Thank you, Mr. Chair, for inviting me to discuss the audit of the RCMP pension and insurance administration. With me today is Gordon Stock, principal of the public safety team, who is responsible for this audit.
I'd like to take this opportunity to provide committee members with an overview of our findings related to the RCMP's response to the abuses in the administration of its pension and insurance plans.
In 2003, allegations of fraud and abuse in the management of the RCMP's pension and insurance plans came to the attention of the commissioner of the RCMP, who then triggered an internal audit. Following this internal audit, the Ottawa Police Service carried out a criminal investigation.
In June 2005, the Ottawa Police Service reported to the RCMP that it had found abuses of the pension and insurance plans, nepotism, wasteful spending, and overrides of controls by management. Two senior officials resigned and the RCMP considered disciplinary action against others.
The objective of our audit was to determine whether the RCMP had responded adequately to the findings of its internal audit and the investigation by the Ottawa Police Service. We did not re-audit or re-investigate the allegations of abuse.
However, we did examine additional allegations that were brought to our attention during our audit. In addition, we looked at whether the Ottawa Police Service conducted its investigation independently of, and without undue direction or bias by, the RCMP.
We concluded that the RCMP had responded adequately to the findings and recommendations of its internal audit and of the OPS investigation by addressing issues directly connected to the abuses. In particular, the RCMP reimbursed or credited about $4.3 million that had been improperly charged to the pension plan. It also took steps to prevent future inappropriate charges to the pension plan and it strengthened staffing and contracting controls. However, we found that the internal audit and criminal investigation raised additional issues that remained unresolved.
Perhaps the most significant issue was the question related to the independence of the criminal investigation itself. We received complaints that the investigation lacked independence. We found that the RCMP does not have a policy on the conduct of external investigations of itself. While the RCMP had signed a formal memorandum of understanding with the Ottawa Police Service for this investigation, we noted that in previous investigations it had not.
The memorandum with the Ottawa Police Service was signed 10 months after the start of the investigation. We found that the organization of the investigation, with the lead investigator reporting to an RCMP assistant commissioner, compromised the appearance of independence. The RCMP justified this arrangement as being the best way to provide administrative support to the investigation, and the Ottawa Police Service told us it had not been directed or influenced by the RCMP. Our recommendation was that the RCMP develop and institute a policy for such investigations to ensure that future investigations are independent in both substance and appearance.
We also found that while the RCMP had reimbursed or credited inappropriate charges made to the pension plan, it had not completely reimbursed or credited the plans for wasteful and unnecessary expenditures charged to them. We estimated that about $1.3 million was charged to the plans for work of little value and that only about $270,000 of that had been reimbursed or credited to the pension plan. We understand that the RCMP has reviewed our estimate, refined it, and made additional adjustments to the plans since the end of our fieldwork.
We found that the pension outsourcing initiative, the project that led to most of the abuses, had not been supported by an adequate business case, and that the cost estimates had not been complete and had greatly underestimated the cost of outsourcing. The RCMP finance branch did not challenge the numbers presented by the National Compensation Policy Centre for inclusion in the RCMP's Treasury Board submission. The branch told us it had relied entirely on the advice and decisions of the sponsoring managers. We recommended that as part of its internal review process, the RCMP challenge all important program changes.
Just prior to the publication of our report, the RCMP informed us that it was no longer considering disciplinary action against RCMP members about whom allegations of misconduct had been received. This was because the RCMP had elected to begin its internal disciplinary processes after the criminal investigation was completed instead of at the same time.
During the intervening period, a court decision in another case clarified that the time limit on internal discipline should have started when the appropriate officer knew of the alleged offence and the identity of the member involved—well beyond the time allowed in the RCMP Act had elapsed. In its internal disciplinary investigation, the RCMP identified that disciplinary action was warranted against four of its members.
We did not make a recommendation on the management of internal investigations and disciplinary proceedings by the RCMP. It is evident, however, that these need to be clarified.
Mr. Chair, that concludes my opening statement. Thank you for the opportunity to discuss this chapter. I will be happy to respond to the committee's questions.