Canada: New Federal Lobbying Act In Force July 2: CEOs Face Increased Potential Liability

Last Updated: May 29 2008
Article by Guy W. Giorno

Changes include potential imprisonment for strict liability offence

Canada's new, strengthened Lobbying Act (currently known as the Lobbyists Registration Act) will take effect July 2, 2008. Corporate CEOs, chief executives of non-profit organizations, and individuals who communicate with government have less than two months to prepare for compliance.

Among the most significant amendments are the following:

  • Clients of consultant lobbyists will be prohibited from paying, and consultant lobbyists will be prohibited from receiving, success fees.

  • The maximum fine for breach of the act will increase to $200,000.

  • The strict liability offence of failure to file a return (including failure to file accurately, completely or on time) will be punishable by fine or imprisonment.

  • The Act will create a new category of federal official, called a "designated public office holder." Designated public office holders will be subject to new post-service restrictions and obligations, and lobbyists and their employers will be subject to new requirements when they deal with designated public office holders.

  • Corporate CEOs and chief executives of non-profit organizations will be required to file returns every month.1 The current requirement is semi-annual reporting.

  • The position of Registrar will be eliminated and replaced by that of the Commissioner of Lobbying, a new, independent officer accountable directly to Parliament.

  • Designated public office holders will be prohibited from lobbying for five years after they leave office or employment. However, the ban is not airtight; there is some, limited scope for lobbying by former public servants who accept positions with business corporations.2

Detailed Monthly Reporting

Among the most significant amendments to the Act is the requirement for detailed monthly returns from consultant lobbyists and from organizations and corporations that employ in-house lobbyists.

A monthly return must be filed by the 15th day of each month. Its content will cover the activity during the preceding month.

The monthly return will not report on all communication with public office holders. It will only cover communication "involving" a designated public office holder and then only where the communication is oral, arranged in advance and not initiated by a public office holder.3

Thus, letters and e-mails, including BlackBerry PIN communications, do not need to be mentioned in the detailed monthly returns. Lobbying that occurs without prior arrangement, such as at a reception, sporting event, restaurant or bar, does not need to be mentioned in the detailed monthly returns.

A monthly return must state, for each communication involving a designated public office holder (provided that the communication is oral, arranged in advance and not initiated by a public office holder):

  • Name and title of the designated public office holder.

  • Name of the designated public office holder's department or government institution, and the particular branch or unit.

  • Date of the communication.

  • Subject-matter of the communication.

However, in the case of in-house lobbying, the Act does not require identification of the particular employee or officer who engaged in a specific communication with a designated public office holder.

Enforcement by the New Commissioner

Parliament has not yet approved the selection of the new Commissioner of Lobbying, and the federal Cabinet has not announced whether it intends to exercise its power under subs. 4.1(4) to make an interim appointment for up to six months.

As of July 2, the current Registrar, Michael Nelson, will have authority to act as the Commissioner of Lobbying until Cabinet makes an interim appointment or a Commissioner is appointed following approval by resolution of the Senate and House of Commons.

Also effective July 2, every employee of the Office of the Registrar becomes an employee occupying the same position in the Office of the Commissioner.

The Commissioner will possess broader investigative authority than the Registrar and will face a lower threshold for launching an investigation.

Currently, the Registrar only has power to investigate a breach of the Lobbyists' Code of Conduct, and then only "Where the registrar believes on reasonable grounds that a person has breached the Code ..."

Under the new provisions, the Commissioner of Lobbying shall conduct an investigation "if he or she has reason to believe ... that an investigation is necessary to ensure compliance with the Code or this Act, as applicable." This makes clear the power to investigate non-compliance with the Act. It also lowers the threshold for commencing an investigation, from the belief that a breach has occurred to the belief that an investigation is necessary to ensure compliance.

The current Act requires the Registrar to suspend an investigation if he or she believes that the person has committed an offence under any federal or provincial Act or the same subject-matter is the subject of a law-enforcement investigation or a charge has been laid. The new legislation will impose a similar requirement on the Commissioner.

An investigation report shall be submitted to Parliament. The Commissioner has the discretion to include in the report details of payments, expenses and disbursements, names of lobbyists, and details of communications with public office holders.

Executives Face Increased Fines, Imprisonment for Strict Liability Offence

Under current Act, chief executives are already responsible for reporting on the lobbying activities of employees who work for their company or non-profit organization. In the event of non-compliance, the officer responsible for filing the return (i.e., the CEO, not the employee and not the corporation) would be the one subject to potential prosecution.

The new Act will double to $50,000 (summary conviction) and $200,000 (indictment) the maximum fines for the mens rea offence of knowingly making a false or misleading statement in any return or other document submitted to the Commissioner. The maximum prison sentence for the mens rea offence remains unchanged: six months (summary) or two years (indictment).

More significantly, failure to file a return — a strict liability offence — will become subject to the same penalties as the mens rea offence of knowingly making a false or misleading statement: $50,000 fine or six months' imprisonment or both (summary conviction), and $200,000 fine or two years imprisonment or both (indictment).

The Act describes the offence as failing "to file a return as required under subsection 5(1) or (3) or 7(1) or (4)," which would also include filing inaccurately or filing incompletely. As noted, this is an offence even if the inaccurate or incomplete filing does not occur knowingly, yet the penalties will be the same as for the mens rea offence of knowingly making a false or misleading statement.

All other offences under the Act will remain subject only to summary prosecution and conviction. The maximum fine for these offences will be doubled to $50,000.

The limitation period for summary prosecutions under the Act will be five years after the Commissioner became aware of the subject-matter of the proceedings, but no later than ten years after the subject matter of the proceedings arose. This represents an increase from the current limitation period of two years after the time when the subject-matter of the proceedings arose.

For more information on compliance with the new federal Lobbying Act, please contact the author.

Footnotes

1 A return only needs to be filed if the overall amount of lobbying by a corporation's employees meets the threshold established under the Act. Essentially, reporting is required once the total amount of lobbying reaches 0.2 FTE.

2 The five-year cooling-off period only applies to activity that would require an individual to be named on a return filed under the Act. It does not apply in circumstances where a threshold for reporting is not reached.

3 The exception is that communication about awarding a federal government grant, contribution or other financial benefit will be subject to detailed monthly reporting even if the communication is initiated by a public office holder.

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