Information & Ethics Committee on Oct. 27th, 2016

[The Chair, Conservative, Blaine Calkins]

Good morning, colleagues. Thank you for being here. We're pleased to have today, at our 31st meeting of the Standing Committee on Access to Information, Privacy and Ethics, our Commissioner of Lobbying, Karen Shepherd, pursuant to Standing Order 108(3)(h)(iv).

Ms. Shepherd, this is not the first time that this has happened for you. We welcome your opening remarks, and then we'll proceed to some questions and see what's on your agenda in the very near future.

So, welcome. The floor is yours.

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

Good morning Mr. Chair and members of the committee.

I am pleased to be here today to speak about my mandate and experience as Commissioner of Lobbying.

I have been part of the federal lobbying regime for 12 years, and the deputy head for eight years. It is an honour to be the first Commissioner of Lobbying of Canada and to have had the opportunity to establish its first fully independent office.

As Commissioner of Lobbying, my role is to administer and ensure compliance with the Lobbying Act and the Lobbyists' Code of Conduct. The act and the code contribute to the confidence of Canadians in the integrity of government decision-making by ensuring lobbying activities are conducted in a transparent manner and according to the highest ethical standards.

Much has been accomplished since I became commissioner. I am grateful for the opportunity given to me to guide the lobbying regime in its early stages, establish an office with a highly skilled group of professionals, and put all the elements in place to ensure transparency and accountability in lobbying.

I am particularly proud of the new Lobbyists' Code of Conduct, which I brought into force in December 2015. Unlike the lobbying legislation, which has been amended several times over the past two decades, the code had not changed since it came into force in 1997. Given the importance of the code in outlining the high ethical standards expected of lobbyists, I felt it was important to hear from key stakeholder groups to ensure it was as strong and clear as it should be.

I am also proud that the Canadian model stands out among countries with lobbying legislation. The Organisation for Economic Co-operation and Development, the OECD, established 10 principles for transparency and integrity in lobbying that should be part of a lobbying regime. The Canadian regime reflects these principles. Many countries believe that there is much to be learned from Canada and have sought advice and expertise from my office over the years.

I have put three excellent programs in place to deliver on my mandate: namely, to establish a registry, raise awareness through education, and ensure compliance with both the act and the code.

The registry of lobbyists is at the forefront of online registration systems and is considered to be a model for similar offices around the world. I made significant investments in the registry to make it secure, searchable, and user-friendly, so lobbyists can easily disclose their lobbying activities and Canadians can access the wealth of information on federal lobbying.

As I mentioned at my last appearance, we successfully moved the hosting of the registry to the Office of the Privacy Commissioner. This provides more control over system development of the registry.

For individuals to comply with any legislation or codes of conduct, they must understand their responsibilities and obligations. I was pleased that Parliament recognized the importance of outreach and education when a specific provision was added to the Lobbying Act, giving me an explicit mandate in this regard.

Since 2008, my staff and I have met with more than 8,000 stakeholders. We intensified outreach activities around regulatory changes, such as the introduction of the Lobbying Act, the amendment of the designated public office holder regulations, and the coming into force of the new Lobbyists' Code of Conduct.

During the consultations held on the Lobbyists' Code of Conduct, I heard from about 200 individuals, associations, organizations and corporations. The views expressed helped me develop the new code and get buy-in from key stakeholders. I believe the code is changing behaviours by making what is expected of lobbyists clearer.

While education and outreach are important for ensuring compliance, they must be accompanied by a strong enforcement regime and by demonstrated consequences in cases of breaches.

Since becoming commissioner, I have closed 173 administrative review files and 22 investigations, including 40 files inherited from my predecessor, the former registrar of lobbyists. Results of closed files are anonymized for privacy reasons and posted on my office's website.

I have tabled 10 reports to Parliament concerning breaches of the code by 12 lobbyists. Two of the reports demonstrate how the intersection of lobbying and political activities performed by lobbyists on behalf of public office holders can give rise to apparent conflicts of interest.

Over the last eight years, I have referred 14 files to the RCMP for investigation. Four individuals have been charged with Lobbying Act offences and three convicted. Three other files remain under RCMP investigation.

In July 2013 there was a historic first conviction for a breach of the Lobbying Act, specifically for failure to register as a consultant lobbyist. The conviction resulted in a fine of $7,500. Following the conviction, I used my authority under the Lobbying Act to prohibit the individual from lobbying for a period of four months. I believe the conviction and the subsequent prohibition sent a message to anyone involved in lobbying the federal government that contravening the act carries consequences.

In May 2016 a second conviction under the Lobbying Act imposed a fine of $20,000 for failing to register under the act. This is currently under appeal.

In September 2016 a third individual was found guilty of three counts of lobbying while subject to the five-year prohibition on lobbying. The crown prosecutor has suggested a fine of $50,000 for all three counts. This first conviction for lobbying while prohibited under the Lobbying Act underscores that the prohibition should not be taken lightly.

As deputy head, I delivered on my mandate by establishing a solid and efficient organization. I established sound governance, well-documented budget and planning processes, and rigorous management practices.

I also entered into service agreements with other federal government departments and agencies in areas such as human resources management, financial services and information technology. This was an efficient way to leverage limited resources and capitalize on a wide range of competencies needed to fulfill my responsibilities as deputy head in the most economical way possible.

In 2013, the Auditor General accepted my invitation to audit our financial statements and controls. I am pleased to say that each year the office has received an unmodified opinion, which means that the financial statements were presented fairly in all material respects.

I have presented to you a number of accomplishments that I realized during my mandate. I have learned a lot over my tenure as commissioner. I would like to share with you some thoughts for your consideration.

First, as a regulator I found that it was important not only to administer and enforce the act and the code but also to educate the public that lobbying is a legitimate activity that plays an important role in democracy. Government decision-makers cannot operate in a vacuum. Sound decision-making requires knowledge about risks and benefits of choosing one option over another. It is just that it must be done in a transparent manner.

Second is the importance of consultation with stakeholders and considering views when making policy or regulatory changes. I believe the code I put in place is stronger because of the input I received from stakeholders.

Third is that the value of periodic reviews should not be underestimated, especially when it comes to newly enacted legislation such as the Lobbying Act. During the 2012 legislative review, I submitted a special report to the committee. It indicated that while the Lobbying Act was working well in meeting the objectives originally intended by Parliament, there were opportunities for improvement. I suggested nine recommendations that I believed would improve transparency and accountability. Despite a committee and government response, no new legislation was introduced.

As a review is due in 2017, this will be another opportunity to use the benefit of experience in enforcing the act to improve its ability to deliver accountability and transparency while also ensuring open, frank policy discussions between government and stakeholders.

It is an honour to have been the first Commissioner of Lobbying, and I am proud of what I have accomplished over the last eight years. However, my successes would not have been possible without the dedication of my staff. I would like to take this opportunity to thank them for their support, professionalism and hard work.

Mr. Chair, this concludes my remarks.

I welcome any questions you or any committee members may have.

[The Chair, Conservative, Blaine Calkins]

Thank you very much, Madam Commissioner. We'll now go to our first round of questions, starting with Mr. Massé.

You have seven minutes.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chair.

Ms. Shepherd, thank you for participating in our work and for appearing before us this morning. It's greatly appreciated. I very much appreciated your remarks. I also want to thank all the employees who contributed, because I know that preparing an appearance before the committee requires work.

Tell us about your main successes over the past eight years of your mandate. What are your three main successes?

[Karen Shepherd]

Thank you for the question.

It's difficult to summarize eight years in three points.

First, as I said in my remarks, I'm very proud to have established an independent agency of Parliament and to have created three programs during my mandate. I'm very proud of the professionalism demonstrated by the people who work with me.

My second success is the Lobbyists' Code of Conduct, which is stronger and clearer. It assures Canadians that lobbying is better regulated. The code is also a clear guide for lobbyists.

My third success was more difficult to achieve. I established a good national and international reputation for the Office of the Commissioner of Lobbying of Canada.

There's also the fact we succeeded in establishing relations with the stakeholders. The consultations were successful. I acted as a regulator, which was appreciated.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you. It's greatly appreciated.

I can see that your consultations with your counterparts had a positive impact. Thank you for mentioning it.

You touched on the regulatory framework that governs lobbying. I believe you want the framework to be strengthened. How can we strengthen the regulatory framework?

[Karen Shepherd]

The code was strengthened. In my experience—

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

You can speak in English.

[Karen Shepherd]

The lobbyists want to comply with the Lobbying Act and the Lobbyists' Code of Conduct, as clearly demonstrated by the many calls we've received from people who want clarifications.

As I've always said, for the continuum of

compliance measures and breaches of the act

we need to do something between education and oversight, and the government must enforce the code. I think monetary penalties would be an ideal way to strengthen the code.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Okay.

What challenges will your successor need to address in the coming years or months, in order to further improve transparency in lobbying?

[Karen Shepherd]

Education is very important. Further investments must be made in education so that more can be done in that area. As I said in my remarks, everyone must understand their responsibilities with regard to the Lobbying Act. To that end, we've started looking at how we could use social media. We'll start by sharing information on Twitter.

I'm very proud of my team and of what we've accomplished. As always, we could do more if we had more money. There's no doubt that, at some point, we'll need to invest in the registry system.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Mr. Chair, do I have any time left?

[The Chair, Conservative, Blaine Calkins]

You have another minute or so.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Okay.

Ms. Shepherd, you again noted the importance of consultations in your work. I want to hear about the positive and concrete results of these consultations. Tell us about the consultations you held.

[Karen Shepherd]

In 2013, I conducted a type of test to see whether the code was meeting its objectives. Since they didn't think there was any problem, the lobbyists wondered why I was asking these questions. However, I immediately noticed that everyone, including lobbyists, had made comments. This really helped me establish a new code. In 2014, I held a consultation, since it was required by the act.

In my view, things worked well because I showed that I was really taking into account people's concerns and expectations. Ultimately, some lobbyists would say that we didn't always agree, but that they respect the way I held the consultation and the fact that I took into consideration what was said. It's very important for me to hear and consider the various viewpoints and to hold the consultations by bringing everyone together for a collective project.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you, Ms. Shepherd.

Thank you for speaking in French. Your French is excellent, by the way.

[Karen Shepherd]

Thank you.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you for your answers.

[The Chair, Conservative, Blaine Calkins]

Mr. Massé, there are only a handful of seconds left, but we appreciate that.

We'll now move on to Mr. Kelly, for seven minutes, please.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Thank you very much for appearing today. We appreciate your remarks and your presentation.

You mentioned in your remarks, briefly, the intersection of lobbying and political activities. I'm wondering if you could comment on that very issue. There have been reports recently about fundraisers being held by political parties and attended by or hosted by people who are registered lobbyists. Can you comment on the conflict of interest and the appearance of it?

I understand that you are responsible for lobbyists and not the Conflict of Interest of Act, but from the lobbyist side, could you comment on that?

[Karen Shepherd]

In looking at those particular events, you're correct in that I look at it from the lobbying perspective. Is lobbying occurring? Looking at it from the act, did lobbying occur? Is it properly reported? Then I look at the code of conduct for lobbyists to ensure they have abided by the code, or in other words that they have acted with the highest ethical standards. What I can say is that in the new code, which I think is a stronger code, it talks about some of the activities that could place public office holders in a real or an apparent conflict of interest. Those terms are specified in the code, namely preferential access, such as where there's a close bond of friendship with a family member, for example, or giving gifts, or political activities.

In the guidance that I have provided on political activities, I have said that some activities create a sense of obligation and some activities do not. For those activities that create a sense of obligation, they should not lobby that particular individual for a period of five years.

Some of the activities I've said do not create a sense of obligation. I appreciate we're in a democracy with other acts like the Canada Elections Act, which are fairly stringent, but you can donate as per the Canada Elections Act, and that would not be seen as creating a sense of obligation. At the other extreme, organizing a fundraising event is something that I have said creates a sense of obligation, but we have been seeing questions on this pay to access recently. Given that I've always said I take allegations of breaching the code or the act seriously, then placing a public office holder in a conflict of interest is something that would be a potential breach of the act.

What I'll say is that I'm currently looking into that matter at this point. I don't have a further comment, but I am looking into it.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Okay, I want to make sure that I understood this correctly. Hosting a political fundraiser is an act of obligation or certainly would be seen to be creating an obligation between the parties.

[Karen Shepherd]

Yes, I've provided...and I have the guidance with me if you'd like a copy. I've said some activities are fine, like posting a sign, donating. For other activities, it's almost like the more involved you are, so organizing a fundraising event.... In the report I referred to in my opening remarks, they were individuals who were actively involved in selling tickets and organizing the fundraising event, and were registered to lobby and had lobbied the minister in question.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

So hosting an event is something that you can take very seriously and look at, and you are currently investigating—

[Karen Shepherd]

To see whether the sense of obligation has been created, yes.