Evidence of meeting #11 for Access to Information, Privacy and Ethics in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was rules.
A video is available from Parliament.
Liberal
Brenda Shanahan Liberal Châteauguay—Lacolle, QC
One minute? Then I want to get to my last question.
The act does outline the duties of the Ethics Commissioner. Do you or do you not agree that it is the job of the Ethics Commissioner to do investigations of any violations that members of Parliament or public office holders are engaged in? In other words, is it appropriate for this committee to be doing an investigation that the Ethics Commissioner is doing?
Co-Founder, Democracy Watch
Parliament is sovereign and this is the ethics committee. I think a partisan committee, made up of MPs who are partisan, is not the best forum, because the questions tend to be driven by partisan motives as opposed to the rules and the evidence, but Parliament has a right to all the information from the government that it has requested. That is getting the information out there in the public.
Personally, given that Mario Dion was hand-picked by the Trudeau cabinet through a secretive, dishonest process, I don't fully trust him to be examining everything. We are challenging a ruling of his in court right now—
Liberal
Brenda Shanahan Liberal Châteauguay—Lacolle, QC
So do you say that you don't have confidence in Mario Dion?
Conservative
The Chair Conservative Rachael Thomas
Madam Shanahan, that's your time.
We'll move on to Mr. Fortin for six minutes.
Rhéal Fortin Bloc Rivière-du-Nord, QC
Thank you, Madam Chair.
Good afternoon, Mr. Conacher.
You talked about political financing and the need to beware and, perhaps, tighten up tax rules. The decision-making process was affected by conflicts of interest. When Mr. Trudeau and Mr. Morneau appeared before the committee, they acknowledged that they should not have participated in the decision and they apologized for it.
As far as the decision to award such a large contract is concerned, don't you think it was crucial to put out a request for proposals? Since that wasn't done, what steps could have been taken to make up for the fact that there wasn't a request for proposals?
Co-Founder, Democracy Watch
Thank you for your question.
As I mentioned in my testimony, there are loopholes in the Financial Administration Act and the related regulations that allow for sole-source contracting. I think this process was a failure also of the public service. As many experts have pointed out, several other organizations, if they had been given a full chance, could have put forward a proposal that would have certainly matched WE Charity's proposal to administer this program. Several organizations have greater reach than WE Charity. As we've learned most recently, they can't operate in Quebec and have no real presence there at all, so how would they ever be chosen to run a national program? But in other ways, other groups had just as much reach as they had.
Frankly, as I pointed out, no one should forget that the Canada summer jobs program and the Canada youth service corps program should have just been expanded to incorporate this program. That was the best way to do it. There was no reason to contract out and waste tens of millions of dollars of the public's money.
Bloc
Rhéal Fortin Bloc Rivière-du-Nord, QC
Mr. Conacher, sorry to cut you off, but every second counts.
I understand what you're saying about the importance of launching a request for proposals. Other organizations also could have administered the program.
I'm going to get right to the point. There doesn't seem to have been any due diligence. The government awarded this money to a new entity associated with WE Charity, but that entity had no assets.
Do you think that was an appropriate way to proceed, or should strict parameters governing the contribution agreement have been put in place? I'm referring to due diligence checks and an oversight mechanism, for example.
In Democracy Watch's opinion, what mechanisms could have been put in place to make up for the fact that there wasn't a request for proposals?
Co-Founder, Democracy Watch
I mentioned in my testimony that I think the key thing to do is to require everyone to check with the Auditor General in advance when starting any significant spending process. The Auditor General could then do a quick check and say, wait a second, you've decided to do this as a sole-source, can you really prove that one of these huge loopholes, which should be closed, applies?
For example, there's one where sole-source contracting is allowed if it's in the public interest. Who decides that? That is just open to such abuse in terms of exercising discretion in defining what is in the “public interest”. In the case of WE Charity, it was if there's only one organization that is deemed by the public service, with possible political influence, to be the only organization that could actually administer whatever is to be done or provide whatever product or service.
Those loopholes need to be constrained and every government institution should have to check with the Auditor General to do a compliance check before they start the whole process. Then the Auditor General would be able to stop it, instead of reporting five years later that all the rules were broken. That's, I think, the best way to go. We have the watchdog in place. Give that watchdog the power to stop the spending and correct it before it happens.
Bloc
Rhéal Fortin Bloc Rivière-du-Nord, QC
Mr. Conacher, what due diligence checks should be done before a contract like this is awarded? Should an organization's finances, legal affairs and general standing be audited?
How far should the government have gone in its scrutiny of WE Charity Foundation before signing the contract?
Co-Founder, Democracy Watch
Given the amount of money.... One of the sole-source loopholes is if a contract is less than $25,000. You can see why. It's a small amount of money and some of the safeguards may not need to be in place. Although, again, I think you should just essentially ban and put in place high penalties if contracts are split to try to fit under that $25,000.
Otherwise, yes, due diligence means looking at whether the organization has a good business record. For example, you have to have that if you want to start a bank in Canada. That means looking through their annual reports and verifying things and ensuring that the money is flowing to an organization that actually has a track record, as opposed to a shell organization that is fronting for that other organization. These are simple, basic steps, and I think it was a failing of the public service as well to not do the due diligence in this case, perhaps because of the ties of the key person, Ms. Wernick, with the WE Charity, given that she had worked with them and approved grants for them before.
Conservative
Bloc
Rhéal Fortin Bloc Rivière-du-Nord, QC
Madam Chair, on the Standing Committee on Finance, members who question witnesses in French are given a bit more time, not because the interpreters do a bad job, but because it always takes longer. I'm not sure whether you plan to do the same here, on the Standing Committee on Access to Information, Privacy and Ethics, but I would suggest that you give us an extra 30 seconds, since the interpretation usually costs us a good bit of time. With your permission, I'd like to ask the witness one last question.
Conservative
The Chair Conservative Rachael Thomas
I will give you the opportunity to ask one last question. Please be brief.
Bloc
Rhéal Fortin Bloc Rivière-du-Nord, QC
Mr. Conacher, you're a lawyer with expertise in government accountability, so have you ever seen a case where a government awarded a $43.5-million contract to administer a $900-million program without putting out a request for proposals or doing some due diligence beforehand?
Have you ever seen such a thing?
Co-Founder, Democracy Watch
No, I have not seen that since 1993 when Democracy Watch started up.
Conservative
The Chair Conservative Rachael Thomas
Thank you very much.
We'll move on then to Mr. Green for six minutes.
NDP
Matthew Green NDP Hamilton Centre, ON
Thank you, Madam Chair.
I appreciate having the witness here. As a newer member of Parliament, I'm certainly fascinated by the historical context of the Conflict of Interest Act, as well as the many well-documented violations of that. We have “The Trudeau Report”. The witness has provided some examples. I wonder if you would like to comment on the recommendations that came out of “The Trudeau Report”, which outlined a whole laundry list of violations in the past, in terms of the recommendations that came out versus what we failed to act on at that time.
Co-Founder, Democracy Watch
Are you talking about the “Trudeau II Report” with regard to SNC-Lavalin scandal or “The Trudeau Report” with regard to the Aga Khan?
NDP
Matthew Green NDP Hamilton Centre, ON
You could speak to either of them. I was speaking to “The Trudeau Report”, particularly as it related to the Aga Khan and the vacations and the travel and any of that sort of thing. I just wondered if you could comment on the lessons that would have been learned from that.
Co-Founder, Democracy Watch
Well, the main one is that there's a loophole in the gifts rule for cabinet ministers: if it's a gift from a friend or family member, the gift is legal. Former ethics commissioner Mary Dawson interpreted that rule...in a way, you could say, taking into account the purpose of the act, which unfortunately she didn't do in a lot of other cases of preventing conflicts of interest. In that case she interpreted it to say that even though it says that a friend can give you a gift, if a friend is a lobbyist or is involved in dealings with the government, she's going to disallow the gift and say that it's prohibited. But technically, the law still says that if it's a friend, the gift is legal. If Prime Minister Trudeau had been able to overcome that hurdle of proving that the Aga Khan was actually his personal friend as opposed to an old family friend, then he would have been let off, possibly by a commissioner other than Mary Dawson at the time, who was saying, no, sorry, even if it was a friend, she was going to ignore the rule and apply it, taking into account the purpose of the act.
As she recommended out of that, gifts should simply be banned. I mean, yes, your family members can give you birthday gifts and holiday gifts, but other than that, gifts should just be banned.
NDP
Matthew Green NDP Hamilton Centre, ON
Sure. I would also like to publicly state that I think there is some confusion around the relationship between the Trudeau family and the Kielburgers. One said they were friends. One said they weren't friends. It was kind of awkward, quite frankly.
This idea of plausible deniability seems to underscore the circumvention of the act as it's applied. This is subsection 6(1):
No public office holder shall make a decision or participate in making a decision related to the exercise of an official power, duty or function if the public office holder knows or reasonably should know that, in the making of the decision, he or she would be in a conflict of interest.
Plausible deniability says, “I didn't know.” What do you consider to be reasonable? Please be brief, as I have only another three minutes.
Co-Founder, Democracy Watch
Again, I think if your staff are acting on your behalf...of the top government officials, which cabinet appoints and which, unfortunately, makes the top level of the public service partisan, because they're all serving at the pleasure of the cabinet. If those people are acting on your behalf, then I don't think the plausible deniability defence should be allowed unless you can truly prove that they went rogue.
That's the key. It's part of our whole notion of ministerial responsibility and accountability. It's stated in the Prime Minister's code and the Treasury Board code that staff are acting on behalf of ministers and have no authority to act otherwise.
NDP
Matthew Green NDP Hamilton Centre, ON
Thank you.
That leads me to my next question. It relates to the disclosure of gifts. You have, I think quite rightly, identified that the penalties for these violations are so immaterial in relation to people's ability to pay. In fact, some have even suggested that the more wealthy you are, the less susceptible you are to influence or corruption, that somehow $40,000 is not material if you can write a cheque and make it go away.
How would you care to comment on section 23's disclosure of gifts at a $200 threshold versus the anti-avoidance in section 18, which clearly states that people should not be engaged in activities that would circumvent the spirit of the act, essentially, or the obligations of the act?
Co-Founder, Democracy Watch
First of all, I would point to how, as I mentioned, the lowest-level government employee can be fired from their job if they're involved in a decision where they have even the appearance of a conflict of interest, even if the decision applies generally. Again, 99% of cabinet ministers' decisions apply generally because they're usually decisions to change laws. It's really only hiring their staff or contracting out that it's a specific decision where the act even applies.
I think a sliding scale of penalties is something that could and should be considered. If you are paid more, the penalties should be higher.