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Group files ethics complaint with federal Lobbying Commissioner about big business chairman assisting with fundraising event for Finance Minister while his business is lobbying the minister

Calls on Lobbying Commissioner to remove herself from ruling on complaint because she has expressed interest in being reappointed by MPs – a similar commissioner from another jurisdiction should rule on the complaint

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

Tuesday, October 25, 2016

OTTAWA – Today, Democracy Watch filed an ethics complaint with federal Commissioner of Lobbying Karen Shepherd about the situation reported in an article in the Globe and Mail today. According to the article, Barry Sherman, the chairman of generic drug manufacturer Apotex Inc., is 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.

Apotex is registered to lobby Finance Canada (with Mr. Sherman listed in the registration as one of its lobbyists), as are three consultant lobbyists registered on behalf of the company (two from StrategyCorp Inc. and one with Goodmans LLP). The most recent monthly communication with Finance Canada officials is by one of Apotex’s consultant lobbyists at StrategyCorp Inc. occurring on September 20, 2016.

However, the complaint requests that the Commissioner Shepherd not rule on the complaint because she has expressed interest in being reappointed by MPs to the position (her term ends this July) and is therefore in a conflict of interest when considering a complaint that affects the reputation and activities of MPs. Democracy Watch is also concerned about Commissioner Shepherd’s very weak enforcement record, and its position is that in order to have proper enforcement of the Lobbying Act and the Lobbyists’ Code Commissioner Shepherd must be replaced by someone who has a demonstrated strong enforcement attitude and record.

Democracy Watch’s complaint letter calls on Commissioner Shepherd to remove herself from ruling on the complaint and to delegate consideration of the complaint to a similar commissioner in another jurisdiction. However, the complaint should not be delegated to federal Ethics Commissioner Dawson because she also has a very weak enforcement record (including ruling in 2010 that it is fine for Cabinet ministers to have lobbyists who are lobbying them raise thousands of dollars for them). As well, federal Cabinet and MPs will also soon consider whether to reappoint Commissioner Dawson for another term (her term also ends in July) and so she is also in an appearance of a conflict of interest when considering a complaint that affects the reputations and activities of MPs.

“Federal ethics rules say it is illegal for lobbyists to do anything that puts a politician or government official in even the appearance of a conflict of interest, and a business lobbyist selling tickets for a fundraising event involving the Finance Minister while the business is lobbying the minister crosses that line,” said Duff Conacher, Co-founder of Democracy Watch. “Neither the federal Commissioner of Lobbying nor the federal Ethics Commissioner should rule on this complaint because they are up for possible reappointment by the Liberals and also have very weak enforcement records.”

Democracy Watch advocated through 10 years of 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 the Registrar’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.

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.

Democracy Watch also called on federal political parties to make the same world-leading changes to the federal political finance 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 (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) with donations routed through the election watchdog agency (as in Quebec);
  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 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 (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