INST Committee Report

            The Act distinguishes between "organizations" e.g. chambers of commerce, associations and trade unions, etc., and "corporations." The different entities have different registration requirements. Currently, the senior officer of an organization must register as an In-House (Organization) lobbyist if the sum total of lobbying time for all employees is equal to 20% of one employee (i.e. one day per work week). The senior officer must list all employees engaged in lobby activity, no matter how much time they spend lobbying. The current filing requirement for In-House (Corporate) lobbyists specifies that every individual must register who devotes a "significant part" of their duties (defined as 20% of their time) to lobbying.

            The Committee was asked to study the advisability of applying the "organization" standard to "corporation" lobbyists. Jayson Myers of the CME expressed the views of that association:

            CME’s recommendation was that, if a change was being considered, then the requirement to register in a similar way to In-House (Organization) lobbyists should be optional.

Concerns were also expressed by Ms. Gervais of Bell Canada:

John Chenier, Editor of the Lobby Monitor, also opposed the change:

            Notably, not a single witness appearing before the Committee endorsed the idea of applying the In-House (Organization) approach to In-House (Corporate) lobbyists. Accordingly:

            Should the registration requirement be changed to encompass employees whose lobbying activity may be less than 20% of time worked, but whose lobbying efforts may have an important impact on the goals and objectives of the corporation? Witnesses raised compelling objections to this suggestion:

            The Committee is mindful of the interpretive problems such a change would raise: for example, how would the "importance" of the lobbying campaign be assessed? Who would decide whether the objective of a particular lobbying effort is "important"? Might it not be argued that all lobbying efforts are important, otherwise why would the company undertake them? It is not even clear that guidelines could be drafted to assist in determining what is, and what is not, "important" to the client. How would the standard be enforced? Would the Registrar be required to order production of the client’s confidential memoranda or other business documents in order to determine the importance or impact

            of a given lobbying effort? Could the registrant be prosecuted for concluding, mistakenly but in good faith, that the effort wasn’t sufficiently "important" to declare?

            Given the Committee’s concerns about the uncertainty inherent in such an approach, we are of the view that it would not be feasible to amend the Act in order to require lobbyists to indicate the relative importance of a given lobbying campaign (a "qualitative" approach) and, accordingly:

            Several witnesses recommended the closure of what they considered a significant "loophole" in the Act. Section 4(2)(c) states that the Act does not apply to "any oral or written communication made to a public office holder…in direct response to a written request from a public office holder, for advice or comment…"

            It is not clear why this exemption exists from the general requirements of the Act, and the Committee noted with concern the potential exploitation of the section to circumvent the Act. As explained by Democracy Watch:

The Committee heard similar views from other witnesses:

            The Committee heard no justification for the "loophole" which appears to be created by section 4(2)(c), which permits a lobbyist to not register when the lobbying contact is initiated by the public office holder. Accordingly, in the absence of any apparent public policy reason for its continuance:

            One witness also suggested that enforcement of the Act could be improved by the inclusion of a general anti-avoidance provision. As explained by John Chenier:

            The Committee agrees that compliance with the letter of the Act may not fulfill the spirit of the Act. For example, a firm of Consultant Lobbyists or a corporation employing a roster of lobbyists could avoid registering by strategically allocating the "actual" lobbying work (i.e. communicating with public office holders) among several lobbyists to ensure that no individual lobbyist reaches the 20% threshold. An anti-avoidance provision would permit a court to determine whether the allocation of work was done for a bona fide business purpose or simply to circumvent the Act. In the latter case, the Court could order registration.

            The ultimate aim of the Lobbyists Registration Act is to ensure openness and integrity in relations between the government and private sector lobbyists. Maintaining public confidence in the system requires the utmost good faith from registrants. The Committee heard evidence that the lobbying community, generally speaking, treats the Act with considerable gravity and, in fact, tends to register out of an abundance of caution even where the activity, on a strict interpretation of the Act, may not be registrable.

            The Committee is aware that the Lobbyists Code of Conduct requires that "lobbyists should conform fully with not only the letter but the spirit of the Lobbyists Code of Conduct as well as all the relevant laws"; moreover, the evidence supports a conclusion that lobbyists are, to a very high degree, complying in good faith with both the registration requirements and the Lobbyists Code. Still, the Committee is of the view that the Lobbyists Registration Act demands more than mere compliance with the letter of the law. Taken together, the Act and Lobbyists Code demand the highest degree of good faith from those subject to it. For these reasons:

            Currently, Consultant Lobbyists are obliged to register within 10 days of beginning a piece of registrable work and deregister within 30 days of completing the assignment. The 30-day requirement is set out in section 5(4) of the Act and applies only to Consultant Lobbyists, presumably because they are more likely to represent clients for individual projects of a definite duration. In-House (Organization) and (Corporate) lobbyists are not subject to the 30-day deregistration requirement, although the policy reason for this is not immediately clear. While it may be the case that these latter lobbyists’ undertakings are more likely to be indefinite in duration, it cannot be said that this is necessarily the case. Accordingly:

Recommendation 9:

For the purposes of simplifying the current deregistration requirements and promoting greater consistency of application of the Act, the Committee recommends that the same deregistration requirements should apply to all lobbyists.

In spite of the 30-day requirement, it appears that deregistration is not always accomplished in a timely fashion:

But why does this happen? A witness explains:

            Witnesses generally agreed that keeping registry information up to date it is difficult to accomplish within the short time span of 30 days and, as a result, is sometimes neglected. There was no suggestion, however, that this was the result of any shortcoming in the legislation, but rather simply an administrative issue. Witnesses agreed that the best way to address this issue was to have the Registrar provide a reminder to registrants to update their information in the registry. The Registrar agreed that this could be done and would likely achieve the desired result. Accordingly:

Recommendation 10:

The Committee recommends that, in order to ensure that registrants update their filings in a timely fashion, the Registrar of Lobbyists provide an E-mail "update reminder" to all registrants at least 30 days in advance of the date upon which their registrations must be updated.

However, this still does not address the question of how often filings should be updated. Currently, In-House (Corporate) lobbyists have to update their registrations once a year; In-House (Organization) lobbyists must update their filings every six months. One witness described this as "an unnecessary administrative task":

            While this suggestion found wide support among witnesses, one member expressed the Committee’s concern that, by moving to an annual filing requirement, lobbyists might, in good faith, remain on the registry for up to a year, thereby creating the misleading impression that they represent a client long after the undertaking has ended. In fact, a lobbyist could be representing a client with totally opposite interests. John Scott responded to this concern:

            While the Committee concurs that a lobbyist approaching a Member of Parliament would be quite likely to identify his client (and, in fact, the lobbyist is required to do so by the Lobbyists Code of Conduct), that is not really the issue: Members are not concerned so much about who the lobbyist is currently representing, but rather about who the lobbyist is no longer representing, and this is not the sort of information that a lobbyist would be likely to reveal in the course of making representations to a Member of Parliament or other public office holder. Confusion could arise when the public office holder, in order to be better informed, consults the registry to learn more about lobbyists and their clients. It would, of course, be very reasonable to assume that the lobbyist represents the clients listed in the registry; in fact, it would suggest that exact conclusion.

            Still, while tardiness in deregistering could lead to confusion, it is not immediately clear whether any genuine harm would result to the public interest. It might equally be argued that there is considerable advantage for the public office holder in having a list of the clients whom the lobbyist has represented over the preceding year, and the issues that the lobbyist has addressed.

            Moreover, there are at least two fairly simple alternatives available to address the possibility of confusion arising from clients’ identities being left on the registry after the completion of an undertaking or termination of a client relationship: the first option would be simply to leave it to the public office holder to ask the lobbyist if he is still representing all the clients he has listed on the registry. Greater certainty could also be achieved by having an appropriately-worded disclaimer set out clearly on the registry Web site stating that some client listings may no longer be active and, accordingly, persons are encouraged to ask the individual lobbyists who they are, and who they are no longer, representing.

            After the close of Committee hearings, Government Relations Institute of Canada (GRIC) submitted to the Clerk of the Committee a supplementary brief that suggested an alternative method of addressing enforcement of the 30-day deregistration period in section 5(4):

            This change is said to reflect the business practices of Consultant Lobbyists, entering into, withdrawing from, and then re-entering client relationships. Removing the strict 30-day requirement would permit lobbyists a little time to determine with certainty whether the undertaking has, in fact, ended. GRIC emphasized the point that the Lobbyists Code of Conduct requires lobbyists to disclose the identity of the person or organization on whose behalf the representation is made, as well as the reasons for the approach. "In other words," GRIC concludes: "Parliamentarians and government officials would be no less knowledgeable about the nature of the lobbyists’ activities."

Recommendation 11:

In order to ensure that information in the lobbyists registry is kept up to date, the Committee recommends that all lobbyists should be required to update their filings semi-annually; however, the 30-day deregistration requirement currently set out in section 5(4) of the Act should be removed from the Act to the Lobbyists Code in order to remove it from the sanctions prescribed by the Act for failing to deregister within the 30-day time frame currently prescribed.

The Committee is mindful, however, that this will likely result in registrations being left on the registry for up to six months. For that reason:

            The Act prescribes two penalties: under section 14(1), a person who breaches any provision of the Act is liable on summary conviction for a fine of up to $25,000. This section could apply even where the failure to comply was the result of honest inadvertence. Section 14(2) deals with a false or misleading statement knowingly made by an individual. Under this section, the Crown may proceed either by way of summary conviction (subject to the two-year limitation) or indictment (in which case no limitation applies). Summary proceedings may lead to terms of imprisonment of up to six months and a fine of up to $25,000. A conviction by indictment may lead to a period of incarceration of up to two years and a fine of up to $100,000.

            For reasons set out above, the Committee agrees in principle that the failure to deregister in a timely fashion is unlikely to have consequences as serious as the failure to register. However, it is questionable whether section 14 is really in need of amendment. That section prescribes the maximum penalties that may be levied, not the minimum. Moreover, the failure to comply with the Act does not automatically lead to charges being laid: the Crown may choose not to proceed with charges if circumstances warrant. And, even where the Crown secures a conviction, the Court will have broad discretion to determine the appropriate penalty within the limits prescribed by section 14 having regard to all the circumstances of the case. If, for example, the failure is the result of honest inadvertence, then it may be dealt with quite simply by a phone call or E-mail reminder from the Registrar, without even requiring the involvement of law enforcement authorities or the judiciary. Or if charges are laid, the Crown may seek ? or the Court may hand down ? a very light penalty, proportionate to the nature of the offence.

            The seriousness of a given breach of the Act is not something that can be determined in the abstract; rather, it must be addressed on a case-by-case basis, a task to which Canadian courts are imminently suited. Prescribing different penalties for offences that might be, in practice, quite similar would be more likely to exacerbate rather than mitigate uncertainty in the application of the penalty provisions. It is certainly foreseeable that an attempt to define penalties too rigidly could "tie the hands" of prosecutors and the judiciary. For these reasons: