Public Accounts Committee on Oct. 19th, 2017

[David Bevan]

Capital equipment is supposed to be purchased with the approval of the board. That was not the case, as I understand it. The equipment was purchased with a focus on yield, but without thinking about the end product and whether it would be acceptable to the buyers. It wasn't acceptable to the buyers. Therefore, the product that was being produced was unsaleable and the equipment wasn't used. It eventually had to be sold and replaced.

[Chandra Arya, Liberal, Nepean, ON]

Did you incur a loss on that?

[David Bevan]

The equipment was purchased outside the normal process.

[Chandra Arya, Liberal, Nepean, ON]

No, but you said that the equipment was sold back.

[David Bevan]

After I came on, we had to find a way to sell the equipment and replace it with equipment that produced a profit.

[Chandra Arya, Liberal, Nepean, ON]

Was there any loss of profit from the sale made?

[Stan Lazar]

There was a loss. The corporation has a policy that anything over $75,000 in capital needs to be approved by the board of directors. The particular equipment that you're referencing was purchased without acknowledging or respecting that policy. The then president hadn't bought that.

[Chandra Arya, Liberal, Nepean, ON]

In addition to the president getting fired, was there any other action initiated for violating the norms?

[Stan Lazar]

I can't answer that question.

[David Bevan]

I should point out that we operate under the FFMA and the Financial Accountability Act. We don't have the authority to hire or to fire the president. We don't have the ability to appoint to the board. The board at the time was raising issues with the Government of Canada about these actions that were taking place, unfortunately during the time of the special investigation—

[Chandra Arya, Liberal, Nepean, ON]

In fact, your answers I think lead me to the same thing, whether the existence of this corporation is relevant in today's times, where you're allowed to come back to the federal government for the approval of every small thing. This includes, I understand, the final returns to the fishermen, which are determined after the annual audit by the Office of the Auditor General.

[David Bevan]

No. The final payment to the fishermen has to be consistent with the plan and it has to be consistent—

[Chandra Arya, Liberal, Nepean, ON]

I'm sorry. I'm reading from your financial report. It says, in reference to returns to the fisher, “Freshwater uses a payment structure that determines initial and final payments”. It goes on to say, “After the annual audit by the Office of the Auditor General of Canada, Freshwater determines final payments from the pooled receipts.”

[David Bevan]

That is correct, because we need to have the books audited so that we have a very clear understanding of our financial position before we send the fishermen the money.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much.

We're going to go back to Mr. Nuttall or Mr. Sopuck for a couple of minutes and then we're going to have to suspend this part of the meeting before we go into the next part.

Mr. Sopuck.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

Thank you very much, Mr. Chair.

So that I'm clear on these contracts, Mr. Bevan, the contracts that you sign with the fishermen, they have to market all of their catch with you of all species. Is that correct? If a private buyer says, “I'd like to buy a few tubs of fish from you for the restaurant trade”, that fisherman cannot sell to that buyer. Is that correct?

[David Bevan]

If you sign a contract with the Freshwater Fish Marketing Corporation, you get services. You get ice. You get totes. You get EI and administration. You get all of that, and in exchange for those services and for us taking the fish, you sell to us.

We won't turn down fish from somebody who sells a little to a private group, but that would be outside of contracts and outside a situation where they'd be eligible for final payment, etc. There's going to be some nimbleness in terms of purchasing fish, but if you want to sell fish to us and get all those services and final payment, you need a contract.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

Again, I find that a little difficult to take.

In terms of the math of a pullout from the FFMC, we have a mini-experiment going on with the Saskatchewan pullout from a couple of years ago.

Right now, what proportion of Saskatchewan's commercial fish catch is marketed by the FFMC?

[David Bevan]

Over 95%.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

Okay, so the fishermen themselves made a choice to market through you, which is fine.

[David Bevan]

They didn't have a choice, in one sense. That's what is of some concern. The people in the northern isolated indigenous communities.... No one's on the wharf, trying to out-compete us.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

Right. I'm well aware of that, and the fact that you market fish from remote areas within an area almost the size of Europe is an incredible logistical challenge. That was one of the reasons the corporation was set up in the first place.

Some of the anti-FFMC fishermen are also saying “once we get rid of the FFMC”, new fish plants will emerge, built by private investors. To the best of your knowledge, did that ever happen in Saskatchewan after they pulled out?

[Stan Lazar]

No, not that we're aware of.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

Okay, so that didn't work.

How many countries does the FFMC market to?

[Stan Lazar]

A dozen, 12 to 15 different countries throughout the world.