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Influence Peddling

  • April 12, 2018
  • Clayton Rice, Q.C.

Crimes of corruption in Canadian law fall under Part IV of the Criminal Code. Bribery of judicial officers and fraud on the government are two of them. Influence peddling is in the fraud category. By criminalizing acts of corruption Parliament strives to preserve both government integrity and the appearance of government integrity thus promoting confidence in democratic institutions. What, then, is influence peddling?

On March 23, 2018, the Supreme Court of Canada released the ruling in R v Carson, 2018 SCC 12 where Justice Andromache Karakatsanis, writing for an 8-1 majority, held that everyone commits the offence of influence peddling under s. 121(1)(d) of the Code who: (a) has influence with the government; (b) demands a benefit; (c) as consideration for the exercise of influence; (d) in connection with any matter of business relating to the government.

(1) Background

Bruce Carson was a senior advisor in the office of former Prime Minister Stephen Harper. After leaving that position, he negotiated a deal with H2O Professionals Inc in which he promised to use his government contacts to help the company sell water treatment products to First Nations. The company agreed to pay sales commissions to Carson’s girlfriend. Carson promoted H2O to First Nations leaders, government leaders and cabinet ministers.

The federal government ministry at the time was Indian and Northern Affairs Canada (INAC). INAC provided funding to First Nations for water treatment systems like those sold by H2O. The First Nations themselves decided how the money would be spent. However, INAC sometimes funded pilot projects. Carson attempted to convince INAC to set up a project to buy H2O products and pilot them in First Nations communities. He was charged with fraud against the government for selling his influence.

(2) Trial Verdict

Carson admitted at trial that he had influence with the government and that he demanded a benefit for his girlfriend. He denied, however, that his assistance was in connection with “any matter of business relating to the government”. The trial judge agreed. Since First Nations did not require INAC’s approval to procure the systems sold by H2O and INAC did not purchase systems directly for First Nations, Justice Bonnie Warkentin concluded that Carson’s assistance to H2O was not in connection with “any matter of business relating to the government”.

In the Reasons for Judgment released on November 17, 2015, reported as R v Carson, 2015 ONSC 7127, 25 CR (7th) 352, Justice Warkentin stated, at paras 95-6: “In light of my findings that there was no business with the government, it follows that the integrity of the government was not in issue…[T]he government’s integrity was never in issue here because regardless of Mr. Carson’s attempts to persuade INAC officials to purchase water systems from H2O, INAC officials were not in the business of procuring these water treatment systems for First Nations communities.”

(3) Appeal

On February 17, 2017, the Ontario Court of Appeal reversed in a ruling reported as R v Carson, 2017 ONCA 142, 347 CCC (3d) 164. Writing for a 2-1 majority, Justice Gladys Pardu held that the trial judge erred by interpreting s. 121(1)(d) too narrowly effectively confining its scope to transactions in which the government is a party. The mischief targeted by Parliament is the acceptance of a benefit as consideration for the exercise of influence. Justice Pardu said this, at para 50: “[T]he government did not make any particular decision about whether to purchase H2O’s water treatment systems, however, the essence of the offence is acceptance of benefit for exercise of influence. Section 121(1) provides that it matters not ‘whether or not, in fact, the official is able to cooperate, render assistance, exercise influence or do or omit to do what is proposed.’ Accepting a benefit in exchange for exercising influence on government officials in order ‘to push through their water treatment products to First Nations Bands’ is a ‘matter of business relating to the government’.”

In dissent, Justice Janet Simmons concluded, at para 101, that Justice Warkentin found that there was no matter of business relating to the government in this case “because INAC did not have the authority to either approve or purchase H2O’s water treatment systems. Had INAC had the authority to approve a transaction, the trial judge would have found that there was ‘a matter of business relating to the government’, even though INAC was not a party to the transaction. The trial judge did not read s. 121(1)(d) to require that the government be a party to any transaction, actual or proposed.”

(4) In The Supreme Court

Two questions landed in the Supreme Court: (1) Must the promised influence be actually connected to a matter of business relating to the government? and (2) How broadly should the phrase “any matter of business relating to the government” be interpreted?

(a) Actual Connection

On the first question, Justice Karakatsanis concluded, at para 23, that the promised influence must be actually connected for the offence to be made out and went on to state the following, at paras 28-9: “[T]he purpose of this provision is to preserve both government integrity and the appearance of government integrity. While this purpose is broad, it cannot override the explicit language of the provision, which requires that the promised influence be connected to a matter of business relating to the government. In fact, this requirement calibrates the scope of the offence to its dual purpose. Given that the offence can be committed by someone who does not have influence with government, this requirement connects the conduct of an individual outside of government to the government…[W]here the influence sold is connected to a matter of business that is not in fact related to the government, the offence under s. 121(1)(d) is not made out. However, if the accused subjectively believes that the promised influence is connected to a matter of business that relates to the government…a judge may find the accused guilty of an attempt.”

(b) Scope

On the second question, Justice Karakatsanis held that the trial judge’s narrow interpretation of the provision was at odds with the expansive language used by Parliament that goes beyond transactions that require government approval, at paras 40-1: “[‘A]ny matter of business relating to the government’ is not limited to matters in which government plays a direct approval role. It includes a matter of business in which government could play a role even if it does not do so at the time the offence is committed. A matter of business relates to the government if it depends on government action or could be facilitated by government…[W]hile the phrase ‘any matter of business relating to the government’ must be interpreted broadly, this is not to suggest that the scope of s. 121(1)(d) is without limits…The fact that First Nations receive government funding does not, in itself, render all commercial transactions with First Nations ‘matter[s] of business relating to the government’.”

(5) Conclusion

The crux of the majority opinion in Carson is that a matter of business relates to government for purposes of criminal liability if it depends on government action or could be facilitated by government. This broad interpretation is grounded in the policy that acceptance of a benefit in exchange for a promise to influence flouts the notion that government decision-making should not be the object of commerce.

It is an important development particularly in the context of the fiduciary relationship between the government of Canada and First Nations peoples. It was clear that Carson believed, when he made the deal, that the sale of H2O’s products to First Nations could be facilitated by the government given INAC’s mandate. “In reaching this conclusion,” Justice Karatatsanis wrote at para 44, “I am mindful of the autonomy of First Nations to determine whether or not to make such purchases, whether with their own funds or general funds provided by INAC. The conclusion that the government could have facilitated the purchase of H2O’s products by First Nations in no way diminishes this autonomy.”

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