Foreign Affairs Committee on April 4th, 2012

[The Chair, Conservative, Dean Allison]

Pursuant to Standing Order 108(2), our study on the role of the private sector in achieving Canada's international development interests will continue today.

I want to say thanks to our guests for being here.

We've got Bonnie Campbell, who is a professor for the Faculty of Political Sciences and Law at the University of Quebec in Montreal. Bonnie, welcome, and thank you for taking the time to be here today.

And then we've also got Nolan Watson, who's the president and chief executive officer and founder of Nations Cry, but also representing Sandstorm Gold and Sandstorm Metals and Energy Ltd. Nolan, welcome to you, as well.

Why don't we just get started?

Bonnie, if you'd take the first ten minutes or so, then we'll move over to Nolan, and then we'll have the members ask some questions in follow-up. That will round out the hour.

Ms. Campbell, I'll turn the floor over to you.

[Dr. Bonnie Campbell, Professor, Faculty of Political Science and Law, University of Quebec in Montreal, As an Individual]

Thank you very much for the opportunity to address the committee. Greetings to you.

My contribution will be centred on the relationship between mining and promoting economic and social development. It draws on several decades of research in this area. It draws as well on my participation as a member of the advisory group to the national roundtables in 2006-2007 and as a member over the last four years of the international study group named by the Economic Commission for Africa, which in December 2011 put out a report, to which I will refer, called Minerals and Africa's Development.

I will say at the beginning that my brief presentation will make three points and come up with six recommendations. There's a text I brought, in English and in French.

First, I would like to question a central premise of much of the ongoing discussion. The thinking and strategies, whether abroad or in Canada, concerning developing mining activities have rested on a hypothesis that the investment in the mining sector will drive growth, which will bring development and reduce poverty. In Canada this problematic assumption is illustrated by what Mr. Pierre Gratton wrote:

Long-term sustainable growth and prosperity are driven by the private sector, and forward-thinkers in the development aid policy field recognize that the effectiveness of aid can be enhanced when aligned with private sector investment.

This affirmation is at the root of the erroneous formulation of arguments put forward to justify certain strategies. It illustrates a lack of awareness of important debates going on, notably in Africa. And more deeply, it suggests a clear misunderstanding of what is at stake when one faces issues related to international development.

Let's begin with a fact. Investment in the private sector of itself does not translate into sustainable economic and social development. There is in fact no historical example anywhere on earth where sustainable growth, social and economic development, and poverty reduction took place through private investment in the absence of appropriate public policies and state interventions needed in order to plan, to regulate, and to monitor investment so that the presence of private investment would be harnessed to meet development objectives determined by the countries themselves.

My second point is that it is essential that Canada be listening to where policy discussions and proposals are at now in Africa. If we're concerned about the policy relevance and effectiveness of current Canadian initiatives with regard to mining and development, it is absolutely essential to pay attention to the recommendations coming out of leaders and experts on the African continent, and notably the economic commission.

What has the commission been saying? One thing is that the problems confronting the field of natural resource development 30 years ago are very much present today—that is, the colonial “enclave nature” lack of local transformation. Consequently, past strategies are now outdated—inappropriate in the present context because past strategies have failed to deliver development. What is needed is a fundamental change of paradigm.

But there's more. The manner in which the mining sector was opened up to investment has brought stringent forms of liberalization. But more than the disappointing results with regard to development, it has brought a stringent withdrawal of states, a transfer of what were considered state functions to private actors. Whether service delivery, clinics, schools, roads, security, or rule-setting implementation, what used to be of the state's domain, we now are looking to companies. This pattern of sidestepping the state has created many problems, not just for the development of communities, but for companies and for the countries themselves.

For companies, because of this transfer of responsibility, it has blurred the lines of responsibility and accountability between companies and countries. It has left communities looking to companies. It has created weakened states, incapable to monitor, incapable to do follow-up, and in case of conflicts, companies and communities are pitted against one another.

This sidestepping of the state, by suggesting companies can gain better social licence or legitimacy for their operations by offering social services, runs the risk of undermining—and this is a key point—a precondition for building responsible governments and the basis for democratic practices; that is, the need for governments to offer social services to their populations and to be held accountable by their populations.

The heritage of these past patterns, deficient development implications, and asymmetrical relations between companies and countries is now contested on the African continent. Thinking now is that mining must be driving industrialization. Nowhere on earth is there historical experience of industrialization without appropriate policies.

The Economic Commission for Africa in its report talks about building linkages and pushing regional integration. None of this, of course, is the domain of companies. The model of the past, driven by industry, is considered outdated. Policies now are calling for more strategic intervention of the state.

I'll now speak on Canada, which is my third point. How are we contributing? Where are we in this conversation about the mining sector's contribution to development?

Current partnering strategies of CIDA, which propose to use aid budgets to reinforce corporate social responsibility, run the risk of further blurring lines of responsibility and accountability, and aggravating problems of legitimacy for companies. Such externally initiated CSR strategies could reduce the motivation of governments to fulfill their responsibilities. This is what the Economic Commission for Africa is saying.

At present there is not sufficient coordination between state planning and investment and corporate strategies. There are many grey areas, which make it very difficult to monitor to know who is bringing what, under what terms, and how this can be evaluated. So before companies go in, there must be appropriate frameworks in place.

I will conclude very briefly with three recommendations that summarize more generally what I have said.

First, it is absolutely urgent and essential that in Canada we distinguish between policies that promote commercial and economic interests—CIDA's mandate—and those that promote sustainable development. We should be looking at and listening to what is coming out of the African continent. It is imperative to make sure that CIDA's mandate is aligned with what African leaders of the United Nations Economic Commission for Africa and the African Union are calling for.

Another key point is that everyone here recognizes that Canada is a leading country in terms of the number of mining companies, not only in Africa but in Latin America. But to date—and this is extremely important—we do not have mechanisms to monitor the behaviour of the companies. Sweden does, Norway does. I could speak of that.

The present situation is very problematic. Companies are going into situations where there are not necessarily frameworks in place. There's not the capacity to enforce. There's likely to be ambiguity about responsibilities, and there is every possibility—we know this is going on in many corners of the world and in increasing numbers—of violent conflicts taking place.

I can give you examples that I know first-hand. I have studies from Africa where I have been. I can also give you examples of where this is happening in Latin America, Colombia, Peru, and Mexico. You know these. These are not individual cases; these are systemic problems, because there are structural origins, and Canadian responses at this point are not at all adequate. In terms of what this means for Canada's reputation, we are now being faced with mounting accusations of violations with no mechanisms to follow up on these problems.

It is absolutely indispensable that we have an overall framework and strong mechanisms to monitor behaviour, to ensure compliance, and to ensure that the obligations are respected. Canada's reputation depends on this.

I could develop more if there are questions on these points.

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you very much, Dr. Campbell.

We're now going to move over to Mr. Watson. Thank you for being here. The floor is yours. You have ten minutes, sir.

[Nolan Watson, President and Chief Executive Officer, Sandstorm Gold & Sandstorm Metals & Energy Ltd.; Founder, Nations Cry]

Thank you very much, honourable members of Parliament and ladies and gentlemen. I am humbled to be here before you today.

I would like to give you a bit of background on myself. I'm the president of a small charity that's building and operating schools in Sierra Leone. I'm also the president and CEO of a mining company that has investments in North America and South America, and although I've been recognized as one of the top 40 under 40 in Canada for my business achievements, most people don't know that my business career actually almost never got started in the first place. I went to drop out of university to become a humanitarian while I was in the faculty of commerce at UBC, but fortunately I learned something before I did. What I learned is what I want to talk about here today, and that is that business, if conducted properly around the world, can be more effective in alleviating poverty and accomplishing our international development goals than charity can or government can.

Over the last number of years I have actually seen this first-hand in Sierra Leone. There are hundreds, and potentially thousands, of not-for-profit organizations operating in Sierra Leone, as well as many government organizations from around the world. Yet in 2010 Sierra Leone's GDP was only $2.2 billion, which is very, very low. There are three British mining companies that are actually now going in and starting operations in Sierra Leone. Those three British companies are expected to take the GDP of Sierra Leone from $2.2 billion to approximately $8 billion, and those three British companies are going to alleviate more poverty and accomplish more development goals than any government organization or any charity has been able to do in that country.

As a result of that, I believe that the Canadian government should view businesses as a key to accomplishing our international development goals.

I realize I only have a couple of minutes here, so I'm just going to talk about two examples where I think we could potentially improve. The first of those is protection. With protection of our businesses internationally from foreign corruption and expropriation risks, our Canadian businesses can thrive. The second point is facilitation. How can we facilitate those Canadian businesses to accomplish our development objectives and—and this is an important “and”—have those businesses fund the majority of that development themselves, so the Canadian government doesn't have to do it?

Talking in a little more detail about issue number one, which is protection, in Sierra Leone, for example, if you're a Canadian company and you get approached by a foreign official and you get asked for a bribe, you have two choices. You can pay the bribe and go to jail in Canada, or you can lose your business and have your assets expropriated.

It's not a coincidence that those three companies operating in Sierra Leone that are going to change the country are all British. If you're a British company operating in Sierra Leone--their government is much more involved there, and IMATT is there--when you get asked for that bribe, you have a third option. You can go to those government officials, tell them what's actually going on—and this happens frequently. They know a lot of the senior government officials within Sierra Leone, and they'll go to them and work back channels and they'll say that so-and-so company just got approached, and we need to deal with this. So the issue gets dealt with before the expropriation happens. It's always easier to stop an expropriation than it is to reverse it once it has already become public.

There is one Canadian company I'm aware of that is operating in Sierra Leone. I'm sure there are more than that, but I'm only aware of one. A few months ago they actually did have their assets expropriated from them, ironically enough. I've been told that those concessions have now just been handed over to a Chinese company. The Chinese government is obviously very active in Sierra Leone as well.

The real problem from my perspective isn't the actual expropriations themselves. The real problem is actually the lack of businesses, or the businesses that don't get started up because of the risk of expropriation. So for every business that gets expropriated, there will be hundreds and hundreds of businesses that never get started in the first place, just because investors and business people are afraid that if they invest in a particular way in a particular country, they will have their assets expropriated.

For example, in the company I'm the CEO of, I would be willing to invest our company's capital in a British mining company starting up in Sierra Leone. I would not be willing to risk my company's capital investing in the start-up of a Canadian mining company operating in Sierra Leone because it is significantly riskier.

So on the issue of protection, just to be very brief, here's one idea that I have; it may be a good one or it may be a terrible one. It's the idea of starting up some form of business stabilization department in the Canadian government whose goal is to be there and answer the phone when Canadian companies encounter foreign corruption. Then the issues can be dealt with before expropriations and foreign corruption happen, so the Canadian companies feel they will be supported, and investors feel there will be support for Canadian companies when they make those investment decisions.

The risk is that if we don't do things like that, Canadian companies will choose to stay home rather than invest abroad. If those Canadian companies are going to be an important part of our international development goals, we need to support them.

I'll move on, in the interest of time, to improvement opportunity number two, which is facilitation to get companies achieving these development goals and paying for most of them. The Manning Centre completed a study last year that stated that the Canadian people are trusting the government less and less to accomplish objectives directly. Personally, I think we have a great government, and I don't think this is a reflection of this current administration. It's more a reflection of the general frustration with the inherently limiting factors of government.

I personally think it's because of something I've nicknamed the “Cathy principle”. Cathy is an orphan girl. She is a real girl. She is in Sierra Leone. Her mother died when she was three years old. Her father died when she was five. She was put into an orphanage at the age of five. For eight years she has been living in that orphanage, available for adoption. No one has adopted her. She's thirteen years old, and she has no parents and no future.

Last year my wife and I got permission from the High Court of Sierra Leone, and we became Cathy's guardians. We got permission from the Ministry of Social Welfare to bring her to Canada and to adopt her here. We bought a much larger house so that we would have an extra bedroom, because we already have two daughters and she would be our third. And it looks like we may not be getting permission from the Canadian High Commission to bring her to Ghana.

I don't raise this issue for personal reasons. I raise it to simply illustrate what I call the Cathy principle, which relates to decisions that should be very easy. Any person you talk to on the street would know what the right decision is here. But the reality, and I understand this and I am sympathetic to it, is that whenever government entities are involved in making decisions and become afraid of making the wrong decision, they become incapable of making the right decision. That is the Cathy principle.

I'll say that again, because I think it's an important principle. Whenever a government entity becomes too afraid of making the wrong decision, they become incapable of making the right decision.

The Cathy principle means that decisions that should be easy or no-brainers become very complex. It's because of this Cathy principle that our government needs to recognize the inherently limiting nature of governments, which hampers their effectiveness in accomplishing our international development goals directly.

The good news is that the Manning Centre also found something else. It found that Canadians are actually trusting our government more and more to act as a facilitator of these things we are trying to accomplish as a government. As a result, I believe and the Canadian people believe that the right role for our government is one of facilitation.

To that extent, the public-private partnership, the model CIDA has recently engaged, for example, in Burkina Faso, I believe is the perfect model the Canadian government should be trying to do more of internationally. Therefore, my strong recommendation would be that the government continue to explore and improve that public-private partnership model.

One way the government could improve that P3 model is to make companies feel as if they are getting a reputational benefit from the activities so that CIDA can extract as much money as possible from these companies. For example, if a P3 builds a vocational school, and the charity puts its logo on it and the Canadian government puts its logo on it, the reputational benefit to the company of being associated with that project is very valuable to that company. And I think our companies should be expected to pay for those benefits. By hiring a few senior executives whose sole role is to negotiate with companies, CIDA could potentially extract hundreds of millions of dollars of additional funding from companies for P3 projects.

On a side note, I know that the recent P3 in Burkina Faso has drawn some public criticism. The papers said that some people viewed it as government funding of social programs for a multi-billion-dollar company. I disagree entirely with that view. To the extent that the government can contribute less and can negotiate with the companies to contribute more, public opinion will back these more strongly, especially in the economic condition we find ourselves in today, with the government not having a lot of money.

With that, I want to conclude. We have the opportunity to protect our companies better to allow them to flourish internationally. We have the opportunity to facilitate to have them accomplish our international development objectives.

I think we have a great country. I think we have a great government. We have great companies. We have great charities. And I think we can change the world if we all work together.

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We're now going to start with members' questions. We're going to start with the opposition NDP.

Ms. Sims, you have seven minutes.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you very much.

As I was listening to your presentation, Nolan, I really felt that some of the issues you raised about protection for companies and things—that maybe you should be before a different committee, talking about trade and things. The very sad story you told of a daughter you're trying to adopt should really be told before the immigration committee.

Today I really want to focus on our international development. It comes as no surprise to anybody here that, on this side of the table, the NDP feel very strongly that aid shouldn't be used to benefit profitable corporations or to finance activities they should be doing anyway, such as cleaning up environmental waste or training workers, or even investing in building the odd school there, or whatever you do. We believe the private sector can play a role in development, but we need to see transparency and accountability to make sure that these programs are reducing poverty in a sustainable way.

My question is to Bonnie. I think you would agree. In your presentation you warned that partnering strategies, such as the ones being pushed by our Minister for International Cooperation, run the risk of blurring the lines between public sector and private sector actors. We had a previous presentation on that, which highlighted the dangers of when the lines get murky and that intertwining happens. Could you expand on your critique of these partnering strategies?

[Dr. Bonnie Campbell]

Yes, thank you.

There is in fact a real danger that certain countries whose budgets are not sufficient to supply social services will not only be de-motivated but also very pleased to leave the room for companies or whoever, so this leaves an ambiguity in terms of who is responsible.

The Economic Commission for Africa has come out and said we're not completely.... Chapter 6 of their report is on corporate social responsibility, but before this goes ahead, there has to be a framework. There have to be public policies. For example, if a clinic or a school fits into a public strategy, that means that when the mine is finished, something will go on and there is public accountability for what's being created.

This is absolutely key. What we're seeing—from the standpoint of researchers and people working with the ECA—is that if you bypass local political processes, you are delaying bringing in governments that are going to be accountable to their people.

We have seen this for the last 20 or 30 years. So it is high time that people say that there is no reason on earth why the African countries should just be destined to export raw bauxite or raw gold. These resources need to be transformed locally. That implies strategies. That implies planning. That implies public responsibilities. And the mandate of our aid budget is to reinforce locally owned developmental strategies that are sustainable in the long term. So we have choices.

Unfortunately, we're completely missing. Canada is completely off the boat. In Australia and Europe, people are lining up to help the ECA. Canada needs to be on that page, not partnering with companies and NGOs that are going a totally different route in situations where there's not the monitoring, not the adequacy of doing the follow-up work and the evaluation. People we work with in Ghana say companies declare all sorts of things in corporate social responsibility. There is no way of checking what goes into CSR. There is no way a company is really going to tell what is going on, because there are no standards. These standards have to be locally owned. That process has to go on before we have this idea that PPP is going to be successful.

[Jinny Sims, NDP, Newton—North Delta, BC]

Okay, thank you very much.

I have a subsequent question.

It's not a surprise to me that we seem to be supporting export of goods rather than developing the economies there, because we seem to be having a similar strategy for some of our own resources here.

Anthony Bebbington testified before this august committee a few weeks ago. He was told by a Latin American environment minister, “I don't know if Canada has ever been more discredited in its history.” Another official said to him: “As far as I can tell, the Canadian ambassador here is a representative for Canadian mining companies.” That gave me goosebumps that day. It really disturbed me.

Can you expand on the impact that this kind of cozy relationship with the extractive industry may have on both overseas development and Canada's broader foreign policy interests?

[Dr. Bonnie Campbell]

Absolutely.

I was struck, in two west African countries, to know that there were CSR people at our embassies and that these people were non-Canadian. When I tried to talk to them about the round-table process, they knew nothing about it. How can they be the spokespeople for Canada if they don't know? Who do they represent?

This question of mining policy becoming foreign policy.... Recently a journalist who was in Burkina Faso got in touch with me because he wanted to talk to people. I gave him names. I said to speak to the people at the embassy. He said that he wasn't allowed to speak to the people at the embassy. How are the Canadian people allowed to know what's going on? What are our policies if our journalists can't speak to the people at the Canadian embassy?

I will also share with you a personal story related to Canada's reputation, if I can. This is a difficult one for me. It is about our international reputation and what's going on. My life is full of stories, every day, from Peru, from Ghana, and from the DRC. I happen to have a son who is a young lawyer from McGill. He's in Colombia, and he's going around with other young lawyers about impunity. He went recently to a site, Gran Colombia Gold at Marmato. What happened there is absolutely incredible. A young priest was killed. People have been assassinated. Exploration was stopped because of local protests. This Canadian company is going to go on to another place, and there's going to be more violence.

What is happening to Canada? It's another generation, which is already picking up the mess in terms of human rights abuses, violations of the environment, etc. And we, of our generation, sit back, and we have no mechanisms for accountability for what our companies are doing. How long was this going on? In 2007 there was a report. In 2005 there was a report. We are still not even interested in holding our companies accountable for the most basic human rights.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We're going to flip back over to the government side.

Ms. Brown, you have seven minutes, please.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

Thank you very much, Mr. Chair.

Thank you very much for being here today. We appreciate your testimony.

Ms. Campbell, I guess we've talked to some very different people. I had a meeting with Dr. Ping of the African Union last fall, who indicated a considerable interest in developing economic ties with Canada. A couple of years ago I was in Zambia, and I had a meeting with the Minister of Trade and Industry, the Honourable Dorcus Makgato-Malesu, who said they were looking to sign a foreign investment agreement with Canada. I was in Ethiopia and talked to the Minister of State for Finance and Economic Development, and he too talked about developing considerable relationships with Canadian companies. We talked about the need for the government to guide private sector development and that there was a real need for that to happen.

I've had conversations with people from SADC, from ECOWAS, from COMESA, and from the EAC, and they are happy with what Canada is doing in bringing foreign investment in.

One of the things we have to look at is that Canada signed on to the Equator Principles in 2005. We have a councillor in place.

We're not saying that everything is perfect. There are still things to be done, but we certainly know that the investment Canada is taking into many of these countries is benefiting these countries. In Zambia, when we were there, the minister said that tax revenues of 30% coming from many of these companies are providing them with resources. These ministers are developing long-term strategies in their countries for health care and public education. Yes, indeed, those structures have to be there.

I was in Botswana. May I first say, Mr. Watson, that you talked about building schools. Are they elementary, my dear Watson? That was just for a little levity.

I was in Botswana. I was at the Essakane mine. I saw what IAMGOLD is doing there to provide opportunities for people in real job skills training. It's not just that they're putting a school in for the short term. They're putting in a school for the long term. They're building hospital clinics. They're building a skills training centre. People who are getting the skills in their training centre are being employed at the mine. Many of them are able to take those skills into other parts of the country to develop businesses, which is a long-term strategy.

I wonder if you could talk specifically about some of the capacities Canada could help put in place. We heard from Mr. de Soto some weeks ago about the need to help in capacity-building. Help countries build their legal structures. Help countries develop capacity in their government structures. Can you talk about how private investment would be partnering with those?

[Nolan Watson]

Yes, absolutely.

First, I would say I have talked with a number of government officials around the world. This year I'm going to be on every continent except Antarctica, and I've been in 15 cities in the last two and a half months, so I have, I think, a very good feel for what third world and developing nations want from our Canadian businesses. They want the Canadian businesses there. Canadian businesses are not perfect, and a lot of them do make mistakes, but on the whole they conduct themselves better than most other countries in the world, and arguably the best in the world. Our Canadian government is deemed to be one of the best, if not the best in the world. So these developing countries recognize the benefit that Canadian companies and the Canadian government can bring.

I would agree very quickly with something that Bonnie said, which is that business development doesn't work in the absence of good public policy. So I think there is a role for Canadian businesses to help achieve our international development objectives, but at the same time I think that some level of oversight is important. I think that public-private partnerships could be used as a mechanism for that form of oversight. You've got government officials watching what these Canadian companies are doing much more closely than they otherwise would, and they realize that Canada's reputation is going to go part and parcel with the reputation of those Canadian companies. So to the extent that those P3s provide that opportunity, it might be a way that those good policies can be put in place.

To address the question of capacity-building, there's no doubt in my mind, having been in many developing countries in the world, that one of the main things that the Canadian people and the Canadian government have to bring to some of these countries is capacity-building, both in their governments and in their various other institutions. For example, we are world leaders in the mining industry. Canada has ten mining companies operating internationally for every one that the U.K. has. So we are by nature an international country and we have more experience in mining than most other countries.

I believe there's an opportunity for our Canadian government to start working with some of these developing countries to say how they should be monitoring these mining companies. Here are minimum environmental standards and processes and procedures that they need to follow as a country to ensure that the right things are being done. Here are the various tax policies and procedures, which maybe they don't have to follow, but which we found effective in Canada for extracting the maximum amount of tax from our mining companies. I think that's another important aspect: a lot of developing countries might have high tax rates, but they find they don't end up getting a lot of tax revenues, and sometimes it's because of the lack of sophistication of their rules and regulations.

So there are capacity-building opportunities all over the place. One good example is some of my business partners or people I work with found the world's largest iron ore deposit in Paraguay. Paraguay had mining laws that made it completely impractical to mine or own or maintain concessions in that country. They said they needed to adopt these laws and change things so they could operate there, and they did. Paraguay has mining-friendly laws now that are going to allow it to thrive in the mining industry.

So it can be done, Canada can do it, and I think we're the right group to do it.

[The Chair, Conservative, Dean Allison]

Thank you.

We're going to move back to the Liberals for seven minutes.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Thanks, Mr. Chairman.

Thank you, Professor Campbell and Mr. Watson, for your presentations and for what I think are some very useful suggestions inspired by the profound experiences of both of you directly in the area of international development or in the area of Canadian companies operating abroad, and particularly in the extractive industry.

I'm struggling a little bit to reconcile views that I think are increasingly seeing things as an either/or proposition. I think there can be a complementary role, a partnership role, for the private sector in achieving some development objectives that the Government of Canada would set. I don't see, however, that you can use private sector money and initiatives to replace what has to be a robust role for a state actor—a governmental agency or department of government—that can develop the government-to-government relations.

As you said, Professor Campbell, often with some of these emerging countries with emerging and developing economies, there are basic rule-of-law issues, basic judicial independence issues. If you have a country where the judges haven't been paid for a number of years and they live off tips, it's not hard to imagine how difficult it is to enforce some contract, whatever the nature of that contract or however legitimate a claim might be.

I wonder whether you would explain, each of you, your view of the concept that private sector participation and corporate social responsibility is not in and of itself contradictory to a country's international development objectives.

By the same token, do you share my worry that we can find ourselves suddenly in a circumstance in which—in error, in my own view—you think you can replace a role for a public governmental agency by simply leveraging private funds?

I'm worried that we seem to think it's an either/or proposition. In my view, in many ways these can be complementary, but one shouldn't be used to offset another, both of which might be legitimate public policy efforts from a government.

Would either or both of you share your views on that notion?

[Dr. Bonnie Campbell]

Thank you.

This goes back to the initial question about the objectives of this study. There seems to be an ambiguity. Is it about the role of the private sector in achieving Canada's business interest—mining-friendly laws, etc.—or is it about your question, promoting social and economic development?

In the whole discussion—with all my respect, Mr. Watson—you were speaking about “development goals”. I beg to differ: I think you're speaking about the promotion of business interests. The very fundamental thing is the blurring between our policies with regard to economic and commercial policy and our policies concerning our development mandate.

This goes back to something that's been around for a long time: thinking that if you simply have investment, it's going to bring development. It's not happening. This is what the report of the ECA is all about; this is where the strategy, which took four years to put forward, has something very interesting to say. We work with mining engineers, we work with geologists—all sorts of people from the mining industry. It's not that there's no place for mining; it's about being very clear about our motivations and about what this study concerns.

Are we here to talk about Canadian development policy? If we are, we should be talking about how the mandate is respected to promote and to reinforce the policies of the countries in which we're operating.

This means a whole lot of things. It's not compatible with what's going on. A study by Ernst & Young suggests that 92% of mining and metal companies have cross-border inter-company transactions. So all this money supposedly is going into the countries, but all sorts of mechanisms explain that much more is coming out. A UNDP report in 2011 suggested that for 38 of the 48 least-developed countries, $246 billion between 1990-2004 has come out in illicit financing.

We have to be paying attention to what is going on about the flows. It's one thing to say that these countries are not robust, but the whole way the corporate sector is working, it means that much more money is coming out of Africa—and there are books and documents to show this—than is flowing in.

If we're serious about promoting development, we have to be much more scrupulous about the kinds of business ethics we have, and also about the legitimacy of regulatory frameworks. We've done books on regulatory frameworks. Countries have been told to keep their taxes low. Companies are saying: “Keep your taxes low. Let us hire contractual labour. But we're going to do CSR studies.” It is completely ambiguous to have this kind of position.

You have to be coherent in what you're promoting. Business logic has a right to exist, but it's something very different, and you don't promote it simply by saying that through investment you're going to promote development. That's not going to happen.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Mr. Watson didn't have a chance.

[The Chair, Conservative, Dean Allison]

Mr. Watson.

[Nolan Watson]

If you could take the GDP of a country from $2 billion to $8 billion and accomplish more in a couple of years than 1,000 organizations and government entities have accomplished in the previous decade, then I think that speaks for itself.

But to answer your question, I don't think it's either/or. I think it has to be that you use companies where you can use them to accomplish the objectives you already have. Where you can't use them to your benefit, government needs to fill that role to accomplish the objectives that the companies won't. You can't leave it just to the companies.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

But then, Mr. Watson, very briefly going back to your point about the GDP going from $2 billion to $8 billion, is there not a risk that without governmental pressure—international multilateral organizations pressuring those governments, but maybe not that specific one—the $6 billion increase in the GDP will go into a very few hands and end up in bank accounts not even on that continent, and that the poverty of the people will either accentuate, and the violence....?

The GDP in and of itself is a good measure, but how is that prosperity shared? It will never be shared perfectly, but if it's not shared at all, I'm not sure we're any further ahead.

[The Chair, Conservative, Dean Allison]

Mr. Watson, give a quick response, because we're out of time.

[Nolan Watson]

Rght now the Sierra Leone government's entire budget is, I think, if memory serves me correctly, half a billion dollars a year. Those companies provide more than double that in tax revenue, and they would hire tens of thousands of people.

I agree with you that this is a problem that needs to be addressed so that there can be a better dispersion of wealth, but I think it's a pretty darn good start, to double your budget for social programs.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We're going to start our second round, which is going to be of five minutes.

We're going to go back to the government, to Mr. Dechert, for five minutes, please.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you, Mr. Chair.

Thank you both, Ms. Campbell and Mr. Watson, for taking the time to be here to share with us the benefit of your experience.

Mr. Watson, when you and I last met, you were one of the presenters at the Canada-U.K. Colloquium, which is a very prestigious conference that happens every year between Canada and the U.K. It was in England last December, and the topic, as I recall, was how countries such as Canada and the U.K. can deliver development aid in failed states. Specifically, there was a focus on Haiti and Afghanistan, but Sierra Leone also figured significantly in those discussions.

As I understand it, in addition to being an investor in mining companies you also operate a charity called Nations Cry. You mentioned earlier that you're building schools in Sierra Leone. Did your company invest in Sierra Leone previously? What is your involvement with Sierra Leone?

[Nolan Watson]

My company has never invested in Sierra Leone. In fact, we've never invested in Africa. The charity side came before that. So it's just pure charity in Sierra Leone.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

So this is something you do of your own initiative.

Tell us about the experience in Sierra Leone of building and operating those schools, and what challenges you found in doing it.