Angry in the Great White North

Bill 151 is the huge budget bill tabled by Dalton McGuinty's Liberal government in Ontario. More than just a budget, this omnibus bill modifies dozens of existing acts. In Schedule D, the Canadian Accountability Board is given the power to see all material used by accountants in preparing audits, including privileged information.

I wrote about the implications of this increased power, not the least of which the ability of the Ontario Securities Commission, which created the CPAB along with other provincial securities regulators, to view material that it currently has troubled seeing thanks to court interference.

That court interference is exactly what the OBA wants to preserve, as laid out in this letter the association sent to its members:

November 14, 2006

Dear OBA Members:

This week in the Legislature, the Ontario government will undoubtedly give second reading to Bill 151, the Budget Measures Act (No.2), and we are hopeful that it will be referred to a Standing Committee for public hearings and possible amendment. This Bill contains provisions that have the effect of eliminating solicitor-client privilege in some circumstances. Budget Bills typically move very quickly through the Legislature and often receive little scrutiny.

While there is much in this Bill that is commendable and decidedly in the public interest, the OBA has serious concerns about provisions changing the regulatory framework and creates the Canadian Public Accountability Board (CPAB). This Board's statutory mandate is to maintain a register of public accounting firms that audit reporting issuers and to provide oversight to their audits.

The OBA supports the principles of transparency and accountability which this section of the legislation will bring about. However, if this Bill is passed without amendment, it will allow CPAB to obtain solicitor-client privileged documents without any demonstration of absolute necessity. This, in our view, is a very serious flaw in the proposed legislation.

The proposed legislation was designed and brought forward without any consultation with the legal profession. On your behalf, we wrote to the Minister of Finance, the Minister of Government Services and the Attorney General, on October 27th (copy of letters attached) but have not yet received a response. If an opinion letter exists that would support this proposal, we would encourage the government to make it public, as we have serious reservations about the constitutionality of the section which would allow CPAB to access privileged documents without first obtaining a Court Order.

The discussions that we have had with Ministerial staff indicate that they believe that CPAB requires this provision to fulfill its mandate. Our view is that the role of CPAB is to ensure that auditors meet prescribed professional standards in carrying out their responsibilities, and it is not the role of CPAB to re-do the actual work of the auditors. Therefore, any requirement for access to privileged documents must be the exception and not the rule, and should, as with any other third party stakeholder, require a Court Order.

We have attached a link to the legislation and a copy of the letter that was sent to the Ministers, as noted above. We have also sent letters to the Opposition Party Leaders, their Finance Critics, and all MPPs who are lawyers.

We believe that this bill can, and must, be amended during clause-by-clause review, following public consultations. The OBA will be making a submission which addresses a number of other matters in this bill as well as this most critical issue. We have asked our colleagues at the Canadian Corporate Counsel Association to review this legislation and bring their concerns forward to the Standing Committee as well.

We urge you to take a moment and express your concern to the government. A number of fax numbers and email addresses are provided below so that you can quickly forward your thoughts on this important matter to the relevant Ministers and Opposition Leaders.

Yours sincerely,

James Morton
President

Click here to view the Bill
http://www.ontla.on.ca/documents/Bills/38_Parliament/session2/index.htm#P1271_87744

Click here to view OBA letter to Minister Sorbara
http://www.oba.org/en/pdf/Bill151.pdf

Hon. Dalton McGuinty, MPP
Premier of Ontario
Fax : 416-325-3745
dmcguinty.mpp.co@liberal.ola.org

Hon. Michael Bryant, MPP
Attorney General of Ontario
Fax : 416-326-4016
mbryant.mpp@liberal.ola.org

Hon. Greg Sorbara, MPP
Minister of Finance
Fax : 416-212-1025
gsorbara.mpp@liberal.ola.org

Hon. Gerry Phillips, MPP
Minister of Government Services
Fax : 416-327-3790
gphillips.mpp.co@liberal.ola.org

John Tory, MPP
Leader of the Official Opposition
Fax : 416-325-0491
john.tory@pc.ola.org

Howard Hampton, MPP
Leader of the New Democratic Party
Fax : 416-325-8222
hhampton-qp@ndp.on.ca

The emphasis was as in the original.

This email is quite significant. Clearly the original letter to Greg Sorbara did not achieve the desired effect. Not that it was all that likely.

Still, the OBA is pushing up the stakes. By demanding to see a legal opinion that trumps the Constitution, they are calling the government out, and in particular, Michael Bryant, the Attorney General. As AG, his job is to advise other ministers, such as Finance Minister Greg Sorbara and Minister of Government Services Gerry Phillips on the constitutionality of proposed legislation. The OBA wants to see that advice and how it justifies this new power for the CPAB.

Of course, there might be no such opinion, and that will look bad on Bryant, Sorbara, Phillips, and McGuinty. Even worse, what if the legals minds at the AG's office said that Schedule D was on shaky ground, constitutionally speaking, and that advice was ignored?

The letter promises more action. A clause-by-clause evalution of the bill, beyond the question of CPAB powers. Getting more lawyers involved through the Canadian Corporate Counsel Association. Generally making sure that the process grinds to a halt.

The government, of course, will be looking for fast passage of this huge bill. Will the Liberals eject Schedule D from Bill 151 in order to appease the OBA? Will it work?