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George Furey

The Hon. George  Furey, Q.C., B.A., B.A. (Ed.), M.Ed., LL.B. A distinguished educator and lawyer with deep roots in the community, Senator George Furey is one of the leading citizens of Newfoundland and Labrador. He was appointed to the Senate on August 11, 1999, by the Rt. Honourable Jean Chrétien.

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Conflict of Interest Act

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Statement made on 05 October 2010 by Senator Joseph Day

Hon. Joseph A. Day:

Honourable senators, I did want to indicate that I had begun the second reading on Bill S-208, An Act to Amend the Conflict of Interest Act.

Honourable senators, this bill proposes an amendment to the Conflict of Interest Act. This same amendment was considered when we studied Bill C-2 and was accepted by our committee at that time. That amendment was then adopted in the Senate and sent to the House of Commons.

That is what we are discussing now. This is the same bill that was defeated in the other place.

Honourable senators, I gave a bit of a background previously in my introduction on this matter, and I indicated then that I was in discussions in an attempt to resolve this matter. It is clearly a matter that should be resolved, but regretfully we were not able to reach a resolution. Therefore I am proceeding with the amendment. I hope, once I finish this explanation, that honourable senators will agree that this is something that should be looked into.

Honourable senators, I want you to know that what I have accepted here in this amendment does not go as far as I would like to see the conflict of interest go but, in the interest of looking for compromise, I went back to the code that was generated by Mr. Harper when he first became prime minister. I accepted that wording and I put that wording in the bill in the hope that that would be a compromise he would accept.

Bill S-208 has been drafted to close a potentially dangerous loophole in the Conflict of Interest Act. Honourable senators will be aware of the recent Oliphant inquiry which focused on the rules governing the conflict of cabinet ministers and, in particular, Mr. Brian Mulroney as prime minister, as he then was; and with respect to rules surrounding the acceptance of gifts and cash. There is no value in our going over the rather sad history of the Oliphant inquiry and the facts that surround that particular matter.

Honourable senators should be aware that several recent prime ministers, including Prime Ministers Trudeau, Clark, Mulroney, Chrétien, Martin and Harper, each, when he became prime minister, generated a code of conflict of interest. Each prime minister generated his own and they looked similar to one another, if one goes over each one of those.

Upon becoming prime minister, that became the tradition. However, shortly after coming into power, Mr. Harper decided to put the code of conflict of interest into statutory form. So, we went from not a voluntary code but a code that was expected to be followed and did not have the same force of law, to a specific act, that is, the Conflict of Interest Act in the Federal Accountability Act. There are about 15 different acts that appear in the Accountability Act. This was the first one.

We worked hard on what was presented to us in the Federal Accountability Act and the Conflict of Interest Act, trying to make it better. Honourable senators will know that in the Federal Accountability Act we proposed 160 amendments and 90 of which were accepted. Regretfully, the amendments that appear here are amendments that were not accepted. It is hard to speculate, but perhaps because there were so many amendments, there were a certain number that got overlooked. I would like to think that is the case.

When the Federal Accountability Act was introduced in 2006, it was said by the Harper government that this was "the toughest anti-corruption law in Canadian history." The first part of that omnibus bill, the Federal Accountability Act, was the Conflict of Interest Act to create "a strong conflict of interest and ethics regime to help build public confidence in our system of government and parliamentary institutions."

The Conflict of Interest Act that was introduced at that time sets out a series of rules of conduct, including rules governing the acceptance of any "gift or other advantage" by public office-holders and members of their families.

I can tell honourable senators that the Conflict of Interest Act that was introduced in that Federal Accountability Act reflects closely the code that Mr. Harper had introduced some time previous to that. They are similar, but in this instance with respect to gifts, they differ in a profound way. That is what I hope to explain to honourable senators.

The general rule with respect to gifts that appears in subsection 11(1) of the Conflict of Interest Act reads as follows:

No public office holder or member of his or her family shall accept any gift or other advantage, including from a trust, that might reasonably be seen to have been given to influence the public office holder in the exercise of an official power, duty or function.

The problem, honourable senators, arises with respect to subsection 11(2) of the Conflict of Interest Act, which sets out a number of exceptions. No public office-holder can accept a gift that reasonably would be accepted to influence that public office-holder. Subsection (2) states:

Despite subsection (1), a public office holder or member of his or her family may accept a gift or other advantage

. . .

(b) that is given by a relative or a friend.

If a relative — husband, wife, sister, brother, mother — gives a public office-holder a gift, that is understandable. Whether it can be seen as, or whether the public might think one is trying to influence a son or daughter is the overriding factor in a gift coming from a relative. However, the exception is that, even though a gift might appear to influence the public office-holder, it is not a problem if it comes from a friend. That is where the problem lies, even if the gift might be seen reasonably to have been given to influence the public office-holder.

The next problem is that the word "friend" is not defined. Was Karlheinz Schreiber a friend of Brian Mulroney? If Mr. Mulroney says yes, then the investigation of that particular matter ends there. The problem is compounded, honourable senators, by the disclosure provisions in this act. "Disclosure" has been described as the cornerstone of a modern conflict of interest regime. The principle is that sunlight is the best disinfectant. If the Ethics Commissioner and the public can see the details of a particular relationship or transaction, then that sight facilitates effective accountability and removes any public suspicion.

Section 23 of this new Conflict of Interest Act brought in by the Federal Accountability Act sets out the requirement for confidential disclosure of gifts, and this disclosure is to the Conflict of Interest and Ethics Commissioner.

Subsection 25(5) governs public disclosure of gifts. I can explain to honourable senators the slight nuance with respect to these two different sections. One is if the gift has a value of $200; the second is if there is an accumulation of gifts that exceed $200.

Both sections require disclosure of gifts, but both sections provide for an exception if the gift or gifts are "from a relative or a friend." Here again, we find these words "a relative or a friend." I take no exception with "relative"; my exception is with "friend."

Honourable senators, the question is what we do with respect to these two sections. Section 23 involves a reporting public officer who receives a gift of $200 from any one source other than relatives or friends in a 12-month period. Public office-holders are senior members of the public service, cabinet ministers; it is that level of personnel.

Section 25 talks about a reporting public office-holder who receives a single gift in excess of $200. That gift must be disclosed to the public, honourable senators, but not, again, if it comes from a relative or a friend. With no definition of "or a friend," it means that the word "friend" can be defined by the recipient.

Honourable senators, this provision must change, if there is no limit under the current act to the value of the gift — and there is not — that may be accepted from a friend. It can be any amount. It can be cash or a gift in kind. It can be anything and it can come from anyone that the recipient wants to define as a friend.

The act is explicit in that the gift may even be — and this wording is in the definition in section 2 of the act — "an amount of money if there is no obligation to pay or repay it." Thus, the act permits cabinet ministers and then the Prime Minister to accept large sums of cash even where the circumstances are such that a reasonable person would believe that the cash was given to influence the minister or the Prime Minister in the exercise of his or her official duties. So long as the minister or the Prime Minister considers the person from whom he or she received that cash, in whatever manner, as a friend, there is no rule preventing the acceptance, and there is no rule requiring the publication or the disclosure to the Ethics Commissioner.

These provisions were noted with concern during the deliberation of Bill C-2 in 2006 by Howard Wilson, who served as the Ethics Commissioner under Prime Minister Chrétien. Bernard Shapiro also appeared before us. He was the ethics commissioner when the Federal Accountability Act was introduced. When Mr. Wilson and Mr. Shapiro testified on this bill before the Standing Senate Committee on Legal and Constitutional Affairs in 2006, each of them independently recommended that the portion of the Federal Accountability Act dealing with the conflict of interest, this portion that I have been highlighting to you, be amended to provide a tighter definition of what constitutes "a friend." Mr. Wilson said:

. . . the provisions on gifts are weakened by exempting gifts from friends. The current code —

Here, Mr. Wilson refers to the code that Mr. Harper himself brought forward —

— says these have to be close personal friends.

That terminology was adopted by Mr. Harper in his first code, but he did not repeat it. He dropped the "close personal" and in front of "friend" in the statute he brought forward. That deletion, in a nutshell, is where the problem lies.

Carrying on with a quotation from Mr. Wilson, the Ethics Commissioner:

It was interesting to read the proposed text. I do not know why the drafters —

He refers to the Federal Accountability Act —

— did not use the existing language, because they have used the language of the existing code invariably throughout.

It is either an oversight or they left out "close personal" specifically to make it a much broader exemption.

Why didn't the act follow the wording of the code, and use the expression" close personal friend"?

I prefer there be no exception, but if there must be an exemption to have this act amended, I will accept the wording that appeared in the code of Mr. Harper, "close personal friend."

The Liberal members of the Standing Senate Committee on Legal and Constitutional Affairs put forward two amendments to these provisions. First, as recommended by the two former ethics advisers, they amended the act to tighten the scope of the exemption, limiting it to "close personal friends." We proposed that wording back when we dealt with the Federal Accountability Act, Bill C-2.

One is acceptance; the second is disclosure. In the disclosure provisions, section 23 and section 25, it was recommended that these sections be amended to require disclosure of all gifts valued at $200 or more from whatever source, including "friends." In effect, we have lifted out the exemption of "friends" not from the code, because in the code it was "close personal friend." In taking that code and putting it into legislation, it was changed to "friend," and the amendment proposed taking out that exemption entirely. It said, why not disclose all gifts? If gifts accumulate to $200, let the Ethics Commissioner know. If a gift is over $200, the recipient should declare it in a public declaration, everyone will be happy and no one will suspect the recipient of being overly influenced.

We believed in 2006, and I believe today, that Canadians have a right to know who is giving expensive gifts to high ranking members of the Government of Canada. That is why this amendment is proposed. Surely an act promising transparency and accountability should provide for nothing less.

These amendments I propose here today were passed, as I mentioned to honourable senators earlier, by your committee, the Standing Senate Committee on Legal and Constitutional Affairs, and then by the Senate as a whole in 2006. A lot of wisdom went into considering these amendments and passing them.

To our disappointment, the government rejected these amendments. In the message that was sent to the Senate responding to the amendments made by the Senate in the Accountability bill, it was said that these amendments were "an inappropriate intrusion into the private lives of public office holders and their families" and they would narrow the exemption for gifts to public office-holders from "friends" to "close personal friends." That result is absolutely what we were trying to accomplish, namely, narrow the exemption from "friends" to "close personal friends."

They went on to say "and would require that any gift over $200 to a reporting public office holder or his or her family from any person other than a relative be disclosed."

That result is what we intended. We knew what the amendment was for because these are gifts that had that qualification that they could be perceived as influencing the recipient in the exercise of his duty.

The Conflict of Interest and Ethics Commissioner publicly reported this particular information. The House of Commons, actually the government, sent it back to us and said that these amendments were inappropriate. My question is this: How would these amendments be inappropriate? What is it that the government is afraid Canadians will learn from a disclosure of gifts of $200 or more?

Honourable senators, these items are not mere Christmas gifts or hospitality or tokens of appreciation we are talking about. By definition, we are talking about gifts of values in excess of $200. We are not talking about special gifts from members of one's family. We accepted that family relationships need to be treated differently. Our amendments looked only to the exclusion of gifts from the undefined term "friends."

The amendments proposed in the bill that we are dealing with here today — Bill S-208 — to the Conflict of Interest Act are exactly what was passed in this chamber in 2006. The wording is the same wording that appeared in Mr. Harper's code of ethics and conflict of interest when he first became Prime Minister. It was disappointing to all of us when the government rejected those amendments, because they were a compromise in an attempt to reach some agreement.

Honourable senators, I hope that this time all honourable senators will acknowledge that the amendments that we passed were appropriate. If we send them back again, I suspect that if the House of Commons will focus on these amendments alone, and not the other 160 that we sent back, perhaps we can reach a reasonable resolution to this matter.

I do not agree that the prohibition against cabinet ministers accepting secret gifts of hundreds of thousands of dollars in cash from so-called "friends" is an inappropriate intrusion into their private lives. Our senior government officials — cabinet ministers, the Prime Minister, parliamentary secretaries, ministers of state and senior officials — simply should not accept gifts that, to a reasonable person, look like they were given to exercise influence or obtain a favour.

That is a qualification. If they do not look like they were given to exercise influence or obtain a favour, then they do not fall under this legislation. Honourable senators must keep that in mind. The gifts have to look like they intend to influence, and they cannot be from a relative because a relative is an exception.

Constraint should be imposed, limiting the gifts to those from close personal friends, as recommended by the previous Ethics Commissioner. Most importantly, gifts should be disclosed to the Conflict of Interest Commissioner and to the public if they are in excess of $200.

Honourable senators, imagine: I started this talk today with a brief reference to the Oliphant inquiry. If this Conflict of Interest Act had been in place at the time of Prime Minister Brian Mulroney, as opposed to his own code of conflict, he would not have been in breach. However, the Oliphant inquiry found he was in breach of his own code.

What has happened since that time until today is that we have weakened and watered down this legislation. We need to rectify this particular point and we need to do it now. Canadians have a right to know when a generous gift is made to those who govern us if that gift appears to be made to influence the actions of those people who govern us.

Honourable senators, I respectfully ask for your support of this amendment and this bill.


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