Recent Developments on Lobbying, Conflict of Interest and Political Financing Laws

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Over the last few months, there have been significant developments in lobbying, conflict of interest and political financing regimes in Ontario, Alberta, Saskatchewan, Manitoba and at the federal level.

ONTARIO

Ontario’s Integrity Commissioner has issued Interpretation Bulletin #11 (Interpretation Bulletin) that spells out that office’s interpretation of the conflict of interest provisions in the Lobbyists Registration Act, 1998 (Ontario Lobbying Act). That Interpretation Bulletin indirectly imposes several requirements similar to the federal Lobbyists’ Code of Conduct.

Currently, the Ontario Lobbying Act provides that consultant and in-house lobbyists are prohibited from placing public office holders in real or potential conflicts of interest such that public office holders would be found to violate certain conflict of interest provisions in the Members’ Integrity Act (Integrity Act). The Ontario Lobbying Act also codifies that certain conflict of interest prohibitions in the Integrity Act would apply to public office holders who are not Members of Provincial Parliament (MPP), meaning that consultant and in-house lobbyists are prohibited from placing any public office holder in a real or potential conflict of interest.
 
In defining a conflict of interest, the Ontario Lobbying Act refers to specific provisions in the Integrity Act, which generally state that a conflict of interest may arise by way of insider information, influence or gifting that ultimately furthers private interests rather than the public interest. The Interpretation Bulletin echoes this language and provides further clarity and examples to lobbyists on this matter. Specifically, the Interpretation Bulletin indicates that lobbyists may place public office holders they are lobbying or planning to lobby in real or potential conflicts when:

Gifts

Lobbyists who give gifts to public office holders are likely to create a conflict of interest and consequently, breach the Ontario Lobbying Act. Examples of gifts include:

  • Meals

  • Tickets to events (e.g., galas, fundraisers, sports or art events)

  • Trips

  • Gift baskets and flowers

Note that, the rejection of a gift does not avail lobbyists from a conflict of interest and subsequent penalties that arise from breaching the Ontario Lobbying Act.

A very narrow exemption to the gifting rule exists, such that public office holders may accept small tokens of appreciation or a meal that arises from a speaking engagement. However, the Interpretation Bulletin does not attach a monetary amount to this exemption and leaves room for interpretation. Lobbyists who are contemplating inexpensive gift gestures ought to be prudent and consult with the Integrity Commissioner for further direction.

Relationships

A real or potential conflict may also arise where a consultant or in-house lobbyist, a client of a consultant lobbyist, or the organization of an in-house lobbyist has or had any of the below relationships with the public office holder who is being or will be lobbied:

  • A family or personal relationship (i.e., close or extended family, or close friends)

  • A close working relationship (i.e., former colleagues from the same office)

  • A business relationship (i.e., joint property or business owners)

  • Engaged in political work

Given that these situations are highly fact-specific, lobbyists are encouraged to obtain an advisory opinion from the Integrity Commissioner with respect to their specific situations.
 
In the case of past political activities, a history of political work or engagement in fundraising activities places an obligation on the public office holder that may result in preferential treatment. Rather than prohibit these activities altogether, the Interpretation Bulletin outlines several risk factors that the Integrity Commissioner views as higher and lower risk. For example, a higher risk of a conflict of interest in lobbying arises if the past political work engaged by such a person was fulfilled through a senior, strategic or significant role with the public office holder, or in signification interaction with the public office holder. Roles which entail volunteering, canvassing, or scrutineering work, or those who simply attend fundraising events, are of lower risk.
 
Lobbyists should conduct a careful assessment of their own relationships and past political work in connection to the public office holder who is being lobbied or will be lobbied, as well as those of their clients and organizations in the case of consultant and in-house lobbyists, respectively.

ALBERTA

The Province of Alberta has amended the Election Finances and Contributions Disclosure Act (Alberta Election Disclosure Act) by adding new third party advertising requirements for referendums. These amendments come by way of Bill 26, Constitutional Referendum Amendment Act, 2020 (Bill 26), which became effective on July 23, 2020.
 
Prior to Bill 26, provincial referendums in Alberta could be heard only in matters connected to the Canadian Constitution. Bill 26 expands the scope of provincial referendums by giving power to the Lieutenant Governor to call a referendum vote on matters involving the public interest. Consequently, Bill 26 adds a third-party advertising regime to the Alberta Election Disclosure Act.
 
These new third-party advertising rules largely mirror the existing third-party advertising regime for provincial elections in the Alberta Election Disclosure Act. However, third-party advertisers seeking to influence public opinion on a referendum issue, which includes organizing events that promote or oppose a referendum question, are subject to an advertising spending limit of C$500,000 from the day the order is issued to polling day. This contrasts with the election advertising limit of C$150,000 from the writ-day to polling day. Furthermore, third-party advertisers for a referendum will only have to file audited financial statements if they spend over C$350,000.

SASKATCHEWAN

Bill 195, The Lobbyists Amendment Act, 2019 came into effect on September 14, 2020 and amended the Saskatchewan Lobbyists Act. Most notably, the in-house lobbyist registration threshold was reduced from 100 hours to 30 hours. In-house lobbyists who reach 30 hours of lobbying in a year must register with the Office of the Registrar of Lobbyists Saskatchewan.

MANITOBA

The Legislative Assembly of Manitoba has started the process of reforming and strengthening Manitoba’s conflict of interest rules. On October 14, 2020, Bill 21, The Conflict of Interest (Members and Ministers) and Related Amendments Act (Manitoba Bill) passed first reading. If enacted as law, the Manitoba Bill will repeal The Legislative Assembly and Executive Council Conflict of Interest Act (Manitoba Conflict of Interest Act) altogether and add new conflict of interest laws.
 
The Manitoba Bill comes after a thorough review by Manitoba’s Conflict of Interest Commissioner, Jeffrey Schnoor, to modernize Manitoba’s conflict of interest legislation. Commissioner Schnoor published his 84 recommendations in an April 2018 report (Report).
 
Below is a summary of the key legislative changes proposed under the Manitoba Bill, which largely follow the Report.

Broadened Scope

The Manitoba Conflict of Interest Act is the main legislation that outlines obligations and restrictions when it comes to handling conflicts of interest arising from members of the Legislative Assembly of Manitoba (Members). Currently, the Manitoba Conflict of Interest Act only contemplates conflicts arising from financial interests of Members. The Report highlights this narrow scope as a weakness of the Manitoba Conflict of Interest Act and recommends a broader definition.

The Manitoba Bill would consider an array of situations where the Member may be confronted with a conflict of interest and would introduce changes by way of:

  • Expanding the Conflict of Interest Definition: The Manitoba Bill would expand the meaning of conflict of interest to be “when the Member exercises an official power, duty or function that provides an opportunity to further their private interests or those of their family or to improperly further another person's private interests”. Therefore, subject to certain exceptions, all private interests (whether financial or not) that may be placed above the public’s interest would be caught under the new regime; and

  • Extending Application of the Rules: Where obligations apply to family members, the Manitoba Bill would extend the application beyond immediate family members to also include any other adult who is related to the Member or their spouse or common-law partner, shares a residence with the Member and is primarily dependent on the Member, spouse or common-law partner for financial support (Family Members).

Expanded Prohibitions

Unlike other Canadian jurisdictions, the Manitoba Conflict of Interest Act does not specify any restrictions on Members accepting gifts and other benefits. The Manitoba Bill would add several new restrictions to this effect, which are as follows:

  • Gifts: A Member or their Family Members would not be able to accept a gift or personal benefit over C$1,000 in value that is connected directly or indirectly with the performance of the Member’s duties of office. If the gift is between C$250–$1,000 and accepted by the Member or Family Member, such a gift would have to be reported to the Ethics Commissioner (Commissioner) within 60 days after acceptance. Certain exemptions apply, such as those gifts received as an incident of the protocol or social obligations that normally accompany the responsibilities of office.

  • Private Air Travel: A Member would not be able to accept travel on a non-commercial chartered or private aircraft that is connected with their duties, unless approved by the Commissioner or the travel is required for performing their duties. Note that, any approvals made by the Commissioner related to travel will be public and detail the Member’s name.

  • Entertainment: Where a government or government agency promotes a sports or cultural event and receives complimentary tickets to such an event, Members would be prohibited from accepting these tickets. However, this restriction does not apply when a Member formally attends the event in the capacity of their duties.

  • Business Dealings: Members would be prohibited from knowingly being a party, or having an interest in a partnership or private corporation that is a party (whether directly or through a subcontract) to a government contract under which the Member or partnership or private corporation would receive a benefit. The Manitoba Bill also sets out a process for dealing with an inherited interest and entrusting the interest to a trustee.

Other Provisions

The Manitoba Bill also increases Member disclosure obligations, expands the Commissioner’s powers, and increases available fines. The Manitoba Bill would also add an additional restriction on former Members and Ministers to prohibit them from receiving employment income or other remuneration from government while they are receiving a transition allowance paid to them under The Legislative Assembly Act.

Consequential Amendments to Lobbying Legislation

The proposed amendments under the Manitoba Bill are planned to come into force in co-ordination with new provisions contemplated for the Lobbyists Registration Act to prohibit lobbyists from giving gifts to public officials, with the exception of gifts given incidentally to protocol or social obligations that usually accompany duties and responsibilities of a public official. This is consistent with lobbying legislation in other provinces.

FEDERAL

The rights of public members to intervene in the investigative and decision-making powers afforded to the Commissioner of Lobbying of Canada (Lobbying Commissioner) has been the subject of a court proceeding involving Democracy Watch, an advocacy group.
 
Democracy Watch v. Attorney General of Canada arises from a ruling made on September 17, 2017 by Karen Shepherd, the former interim Lobbying Commissioner (Former Lobbying Commissioner). The Former Lobbying Commissioner received a written complaint from a private citizen alleging that the Prince Shah Karim Al Hussaini, Aga Khan IV (Aga Khan) breached the federal lobbying laws and Lobbyists’ Code of Conduct (Code) by gifting Prime Minister Justin Trudeau and his family a trip to the Bahamas. Following an internal review, the Former Lobbying Commissioner ruled that the complaint did not warrant further investigation because there was no evidence that the Aga Khan is paid by the Aga Khan Foundation Canada, meaning that such communications are not considered registrable lobbying activities and the federal lobbying laws and Code do not apply.

Democracy Watch sought judicial review of the Former Lobbying Commissioner’s ruling at the Federal Court. While Democracy Watch successfully challenged the ruling at the Federal Court, the Federal Court of Appeal overturned this decision on April 1, 2020. In its decision, the Federal Court of Appeal referred to the language of several pieces of legislation and found that the federal lobbying laws do not establish a public complaints process. Democracy Watch did file a leave for application with the Supreme Court of Canada (SCC), but the SCC denied an appeal hearing on October 15, 2020 with no reasons.
 
The federal lobbying laws currently provide broad discretionary powers to the Lobbying Commissioner in deciding whether to investigate a complaint or to cease an investigation altogether. This case highlights that third parties do not have legal right to intervene in such decisions.

NEXT STEPS

Taken together, this flurry of new laws and proposed amendments in multiple jurisdictions along with a new interpretation bulletin and court rulings demonstrate the increased attention being applied to the refinement of lobbying, conflict of interest and political financing rules. Businesses, industry associations, professional associations, unions, and other organizations should carefully review their policies and practices in order to avoid non-compliance and subsequent penalties.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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