The Lobbying Activities of Neelam J. Makhija on Behalf of Intrinsyc Software, Inc.

Conclusions

Companies seeking a repayable contribution from government organizations such as Technology Partnerships Canada sometimes hire individuals to assist them with managing the application process and presenting their case to officials in the best possible light. These individuals may also arrange meetings between the company and officials or may communicate with officials to clarify technical details of a company's proposal. Similarly, a practical issue such as a company's location in Canada may lead the company to decide that hiring a person to be regularly "on the ground" in Ottawa to work with government officials, is more efficient than having their own staff travel frequently across the country.

These are legitimate actions on the part of companies and those they hire. The Lobbyists Registration Act acknowledges this legitimacy but imposes certain obligations of disclosure and behaviour on those who for payment, undertake to assist companies in this way.

I have concluded that Mr. Makhija did not meet his obligations under the Lobbyists Registration Act and the Lobbyists' Code of Conduct. This chapter contains my reasons for reaching this conclusion.

During the period of Mr. Makhija's activities on behalf of Intrinsyc, subsection 5(1) of the Lobbyists Registration Act provided, in part, that:

Every individual who, for payment, on behalf of any person or organization, undertakes to

(a) communicate with a public office holder in an attempt to influence

…
(v) the awarding of any grant, contribution or other financial benefit by or on behalf of Her Majesty in right of Canada, or
(vi) the awarding of any contract by or on behalf of Her Majesty in right of Canada, or

(b) arrange a meeting between a public office holder and any other person,

shall, not later than ten days after entering into that undertaking, file with the registrar, in the prescribed form and manner, a return setting out the information referred to in subsection (2).

The following examines whether Neelam Makhija complied with these elements of the subsection with respect to his activities on behalf of Intrinsyc.

Undertaking to Communicate with a Public Office Holder in an Attempt to Influence the Awarding, on Behalf of Her Majesty in Right of Canada, of a Grant, Contribution or other Financial Benefit or a Contract

The preamble of the MOU of February 23, 2001 between NJM Initiatives and Intrinsyc Systems states that NJM had been retained to assist in a planning process "with the objective of qualifying for and securing of financial support from government agencies". The list of services to be supplied by NJM includes "proposal preparation, initial presentation, submission, discussion, and defense." The MOU also provides that subsequent to approval of government funding, NJM would offer Intrinsyc "ongoing liaison with funding source(s)" until completion or termination of the project. The language of the agreement indicates that it was the intention of the parties that NJM would work to influence the awarding of a contribution, contract or financial benefit to Intrinsyc. During the period 2001-2003 Mr. Makhija met with investment officers and other TPC officials to provide information about Intrinsyc and its projects.

Arranging a Meeting Between a Public Office Holder and any other Person

The evidence shows that Mr. Makhija's role included arranging meetings between Intrinsyc and public office holders with TPC and CRC. These meetings took place in Ottawa and in Vancouver. For example:

• A meeting was arranged for May 28, 2001, in Ottawa, involving Intrinsyc and the Executive Director of TPC.
• In May 2001, a TPC investment officer and another Industry Canada employee attended a meeting with Intrinsyc in Vancouver. Mr. Makhija was responsible for the arrangements of this meeting as well. He co-ordinated between government and Intrinsyc representatives, determining the availabilities of those attending, and setting or changing the time and date of the meeting.

Payment

The work performed for Intrinsyc by NJM Initiatives and Mr. Makhija was for payment. NJM and Intrinsyc signed a Memorandum of Understanding on March 26, 2001 that sets NJM's remuneration at the following rate:

(1) upon signing of the MOU, $2,000, which would be deducted from (2); and

(2) upon approval of government funding, a professional fee of 15% of the total amount of the funding.

The terms of payment provided that NJM would be paid the professional fee quarterly as agreed by the parties based on the projected funding payments. Intrinsyc issued three cheques to NJM in January, March and October of 2003 in the amount of $164,956.29, $66,984.04, and $161,427.60 respectively.

The Lobbyists Registration Act was Breached

Mr. Makhija's lawyer argues that Mr. Makhija was not required to register because he was contacted initially by TPC and asked to find companies. This is an incorrect interpretation of the former paragraph 4(2)(c) of the Lobbyists Registration Act, which was in effect during the period of Mr. Makhija's activities on behalf of Intrinsyc. This part of the LRA provided public office holders with the ability to seek the advice of a specialist without triggering the requirement for the individual or organization to register. It did not sanction a lobbyist to seek out clients and perform lobbying activities on their behalf without registering.

He further argues that the meetings he arranged did not require registration. With respect to the meeting that he arranged in December 2000 I cannot dispute this assertion, since I have no evidence that there was an undertaking in place between Mr. Makhija and Intrinsyc at that time with respect to securing a TPC contribution agreement. However, Mr. Makhija arranged at least one meeting after an MOU for his services was signed in March 2001.

Mr. Makhija argues that he did not attempt to influence TPC officials to award contributions. However, the means by which influence may be brought to bear are many and varied. In this Investigation Report, I am not suggesting that Mr. Makhija used unsavoury means of persuasion or personal connections to influence the awarding of a TPC contribution. Influence with respect to the decision to invest in a high-technology company such as Intrinsyc arises in part through the presentation of data regarding the proposed investment, including technical data, financial data and market data. The MOU between Intrinsyc and NJM provides for, among other services, compilation of material supplied by the company and other sources; proposal preparation; initial presentation; submission; discussion; and, defence. The intent of the MOU is clearly that NJM would carry out these services in order to obtain a financial contribution for Intrinsyc from the federal government.

My conclusion is that Mr. Makhija contravened subsection 5(1) of the Lobbyists Registration Act. For payment, he acted as a consultant lobbyist. He arranged at least one meeting between public office holders and Intrinsyc representatives. He communicated with public office holders in an attempt to influence the awarding of a financial contribution by TPC. Mr. Makhija was required under the Lobbyists Registration Act to register as a lobbyist but failed to do so. At the latest, he should have registered within 10 days of signing the MOU with Intrinsyc on March 26, 2001.

Rule 3 of the Lobbyists' Code of Conduct was Breached

Individuals who must register as lobbyists in accordance with the requirements of the Lobbyists Registration Act must also comply with the Lobbyists' Code of Conduct. The Lobbyists' Code of Conduct contains three principles, including the following:

Professionalism

Lobbyists should observe the highest professional and ethical standards. In particular, lobbyists should conform fully with not only the letter but the spirit of the Lobbyists' Code of Conduct as well as all the relevant laws, including the Lobbyists Registration Act and its regulations.

Mr. Makhija's lobbying on behalf of Intrinsyc without registering violates the Principle of Professionalism under the Lobbyists' Code of Conduct because he was in breach of his obligations under the Lobbyists Registration Act.

The Lobbyists' Code of Conduct includes eight Rules that flow from the Lobbyists' Code of Conduct's three Principles. During the period covered by this investigation, it was necessary to contravene one or more of the Rules in order to be found in breach of the Lobbyists' Code of Conduct. Rule 3, under the heading of Transparency, reads as follows:

Disclosure of Obligations

Lobbyists shall indicate to their client, employer or organization their obligations under the Lobbyists Registration Act, and their obligation to adhere to the Lobbyists Code of Conduct.

Mr. Makhija's view, as evidenced by his lack of registration and as confirmed by his written submission during the investigation, was that his activities were not subject to registration under the Lobbyists Registration Act. It follows, then, that he did not disclose his obligations under the Lobbyists Registration Act to Intrinsyc.

My conclusion is that Mr Makhija breached Rule 3 of the Lobbyists' Code of Conduct.