Information & Ethics Committee on Feb. 8th, 2018

[The Vice-Chair, Liberal, Nathaniel Erskine-Smith]

Good morning.

We have quorum. We are waiting on Mr. Baylis but I'm sure he'll be joining us.

Thank you, Mr. Dion, for attending today as we continue our study on the Conflict of Interest Act.

We'll start with opening comments from you before we proceed with a round of questions.

[Mario Dion, Conflict of Interest and Ethics Commissioner, Office of the Conflict of Interest and Ethics Commissioner]

Thank you, Mr. Chair and honourable members of the committee, for inviting me to be here this morning. I'm accompanied by Martine Richard, who is our senior general counsel, and Lyne Robinson-Dalpé, who is our director of the very important advisory and compliance services.

I'm pleased to have an opportunity to present some initial.... Of course, I've been on the job for less than one month. Tomorrow will be my one-month anniversary so these are initial talks on the possible changes to the Conflict of Interest Act. It's important to note that I make these observations after having been in office for just under one month, as I just said; but I have been a keen observer of the ethics regime for a few decades.

The degree of interest expressed in the House since we all came back last week of course creates an interesting context within which to talk about the Conflict of Interest Act and whether some amendments should be considered. Like my predecessor, I do not think the act is broken. My view is that there is clearly room for improvement. From my point of view, it would be desirable to undertake a comprehensive review of the act, and I'll explain why.

We have just formally adopted a mission statement for the office that says that we exist to provide “independent, rigorous and consistent direction and advice to members”. That's the goal, to be “rigorous and consistent” in providing advice to members of Parliament but also to federal public office holders. There are 2,500 people as well who are appointed officials. That's our role, to provide advice, then to make “use of appropriate sanctions in order to ensure full compliance” and to investigate, where necessary. We advise, we investigate, and we impose sanctions, if and when appropriate, to ensure that the act is respected.

My goal as commissioner is an ambitious one. I want to create the conditions under which all public office holders can actually be in full compliance with the act at all times. The changes I speak of today are made with that objective in mind. There are two categories, in my view, of possible changes. The first category would be intended to clarify the obligations of ministers, parliamentary secretaries, ministerial staff, and Governor in Council appointees, and to provide more predictability in the administration of the act. That would be the first category of changes. The second category would be those changes that are intended to strengthen the enforcement of the act.

In the first category, one clear and obvious possibility would be to make an effort to harmonize the Conflict of Interest Act with the code that governs the conflict of interest for members of the House of Commons. Ministers and parliamentary secretaries are subject to both the act and the code, but there are definitions and terminology in both regimes that should be harmonized to avoid confusion. To be clear, I'm not speaking about harmonizing obligations. The act is more stringent, and this is important given the field of influence of ministers and parliamentary secretaries. For example, the act has post-employment and divestment requirements, while the code has none; and that's fine. However, there are areas that should be harmonized. For example, the code describes in some detail what amounts to furthering a private interest, while the act does not. The code also provides for a preliminary review to determine whether an inquiry is warranted, whereas the act does not. Those are differences that do not really have a logical explanation. That would be the first one.

The second one.... There are many more, but I've picked the most important possibilities from a strategic point of view. Of course, there was a list of 75 amendments that was tabled by my predecessor before this could be...back in 2013. I don't want to discuss technical amendments. I'd like to focus on the most important big ones. There's harmonizing the act and the code; and the second one would be to amend section 17 to clarify that controlled assets that are held indirectly are a no-no, as well as those held directly.

There are two types of assets defined under the act: controlled assets and exempt assets. Exempt assets are items that are for private use and those of a non-commercial character, like your residence, your personal effects, and so forth. These assets do not trigger compliance measures because they do not present the possibility for conflict of interest.

Controlled assets on the other hand are assets that could be directly or indirectly affected by government decisions. The act requires that controlled assets be divested by sale in an arm's-length transaction or by placing them in a blind trust. I agree with my predecessor that the act should be amended to expressly indicate whether controlled assets can be held through a private company. That's the second one.

Third, the committee should consider removing the exception for gifts given by friends that is included in subsection 11(2) of the act.

What people view as constituting a friend varies between cultures, ages and circumstances. It would be impossible to define “friend” for the purposes of the act in a way that would take into consideration all of the possible circumstances and that would survive the test of time. It evolves with time and over generations.

Moreover, if the definition of the word “friend” was eliminated, there would still be the acceptability test, and that is what counts in the act. Under subsection 11(1) of the act, when there is a gift “that might reasonably be seen to have been given to influence the public office holder in the exercise of an official power, duty or function”, it is not acceptable. Whether a gift is given by a friend or not is unimportant. According to the act, you cannot accept a gift if it can reasonably be seen to have been given to influence you. The converse is also true, if a gift given by a friend could not be seen to have been given to influence, you are not breaching the act.

Gifts from a friend or relative are not subject to an exception in the Conflict of Interest Code for Members of the House of Commons. I think that in this case as well, if this exception in the act were removed, the code for members of Parliament and the act would say the same thing.

Once again, in order to clarify and facilitate the continued observation of the act by members of Parliament, ministers and parliamentary secretaries, the rules on fundraising for ministers and parliamentary secretaries could be strengthened.

Currently, the act contains only one provision, section 16, that directly addresses participation in fundraising activities, and that provision does not distinguish between political and charitable fundraising.

It is clear that the potential for conflicts of interest is higher for ministers and parliamentary secretaries in relation to fundraising activities because of the influence they have in departments or, in the case of ministers, in cabinet. Stronger fundraising rules should be included in the act.

That ends the first category of amendments, namely, those to clarify the obligations. I have made four suggestions. I have others, but those are the most important, in my opinion.

I will now address the second category of amendments.

First, there should be sanctions because there aren't any currently.

I'd like to suggest there should be sanctions, or at least Parliament should look at the possibility of establishing sanctions, for substantive breaches of the act.

The role of the commissioner is first and foremost to provide accessible and clear advice as a means of prevention. Robert C. Clark, a former ethics commissioner from Alberta who's been in the business for decades, describes the role as being 90% priest and 10% policeman. I think this is true, and it should be true. However, one should not ignore the dissuasive effect that sanctions can have. They help to focus the mind. They also provide Canadians with the assurance that there are consequences for breaching the act that are more serious than what has been called “naming and shaming”. Sanctions could go some way to rebuilding the trust relationship with the Canadian public.

My office has had a look at the literature on the subject and we've found that there are no studies on the effectiveness of penalties in conflict of interest regimes. We haven't found anything. There are, however, several jurisdictions in Canada and elsewhere that provide for such penalties. For example, the majority of provincial ethics commissioners are already empowered to recommend that the legislature impose a penalty. That's the first one under the category of enforcement.

The second would be the power to issue confidentiality orders. As you know, the Conflict of Interest Act is intended to help build public confidence in our system of government and parliamentary institutions. One could argue that public airing of requests for examinations before the commissioner has had an opportunity to consider and report on them has the opposite effect. It can, in fact, contribute to a loss of trust. For many Canadians, an allegation that the public office holder has contravened the act is tantamount to a finding of a contravention. For reasons of fundamental justice, and in order to protect the integrity of an examination, the act imposes confidentiality upon us at the office. I suggest that the commissioner be given the power to also issue confidentiality orders to witnesses and that the act be amended to require complainants to maintain confidentiality until the commissioner has actually reported. That's another possible—probably controversial—amendment to facilitate the enforcement of the act.

I also believe that the first one I would make under this category would be to give the commissioner the power to make recommendations, because at this point in time there is no power in the statute for the commissioner to recommend anything.

Examination reports, of course, invariably lead to a better understanding of circumstances that can lead to a failure to comply. They serve as a reminder for public office holders of their obligations under the act. When I served as Public Sector Integrity Commissioner, I had the power to make recommendations, and I used it on several occasions. I believe that such authority...which doesn't have to be used each and every time, but if it is at least available if it makes sense, if it serves a purpose.... If I had the power to make recommendations, if and when appropriate, it would allow me to recommend changes that would further strengthen the regime and to craft a just remedy to address the situation at hand.

My last suggestion is the following: Training sessions should be mandatory for public office holders.

I am convinced that contraventions to the act often occur because of public office holders' lack of understanding of their obligations. Ignorance of the law, of course, is no excuse but mandatory training sessions could go some way towards mitigating the risk of an inadvertent breach.

These days, giving training isn't very demanding, since we have modern technology that enables us to provide a good overview of the act and the code in an hour or two. Members of Parliament could take this training initially, after their election or appointment to an office, and could retake it periodically, perhaps every year or two.

I look forward to having a dialogue with members of the committee about these possibilities or any other matter they might wish to discuss with me this morning.

Thank you very much for inviting me to appear.

[The Vice-Chair, Liberal, Nathaniel Erskine-Smith]

Thanks very much for that presentation.

We'll begin our first round of questioning with Mr. Saini.

[Raj Saini, Liberal, Kitchener Centre, ON]

Good morning, Mr. Dion. It's always a pleasure to see you.

You've touched on a lot of topics that I wanted to go through in my questions. I wish I had had these before; I could have prepared differently. But that's okay.

I know that you don't want to go into the weeds on this, but one of the recommendations your predecessor made was on the $200 threshold for disclosing gifts. She wanted to reduce that to $30, I think it was.

What's your opinion on that recommendation?

[Mario Dion]

In fact, we have discussed that since I joined the office. I understand she recommended that if a gift is $30 or less, no one would have to do anything about it, essentially. She proposed $30. It could have been $50. It could have been $25. There is a minimal threshold.

It doesn't really serve a purpose to require people to declare a gift that is worth no more than x—$25, $30, or $50. It takes time, and there are costs associated with making a declaration, putting it on the registry, and so on and so forth, so I agree with that suggestion.

[Raj Saini, Liberal, Kitchener Centre, ON]

The other issue you brought up—and I was going to delve a little bit more into this—was harmonizing the code, because there's the code and the act.

How would you do that? Would you have one—let's say you call it the act—and you subsume the code into the act? Do you keep them separate? Going forward, how would you see harmonizing both?

There are similarities in some, and there are differences in others, especially when it comes to ministers and parliamentary secretaries. How would you go about producing the document?

[Mario Dion]

I think that for constitutional reasons we will have to continue to have a code that governs parliamentarians and other elected officials, and an act or statute. I don't think it's possible to merge the two because of parliamentary privilege and because the House is the master of its own procedure.

At the same time, if there is a will on the part of the government and the committee on procedures and operations to look at these processes, it could actually be possible to do it in parallel. There are several sections that intersect, but it would actually be conceivable that two could be taking place at the same time.

[Raj Saini, Liberal, Kitchener Centre, ON]

When you talk about putting things in a blind trust, would it be easier, in a way, if anybody who's elected put all their assets in a blind trust? Would that be easier, or is that too burdensome?

[Mario Dion]

There are currently three options under the act. Option one is that you sell your controlled assets. Option two is that you place them in a blind trust. We saw option three in a case a few months ago. My predecessor has determined that if a corporation owns controlled assets, even if it's a sole-owner corporation, that's adequate, too. Those are the three possibilities at this point in time.

I suggested in my opening remarks that maybe we should abolish the third possibility because I don't believe this was necessarily the intent of the legislation, even though it has been interpreted that way. It would clarify things, and there would be two options: you sell or you place in a blind trust.

Many people sell, by the way. I looked at the numbers from last year, and I was surprised to see that the vast majority of people decide to sell as opposed to going through—I'm not talking about MPs; I'm talking about all public office holders. The vast majority do sell, as opposed to placing in a blind trust. We had 18 active blind trusts at the end of 2017 and 46 individuals who sold their controlled assets last year.

[Raj Saini, Liberal, Kitchener Centre, ON]

Also, you mentioned that there's a difference between the code and the act. I think this point is very important, and I would like to hear a further comment on your part. If somebody makes a claim or an allegation within the act, I believe that becomes public as compared to the code, or do I have it opposite?

[Mario Dion]

On several occasions in the past it has become public because the office is the only party that's required to keep things confidential. The MP or senator is free actually. There is no bar against the complainer from making a complaint public. Also, if the media finds out about it, there's no bar against them from making it public. We're the only ones who are required to keep it confidential.

What I was proposing as a possibility, which would have to be looked at very carefully, would be to impose a general blanket obligation on anyone involved to keep it confidential.

[Raj Saini, Liberal, Kitchener Centre, ON]

I think that's in concert with what your predecessor also said, to make sure that the process is confidential.

Just in general, I know there are a lot of recommendations that your predecessor put forward. I know you mentioned the penalties. Are there any that you disagree with?

[Mario Dion]

No. I went through them carefully, but you have to bear in mind that I've been on the job for one month. Madam Dawson was there for 10 and a half years, so we still have a ratio of 1:25, or something like that, between my time and her time.

I went through the list. There was nothing where fundamentally my gut said, “This is wrong, I don't agree with this.” I saw nothing, but I did not do a complete in-depth analysis, as I would if I were asked to present a document to the committee about proposed amendments. I didn't see anything that prima facie caused me heartburn or difficulty.

[The Vice-Chair, Liberal, Nathaniel Erskine-Smith]

Thank you.

We now have Mr. Kent.

[Peter Kent, Conservative, Thornhill, ON]

Thank you, Commissioner, for making yourself available to us so early in your term.

I was struck by your quoting of former Alberta Commissioner Clark with regard to the priest and policeman self-identification. I know that on the public record you have suggested that you see the role somewhat as that of a judge.

I think you are saying you disagree with the concept that mere naming and shaming to encourage compliance is adequate going forward, and that in fact, as you've said today, you'd like to see those reforms with more significant capability for penalties.

You suggested, again on the public record—a quote, or maybe it's a paraphrase—that a fine of $10,000 hurts more than $500. Is that the range you would suggest in changing the provision for penalties?

[Mario Dion]

I could also address the earlier portion of your question, Mr. Kent.

The allusion to the priest refers to conduct prior to a breach having occurred. You counsel people. Once it's been determined through an examination or an inquiry that somebody has breached the act, then you become the policeman vis-à-vis the same person. The priest is preventative, and the other one is a word we learned at law school, which I avoid using. There is prevention and there is repression. Once it's been established that the breach has occurred, maybe there should also be a role to sanction.

I mentioned $10,000 as a possibility, but this is something that would have to be looked at by those who know more than me about sentencing and federal statutory breaches and what would be adequate. It would be a maximum of this nature, of this order of magnitude. A million dollars would be ridiculous, and I think $100 would be ridiculous as well, so where does it lie? I thought about $10,000, or it could be $25,000. I have not done research yet to suggest any figure at this point in time.

[Peter Kent, Conservative, Thornhill, ON]

Aside from perhaps an increased penalty—a dollar figure, a fine—to a violator of the act or the code, what are your thoughts on a situation where a violation of the act or the code might have improperly generated significant cost to public funds?

Would you favour those funds being repaid?

[Mario Dion]

This is an indirect consequence of the breach of the act. Under the current statute, the commissioner has the authority to examine the situation to see whether the act has been breached, and has no authority to penalize or recommend anything.

My own personal view is that the issue of public funds and whether they were improperly used belongs somewhere else. There is accountability for that, but that accountability is outside of the regime created by this act.

[Peter Kent, Conservative, Thornhill, ON]

I was struck by your remarks regarding the changes to require complainants to maintain confidentiality until the commissioner has reported. As we've seen, certainly in the past year, in some cases the barn door is already open and the public is well aware that a complaint may be made or a decision made by the commissioner independently to begin an investigation based on public information.

I know that the work of the office is meant to be conducted under a veil of confidentiality, and certainly—

[Mario Dion]

I think office-holders would want that. Section 48 is extremely clear about that.

[Peter Kent, Conservative, Thornhill, ON]

Absolutely.

Again, though, coming back to your seeing yourself as a judge in a court of law.... If a decision is made by the judge—in this case by the commissioner—with which the complainant doesn't agree, there is an opportunity for appeal.

Do you believe that perhaps if there is tighter confidentiality, there may still be room for further discussion or appeal, depending on a finding by the commissioner?

[Mario Dion]

The current regime—and I reread it several times—is essentially the commissioner decides, and there is no appeal. If the commissioner says there is a breach, it's final. Nobody, including the Supreme Court, can upset that, unless of course there's been a procedural breach. There is no appeal. I think it gives finality to a process. I think it's a good thing.

What we're suggesting is that if somebody makes a complaint, even though people might suspect a complaint has been made, they don't know for a fact that something is under investigation until such time as somebody says so. It pollutes the environment within which we have to do our examination. I understand that we're dealing in a political situation most of the time. I can appreciate that. I'm saying from a conduct of investigation point of view it would be better if these things did not exist, if people were not allowed to make it public anymore than we are allowed to make it public. Because then it's the beginning of a conjecture as to how long will it take and how guilty is she, and so on and so forth. If we proceed with dispatch, as I hope we will in the future, we will work on that. It's probably much better to wait until the report is made public at the same time to the person against whom the complaint was lodged, the complainant, and the Prime Minister and the public at large all at the same time. Everybody knows about the situation.

[Peter Kent, Conservative, Thornhill, ON]

I've had disagreements in the past with conclusions reached by your predecessor, but I've respected the confidentiality labelled across the top of the letter and held my tongue. In most cases in a finding of “no reason to proceed with an investigation”, the subject of a complaint where it's become publicly known is free to discuss in public that finding whereas the complainant is encouraged to accept it for what it was.

[Mario Dion]

Once the matter is over, my concern is much less. Once the matter is over, a decision has been made by the commissioner not to pursue an examination, or to discontinue an examination. I don't think from a management of the regime point of view that this is a problem. The complainant explains that they've received a letter from the commissioner stating that they've abandoned the investigation because of that. I'm talking about until the conclusion has been reached, and only until the conclusion has been reached. Afterwards, everything is fair game, although the office continues to be under an obligation of confidentiality vis-à-vis anything that has taken place since the complaint was made and until the report was published.

[The Vice-Chair, Liberal, Nathaniel Erskine-Smith]

Thanks very much.

Ms. Mathyssen, you have seven minutes.