Canada Ethics Roiled as Barrick, Visa Exploit Law

Barrick Gold Corp. and Visa Canada Corp. are exploiting an exemption in ethics legislation to hire former Harper administration aides as lobbyists, triggering calls for increased regulation as Canadian lawmakers prepare to review the rules.

Barrick, the world’s largest gold producer, and Visa Canada, the subsidiary of the world’s largest bank-card network, have hired former advisers to Finance Minister Jim Flaherty and Industry Minister Tony Clement as directors of government affairs. They have done so even though a 2006 law sought to ban politicians and ministerial staffers from lobbying for five years after leaving office.

The companies are taking advantage of a provision that exempts former policy makers who take jobs with corporations and spend less than 20 percent of their time lobbying. The exemption undermines the effectiveness of rules Prime Minister Stephen Harper has said were aimed at eliminating lobbying by insiders, and should be removed, said Pat Martin, a lawmaker for the opposition New Democratic Party.

“It violates the spirit if not the letter of the law to be lobbying on policy or legislation when you’ve just recently left the ranks of government, and I don’t care if it’s for 20 percent or 1 percent of your time,” Martin said in a telephone interview. “There are inherent loopholes in the lobbyist registration regime that you could drive a Mack truck through and make a mockery of the intent.”

‘Revolving Door’

Martin, who said he wants removal of the exemption to be part of his party’s platform in the next election, raised the issue in the House of Commons today, asking the Conservatives what happened to their pledge to “clean up the revolving door between their government and lobbying firms.” Treasury Board President Stockwell Day, the minister responsible for the law, said lawmakers “can review the legislation at any time, adding he intends to keep it “the best legislation among most western democracies.”

The law is up for review by a parliamentary committee before Parliament breaks for its summer session and the government will review suggestions on how to improve the law, Jay Denney, a spokesman for Day, said in an e-mailed statement.

Alanna Heath, a former adviser to Flaherty, was part of Barrick’s efforts last year to defeat a bill requiring the government to probe any alleged human-rights violations by domestic mining companies outside Canada.

Government Relations

Heath worked for Flaherty from 2007 to 2009 before joining Toronto-based Barrick as director of government relations early last year. Heath isn’t registered as a lobbyist, according to public records as of Feb. 16.

Heath deferred questions about her actions to Barrick spokesman Andy Lloyd, who confirmed in an e-mailed statement that Heath met with lawmakers. Lloyd said the meetings were allowed because of the exemption in the law, and that all meetings were disclosed to the office of Commissioner of Lobbying Karen E. Shepherd.

Rodney MacDonald, a former adviser to Clement, signed on last year as director of government relations for Toronto-based Visa Canada. In a telephone interview Jan. 6, MacDonald said he has lobbied lawmakers legally because he doesn’t spend more than 20 percent of his time lobbying. He was listed as an active lobbyist in a Feb. 2 filing by Visa on the commissioner’s website.

MacDonald said he voluntarily tells the lobbying commission who he is meeting in order to “safeguard” himself from “hearsay” about what he is doing.

First Legislation

The Federal Accountability Act was the first piece of legislation introduced after Harper took office in 2006. In addition to the lobbying restrictions, it ended political donations by companies, required public servants to record all contacts with lobbyists and eliminated contingency fees in the lobbying industry.

The law, which Harper says was aimed at removing the influence of insiders, prohibits former government employees who held senior positions from communicating with designated “public office holders” on behalf of companies for five years.

It exempts from that provision former officials for whom lobbying doesn’t constitute a significant part of their work. In July 2009, Shepherd ruled that “significant” means “20 percent or more of overall duties.”

The exemption isn’t available to former officials who work for lobbyist consulting firms.

No Lobbying Ban

“There is no five-year ban on lobbying; there is a five- year ban on doing a significant amount of it,” said Duff Conacher, head of Ottawa-based Democracy Watch, an advocacy group for government accountability.

Individuals can also apply for an exemption from any lobbying restrictions if they held office for a short period of time or had administrative duties only. The exemptions are posted on the commissioner’s website.

Former senior government employees are also constrained by conflict of interest regulations in the law that prohibit them from taking “improper advantage” of their public office, giving advice to employers using confidential information or communicating for one year with any public official with whom they had “significant official dealings” while in office.

Visa’s MacDonald said that means he doesn’t meet with any officials from a “swath of ministries,” though there aren’t any specific guidelines from the ethics commissioner on whom he could meet.

‘Honor System’

“It is kind of an honor system,” MacDonald said. “I really wish it wasn’t. The onus is on me not to meet with people that would be against those rules. So I have self-determined that just as a safeguard I’m not meeting with any ministers’ offices because I worked with all the ministers’ offices.”

Barrick’s Heath met or spoke to lawmakers on at least four occasions in October, according to Members of Parliament who witnessed her doing so, as part of efforts by companies such as Barrick, Goldcorp Inc., and IAMGOLD Corp. to defeat a bill aimed at cracking down on alleged human-rights violations by Canadian mining companies.

Liberal lawmaker Wayne Easter said he met Heath in his office on Oct. 20. Liberal lawmaker Martha Hall-Findlay said Heath took part in a meeting with lawmakers from her party shortly before the bill was defeated by a 140-134 margin in an Oct. 27 vote. Heath also spoke to Liberal lawmaker Marc Garneau in Garneau’s office on Oct. 18, according to Roch Gamache, a Garneau aide.

Shares Decline

Shares of Barrick have lost 3.6 percent over the past three months and returned 26.8 percent over the past year. The company’s 10 closest gold mining peers by market value have averaged a 6 percent decline over the past three months, and a 14.5 percent gain over the past 12 months.

Shares of San Francisco-based Visa Inc. have lost 10.2 percent over the past year, compared with a 13.9 percent gain for MasterCard Inc. and a 22.4 percent gain for American Express Co.

Natalie Hall, a spokeswoman for Shepherd, said that the office doesn’t comment on specific lobbyists or cases. Jocelyne Brisebois, a spokeswoman with the country’s ethics commissioner who oversees this aspect of the Federal Accountability Act, also declined to comment on specific cases.

Harper’s office deferred questions about the act to Day, the Treasury Board president.

The exemption was intended to ensure that former public officials who have “one meeting a year” with a lawmaker aren’t hurt by a “whopping regulatory overhead,” according to Charles King, president of the Government Relations Institute of Canada, an Ottawa-based association that represents the lobbying industry.

King said in a Jan. 24 interview he was concerned that use of the exemption may “wind up giving everyone who follows the rules a black eye, and wind up strengthening the case for tougher rules for everyone” who attempts to sway lawmakers.

“Lobbying is lobbying is lobbying,” King said.

To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net

To contact the editors responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net; David Scanlan at dscanlan@bloomberg.net.

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