Evidence of meeting #50 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cabinet.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Clerk of the Committee  Mr. David Gagnon
Benoît Robidoux  Associate Deputy Minister, Department of Employment and Social Development
Marc Tassé  Senior Advisor, Canadian Centre of Excellence for Anti-Corruption, University of Ottawa, As an Individual

5:05 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

All right.

Did anyone in the PMO ever communicate with you, or you with them, about WE since March 1?

August 12th, 2020 / 5:05 p.m.

Liberal

Mary Ng Liberal Markham—Thornhill, ON

No.

5:05 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Did anyone in your staff ever hear from the PMO about WE since March 1?

5:05 p.m.

Liberal

Mary Ng Liberal Markham—Thornhill, ON

Not to my knowledge.

5:05 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Can you confirm that with them and get back to us?

5:05 p.m.

Liberal

Mary Ng Liberal Markham—Thornhill, ON

I'd be happy to.

5:05 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

And vice versa, did anyone in your staff communicate to the PMO about WE since March 1?

5:05 p.m.

Liberal

Mary Ng Liberal Markham—Thornhill, ON

There would have been a discussion about the social entrepreneurship program with relevant colleague departments. It could have included the PMO, but on the social entrepreneurship program.

5:05 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Only.

5:05 p.m.

Liberal

Mary Ng Liberal Markham—Thornhill, ON

Only.

5:05 p.m.

Liberal

The Chair Liberal Wayne Easter

We'll have to end it there.

The last round will be Mr. Fragiskatos for five minutes. Then we'll have to go to the next witness.

Mr. Fragiskatos.

5:05 p.m.

Liberal

Peter Fragiskatos Liberal London North Centre, ON

Thank you, Chair.

Thank you, Minister, for being here.

I want to raise a question that I raised with Minister Qualtrough. It's an important issue, and that's why I'm repeating it. There is a myth—a mistake, a falsehood, call it what you will—that continues to be peddled by the opposition that has created a perception among the Canadian public, which is that hundreds of millions of dollars were going to be pocketed by WE from the federal government for the purposes of administering and building the Canada student service grant.

On July 28, Craig Kielburger testified to the finance committee. He said the following in his opening statement:

As per the contribution agreement, WE Charity would only be reimbursed for its costs to build and administer the program. To be clear, there was no financial benefit for the charity. WE Charity would not have received any financial gain from the CSSG program....

Minister, does that align with your understanding of all this, that it was a reimbursement, up to a maximum of $43.5 million, for WE from the federal government?

5:05 p.m.

Liberal

Mary Ng Liberal Markham—Thornhill, ON

Yes, that would be my understanding. For context, which I think bears repeating, during COVID-19 it was really important that we ensured that young people were supported, just as businesses were supported, Canadians were supported, farmers were supported, seniors were supported, vulnerable people were supported.

It was very important to ensure that young people—you and I have this in common, having worked with young people in many parts of our life—had the supports they needed to weather this very difficult period. The Canada student service grant was a component of the supports for students. This component was important, because it provided service opportunities for our young people.

5:05 p.m.

Liberal

Peter Fragiskatos Liberal London North Centre, ON

Thank you very much.

There is money still on the table, of course, because the Canada student service grant is not going ahead. Do you have thoughts on how youth can be supported? This doesn't necessarily fall directly under your portfolio, obviously, but I have constituents—young people, their parents and others—asking questions about what else the government can do to assist young people. It doesn't look like this money will be spent any time soon.

Do you have a view on whether or not the government ought to hold it back, since we don't know whether or not a second wave of COVID-19 could hit and it could be prudent to hold that money back? We're talking about hundreds of millions of dollars here. Or are there other programs that could be introduced in various departments—in your department, for example, supporting youth entrepreneurship? Is that a possibility, working in concert with other ministers to ensure that youth programming is expanded or that existing programs are supported? Do you have any thoughts on that at all?

5:05 p.m.

Liberal

Mary Ng Liberal Markham—Thornhill, ON

Well, it is really important during this period that the leaders of today, who are our young people—and who are also our leaders of tomorrow—are supported and are given all the opportunities to weather COVID-19 and be successful. I would say that there is nothing that is off the table.

Throughout this, our job has been to ensure, on the one hand, that the health and safety of Canadians is absolutely the top priority—to flatten this curve and fight the spread of COVID-19—and I thank all Canadians for doing that. At the same time, our job has been to ensure that our businesses, our young entrepreneurs, our women entrepreneurs, our indigenous entrepreneurs and those incredible young leaders and business leaders are supported in order to weather COVID-19 and then get on the road to recovery.

I think there is still work ahead of us. We must continue this work. We mustn't stop it. Our young people in this country are some of the most innovative and some of the most creative. Certainly, through my youth council, which I meet with on a regular basis, I've heard the challenges that they were facing around their uncertainty. Therefore, the supports that the government has put forward are intended to make sure that we and this incredible young generation get every leg-up during this time.

5:10 p.m.

Liberal

The Chair Liberal Wayne Easter

You have time for a very quick last question and a short answer, Mr. Fragiskatos.

5:10 p.m.

Liberal

Peter Fragiskatos Liberal London North Centre, ON

This probably touches on matters that have been raised prior to today, but can you point to proposals that have been presented to you in an unsolicited way and in fact turned into public policy?

5:10 p.m.

Liberal

Mary Ng Liberal Markham—Thornhill, ON

Yes, indeed. The Business Council of Canada, which of course represents many of Canada's private sector companies, came up with a training and education platform that was there to help businesses take steps to prevent the spread of COVID-19. They came up with the POST Promise. We collaborated with them. This is from the Business Council of Canada and also includes the CFIB and the Retail Council as part of it.

We also collaborated with the certified accountants of Canada through the Canada business resilience service. This was a hotline seven days a week to help businesses get the service and support they need to help them through this period. We have done that with them. The Business Resilience Network is a collaboration with the Canadian Chamber of Commerce—and again, with all of the provincial chambers and many local organizations—to help businesses navigate.

These are proposals that came through the business community, and we decided to work with them. I announced just last week a collaboration with Shopify to help Canada's small businesses digitize. There are many proposals that come forward and do make their way to helping Canadians.

5:10 p.m.

Liberal

The Chair Liberal Wayne Easter

We are going to have to end it there, Minister. I certainly want to thank you for appearing before the committee and answering our questions today. I'm sorry about the twists and turns in terms of the technology. Maybe you could speak to Minister Bains and tell him that we need broadband that works—and works well—right across the country.

With that, thank you very much, Minister.

We will suspend for a couple of minutes to bring on the last witness.

5:15 p.m.

Liberal

The Chair Liberal Wayne Easter

We will reconvene and call the meeting to order.

Welcome to meeting number 50 of the House of Commons Standing Committee on Finance and panel number three of the day. We are meeting on government spending, WE Charity and the Canada student service grant. The meeting is being carried on the House of Commons website.

Our guest for this panel is Marc Tassé, senior adviser at the Canadian Centre of Excellence for Anti-Corruption, at the University of Ottawa.

Welcome, Mr. Tassé. I expect you have a few opening remarks. Then we'll go to a series of questions for about an hour.

Just to give MPs a heads-up on the lineup for questions, starting off will be Mr. Morantz, who will be followed by Mr. Fragiskatos, Mr. Fortin and Mr. Julian.

Mr. Tassé, the floor is yours. Welcome. Thank you for coming.

5:15 p.m.

Marc Tassé Senior Advisor, Canadian Centre of Excellence for Anti-Corruption, University of Ottawa, As an Individual

Mr. Chair, members of the committee, thank you for inviting me to speak at this hearing.

I am a chartered professional accountant and a forensic accounting specialist. Over the course of my career, I have investigated various cases related to allegations of corruption, fraud, financial misconduct and conflicts of interest. I also teach at the University of Ottawa's Faculty of Law and in the executive MBA program at the Telfer School of Management in the areas of corporate ethics and corruption.

In these times of 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 corruption, embezzlement, undue influence and fraud.

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 unethical practices. The reputation of the government and the credibility of programs depend on it.

It is important that the flow of money and the contracts associated with it be very transparent. This means making the information accessible to the general public. It is also important to always document the considerations that led to a single-source contract with a company or an organization.

To mitigate the impact of the risks of non-integrity and corruption, it is important to take a holistic approach in six stages.

First, integrity. Senior officials must ensure that the various players in the procurement process demonstrate integrity and adhere to standards of ethics, honesty, professionalism and righteousness. The issue is fairness, non-discrimination and compliance in the public procurement process.

Second, transparency. There must be full transparency in public procurement to promote accountability, ensure access to information and, above all, level the playing field so that small and medium-sized enterprises can compete on an equal footing.

Third, access. Access to public procurement by potential companies of all sizes is important to ensure the best value for money through fair competition. It is essential that companies that violate integrity and engage in corruption be punished and excluded. The deterrent effect is paramount.

Fourth, monitoring. With respect to the public procurement cycle, it is essential that it be monitored and overseen to support accountability and promote integrity. It is important that the effectiveness of the supply cycle can be measured by a system for analyzing the risks of the process and its environment. This will allow the government to gain insight into new and emerging risks or alarm indicators that will allow it to improve its monitoring and oversight system.

Fifth are controls. Internal controls are firewalls and they avoid dangerous shortcuts. Whether we are talking about financial controls, internal audits or management controls, they must be carried out to ensure that legal, administrative and financial procedures are followed. More than ever, in times of pandemic and anti-corruption, we need harmonized internal control practices to ensure consistency in the application of procurement rules and standards across the public sector.

The sixth and final stage is due diligence. With respect to the pre-examination of the financial situation and governance structure of contracting entities, senior officials must conduct appropriate diligence that includes identification and verification of four key factors: the true shareholders, the governance structure, the legal structure of related organizations and, lastly, a detailed review of financial statements and other financial reports.

Moreover, in public contracts, the most basic caution requires that there be 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. 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 award of the contract? Was the contract awarded in an emergency context? Were apparent, potential and actual conflict of interest issues assessed prior to the award of the contract? Is the contract guided by due diligence with respect to the department's interests? Is the contract typical of the relationship between a department and an entity? Does the contract include a clause relating to the ongoing monitoring of the ethics and compliance program of the entity under consideration to be retained? Does the contract include anti-corruption clauses? Lastly, was there a legal validation of the contract prior to its award?

These questions must be answered.

In closing, in this time of a global pandemic where wrongdoing can lead to reputationally 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 be necessary and non-selective as they provide possible bypass routes for deviant actors.

Canada has an efficient, rules-based procurement system. We must simply use it properly and follow the rules.

5:20 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much, Mr. Tassé.

We'll go to a six-minute round first, and then we'll have a couple of five-minute rounds.

Up first is Mr. Morantz, followed by Mr. Fragiskatos.

Mr. Morantz.

5:20 p.m.

Conservative

Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB

Thank you, Mr. Chair.

Thank you, Professor Tassé, for being here today. I found your opening statement just bang on. I think you've covered all of the right points. I wish I had more time so that I could go through them all with you.

I want to start with conflict of interest. You talked about how, essentially, because of the pandemic, the procurement rules that would normally apply did not apply. For reasons of speed, the government felt it was necessary to get these programs out the door. Wouldn't that be all the more reason for politicians in positions of authority, having a fiduciary duty, to make sure they were not in conflict with the Conflict of Interest Act?

For example, the Prime Minister recognized, in his testimony, that there were potential conflicts, but he chose not to recuse himself from discussion, decision, debate or even a vote in cabinet. The finance minister, we also know, has had similar problems, and he later came out and apologized.

What do you make of the fact that they did not recuse themselves in this case?

5:25 p.m.

Senior Advisor, Canadian Centre of Excellence for Anti-Corruption, University of Ottawa, As an Individual

Marc Tassé

It is hard to offer an opinion on that because we do not exactly know what information was shared. I believe the Conflict of Interest and Ethics Commissioner might be able to answer that question. However, in my view, there is no question that we must always be transparent and disclose any potential, apparent or actual conflict of interest. It must be disclosed. It will be important to find out what information was shared.

5:25 p.m.

Conservative

Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB

On that point, actually, I'm glad you mentioned the word “perceived”. Professor Arthur Schafer, from the University of Manitoba law school—he's a professor of ethics—wrote a piece in The Globe and Mail recently, and there's a very on-point paragraph in his article. I'm going to read it to you. It says:

Conflict of interest does not require that bias actually occur, only that there is reason to fear that bias may be present. The risk of bias, not the exercise of bias, is what makes both our imaginary scenario and the WE Charity imbroglio real conflicts of interest.

Essentially, I think what he's saying is that even the perception of a conflict of interest should have been enough for both the Prime Minister and the finance minister to recuse themselves in all manner required under the Conflict of Interest Act.

Would you agree with Professor Schafer's assessment?