Public Accounts Committee on March 21st, 2024

[The Chair, Conservative, John Williamson]

Thank you.

Mr. Viersen, you have the floor for five minutes.

[Arnold Viersen, Conservative, Peace River—Westlock, AB]

Thank you, Mr. Chair.

I thank the witnesses for being here today.

You said earlier in your opening statement that you discovered evidence of the engagement of Mr. Yeo in Dalian after his hiring. Can you confirm that again?

[Bill Matthews]

Certainly, Mr. Chair.

The key evidence for me was the signed contract with a date after his employment with the public service—National Defence—started, but I do want to be clear that my bigger concern was around his lack of disclosure of his conflicts as an employee.

That alone is a shortcoming, but yes, we do have evidence that activity continued as part of Dalian.

[Arnold Viersen, Conservative, Peace River—Westlock, AB]

Would you suggest that Mr. Yeo lied to this committee in his testimony in saying that he had no involvement?

[Bill Matthews]

I would say it's highly suspicious. He did provide an explanation as to how that signature occurred, but he also, I believe, Mr. Chair, talked about the delayed process in putting his assets or business interests into a blind trust.

Again, I am more concerned about his lack of disclosure of a conflict of interest. He did refer to a statement that he said National Defence made about no conflict. We are not aware of the statement he was referring to.

[Arnold Viersen, Conservative, Peace River—Westlock, AB]

I'm interested in the trends around contracting with DND. This is something that we hear about more often. Would you say there's a trend for an increase for DND to pursue contracts rather than employment with DND?

[Bill Matthews]

I would say, Mr. Chair, that it depends on the area. We've certainly seen growth in both the number of our public servants and also in our contracted dollars over the last few years. The defence budget is increasing. Both are growing.

I think we've had some interesting discussion here today around the use of body shops for IT services as well as health care workers. We do know that in certain areas of the country we are struggling to fill public service positions on a timely basis, and therefore that leads to additional temporary help contracts, etc.

[Arnold Viersen, Conservative, Peace River—Westlock, AB]

We hear increasing concerns all the time around recruitment for our Canadian Armed Forces. It appears to me, just from your testimony here today, that perhaps the increase in contracting is causing folks to pursue contracts rather than employment. Would you say that this has any effect on recruitment overall?

[Bill Matthews]

I wouldn't, Mr. Chair.

It's a tough one to answer at such a high level. I would say that when you're looking at the contracted services through body shops or agencies, they are more often than not a question of public service versus contractor, not a question of armed forces member versus contractor. That's not to say there are not some jobs that could be done by armed forces members that are being done by contractors.

[Arnold Viersen, Conservative, Peace River—Westlock, AB]

You confirmed that there are at least three different investigations going on within the department. You referenced that the military police are investigating and kind of insinuated that the perhaps there's an RCMP investigation happening.

Can you confirm that the RCMP is investigating around these issues?

[Bill Matthews]

I have made the provost marshal, our military police link, aware of the file. There is no such investigation yet, but I have committed to keeping the provost marshal informed of our work. If it gets to the point that he feels an investigation is warranted, he will let me know.

On the broader ArriveCAN files, I know that Public Services and Procurement Canada has been in touch with the RCMP. The RCMP has not yet contacted National Defence as part of any of that work, but obviously we will be supportive and we will co-operate should they do that.

The work that we are doing is more around looking at the staffing process through the Public Service Commission and looking at whether we did indeed get the services we contracted for through Dalian. The answer to date is yes.

The final piece is to make sure we understand properly any other businesses that Mr. Yeo is linked to so that we can take appropriate action.

[Arnold Viersen, Conservative, Peace River—Westlock, AB]

What's your timeline on the other businesses linked to Dalian and Mr. Yeo? Do you think you'll be able to get those to our committee in the next 14 days or so?

[Bill Matthews]

That sounds reasonable, Mr. Chair.

[Arnold Viersen, Conservative, Peace River—Westlock, AB]

Could you do that, please?

[Bill Matthews]

Yes.

[Arnold Viersen, Conservative, Peace River—Westlock, AB]

Thank you, Mr. Chair.

[The Chair, Conservative, John Williamson]

Thank you very much, Mr. Viersen.

Next up is Ms. Bradford.

You have the floor for five minutes.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you, Mr. Chair.

On Tuesday, when Ms. Yip was questioning Mr. Yeo, she said, “Dalian signed a contract with DND after you became an employee again in the fall of 2021. This is obviously a conflict of interest. Why did you not feel you were in conflict?”

Mr. Yeo said:

At that time, I had my hands off the wheel of Dalian—even before September 19—and that's why I provided my signature to the staff so if there was something going on, I would not even be aware of it. In all honesty, I was not even aware that this smaller contract had even come through

Deputy Minister, do you think that it's accurate for Mr. Yeo to say that he had his hands off the wheel of Dalian on or by September 19?

[Bill Matthews]

It's hard for me to say, based on my role and his role as employee of the department.

It sounds like he was still involved, at least on paper. I think the more important piece to me is that Mr. Yeo did not see the conflicts, in fact or in appearance, with his employment role and he failed to disclose those conflicts to National Defence as his employer.

Whether he believes he was in conflict or not, clearly there's a conflict in appearance. He did not see that and he did not take appropriate steps.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you.

Further from Hansard, Mr. Yeo stated the following.

Even more disappointingly, no one from the federal government had ever contacted Dalian or me before undertaking the unfounded action of terminating all contracts with Dalian—hardware and software, and professional services—suspending security clearances, suspending Dalian and Coradix from continuing current work and competing for future opportunities with the Government of Canada, their primary customer for 22 years and 29 years respectively.

Is this standard practice?

[Bill Matthews]

We've talked a lot today, Mr. Chair, about the obligations of the employee in terms of informing the employer of a conflict. There is also an obligation on contractors to inform the contracting authority about conflict of interest.

In the case of Dalian, Mr. Yeo did neither. There was enough, in our minds, to have concern about his actions and activities.

As well, over at PSPC, they were looking at some of the interactions around the ArriveCAN file and the various joint ventures between Dalian, Coradix and other companies and they decided to suspend security clearances. We followed suit.

I think we've heard enough that concerned us that the action was justified.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

We also found out the other day that card-carrying Conservative David Yeo should have disclosed any real or perceived conflicts of interest.

What actions have you taken to make sure the expectations for employees are clear going forward?

Did he declare that he was a political candidate for the PPC?

[Bill Matthews]

Mr. Yeo's political affiliations while he was a contractor—and that they predate joining the public service—are not of import to us.

Had he been a public servant and pursuing candidacy of a political party, he would have needed to get clearance to do that. His political activities, in terms of an election, predate his employment, so they are not a concern.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Okay. Thank you.

I have no further questions.

[The Chair, Conservative, John Williamson]

Thank you very much.

Mr. Viersen, you have the floor for five minutes.