The Conflict of Interest Act is toothless and leads to conflict of ethics at the PMO

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Nigel Wright's position in the PMO, as Stephen Harper's new chief of staff, is only possible because of huge loophole in ethics rules.

How is it that a senior executive, formerly one of the managing directors of private equity fund Onex, who stills own shares in this huge conglomerate corporation, could serve as chief-of-staff in the Prime Minister's Office and take part in policy decisions on many issues that affect the corporation? 

Simple. A loophole in the federal government's ethics law, the Conflict of Interest Act, allows Cabinet ministers, their staff, appointees and senior government officials to take part in any decision, even if they or their family members or friends have a personal financial interest in the decision, as long as the decision applies generally to a broad group of people or organizations.

This loophole was added to the ethics law by Paul Martin in his first days as prime minister in Dec. 2003. Before making this change, the law prohibited cabinet ministers and the other senior officials from being in an apparent conflict of interest (a rule that many have violated all the way back to 1986 when the rules were first enacted).

However, first Prime Minister Brian Mulroney, followed by Prime Minister Jean Chrétien and his lapdog ethics counsellor, Howard Wilson, had all ignored the "apparent conflict" standard and allowed several officials to take part in general application decisions even when they had a financial interest in the decision

Because Wilson was a political adviser, not a quasi-judicial decision-maker, his rulings letting Cabinet ministers and others off the hook for alleged apparent conflicts of interest could not be challenged in court.

Martin changed the rules as the Ethics Counsellor position was changing into the Ethics Commissioner position, and the Commissioner could be challenged in court because he was a quasi-judicial decision-maker. Because of his rule change, Martin could sell his company to his sons and still be involved in decisions "of general application" that affected the company.

Of course, Martin did not have to worry about new Ethics Commissioner Bernard Shapiro ruling against him because Shapiro was picked by Martin and continued Wilson's well-established record as a lapdog who couldn't recognize a conflict of interest if it slapped him in the face.

However, Martin did have to worry about someone filing a complaint with Shapiro against him, and then challenging Shapiro's ruling in court. In fact, Democracy Watch did just this, challenging several of Shapiro's rulings in court, then Shapiro resigned in spring 2007 which nixed the case.

The Harper Conservatives promised in their 2006 election platform to "Close the loopholes that allow ministers to vote on matters connected with their business interests". They broke that promise, and they also put a measure in the Conflict of Interest Act that prevents the public from filing complaints with the ethics commissioner that the commissioner is required to investigate (since then, only MPs and senators can force an investigation).

In summer 2007, the Conservatives hand-picked their own ethics commissioner, Mary Dawson, and also changed the law to prohibit anyone from challenging commissioner Dawson's rulings in court for errors of fact or law. As a result, she has all the powers and immunity of an actual ethics czar.

Unfortunately, Dawson has continued the tradition of her predecessors, so far letting more than 20 Conservative Cabinet ministers and MPs off the hook for questionable reasons even though they were involved in questionable activities, likely in part because none of her rulings can be challenged in court.

However, because of the loopholes in the law, even if Dawson was a strong watchdog she would have no choice but to allow Nigel Wright to take part in decisions "of general application" that affect his own, and Onex's, financial interests.

If you think about it, you quickly realize that 99.9 per cent of decisions made by cabinet ministers, their staff, appointees and senior government officials are decisions "of general application." Every law, regulation, tax, subsidy and government program is of general application, applying not just to one person or corporation but to many of them.

As a result, any cabinet minister or senior official can own shares in any corporation and take part in decisions changing any rule that affects that company, as long as it is a general rule that also applies to other companies.

In other words, the only thing the Conflict of Interest Act prohibits is cabinet ministers taking part in decisions about handing a contract to a specific person or company in which they have an interest.

So the "ethical wall" that Ethics Commissioner Dawson is setting up for Nigel Wright will actually be full of holes, and therefore more like an open door.

If we want government decisions that are in the public interest, the apparent conflict of interest rule must be put back in the federal ethics law (as it is in many provincial ethics laws) to ensure that policy-makers are prohibited from making decisions in which they have an opportunity to further their own and/or their associates' personal financial interests.

Duff Conacher is the co-ordinator of Democracy Watch.

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