Focus: Conflicts of interest ‘hot topic of the day’ for PIs

When private investigator Derrick Snowdy raised concerns about a federal minister’s links with a businessman charged with fraud, it led to a political scandal.

In 2010, Snowdy contacted the Conservative party about alleged ties between then-cabinet minister Helena Guergis and businessman Nazim Gillani.

Guergis launched a defamation claim against Prime Minister Stephen Harper and others after he expelled her from the Conservative caucus.

She lost the case in the latest ruling on June 28. Then in July, an ethics commissioner report found her to have breached conflict of interest rules.

Snowdy, meanwhile, faced accusations in some circles of having an axe to grind. He has denied that in interviews with national media and has pointed to his Conservative party membership.

But to what extent do private investigators need to be careful when probing potential conflicts of interest by public figures and how can they avoid accusations of conflicts themselves?

David Debenham, a partner at McMillan LLP, notes conflicts of interest are “the hot topic of the day. In order to discredit an investigation, the best way is to show bias, and where there’s no actual bias, then show a conflict of interest.”

Conflicts of interest, he suggests, are “becoming the way to discredit an investigation.”

An investigator with a conflict of interest has a tainted investigation. As a result, the client can demand a refund and compensation for having to redo the original investigation as well as any damages resulting from the investigator corrupting the witnesses.

However, conflicts rarely reach the public domain as people tend to discuss them in private among a law firm, an investigator, and the party making the accusation.

They commonly arise if, partly through delving into a matter, an investigator realizes a friend, relative or associate has become a target of the investigation. But there are countless other situations where conflicts can arise.

“There are all sorts of ethical issues for investigators that relate to conflicts,” says Chris Mathers, an international crime and risk consultant based in Toronto. “If you’re doing an investigation for an organization, you know there’s going to be either a big rise in their stock or a big drop — usually a big drop — if it’s [related to] fraud. We have a rule about not having stock in anyone we’re acting for.”

The fact that law firms hiring investigators can be large organizations with offices around the world can make it difficult to judge whether a conflict is a genuine issue.

For example, a law firm may have once acted for a client’s international subsidiary in a property case. What happens if that client is then the subject of an unrelated investigation?

“Lawyers are obsessed with conflicts,” says Mathers, adding law firms have routinely asked him whether conflicts could pose any problems. His firm has a strict code of conduct, he notes.

The code of ethics produced by the Council of Private Investigators Ontario states: “Members shall, at the first opportunity, disclose to a client any influence, interest or relationship, pertaining to an investigative engagement, which, in the judgment of a reasonable person may impair the member’s professional judgment or objectivity.”

Conflict of interest issues also form part of the basic private investigator training program regulated by Ontario’s Ministry of Community Safety and Correctional Services.

The completion of prescribed training and testing are mandatory licensing requirements.

However, this isn’t an area that’s subject to heavy regulation. Ministry spokesman Brent Ross said in a statement: “Conflict of interest for a private investigator is a matter between the employer and the licensee. It is an individual’s and/or business’ responsibility to determine whether they are in a conflict of interest by obtaining their own legal counsel.”

Investigating alleged conflicts faced by public figures is an equally controversial area.

Clients may ask private investigators to carry out background checks on people up for nomination to political roles or conduct investigations into civil and criminal wrongdoing in municipalities.

They may conduct investigations for conflicts of interest as a statutory audit to ensure compliance or at the request of the government or its political opponents in the face of specific allegations.

Debenham says when investigating allegations of conflicts of interest against politicians, the best place to start is to focus on the statute, regulations, and accepted practices before looking at “anything that might look like a non-arm’s-length transaction involving a public official.”

Investigators should also plan an audit of areas where conflicts are likely to occur before gathering documents, mining data, and conducting interviews in those high-risk areas.

For example, an infrastructure minister may be “susceptible to conflicts involving her land purchases, contributions from developers and construction companies” while the transportation minister needs to be careful about conflicts with particular airlines and railways, according to Debenham.

Taras Hryb, president of the Canadian Association of Private Investigators, says conflict of interest cases can prove challenging due to confidentiality issues, access to information, and the “fast-changing regulatory environment.”

“Investigators must be aware of the potential that they may be deemed as agents of the state in some circumstances when working for government entities and need to change their investigative methods and procedures accordingly,” he notes.

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