Explanatory Note

The Conflict of Interest Act establishes clear conflict of interest and post-employment rules for public office holders. It expands the scope and mandate of the existing Conflict of Interest Commissioner to include non-parliamentarian appointees, such as Ministerial staff and advisors, subjects these appointees to conflict of interest legislation, and strengthens conflict of interest rules. It also establishes new rules for blind trusts.

BILL M 216 – 2007
MEMBERS' CONFLICT OF INTEREST AMENDMENT ACT, 2007

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:

1 The Members' Conflict of Interest Act, R.S.B.C. 1996, c. 287 is amended by repealing the name of the Act and replacing it with:

CONFLICT OF INTEREST ACT .

2 Section 1 of the Members' Conflict of Interest Act, R.S.B.C. 1996, c. 287, is amended by adding the following definitions:

"appointee" means

(a) a person appointed by Order In Council, Minister's Order, shareholder's resolution or other instrument of the Province of British Columbia to a public sector organization,

(b) a person appointed by Order In Council, Minister's Order, shareholder's resolution or other instrument of the Province of British Columbia to any other body as a representative of the Province of British Columbia, or

(c) any other ministerial staff or advisors as defined in this Act.

"assets" includes any trusts in respect of which a member of Executive Council or a parliamentary secretary or a member of his or her family is a beneficiary.

"controlled assets" means assets whose value could be directly or indirectly affected by government decisions or policy including, but not limited to, the following:

(a) publicly traded securities of corporations and foreign governments, whether held individually or in an investment portfolio account such as, but not limited to, stocks, bonds, stock market indices, trust units, closed-end mutual funds, commercial papers and medium-term notes;

(b) self-administered registered retirement savings plans, self-administered registered education savings plans and registered retirement income funds composed of at least one asset that would be considered controlled if held outside the plan or fund;

(c) commodities, futures and foreign currencies held or traded for speculative purposes; and

(d) stock options, warrants, rights and similar instruments.

"exempt assets" means assets and interests in assets for the private use of members of Executive Council or parliamentary secretaries and the members of their family and assets that are not of a commercial character, including the following:

(a) primary and secondary residences, recreational property and farm land and buildings used or intended for use by members of Executive Council or parliamentary secretaries or the members of their family;

(b) household goods and personal effects;

(c) works of art, antiques and collectibles;

(d) automobiles and other personal means of transportation;

(e) cash and deposits;

(f) Canada Savings Bonds and other similar investments issued or guaranteed by any level of government in Canada or agencies of those governments;

(g) registered retirement savings plans, registered education savings plans, and registered retirement income funds that are composed exclusively of assets that would be considered exempt if held outside the plan or fund;

(h) guaranteed investment certificates and similar financial instruments;

(i) public sector debt financing not guaranteed by a level of government, such as university and hospital debt financing;

(j) annuities and life insurance policies;

(k) pension rights;

(l) money owed by a previous employer, client or partner;

(m) personal loans receivable from the member of Executive Council's or parliamentary secretary's relatives, and personal loans of less than $10,000 receivable from other persons if the member of Executive Council or parliamentary secretary has loaned the moneys receivable;

(n) money owed under a mortgage or hypothec of less than $10,000; and

(o) investments in limited partnerships that are not traded publicly and whose assets are exempt assets.

"ministerial advisor" means a person, other than a public servant, who occupies a position in the office of a minister and who provides policy, program or financial advice to that person on issues relating to his or her powers, duties and functions as a minister, whether or not the advice is provided on a full time or part time basis and whether or not the person is entitled to any renumeration or other compensation for the advice.

"ministerial staff" means those persons, other than public servants, who work o behalf of a minister.

"public sector organization" includes

(a) a separate legal entity established pursuant to British Columbia legislation that is classified as being within the Government reporting entity pursuant to the Budget Transparency and Accountability Act; and

(b) a corporation established under the BC Business Corporations Act, the Society Act, or other enabling statute in which the Province of British Columbia has a controlling interest

3 Section 8 of the Act is amended by

a) repealing the section sub-title and replacing it with

Former members of Executive Council, former parliamentary secretaries and former deputy ministers

and

b) in sub-sections (1), (4) and (7) by adding the following after every occurrence of the words "parliamentary secretary"

or deputy minister.

4 The following section is added:

Assets of cabinet ministers and parliamentary secretaries

9.1 (1) Subject to subsection (9), a member of Executive Council or a parliamentary secretary shall, within the earlier of 120 days after the day on which he or she is appointed as a member of Executive Council or a parliamentary secretary or 120 days after the coming into force of this section, divest each of his or her controlled assets by doing one of the following:

(a) selling it in an arm's-length transaction; or

(b) placing it in a blind trust that meets the requirements of subsection (4).

(2) Subject to subsection (9), a member of Executive Council or a parliamentary secretary shall, within the earlier of 120 days after the day on which he or she receives controlled assets by way of gift or testamentary disposition or in any other way over which the member of Executive Council or a parliamentary secretary has no control or 120 days after the coming into force of this section, divest the controlled assets in the manner required by subsection (1).

(3) For greater certainty, a member of Executive Council or a parliamentary secretary may not divest his or her controlled assets by any measure other than one referred to in subsection (1), including by placing them in a blind management agreement.

(4) The terms of a blind trust must provide that

(a) the assets to be placed in trust shall be registered to the trustee unless they are in a registered retirement savings plan account;

(b) the member of Executive Council or a parliamentary secretary shall not have any power of management or control over the trust assets;

(c) the trustee shall not seek or accept any instruction or advice from the member of Executive Council or a parliamentary secretary concerning the management or the administration of the assets;

(d) the assets placed in the trust shall be listed on a schedule attached to the instrument or contract establishing the trust;

(e) the term of any trust shall be for as long as the member of Executive Council or parliamentary secretary who establishes the trust continues to hold his or her office, or until the trust assets have been depleted;

(f) the trustee shall deliver the trust assets to the member of Executive Council or parliamentary secretary when the trust is terminated;

(g) the trustee shall not provide information about the trust, including its composition, to the member of Executive Council or parliamentary secretary, except for information that is required by law to be filed by the member of Executive Council or parliamentary secretary and periodic reports on the overall value of the trust;

(h) the member of Executive Council or parliamentary secretary may receive any income earned by the trust, and add to or withdraw from the capital funds in the trust;

(i) the trustee shall be at arm's length from the member of Executive Council or parliamentary secretary and the Commissioner is to be satisfied that an arm's length relationship exists;

(j) the trustee must be

(i) a public trustee,

(ii) a public company, including a trust company or investment company, that is known to be qualified to perform the duties of a trustee, or

(iii) an individual who may perform trustee duties in the normal course of his or her work; and

(k) the trustee shall provide the Commissioner, on every anniversary of the trust, a written annual report verifying as to accuracy the nature and market value of the trust, a reconciliation of the trust property, the net income of the trust for the preceding year, and the fees of the trustee, if any.

(5) Despite subsection (4), general investment instructions may be included in a blind trust instrument or contract but only with the prior approval of the Commissioner. The instructions may provide for proportions to be invested in various categories of risk, but may not be industry-specific, except if there are legislative restrictions on the type of assets that a member of Executive Council or parliamentary secretary may own.

(6) For greater certainty, no oral investment instructions may be given with respect to a blind trust contract or instrument.

(7) A member of Executive Council or parliamentary secretary shall provide to the Commissioner a confirmation of sale or a copy of any contract or instrument establishing the trust in respect of any controlled asset divested under subsection (1).

(8) Unless otherwise required by law, the Commissioner shall keep confidential all information provided by a member of Executive Council or parliamentary secretary relating to a divestment under subsection (1), except the fact that a sale has taken place or that a trust exists.

(9) Subject to the approval of the Commissioner, a member of Executive Council or parliamentary secretary is not required to divest controlled assets that are given as security to a lending institution.

5 The following section is added:

Conflict and appointees of the Province

9.2 (1) In this section, the meaning of "conflict of interest" and "apparent conflict of interest" includes, in respect of the conduct of an appointee, the same meaning as those words have in section 2 of this Act in respect of the conduct of a member.

(2) In this section, the meaning of "conflict of interest" also includes when an appointee exercises an official power or performs an official duty or function in respect of his or her appointment to a public sector organization or other body to which he or she is appointed by the Province as a representative of the Province 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 the interest of another person, body or organization that is not the public sector organization or body to which the appointee is appointed by the Province and with which the appointee has a relationship by way of ownership, financial interest, employment, contract, appointment or office.

(3) In this section the meaning of "apparent conflict of interest" also includes where there is a reasonable perception, which a reasonably well informed person could properly have, that the appointee's ability to exercise an official power or function or perform an official duty or function must have been influenced by the interests of another person, body or organization that is not the public sector organization or body to which the appointee is appointed by the Province and with which the appointee has a relationship by way of ownership, financial interest, employment, contract, appointment or office.

(4) Subsections (2) and (3) do not apply where the instrument of the Province appointing the appointee to the public sector organization or other body to which the appointee is appointed by the Province expressly requires or permits the appointee to further the interests of, or be influenced by the interests of, another person, body or organization that is not the public sector organization or body to which the appointee is appointed by the Province and with which the appointee has a relationship by way of ownership, financial interest, employment, contract, appointment or office.

(5) Despite subsection (4), an appointee appointed to a public sector organization or appointed to another body by the Province as a representative of a stakeholder group or region owes the same duties and loyalty to the public sector organization or other body to which the appointee is appointed by the Province and, when an appointee's duties or functions conflict with the wishes of the stakeholder group or region, the appointees primary duty remains to act in the best interests of the public sector organization or other body to which the appointee is appointed by the Province.

(6) In addition to the requirements of this section, an appointee is subject to the same requirements of sections 2, 3, 4, 5 and 7 of this Act in respect of their appointment to a public sector organization or other body to which he or she is appointed by the Province as a member is in respect of his or her office as a member of the Legislative Assembly.

(7) At the time of his or her appointment, an appointee shall declare in writing to the chair, chief executive officer or other head of the public sector organization or body to which the appointee is appointed by the Province all possible conflicting outside business activities.

(8) An appointee shall fully disclose to the chair, chief executive officer or other head of the public sector organization or other body to which the appointee has been appointed by the Province all circumstances that could conceivably be construed as conflict of interest or apparent conflict of interest.

(9) An appointee shall, immediately upon becoming aware of a potential conflict of interest or apparent conflict of interest, disclose the conflict or apparent conflict in writing to the chair, chief executive officer or other head of the organization or body.

(10) Unless the appointee is otherwise directed by the chair, chief executive officer or other head of the organization or body, the appointee shall immediately take steps to resolve the conflict or apparent conflict.

(11) An appointee who has a relationship by way of ownership, financial interest, employment, contract, appointment or office with a person, organization or body that is not the public sector organization or the body to which the appointee is appointed by the Province, shall not participate in or in any way influence purchasing, selling, granting or other decisions of the public sector organization or body to which the appointee is appointed by the Province which may directly or indirectly benefit the other person, body, or organization with which the appointee has a relationship.

6 Section 16 is amended in subsection 2.1 by adding the following text

(2.1) The disclosure statement of a member of the Executive Council who has complied with section 9 (1) (b) by entrusting his or her business to one or more trustees or the disclosure statement of a member of Executive Council or parliamentary secretary who has complied with section 9.1 need not contain a statement of the nature of the assets, liabilities and financial interests contained in the trust or blind trust,

Commencement

7 This Act comes into force upon Royal Assent.

 
Explanatory Note

The Conflict of Interest Act establishes clear conflict of interest and post-employment rules for public office holders. It expands the scope and mandate of the existing Conflict of Interest Commissioner to include non-parliamentarian appointees, such as Ministerial staff and advisors, subjects these appointees to conflict of interest legislation, and strengthens conflict of interest rules. It also establishes new rules for blind trusts.