Information & Ethics Committee on Nov. 2nd, 2010

[The Chair, Liberal, Shawn Murphy]

I would now, colleagues, call the meeting to order and welcome everyone here.

This meeting of the Standing Committee on Access to Information, Privacy and Ethics has been called pursuant to the Standing Orders.

The first witness here today is Mr. Nigel Wright, who is the chief of staff designate to the Office of the Prime Minister.

Before we start, and perhaps even before we hear from Mr. Wright, I just want to make a few opening comments about the nature of the hearing and hopefully this will serve as a framework for questions from committee members.

As I indicated, the witness before the committee is Mr. Nigel Wright, who is the chief of staff designate. He is accompanied by Mr. Joe Wild, the assistant secretary to the cabinet, who's here to answer any technical questions that may arise. As is well reported by now, Mr. Wright is from the private sector. He comes from a large, well-established Canadian firm with interests in many sectors, not only across the country, but from across the economic spectrum. It's also been reported that Mr. Wright may, after serving at a certain time with the Office of the Prime Minister, return to that company.

I want to remind all members that this inquiry is not, and the chair will not allow it to become, an inquiry into Mr. Wright's qualifications for that position. That determination has been made by others and it's not within the mandate of this particular committee. Any questions in that regard will be ruled out of order by the chair. It is my suggestion that the inquiry be restricted as to how Mr. Wright, the Office of the Prime Minister, the Government of Canada, and the Privy Council propose to deal with any real, perceived, or apparent conflict of interest. Mr. Wright has kindly provided this committee with documentation as to his arrangements with the government and which arrangements were completed with the assistance of the ethics commissioner.

Again, I would urge members to restrict their questions to those particular issues. Having made those very brief comments, I will turn the floor over to Mr. Wright.

Again, Mr. Wright and Mr. Wild, welcome to both of you to this committee.

You have an opening statement, I understand, Mr. Wright. The floor is now yours.

[Nigel Wright, As an Individual]

Mr. Chair and members of the committee, I would like to thank you for having invited me to appear before you today.

I am pleased to appear before this committee. I am committed to the principles of the Conflict of Interest Act and the concept of its administration by an independent officer of Parliament. These are important safeguards for the integrity of public office.

Appearing with me today, as the chairman has indicated, is Joe Wild, the assistant secretary to cabinet in the machinery of government secretariat, in the Privy Council. Joe drafted the ethical wall documents that I've provided to the committee.

As many of you know, in March of this year the Right Hoourable Stephen Harper asked me to become his chief of staff, effective January 1, 2011. I accepted without hesitation.

It is a great honour for me to have been invited to serve the Prime Minister as his chief of staff and, through him, to serve our country. I was touched by his confidence in me, and I expect to live up to that confidence each and every day.

Until a few days ago I served as a managing director at Onex Corporation, a company that works to grow and build value in a portfolio of companies it invests in. Onex is a Canadian company and a great Canadian success story. I'm very proud of what we accomplished there. We helped our management teams build leading sustainable businesses and create thousands and thousands of jobs that would not otherwise exist.

Onex is entrusted with billions of dollars of capital from investors and it has a very enviable record over three decades of putting that capital to work to grow businesses, new factories, new products, new processes, and new jobs. My particular area of focus at Onex was aerospace manufacturing, and as a result I served on the board of two of Onex's affiliated companies, Hawker Beechcraft and Spirit. I have since resigned from those positions. As I say, I'm very proud of what we accomplished at Onex and I wish my former colleagues well.

My mandate at Onex has ended, and I will now dedicate 100% of my professional activities to exclusively serving the Prime Minister.

This committee has raised questions about my role at Onex and how it will affect my service to the Prime Minister. My personal experience is that Onex's interactions with government were quite limited. Only once in the past five years have I met with any federal official regarding any Onex business. That was when I accompanied the chief financial officer of Onex to discuss a matter relating to Canada's adoption of the new international financial reporting standards accounting rules with officials from the Bank of Canada. I don't expect issues to arise very frequently, and neither do I expect the ethical wall that we have established to hinder the service and advice that I will render to the Prime Minister.

At your invitation, I have come here to discuss the arrangements I have made on the advice and at the direction of the Conflict of Interest and Ethics Commissioner and the Privy Council Office. I wanted to appear as a private citizen before I begin employment so that the committee members' questions may be answered before I take up my duties.

I can tell you that at each step of the way, I sought out and followed to the letter the advice of the Conflict of Interest and Ethics Commissioner and her staff.

I have provided the committee with a number of documents. The first that I will discuss is a letter of agreement between Onex and me reciting the fact that I have taken a leave of absence from that company, and setting out the arrangements regarding any potential return.

The agreement states that if I choose not to return to Onex on or before January 1, 2013—almost two and a quarter years from now—I will be deemed to have voluntarily resigned. As well, the agreement makes an exception to the voluntary resignation principle in the event that Onex terminates me without cause or constructively dismisses me. The purpose of the leave is to avoid the forfeiture of savings and stock options that it took many years for me to earn.

The second set of documents that I will discuss are the ones that together define and provide for the administration of the ethical wall I referred to earlier. These documents have been reviewed and approved by the Ethics Commissioner, who is responsible for administering the act. She has indicated in the e-mail from her office, which I provided to the committee, that her determination of my full compliance with the act, as with any reporting public office holder, will be made upon completion of the confidential report and the publication of any declarations.

The ethical wall was prepared by Joe Wild and Yvan Roy, the deputy secretary to cabinet and counsel to the clerk of the Privy Council. Monsieur Roy is responsible for administering the ethical wall--or conflict screen, as it is sometimes known within government--and as supervisor of the ethical wall will be responsible for ensuring that it is adhered to among political staff in the Prime Minister's Office.

The Office of the Ethics Commissioner will monitor the subject matter of the ethical wall to determine whether changes to that subject matter are required from time to time. Monitoring and considering any changes are also obligations that I personally will have.

The arrangements that I have taken are those of any public office holder, who is subject to the strictest legislation in Canada's history, i.e., the Federal Accountability Act.

When the Conflict of Interest Act was created, Parliament set out five purposes, one of which was to facilitate people who have worked in the private sector to join the public sector, and vice versa. That is a good thing. It is what has allowed people from all walks of life to serve in government, including the highest level of government.

With that in mind, it was back in April that I began working with the Ethics Commissioner and others to ensure that my affairs were arranged in compliance with the act. The very first question I raised with the Office of the Ethics Commissioner was about public office holders on leaves of absence. I was told that the Ethics Commissioner accepts leaves with the proper protections in place and has done so with other individuals.

I then began disclosing my personal financial circumstances to the Ethics Commissioner and familiarizing myself with the Conflict of Interest Act. Her office recommended that a conflict screen or ethical wall be established. With that direction, I met with Monsieur Roy and Mr. Wild of the Privy Council Office and asked them to prepare an ethical wall that would prevent any potential conflicts from arising. That process has been ongoing and was completed this past Friday, when the Ethics Commissioner indicated her approval of the ethical wall documents that you have.

The maintenance and monitoring of the ethical wall will be an ongoing process involving the PCO, the supervisor of the wall, and the Office of the Ethics Commissioner. It will also require me to update those three offices should any information come to my attention requiring a change to the scope.

I have fully disclosed to the Ethics Commissioner my personal financial circumstances and I will be repeating that in a formal confidential report that the statute requires. The Ethics Commissioner's office will be posting my declaration online for everyone to see.

The ethical wall covers three areas that have been determined by the Ethics Commissioner with my agreement. As of now, the Ethics Commissioner has determined that these three areas, and no others, are areas of actual or potential conflicts. I have voluntarily added a fourth area, the Canadian aerospace manufacturing industry. Because my previous involvement in aerospace manufacturing was extensive, I decided it would be prudent to make the aerospace manufacturing industry in Canada part of the wall. I was not required to do so, but I have considered it prudent to do so.

In 2006 Parliament enacted a law administered by the Ethics Commissioner explicitly to provide for the avoidance of conflicts of interest for individuals intending to come from other walks of life into the Government of Canada. It established a complete and comprehensive system based on public and confidential disclosures, and it is working well.

I have full confidence in the Conflict of Interest and Ethics Commissioner and her ability, as an independent officer of Parliament, to ensure compliance with the act and that myself, just like all other public office holders, place the interests of Canadians before all others. That is the level of accountability that Parliament sought by adopting the Federal Accountability Act, and that Canadians are entitled to expect.

That is how I conducted myself, and there is nothing in my past to suggest that I will do things any differently. That is a public commitment I am willing to make.

I would like to thank you for having invited me and I would be pleased to answer any questions you might have.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Wright.

We're now going to go to the first round, for seven minutes each.

Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Welcome, Mr. Wright and Mr. Wild.

First and foremost, I might say that Onex--and your connection with Onex and the company--certainly has been a success in the business world. We congratulate you for that.

This, however, is the political world, and government doesn't run exactly like a business. Sometimes we think it should, but it certainly doesn't.

Since you have been named as chief of staff for the Prime Minister, there has been a lot of concern raised about the holdings of Onex and the number of companies--I think there are 40--that are connected to quite a number of departments. There's certainly the potential for a conflict of interest.

I know we, as well as the public, are very concerned about that, and especially the fact that, as you state in your letter, you're really on a leave of absence from Onex and will return to that company under very different rules from somebody else who, after working with government, would go into the private sector after certain cooling-off periods.

Mr. Chair, I do have a graphic that we would like to put up on the screens. I think it would make it easier to make the connections to at least some of the companies Mr. Wright has connections to. Is it possible to put that graph up on the screens?

[The Chair, Liberal, Shawn Murphy]

Is it in both official languages, Mr. Easter?

[Wayne Easter, Liberal, Malpeque, PE]

Yes, it is.

[The Chair, Liberal, Shawn Murphy]

Does anyone have any...?

Okay, go ahead.

[Wayne Easter, Liberal, Malpeque, PE]

Then can it be put up on the screens there?

[The Chair, Liberal, Shawn Murphy]

Well, I can't put it up, Mr. Easter. I don't know. You haven't made arrangements.

[Wayne Easter, Liberal, Malpeque, PE]

Yes, it's being done.

[The Chair, Liberal, Shawn Murphy]

Go ahead with your question now, Mr. Easter, while we put it up.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Wright, in your documents you outline five areas where you're using the ethical walls to try to prevent conflict of interest: aerospace is there, as are special taxation, taxation in the Canadian private equity sector, tax deductibility, and any other areas that the Ethics Commissioner may deem to be of concern.

I wonder if the clerk could hand those out. I think they're clearer than the graphs.

In any event, on the graph you have before you, Mr. Wright, when you look at everything from Cineplex and Indigo, in the cultural area; Allison Transmission in heavy equipment and fluids; you have mentioned Hawker Beechcraft aircraft, etc.; ResCare is involved and skilled health care groups are all involved in the health area. Onex itself and quite a number of others are on this chart.

In the blue on the inside of that chart, the red circles are companies you and Onex have connections to. The blue circles are the departments we feel are connected to companies.

You are going to be in the second or third most powerful position in the land. With what you've spelled out here on the ethical walls, how can you do your job as chief of staff, and how can you assure us that there will not be a conflict of interest, either when you're doing your job as chief of staff or when you go back to Onex within an 18-month period?

[Nigel Wright]

Thank you.

I'd like to first respond to--I'm not sure it was part of the question, but it was certainly stated--that I might return to Onex under rules that are different from anybody else. I don't think that's true, at all. I think there's a system established within the Ethics Commissioner's office around leaves of absence.

Particularly, the reference was made to the cooling-off period in section 35 of the Conflict of Interest Act. That section provides that nobody accepts a contract of employment with a company with which they have had direct dealings during the prior year in their role as a public office holder.

Definitionally, the construct of the ethical wall that I have put before the committee ensures that I will not have any dealings with Onex Corporation or any of its subsidiaries, let alone during the year before any return to Onex. I think the cooling-off period is a moot point. I think the rules apply to me as they would to anybody else in that regard.

Secondly, I think an important question has been asked about how the wall operates. The member has given me a slide with a number of departments of government listed on it. It's important to understand that the ethical wall is established around issues and topics and decision points, not around departments of government.

What the ethical wall sets out, I think very clearly, is that any matter or discussion or information that may relate to any of those areas that are subject to the wall--so anything touching an Onex company, Canadian aerospace manufacturing--will be diverted from me. People other than me will be involved in making decisions and briefings about those. They won't come close to me.

I think it's going to be quite straightforward. In my experience, and I can only speak to my personal experience, the interactions between government and Onex have been very limited. I think ethical walls like this have operated successfully in the past.

In my view, it's actually going to be very straightforward, and it's not going to hinder the service I'm going to render to the Prime Minister.

[The Chair, Liberal, Shawn Murphy]

Mr. Easter, your time is up. Thank you.

We're now going to move to Madame Freeman.

[Carole Freeman, Bloc, Châteauguay—Saint-Constant, QC]

Mr. Wright, thank you for having accepted our invitation.

The Conservative government has always spoken out against the fact that people holding senior positions within the federal government could move from the private sector to the public sector, and vice-versa. In describing that situation, they talked about the phenomenon of the revolving doors. The Conservative government objected to that by denouncing the situation and announcing that it would put an end to it.

Mr. Harper appointed you as his chief of staff; you are a star on Bay Street. You have come from the private sector, from a corporation that is the largest employer in the Canadian private sector. As chief of staff, you will become the second most influential person in government. In your opinion, does that not constitute an ethical problem?

Despite the fact that you have implemented a system to compartmentalize information, you will be receiving and hearing confidential reports, and reviewing a large amount of information. Despite the fact that sections 34 and 35 of the Conflict of Interest Act set out the post-employment rules, you will not be able to ignore everything that you have heard, seen and read. You will also be privy to state secrets. You will bring all of that information as well as the privileged contacts you will have made to the private sector. Would you not agree that that raises an ethical problem?

[Nigel Wright]

Thank you for the question.

I think the problem this government saw was not so much that there was an interchange of people between the public and the private sectors; I think Parliament adopted an act encouraging people from all walks of life to come into government and for the opposite to be true. The problem was a lack of transparency and a lack of statutory rules around what happened. So the Accountability Act and the Conflict of Interest Act were important reforms. They are reforms I'm personally very committed to--as the member knows, the very first legislation enacted after this government came into office.

[Carole Freeman, Bloc, Châteauguay—Saint-Constant, QC]

You are not answering my question, Mr. Wright. Do you not find it odd that you are moving from the largest private corporation in Canada to the most influential position in the country, second only to the Prime Minister? It appears that your mandate will be relatively short, following which you will be returning to the private sector with privileged information and contacts, and that raises an ethical problem.

[Nigel Wright]

I think it's just not true. I think the ethical wall we've established is going to prevent exactly that kind of information from coming to me.

I have acknowledged, in the form of the document you've seen, that this wall has been put in place. I've sent a memorandum to political staff throughout government and through PCO, through deputy secretaries--

[Carole Freeman, Bloc, Châteauguay—Saint-Constant, QC]

No--

[Nigel Wright]

I'm sorry, Mr. Chair, I just need to respond to this, because it's a very important point.

I have asked that no information come to me that in any way relates to Onex or its businesses or the other areas. So I do not accept that any information will come to me. If it--

[Carole Freeman, Bloc, Châteauguay—Saint-Constant, QC]

Forgive me, but you are not answering my question. I am not simply referring to that ethical wall. I am talking about all the information that you will be able to gather as chief of staff. You will gain knowledge about everything going on in the departments, which might help you to create an even larger network post-employment. There is something wrong here in terms of ethics. That is my comment, I will now move on to a second question.

How will you be able to act as chief of staff? Onex does business with so many departments in so many areas, that you will constantly have to recuse yourself. How will you be able to carry out your duties of chief of staff? You will have to recuse yourself.

What will you do when the time comes to prepare the budget, the government's key policy piece? With all of your corporate ramifications, I wonder what kind of role you will play as chief of staff. Onex's activities are so pervasive that you will have to withdraw from almost all situations. Where will that leave you? How will you be able to advise the Prime Minister?

[Nigel Wright]

I would say first of all that information will not come to me. The kind of information that's governed by the Conflict of Interest Act is any information that touches on any matter in which I may have a private interest. None of that information will come to me, and I won't be participating in any conversations around that.

Another member has put in front of the committee a chart showing six potential conflicts.

[Carole Freeman, Bloc, Châteauguay—Saint-Constant, QC]

There lies the problem, Mr. Wright. You will not have access to the information. You will not be able to respond to anything since your corporate responsibilities are pervasive. You will therefore have to recuse yourself from everything. What will you do as chief of staff? I understand that there is an ethical wall, but will they be keeping you in a room? What will happen? I wonder what your role will be.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Point of order, Mr. Chair.

Can the witness answer the question?

[The Chair, Liberal, Shawn Murphy]

We're going to give the remaining time to Mr. Wright to answer the question and try to deal, as best as possible, with the issues and questions that Madame Freeman raised.

Madame Freeman, it may not be the right answer or the answer you're looking for, but we're going to allow Mr. Wright to speak.

Mr. Wright.