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News Release

Federal Court of Appeal Hearing on Monday of Landmark Case Challenging Ruling that Approved of a Lobbyist Organizing a Fundraising Event for a Cabinet Minister He Was Registered To Lobby
Ethics Commissioner’s New Guideline Strongly Reaffirms That Federal Cabinet Ministers/Senior Officials Cannot Accept Gifts or Favours From Lobbyists

Friday, January 9, 2009

OTTAWA - Today, as Democracy Watch's historic court challenge of the Registrar of Lobbyists' ruling that a lobbyist did not violate Rule 8 of the Lobbyists’ Code of Conduct when he organized a fundraising event for a Cabinet minister he was registered to lobby is scheduled to be heard in the Federal Court of Appeal in Toronto this Monday, January 12th (File #A-128-08), the group highlighted the federal Conflict of Interest and Ethics Commissioner's new guideline which strongly reaffirms that Cabinet ministers and other senior government officials essentially cannot accept any gifts or favours from anyone lobbying or dealing with them even if the lobbyist is a friend or a relative.
The undated Guideline on Gifts (including Invitations, Fundraisers and Business Lunches) covers gifts of money, property or services as defined under the Conflict of Interest Act and was issued by the Commissioner some time in the past few months.
The Guideline on Gifts sets a world-leading standard that essentially prohibits Cabinet ministers, their senior staff and senior government officials (all of whom are covered by the Act) and their family members from accepting even small gifts and favours (even from relatives and friends) if the giver is someone who is trying to influence, or will be trying to influence, or has or will have dealings with, the minister or government official.
The Guideline on Gifts offers examples of gift givers who will be viewed by the Commissioner 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).
Democracy Watch challenged the Registrar of Lobbyists' October 2006 ruling in Federal Court (the first-ever such court case in Canada) because it believes it directly contradicts past rulings and notices by former Ethics Counsellor Howard Wilson and the Registrar himself that, like the Ethics Commissioner's new Guideline on Gifts, make it clear that a gift from a lobbyist of money, property and services to a Cabinet minister creates a conflict of interest for the minister. (To see Democracy Watch's Federal 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).
In February 2008, Federal Court Deputy Judge Orville Frenette issued a ruling which, after only a three-paragraph-long review of the Registrar's ruling that did not mention Cabinet ethics rules or evidence that Democracy Watch believes is relevant, concluded that the Registrar's ruling was reasonable and that Democracy Watch's application did not raise sufficient questions of public interest and therefore it 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, and will be heard by the Federal Court of Appeal in Toronto this Monday, January 12th (File #A-128-08 -- 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 Ethics Commissioner's new guideline strongly reaffirms that Cabinet ministers and senior government officials cannot accept gifts or favours from people who are lobbying them, and Democracy Watch hopes the Federal Court of Appeal will similarly rule that people who are lobbying cannot give gifts or do favours for ministers and officials," said Duff Conacher, Coordinator of Democracy Watch.

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

  • "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)
  • "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)

Soon after Deputy Judge Frenette’s ruling in February 2008, 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 October 2006 ruling was on the complaint filed by Democracy Watch on April 13, 2000 about former Liberal MP-turned lobbyist Barry Campbell who, 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 described 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.

Democracy Watch alleged in the complaint that Campbell’s actions violated Rule 8 of the 12-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).

In July 2002, Ethics Counsellor Wilson determined that then-Liberal Cabinet ministers Allan Rock, John Manley and Sheila Copps had to return donations they had received for their campaigns for the leadership of the Liberal Party because the donations had come from corporations that were lobbying them (To see details about the Ethics Counsellor's July 2002 decisions, go to Democracy Watch's October 17, 2002 news release).
However, in September 2002 Wilson then 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: Advisory Opinion on Rule 8 of Lobbyists' Code)
The federal Registrar of Lobbyists used the Ethics Counsellor’s Advisory Opinion as part of 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 even though 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 was registered to lobby Mr. Peterson to lobby Mr. Peterson, but that organizing a benefit dinner for Mr. Peterson did not cause Mr. Peterson to treat APCO Canada or its clients favourably, and that the role and discretion of officials in Mr. Peterson’s office were not constrained.

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 23-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 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’s position is that Rule 8 of the Lobbyists' Code prohibits lobbyists from providing money, property or services to public office holders.

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Duff Conacher, Coordinator of Democracy Watch
Tel: (613) 241-5179  

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 for various reasons Democracy Watch did not file a court challenge of those two rulings.  As a result, Democracy Watch is still waiting for rulings on 5 of its complaints from the new Commissioner of Lobbying (who replaced the Registrar of Lobbyists in July 2008) -- To see details and a summary of the history of the 8 complaints, click here

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