[Democracy Watch Logo] [Op-ed]

Nigel Wright's PMO position only possible because of huge loophole in federal ethics rules

Set out below is an op-ed by Democracy Watch Coordinator Duff Conacher which was published on November 5, 2010 on TheMarkNews.com and PublicValues.ca, on November 9, 2010 on rabble.ca, and in the Hill Times November 15, 2010 issue

How is it that a senior executive who stills own shares in a huge conglomerate corporation could serve as Chief of Staff in the Prime Minister’s office and take part in policy decisions on many issues that affect the corporation?

Simple, a loophole in the federal government’s ethics law, the Conflict of Interest Act, allows Cabinet ministers, their staff, appointees and senior government officials to take part in any decision, even if they or their family members or friends have a personal financial interest in the decision, as long as the decision applies generally to a broad group of people or organizations.

This loophole was added to the ethics law by Paul Martin in his first days as Prime Minister in December 2003.  Before making this change, the law prohibited Cabinet ministers and the other senior officials from being in an apparent conflict of interest (a rule that many violated back to 1986 when the rules were first enacted).

However, Prime Minister Brian Mulroney, and then Prime Minister Jean Chrétien and his lapdog Ethics Counsellor Howard Wilson, had all ignored the “apparent conflict” standard and allowed several officials to take part in general application decisions even when they had a financial interest in the decision.

Because Mr. Wilson was a political adviser, not a quasi-judicial decisionmaker, his rulings letting Cabinet ministers and others off the hook for alleged apparent conflicts of interest could not be challenged in court.

Mr. Martin changed the rules as the Ethics Counsellor position was changing into the Ethics Commissioner position, and the Commissioner could be challenged in court because he was a quasi-judicial decision-maker.  Because of his rule change, Mr. Martin could sell his company to his sons and still be involved in decisions "of general application" that affected the company.

Of course, Mr. Martin did not have to worry about new Ethics Commissioner Bernard Shapiro ruling against him because Mr. Shapiro was picked my Martin and continued Mr. Wilson’s well-established record as a lapdog who couldn’t recognize a conflict of interest if it slapped him in the face.

However, Mr. Martin had to worry about someone filing a complaint with Shapiro against him, and then challenging Shapiro's ruling in court.  In fact, Democracy Watch did challenge several of Shapiro's rulings in court, but then Shapiro resigned in spring 2007 which nixed the case.

The Harper Conservatives promised in their 2006 election platform to "Close the loopholes that allow ministers to vote on matters connected with their business interests".  But they broke that promise, and they also put a measure in the Conflict of Interest Act that prevents the public from filing complaints with the Ethics Commissioner that the Commissioner is required to investigate (since then, only MPs and senators can force an investigation).

In summer 2007, the Conservatives hand-picked their own Ethics Commissioner, Mary Dawson, and also changed the law to prohibit anyone from challenging Commissioner Dawson's rulings in court for errors of fact or law.  As a result, she has all the powers and immunity of an actual ethics czar (which is dangerously undemocratic).

Unfortunately, Commissioner Dawson has continued the lapdog tradition, so far letting more than 20 Conservative Cabinet ministers and MPs off the hook for very questionable reasons even though they were involved in very questionable activities, likely in part because none of her rulings can be challenged in court.

However, because of the loopholes in the law, even if Commissioner Dawson was a strong watchdog she would have no choice but to allow Nigel Wright to take part in decisions “of general application” that affect his own, and Onex’s, financial interests.

If you think about it, you quickly realize that 99.9 percent of decisions made by Cabinet ministers, their staff, appointees and senior government officials are decisions “of general application.”  Every law, regulation, tax, subsidy and government program is of general application, applying not just to one person or corporation but to many of them.

As a result, any Cabinet minister or senior official can own shares in any corporation and take part in decisions changing any rule that affects that company, as long as it is a general rule that also applies to other companies.

In other words, the only thing the Conflict of Interest Act prohibits is taking part in decisions about handing a contract to a specific person or company in which they have an interest.

So the "ethical wall" that Ethics Commissioner Dawson is setting up for Nigel Wright will actually be full of holes, and therefore more like an open door that will allow him to take part in many Cabinet decisions.

As well, because of other loopholes, representatives of Onex Corp. or its subsidiaries can lobby Mr. Wright in secret, and despite the so-called five-year ban in the Lobbying Act on lobbying the government after leaving office, the ban is actually only on being a registered lobbyist. 

As a result, Mr. Wright, and any public office holder, can leave office and legally lobby the federal government the next day, as long as they lobby in ways that are not required to be registered (namely, not be paid for their lobbying, lobby as an employee of a for-profit corporation less than 20 percent of their work time, or lobby about the enforcement of a law (however, if they are a former Cabinet minister, senior Cabinet staffperson, or senior government official, they also have to be careful for 1-2 years whom they lobby for, whom they lobby, and on what issue they lobby because of separate rules in the federal Conflict of Interest Act).

If we want government decisions that are in the public interest, the apparent conflict of interest rule must be put back in the federal ethics law to ensure that policy-makers are prohibited from making decisions in which they have an opportunity to further their own and their associates’ personal financial interests.

For more detailsclick here to see a summary of all of the loopholes in federal ethics rules, or go to Democracy Watch's Government Ethics Campaign page