Companies in the property development industry should review their communications and other dealings with the Ontario Government, in the wake of a new compliance initiative launched this month by the Registrar of Lobbyists. The Registrar is focusing on developers and their employees who might be in breach of their obligations under the Lobbyists Registration Act.
The Act makes individual employees, officers and directors of development companies responsible for registering as lobbyists, if they meet the threshold for registration (discussed below). An individual who breaches this requirement can be charged and, on conviction, fined up to $25,000.
According to a letter issued by the Registrar last week, she is targetting “a number of companies within the building and development sector in Ontario to raise awareness of the Act and promote compliance and transparency.” While the Registrar has not characterized her focus as an enforcement activity, prudent developers will ensure that their organizations are fully compliant with the Act. (In fact, all companies, regardless of industry, that have dealings with the Ontario Government should be sensitive to lobbyist-registration compliance.)
While no developer in Ontario has been convicted of unregistered lobbying, in Quebec a consultant was convicted and fined for communicating with government officials about a real estate development project without having registered as a lobbyist. Members of the Ontario development industry will want to avoid the same consequence.
What is Lobbying?
The employee of a business engages in lobbying when he or she, on behalf of the business, communicates with an Ontario public office holder in an attempt to influence:
- The development, introduction, passage defeat or amendment of legislation or any bill or resolution before the Legislative Assembly
- The making or amendment of any regulation
- The development, amendment or termination of any Ontario government policy or program
- A decision by the Cabinet about privatization of government services
- The awarding of any grant, contribution or other financial benefit by or on behalf of the Ontario government
A public office holder is any Ontario government employee, or elected or appointed official. The term includes: any MPP; any MPP’s staff member; anyone appointed to an office or body by the Cabinet or a Cabinet Minister; any officer, director or employee of a government agency, board or commission; a member of the OPP; and an officer, director or employee of Hydro One Inc. or a subsidiary, Ontario Power Generation Inc. or a subsidiary, Ontario Power Authority, or the Independent Electricity System Operator.
Companies that operate in multiple jurisdictions must recognize that the lobbying laws in other jurisdictions (including federal, other provinces, and some municipalities) differ from the rules in Ontario. Before communicating with government it is prudent to obtain legal advice about what constitutes “lobbying” and other requirements of the law in each jurisdiction.
When Must Employees (and Officers and Directors) Register?
An employee who lobbies for a business must register as an in-house lobbyist if the employee spends at least 20 per cent of his or her work time lobbying Ontario public office holders. The calculation is based on a three-month period. Only time actually spent lobbying is included in the calculation; preparation time is not.
Each such individual must register as a lobbyist within 60 days of assuming lobbying duties for the employer, and renew the registration annually. Any changes to the information on the registry must be reported within 30 days.
Under Ontario law, unlike under federal law, the reporting lobbying by the Board of Directors is reported as if the directors are employees of the company.
When Must Independent Contractors Register?
An independent contractor engaged by the company (i.e., someone who provides services but who is not an employee) is subject to more onerous lobbyist registration requirements than an employee of the business.
First, the independent contractor must register if he or she engages in any amount of lobbying of provincial officials. The 20-per-cent threshold does not apply.
Second, the independent contractor must register as a lobbyist within 10 days of starting to lobby.
Third, in the case of an independent contractor, the definition of lobbying is expanded to include two additional activities: attempting to arrange a meeting between anyone and a public office holder, and communicating in an attempt to influence the awarding of a government contract.
In Ontario, it is an offence to fail to register as a lobbyist or to submit false or misleading information in a registration. Additional offences are: failing to file a return in a timely manner; failing to provide proper information to the Registrar; and knowingly placing a public office holder in a real or potential conflict of interest.
Upon conviction, an individual can face a fine of up to $25,000.
Lobbying of Municipalities
The City of Toronto and the City of Ottawa have both adopted lobbying by-laws. Lobbying of local officials in each city requires registration. Other municipalities in Ontario (including Brampton, London and Markham) have discussed the creation of lobbyist registries, but none has yet taken the step.
The lobbying rules in Toronto and Ottawa are different from (and in many ways more restrictive than) the provincial law. For example, there is no 20-per-cent threshold: any amount of lobbying, even a brief communication, requires registration. A developer should seek legal advice before lobbying municipal officials in Toronto or Ottawa.
In light of the Registrar’s compliance initiative, developers (and all other companies that deal with the provincial government) should ensure that they and their employees are observing all applicable lobbying laws. Appropriate steps would include:
- A compliance audit, to confirm that the law is being followed and to identify areas of potential risk or vulnerability
- Protocols for employees to report, to a central place in the company, all of their communications with public officials
- Training of employees, to make them aware of the rules affecting communication with government
- Revising employment contracts to address the need for compliance with lobbying law
Even if you hire a consultant, lawyer or other third party to communicate with government on your behalf, you still should take steps to protect your interest. While each consultant is solely responsible for complying with lobbying law, a breach can harm the reputation and business interests of the client. Unfortunately, standard government-relations consulting contracts do not contain explicit assurances that lobbying laws will be honoured. A client should insist on such language, and on an adequate remedy in the event of a breach.