Information & Ethics Committee on Nov. 30th, 2020

[The Chair, Conservative, David Sweet]

I call the meeting to order.

Good morning, colleagues. Welcome to our second meeting on the study of Mr. Angus' motion regarding several elements.

Today we have Mr. Marc Tassé. He's an award-winning lecturer in the M.B.A. program at the Telfer School of Management and the common law section at the University of Ottawa’s faculty of law. He is also an instructor at the United Nations Global Compact Network Canada anti-corruption certificate program. He is a recipient of the prestigious Trudeau Medal, which, by the way, is a medal from 1926. It is different from any Trudeau names that might come up during our meeting. He is a frequent media commentator and conference speaker. He has been published extensively in Canada and abroad and quoted in various publications, such as The Wall Street Journal. He also delivers presentations at the Harvard Institute for Learning in Retirement.

Mr. Tassé, it's great to have you with us today.

Please go ahead with your opening remarks for seven minutes. Then we'll go to our rounds of questions and answers.

[Marc Tassé, Chartered Professional Accountant - Chartered Accountant (Ontario - Quebec), University of Ottawa, As an Individual]

Thank you, Mr. Chairman and members of the committee.

In times of global crisis, the worst and best human behaviours are noticeable. As a result of the declaration of a state of health emergency, the abolition of certain internal control procedures for awarding contracts makes the federal government vulnerable to fraud, corruption, embezzlement, undue influence and, most of all, conflict of interest.

With the introduction of tens of billions of dollars in new federal aid programs, oversight and accountability are becoming unavoidable paradigms. Thus, alternative measures must be put in place to compensate for the revocation of certain internal compliance controls.

While rapid action is needed in times of crisis, maintaining an adequate level of due diligence at the supply chain level is essential to prevent corruption, fraud and other illegal and unethical practices. The reputation of the government and the credibility of the programs depend on it.

First, let's define a conflict of interest.

A conflict of interest may arise in all environments and sometimes irrespectively of the will of a public official. Every person has private interests. Civil servants, however, have a duty to serve the public interest and make decisions using criteria in an impartial manner. If not managed appropriately and left unresolved, a conflict of interest can lead to corruption. As seen from the definition above, in situations of conflict of interest, the private capacity interests of public officials may improperly influence the decision-making process.

There are three different types of conflict of interest. The first one is what we call the actual or, if you prefer, the real conflict of interest. It involves a situation in which an official's private capacity interest is already in conflict with his or her duty to perform in the public interest.

The second one is a potential or a future conflict of interest. It involves a situation in which an official’s private capacity interest does not yet come into conflict with his or her duty to perform in the public interest but may do so in the future.

The third one is an apparent conflict of interest. It involves a situation in which an official’s private capacity interest looks as though it is in conflict with his or her duty to perform in the public interest, although that is not the case.

There are three different types of conflict of interest, so how do we deal with them?

First of all, a duty is imposed on officials to disclose any conflicts of interest and, if directed to do so by their superior or the relevant public sector body, to apply a management strategy such as recusal, removal and even the resignation from duties to mitigate the risk of corruption or loss of trust.

I strongly believe that all laws need teeth to ensure compliance. Whether it is increasing awareness among public office holders of the law and its code or penalizing those who accept to be lobbied when they know they are dealing with a public service holder without authorization, it must be looked at in a way to encourage compliance and discourage any inadvertent or wilful disregard for the laws and codes of ethics.

As I said in my opening remarks, the degree of due diligence should be commensurate with the urgency in which decisions are made, because transparency must prevail and is fundamental in maintaining the public trust in our institutions. Yes, decisions can be made urgently, but we have the mechanisms to transparently review those decisions during or after the fact and hold decision-makers accountable for those decisions. Certainly mistakes may be made; the key is to have mechanisms that allow for urgent decisions to be made, but not at the long-term cost of the reduction of the public trust or good governance.

In public contracts, the most basic caution requires a comprehensive justification and documentation of the decision-making process recommending the award of a non-tender contract. When it comes to awarding a sole-source contract to an entity, it is crucial that some questions are specifically answered. I'm going to give you a list of 15 questions, and they're very important.

Does the entity have impeccable probity?

Does the entity have the technical skills?

Does the entity have the human resources to carry out the mandate properly?

Does the entity have a transparent legal structure?

Does the entity have a stable governance structure?

Does the entity have the financial stability to complete the contract?

Were audits of the entity's officers carried out prior to the awarding of the contract?

Was the contract awarded in an emergency or personal safety context?

Were apparent, potential and actual conflict of interest issues assessed prior to the awarding of the contract?

Is the contract guided by due diligence with respect to the department's interest?

Is the contract typical of the relationship between a department and an entity?

Does the contract include a clause relating to ongoing monitoring of the ethics and compliance program of the entity that is considered to be retained?

Does the contract include anti-corruption clauses?

Does the contract contain clauses for the recovery of embezzled funds?

Was there a legal validation of the contract prior to its being awarded?

In conclusion, I think there are a couple of questions that the committee has to ask itself.

Could the vulnerabilities known at all levels—but particularly in government contracts since the beginning of the pandemic—have been prevented with better pre-pandemic planning?

In other words, are the laws that serve as a framework for the proper management of public funds—to ensure value for money, the absence of conflicts of interest, appropriate lobbying, rules for offers to purchase and so on—suitable for the context of a pandemic or other type of emergency?

Another question the committee should ask is whether the administrators of these laws and the statutes themselves have sufficient resources and teeth to prevent, detect and punish violations of these laws, and in particular conflicts of interest in emergency conditions that require greater transparency and integrity to maintain Canadians' confidence in their institutions. The public has a right to transparency, because taxpayers' money is being spent. The appearance of a conflict of interest is as damaging to public trust as is the actual conflict, in my view.

Again, in my view, there's a direct relationship between the urgency of decision-making in these pandemic situations and a proportionate and high degree of transparency, oversight and consequences for violations of those laws. In this time of a global pandemic, when wrongdoing can lead to reputation-damaging administrative or judicial action, the government must set an example and strengthen its reputation for integrity. The government and senior officials need to be more vigilant and strengthen structures to reduce the risk of favouritism and “clientelism" in awarding contracts.

Although emergency exemptions may be permitted to award sole-source contracts, they must also be necessary and non-selective, as they provide possible bypass routes for deviant actors. Canada has an efficient rules-based procurement system. Therefore, the government and senior officials just have to use it properly and follow the rules.

One last word: Beyond the prevention of fraudulent behaviour through laws or norms that are added to an already existing arsenal, it would be wise to also think about ethics and support programs for individuals in positions of power in order to anchor a truly ethical work culture based on discernment and questioning before making decisions.

Thank you very much. I'm now available to answer any of your questions.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Tassé.

We'll move onto the first round of questions. We'll start with Mr. Barrett for six minutes.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Sir, thank you very much for joining us here today, for your testimony and for taking our questions.

I'm wondering if you could expand on your comment with respect to the effect on public confidence by real or perceived conflict of interest, particularly around the cabinet table.

What effect do those conflicts have on Canadians' confidence in their democratic institutions?

[Marc Tassé]

I think the major effect results from the fact that what people hear is from the media. Very often the media will report something in a way that will actually put it in a light that is favourable or otherwise. The problem is that people will make decisions based on what they see in the media. Sometimes the perception is worse than the actual act itself. People have a tendency to always expect the worst to happen. Especially in the time of a pandemic, people have what we call “performance anxiety” in relation to anything like that. For them, as soon as they hear something negative, they take it for granted and they expand on it. I think that's the biggest issue: that when there is a certain perception, you're not able to really set the facts straight. We see more and more now that some media are not really operating based on facts but instead mostly on perception.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Do you believe that during those times of heightened anxiety especially—for example, like the pandemic that we're currently living through—more caution or real or extra due diligence should be undertaken to prevent the damage that can come from those decisions?

[Marc Tassé]

I would say that the existing procurement system already has some very good internal controls in place and I wouldn't think that there would be extra work to be done, but the thing is that if, because of an emergency, we are bypassing some existing rules and controls that are already in place, at that time I'd agree to be extra cautious.

Sometimes we have no choice. In order to speed up the process, we might need to accelerate the process, but the thing is, be careful. If you're putting some internal controls away, you need to have extra enhanced due diligence in order to make sure that you have other controls to compensate for the ones that were not respected.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

With respect to the 16 conditions you listed, in this case we've learned through media reports that there would be real questions about a number of those 16 items.

If there's only one option being presented to the decision-makers, and with respect to due diligence having been completed by public servants, if there are gaps in terms of the satisfaction or the quality with which the organization being considered meets one of those criteria, how effective is that list if there's not an option?

If it's simply a yes or a no, and if no, well, we're in a pandemic and therefore we're going to fail to deliver to a very large number of Canadians.... It was presented to us as a binary choice, but if those 16 criteria were checked, anyone looking at those conditions—as we've seen since in very public media reports—would have found a number of serious areas for concern.

[Marc Tassé]

Well, I think those 16 questions are really there to give you a guideline. The thing is, if there are some of them, and you say.... As you pointed out, when there's only one option on the table, you need to ask yourself why there is only one option on the table and what was actually put out to support it, to document it.

I think it always comes down to those questions. What were the answers? What was documented in order to support the fact that you might have said that criteria do not apply because of X, Y and Z reasons?

I think you cannot push those questions away. On the other hand, you need to find alternative reasoning sometimes, such as that it's just logical, since there is only one supplier that can actually provide you that type of service. Before the pandemic, were there more? How come there's only one right now? Have some of them just gone out of business, or were they not interested? That could be a possibility, but you need to document and support whatever decision has been made.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

We have a conflict of interest and ethics regime—the act and the code—and they're not new. In a historical context, in the history of our country, they are new, but they didn't come into force in 2015 with this government. They were in place during the previous government's tenure, but we've seen a number of very high-profile breaches and findings of breaches by the Ethics Commissioner.

Into our sixth year with this government, we seem to see the same behaviours repeated, and we're told that there's more for folks to learn. Would you not say that it's incumbent on the decision-makers, on public office holders, to have an intimate knowledge of the rules and to ensure that they're followed in order to protect Canadians' confidence in their public institutions?

[The Chair, Conservative, David Sweet]

Answer as briefly as possible, please, Mr. Tassé.

[Marc Tassé]

Yes. I would think it is one of the responsibilities to know them, to make sure they understand them and to receive the training on them if they don't understand them correctly.

As you pointed out, I think the Conflict of Interest Code for Members of the House of Commons was put in place in 2004, if I recall correctly, and the Conflict of Interest Act in 2007.

The thing is that sometimes there was a difference between the code and act in terms of the requirements. This is something that sometimes might lead to confusion, up to a certain level.

[The Chair, Conservative, David Sweet]

Thank you very much, colleagues.

Now we'll move on to Mr. Dong for six minutes.

[Han Dong, Liberal, Don Valley North, ON]

Thank you very much, Chair.

Good morning, colleagues.

Monsieur Tassé, thank you very much for being here with us today.

I am sure you have had a chance to review a number of the government's emergency assistance programs, as you mentioned in your opening remarks. The government has been clear about the need to balance speed of deployment while building back-end safeguards.

On par, would you agree that the government has done well?

[Marc Tassé]

It's really hard for me to say so, first of all because I don't have access to all the information and the facts that would support it. Unfortunately, the only things I see right now are from the media, so I don't think it would be fair for me to speculate.

[Han Dong, Liberal, Don Valley North, ON]

Fair enough.

With relation to our study here, we were looking at conflict of interest in lobbying in relation to the pandemic spending—for example, buying PPE for the front-line workers, ventilators for people suffering from the worst symptoms of COVID and even vaccines to inoculate Canadians for the future.

Would you say that this spending is bad, that it is suffering from pervasive ethical lapses?

[Marc Tassé]

Once again, it would be very hard to say.

I think the security of people has been put at stake and I think all the decisions that were made were probably for a good reason. The question is, was the process followed? It's all about the procurement process. Knowing whether it was followed or not is where the answer lies.

[Han Dong, Liberal, Don Valley North, ON]

Okay.

What advice would you be willing to provide to the committee about the best kind of due diligence that can happen during emergency decision-making?

I think it's fair to say that COVID-19 is precisely that type of emergency in which the government is racing to protect Canadians against a deadly virus. I remember that back in March and February, the entire world, all governments, were looking for sanitation products, looking for anything that related to protecting their citizens. Even citizens were rushing out and getting all the supplies they needed.

In that context, what are some of the best practices when decision-making has to be that quick? Any thoughts you might have on this aspect would be much appreciated.

[Marc Tassé]

I would say it would be to discuss with senior policy officials to see what the procurement standards are, what the rules and regulations are, and whether we are following them. If there are some that we might not be following because of the emergency, what else can we have in place that could compensate for them and that we can check afterward?

The first thing is to talk with the people in procurement and then make sure that all officials are aware of potential conflict of interest and the appearance of conflict of interest. I would say that Mr. Dion's team is offering training or will actually provide you with guidelines on specific situations.

As I said, one of the items I was pointing out was to consider conflict of interest before awarding the contract. I think all this has to be done beforehand. It's not really rocket science, to be honest. It's just that there are rules that are already in place, and we want to make sure that we are actually following them. If we can't, for whatever good reason, then we have to support that choice with reasons, but what Canada has in place right now is excellent. Under the procurement system, it's excellent.

The conflict of interest code and the act are good also, but people don't understand them correctly. The danger is, I would say that you need to sit down and talk to everyone who is what I call a CLO, a “chief loophole officer”, the person who would always respect the letter of the law but never the spirit of the law. That's what you really need to focus on, to say there is nothing great in finding loopholes. That's never good in the long term; it's always bad.

[Han Dong, Liberal, Don Valley North, ON]

I appreciate that.

It's ongoing training for staff, and conversations with senior officials to make sure they know that it is a very important part of their job to remind and train everyone in the ministry.

Are there particular safeguards you can point to during a crisis, during an emergency, that you want to recommend, and maybe some examples you've seen in the past? I am asking this because obviously the point is that when we are moving very quickly, mistakes are much more likely to happen.

I appreciate the 15 points you listed in your opening remarks. Can you offer any due diligence measures during a specific time of the pandemic that will provide the safeguards, going forward?

[Marc Tassé]

I would apply the same rules that we had before the pandemic, and whichever do not apply, document the situation, discuss it, ask advice. It could be from external advisers or internal advisers. Ask advice. Ask, “If you were not to respect this guideline, would you be in breach of something?” Just inquire. Focus on the one that you cannot really not respect, instead of going through the 16 of them. Say that you are going to go with the regular process, but that if ever you need to speed it up, then you're going to try to see what the effect would be and what you could do to compensate for the fact that you might be bypassing existing internal controls.

[Han Dong, Liberal, Don Valley North, ON]

Are the current codes and laws in place sufficient, and are they good as a prevention if everybody knows about them and practises them in their daily jobs?

[Marc Tassé]

They are, if people are respecting the spirit of the law and not just sticking to the letter of the law. The ones who find the loopholes are the dangerous ones. They are the threat to the organization or the government. You need to make sure to identify those people and to say, “I understand what you're saying, but you're going against us, and we're not there for loopholes.”

[The Chair, Conservative, David Sweet]

Ms. Gaudreau, you may go ahead. You have six minutes.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Good afternoon, Mr. Tassé.

I want you to know how much I appreciate your appearing before the committee a second time.

We realized just how helpful your expertise was and how much it could help us strengthen what was put in place in 2004 and 2007.

I have so many questions for you, some very broad and others, quite specific.

You said how important it was that the government establish a program to ensure integrity so that situations don't fall through the cracks and so that people don't breach the act.

That is always important, but even more so during a time of crisis.

Do you think the government could have introduced an integrity program to prevent ethical breaches and loopholes that could open the door to conflicts of interest in relation to the crisis?