Democracy Watch files complaint with Ethics Commissioner raising questions about violations of federal ethics law by BlackRock and the federal Cabinet

Democracy Watch files complaint with Ethics Commissioner raising questions about violations of federal ethics law by BlackRock and the federal Cabinet

Complaint argues BlackRock executives and staff violated rules in the Conflict of Interest Act by acting as advisers to Cabinet while BlackRock lobbied government

Complaint also argues federal Cabinet gave preferential treatment to BlackRock

Ethics Commissioner must recuse herself as she is serving at the pleasure of Cabinet – appointment process for all government watchdogs must be made merit-based

FOR IMMEDIATE RELEASE:
Wednesday, May 24, 2017

OTTAWA – Democracy Watch released the letter it sent today to federal Conflict of Interest and Ethics Commissioner Mary Dawson concerning the situation revealed in an article in the May 5th edition of the Globe and Mail, and in documents (NOTE: 50 MB PDF) obtained by Ken Rubin and the Globe and Mail through an Access to Information Act request. The letter calls for an investigation and ruling on whether Privy Council Office staff and Infrastructure Minister Amarjeet Sohi and his staff violated the Conflict of Interest Act (COIA) by giving preferential treatment to BlackRock Asset Management Canada Ltd. because Mark Wiseman of BlackRock is serving as a member of the federal government’s Advisory Council on Economic Growth.

Democracy Watch’s letter also calls for an investigation of whether executives and staff at BlackRock Asset Management Canada Ltd. violated the COIA given that they served as ministerial advisers to Minister Sohi and department officials at the same time that BlackRock was registered to lobby the federal government. BlackRock executives and staff organized a meeting last November for Minister Sohi, Prime Minister Trudeau and eight other Cabinet ministers to appeal to BlackRock’s clients to invest in the federal government’s proposed Infrastructure Bank and infrastructure spending. BlackRock’s conflict of interest that violates the COIA is also based on the fact that BlackRock clients were at the meeting, and that BlackRock will benefit from the public money the government will spend on infrastructure through the Infrastructure Bank.

On May 8th, Democracy Watch also filed a complaint with the Ethics Commissioner about similar conflicts of interest and preferential treatment by Finance Minister Morneau and members of his Advisory Council on Economic Growth.

“It’s illegal under the federal ethics law for BlackRock executives and staff to be advisers to the Privy Council Office, Minister Sohi and the Liberal Cabinet at the same time as BlackRock was trying to influence federal government and Finance Minister Morneau’s decisions,” said Duff Conacher, Co-founder of Democracy Watch.

“The ruling on this situation must uphold the rule in the federal ethics law that people lobbying the federal government can’t also work for or with the government,” said Conacher. “If it doesn’t, the law will be gutted and it will become effectively legal for big business executives and lobbyists to be inside government advisers.”

Section 7 of the Conflict of Interest Act prohibits ministers and other public office holders from giving preferential treatment to any organization based on the organization’s representative. “An independent investigation is needed to determine whether Privy Council Office staff, Minister Sohi and his staff, and any other senior government officials, gave BlackRock preferential treatment because BlackRock executive Mark Wiseman was serving as Minister Morneau’s adviser,” said Conacher.

Democracy Watch’s letter also calls on Ethics Commissioner Mary Dawson to recuse herself from ruling on the complaint because the Trudeau Liberal Cabinet gave her the gift of a $100,000, six-month contract in mid-December. Under subsection 82(2) of the Parliament of Canada Act, the Cabinet is not required to consult opposition party leaders before appointing anyone to a six-month term like the one the Ethics Commissioner is currently serving.

Before the Cabinet gave her the contract in December, Democracy Watch filed a complaint calling on the Ethics Commissioner to rule that the Trudeau Cabinet was in a conflict of interest and could not choose its own ethics watchdog.

“It would be outrageous if someone filed a lawsuit against a Trudeau Cabinet minister and Prime Minister Trudeau chose the judge to rule on the lawsuit and handed the judge a six-month contract worth $100,000, and it is equally outrageous for ethics complaints against Trudeau Cabinet ministers to be ruled on by an ethics commissioner Prime Minister Trudeau has chosen,” said Conacher.

The COIA covers anyone who is “ministerial adviser” – defined as anyone, other than a public servant, who “occupies a position in the office of a minister” and provides policy advice to a minister on issues relating to his/her powers and duties, even if they don’t work full time and are not paid or compensated in any way.

Democracy Watch’s opinion is that BlackRock executives and staff were ministerial advisers (the details are in the letter) from mid-August 2016 to November 14, 2016 when the meeting took place, and are therefore covered by the COIA. While they didn’t physically work in the Privy Council Office or the office of Infrastructure Minister Sohi, they were: working with and advising those offices directly; had access to confidential government information, and; were described by the federal government as participating in “working groups” with several government officials.

Section 4 and subsection 6(1) of the COIA together prohibit public office holders, including “ministerial advisers” from making or taking part in decisions when they have an opportunity to further their own, their family’s or their friends’ private interests or to improperly further another person’s interests.

Democracy Watch’s opinion is that, based on the information in May 5th’s Globe and Mail article and the government’s documents, BlackRock executives took part in decision-making processes in which they had the opportunity to further their own interests given that their positions in BlackRock meant that if BlackRock benefited they would also benefit.

Beyond Ethics Commissioner Dawson’s own conflict of interest, which means she must recuse herself from ruling on Democracy Watch’s complaint, another reason not to have Ethics Commissioner Dawson rule on the complaints is her negligently weak enforcement record since 2007 and lack of accountability (See Backgrounder below for details). Democracy Watch and the nation-wide Government Ethics Coalition continue to call for key changes to strengthen federal political ethics rules and the enforcement system (See Backgrounder for details).

Democracy Watch’s Stop Bad Government Appointments Campaign proposes that the way to ensure the appointment of a fully independent, merit-based Ethics Commissioner is to have a fully independent commission whose members are approved by all federal party leaders along with entities such as the Canadian Judicial Council do a public, non-partisan merit-based search for candidates, and to require the Trudeau Cabinet to choose from a short-list of candidates that the commission nominates, with approval still by the House of Commons.

Ontario uses this kind of independent appointment system to appoint provincial judges (with the advisory committee provides a shortlist of three candidates to the Cabinet). The United Kingdom uses it to appoint judges and judicial tribunal members (like the Ethics Commissioner is) – its advisory committee provides only one candidate to the Cabinet, and the Cabinet has to accept the candidate or reject the candidate and provide written reasons. Both of their systems are considered to be world leading.

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FOR MORE INFORMATION, CONTACT:
Duff Conacher, Co-founder of Democracy Watch
Tel: (613) 241-5179
Cell: 416-546-3443
info@democracywatch.ca

Democracy Watch’s Government Ethics Campaign


Backgrounder

1. Federal Ethics Commissioner Mary Dawson’s weak enforcement record

Federal Ethics Commissioner Mary Dawson has had a very weak enforcement record since 2007, including (as of June 2015) making 149 secret rulings, issuing only 25 public rulings, and letting 75 (94%) of people who clearly violated ethics rules off the hook.

Ethics Commissioner Dawson has greatly undermined various sections of the Conflict of Interest Act (COIA) in past rulings by creating loopholes in the COIA that do not exist – such as:

  1. her April 29, 2010 “Cheques Report” ruling claiming that political parties are not “persons” under the COIA and therefore it was fine for Conservative MPs and Cabinet ministers to hand out government cheques with the Conservative Party logo on them;
  2. her May 13, 2010 “Raitt Report” ruling that it was fine for two lobbyists who were lobbying Minister Lisa Raitt to help raise thousands of dollars for her riding association because, you claimed, that only helped the association not her;
  3. her December 2016 ruling that it was fine for Health Minister Jane Philpott to use the driving service company of one of her former campaign volunteers because it was the only such company Minister Philpott claimed she knew about (a ruling that creates a loophole allowing any Minister or other senior government officlal to use the same invalid excuse Minister Philpott used to give contracts to their friends or other party loyalists);
  4. her baseless decision that the COIA only applies to financial interests despite the fact that the COIA’s section 2 definition of “private interest” does not in any way even suggest that the definition of “private interest” is restricted to only financial interests, and;
  5. her baseless decision that the COIA only applies to close personal friends (there is no such definition of “friends” in the COIA).

Because of section 66 added to the then-new Conflict of Interest Act by the Conservatives in 2006, the Ethics Commissioner’s rulings cannot be challenged in court if she has factual or legal errors in her rulings. If this section had not been added to the Act, Democracy Watch would have challenged several of Commissioner Dawson’s rulings since 2007 in court.

Democracy Watch is currently challenging Ethics Commissioner Dawson’s use of conflict-of-interest screens in court on the basis that the screens are unlawful.

2. Federal ethics law and codes missing key rules and accountability measures

The Conservatives broke a 2006 election promise (one of their many broken accountability promises) to include key ethics rules in the new Conflict of Interest Act prohibiting dishonesty and being in even an appearance of a conflict of interest. Prime Minister Harper instead put those rules in his Accountable Government code for ministers and other senior officials so he could ignore the rules (as he did until the Conservatives were defeated in the 2015 election – see especially rules in Annex A, Part 1 of the code).

The Liberals made no promises in their 2015 election platform to close the huge loopholes in the Conflict of Interest Act (and they also made no promises to close the huge loopholes in the Lobbying Act or the Public Servants Disclosure Protection Act). Instead, Prime Minister Trudeau re-named and re-issued the Accountability Government code as his Open and Accountable Government code. He has ignored the rules in his code just like Prime Minister Harper did.

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