OTTAWA - A watchdog who advocates greater government transparency says the Rahim Jaffer affair highlights a major loophole in Canada's lobbying law.

Jaffer's actions may be in line the Lobbying Act if he's telling the truth about receiving no payment for his work on behalf of environmental companies, said Duff Conacher of Ottawa-based Democracy Watch.

"And that reveals a loophole, because that's crazy," he said in an interview.

Jaffer, a former Conservative MP, and business partner Patrick Glemaud made inquiries about the federal Green Infrastructure Fund on behalf of companies involved in renewable energy and other environmental concerns.

But they say the meetings with federal officials were not lobbying -- that they were merely gathering information in order to counsel companies contemplating applications for federal money.

Jaffer and Glemaud stress that they weren't paid for their services. Conacher said if they escape sanction under the lobbying law, that'll be the reason.

Under the Lobbying Act, registered lobbyists must record and disclose pre-arranged meetings with public office holders -- virtually all people who hold elected or appointed government positions. But the law excludes email communication and chance meetings.

Conacher says that falls short of the Conservatives' 2006 campaign promise to require ministers and senior government officials to record their contacts with lobbyists.

"If they had kept their promise and kept the spirit of it, no more secret lobbying would be legal. But they didn't. All they did was require registered lobbyists to disclose some of their communications."

Opposition MPs joined Conacher in scoffing at the notion Jaffer and Glemaud weren't engaged in lobbying.

During the Commons question period, Liberal MP Bob Rae said Jaffer's dealings amounted to special access "for those who are friends of and close to" the Conservatives.

"It swims like lobbying, it walks like lobbying, it talks like lobbying and it smells a lot like lobbying, so it must be lobbying," Rae said.

New Democrat MP Pat Martin said Jaffer should know the rules.

"Rahim Jaffer is a veteran MP. I think he knows the guidelines about what constitutes lobbying and what doesn't. The activities that they engaged in constitute lobbying I would think by anybody's definition," Martin said.

The notion that "there's no harm and no foul because no money changed hands" is tantamount to saying that "if you rob a bank and the vault was empty then you're not guilty of any offence," he added.

Prime Minister Stephen Harper told the Commons the government is confident Karen Shepherd, the independent commissioner of lobbying, will enforce the rules.

Conacher argues the law is ineffective because, even if no money was promised to Jaffer down the line, his activities amount to lobbying.

"You're trying to prevent conflicts of interest with this, right? You want to disclose lobbying. That is lobbying.

"The whole intent of this disclosure is to track and make sure secret deals aren't being made with family, friends, party supporters that waste the public money and abuse the public interest. So you want to know whether people are doing it paid or unpaid."