates). The far right column indicates to which parties these donations were made.

Sources for Figures in the Chart
Contractors are ranked according to a study done in September 2001 by Summit Magazine, the magazine of Canadian government procurement. The study is contained in an article that can be found at http://www.summitconnects.com/Articles_Columns/Summit_Articles/2001/0901/0901_numbers.htm

The author notes that the numbers are not comprehensive. They are based on Public Accounts figures, and calculations were made with the help of a major auditing firm, but some categories are nonetheless missing. As a result, some contractors may in reality have a higher sales dollar value than the figure listed, and other top contractors may not be listed. However, the numbers are a reliable indicator of who the major government contractors are.

The chart excludes contractors from the Summit list that are government departments or agencies.

Party and riding donations figures were obtained from Elections Canada.

Lobbyist figures were obtained from the federal Lobbyists Registry. Lobbyists were not included in the chart if they were registered for less than three months in either year to lobby for any of the listed corporations.

PLEASE NOTE:

• "Other" Lobbyists includes instances in which the contractor is listed as a member of a "coalition" of interests seeking a contract, grant or policy change.
• "Riding Donations" only include donations disclosed in candidate disclosure forms for the 2000 federal election (federal law did not require any riding donation disclosure in annual party forms in 2000, and still does not require full disclosure of donations to ridings).
• Royal Lepage's "Liberal Paty Donations 2000" includes donations from Royal Lepage Commercial ($5,380), Royal Lepage Haut Richelieu ($869), Royal Lepage Relocation Services ($2,000) and Royal Lepage Simpson ($142).
• Royal Lepage's "Liberal Paty Donations 2001" includes $1,000 from Lepage, plus $1,001 from Royal Lepage Relocation Services.