Annex

Reasoning Underlying the Commissioner's Guidance on Conflict of Interest – Rule 8 (Lobbyists' Code of Conduct)

Background

In 2002 the former Ethics Counsellor received a number of allegations that registered lobbyists had breached the Lobbyists' Code of Conduct by lobbying a federal department at the same time they were involved in assisting the Minister responsible for that department on a possible bid for the leadership of a political party. In that same year, the Ethics Counsellor was asked to examine the application of the Lobbyists' Code of Conduct, in particular Rule 8, to this situation. He issued guidelines entitled "Rule 8 – Improper Influence – Lobbyists and Leadership Campaigns" (the "2002 Guidelines").

The 2002 Guidelines were the subject of a decision of the Federal Court of Appeal in the case of Democracy Watch v. Campbell and Attorney General of Canada (Registrar of Lobbyists) 2009 FCA 79¹. In that decision, the Federal Court of Appeal held that an interpretation of Rule 8 based upon the previous 2002 Guidelines, was unreasonable.

Lobbyists' Code of Conduct – Conflict of Interest Rule 8

Rule 8 states:

Lobbyists shall not place public office holders in a conflict of interest by proposing or undertaking any action that would constitute an improper influence on a public office holder.

Defining Conflict of Interest

The Federal Court of Appeal's decision emphasized the presence of "competing loyalties" as a common element in various definitions of conflict of interest. The Court stated at paragraph 45 of the decision:

"…the idea of conflict of interest is intimately bound to the problem of divided loyalties or conflicting obligations. While the specific facts giving rise to a conflict of interest will vary from one profession to another, that which leads to the conclusion that a person is subject to a conflict of interest is the presence of a tension between the person's duty and some other interest or obligation."

The Conflict of Interest Act defines conflict of interest for public office holders. In that legislation, which applies to Ministers of the Crown, their staff and advisors and many appointees of the Governor in Council, section 4 provides as follows:

"…a public office holder is in a conflict of interest when he or she exercises an official power, duty or function that provides an opportunity to further his or her private interests or those of his or her relatives or friends or to improperly further another person's private interests."

A competing private interest on the part of the public office holder is one that provides an opportunity to further the interests of the lobbyist or those of his or her clients. The creation of a private interest, or the apparent creation of such a private interest, must be assessed based upon the facts of each case. However, Parliament has provided a definition of a "private interest" in the Conflict of Interest Act, as follows:

"private interest" does not include an interest in a decision or matter
(a) that is of general application;
(b) that affects a public office holder as one of a broad class of persons; or
(c) that concerns the remuneration or benefits received by virtue of being a public office holder.

The Conflict of Interest Act also deals with the giving of a "gift or other advantage" to a public office holder.  Such an action by a lobbyist could have the effect of creating a real or apparent conflict of interest for a public office holder.  The Conflict of Interest Act defines "gift or other advantage" as follows:

"gift or other advantage" means
(a) an amount of money if there is no obligation to repay it; and
(b) a service or property, or the use of property or money that is provided without charge or at less than its commercial value.

This "gift or other advantage" definition should be helpful to lobbyists in determining whether the actions they propose or undertake could create a competing private interest for a public office holder, and thus a real or apparent conflict of interest.

Other codes of conduct make reference to conflict of interest and what that may mean for their members. For example, the Values and Ethics Code for the Public Service² applies to all public servants working in the federal public administration. This Code directs public servants to arrange their private affairs in a manner that will prevent real, apparent or potential conflicts of interest from arising, and if they do arise, the Values and Ethics Code for the Public Service directs that conflicts should be resolved in favour of the public interest.

The Commissioner of Lobbying has, for purposes of the Lobbyists' Code of Conduct, interpreted real or apparent conflict of interest as follows:

A conflict of interest can be created by the presence of a tension between the public officer holder's duty to serve the public interest and his or her private interest or obligation created or facilitated by the lobbyist.

Shift in Understanding from the 2002 Guidelines

The 2002 Guidelines regarding Rule 8 took the position that the "improper influence" set out in Rule 8 must be such that there is interference with a decision or judgement made by a public office holder or an action by a public office holder. The standard was such that only the inappropriate use of the lobbyists' authority or trust of the public office holder was considered an improper influence. The result was held to be the deprivation of the public office holder's free will.

The Federal Court of Appeal concluded that such an interpretation of Rule 8 was unreasonable and that Rule 8 is principally a rule that prohibits lobbyists from placing public office holders in a conflict of interest. As a result, the words "improper influence" must be understood as an elaboration of, and not a limitation on, the notion of "conflict of interest." This constitutes a significant shift from the approach taken in the 2002 Guidelines and broadens the scope of circumstances in which Rule 8 may apply.

The Federal Court of Appeal summarized the concept of improper influence in paragraph 52 of the decision:

"Improper influence has to be assessed in the context of conflict of interest, where the issue is divided loyalties. Since a public office holder has, by definition, a public duty, one can only place a public office holder in a conflict of interest by creating a competing private interest. That private interest, which claims or could claim the public office holder's loyalty, is the improper influence to which the Rule refers."

Interpretation of Rule 8

The following consideration factored into the Commissioner's guidance regarding Rule 8 of the Lobbyists' Code of Conduct:

Conflict of interest may exist because of a "reasonable apprehension" of an apparent conflict of interest, rather than a demonstration of interference with the public duties of a public office holder.

The determination of what constitutes an improper influence upon a public office holder must remain a question of fact in each case. Depending on the specific circumstances, a competing obligation or private interest could arise from factors such as, but not limited to:

• the provision of a gift, an amount of money, a service, or property without an obligation to repay;
• the use of property or money that is provided without charge or at less than its commercial value; and
• political activities.

Lobbyists should endeavour to conduct themselves in the highest ethical manner thus avoiding situations which could create a real or apparent conflict of interest for a public office holder.

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[1] The Federal Court of Appeal decision is located at: decisions.fca-caf.gc.ca

[2] In addition to the Values and Ethics Code for the Public Service and the Conflict of Interest Act, references to the concept of conflict of interest are set out in the Conflict of Interest Code for Senators and the Conflict of Interest Code for Members of the House of Commons. Those Codes are nearly identical and provide a similar constraint upon furthering private interests to the detriment of the public interest. The Conflict of Interest Code for Senators reads as follows:

When performing parliamentary duties and functions, a Senator shall not act or attempt to act in any way to further his or her private interests, or those of a family member or to improperly further another person's or entity's private interests.

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