DAOD 7021-1, Conflict of Interest

1. Introduction

Date of Issue: 2000-07-07

Date of Last Modification: 2015-05-06

Application: This DAOD is a directive that applies to employees of the Department of National Defence (DND employees) and an order that applies to officers and non-commissioned members of the Canadian Armed Forces (CAF members).

Supersession:

  • CPAO 7.10, Conflict of Interest
  • CFAO 19-7, Civil Employment – Military Personnel
  • CFAO 19-37, Conflict of Interest and Post-Employment Compliance Measures
  • NDHQ Policy Directive P5/89, Conflict of Interest Supplementary Compliance Measures

Approval Authority: Chief Review Services (CRS)

Enquiries: Director Defence Ethics Programme (DDEP)

2. Definitions

conflict of duties (tâches conflictuelles)

A conflict that arises, not because of a DND employee’s or CF member’s private interests, but as a result of one or more concurrent or competing official responsibilities. For example, responsibilities associated with his or her primary official duties compete with his or her responsibilities in a role outside of DND or the CF, such as an appointment to a board of directors, or other outside function, when that role is also part of his or her official duties. (Department of National Defence and Canadian Forces Code of Values and Ethics)

organizational conflict of interest (conflit d’intérêts organisationnel)

A situation in which the action or decision of a DND employee or CF member calls into question the integrity, objectivity, impartiality or non-partisanship of the DND or the CF. As a result, the situation could be perceived by a reasonable observer as placing the DND or the CF in a conflict of interest with the public interest. A real organizational conflict of interest is defined as existing at the present time in a situation; an apparent organizational conflict of interest could be perceived by a reasonable person to exist in the situation, whether or not it is the case; and a potential organizational conflict of interest could reasonably be foreseen to exist in the future. An apparent organizational conflict of interest is just as serious as a real or potential organizational conflict of interest. (Department of National Defence and Canadian Forces Code of Values and Ethics)

outside activity (activité extérieure)

Any employment, political or charitable activity, whether remunerated or not, that is conducted outside the official working hours of a DND employee or the authorized hours of duty or service of a CAF member. (Defence Terminology Bank record number 693780)

personal conflict of interest (conflit d’intérêts personnel)

A situation in which a DND employee or CF member has private interests that are not an integral part of their public role and that could improperly influence the performance of his or her official duties and responsibilities or in which the DND employee or CF member uses his or her office for personal gain. A real conflict of interest is defined as existing at the present time in a situation; an apparent conflict of interest could be perceived by a reasonable observer to exist in a situation, whether or not it is the case; and a potential conflict of interest could reasonably be foreseen to exist in the future. Conflicts of interest may arise in the following circumstances: outside activities (including political activities); acceptance of gifts, hospitality and other benefits; post-employment activities; and any other activity or decision incompatible with the official duties and responsibilities of a DND employee or a CF member. An apparent PCOI is just as serious as a real or potential PCOI. (Department of National Defence and Canadian Forces Code of Values and Ethics)

3. Principles

Aim

3.1 The avoidance of conflicts of interest (COIs) is the primary means by which DND employees and CAF members maintain public trust and confidence in the impartiality and integrity of the DND and the CAF. DND employees and CAF members must therefore undertake to minimize the possibility of COIs arising by avoiding and preventing situations that could create such COIs.

Note – In this DAOD, a COI is an organizational COI, a personal COI or a conflict of duties, as applicable.

Requirement

3.2 All DND employees and CAF members must conform to the following principles in their public roles as well as in their outside activities:

DescriptionPrinciple

Ethical Standards

  • Performing their official duties and arranging their private affairs to ensure that public confidence in the impartiality and integrity of the DND and the CAF is maintained and enhanced.
  • Exercising decision-making authority on behalf of the DND and the CAF, and any of its organizations, such that the integrity and impartiality of the DND and the CAF are maintained.

Public Scrutiny

  • Acting at all times in a manner that withstands the closest public scrutiny, an obligation that goes beyond strict adherence to the law.

Public Interest

  • Acting at all times in the broader public interest and, if a COI arises, always resolving it in favour of that interest.

Private Interests 

  • Arranging their private affairs in a manner that prevents a COI or the potential for adverse public perception arising from their official duties. 

Preferential Treatment

  • Not exceeding their official duties to assist a person or private entity seeking to have dealings with the federal government if this would result in preferential treatment to that person or private entity.
  • Not according preferential treatment to a family member, friend or associate, or to an entity in which the DND employee or the CAF member, family member or friend has an interest.
  •  Avoiding being placed, or appearing to be placed, under an obligation to any person or private entity that might profit from special consideration on the part of the DND employee or the CAF member.

Note – Providing information that is generally accessible to the public to a person or private entity is not considered preferential treatment.

Outside Activities
  • Only pursuing an outside activity that does not create a COI or a potential for adverse public perception, and that does not otherwise contravene a federal, provincial or territorial act or regulation, or a DND or CAF directive, order or policy.
Political Activities
  • Only pursuing an outside activity in support of a candidate for public office, including oneself, with the approval of the appropriate authority, and with due consideration given to the maintenance of public trust in the impartiality and integrity of the DND and the CAF.

Insider Information

  • Not knowingly taking advantage of information obtained in the course of their official duties that is not generally available to the public. 

Endorsement of an Entity, a Product or a Service

  • Not privately endorsing or recommending, while identifying oneself as a DND employee or CAF member, any entity, product or service from outside the Government of Canada (GC) nor allowing the use of their name or photograph in connection with any such entity, product or service, without the prior written consent of the Deputy Minister (DM) or the Chief of the Defence Staff (CDS) or their delegates, as applicable, except in so far as their name may be part of a firm’s name.

Note – QR&O article 19.39, Dealings with Contractors, applies to the private testimonials and dealings of CAF members but does not prevent testimonies and dealings on behalf of the GC for purposes within the guidelines for the Defence Procurement Strategy.

  • Respecting the provisions of the Federal Identity Program Policy and the Communications Policy of the Government of Canada

Participation in Public Events

  • Not identifying oneself as a DND employee or CAF member when participating in public events held by for-profit or non-profit entities without the prior written consent of the DM or the CDS or their delegates, as applicable, except in the course of the official duties of the DND employee or CAF member.

Note – During participation in public events, DND employees and CAF members must remain aware of their obligation of loyalty to the GC. Also, QR&O articles 19.14, Improper Comments, and 19.36, Disclosure of Information or Opinion, have application to the comments and disclosures of CAF members during their participation. 

Social Media and the Internet
  • Remaining aware of their obligation of loyalty to the GC and remaining particularly sensitive to COI or the potential for adverse public perception that may arise from the creation, sharing or discussion of information on social media and other Internet sites.

4. Civil Employment or Undertakings of CAF Members

Limitations on Civil Employment or Undertakings

4.1 QR&O article 19.42, Civil Employment, sets out limitations on the civil employment or undertakings of a CAF member who is on full-time service. To ensure any proposed civil employment or undertaking is not contrary to this article, a CAF member must submit a completed form DND 2839-E, Confidential Report, to their commanding officer (CO), requesting permission to engage in the civil employment or undertaking.

Note – A member of the Regular Force is on full-time service at all times, and a member of the Reserve Force is on full-time service when on Class “B” or Class “C” Reserve Service, in accordance with QR&O Chapter 9, Reserve Service.

Factors for a CO to Consider

4.2 When reviewing a form DND 2839-E submitted under paragraph 4.1 by a CAF member, a CO should take into consideration the following:

  1. whether the proposed civil employment or undertaking will only occur during approved leave or outside the authorized hours of duty or service of the CAF member;
  2. whether or not the potential clients of the CAF member will be primarily DND employees, other CAF members and their family members;
  3. the risk that the CAF member will be placed in a position which is not consistent with the principles of conduct set out in paragraph 3.2;
  4. the general practice in the CAF regarding the approval of this type of civil employment or undertaking; and
  5. any other factors that the CO considers to be relevant to the situation.

Military Duty Takes Precedence

4.3 A CAF member on full-time service must not engage in any civil employment or undertaking that interferes or conflicts with their military duties. The CAF member will only be permitted to engage in any civil employment or undertaking with the understanding that military duty takes precedence.

Civil Employment or Volunteering with Risk of Injury

4.4 Civil employment or volunteering such as working as a paramedic, volunteer fire fighter, member of an auxiliary police force or emergency planning organizer may result in an injury that could affect a CAF member’s service. A CAF member granted permission for such employment activity may not hold the Crown liable for any resulting injuries.

4.5 A CAF member who wishes to engage in such civil employment or volunteering must sign form DND 4086-E, Statement of Understanding for Civil Employment or Volunteering acknowledging the risks.

Review of COI by the DDEP

4.6 Once a CO has confirmed that the proposed civil employment or undertaking is not contrary to QR&O article 19.42, the CAF member must send the completed form DND 2839-E, along with the confirmation of the CO, to the DDEP in order to confirm that a COI does not prevent the CAF member from engaging in it.

5. Criteria Applicable to DND Employees and CAF Members

Applicable Criteria

5.1 In evaluating situations of COI, the permissibility of the holding of a non-exempt asset or liability, the permissibility of the conduct of an outside activity, or any action or decision of a DND employee or CAF member under this DAOD, the DDEP must consider the following:

  1. whether the holding of the non-exempt asset or liability, the conduct of the outside activity or other action or decision of the DND employee or CAF member under this DAOD complies with the principles of conduct in paragraph 3.2, the ethical principles and specific values of the Department of National Defence and Canadian Forces Code of Values and Ethics and, in the case of a DND employee, the Treasury Board (TB) Policy on Conflict of Interest and Post-Employment, as they apply in their public roles;
  2. whether the outside activity involves the use of GC property, including intellectual property;
  3. whether the outside activity is in fact to be conducted outside the official working hours of the DND employee or the authorized hours of duty or service of the CAF member;
  4. whether the holding of the non-exempt asset or liability, proposed outside activity or other action or decision of the DND employee or CAF member creates the potential for adverse public perception;
  5. whether the non-exempt asset or proposed outside activity of the DND employee or CAF member will have the GC, DND or CAF as a user or client;
  6. whether the non-exempt asset or proposed outside activity of the DND employee or CAF member will have other DND employees, other CAF members or their family members as users or clients; and
  7. any other factors relevant to the situation.

Note – In this paragraph, “outside activity” includes any civil employment or undertaking or political activity of a CAF member.

5.2 In reaching a determination, the DDEP must always defer to the broader public interest above that of the personal interest of the DND employee or of the CAF member, or the interest of the DND or the CAF.

6. Submission of a Confidential Report and Classification of Assets and Liabilities

Confidential Report

6.1 A DND employee must complete and submit form DND 2839-E for any of the activities or changes in the following table:

In the case of …the form must be submitted to the DDEP …
initial appointment to the public service or any subsequent appointment, deployment, assignment or secondment,
  • without delay if already engaging in any outside activity or political activity; and
  • within 60 days if already in possession of a non-exempt asset or liability listed in subparagraph 6.4.b.
any proposed new outside activity or political activity,
  • prior to engaging in the activity.
acquisition of a new non-exempt asset or liability,
  • without delay to indicate possession of the non-exempt asset or liability.
personal services contract with the GC,
  • prior to contracting.
an appointment to an additional public service position,
  • prior to the appointment, along with the written permission of the Director Corporate Compensation Programme (DCCP) under the Directive 6004-12, Dual Remuneration.

6.2 A CAF member must complete and submit form DND 2839-E for any of the activities or changes in the following table:

In the case of …the form must be submitted to the DDEP …
initial enrolment in the CAF or any change of duties,
  • without delay if already engaging in any civil employment or undertaking or political activity; and
  • within 60 days if already in possession of a non-exempt asset or liability listed in subparagraph 6.4.b.
any proposed new civil employment or undertaking or political activity,
  • prior to commencing the civil employment or undertaking or political activity, along with the written permission under paragraph 4.1 of this DAOD or QR&O article 19.44, Political Activities and Candidature for Office, as applicable.
acquisition of a new non-exempt asset or liability,
  • without delay.

Assets and Liabilities

6.3 DND employees and CAF members must evaluate their assets, taking into consideration the nature of their official duties and the characteristics of their assets.

6.4 Assets and liabilities of DND employees and CAF members are classified as either exempt assets, or non-exempt assets and liabilities, as described in subparagraphs 6.4.a and 6.4.b respectively:

  1. exempt assets, which are all assets and interests of a non-commercial character intended for the private use of a DND employee, a CAF member or their family members, as well as non-commercial assets, including:
    1. residences, recreational properties and farms used or intended for use by the DND employee, CAF member or their family members;
    2. household goods and personal effects;
    3. works of art, antiques and collectibles;
    4. automobiles and other personal means of transportation;
    5. cash and deposits other than foreign currencies held for speculative purposes;
    6. Canada Saving Bonds and other similar investments in securities of fixed value issued or guaranteed by any level of government in Canada or agencies of those governments;
    7. investments in limited partnerships that are not traded publicly and whose assets are exempt assets;
    8. public sector debt financing not guaranteed by a level of government, such as university and hospital debt financing;
    9. Registered Retirement Savings Plans (RRSPs) and Registered Education Saving Plans (RESPs) that are not self-administered or self-directed;
    10. investments in open-ended mutual funds;
    11. guaranteed investment certificates and similar financial instruments;
    12. annuities and life insurance policies;
    13. pension rights;
    14. money owed by a previous employer, client or partnership;
    15. personal loans receivable from members of the immediate family of the DND employee or CAF member and small personal loans receivable from other persons if the DND employee or CAF member have loaned the moneys receivable; and
    16. direct and contingent liabilities in respect of any of the assets in this subparagraph; and
  2. non-exempt assets, which are any assets that are not exempt assets, and any liabilities, including:
    1. publicly traded securities of corporations and foreign governments, and self-administered or self-directed RRSPs, and self-administered or self-directed RESPs, that are composed of securities related to defence contractors if these securities are held directly and not through units in mutual funds;
    2. interests in partnerships, proprietorships, joint ventures, private companies and family businesses, in particular those that own or control shares of public companies or that do business with the government;
    3. commercially-operated farm businesses;
    4. real property or an immovable that is not for the private use of the DND employee, CAF member or their family members;
    5. commodities, futures and foreign currencies held or traded for speculative purposes;
    6. assets placed in trust or resulting from an estate of which the DND employee or CAF member is a beneficiary;
    7. secured or unsecured loans granted to persons other than to members of the immediate family of the DND employee or CAF member;
    8. any other assets or liabilities that could create a COI due to the particular nature of the official duties and responsibilities of the DND employee or CAF member; and
    9. direct and contingent liabilities in respect of any of the assets described in this subparagraph.

6.5 The exempt assets set out in subparagraph 6.4.a are not subject to the compliance measures under this DAOD. The non-exempt assets and liabilities set out in subparagraph 6.4.b are subject to the compliance measures. DND employees and CAF members must declare any non-exempt asset or liability in form DND 2839-E.

6.6 Inquiries on the classification of assets and liabilities should be directed to the DDEP.

Divestment of Non-Exempt Assets and Liabilities

6.7 A DND employee or CAF member must divest a non-exempt asset or liability if the DM or the CDS, as applicable, determines that continued possession of such an asset or liability creates a COI.

7. Financial Arrangements and Contracting

Financial Arrangements

7.1 When negotiating financial arrangements with outside parties, a DND employee or CAF member must comply with the provisions of this DAOD, the Department of National Defence and Canadian Forces Code of Values and Ethics and, in the case of a DND employee, the Values and Ethics Code for the Public Sector and the Policy on Conflict of Interest and Post-Employment. If any doubt exists, a DND employee or CAF member must immediately report the situation to their supervisor in order to seek advice or direction on how to proceed.

Control of Contracts

7.2 A DND employee or CAF member negotiating a GC contract must ensure that the contract includes COI safeguard provisions in accordance with the Procurement Administration Manual. This is intended to prevent a former senior DND employee or former senior CAF member, who is not complying with the post-employment compliance measures, as set out in DAOD 7021-2, Post-Employment, or the Department of National Defence and Canadian Forces Code of Values and Ethics, from receiving any benefit from the contract.

Contracts for Services

7.3 While there is no prohibition against contracting for services with current and former DND employees at any level, and current and former CAF members at any rank, it is essential that the contracting be conducted honestly and prudently in order to withstand public scrutiny. A contract for services should not be used to acquire overtime services that would normally be an extension of the regular duties of a DND employee or CAF member. The contracting process must facilitate access, encourage competition and reflect fairness in the spending of public funds.

7.4 If a contract is awarded to a DND employee or CAF member, it should not give rise to any suggestion of preferential treatment. The risk of COI must be given serious consideration and, if necessary, action must be taken to alleviate the COI prior to engaging the services of any person or entity. If a potential COI situation is discovered, the matter must be disclosed to a supervisor and the COI resolved. Advice or assistance may also be sought from the DDEP.

7.5 Former DND employees or CAF members in receipt of a pension or of a lump sum payment must comply with the provisions of section 16.8 of the TB Contracting Policy, if applicable to them.

Fraud on the Government

7.6 Under paragraph 121(1)(c) of the Criminal Code, the offence of fraud on the government is committed if an official or employee of the government, directly or indirectly demands, accepts or offers or agrees to accept from a person who has dealings with the government a commission, reward, advantage or benefit of any kind for themselves or another person, unless they have the consent in writing of the head of the branch of government that employs them or of which they are an official. The CRS acts as the head of the branch of government for this provision. DND and CAF contracting authorities should make prospective employees and contractors aware of this requirement of the law. See paragraph 16.9.3 of the Contracting Policy and section 3.3.9.3.4.2 of the Articles of Agreement (AoA) for Services of the Procurement Administration Manual for additional information.

8. Privacy Issues

Protected Information

8.1 Information concerning offers of employment for DND employees, former DND employees, CAF members and former CAF members that is provided to the DDEP is designated as “Protected B” and is contained in personal information bank DND PSE 915 – Values and Ethics Codes for the Public Sector and Organization Code(s) of Conduct. Personal information is protected under the Privacy Act.

9. Consequences

Consequences of Non-Compliance

9.1 Non-compliance with this DAOD may have consequences for both the DND and the CAF as institutions, and for DND employees and CAF members as individuals. Suspected non-compliance will be investigated. The nature and severity of the consequences resulting from actual non-compliance will be commensurate with the circumstances of the non-compliance.

Note – In respect of the compliance of DND employees, see the TB Framework for the Management of Compliance for additional information.

Failure by a DND Employee to Comply

9.2 A DND employee who fails to comply with this DAOD, or the COI provisions of the Values and Ethics Code for the Public Sector or the Department of National Defence and Canadian Forces Code of Values and Ethics, may be subject to appropriate disciplinary action, up to and including termination of employment under DAOD 5016-0, Standards of Civilian Conduct and Discipline.

Failure by a CAF Member to Comply

9.3 A CAF member who fails to comply with this DAOD or the COI provisions of the Department of National Defence and Canadian Forces Code of Values and Ethics may be subject to one or more of the following:

  1. change of duties;
  2. release or other administrative action as set out in the AR Decisions paragraph of DAOD 5019-2, Administrative Review; or
  3. disciplinary action under the National Defence Act.

Recourse

9.4 Any DND employee or CAF member who disagrees with a decision on the appropriate arrangements necessary to achieve compliance with this DAOD, the Department of National Defence and Canadian Forces Code of Values and Ethics or, additionally in the case of a DND employee, the Values and Ethics Code for the Public Sector and the Policy on Conflict of Interest and Post-Employment, may have recourse by submitting a grievance in accordance with established processes.

10. Responsibilities

Responsibility Table

10.1 The following table identifies the responsibilities associated with this DAOD:

The …is or are responsible for …
Assistant Deputy Minister (Human Resources – Civilian)
  • ensuring that all letters of offer to DND employees include a statement that the Values and Ethics Code for the Public Sector, the Department of National Defence and Canadian Forces Code of Values and Ethics and the Policy on Conflict of Interest and Post-Employment apply to them as conditions of employment.
DDEP
  • notifying the CRS of any non-compliance with this DAOD.
DND employees and CAF members
  • reviewing their obligations under this DAOD and the Department of National Defence and Canadian Forces Code of Values and Ethics:
    • on initial appointment for DND employees;
    • on enrolment for CAF members; and
    • each time a major change occurs in their personal affairs or official duties.

 

11. References

Acts, Regulations, Central Agency Policies and Policy DAOD

Other References