Tag Archives: transparency

Canada’s Opaque Transparency – An Open Data Failure

Yesterday, at the Prospectors and Developers Association of Canada’s (PDAC) Canada Minister of Natural Resource, Joe Oliver, announced with great fanfare a new initiative to compel mining companies to disclose payments of over $100,000’s to foreign and domestic governments.

On the surface this looks like a win for transparency, particularly for a sector that is of great importance to Canada: mining.

And this issue matters since not only do extractive industries represent an important part of Canada’s economy, but the sector has been dogged with controversy. Indeed the Toronto Star just uncovered today a report commissioned (and buried) by the Prospectors and Developers Association of Canada (PDAC) that showed Canadian mining companies have the worst record when it comes to environmental standard and human rights.

Forcing mining companies to account for their payments to foreign and domestic governments won’t solve every problem, but it can help curb corruption. Indeed the issue was seen as so important that at the last G8 summit, the leaders agreed that companies should be compelled to disclose these payments.

Happily, there is a legitimate global movement to make government payments by extractive industry companies more transparent. It is called the Extractive Industries Transparency Iniative (EITI). It has set a series of standards for disclosing such payments so that they are easier to track across borders. In fact EITI is seen as so important it is actually the only organization mentioned by name in the last G8 summit communique. This is the same EITI program about which last year the Minister’s press secretary boasted:

Since 2007 Canada has also been a supporting country of the Extractive Industries Transparency Initiative, and is now the second largest financial donor to the initiative, providing $12.65 million to the World Bank’s Extractive Industries Transparency Initiative Multi-donor Trust Fund…

Which brings us to Minister Oliver’s important announcement.

Did the government announce that it was joining 42 other countries, including its G8 partners the United States, the United Kingdom, France, Germany and Italy to join the standard it has been a major funder of?

No. It did not.

Apparently EITI is good enough to fund so that others can implement it. When it comes to actually doing what is effective… the government balked. Canada, apparently, is going to adhere to its own “unique” approach.

And it gets worse.

Read the Minister’s statement more closely, particularly this line:

“We want to make it as easy as possible, so we will not create a central database. Instead, we would require that reports be posted to company websites, with the government and public notified.”

So unlike EITI, which offers a centralized repository where records can quickly be downloaded and compared, Canada’s “compliance” will involve each company to maintain their own records “somewhere” and will require anyone interested if actually figuring out what is going on to go and track down each one individually.

We call this secrecy by obscurity. It makes a mockery of the notion of transparency.

We have a global infrastructure designed to make disclosure cheap, easy and effective. Infrastructure our own government has poured $12.7M into it. And we turn around and ignore it all.

Canada claims it wants to be a leader in open data. But if it can’t even get something basic like this right… such claims sounds increasingly silly here at home, among our G8 partners and, well, among the rest of the world.

Addendum: It gets worse still. Few people have noticed yet, but Canada recently (and quietly) stopped reporting the names of corporate directors in the public database of the country’s firms. This is a major step backwards and makes those who benefit from one of the most important benefits society can confer – limited liability – invisible to the public who confers that right. This is a major step backwards. Read this wonderful Economist article on why. More on this to come.

Duffy, the Government and the problem with “no-notes” meetings

So, for my non-canadian readers, there is a significant scandal brewing up here in Canadaland, regarding a senator, who claimed certain expenses he was not allowed to (to the tune of $90,000) and then had that debt paid for by the Prime Minister’s chief of staff (who has now resigned).

This short paragraph in an article by the star captures the dark nature of the exchange:

…once the repayment was made, Duffy stopped cooperating with independent auditors examining his expense claims. When a Senate committee met behind closed doors in early May to write the final report on the results of the audit, Conservatives used their majority to soften the conclusions about Duffy’s misuse of taxpayers’ money.

So, it was money designed to make a potential minor scandal go away.

Now the opposition party  ethics critic Charlie Angus is calling for an RCMP investigation. From the same story:

“Where is the paper trail? Who was involved,” Angus said.

“If there is a signed agreement between Mr. Duffy and Mr. Wright or Mr. Duffy and the Prime Minister’s Office, we need to see that documentation,” he said.

And herein lies an interesting rub. This government is infamous for holding “no-note” meetings. I’ve been told about such meetings on numerous occasions by public servants. Perhaps they are making it up. But I don’t think so. The accusations have happened too many times.

So maybe there is a paper trail between the Prime Minister’s Office and Senator Duffy. There were lawyers involved… so one suspects there was. But who knows. Maybe there isn’t. And the lack of a paper trail won’t give many people confidence. Indeed, with Duffy now no longer in the Conservative Caucus and with the Chief of Staff resigned everyone is now looking at the Prime Minister, people are now starting to focus on the Prime Minister. What did he know?

And therein lies the bigger rub. In an environment where there is no paper trail one cannot audit who knew what or who is responsible. This means everyone is responsible, all the way to the top. So a “no-notes” meeting can be good for keeping the public from knowing certain decisions, and who made them, but the approach fails once the public finds out about one of these decisions and starts to care. If there is no smoking email in which someone else claims responsibility, it is going to be hard for this not to reach the Prime Minister’s desk.

Politicians and political staff will sometimes forget that the rules and processes around meetings – which appear to be designed to simply promote a degree of (annoying to them) transparency and accountability – are as much about creating a record for the public as they are about protecting the people involved.

 

 

Transparency Case Study: There are Good and Bad Ways Your Organization can be made "Open"

If you have not had the chance, I strongly encourage you to check out a fantastic piece of journalism in this week’s Economist on the state of the Catholic Church in America. It’s a wonderful example of investigative and data driven journalism made possible (sadly) by the recent spat of sexual-abuse and bankruptcy cases. As a result some of the normally secret financial records of the Church have been made public enabling the Economist to reconstruct the secret and opaque general finances of the Catholic church in America. It is a fascinating, and at times disturbing read.

The articles also suggests – I believe – a broader lessons for non-profits, governments and companies. Disclosure and transparency are essential to the effective running of an organization. As you read the piece it is clear that more disclosure would probably have compelled the Church to manage its finances in a more fiscally sound manner. It probably would have also made acts that are, at best negligent, at worst corrupt, difficult to impossible. This is, indeed, why many charities, organizations and public companies must conduct audits and publish the results.

But conforming to legal requirements will not shield you from an angry public. My sense is that many member contribution based organizations – from public companies to clubs to governments, are going to feel enormous pressure from their “contributors” to disclose more about how funds are collected, managed, disbursed and used. In a post financial collapse and post Enron era it’s unclear to me that people trust auditors the way they once did. In addition, as technology makes it easier to track money in real time, contributors are going to want more than just an annual audit. Even if they look at it rarely, they are going to want to know there is a dashboard or system they can look at and understand that shows them where the money goes.

I’m open to being wrong about this – and I’m not suggesting this is a panacea that solves all problems, but I nonetheless suspect that many organizations are going to feel pressure to become more transparent. There will be good ways in which that takes place… and bad ways. The Catholic Church story in the Economist is probably an example of the worst possible way: transparency forced upon an organization through the release of documents in a court case.

For anyone running an non-profit, community group, public agency or government department – this makes the article doubly worth reading. It is a case study in the worst possible scenario for your organization. The kind of disaster you never want to have to deal with.

The problem is, and I’m going to go out on a limb here, is that, at some point in the next 10-20 years, there is a non-trivial risk any organization (including your’s, reader) will face a publicity or legitimacy crisis because of a real or imagined problem. Trust me when I tell you: that moment will not be the moment when it is easiest or desirable from a cost, political and cultural perspective, to make your organization more transaparent. So better for you to think about how you’d like to shift policies, culture and norms to make it more transparent and accountable today, when things are okay, than in the crisis.

Consider again the Catholic Church. There are some fascinating and disturbing facts shared in the story that provide some interesting context. On the fascinating side, I had no idea of the scope and size of the Catholic Church. Consider that, according to the article:

“Almost 100m Americans, a third of the nation, have been baptised into the faith and 74m identify themselves as Catholic.”

and

“there are now over 6,800 Catholic schools (5% of the national total); 630 hospitals (11%) plus a similar number of smaller health facilities; and 244 colleges and universities.”

We are talking about a major non-profit that is providing significant services into numerous communities. It also means that the Catholic church does a lot of things that many other non-profits do. Whatever you are doing, they are probably doing it too.

Now consider some of the terrible financial practices the Church tried/tries to get away with because it thinks no one will be able to see them:

Lying about assets: “In a particularly striking example, the diocese of San Diego listed the value of a whole city block in downtown San Diego at $40,000, the price at which it had been acquired in the 1940s, rather than trying to estimate the current market value, as required. Worse, it altered the forms in which assets had to be listed. The judge in the case, Louise Adler, was so vexed by this and other shenanigans on the part of the diocese that she ordered a special investigation into church finances which was led by Todd Neilson, a former FBI agent and renowned forensic accountant. The diocese ended up settling its sexual-abuse cases for almost $200m.”

Playing fast and loose with finances: “Some dioceses have, in effect, raided priests’ pension funds to cover settlements and other losses. The church regularly collects money in the name of priests’ retirement. But in the dioceses that have gone bust lawyers and judges confirm that those funds are commingled with other investments, which makes them easily diverted to other uses.”

Misleading contributors about the destination of funds: “Under Cardinal Bernard Law, the archdiocese of Boston contributed nothing to its clergy retirement fund between 1986 and 2002, despite receiving an estimated $70m-90m in Easter and Christmas offerings that many parishioners believed would benefit retired priests.”

Using Public Subsidies to Indirectly Fund Unpopular Activities: “Muni bonds are generally tax-free for investors, so the cost of borrowing is lower than it would be for a taxable investment. In other words, the church enjoys a subsidy more commonly associated with local governments and public-sector projects. If the church has issued more debt in part to meet the financial strains caused by the scandals, then the American taxpayer has indirectly helped mitigate the church’s losses from its settlements. Taxpayers may end up on the hook for other costs, too. For example, settlement of the hundreds of possible abuse cases in New York might cause the closure of Catholic schools across the city.”

Of course all of this pales in comparison to the most disturbing part of the article: in several jurisdictions, the church is spending money to lobby governments to no extend the statute of limitations around sexual-abuse cases. This is so that it, and its priests, cannot be charged by authorities diminishing the likelihood that they get sued. The prospect that an organization that is supposed to both model the highest ideals of behaviour as well as protect the most marginalized is trying to limit the statues on such a heinous crime is so profoundly disgusting it is hard to put words to it. The Economist gives it a shot:

Various sources say that Cardinal Dolan and other New York bishops are spending a substantial amount—estimates range from $100,000 a year to well over $1m—on lobbying the state assembly to keep the current statute of limitations in place. His office will not comment on these estimates. This is in addition to the soft lobbying of lawmakers by those with pulpits at their disposal. The USCCB, the highest Catholic body in America, also lobbies the federal government on the issue. In April the California Catholic Conference, an organisation that brings the state’s bishops together, sent a letter to California’s Assembly opposing a bill that would extend the statute and require more rigorous background checks on church workers.

This disgusting discover aside, most organizations are probably not going to have the same profound problems found in the Catholic Church. But in almost every organization, no matter the controls, some form of mismanagement is probably taking place. The question is, will you already have in place policies and a culture that support transparency and disclosure before the problem is discovered – or will the crises become the moment where you have to try to implement them, probably under less than ideal circumstances?

As they said after Watergate “It’s not the Crime that kills you, but the cover up,” good transparency and disclosure can’t stop the crime, but it might help prevent them. Moreover, it can also make the cover up harder and, potentially, make it easier to ease the concerns of contributors and rebuilt trust. One could imagine that if the Church had been more transparent about its finances it might have better protected itself against bankruptcy from some of these cases. More importantly, it’s transparency might have make it easier to rebuilt trust, whereas any chance now will just seem like a reaction to the crises, not a genuine desire to operate differently.

Again, I think the pressure on many orgs to be more transparent is going to grow. And managers should recognize there are good and bad conditions under which such transparency can take place. Read this Economist story. In addition to be fascinating, it is a great case study in the worst case scenario for opaque institutions.

What do I think of the Canadian Senate?

Read Jennifer Ditchburn in the Globe and Mail – Senate stubborn on making information about chamber more accessible.

It is laughable about how hard the Canadian Senate makes it to access information about it. The lower house – which has made good progress in the last few years on this front – shares tons of information online. But the Senate? Attendance records, voting records and well, pretty much any record, is nigh high impossible to get online. Indeed, as Jennifer points out, for many requests you have to make an appointment and go in, in person, in Ottawa(!!!) to get them.

What year is it? 1823? It’s not like we haven’t had the mail, the telephone, the fax machine, and of course, the internet come along to make accessing all this information a little easier. I love that if you want to get certain documents about the operation of the senate you have to go to Ottawa.

Given the Senate is not even elected in Canada and has, shall we say, a poor reputation for accountability and accessibility, you’d think this would be a priority. Sadly, it is not. Having spoken with some of the relevant parties I can say, Senators are not interested in letting you see or know anything.

I understand the desire of the senate to be above the political fray, to not be bent by the fickle swings in electoral politics, to be a true house of “second sober thought.” And yet I see no reason why it can’t still be all that, while still making all the information that it must make public about itself, available online in a machine readable format. It is hard to see how voting records or attendance records will sway how the Senate operates, other than maybe prompt some Senators to show up for work more often.

But let’s not hold our breath for change. Consider my favourite part of the article:

“A spokeswoman for government Senate leader Marjory LeBreton said she was unavailable and her office had no comment. Ms. LeBreton has asked a Senate committee to review the rules around Senate attendance, but it’s unclear if the review includes the accessibility of the register.”

No comment? For a story on the Senate’s lack of accessibility? Oh vey! File it under: #youredoingitwrong

 

 

Is Civic Hacking Becoming 'Our Pieces, Loosely Joined?'

I’ve got a piece up over on the WeGov blog at TechPresident – Is Civic Hacking Becoming ‘Our Pieces, Loosely Joined?

Juicy bit:

There is however, a larger issue that this press release raises. So far, it appears that the spirit of re-use among the big players, like MySociety and the Sunlight Foundation*, only goes so deep. Indeed often it seems they are limited to believing others should re-use their code. There are few examples where the bigger players dedicate resources to support other people’s components. Again, it is fine if this is all about creating competing platforms and competing to get players in smaller jurisdictions who cannot finance creating whole websites on their own to adopt it. But if this is about reducing duplication then I’ll expect to see some of the big players throw resources behind components they see built elsewhere. So far it isn’t clear to me that we are truly moving to a world of “small pieces loosely joined” instead of a world of “our pieces, loosely joined.”

You can read the rest over there.

Help OpenNorth Raise 10K to Improve Democracy and Engagement thru Tech

Some of you may know that I sit on the board of directors for OpenNorth – a cool little non-profit that is building tools for citizens, governments and journalists to improve participation and, sometimes, just make it a little bit easier to be a citizen. Here’s great example of a simple tool they created that others are starting to use – Represent – a database that allows you to quickly figure out all the elected officials the serve the place where you are currently standing.

As a humble non-profit OpenNorth runs on a shoestring, with a lot of volunteer participation. With that in mind we’d like to raise $10,000 this Canada Day. I’ve already donated $100.

The reason?

To sponsor our next project – Citizen Writes – which, inspired by the successful Parliament Watch in Germany, would allow citizens to publicly ask questions both to candidates during elections and to representatives in office. The German site has, since 2004, posed over 140,000 questions from everyday citizens of which 80% been answered by politicians. More importantly such a tool could empower all back benchers, rebalancing power which is increasingly centralized in Canada.

I encourage you to check out our other projects too – I think you’ll find we are up to all sorts of goodness.

You can read more at the OpenNorth blog, or donate by going here.

The Transparent Hypocrisy of Ethical Oil – who is really laundering money

The other week the Canadian Minister of the Environment, Peter Kent accused Canadian Charities of “laundering money” because they accept some funds from outside the country. This has all been part of a larger effort – championed by Ethical Oil – to discredit Canada’s environmental organizations.

As an open government and transparency in politics advocate I find the whole conversation deeply interesting. On the one side, environmental groups have to disclose who funds them and where the money comes from. This is what actually allows Ethical Oil to make their complaint in the first place. Ethical Oil however, feels no need to share this information. Apparently what is good for the goose, is not good for the gander.

The media really only touches on this fact occasionally. In the Globe an Mail this hypocrisy was buried in the last few lines of a recent article:

Ethical Oil launched a radio ad Tuesday that will run throughout Ontario flaunting the proposal as a way to lower oil prices and create jobs.

Mr. Ellerton said he couldn’t immediately provide an estimate for how much the group is spending on the campaign. He also refused to reveal who funds the lobby group, other than to say: “Ethical Oil accepts donations from Canadians and Canadian businesses.”

The group has supported the Conservatives move to end foreign funding of environmental groups, including those that oppose the Northern Gateway and Keystone XL pipeline projects. Mr. Ellerton has campaigned to expose the funding behind those groups but said he could not shed more light on his own organization.

“We have an organizational policy not to disclose who are donors because we’ve faced lawsuits in the Kingdom of Saudi Arabia,” he said, “and we don’t want to expose our donors to that kind of litigation.”

Of course, the the notion of what a “Canadian Business” means is never challenged. It turns out that many of the large “Canadian” players in the oil sands – those with corporate headquarters in Canada – are barely Canadian. Indeed, a recent analysis using Bloomberg data showed that 71 per cent of all tar sands production is owned by non-Canadian shareholders.

Consider the following ownership stakes of “Canadian” businesses:

Petrobank Energy Resources: 94.8% foreign owned

Husky Energy: 90.9% foreign (this one really surprised me!)

MEG Energy: 89.1% foreign

Imperial Oil: 88.9% foreign

Nexen: 69.9% foreign

Canadian Natural Resources Limited: 58.8% foreign

Suncor Energy: 56.8% foreign

Canadian Oil Sands: 56.8% foreign

Cenovus: 54.7% foreign

I think it is great that Ethical Oil wants greater transparency around who is funding who in the Oil Sands debate. But shouldn’t they be held to the same standard so that we can understand who is funding them?

If Ethical Oil and the government want to call it money laundering when a foreign citizen funds a Canadian environmental group, should we also use the term if a foreign (often Chinese or American) entity plows money into Ethical Oil?