Victor Boudreau case shows 'huge loophole' in conflict law, ethics group says

​A national ethics watchdog group says New Brunswick's conflict-of-interest law needs changes because of how it's being applied, and not applied, to Health Minister Victor Boudreau.

Boudreau has recused himself from involvement in the Parlee Beach contamination issue because his departmental officials are on a committee that may recommend a moratorium on development in the area.

Secrecy in a case like this just raises questions and suspicions about other conflicts of interest.- Duff Conacher, Democracy Watch

That would affect a proposed campground in which Boudreau is an investor.

Duff Conacher, the founder of Ottawa-based Democracy Watch, says Boudreau should be required to reveal who the other investors are.

"Secrecy in a case like this just raises questions and suspicions about other conflicts of interest," he said.

• 'Gap in the law': PC critic suggests review of conflict law
• Boudreau recuses himself from Parlee Beach controversy

Boudreau refused in an interview with CBC News last week to identify the other investors in the campground project.

Have chosen silence

"In any business venture, you've got active partners and you've got silent partners," he said.  "The others have chosen to be silent partners and I don't see why that shouldn't be respected."

Boudreau also hasn't listed them in his public conflict disclosure statements.

Section 20(4)(b) of the Members Conflict of Interest Act says a cabinet minister with a financial interest in a "business activity" must disclose any fellow investors who own 10 per cent or more of the business.

Boudreau said there are four investors with 20 per cent, including him and businessman Michel Boudreau. One other investor has 10 per cent and two others have five per cent each.

In a written statement to CBC News, Conflict of Interest Commissioner Alexander Deschênes said the requirement to disclose fellow investors is aimed at ministers who don't put their investments in a blind trust. Boudreau put his stake in a blind trust in 2014.

"It is only under such circumstances that the obligation to disclose [the names of other investors] is triggered," Deschênes said. "This obligation does not exist in a case where a Minister has entrusted his business interests to a trustee in a blind trust agreement."

'Escape' clause criticized

Scott Mawdsley, who owns a cottage near Parlee Beach, says that's not acceptable.

"This act was intended to restore public confidence and enhance faith in government's integrity," Mawdsley said in an email. "Escape clauses or interpretations like this do the opposite."

This act was intended to restore public confidence and enhance faith in government's integrity. Escape clauses or interpretations like this do the opposite.- Scott Mawdsley, cottage owner

Public disclosure statements are prepared by the conflict-of-interest commissioner, who draws them up after meeting MLAs to discuss their more detailed private disclosures.

Premier Brian Gallant said in question period Tuesday that Boudreau has consulted three different conflict commissioners "every step of the way" since 2014, and they have "always cleared the actions of the minister of health."

Conacher says it's "technically true" Boudreau is not involved in the business, but "it's not actually true" because the law lets him sell part or all of his stake, even when it's in the blind trust.

'Huge loophole'

"It's really a legal fiction because he can be involved in decisions about his interest in the business, and therefore he should be disclosing who the others are," Conacher said.

He said the law should be changed to require politicians to sell all their business interests when they take office.

"It's the only way to effectively prevent conflicts of interest."

Conacher said another "huge loophole" also needs fixing.

Boudreau recused himself from Parlee discussions even though he and Deschênes say he's not in an actual conflict.

The provincial act says MLAs can't be involved in decisions that affect their private interest or anyone else's but says this does not include "an interest in a matter that is of general public application" or "that affects a person as one of a broad class of persons."

Because Parlee decisions would affect the public or a broad class of persons, Deschênes said in a letter to Boudreau, the law "seems to permit your participation" in Parlee Beach decisions.

'99%' of decisions not covered

Conacher says it makes the legislation almost meaningless.

"It essentially means it should really be called the 'Almost Impossible to be in a Conflict of Interest Law,' because it exempts almost every decision by a cabinet minister," he said.

The only actions that might be deemed a conflict would be a minister handing a contract to his or her own company, or that of a family member.

"Other than that, it doesn't apply, and that means 99 per cent of decisions by ministers, which are general, are not covered by the law," Conacher said.

Ex-premier had Atcon conflict

In 2013, former Liberal premier Shawn Graham was found in a conflict of interest because he took part in his government's decisions to give $63 million in loans and loan guarantees to the Atcon group of companies. His father Alan had been a director of an Atcon subsidiary and a company consultant.

Graham argued during the conflict commissioner's investigation that his father was part of a "broad class of persons" of 360 Atcon employees whose jobs would be saved by the loans so it wasn't a private interest.

But then-commissioner Patrick Ryan ruled Alan Graham wasn't part of that group. He was part of "an exclusive class" of company directors, Ryan said, and that created a conflict for Shawn Graham.

Conacher says the "general application" provision is in most other provincial conflict laws that apply to elected politicians and it makes those laws too weak.

Amendments introduced

The Liberal government in New Brunswick introduced amendments to the Members' Conflict of Interest Act last month but they don't include any changes to the "general application" provision.

Boudreau said last week because his investment is in a blind trust, he doesn't know if it's still 20 per cent of the project. The blind trust prevents him from knowing if other investors have bought part of his interest or sold him part of theirs.

He pointed out he has been transparent about his involvement in the project from the time it started, which was when he was an Opposition MLA.

"I could have opted to be a silent partner in this project," he said. "I didn't feel that was the right thing to do. Shediac is too small a town, right? Eventually if that had gotten out, 'Aha,' that 'aha' moment would have been there and I wanted to avoid that."