Martin divestment a dangerous precedent

Frontier Centre, Public Sector, Uncategorized, Worth A Look

The recent controversy over Paul Martin’s ownership of Canada Steamship Lines illustrates how ad hoc responses to unfounded allegations of conflict of interest can produce unfortunate public policy outcomes.

Mr. Martin was forced to agree to transfer his shares in CSL to his sons after the Opposition alleged that continued ownership of the shares would place him in a conflict of interest should he become prime minister.

While Mr. Martin’s concession seems to have quieted most critics, the problem is the precedent that this episode seems to have established — to the effect that public office-holders may be required to permanently divest business assets as a condition of holding office.

The various conflict-of-interest codes that have been developed in the different provinces over the past 15 years all proceed on an entirely different footing. Cabinet ministers are prohibited from carrying on a business or accepting outside employment while in Cabinet. However, no province requires a Cabinet minister to permanently sell his or her business interests in order to become a member of the government. Instead, ministers are generally required to fully disclose their interests and to place assets into a blind trust for the duration of their term as minister.

I was involved in the drafting of the Ontario conflict-of-interest legislation in the mid-1980s, which subsequently became the model upon which the other provincial regimes were based. The sponsor of that legislation, Ontario’s attorney-general Ian Scott, steadfastly resisted the impulse to require Cabinet ministers to sell off their business and other assets.

Mr. Scott maintained that high political office should be open to Canadians from all walks of life. He therefore opposed a rule requiring prospective Cabinet ministers to divest their business assets, on grounds that this would effectively bar Canadians with business backgrounds from agreeing to stand for public office.

Choosing to enter politics is an inherently risky proposition, one which demands major personal and professional sacrifices. Moreover, even those who are fortunate enough to get elected know that their term in office is likely to last for five or 10 years at the most. They need to plan for a life after politics, which generally will involve a return to their business or employment activity that they engaged in prior to holding public office.

Yet if those with business backgrounds have been required to permanently sell off their assets in order to take a seat at the Cabinet table, they will have effectively foreclosed that possibility. As it stands, relatively few business people are prepared to make the sacrifices involved in standing for public office. A rule requiring some Cabinet ministers to permanently divest their assets will make the prospect of political life so unpalatable that only the most foolhardy would be willing to apply.

To be sure, all of the provincial conflict-of-interest regimes are premised on the existence of an independent ethics commissioner, appointed with the consent of the Opposition parties as well as the government, and answerable to the legislature. The existence of an independent ethics commissioner is key, since the commissioner reviews the particular circumstances of each Cabinet minister and provides advice as to the arrangements that are needed to ensure that situations of potential conflict of interest are avoided.

In this regard, while Prime Minister Jean Chrétien’s ethics package announced in the fall provides for an independent ethics commissioner to deal with conflicts of interest in relation to ordinary MPs, the ethics commissioner would continue to report to the Prime Minister in dealing with conflicts involving Cabinet ministers. This departs from the approach that has worked well in the provinces, where the various commissioners deal with all aspects of conflict of interest as appointees of the legislature.

The larger point is simply that, assuming a proper conflicts regime is in place, including full disclosure to a truly independent commissioner, Cabinet ministers (including prime ministers) should not be required to divest their assets as a condition of holding public office.

Paul Martin may have been prepared to go the extra mile in agreeing to divest his shares in CSL, no doubt on grounds that following his tenure as prime minister it is highly unlikely that he would want to return to running the company. But that decision should surely not become the rule in future cases, on the grounds that it is essential that the highest public offices in the land should remain genuinely accessible to Canadians from all backgrounds and walks of life.

Patrick J. Monahan is associate dean and dean-designate of Osgoode Hall Law School of York University.