Ian Greene October 17, 2013

1. PPAS 4000 3.0Ethics and the Public Service: Integrity and DemocracyConflicts of interest (case studies) Ian Greene October 17, 2013

2. Preliminary • Next week’s class (Thursday, October 24) runs from 9:30 am to noon, and will be held at the Office of the Integrity Commissioner, 2 Bloor Street East, Suite 2101. The Integrity Commissioner supervises the ethics rules for members of the Ontario Parliament. You will also visit the office of the Conflict of Interest Commissioner (3 floors below), who supervises the ethics rules for Ontario public servants. (I will be in Calgary.) David Leyton-Brown, Master of McLaughlin College, will meet you at 9:30 a.m. at the office of the Integrity Commissioner.

3. Greene & Shugarman, Ch 4 • Same order as “heirarchy of conflict of interest wrongs” discussed last week • Fraud: • Michel Gravel: PC MP elected in 1984. Obtained confidential list of fed gov’t leases in Hull. Promised to get leases in return for kickbacks – donations to party, high-priced ticket to fundraising event, bribes, or free renovation. • Honest public servants prevented some leases that Gravel promised from being contracted. • After 1988 election he pleaded guilty to fraud charges; fined $50K & sentenced to 1 year, of which he served 2 months • Pled guilty, thus saving 27 witnesses from testifying with potentially embarrassing info about the government

4. More fraud • Pierre Blouin: 1986 pleaded guilty to influence peddling; Drummondville businessman gave $50K to PC party in return for a $1 million contract that was not awarded. • 1982 & 83: 3 fundraisers for Nova Scotia Liberal party convicted promising gov’t contracts in return for donations to Liberal party. • 1998: PC Senator Michel Cogger convicted of influence peddling: accepted payments for helping a businessman get gov’t contracts. 12 months probation & community service. Commuted to absolute discharge in 2001; fined $23K by Senate. • 2011: Liberal Senator Raymond Lavigne convicted of fraud: false expense claims of $10,000 and using a staffer for personal work. Sentence: 6 months jail.

5. Real conflicts of interest • Being in a situation to use public office for personal gain and not exiting that situation • Sinclair Stevens (1986) • Parker report: December 1987: at least 14 examples of real conflict of interest • 2004: Federal Court judge declared Parker’s findings “null and void” because Mulroney’s conflict of interest guidelines did not contain a definition of “conflict of interest” • Parker recommendations: • Full disclosure of non-personal assets • Stop using “blind trusts” • Define “conflict of interest” as “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.” • Bisonnette scancal (Oerlikon Aerospace – campaign manager convicted of fraud) and draft conflict of interest legislation

6. Vander Zalm and Fantasy Gardens • 1980s: BC had high incidence of conflict-of-interest scandals in cabinet • 1990: BC Conflict of Interest Act passed; based on Ontario’s; Ted Hughes first Commissioner • 1986: became premier; 1989 tried to sell theme park • 1990 sold to Tan Yu, Taiwanese investor • 1991: Vander Zalm accused of using public office to sell theme park; asked Hughes to investigate • Hughes: found premier was in real conflict of interest position • Vander Zalm resigned and Socreds defeated in 1991 • Vander Zalm led successgul fight against HST in BC in 2009-11 • Feb 2012: Hughes successfully sued Vander Zalm for demamation in Vander Zalm’s 2008 autobiography; $60K damages

7. Violations of Codes • 1988: Min of Supply & Services (Coté) did not disclose $250K from PC Party organizer. Fired from cabinet. • 1988: Mulroney did not disclose $324 “advance” from PC Party, but ADRG claimed not covered by guidelines. Issue of party “supplemental salaries” to leading politicians • 1980: New Brunswick Premier Hatfield disclosed supplemental payments from PC Party; designated judge ordered him to return the payments. Then Code amended to exclude such payments. • See web page of federal Conflict of Interest and Ethics Commissioner: MPs and cab ministers who are late filing disclosure

8. Apparent conflicts of interest • BC Legislation: see definition on p. 86 • 1993: BC citizen asked Hughes to investigate NDP cabinet minister Robin Blencoe, about to make a decision about Bamberton housing development • “private interest” could include something other than financial gain. • Blencoe must recuse

9. Ralph Klein and MultiCorp • 1993: Klein attended ribbon-cutting ceremony in Hong Kong of Alberta company, Multi-Corp, computer translation company • President delivered 10,000 shares to wife for less than market rate, to be paid later • Alberta Ethics Commissioner Clark investigated; blamed himself for not asking whether wife had paid for the shares • She sold them and donated $51K profit to charity

10. Scope of Conflicts of Interest • Richard Le Hir and PQ propaganda contracts in 1994-95 • Investigated by Auditor General • Le Hir claimed contract procedure orchestrated by Premier’s office; deputy minister handled details (and may have profited) • Several reports were misleading and falsely researched (dirty hands) • Le Hir resigned from PQ in 1996, claiming that upon reflection, PQ practised “exclusion and intolerance” toward ethnic minorited – an additional ethics issue

11. Greene & Shugarman, review of Gomery Commission Report • Background: 1999 – 2004: allegations of misuse of sponsorship funds • 2004: Martin becomes PM; commissions Gomery to conduct inquiry • Director of Research: Donald Savoie; researchers included David Smith, Jacques Bourgault, Peter Aucoin, Lorne Sossin, Kenneth Kernaghan, Ned Franks. • Phase I: What Happened? Key people in PMO ordered spending without adequate oversight. Invoices submitted with little or no work accomplished. Because directed by PMO, usual departmental safeguards bypassed. • (Charles Guite, Dir of Advertising for Public Works, convicted of fraud in 2006; 42 months in jail. Paroled in September 2009)

12. Recommendations Phase II • Role of deputy ministers • Appointments • Direct accountability to Public Accounts Committee • If Minister overrules deputy in matters of accountability, Minister must send a written directive and make available to Auditor General • Longer appointments for DMs to gain expertise • Sec of Treasury Board should be head of public service; Clerk of Privy Council should represent public service to government • Public Accounts Committee • Adequate funding for research, and members should serve longer terms for expertise • Public Service, Crown Corporations, Ministerial Exempt Staff • Public Service Charter with clear statement of values • Appointment to boards should be by merit • Adequate training for ministerial staff, with a code of conduct

13. Aftermath • Arthur Kroeger open letter criticizing recommendations relating to deputy ministers and Clerk. • Harper’s Federal Accountability Act implemented very few of Gomery’s recommendations; Paul Martin on record as favouring most. • Gomery continues to try to draw attention to current government’s lack of response to his Commission’s recommendations

14. Kernaghan and Langford, Ch 6Conflicts of Interest • Defining the Duty • Real, apparent, or potential conflict? • Why are conflicts of interest of concern? • Variations: • Self-dealing • Accepting benefits • Influence peddling • Using government property • Using confidential informatin • Outside employment • Post-Employment • Case studies: pp 143, 148 and 151