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ARCHIVED - Conflict of Interest and Post-Employment - Archived version of 1991
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Policy objective
To enhance public confidence in the integrity of the Public Service and its employees.
Policy statement
It is government policy to minimize the possibility of conflicts between the private interests and the Public Service duties of employees and to resolve any such conflicts in the public interest.
Application
This policy applies to all departments and other portions of the Public Service listed in Part I of Schedule I of the Public Service Staff Relations Act.
Policy requirements
Employees must take measures to prevent real, potential, or apparent conflicts in accordance with the principles of conduct and measures in the Conflict of Interest and Post-Employment Code for the Public Service (Appendix - A).
The deputy head as designated official must:
- ensure that employees are informed of the requirements of
the Code and that they comply with all its requirements;
- determine whether real or potential conflicts of interest
exist and what action, if any, specific employees have to
take;
- seek Treasury Board approval for any compliance measures
that may be required, beyond those the Code specifies, to reflect
the department's particular responsibilities or the statutes
governing its operations;
- establish procedures for employees to report official
dealings with former public office holders who are or may be
governed by the Code's post-employment measures;
- conduct exit interviews with employees subject to the
post-employment compliance measures before they leave the Public
Service or review with employees their responsibility in this
regard;
- ensure that bargaining agents are consulted at the
departmental level about the administration of the Code including
the implementation of any supplemental compliance measures and
the extension of the post-employment requirements to positions
other than those in the Management Category;
- request Treasury Board approval on the minister's
recommendation to:
. designate any positions below the level of senior manager
(SM) as subject to post-employment compliance measures; and
. exclude positions from the application of sections 41 and 42
of the post-employment compliance measures.
Responsibilities
The Treasury Board as the designated authority will:
- review and rule on:
. requests to supplement the compliance measures in the
Code;
. recommendations to designate positions at a level below SM
as subject to the post-employment compliance measures or to
exclude positions from such measures; and
. applications from employees or former employees to reduce
the post-employment limitation period specified in the Code;
and
- convene panels, as necessary, to advise on the application
of the post-employment compliance measures in particular
cases.
The Assistant Deputy Registrar General will:
- provide advice on the most appropriate arrangements required
for divestment of assets;
- serve as trustee of a frozen or retention trust, if
requested; and
- assess whether proposals for departmental reimbursement of
costs incurred by employees in establishing trusts are
appropriate.
The Public Service Commission is responsible for:
- establishing procedures to ensure that before or upon any appointment, appointees sign a document certifying that they have read and understood the Code and that, as a condition of employment, they will observe it; and
- applying policies and establishing procedures and mechanisms to ensure compliance with the Code regarding Business/Government Executive Exchange and Interchange Canada assignments.
Monitoring
Treasury Board Secretariat will monitor and evaluate departmental performance by:
- periodically reviewing departmental application of the
Code;
- reviewing audit and evaluation reports on the application of
the Code; and
- reviewing information on the following performance
indicators:
. the completion rate of the Employee Certification Document
and Confidential Report as required;
. the results of direction to specific employees to divest
themselves of interests or cease activities, etc.; and
. the rate of exit interviews and reviews of post-employment
requirements to the number of employees subject to Part III of
the Code who leave the Public Service.
Departments must advise the Treasury Board Secretariat should the completion rate for required reports and/or exit interviews for a given year fall below 95% in any occupational category.
References
Public Service Staff Relations Act;
Treasury Board Manual, Contracting volume;
Treasury Board Manual, Staff relations volume, chapter 6 entitled Discipline.
This chapter replaces chapter 3 of PMM volume 1.
Enquiries
Enquiries about this policy should be referred to the responsible officers in departmental headquarters who, in turn, may direct questions regarding policy interpretation to the following:
Policies and Procedures Group
General Personnel Policy Development and Compensation Division
Personnel Policy Branch
Treasury Board Secretariat
Enquiries about the requirements governing personal service and other government contracts should be directed to:
Procurement Policy Group
Procurement Management
Administrative Policy Branch
Treasury Board Secretariat
Enquiries about the requirements covering Business/Government Executive Exchange assignments should be directed to:
Business/Government Executive Exchange Program
Public Service Commission
Enquiries about the requirements covering Interchange Canada assignments should be directed to:
Public Service Commission
Enquiries about the establishment, verification, and costs of trusts should be directed to:
Consumer and Corporate Affairs Canada
Appendix A - Conflict of Interest and Post-employment Code for the Public Service
Introduction
1. This Code for the Public Service is designed to bring to the attention of all public servants for whom Treasury Board represents the government as the employer the provisions of the Conflict of Interest and Post-Employment Code for Public Office Holders, which was tabled by the Prime Minister in the House of Commons on September 9, 1985.
2. For the purposes of the Code for the Public Service, employee means:
(a) an employee of a department for whom the Treasury Board represents the government as employer; and
(b) a head of mission as defined in the Department of External Affairs Act.
3. For employees listed in (a) and (b) above,
designated authority means the Treasury Board; and,
designated official means the deputy head of the employee's department.
Part I - Principles and Administration
Objects
4. The objects of the Code are to enhance public confidence in the integrity of employees and the Public Service:
(a) while encouraging experienced and competent persons to seek and accept public office;
(b) while facilitating interchange between the private and the public sector;
(c) by establishing clear rules of conduct respecting conflict of interest for, and post-employment practices applicable to, all employees; and
(d) by minimizing the possibility of conflicts arising between the private interests and public service duties of employees and providing for the resolution of such conflicts in the public interest should they arise.
Application
5. In keeping with the principles described below, each employee is responsible for taking such action as is necessary to prevent real, potential or apparent conflicts of interest. The employee is also required to observe any specific conduct requirements contained in the statutes governing his or her particular department and the relevant provisions of legislation of more general application such as the Criminal Code, the Canadian Human Rights Act, the Privacy Act, the Financial Administration Act and the Public Service Employment Act.
Principles
6. Every employee shall conform to the following principles:
(a) employees shall perform their official duties and arrange their private affairs in such a manner that public confidence and trust in the integrity, objectivity and impartiality of government are conserved and enhanced;
(b) employees have an obligation to act in a manner that will bear the closest public scrutiny, an obligation that is not fully discharged by simply acting within the law;
(c) employees shall not have private interests, other than those permitted pursuant to this Code, that would be affected particularly or significantly by government actions in which they participate;
(d) on appointment to office, and thereafter, employees shall arrange their private affairs in a manner that will prevent real, potential or apparent conflicts of interest from arising, but if such a conflict does arise between the private interests of an employee and the official duties and responsibilities of that employee, the conflict shall be resolved in favour of the public interest;
(e) employees shall not solicit or accept transfers of economic benefit, other than incidental gifts, customary hospitality, or other benefits of nominal value, unless the transfer is pursuant to an enforceable contract or property right of the employee;
(f) employees shall not step out of their official roles to assist private entities or persons in their dealings with the government where this would result in preferential treatment to any person;
(g) employees shall not knowingly take advantage of, or benefit from, information that is obtained in the course of their official duties and responsibilities and that is not generally available to the public;
(h) employees shall not directly or indirectly use, or allow the use of, government property of any kind, including property leased to the government, for anything other than officially approved activities; and
(i) employees shall not act, after they leave public office, in such a manner as to take improper advantage of their previous office.
Certification document
7. Before or upon appointment, employees must sign a document certifying that they have read and understood this Code and that, as a condition of employment, they will observe this Code. Employees appointed prior to the coming into force of this Code shall sign the document not later than January 1, 1986.
Annual review
8. All employees are required to review their obligations under the Code at least once a year.
Contracts
9. Every employee:
- negotiating a personal service contract must include in the contract appropriate provisions with respect to the Code in accordance with such directives as the Treasury Board may issue;
- negotiating a government contract must ensure that the contract includes safeguards, in accordance with such directives as the Treasury Board may issue, to prevent a former employee or other former public office holder who is not complying with the requisite post-employment measures, as set out in Part III of this Code, from receiving benefit from the contract.
Education and resource centre
10. The Assistant Deputy Registrar General (ADRG), Consumer and Corporate Affairs, in consultation with the Secretary of the Treasury Board, will prepare informational and educational material about this Code for public office holders, including employees and the general public, and make appropriate arrangements for the preparation and implementation of training of public office holders on conflict of interest and post-employment behaviour.
The ADRG will also establish a resource centre of print, film, videotape and other material related to conflict of interest, post-employment behaviour and other ethical matters of concern to public office holders and to government.
Supplementary compliance measures
11. The deputy head of a department may augment the compliance measures set out in Parts II and III with supplementary procedures and guidance:
- respecting conflict of interest and post-employment situations peculiar to the unique and special responsibilities of the department; and
- reflecting any special requirements relating to employee conduct or interests contained in statutes governing the operations of the department.
These measures require Treasury Board approval before coming into force.
Dealing with former public office holders
12. Employees who have official dealings, other than those that consist of routine provision of service to an individual, with former employees or other former public office holders who are or may be governed by the post-employment measures set out in Part III must report this fact to the designated official in accordance with departmental procedure. The designated official shall determine immediately whether the former public office holder is complying with the prescribed measures.
13. Employees shall not have official dealings with former employees or other former public office holders deemed, pursuant to Section 12, to be acting in violation of the compliance measures in the specific transaction involved.
Part II - Conflict of interest compliance measures
Objects
14. The compliance measures set out the procedural and administrative requirements to be observed by public servants in order to minimize the risk of conflict of interest and to permit the resolution of such conflicts of interest in favour of the public interest, should any arise.
Confidentiality
15. Information concerning the private interests of employees provided to the designated official is treated in complete confidence. The designated official is required to ensure that this information is placed in special personal files (i.e. distinct from regular personnel files) and in secure safekeeping. Departments shall establish a central repository for such information and place it under the responsibility of the Senior Personnel Officer, who shall ensure that the privacy of the individual is fully respected.
Methods of compliance
16. An employee complies with the Code in the following ways:
(a) avoidance: by avoiding or withdrawing from activities or situations that would place the employee in a real, potential or apparent conflict of interest relative to his or her official duties and responsibilities;
(b) confidential report: by providing a written statement to the designated official indicating ownership of an asset, receipt of a gift, hospitality, or other benefit, or participation in any outside employment or activity; and
(c) divestment: where continued ownership by an employee would constitute a real or potential conflict of interest with the employee's official duties and responsibilities, the employee may elect to sell the asset "at arm's length" or place that asset in trust.
17. Employees must not sell or transfer assets to family members or others for purposes of circumventing the compliance measures.
18. A confidential report will usually be considered as compliance with the conflict of interest measures. However, there will be instances where "withdrawal from the activity" or "divestment" will be necessary. The designated official will make this decision and communicate it to the employee. Where there is doubt as to which method is appropriate in order that an employee may comply with the code, the designated official will determine the appropriate method and, in doing so, will try to achieve mutual agreement with the employee taking into account:
(a) the employee's specific responsibilities;
(b) the value and type of the assets and interests involved; and
(c) the actual costs to be incurred by divesting the assets and interests, as opposed to the potential that the assets and interests represent for a conflict of interest.
19. Employees are required to make a confidential report to the designated official of all assets prescribed by the code other than those assets and interests which are for their private use or that of their families and assets that are not of a commercial character. Examples of such "exempt assets" are described in the following section.
Exempt assets
20. Assets and interests intended for the private use of employees and assets that are not of a commercial character are not subject to the compliance measures. Such assets include:
(a) residences, recreational property and farms used or intended for use by employees or their families;
(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 in securities of fixed value issued or guaranteed by any level of government in Canada or agencies of those governments;
(g) registered retirement savings plans that are not self-administered;
(h) registered home ownership savings plans;
(i) investments in open-ended mutual funds;
(j) guaranteed investment certificates and similar financial instruments;
(k) annuities and life insurance policies;
(l) pension rights;
(m) money owed by a previous employer, client or partnership; and
(n) personal loans receivable from members of the employee's immediate family and small personal loans receivable from other persons where the employee has loaned the moneys receivable.
Confidential report
21. Employees must, within 60 days after appointment, make a confidential report to the designated official of all assets other than exempt assets as described in Section 20 and of all direct and contingent liabilities, where such assets and liabilities might give rise to a conflict of interest in respect of the employee's official duties and responsibilities.
Assets and liabilities subject to a confidential report
22. Assets and liabilities which may be subject to a confidential report include:
(a) publicly traded securities of corporations and foreign governments and self-administered registered retirement savings plans composed of such securities;
(b) interests in partnerships, proprietorships, joint ventures, private companies and family businesses, in particular those that own or control shares of public companies or that do business with the government;
(c) farms under commercial operation;
(d) real property that is not an exempt asset;
(e) commodities, futures and foreign currencies held or traded for speculative purposes;
(f) assets that are beneficially owned, that are not exempt assets and that are administered at arm's length;
(g) secured or unsecured loans granted to persons other than to members of the employee's immediate family;
(h) any other assets or liabilities that could give rise to a real or potential conflict of interest due to the particular nature of the employee's duties and responsibilities; and
(i) direct and contingent liabilities in respect of any of the assets described in this section.
Divestment of assets
23. Employees must divest assets where it is determined by the designated official that such assets constitute a real or potential conflict of interest in relation to the duties and responsibilities of the employee. Divestment, where required, must take place within 120 days after appointment. Divestment of assets is usually achieved by selling them in an arm's length transaction or by making them subject to a trust arrangement. The schedule attached to this code contains information on the more common trust arrangements.
24. The trust arrangements established must not leave in the hands of the employee any power of management or decision over the assets placed in trust. The Assistant Deputy Registrar General (ADRG) has the responsibility for determining that a trust meets the requirements of the code. Before a trust is executed or when a change from one trust option to another is contemplated, a determination that the trust meets the requirements must be obtained from the ADRG. The ADRG may serve as trustee of a frozen or retention trust, but not of a blind trust.
25. On the recommendation of the ADRG, the department may reimburse the employee for trust costs incurred in an amount set out in the schedule.
Outside activities
26. (Revised) Involvement in outside employment and other activities by employees is not prohibited unless the employment or other activity is such that it is likely to result in a conflict of interest. It is the responsibility of the employee to make a confidential report to the designated official of involvement in an outside activity that could place on the employee demands inconsistent with his or her official duties and responsibilities, or call into question the employee's capacity to perform his or her official duties and responsibilities objectively. The designated official may require that such activity be curtailed, modified, or ceased, when it has been determined that a real or potential conflict of interest exists.
Gifts, hospitality and other benefits
27. Gifts, hospitality or other benefits that could influence employees in their judgement and performance of official duties and responsibilities must be declined. Employees must not accept, directly or indirectly, any gifts, hospitality or other benefits that are offered by persons, groups or organizations having dealings with the government.
28. Notwithstanding, acceptance of offers of incidental gifts, hospitality or other benefits arising out of activities associated with the performance of their official duties and responsibilities is not prohibited if such gifts, hospitality or other benefits:
(a) are within the bounds of propriety, a normal expression of courtesy or within the normal standards of hospitality;
(b) are not such as to bring suspicion on the employee's objectivity and impartiality; and
(c) would not compromise the integrity of the government.
29. Where it is impossible to decline unauthorized gifts, hospitality or other benefits, employees must immediately report the matter to the designated official. The designated official may require that a gift of this nature be retained by the department or be disposed of for charitable purposes.
Avoidance of preferential treatment
30. Employees must not accord preferential treatment in relation to any official matter to family members or friends, or to organizations in which the employee, family members or friends have an interest. Care must be taken to avoid being placed, or appearing to be placed, under obligation to any person or organization that might profit from special consideration by the employee.
31. Employees must not, without the prior permission of their supervisor, offer assistance in dealing with the government to any individual or entity where such assistance is outside the official role of the employee.
Failure to agree
32. Where an employee and the designated official disagree with respect to the appropriate arrangements necessary to achieve compliance with the code, the disagreement shall be resolved through the established grievance procedures.
Failure to comply
33. An employee who does not comply with the measures described in Parts I and II is subject to appropriate disciplinary action up to and including discharge.
Subsequent changes
34. Employees must forthwith inform the designated official of any changes in their assets, liabilities and outside activities that would be subject to a confidential report.
Transitional provision
35. Where an employee was, immediately prior to the coming into force of the Code, subject to any conflict of interest or post-employment guidelines of the government, the employee shall continue to be subject to those guidelines, in lieu of the Code, until a review of his or her compliance measures is completed by the designated official. The designated official must complete the review within one year after the date the employee signs the Certification document.
Part III - Post-employment compliance measures
Objects
36. Post-employment compliance measures are designed to minimize, without unduly restricting former employees in seeking employment, the possibilities of (a) allowing prospects of outside employment to create a real, potential or apparent conflict of interest for employees while in public office; (b) obtaining preferential treatment or privileged access to government after leaving public office; (c) taking personal advantage of information obtained in the course of official duties and responsibilities until it has become generally available to the public; and (d) using public office to unfair advantage in obtaining opportunities for outside employment.
Application
37. The post-employment compliance measures apply to all positions at or above the level of senior manager (SM). Treasury Board may, on the recommendation of the Minister responsible for a department, designate positions at a level below senior manager as being subject to these measures, where the position involves duties and responsibilities that raise post-employment concerns.
38. In special circumstances, Treasury Board may, on the recommendation of the Minister responsible for a department, exclude positions from the application of sections 41 and 42 of the post-employment provisions. Such circumstances would include those where certain knowledge and skills in the public interest should be transferred rapidly from the government to private and other governmental sectors.
Before leaving office
39. Employees should not allow themselves to be influenced in the pursuit of their official duties and responsibilities by plans for, or offers of, outside employment. Employees must: disclose, in writing to the designated official, all firm offers of employment that could place the employee in a conflict of interest situation; and disclose immediately the acceptance of any offer.
40. Where the designated official determines that the employee is engaged in significant official dealings with the future employer, the employee shall be assigned to other duties and responsibilities as soon as possible. The period of time spent in public office following such an assignment shall be counted toward the limitation period on employment as described below.
After leaving office
Prohibited activities
41. At no time shall a former employee act for or on behalf of any person, commercial entity, association, or union in connection with any specific ongoing proceeding, transaction, negotiation or case to which the government is a party:
(a) in respect of which the former employee acted for or advised a department; and
(b) which would result in the conferring of a benefit not for general application or of a purely commercial or private nature.
Limitation period
42. Former employees shall not, within a period of one year after leaving office:
(a) accept appointment to a board of directors of, or employment with, an entity with which they had significant official dealings during the period of one year immediately prior to the termination of their service;
(b) make representations for or on behalf of any other person or entity to any department with which they had significant official dealings during the period of one year immediately prior to the termination of their service; or
(c) give counsel, for the commercial purposes of the recipient of the counsel, concerning the programs or policies of the department with which they were employed, or with which they had a direct and substantial relationship during the period of one year immediately prior to the termination of their service.
Reduction of limitation period
43. On application from an employee or former employee, the designated authority may reduce the limitation period on employment. Decisions to reduce the limitation period will be made taking into consideration:
(a) the circumstances under which the termination of their service occurred;
(b) the general employment prospects of the employee or former employee making the application;
(c) the significance to the government of information possessed by the employee or former employee by virtue of that employee's position in the Public Service;
(d) the desirability of a rapid transfer from the government to private or other governmental sectors of the employee's or former employee's knowledge and skills;
(e) the degree to which the new employer might gain unfair commercial advantage by hiring the employee or former employee;
(f) the authority and influence possessed while in the Public Service; and
(g) the disposition of other cases.
44. Decisions made by the designated authority will be in writing to the applicant and to all departments affected by the decision.
Advisory panels
45. The Treasury Board may convene advisory panels to advise on the application of the compliance measures in particular cases, and to help employees or former employees understand how the compliance measures apply in their particular case.
Exit arrangements
46. Prior to an employee's official separation from public office, the designated official will communicate with the employee to review the post-employment requirements in order to facilitate their observance.
Reconsideration
47. An employee or former employee may apply to the Treasury Board for reconsideration of any determination respecting his or her compliance with the post-employment measures.
Failure to comply
48. An employee who does not comply with the measures set out in this Part is subject to appropriate disciplinary action up to and including discharge.
Part IV - Compliance measures for public office holders who are not subject to Parts II and III compliance measures
Interchange Canada
49. Before entering into an Interchange Canada agreement to accept a person on assignment, the parties to the agreement shall satisfy themselves that there is no risk of conflict of interest or that the risk of conflict of interest is not significant. If the parties determine that the risk of conflict of interest is significant, the parties shall make such provisions as are necessary to prevent the conflict of interest from arising.
50. Persons entering the Public Service on an Interchange Canada assignment shall not act, after they leave such office, in such a manner as to take improper advantage of that office.
Schedule - Trusts
1. The following trusts are examples of the most common trusts that may be established by employees for the purpose of divestment under the Code.
(a) Blind trust
A blind trust is one in which the trustee makes all investment decisions concerning the management of the trust assets with no direction from or control by the employee placing the assets in trust.
No information is provided to the employee (settlor) except information that is required by law to be filed. An employee who establishes a blind trust may receive any income earned by the trust, add or withdraw capital funds, and be informed of the aggregate value of the entrusted assets.
(b) Frozen trust
A frozen trust is one in which the trustee maintains the holdings essentially as they were when the trust was established. Employees who establish a frozen trust are entitled to any income earned by the trust.
Assets requiring active decision-making by the trustee (such as convertible securities and real estate) or assets easily affected by government action are not considered suitable for a frozen trust.
(c) Retention trust
A retention trust is one in which the trustee maintains rights in holding companies, established for estate planning purposes, essentially as they were when the trust was established. The settlor makes arrangements to have third parties exercise his or her voting rights in relation to the shares in the holding company as long as such arrangements will not result in a conflict of interest. Retention trusts usually do not generate income for the settlor.
This form of divestment is useful for an employee who has assets to be held under special proper management through a holding company for estate planning purposes.
Provisions common to all trusts
2. Provisions common to all trusts are:
(a) Custody of the assets:
The assets to be placed in trust must vest in the trustee.
(b) Power of management or control:
The employee (settlor) may not have any power of management or control over trust assets. The trustee, likewise, may not seek or accept any instruction or advice from the employee concerning the management or the administration of the assets.
(c) Schedule of assets:
The assets placed in trust shall be listed on a schedule attached to the trust agreement.
(d) Duration of trust:
The term of any trust is to be for as long as the employee who establishes the trust continues to hold an office that makes that method of divestment appropriate. A trust may be dismantled once the trust assets have been depleted.
(e) Return of trust assets:
Whenever a trust agreement is dismantled, the trustee shall deliver the trust assets to the employee.
Trustees
3. Care must be exercised in selecting trustees for each type of trust arrangement. If a single trustee, other than the ADRG, is appointed, the trustee should be:
(a) a public trustee;
(b) a company, such as a trust company or investment company, that is public and known to be qualified in performing the duties of a trustee; or
(c) an individual who performs trustee duties in the normal course of his or her work.
4. If a single trustee is appointed he or she shall clearly be at arm's length from the employee.
5. If more than one trustee is selected, at least one of them shall be a public trustee or a company at arm's length from the employee.
Trust indenture
6. Acceptable blind, frozen and retention trust indentures are available from the ADRG. Any amendments to such trust indentures shall be submitted to the ADRG before being executed.
Filing of trust documents
7. Under the trust options available, employees are required to file with the ADRG a copy of any trust instrument. Except for the fact that a trust exists, detailed trust information will be kept in the employee's confidential file and will not be made available to anyone for any purpose.
Reimbursement for costs incurred
8. On the recommendation of the ADRG, the following reimbursements for costs of trusts established to comply with the conflict of interest compliance measures set out in this Code may be permitted:
(a) reasonable legal, accounting and transfer costs to establish the trust;
(b) reasonable legal, accounting and transfer costs to dismantle the trust; and
(c) annual, actual and reasonable costs to maintain and administer the trust, as follows:
(i) up to a maximum of $500 for a portfolio with a market value of $100,000 or less, or
(ii) up to a maximum of $5,000 for a portfolio with a market value over $100,000, 1/2 of 1% on the first $400,000 and 1/4 of 1% on the remaining value.
The employee is responsible for any income tax adjustment that may result from the reimbursement of trust costs.
Appendix B - Relevant Forms
|
Title of form |
No. of form |
Issued by |
Available from |
Phone no. Fax. No. |
|
Employee Certification Document |
7540-21-900-0060 |
TBS |
SSC |
746-4005 |
|
Confidential Report |
7540-21-900-0061 TBS/SCT 330-409 |
TBS |
SSC |
746-4005 |