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Federal Court Justice Orders Democracy Watch To Pay In Advance $10,000 in Costs or Face Dismissal of Its Appeal of a Federal Court Ruling That Legalizes Lobbyists Raising Money and Doing Favours for Cabinet Ministers They Lobby

Friday, August 15, 2008

OTTAWA - In an extraordinary one-line ruling, without giving any reasons, Federal Court of Canada Justice Alan M. Linden recently ordered Democracy Watch to pay $10,000 in advance into court to cover costs it may possibly have to pay in the future to lobbyist Barry Campbell as a result of Democracy Watch’s appeal of the February 2008 Federal Court ruling by Deputy Judge Orville Frenette that legalizes federal registered lobbyists raising money and doing favours for Cabinet ministers they lobby.

Justice Linden’s July 30th ruling on Mr. Campbell’s motion states “Security for costs in the amount of $10,000.00 shall be paid into Court by August 29, 2008, failing which the appeal shall be dismissed.”  Democracy Watch’s appeal application is Federal Court of Appeal file number A-128-08.

Federal Registrar of Lobbyists Michael Nelson initially ruled in October 2006 (on a Democracy Watch complaint filed on April 13, 2000) that a lobbyist raising money for a Cabinet minister while also lobbying the same minister does not create a conflict of interest.  (To see the Registrar's ruling, click here)

Democracy Watch challenged the Registrar’s ruling in the Federal Court (To see Democracy Watch's court application, click here -- To see Democracy Watch's affidavit for the court case, click here -- To see Democracy Watch's factum for the case, click here).  On February 19, 2008 Deputy Judge Frenette issued his ruling which, after only a two-paragraph-long review of the Registrar’s ruling that did not mention relevant evidence or Cabinet ethics rules, concluded that the Registrar’s ruling was reasonable and that Democracy Watch was not a public interest litigant and therefore must pay the costs of the other parties (To see Deputy Judge Frenette's ruling, click here).  Democracy Watch’s appeal contests both of Frenette’s conclusions (To see Democracy Watch's Notice of Appeal to the Federal Court of Appeal, click here -- To see Democracy Watch's factum for the appeal, click here)

"The Federal Court ruling makes it legal for federal lobbyists to do things for federal Cabinet ministers that the ministers’ ethics rules say ministers cannot have done for them by lobbyists," said Duff Conacher, Coordinator of Democracy Watch.  "Democracy Watch is appealing because making it legal for lobbyists to do favours for Cabinet ministers creates conflicts of interest that are dangerous to democracy, as the OECD, the U.S. and other countries, and some Canadian provinces have recognized."

After Deputy Judge Frenette’s ruling, Registrar of Lobbyists Michael Nelson revealed that in December 2005 he had issued a legal notice to all federally registered lobbyists (which he failed to post on his website or make public in any other way) stating that lobbyists will often place politicians in a conflict of interest when they raise money for them or their party or assist them in other ways.  Incredibly, 11 months later the Registrar directly contradicted this notice when he ruled on Democracy Watch’s complaint.

The Registrar’s ruling was on the complaint filed by Democracy Watch on April 13, 2000 about former Liberal MP-turned lobbyist Barry Campbell who, as a favour for Jim Peterson, then-Secretary of State (International Financial Institutions), “organized a benefit dinner for Mr. Peterson’s re-election campaign in 1999, at which $70, 000 was raised, while registered to lobby the Finance Ministry for a variety of financial institutions” (as Deputy Judge Frenette decribed it in para. 2 of his ruling).  Campbell was registered as Chairman of the company APCO Canada to lobby on issues for which Peterson was responsible.  The invitation to the fundraising event was sent out on APCO Canada letterhead, in an envelope and with a return envelope all identifying Mr. Campbell as the lead organizer of the event. (To see Democracy Watch's April 13, 2000 complaint, click here)

Democracy Watch alleged in the complaint that Campbell’s actions violated Rule 8 of the 11-year-old federal Lobbyists' Code of Conduct (Lobbyists’ Code), which 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."
Former Ethics Counsellor Howard Wilson did not issue a public ruling on Democracy Watch’s April 2000 complaint about Mr. Campbell and Mr. Peterson, even though he enforced the Lobbyists’ Code until May 2004, and former Ethics Commissioner Bernard Shapiro refused to rule on the complaint (To see details about Democracy Watch's court challenge of the Ethics Commissioner's failure to enforce ethics rules, which was launched in September 2005, and which Democracy Watch withdrew in spring 2007 after Commissioner Shapiro resigned, click here). 

However, in September 2002 Wilson issued, in the opinion of Democracy Watch, an incorrect and illegal Advisory Opinion about Rule 8 that stated a federal lobbyist only violates Rule 8 if the lobbyist’s actions:

interfere with the decisions of a public office holder (meaning a federal politician, member of their staff, Cabinet appointee, or a public servant) in a way that amounts to a “wrongful constraint whereby the will of the public office holder was overpowered” and/or if the public office holder  “was induced to do or forbear an act which he or she would not do if left to act freely” and/or “whether the lobbyist took advantage of a public office holder's weakness, infirmity or distress to alter that public office holder's actions or decision.”(To see the full text of interpretation, go to: Interpretation Bulletin for Rule 8 of Lobbyists' Code)
The federal Registrar of Lobbyists used the Ethics Counsellor’s Advisory Opinion as the basis of his October 10, 2006 ruling on Democracy Watch’s complaint (even though the Federal Court ruled in July 2004 that the Ethics Counsellor was biased, and the federal Lobbying Act prohibits such opinions)  -- To see a summary of the 2004 Federal Court ruling, click here).  The Registrar concluded that Mr. Campbell had been lobbying Mr. Peterson, but that lobbying does not interfere with a Cabinet minister’s decision-making, and organizing the fundraising event did not wrongfully constrain, induce or take advantage of Mr. Peterson.

Democracy Watch’s position is, given that the Preamble of the Lobbyists' Code states that together it and the 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 the interpretation of Rule 8 of the Lobbyists' Code must be based on public office holders' ethics rules.

There are rules that make it clear what types of influence are improper and cause conflicts of interest in the 22-year-old federal Conflict of Interest and Post-Employment Code for Public Office Holders (which applies to Cabinet ministers, ministerial staff, and many senior government officials) and the Conflict of Interest Act which replaced that Code in July 2007, and in the four-year-old Conflict of Interest Code for Members of the House of Commons and in the three-year-old Conflict of Interest Code for Senators and in the 10-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’s position is that Rule 8 of the Lobbyists' Code prohibits lobbyists from providing money, property or services to a public office holder.

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Duff Conacher, Coordinator of Democracy Watch, Tel: (613) 241-5179
David Baker, bakerlaw, Counsel to Democracy Watch -- Tel: (416) 533-0040 ext. 222

NOTE: The Registrar of Lobbyists ruled on another 2 of the 8 complaints Democracy Watch filed between April 2000 and January 2004 concerning lobbyists doing various things for ministers they were lobbying, but Democracy Watch has not filed a court challenge of those two rulings.  Democracy Watch is still waiting for rulings on 5 complaints -- To see a summary of the history of the 8 complaints, click here

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