Annual Report 2009–2010

Compliance with the Act

As mentioned earlier, education and outreach activities are key components of the mandate of the Commissioner of Lobbying to ensure greater compliance with the Lobbying Act (the Act) and the Lobbyists' Code of Conduct (the Code). However, these activities must be complemented with a rigorous program of monitoring, reviewing and investigating to ensure compliance.

Monitoring

The Office monitors publicly available information to identify individuals or firms who may be conducting lobbying activity and determine if they are registered in accordance with the requirements of the Act. In most cases, they are. If they are not registered, advisory letters may be sent to corporations and organizations advising them of the requirement to register should they engage in registrable lobbying activity, and where to find information about the Act. This year, the Office sent 12 advisory letters to potential registrants, suggesting that they visit the website, or contact the Office for additional information about the Act's registration requirements. Three of the letters resulted in new registrations, and the remaining recipients advised the Office that they were not conducting activity requiring registration at this time.

This year, 293 individuals, corporations and organizations were subject to compliance verification after the Office learned that they were lobbying federal public office holders. The vast majority (90%) had filed returns in the Lobbyists Registration System. The rest were subject to further monitoring, or were educated about federal lobbyist registration in advisory letters. In some cases, registration was not required, as the lobbyist was a volunteer, or the lobbying activity was directed at provincial officials. The following table demonstrates the Office's monitoring activity over the past four years, and highlights the proportion of corporations, organizations or individuals who were found to be registered.

Communication Verification

The Lobbying Act requires lobbyists to disclose oral and arranged communications with designated public office holders (DPOHs) on a monthly basis, subject to certain conditions. By submitting these reports, registrants contribute to transparency, providing the public with information about the date and subject matter of the communication, as well as the name and title of the DPOH with whom the communication took place.

Monthly communication reports are published directly in the Registry. The Office ensures that information submitted by lobbyists in communication returns is valid by corresponding in writing with DPOHs listed in a sample of monthly communication reports. The Office requests that they verify the accuracy and completeness of returns. The following table highlights the types and frequency of errors reported by the DPOHs contacted.

This year, the Office sent 87 letters to DPOHs requesting that they confirm the accuracy of 429 communication entries. Respondents have identified a total of 60 errors.

The Office also received unsolicited requests from DPOHs for corrections to monthly returns. In most cases, the DPOH informed the Office that a communication was either not oral or arranged and, therefore, not subject to the requirement to file a monthly communication return.

Over-Reporting

In September 2009, the Office conducted a review of errors found in the reporting of monthly communications by registrants. In an effort to improve the accuracy of information contained in monthly communication reports, and reduce unnecessary reporting, the Office sent electronic reminders to registrants explaining the requirements of the Act. Common errors leading to over-reporting were listed, such as: filing a monthly return when communicating with a public office holder who is not a "designated" public office holder (DPOH); filing a monthly return for a written communication; and filing a return for a communication that was not arranged in advance.

In addition, efforts have been made to target specific errors. In January 2010, an internal study was conducted on over-reporting by registrants who incorrectly filed returns about communications with Members of Parliament (MPs) and Senators who are not Ministers or Ministers of State. Approximately 200 registrants were found to have filed monthly communications that were not required. Although MPs and Senators are public office holders, unless they hold a ministerial portfolio, they are not "designated" public office holders as defined in the Lobbying Act. Therefore, lobbyists do not need to file monthly reports in respect of any communications with these individuals. The Office is contacting registrants who have made such reports, requesting that corrections be made to the returns. It is anticipated that this effort will raise awareness of who is, and who is not defined as a DPOH under the Act.

Administrative Reviews

The Commissioner will review any suspected, alleged or known contravention of the Lobbying Act or the Lobbyists' Code of Conduct that is brought to her attention through monitoring or a complaint. The objective of an administrative review is to provide the Commissioner with a summary of the allegation, background information, and an analysis of the alleged contravention to determine a suitable means of ensuring compliance. Administrative reviews are fact-finding efforts, involving background research, in-depth interviews, and searches of the Registry and other publicly available information. At the conclusion of a review, the Commissioner is provided with a comprehensive report including recommendations to assist her in administering the Act. Possible recommendations include:

• the allegation is unfounded;
• the allegation is well-founded, and compliance is best achieved by educating the subject; and
• the allegation is well-founded, and there is reason to believe an investigation is necessary to ensure compliance with the Act or Code.

In some cases, compliance is promoted by requesting that an individual correct or amend information in their registration; in other cases, a formal investigation may be initiated.

At any point in time, the Office carries a caseload of about 40 administrative review files. This year, the Office received 11 new complaints of non-compliance with the Act and the Code. An additional five administrative reviews were opened as a result of internal monitoring and compliance verification efforts. Additionally, 10 reports were submitted to the Commissioner to assist her in administering the Lobbying Act.

The table below highlights the types of files that constitute OCL's new caseload of administrative reviews in 2009–2010.

Investigations

The Commissioner has the authority to initiate a formal investigation under the Lobbying Act if she has reason to believe an investigation is necessary to ensure compliance with the Act or the Code. The Act requires that investigations be conducted in private, and that the subject be given an opportunity to present their views. The Commissioner may also refuse to conduct, or cease, an investigation if she determines that pursuing the matter would serve no useful purpose because of, among other things, the amount of time that has elapsed since the matter arose.

This year, the Commissioner initiated three new investigations. Once completed, a report of the investigations will be submitted to the Speaker of the Senate and the Speaker of the House of Commons for tabling in Parliament, as required by the Act.

Referrals to a Peace Officer

The Commissioner of Lobbying is mandated to review complaints of alleged breaches of the Lobbying Act or the Lobbyists' Code of Conduct. The Office prioritizes files according to: the nature and gravity of the contravention; the length of time that has elapsed; the subject's degree of negligence or intent; and their compliance history. If, during the course of an administrative review or investigation, the Commissioner believes on reasonable grounds that a person has committed an offence under the Lobbying Act or any other Act of Parliament, or of the legislature of a province, she must advise a peace officer having jurisdiction to investigate the alleged offence.

This year, four administrative reviews under the Lobbying Act have resulted in referrals to the Royal Canadian Mounted Police. Since the coming into force of the Lobbying Act, no charges have been laid.

Exemption Reviews

The Lobbying Act seeks to ensure that designated public office holders (DPOHs) do not use advantages and personal connections derived from their government positions for lobbying purposes, by making these officials subject to a five-year prohibition on lobbying the federal government after leaving office. However, on application, the Commissioner may exempt an individual from the five-year prohibition if to do so would not be contrary to the purposes of the Act.

Any former DPOH may apply for an exemption from the five-year prohibition, and every application is subject to a thorough review and analysis. The Commissioner has taken a strict view, choosing to use her authority to provide exemptions only in the most exceptional circumstances.

During 2009–2010, two reviews were ceased after the applicant declined to provide additional information; another request was rejected because the applicant had left office prior to the July 2, 2008 coming into force of the Act. The Commissioner denied three applications on the basis that the granting of an exemption would be contrary to the purposes of the Act. In March of 2010, the Commissioner granted an exemption because the applicant had been a DPOH for a short period of time.

The Act requires the Commissioner to make every exemption and the reasons for it public without delay and she has chosen to do so by posting the information on the Office's website.

Court Challenges (2009–2010)

This section will report upon each of the two matters that have been before the courts and that have been referred to in Annual Reports in previous years.

1. Federal Court of Appeal Decision in Democracy Watch v. Barry Campbell and the Attorney General of Canada, (2009 FCA 79) and Commissioner's Guidance on Conflict of Interest — Rule 8 of the Lobbyists' Code of Conduct

In October 2006, the Registrar of Lobbyists completed an administrative review of an allegation by the public interest group Democracy Watch that Barry Campbell, a registered lobbyist, had breached Rule 8 of the Lobbyists' Code of Conduct when he hosted a fundraising dinner in September 1999 on behalf of Jim Peterson, a Liberal Member of Parliament who was running for re-election. At the time, Mr. Peterson was Secretary of State (International Financial Institutions), a cabinet member with responsibilities in relation to the Department of Finance. Mr. Campbell had registered as a lobbyist in relation to a number of undertakings, one of which involved Mr. Peterson and the Department of Finance.

Rule 8 of the Lobbyists' Code of Conduct states:

The Registrar concluded that Mr. Campbell had not violated Rule 8 and he determined that an investigation under the Act would not be initiated. His decision took into account advice that had been provided to lobbyists by the former Ethics Counsellor, which suggested that improper influence would require putting a public office holder in an actual, rather than an apparent, conflict of interest. The Registrar noted in his decision that it would be unfair to retroactively apply a new approach to enforcement of the Lobbyists' Code of Conduct.

In November 2006, Democracy Watch applied to the Federal Court for judicial review of the Registrar's decision. The Federal Court dismissed the application in a decision released in February 2008 (Democracy Watch v. Campbell, 2008 FC 214). Democracy Watch appealed the decision and, on March 12, 2009, the Federal Court of Appeal released a unanimous decision that allowed the appeal and set aside the decision of the Federal Court. The Federal Court of Appeal concluded that the interpretation of conflict of interest used by the Registrar, which was based upon the advice that had been provided to lobbyists by the former Ethics Counsellor, was too narrow. The decision outlined a number of principles to be applied in determining a conflict of interest and instructed the Registrar (now the Commissioner of Lobbying) to develop a new approach to the interpretation and application of Rule 8 that would reflect the Court's decision. In doing so, the Court affirmed the Commissioner of Lobbying's authority to provide guidance regarding the Lobbyists' Code of Conduct.

Acknowledging the length of time that has passed since the events occurred that gave rise to the Democracy Watch complaint, the Federal Court of Appeal declined to return the complaint to the Federal Court for a new hearing. As a result, the complaint regarding Mr. Campbell has lapsed. The Commissioner provided guidance to lobbyists regarding the application of Rule 8 of the Lobbyists' Code of Conduct in November 2009. The Guidance may be summarized as follows:

A lobbyist may be in breach of Rule 8 if:

• the lobbyist's actions create a real conflict of interest for a public office holder; or
• the lobbyist's actions create the appearance of a conflict of interest for a public office holder.

The full text of the Guidance, along with background and other relevant information regarding the reasoning underlying the Commissioner's Guidance, is available on the Office's website.

2. Federal Court Decision in Makhija v. Attorney General of Canada, (2010 FC 141)

In March 2007, the Registrar of Lobbyists completed four investigation reports concerning allegations of unregistered lobbying by Mr. Neelam Makhija. The reports, which were tabled in the Senate and the House of Commons, concluded that Mr. Makhija contravened the former Lobbyists Registration Act when he failed to register his activities on behalf of four corporations, and that his activities were in breach of the Lobbyists' Code of Conduct.

Mr. Makhija applied to the Federal Court for a judicial review of the Registrar's decisions, as set out in the four reports, claiming that he was not a lobbyist and that the Registrar had made a legal error. He asked that the decisions be overturned and that the reports be withdrawn from Parliament. In March 2008, the Federal Court overturned the Registrar's decisions and ordered that the four investigation reports that were tabled in Parliament be withdrawn. This decision placed into question the Registrar's ability to table findings regarding apparent breaches of the Act and to initiate an investigation under the Lobbyists' Code of Conduct of those who fail to register as lobbyists.

The Federal Court decision was appealed to the Federal Court of Appeal (FCA) by the Attorney General. In December 2008, the FCA quashed the decision of the Federal Court, concluding that the Registrar was entitled to conduct an investigation once he had reasonable grounds to believe that a breach of the Code had occurred, even if the person under investigation had not registered as a lobbyist. That decision resolved the question of the Registrar's jurisdiction raised by the Federal Court. Mr. Makhija sought leave to appeal the decision of the FCA from the Supreme Court of Canada, but the application for leave to appeal was denied.

The FCA directed that the application for judicial review be sent back to the Federal Court to make a decision based on the merits of Mr. Makhija's application for judicial review. The Federal Court decision was issued on February 11, 2010. The Court declared that the Registrar's conclusions regarding the breaches of the Lobbyists' Code of Conduct were reasonable and thus valid and legal in the circumstances. With respect to the Registrar's conclusion that Mr. Makhija had breached the Lobbyists Registration Act, the Court declared that the Registrar was not entitled to reach that conclusion under the Act and quashed the portion of each of the four investigation reports by the Registrar that set out that conclusion.

As of March 31, 2010, Mr. Makhija had indicated his intention to appeal the Federal Court's decision. The Attorney General of Canada will be responding to this appeal.