CONFLICT OF INTEREST:
Prepared by Margaret Young
Law and Government Division
Revised October 1998
APPROACHES TO CONFLICT OF INTEREST
A. Prevention or Cure?
B. Defining Conflict of Interest
C. Public Office Holders or All Parliamentarians?
A. Public Disclosure
B. Declaration and Recusal
THE SCOPE OF CONFLICT OF INTEREST
A. Provincial Experience
B. Perception and Reality
C. The Blencoe Decision
Facts and Findings
D. The Harcourt Decision
THE BOARD OF INTERNAL ECONOMY
CONFLICT OF INTEREST:
"Conflict of interest"
can be a conceptually difficult issue. Why has Parliament been unable
to pass conflict of interest legislation, despite the introduction of
four bills since 1988 and comprehensive reports by two different parliamentary
committees? What are the principles served by minimizing conflicts? How
do those principles relate to the compliance mechanisms commonly enacted
or suggested? What role is played by the independent conflicts regulatory
bodies? This paper will explore these and related issues by focusing on
certain topics relevant to the regulation of conflict of interest.
Several principles underlie
conflict of interest rules. First are those of impartiality and integrity:
legislators and decision-makers cannot be perceived as impartial and acting
with integrity if they could derive a personal benefit from their decisions.
The public wants assurances that decisions will be taken and laws will
be enacted, and subsequently applied and administered, fairly and objectively,
free of personal biases and considerations. Thus, people holding public
office have a public trust that must sometimes override their freedom
to order their personal economic interests.
The concept of public trust
also underlies the second major principle relevant to conflict of interest
rules for legislators: holders of public office should not use their office
for personal gain, regardless of whether the gain is related to any activity
or decisions of the legislator personally. This principle explains, for
example, the prohibition commonly found in conflict of interest rules
against the use of confidential information to further private interests.
The overall goal of conflict
of interest regulation is to enhance confidence in public institutions.
In this regard, it is one of a number of ethical issues relating to legislators,
which include the proper role of lobbyists, election spending, the exercice
of patronage, the proper use of public money and the propriety of politicians
actions generally. Examining how conflict of interest problems are handled
by provincial commissions will reveal some surprising aspects of how these
commissions function within this broader cluster of ethical issues and
may lead to some interesting conclusions about the extent to which conflict
of interest regimes, if narrowly viewed, may, or may not, achieve their
overall objective of enhancing public confidence in government and Parliament.
APPROACHES TO CONFLICT
of interest has been much studied at the federal level in recent years.
In 1984 the government released the Report of the Task Force on Conflict
of Interest chaired by the Hon. Mitchell Sharp and the Hon. Michael Starr.
The report was entitled Ethical Conduct in the Public Sector and
is referred to as the Starr-Sharp Report. At the end of 1987 came the
Report of the Parker Commission on Conflict of Interest relating to Sinclair
Stevens. That report was followed three months later by the introduction
of the first of four conflict of interest bills, all similar and all destined
to die on the Order Paper in the course of the 33rd
and 34th Parliaments. The subject matter of one of the bills
was referred for study to the Special Joint Committee of the Senate and
House of Commons on Conflict of Interests, which reported in June 1992.
A second special Joint Committee reported in March 1997. No changes ensued
as a result of either report.
from recent Canadian experience, it is possible to see two differing approaches
to conflict of interest regulation for legislators. The first may be called
the preventive approach and is illustrated by reference to the current
non-statutory Conflict of Interest and Post-Employment Code for Public
Office Holders, which has been in use since 1986 (although based on
earlier versions) and applies to Ministers and Parliamentary Secretaries,
as well as Governor in Council appointees. The current Liberal government
continued the Code, slightly modified.(2)
The Code establishes as a principle that "public office holders shall
arrange their private affairs in a manner that will prevent real,
potential or apparent conflicts of interest from arising..." (section
3(5), emphasis added). This principle was also contained in the various
conflict of interest bills introduced in, although not passed by, Parliament
from 1988 to 1993 and may be found in a resolution adopted by the Saskatchewan
Legislative Assembly in June 1993: "Every member is individually
responsible for preventing potential and actual conflicts of interest,
and must arrange private financial affairs in a manner that prevents such
conflicts from arising."
The preventive approach
does not deny that conflicts may arise despite every good intention. When
they do arise, however, individuals are typically enjoined to resolve
them in favour of the public interest. The compliance rules that follow
from this approach tend to emphasize divestment of assets (by sale or
trust) that are or are likely to be problematic to the individual, with
public disclosure of assets limited to those unlikely to cause a conflict.
Recusal (withdrawal from a meeting or from making a decision) is either
not mentioned or is limited.
The preventive approach
may be contrasted with the approach of the Special Joint Committee on
Conflict of Interests, which studied one of the conflict of interest bills
(Bill C-43) in the 34th Parliament and reported to Parliament
in June 1992:
We are persuaded
that conflicts of interest will arise; in itself, there is nothing morally
wrong or heinous about having a conflict of interest. What is important
is not that a Member insulates him- or herself to avoid conflicts of
interest arising, but that clear rules and procedures be established
to ensure that the conflict is resolved in the public interest... The
purpose of these rules is not to avoid conflicts arising [emphasis
Special Committees draft bill, included as part of its report, did
not require Members to "act generally to prevent conflicts of interests
from arising" as the bills would have done. The Committees
compliance rules that followed from this approach emphasized disclosure
and recusal. Interestingly, the next special Joint Committee did include
as a principle that Parliamentarians should arrange their private affairs
so as to prevent conflicts of interests from arising.(4)
The differences between
the preventive and the first Special Committees approach should
not be overemphasized. To some extent, they could prove more rhetorical
than real. Indeed, the Committee specifically recognized divestment as
a possible compliance technique. A preventive approach that required extensive
divestment regardless of an individuals responsibilities would be
as unreasonable as a disclosure/recusal-based system that allowed a Minister
to continually recuse, to the detriment of his or her duties. The differences
in approach do exist, however, and go some distance to explain why the
first Special Committee and the government could not agree on the best
approach to take in a conflict statute.
However the two approaches
might work out in practice, it may be that the principles underlying the
preventive approach are ultimately more appropriate to the goal of enhancing
public confidence, particularly with regard to Ministers, than an approach
that emphasizes dealing with conflicts as they come along.
B. Defining Conflict
his Report relating to the Hon. Sinclair Stevens, Mr. Justice Parker was
critical of the Code for not defining "conflict of interest,"
although it used the terms "real," "apparent," and
"potential" to describe it. He adopted the following definition
of a real conflict: "a situation in which a minister of the Crown
has knowledge of a private economic interest that is sufficient to influence
the exercise of his or her public duties and responsibilities." An
apparent conflict arises where a reasonably well-informed person could
reasonably conclude that a conflict exists. A potential conflict exists
at the moment the individual becomes aware of a conflict, but before he
or she exercises any duty or responsibility that could affect the interest.(5)
Note the emphasis on a situation,
as opposed to a more narrow focus on decision-making. Mr. Justice
Parker reasoned as follows:
and responsibilities of public office, particularly those of a minister
are sophisticated and subtle. Immense power and influence can be wielded
even in the absence of actual decision ... [P]ublic confidence and trust
in the integrity, objectivity, and impartiality of government can only
be conserved and enhanced if all of the duties and responsibilities
of the public office holder are properly subject to scrutiny, not just
those that involve actual decisions.(6)
an approach that focused on all the activities of a legislator (particularly
a Minister), as opposed to only decision-making, would have brought within
its ambit all the various kinds of conflict found by Mr. Justice Parker
in the Stevens case. Of relevance also is the qualification (mentioned
previously) that the private interest be an economic one.
The government bills presented
to Parliament proposed a variant of Mr. Justice Parkers definition:
For the purpose
of this Act, a member has a conflict of interests when the member, the
members spouse or a dependant in relation to the member has significant
private interests ... that afford the opportunity for the member to
benefit, whether directly or indirectly, as a result of the execution
of, or the failure to execute, any office of the member.(7)
Although the word "situation"
is not used, it is implicit in the broad reference to "any office
of the member." Note also that an explicit reference to private economic
interests was dropped. Although there was no specific definition of "apparent"
conflict, it is likely that the definition itself was broad enough to
confine the definition to actual decision-making. For example, the Ontario
statute prohibits a member from making a decision or participating in
making a decision in the execution of his or her office if the member
knows that there is the opportunity to further his or her private interest
or improperly further the private interest of another.(8) The definition in British Columbia was similar
until its amendment in 1992; now the definition focuses broadly on the
exercise of any official duty or function relating to the office. Interestingly,
until Ontarios new Act in 1994, the revised B.C. statute was the
only one in Canada to broadly prohibit a legislator from acting
when he or she has a conflict of interest.(9)
Special Committees declined to explicitly define the term "conflict
of interest," a definition was implicit in the Committees various
prohibitions. For example, the first special Committee wrote: "a
Member shall not make or participate in making a decision in his or her
capacity as a Member, if the Member knows or should reasonably know that
in the making of the decision there is the opportunity to further, directly
or indirectly, a private interest of the Member or the Members family."(10) Note the emphasis on decision-making.
The second Special Committees prohibition was broader; it enjoined
Parliamentarians from taking "any actions, [making] any decisions,
or [participating] in making any decisions in which they know, or reasonably
should know, that there is the opportunity to further, directly or indirectly,
their own private interests, the private interests of a member of their
family, or improperly to further another persons private interest.(11)
C. Public Office Holders
or All Parliamentarians?
the federal level currently the only Parliamentarians who are covered
by the Code are Ministers, Secretaries of State and Parliamentary Secretaries
("public office holders"). That is, the Code has been developed
by the executive and applies only to it. Senators and Private Members
of the House of Commons are bound by certain statutory provisions relating
to conflict of interest -- those found in the Criminal Code and
the Parliament of Canada Act, as well as in the Standing Orders
of the House of Commons and the Rules of the Senate -- but do not have
any additional rules or compliance measures. Any such regulation would
have to be by way of resolutions of the Senate and/or House or by the
enactment by Parliament of statutory provisions.
statutes that regulate conflict of interest by a combination of disclosure(12) and other techniques apply to all provincial
legislators, often with additional measures applicable to Ministers, and
this was the approach generally taken by the federal government in its
attempts to legislate regarding conflict of interest in the 33rd
and 34th Parliaments. Not everyone agrees, however, that Private
Members need to be brought within a comprehensive régime. Notable among
these, particularly in view of the fact of his advisory role to the current
government, is the Hon. Mitchell Sharp. In testimony before the Special
Joint Committee in 1992, Mr. Sharp stated that Private Members should
not have been included in the bill then being discussed (Bill C-43) and
that when he personally was a Private Member he did not have access to
any insider information from which he could have profited. He therefore
saw no point in public disclosure of private interests for this group.(13)
after the Liberal government was sworn in in 1993, Mr. Sharp was quoted
are the representatives of the people who debate, who vote and so on
but they dont make decisions like cabinet ministers do. Members
of Parliament dont know anything more than I know.
of interest lie with the cabinet ministers. They have access to privileged
information which they can personally benefit from and therefore have
to make it evident that public interest takes precedence over private
interest. Thats the whole purpose of conflict of interest regulations.(14)
Mr. Sharp advocated
two sets of rules, or bills, one to govern public office holders and the
other for other Parliamentarians. This approach no doubt recognizes the
differing duties of Ministers and Parliamentary Secretaries, on the one
hand, and Private Members, on the other, but it fails to recognize that
for substantive and administrative purposes many features of the two régimes
would ideally be the same. For example, it would seem advantageous to
have the same body (whether it be called a Commission, a Commissioner,
a Jurisconsult, an Ethics Counsellor or an Integrity Commissioner) providing
advice in order to ensure a consistent approach.(15)
If rules for Private Members contain any level of detail at all, definitions
should be the same for both groups. (The definitions of "spouse"
and "dependants" or "family," for example, should
be parallel.) If Private Members are to be subject to investigation, it
would also seem to be the best approach to consolidate that function in
Second Special Joint Committee proposed a hybrid system. All Parliamentarians,
including public office holders, would be subject to a non-statutory Code
enforced by a Jurisconsult. Public office holders would also be subject
to the Prime Ministers Code, enforced by the Ethics Councillor.
Private Members and Senators could remain unregulated except by the existing
provisions noted above.
are a number of standard compliance mechanisms that typically accompany
conflict of interest regimes, alone or in combination: confidential and/or
public disclosure, sale of assets, withdrawal from offices and activities,
trusts of different kinds, declaration and withdrawal from participation
or voting in meetings (also called recusal), and delegation. The sale
of assets and various trust arrangements are forms of divestment.
section will discuss the nature and purposes of the various compliance
techniques commonly used in conflict of interest regimes and a comparison
will be made between the philosophies of compliance -- to the extent that
they are apparent -- in the Conflict of Interest and Post-Employment
Code for Public Office Holders, the Parker Report, the federal bills
in the last two Parliaments, and the Report of the Special Joint Committee
on Conflict of Interests of June 1992.
A. Public Disclosure
has become commonplace in the last 15 years to state that public disclosure
of legislators private interests should be the cornerstone of a
modern conflicts regime;(16) it is a feature of most of the provincial
statutes on the issue and was part of the proposed federal bills, although
the degree of disclosure was unclear and would have depended on regulations.
are several different purposes asserted for public disclosure. Some claim
that full(17) public disclosure serves to
ensure that the public can readily see that legislators are not acting
improperly. This approach places less emphasis on avoidance of conflicts
in the first place and assumes knowledge and constant vigilance by the
public (as a practical matter, by the press and likely, political opponents)
and an awareness of the full range of activities of legislators.
The drawback to this approach
was stated in the testimony of two political scientists before the Special
Joint Committee in 1992:
[Disclosure] brings it to the public eye or to the attention of colleagues
and others, but it doesnt necessarily mean that the conflict goes
Staff members in the [U.S.] House of Representatives told us that they
were concerned that members of Congress treated disclosure as a kind
of panacea. They seemed to feel that once a matter was disclosed...
For example, take a member of an appropriations committee in the House
of Representatives who has significant financial interests in the area
in which he or she is dealing. Those interests would be clearly disclosed
under the onerous disclosure provisions of the Ethics in Government
staffers were concerned, and perhaps their concern is misplaced, that
congressmen were treating disclosure as a way of washing their hands.
So although they faced people and made decisions in areas that bore
directly on significant holdings they had, their argument was that everything
was now absolved, and they were all okay.(18)
The same concern was echoed
in a recent British report, which noted:
... the introduction
of the Register of Members Interests, designed to further the
wholly admirable concept of disclosure of interests, has tended to create
a false impression that any interest is acceptable once it has been
registered, and so to add to the confusion which has developed.(19)
The short answer to the
foregoing problem is that, in Canada, public disclosure is an important,
but not the only, compliance mechanism, as it is for federal legislators
in the United States, although not in the U.K. The points mentioned above
should be kept in mind, however, whenever possibly excessive claims are
made for the value of public disclosure.
In addition to promoting
transparency and vigilance, public disclosure can also promote avoidance
of conflict of interest situations if by mere disclosure of an interest
the potential for a conflict would be apparent. Most legislators would
presumably rather divest themselves of the asset rather than undergo negative
A different approach to
disclosure may be seen in the Code, which goes further in explicitly establishing
a hierarchy of compliance mechanisms than did the proposed government
bills. Assets are "declarable" and subject to public disclosure
only if they are not "controlled" (sections 9, 11-13). Controlled
assets are those "that could be directly or indirectly affected as
to value by Government actions or policy" and are required to be
divested, either by sale, trust or management agreement (sections 12-13).
Declarable assets, then, are those that are left over, such as interests
in family businesses, local companies, farms, and so on. The chance of
these types of assets causing conflicts is inherently less than with controlled
assets, although continued vigilance is required.
popularity of public disclosure is by no means universal. As noted above,
Mr. Sharp, testifying before the Special Joint Committee was particularly
critical of public disclosure for Private Members, calling it "offensive
and unwise" and "a discouragement to the recruitment of candidates
for election to Parliament who are involved in business and community
The need for declaration
of an interest and recusal (withdrawal) arises when legislators, owing
to the existence of a private interest, realize that to participate in
a meeting or to make a decision would place them in a position of conflict.
A declaration and recusal requirement is common in the conflicts legislation
of the provinces and, in some, is coupled with a right of delegation of
Ministerial decision-making. That is, a Minister faced with making a decision
that would entail a conflict may have the Cabinet or Premier delegate
another Minister to act in his or her stead.
are no declaration and recusal provisions in the current Code and there
were none in the bills presented in previous Parliaments. In contrast,
the first Special Joint Committee focused on declaration and recusal,
along with disclosure, as the main compliance techniques and the Second
Special Joint Committee would have required a declaration of an interest,
coupled with a requirement not to vote on any matter in which they have
a direct pecuniary interest.(21)
Mr. Justice Parker recommended
that recusal be used in conflict regulation, but he noted the essential
problem, one faced by any régime that concentrates primarily on disclosure
the system will be useful only where recusal is not the norm for the
particular minister. Where a ministers private interests are of
such a nature or extent as to require routine withdrawal from public
duties, divestment of the interests or declining or resigning the office
will be necessary. Nonetheless, in the more usual case of a minister
with limited private interests, recusal will serve as a vital adjunct
to the cornerstone of public disclosure.(22)
In responding to the first
Special Committees report, the Hon. Harvie Andre, then Government
House Leader, completely rejected the option of recusal for Ministers:
of what cabinet does is done in camera. The only way you can assure
a skeptical public is by avoiding conflict of interest. Parliament operates
in public, so the disclosure of conflicts and the recusal option [for
Private Members] meet the test for seeing if someone is taking advantage
of their conflict of interest. Its unnecessary to impose the same
kinds of strictures on MPs, who operate in public, as it is on cabinet
ministers, who operate confidentially.(23)
might also be added that a sceptical public might not, in fact, be reassured
by a significant degree of recusal. Instead, even a small number of recusals
could be seen as evidence that conflicts abound. Thus, the overall goal
of conflict of interest regulation -- enhancing public confidence -- could
be undermined by an over-reliance on recusal.
The Code is explicit that
certain assets and interests must be divested, either by sale or by the
establishment of a trust. As was mentioned earlier, "controlled"
assets are defined as those "that could be directly or indirectly
affected as to value by Government decisions or policy," and include
publicly traded securities, self-administered RRSPs (except those containing
only exempt assets) and commodities, futures and foreign currencies held
or traded for speculative purposes (section 12). Requirements for trusts
are also established.
Mr. Justice Parker recognized
that disclosure alone was insufficient and concluded that divestment was
the tool that would have to be applied when recusal was inadequate. As
a result of the Stevens situation, however, he was sharply critical of
the use of blind trusts. Administrators of the Code since then have not
utilized blind trusts as a divestment mechanism for family businesses.
In 1994, the concept of "blind management agreement" was adopted
to permit management of the asset independently of the public office holder.
contrast, the conflict of interest bills presented to previous Parliaments
did not use the term divestment, gave no guidelines as to when the use
of this technique of compliance would be appropriate and included only
one substantive reference to trusts.(24) As noted above, however, the bills appeared
to take a preventive approach and significant scope for divestment was
inferred from the obligation to "act generally to prevent conflicts
of interests from arising."(25) The vagueness of the bills
served no interests -- both Ministers and the Commission would have received
significantly less guidance than they do under the Code, and Private Members
would have been unclear if, or under what conditions, divestment would
have applied to them. It may therefore be understandable that a Committee
composed of Private Members and Senators rejected the bill.(26)
THE SCOPE OF CONFLICT OF
A. Provincial Experience
An examination of the annual
reports of the Commission on Conflict of Interest in Ontario and of the
Commissioner of Conflict of Interest in British Columbia is revealing.
The reports contain short summaries of some of the questions put to the
Commissioners and the decisions rendered. It is interesting that many
of the questions do not deal with the subject matter of conflict of interest
as it is defined and regulated by the statute. Rather, the majority deal
with appropriate conduct for politicians in matters unrelated to their
private interests and those of their families, although the latter is
the essence of both the Ontario and the British Columbia statutes.
It can be concluded that,
while conflict of interest questions do arise for members in the course
of their duties, a greater number of issues come under the rubric of general
propriety, common (and political) sense, and the desirability of not giving
-- and appearing not to give -- improper preferences. As a result, the
Commissioners, at least in Ontario and British Columbia, appear to take
on a broader function than counselling and regulating conflict of interest.
In doing so, they are no doubt filling a gap and rendering an important
service to members of the Legislatures.
Even if the public were
reassured by the existence of conflict legislation, and by the compliance
measures it required, the Ontario and British Columbia experience suggests
that legislators need more guidance than that technically within the jurisdiction
of the Commission. The need for this kind of guidance could be recognized
by the institution of ethics committees (as in the United States) or by
other mechanisms, such as the Board of Internal Economy of the House of
Commons. In the absence of other bodies to provide general guidance, a
Conflicts Commission may be called upon to do so, regardless of its official
mandate. Failure to respond to this need would leave a gap in the provision
of general advice relating to ethics.
As noted above, Commissioners
in Ontario and British Columbia respond to a significantly wider range
of issues than one would expect from their governing statutes. What exactly
is the technical scope of the statutes, however, and how far would a federal
bill or non-statutory Code go in dealing with what the public would probably
perceive as conflict of interest situations? The answer is that conflict
of interest (as it has been conceived in the various federal proposals
and in provincial legislation) covers much less ethical territory than
is often claimed for it. As a result, the public could be disillusioned
if cases arose that were legally outside its purview and the Commissioner
declined to give advice or take action, or if his or her jurisdiction
to provide such advice was challenged by a Parliamentarian.
The limited scope of conflict
of interest as it is currently conceived may be illustrated by two theoretical
examples based on the federal bills previously presented to Parliament:
If a Minister had ensured
that a contract was awarded to a company in which his minor child
held shares, there would have been a conflict of interest. If the
Minister ensured that the contract was awarded instead to the Ministers
adult daughter or former business partner, there would not appear
to have been a violation of the bills. It seems safe to predict, however,
that there would have been a public perception of improper preferential
treatment and a violation of ethical standards. (Note that the Code
now prohibits Ministers and their Departments from contracting with
their immediate family members.)
a Member had used information gained as a Member and not available
to the general public to make a gain on the stock market or gave such
information to her spouse to do so, there would have been a conflict
of interest. If, in the same circumstances, he or she had given the
information to a friend, party supporter or former business associate,
there would, on a bare reading of the bills, appear not to have been
a conflict of interest. Yet many members of the public would no doubt
consider such conduct also to be unethical.(27)
Why should rules designed
to lead to a restoration of public confidence lead to such jarring conclusions?
The answer may be in the wide gap between the general ethical principles
enunciated as purposes for such rules and the often narrow scope of the
rules themselves. The obligations that would have been placed on Parliamentarians
by the bills tabled in previous Parliaments contained such words as "public
confidence and trust in the integrity, objectivity or impartiality of
the public office holder," and set a goal for Parliamentarians to
"act in a manner that will bear the closest public scrutiny."
Meeting these broad, ethical standards are what the public expects; if
the rules are narrowly drawn and if they are treated as technical -- and
maximum as opposed to minimum -- requirements by even a few Parliamentarians,
the goal of enhancing public confidence will not be met.
difficulty can be illustrated in the December 1994 decision of the Ethics
Commissioner for Alberta.(28) The complaint was that the
Minister of Transportation and Utilities had breached the Act by employing
to construct his own driveway a company that also had over $28 million
in government contracts. The Commissioner found that the Act had not been
breached: the work had not been performed with the intention of providing
a gift to the Minister; the price had been reasonable; and the Minister
was unable personally to effect a favour on behalf of the contractor.
The Commissioner was concerned, however, that there might be a perception
that a favour could be given and returned, and recommended the development
of guidelines for Ministers contracting with companies that do business
with their departments.
Despite his finding that
the Act had not been breached, the Commissioner reported that the Minister
had failed to be candid with him. He recommended that the Legislature
might wish to consider amending the statute to impose a legal obligation
on Members "to give full and frank disclosure during an investigation
by [the Commissioners] office." Thus, although the Act had
technically had not been violated, clearly high ethical standards had
not been maintained, and the perception of a conflict had been possible.
Premier Klein subsequently removed the Minister from his post.
As discussed above, the
principle of impartiality underlies conflict of interest rules. The problem
illustrated by the foregoing examples (and by the decision discussed below)
is that the reach of the principle of impartiality is unclear. At one
end of the spectrum, the impartiality principle dictates that legislators
cannot act impartially if they stand to gain personally in a monetary
prohibition against personal profit has been extended to the spouses and
dependent children of public office holders, but not generally to other
family members, friends, business associates and so on.(29)
The impartiality principle, however, would suggest a broad approach, at
least in some circumstances, on the grounds that all members of the public
should be placed on the same footing vis-à-vis government and that no
one should benefit solely from a connection with a public office holder.(30)
In assessing how far actual or proposed rules do extend -- and how far
they should extend in view of the evolution of the publics expectations
-- difficulties begin to become clear.
The more narrow the rules
or situations that would be covered by the rules, the greater is the possibility
that public confidence will not be enhanced. This may pose problems for
legislators who hold the view that, if there is such a statute, the rules
will (or should) be clear about what is acceptable and what is not. While
laudable as a goal, it is probably impossible to attain, given the myriad
of situations that could conceivably present conflict of interest issues
and the necessity of arriving at decisions in keeping with the purpose
of the rules.
In interpreting broad prohibitions,
some activities will be clearly proscribed, while others will depend on
the circumstances. The following caution by the Commissioner of British
Columbia reproduced in Appendix A of his 1992-93 Annual Report is
instructive. It appears in connection with an opinion provided to members
of the Legislative Assembly concerning membership, directorship, office
or patronage of non-profit community organizations:
specific situation can have its own special circumstances and nuances
and, therefore, should be evaluated by the Commissioner at the time
of the situation arising. It is much easier to answer with precision
when a known factual situation exists. That is why I caution that an
answer to an abstract or hypothetical question should not be seen as
carved in stone but must always be capable of modification when specific
factual circumstances are identified.
C. The Blencoe
Even when the
rules appear clear, the application and interpretation of the law can
take on a life of its own. This paper would be incomplete, therefore,
without a discussion of two opinions of the Commissioner of Conflict of
Interest for British Columbia. In the first, the Commissioner found Robin
Blencoe, the B.C. Minister of Municipal Affairs, to be in an apparent
conflict of interest in relation to a proposal for a large housing development
on Vancouver Island.(31)
1. Facts and Findings
of the individuals involved in the project had been active in the previous
election on the Ministers behalf and had made financial contributions
which had been specifically directed to the Ministers riding. One
of the contributions was relatively small; the other was described as
"significant." One of the individuals had been the Ministers
official agent. On the basis of these (and other political activities
in support of the Minister before and during the campaign), the Commissioner
found that the Minister had a private interest that, given his past and
projected role in the development approval process, led to the conclusion
that he had an apparent conflict of interest.(32)
aspects of this decision were particularly interesting. The first was
the treatment of the term "private interest."(33)
The Commissioner held that a private interest was not limited to a pecuniary
interest but included any tangible benefit to the Member. In so holding,
he rejected court decisions, and some traditional definitions, that had
held that the essence of conflict of interest was a private interest capable
of being measured pecuniarily.(34) The Minister had no financial interest, current
or future, in the proposed development.
Further, the Commissioner
held that the private interest may consist of benefits received in
the past. In other words, a current decision that could be perceived
as a quid pro quo for past favours was brought within the ambit
of conflict of interest. The past favours in this case that comprised
the private interest of the Minister were the campaign contributions and
election assistance rendered by the individuals associated with the project.
The Commissioner did not hold that all campaign activities and
contributions would constitute a private interest, but where they were
of particular benefit to the candidate they could be so considered.
What transformed the receipt
of a private interest into an apparent conflict of interest constituting
a violation of the Act was the opportunity to confer an advantage or benefit
on the person who made the contribution. The Commissioner ruled that the
Minister appeared to be in conflict on the basis of three actions: when
he intervened to speed up the approval process, when he made a grant to
the local government authority for further studies contingent on its approval
in general of the project, and when he met with the proponents of the
development. (The Minister had met with both supporters and opponents
of the project.)
comments not central to the case but interesting nevertheless, the Commissioner,
as noted above, decided that a private interest could be attributed to
a legislator if the benefit would go to a third party. The Commissioners
suggested spouses (included in most legislation), other family members,
close personal friends and perhaps business associates.
appeared that the Commissioners treatment of "private interest"
was more expansive than the statute and previous case law would have suggested.
Indeed, the Premier of the province responded by stating that: "what
Mr. Hughes [the Commissioner] did was move the goal posts quite dramatically."(35)
The Commissioner could hardly
be faulted, however, in responding to the politicians own statements.
After extensively reviewing Members speeches in the Legislature
during debate on conflict of interest, he concluded that the legislation
promote public confidence in elected public officials as they conduct
public business. I conclude that this was seen and continues to be seen
as necessary because of the low ebb to which that public confidence
has sunk in recent years. ... [In this decision] my endeavour will be
to reach a conclusion that will honour the heart and soul of this legislation
-- the restoration of public confidence in the conduct of the peoples
business by politicians who have achieved electoral success.(36)
the decision was the perceived unethical conduct of preferential treatment;
that is, the principle that decisions should not be made using factors
irrelevant to the intrinsic merit of a matter. It accurately reflected
the principle of impartiality, which, as discussed above, has been posited
as one of the underlying principles of all conflict of interest rules.
As noted, the degree to which impartiality should extend is currently
unclear and subject to public debate. Particularly unclear is the degree
to which the principle of impartiality extends in the face of patronage
decisions and the degree to which Ministers (and Cabinets?) can go in
dealing with, let alone showing favouritism to, party supporters.(37)
Thus, the Premiers
reaction to the decision ("he moved the goalposts") and the
basis for the decision by the Commissioner (conflict of interest is about
impartiality) were both understandable.
The Blencoe decision also
supported the previous suggestion that Conflicts Commissioners tend to
broaden the base of narrow conceptions of "conflict of interest"
in order to encompass broader ethical questions. It is in this sense that
the Commissioner was honouring the heart and soul of the legislation.
decision raised some very interesting issues. The interpretation of "private
interest" as including non-pecuniary interests, past benefits, and
campaign assistance and contributions could potentially affect many situations.
Lobbyists, for example, are often involved in leadership campaigns and
federal election campaigns for the major parties. Under a conflicts regime,
how should Ministers respond if the same lobbyists later make representations
to government?(38) How should
Ministers respond when party supporters stand to gain from their decisions?
How should Cabinet respond?
These questions could also
be relevant to the position of Private Members in the future. Their role
is currently relatively circumscribed, because of party discipline and
a narrow view of the nature of their representational duties. If party
discipline were to be relaxed, however, and Members representational
duties were to be tied more directly to their constituents wishes,
Private Members could be open to more direct lobbying (as are legislators
in the United States) and that could raise conflict of interest questions.
The B.C. Commissioner
held that the Members private interest could be non-pecuniary and
could include campaign assistance. In the Blencoe case, however, the potential
benefits to the proponents of the plan were clearly pecuniary, and so
noted by the Commissioner. Does that mean that pecuniary benefit is still
an essential part of the conflict of interest equation? What if the benefits
to supporters were non-monetary -- a nomination for an award, for example
-- or less directly monetary, such as appointment to a board or commission.
If the quid pro quo principle is behind the decision, could its
rationale be extended to patronage appointments?(39)
decision may also serve to remind the public and legislators that, while
public disclosure of financial interests may remain the cornerstone of
a conflict of interest régime, it is clearly not the whole building. Nothing
in the Ministers public disclosure would have had any relevance
to the conflict of interest situation as found by the Commissioner.
of the questions left open in the Blencoe decision were resolved by the
same Commissioner in his subsequent decision relating to the Premier of
the province and a communications firm that had been active in NDP politics
and held contracts from the government.(40) In the "Harcourt" decision of April
1995, the Commissioner acknowledged the difficulty in attempting to understand
the interplay between patronage and conflict of interest rules. He regarded
it as essential, however, that lines be drawn:
the Act ... my concern is with determining whether a Member has a conflict
of interest or an apparent conflict of interest. It is neither express
nor implicit in those sections that I am to act as a "watchdog
on patronage" and thus it is generally not my duty to monitor whether
government contracts are awarded on the basis of party affiliation.
It becomes my concern however if a government decision, in which a Member
has a role to play, is made or reasonably perceived to have been made
after a personal benefit amounting to a "private interest"
has been conferred upon the Member by someone who stands to gain from
the decision. This will amount to either a conflict or an apparent conflict
The Commissioner went on
to say that campaign contributions that directly and particularly
benefit a Member, followed by the awarding by the Member of a patronage
contact to the contributor, can give rise to an apparent conflict of interest.
He found that this had not been the situation in the Harcourt case; accordingly,
and for a number of other reasons, the Commissioner found that there had
been no breach of the Act.
THE BOARD OF INTERNAL
discussed above, at the provincial level there has been a tendency for
at least some Conflicts Commissioners to respond to a broad range of issues,
many of which do not relate directly to conflict of interest. At the federal
level, both the administering of a statute or a non-statutory Code of
Conduct and any de facto broadening of a Jurisconsults mandate
could cause particular problems in relation to the House of Commons Board
of Internal Economy, which, by virtue of the Parliament of Canada Act,
has exclusive jurisdiction over the propriety of the use of any funds,
goods, services or premises made available to members for the carrying
out of their parliamentary functions.(42) Thus, the interpretation of
what constitutes "parliamentary functions" has, at least partially,
been conferred on the Board, which will no doubt be inclined to guard
that jurisdiction, and possibly to interpret it as extending to the definition
of parliamentary functions for all purposes.
the Ontario and the British Columbia conflicts statutes contain a clause
specifying the Act does not prohibit the activities in which members normally
engage on behalf of constituents.(43)
A number of the decisions in the Ontario 1992-3 Annual Report made reference
to this provision.(44) Thus, the Commissioner held that a letter
of support in reply to a tender offer, forwarding letters on behalf of
constituents, signing petitions in federal matters and contacting government
departments or agencies for general information were all normal constituency
activities, whereas attending as an observer at an election in a foreign
country was not within the normal responsibilities of members of the Legislature.
It is not suggested that there would necessarily be any disagreement at
the federal level if a Jurisconsult were to provide similar opinions,
merely that an overlap could exist.
the other hand, another example from Ontario would more clearly fall under
the exclusive jurisdiction of the Board of Internal Economy, should the
issue arise at the federal level, because it involved the use of premises
and services provided to members. A constituency assistant asked if it
would be proper to allow a constituent to use the Members fax machine
to send an announcement to the media in Toronto. The decision was that
use of the machine to send documents to government agencies fell within
the provision quoted above as an activity in which members normally engage
on behalf of constituents; to send documents to the media, however, was
unrelated to government business and would be inappropriate and a misuse
of government property.(45)
seems clear that at the federal level there is at least the possibility
of overlapping, and possibly conflicting, jurisdiction between the Board
and a Commission. The possibility of conflict is increased by the fact
that the Boards definition of "parliamentary functions"
is very general.(46)
This paper has discussed
some of the most topical and problematic aspects of conflict of interest
regulation of potential relevance for Parliamentarians. Some areas not
touched, however, are also important and should be kept in mind. These
include: post-employment restrictions for Ministers and Parliamentary
Secretaries, the extent to which spouses should be included within a conflicts
régime, and the regulation of conflicts of interest of other federal office
holders, such as senior public servants and Governor in Council appointees.
Despite the difficulties
of developing a conflict of interest regime at the federal level, provincial
experience indicates that it can be done and, it is suggested, that it
is worth doing. It may be that the 36th Parliament can build
on the experiences of its predecessors and find the right mix of privacy
and regulation and the right distinctions between Ministers and Private
Members, and can agree on a philosophical approach that will satisfy both
a sceptical public and Parliamentarians who wish to do the right thing
at an acceptable cost.
a general overview of the topic, see Conflict
of Interest for Federal Legislators, CIR 79-3E, Parliamentary
Research Branch, Library of Parliament.
(2) One important change was the
removal of all public servants from the Code.
(3) The Special Joint Committee of
the Senate and the House of Commons on Conflict of Interests, Report,
June 1992, p. 7; hereafter "First Special Joint Committee,"
(4) Special Joint Committee on a Code of Conduct,
Report, March 1997, p. 4 (hereafter Second Joint Committee, Report).
(5) Commission of Inquiry into
the Facts of Allegations of Conflict of Interest Concerning the Honourable
Sinclair M. Stevens, Supply and Services Canada, 1987, p. 29-35;
hereafter "Parker Report."
(6) Ibid., p. 28.
(7) Bill C-43, 3rd
Session, 34th Parliament, section 2(2).
(8) Members Integrity Act,
SO 1994, Chap. 38, section 2.
(9) Section 2.1 of the Members
Conflict of Interest Act, SBC 1990, Chap. 54, Index Chap. 255.7
states: "A member shall not exercise an official power or perform
an official duty or function if the member has a conflict of interest
or an apparent conflict of interest."
(10) First Special Joint Committee,
Report, Draft Bill, section 4.
(11) Second Special Joint Committee,
Report, p. 6 (Senate version), p. 7. (House version).
(12) Only Quebec
does not require any disclosure from Private Members of its legislature.
(13) Special Joint Committee, Minutes
of Proceedings and Evidence, 3rd Session, 34th
Parliament, Issue No. 16, p. 17; hereafter First Special Joint
(14) The Hill Times, 11 November
1993, p. 15.
(15) At the federal level, the
previous government proposed a three-person Conflict of Interests Commission
to administer the proposed régime, and the Special Committee on Conflict
of Interests proposed an individual to be named the "Jurisconsult."
In some jurisdictions, a Commissioner has been established, while in others
the independent person administering the regime has been named the Ethics
(16) See, e.g., Parker Report,
(17) The word "full"
almost always accompanies the phrase, but typically there is provided
a substantial list of exemptions of purely personal interests (residence,
car, cottage), or interests very unlikely to cause conflicts (Canada Savings
Bonds, GICs). These often need not be disclosed publicly.
(18) First Special Joint
Committee, Proceedings, Issue No. 6, p. 22.
(19) Standards in Public Life,
First Report of the Committee on Standards in Public Life, Chairman, Lord
Nolan, May 1995, Ch. 2. para. 40.
(20) Supra, note 16, Issue
No. 1, p. 16.
(21) Second Joint Committee, Report,
(22) Parker Report, p. 354.
(23) Minutes of Proceedings and Evidence
of the Special Joint Committee on Bill C-116, Conflict of Interests,
3rd Session, 34th Parliament, Issue No. 4,
(24) See Bill C-43, section 10(2):
"...the Commission may recommend the establishment of a trust on
such terms, and subject to such conditions, as it considers appropriate."
(25) Ibid., section 3(C).
(26) It is interesting to
note that Mr. Justice Parker criticized the Code for being ambiguous about
compliance techniques and when they were appropriate, yet the government
bills were far vaguer, consisting only of a measure of public disclosure
and a mention of trusts, in addition to the general principle noted above.
(27) Both the Special Joint Committees
would have prohibited the sharing of such information with anyone.
(28) Robert C. Clark, Ethics Commissioner,
Investigation Relating to Alleged Benefit Received by the Hon. Peter
Trynchy, Minister of Transportation and Utilities, 14 December 1994.
(29) Interestingly, a recent decision
of the Commissioner in British Columbia (discussed in detail below) held
that the private interests of other people can be attributed to the legislator
if the latter would benefit directly or indirectly from the benefit to
that other party. If this interpretation were to be generally adopted,
both of the theoretical examples presented at the beginning of this section
of the paper could be found to be conflicts of interest.
(30) Although the current Liberal
government did not change the Code extensively, it is noteworthy that
the "impartiality principle" was strengthened. Noted before
is the prohibition on contracting with the Ministers family; also
new is the principle found in section 3(3) entitled "Decision-Making":
Public office holders, in fulfilling their official duties and responsibilities,
shall make decisions in the public interest and with regard to the merits
of each case.
(31) Opinion of the Commissioner
of Conflict for Interest on a Citizens Complaint of Alleged Contravention
of the Members Conflict of Interest Act by the Honourable Robin
Blencoe, Minister of Municipal Affairs, Recreation and Housing, 16 August
1993; hereafter "Blencoe Decision."
(32) Although no other province
has a definition of conflict of interest that specifically encompasses
an "apparent conflict of interest," the current Code includes
it and the definition proposed in the bills introduced in Parliament from
1988-93 would appear to have been wide enough to cover it.
(33) "Private interest"
in the B.C. statute is defined negatively as not including an interest
in a decision that is of general public application, that affects a Member
as one of a broad class of electors, or that concerns Members remuneration
and benefits. A similar approach is taken in other statutes and was taken
in the federal bills. (An interesting exception was the proposal of the
first Special Joint Committee on Conflict of Interests, which proposed
a definition of "private interest" that would seem to preclude
the conclusion reached in the Blencoe decision.)
(34) The Parker Commission adopted
as its definition of conflict of interest "a situation in which a
minister of the Crown has knowledge of a private economic interest
that is sufficient to influence the exercise of his or her public duties
or responsibilities" (Report, p. 29, emphasis added). In this,
Mr. Justice Parker was following the lead of a 1973 federal Green Paper
which had spoken of "private pecuniary interests."
(35) Vancouver Sun, 20 August
1993, p. A14. Mr. Harcourt appointed another Minister to act on the
development proposal (as provided for in the B.C. legislation) but declined
to dismiss Mr. Blencoe, on the grounds that his mistakes did not involve
any potential for him to benefit personally. Note that the drafters of
the recent federal conflict of interest bills rejected the option of permitting
another Minister to be delegated to make a decision. It is, therefore,
unclear how such a situation would be resolved at the federal level.
(36) Blencoe Decision, p. 22.
(37) For an excellent discussion
of the constitutional basis for the impartiality principle and how it
underlies and affects the treatment of conflict of interest, see: Ian
Greene, "Conflict of Interest and the Canadian Constitution: An Analysis
of Conflict of Interest Rules for Canadian Cabinet Ministers," Canadian
Journal of Political Science, Vol. 23, p. 233-56, June 1990.
(38) In the Blencoe Decision,
the Commissioner held that meeting with the proponents of the developments,
given their past support, was an apparent conflict, even though the Minister
met with opponents of the plan as well.
(39) It is noteworthy that
there has been ongoing public criticism of the grounds on which some Order
in Council appointments are perceived to be made. No doubt the principle
of impartiality also underlies those criticisms.
(40) In the matter of Applications
by Jack Weisgberger, Member of the Legislative Assembly for Peace River
South, and by Kim Emerson with respect to Alleged Contravention of Provisions
of the Members Conflict of Interest Act by the Honourable Michael
Harcourt, Member of the Legislative Assembly for Vancouver-Mount Pleasant,
17 April 1995.
(41) Ibid., p. 27.
(42) Parliament of Canada Act,
R.S. 1985, Chap. P-1, section 52.6. In the Senate, the Standing
Senate Committee on Internal Economy, Budgets and Administration has the
same mandate, subject to approval by the Senate.
(43) Members Integrity
Act, 1994, SO 1994, Chap. 38, s. 5. Interestingly, the Ontario
Act now specifies that the activities must be those in which members engage
"in accordance with Ontario parliamentary convention." Members
Conflict of Interest Act, SBC Chap. 54, Index Chap. 255.7,
section 5. Bill C-116, the last of the four conflict of interest
bills of the previous Parliaments, contained language that raises the
same issue as the wording of these provisions. It also contained other
provisions that would have directly involved the Jurisconsult (the equivalent
to the Commission for Members and Senators who were not in the Cabinet)
in assessing questions relating to travel expenses paid by the House of
(44) Similar issues are dealt with
in the Annual Reports of the B.C. Commissioner of Conflicts.
(45) Ontario, Commission on Conflict
of Interest, Annual Report 1992-93, p. 10.
(46) By-Laws under the Parliament
of Canada Act, April 1993, By-Law 101: "parliamentary functions"
... means duties and activities related to the position of Member of the
House of Commons wherever performed and includes public and official business,
and partisan matters, but does not include the private business interests
of a Member or a Members immediate family."