The bill, still awaiting the Senate’s approval, would allow Canadians to bet on individual sporting events; currently, legitimate establishments allow wagers on the outcomes of three combined games. This increases the odds of losing, which discourages gambling, which is why the industry wants a change.
Which is also why Mr. Campbell’s “private interest” poses a possible conflict: The B.C. Liberal sits on the board of Great Canadian Gaming Corp. and, thanks to arrangements like this, he has earned more than $201,000 from the gambling firm, above his public salary and benefits.
Paul Massicotte, a senator with professional connections to the horse-racing industry in Quebec, similarly declared himself to be in conflict.
Like all such declarations, they were noted in the official transcripts. The senators recused themselves and none of their colleagues appeared to have anything more to say.
Although the conflicts between serving the public and personal financial interests may not have seemed an issue, a National Post analysis finds they are everywhere in the red chamber.
While ministers in the House of Commons must put their business assets in a blind trust, senators, who can stall, alter or even quash proposed laws, are under no such obligation.
The scrupulous ones try to segregate their personal business from their political power. But in many cases, drawing a hard line between the two spheres of interest is not as simple as recusing oneself from a Senate discussion, committee or vote.
This raises the question: can a public representative serve two masters, particularly when work for one could seriously affect work for the other?
“It’s shocking” senators are allowed to join corporate boards, says Richard Leblanc, associate professor of law, governance and ethics at York University in Toronto.
“I think a reasonable person would conclude that this doesn’t make sense. That a politician that makes laws can sit on the board of a company that is affected by laws. I think this has fallen through the cracks.”
The scandals surrounding former Liberal senator Mac Harb, and suspended Tory senators Mike Duffy, Patrick Brazeau and Pamela Wallin, have escalated calls for Senate reform. Next Friday, the Supreme Court will finally rule on the Harper government’s reference question: How much power Ottawa has to change the senate without a constitutional amendment, including imposing term limits, electing senators, or even the power to abolish it.
More than a third of the Senate currently hold positions on either public and private boards of directors. There may be more: senators publicly disclose this kind of information only voluntarily on their websites, although they are required to privately detail their personal business interests to the senate itself. The National Post was able to identify certain senators’ corporate interests based on a thorough review of voluntarily disclosed information combined with cross-referencing across databases compiled by Postmedia’s national bureau, FP Infomart and the federal NDP.
Mr. Campbell is not the only senator who has had to recuse himself recently. In the past three years, the chamber’s ethics officer has noted several others.
They include: Larry Smith, who has an interest in a moving and warehousing company connected to a Defence department contractor; and Pana Merchant, who has recused herself from several studies, including reports on prescription drugs and an examination of CBC’s Radio Canada International.
While the direct conflicts of interest are apparent, there are more subtle conflicts that are just as relevant: How can senators manage the duties of their public service job, while running private businesses or serving as business directors?
Data compiled by the National Post show the largest source of extra income comes from directorships. While some senators continue to work in the jobs they had before their appointment — mostly lawyers, consultants, public speakers and landlords, and one Christmas tree farmer — at least 34 of the current 96 Senators (the Senate count includes the suspended Senators) also sit on the boards of public and private companies.
The companies operate in a wide range of industries, including some highly regulated sectors, from real estate, financial services, mining and energy, to gaming and lotteries and hygiene. While most senators are affiliated with privately held companies, at least 12 have paying positions with firms whose shares trade on major exchanges in Canada and the U.S.
“I find it very surprising that senators can sit on corporate boards,” said Richard Powers, national academic director and governance expert at the Joseph L. Rotman School of Management at the University of Toronto.
According to the Senate’s conflict of interest guidelines, the 105 senators — nine seats are vacant, including three recently suspended Conservatives — can do so, provided they disclose those positions and any earnings of $2,000 or more.
Although the federal government introduced tougher disclosure rules for senators governing outside business interests, recent expense and housing-claims scandals have raised questions about whether this is enough without more transparency and accountability.
Hugh Segal, a Conservative senator and one of the more active outside the chamber, agrees the issue merits further inquiry. “Is it appropriate for senators to be on boards? I say that is a very legitimate public debate,” he said.
Long-time Liberal Senator David Smith goes even further. saying, “We’re going to have to redo a bunch of the rules here.”
The dozen senators who are directors of publicly traded companies have pocketed at least $8.25-million in the last decade.Among the top earners: Irving Gerstein, Mr. Segal, Mr. Campbell, James Cowan, the recently resigned David Braley, and the recently suspended Pamela Wallin.
Most did not respond to interview requests or declined to comment when contacted by the Post.
James Cowan, leader of the Senate caucus identifying as Liberal, withdrew from his law practice in Nova Scotia and stepped down as chancellor of Dalhousie University, Halifax, two years after he was appointed a senator in 2005.
“I didn’t go to the Senate to make money nor do I feel like I’ve made enough money that I can afford to do the job for nothing,” he said, acknowledging he has been paid $243,992 for acting as the Halifax Airport Authority secretary.
“If people think they can fulfill their jobs as senators and do other things, I don’t think there’s anything wrong with that.”
Mr. Segal, who sits on the boards of Just Energy Group Inc. and Sun Life Financial Inc., and has announced that he will leave the Senate in June, also argues that the Senate job is not overly time-consuming.
“The truth about the Senate is that it sits 80 to 90 days a year,” he said.
In his eight years as a senator, he has earned about $2.7-million in board fees, stock options from directorships, and fees as acting senior fellow at the policy studies and business schools at Queen’s University, Kingston, Ont.
However, experts say sitting on corporate boards has become increasingly onerous in the past 13 years.
Sweeping corporate governance reforms in Canada and the United States have curtailed the practice of appointing “trophy” directors — high-profile politicians, diplomats and academics. Their responsibilities and personal liabilities have also increased.
“The demands of time are enormous and the due diligence requirements are such that it’s questionable whether you can cover duties as both a corporate director and a senator,” said Prof. Powers.
In the private sector, executives are limited to three boards, with terms usually no longer than nine years. An effective director is also expected to devote 250-300 hours a year to a public company, and 100-150 hours to a private or not-for-profit entity.
The commitment increases if they sit on board committees, like Mr. Segal (two at Sun Life); and Mr. Braley (three, including Swisher Hygiene, where has earned about $191,000 since his appointment to the board in 2010.
Chairing a board is even more onerous. Mr. Gerstein, chairman of the board of Boston-based Atlantic Power, also heads four committees there, including the important audit committee. He has been paid about $1.72-million in directors’ fees and options since his appointment in 2009.
Senators receive a basic annual salary of $132,200, and can earn more by participating in the 17 committees and two joint committees, where most of the Senate’s legislative and public policy work is done.
Mr. Gerstein gets an extra $10,000 a year for chairing the Senate’s influential banking, trade and commerce committee. Fellow members Wilfred Moore, Douglas Black and Paul Massicotte are among the busiest senators working.
The bottom line: if a senator is committed to numerous corporate boards and committees and must devote thousands of hours a year to outside work, how much time does that leave for Senate responsibilities? Not much, says Mr. Cowan.
“I simply, in my own mind, couldn’t do justice to my Senate job,” he said. “Maybe some of the other senators feel they can manage their workload but I can’t speak for them. I certainly haven’t found it to be a part-time job.”
Mr. Segal says he resigned three corporate directorships since joining the Senate because “I wanted to make sure I had the time to do a proper job as a director and follow best practices and meet my primary responsibility as a member of the upper house.”
Outsiders ask whether senators should profit from board appointments that have much to do with their political and government connections as any additional expertise.
“It smacks of self interest,” said Prof. Leblanc. “Senators are named to boards to open doors and advance the interests of a company while getting paid by taxpayers and collecting directors’ fees from shareholders. It’s frankly outrageous.”
What is less clear is how the public interest is served by allowing senators to sit on private-sector boards.
“They were appointed because of their proximity to power, which is all the more reason to have a dividing line,” said Prof. Leblanc.
“Just the perception of a politician sitting on a commercial board is troubling. And the perception of a conflict is just as important as a real one.”
For example, fiduciary duty requires directors of private and public companies to act in shareholders’ best interests. But, senators are also members of government, who have taken an oath to the Queen to act in the best interests of all Canadians. How do they reconcile this conflict?
“If I’m a constituent of that senator, I would be concerned about whether that politician was serving me or the corporation. Are my interests being compromised because the politician is being paid by the corporation in directors fees and other incentives, monetary or not that may be compromising?” said Mr. Orsagh.
Charlie Angus, the New Democrat Party’s ethics critic, says it’s high time the rules governing senators were overhauled.
“Conflicts have been longstanding but they’ve been under the radar,” he said. “Canadian attitudes have changed and the rules haven’t kept pace with changing expectations.”
That’s why the Senate’s culture of behaviour and controls is just as important as its rules, says Prof. Powers. He points to the housing and expense claims, now being investigated by the Royal Mounted Canadian Police, as proof the current conflict-of-interest rules — which are largely based on an honour system — are too permissive.
More disconcerting, he said, is that without an independent auditor to scrutinize senators’ activities outside government, the upper chamber and its members may find their reputations irrevocably tarnished.
Indeed, some senators have run into problems with their board memberships.
Last May, Mr. Braley quietly resigned from the board of Swisher Hygiene Inc. amid claims of accounting fraud and a class-action lawsuit from irate shareholders alleging the once-high-flying company had manipulated its financial records.
Then there’s the case of George Furey, who sits on the board of Canada Fluorspar Inc. He received $111,438 in cash and stock in 2010-12, while the company negotiated a $17-million loan from Newfoundland & Labrador to build a deep-water port facility.
Washington has much tougher regulations for its 100 U.S. senators. Anyone employed for more than 90 days and earning more than US$25,000 cannot sit on the boards of publicly held or publicly regulated companies.
That’s because this “involves a fiduciary duty — and, thus, an increased potential for conflict of interest,” says the U.S. Senate’s Conflicts of Interest, Ethics Rules.
Senators, who are legislators similar to Canadian MPs, may sit on boards or act as officers of non-for-profit organizations. They cannot be paid for their work and their time.
Mr. Segal dismissed the comparison, arguing U.S. senators are “in real positions of power,” while the role of the Canadian senate and its Commonwealth peers is “at best, periphery and advisory.”
Original Article
Source: nationalpost.com/
Author: Theresa Tedesco and Jen Gerson
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