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Conflict of interest, or not?

Thursday, June 1, 2017

Town of Gibsons

In the summer of 2015 we received a number of complaints from Gibsons BC residents concerned about the approval process for a commercial development proposal. Community members reported concerns about the process followed to approve a number of Official Community Plan and zoning bylaw amendments to allow the development to proceed. We received complaints that two members of council may have been in a conflict of interest when participating in decision making processes related to the development. The Community Charter prohibits council members from participating in any discussion or voting on a matter in which the member has a direct or indirect pecuniary interest in a matter or another interest in the matter that constitutes a conflict of interest. Members are required to declare their interest in the matter and remove themselves from any meeting where the matter is under consideration.

The Community Charter does not define conflict of interest. However, it does prescribe circumstances where the rules noted above do not apply. For example, the requirement to declare a conflict and the prohibitions on participation in discussions and voting do not apply if the pecuniary interest of the council member is a pecuniary interest in common with electors of the municipality generally. They also do not apply if the pecuniary interest is so remote or insignificant that it cannot reasonably be regarded as likely to influence the member in relation to the matter. The conflict of interest provisions contained in the Community Charter are intended to ensure transparency, impartiality, and integrity in municipal decision making by elected officials and should be read through that lens. The first allegation of conflict of interest arose from a belief that by virtue of the members’ prior business relationship with the proponent, the member had a personal interest in the development proposal.

A further allegation of conflict of interest arose from a different member’s participation in decision making related to the development after he had publicly acknowledged in a presentation to council that his business, located near the development, might benefit from the development. Our Office investigated whether the town responded adequately to the allegations of conflict of interest it received with respect to the development proposal. Through the course of our investigation, we confirmed that one of the members had, in his capacity as a lawyer, assisted  the proponent on several routine matters dating back to 2002. The proponent filed the application to the Town of Gibsons for the proposed development in 2013. The member did not provide legal services to the proponent after the application was submitted and we did not obtain any evidence to indicate the existence of any ongoing business relationship. Following our analysis of the information we reviewed, we determined that any interest the member might have had in the matter would be insignificant and unlikely to influence the member’s participation in the discussion and voting on matters related to the development. As noted above, the conflict of interest rules do not apply if a pecuniary interest is so remote or insignificant that it cannot reasonably be regarded as likely to influence the elected official on the matter in question. Therefore, we concluded this aspect of our investigation and determined no action was necessary by the town. With respect to the concern involving the other member’s potential conflict of interest, the town explained that they believed he was exempt from the conflict restrictions set out in the Community Charter.

The town relied on a previous legal opinion it obtained on a different matter to determine the member shared an interest in common with other electors who had business interests in the municipality. In addition, the town explained that the member’s presentation to council was intended to highlight the potential economic benefits to all local businesses, and his projected revenues from the approval of the development were entirely speculative. It appeared to us that the member’s personal interest in the development may have extended beyond the interest of the community generally. In his presentation to council, the member referenced specific revenue projections to demonstrate how his business might benefit from increased tourism associated with the development. Even if these projections were hypothetical, his presentation implied that he believed it was more likely than not that the development would benefit his business and it appeared that any benefit would not be remote or insignificant. The member had not obtained a legal opinion specific to his case when the concern was raised about potential conflict of interest. We consulted with the town and suggested that he consider recusing himself from further discussions on matters in respect of the development application until he received legal advice to the effect that he did not have a conflict. In addition, we proposed that the town develop a policy and additional training material for newly elected council members to emphasize the requirements to disclose conflicts of interest. In a resolution passed on April 18, 2017, the Town of Gibsons Council agreed to take steps in response to these issues and accepted all of our proposed resolutions. The town also agreed in the future to direct council members to obtain independent legal advice if there is any uncertainty regarding conflict of interest.

In addition, in light of the concerns identified through our investigation, we asked the town to review all previous decisions related to the Official Community Plan and zoning amendments associated with the development. Through this review we established that all decisions were passed by a unanimous vote with four members of council present. As a majority vote of council is three, we determined that the member’s participation in the matter did not affect the final outcome of the voting on the application. As we were satisfied that the Town of Gibsons took adequate steps to address the issues regarding the appearance of conflict of interest we determined no further investigation was necessary.

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