Information & Ethics Committee on Dec. 13th, 2011

[The Chair, NDP, Jean Crowder]

Good morning, and welcome to the Standing Committee on Access to Information, Privacy and Ethics.

I want to welcome the Commissioner of Lobbying and her staff. I'll leave it up to the commissioner to introduce her staff.

We'll have a presentation from the commissioner, and as usual we will go to our round of questions.

Ms. Shepherd, I'll turn it over to you.

[Karen Shepherd, Commissioner of Lobbying, Office of the Commissioner of Lobbying]

Good morning, Madam Chair and members of the committee.

I am pleased to be here today to discuss the legislative review of the Lobbying Act. I am accompanied by Mr. René Leblanc, Deputy Commissioner, and Mr. Bruce Bergen, Senior Counsel.

Last March I submitted to the committee my report on the experience of administering the act over the last five years. Today I am submitting a revised report. It is essentially the same report, containing my recommendations for improving the Lobbying Act. This report also contains information about three administrative monetary systems currently in existence.

In my view, several aspects of the Lobbying Act are working to increase transparency in government. Approximately 5,000 lobbyists are registered to lobby federal public office holders, and every month hundreds of communications with designated public office holders are disclosed by lobbyists. However, based on my experience, key amendments to the act would capture a greater share of lobbying activities, thus increasing transparency and enabling me to enforce it more decisively.

The Registry of Lobbyists provides a wealth of information on who is engaged in the lobbying activities for payment but does not capture the lobbying activities of organizations and corporations who do not meet the “significant part of duties” threshold. That threshold is difficult to calculate and even more difficult to enforce. That is why I am recommending that the “significant part of duties” provisions be removed from the act. In doing so, I would also recommend that Parliament give consideration as to whom the legislation should capture and whether a limited set of exemptions might be necessary. I would be pleased to explore this issue with Parliament during its deliberations.

The senior officer in a corporation or organization is currently responsible for reporting on its lobbying activities. I believe this accountability is important and should not be changed. That said, I believe it would be more transparent if the names of those actually engaging in lobbying activities at meetings with designated public office holders were also listed in the monthly communication report. Currently, only the senior officer is listed, even though he or she may not have attended the meeting.

I also recommend that all oral communications, regardless of who initiated them and whether or not they were planned, should be reported. Currently, only oral and arranged communications are reported monthly. Deleting “and arranged” would increase transparency by disclosing any chance meetings or other communications between lobbyists and designated public office holders where a registerable lobbying activity takes place.

The Lobbying Act provides me with a mandate to develop and implement educational programs to foster public awareness of the act. Communicating the rationale and requirements of the act and the Lobbyists' Code of Conduct leads to greater compliance. I recommend that this education mandate remain explicit in the legislation.

In terms of my ability to enforce the Lobbying Act, the only measures available to me are referrals to the police for a breach of the act and reports to Parliament for a breach of the code. Previously before this committee, I suggested that these enforcement measures may not be appropriate for the different levels of infractions that I encounter.

When I refer a file to the RCMP, the act requires that I suspend looking into the matter, pending the outcome of their investigation. As I can only continue with my own investigation once a decision has been taken by the RCMP, this affects my ability to render decisions and to table reports to Parliament in a timely manner.

In a previous appearance, I indicated that lobbyists have voluntarily come forward to disclose that they were late in registering or submitting monthly communication reports. I see this as an encouraging sign that lobbyists want to comply with the act. I do not believe the public interest would be well served if I were to refer such files to the RCMP for criminal investigation.

For these and other lesser transgressions, I have decided to educate and monitor the lobbyists. I do not see this as letting them off the hook. Employing such alternative measures encourages others to come forward. In addition, as I indicated, individuals subject to education and/or correction continue to be monitored to ensure they remain in compliance.

For that reason, I am recommending an administrative monetary penalty mechanism be adopted. This would provide a continuum between my current practice of relying on educational measures and the more severe and lengthy processes of referrals to a peace officer or reports to Parliament.

Despite the available penalties under the current act, no one has ever been charged, or convicted, of an offence under the Lobbying Act. I am of the view that, unless there are amendments to include a range of enforcement measures, probabilities of consequences other than reports to Parliament remain low.

As I have mentioned before, the Lobbying Act prescribes that investigations must be conducted in private. This should not be taken as an indication that I am not enforcing the act; in fact, the opposite is true. I am enforcing the act to the full extent provided by the current provisions of the legislation.

Since I became commissioner I have sent six files to the RCMP and I have tabled eight reports in Parliament for breaches of the code, including the one I tabled yesterday.

I continue to believe that conducting investigations in private assures their integrity and protects the reputation of those who may have been wrongly accused. This is not insignificant; however, I have started confirming to parliamentary committees that certain administrative reviews and investigations have been opened when the matter was clearly in the public domain.

As a result, I think it is important that the act be amended to include provisions that would offer the commissioner or any person acting on my behalf some degree of immunity against criminal or civil proceedings, libel, or slander.

I would now like to take this opportunity to address some of the criticisms of the administration of the act and the Lobbyists' Code of Conduct.

At the federal level, a lobbyists' code of conduct has been in place since 1997. Its purpose is to ensure that lobbying activities are conducted at the highest ethical level. Rule 8 of the code has received much attention. Rule 8 prohibits lobbyists from placing public office holders in a conflict of interest.

Political activities are only one way that lobbyists risk placing a public office holder in a real or potential conflict of interest. Because political activities have been the focus, I would like to address this here. Both my guidance and two of my reports to Parliament clearly indicate that helping a person to get elected advances his or her private interest. Political activities by lobbyists in support of persons who seek public office and become public office holders may place those public office holders in a position of conflict of interest when lobby activities also take place. This can result in a breach of rule 8 of the code.

My interpretation reflects the judgment of the Federal Court of Appeal, which was quite conclusive in overturning the old interpretation of rule 8 and in offering clear direction regarding how it should be interpreted.

Contrary to some reports in the media, I do not prohibit lobbyists from engaging in political activities. I believe that lobbyists are professionals and that I have provided them with sufficient information to allow them to make decisions. This enables them to exercise caution when engaging in political activities by taking into account their lobbying activities. In fact, some lobbyists have indicated that the guidance and clarifications were sufficient and they are arranging their affairs accordingly.

The issue of my decision not to provide advance rulings has also been raised in terms of which political activities lobbyists may perform without risk. First, I would like to reiterate that I do not regulate political activities. From my perspective, the issue only arises when political activities intersect with lobbying activities.

Second, I am administering and enforcing the act that Parliament enacted. Under the Lobbying Act, my decisions are judicially reviewable. It is therefore imperative that all my decisions be fair and based on all relevant facts. I must be prudent in relation to advising lobbyists regarding potential situations based on information that could easily change after the advice is given. It would not only put at risk the person to whom I would provide this ruling, but it would also put at risk my ability to look into a matter in the future should there be allegations of improper lobbying activity against this person. My neutrality and my ability to be fair would be compromised.

In conclusion, I want to assure the members of the committee that I've been administering the Lobbying Act as Parliament has enacted it. As the administrator of the act I look forward to working with the committee on the legislative review to find ways to further enhance transparency and better ensure compliance.

Madam Chair, this concludes my remarks.

I want to thank you for your attention and I will now be pleased to answer any questions you or the committee members may have.

[The Chair, NDP, Jean Crowder]

Thank you, Ms. Shepherd.

We're now going to go to the members, with a reminder that it's a seven-minute round to begin with. That includes both your questions and the commissioner's comments.

We'll start with Mr. Angus, for seven minutes.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you, Madam Chair.

Thank you, Madam Shepherd, for coming. It was very interesting and very timely.

I think the issue with lobbying that is very important to us is to ensure.... We're talking about open access to government, efficiency, and making sure the people who represent various organizations or companies are able to meet and provide input on the development of government policies. That's something we don't want to limit.

Our concern is the fly-by-nighters—the people who break the rules, the people who decide to fly under the radar. We have a number of concerns about your inability to actually hold these people to account. In 23 years, nobody has been prosecuted for improperly lobbying. Over 30 have been let off the hook since 2004 for unregistered lobbying. It seems your hands are unfairly tied in terms of weeding these people out and holding them to account in any substantive way.

Given yesterday's report on Mr. Jaffer and Mr. Glémaud, it seems that a financial penalty may be one of the only ways of actually getting characters like this to abide by the law. Do you feel that if we have that administrative monetary penalty it may alleviate some of this below-the-radar lobbying?

[Karen Shepherd]

Yes, that's why it's one of my recommendations. Right now what I have at my disposal is educating and monitoring, on one hand, and the gap that exists at the other extreme, of referrals to the RCMP and reports to Parliament. The ability to have administrative monetary penalties within my control, that I could exercise, would I think help in terms of timely decisions. If I'd had them in the case yesterday, it might perhaps have been a decision not to refer to the RCMP and to have issued penalties, and a decision could have been out earlier.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I want to go through your two options. One is the RCMP and one is education.

Under subsection 10.4(7), if you believe someone has engaged in unregistered lobbying you're immediately forced to suspend your investigation and hand it over to the RCMP. The RCMP have never, ever followed up. We are in a situation where you're unable to continue your work in a timely manner and be accountable to Parliament. The RCMP then rubber-stamps or whitewashes whatever Lobbying Act activity has happened. Then it creates a public impression that it was okay. I think that's very problematic. If the RCMP is going to refuse to follow up, you're left in a position where you've sent it to them and they've said, “We didn't find a problem.” The RCMP never finds a problem.

Would it be better if we change the rules with the RCMP so they have a specific function, but their role is not interfering with your legitimate work on behalf of Parliament to hold these people to account?

[Karen Shepherd]

In terms of the RCMP.... I'm not sure whether it's the intention of the committee to invite them. It might be a suggestion, if I may, to have them come to committee so they can explain the reasons why they have not pursued the different files.

But yes, while the file is over there, I'm conducting it in private, so I can't speak. When it's over there for a period of time, the act requires that I suspend. It would be better to have the administrative penalties. The question for Parliament becomes whether the administrative monetary penalties would be where it stops, or whether there would be a range, where it would actually go to referral to the RCMP for really extreme cases.

In the two models that I've put into the report, which my provincial colleagues in B.C. and Alberta have, both of them have the ability to administer penalties up to $25,000.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I would think that sometimes the administrative monetary penalities should be much higher. In the case of Mr. Jaffer and Mr. Glémaud, they were looking at $178 million in contracts. Flying below the radar was well worth it for them because the risks were fairly minor. The only penalty you could impose is making them write an essay.

With no disrespect to education and writing essays, when I was in primary school Sister Frances Margaret used to have me write lines on the blackboard all the time and it never actually changed my behaviour to any degree. Making Mr. Jaffer write lines on the blackboard for a contract of $178 million I think he would have figured was well worth his time.

We had a situation with Mr. Glémaud, who was a failed Conservative candidate, and Mr. Jaffer, who knew all kinds of people in the Conservative Party, that they were buying influence. The fact that they didn't end up making money on it is neither here nor there; they probably weren't very good at it.

This is my concern. How do we ensure that people aren't able to trade on their influence, trade on who they know, open doors unfairly and get ahead of a process, when other people are playing by the rules? You talked about who this legislation should capture and you mentioned that the names of those who are engaged on behalf of a corporation should be listed. Would that help us to raise the red flags so we can weed these kinds of characters out?

[Karen Shepherd]

My comment, in terms of those who should actually be named in terms of a communication report for attendance, is that right now, with the significant....

Well, there are two things. With the monthly communication reports, they only list the reporting officer; they don't actually list who was in attendance. In this particular situation the individuals didn't think they were required to register, so having the names wouldn't have made a difference. I think you're right that having the ability to issue penalities would maybe be more of a deterrent.

[Charlie Angus, NDP, Timmins—James Bay, ON]

We have the need for penalties, but I'm also concerned about people who are making contact on behalf of companies. It does take two to tango. We've had senior bureaucrats who were passing these files on.

Is there some obligation when a guy like Mr. Jaffer comes calling, who hasn't bothered to register, who is lobbying on behalf of a company for major contracts, for the department to check whether he's on any list and whether that has been clarified to them? Do we need an obligation within the departments themselves?

[Karen Shepherd]

Right now the Lobbying Act places the onus strictly on the lobbyist to ensure compliance.

What I do in terms of my education mandate is to meet with a number of public office holders. What I have done, and I'm now doing again, with the 20 most lobbied departments is to meet with the ministerial level. When I meet with public office holders—and I've gone across the country as well—I educate them about the Lobbying Act.

What a number of public office holders have started to do as a best practice is to ask any individual coming to see them whether they are aware of the Lobbying Act and whether they are in compliance—understanding that compliance may not always necessitate a registration, because right now we have that significant amount of duties test.

[The Chair, NDP, Jean Crowder]

Thanks, Mr. Angus.

Mr. Calkins.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Thank you, Madam Chair.

Commissioner, thank you for being here today. We certainly appreciate this.

You know of course that the Lobbying Act came into existence in 2006 with the Federal Accountability Act, and it has gone through a few changes since then.

Could you highlight what the changes have been since the original version of the act was passed by Parliament, and any of the changes that have trickled down through your interpretation of the code? What's changed since the initial version?

[Karen Shepherd]

You mentioned 2006. In 1989—

[Blaine Calkins, Conservative, Wetaskiwin, AB]

I understand. I mean since the Federal Accountability Act was implemented and the changes subsequent to 2006.

[Karen Shepherd]

Well, the Federal Accountability Act was 2006, and it came into force in July 2008. One of the key changes included making the position I am in an independent agent of Parliament.

It introduced the monthly reporting requirements so that lobbyists are required to update their registration on a monthly basis, first of all, if something changes. It introduced that meetings with designated public office holders should be reported on a monthly basis under certain conditions. The penalties were doubled. The contingency fees were banned. There were some stronger provisions that were brought in.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

And those provisions were brought to bear based on recommendations you made previously? How did those recommendations come about?

[Karen Shepherd]

It was part of the platform of the research.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

I understand that, but those changes came about as a result of pressure, perceived need, and strengthening the legislation so that Canadians could be more confident in the transparency of the lobbying process. We all know the process of lobbying is a bona fide activity. Canadians should have access to the parliamentarians who set policy and make decisions on behalf of all Canadians. Do the changes add value? Is it worth the effort to make the changes? That's where I'm trying to go with this.

You said that you would capture a greater share of the lobbying activities, thus increasing transparency, and that this would enable you to enforce these activities more decisively. Your first recommendation is to remove the significant part of the duties threshold. What do you suppose that would do? Do you have any information? Is it worth the effort to go through this? How many more people do you think this would capture? How many more lobbyists would need to register? What would be the perceived value in doing this?

[Karen Shepherd]

When we're looking at transparency, which is what the act is about, there are now a number of organizations and corporations that are not hitting the threshold. The monthly reporting with designated public office holders is not being captured either. To my mind, it makes sense to look at getting rid of significant amounts of duties and to figure out who should be captured. It is difficult to enforce that test, because in coming up with the percentages you're looking at the number of hours an individual spends lobbying versus the number of hours he actually spends working.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

When you look at legislation in the various parliaments around the world and in Canada, you find that most of it has some type of clause that defines the level of engagement with a parliament, parliamentarians, or public office holders. This is the first case. If we were to follow through on this recommendation, would this be the first one you're aware of without a threshold to trigger a registration with the Commissioner of Lobbying?

[Karen Shepherd]

Yes, that would be correct for my provincial colleagues. We might want to look at replacing the significant amount of duties with a certain number of hours so that it's a little more explicit. You might spend 100 hours performing the lobbying activity, but this would have to include the preparation that goes into it.

The other issue is that a CEO's 15-minute meeting or quick phone call can be quite significant, and if you're looking at a monetary way of counting, you might not capture these events.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

I understand that. You're suggesting that changing the percentage of duties is harder to enforce, harder to capture, than prescribing a set number of hours. Is that right? Once you move from the enforcement level and you're conducting your duties, your next major complaint is that, when you decide to pursue something with the RCMP, you have to stop it. No charges have been laid under the act right now.

The next one is that you want to be able to go straight to administrative penalties as you see fit. Do you think the process of laying a charge or an administrative penalty directly through you rather than through the RCMP is going to have more of a preventative effect than simply tabling a report in Parliament? What are parliamentarians or lobbyists more afraid of, public perception or administrative penalties?

[Karen Shepherd]

Well, I have been saying that tabling reports to Parliament has consequences to an individual's reputation, which I don't think is insignificant. But another reason for the administrative monetary penalty is that there's quite a gap between referrals to the RCMP.... For example, late filings don't warrant going to the RCMP. That's a case I would find...and wouldn't refer right now, because it doesn't warrant going there.

So those are the types of cases I'm looking at in terms of educating and monitoring, and we do monitor to make sure the transgression doesn't happen again. Having the administrative monetary penalty would encourage them—in those kinds of cases especially—to ensure that they register on time. I think transparency is key, and the more timely it is done, the more transparent it is.

[The Chair, NDP, Jean Crowder]

Thank you, Mr. Calkins.

Mr. Andrews, please go ahead.