Public Accounts Committee on Oct. 28th, 2009

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

But public servants are still required to make sure that the person is effectively registered as a lobbyist, are they not?

[Cassie Doyle]

The obligation starts at a particular level in the public service. In our Lobbying Act, the primary responsibility is for the lobbyist to record any interactions. We do have a system at NRCan where we take note and ensure that anyone at the assistant deputy minister level or above is aware of the status of any stakeholder and whether or not they are on the list of official lobbyists.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

I have asked the question differently. If I understand correctly, you are not obliged to check that the person you are meeting with is effectively authorized to meet with you and is registered as a lobbyist. This is what you have explained to us in your answer.

Mrs. Fraser, on the basis of the many situations that you have identified as potential situations of conflict of interest--Natural Resources Canada is not the only Department in this situation, there are others--do you believe that steps should be taken at other levels?

[Sheila Fraser]

As of the member stated, we have identified other cases of conflict of interest through recent audits. It seems obvious to us that this is not well understood. There seems to be a gap, generally, in the training of public servants and in their understanding of conflicts of interest. We have started a governmentwide audit in order to review existing policies. Are they clear enough? Later on, we will decide it we have to select some Departments to review the type of training provided to their staff.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

In the present case, there was not only a potential conflict of interest, there was also a violation of several provisions of the Financial Administration Act.

My question is for the Deputy Minister. In the new situation of potential conflict of interest that you are looking at, have any payments been made already?

[Cassie Doyle]

Thank you for the question.

All payments under these contribution agreements have now been concluded; all payments have been made. Under the Canadian Energy Efficiency Association Transport, there were payments withheld and not paid after the review of the specific deliverables against actual work performed.

[The Chair, Liberal, Shawn Murphy]

Merci, madame Faille.

Mr. Christopherson, you have seven minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thanks, Chair.

Thank you all very much for your attendance today. We appreciate it.

I believe my friend Mr. Kramp is going to ask some questions about Mr. Middleton and suss out a bit how much more we need to look at that, so I won't go there; I'll leave it to him.

Also, right off the bat, Deputy, thank you for accepting responsibility. That's always a good start, and it's appreciated.

I want to turn to page 10 of the Auditor General's report, to paragraph 6.25: “We found that when concerns about the contribution agreements were identified in August 2005...”. Deputy, what were the concerns that led you to cause an internal audit?

[Cassie Doyle]

The concerns at that time were due to the information that was discovered by the department: that the subcontractors were not being paid.

[David Christopherson, NDP, Hamilton Centre, ON]

You say “discovered”; I'm trying to get at how it was discovered. Did they find a file in a drawer that they hadn't seen before? What does that mean, “discovered”?

[Cassie Doyle]

I wish I had more detail to provide to you on this. I think there was some communication back to the department, perhaps through phone calls, from subcontractors saying they had not been paid by the contractor with whom we had the contribution agreement.

[David Christopherson, NDP, Hamilton Centre, ON]

Right, and that triggered you to look into it. And right then and there, at that look, was it determined that there needed to be some follow-up from there?

[Cassie Doyle]

Yes. The first action taken by the department was to ask Consulting and Audit Canada to undertake a recipient audit, which was initiated in 2005. From the findings of that recipient audit, there appeared to be enough risks that an internal audit was undertaken by the department.

[David Christopherson, NDP, Hamilton Centre, ON]

Okay, I've got that.

Auditor General, subsequently, after the internal audit was done, your office received complaints. As much as you can, can you advise what “complaints” means, from whom, and what they were about?

[Sheila Fraser]

There were at least two complaints, I believe. They were essentially about the conflict of interest, the fact that a consultant—

[David Christopherson, NDP, Hamilton Centre, ON]

Were they be from similar sources? Are we talking about subcontractors?

[Sheila Fraser]

No, I believe it would have been....

[John Wiersema, Deputy Auditor General, Office of the Auditor General of Canada]

The complaint, Mr. Chair, came in the form of an anonymous letter.

[David Christopherson, NDP, Hamilton Centre, ON]

Was there just one?

[John Wiersema]

There was one that I recall; there may have been others as well.

[David Christopherson, NDP, Hamilton Centre, ON]

So there was a whistle-blower who triggered your involvement in this.

[Sheila Fraser]

Yes.

[David Christopherson, NDP, Hamilton Centre, ON]

I appreciate all those answers. I have to tell you, I have a bit of trouble following the chronology, because it bounces around a bit, and then there are different audits. I don't claim to be the smartest guy on the Hill. Here's where my question is going.

Deputy, you mentioned in your comments, on page three, that “All recommendations and management response commitments from this September 2006 audit report have been implemented”. Then in the next paragraph you say, “My department is fully committed and has demonstrated excellence in the management of grants and contributions...”, and you even mention that because of your elevated attention after September 2006.... Yet if I understand correctly, it was after September 2006 that the audit was done by the Auditor General—I believe from June to November 2008—and the audit and the work you did after that was still found, in paragraphs 6.27 and 6.32, indicate that the AG found further work that needed to be done; that your audits weren't all that...and yet you're bragging about the 2006 and what you've done since then. I would have been happier to hear you say you were bragging after you got the AG's audit and cleaned up everything.

Help me understand why you're bragging about what you did after the 2006 internal audit, given that the AG, when she went in and looked at the results of it, was—my words—not impressed. She found other areas that you still had not dealt with, and yet you're in here praising what you did after the 2006 audit.

Help me understand, please.

[Cassie Doyle]

I was trying to provide the committee with a fairly comprehensive overview of the measures we've put in place to improve the overall management of our grants and contributions. It certainly wasn't my intent to be overstating those, but I want to say that at the time we initiated the internal audit, the focus was very much on our management control framework and ensuring that we had adequate controls in place to govern adherence to terms and conditions and to ensure value for money. We were also motivated at that time to ensure that there was no wrongdoing in the overall management of this contribution agreement. That was our—

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you. I'm sorry to interrupt.

These are important omissions. To me, there's a whole set of criticisms that your department is open to because you didn't do the job properly after 2006. Had the Auditor General not gotten an anonymous complaint and gone in there, you would still have procedures lacking: paragraph 6.27 says your evaluation documents are still “silent on conflict of information issues”, that they are “not supplemented by guidance for staff”, and that “we found that the new practices and processes still do not require an assessment”. This was after your great internal audit of 2006.

What happened? Some things happen in this world. Fine; you go in and look at it and fix it. But your fix didn't fix it. So what happened there? After you were already in there trying to fix it, you didn't fix it right.