Democracy Watch files complaint with Ethics Commissioner raising questions about violations of federal ethics law by Finance Minister Morneau and members of his Advisory Council on Economic Growth

Democracy Watch files complaint with Ethics Commissioner raising questions about violations of federal ethics law by Finance Minister Morneau and members of his Advisory Council on Economic Growth

Complaint argues some members not only violated ethics rules in their contract with the Finance Canada but also rules in the Conflict of Interest Act by taking part in Advisory Council decisions while their businesses were seeking favourable decisions from Finance Minister Morneau

Complaint also argues Minister Morneau is giving preferential treatment to the Quebec Caisse because its President Michael Sabia is on Morneau’s Council

Ethics Commissioner must recuse herself as she is serving at the pleasure of Cabinet

FOR IMMEDIATE RELEASE:
Monday, May 8, 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 last Friday’s Globe and Mail. The letter calling for an investigation and ruling on whether Finance Minister Bill Morneau violated the Conflict of Interest Act (COIA) by giving preferential treatment to the Caisse de dépôt et placement du Québec because the Caisse’s president, Michael Sabia, is serving as a member of Morneau’s Advisory Council on Economic Growth.

Democracy Watch’s letter also calls for an investigation of whether Mr. Sabia and other members of the Advisory Council, including Mark Wiseman of BlackRock Asset Management Canada Ltd., violated the COIA given that, as ministerial advisers to Morneau, they failed to remove themselves from decision-making processes when they were in an conflict of interest, as required by the COIA and their contract as a Council member.

In Democracy Watch’s opinion, based on the information in Friday’s Globe and Mail article and other research it has conducted, Mr. Sabia and Mr. Wiseman were in a conflict of interest when they took part in decisions concerning the Council’s recommendations for the creation of an Infrastructure Bank, given that the Caisse and BlackRock would benefit from the public funding provided to the bank. Mr. Sabia also had a conflict of interest because the Caisse is seeking federal government funding for its public transportation initiative in Montreal. Mr. Wiseman also had a conflict of interest because BlackRock was registered to lobby Finance Canada through to December 21, 2016. An investigation is needed to determine whether other members of the Council also work with organizations that would benefit from the Infrastructure Bank.

“It’s illegal under the federal ethics law for members of Finance Minister Morneau’s economic advisory council to be his advisers at the same time as the businesses and organizations they work for are trying to influence Minister Morneau’s decisions of Finance Canada and the federal government,” said Duff Conacher, Co-founder of Democracy Watch. “An independent investigation is needed to determine how many members of the council crossed this line.”

“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 senior government officials.”

Also according to Friday’s Globe and Mail article, the federal government has hired a Toronto investment bank, Blair Franklin Capital Partners, under a special process to speed up the government’s review of the Caisse’s request for federal funding. Democracy Watch’s opinion is that it seems the Caisse is receiving preferential treatment from Minister Morneau because it is represented by Mr. Sabia who is on Minister Morneau’s Advisory Council.

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 Minister Morneau has given the Caisse preferential treatment because the Caisse’s president Michael Sabia is serving as his 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.

“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.

Under the Annex 2 “Conflict of Interest Guidelines” in the Letter of Agreement each member of Morneau’s Advisory Council was required to sign with the Finance Canada, members were required to disclose any apparent conflicts of interest and to remove themselves from discussions that affected their or their business’ interests. According to Friday’s Globe and Mail article, no disclosures were made, and no recusals happened.

Beyond violating those guidelines, 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 the members of Minister Morneau’s Advisory Council are ministerial advisers (the details are in the letter) and are therefore covered by the COIA. While they don’t physically work in the office of Finance Minister Morneau, they are: working with and advising him directly; have access to confidential government information, and; have been described by Finance Canada as “working with the Government.”

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 Friday’s Globe and Mail article, Michael Sabia and Mark Wiseman (and possibly also other members of the council) took part in Advisory Council decision-making processes in which they had the opportunity to further their own interests given their positions in their organizations meant that if their organizations benefited they would also benefit. They also violated the guidelines in their Letter of Agreement by taking part in those decisions, and as a result also improperly furthered the interests of their organizations.

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 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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