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Like Scrooge, Canada’s big businesses and banks trying to keep all the money for themselves

Paying only 22% of all income taxes, at near lowest rate of G7 countries, and loopholes legalize tax evasion

New national petition calls for Finance Minister Morneau to make key changes to make them pay their fair share of taxes

Key changes also needed to stop Big Bank gouging and abuse – Canada’s Big 6 Banks made a record profit of $42.3 billion in 2017

FOR IMMEDIATE RELEASE:
Monday, December 18, 2017

OTTAWA – Today, Democracy Watch launched its new national petition on Change.org calling for key changes to make Canada’s big businesses and Big Banks pay their fair share of taxes.

A special report recently published in the Toronto Star details how Canadian big businesses, especially the Big Banks, have higher profits but pay a lower rate of taxes than ever before.

“Like Scrooge, Canada’s big businesses and banks are trying to keep all the money for themselves, and key changes are needed to close loopholes and match the average tax rate in G7 countries to ensure they pay their fair share of taxes,” said Duff Conacher, Co-founder of Democracy Watch. “As well, Canada’s big banks have gouged their way to record profits again this year, and key changes are needed to stop the gouging and ensure they serve all customers fairly at fair prices.”

In 2016, big businesses paid only 22% of total taxes collected by governments — Canadians paid 78%. In contrast, in 1952 big businesses and Canadians paid the same amount in taxes.

As the report says: “Canada’s largest corporations use complex techniques and tax loopholes to reduce their taxes significantly below the official corporate tax rate set by the government.”

As well, the report details how cutting Canada’s corporate tax rate by 16% from 1997 to 2016 has not increased corporate investment in machinery and equipment and in intellectual property like it was supposed to do. Investments by Canada’s big businesses in these areas are still below the 1997 level as a percentage of GDP.

Canada’s official corporate tax rate is now 26.6% but, on average, Canadian big businesses paid only 17.7% from 2011-2016 — one of the lowest rates of all G7 countries.

Canada’s Big Banks paid a tax rate of only 16% over the past 6 years — lower than banks in other G7 countries. They are the biggest tax evaders of all Canadian big businesses and, not surprisingly, also the most profitable. They made a record $42.3 billion in profits in 2017.

If Canada’s big businesses and banks paid the official tax rate from 2011-2016, governments across Canada would have almost $64 billion more to spend on making hospitals, schools, housing, public transit and roads better, and on other things Canadians need.

Making Canada’s big businesses and banks pay their fair share in taxes will raise at least $10 billion each year, and billions more if the corporate tax rate is increased to the average rate in G7 countries.

The petition calls on Liberal Finance Minister Morneau to work with federal political parties to work together to make the following three key changes:

  1. Close all the loopholes that allow Canada’s big businesses and banks to evade paying taxes in Canada by pretending they make their money through companies they own in low-tax countries;
  2. Increase Canada’s business tax rate to match the average rate in G7 countries, and;
  3. Impose a special tax (like England and Australia have) on any Canadian business or bank that has excessively high profits like Canada’s Big Banks have had in the past several years.

Democracy Watch is also calling on Finance Minister Morneau to work with federal political parties to make key changes to stop gouging and abuse by Canada’s big banks. The Big Six Banks made a record $42.3 billion profit in 2017.

As the report also shows, most Canadians don’t benefit from excessive Big Bank profits because they don’t own shares in the banks. As the report says: “more than 80 per cent of Canadian stocks are owned (both directly and indirectly through pensions and mutual funds) by foreigners and the wealthiest households in the country.”

As well, the report reveals that Canada’s Big Banks donate to charities only 10% of what they avoid in taxes – only $2.1 billion donated compared to $23 billion in taxes avoided.

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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 Bank Accountability Campaign

Nine months of 2017 donations show Ontario political finance system still undemocratic – Liberals received almost 29% of donations from only 7% of donors, PCs received almost 33% of donations from only 9.4% of donors

Elections Ontario should conduct audit — would likely find high donation limit has led to funneling of donations by businesses (as happened in Quebec and at the federal level)

50-group coalition, and more than 10,000 Ontario voters, call for annual donation and loan limit for individuals (including candidates) of $100 (as in Quebec), stronger enforcement and penalties for violations, and review of annual per-vote and donation-matching public funding to prove it’s actually needed

Same changes should be made to municipal political finance system across Ontario

FOR IMMEDIATE RELEASE:
Wednesday, December 13, 2017

OTTAWA – Today, just as it predicted last year, Democracy Watch revealed that Ontario’s provincial political finance system is still undemocratic as donations under the new system from January 1, 2017 to September 30, 2017 show the Liberals and PCs receiving a large share of their donations from a very small group of people who contributed $1,000 or more, as follows:

Ontario Liberal Party:
– Total Donated (Jan. 1-Sept. 30, 2017) – $420,133.30
– Total Number of Donors – 1,501
– Total Donated in amounts of $1,000 or more – $120,795.60 (28.75%)
– Total Number of Donors donating $1,000 or more – 103 (6.8%)

PC Party of Ontario:
– Total Donated (Jan. 1-Sept. 30, 2017) – $1,391,651
– Total Number of Donors – 4,151
– Total Donated in amounts of $1,000 or more – $454.920 (32.69%)
– Total Number of Donors donating $1,000 or more – 391 (9.4%)

The Green Party had a similar pattern (2.4% of total donors (22 people) donated 13.7% ($27,087) of total donations in amounts of $1,000 or more).  Only the NDP diverted from the pattern, as only 0.5% of total donors donated $1,000, and in total only donated 3.85% ($24,965.16) of the total amount the party raised ($647,763.20).

Based on these results, Democracy Watch and the Money in Politics Coalition (made up of 50 groups with a total of more than 3 million members), joined by almost 10,000 Ontario voters who have signed a petition on Change.org, called on Ontario’s political parties to make the following changes before the legislature breaks for the upcoming provincial election:

  1. set an individual donation limit of $100 per year (as in Quebec);
  2. set a limit of what candidates can give to their own campaign of $100 per year;
  3. prohibit loans to parties except from a public fund;
  4. review the per-vote annual public funding and, if the parties can actually prove they need it, set it at at most $1 per vote, and use annual donation-matching public funding if parties prove it is needed, and;
  5. strengthen enforcement and penalties for violations.

Democracy Watch also called on Elections Ontario to conduct an audit to ensure that businesses were not funneling donations through their executives and family members (as happened in Quebec and at the federal level.

“As Democracy Watch predicted last year, Ontario’s new donation limit is much higher than the average voter can afford, and allows wealthy donors to continue to use money as an unethical way to influence politicians and parties,” said Duff Conacher, Co-founder of Democracy Watch and Chairperson of the Money in Politics Coalition.  “Ontario’s too-high donation limit is likely encouraging funneling of donations from businesses through their executives and employees and their families, as has happened in Quebec and at the federal level, and Elections Ontario must conduct an audit to ensure this isn’t happening.”

Years of experience and scandals in Quebec before 2013, at the federal level since 2007, and in Toronto since 2009, show clearly that setting a donation limit that allows individuals to donate more than $1,000 each year will allow the unethical influence of big money donations, and cash-for-access fundraising schemes, to continue in B.C.

“As Quebec, federal and Alberta donation scandals show clearly, the only way to stop the unethical, undemocratic influence of money in B.C. politics is to stop big money donations by allowing only individuals to donate only $100 a year,” said Conacher.

The many donation scandals across the country show that low donation limits are the only way to stop the influence of big money.  Few have been charged in Quebec’s corruption scandal even though an Elections Quebec audit found  $12.8 million in likely illegally funneled donations from 2006-2011. To stop the corruption, in 2013 Quebec lowered its individual donation limit to $100 annually to each party, with an additional $100 allowed to be donated to an independent candidate), and required donations to be verified by Elections Quebec before being transferred to parties and candidates.  B.C. should make the same democratic changes.

At the federal level, SNC-Lavalin illegally funneled almost $118,000 to the Liberal and Conservative parties, riding associations and candidates through its executives and employees from 2004 to 2011.  And former-Conservative MP Dean Del Mastro’s cousin was charged in 2014 with illegally funneling donations through his business’ employees.  There are likely many more examples of illegally funneling of donations at the federal level, as it seems Elections Canada has not yet done the full audit it promised to do in 2013.

As in Quebec, when Elections Alberta did an audit in 2012 it found dozens of illegal donations.  As well, in a 2013 scandal in Alberta, a coalition of construction companies made it clear that their big money donations were conditional on the Alberta government changing the labour law.

As well, the federal Liberals were caught last fall in a cash-for-access scandal as Prime Minister Trudeau and several Cabinet ministers have attended about 90 high-priced, exclusive events since January 1, 2016.  And, as the Globe and Mail reported last October 25th, one of the events was a fundraising event to be attended by Finance Minister Morneau that a drug company executive helped organize while his company lobbied Finance Canada.

Democracy Watch filed a complaint about the event with the federal Lobbying Commissioner who is investigating, and also a complaint about another event the same drug company executive organized for Justin Trudeau in August 2015, and a complaint about another event top Liberal donors were invited to in September 2016, as well as a complaint about the Trudeau Cabinet selecting their own ethics and lobbying watchdogs.  In March, Democracy Watch filed a complaint about a big money fundraising event held by a corporate board member for the Liberals in August 2014.  The Lobbying Commissioner has failed to rule on any of the complaints.

The results of Democracy Watch’s research also show that top federal Liberal Party donors (to the Party only, not its riding associations) who gave $1,100 or more in 2015 were only 4.37% of total donors (4,084 donors out of 93,426 donors total) but they gave the Party 22.87% of total donations raised ($4,866,373.76 out of the $21,276,897.57 total raised).

In addition, the federal Liberals hold special events for donors who donate $1,500 or more annually (they become members of the exclusive Laurier Club).  As the Globe and Mail reported recently, based on Elections Canada figures only 790 people (0.85% of all donors to the Liberals) donated $1,500 or more in 2015, and in 2014 only 522 people (0.68% out of 77,064 total donors) donated $1,200 or more (the amount needed then to attend a Laurier Club event).

Toronto’s experience is another example of how high donation limits allow donors to get around bans of corporate and union donations.  Such donations were banned in Toronto elections in 2009, and individual donations limited to $750 annually, but a 2016 analysis by the Toronto Star found that big business and other special interest group executives and their families continue to give large amounts to city councillors.

Loans from financial institutions must also be limited to ensure financial institutions, businesses and unions can’t use loans as a means of unethical influence.  Loans should only come from a public fund and be limited to the average total amount donated during the previous two years.

If the parties can prove that they need public funding, annual per-vote funding should be no more than $1 per vote, and the parties should implement a similar annual public funding matching system as Quebec ($2.50 for the first $20,000 raised annually by each party, and $1 for the first $200,000 raised annually).  Elections Quebec has analyzed the results of Quebec’s changes and found that the parties are still adequately funded.

“To match Quebec’s world-leading democratic system, Ontario must limit individual donations to about $100 annually and, if the parties can prove they need it, use per-vote and donation-matching public funding to give parties and candidates funding based on their actual level of voter support,” said Conacher.  “Similar changes should be made to Ontario’s municipal law, taking into account that there are no parties in most municipalities, to ensure every city and town across the province has the same democratic rules.”

The key changes that must be made in Ontario to democratize its political finance system are as follows (and similar changes should be made province-wide to the municipal political finance system, taking into account that many municipalities do not have political parties):

  1. limit annual combined total donations of money, property and services by individuals to $100-200 to each party (Quebec’s limit is $100), and establish the same limit on candidates donating to their own campaign, with donations routed through the election watchdog agency (as in Quebec);
  2. prohibit loans to political parties, riding associations and candidates, except from a public fund (with loans limited to the average annual amount of donations received during the previous two years);
  3. limit spending leading up to, and during election campaigns by parties, nomination race and election candidates, third party interest groups, and also candidates in party leadership races;
  4. require disclosure of all donations and gifts of money, property, services and volunteer labour given to any party, riding association, politician, nomination race, election or party leadership candidate, including the identity of the donor’s employer, and board and executive affiliations (and the identity of anyone who assists with any fundraising);
  5. review the annual per-vote funding for political parties and riding associations, and if the parties can prove they actually need it, give annual public funding for parties based on each vote received during the last election (no more than $1 per vote, with a portion required to be shared with riding associations);
  6. if the review shows that parties and riding associations actually need it, give annual public funding for parties matching up to the first $500,000 raised (as in Quebec where the first $200,000 raised is matched);
  7. give public funding matching up to $25,000 that each nomination race and election candidate (including an independent candidate) raises (similar to Quebec’s matching funding system), and public funding matching up to $100,000 that each party leadership campaign candidate raises, and;
  8. require election, donation and ethics watchdogs to conduct annual random audits to ensure all the rules are being followed by everyone;
  9. Elections Ontario, or the Auditor General, must be empowered to review all government advertising and to stop or change any ad that is partisan or misleading;
  10. all penalties for violating donation and spending rules must be increased to minimum $100,000 fine and a multi-year jail term, and loss of any severance payment, and a partial clawback of any pension payments, and;
  11. Elections Ontario must be required to disclose the rulings they make on all complaints they receive as soon as they make the ruling, and to disclose the rulings they make on all investigations they initiate themselves.

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FOR MORE INFORMATION, CONTACT:
Duff Conacher, Co-founder of Democracy Watch and Chairperson of the Money in Politics Coalition
Tel: (613) 241-5179    Cell: 416-546-3443
info@democracywatch.ca
Democracy Watch’s Money in Politics Campaign

Liberals’ proposed candidate for Ethics Commissioner has record of eight unethical and questionable actions as Integrity Commissioner

Mario Dion chosen through secretive, PMO-controlled, partisan process – not independent, merit-based process as Prime Minister claimed yesterday

Opposition parties not consulted – any MP with personal integrity and concern for government ethics will vote to reject Dion

Last March, Liberals had qualified candidates to replace lapdog Ethics Commissioner Mary Dawson but refuse to say how many

10,000+ call on Liberals to make changes to match Ontario’s and Britain’s world-leading appointment processes

FOR IMMEDIATE RELEASE:
Tuesday, December 12, 2017

OTTAWA – Today, Democracy Watch detailed the eight unethical and questionable actions of Mario Dion, the Trudeau Cabinet’s proposed candidate for Conflict of Interest and Ethics Commissioner, when he was Integrity Commissioner.

Democracy Watch called on all MPs to show personal integrity and concern for government ethics by voting to reject Dion. Even Liberal MPs should be very disturbed by Mr. Dion’s record, and by the fact that he was chosen through a secretive, PMO-controlled, partisan process that failed to consult opposition party leaders as required by the Parliament of Canada Act.

“Given his many unethical and questionable actions when he was Integrity Commissioner, Mario Dion would likely be just as bad a lapdog as Ethics Commissioner Mary Dawson who has let 95 percent of alleged violators off the hook, including many Cabinet ministers who clearly violated federal ethics rules,” said Duff Conacher. “If MPs have personal integrity, they will vote to reject the Trudeau Cabinet’s proposal to make Mario Dion the new Ethics Commissioner because of Dion’s record of wrongdoing, and because the Cabinet handpicked Dion through a secretive, partisan process.”

Mr. Dion’s eight unethical wrongdoing and questionable actions when he was Integrity Commissioner are as follows:

  1. Soon after starting as Integrity Commissioner in early 2011, Mr. Dion secretly warned Clerk of the Privy Council Wayne Wouters of a situation that could cause Wouters embarrassment (Democracy Watch’s opinion is that this action violated the law Mr. Dion was supposed to be enforcing, the Public Servants Disclosure Protection Act, as well as federal ethics rules. Even former Liberal Cabinet minister Joe Volpe, who faced many accusations of wrongdoing during his 2006 campaign for the Liberal leadership, was concerned about this action by Mr. Dion.
  2. In spring 2011, Integrity Commissioner Dion had only a paper audit completed of past cases that his predecessor failed to investigate properly, and he refused to fully examine many of the 228 cases the Auditor General identified as wrongfully closed;
  3. In October 2012, a Federal Court judge ruled against the Integrity Commissioner Dion’s office because it failed to investigate a whistleblower’s case properly;
  4. In October 2012, Integrity Commissioner Dion kicked one person off of his Advisory Committee for writing a letter-to-the-editor than mentioned the above Federal Court ruling (other members of Advisory Committee, including Democracy Watch, resigned in protest);
  5. In Part 1 and Part 2 of an April 2014 report, the Auditor General found “gross mismanagement” by Dion’s office in two whistleblower cases;
  6. In May 2015, a Federal Court judge again ruled against some of Integrity Commissioner Dion’s actions concerning the same whistleblower as in #2 above;
  7. In 2012, Mr. Dion declared publicly on CBC’s Inside Politics show that, given his long history in the federal bureaucracy, he recused himself in cases where he was friends with a person named in the case (see para. 41 of this case ruling for an example of a recusal). However, Dion’s registry under the Conflict of Interest Act does not list any recusals, even though subsection 25(1) of the Act clearly requires a public declaration of every recusal. Democracy Watch’s opinion is that Mr. Dion very likely violated the Act by failing to disclose his recusals, and;
  8. Mr. Dion also consistently failed to name government officials who were found guilty of wrongdoing, thereby allowing them to move on to other jobs without anyone knowing they were wrongdoers.

As Democracy Watch revealed recently, the Trudeau government’s affidavit responding to one of the court cases Democracy Watch filed in July admits that the Liberals had a “pool of qualified candidates” for the Ethics Commissioner position last March. The government has refused to disclose how many qualified candidates it had, nor why it believes Mr. Dion is the best candidate.

Ideally, as Democracy Watch is calling for in its Stop Bad Government Appointments Campaign, the government would establish two fully independent committees, one for judicial and quasi-judicial appointments, and one for other Cabinet appointments. The members for both committees would come from non-government organizations, and would serve fixed, non-renewable terms.

The committees would conduct public, merit-based searches and develop a short list of qualified candidates for each open position, and then the Cabinet would be required to choose from the short list (even better with opposition party leader approval for some of the key watchdog positions). Ontario has a committee like this to appoint provincial court judges, and Britain has such a committee to appoint judges and administrative tribunal members.. More than 10,000 Canadians have signed Democracy Watch’s Stop Political Lapdog Appointments petition on Change.org calling for these changes.

“The Trudeau government has claimed again and again that it has changed the Cabinet appointment process to make it independent and merit-based but, in fact, representatives from the PMO and ministers’ offices are making the decisions which means the process is as political and partisan as in past governments,” said Conacher. “It is very dangerous to our democracy that the Prime Minister and Cabinet can dictate who will be the government’s transparency and ethics watchdogs, and also the watchdogs for lobbying, elections and overall federal law enforcement, including enforcement of anti-corruption measures.”

“To make Cabinet appointments actually merit-based, the Trudeau Liberals must change the law to establish fully independent committees to find a short list of qualified candidates for each watchdog position, and require the Cabinet to choose from the short list,” said Conacher.

Democracy Watch also called on the Liberals, and all governments, to change the law to ensure all Cabinet appointees who watch over the government or oversee key democracy laws and processes (especially every Officer of Parliament) serve only one term.

“Like judges, all government and democracy watchdogs must only serve one term, with no possibility that the government can reappoint them, to ensure watchdogs don’t try to please the government in order to keep their job,” said Conacher. “To safeguard our democracy the ruling party must not be allowed to reappoint any government watchdog.”

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

Democracy Watch’s Stop Bad Government Appointments Campaign and Government Ethics Campaign

25,000+ petition calls on Finance Minister Morneau to stop protecting his big bank friends and make key changes to stop gouging and abuse of bank customers

Finance Minister reviewing Bank Act right now – petition calls for creation of financial consumer group, turning FCAC and Ombudsman from lapdogs into watchdogs, audits of profits and lending, and increasing penalties

Big Six Banks gouge out record profits of $42.3 billion in 2017 ($5 billion (13%) higher than in 2016, and more than double their 2010 profits) – higher than comparable banks in all other countries

Three of Canada Big Six Banks were among top 90 most profitable companies in the world in 2016, will likely move up in the rankings in 2017

Australia has launched a royal commission on bank gouging – Canada should also do a similar examination

FOR IMMEDIATE RELEASE:
Wednesday, December 6, 2017

OTTAWA – Today, as Canada’s Big 6 Banks have finished reporting their record 2017 profits which are more than double their 2010 profits, and as Finance Minister Bill Morneau reviews the Bank Act and other financial sector laws, Democracy Watch called on the Finance Minister to make the key changes to stop gouging and abuse called for by its Bank Accountability Campaign and Change.org petition that more than 25,000 people have signed.

According to Fortune magazine’s Global 500 for 2016, three of Canada’s Big Six Banks ranked in the top 500 based on their revenues but are in the top 90 most profitable companies in the world: Royal Bank ($7.84 billion in 2016 profits; ranked #50 in total profits, #304 in revenue); TD Bank ($6.64 billion in 2016 profits; ranked #65 in profits, #351 in revenue); Scotiabank ($5.36 billion ranked #88 in profits, #424 in revenue). The profits of all three, and the other three Big Six Banks in Canada, all increased in 2017 so they will all very likely rank even higher in the Global 500 for 2017. The three banks were the most profitable of the 11 Canadian companies in the Global 500 for 2016.

Democracy Watch’s September 2017 submission to Finance Canada’s review and the petition call for the following key changes to stop big bank gouging and abuse:

  1. Require banks, trust and insurance companies to promote in their mailings and emails to customers that they can join a national Financial Consumer Organization (FCO – as recommended in 1998 by the MacKay Task Force, and the House Finance and Senate Banking committees);
  2. Strengthen key consumer protection rules, and require the Financial Consumer Agency of Canada (FCAC) to do unannounced, mystery-shopper audits to find violations, and to identify violators and fine them (the FCAC hasn’t done unannounced audits since 2005, and tipped off the banks in March about their current audit);
  3. Require all banks to be covered by the Ombudsman for Banking Services and Investments (the Conservatives let TD and Royal leave OBSI and choose their own complaint judges);
  4. Require the FCAC, Auditor General or Competition Bureau to conduct regular independent audits of the profits in each banking division, and savings from withdrawal of services, and require banks to lower prices and interest rates wherever excessive profits are found (i.e. profits higher than 15% annually in any division);
  5. Require the banks to disclose detailed information annually about their service and lending records (as the U.S. has required banks to do for 30 years), and require corrective action whenever banks discriminate against customers, and;
  6. Given the big banks each make billions in profit annually, increase the meaningless maximum fine of $500,000 for violations to $50 million.

According to Finance Canada, despite the lowering of barriers to competition 15 years ago under a World Trade Organization agreement, Canada’s big banks control 93 per cent of all banking assets, and are more profitable than comparable banks in other countries, and than small banks in Canada, and Canada’s corporate sector overall. The big banks control of the market essentially allows them to gouge and abuse customers with excessive fees, high interest rates (especially on credit cards). As a result, government regulation is needed to stop them.

The federal government bailed out the banks with $114 billion in mortgage purchases during the financial industry fraud crisis in 2009. It hasn’t required the banks to do anything in return for that bailout, or for the protections from foreign competition that the government gave the banks in 1967, and continues to maintain.

In 2017, Canada’s Big Six banks continued to gouge out excessively high profits of more than $42 billion (13%% higher than in 2016, and more than double their profits in 2010) – in part by firing thousands of people, cutting services, and hiking fees and credit card interest rates. Canada’s big banks also paid their CEOs about $10 million each in 2015, and gave them bonuses that totalled more than $10 million (51% higher than in 2008).

“Will the federal Liberals continue to protect big bank executives and their multi-million salaries or will they make real changes to protect 30 million bank customers from gouging and abuse, especially by requiring banks and insurance companies to promote a national financial consumer group in their emails and mailings to their customers,” said Duff Conacher, Co-founder of Democracy Watch. “At little or no cost to the federal government or the financial services industry, financial consumers across Canada can be given a very easy way to band together to help and protect themselves through joining a national financial consumer organization they fund and run – all the federal government has to do is require the banks and insurance companies to inform their customers about the group.”

“Federal Conservatives and Liberals have watched bank’s hike fees and keep credit card interest rates up to double their profits since 2010, and the Liberals should finally take action like Australia has to audit the banks’ excessive profits,” said Conacher.

The Financial Consumer Agency of Canada (FCAC) has a very weak enforcement record since it was created in 2003. It has made only 125 compliance rulings, is prohibited from naming a law-violating bank unless it prosecutes the bank, and it has only prosecuted 2 banks (neither of them a Big Six bank). The FCAC not only lacks resources by comparison to the similar watchdog agencies in Britain and the U.S., it is also clearly a lapdog compared to these two other agencies. According to an article by Reuter last March, the FCAC has issued fines totaling just $1.7 million since 2001 (the maximum fine allowed under the Bank Act is $500,000, which is meaningless to the big banks who each make more than $10 billion in revenue annually). Since 2013 when it was created, Britain’s FCA has already issued penalties totalling more than US$3 billion, and since 2011 when it was created, the U.S. CFPB has already imposed fines of more than US$5 billion.

“The fact that the media revealed the latest wrongdoing by the banks instead of the Financial Consumer Agency of Canada shows that the agency is a lapdog not an effective watchdog, and the banks are not even required to be covered by the Ombudsman for Banking Services and Investments,” said Conacher. “The FCAC must be required to conduct unannounced mystery-shopper audits regularly, and all banks must be covered by the OBSI, and both agencies must be required to identify and penalize banks that violate the law with multi-million dollar fines”

Incredibly, the Financial Consumer Agency of Canada (FCAC) announced last March that it was going to inspect the banks’ selling practices in April. “The FCAC made a big mistake announcing an inspection a month in advance as they tipped off the banks and gave them time to cover up and clean up their wrongdoing,” said Conacher. “It’s as bad as the police giving advance notice that they are setting up a speed trap on a highway — you don’t catch anyone violating the law that way.”

According to the Bank of Canada, the banks currently have about $1.3 trillion in business loans. That makes the so-called Canadian Business Growth Fund of (eventually) $1 billion that the Liberal government announced last March a sad joke as it will amount to only 0.1% of total bank lending. Given that the fund is a joint initiative of Finance Minister Morneau and the big banks, it is clear that the federal Liberals are trying to fool Canadians into applauding the banks for this largely meaningless initiative.

“Instead of helping the banks promote a very small loan fund to help grow entrepreneurial businesses, the federal government should do what the U.S. government did 40 years ago and pass a community reinvestment law requiring the banks to disclose detailed information that will allow the public to judge whether they are discriminating against borrowers such as women entrepreneurs, and requiring the banks to take corrective action whenever discrimination is found,” said Conacher.

“Every dollar of excessive profit for the banks, and every person and business the banks unjustifiably cut off from credit, costs the Canadian economy because it means that the banks are overcharging for their essential services and loans, and choking off spending and job creation,” said Conacher.

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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 Bank Accountability Campaign

Group calls on Auditor General to audit performance of federal Ethics Commissioner given negligently weak enforcement record that is a sad joke

Since 2007, likely more than 1,700 politicians or officials have violated Conflict of Interest Act or MPs Code – but Ethics Commissioner has only found 12 guilty

Ethics Commissioner doesn’t do any audits of polticians and officials activities so likely only 5% of violators are caught – enforcement must be strengthened

Since 2007, Ethics Commissioner has decided not to penalize 76 of 88 people (86%) she has investigated for violating the COIA or MPs Code (and she has let another 218 people off in secret rulings – so overall only 4.7% have been found guilty)

Ethics Commissioner has not found a Liberal guilty since the Liberals were elected in October 2015 despite many clear violations – she is biased as Trudeau Cabinet has handed her 3 six-month contracts worth $100,000 each since June 2016

FOR IMMEDIATE RELEASE:

Thursday, November 30, 2017

OTTAWA – In an open letter sent today, Democracy Watch called on the Auditor General to audit federal Ethics Commissioner Mary Dawson’s enforcement record similar to the review the auditor did in 2010 of the very negligently weak enforcement record of the former federal Integrity Commissioner.  Commissioner Shepherd is the enforcer of the Conflict of Interest Act (“COIA”) and the Conflict of Interest Code for Members of the House of Commons (“MPs Code”).  Her enforcement record is as bad as the former Integrity Commissioner’s record.

Democracy Watch recently called for a similar audit of federal Lobbying Commissioner and the RCMP for their negligently weak record in enforcing the Lobbying Act and the Lobbyists’ Code of Conduct.

According to her annual reports, from April 1, 2007 up to March 31, 2017, the Ethics Commissioner completed 253 investigations of violations of the ethics rules in the COIA and the MPs Code (not including administrative reviews of things like filing accurate reports by required deadlines).  However, she released only 35 public rulings which means she made 218 secret rulings (86.1% of all rulings).

In every one of those 218 secret rulings, Commissioner Dawson found the person not guilty of violating the COIA and/or the MPs Code.  It is impossible to tell whether these were correct rulings because Commissioner Dawson’s annual reports before 2012-2013 didn’t provide any details about these rulings, and her annual reports from 2012-2013 on provide few details of the situations she investigated that led to these 218 secret rulings.

In Commissioner Dawson’s 35 public rulings, a total of 88 people were investigated for alleged violations – 12 were found guilty (13.6% ), and 76 were found innocent (86.3%).

As a result, overall of the 253 case investigations Commissioner Dawson ruled on from April 1, 2007 up to March 31, 2017, she ruled that the person investigated was guilty of violating the COIA or the MPs Code in only 4.7% of the cases.

Ethics Commissioner Dawson doesn’t mention in her annual reports that she conducts any audits, random or otherwise, of any information Cabinet ministers, Cabinet staff and appointees, and MPs submit to her or of any MP activities.  The Ethics Commissioner may have contact with a newly elected MP or newly appointed Cabinet minister, staff or appointee as they file their initial information, and then that information is reviewed annually under the MPs Code (clause 20(1)(ii)) and COIA (section 28).

However, the information that public office holders — Cabinet ministers, Cabinet staff and appointees, and MPs — disclose to the Ethics Commissioner is not audited by the Commissioner or anyone in her office.  Commissioner Dawson has testified before a House Committee more than once that she simply trusts that everyone is telling her the truth.  Because she doesn’t do any inspections or audits – which experts in law enforcement agree is necessary for effective law enforcement –  Ethics Commissioner has never caught a public office holder violating the COIA or the MPs Code.

As a result, likely she has caught only 5% of the people have done wrong – which means that likely more than 1,700 federal politicians and top government officials have violated the COIA or MPs Code since 2007.

According to Ethics Commissioner Dawson’s 2016-2017 annual report, at any one time since 2012, on average approximately 2,500 public office holders have been covered by the COIA, and 338 MPs by the MPs Code (some of whom are Cabinet MPs covered also by the COIA).   Also according to that annual report, 3,845 public office holders left office between April 1, 2012 and March 31, 2017.  Assuming approximately the same number of public office holders covered by the COIA and MP Code left their position from 2007 to 2012, over the past 10 years the Ethics Commissioner would have enforced rules that cover approximately 10,000 people.

So, overall the Ethics Commissioner has only found an implausibly low 0.12% of public office holders in violation of the COIA or the MPs Code since 2007.

In addition, Ethics Commissioner Dawson has not found any Liberal guilty of violating the ethics rules in the COIA or MPs Code since the Liberals were elected in October 2015.

Ethics Commissioner Dawson made many very questionable rulings (and made up many loopholes in federal ethics rules) from when she was appointed in 2007 up to June 2015. Since then, Commissioner Dawson has continued at the same high rate to let people off the hook for clear violations, including the following public cases:

“Ethics Commissioner Dawson has clearly failed to enforce the federal ethics law and code effectively as she has let 95 percent of alleged violators off the hook, and since 2007 has only found 12 of 10,000 people covered by the rules in violation of the rules,” said Duff Conacher, Co-founder of Democracy Watch and Part-time Professor of law and political science at the University of Ottawa. “The Ethics Commissioner has a negligently weak enforcement record as bad as the former Integrity Commissioner’s record, and so Democracy Watch is calling on the Auditor General to do a similar review as the auditor did in 2010 of the former Integrity Commissioner’s performance.”

Democracy Watch has filed a court case challenging the Ethics Commissioner for being in a conflict of interest because the Trudeau Cabinet’s re-appointed her last June to her third six-month interim term — so she is essentially currently serving at the pleasure of the Trudeau Cabinet.

Democracy Watch also recently filed a court case challenging the Ethics Commissioner’s ruling that it was fine for Liberal Finance Minister Morneau to own shares in his family company after he became Finance Minister.  Democracy Watch is also challenging the Ethics Commissioner’s illegal ethics screens in court because they cover up whether ministers are stepping aside because of conflicts of interest.

“The Trudeau Cabinet’s decision last spring to rehire lapdog Ethics Commissioner Mary Dawson while she was investigating Trudeau smells as unethically bad as Trump’s decision to fire watchdog FBI head James Comey while he was investigating Trump,” said Conacher.  “The Trudeau Cabinet handed a $100,000 contract to the person judging whether Trudeau and other ministers violated a federal law, and that is clearly unethical and also puts the Ethics Commissioner in a conflict of interest that makes her biased in favour of Trudeau and his ministers.”

Democracy Watch also called on the Trudeau Cabinet to end their conflict-ridden charade and ensure that Ethics Commissioner Mary Dawson and Lobbying Commissioner Karen Shepherd are replaced before January 2018 when their current six-month contracts end.  “In the past decade, the Ethics Commissioner and Lobbying Commissioner have been negligently weak lapdogs whose bad rulings have let dozens of people off the hook for clear violations, and the sooner they are gone the better,” said Conacher.

In addition to stronger enforcement, as the recent scandal involving Minister Morneau has shown clearly (yet again), the Conflict of Interest Act (“COIA”) and MPs Code both need to be strengthened in all the ways that Democracy Watch recommended in 2013, to ensure ethical government decision-making, and that most violators will be caught and effectively penalized.

Former Treasury Board Minister Tony Clement and the Harper Conservative government failed to do anything to implemented any changes after a House Committee reviewed the law and code in 2013, and the Liberals failed to include any promises to make changes in their 2015 election platform.  The House Committee is required to review the Lobbying Act in 2018.

– 30 –

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 page and Audit Ethics Commissioner and Lobbying Commissioner Campaign page

Group calls on Auditor General to audit performance of federal Commissioner of Lobbying and RCMP given negligently weak enforcement record that is a sad joke

Likely 2,100 lobbyists have violated Lobbying Act or Lobbyists’ Code since 2008 but only 4 have been found guilty of violating Act, and only 13 have been found in violation of the Code (none since 2012)

Commissioner doesn’t do any audits to find unregistered communications with government institutions and officials — so likely only 5% of violators are caught – enforcement must be strengthened

Since 2008, the Commissioner, RCMP and Crown prosecutors have decided not to penalize 88 of the 105 lobbyists (84%) who they have caught violating the Act and Code (and they have kept the identity of the 88 violators secret)

Commissioner has taken three or more years to issue a ruling on one-third of the situations she has investigated since 2008

Commissioner has not issued a public ruling since the Liberals were elected in October 2015 despite receiving many complaints – she is biased as Trudeau Cabinet has handed her 3 six-month contracts worth $100,000 each since June 2016

FOR IMMEDIATE RELEASE:
Friday, November 24, 2017

OTTAWA – In an open letter sent yesterday, Democracy Watch called on the Auditor General to audit federal Commissioner of Lobbying Karen Shepherd’s and the RCMP performance record similar to the review the auditor did in 2010 of the very negligently weak enforcement record of the former federal Integrity Commissioner.  Commissioner Shepherd is the front-line enforcer of the Lobbying Act and Lobbyists’ Code of Conduct and the RCMP are supposed to assist in enforcement.  Together their enforcement record is as bad as the former Integrity Commissioner’s record.

From April 1, 2008 to March 31, 2017, according to Commissioner of Lobbying Karen Shepherd’s annual reports, she and the RCMP and Crown prosecutors have secretly decided not to penalize or prosecute 88 of the 105 lobbyists (84%) who have been caught violating the Lobbying Act or the Lobbyists’ Code (when you violate the Act you automatically violate the Code).  The details of why those 88 have been let off the hook are not disclosed by the Commissioner, the RCMP or Crown prosecutors.  The fact that they have been let off is mainly the Commissioner’s fault because the Commissioner is the front-line enforcer of the Act who decides whether to refer any case to the RCMP and Crown prosecutors for possible prosecution.

Using the likely very conservative estimate that, since 2008, 10,000 different people have lobbied the federal government in ways that would have required them to register under the Lobbying Act, the Commissioner and her predecessors and the RCMP have caught only 1% of those people violating the Act or the Code.

Given the weak enforcement practices, approach, attitude and record of Commissioner Shepherd and the RCMP, it is reasonable to assume that only 5% of violators are likely caught, and therefore that actually about 2,100 people have violated the Lobbying Act and Lobbyists’ Code of Conduct since 2008.

In addition, of the 189 cases that Commissioner Shepherd has reported that she has reviewed since she became commissioner in 2008, she has taken three years or more to issue a ruling on 59 (31.2%) of those complaints.

As well, Commissioner Shepherd has not issued a public ruling since the Liberals were elected despite receiving five complaints of clear violations from Democracy Watch alone since late May 2016.  She has also refused to recuse herself from investigating these complaints.  Democracy Watch filed a court case in July challenging the Commissioner of Lobbying for being in a conflict of interest because the Trudeau Cabinet’s re-appointed her last June to her third six-month interim term — so she is essentially currently serving at the pleasure of the Trudeau Cabinet.

“Lobbying Commissioner Shepherd has clearly failed to enforce the federal lobbying law and code effectively as she has failed to even name and shame 84 percent of the lobbyists caught violating the law and has taken more than three years to rule on many violations,” said Duff Conacher, Co-founder of Democracy Watch and Part-time Professor of law and political science at the University of Ottawa. “Together with the RCMP and Crown prosecutors, the Lobbying Commissioner has a negligently weak enforcement record as bad as the former Integrity Commissioner’s record, and so Democracy Watch is calling on the Auditor General to do a similar review as the auditor did in 2010 of the former Integrity Commissioner’s performance.”

On May 27, 2015, as she has in the past, Commissioner Shepherd testified before the House of Commons Standing Committee on Access, Ethics and Privacy and stated that her only enforcement action concerning unregistered communications between lobbyists and government institutions and officials is “monitoring the media.”  She didn’t do any random auditing – which experts in law enforcement agree is necessary for effective law enforcement – until the 2015-2016 fiscal year and since then has only audited communication reports filed by registered lobbyists.  To catch unregistered lobbying, obviously the phone, email, and PIN communications of ministers and top government officials must be audited.

For the 88 people who were caught but have been let off the hook, the Commissioner has kept their identity secret and has only given them warnings or required them to write an essay or be educated about the law and monitored by the Commissioner’s office for a year or so after their violation (summary information about how the Commissioner has dealt with these cases is disclosed in these reports).

Since 1988, only four people have been found guilty of violating the Act (Andrew Skaling, Bruce Carson and Jamie Carroll (see also here re: Carroll) and Hervé Pouts).

As well, only 13 people have been found guilty of violating the Code.  Commissioner Shepherd took from July 2007 until November 2011 to issue the first valid ruling on a violation of the Code, and two of the 13 (Réné Fugère and André Nollet) were only found guilty after the Commissioner was forced to issue a ruling under a court order that Democracy Watch won.  Commissioner Shepherd has not found anyone guilty of violating the Code since 2012.

The extremely low violation rate for the Act and the Code is another clear sign of negligently weak enforcement on the part of the Commissioner and her predecessors and the RCMP.  Lobbying in secret or unethically benefits both the lobbyist and also often the government official being lobbied, as they escape accountability for doing an unethical or secret deal that may make the government look bad.  As a result, it is simply unbelievable that only 1% of people who have lobbied the federal government since 2007 in ways that require registration have failed to register or have violated the Act or Code in some other way.

In addition, since 2004 at least another 71 people have been caught lobbying without registering but have been let off the hook because huge loopholes in the Act mean their secret lobbying was legal.  The loopholes include that a person is not required to register if they are doing unpaid lobbying, or if they are lobbying a regulatory agency about the enforcement of a law that applies to them or their client, or if they work for a business and lobby less than 20% of their work time.

In addition to stronger enforcement, the Act needs to be strengthened in all the ways the House Committee recommended in its May 2012 report, and more, to ensure secret, unethical lobbying is finally made effectively illegal and that most violators will be caught and effectively penalized.

Former Conservative Treasury Board Minister Tony Clement failed to do anything to implemented key changes recommended in 2012 by the Committee, and the Liberals failed to include any promises in their 2015 election platform.  The House Committee is required to review the Lobbying Act within the next six months.

– 30 –

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 page and Audit Ethics Commissioner and Lobbying Commissioner Campaign page

Democracy Watch files court case challenging Ethics Commissioner’s ruling that Morneau didn’t need to sell his family company shares

Third court case filed concerning Ethics Commissioner – already challenging her illegal ethics screens, and her illegal re-appointment by Trudeau Cabinet

Will soon file fourth case challenging Ethics Commissioner’s failure to remove herself from ruling on complaints about Morneau – she is biased due to past advice to him, and given Trudeau Cabinet handed her a renewable contract in June

FOR IMMEDIATE RELEASE:
Tuesday, November 21, 2017

OTTAWA – Today, Democracy Watch released details about the lawsuit it filed last Thursday in the Federal Court of Appeal challenging the Ethics Commissioner’s decision that Finance Minister Bill Morneau did not need to sell the shares he owned in his family’s company, Morneau Shepell Inc.

“As she has many times in the past, Ethics Commissioner Mary Dawson once again allowed a Cabinet minister to violate the federal ethics law, and so as it has many times in the past, Democracy Watch is once again challenging the Ethics Commissioner in court,” said Duff Conacher, Co-founder of Democracy Watch. “All of these court cases would be unnecessary if the Ethics Commissioner would just do her job and enforce federal ethics rules properly and effectively.”

Subsection 27(1) of the Conflict of Interest Act requires ministers, their staff, Cabinet appointees (including Deputy Ministers) and other senior government officials to either sell investments they control (such as shares in a family company) or place them in a blind trust, and the section 20 definition of “controlled assets” is clearly broad enough to cover the investment scheme that Morneau set up to hide his Morneau Shepell shares.

Instead of requiring Minister Morneau to sell the shares or put them in a blind trust, Ethics Commissioner Dawson allowed him to set up what she calls a conflict of interest “screen” that, she claims, prevents him from taking part in discussions and decisions if he has a conflict of interest. In fact, the Ethics Commissioner’s screens are smokescreens that allow Cabinet ministers and others to take part in almost all discussions and decisions even if they have a financial interest and could profit from the decision.

Similar “screens” allow many other Cabinet ministers, ministerial staff and senior government officials to make decisions that affect their families, friends, and their own financial investments, which is why Democracy Watch has challenged the Ethics Commissioner’s smokescreens in court because they are illegal under the Act.

Democracy Watch has also filed a court case challenging the Ethics Commissioner for being in a conflict of interest because the Trudeau Cabinet’s re-appointed her last June to her third six-month interim term — so she is essentially currently serving at the pleasure of the Trudeau Cabinet.

Democracy Watch will also soon file another lawsuit against Ethics Commissioner Mary Dawson because she has refused to recuse herself from investigating complaints filed by Democracy Watch and the NDP MP Nathan Cullen and Conservative MP Pierre Poilievre.  The Ethics Commissioner is biased in making future decisions given that she advised Minister Morneau that selling his shares was not required, and established a conflict of interest “screen” for him that she believes works, and is essentially serving at the pleasure of the Trudeau Cabinet.

Background on the lawsuit filed last Thursday

On November 4, 2015, the day he was appointed as Minister of Finance, Minister Morneau told CBC TV: “I suspect all my assets will go into a blind trust” and “I’ve already communicated with the Ethics Commissioner in that regard.”  At the time, his assets included 4.7 percent of the stocks of Morneau Shepell Inc., valued at more than $30 million.

On February 2, 2016, the Commissioner provided a letter to Minister Morneau that claimed that he did “not personally hold any assets that are considered controlled under the Act” but that, given Morneau owned millions of dollars of shares in Morneau Shepell Inc., “the Commissioner is of the opinion that the best measure of compliance would be to establish a conflict of interest screen which would be made public.”

The letter was confidential and neither Minister Morneau nor the Commissioner disclosed what exactly Minister Morneau did with the stocks he owned of Morneau Shepell Inc., and specifically neither disclosed whether the Commissioner had required him to sell the stocks or put them in a blind trust, until October 17, 2017.  On that day, the Ethics Commissioner told media in general terms that she had advised Minister Morneau that he “wasn’t required” to set up a blind trust when he was appointed as Minister of Finance.

On October 19, 2017, Minister Morneau disclosed to the media the Commissioner’s February 2, 2016 Decision letter.

Appointment Process and Ethics Rules Must be Strengthened

More than 10,000 Canadians have signed a petition supporting Democracy Watch call for federal parties to work together to change the appointment process for the Ethics Commissioner, and all officers of Parliament and judicial and watchdog positions, to make it actually merit-based and independent from Cabinet, and to prohibit reappointments.

Minister Morneau’s new blind trust for his other holding company assets will, like all blind trusts, be a sham because he will still know that he owns the investments that he puts in the trust, and he is also allowed under subsection 27(4) to choose his trustee, and is allowed under subsection 27(5) to give them instructions concerning the investments in the trust.

“Loopholes in the federal ethics law allow Finance Minister Morneau to continue to make decisions that affect his family’s company and his investments, so to actually be ethical he must not take part in any future decisions that affect the company or the investments directly or indirectly,” said Duff Conacher, Co-founder of Democracy Watch. “Minister Morneau’s blind trust will be a sham, as all blind trusts are, because he will know what investments he puts in the trust, will choose the trustee, and can give general instructions to the trustee about the investments.”

“Prime Minister Trudeau and all other Cabinet ministers and senior government officials, should be required to sell their investments in any company and buy term deposits or Canadian governments’ bonds until they leave office.  If they are not required to do this, they must be required not to take part in decisions that directly or indirectly their investments,” said Conacher.

Democracy Watch has called repeatedly since 2007 for these huge loopholes in the Conflict of Interest Act to be closed.  “It really should be called the ‘Almost Impossible to be in a Conflict of Interest Act,’” said Conacher.

– 30 –

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

Democracy Watch’s Government Ethics Campaign and Stop Bad Government Appointments Campaign

Headhunting firms confirm PMO and Cabinet staff on all good government watchdog selection committees

Proves that Cabinet appointment process is political and partisan – Liberals claim that process is merit-based is clearly false

Last March, Liberals had qualified candidates to replace lapdog Ethics Commissioner Mary Dawson last March but, likely before Trudeau recused himself, decided to reappoint her

10,000+ call on Liberals to make changes to match Ontario’s and Britain’s world-leading appointment processes

FOR IMMEDIATE RELEASE:
Thursday, November 16, 2017

OTTAWA – Today, Democracy Watch revealed that it has confirmed that staff from Prime Minister’s Office (PMO) and responsible ministers sit on the selection committees for all the key good government watchdogs.  The committees, not the firms, do all the screening and interviews of candidates from the long lists sent to them by the firms.  Democracy Watch confirmed that this is the process in conversations with people at the headhunting firms hired by the Trudeau Cabinet to help with the search.

This confirms that despite their claim that their new Cabinet appointment process is merit-based, the Liberals are in fact using a political, partisan process to search for replacements for the following five key good government watchdogs: Chief Electoral Officer (CEO); Conflict of Interest and Ethics Commissioner; Information Commissioner; Lobbying Commissioner; RCMP Commissioner, and also for the Official Languages Commissioner.  Boyden Canada is providing administrative assistance for all the searches except for the search for the CEO which is being handled by Odgers Berndtson.

These watchdog positions are as important as Supreme Court justices in terms of ensuring democratic good government.  In contrast to the completely political process the Liberals are using to come up with the short list of candidates for the watchdog positions, the short list of candidates for justices is developed by a seven-member advisory committee, four of whom are appointed by non-governmental organizations.  Although the other three members of the advisory committee are appointed by the Minister of Justice, and the Trudeau Cabinet is not required to choose from the short list of candidates that the committee proposes, at least the PMO and ministers’ offices don’t have representatives on the committee.

Ideally, as Democracy Watch is calling for in its Stop Bad Government Appointments Campaign, the government would establish two fully independent committees, one for judicial and quasi-judicial appointments, and one for other Cabinet appointments. The members for both committees would come from non-government organizations, and would serve fixed, non-renewable terms.

The committees would conduct public, merit-based searches and develop a short list of qualified candidates for each open position, and then the Cabinet would be required to choose from the short list (even better with opposition party leader approval for some of the key watchdog positions). Ontario has a committee like this to appoint provincial court judges, and Britain has such a committee to appoint judges and administrative tribunal members.

“The Trudeau government has claimed again and again that it has changed the Cabinet appointment process to make it merit-based but, in fact, representatives from the PMO and ministers’ offices are making the decisions which means the process is as political and partisan as in past governments,” said Duff Conacher, Co-founder of Democracy Watch and Part-time Professor of law and political science at the University of Ottawa.  “It is very dangerous to our democracy that the Prime Minister and Cabinet can dictate who will be the government’s transparency and ethics watchdogs, and also the watchdogs for lobbying, elections and overall federal law enforcement, including enforcement of anti-corruption measures.”

“To make Cabinet appointments actually merit-based, the Trudeau Liberals must match what Ontario and Britain have done by changing the law to establish fully independent committees to find a short list of qualified candidates for each watchdog position, and require the Cabinet to choose from the short list,” said Conacher.

The revelation about the PMO and ministers’ office having representatives on the selection committees only adds to the evidence that the Trudeau Cabinet is seeking lapdogs instead of watchdogs for these key democratic good government positions.

As Democracy Watch revealed last week, he Trudeau government’s affidavit responding to one of the court cases Democracy Watch filed in July admits that the Liberals had a “pool of qualified candidates” for the Ethics Commissioner position last winter.  According to the affidavit, instead of consulting with opposition party leaders and nominating one of the qualified candidates for House of Commons approval for a seven-year term (as required under the Parliament of Canada Act), , the Liberals decided “in early April 2017” to reappoint existing Ethics Commissioner Mary Dawson for a third six-month interim term and to keep the search process open for the new Ethics Commissioner.

These decisions in April precede Trudeau’s move in mid-May to recuse himself from the appointment process for the new Ethics Commissioner.  This raises the question of whether Trudeau took part in these decisions.  Given that Ethics Commissioner Mary Dawon is currently investigating not only Trudeau but also Finance Minister Bill Morneau, it is also important to know whether Morneau participated in the decision to reappoint her.

“The Trudeau Cabinet’s decision last spring to rehire lapdog Ethics Commissioner Mary Dawson while she was investigating Trudeau smells as unethically bad as Trump’s decision to fire watchdog FBI head James Comey while he was investigating Trump,” said Duff Conacher, Co-founder of Democracy Watch.  “The Trudeau Cabinet handed a $100,000 contract to the person judging whether Trudeau and other ministers violated a federal law, and that is clearly unethical and also puts the Ethics Commissioner in a conflict of interest that makes her biased in favour of Trudeau and his ministers.”

Democracy Watch’s position is also that the Ethics Commissioner and Lobbying Commissioner are both currently in a conflict of interest when investigating anything concerning the Trudeau Cabinet, given that they essentially serving at the pleasure of the Cabinet on six-month renewable contracts.  Democracy Watch has repeatedly requested that the Ethics Commissioner recuse herself and that the Lobbying Commissioner recuse herself from ruling on complaints about Cabinet ministers and other Liberals, but they have refused to do so.

Most recently, Democracy Watch requested that the Ethics Commissioner recuse herself from investigating complaints concerning Finance Minister Morneau but the Ethics Commissioner has refused and so Democracy Watch will soon file a court case challenging her bias and incorrect rulings concerning ministers’ investments.  Democracy Watch is also challenging the Ethics Commissioner’s illegal ethics screens in court because they cover up whether ministers are stepping aside because of conflicts of interest.

Democracy Watch also called on the Trudeau Cabinet to end their conflict-ridden charade and ensure that Ethics Commissioner Mary Dawson and Lobbying Commissioner Karen Shepherd are replaced before January when their current six-month contracts end.  “In the past decade, the Ethics Commissioner and Lobbying Commissioner have been negligently weak lapdogs whose bad rulings have let many politicians off the hook for clear violations, and the sooner they are gone the better,” said Conacher.

In past news releases, Conacher has revealed that, to test the integrity of the Trudeau Cabinet’s appointment process, he has applied for both the positions of Lobbying Commissioner and Information Commissioner.  Despite being fully qualified for both positions, he has not been contacted by the selection committees for either position.  As was revealed by the fiasco that occurred last spring with the government’s attempted appointment of a new Languages Commissioner, Democracy Watch believes that many qualified people have applied for all the watchdog positions but are being ignored by the Trudeau Cabinet because they would actually be watchdogs, not the lapdogs that the Cabinet wants.

More than 10,000 Canadians have signed Democracy Watch’s Stop Political Lapdog Appointments petition on Change.org. The petition calls on the federal Liberals to make the Cabinet appointment process actually independent and merit-based (as Britain has) for appointments of all judges, officers of parliament, and members of agencies, boards, commissions and tribunals. The petition was launched as part of Democracy Watch’s Stop Bad Government Appointments Campaign.

The Liberals haven’t changed the federal Cabinet appointment process at all from what the Conservatives used (other than adding the goal of diversity). In the answer to the third question in the “Frequently Asked Questions” document describing the Liberals’ Cabinet appointment process (which was updated on April 28th), it says Cabinet ministers “manage” all appointment processes.

That means Cabinet appointments are still partisan, political processes, not merit-based as the Liberals claim (as the recent appointment of former Ontario Liberal Cabinet minister Madeleine Meilleur as the federal Languages Commissioner has revealed so clearly). And the government’s website listing openings and qualifications for Cabinet appointments that the Liberals claim makes the appointment process more open and transparent has existed for several years.

As well, the Liberals have made the very questionable claim that they can’t find anyone qualified to be the next Lobbying Commissioner or next Ethics Commissioner.

“The Liberals’ false claims smell very fishy and are clearly an attempt to cover up the fact that their Cabinet appointment system is essentially the same as the Harper Conservatives used, and that it’s still political and partisan, not merit-based, and allows Trudeau Cabinet ministers to choose their own Liberal Party cronies as government and law enforcement lapdogs,” said Conacher.

“The Trudeau Cabinet is in a conflict of interest when choosing any government or law enforcement watchdog because those watchdogs enforce laws that apply to Cabinet ministers or their departments,” said Conacher. “The only way to stop this dangerously undemocratic and unethical appointment process for judges and watchdogs is to establish a fully independent public appointment commission, as Ontario and Britain have, to conduct public, merit-based searches for nominees and send a short list to Cabinet, with Cabinet required to choose from the list.”

The independent commission, whose members are approved by all federal party leaders (and entities such as the Canadian Judicial Council) should be mandated to do a public, non-partisan merit-based search for candidates, and the Trudeau Cabinet should be required to choose appointees from a short-list of one to three candidates that the commission nominates.

Ontario uses this kind of independent appointment system to appoint provincial judges (the advisory committee provides a shortlist of three candidates to the Cabinet). Britain uses it to appoint judges and judicial tribunal members (like the Ethics Commissioner and Lobbying Commissioner are) – 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.

The new appointment process, and prohibition on being reappointed, should apply to the judicial advisory committees and appointments of all 1,123 federal and provincial superior court judicial appointments listed here, and to the new public appointments commission that must be established to ensure a merit-based selection process for a short list of candidates for appointment to the 32 federal administrative tribunals and 108 agencies/boards listed here.

Democracy Watch also called on the Liberals, and all governments, to change the law to ensure all Cabinet appointees who watch over the government or oversee key democracy laws and processes (especially every Officer of Parliament) serve only one term.

“Like judges, all government and democracy watchdogs must only serve one term, with no possibility that the government can reappoint them, to ensure watchdogs don’t try to please the government in order to keep their job,” said Conacher. “To safeguard our democracy the ruling party must not be allowed to reappoint any government watchdog.”

– 30 –

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 Stop Bad Government Appointments Campaign and Government Ethics Campaign

How to untie the unethical knots revealed by Minister Morneau’s scandal

The following op-ed by Duff Conacher, Co-founder of Democracy Watch, was published in edited form by the Hill Times on November 6, 2017, and by CBC.ca on November 7, 2017.


In all the spin and the counter-spin concerning Finance Minister Bill Morneau’s conflicts of interest scandal, what are the real problems, and how can the unethical knots that the scandal reveals be untied to ensure ethical government decision-making in the future?

Let’s begin at the beginning.  Canada’s federal ethics law, called the Conflict of Interest Act, says its purpose is to “minimize the possibility of conflicts” and “provide for the resolution of those conflicts in the public interest” while encouraging “experienced and competent persons to seek and accept public office” as politicians or public officials.

Those kind of public office holders may, like Minister Morneau, have been successful in the business world, and like him have lots of relatives and friends involved in businesses, and lots of investments and houses and properties.  They may have been successful in another field, such as working with unions, and have relatives and friends involved in unions, and also have saved and invested in companies, and maybe even a cottage or vacation property.

Most everyone, including international standard-setters like the UN and the OECD, the Supreme Court of Canada in its rulings, and experts worldwide, say that in order to have a democratic good government, it is key to ensure that politicians and government officials are prohibited from making decisions and spending money helping themselves, their relatives and their friends, or protecting their investments or properties.

Why? Because while a politician or official may claim that they made a decision to help the public, and while they and others may claim that they are completely ethical, no one can tell whether that is true.  Despite the claims of 1-800 TV psychics, no one can do a Vulcan mind-meld to determine the actual reasons why anyone makes a decision.

Canada’s Criminal Code prohibits politicians and government officials from directing government contracts or spending to themselves, their relatives, friends and associates, and from taking bribes or kickbacks for doing so, with time in prison as the penalty.

Many people assume that Canada has stopped this kind of thing happening, at least for big contracts and spending decisions.  However, the corruption scandal that continues to unfold in Quebec, and other scandals across the country like the GTH land deal in Saskatchewan, and the fact that the RCMP only launched a federal anti-corruption team a few years ago, a clear signs that no one should make this assumption.

Italy’s police force warned in 2012 that the Mafia was just as strong in Ontario as Quebec, and involved in corruption among other crimes, and that Canada has weak laws and enforcement.  And when he retired from his position as RCMP Commissioner in June 2017, Bob Paulson warned the organized crime was the greatest threat to Canada, including its involvement in corrupting politicians and government institutions.

To find a politician or government official guilty of violating the Criminal Code’s anti-corruption measures, prosecutors have to prove they did it beyond a shadow of a doubt.  That’s not easy to do in many situations, so experts agree that the old “ounce of prevention” approach helps ensure government integrity.

That means having laws, like Canada’s federal ethics law, that prohibit public office holders from even taking part in discussions or decisions where they could help themselves, their relatives or friends.  But what lines should that prohibition draw?

Usually, ethics laws prohibit Cabinet ministers and top government officials from having the direct conflict of interest of owning a business or investments in businesses, as Canada’s federal ethics law does.  However, Ethics Commissioner Mary Dawson interpreted the law in a legally incorrect way to create a loophole, and has allowed Minister Morneau and other Cabinet ministers to own investments and other assets indirectly.  Many people are calling for the loophole to be closed – but there is no loophole which is why Democracy Watch is filing a court case challenging the Ethics Commissioner’s decision.

Canada’s federal ethics law also allows ministers and top officials to own mutual fund investments without even disclosing them publicly, and to put other assets and investments in a so-called “blind trust.”  These investments should be prohibited, and (as the Parker Commission recommended in 1987) blind trusts should be abolished because ministers and officials can easily know what they own, especially since they choose their own trustee.

The only way to prevent these conflicts is to require Cabinet ministers and top government officials to sell all their investments in businesses (as the Parker Commission also recommended in 1987).  They can take the money from selling them and buy term deposits or government bonds that pay a set interest rate until they leave office.

They are already paid a salary in the top five per cent – they don’t need to make more money while in office, especially by making decisions that help themselves instead of helping as many Canadians as possible.

If a minister or top official owns some asset or investment which is not possible to sell, they should be required to disclose it publicly (as the Parker Commission also recommended).

What about businesses or investments owned by the relatives or friends of Cabinet ministers and top officials?  Canada’s federal ethics law requires their spouses and dependent children to disclose their investments only to the Ethics Commissioner – they are not required to sell anything.  Spouses should be required to disclose their investments publicly (as the Parker Commission also recommended), as should all children whether or not they live at home.

To avoid disrupting the lives of other relatives and friends of a person who enters politics or government, another approach is usually used to prevent conflicts with their interests.  The minister or official is prohibited from taking part in discussions or decisions that affect their own interests, and the interests of their relatives or friends, directly or indirectly.

Political ethics laws across Canada don’t do this, however.  They all have a huge loophole that actually allows ministers and top officials, and all politicians and their staff, to participate in and make all decisions that apply generally, even if they have a direct financial conflict of interest.  Yes, that’s right, the powerful people in politics in Canada are allowed to profit from their decisions.  This loophole must be closed, and the rule must be that they are prohibited from taking part in any decision if they have even the appearance of a conflict of interest.

The federal Ethics Commissioner has made things even worse by creating so-called ethics “screens” that hide whether ministers and officials are actually stepping aside when they have a conflict of interest.  The federal ethics law requires disclosure every time a minister steps aside and, as a result,  Democracy Watch believes the screens are illegal “smokescreens” and is challenging them in court.

What about ethics rules for MPs and senators, and their staff, and lower-level government employees?  A general principle is that the more decision-making power a politician or official has, the stronger the ethics rules should be.  Canada’s federal ethics rules violate this principle.  The rules for Cabinet ministers, MPs and their senators all have the same huge loopholes.

In contrast, even federal government employees with little decision-making power are prohibited from having interests that are affected by “government actions in which they participate” and from taking part in decisions when they have even the appearance of a conflict of interest.  The Prime Minister has the same rules in his code for ministers and their staff (which has existed in one form or another since 1985).  However, those rules are only in the PM’s code, not in the federal ethics law, and no prime minister has ever enforced these key rules in their code.

The simple solution is to take the rules in the PM’s code (or the government employees’ code) and put them into the federal ethics law (and every government across Canada should make the same change to its ethics law).

What about enforcement?  The first problem is that the federal Ethics Commissioner is chosen by the Cabinet, with opposition party leaders only consulted on the choice.  Politicians choosing their own watchdog is a bad idea.  Instead, a fully independent commission should be established, with commission members appointed by non-governmental organizations like the Canadian Judicial Council.  The appointments commission should be empowered to conduct a public, merit-based search to come up with a short list of candidates for all watchdog positions (including judges).  The Cabinet should then have to choose from the commission’s short list.

In fact, the federal Ethics Commissioner is currently on her third six-month contract with the Trudeau Cabinet, essentially serving at the Cabinet’s pleasure.  Democracy Watch believes this contract is illegal and undermines the independence of commissioner, and is challenging it in court.

Another problem is that Canada’s Ethics Commissioner trusts everyone to do the right thing, and has refused to use her legal power to do audits of financial statements and activities of ministers and officials.  This must change – audits are essential to the enforcement of any law, and so the Ethics Commissioner must be required to do random, regular audits.

The Ethics Commissioner can refuse to investigate a complaint, and is not required to investigate and rule on complaints filed by members of the public even though we pay the salaries of all politicians, political staff and government officials and employees.  The Ethics Commissioner must be required to investigate and rule publicly on all complaints.

If someone believes the Ethics Commissioner’s ruling on a complaint has ignored facts or the law, they can’t challenge her in court.  She is an unaccountable czar.  This must be changed to ensure that the Ethics Commissioner can be held accountable if her rulings are clearly wrong in any way.

Finally, the penalty for violating the federal ethics law, one of the key laws that protects our democracy, is a maximum $500 fine, and only for failing to file accurate documents with the commissioner.  Mandatory high fines of at least one year’s salary should be the penalty for all violations.

Overall, a federal Cabinet minister or top government official has less chance of getting caught, and will pay a smaller penalty, for violating the ethics law than you will for parking illegally wherever you live.

It’s long past time for federal political parties to close the unethical loopholes, and ensure a fully independent, fully empowered, accountable and strong Ethics Commissioner is appointed to enforce the rules, and to penalize all violators.  Canadians deserve no less, especially from the Trudeau Liberal government that promised real change, and open and honest government.

Duff Conacher is Co-founder of Democracy Watch, Canada’s leading democratic reform organization

Democracy Watch calls for changes to stop fake online election ads

More than 4,500 Canadians have already signed online petition supporting changes to election laws to ensure social media companies don’t publish false election ads

FOR IMMEDIATE RELEASE:
Tuesday, November 14, 2017

OTTAWA – Today, Democracy Watch formally launched its campaign calling for changes to election laws across Canada to stop fake online election ads.  Already more than 4,500 Canadians have signed its online petition on Change.org aimed at federal party leaders, and Democracy Watch also has an online letter-writing campaign calling on all governments across Canada to make the same changes.

The campaign calls for changes to ensure that all election advertising, in media and social media, complies with election laws that:

The problem is mainly with social media sites, like Facebook, through which ads can be targeted directly and only to a specific individual’s page.  Unlike an ad in a newspaper or on radio or TV, election watchdog agencies, the media and the public can’t track these targeted online social media ads because only the targeted individual sees the ad.  As a result, they can’t ensure the ads comply with the law.

“Canadians have fought many battles in the past to protect our democracy, and our democracy now faces the new threat of fake and foreign online election ads, and we need to fight back with changes to elections laws to stop these ads in their tracks,” said Duff Conacher, Co-founder of Democracy Watch.  “Social media companies cannot be trusted to stop fake or foreign ads on their own as they lobby governments and are in a conflict of interest as they may support one political party more than others.”

Democracy Watch’s Stop Fake Online Election Ads campaign calls for the following six key changes:

  1. prohibit media and social media companies from publishing election-related ads during the six months leading up to an election if the ad is paid for with foreign currency (such as Russian rubles);
  2. require media and social media companies to report every election-related ad to the election law enforcement agency during the six months leading up to an election so the ad can be reviewed to determine if it makes a clearly false claim about a party or candidate;
  3. require media and social media companies to report to the election law enforcement agency who placed and paid for each ad, and how much was spent on the ad, so agency can determine if the amount spent on the ad violates the legal limit (including the amount spent on having employees or contractors or bots share, like or retweet the ad);
  4. require the government to establish an independent commission (whose members are appointed by non-governmental bodies like the Canadian Judicial Council) to conduct a public, merit-based search for the next Chief Electoral Officer (CEO) of Elections Canada (and for the next head of the election law enforcement agency in each province), and to give a shortlist of nominees to the party leaders from which they all choose together one person as the head of the agency;
  5. give the head of the election law enforcement agency (at the federal level, the Commissioner of Canada Elections) the power, during the six months leading up to an election, to order clearly false, illegal ads be deleted from media and social media sites, and require the head to issue these orders within a few days of receiving the information about each ad, and;
  6. give the head of the election law enforcement agency (at the federal level, the Commissioner of Canada Elections) the power to impose significant fines on social media companies and advertisers who violate the rules (the fines must be large enough to discourage attempts to violate the rules).

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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 Stop Fake Online Election Ads Campaign