Public Accounts Committee on March 6th, 2008

[Charles Hubbard, Liberal, Miramichi, NB]

Mr. Gagliano, on Tuesday, we seemed to define that most of the so-called loss, or money being spent that maybe shouldn't have been spent, was a result of having two leases at the same time, which indicated that we had certain ratios of occupancy or lack of occupancy.

As minister for a five-year period, do you know of other regions or cities, other than Montreal, where we owned more office space than we could occupy, in other words there were certain leases that were not being occupied? Was that a concern to you, as a minister? Were you aware that there was a vacancy rate of maybe 3% or 5%, or 1.5%, as Madam Cochrane indicated to us, which would be a considerable cost to the Government of Canada?

[Alfonso Gagliano]

First of all, I knew it was lack of space and not that we had more space. During my tenure as a public works minister, I was concerned about the amount of space we were using, because, if you recall, after a program review, I believe in 1996-97, we reduced our staff by about 50,000 people. I was concerned because we had 50,00 fewer people working for the Government of Canada. I was looking at the space, and the number of metres we were using was increasing. For me, it didn't make sense. We had less people and we needed more space, so that was the debate I had with the department.

Frankly, I never heard that.... Because of moving, because you had to plan in advance to retrofit a building, for a certain period there might be a lack of occupancy. But generally I think the department was managing it very well.

[Charles Hubbard, Liberal, Miramichi, NB]

In defence of Madam Cochrane, you might say that when she saw a vacancy occurring, it would not be at the top of her mind to try to make sure a vacancy did not occur. The vacancy caused this whole problem with the Auditor General--the cost of having office space that was not being used. So from your experience, she probably made a fairly good decision to allow the Government of Canada to have some vacant office space in the city of Montreal.

[Alfonso Gagliano]

I knew for a fact that there were some considerations before I left--or in the last year that I was at that department--in which the department was looking at all kinds of refits in the whole Montreal area. We owned some buildings, we were renting others, and the idea was to put everybody as close as possible and sell some of the buildings we owned that were old and that we had to refit. That was going on, but I don't know if that has anything to do with the question that is before you.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Hubbard.

Mr. Poilievre, eight minutes.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

You said the problems that have occurred here were the result of things that happened after you left as minister.

[Alfonso Gagliano]

Yes.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

You have described the intervention that occurred to favour Place Victoria over the winning bidder was, quote:

“exceptional”.

Exceptional. And when you were asked if you would have done the same thing had you been minister,

you said: “I would say not.”

Are you indicating that you think your successors made mistakes here?

[Alfonso Gagliano]

You didn't finish quoting me. I said, looking at this, as it is, without having any other knowledge, I would have said no. There is a tender; there is a winner. We signed the lease. Forget about it. But the officials at the department did the analysis, and they said, look, we have clients who can't occupy the space we leased; therefore, we can make the clients who want to stay there happy, with no extra cost to the crown. If that information--that analysis--was brought to me, I probably would have said yes, but I wasn't there. You're asking me to answer a hypothetical question.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

All right.

I'll turn my time over to Mr. Williams.

[John Williams, Conservative, Edmonton—St. Albert, AB]

Thank you, Mr. Chairman. Thank you, Mr. Poilievre.

Good morning, Mr. Gagliano. You may recall we've met before.

[Alfonso Gagliano]

Yes. Good morning, Mr. Williams.

[John Williams, Conservative, Edmonton—St. Albert, AB]

The last time we met it was dealing with the sponsorship file. You made a great effort to ensure that you only dealt with policy. You never dealt with administration. Am I correct in saying that?

[Alfonso Gagliano]

Yes.

[John Williams, Conservative, Edmonton—St. Albert, AB]

Here we find that you have been intimately involved in the administration of in fact every lease in Montreal, in the province of Quebec, that was over 500 metres; 500 metres was enough space to accommodate maybe 10 or 12 staff members--5,000 square feet.

Were you actively involved in the administration of leasehold space in Montreal, in the province of Quebec?

[Alfonso Gagliano]

We were directly informed. I believe there is a difference between being informed and being involved.

As a regional minister, we were receiving a lot of queries and a lot of information. Therefore, to expedite the process, we decided my staff should meet regularly with the staff and officials at Public Works to discuss the different things that were being done.

[John Williams, Conservative, Edmonton—St. Albert, AB]

That statement just doesn't hold water, Mr. Gagliano, because, first of all, we've got the memo from your executive assistant, Jean-Marc Bard, who put the whole project on hold. That is direct intervention in the administration. And then Claude Drouin, who was a parliamentary secretary, was able to reverse the entire process after the lease had actually been signed. So your statement that you had no influence--you could only be informed--doesn't hold water.

[Alfonso Gagliano]

Let me say, first of all, that there is no memo from Jean-Marc Bard asking the officials to hold the project. The officials concluded that he was asking for a hold; he could have asked for information. I want to make it clear for the record that there is no memo that I saw. If you have one, I would like to have it. There is no memo.

As I said, all the officials from Public Works--from the bottom to the top, from the director of the project to the assistant deputy minister--all testified before you and said very clearly that, yes, my staff were asking questions, but there was no interference whatsoever. And even--

[John Williams, Conservative, Edmonton—St. Albert, AB]

Well, the record is contrary to that. We have one gentleman who actually objected to the political interference. In fact, he could not recommend that the tenant remain in Place Victoria by virtue of the fact that he could not justify it to his deputy and to the minister, by virtue of the fact that the economics weren't working and he was the number four bidder.

So there was interference. We know perfectly well that Claude Drouin's letter turned things around on its ear, and I'm trying to find out why you, as a former minister of the department, seem to think you had no capacity to influence anything when your parliamentary secretary could, just by virtue of a letter, turn things around on a dime after they had all been concluded.

[Alfonso Gagliano]

Wait a minute. I think you have your facts wrong here.

Claude Drouin was not my parliamentary secretary. Claude Drouin became secretary of state responsible for the Economic Development Canada once I left.

I would like to remind you that I left on January 15, 2002, and the letter to the then Minister of Public Works, who I believe was Mr. Don Boudria, was written by Secretary of State Claude Drouin to Don Boudria, not to me. So you're asking me something that I cannot answer because I wasn't there.

In the past, you've accused me of a lot of things, but this time, believe me, you're barking at the wrong dog.

[John Williams, Conservative, Edmonton—St. Albert, AB]

Well, we come back to Jean-Marc Bard, your executive assistant, who seems to have been intimately involved in these types of things. I go back to the previous investigation we had where he also appeared as a witness before the public accounts committee. In this situation, I find it rather strange that the minister and the minister's office were only involved and took no particular action, when it appears from our perspective that political intervention was able to turn this thing around on a dime, completely after it was all sealed and delivered.

[Alfonso Gagliano]

I beg your pardon. You're referring to what?

[John Williams, Conservative, Edmonton—St. Albert, AB]

I'm saying after the contract was signed, sealed, and delivered, we were obligated to start paying rent in Place Bonaventure, and Canada Economic Development was able to remain where they were, contrary to the guidelines that insisted that there be handicapped access to the building—which apparently there wasn't—and a few other things. So I'm trying to find out the culture of the office, Mr. Gagliano, where these things were allowable, and from the deputy minister down, they accommodated the requests of the political staff.

[Alfonso Gagliano]

There was no request from political staff or the minister on this thing. The dilemma you're facing is that this happened after I left. While I was there, everything went according to the rules. The ethics or third-party advisor even states in his document that all the things were done properly in the tendering process. The tendering letters were opened and the winner was declared. Everything went according to the rules.

[John Williams, Conservative, Edmonton—St. Albert, AB]

Okay, I'm going to interject here, Mr. Gagliano, and quote from a memo of July 16, 2001. You were the minister at that time. This is a memo from Mario Arès to Linda LeBrun, and so on, regarding Economic Development Canada. It says:

I am writing to ask for your support, in raising the issue of the CED file with headquarters again.

More than a month ago, we informed the Minister's office of our accommodation strategy for CED, our client. On June 8,

—when you were the minister—

after a meeting with J. M. Bard,

—your executive assistant—

we were told to put the CED file on hold.

I'm trying to understand, Mr. Gagliano, your statement where you said you had no capacity to influence anything, you could only be informed, and we have documentation right here that says your executive assistant, who seems to have a lot more authority than you ever had, put things on hold.

What's going on here?