The recent investigation into unregistered lobbying by Julie Couillard1 serves as a warning, not only to consultants who communicate with government, but also to their clients.
Consultants should note the continuing effort of the federal Commissioner of Lobbying, and her office, to crack down on unregistered lobbying. Meanwhile, clients of consultants should pay better attention to whether the consultants are complying with all relevant rules, including the Lobbying Act and the Lobbyists' Code of Conduct. A client should also ensure that its contract with a consultant insulates and protects the client in the event of a breach.
The Investigation Findings
The Commissioner concluded that Ms Couillard failed to register as a consultant lobbyist under the Lobbyists Registration Act (now the Lobbying Act)2 when she communicated with federal public office holders on behalf of her client, a Montreal-based property development company. Ms Couillard had been paid to communicate with federal public office holders at the Department of Public Works and Government Services (PWGSC) concerning a request for proposals (RFP) for the construction and leasing of an office building in Quebec City.
Ms Couillard's actions also violated the Lobbyists' Code of Conduct. She breached the principle of professionalism, as well as rules requiring each lobbyist to provide accurate information to public office holders and to inform the client of obligations under the Code and the Lobbyists Registration Act. Violation of the Code does not carry a penalty,3 but being the subject of a detailed report to Parliament and of subsequent news media coverage is a significant deterrent.
Registerable Lobbying Did Occur
Ms Couillard had entered into two contracts with her client. The first was a five-month consulting agreement between the client and Ms Couillard's company, ITEK Global Solutions Inc. ITEK was paid monthly fees to help draft a response to the RFP. At the same time, Ms Couillard personally entered into a one-year commission agreement, under which she was to represent the client in negotiations with PWGSC for the leasing of office space in connection with the same RFP.
Ms Couillard made several arguments in her defence. She argued that her communications with public office holders were simply an effort to ensure that the client's proposal was "complete and up-to-date." She also argued that she was not required to register as a lobbyist because the consulting contract was between the client and ITEK (Ms Couillard's company), not between the client and her personally.
The Commissioner rejected these arguments. She concluded that Ms Couillard's activities, whether on behalf of ITEK or not, were registrable communications under subparagraph 5(1)(a)(vi) of the Lobbyists Registration Act4in respect of "the awarding of any contract by or on behalf of Her Majesty in right of Canada." Both contracts recognized that Ms Couillard would be the person providing the services, and so she was responsible for registering any lobbying activities under either agreement. Simply put, lobbyists cannot use a corporation as an intermediary to avoid registration requirements.
An exemption in the Act states that requesting information from government officials is not registerable lobbying. Ms Couillard had been asking various questions of the Government, including "whether it was worthwhile [for her client] to submit a proposal" and "whether [the tendering process] was progressing well." Clearly, this questioning went beyond merely seeking information, as it hit at the core of the Government's decision. The Commissioner had no trouble deciding that it was registerable lobbying and the exemption did not apply.
Lesson for Clients (and Employers)
Unfortunately, Ms Couillard's client received considerable, negative publicity, even though the client did not violate any rules. The client was named in most of the news media stories and the coverage was not favourable.
The Commissioner found that Ms Couillard's client "was unaware of her obligation to register as a consultant lobbyist acting on its behalf." It was Ms Couillard's responsibility to make the client aware of her obligations under federal lobbying law, and by failing to inform her client she breached the Lobbyists Code of Conduct.
While the burden of registration lies on each consultant lobbyist, this incident demonstrates the serious, adverse impact on the client in the event of a lobbying transgression. A client should consider these potential impacts and ensure that the consulting contract contains adequate protection.
Standard government-relations consulting contracts do not contain explicit assurances that lobbying transparency/lobbying ethics laws will be honoured. A client should insist on such language, and on an adequate remedy in the event of a breach.
The lesson of this case is not just for those clients who know they are hiring lobbyists. What constitutes registerable lobbying may not always be clear to the client. Therefore, a client who hires a consultant (or other third party) in any matter involving a provincial or federal government should ensure that the contract language addresses the potential application of lobbying law.
An employer, too, should ensure that its employment contracts address the need for compliance with lobbying law – and for cooperation with the filing obligation of the CEO. Training of employees, and due diligence, are other components of an appropriate compliance regime.
Footnotes
1.Canada, Commissioner of Lobbying, Report on Investigation – The Lobbying Activities of Julie Couillard (October 23, 2012): https://ocl-cal.gc.ca/eic/site/012.nsf/eng/h_00683.html#ToC.
2.The Lobbyists Registration Act was in force at the time of the activities covered in the report.
3.Violation of the Lobbyists' Code of Conduct is not an offence. However, the Commissioner publicizes the violation by presenting a report of her findings to the House of Commons and the Senate.
4.Now subparagraph 5(1)(a)(vi) of the Lobbying Act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
