American money buying Canadian elections

When Big Oil intervenes in Canadian politics, it does so with foreign money—and on a huge scale

Gordon Laxer
4 months ago

This is the part 2 in a series of excerpts from Gordon Laxer's new report, "Posing as Canadian: How Big Foreign Oil captures energy and climate policy" — co-published by the Council of Canadians, CCPA BC, and CCPA Saskatchewan.

Click here for part 1 of the series, and here to read the full report.

When the report of the inquiry into so-called anti-Alberta energy campaigns was released in October 2021, Alberta Energy Minister Sonya Savage said it was a “real concern” that any group is “influencing political and regulatory change using foreign funding.” But if political intervention by foreign money is the issue, why did the Alberta government not look at the much greater foreign funding intrusions by big oil and gas corporations? Size matters.

All the big oil and gas producers operating in Canada are either fully or majority foreign-owned. None are majority Canadian-owned. Most call themselves Canadian and list their headquarters in Calgary. But being foreign-owned means being foreign-funded. When Big Oil intervenes in Canadian politics, it does so with foreign money, and on a huge scale.

The Alberta government’s accusations about the foreign funding of Canadian environmentalists assume that who pays the piper calls the tune. If that assumption has validity, then the power and influence of foreign-owned petro corporations in Canada is enormous – because the scale of their financial and organizational resources is vast.

Oil corporations in Alberta and Canada are overwhelmingly foreign-owned. And by capturing and controlling the lion’s share of the industry, Big Foreign Oil (BFO) exerts considerable power over provincial and federal climate and energy policies too.

Foreign-owned corporations dominate CAPP’s board

BFO’s main vehicle for asserting its power is Canada’s apex oil and gas lobby group, the Canadian Association of Petroleum Producers (CAPP). While CAPP claims to champion Canadian interests, beginning with its name, it is dominated by some of the wealthiest BFO corporations in the world. The political power CAPP wields is the very definition of foreign-funded influence in the country.

At the outset of researching this report, I did not know the extent of foreign ownership among CAPP’s corporate board members and was surprised to learn the scale of their preponderance. My research discovered that a little over 75 per cent of CAPP’s board members represented corporations that were fully or mainly foreign-owned. Of the 48 corporations on CAPP’s board, 30 were confirmed to be fully or majority foreign-owned, while seven more are very likely majority foreign-owned.

Since corporations on CAPP’s board that were Canadian-owned were much smaller producers, it became evident that oil production by petro corporations on CAPP’s board is overwhelmingly dominated by foreign-owned corporations. About 97 per cent of all the oil produced by corporations on CAPP’s board in 2018 came from fully or majority foreign-owned corporations.

But none of this has stopped CAPP from wrapping itself in the maple leaf flag and hypocritically lambasting environmentalists as traitors to Canada.

Foreign interference in Canadian politics

Despite being dominated by Big Foreign Oil, CAPP has benefited from a loophole that allows it to circumvent rules preventing foreign money interference in Canadian elections. As a well-funded, registered third party, it has commanded the attention of voters and political leaders during election campaigns. And as an organization with financial heft, it has influenced elections through advertising spending and indirect political donations.

After allegations of Russian meddling tainted the validity of the 2016 U.S. presidential election, Ottawa updated election laws to prohibit foreign interference in Canadian federal elections. The 2018 Elections Modernization Act forbade foreign third parties from participating in elections and incurring expenses for activities during pre-election and election periods.[1] Third parties may not use funds for a regulated activity “if the source of funds is a foreign entity.”[2] Yet, Elections Canada left a loophole as wide as a prairie sky. According to the Act, foreign entities include “corporations outside Canada,” but not foreign-owned corporations with headquarters in Canada.[3] Most foreign-owned oil corporations list their headquarters in Calgary. Setting up shop inside Canada has long been a way for foreign corporations to pose as Canadian.

CAPP drove right through the Elections Canada loophole. For the first time, it was allowed to register as a third-party advertiser in the 2019 federal election, letting it run ads supporting specific candidates and political parties and advocating on key issues. Elections Canada permits third parties to spend up to one million dollars in the pre-writ period and up to $500,000 during the election campaign. Big Oil has big money, and money talks in elections.

CAPP makes its influence felt in federal and Alberta elections in other ways too. It has tried to influence voters through Canada’s Energy Citizens – a front group working to bolster support for further oil and gas extraction that deceptively appears to be grassroots and citizen-based. As heads of foreign-financed corporations, oil executives on CAPP’s board also advance BFO’s interests in elections through financial donations. Corporate political donations are banned federally, as well as in Quebec, Nova Scotia, Manitoba, and Alberta. But corporate executives can partly get around the bans by making big donations as individuals and through family members, notably their spouses.[4] The individual donations of CAPP board members were not spread across the political spectrum. Federal and Alberta Liberals got significant donations, but the vast majority went to conservative parties that oppose taking meaningful climate action.

Meanwhile, CAPP engages in xtensive lobbying on behalf of BFO and has had a long-standing grip on Albertan governments regardless of political stripe. Its 36 full-time lobbyists have privileged access to federal government officials and continually communicate with them, especially when climate and energy legislation is being considered. As well, CAPP has the power to command the attention of political leaders. This was shown, for example, when it held a one-day closed meeting with the federal Conservatives in the run-up to the 2019 federal election.

In sum, CAPP has used its foreign-funded, financial heft to intervene heavily in elections in this country.

Blocking climate action

Canada is the G7 laggard in cutting emissions. With only 0.48 per cent of the world’s population, this country emits 1.5 per cent of the global total.

A 2019 Environmental Defence report revealed that for Canada to meet its Paris pledge, “the collective emissions of British Columbia, Manitoba, New Brunswick, P.E.I. and Nova Scotia plus the three territories would have to disappear entirely by 2030 just to make room for the growth in oil and gas emissions.”[5]

As Big Foreign Oil’s advocate in Calgary, CAPP is the main obstacle to Canada’s ability to cut carbon pollution. It has hindered Alberta and Canada from taking necessary climate action, including setting a timeline to phase out fossil fuel production.

Big Oil’s defence is that they provide lots of jobs. That is false. The oil and gas sector generates very few jobs. In 2019, it directly employed 55,853 people – one-third of one per cent of all payroll employment in Canada.[6] When jobs in petrochemicals, natural gas distribution, and pipelines are added in, total direct employment in the broader oil and gas sector was 97,713. That’s 0.58 per cent, or under six-tenths of one per cent of all jobs in Canada. Remaining jobs in the sector are steadily falling because oil sands corporations are “demanning” the industry to reduce costs.

The oil and gas sector is a very poor producer of jobs because, on average, it creates only one half a job for every million dollars in value-added.[7] No other major Canadian economic sector generates so few jobs per unit of value added. In contrast, Canada’s economy as a whole spawns an average of 8.6 jobs for each million dollars of value-added.[8] Owners of petro corporations, not those who work for them, get most of the economic benefits from the vast revenues created.[9] Most of the profits leak out of Canada because, as we saw earlier, a solid majority of owners of oil sands corporations reside outside of the country.

The public inquiry into foreign funding launched by the Alberta UCP government targeted a molehill and missed the Rockies. If, as the government claimed, the aim of the inquiry was to expose the influence of foreign actors over domestic policy, it missed the mark badly. Right under its nose was a far larger source of outside money influencing Albertan and Canadian politics. By controlling the lion’s share of the oil industry and its profits while having an outsized influence on policy-making, Big Foreign Oil has been a colossal barrier to effective climate action in this country.


References:

[1] “Bill C-76,” Parliament of Canada, https://www.parl.ca/DocumentViewer/en/42-1/bill/C-76/royal-assent

[2] “New Requirements for Third Parties: Corporations, Unions, Groups and Individuals,” Elections Canada, June 14, 2019.

[3] Awanish Sinha et al., “Election 2019: What Canada is – and isn’t – doing to prevent foreign interference,” McCarthy Tetrault. August 4, 2019, https://www.mccarthy.ca/en/insights/articles/election-2019-what-canada-and-isnt-doing-prevent-foreign-interference

[4] Harold Jansen (updated by Andrew McIntosh), “Political Party Financing in Canada,” The Canadian Encyclopedia, last modified December 16, 2020, https://www.thecanadianencyclopedia.ca/en/article/party-financing.

[5] Environmental Defence, “The Single Biggest Barrier to Climate Action: the oil and gas lobby,” October 2019, https://environmentaldefence.ca/report/oil_barrier_climate_action_canada.

[6] Jim Stanford, Employment Transitions and the Phase out of Fossil Fuels (Vancouver: Centre for Future Work, January 2021). Bruce Anderson and David Coletto, “Public perspectives on Canada’s oil resources,” Abacus Data, November 24, 2016, https://abacusdata.ca/public-perspectives-on-canadas-oil-resources.

[7] Ibid., 26.

[8] Ibid., 25.

[9] Ibid., 28.