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New, Complex Rules for Public Sector Gifts, Hospitality, and Entertainment Coming July 1st

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Political Law Bulletin

Significant changes to the Lobbyists’ Code of Conduct (“Code”) will come into force on July 1, 2023. The amendments, which were published in the Canada Gazette on May 26, 2023, will create a labyrinth of new legal rules for public sector gifts, hospitality, and entertainment.

The amendments will also alter the cooling-off period for political work, the ban on communications with “close relationships”, and the prohibition on providing misleading information.

Gifts, Hospitality Rules Apply to Lobbyists

Lobbying will still be defined broadly under the Code as any communication with a public office holder in respect of the development, introduction or amendment of a bill, resolution, legislative proposal, regulation[1], policy, or program.[2]

Lobbying will also still include a communication about “the awarding of any grant, contribution or other financial benefit by or on behalf of” the federal government and, in some instances, a communication about the “awarding of any contract by or on behalf of” the federal government.[3]

The new rules will limit the circumstances in which a lobbyist can provide a public office holder with a gift or hospitality. These rules will apply to lobbyists who offer gifts and hospitality, as opposed to public office holders who accept gifts and hospitality. (The latter are subject to different restrictions, which are discussed below.)

Importantly, the new rules on gifts and hospitality will apply equally to employees and officers who lobby on behalf of an employer—and to consultants and contractors who lobby, for payment, on behalf of a client. The former are referred to as “in-house lobbyists”; the latter are referred to as “consultant lobbyists”.

Gifts, Hospitality Cannot Exceed Limit

The new rules on gifts and hospitality will be set out in Rules 3.1, 3.2, and 3.3 of the Code. Under the new rules, a gift will be defined as “[a]nything of value provided for free, without charge, at a reduced rate, or at less than market value, with no obligation to repay”.[4] Gifts will include event passes, tickets, door prizes, tokens of appreciation, gift certificates, vouchers, money, loans, property, services, travel, and transportation.[5] Hospitality will be defined as any “[f]ood or beverage provided for consumption during an in-person gathering” such as at an event, meeting, or reception.[6]

  • Rule 3.1 will prohibit a lobbyist from providing, directly or indirectly, a gift to any public office holder that is being lobbied—or that is “expect[ed]” to be lobbied.
  • Rule 3.2 will prohibit a lobbyist from providing, directly or indirectly, hospitality to any public office holder that is being lobbied—or that is “expect[ed]” to be lobbied.

There will be a new exemption for gifts that are “customary expressions of a lobbyist’s Indigenous cultural tradition or practice”.[7] There will also be exemptions for “low-value hospitality… during an in-person gathering” and for “a low-value gift that is a token of appreciation or promotional item”.[8] Low-value will mean $40 or less per person (excluding taxes, shipping costs, gratuities, and service charges).

  • The new rules will also clarify how the value of hospitality will be calculated. Moving forward, the value will be calculated “on a per-person basis by dividing the total cost of the food and/or beverage by the number of all individuals reasonably expected to attend the gathering.”[9]

Rules 3.1 and 3.2 must be read in conjunction with Rule 3.3. Rule 3.3 states that the total value of all exempt gifts and hospitality provided to a public office holder, in aggregate, must not exceed $200 in any calendar year.

Commissioner May Grant Exemptions, Impose Conditions

The Commissioner of Lobbying for Canada will have a new power, effective July 1, 2023, to exempt lobbyists from the aforementioned restrictions on gifts and hospitality.[10] The Commissioner will also have the ability to impose conditions on lobbyists who provide gifts and hospitality, including the imposition of “a cooling-off period during which the lobbyist may not lobby the official”.

Restrictions Extend to “Indirect” Gifts, Hospitality

The new rules clarify that the restrictions apply to both direct and indirect gifts and hospitality. The current rule, which will be replaced on July 1, 2023, prohibits a lobbyist from providing a gift to a “public office holder, whom they are lobbying or will lobby”. The current rule is silent on gifts provided indirectly by another person, such as a colleague, a client, or a consultant, on behalf of a lobbyist.

The new rule eliminates this ambiguity by clarifying that gifts provided indirectly, “at [a] lobbyist’s suggestion or request”, are covered by the new rules.[11] In other words, gifts provided by colleagues, clients and consultants must comply with Rules 3.1, 3.2, and 3.3.

This new rule will mean that corporations and organizations will need to value, track, and monitor all gifts and hospitality that are provided on their behalf, including those provided by external consultants and contractors. Given this increased legal and reputational risk, it is strongly recommended that corporations and organizations protect themselves by:

  • Reviewing the compliance programs, policies and procedures of prospective external consultants and contractors, prior to retaining them;
  • Embedding legal protections into contracts and agreements with external consultants and contractors; and
  • Creating a central depository where all public sector gifts and hospitality, including those provided by external consultants and contractors, are documented.

It is also recommended that corporations and organizations review their own compliance programs, policies and procedures to ensure they are complete and up to date. Failure to comply with the Act and/or Code may have serious legal and reputational consequences.

Other Legal Restrictions on Gifts, Hospitality are Relevant

It is important to keep in mind that the restrictions outlined above are not the only restrictions that apply to public sector gifts, hospitality, and entertainment. The Code must be read in conjunction with other legal instruments, including those that apply to the acceptance of gifts, hospitality, and entertainment by public office holders. For example:

  • The Conflict of Interest Act prohibits certain public office holders (including the Prime Minister, Ministers, Ministers of State, Parliamentary Secretaries, and members of their staff and families) from accepting gifts or advantages that “might reasonably be seen to have been given to influence the public office holder in the exercise of an official power, duty or function”.[12] There is a limited exemption under that legislation for gifts or advantages that are received “as a normal expression of courtesy or protocol” or “within the customary standards that normally accompany the public office holder’s position”.[13]
  • The Criminal Code prohibits public office holders from, among other things, directly or indirectly accepting or demanding “a loan, reward, advantage or benefit of any kind” as consideration for specific actions or omissions connected to the “transaction of business” with the government.[14] It also prohibits bribery (section 119), frauds on government (section 121) and secret commissions (section 426).

Given the labyrinth of legal rules that apply to public sector gifts, hospitality, and entertainment, it is strongly recommended that businesses and organizations consult legal counsel before offering public sector gifts, hospitality, or entertainment.

It is also strongly recommended that lobbyists consult legal counsel before communicating with the regulator. The regulator has a broad power to refer matters to the police if they suspect, on reasonable grounds, “that a person has committed an offence under [the Lobbying Act] or any other Act of Parliament or of the legislature of a province”. The regulator also has broad investigatory powers, including powers:

  • to “compel [persons] to give oral or written evidence on oath”;[15]
  • to “summon and enforce the attendance of persons before the Commissioner”;[16] and  
  • to “compel persons to produce any documents or other things”.[17]

If you’d like more information on the rules that apply to public sector gifts, hospitality, or entertainment, please contact a member of our political law team. You may also wish to consult our bulletin, "Changes to Lobbyists’ Code of Conduct Will Impact Those Who Communicate With Federal Government."

[1] Regulations include, but are not limited to, rules, orders, regulations, ordinances, directions, forms, tariffs of costs or fees, letters patent, commissions, warrants, proclamations, by-laws and resolutions per subsection 2(1) of the Statutory Instruments Act.

[2] Lobbying Act (“Act”) at paras. 5(1)(a) and 7(1)(a).

[3] Act, supra note 2, at sub-paras. 5(1)(a)(v) and 7(1)(a)(v).

[4] Lobbyists’ Code of Conduct, 2023 (“Code”) at “Definitions” section.

[5] Ibid.

[6] Ibid.

[7] Ibid.

[8] Code, supra note 4, at sections 3.1 and 3.2.

[9] Ibid. at “Definitions” section.

[10] Lobbyists contemplating an exemption request under Rules 3.1, 3.2 or 3.3 of the Code are strongly encouraged to consult legal counsel before submitting their request.

[11] Code at “Definitions” section.

[12] Conflict of Interest Act at subs. 11(1).

[13] Ibid. at para. 11(2)(c).

[14] Criminal Code at sec. 121.

[15] Act at sub-para. 10.4(2)(a)(i).

[16] Ibid.

[17] Ibid. at sub-para. 10.4(2)(a)(ii).                                                       

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