Public Accounts Committee on March 26th, 2007

[The Chair, Liberal, Shawn Murphy]

Colleagues, I'd like to call the meeting to order and at this time ask that the cameras leave. Thank you very much.

Welcome, everyone. Welcome, witnesses. Welcome, members. Welcome, members of the public.

The matter today is chapter 11 of the November 2006 report of the Auditor General, “Protection of Public Assets—Office of the Correctional Investigator”, a report of the Auditor General of Canada.

We're very pleased to have with us today the Auditor General, Sheila Fraser. She's accompanied by Jean Ste-Marie, assistant Auditor General and legal advisor. As an individual, we have Mr. Ron Stewart, accompanied by his solicitor, Peter Doody. From the Department of Public Safety and Emergency Preparedness we have Suzanne Hurtubise, the deputy minister. From the present Office of the Correctional Investigator, we have Mr. Howard Sapers. From the Treasury Board, we have Charles-Antoine St-Jean, the Comptroller General of Canada. From the Privy Council Office, we have Mr. Marc O'Sullivan, the assistant secretary to the cabinet, senior personnel and special projects secretariat.

I want to welcome each and every one of you.

I understand that several of you have opening statements. I would urge you to keep them as short as possible.

Members, we're going to conclude this portion of the meeting at 5:15. Then we're going to go to motions that we had before this meeting, the first one at 5:15.

Without any further ado, I'm going to call upon you, Mrs. Fraser, for your opening comments.

[Sheila Fraser, Auditor General of Canada, Office of the Auditor General of Canada]

Thank you, Mr. Chair.

I thank you for this opportunity to present the results of chapter 11 of our November 2006 report entitled “Protection of Public Assets—Office of the Correctional Investigator”.

The Office of the Correctional Investigator acts as an ombudsman for federal offenders. It is a small, independent agency that investigates complaints of individual offenders and tries to resolve them by making recommendations to Correctional Service Canada.

Our audit identified a series of abuses and wrongdoings at the Office of the Correctional Investigator. These related to personal leave, absences, cash-out of annual leave, and travel and hospitality claims.

Before continuing, I would first like to address statements made that may cause committee members to question our conduct of this audit. I want to assure the committee that we rigorously followed our audit methodology, including allowing the entity and individuals concerned the opportunity to review and comment on our findings.

While our audit dealt with only the Office of the Correctional Investigator, it served to highlight some broader, more fundamental problems. I would like to focus today on the underlying issues and on how such abuses could be prevented in the future. To this end, my remarks will centre on three concerns highlighted in our chapter.

First, to maintain the public's trust and confidence in government, agency heads and senior management are required to discharge their responsibilities according to the highest ethical standards of integrity, objectivity, and impartiality. Their conduct and their actions are expected to exemplify the values of the public service.

In order to do this, Governor in Council appointees, such as the Correctional Investigator, and other senior officials need to be advised and informed about their expected standards of conduct as holders of public office. Responsibility for this orientation and training rests with the central agencies, the Privy Council Office and the Treasury Board Secretariat.

We raised this issue in our audit of the Office of the Privacy Commissioner in 2003. To our knowledge, it has still not been resolved, even though the public accounts committee made a recommendation about the training of Governor in Council appointees in its 2004 report on the audit of the Office of the Privacy Commissioner.

Second, our audit found that poor human resource management and financial management practices contributed to the improprieties of the Office of the Correctional Investigator. Appropriate comptrollership and management are essential in any federal organization to manage financial risks and protect against fraud, financial negligence, violation of financial rules or principles, and losses of assets or public money.

In our audit, we found there was some confusion about who was assuming the position and functions of the senior financial officer of the OCI. We recommended that the Treasury Board Secretariat ensure that every small, independent organization have a formally designated senior financial officer who is appropriately trained to carry out his or her responsibilities and duties.

We also found that Public Safety Canada did not properly fulfill its responsibilities as a provider of financial and human resource management services to the OCI. Public Safety Canada officials failed to report concerns or suspicions to appropriate government officials. Instead of challenging questionable and inappropriate transactions of the OCI, they simply processed them.

The third concern arising from our audit was that these abuses continued over such a long period of time, and that while senior officials were aware of some of the improper activities, they took no action to stop them. It is important to reinforce the responsibility of all public servants to take action in such cases.

The audit once again points to the issue of accountability in independent or quasi-judicial bodies. An independent agency such as the Office of the Correctional Investigator must maintain its independence while discharging its mandate; at the same time, it must act in accordance with government policies and the public interest. The challenge for central agencies is to provide adequate oversight while respecting this independence.

I would like to take this opportunity to inform committee members that we are planning to undertake audit work, in the near future, looking at the governance of small entities in general.

The Privy Council Office, the Treasury Board Secretariat and Public Safety Canada have agreed with all of the recommendations in our audit. The Office of the Correctional Investigator has also agreed with those recommendations directed at it and has indicated that it is taking action to address deficiencies.

Mr. Chairman, that concludes my opening statement. We would be pleased to answer the committee's questions.

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Ms. Fraser. Merci beaucoup.

I understand, Mr. Stewart, you have an opening statement.

[Ron Stewart, Former Correctional Investigator, As an Individual]

Yes, I have. Thank you, Mr. Chairman.

I was appointed the Correctional Investigator of Canada by the Governor in Council in November 1977 and held that position until I retired in October 2003. I was reappointed three times. The Correctional Investigator's office does very important work, and I was proud to lead that office for over 25 years. I tried to do the job to the best of my ability.

I am 72 years old and my memory is not good. On April 13, 2006, before I was questioned by the Auditor General's investigator and lawyer, my lawyer, David W. Scott, spoke to the present Correctional Investigator, Howard Sapers. Mr. Sapers told Mr. Scott that he and the executive director had been instructed by the Auditor General's investigators that no one at the office was to speak to anyone about the audit or the things under investigation. As a result, I could not speak to anyone in the office about these matters.

Even after I received a copy of the Auditor General's draft report, none of the people in my office would speak to me or my lawyer. Although I was given copies of some documents, my lawyer and I were not allowed access to many important documents from the office to refresh my memory before I was questioned.

Although I had kept a lot of documents at my home, which would have helped me to remember some of the things I was asked about, my wife and I destroyed them long after I retired. My lawyer has asked the Correctional Investigator's office and the Auditor General's office to provide him and an accountant I have retained with relevant documents to allow them to determine the true facts. None has yet been provided.

The result is that I do not have an adequate memory or the ability to respond completely today to many of the accusations brought against me, but I intend to have my lawyer and my accountant review all of those documents.

I want to tell this committee and the people of Canada that if I have received money or benefits that I should not have received, I intend to pay them back to the best of my ability. I promise you I will do that.

Thank you, Mr. Chairman.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Stewart.

We have with us the deputy minister of the Department of Public Safety and Emergency Preparedness and the present investigator with the Office of the Correctional Investigator, Mr. Howard Sapers.

I understand, Mr. Sapers, you have a brief opening comment. Is that correct?

[Howard Sapers, Correctional Investigator, Office of the Correctional Investigator]

Yes, Mr. Chairman. Thank you.

Members of the committee, good afternoon. Thank you for this opportunity to appear before the public accounts committee and, through you, to report to Canadians on the actions the agency I lead has taken to implement the recommendations of the Auditor General in her report to Parliament.

I will use my brief time to update you first on recovery efforts and then on how the financial management systems within the Office of the Correctional Investigator have been improved to prevent the abuses and wrongdoings reported by the Auditor General from happening again.

At the request of the Minister of Public Safety, my office is leading the process to confirm and recover funds that have been, or may have been, improperly paid to the former Correctional Investigator. During the last four months, my office has established an advisory committee, co-chaired by the Comptroller General of Canada and me, to guide the office in its recovery efforts. We've retained the services of a senior litigator to support the recovery process, and we've begun the verification process of the audit's findings and conclusions.

The due diligence legally required in this instance is a separate validation process to ascertain any amounts that may be owed by Mr. Stewart. This must be done independently from the analysis and conclusions of the Auditor General. My office is also fully cooperating with the RCMP.

While this recovery process may seem slow and frustrating, the need for swift and clear action following apparent breaches of trust must be balanced by the need for reliable due process.

I was concerned when first briefed on the findings of the initial audit, upon my appointment in April 2004. That's almost three years ago, and long before the Auditor General's final report was tabled, I initiated the strengthening of the financial and human resources management practices within the office.

Following the release of the Auditor General's report in November, my office worked with the Office of the Comptroller General to secure the services of an interim senior financial officer. He was contracted to review and further improve the new management policies and procedures already in place and to advise on how best to respond to the Auditor General's broader recommendations.

Today, our interim senior financial officer confirms that the processes now implemented at the Office of the Correctional Investigator represent prudent and effective practices for a small agency.

My office is also working with central agencies on the development and application of appropriate government-wide policy or procedural changes aimed at strengthening agency accountability. I'm proud of the commitment and diligence with which my office has responded to the Auditor General's report, all the while continuing to perform the important work legislated to it by Parliament.

In addition to investigating individual complaints, the Office of the Correctional Investigator also addresses broader systemic issues and corrections to improve the outcomes for inmates and ultimately to contribute to public safety. Since April 2004, the agency's work in this regard has focused on improving health services for inmates with mental illness, closing the outcome gaps for aboriginal inmates, and better accountability in women's corrections.

Thank you, and I look forward to your questions.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Sapers.

Madame Hurtubise has a brief opening comment, which is being circulated and will form part of the record.

[Statement by Mrs. Suzanne Hurtubise, Deputy Minister, Department of Public Safety and Emergency Preparedness]

Mr. Chairman, members of the committee, I am pleased to be here today to discuss the issues relating to the Department of Public Safety raised in chapter 11 of the Auditor General's report.

[The Chair, Liberal, Shawn Murphy]

While Public Safety Canada and the Office of the Correctional Investigator are part of the same portfolio, each is a separate agency headed by a deputy head, who is also the accounting officer. In view of its relative size--approximately 30 employees--it would not be practical or cost effective for the Office of the Correctional Investigator to provide its own core administrative services.

Since its establishment as a separate agency in 1992, the Office of the Correctional Investigator has received from the former Department of the Solicitor General and from Public Safety Canada some services in the area of financial and human resources management.

As the accounting officer of the Department of Public Safety, I am responsible for the quality of the services provided by officers of the department to the agencies of the portfolio.

The report of the Auditor General identified some weaknesses in the way officials of my department have discharged their responsibilities over the years. The appropriate corrective measures have been identified and are being implemented. For example, we now have a memorandum of understanding with the Office of the Correctional Investigator, which clearly specifies the roles and responsibilities of each organization. We have also issued further guidance and tools to assist employees who have delegated financial and human resources responsibilities.

I would be pleased to respond to the questions of committee members.

Mr. St-Jean, you have a few comments you want to make.

[Charles-Antoine St-Jean, Comptroller General of Canada, Treasury Board Secretariat]

Thank you very much, Mr. Chairman and members of the committee.

I've got a few opening comments, which I'll shorten to give you more time for questions.

I'd like to thank you for inviting me to appear before the committee to discuss the November 2006 report of the Auditor General regarding the Office of the Correctional Investigator.

I would in particular like to discuss the actions my office is taking to strengthen financial management and internal audit in small departments and agencies. My office has provided advice and support to the Office of the Correctional Investigator in responding to recommendations.

For example, we've assisted the office in acquiring the services of an interim senior financial officer. We are also providing financial management and internal audit advice and support, and we've also worked closely with the Office of the Auditor General to review the audit material. I would like to thank especially Mr. Jean Ste-Marie and Mr. Neil Papineau for their ongoing assistance in this matter. I'm also co-chairing the advisory committee with Mr. Sapers to ensure a coordinated and comprehensive response by government.

Clearly, however, this case also indicates a need for broader efforts to strengthen internal audits and financial management across government as a whole. My office is leading this effort, and our work is well supported by the Federal Accountability Act that came into effect on December 12, 2006.

As part of the accompanying Federal Accountability Action Plan, which complements the act, the government also committed to implementation of the policy on internal audit. Let me say a few words about the internal audit policy, which came into effect on April 1, 2006.

Under the policy, the Office of the Comptroller General has a mandate to conduct horizontal and other audits of small departments and agencies. We are conducting our first horizontal audit of travel and hospitality in small departments and agencies and we will be reporting this in the next few months. My office expects to complete this work in the next few months.

In our next small departments and agencies audit we will review the use of delegation of authority. We're also exploring the possibility of conducting an audit of the financial management practices associated with overtime, leave, and taxable benefits. By conducting these audits we can support small departments and agencies in identifying problems and implementing solutions and we can resolve issues before they have a chance to escalate.

There is also a broader policy review under way that will support our efforts to strengthen financial management across government.

That review is near completion and the report will be presented to the President of the Treasury Board in the near future. Once the new financial policies are in place, everyone's role and responsibilities will be clearly defined, and accountabilities will be clear.

The Federal Accountability Act and action plan, the review of the financial management policies, and the policy on internal audit and the management and accountability framework are just some of the many actions we have taken to strengthen financial management, internal audit, and overall accountability across the government. These actions address many of the issues raised in the Auditor General's report.

No systems, measures, or sanctions can completely eliminate problems in an organization as large as the Government of Canada, but we can mitigate the risk.

Thank you very much. I look forward to your questions.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. St-Jean.

Mr. O'Sullivan, you're from the Privy Council Office. Do you have an opening comment?

[Marc O'Sullivan, Assistant Secretary to the Cabinet, Senior Personnel and Special Projects Secretariat, Privy Council Office]

Thank you, Mr. Chairman.

I'll be very brief. I'll provide a quick overview of the steps taken by the Privy Council Office in response to the Auditor General's recommendations.

Prior to appointment, conflict of interest and expected standards of conduct are discussed with each proposed governor in council appointee. Candidates are provided with a copy of the Conflict of Interest and Post Employment Code and instructed to contact the Office of the Ethics Commissioner to discuss any concerns or queries.

Upon appointment, each new full-time governor in council appointee is contacted by the Ethics Commissioner to discuss their situation. A condition of holding office for all public office holders is compliance with the Conflict of Interest and Post Employment Code and each new appointee must sign a certificate of compliance.

Moreover, as you are aware, the new Conflict of Interest Act will enact stronger compliance measures, including the power for the Conflict of Interest and Ethics Commissioner to initiate formal investigations and to levy monetary sanctions for administrative breaches under this act.

We are also updating our guidebooks for Governor in Council appointees to reflect changes in the conflict of interest regime and other changes brought about notably by the Federal Accountability Act.

To ensure proper orientation of new appointees, we are proceeding with one-on-one briefings for newly appointed heads of agencies that cover terms and conditions of employment, conflict of interest, and standards of conduct. We are also providing a session covering standards of conduct in the orientation program for heads of agencies offered by the Canada School of Public Service, which has also become compulsory. The next session is on April 3. Finally, we are issuing more fulsome guidance to deputy heads on the approval, usage, and reporting of their leave.

In summary, we take every opportunity to emphasize ethics and values in both our guidance and training initiatives to ensure that public office-holders are aware of their responsibilities and their obligations with regard to standards of conduct.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. O'Sullivan.

I understand, Madame Hurtubise, you want to read your report into the record.

[Suzanne Hurtubise, Deputy Minister, Department of Public Safety and Emergency Preparedness]

Thank you, Mr. Chair.

I'd like to make a few points. I will not repeat the niceties.

I simply make the point that while Public Safety Canada and the Office of the Correctional Investigator are part of the same portfolio, each is headed by a deputy head who is the accounting officer for that body. Since the establishment as a separate agency in 1992 of the Office of the Correctional Investigator, the former Department of the Solicitor General and now Public Safety Canada does provide services in the area of financial and human resources management to the Office of the Correctional Investigator.

Mr. Chairman, the report of the Auditor General did identify some weaknesses in the way officials of my department have discharged their responsibilities over the years. I can assure the committee that the appropriate corrective measures have been identified and are being implemented.

For example, I referred the Auditor General's report to the RCMP. We developed a work plan to implement the recommendations made in the Auditor General's report. I can confirm that most of the corrective measures are already in place. For example, we now have a memorandum of understanding with the Office of the Correctional Investigator that clearly specifies the roles and responsibilities of each organization. We have also issued further guidance and tools to assist employees who have delegated financial and human resources responsibilities. I, and others in the Department of Public Safety, have worked closely with the Correctional Investigator, Mr. Howard Sapers, to address the issues raised in the Auditor General's report.

I would be pleased to respond to the committee's members.

Thank you, Mr. Chairman.

[The Chair, Liberal, Shawn Murphy]

Thank you, Madame Hurtubise.

On behalf of the committee, I want to thank all witnesses for their presentations and their attendance here this afternoon.

Before going to the first round, I want to make a few brief opening comments.

We have here what I consider to be a breakdown in the system of checks and balances that we as parliamentarians would normally expect to see in the federal financial administration.

Some of the facts are titillating, but I hope that in the dialogue that ensues here we get answers to the basic questions of who was responsible for financial comptrollership within this agency and did that person understand his or her role. What were the role, duties, and responsibilities of the Department of Public Safety and Emergency Preparedness? Did they have any mandate for financial oversight? Where was the Treasury Board?

This is not a situation of a snatch and grab in the middle of the night. This went on for 13 or 14 years. Where was the Treasury Board, in particular the Office of the Comptroller General? That may be an unfair comment because it was just reinstituted since this event. But where was the Treasury Board, and did they provide any oversight at all to this particular agency?

Does the Office of the Auditor General have any responsibility for going in at any point in time to audit a small agency like this? If they did, it would have caught the situation.

Hopefully we can get to the answers of these particular questions. I urge all members to keep their questions brief and relevant--we don't need long preambles. I urge all witnesses to answer the questions as succinctly as possible.

Having said that, I'm going to start the first round. The first round will be seven minutes, and then we'll see how we get along after the first round. We are going to adjourn at 5:15 sharp.

Mrs. Sgro, seven minutes.

[Judy Sgro, Liberal, York West, ON]

Thank you.

Everything you just said is exactly what I was feeling while I was sitting here listening to the heads of various departments that we rely on to make sure things are running right. It seems that everybody brings in more rules after.

To get to the point, Mr. Stewart, a couple of things concern me just in looking at the audit findings--things like receiving unearned salary. You were absent for 319 days from OCI premises from 1998 to 1999. You were paid for that time and generated little work product. What did you do when you were working, and how can you account for being absent for 319 days, yet receiving payment for that?

And thank you, Mr. Stewart, for coming. We very much appreciate your being here.

[Ron Stewart]

Thank you.

I live in Ottawa, but I have a summer place. I'd spend most of the summer at the summer residence, where I took my work and did it at that place. I don't think there's anything that says you have to sit in an office to do your work. There was lots of work to do in the Office of the Correctional Investigator, and I always had a briefcase full of things I had to get through. Whether I did them in the office or at my summer place really didn't make a lot of difference to me.

[Judy Sgro, Liberal, York West, ON]

What kind of work were you doing, Mr. Stewart? Help me to understand the kind of work you were doing if you were able to do it at home with little tracking of e-mails, letters, phone calls, or so on.

[Ron Stewart]

You don't get a lot of e-mails or telephone calls from inmates. I'm not trying to be flippant, but you would go to the institution, meet with them and see what their problems were, and try to figure out through analyzing things and reading material...to see what kind of help you could give them.

[Judy Sgro, Liberal, York West, ON]

How many times did you go and visit the correctional institutions?

[Ron Stewart]

How many times?

[Judy Sgro, Liberal, York West, ON]

Yes.

[Ron Stewart]

I have no idea.

[Judy Sgro, Liberal, York West, ON]

Did you normally go every two weeks? Once a month?

[Ron Stewart]

There are about 60 federal institutions in Canada, and I would go on a needs basis, really. If we had a lot of complaints from Millhaven, I might have to go down there for a couple of weeks to see if I could clear some of them up. Sometimes you wouldn't get a complaint from an institution, but you would manage to get there...well, I can't say “once a month” or whatever. You'd have to go to see the person, or one of the investigators would go.

When I first took over the office, we had a staff of five people. I pretty well did everything. I would be contacted by the warden's secretary, who kept a list of the inmates who wanted to talk to me. I would arrange my office business. I would arrange the flight out there. I'd rent a car and drive to the institution. I'd meet with the warden, meet with the inmate. I did that for years. It was a kind of one-man show.

When I left the office, I think we had 25 people in place, and with more investigators to go into the prisons, I spent less time there and more time in the office in Ottawa.