Information & Ethics Committee on Dec. 11th, 2020

[Simon Kennedy]

No. Obviously, there was the report of Mr. Dion that talked about various officials and political staff, but at the time, this was just another company among the thousands, frankly, that were pouring in, looking to help out. It didn't stand out as some special company. It was very routine. We treated it in the same kind of routine way we treated others. I sent them to the staff I had who were tracking this kind of stuff to check them out.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

This is a routine meeting, but you get into this meeting, you get onto Zoom, and there's Mr. MacNaughton. He's a very well-known person in government. You know that he's the former ambassador to the United States. You know about the ethics act. You know about the rules. Did it ever cross your mind that maybe you shouldn't be in that Zoom meeting?

[Simon Kennedy]

Just by way of context, as I noted earlier, ISED is an organization that interacts with hundreds and in fact thousands of businesses. It has been my experience, not just at Health Canada but in all of my other ministries, that if you are dealing regularly with the business community—whether as a regulator or, in our case, as a regulator and a funder—and with management teams and their boards, typically there is often some crosswalk to people who have been a former political actor or been a former MP.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Mr. Kennedy—

[Simon Kennedy]

I would say that's true across the aisle. My experience has been that it is very typical—

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

If I may, do you feel that you bear some responsibility for also ensuring that those ethics rules get followed?

[Simon Kennedy]

I certainly make it my absolute rule to try to follow the rules to the letter and make sure that I behave in a way that is ethical. I would say that I and my senior civil service colleagues take that very seriously. We know, frankly, how it can lead to significant heartache for a government, but we also know that it can be very disruptive to the operations of our ministry. I am quite fastidious about that. As I say—

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

After that meeting, the Conflict of Interest Commissioner ordered you not to meet with Mr. MacNaughton. Knowing that now, in hindsight do you regret participating in that Zoom meeting at which he was present?

[Simon Kennedy]

I think if I had known that there was a breach of the rules going on, I would have declined to attend. I think that's pretty obvious. I think that would have been the default position of most of my colleagues.

As I say, I meet with a lot of—

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Despite your familiarity with the ethics act and despite your familiarity with Mr. MacNaughton, the thought never crossed your mind, when you were on that Zoom call, that maybe there was a breach of the ethics act going on? It just never—

[Simon Kennedy]

Mr. Chair, I think questions about whether rules were broken are best directed to those with whom that is at issue. In my case, I followed all the rules we normally follow. I deal with hundreds of businesses a year. I've dealt routinely with businesses that have former politicians and others from both sides of the aisle or from different governments over time. The obligation to ensure you're following the rules is actually on the lobbyist, not on the person being lobbied.

Many times individuals are listed in the lobbying register, the CEO of the organization, but it will be one of their staff actually doing the lobbying. Other times they'll hire a professional lobbyist. Even if you check the lobbying register, it can be.... This is an obligation on the person doing the lobbying, not on me.

As I said, I attended a meeting with maybe a dozen other people on a video screen. At the conclusion of the meeting, we politely said we saw no further cause to follow up with them. That was the extent of the meeting.

[The Chair, Conservative, David Sweet]

That's all the time we have. Thank you very much.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thanks, Mr. Kennedy.

Thanks, Mr. Chair.

[The Chair, Conservative, David Sweet]

Now we're going to move on to our second round.

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

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Thank you, Mr. Chair.

Mr. Kennedy, thank you for being here today.

I am familiar with Innovation, Science and Economic Development Canada, for whom I have been fortunate enough to make about 500 announcements in my lifetime. During the pandemic, ISED helped companies increase their productivity to help the cause as a result of the Prime Minister's appeal. In addition, Canada was purchasing inputs, masks and disinfectants from abroad.

Yesterday, I asked a question in the House because CBC reported this week that Canada bought 570 million dollars' worth of disinfectant from abroad. Only $100 million has been allocated to Canadian companies that produce disinfectants and can produce more.

Let me give an example. In my riding, a small business that was already producing agricultural disinfectant changed its recipe slightly and had to register its new product with Health Canada before it could sell its disinfectant to the public. That took some time. The owner invested in his business to increase its production capacity, hoping to secure contracts with the Government of Canada. In the end, he did not get any contracts.

During that time, disinfectants worth $250 million were purchased from a Chinese auto parts factory that changed everything in two weeks and had a recipe that was never approved by Health Canada. These products arrived in Canada in a container filled to capacity and invaded the disinfectant market. We don't know if this disinfectant is good or not, whereas here we have Canadian-produced, Health Canada-licensed disinfectant that cannot be sold to Canadians through Public Services and Procurement Canada.

Mr. Kennedy, can you tell us if disinfectants imported into Canada are registered and approved to the same standards as those produced in Canada?

[Simon Kennedy]

To get the best possible answer to this question, I think you should ask my colleagues at Health Canada and perhaps my colleagues at the Department of Public Services and Procurement.

I can only speak from my own experience. When ISED worked with Canadian industry, it was honestly almost impossible to get all the products people needed.

In Canada and around the world, production was failing. Our goal was to protect Canadians and get products from wherever they came from. It was necessary to get Canadian industry moving to make these products. As I said at the beginning, there was zero production of disinfectant products in Canada, and the country now produces almost half of them, 40%. ISED really encouraged companies in their choice because it was necessary. Why did we buy products abroad and not in Canada? I can't answer your question directly. I'm sorry.

However, we are very proud of the efforts made by the Canadian industry. In my opinion, we worked with the industry because we needed these products.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Thank you.

Innovation, Science and Economic Development Canada has received additional funding to increase the productivity of Canadian businesses to help fight the pandemic. How much more ISED has received? Has this amount been distributed in a sectoral manner? Could each ISED regional office have a share and choose how to distribute it, or was there a deposit that came from the main office for all regions?

[Simon Kennedy]

I'm sorry. Although Canada Economic Development Canada, or CED, is part of ISED, I'm not directly responsible for it. That responsibility rests with one of my colleagues.

I could talk about it with my colleagues and come back to the committee with a response, but I don't have the information right now.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

If possible, you can send us the response later.

Within your portfolio at the Department of Industry, you pay particular attention to Canada's purchasing. You said there was undercapacity in production.

Is this undercapacity found in all sectors? We know that for vaccines, there was almost no production capacity.

With respect to disinfectants, Canada had the capacity to produce disinfectants. It isn't possible that disinfectant could have been purchased abroad at $6 per unit, when Canada could have produced the same product at $1 per unit.

[Simon Kennedy]

We noticed that there was a lack of capacity in several areas. I could come back to you later on and give you more information.

At the beginning of the pandemic, it wasn't just about vaccines; there was a lack of gloves, masks, all kinds of clothing for doctors and personal protective equipment for frontline workers.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Kennedy.

We are out of time, but if you do come back with that answer, I'm certain Mr. Gourde would be very amenable to receiving it.

Now we're going to move to a returning colleague who is with us today. Nathaniel Erskine-Smith, you have five minutes, sir.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thank you very much, Mr. Chair.

Mr. Kennedy, thank you for joining us today.

On April 3, the Ethics Commissioner outlined in his report that you meant to discuss making Palantir software available to the government on a pro bono basis in assisting with COVID-related supply chain issues. I know it was a relatively cursory meeting and that at the end of the meeting you indicated that you didn't think the software would be applicable.

Just so I'm clear, what would the software have done, exactly?

[Simon Kennedy]

The software package that was described to us was called Foundry. To be frank, it was clear that it was very sophisticated. I had knowledge of the kind of needs we had—certainly in my ministry—and it was pretty clear this thing was a lot more sophisticated than anything we would probably have need for. That was my own personal judgment.

My understanding was that it was for supply chain management. Again, this is probably best directed to the company, but my recollection of the presentation and discussion is of a very sophisticated management of supply chains—scheduling and this sort of thing. If you were running a large assembly line, for example, or you were an airline that had airplanes with thousands of parts and this sort of stuff, you might need to manage a very complicated operation. This seemed like the kind of very sophisticated software that could do that.

Our needs were, frankly, much more rudimentary. I had suggested that they might wish to talk to, for example, the automobile manufacturing industry or somebody like that.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

It's hard now to situate oneself in the same frame of mind, but I recall that in the panic of the spring, even locally I had a number of constituents reaching out about potential contact-tracing applications and various ways their own companies could support our efforts by way of PPE and more.

You must have been overwhelmed, in the position you were in, with requests. How many of these short exploratory meetings would you have been a part of?

[Simon Kennedy]

Mr. Chair, I've been a part of many of them.

I feel very privileged to have the role I have. I feel like I'm doing important work on behalf of the government and on behalf of Canadians, so you will never hear me complaining, and I think that's true of many of my colleagues. I want to preface this by saying, because I don't want it to sound like a complaint, that I'm very grateful to have the role I have.

However, it is very true that in the early days of the pandemic, it was a seven-day-a-week affair, with very late evenings and very long hours, more or less continuously, for weeks at a time. For a lot of my colleagues and for me, that kind of intensity continues. We're very happy to be able to do our roles.

I would say that “panic” is maybe not the right word, but certainly there was a profound sense of leaving no stone unturned, of real urgency and, certainly in the early days, a really profound sense of not quite knowing what was going to happen next. Maybe many Canadians would die, and it was on us to make sure we did everything we could to support the government in making sure that didn't happen—