Conflict Of Interest A Blind Spot For Some Provincial Governments

Why do the public servants who stand to benefit most get to decide what is and what isn't a conflict of interest?

02/05/2018 14:13 EST | Updated 02/05/2018 14:14 EST
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The Newfoundland flag.

Wouldn't be nice to live in a land free of conflict of interest? People trust each other, including those who govern them. How close we are to such a perfect situation? On the surface, not far. Newfoundland, along with several other provinces, has not seen a single case where the Conflict of Interest Act that applies to the provincial public service was actually cited by the courts.

The Act aims to minimize the impact of public servants' private/group interests on decision-making. As per the letter of the Act, contracts shall be awarded on the basis of merit, not the bidder's connections or benefits promised to the office holder.

Upon a closer inspection, however, it appears that a "success story" may be nothing more than an optical illusion. Tensions between office holders' group/private interests and their duty to serve the public interest abound, but the existing laws do not allow for the proper identification and management of potential conflicts. The reason is simple: the application of the Act is left to the discretion of office holders themselves.

The more one knows, the less one believes

The Canadian Legal Information Institute indexes decisions rendered by various courts and administrative tribunals at the federal and provincial levels. For those interested in matters of conflicts of interest, Newfoundland is a case in point.

The Act designed to identify and prevent conflicts of interests in reality renders them less amendable to prosecution. On the one hand, conflicts of interest are mentioned in legal cases in Newfoundland more often than elsewhere, with the exception of PEI. Just 2.8 per cent of cases brought before the provincial courts and tribunals have some connection to conflicts of interest (this ratio varies from 3.16 per cent in PEI, 1.09 per cent at the federal level, to 0.8 per cent in Quebec). On the other hand — together with Nova Scotia, New Brunswick, Nunavut and the Yukon — Newfoundland does not have any single reference to the provincial Conflict of Interest Act (Ontario, Manitoba, Saskatchewan and British Columbia do not have similar acts).

Conflicts of interest seem to affect Newfoundland in spheres beyond the provincial government. Most cases mentioning a conflict of interest situation in Newfoundland refer to the municipal matters regulated by the Municipalities Act and to the conduct of lawyers whose standards are set in the relevant Code. For instance, former Carbonear mayor Frank Butt, who was recently removed for the alleged failure to declare a conflict of interest when initiating the demolition of a building that benefited his own business, now asks the Court to reinstate him in the town's top job. In the other case, a party in a litigation alleged the existence of a conflict of interest since the solicitor for the adverse party possesses some confidential and potentially prejudicial information about the first party.

It would appear that conflicts of interest in the provincial government constitute a blind spot, particularly in Newfoundland. One possible explanation can be found in the fact that the Conflict of Interest Act operates on the assumption that public servants will properly disclose their concerns and refrain from any activity that may lead to a conflict of interest situation. Their failure to do so does not constitute an offence, however. Furthermore, the Act cannot be enforced from outside, by the courts let alone by the citizens. In other words, the system works on the presumption of absolute trust in public servants.

Shall unconditional trust in public servants be taken for granted? On a normative level, perhaps. But such an approach appears to be too naïve and even dangerous on a practical level, since it allows public servants to have absolute discretion in managing conflicts of interests. What follows is an example highlighting the potential drawbacks of placing unconditional trust in public servants in those matters, and comes from my personal experience.

Tale of a commissioner

A public servant working for a statutory office was assigned to investigate a complaint lodged against an educational body. Ironically, the complaint itself was indirectly inspired by a conflict of interest situation, within the educational body (in this milieu, too, mechanisms for managing conflicts of interests are weak to non-existent).

In addition to being a public servant, the investigator happened to be a part-time employee of the educational body which was the subject of the investigation. The Act leaves little doubt that this constitutes a conflict of interest situation since the public servant relies on the education body as a source of income. Given her precarious status as a per-course instructor, the investigator has little interest in alienating the employer by discovering any wrongdoings.

Our public servant chose neither to disclose a conflict of interest nor to recluse herself from the investigation. The investigation quite expectedly led to a conclusion that the education body did not do anything wrong, in spite of the documented evidence of the opposite.

What options are available to the complainant in a conflict of interest free environment? The investigator's boss chose to protect his subordinate, alerting the complainant that "any continued efforts [to enforce the Act] may be treated as vexatious." The complainant nevertheless attempted to do what the public servant had been supposed to do beforehand, i.e. to contact the deputy minister responsible for deciding if a conflict of interest indeed exists. No response. Then the complainant attempted to reach out to the minister responsible for the application of the Act. The minister's first reaction was reassuring: "I will follow up and respond." But time passed, and the very important minister disappeared from sight.

As a last resort, the complainant contacted the Citizens' representative — to no avail. "We are statute-barred from investigating these allegations" due to the above mentioned safeguard in the Act: a public servant's failure to disclose a conflict of interest does not "constitute an offence."

This tale has a lesson at its end: Absolute trust in the public service comes at a price of turning a blind eye to mismanagement of conflicts of interest. Newfoundland has been consistently perceived as being among the worst-managed in Canada, and that its population has the highest municipal and provincial debt per capita. In other words, we are paying for the absolute discretion given to public servants, and not in a figurative sense. The price is more than real.