Canada’s ‘Democratic Evolution’ Tested by Conflict of Interest Violations

Canada’s conflict of interest regulations are 'full of loopholes,' says head of government accountability watchdog

Canada's International Trade Minister Mary Ng speaks during question period in the House of Commons on Parliament Hill in Ottawa on Nov. 29, 2021. Reuters/Blair Gable

News Analysis

Canada’s first prime minister resigned over a conflict of interest scandal in 1873. John A. Macdonald was accused of accepting election funds from a shipping magnate in exchange for the contract to build the Canadian Pacific Railway.

It was Canada’s first political scandal, long before the country had a conflict of interest watchdog.

“The big thing is we now have a conflict of interest commissioner,” Nelson Wiseman, political science professor at the University of Toronto, told The Epoch Times. “So if someone complains, this fellow or gal has to look at it. That’s their job, and before there was nobody who had such a job. Thus these things would happen, and how would you ever find out about them?”

The Conflict of Interest Act of 2006 was “a development in democratic evolution,” Wiseman said. It created the Office of the Conflict of Interest and Ethics Commissioner. But a string of recent violations have some calling for greater stringency.

On Dec. 13, Trade Minister Mary Ng was found by Commissioner Mario Dion to have contravened the act when she awarded two contracts, totalling about $22,000, to a friend’s company to provide public relations services to her office.

It was the fourth case of contravention the ethics commissioner has found in recent years in Prime Minister Justin Trudeau’s government, including one case against former finance minister Bill Morneau and two cases against Trudeau himself.

In 2017, Trudeau accepted a trip for his family to a private island in the Bahamas owned by the Aga Khan, the spiritual leader of Shia Ismaili Muslims. Then-ethics commissioner Mary Dawson said the gift of the vacation could “reasonably be seen to have been given to influence the public office holder in the exercise of an official power, duty or function.”

In 2019, Commissioner Dion found that Trudeau sought to influence Attorney General Jody Wilson-Raybould relating to a criminal prosecution of SNC-Lavalin. “The actions that sought to further these interests were improper since the actions were contrary to the constitutional principles of prosecutorial independence and the rule of law,” Dion said in his report.

In 2021, Dion found Morneau had a conflict of interest in his involvement in awarding WE Charity the contract for the Canada Emergency Student Benefit. WE Charity is run by Craig Kielburger, a friend of Morneau’s. Trudeau was also investigated regarding the contract but was cleared of wrongdoing.

However, a court decided on Dec. 19 to hear an appeal by the non-profit Democracy Watch to overturn Dion’s decision to clear Trudeau. The government had brought a motion to try to have the appeal thrown out, but the case will be heard next year, Democracy Watch co-founder Duff Conacher told The Epoch Times.

Conacher said Canada’s conflict of interest regulations are “full of loopholes, weakly enforced … and the penalties are either non-existent or our politicians decide themselves whether to penalize themselves.”

Penalties

At the federal level, the commissioner investigates and decides when there has been a conflict of interest. The commissioner can issue a fine of up to $500 for officials who fail to meet certain reporting requirements, but any further penalty is left to the prime minister to decide. And for the prime minister himself, there is no penalty.

At the provincial level, sometimes the premier decides penalties or sometimes the legislature does, Conacher said. “But if you’re from the majority ruling party, then you likely won’t get penalized if it’s left to the legislature to vote on it.”

“It’s fundamentally flawed,” he said. “People across Canada have a higher chance of getting caught and pay a larger penalty for parking illegally than the top politicians and government officials have of getting caught violating the ethics law, and they have either no penalty or a lower penalty.”

The main penalty, Wiseman said, is that the commissioner’s office reports publicize these transgressions and can impact voters.

“Incidents like this, which pile up, lead to the decline in the popularity of a government,” he said. “We don’t have an election on the horizon, but this will be raised or could be raised by the opposition parties in the election whenever it comes. It will add to the cataloging, the list of improprieties by the government.”

The commissioner’s office told The Epoch Times via email that ministers found in violation of the Conflict of Interest Act must answer to the prime minister, as their employer. It is up to the prime minister’s discretion to impose consequences.

As to whom the prime minister answers if found in violation of the act, a commissioner’s office spokesperson said, “The Prime Minister and all 338 Members of the House of Commons are elected by Canadians.”

Conacher noted: “The prime minister obviously doesn’t want to penalize any cabinet minister because then it raises questions about why the prime minister doesn’t face penalties.”

‘Huge Loophole’

Conacher highlighted what he called a “huge loophole” in the Conflict of Interest Act.

According to the act, “you can’t have a private interest in a matter that applies generally or that affects you in the same way it affects a broad sector of the population,” he said.

“[Yet] 99 percent of the decisions that politicians and top government officials make across the country apply generally. They’re changing laws, and the laws apply generally.”

He gave a hypothetical example of a finance minister owning shares in banks. The minister could make a decision that would affect all banks⁠ and that would also profit him by increasing the value of his shares.

The way to close the loophole, Conacher said, is “no investments allowed. You have to sell them all.” He said some people look to blind trusts as the solution, in which an official can give a trustee money to invest but not be aware of where that trustee is investing it. But it’s a “total charade,” he said, because the investors often do know where their money is going.

He calls for tougher penalties for violating conflict of interest laws.

How It’s Handled in Other Countries

A 2020 report commissioned by the European Parliament assessed conflict of interest regulations in European countries and found similar questions to those being raised in Canada.

European countries have various ethics commissioners and bodies, and there have been pushes to enforce and penalize more, rather than just monitor. The report highlighted the concern that the bureaucracy of stringent ethics policies can be burdensome if taken too far. It can put red tape in the way of government action.

The report found that Nordic countries had the fewest rules and policies, whereas countries with higher corruption levels had more. That could either mean that policies do not prevent corruption or that places with more corruption tend to react with strong policies, it said.

“Ministers and top-officials esteem too highly their ability to deal with their own [conflict of interest]. They also overestimate their capacity to deal in a conscious and impartial way with their own [conflict of interest],” the report stated.

“In addition, current political trends in international politics and leadership are towards moral relativism and certain toleration of [conflict of interest] of leaders and ministers. The latter pose additional problems if leaders do not react as role-models. These trends should not be tolerated.”