Public Accounts Committee on June 12th, 2007

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

If it's prepared, is there any particular reason why it's being delayed?

[Pat Casey]

Sorry, I didn't bring it with me.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Could it be provided forthwith?

[The Vice-Chair, Conservative, Brian Fitzpatrick]

Mr. Casey, I understand we have your undertaking that you're going to be providing that information to the committee—

[Pat Casey]

Correct, within the ten days.

[The Vice-Chair, Conservative, Brian Fitzpatrick]

—within the ten days that was agreed to.

[Pat Casey]

Yes.

[The Vice-Chair, Conservative, Brian Fitzpatrick]

Okay.

Now we'll start our meeting.

Pursuant to Standing Order 108(3)(g), chapter 9, “Pension and Insurance Administration—Royal Canadian Mounted Police”, of the November 2006 report of the Auditor General of Canada, we're going to embark on trying to figure out what transpired in some outsourcing with Great-West Life Insurance and Morneau Sobeco and some other parties to those transactions. That's the purpose of our meeting today.

We have a number of people who have opening statements.

We have to swear you in, so we'll let Georges do that.

[John Williams, Conservative, Edmonton—St. Albert, AB]

Mr. Chairman, are you going to introduce all the witnesses?

[The Vice-Chair, Conservative, Brian Fitzpatrick]

Yes, we'll have them sworn in, and then I'll introduce them all.

[Pat Casey]

I, Pat Casey, do swear that the evidence I shall give on this examination shall be the truth, the whole truth, and nothing but the truth, so help me God.

[Jeff Molson, As an Individual]

I, Jeff Molson, do swear that the evidence I shall give on this examination shall be the truth, the whole truth, and nothing but the truth, so help me God.

[Francine Pell, Morneau Sobeco]

I'd like to attest.

I, Francine Pell, do solemnly, sincerely, and truly affirm and declare the taking of any oath is according to my religious belief unlawful. I do also solemnly, sincerely, and truly affirm and declare that the evidence I shall give on this examination shall be the truth, the whole, and nothing but the truth.

[Dominic Crupi, As an Individual]

I, Dominic Crupi, do swear that the evidence I shall give on this examination shall be the truth, the whole truth, and nothing but the truth, so help me God.

[Garry Roy, Senior Policy Analyst, Disability Program & Services, Royal Canadian Mounted Police]

I, Garry Roy, do swear that the evidence I shall give on this examination shall be the truth, the whole truth, and nothing but the truth, so help me God.

[Assistant Commissioner David Gork, Assistant Commissioner, Royal Canadian Mounted Police]

I, David Gork, do swear that the evidence I shall give on this examination shall be the truth, the whole truth, and nothing but the truth, so help me God.

[Peter Foley, Great-West Life Assurance Company]

I, Peter Foley, do swear that the evidence I shall give on this examination shall be the truth, the whole truth, and nothing but the truth, so help me God.

[Jeff Kitchen, Great-West Life Assurance Company]

Can I attest also?

I, Jeff Kitchen, do solemnly, sincerely, and truly affirm and declare the taking of any oath is according to my religious belief unlawful. I do also solemnly, sincerely, and truly affirm and declare that the evidence I shall give on this examination shall be the truth, the whole, and nothing but the truth.

[Frank Pattie, (Retired), Great-West Life Assurance Company]

I, Frank Pattie, do swear that the evidence I shall give on this examination shall be the truth, the whole truth, and nothing but the truth, so help me God.

[The Vice-Chair, Conservative, Brian Fitzpatrick]

Thank you very much.

We have the following witnesses today: from the RCMP, we have David Gork, assistant commissioner, and we have Garry Roy, senior policy analyst, disability programs and services; with Great-West Life, we have Jeff Kitchen, Peter Foley, and Frank Pattie, retired; from Morneau Sobeco, we have Francine Pell; and as individuals, we have Pat Casey, Dominic Crupi, and Jeff Molson.

Maybe we can start with Mr. Foley. Do you have an opening statement?

[Peter Foley]

Yes, Mr. Chair. Thank you for inviting us.

Good afternoon, ladies and gentlemen. My name is Peter Foley, and I will present Great-West Life's opening statement.

I plan on introducing in a little greater detail our representatives who are present here today, giving a little company background and a brief sketch of our involvement in the issues at question, and clarifying one or two statements that we have read or heard.

Attendees today include Frank Pattie, who retired from Great-West Life on December 31, 2006, as vice-president of group operations; and Jeff Kitchen, the assistant vice-president and associate general counsel at Great-West Life. Both Jeff and Frank are from Winnipeg.

My name is Peter Foley, and I recently retired as the regional director overseeing the Ottawa group office.

Great-West Life has been a long-term supplier of insurance benefits for members of the RCMP, retired members of the RCMP, and their families. As most of you know, we are a large Canadian insurance company, with our head office in Winnipeg, Manitoba.

In 2000 we were asked by the RCMP to provide additional administrative services and support for their various insurance plans. Such services would typically include participant enrolment, payroll deduction calculations, actual payroll deduction input, maintenance of beneficiary designations, and member inquiries.

For almost two years, we worked with the RCMP to help define the services and map out the technological requirements. As the requirements kept getting more complex and changing, we met with the RCMP on December 13, 2001, and advised them that we did not feel we could meet their changing needs. We did invoice the RCMP about $250,000 for the time spent advancing the project. The charges included travel costs, and some fixed goods, as well as time charges.

To clarify a point or two, Mike Frizzell, in his presentation, implied that the full risk of the insurance plans—specifically the life insurance plans—rests with the members. In fact, just as a point of clarity, Great-West Life has the ultimate risk on the insurance plans.

Also, Pat Casey said our purchase of London Life and Prudential caused us to change our minds about the outsourcing project. The changing technological requirements were the cause of our decision not to proceed. We could not provide any of the web- or Internet-based services that were being requested at that time. The change did not come as a result of our purchase of London Life, which owned Prudential Insurance. The purchase of London Life actually took place three years prior to 2001.

It was suggested that we recommended Morneau Sobeco to become the insurance administration outsourcer. In fact, our recall is that when we were discussing alternatives at our meeting on December 13, 2001, we suggested that their pension outsourcer would be a likely alternative. We did not know which firm that was. We were informed via e-mail on February 15, 2001, that a service provider had been selected.

Finally, when given the chance by the Auditor General to comment on statements about the $250,000 in charges made by Great-West Life, we pointed out that in our view the work was of considerable value to the RCMP in defining the requirements for the outsourcing work eventually undertaken by Morneau Sobeco.

Again, thank you for having us here today and for allowing us to answer your questions.

[The Vice-Chair, Conservative, Brian Fitzpatrick]

Thank you, Mr. Foley.

[John Williams, Conservative, Edmonton—St. Albert, AB]

On a point of order, Mr. Chairman, just for the record, I found out that Mr. Jeff Kitchen of Great-West Life is the assistant vice-president and associate general counsel, and Mr. Peter Foley is the regional director.

Am I correct, gentlemen?

[Peter Foley]

Yes.

[Jeff Kitchen]

Yes.