Public servant who promoted $225M baby formula plant now sits on Chinese investor's board

The former head of the Canadian Dairy Commission who facilitated a $225-million investment by a Chinese dairy processor to build an infant formula plant in Kingston, Ont., is now serving on that same Chinese corporation's board.

In keeping with the "cooling-off" period required by federal law, Jacques Laforgewaited a year before accepting thispaid role. But he was notrequired to notifythe federal ethics commissioner in order to evaluate whether the move wasappropriatesomething that troubles critics of Canada's current conflict of interest rules.

Laforge, a New Brunswick dairy farmer and a former president of the Dairy Farmers of Canada, was appointed CEOof the commission by then-agriculture minister Gerry Ritz in 2012.

The director ofcorporate services forthe Canadian Dairy Commission (CDC), Chantal Paul, confirmed to CBC News that Laforge's mandate ended inMay2018 and he left the Crown corporation at that time.

The corporate website for China Feihe Limited saysLaforge was appointed as one of its three independent non-executive directors in June 2019. Hisappointmenttook effect in October, just over a month beforethe Canary Islands-registered corporation waslisted on the Hong Kong stock exchange.

Under Laforge'sleadership, the CDCsigned agreements in 2016 with Feiheto build anew manufacturing facilityin Canada, where no other dairy processormakesinfant formula.

Now incorporated in Canada under the nameCanada Royal Milk, thefactory took its first deliveries of Ontario milk in December and currently istesting its processingline. Once production ramps up, most of the formula will be exportedto China.

Documents obtained by CBC News under the Access to Information Act show that during Laforge'sfinal two years as CEO, the CDCset upmeetings forFeihe executives withother levels of government and federal regulators. Laforge also travelled to China multiple times, meeting with Feihe's chairman Leng Youbin and Chinese government officials.

"I definitely was involved in bringing them to Canada," he told CBC News. "We spent a lot of energy ...We opened up the doors for them."

Laforgesaid he doesnot believe his role as one of three rotating independent board members amounts to a conflict with his former role at a Crown corporation because it's "99 per cent international" and won't deal directly with the Canadian factory.

No disclosure required

Despite his direct dealingswith Feihe as a public official, Laforgetold CBC he did not clear his new job with the federal ethics commissioner.

When asked what post-employment rules apply forLaforge, the CDC's Paul suggestedthe CBC examine Section 33 of the Conflict of Interest Act.

It says: "No former public office holder shall act in such a manner as to take improper advantage of his or her previous public office."

A spokesperson for Conflict of Interest andEthicsCommissionerMario Dionsaid his officecan't answer questions about individuals because of confidentiality rules, but confirmed that Laforge'sone-year "cooling-off period" is over, sohis board appointment is no longer prohibited.

Guy Giorno, a former chief of staff to Stephen Harper who now advises clients onethics and accountability in his legal practice, said not requiring a former senior civil servantlike Laforgeto discloseoffers of employment and submit to an ethics reviewamounts to a "hole" in the law.

"It ought to be mandatory, and it stands to reason that the commissioner can't do a very good job policing people who have left when he's not under the statute required to be told about everybody who is seeking a new position," Giorno said.

'Fuzzy' rules

Nevertheless, several federal ethics rules apply for life, Giorno said.

Laforgecan't give advice based on confidential information he knewas head of the CDC, and he can't "switch sides" and start working for Feiheon any financial transactions or legal proceedings he handledat the Crown corporation.

But Section 33, the rule against "taking improper advantage of a previous office,"hasn't been interpreted very often.Giorno called it "very fuzzy."

"That doesn't mean it's unimportant as a general rule ... In fact, it's the first listed in the statute," he said.

Government service brings with it a network of contacts, goodwill and other "intangible things" which taxpayers paid Laforgeto acquire, Giorno said.

"My own personal view is that Parliament intended to police the profiting from the monetization of those things," he said.

"Nothing happens for nothing. A former public servant must always be asking, 'Why are they paying me?'"

Protectingshareholders from'boo-boos'

Laforgesaidhe received a number of requestsafter he left the CDC. He followed itsinternal policy and waited a year before saying yes to anything, including Feihe's offer last summer.

"It's my first time doing this. I didn't know too much about independent directors," he said. "Common sense was telling me, stay away for a year, and when you start taking things make sure that it's not in conflict of interest with some files."

"They might have a Chinese namebut ... they want to source and do things internationally," he added."I'm there to observe that they don't make any boo-boos affecting the shareholders."

He saidhe hasn't been paid yet, but expects his compensation to follow theguidelines of the Hong Kong exchange, which provide for a "basic fee of at least $400,000 HK ($67,000 Cdn) per year, coupled with additional payments for membership or chairing of board committees."Laforgesits on twocommittees, including Feihe'saudit committee.

"It might look lucrative," he said, adding it's not clear how much time it will require.

He also admits he's nervous about the potential consequences of taking on this role.

"I know Feihe's a good company, but companies are companies. They go sideways once in a while," he said.

Normalizing China

David Mulroney, Canada's ambassador toChina from 2009-12, said it's not necessarily bad for a company that wants to build a high-quality reputation to have a Canadian aboard.

DuringChina's 2008tainted baby formula scandal, which involvedFeihe's competitor, directors on thatcompany's board from New Zealand helpedbring the facts to light.

While Laforge said his role with the company is largely international,Mulroneysaid the rationale forhis appointment still needs to be explored and explained.

And although Laforge's appointment respects the "cooling-off" period in the law, Mulroney said that year-long period is too short and Canadians should expect public servants to do more than tick the box on the minimum post-employment requirements.

"There's something wrong with the speed with which elected officials and senior officials aretaking jobs that do suggest they're trading on their past experience," the ex-ambassadorsaid.

"The Chinese may be on the lookout for guanxiopportunities in Canada," Mulroneysaid, using a term that means "connectedness" to referto theChineseapproach tonetworking through seeking out personal connections.

Without singling out Feihe, Mulroney said that China's corporate sector writ large is widely seen as too closely linked to the Chinese government.

"It's ... increasingly unclear in Xi Jinping'sChina that there are companies at all separate from the Chinese Communist Party," he said.

"It's difficult to understand why so many high-profile Canadians are allowing themselves to be associated with Chinese firms. It normalizes China at a time when China is anything but normal."

Feihe representatives have not responded to multiple interview requests inrecent months.

CBC News asked Laforge about his decision to accept this workat a delicate time in CanadaChinese relations.

"Believe me ... don't think that's not crossing my mind," he said. "It's too late now."