Public Accounts Committee on Dec. 5th, 2006

[Sheila Fraser]

I would presume so, but I'm not sure. I don't know. I can find out—

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

So we're not sure why that investigation was suspended.

[Sheila Fraser]

I think they determined that they wanted to do an internal audit first to see what the nature of the problems were.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

So initially someone blows the whistle, and it appears that the officers who received this information felt it was of a grave enough nature that they began a criminal investigation. It also entailed senior appointees, or Mr. Ewanovich, who was appointed by the commissioner. Suddenly, two days later, the commissioner catches wind of this and shuts down the criminal investigation to do an internal audit.

Finally, after that whole process is done, the Ottawa police get involved. But it turns out that in fact the RCMP described this as an RCMP investigation conducted with OPS assistance, and the lead investigator reported to an RCMP assistant commissioner, who reported back to Commissioner Zaccardelli.

[Sheila Fraser]

That's correct.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

To this point, how many millions of dollars haven't been repaid?

[Sheila Fraser]

We estimate that there were sort of questionable expenditures of about $1.3 million, of which I think $250,000 has been repaid. We have recommended that the RCMP review the one million to see if more amounts shouldn't be repaid.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Wrzesnewskyj.

Mr. Sweet, you have eight minutes.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Thank you, Mr. Chair.

Madam Fraser, just looking at the Royal LePage contract again and doing a little bit of math, there were almost 100,000 moves covered from 1999 to 2005. Would it be an overstatement to say that although the dollar figure doesn't rank right up there, this is somewhat of a substantially sophisticated contract, in the scheme of things, that would have to be managed by the federal government?

[Sheila Fraser]

Absolutely. As I mentioned in my remarks, about 15,000 employees are affected by this each year at a cost of some $270 million in 2005, so it is a significant contract. It is significant not only in terms of monetary value but also because of the fact that a lot of people are affected by this. So the quality of the services has to be very good.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Can you tell me now, of the $270 million that you mentioned, is the ancillary income the company earns from the listing and sale of properties included in that contract?

[Sheila Fraser]

No, I don't believe so.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

So the contract is worth a lot more, actually, to the incumbent, which was able to capture the contract.

[Sheila Fraser]

Potentially, yes.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

I just find it mysterious that the original contract was cancelled in 2002. So it would seem to me that PWGSC, which was overseeing the tendering, would be on high alert, and yet the second contract had flawed information.

You mentioned here--and I'm just wondering if I could get a sense of it from whoever was in charge of this audit--that a number of times information was requested. Do you know exactly how many times the other bidders requested additional information and were rebuffed?

[Sheila Fraser]

I'll ask Mr. Campbell to respond.

[Ronnie Campbell, Assistant Auditor General, Office of the Auditor General of Canada]

Mr. Chairman, yes, twice, in writing, bidders asked specifically for information in relation to the property management services volumes.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

And when we say bidders, there was only one other, and that was Envoy. Is that correct?

[Ronnie Campbell]

Yes, and the other one was a potential bidder.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

It was a potential bidder, okay.

Were there any inquiries by telephone that we know of that they represented?

[Ronnie Campbell]

Not that I'm aware of.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

So Royal LePage had specialized information that the other bidders did not have access to.

[Sheila Fraser]

They would have known the true business volumes, yes.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

And this 60% that came up in the property management, did you have an opportunity or was it within the scope of your analysis to ask them where they got that figure?