Barry Sherman’s death cuts short the lobbying probe against him

The federal lobbying commissioner has dropped her high-profile investigation into Apotex founder Barry Sherman—and the Liberal fundraiser he hosted for Justin Trudeau—because she says there is no point in continuing the probe now that the billionaire drug maker is dead.

But the case isn’t closed quite yet. Democracy Watch, the advocacy group that triggered the investigation last year after filing a formal complaint, is promising to challenge the commissioner’s decision in Federal Court.

The chairman of Canada’s largest pharmaceutical firm, Sherman was the target of Ottawa’s lobbying watchdog in the months before he and his wife, Honey, were discovered dead inside their Toronto mansion on Dec. 15. At the heart of the investigation was an exclusive Liberal party fundraiser Sherman hosted at his home in August 2015—featuring soon-to-be Prime Minister Justin Trudeau as guest of honour—and whether that event breached the Lobbyists’ Code of Conduct.

A registered lobbyist (which Sherman was at the time, as chair of Apotex) is prohibited from placing elected officials in a potential conflict of interest that could make them feel “a sense of obligation.”

Last May, Sherman and his company responded to the investigation with a Federal Court challenge, hoping to quash the commissioner’s “unanchored fishing expedition” before it even finished. The case marked a first: never had someone gone to court to try to derail an active probe by the lobbying commissioner.

READ MORE: Barry Sherman’s death is forcing the lobbying commissioner to make a tough decision

After the Shermans’ bodies were discovered, outgoing commissioner Karen Shepherd said she was assessing the fate of her investigation. In the meantime, the court challenge inched ahead. Lawyers for both sides filed fresh written arguments on Dec. 29—the same day, by chance, that Rideau Hall announced Sherman’s posthumous appointment to the Order of Canada—and a hearing was scheduled for Feb. 8 in Ottawa.

Last week, however, both sides agreed to pause the highly publicized court action while the new commissioner, Nancy Bélanger, contemplated the most obvious question: Should her office bother with the investigation now that Sherman is dead? Bélanger, who replaced Shepherd on Dec. 30, promised an answer by Feb. 2.

That answer arrived this morning in a short letter addressed to Democracy Watch. “As you know, Dr. Sherman passed away in December 2017,” Bélanger wrote. “Subsection 10.4(1.1) of the Lobbying Act provides me with the authority to cease an investigation if I believe there is a ‘valid reason for not dealing with the matter.’ In light of Dr. Sherman’s passing, the purpose of the investigation to ensure his compliance with the Code can no longer be fulfilled.”

“Accordingly, I decided to cease the investigation,” she continues.

Duff Conacher, co-founder of Democracy Watch, says the investigation must continue because the case goes much deeper than Sherman himself. His organization plans to file its Federal Court challenge in the coming days, he says. “It is legally incorrect for the new Lobbying Commissioner to ignore the fact that Barry Sherman was chairman and registered to lobby on behalf of Apotex Inc. when he helped raised more than $100,000 for the Liberal Party by hosting an event that Justin Trudeau attended,” Conacher said in a news release. “[H]is huge, unethical favour will continue to help Apotex in its dealings with the Trudeau Liberals even though Mr. Sherman and his spouse unfortunately passed away recently.”

RELATED: Jonathon Sherman pays tribute to his parents Barry and Honey Sherman

A spokesman for Apotex has yet to respond to a request for comment.

The lobbying saga dates back to October 2016, when Democracy Watch filed a formal complaint against Sherman in connection with a cash-for-access fundraiser featuring Finance Minister Bill Morneau. Sherman was among those reportedly selling $500 tickets to the event, scheduled for Nov. 7, 2016.

A few days before the fundraiser, an investigator from the commissioner’s office visited Apotex headquarters in Toronto, where Sherman agreed to a tape-recorded interview. During the conversation, he openly discussed the other fundraiser held at his house on August 26, 2015, which featured then-Liberal candidate Michael Levitt, now an MP, along with Trudeau. Sherman said his wife organized the logistics, that the guest list was somewhere between 100 and 150 people and that he believed the proceeds were split between the Liberal Party of Canada and Levitt’s electoral district association. A ticket reportedly cost $1,500.

The day after the interview, Democracy Watch filed a second complaint, this one alleging Sherman breached the lobbyists’ code when he hosted his 2015 fundraiser. Although an administrative review found insufficient evidence to support the first complaint, the commissioner’s director of investigations, Phil McIntosh, did conclude there was reason to believe Sherman’s at-home fundraiser created “a sense of obligation on the part of one or more public office holders.” He recommended last January that Shepherd commence a full investigation. She agreed.

RELATED: Ambrose asks federal watchdogs to investigate Liberal fundraisers

A few months later, the commissioner issued subpoenas against two senior Apotex officials: president and CEO Jeremy Desai, and Elie Betito, a former director of government relations who was among the guests at the 2015 fundraiser. That’s when lawyers for Sherman and Apotex turned to Federal Court, decrying the ongoing investigation as unconstitutional and launched in “bad faith.” Faced with mounting legal bills, Shepherd was eventually forced to request $400,000 from a parliamentary committee or risk conceding defeat.

For the chairman of Apotex, the stakes were undoubtedly high. Although a breach of the lobbying code does not carry fines or jail time, it does trigger a public rebuke in a report to Parliament. And because a person who campaigns or fundraises for a political party is barred from lobbying that same party for five years, Sherman faced the possibility of being stripped of his status on the lobbyist registry until at least 2020.

It’s not clear whether the commissioner’s investigation could have resulted in wider sanctions against Apotex or the company’s other lobbyists. Again, the fall-out would have been considerable. Apotex representatives are active lobbyists on the Hill in the fields of health, industry and patent rights.

Toronto police continue to investigate the Shermans’ deaths, which they’ve termed “suspicious,” but detectives have revealed few other details. Last weekend, unconfirmed reports said a team of private investigators hired by the Sherman family has concluded that both Barry and Honey were murdered.

Leading the private probe is Tom Klatt, a retired Toronto homicide detective who was recently retained to investigate sexual abuse revelations at the prestigious Lakefield College School, just north of Peterborough, Ont.