Proposed House Finance Committee hearings a “kangaroo court” – partisan politicians can’t investigate past governments impartially

Ethics rules, enforcement and penalties for former government employees also need to be strengthened to ensure they don’t sell their inside access and knowledge

FOR IMMEDIATE RELEASE:
Thursday, April 14, 2016

OTTAWA – Today, Democracy Watch launched a petition on Change.org calling on Prime Minister Trudeau and Revenue Minister Diane Lebouthillier to call a public inquiry into the Canada Revenue Agency’s relationship with big accounting firms. The petition already has more than 15,000 signatures.

The House of Commons Finance Committee is considering holding hearings on the relationship but a partisan committee dominated by Liberals can’t impartially investigate what happened during a previous Conservative government.

“An independent, impartial public inquiry is needed to find out the whole truth about whether the CRA’s relationship with big accounting firms has allowed their wealthy clients to get away with cheating on their taxes,” said Duff Conacher, Co-founder of Democracy Watch, and Visiting Professor and LL.M. candidate at the University of Ottawa. “The House Finance Committee holding hearings on the situation is not enough to find out the whole truth because committees are kangaroo courts made up of partisan politicians judging other politicians and past governments.”

As the CBC has reported over the past six months, dozens of people have left the CRA or the Department of Justice and gone to work for the big accounting companies. Top CRA officials regularly attend behind-closed-door events with top accounting company officials. As well, Cabinet ministers have also played questionable roles at events, and the Canadian government even works in partnership with the accounting industry association.

Also as the CBC has reported, the CRA also failed to aggressively pursue a case against a tax-evasion scheme involving KPMG and some of it wealthy clients, and the CRA offered a secret amnesty to some of those clients.

Democracy Watch also called on the federal government to change federal laws as soon as possible:

• to increase the cooling-off period for former federal government employees from one year to up to five years based on their last one year up to five years in their job (on a sliding scale depending on whether they are a junior or senior employee);
• to require all employees to notify the Public Sector Integrity Commissioner when they leave government so the Commissioner can ensure they don’t take jobs or share information with individuals or entities they watched over when they were in government, and;
• to establish strong penalties for former government employees who violate key ethics rules (there are no penalties now), and to give the Integrity Commissioner the power to impose the penalties.

“The ethics rules and enforcement for CRA and all former federal government employees are too weak to ensure they don’t secretly sell their inside access and knowledge to companies or others they watched over, and the lack of penalties for violating post-employment rules makes the system a sad joke,” said Conacher. “The cooling-off period for former employees must be increased, and they should be required to tell the Integrity Commissioner what they are doing during their cooling-off period, with the Commissioner empowered to impose strong penalties on anyone who violates the rules.”

The Values and Ethics Code for the Public Sector (which covers the CRA and all government institutions) requires public servants to avoid even the appearance of a conflict of interest, and the Policy on Conflict of Interest and Post-Employment requires government institutions to prevent situations “that could impair either the integrity of the public service or the public’s perception of its integrity.”

However, the Policy (Appendix B) only specifically prohibits senior government employees, for only one year after they leave their job, from working with anyone or any entity that they had significant official dealings with only during the last year of their job, and to disclose what jobs they take during that one year only to their deputy head (who can exempt them from the cooling-off period).

The CRA’s own Code of Integrity and Professional Conduct also requires avoiding even the appearance of a conflict of interest, and says CRA’s employees and former employees can never “communicate any information or share any proprietary knowledge that you obtained while on the job, and that has not been made public by the CRA.”

However, the CRA’s Directive on conflict of interest, gifts and hospitality, and post-employment says all employees only have a one-year cooling-off period after they leave their job that prohibits them from working with anyone or any entity that they had significant official dealings with during the last year of their job (and it can be reduced or waived by their manager), and they are not required to notify anyone about their work after they leave, and there are no penalties for violating any post-employm`ent rule.

Even worse, the most senior government officials at the CRA and all government institutions – people who are appointed by Cabinet like deputy ministers and commissioners and heads of institutions – are only required to comply with the much weaker rules in the Conflict of Interest Act. The Act allows Cabinet ministers, their staff, and Cabinet appointees like deputy ministers, to make decisions they can profit from, and while the Act requires a one- to two-year cooling-off period after they leave their position, they don’t have to notify the Conflict of Interest and Ethics Commissioner about who they are working for during that period. There are also no penalties for violating any of the ethics or post-employment rules in the Act.

“The ethics rules from the top to the bottom of the federal government, and enforcement of the rules and penalties for violations, are all dangerously weak – they need to be strengthened, and until they are unethical relationships between politicians and government officials and lobbyists will continue to undermine our democracy,” said Conacher.

FOR MORE INFORMATION, CONTACT:
Duff Conacher, Co-founder of Democracy Watch
Tel: (613) 241-5179
Cell: 416-546-3443
[email protected]

Democracy Watch’s Government Ethics Campaign

Will federal Ethics Commissioner enforce federal ethics rule that prohibits politicians from accepting gifts that might influence them – and rule that donations at private fundraising events are illegal gifts?

Ethics Commissioner must also investigate and publicly disclose identities of all who have donated at the exclusive events, and must monitor all policy-making processes that affect the donors to ensure no preferential treatment occurs

Federal government must also make same world-leading changes to political donations laws as Quebec made in 2013

FOR IMMEDIATE RELEASE:
Wednesday, April 6, 2016

OTTAWA – Today, Democracy Watch called on Prime Minister Trudeau to enforce the rule in his Open and Accountable Government code for ministers that prohibits ministers from fundraising from department stakeholders. The rules are in Annex B and state:

“Ministers and Parliamentary Secretaries should ensure that the solicitation of political contributions on their behalf does not target:
  –  departmental stakeholders, or
  –  other lobbyists and employees of lobbying firms.”

and

“Ministers and Parliamentary Secretaries must avoid conflict of interest, the appearance of conflict of interest and situations that have the potential to involve conflicts of interest.”

Justice Minister Jody Wilson-Raybould is scheduled to attend a $500-a-ticket private, exclusive fundraising event at a law firm in Toronto on Thursday. This event clearly violates the rules in Prime Minister Trudeau’s code. Will he enforce his own rules?

Democracy Watch also called on federal Ethics Commissioner Mary Dawson to do her job properly, finally, by issuing a ruling prohibiting politicians from taking part in private, exclusive fundraising events because they violate the rules in the Conflict of Interest Act (subsection 11(1)) and the Conflict of Interest Code for Members of the House of Commons (subsection 14(1)) that prohibit federal ministers and MPs from accepting gifts or other benefits “that might reasonably be seen to have been given to influence” them. Section 16 of the Act also states public office holders can’t “personally solicit funds from any person or organization if it would place the public office holder in a conflict of interest.

As well, the federal Ethics Commissioner must investigate how many private, exclusive high-priced events have occurred since July 2007 when the Conflict of Interest Act came into force. There is no limitation period on violations of the Act, and so the Commissioner should investigate and obtain and release the list of donors to all the events that have happened, and also investigate and monitor all policy-making processes that affect the donors to ensure no preferential treatment occurs (preferential treatment is illegal under section 7 of the Conflict of Interest Act).

“Big donations made at private fundraising events where the politician is essentially selling access to themselves are a clear violation of federal ethics rules that prohibit ministers and MPs from accepting gifts or benefits that might influence them,” said Duff Conacher, Co-founder of Democracy Watch and Visiting Professor and LL.M. candidate at the University of Ottawa. “If Ethics Commissioner Dawson doesn’t issue a ruling that these unethical fundraising events are illegal, and investigate all such events in recent years, she will not only be negligently ignoring the law she will also be approving corrupting relationships between donors and politicians.”

Democracy Watch is not claiming that all fundraising events are illegal — just high-priced, private, exclusive events where politicians sell access to themselves in return for a donation, as the Globe and Mail and the Toronto Star have recently revealed are happening frequently in Ontario and B.C. (and they happen across the country at all levels of government). Low-priced, large, public events at which no one gets special access to the politician are clearly legal under the conflict-of-interest rules because the donation is not made to gain access to the politician.

While the donations for a high-priced, private, exclusive event go to a party or riding association, access to the politician is part of the ticket price for these exclusive events (which connects the donation to their position as a politician); the politician takes part in directing the spending of the money (as the party leader or local politician for the riding association), and; at least some of the donated money is spent on the politician’s re-election campaign. As a result, the politician is receiving part of a donation made because the politician attended an event – and therefore the politician is receiving an illegal gift.

“Any politician who claims that the donations are funneled to a party or riding association before they are used for the politician’s election campaign, and therefore selling access to themselves is fine, is hiding behind an unethical façade,” said Conacher. “If Ethics Commissioner Dawson has integrity she will end this unethical charade by issuing a ruling that exclusive, high-priced fundraising events violate the federal ethics rule that prohibits politicians from accepting gifts that could influence them.”

Democracy Watch also called on federal parties to make the same world-leading changes to the federal political donation system as Quebec made in 2013, along with other key changes.

While the federal government banned corporate and union donations, it still allows undemocratically high donations that only wealthy people can afford ($1,525 annually to each party, and another $1,525 combined total to each party’s riding associations). As Quebec’s corruption scandal showed, these high donation limits facilitate corporations and unions funneling donations through their executives and/or employees. Few have been charged in its corruption scandal even though an Elections Quebec audit found $12.8 million in likely funneled donations from 2006-2011.

“Any political party that refuses to support these changes is essentially admitting they are up for sale and that they approve of the corrupt best-government-money-can-buy approach to politics,” said Conacher.

The key changes that to democratize the federal political finance systems are as follows:

1. a limit on annual donations by individuals to each party of $100-200 annually (Quebec’s limit is $100) with donations routed through the election watchdog agency (as in Quebec);
2. a prohibition on 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. a limit on spending by nomination race and party leadership candidates;
4. if an election is held on the fixed election date, a limit on paid issue and campaign advertising spending by individuals and third party interest groups during the 4-month period before election day;
5. disclosure of amounts spent by individuals and third party interest groups on issue campaigns in between elections, and disclosure of the source of their funding;
6. 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 organizers of any fundraising event);
7. a base amount of 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);
8. annual public funding for parties matching the first $100,000-$200,000 raised (as in Quebec);
9. public funding for candidates matching the first $20,000 raised (as in Quebec), and;
10. a requirement that election, donation and ethics watchdogs conduct and release the results of annual random audits to ensure everyone is following all the rules.

Democracy Watch’s Money in Politics Campaign
Democracy Watch’s Government Ethics Campaign

Conflict-of-interest laws across country prohibit politicians from accepting gifts connected with their position — donations at private fundraising events are illegal gifts

Ethics commissioners must also investigate and publicly disclose identities of all who have donated at the exclusive events, and must monitor all policy-making processes that affect the donors to ensure no preferential treatment occurs

All governments must also make same world-leading changes to political donations laws as Quebec made in 2013

FOR IMMEDIATE RELEASE:
Thursday, March 31, 2016

OTTAWA – Today, Democracy Watch called on the Ontario and B.C. ethics commissioners, and ethics commissioners across the country, to do their jobs properly by issuing rulings prohibiting politicians from taking part in private fundraising events because they violate the rules in conflict-of-interest laws across Canada that prohibit politicians from accepting gifts connected with their positions. The request has been sent to every ethics commissioner in Canada (federal, provincial and territorial).

“Big donations made at private fundraising events where the politician is essentially selling access to themselves are a clear violation of conflict-of-interest laws that prohibit politicians across Canada from accepting gifts connected with their positions,” said Duff Conacher, Co-founder of Democracy Watch and Visiting Professor and LL.M. candidate at the University of Ottawa. “If ethics commissioners across Canada don’t issue rulings that these unethical fundraising events are illegal, they will not only be negligently ignoring the law they will also be approving corrupting relationships between donors and politicians.”

Democracy Watch also called on all ethics commissioners to investigate whether such events have occurred, and if they have to obtain and release the list of donors to the events, and to monitor all policy-making processes that affect the donors to ensure no preferential treatment occurs.

Democracy Watch is not claiming that all fundraising events are illegal — just high-priced, exclusive events where politicians sell access to themselves in return for a donation, as the Globe and Mail and the Toronto Star have recently revealed are happening frequently in Ontario and B.C. (and they happen across the country at all levels of government). Low-priced, large, public events at which no one gets special access to the politician are clearly legal under the conflict-of-interest laws because the donation is not made to gain access to the politician.

The federal, provincial and territorial conflict-of-interest laws all have the same provision that says politicians cannot accept any gift or benefit “directly or indirectly” connected to their position or “that might reasonably be seen to be given to influence” them (for example, see Ontario’s rule here and B.C.’s rule here). While the donations go to a party or riding association, access to the politician is part of the ticket price for these exclusive events (which connects the donation to their position as a politician); the politician takes part in directing the spending of the money (as the party leader or local politician for the riding association), and; at least some of the donated money is spent on the politician’s re-election campaign. As a result, the politician is receiving part of a donation made because the politician attended an event – and therefore the politician is receiving an illegal gift.

“Any politician who claims that the donations are funnelled to a party or riding association before they are used for the politician’s election campaign, and therefore selling access to themselves is fine, is hiding behind a corrupt façade,” said Conacher. “Any ethics commissioner with integrity will end this unethical charade by issuing a ruling that exclusive, high-priced fundraising events violate the rule that prohibits receiving gifts that is in every conflict of interest law across Canada.”

Democracy Watch also called on governments across the country to make the same world-leading changes to their political donation systems (federal, provincial, territorial, and municipal in each province and territory) as Quebec made in 2013, along with other key changes.

Political finance systems across Canada, other than Quebec’s provincial system, are all undemocratic in various ways. B.C., Newfoundland and Labrador, Prince Edward Island, and the Yukon are the worst as they allow unlimited donations from corporations, unions and other organizations, and individuals, even if they are not located in or don’t live in the jurisdiction. Saskatchewan is almost as bad, with the only difference being that individual donors have to be a Canadian citizen.

Ontario, New Brunswick, Nunavut and the Northwest Territories are also almost as bad because they allow undemocratically high donations from corporations, unions and organizations (and New Brunswick allows those donations to come from outside the province).

And while the federal government, Alberta, Manitoba and Nova Scotia have banned corporate and union donations, they still allow undemocratically high donations that only wealthy people can afford. As Quebec’s corruption scandal showed, these high donation limits facilitate corporations and unions funneling donations through their executives and/or employees.

“Any political party that refuses to make these changes is essentially admitting they are up for sale and that they approve of the corrupt best-government-money-can-buy approach to politics,” said Conacher.

The key changes that must be made across Canada to democratize political finance systems are as follows:

1. a ban on donations by corporations, unions and other organizations (Quebec enacted such a ban in the late 1970s);
2. a limit on annual donations by individuals to each party of $100-200 annually (Quebec’s limit is $100);
3. a ban on donations from individuals who do not live in the jurisdiction;
4. a prohibition on 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)
5. a limit on spending during campaigns by parties, nomination race and election candidates, third party interest groups, and candidates in party leadership races (Alberta and the Yukon have no limits at all; only the federal government, B.C., Manitoba, New Brunswick, Nova Scotia and Quebec limit third party spending, and; no jurisdictions have limits on party leadership race spending);
6. disclosure of all donations and gifts of money, property, services and volunteer labour given to any politician, nomination race, election or party leadership candidate, including the identity of the donor’s employer, and board and executive affiliations;
7. a base amount of annual public funding for parties based on each vote received during the last election (which Quebec has — no more than $1 per vote, with a portion required to be shared with riding associations);
8. annual public funding for parties matching the first $100,000-$200,000 raised (which Quebec has);
9. public funding for candidates matching the first $20,000 raised (which Quebec has), and;
10. a requirement that election, donation and ethics watchdogs conduct annual random audits to ensure all the rules are being followed by everyone.

The following op-ed, by Democracy Watch Co-founder Duff Conacher, was published in the Globe and Mail on January 8, 2016 and in the Hill Times on January 11, 2016 and by TroyMedia.com on February 12, 2016

To referendum or not to referendum – that is not the only question in the ongoing debate about reforming Canada’s voting system. The overall issue is ensuring the review process, including any referendum, meets best-practice democratic standards.

If Canada’s current voting system had been subject to a referendum in 1867, only wealthy white men (about 10% of the total population at the time) would have been allowed to vote, and secret donations and spending would have dominated the campaign.

The first important question is the makeup of the committee of politicians that will lead the public consultation. Normally, the Liberal majority would mean a majority of Liberals on all committees. However, no more than half the committee should be Liberal MPs to ensure they can’t just push through whatever system they want. The Liberals should have no concerns about giving up their majority on the committee given that Liberal House Leader Dominic LeBlanc has said voting system reform should have “broad support in Parliament.”

Some claim the Liberals have made it clear committee hearings will be the only consultation process. I don’t think the Liberals have made this decision, and if they have they should reconsider because hearings alone will not amount to meaningful consultation, in part because people self-select whether they participate.

The committee should also undertake a “deliberative judgment” process as the “national engagement” process the Liberals have promised, as it is the best practice for meaningful public consultation. Either several meetings should be held of a large citizen assembly (as B.C. and Ontario used in the past to review their voting systems) or of small focus groups across the country. I believe that several small groups are better because one large group is, like any crowd, more likely to suffer from a collective bias (like jumping on the bandwagon).

In either case: a randomly selected, demographically representative group of Canadians should be consulted; with public servants or independent, non-partisan organizations coordinating the process; politicians and officials from all political parties prohibited from participating in any way; an integrity auditor to hear complaints about violations of process rules, and; details about the process and results all reported publicly before any policy decision is made.

As the Liberals’ platform promised, the process should cover not only possible vote-counting changes but also “a wide variety of reforms” – including the right to vote none-of-the-above (as voters in Alberta, Manitoba, Ontario and Saskatchewan can do by declining their ballot), and the right to file complaints and have politicians penalized by an independent watchdog for unjustifiably breaking election promises.

As well, when the deliberative judgment process is ending and people are asked what changes they support (if any), best-practice methods should be used to record their choices. These methods don’t offer take it or leave it choices (which can be easily biased) but instead let people indicate the level of their support of various options – and if used properly they can produce a clear picture of whether there is any specific change most people support the most.

That public consultation process, done properly, can produce a roadmap for change (if change is supported by most people) that is as democratically legitimate as a referendum result.

The difficulty with a national referendum in a federation is the rules. What proposal should be on the ballot or should there be multiple proposals – and how much detail should the question(s) include? Should a certain minimum national percentage of voters be required to vote – or in each province or in each region? Should politicians be allowed to campaign, using their public office funding and travel perks, or not or should their parties have to pay for any campaigning they do? These are not easy questions to answer.

If a referendum is held, a strong argument can be made, given that the voting system determines who sits in our federal Parliament, and given that sections 37, 51, 51A and 52 of the Constitution Act, 1867 guarantee a specific percentage of seats in the House from each province, that at least a majority of voters in 7 out of 10 provinces representing 50% of the total population should be required to approve any proposed change.

If a referendum is not held, the same approval requirement should be applied to any other type of vote on any change proposal.

The current federal Referendum Act – enacted in 1992 for the Charlottetown Accord referendum and for the federal government to use for any future referendum on issues with constitutional implications (such as voting system change) – only requires a simple majority at a national level. It also has other undemocratic flaws that need to be corrected if a referendum is going to be held under its rules.

For example, the Act democratically limits spending by individuals and groups (although the spending limit measure is unclear as it has not been properly updated), and it requires them to register as a “referendum committee” if they spend more than $5,000. However, it undemocratically allows for unlimited donations from businesses, unions and other organizations to the committees, and allows the committees to collude with each other.

This would allow businesses and other wealthy interests to set up many committees, and fund them all to spend the maximum allowed. In 2004, the Supreme Court of Canada upheld limits in the Canada Elections Act on interest group advertising spending, and colluding, during elections specifically to prevent wealthy interests from dominating a campaign. Similar limits should be in place for any referendum.

Only by following best-practice democratic processes will federal politicians make the best, most widely supported, changes to our voting system. Canadians deserve such processes, not only for voting system reform but also for all the other real changes promised by the Liberals, and not just because it’s 2016 but also because such processes are the only way the Liberals can fulfill their promises of a government that “better reflects the values and expectations of Canadians” and that “trusts Canadians” and makes “evidence-based” decisions.

Democratic Voting System Campaign