PROC Committee Report

On October 19, 2006, pursuant to Standing Order 108(3)(a)(viii) and section 33 of the Conflict of Interest Code for Members of the House of Commons, the Standing Committee on Procedure and House Affairs began consideration of matters relating to the Code. On November 7, 2006, the Committee established a Subcommittee specifically to examine the forms used in connection with the Code. Early in 2007, the Committee widened the mandate of the Subcommittee by extending it to the Code itself. The Subcommittee reported to the main Committee in June 2007, and the Committee now reports as follows.

This Report consists of two parts. In the first part, the Committee explains the changes it proposes to the Code, with the exception of minor, technical or consequential changes. The second part is an Appendix consisting of the Code itself, showing the provisions that the Committee believes should be amended, and new provisions that should be added.

The Committee recommends that there be an addition to the interpretation section of the Code to clarify that the purposes and principles in sections 1 and 2 are not intended to stand alone as rules or obligations, being much too general for that purpose. Instead, they serve as aids to the interpretation of the rest of the Code.

It will be noted that in the interpretation section of the Code, the current title, “Ethics Commissioner,” is changed to “Conflict of Interest and Ethics Commissioner.” This reflects a change in terminology that will be introduced once the relevant provisions of theFederal Accountability Act, which amend the Parliament of Canada Act, come into force. Because the new title of the position is lengthy, for ease of reference the Committee recommends that the term “Commissioner” be used throughout the English text of the Code. No substitution is required in the French, because the title “commissaire” is already used.

The terms “gift” and “other benefit” are used in the Code. It is clear from the wording that a gift is an example of a benefit. There is no definition, however, of “benefit.” The Committee recommends that this term be defined. The Committee also recommends clarifying that a gift or other benefit received from a riding association or political party is included in the definition.

The Committee finds the term “child” in the definition of “family members” potentially confusing, because it is clear that some of the included individuals will, in fact, be adults. We recommend substituting the term “son or daughter.”

Sections 8 through 10 of the Code prohibit Members from using their office to further their own or their family’s private interests, or to improperly further the interests of another person. The Committee notes that the reference to “person” might be interpreted to exclude such organizations as corporations, associations, or partnerships, and so recommends that the term “entity” be added to make it clear that improperly furthering any private interests is prohibited.

Section 12 of the Code requires a Member who has a private interest that might be affected by a matter before the House or a committee of which the Member is a member to disclose the matter. The information is then transmitted to the Clerk of the House, who forwards it to the Commissioner, who makes it public. The Committee recommends that there be a formal record of the disclosure in the Journals. The Committee also recommends that a new provision be adopted governing situations outside the House or a committee. Members involved in parliamentary business in any other context should be required to disclose any private interests that might be affected, and subsequently file a notice in writing with the Commissioner, which notice should be made public.

The Committee recommends one small change regarding gifts and other benefits (sections 14 and 15 of the Code): increasing from 30 days to 60 days the deadline for reporting their receipt.

With regard to sponsored travel, the Committee recommends clarifying that a trip paid wholly or substantially from the Consolidated Revenue Fund or the other listed sources is not within the ambit of this provision. Members are often treated to incidental hospitality when travelling, particularly when abroad, and this does not change the fundamental nature of the travel. As with gifts and other benefits, the Committee recommends that the reporting deadline be changed to 60 days after the end of the trip.

The Committee makes several proposals to the provisions relating to government contracts (sections 16 to 19 of the Code). First, we recommend adding contracting by means of a subcontract to the general prohibition on contracting with the government. Second, we recommend that the manner of contracting not be relevant to the prohibition. At the current time, a Member is prohibited from contracting personally with the Government of Canada, with no exceptions. In contrast, having an interest in a partnership or private corporation that contracts with the government, while also generally prohibited, is permitted if the Commissioner is of the opinion that the interest is unlikely to affect the Member’s obligations under the Code. In view of the ease in which a private corporation or partnership can be established, the Committee believes that this distinction serves no useful purpose and recommends eliminating it.

Subsections 17.(2) and 19.(2) of the Code provide that, in certain circumstances, Members may comply with their obligations under the Code by placing their interests in a trust. Section 19 establishes seven conditions that the trust must meet: the approval of the Commissioner, arm’s length trustees, and so on. The Committee compared those provisions with the requirements of section 99 of the Federal Accountability Act (the applicable part of which was not yet in force when this report was written). That provision adds sections 41.1 to 41.5, which also deal with trusts, to the Parliament of Canada Act. Among the new rules, all trusts from which a Member may derive a benefit must be disclosed, and non-family trusts must be wound up, if possible. There is an exception for trusts that meet the requirements of the Conflict of Interest Act. That Act applies to public office holders, which, in the parliamentary context, means ministers and parliamentary secretaries. The exception thus does not apply to other Members of Parliament, because there is no such exception for trusts that meet the requirements of the Code.

The Committee has concluded that this was an oversight on the part of the drafters of the Federal Accountability Act, and that an amendment is needed to subsection 41.3(3) of the Parliament of Canada Act. To that end, the Chair of the Committee has sent a letter to the government requesting that the matter be studied and the appropriate change made. If the Parliament of Canada Act is not changed, it would appear that the use of trusts as a mechanism for complying with the Code will no longer be permitted.

The Code requires all Members of the House of Commons to file a confidential disclosure statement upon election, and annually after that. The Committee recommends that a number of substantive changes be made to these provisions:

• Only an asset or liability greater than $10,000 should be included in the statement;
• Credit card balances need to be disclosed only if the balance is greater than $10,000 and that amount has been outstanding for more than six months;
• A source of income below $1,000 need not be disclosed;
• To comply with the Federal Accountability Act, trusts known to Members from which they could, currently or in the future, either directly or indirectly, derive a benefit or income should be disclosed;
• Compensation received from the Government of Canada as a result of expropriation should be declared as a benefit arising from a contract with the Government;
• Real property owned by a private corporation in which a Member or a member of the Member’s family has an interest should be disclosed;
• It should be clarified that it is directorships and offices in organizations of a business nature, as well as trade unions, that should be disclosed. Both the positions and the organizations should be disclosed; and
• The time period for reporting a material change should be changed from 30 days to 60 days. There should be a definition of material change such that only matters needing to be publicly disclosed would be reported.

Following the submission of the confidential statement and consultation with the Member, the Commissioner prepares the public disclosure summary. The Committee has several recommendations with regard to this document. Currently, the Code states that the summaries are to be placed on file in the office of the Commissioner and made available to the public during normal business hours. With the agreement of the Committee, the Commissioner has also been faxing information to the public at their request. The Committee recommends that public access to these documents be further facilitated by expressly permitting faxes to be sent, as well as regular mail, and by requiring all disclosure summaries to be posted on the Web site of the Commissioner, as are the statements of ministers and parliamentary secretaries.

The Committee also recommends that public disclosure be made of the positions and the organizations for which confidential disclosure is required, and that the trusts that we recommended be disclosed confidentially also be publicly disclosed.

In 2006, some Members of the House were of the opinion that certain information relating to their family members – the place of employment of their dependent children – was being unnecessarily publicly disclosed. They felt that revealing this information could possibly place their sons and daughters at risk. In a report to the House in May 2006, in which the House concurred, the Committee recommended that such information not be included in the public summary. The Commissioner responded that he would use his discretion not to release this information. The Committee now recommends that this information be placed in the Code as an additional exclusion to the information required to be made public.

The Committee is concerned that, from time to time, Members may seek an opinion from the Commissioner but the opinion is not forthcoming in time to be useful. We therefore recommend that there be an explicit instruction to the effect that, in any situation in which a Member seeks an opinion from the Commissioner, the latter should be obliged to provide it in a timely manner. The Committee also recommends that the Commissioner should be obliged to respond to any written request for an opinion from a Member, rather than the decision as to whether to respond or not being left to the discretion of the Commissioner, as at present. We also recommend that the requirement placed on the Commissioner to keep an opinion confidential not apply if the Member has made it public.

At the current time, a Member who has reasonable grounds to believe that another Member has not complied with his or her obligations under the Code may request the Commissioner to conduct an inquiry. The Committee has concluded that a preliminary step is necessary in order to deal in an expeditious manner with requests that should not go forward. We therefore recommend that the Code explicitly require the Commissioner to conduct a preliminary review of all requests to determine whether an inquiry is warranted. The language we propose is broad, but is intended to cover requests such as those that fall outside the Commissioner’s mandate, requests that reveal no reasonable grounds for the complaint, and requests that appear to be frivolous, vexatious or made in bad faith.

With regard to requests dismissed on the latter grounds, a report would still go forward to the House of Commons, permitting the Commissioner to continue to recommend that action be considered against the Member who made the request. With regard to any other reason for dismissing the request, notice of the decision would be made in writing to the parties concerned and Members could make this public if they chose.

The Committee also recommends the addition of certain procedural protections at both the preliminary review and the inquiry stage. All requests for an inquiry should be forwarded without delay to the Member who is the subject of the request, who should have up to 30 days to respond. Upon receipt of that response, the Commissioner should conduct the preliminary review and make a decision within 10 working days as to whether or not to go forward with an inquiry. As was discussed above, notice of that decision would be communicated in writing to both parties.

We also recommend that a standard of reasonable grounds be required before the Commissioner may indicate to a Member his or her concerns that the Member may not be meeting the obligations under the Code; Members should be permitted the same 30-day period to respond before the Commissioner makes a decision as to whether or not to proceed to an inquiry.

With the addition of those requirements, the Committee has concluded that the legitimate interests of Members in a timely and fair process can be better protected.

Currently, the Code states that once a request for an inquiry has been made, Members should respect the process and permit it to take place without commenting. The Committee recommends that this provision be removed. We believe that it is both unenforceable and an unwarranted restriction on freedom of speech.

The Committee also recommends clarifying the public role of the Commissioner once a request for an inquiry has been received, or a preliminary review or inquiry has commenced or been completed. We recommend that the Commissioner be restricted in his or her public comments to confirmation only that those events have taken place. No public comments of a substantive nature are warranted.

Once the Commissioner reports to the Speaker, who presents the report to the House, the Code mandates the procedures to be followed. The provision regarding deemed adoption of the report was inserted in the Code to ensure that a report from the Commissioner that is not critical of a Member would be adopted 10 sitting days after tabling, even if no motion for concurrence had been made at that point. The Committee believes that this period is too short, and recommends extending it to 30 sitting days. Note that this does not mean that the House cannot deal with it before that time (although it cannot deal with it during the period in which the Member concerned has a right to speak and has not done so). With the extension of time for deemed concurrence, the Committee also recommends that the Member who is the subject of the report be given an additional five sitting days, for a total of 10, during which he or she has a right to make a statement in the House. Comparable changes are made to the time periods in the situation where a report is critical of a Member.

At the current time, the Code states that the House may refer a report back to the Commissioner with or without instruction. The Committee feels that it is illogical to imagine that the House would refer a report back to the Commissioner without instruction as to what its concerns were. We therefore recommend removing that possibility. We also recommend that the Code be clarified to make it clear that referral is possible only before deemed disposition or consideration of a specific motion relating to the report has occurred.

In the course of its review of the Code, the Committee was made aware of the fact that the Code is silent as to whether documents could voluntarily be handed over to the authorities in the circumstances contemplated in section 29(1). That section requires the Commissioner to suspend an inquiry should the Commissioner have reasonable grounds to believe that an offence under an Act of Parliament has taken place. In that case, the Commissioner must refer “the matter” to the proper authorities. The Committee recommends some wording changes to eliminate possible ambiguity arising from the use of the word “matter” in the English version of the Code. More important, we recommend a more precise formulation of the duty of confidentiality to make it clear that documents and information shall remain confidential, except as required for the purposes of the Code, unless a court or the House orders otherwise.

Section 30 of the Code requires the Commissioner to submit “any proposed rules for the administration of this Code” to the Committee. Following approval by the Committee and the House, the rules may come into effect. It has never been entirely clear what documents were intended to be covered by this provision. The Committee recommends amending the section to refer to “procedural and interpretative guidelines and all forms relating to the Code.” It is intended that this change will provide more guidance to the Commissioner, as well as codifying the current expectation that forms should be approved.

The Committee also recommends adding a provision requiring guidelines and forms to remain confidential until reported to the House.

Finally, in view of the importance of educating both Members and the general public about the Code and the role of the Commissioner, the Committee recommends making educational activities mandatory, instead of merely permissive as at the present time.

The Committee wishes to briefly mention four issues that do not involve amendments to the Code. First, we think it would be advantageous for the Commissioner to develop guidelines to assist Members in applying sections 16 and 18 regarding contracting with the government. These provisions are complex and Members can be forgiven if they find them confusing. The committee also believes that guidelines be developed relating to the interpretation of the provisions regarding gifts and other benefits. It should be emphasized to Members that the starting point is a prohibition on their receipt. It is only if a gift or other benefit falls within the exceptions that a Member may accept it. It is not the case that any gift may be accepted as long as it is disclosed (if the value exceeds $500).

The Committee also wishes that the Commissioner would include in the Annual Report more information about inquiries that he or she has conducted. In particular, more details about the costs of inquiries would be appreciated.

Finally, we suggest that any report to the House of Commons following an inquiry should respect to the legitimate privacy concerns of third parties and not include any personal information relating to them that is not essential to an understanding of the issues or conclusions.

1. The Committee recommends that the Conflict of Interest Code for Members of the House of Commons be amended as provided in the Appendix to this Report.
2. The Committee recommends that, until section 81 of the Parliament of Canada Act, as enacted by section 28 of the Federal Accountability Act, comes into force, the definition of “Commissioner” in subsection 3(1) of the Code be as follows:

“Commissioner” means the Ethics Commissioner appointed under section 72.01 of the Parliament of Canada Act.

3. The Committee recommends that the new paragraphs 21(1)(b.1) and 24(1)(f) of the Code come into force on the coming into force of sections 41.1 to 41.5 of the Parliament of Canada Act, as enacted by section 99 of the Federal Accountability Act.
4. The Committee recommends that guidelines be developed to assist Members in applying the provisions regarding contracting with the government.
5. The Committee recommends that the Commissioner develop guidelines relating to the provisions regarding gifs and other benefits.
6. The Committee recommends that the Annual Report of the Commissioner include more information, in particular with regard to the cost of inquiries.
7. The Committee recommends that any inquiry report of the Commissioner to the House of Commons should respect legitimate privacy concerns of third parties and not include any personal information relating to them that is not essential to an understanding of the issues or conclusions.

Appendix

A copy of the relevant Minutes of Proceedings (Meetings No. 28 and 56 ) is tabled.

Respectfully submitted,

GARY GOODYEAR, M.P.
Chair