Government Operations Committee on Nov. 16th, 2010

[Michael Fortier]

Of course, that's not incompatible. Did you hear me tell you that I wasn't responsible?

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

No, but you seem to say no one is aware.

[Michael Fortier]

I told you I was responsible, and I am here today to say so.

[The Chair, Liberal, John McKay]

Ms. Bourgeois, your time is up.

[Michael Fortier]

Chair, if you don't mind, I'd like to finish my answer.

You asked me—

[The Chair, Liberal, John McKay]

Monsieur Fortier, you will have another hour to finish your complete answer.

We've been joined by Mr. Conacher and Mr. Broccolini, and Mr. Fortier has agreed to stay for another hour.

[Michael Fortier]

Have I?

[The Chair, Liberal, John McKay]

Yes, you have.

[Michael Fortier]

Oh.

[The Chair, Liberal, John McKay]

It was very generous of you.

[Voices]

Oh, oh!

[The Chair, Liberal, John McKay]

I thank you for that.

I'm going to ask Mr. Conacher and Mr. Broccolini for their opening statements, if they have any. Normally when we suspend we would restart the questioning list, or we can continue on with the questioning list. My proposal would be a restart, but unless I see a contrary opinion, we'll start the list over again after the statements of Mr. Conacher and Mr. Broccolini.

That's fine? Okay.

So it's Mr. Conacher, and then Mr. Broccolini, for up to 10 minutes. Thank you.

[Duff Conacher, Coordinator, Democracy Watch]

Thank you very much, Chair, and members of the committee for this opportunity today to speak to you.

My name is Duff Conacher. I'm the coordinator of Democracy Watch and also the chairperson of the Government Ethics Coalition, which is made up of more than 30 organizations from across the country, representing more than three million Canadians in total membership. As well, Democracy Watch coordinates the Open Government Coalition and the Money in Politics Coalition, also multi-member group coalitions with groups from across the country.

For more than 10 years Democracy Watch has been pushing for changes to close systemic loopholes in the rules in many good government laws, and that is what I'm going to talk with you about today: the loopholes that Democracy Watch sees revealed by this and similar situations that have arisen recently.

I'm only going to be able to sketch out the loopholes, and I apologize in advance. As I was away for personal reasons all last week, I was not able to prepare a brief, but I'm happy to provide details to the clerk and researchers for the committee of the actual sections in laws that I'll be talking about concerning this overall situation and similar situations.

There are also a lot of technical terms, and as I still need to improve my French, I will give my evidence in English.

I will say that, overall, there are many, many loopholes in key good government laws that allow such situations to arise and also questions to arise about these situations. Until these loopholes are closed, you will see these kinds of situations continue to arise.

In other words, the system is the scandal, and until the system is cleaned up, you will continue to see these kinds of questionable situations arise far too frequently.

I'll start by summarizing the loopholes. First of all, within the contracting policy of Treasury Board, section 8.2.1 states that the minister “customarily delegates contracting authority” to public servants, but they're not required to do so. So it's actually legal for ministers to be intervening in the contracting process under the Treasury Board policy itself.

When you combine that with the very vague notion of what ministerial responsibility is and where the lines are drawn between what ministers do, what staff do, and what public servants do—and there are questions right now concerning staff even testifying before committees about their actions, which is another situation that remains unresolved—you have a very vague situation concerning responsibility, and, beyond responsibility, actual accountability for what happens in contracting processes because the decision-making is legally mixed between the minister, ministerial staff, and public servants.

When you combine that with an Access to Information Act that does not allow you access in many cases to the documents that would track a paper trail of a contracting process, because of loopholes in the Access to Information Act that allow secrecy in this area, you have a situation where it is very easy for a minister to be involved in the contracting process and yet escape responsibility or accountability in any way.

Beyond that, under the Conflict of Interest Act, ministers are allowed to be involved in situations, even if they have a private financial interest in the situation, as long as the matter that is being dealt with is a matter of general application. It could be argued that an RFP, because it's generally aimed at a bunch of different companies, during that whole time period is a situation that is a matter of general application. It doesn't involve a specific company yet because bids haven't been received. Even when bids are received, they're received from more than one company, so even then it could be viewed as a matter of general application.

The Conflict of Interest Commissioner, although she's been on the job now for almost three and a half years, has not defined what general application means. It's a huge loophole in the Conflict of Interest Act. You cannot be in a conflict of interest as a cabinet minister when you are dealing with any matter that's of general application, even if you have a personal financial interest in that matter. That is a gigantic loophole.

I'll come back to another aspect with regard to cabinet ministers.

When you turn to the Lobbying Act, it is legal to lobby without registering. It is legal if you are not paid to lobby. So if you have a lobbyist who is paid by a company, that lobbyist can simply claim they were paid to give advice to the company and that they did the lobbying for free, as a volunteer. It's a very simple arrangement for anyone to do, and then you do not have to register. Or you can say, “Oh, yes, I was paid, but I was paid as an employee”. If you're paid as an employee to lobby the federal government, an employee of a for-profit corporation, you do not have to register if you do not lobby more than 20% of your time. Every six months is how it's counted, so you can lobby for 34 days, eight hours a day, full time, and not have to register as a lobbyist.

So you can even be paid and you don't have to do the “Oh, I was giving advice and lobbying for free”; you can say, “Oh, yes, I was paid to lobby, but I lobbied 19.9% of my time”.

As well, I would just mention--it's an unrelated loophole, but it's also a giant loophole--that you do not have to register if you were lobbying about the enforcement of a law or an inspection or administration of a law or a regulation or a policy or code. That's just another loophole that doesn't really apply to this particular situation that's arisen.

So secret lobbying is legal. In terms of cabinet ministers, there was a code brought in by Prime Minister Chrétien to prohibit cabinet ministers--sort of--from raising funds and soliciting funds, especially from entities in which they had dealings as a cabinet minister. now, this was just a code; it was the Prime Minister's code. It wasn't ever enforced at all. It was enforced by the Prime Minister himself, who didn't really have an interest in finding any of his cabinet ministers guilty of violating this code.

Apparently there's now a new code that Prime Minister Harper has issued that we still haven't seen. It's secret. These rules are not in the Conflict of Interest Act, and they should be, because that code by Prime Minister Harper is, again, enforced by him, and the rules, again, aren't even made public yet, so we don't know where the lines are.

The real controversy that Democracy Watch sees arising from contractors attending a fundraising event is not that they attended the event and donated a nominal sum, because the political finance donation limits are fairly good now--not as low as they should be, but fairly low. The real question about that situation is who invited them to come to those fundraising events? Was it the minister or ministerial staff soliciting those donations? If so, then, of course, any entity that would be dealing with a minister who receives an invitation, the not-so-subtle message would be, come and make the donation or you're not going to get any further with this minister. That's why Chrétien outlawed it--again, sort of, as it wasn't enforced--and that's why it needs to be put in the Conflict of Interest Act, again, as the Ethics Commissioner has actually recommended.

Finally, we need to have a safeguard in place that's a front-line safeguard and also the end safeguard that you need, and that's effective whistle-blower protection. Currently the system is not strong enough. Not everyone's protected. For example, political staff are not protected, nor are suppliers or contractors protected under the whistle-blower protection act. It's only directed at public servants, not even all of them. So suppliers, political staff, and contractors are not protected. Even if they see wrongdoing from retaliation, they can't complain under the system and receive protection from the system.

When you add up all of these loopholes, you see that all of the players have very vague rules and can escape accountability and responsibility, can act in secret, and actually can act unethically. It's not surprising at all that these situations arise and they'll continue to arise and you'll continue to have these unclear situations about whether anyone's guilty of any wrongdoing as long as these loopholes exist in the rules, the enforcement's weak, and you have an overall situation of secrecy.

I welcome your questions.

[The Chair, Liberal, John McKay]

That's ten minutes exactly.

Mr. Broccolini, do you have an opening statement?

[Joseph Broccolini, Vice-President, Montreal, Broccolini Construction Inc.]

My name is Joseph Broccolini. I'm VP of Broccolini Construction, founded in 1949 by my dad. It's a third-generation general contracting and real estate development company.

I'm here because I was asked to be here. We have absolutely nothing to hide. I'm open to all of your questions.

[The Chair, Liberal, John McKay]

Thank you, Mr. Broccolini.

Mr. Regan, for eight minutes, please.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much, Mr. Chairman.

Mr. Conacher, you talked about a loophole in the case of a general competition or an RFP whereby--I think you were saying this--it would be possible for a minister to be able to politically interfere in the awarding of a contract and then actually come before a committee and say, no, I had no involvement.

Is that what you're saying, and could you explain that?

[Duff Conacher]

Certainly. The contracting policy of Treasury Board states, in section 8.2.1, that the minister “customarily delegates contracting authority” to public servants, but it doesn't say he's required to do so. When you combine that with the Conflict of Interest Act, allowing ministers to intervene in matters of general application...and, again, we don't know what that means, because the Ethics Commissioner has not drawn that line. Obviously it's a line in the sand that can be blown away very easily, and anyone can define it however they want. We think an RFP going out to many companies is a matter of general application, not as general as a law that applies to a ton of different companies, but still fairly general.

Tell me, where are the lines of cabinet minister responsibility and accountability versus what their staff do versus what senior public servants do? I don't see anywhere, in any law, where those lines are very clear. It's a wide open situation in terms of being involved and then denying that the involvement was improper or that this amounts to something the minister is responsible for if the staff did it on behalf of the minister.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much.

Minister Fortier, in relation to your involvement or non-involvement in contracts and so forth--we talked already about the $9-billion sale of buildings and your decision in relation to BMO and RBC--let me ask you about the case of Mr. David Rotor, who filed a statement of claim against the government. The government has since settled the lawsuit.

In his claim he alleged that he received a call in August of 2006 from Rick Byers, a well-connected Conservative fundraiser and friend of yours, according to this story from the Canadian Press, who was in the middle of BMO's winning bid on a massive government real estate sell-off. Byers reassured Rotor that he had just spoken with Minister Fortier. Apparently Mr. Rotor blew the whistle on this and ended up getting fired, and now the government has settled the claim.

What do you have to say about this?

[Michael Fortier]

I say that I suggest to you that you bring all these people here. I have nothing to say about this. These are allegations by a person about a conversation he had with another person. If you want to ascertain whether the conversation took place, I would suggest you invite them to appear.

[Geoff Regan, Liberal, Halifax West, NS]

Well, if the claim said that Byers assured Rotor that he'd just had a conversation with you, is that the truth?

[Michael Fortier]

That is not true. But again, I would suggest to you that you bring them here and ask those questions. Mr. Rotor made those--

[Geoff Regan, Liberal, Halifax West, NS]

We may do that. But do you know Mr. Byers?

[Michael Fortier]

Yes, I do.

[Geoff Regan, Liberal, Halifax West, NS]

And how do you know him?