December 1, 2007 Bio Business Mag The controversy this year over the visit to Parliament Hill by product promoter Don Cherry and the president of the company that sells COLD-fX, demonstrates continued confusion over when registration as a lobbyist by company employees is necessary under Canada’s Lobbyist Registration Act (LRA).
Dr. Jacqueline Shan, president of CV Technologies, Inc. and Mr. Cherry met with about 20 federal Conservative Party Members of Parliament (MP), including some Cabinet Ministers, in the exclusive parliamentary dining room and also visited with Prime Minister Stephen Harper. They were invited to Ottawa by James Rajotte, chairman of the House of Commons Industry Committee and the Conservative MP for Dr. Schan’s Edmonton-Leduc riding.
The reaction to the “COLD-fX case” reveals a general misunderstanding of the federal lobbying law.
During the lunch meeting, Dr. Shan gave a presentation about her company and expressed frustration with the process of obtaining regulatory approval from Health Canada, in order to make natural health product claims, which are at the centre of their marketing campaign for COLD-fX.
After their meeting, the company received regulatory approval to market COLD-fX as helping “to reduce the frequency, sever- ity and duration of cold and flu symptoms by boosting the immune system.” Company shares then reportedly jumped almost 60 percent. In the wake of this development, New Democratic MP Pat Martin called for a full investigation by the federal government’s Office of the Registrar of Lobbyists. Mr. Martin claimed that the “COLD-fX case” breached “the spirit and the letter of the lobbyists registration.”
Following an investigation by the Registrar of Lobbyists, it was found that although executives
from CV Technologies, Inc. did meet with MPs and Cabinet Ministers before a private meet- ing with Prime Minister Harper to discuss changes they wanted to the regulatory status of their
product from Health Canada, a potentially registerable activity, they were not obligated to register as lobbyists because lobbying did not constitute a “significant part” of their overall duties.
The reaction to the activity in the “COLD-fX case” reveals a general misunderstanding of the federal lobbying law. A confus- ing and often little understood provision of the federal lobbyist legislation, requires that in order for a company executive(s) to have to register as a corporate in-house lobbyist, communication with politicians, among other things, must “constitute a significant part of the duties” of the executive or executives of a company.
On this point it should be noted that the new Federal Accountability Act, which is not yet fully in force, does not make any changes to the sections of the LRA that deal with registerable activities for either consultant lobbyists (those who lobby on behalf of a corporation) or corporate in-house lobby- ists. The duty to register as a corporate in-house lobbyist only arises when each of two tests are satisfied: lobbying and “significant part of the duties”.
Lobbying involves verbal or written communication with a public office holder, in the “COLD-fX case” an MP, on behalf of the employer in respect of the making or amendment of any regulation, the development of any legislative proposal, the introduction of any Bill or resolution or the passage, defeat or amend- ment of any Bill or resolution, the development or amendment of any policy or program, or the awarding of any grant, contribution or other financial benefit with respect to the Government of Canada. Whether the communication is initiated by a lobbyist or an MP is irrelevant. However, a corporate lobbyist registration is only necessary where lobbying constitutes a “significant part of the duties” of an employee or employees.
The threshold above which lobbying represents a significant portion of an employee’s duties has been established by the Office of the Registrar of Lobbyists at 20 percent of overall duties. With respect to corporations, the senior officer must register on behalf of the corporation and list the names of each senior officer (i.e. Chief Executive Officer, Chief Operating Officer, President, and any other officer who reports directly to one of the above) who lobbies as part of his or her duties, as well as the names of other employees whose duties require them to dedicate a significant
part of their time to lobbying. Although these employees may com- municate infrequently with public office holders, all duties related to such communication activities must be col- lectively taken into account in deter- mining whether the 20 percent thresh- old has been reached or surpassed.
In other words, registration is nec- essary under the LRA if there is any one person in a corporation who spends 20 percent or more of their time in any one month performing register- able lobbying activity at the federal level of government, or if all employees of a corporation, cumulatively, spend 20 percent or more of the employment time of one employee in a month, per- forming registerable lobbying activity.
Ultimately, in the “COLD-fX case”, the Registrar of Lobbyists dis- missed the complaint launched by NDP MP Pat Martin. The Registrar concluded that the meetings with MPs “did not constitute a sufficient amount of time to be considered a significant part of their duties.”
Merely engaging in lobbying will not necessarily trigger the obligations under the LRA. As the Registrar made clear in COLD-fX, only where both tests are met: that lobbying is taking place and that lobbying occupies at least 20% of an employee’s time (either of one individual or of an aggregate of individuals) is there a legal require- ment to register as a corporate in- house lobbyist.