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Group files ethics complaint with federal Lobbying Commissioner about August 2015 fundraising event involving Apotex and Justin Trudeau

Lobbyists who assist parties, candidates or politicians with fundraising or campaigning are prohibited from lobbying them or their staff for 5 years – Apotex is now registered to lobby Prime Minister Trudeau’s office

Federal political parties should change political finance system to stop big money’s unethical influence by matching Quebec’s $100 annual donation limit and other world-leading measures

Friday, November 4, 2016

OTTAWA – Today, Democracy Watch filed an ethics complaint with federal Commissioner of Lobbying Karen Shepherd calling on her to investigate an August 26, 2015 fundraising event for the Liberal Party of Canada hosted by Apotex Inc. chairman Barry Sherman at his home and attended by Justin Trudeau and then-candidate, now-Liberal MP Michael Levitt. According to an article in the National Post, tickets for the event cost $1,500.

At the time of the event, Apotex was registered to lobby the House of Commons (which means it claimed it was lobbying at least some MPs, possibly including Trudeau) and Mr. Sherman was included as a registered lobbyist in that registration. Currently, Apotex itself (including Mr. Sherman), along with several consultant lobbyists it has hired since March 1, 2016, are all registered to lobby the Prime Minister’s Office. The consultant lobbyists registered to lobby the Prime Minister’s Office on behalf of Apotex are Aaron Dobbin, John Duffy, Andrew Steele, Brian Teefy and Danya Vered (all five work at StrategyCorp Inc.), as well as Lester Scheininger.

“Federal lobbying ethics rules say it is illegal for a lobbyist to do anything that puts any federal politician or candidate in even the appearance of a conflict of interest, and a person crosses that line if they help in any way with a fundraising event involving a politician while they or their business or organization is lobbying the politician,” said Duff Conacher, Co-founder of Democracy Watch. “Federal lobbyist ethics rules also say it is illegal for anyone to help a party, candidate or politician with fundraising or campaigning and then be involved in lobbying them any time within the following five years.”

The Lobbying Commissioner office confirmed in a letter dated October 25, 2016 that it is already investigating Democracy Watch’s complaint about the situation revealed in an October 25th Globe and Mail article involving Barry Sherman, the chairman of generic drug manufacturer Apotex Inc., assisting with selling tickets for a $500-per-ticket fundraising event to be held in Toronto on November 7, 2016 featuring Finance Minister Bill Morneau while Apotex is registered to lobby, and is lobbying, Finance Canada.

Rule 6 of the Lobbyists’ Code of Conduct states:

A lobbyist shall not propose or undertake any action that would place a public office holder in a real or apparent conflict of interest.

Rule 9 of the Lobbyists’ Code prohibits anyone from assisting a party, candidate or politician (or other public office holder) with fundraising or campaigning or any way that creates a sense of obligation, and then lobbying them afterwards for a period of five years because of the ongoing apparent conflict of interest that person’s assistance has caused for the politician or other type public office holder.

While Rule 9 came into effect in December 2015, in a public guidance document on Rule 8 published in 2009, and a clarification document published later, and in an updated guidance document on Rule 8 published on June 25, 2015, and in a reminder to lobbyists about Rule 8 and political activities published on June 25, 2015, the Lobbying Commissioner made it clear that lobbyists assisting a party, candidate or politician with campaigning or fundraising violate Rule 8 by creating an apparent conflict of interest for the politician that continues into the future for five years. Therefore, anyone who assists with campaigning or fundraising cannot be involved, and their organization cannot be involved, in lobbying the politicians involved in campaign or fundraising for the following five years.

Democracy Watch advocated through 10 years of campaigns and court cases until 2009 to win the enforcement of Rule 8 of the Lobbyists’ Code (now Rule 6 in a new version of the Code in force since December 1, 2015). In March 2009, the Federal Court of Appeal ruled unanimously in the case Democracy Watch v. Barry Campbell, the Attorney General of Canada and the Office of the Registrar of Lobbyists, rejecting former Registrar Michael Nelson’s “deeply flawed” interpretation of Rule 8 (Commissioner Shepherd was Deputy Registrar at the time) and making it clear that Rule 8 (now Rule 6) prohibits lobbyists from doing anything that puts a public office holder in even an appearance of a conflict of interest. Registrar Nelson had used the same “deeply flawed” interpretation of Rule 8 as former Ethics Counsellor Howard Wilson, both of whom had negligently weak enforcement records that let hundreds of lobbyists get away with violating the Lobbyists’ Code or the Lobbying Act. Commissioner Shepherd has had a similar negligently weak enforcement record over the past nine years.

Democracy Watch also called on federal political parties to stop the unethical influence of big money in federal politics by making the same world-leading changes to the federal political donation system as Quebec made in 2013 when it 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.

Political finance systems across Canada, other than Quebec’s provincial system, are all undemocratic in various ways. B.C. (along with Newfoundland and Labrador, Prince Edward Island, and the Yukon) have the most undemocratic political finance systems in Canada 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.

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 (and Ontario will likely do this soon), they still allow undemocratically high donations that only wealthy people can afford.

Donations to parties in Quebec, the federal parties in the past few years, and to Toronto city councillors, show what happens with such high donation limits. 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.

And to give one example from the federal level, in 2014 only 8.9% of donors gave 41.7% of total donations to federal Liberal Party (and 3.8% of donors gave the party 23.1% of the total donated to the Party – neither of these figures count how much more these people gave to riding associations that year).

And 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.

“Any political party that refuses to make these changes is essentially admitting they are up for sale and that they approve of the unethical and undemocratic best-government-money-can-buy approach to politics,” said Conacher. “The only way to stop the unethical and undemocratic influence of big money in Canadian politics is to stop big money donations.”

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;
  2. 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) to prevent businesses and other organizations funneling donations through their executives or employees or their families;
  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 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 disclosure of the identity of anyone who assists with any fundraising, campaign or party event or activity);
  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 (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 annual random audits to ensure all the rules are being followed by everyone.

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

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