Information & Ethics Committee on March 4th, 2013

[W. Scott Thurlow]

I would add that there's another officer of Parliament you can consult, and that would be the Chief Electoral Officer. The Chief Electoral Officer has dealt with this issue very specifically in the value that you, Blaine Calkins, as a member of the committee, would receive by attending that event—the cost of the chicken, the cost of the lettuce, the cost of the plates—and then everything else would be deemed a political contribution.

There is some insight that you could gain from that about what would be an acceptable threshold or not, but ultimately, as far as we're concerned, there is an effect. It's an effect that is going to have an adverse impact on the ability of charities, the ability of individual community organizations, separate and apart from the wing inside Ottawa, to sustain themselves. I'd be very, very concerned about it.

[The Chair, NDP, Pierre-Luc Dusseault]

Once again, I want to thank you for joining us.

That brings our first hour to an end. We will suspend the meeting for a few minutes, so that you can leave the room. Thanks again.

We will be back in two minutes.

[The Chair, NDP, Pierre-Luc Dusseault]

We are starting the second hour of our meeting with the representatives of the Office of the Commissioner of Lobbying. The Commissioner of Lobbying, Ms. Shepherd, and Mr. Bergen, senior counsel, are here on behalf of the office.

We are continuing the statutory review of the Conflict of Interest Act. You have 10 minutes to make your presentation. As usual, that will be followed by a question and answer period.

Ms. Shepherd, thank you for joining us. You may go ahead with your presentation.

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

Mr. Chair, members of the committee, good afternoon. I am pleased to be here today to discuss the legislative review of the Conflict of Interest Act. I am accompanied by Bruce Bergen, our Senior Counsel.

As the Commissioner of Lobbying, I am mandated with administering the Lobbying Act and the Lobbyists' Code of Conduct.

The Lobbying Act outlines requirements for lobbyists who are communicating with government decision-makers and is intended to ensure transparency in lobbying activities. The Conflict of Interest Act applies to government decision-makers and establishes a framework for preventing conflicts of interest from arising. In this way, the two pieces of legislation are complementary.

Today, I would like to share with you my perspective on matters where the two statutes may deal with related topics, such as the definition of public office holders, the treatment of post-employment periods for public office holders, and the interpretation of conflict of interest.

The first point I would like to make is that the definition of “public office holder” is different in the two pieces of legislation.

In addition, each act provides for a subcategory of public office holders—reporting public office holder in the Conflict of Interest Act, and designated public office holder under the Lobbying Act—to which specific requirements apply.

Several public office holders are captured by both subcategories, including ministers, ministers of state, parliamentary secretaries and ministerial staff. The Governor in Council appointees are considered reporting public office holders under the Conflict of Interest Act, but, with the exception of deputy ministers and associate deputy ministers in government departments, are not designated public office holders under the Lobbying Act.

In addition, the Lobbying Act considers certain public servants—such as assistant deputy ministers—as designated public office holders, while the Conflict of Interest Act does not apply to them. All members of the House of Commons and senators have been identified as designated public office holders, but the Conflict of Interest Act does not apply to them unless they are ministers, ministers of state or parliamentary secretaries.

These differences regarding who is covered by each piece of legislation are a source of confusion for public office holders. This is especially true when it comes to determining which post-employment prohibitions one is subject to.

Under the Conflict of Interest Act, reporting public office holders are subject to a one- or two-year prohibition on certain activities, which may include lobbying activities. The Lobbying Act prohibits designated public office holders from working as lobbyists, except under certain circumstances, for a period of five years. This can be confusing for individuals who are subject to both acts.

It is essential to make it clear to former public office holders that there are two different post-employment regimes, so they do not find themselves in breach of one of them.

I have worked with Commissioner Dawson's office to avoid this confusion. For example, a reference to the post-employment prohibitions that apply to former designated public office holders in the Lobbying Act is now added to letters sent by Commissioner Dawson to former members of Parliament when they leave office. I believe this will help alleviate some of the confusion between the post-employment restrictions contained in each statute.

I understand that Commissioner Dawson is recommending that the definition of reporting public office holder exclude interns and summer students who are ministerial staff for terms of less than six months.

From what I understand, this would mean that interns and summer students would not be subject to the one-year post-employment period currently in place under the Conflict of Interest Act.

Some interns and students working as ministerial staff, if hired under the Public Service Employment Act, are subject to the five-year prohibition on lobbying activities contained in the Lobbying Act.

The Lobbying Act gives me the power to grant an exemption from the prohibition to former designated public office holders if it would not be contrary to the purposes of the act. I have taken a strict view of the act and I have granted nine exemptions out of the 21 applications from former designated public office holders that I have considered to date.

One of the grounds provided by the act for granting an exemption is that an individual was employed under a program of student employment. Three of the nine exemptions I granted since July 2008 were granted to individuals on the basis of their being employed through a student employment program. In my opinion, Parliament may wish to consider the application of the post-employment prohibitions in both the Lobbying Act and the Conflict of Interest Act to individuals employed under a program of student employment.

As I mentioned earlier, I am also responsible for administering the Lobbyists' Code of Conduct. The code has been in place since 1997. Its purpose is to ensure that lobbying activities are conducted at the highest ethical level. The code comprises three principles and eight rules. Rule eight of the code deals with improper influence and conflict of interest. This rule prohibits lobbyists from placing public office holders in a situation that would create a conflict of interest.

In a judgment issued in March 2009, the Federal Court of Appeal offered clear direction regarding how the question of conflict of interest should be interpreted. My interpretation of what constitutes a conflict of interest and the guidance that I have provided to lobbyists flow from this decision. For a lobbyist, rule eight of the code is about avoiding placing public office holders in a situation that creates either a real or an apparent conflict of interest.

A conflict of interest may arise when a lobbyist offers a gift or anything of value to a public office holder while lobbying this same public office holder or their organization. My experience in enforcing rule 8 of the code is that lobbyists generally seek to avoid placing public office holders in a real or apparent conflict of interest.

Commissioner Dawson recommends that the current threshold of $200 for requiring public declarations of gifts received be lowered to a value of $30. This recommendation will improve transparency in terms of the gifts public office holders are receiving from lobbyists. In my view, however, the monetary value of a gift is not the most important test of whether that gift is acceptable—particularly those gifts given by lobbyists to public office holders. The test for acceptability requires a consideration of whether the giving of a gift could reasonably be seen to influence public office holders' decisions to the detriment of the public interest.

In 2010, I tabled two reports on investigation in Parliament, on the lobbying activities of Michael McSweeney and Will Stewart, in which I found the lobbyists in breach of rule 8 for having placed a minister in an apparent conflict of interest. They did so by helping to organize and sell tickets for a fundraising event for the minister's electoral district association. These lobbyists were at the same time lobbying the minister. Although they were properly registered, I concluded that the actions of the lobbyists created a reasonable apprehension that the minister had been placed in what appeared to be a conflict of interest. In reviewing the same situation in relation to Michael McSweeney, Commissioner Dawson in her report under the Conflict of Interest Act concluded that Minister Raitt had not taken any action that created a conflict of interest. However, she noted in her report that she was concerned that should a situation arise where the minister had to make an official decision involving the lobbyist, she could be subject to allegations of preferential treatment because of his work on the fundraiser.

As mentioned in my reports on investigation, I believe that raising funds for the minister's riding association advanced the private interest of this minister by helping her get re-elected as a member of Parliament. In my opinion, private interest is not limited to financial interest or to an interest that generates a direct personal benefit. In my view, it is broader and includes such things as political advantage and family interests, if those interests could recently be considered to create a tension between the public office holder's public duty and his or her private interest.

In summary, I believe that the Conflict of Interest Act and the Lobbying Act are key to achieving greater ethical behaviour, with the ultimate objective of enhancing the trust of Canadians in government's decision-making.

Mr. Chair, this concludes my remarks. I would now be pleased to answer any questions you or the committee members may have.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you for this presentation.

We will begin the question and answer period with Mr. Angus, who has seven minutes.

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

Thank you, Mr. Chair.

Thank you, Madam Shepherd, for coming here and, as always, giving us a very clear and concise interpretation of your work. I'd like to put this review and our review of the Lobbying Act into context. We felt that rules needed to be tightened because of a widespread disgust about big money unduly influencing politicians. Rules were brought in and standards were set. Now sometimes we might chafe against some of those rules because they may seem a little arbitrary, but the reason those rules were put in place was to stop the backroom influence that was plaguing Ottawa.

In looking at your reports, I'm really impressed with their clarity. In fact, in the reports on Michael McSweeney and Will Stewart, you found that they were in breach of rule 8 by placing the minister in an apparent conflict of interest. It was because they were helping to organize and sell the tickets to a fundraiser. They were playing an active role. In your act, the issue is real and apparent and these seemed perhaps to have an equal weight, or at least there's a clear weight there.

In the review we're doing, we're not getting a clear sense from the commissioner whether she sees fundraising as a personal benefit or not. You've said that it clearly is. Do you think that if we had clarity in the language in both acts, that it should be real and apparent, it would help to alleviate any possible conflict of interpretation between your office and Ms. Dawson's?

[Karen Shepherd]

In terms of the definition for conflict of interest, the Lobbyists' Code of Conduct refers to three rules that deal with conflict of interest. The court case that I referred to in my opening remarks provided clear direction that it's not just looking at a real conflict of interest, but also an apparent conflict of interest, because just to look at a real conflict of interest would be to say that other conflicts are acceptable. When I look at other definitions, even of private interest for example, using a broader definition is consistent with the OECD's definition as well.

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

I guess the issue in terms of the word “apparent” is that the line could be used—and it was used with Mr. Jaffer's case and Bruce Carson's—that they weren't successful in lobbying, so there wasn't a problem. The only way you could have a real conflict is if they actually were successful, but it's the issue of stopping that lobbying, the importance of public office holders knowing that there's a line that has to be maintained, and, again, 95% of the lobbyists are going to follow the rules, but it's the ones who aren't following the rules that we have to make sure of. How important is that word apparent in terms of keeping the line very clearly drawn?

[Karen Shepherd]

Just to make a small correction regarding the Rahim Jaffer case, it wasn't about conflict of interest. The issue was that the individual had not registered.

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

As a lobbyist, yes.

[Karen Shepherd]

Yes, as a lobbyist. So you're correct in that it's not whether the undertaking is successful or not, but the actual activity of communicating on a registerable activity that requires registration.

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

That's what I wanted to clarify, because I've heard it said, “Well, they weren't successful so what's the problem?” But the issue is that we have a clear line about that apparent conflict, that people know what that means so that there's no ambiguity there. That's what we're trying to weed out.

I'd like to ask you—we've had so many questions going back and forth—whether or not going to your local Heart and Stroke Foundation dinner as a member of Parliament is the same as receiving a gift from a lobbyist who is trying to influence you. We are getting ourselves caught up in a morass here. Under the Lobbying Act, a public office holder is defined as “a member of the Senate or the House of Commons, or any person on the staff of such member.” Under the Conflict of Interest Act, a public officer holder is a minister of the crown, member of ministerial staff, ministerial adviser, or governor in council appointee. It doesn't seem to have the exact same definition.

Am I reading that correctly, that under the conflict of interest we're not seeing members of Parliament, although there is the Conflict of Interest Code for members of Parliament? I think all of us are trying to figure out what the difference is in our role as ordinary members of Parliament in receiving gifts, first of all from community organizations, is that under the act? Is there a distinction between how we are defined under the Lobbying Act and under the Conflict of Interest Act?

[Karen Shepherd]

Under the Conflict of Interest Act, as I understand it, with the exceptions of ministers, ministers of state, and parliamentary secretaries, they're considered to be reporting officers under the Conflict of Interest Act, where, as you say, a normal member of Parliament would not be a reporting officer. That's where the confusion comes, because then in the Lobbying Act, members of Parliament, whether they are ministers or MPs, are designated public office holders.

In terms of the issue of gifts, I don't look at the gifts in terms of what the public office holder is receiving. My responsibility and mandate is to look at what's happening vis-à-vis the lobbyist. Is the lobbyist's giving a gift to the public office-holder creating an apparent or real conflict of interest?

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

It's just something we're trying to clarify, because clearly under the Lobbying Act, you're dealing with lobbyists giving gifts, and they're doing this because they're hoping to influence. It could be okay, it might not be okay; you're interpreting that. We're trying to define it under the Conflict of Interest Act, because you have the reporting office-holders, we have public office-holders, which is a slightly different definition, but it's not really clear what exactly an ordinary member of Parliament is supposed to report, because we see a really clear set of rules in terms of conflict of interest with ministers and parliamentary secretaries. Do we need to define that language a little clearer so there is no ambiguity?

[Karen Shepherd]

My experience in administering the Lobbying Act is that it's always better to have rules clearly spelled out, because then it's easier to understand what you need to do in terms of following something.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you.

I will now yield the floor to Mr. Butt for seven minutes.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Thank you very much, Mr. Chair, and my thanks to Ms. Shepherd and Mr. Bergen for being here.

One of the reasons we are here today is that the government had the foresight to bring in a number of pieces of legislation to provide better accountability and transparency through the Conflict of Interest Act and the Lobbying Act and the subsequent codes that are there. Five years later, it is appropriate for us to be here reviewing this and getting expert testimony, not only from you and other commissioners but from other witnesses who are in the trenches day in and day out. They are asking for the same thing: they want to know what the specific rules are. They're not interested in breaching rules. They want to know what the clear rules are.

One of the things we have said is that lobbying and interaction with members of Parliament, cabinet ministers, and other public office holders is a proper part of the job we all do here. Whether it's the constituent who calls about a mailbox or whether it is a lobbyist for a major company that does a significant amount of business in my riding, for them to have interaction with me, as a member of Parliament, is a legitimate part of their job. It's also a legitimate part of my job to listen to what the issues are and to what they have to say.

One of the concerns I have is there seems to be a disconnect between the two pieces of legislation and between the two commissioners' offices. It's not because you folks aren't doing your jobs. You are interpreting your different acts the way they are, but it would be better for everyone if we had one set of clear rules, clear definitions.

What are some of the specific things that we could do to have your office and the Office of the Conflict of Interest and Ethics Commissioner and the two pieces of legislation do a better job of speaking the same language to the same people? You've mentioned a few of the differences, whether we call it “designated public office holder” in one act or a “reporting public office holder” in another act. Do you have any specific recommendations on how we can get these two pieces of legislation to say the same thing, generally, to all the people to whom they apply?

[Karen Shepherd]

Parliament decides whom to cover in using the “reporting public office holder” definition or the definition of “designated public officer holder”.

The other issue that's different in both legislations is the time period for post-employment.

The third issue is the activities that are covered. The Conflict of Interest Act refers to representations. Some of these representations may be lobbying. But it may interest the committee to know that in the Conflict of Interest Act it doesn't matter whether you're paid or unpaid in that one-year or two-year period. Under the Lobbying Act, it's only considered a registerable lobbying activity, under which the five-year prohibition applies, if it's paid lobbying. Actually, where it may not be acceptable during that first year to do lobbying if it's unpaid under the Conflict of Interest Act, under the Lobbying Act that would not be something that fits the prohibition.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Do you draw any differences in lobbying between government members or cabinet ministers versus members of the opposition? We know that lobbyists will try to meet with all 308 members of Parliament as well as senators. In respect of what the lobbyist is required to do and how the Conflict of Interest rules are established, is there any distinction between whether or not you are meeting with a cabinet minister, a parliamentary secretary, a government member of Parliament, or an opposition member of Parliament? Are the rules different, or are they the same for everyone?

[Karen Shepherd]

It's the same rules for everyone. The only difference might be in looking at whether the conflict of interest occurred when an individual was a minister. Then, after a court case dealing with not only lobbying the minister but also the department in question, I would be looking at the conflict even closer, depending upon the lobbying that was being done. But the rules are the same. If they are paid and communicating a registerable activity for in-house organizations and corporations, there is the additional test of the significant part of duties, the 20%. And if the meetings are organized with a designated public officer holder, which all members of Parliament are no matter whether they're part of the government, a minister, or an opposition MP, then those encounters have to be registered unless it's the designated public office holder who invites the lobbyist to come in and do a presentation.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Do we need to clarify the definitions of apparent versus perceived conflict of interest? I remember serving as a member of the Mississauga Committee of Adjustment, a small zoning body where we dealt with very small zoning issues in Mississauga. I remember that when I was first appointed to that as a volunteer citizen member, I had to sign a declaration. We were always read the riot act on the pecuniary conflict of interest and whether we had a pecuniary conflict, which really meant financial. Would you financially benefit personally because you participated in the debate, even a debate on an application? Maybe it was your next door neighbour who was wanting to build an illegal swimming pool and it would affect your property value, or you worked for a company and a subsidiary company was involved and had an application before the committee. I quite often declared a conflict of interest at the beginning of the meeting and excused myself from the room. I did not participate.

Are our rules in the federal legislation strong enough to give these proper definitions of where there could be direct financial benefit? Or is that something that we as a committee, through this review, need to look at when considering these definitions to make sure that they are very clear? I think there's a different story between an inadvertent conflict of interest, when you meant no harm and weren't totally aware of a conflict, versus obviously something where you stand to benefit as a designated public office holder, or if anyone else covered under the legislation would. This is where there's obviously a direct financial impact, where you or a family member would directly benefit. Have we got the definitions right so far or is there more work we need to do in setting those definitions?

[Karen Shepherd]

As I was saying earlier, where I am drawn in regarding conflict of interest is with the Lobbyists' Code of Conduct. The court has provided me with a clear direction on the fact that I must look at both apparent and real conflict.

In looking to answer your question on whether the definition in the Conflict of Interest Act is sufficient or right, I would point out when looking at the two pieces of legislation that the reason we have these definitions is for Canadians to have more confidence in the integrity of government decision-making. Whether the definition should include an apparent conflict of interest as opposed to just a real conflict, I think is something that Parliament does want to address.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you, Mr. Butt.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Thank you.

[The Chair, NDP, Pierre-Luc Dusseault]

I now yield the floor to Mr. Andrews for seven minutes.