Ethics commissioner rules Palantir’s MacNaughton broke conflict-of-interest rules, orders top federal officials to cease contact

David MacNaughton, then-Canadian ambassador to the U.S., at a news conference in Washington, D.C. in June 2019.
David MacNaughton, then-Canadian ambassador to the U.S., at a news conference in Washington, D.C. in June 2019. AP Photo/J. Scott Applewhite

OTTAWA — Palantir Canada president David MacNaughton broke conflict-of-interest rules by offering the data-mining company’s services to the federal government as part of its response to the COVID-19 pandemic, federal ethics commissioner Mario Dion ruled Wednesday. The watchdog also ordered nine top government officials to “restrict their official dealings” with the former Canadian ambassador to the U.S.

The watchdog’s ruling covers Innovation Minister Navdeep Bains, Deputy Prime Minister Chrystia Freeland, and senior staff and civil servants in several departments as well as the Prime Minister’s Office, for a period of one year.

In June, Dion’s office launched an investigation into whether the ex-ambassador and counselor to Prime Minister Justin Trudeau had breached conflict-of-interest rules, prompted by a letter from NDP ethics critic Charlie Angus after The Logic reported that MacNaughton had said Palantir was working with the federal government and several provinces on their responses to the COVID-19 pandemic.

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Talking Point

Palantir Canada president David MacNaughton broke the Conflict of Interest Act when he met with senior federal officials to offer the data-mining firm’s services pro bono to help with the government’s COVID-19 response, ethics commissioner Mario Dion ruled Wednesday.

The commissioner’s ruling states that MacNaughton reported multiple meetings with the nine officials “for the purpose of offering pro bono assistance on behalf of Palantir in respect of the Government of Canada’s response to the COVID-19 pandemic.” While the company wasn’t awarded a contract as a result of the contacts, they “could have furthered the firm’s interests.” That contravenes a section of the Conflict of Interest Act that states former high-level officials cannot “take improper advantage of his or her previous public office.”   

Palantir did not immediately respond to The Logic’s request for comment. The commissioner’s release states that MacNaughton has consented to the order, and has acknowledged that his contacts with federal officials contravened the Act.

Angus wrote to both Dion and lobbying commissioner Nancy Bélanger in May asking them to investigate MacNaughton’s contacts with federal officials. “Palantir is a very controversial, powerful, secretive company,” Angus told The Logic on Wednesday. “For them to set themselves up within the corridors of power in Canada requires a public discussion.” He called MacNaughton “a powerful Liberal insider,” saying the former ambassador had “used his contacts” with senior ministers in “a very short space of time.” 

Palantir makes software to analyze large amounts of data. Its work with U.S. authorities has attracted public scrutiny. Latinx advocacy organization Mijente said U.S. Immigration and Customs Enforcement used the company’s software to arrest relatives of unaccompanied children who crossed into the U.S. via the Mexican border; Palantir has denied its technology is used in deportation and detentions. Last year, the Los Angeles Police Department ended a program that used the firm’s technology to identify people it determined were likely to commit crimes, which a civil rights group said created a “racist feedback loop.” 

Palantir’s corporate customers have included Airbus, Credit Suisse, Merck and BP. In July, it filed for a public listing; the company’s filings with the U.S. Securities and Exchange Commission show it made revenues of US$742.5 million in 2019, with government clients contributing 46.5 per cent of that.  

The Logic first reported that MacNaughton told a private event in April that Palantir was working with Ottawa, and that the company was offering its services to governments for free during the pandemic. At the time, spokespeople for Health Minister Patty Hajdu and her department said they were unaware of any work or discussions with Palantir, and that the federal government had not entered into any contracts with the company as part of its antiviral efforts.

Following The Logic’s report, Bains told a House of Commons committee that the former ambassador had “engaged with many” in the federal government to offer “solutions and ideas on how to help Canadians.” MacNaughton himself told Politico he was in contact with cabinet ministers and political staff, but had not lobbied on Palantir’s behalf.

The commissioner’s order details 17 communications between MacNaughton and the nine public office holders listed. The former ambassador contacted Bains in March to arrange a meeting with Public Service and Procurement Canada Canada on the firm’s pro bono offer, and later the same week discussed its work “to track COVID-19” in other jurisdictions with Bains’s chief of staff Ryan Dunn. In early April, MacNaughton met Simon Kennedy, deputy minister of Innovation Science and Economic Development Canada (ISED), a conversation that also covered how Palantir could assist “with COVID- related supply chain issues.”

In April, The Daily Beast reported the company had a contract with the U.S. Department of Health and Human Services to use its software to aggregate data on capacity, testing and supply chains across multiple levels of government and health-care facilities to track the spread of COVID-19. The Wall Street Journal reported authorities in more than a dozen countries were using its modelling tools as part of their COVID-19 responses.

In response to a question from The Logic, Trudeau told reporters in June he had not spoken to MacNaughton about Palantir,. Dion’s order notes that in early March, the former ambassador did tell Rick Theis, director of policy and cabinet affairs in the prime minister’s office, about the company’s work with the U.S. Centers for Disease Control and Prevention (CDC).

MacNaughton also had three conversations with Freeland in March—who, as minister of international trade and then of foreign affairs, worked closely alongside the ambassador on the NAFTA renegotiation—described as “general discussions on the coronavirus.” In addition, the Palantir executive communicated over the spring with Leslie Church, chief of staff to Procurement Minister Anita Anand; Gen. Jonathan Vance, then-chief of defence staff of the Canadian Armed Forces; and the deputy ministers of the defence and procurement departments.  

The Conflict of Interest Act bars former public office holders from taking “improper advantage” of their former positions; from acting on a company’s behalf on any issue on which they previously represented or advised the government; and from using non-public information they received while in office. For a year after leaving public office, they can’t make representations to federal departments or agencies with which they had contact for government business, or work for anyone with whom they dealt in that capacity. Dion has ordered the nine officials to not have “official dealings” with MacNaughton for a year. 

The Lobbying Act, meanwhile, requires ex-officials to serve a five-year lobbying ban.

Dion’s order “is based on the conduct of a former public office holder, and does not suggest any wrongdoing whatsoever by any current public office holder,” said Bains’s spokesperson John Power, in a statement to The Logic. It also thanked MacNaughton “for his leadership and hard work in the negotiation of the new NAFTA, and his commitment to public service.” 

MacNaughton resigned as ambassador to take the role at the data-mining firm in August 2019. The company has since repeatedly met with officials from the Public Health Agency of Canada (PHAC), The Logic has learned. Members of the department’s Data, Partnerships and Innovation Hub had a one-hour meeting in early March, where Palantir representatives described “how they could assist PHAC in responding to the COVID-19 outbreak in Canada,” agency spokesperson Eric Morrissette said, one of three engagements that month. 

In October 2019, officials from the Centre for Immunization and Respiratory Infectious Diseases attended a demonstration of the firm’s software, but determined it would not meet the division’s needs. Palantir also met with the Centre for Food-Borne, Environmental and Zoonotic Infectious Diseases repeatedly between July 2019 and January 2020 to discuss providing a database for enteric disease outbreak detection and response, similar to its work with the CDC; Morrissette described the conversations as “exploratory.” He wouldn’t disclose whether MacNaughton was involved with any of the communications, directing The Logic to file an access-to-information request, instead.

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The federal government has only disclosed one procurement from Palantir so far. As The Logic first reported, the firm was awarded a one-year contract worth $997,434 in March 2019 for software to be used by the Canadian Special Operations Forces Command. That contract has since expired

MacNaughton was also elected to the board of TC Energy in May. The Calgary-based company’s projects include the Keystone XL pipeline across the U.S.-Canada border, and Coastal GasLink in British Columbia, which was the subject of Indigenous protests earlier this year.