OTTAWA—Kevin McCarthy, Finance Minister Jim Flaherty’s chief of staff and one-time chief policy adviser on the banking sector, is leaving the federal government to go to a new job at Scotiabank, the Star has learned.

Sheena Findlay, a spokesperson for the bank, confirmed it has hired McCarthy as “a director in our Canadian Banking business, effective Nov. 1.”

McCarthy’s beeline into a Bay Street job in a federally regulated industry may not violate the Conservative government’s conflict of interest or lobbying laws, but Democracy Watch spokesman Duff Conacher said the move shows how weak the rules really are.

“It’s all a bit of a joke,” Conacher said. “They’ve spun it well. Most people think there is a five-year ban on lobbying, but there isn’t; you can lobby the day you leave government as long as it just takes less than 20 per cent of your time, or one day a week.”

It remains unclear whether McCarthy will be lobbying his former department or providing strategic advice based on his nearly eight-year career in the finance department.

Findlay, manager of media communications with Scotiabank’s public, corporate, and government affairs office, told the Star in an email that McCarthy “will be working through a rotational program to learn the business. After the rotation is complete, he will be considered for further opportunities within the business.”

McCarthy is Flaherty’s top ministerial aide, a job he’s held for three years and three months, according to his online professional profile on LinkedIn. Prior to that, he worked with Flaherty in a variety of roles, including deputy chief of staff, director of policy and policy adviser since 2006.

He stepped into the chief of staff job in July 2010 after Derek Vanstone moved to the Prime Minister’s Office as Stephen Harper’s deputy chief of staff. Vanstone last year took up a job as Air Canada’s vice-president, corporate strategy, industry and government affairs.

When Vanstone’s industry appointment made news, the PMO said he had gotten a green light from the federal ethics commissioner’s office. But that office officially declined comment at the time, citing confidentiality of advice it offers public office holders.

On Tuesday, the Star sought comment but received no response from McCarthy. But a spokesperson for Flaherty’s office said late Tuesday McCarthy “followed all required procedures around the consideration and acceptance of his position at Scotiabank, as he was in contact with the ethics commissioner’s office throughout this process and received their guidance.”

Ethics Commissioner Mary Dawson’s office said she at times provides guidance on post-employment rules to individuals but does not “approve” new jobs. Jocelyne Brisebois declined all comment on McCarthy’s case, citing confidentiality rules.

Flaherty’s spokesperson Kathleen Perchaluk claimed the ethics commissioner “approved his new position” and directed further questions to her.

Federal lobbying and conflict-of-interest laws prohibit public office holders such as senior ministerial staff from lobbying their former departments for five years after leaving. But Conacher says that law is toothless.

Public office holders, which includes ministerial staff like McCarthy, are barred from contracting with, serving on the board of directors of, or working for any entity with which they had “direct and significant official dealings during their last year in office.” But the phrase “direct and significant official dealings” is not defined in the act.

Individuals must disclose in writing within seven days to the ethics commissioner any outside offers of employment they receive while in office, and any acceptance of an outside job offer. It’s not clear if this was done in McCarthy’s case.

And public office holders are prohibited from providing advice to any clients, business associates or employers “using information that was acquired in the course of your official duties and that is not available to the public.”

Conacher says it all amounts to little. He cited a series of staff departures from the Harper government that don’t pass Democracy Watch’s smell test, including Vanstone’s.

Conacher says if a public office holder claims no significant dealings with a prospective employer within the past year, nothing prevents them from landing a well-paying job where they can trade on “insider knowledge.”

“That’s why they’re hired, to give that kind of insider’s look to the entity that hires them.”

Conacher argues Dawson should conduct audits of the employers to ensure the law is enforced.

Certainly Scotiabank lobbies the federal government on a range of activities. Recent registrations of Scotiabank’s federal lobbying activity show no direct work with McCarthy, but do identify lobbying of the finance minister himself and others in his office.

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McCarthy, a Queen’s University graduate in history and political studies, would have an important grasp of the government’s intentions in the sector and would have been involved in the drafting of the 2013 budget in which Flaherty devoted a section to “Building on Canada’s Financial Sector Advantage,” including “implementing a comprehensive risk management framework for Canada’s systemically important banks.”

“This framework will be consistent with reforms in other countries and key international standards, and will work alongside the existing Canadian regulatory capital regime in order to reduce potential risk to taxpayers,” the budget said.

In a speech to his caucus last spring, Harper boasted he had “dramatically tightened” federal accountability laws as promised in the fall of 2005, when he warned: “If there are Hill staffers who dream of making it rich trying to lobby a future Conservative government, if that’s true of any of you, you had better make different plans, or leave.”

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