Commentary: Part 1 – It’s a matter of disclosure (May 22, 2019)

by Dermod Travis,


Pity assignment editors in newsrooms across B.C. this month. No shortage of material, as of late.

Monty’s Showroom Pub – now ashes, after the Plaza Hotel in Victoria burned to the ground – found itself back in the news, gang activity on the West Shore on Vancouver Island regrettably contributed to news cycles, the scandal at the B.C. legislature did too, money laundering and a new – but not quite so new – label has been thrown into B.C.’s political lexicon, “politically exposed persons.”

At first glance these stories may seem unrelated and by and large they are, but they’ve also had more than a nodding acquaintance with each other over the last decade.

How could Monty’s connect – even remotely – to the goings on at the legislature?

It’s an interesting tale in a raised eyebrows kind of way, but for now it offers a bit of context to the term “politically exposed persons (PEP).”

Much to View Royal mayor David Screech’s annoyance, he recently learned that the Financial Transactions and Reports Analysis Centre of Canada – better known as FINTRAC – considers him a PEP. This after he tried to make a bank deposit of $5,100 in cash he had a won in a 50/50 draw at a Victoria Royals game.

Past days, a bank may have asked a few simple questions and that would be that, but the bank called Screech’s wife to inquire as to how she paid her Visa bill and other banking matters, as was one of his sons.

It’s part of Canada’s anti-corruption and money laundering efforts adopted in 2017, at the urging of the Paris-based Financial Action Task Force.

The United Nations Convention against Corruption (UNCAC) defines PEPs as “individuals who are, or have been, entrusted with prominent public functions and their family members and close associates,” including step-children, “if they’ve been legally adopted through marriage.”

Who else makes FINTRAC’s PEP list?

Every mayor in Canada is on the list from villages to Toronto, as is every member of the Senate, House of Commons and provincial legislatures. Deputy ministers or equivalent rank, heads of government agencies and Crown corporations are as well.

They are collectively defined as individuals who are “in a position to impact policy decisions, institutions and rules of procedure in the allocation of resources and finances (making) them vulnerable to corruption.”

It doesn’t automatically imply any wrongdoing on the part of any individual on the list.

Screech can take some comfort in the fact that a person ceases to be a PEP, “five years after they have left office.”

While the PEP designation applies to the banking sector, many of the same risks could be faced by any employer, even more so when it’s a government.

It’s why B.C. needs to hit refresh on much of its oversight in these areas, as the scandal at the B.C. legislature has already shown.

Unlike Alberta’s 88-page conflict-of-interest legislation for MLAs, B.C.’s legislation – all 4,600 words of it – doesn’t speak to possible conflicts when they involve an MLA’s family or close associates.

Consider this passage from Alberta: “A Member breaches this Act if the Member uses the Member’s office or powers to influence or to seek to influence a decision to be made by or on behalf of the Crown to further a private interest of the Member, a person directly associated with the Member or the Member’s minor child or to improperly further another person’s private interest.

Contrast that with B.C.: “A member has a conflict of interest when the member exercises an official power or performs an official duty or function in the execution of his or her office and at the same time knows that in the performance of the duty or function or in the exercise of the power there is the opportunity to further his or her private interest.”

But that’s MLAs.

FINTRAC’s list goes far further, touching on senior posts in the public sector, Crown corporations, provincial agencies and local governments and underlines that “It is critical to consider family members or close associates of PEPs,” including step-children, “if they’ve been legally adopted through marriage.”

Imagine how deficient the rules and disclosure could be for some of the posts in B.C.’s public sector?

Consider this real-life scenario: one job applicant, qualified for two vacant posts: one in a non-sensitive ministry, another in a sensitive unit in a highly sensitive ministry.

Would the applicant’s personal entanglements with senior members of a street gang factor into your decision as to which job to offer, particularly when organized crime would have an interest in the inner workings of one of those two posts?

The sensitive ministry, responding to questions, didn’t offer much comfort.

B.C.’s public service security screening policy first set in 1988, and revised in 2010, still places more onus on self-reporting than it does on thoroughly vetting applicants and carrying out periodic checks on senior mandarins.

Do revised policies need to apply to each and every member of the public sector and be made public?

No, but it should for some, especially those who find themselves on the PEP roll and for those who work in highly sensitive offices of government, regardless of the position they hold.

One who likely would have been on the PEP list is the former clerk of the legislature, Craig James.

A fact that adds some significance to this line from Speaker Darryl Plecas’ report in January: “Mr. James then asked us if we knew how many years back the security checks go for a security clearance and what sorts of things the authorities looked for.”

How much should the government know about the outside activities of some employees? More than they seem to know now.

Was the Legislative Assembly Management Committee kept fully apprised of James’s work with McGill University and Dublin-based consultancy firm AARC Ltd.?

Hansard transcripts of their meetings would suggest not.

As for his interactions with the World Bank – singled out on the FINTRAC list – he described himself as “a volunteer” at a LAMC meeting and for others as having “worked” on various projects with the bank.

It’s a delicate balancing act between the right to privacy and the right of citizens to expect that senior employees are free of undue influence from inside government or elsewhere.

Disclosure reduces the risk of conflict-of-interest.

It’s the knowledge that allows others to judge decisions that might be made by an office holder or appointee.

When pertinent facts about key decision makers in government are unknown, viewed as idle gossip, or overlooked entirely, it points to dropping the ball.

Being a PEP may be burdensome for those designated as such, but one of its goals is an added layer of protection for Canada’s political structure from criminal elements.

That same layer is needed in government.

Something little-known about gangs and organized crime is the fact they like to ingratiate themselves in diverse social arenas, including politics. That’s a story for another day.


Dermod Travis is the executive director of IntegrityBC.


May 22, 2019