INST Committee Report

            The relationship between compliance and enforcement is clear: simply put, the enforcement mechanisms in the LRA aim at ensuring compliance by lobbyists. The two concepts are, in a sense, inversely related; if compliance is a problem, an argument exists to strengthen enforcement mechanisms. Where compliance rates are good, the suggestion is that enforcement mechanisms are adequate.

            According to the Registrar of Lobbyists, as of March 16, 2001, there were 785 registered Consultant Lobbyists, 301 registered In-House (Corporate) lobbyists and 364 registered senior paid officers for non-profit organizations and interest groups i.e. In-House (Organization) lobbyists. In large measure, the high rates of compliance are attributable to the ease of access to the system:

There is every indication that the registry is a very-frequently used resource:

The accomplishments of the registry are even more impressive when one considers the size of its budget:

            One witness, Democracy Watch, did not agree that the registry was effective, and told the Committee that "there is considerable anecdotal evidence that many lobbyists simply decline to register." [Aaron Freeman 8:15:45]. However, Democracy Watch provided no evidence to the Committee in support of this contentious assertion, and the fact remains that "anecdote" ? even in its plural form ? cannot be considered "evidence."

            Moreover, it is not clear from the anecdotal "evidence" if it is only certain types of lobbyists who fail to register, or all lobbyists across the board; or, for that matter, whether the failure is the result of ignorance of the law or malfeasance. Of course, if the statement was meant to refer to paid lobbyists for non-governmental organizations (NGOs), it might be said to find some support in a study conducted and reported by the Association of Canadian Manufacturers and Exporters (CME). As Jayson Myers explained:

            In support of his assertion, Mr. Myers referred to the results of a study conducted by his organization, which measured registration compliance rates during discussions of three issues in which the CME had been involved over the previous two years: the World Trade Organization; the development of the Export Development Corporation's disclosure standards and requirements; and climate change and the national negotiations on Canada's participation in the Kyoto Protocol. The CME’s study found that, of the 36 Consultant Lobbyists representing business associations, 34 were registered; of 14 In-House (Corporate) lobbyists, all 14 were registered; of 28 non-governmental lobbyists involved in the consultations, only three were "properly registered."

This approach, which relies on industry participants to report possible breaches, did not meet with the approval of all witnesses. John Chenier, Editor of the Lobby Monitor:

            Of course, one cannot infer malfeasance from every failure to register, since ignorance of the law might just as likely be the cause; and, in our system of justice, defendants are entitled to the benefit of reasonable doubt. Still, even breaches of the Act made in good faith will, if left unaddressed, erode its effectiveness; the Committee is of the view, however, that ignorance of the law is not best cured by stronger enforcement, but rather through public education. The point was well-expressed by Brian Grainger, a long-time consultant on business ethics:

            In conclusion, although it appears to be the case that the registration requirements of the Act are, for the most part, being complied with, the Committee is of the view that the question of compliance would benefit from further study and, accordingly:

            The Ethics Counsellor is responsible for investigating possible violations of the Lobbyists Code of Conduct. In this capacity, he reports to the Minister of Industry (and accordingly, to the Committee). It was in this capacity that the Ethics Counsellor appeared to talk about his role of enforcing the Lobbyists Code.

            The Ethics Counsellor derives his authority under the LRA from a Governor in Council appointment, made under section 10.1 of the LRA. The section permits the Governor in Council to "designate any person as Ethics Counsellor for the purposes of this Act." The exact instrument that gives the Ethics Counsellor his duties under the LRA is Order in Council (P.C. 1996-266, February 26, 1996):

            In addition to being appointed under the LRA for the purposes of the Act, the Ethics Counsellor also derives his powers to investigate breaches of the Lobbyists Code. The 1995 amendments that created the office of the Ethics Counsellor also gave him, appropriately, the mandate to draft a Lobbyists Code of Conduct. The Ethics Counsellor introduced the Code in March 1997.

By contrast, the Ethics Counsellor derives his mandate under the Conflict of Interest Code from section 5(1) of the Code:

            The Ethics Counsellor’s appearance before the Committee to talk about his role under the LRA led to some debate concerning the scope of our study. Some members expressed the view that it was proper, on the occasion of the Ethics Counsellor’s attendance, to have him answer questions about the Prime Minister. The majority of members were of the view that the Ethics Counsellor’s appearance clearly related to the application of the LRA and Lobbyists Code, not the Conflict of Interest Code. The matter appeared to be resolved when the Committee and the Ethics Counsellor agreed that he would devote the first hour of his appearance to answering questions about the Prime Minister .

            While the Committee’s mandate in the current study derives from the LRA, we did not view ourselves as being strictly confined to matters directly related to it; in fact, there emerged from the evidence a broad range of issues, some very directly related to the Act, and others bearing only a very tenuous connection to it. For example, discussion frequently returned to such issues as the "cooling off period" for former public office holders, or the reform of campaign financing. While the Committee heard the evidence on these subjects with great interest, we are aware that not all discussions were of direct relevance to our study. More fundamentally, though, this illustrates that the scope of our study was not always clear.

              Where this became most evident was in our discussion about the Ethics Counsellor. The Committee is of the view that the investigative powers of the Ethics Counsellor, as well as his appointment for the purposes of the LRA are clearly subjects within the bounds of the study and, indeed, evidence was heard on them. For example, the Committee addressed the question of whether the Ethics Counsellor should be involved in the enforcement of the Lobbyists Code, or whether this task might not be better assigned to another public servant. At the same time, the Committee recognizes that certain aspects of the Ethics Counsellor’s relationship fall outside the scope of our study; for example, the Ethics Counsellor’s appointment or his conduct of investigations under the Conflict of Interest Code are matters that, while certainly of interest to members of the opposition and to some Canadians, cannot be said to form part of the Committee’s mandate.

            In retrospect, it appears that the controversy over the scope of the Committee’s mandate would not have arisen but for the fact that the Ethics Counsellor holds two jobs, with two very different reporting relationships. In his role as the investigator under the Lobbyists Code he reports to the Minister of Industry (and to the Committee) on violations of it. In his other role as Ethics Counsellor, he advises on possible violations of the Conflict of Interest Code. The confusion is exacerbated by the fact that the Ethics Counsellor’s two tasks, while quite different in nature, go under the same title i.e. the Ethics Counsellor. But this is merely a question of title, and that could be easily rectified simply by giving the Ethics Counsellor (or some other public servant) a different title, such as, for example, the Lobbyists Registration Counsellor.

            But, while the 1995 amendments gave the Ethics Counsellor a mandate to draft the Lobbyists Code of Conduct, does this require his continued involvement as investigator under the Code? There is no clear policy reason for having the Ethics Counsellor do both jobs, and in fact, it appears to contribute to some confusion over his roles and reporting relationships.

            At the time the Act was amended, it appears that it was the intention of Parliament that the Ethics Counsellor’s powers of investigation, being quite similar to those of a federal court judge, should most appropriately be exercised by a senior civil servant:

            The Ethics Counsellor, as the person charged with drafting the Lobbyists Code, seemed like the logical person to investigate and report on violations of it. This does not appear to have been done out of administrative necessity, but out of administrative convenience. In retrospect, it is questionable whether giving the power to the Ethics

            Counsellor was sound policy. Lobbying is the concern of all Members of Parliament, not merely that of the Prime Minister, his Cabinet and the members of the governing party. Might the Lobbyists’ Code not be more appropriately the responsibility of an official who reports to Parliament? Witnesses were virtually unanimous in supporting this idea. The Committee endorses this proposal; however, it is important to emphasize that this recommendation does not foreclose the prerogative of the Prime Minister to appoint an Ethics Counsellor to advise his government. In fact, any party is free to do the same.

            Removing the Ethics Counsellor from the enforcement of the LRA would have two benefits: it would eliminate the confusion arising from the dual reporting relationship; and it would free up the Ethics Counsellor to devote his attentions exclusively to his mandate under the Conflict of Interest Code. Of course, the way the system has evolved, there exists considerable administrative interdependence between the Office of the Registrar and the Office of the Ethics Counsellor. But it is not clear that there is any obvious advantage to this arrangement; and, in fact, as the hearings demonstrated, it may lead to considerable misconception about the Ethics Counsellor’s role in the LRA system. This ambiguity could be resolved by the creation of a new office for the investigation of breaches of the Lobbyist’s Code.

Accordingly, for the reasons set out above:

            Currently, the Act applies to every individual who for payment on behalf of a client undertakes to communicate in an attempt to influence public decision making. As the Ethics Counsellor explains, this has led to enforcement difficulties:

            The effect of this different interpretation is considerable. Under the test as normally interpreted, if a person, for payment, communicates with a public office holder to discuss government business (i.e. legislation or awarding contracts) that person is required to register. This was likely the interpretation Parliament intended, given its consistency with the Criminal Code. However, the use of the term "in an attempt to influence" gives rise to interpretive problems. As Irving Miller, Senior Counsel, Commercial Law Division, Department of Justice, explained:

            Mr. Miller also noted, however, that the solution was not as simple as dropping the troublesome phrase:

            The Ethics Counsellor referred to other jurisdictions, such as the United States, where different language is used, such as "communicate with a public office holder with respect to or in regard to" legislation and the awarding of contracts.

            Mr. Miller also reported that several options have been, or are being considered by, the department. One option would move the offence to the system of civil regulatory or administrative offences:

            Another alternative would be to adopt an administrative penalty-type mechanism, which has apparently been done in other federal statutes. However, this approach also has its drawbacks:

            A third option would use the Contraventions Act, an existing federal law that provides for an administrative-type penalty and which is administered using existing courts of the provinces, known as contravention courts. Being designated as a "contravention" decriminalizes an offence. The person is given the option of pleading guilty and paying a fine, pleading guilty and making representations or requesting a trial. However, only seven or eight provinces have signed on to the administration of the contraventions courts. Moreover, it is questionable whether the penalty limits under the current Contraventions Act are sufficient to encourage compliance. Based on the evidence presented, the Committee concurs that the enforcement issue appears to be genuine; however, it does not have sufficient information to be able to assess fully the legislative alternatives available. Accordingly:

Under the current Act, anyone who makes a knowingly false or misleading statement in a return is guilty of an offence. The offence may be prosecuted either by way of summary conviction (subject to a fine of up to $25,000 and imprisonment of up to six months) or by way of indictment (subject to a fine of up to $100,000 and imprisonment of up to two years). The two-year limitation applies only when the crown proceeds by way of summary conviction. There is no limitation if the Crown proceeds by way of indictment. The traditional limitation for summary conviction offences (for example, under the Criminal Code) is six months; however, the LRA provides a considerably longer two-year period. The Committee is aware of a growing trend towards lengthening limitation periods and increasing penalties available under summary conviction proceedings, with the aim of increasing prosecutors’ flexibility; in some cases, the lapsing of the short six-month limitation period on summary proceedings may force prosecutors to proceed either by way of indictment or not at all. Indictment proceedings, however, are traditionally reserved for more serious offences, since they entitle the accused to a jury trial and preliminary inquiry. As well, because indictable offences carry more serious consequences, it may be more difficult to secure a conviction.

              No clear consensus emerged as to the appropriateness of the two-year limitation: some witnesses expressed the view that it was adequate; others felt that if increasing the limitation period would improve compliance and enforcement then it would be justified; still others expressed concern that the two-year period could lapse before a violation is discovered:

            The adequacy of the limitation period cannot be evaluated theoretically, but rather must be evaluated having regard to operation of the system in practice. Have there been cases where a prosecution has been abandoned owing to the lapse of the limitation? The Registrar in her evidence did not provide the Committee with any instance of such an occurrence. In practice, then, it is not obviously the case that the two-year limitation period has proven to be inadequate. Theoretically, however, the situation could be different: what would happen if two years passed before the breach came to light? As a first response, of course, the Crown would have the option of proceeding by way of indictment (if the offence was sufficiently serious); but what about minor breaches, for which summary conviction is the only reasonable means of proceeding? How does it come to the Registrar’s attention that a person has failed to register? How long does it take for this information to surface? Since a lobbyist only "shows up on the radar" by registering, how does the Registrar determine whether a lobbyist is actually registered? The Registrar responds:

            The Registrar explains that unregistered lobbying rarely occurs, for the simple reason that the practice is usually an open one:

            The system therefore relies on industry participants to report, a process which is facilitated by the open availability of the registry on the Internet:

            In some cases, the Registrar reports, her investigation reveals that the activity reported is not a registrable activity; as such, the reported "breach" is not a breach at all:

            Where the reported activities fall within the scope of the Act:

            The Ethics Counsellor was of the view that the registry system has cleared up much of the mystery which used to surround the system:

The Canadian Bar Association, in its written brief to the Committee, expressed its view:

            Owing to the openness created by the registry, it appears that for the most part the likelihood is that the Registrar will learn of possible breaches of the Act in a timely fashion, and it does not appear that the two-year limitation has adversely affected the ability of the Crown to proceed with commencing summary conviction proceedings. Accordingly, for this and other reasons set out above: