Evidence of meeting #36 for Public Accounts in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was agreement.
A recording is available from Parliament.
4:10 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Thank you.
Finally, Ms. Doyle, can you tell us how long you've been at the department yourself?
4:10 p.m.
Deputy Minister, Department of Natural Resources
It has been since July 2006.
4:10 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
So you've been there for most of the time during which the changes have taken place.
4:10 p.m.
Liberal
The Chair Liberal Shawn Murphy
Thank you, Mr. Saxton.
Ms. Doyle, I have one area that I want to pursue.
It's my view that this is a pretty bad situation. We're dealing with conflict of interest, mismanagement, negligence, $3.2 million paid to an insolvent company, other subcontractors and suppliers not being paid, and section 34 of the Financial Administration Act not being followed.
I accept your evidence that you've made corrective actions, but one issue on which I'd like to get a detailed report from you concerns the matrix of sanctions that have been posed, because these individuals knew about the conflict, they acquiesced to the conflict, they approved the payment under section 34 of the Financial Administration Act illegally and unlawfully, and they certainly didn't follow what I would consider ethics and values that one would like to see in a federal public service.
We don't have to get the names of the individuals, but can you relay to the committee a review of the sanctions you imposed on these individuals who are responsible?
4:10 p.m.
Deputy Minister, Department of Natural Resources
Thank you very much.
I'm going to assure you that we—the department, my predecessor, and I—certainly took this situation very seriously and implemented immediate actions.
As I mentioned earlier, we did take disciplinary action. The employee who was responsible for this program, whose name I will not release because of the Privacy Act, the director responsible, was relieved of his duties and he is no longer under the employment of the department or the public service.
4:10 p.m.
Deputy Minister, Department of Natural Resources
Yes, he was relieved of his duties. He was dismissed—
4:10 p.m.
Deputy Minister, Department of Natural Resources
No. I think the primary mismanagement was the responsibility of the program director, and the program director was relieved of his responsibilities as a result of both the recipient audit undertaken by Consulting and Audit Canada and our own internal audit.
4:10 p.m.
Liberal
The Chair Liberal Shawn Murphy
Was there any evidence of collusion between the program director and either Mr. Middleton or one of the recipient organizations?
4:10 p.m.
Deputy Minister, Department of Natural Resources
Mr. Chair, there was no way to establish whether there was any collusion. We certainly had that reviewed and ensured that there was the opportunity to provide the RCMP with the question of whether or not there was any criminal activity involved. The RCMP declined to investigate, after its review. So there was no way to identify any apparent collusion.
4:15 p.m.
Liberal
The Chair Liberal Shawn Murphy
Mr. Fadden, not during the entire time but during the latter part of this situation, you were the accounting officer. Do you accept any responsibility for the problem that occurred?
October 28th, 2009 / 4:15 p.m.
Richard Fadden Former Deputy Minister, Department of Natural Resources, As an Individual
Yes, Mr. Chairman. I think in practical terms, the greater contribution I could make was to ensure that it was investigated. That occurred during my term there. But yes.
4:15 p.m.
Liberal
The Chair Liberal Shawn Murphy
We're going to go to the second round now, of five minutes.
Ms. Crombie, you have five minutes.
4:15 p.m.
Liberal
Bonnie Crombie Liberal Mississauga—Streetsville, ON
Thank you, Mr. Chair, and welcome to our guests.
Ms. Doyle, I printed up the internal audit from September 2006 and took a look at it. I came to the conclusion that it was a very unfortunate but hopefully isolated incident that occurred back then. It was interesting that it came from, and in fact it states that the internal audit was raised as a result of, concerns by employees—plural, not just an independent whistle-blower.
My question has to do with one of the agreements undertaken with one of the companies that were subject to this compliance audit.
It was a $6.9 million contribution agreement, and we know that the largest agreement permitted is $7 million. It was undertaken with a newly formed not-for-profit organization that had no established source of funding other than the contribution fund, had no established internal management or financial system, and the agreement was not reviewed or approved by legal services, contravened departmental regulations, and was not assessed for risk—all of that.
Was that CEEA-T, CEEA Transport? Or was it some other...?
4:15 p.m.
Liberal
Bonnie Crombie Liberal Mississauga—Streetsville, ON
Do we think that the agreement that was entered with CEEA-T was isolated? Some suggestions were brought up: that it could have been due to the overly aggressive lobbyists; that perhaps the program director had been errant in his decision; that there were some mitigating factors; as well as that we didn't have a solid framework in place to assess risk and have a strong conflict of interest guideline in place.
What would you say? Were there other factors?
4:15 p.m.
Deputy Minister, Department of Natural Resources
Thank you for the question.
It's a little difficult for me to understand what the motivation was in 2005. I know this is an area where the expertise is fairly limited. I believe that contributed to this situation, which is that you're using a consultant who has this sort of rare expertise at that particular time.
4:15 p.m.
Liberal
Bonnie Crombie Liberal Mississauga—Streetsville, ON
If we look at CEEA-T, we see that they had not made payments to some of the contractors; yet they were still advanced $1.3 million in payments. How did NRCan learn that they weren't complying with some of the terms of the contribution agreement, when did you learn that, and why did you continue to make payments to CEEA-T?
Then the Auditor General asked why other options were not explored to resolve the payment issue or the agreement amended.
4:15 p.m.
Deputy Minister, Department of Natural Resources
Thank you for the question.
Throughout this exercise, we were receiving legal advice on our obligations under the contribution agreements. I would acknowledge that there probably were other possible approaches that could have been undertaken, but the advice we received was that because we were in a contribution agreement, the crown had an obligation to pay for work completed. As I mentioned, there was a very rigorous review of each of the promised deliverables in the contribution agreement signed with the Canadian Energy Efficiency Alliance Transport, which is the CEEA-T, and after that review, we paid and were assured that we were obligated to pay, on the advice of our legal advisers, for the work that had been actually completed.
4:15 p.m.
Liberal
Bonnie Crombie Liberal Mississauga—Streetsville, ON
Could the contract not have been amended?
This question may be to the Auditor General, who suggested that there could have been other options to resolve the payment. What other options would you propose?