Influence Peddling: From the Criminal Code to the Prime Minister’s Office

At first glance, R v Carson, 2018 SCC 12 [Carson] is a criminal law case concerning the interpretation of section 121(1)(d) of the Criminal Code,  RSC 185, c C-46 [Criminal Code]. However, the dissent in Carson reveals an important critique of Canada’s relationship with Indigenous peoples. The narrow reading of section 121(1)(d) of the Criminal Code grants First Nations communities the autonomy to conduct contractual relations without government oversight or interference. This autonomy is denied by the majority of the SCC, a decision that requires further exploration as part of Canada’s nation-to-nation approach with Indigenous peoples.

The Facts

The appellant, Bruce Carson, was formerly a Senior Advisor in the Office of the Prime Minister (“PMO”). Following his departure from the PMO, Mr. Carson entered into an agreement to use his government contacts to help H2O Professionals Inc. (“H2O”) sell water treatment systems to First Nations. Mr. Carson testified that he had significant access to and influence on the federal government, and had demanded a benefit for utilizing his government contacts to assist H2O. H2O agreed to pay a commission to Mr. Carson’s then-girlfriend on all their sales of water treatment systems to First Nations. The agreement specified that the commission would be paid irrespective of whether the First Nations or the federal government paid for the water treatment systems.

In following through with this arrangement, Mr. Carson spoke to First Nations leaders, government officials at Indigenous and Norther Affairs Canada (“INAC”), and several cabinet ministers and their staff to promote the purchase of H2O’s water treatment systems for use in First Nations communities. INAC officials advised Mr. Carson that they had provided funding to First Nations which could subsequently be used to purchase H2O’s water treatment systems. However, First Nations had full autonomy in determining how to allocate this funding and the federal government was not directly involved in selecting water treatment systems for reserves. Nevertheless, Mr. Carson was charged with influence peddling contrary to section 121(1)(d) of the Criminal Code for using his connections and influence to lobby the federal government.

Judicial History

At trial, the Crown took the position that a three-way business relationship existed between the government, First Nations communities, and H2O that demonstrated that a transaction took place as a “matter of business relating to the government” (Criminal Code, s 121(1)(d)). Counsel for Mr. Carson argued that a two-way business relationship existed between First Nations communities and H2O, effectively excluding the government. Since Mr. Carson was looking to contract directly with First Nations, this matter of business was not a “matter of business relating to the government” (Criminal Code, s 121(1)(d)).

Justice Warkentin assessed whether INAC played a role in relation to the purchase of water treatment systems on reserves in order to determine whether the government was involved in Mr. Carson’s transactions. Justice Warkentin limited the scope of section 121(1)(d) to matters of business that depend on some government approval or action within existing operational structures of government. In doing so, she found that INAC did not play a significant role in or grant approval to Mr. Carson’s transactions. Mr. Carson was acquitted at trial on the basis that First Nations—rather than the government—decide whether to purchase the water treatment systems sold by H2O.

The Ontario Court of Appeal (“ONCA”) substituted a conviction, holding Mr. Carson responsible for infringing section 121(1)(d) of the Criminal Code. The ONCA concluded that Justice Warkentin had erred in law by interpreting section 121(1)(d) so narrowly as to effectively confine its scope to transactions in which the government itself is a party. In its place, the ONCA held that the mischief targeted by this offence was the acceptance of a benefit as consideration for the exercise of influence with the government. When applied to the case at hand, the ONCA clarified that when Mr. Carson exercised his influence on First Nations communities, he effectively transacted with the government.

Questions at Issue

Mr. Carson appealed the ONCA’s conviction to the SCC, raising the following questions:

  1. For the section 121(1)(d) offence to be made out, must the promised influence be actually connected to a matter of business relating to the government?
  2. How broadly should the phrase “any matter of business relating to the government” be interpreted?

Majority Decision

Justice Karakatsanis writing for the majority first held that the promised influence must be actually connected to a matter of business relating to the government for the offence to be made out. A matter of business relates to the government if it “depends on or could be facilitated by the government” (Carson, para 32). It includes publicly funded commercial transactions for which the government could impose or amend terms and conditions that would favour one vendor. In Carson, government approval was not required for First Nations communities to purchase water treatment systems from H2O. However, INAC could have facilitated these purchases. The coordination and supervision provided by INAC in funding First Nations brought Mr. Carson’s actions within the scope of the phrase “any matter of business relating to the government” (Criminal Code, s 121(1)(d)). As a result, Mr. Carson’s transactions with First Nations communities were found to be contrary to section 121(1)(d) of the Criminal Code.

In addressing the second question, the majority held that “any matter of business relating to government” should not be interpreted narrowly because governments are always evolving and “are not static entities” (Carson, para 5). In determining how broadly the phrase should be interpreted, Justice Karakatsanis considered the parliamentary intent behind section 121(1)(d). She understood this section of the Criminal Code as striving to preserve both government integrity and the appearance of government integrity. Through this purposive interpretation, section121(1)(d) ensures that government activity promotes confidence in Canada’s democratic process.

Since government integrity is undermined when “people are paid to persuade government to facilitate transactions to one party’s advantage,” Mr. Carson undermined the appearance of government integrity by exercising his influence with the government to H2O’s advantage (Carson, para 38). The undermining of the appearance of government integrity exists even if no government approval was required for the transaction to proceed. Mr. Carson’s actions were thus a direct challenge to the rule of law—that all persons and entities, both public and private, are accountable to the law.

Interpretation

The majority clarified the relevant constituent elements of a conduct offence under section 121(1)(d) of the Criminal Code. When an individual demands a benefit in exchange for a promise to exercise their influence on the government, section 121(1)(d) of the Criminal Code is triggered. Interestingly, the accused is neither required to have real influence with the government nor succeed in influencing the government for section 121(1)(d) of the Criminal Code to apply. The relevant constituent elements of the offence are:

(1) having or pretending to have influence with the government, a minister, or an official;

(2) directly or indirectly demanding, accepting, or offering or agreeing to accept a reward, advantage or benefit of any kind for oneself or another person;

(3) as consideration for the cooperation, assistance, exercise of influence, or an act or omission;

(4) in connection with a transaction of business with or any matter of business relating to the government. (Carson, para 23).

Mr. Carson demanded a benefit as consideration for influencing his government contacts to assist H2O in selling water treatment systems to First Nations communities.  As a result, the majority of the SCC upheld the ONCA’s guilty verdict under section 121(1)(d) of the Criminal Code.

Reasons for Dissent

Justice Côté, the sole dissenting justice in Carson, provided a strong alternate framework from which to understand section 121(1)(d) of the Criminal Code. Justice Côté amalgamated the questions at issue by asking whether Mr. Carson exercised his influence with the government for a benefit in connection with “any matter of business relating to the government.” Before answering this question, Justice Côté cited R v Malmo-Levine, 2003 SCC 74, stating that it is a fundamental substantive principle of criminal law that there should be no criminal responsibility without an act or omission accompanied by fault. She explained that “while there is no doubt that Mr. Carson had a guilty mind, establishing the mens rea is insufficient, in and of itself, to make out the offence” (Carson, para 52). Justice Côté’s reading of the facts in Carson reveal that an element of the actus reus was missing at the time of the alleged offence; namely that Mr. Carson’s transaction with First Nations communities was insufficient to establish a “matter of business relating to the government” (Criminal Code, s 121(1)(d)). As such, Justice Côté criticized the majority of the Court for “allow[ing] Mr. Carson’s criminal intent to overshadow deficiencies in establishing a central element of the actus reus” (Carson, para 52).

 Different Frame of Analysis  

Justice Côté’s contextual reading of section 121(1)(d) alongside relevant jurisprudence (see R v Hinchey, [1996] 3 SCR 1128) led her to conclude that this provision’s underlying purpose is to “preserve the integrity of government” by criminalizing influence peddling (Carson, para 50). Accordingly, Justice Côté found that section 121(1)(d) seeks to protect the government’s integrity by criminalizing corrupt agreements, which, if successfully carried out, would pose an actual risk.

Through a contextual analysis of the other subsections, Justice Côté determined that the offence in section 121(1)(d) is made out only where the matter of business in question is actually related to the government. Justice Côté limited the scope of “any matter of business relating to government” to matters of business that depend on some government approval or action within existing operational structures of the government. Moreover, the matter of business must relate to the government in reality and not merely be believed to relate to the government by the parties of the alleged section 121(1)(d) offence. However, the integrity of the government cannot be compromised where transactions have no connection with actual government business.

At the last point of her analysis, Justice Côté suggested that a relationship between the matter of business concerned and the government must exist at the time of the agreement for section 121(1)(d) to apply. The operational structure in place at the time of the agreement between Mr. Carson and H2O was such that First Nations communities had been granted complete autonomy to purchase water treatment systems. It was solely First Nations who could contract with Mr. Carson on behalf of H2O; INAC could not contract on their behalf. Justice Côté indicated that where the government intentionally placed certain matters of business outside of its operational structure, “they cannot be said to be matters of government business simply because the government could, at a future date, reclaim control over them” (Carson, para 76). Since INAC had granted First Nations complete autonomy over the purchase of water treatment systems at the time of the agreement between Mr. Carson and H2O, the agreement cannot be said to be in connection with a matter of business relating to the government. Therefore, Justice Côté found that section 121(1)(d) of the Criminal Code does not apply and would have restored Mr. Carson’s acquittal.

Points to Ponder

The majority decision of Carson expanded the scope section 121(1)(d) and, in doing so, made the government a third party to the transactions between Mr. Carson and First Nations communities. However, this was done without sufficient consideration of First Nations’ autonomy. Although Justice Karakatsanis directly stated that she is “mindful of the autonomy of First Nations” to determine whether or not to transact, this statement was not followed by any analysis (Carson, para 44). Justice Karakatsanis ultimately did not grapple with this issue and disregarded First Nations’ autonomy in favour of expanding the reach of the Criminal Code. I imagine that Justice Karakatsanis was attempting to keep the reasons for judgement concise, but nevertheless, in order to overcome Canada’s colonial past the reasons for judgement should have addressed First Nations’ autonomy in more detail. First Nations’ special relationship with the Crown does not permit their disenfranchisement from a decision-making process.

In contrast, Justice Côté’s reasons for dissent do not diminish First Nations’ autonomy in contractual relations. Justice Côté’s narrow reading of section 121(1)(d) of the Criminal Code proposes that a two-way transaction occurred between Mr. Carson and First Nations communities since INAC could not contract on First Nations’ behalf. A transaction cannot be considered to be a “matter of business relating to the government” per section 121(1)(d) of the Criminal Code merely because the government could contract on First Nations communities’ behalf at a future date. The dissent reveals an alternative interpretation of the Criminal Code that supports—rather than diminishes—the autonomy of First Nations. We cannot afford for this dissent to be ignored as mere obiter in Canada’s nation-to-nation approach with Indigenous peoples.

Vivian Grinfeld

Vivian Grinfeld

Vivian is a second-year JD student at Osgoode Hall Law School. She holds a BA (Hons) in Public Affairs and Policy Management from Carleton University. She has a broad range of substantive interests in law, including constitutional, human rights, taxation, and intellectual property. When Vivian isn't writing Court posts, she trains for marathons and listens to Freakonomics podcasts.

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