Public official who promoted $ 225 million in baby formula factories is now on the board of Chinese investors

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The former head of the Canadian Dairy Commission, which facilitated an investment of $ 225 million from a Chinese dairy processor to build a infant formula factory in Kingston, Ontario. is now serving on the same board as the Chinese company.

According to the "reflection" period required by federal law, Jacques Laforge waited a year before accepting this paid role. But he was not required to notify the federal ethics commissioner to assess whether the measure was appropriate – something that bothers critics of Canada's current conflict of interest rules.

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Laforge, a New Brunswick milk producer and former president of Dairy Farmers of Canada, was CEO appointed of the commission of the then Minister of Agriculture Gerry Ritz in 2012.

Canadian Dairy Commission (CDC) director of corporate services, Chantal Paul, confirmed to CBC News that Laforge's term ended in May 2018 and he left the Crown corporation at that time.

China's corporate website Feihe Limited says Laforge was named as one of its three independent non-executive directors in June 2019. His appointment took effect in October, just over a month before the Canary Islands-listed company was listed on the Hong Kong stock exchange.

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Under Laforge's leadership, CDC signed agreements in 2016 with Feihe to build a new factory in Canada, where no other dairy processor produces infant formula.

Now incorporated in Canada under the name Canada Royal Milk, the factory made its first deliveries of milk from Ontario in December and is currently testing its processing line. Once production increases, most of the formula will be exported to China.

The documents obtained by CBC News under the Access to Information Act show that, during Laforge's last two years as CEO, the CDC organized meetings for Feihe executives with other levels of government and federal regulators. Laforge has also traveled to China several times, meeting with Feihe President Leng Youbin and Chinese government officials.

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Leng Youbin, president of China Feihe Limited, at an event that marked Feihe's initial public offering in Hong Kong in October. Laforge met with the chairman of Feihe several times while serving as CEO of the Canadian Dairy Commission. (Zhang Wei / China News Service / VCG / Getty Images)

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

Laforge said he does not believe that his role as one of the three independent rotating members of the board represents a conflict with his former position at a Crown corporation because he is "99% international" and does not negotiate directly with the Canadian factory.

No disclosure required

Despite his direct relations with Feihe as a civil servant, Laforge told CBC that he has not released his new job with the federal ethics commissioner.

When asked what post-employment rules apply to Laforge, Paul of the CDC suggested that CBC examine Section 33 of the Conflicts of Interest Act.

He says: "No ex-public servant should act in a way to take undue advantage of his previous public office."

A spokesman for Commissioner for Conflicts and Interests, Mario Dion, said his office was unable to answer questions about individuals because of confidentiality rules, but confirmed that Laforge's one-year "cooling-off period" was over, so his appointment was over. on the council is no longer prohibited. .

Royal Royal Milk's baby formula factory in Kingston, Ontario's Cataraqui Estates Business Park, was the result of a $ 225 million foreign direct investment in Canada's dairy processing industry. (Feihe International Inc.)

Guy Giorno, former chief of staff to Stephen Harper, who now advises clients on ethics and responsibility in their legal practice, said he does not require a former senior civil servant like Laforge to post job offers and undergo an ethical review is equivalent to a "hole" "in the law.

"It should be mandatory, and it is logical that the commissioner cannot do a very good job of policing the people who left when he is not under the statute, who need to be informed about everyone who is looking for a new position," said Giorno. .

Rules & # 39; confusing & # 39;

However, several federal ethical rules apply throughout life, said Giorno.

Laforge cannot give advice based on confidential information that he knew as head of the CDC, and he cannot "switch sides" and start working for Feihe in any financial transactions or legal processes that he managed at the Crown corporation.

But Section 33, the rule against "taking an improper advantage from a previous position", has not been interpreted very often. Giorno called it "very confused".

"This does not mean that it is not important as a general rule … In fact, it is the first listed in the bylaws," he said.

The government service brings with it a network of contacts, goodwill and other "intangible things" that taxpayers paid Laforge to acquire, said Giorno.

"My personal opinion is that Parliament intended to police the profits from monetizing these things," he said.

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

Protecting shareholders from boo-boos

Laforge said he received a series of requests after he left the CDC. He followed his domestic policy and waited a year before saying yes to anything, including Feihe's offer last summer.

"It's the first time I've done this. I didn't know much about independent directors," he said. "Common sense was telling me, stay away for a year, and when you start taking things, make sure there are no conflicts of interest with some files."

Kingston, Ontario. Mayor Bryan Paterson, seen here on a visit to a Feihe plant in China, was one of several employees that the Canadian Dairy Commission helped connect with Chinese executives to take the plant to Canada. (Mayor Bryan Paterson's office)

"They may have a Chinese name, but … they want to get and do things internationally," he added. "I am there to note that they do not do boo-boos affecting shareholders."

He said he has not yet received the payment, but expects his remuneration to follow the guidelines of the Hong Kong stock exchange, which provides for a "basic fee of at least HK $ 400,000 (Canadian $ 67,000) per year, along with additional membership payments or chairman of the council commissions ". Laforge is a member of two committees, including Feihe's audit committee.

"It may look profitable," he said, adding that it is unclear how long it will take.

He also admits that he is nervous about the possible consequences of taking on that role.

"I know Feihe is a good company, but companies are companies. They get away from time to time," he said.

Normalizing China

David Mulroney, Canada's ambassador to China between 2009 and 2012, said it is not necessarily a bad thing for a company that wants to build a high-quality reputation to have a Canadian on board.

During 2008 from China contaminated baby formula scandal, which involved Feihe's competitor, the New Zealand company's board directors helped clarify the facts.

While Laforge said his role at the company was largely international, Mulroney said the rationale for his appointment had yet to be explored and explained.

After the contaminated milk scandal in 2008 that left thousands sick and killed six children, many Chinese parents now buy imported baby formula. Feihe is using Canadian milk to boost its brand reputation. (By Han Guan / Associated Press)

And while Laforge's appointment respects the law's "cool down" period, Mulroney said the one-year period is too short – and Canadians should expect public officials to do more than set minimum post-employment requirements.

"There is something wrong with the speed with which elected officials and senior officials are taking on jobs that suggest they are exchanging previous experiences," said the former ambassador.

"The Chinese may be looking for guanxi opportunities in Canada," said Mulroney, using a term that means "connectivity" to refer to the Chinese approach to creating networks, looking for personal connections.

Without highlighting Feihe, Mulroney said that China's large-scale corporate sector is widely seen as closely linked to the Chinese government.

"It is … increasingly clear in Xi Jinping's China that there are separate companies from the Chinese Communist Party," he said.

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

Feihe representatives have not responded to several requests for interviews in recent months.

CBC News asked Laforge about his decision to accept this job in a delicate moment in Canada-China relations.

"Believe me … don't think this isn't going through my head," he said. "It's too late now."

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