Public Accounts Committee on Oct. 19th, 2017

[David Christopherson, NDP, Hamilton Centre, ON]

I appreciate that, Chair. I would only respond, sir, that the business plan may suggest that it's not sustainable going forward, in which case, it's moot. If they do come back with a different kind of organization, then we're going to be getting commitments from them based on what we're hearing at that time, vis-à-vis the existing structure they have, rather than what we think it might look like.

I leave that with you, sir.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Christopherson.

We'll now move to Ms. Shanahan, please. Ms. Shanahan, you have seven minutes.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you, Chair.

Thank you very much to all the parties for being here this morning.

Respectfully, I agree with you, David, on one side, that for this organization here, for the people who are in front of us, we don't need to badger them with things that were out of their control. However, I think there are lessons to be learned here about dealing with crown corporations. That's where I would like to dig a little bit further.

I realize there could be some confidentiality involved here, but we need to get to the systemic problems that allowed this debacle to happen. It's only lucky that foreign exchange—the difference in the U.S. and Canadian dollars—allowed the corporation to come out with nominal profitability at the end. Business risk will happen. Suppliers come and go, and clients come and go, but you need to have the management in place to effectively deal with that.

What concerns me is that there were not only vacancies on the board for extended periods of time, but there were also problems with the staffing, and there is the potential for conflict of interest.

I would like the Auditor General's office initially to give us their comments on what could have been done to avoid what looks like—and I'm sorry to use the pun—some fishy business going on here.

[Clyde MacLellan]

When you asked what could have been done, my first reaction is that we audit at a point in time and look at the status of systems and processes to determine whether they're in place. We don't necessarily go through a hindsight exercise of what could have been or would have been to produce a different result.

I think we're finding that the governance and appointments issue is a pretty important and systemic question that needs to be properly addressed and resolved, in order to ensure that there are competent, sufficient board members in place and a process to ensure continuity.

I would draw to the committee's attention that this isn't the first special examination in which we've reported on problems with appointments and problems with governance challenges. As Mr. Bevan rightly indicated, this report does allude to some of the challenges in the act and the actual governance structure that one of your colleagues had noted. That would be the first lesson that we're beginning to amalgamate in totality that is important to learn. You need to get that right to set the tone that can allow the rest of the operations to be effective.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

What would you suggest for us as a government? It's an arm's-length operation. In fact, it's only fortunate that we have three audits in front of us. Well, it's fortunate because they kept coming back and you needed to re-examine them. How can we be sure that board positions are being properly filled and people don't have their hand in the till?

[Clyde MacLellan]

In terms of the question of appointments processes, you have an opportunity. A number of recommendations have been made by us in relation to gaps that exist in the appointments process. You'll have a series of those that I think you can follow up on in terms of the recommendations and what actions have been taken in relation to those.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

I have another question. The OGGO committee is looking at the whistle-blower protection legislation. I think there will be a report coming out fairly soon. Can you make any comments about that? In the course of your audit, people are telling you things. That's what I'm sensing. People were saying things. People were aware of deficiencies, problems, conflicts of interest. Does that come into your audit? Are you able to use that information?

[Clyde MacLellan]

I don't have anything to comment on in relation to that.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Okay. Thank you.

For the management in front of us, can you talk to us about whether there are still vacancies on the board or have they been filled? What does it look like now?

[David Bevan]

We still have vacancies on the board. I would prefer more board members, to say the least. I've been asking for appointments to take place. I've been asking for a broader array of experience and skill sets. We're still on a skeleton crew at this point in time. There's some reason for that, I suppose. The Government of Canada has to make a decision as to what they're going to do with this crown corporation in light of the the removal of Manitoba fishermen from the Freshwater Fish Marketing Act. As long as we are responsible for continuing to manage it and giving them time by maintaining the value and the profitability, I would really prefer to have more board members.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you.

Chair, how much time do I have?

[The Chair, Conservative, Kevin Sorenson]

You have a minute and a half.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Okay, I'll give it to my colleague.

[The Chair, Conservative, Kevin Sorenson]

Mr. Chen, please.

[Shaun Chen, Liberal, Scarborough North, ON]

Thank you.

In terms of not having board positions filled and perhaps not having a strategic plan that is updated, these are issues we do come across, unfortunately, every so often. However, when it comes to the creation of staff positions with no job descriptions, and then filling them through a process that is not merit-based and not competitive, that is very concerning. It's also very concerning that equipment is being purchased, some of which has never been used. To me, these are serious issues that need to be addressed.

You noted, Mr. Bevan, that the special examination took place at a particularly difficult time. I'm not sure how we would describe this upcoming time, when you are going to lose Manitoba, which contributes 80% of your fish. You have 250 full-time staff, up to 150 seasonal workers. What is the plan? How are you going to deal with such a huge impact on the business you do?

[David Bevan]

The plan that we have implemented is to secure supplies of fish by entering into long-term contracts with fishermen for all of their fish. We don't enter into contracts for people to sell us part of their catch. What they sell us has to be something we can profitably use. That's what we're doing as an interim measure, and that's what it is because the Government of Canada—

[Shaun Chen, Liberal, Scarborough North, ON]

Are you going to be competitive enough to secure those contracts?

[David Bevan]

I think so. We are securing contracts. Therefore, I guess that answers itself.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much. Hopefully, we'll get back to you.

We'll now move the second round, and Mr. Nuttall, please, for five minutes.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

Thank you, Mr. Chair.

Mr. Bevan and Mr. Lazar, thank you for joining us today.

I'd like to pick up where Mr. Chen was, but first, can you tell me in 15 to 30 seconds the mission statement of your organization?

[David Bevan]

It is to maximize the returns to the fishermen.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

Okay. When I look at the competition that's coming into the marketplace, I see the withdrawal of Manitoba and the potential of the private sector to increase its ability to secure supply and eventually get that to the market. Does the business plan that you've provided to the Government of Canada include an option that refers to closure of the crown corporation?

[David Bevan]

That's not something I could possibly do in my current position. I have a fiduciary obligation to the crown corporation, and closing it is not exactly fulfilling that. It's a decision for government whether to sell, close, or do some other kind of governance around the corporation. We will take whatever direction we get from the government. If it's still to be a crown corporation, we will endeavour to implement that recommendation, but questions about those decisions are best put to the government.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

The issues that were outlined in the audit are twofold: first the governance of the entire structure, and second the management of either assets or risk, meaning those potential liabilities coming down the road, including production.... Essentially, issues were found throughout the entire organization. I will give it to you that the first step is to secure a strong governance structure to be able to set the rest of the organization on its feet again.

With the changing landscape, do you feel there's value in your organization's continuing in light of what we're looking at, namely, the government's competing with the private sector?

[David Bevan]

I understand what you're asking. Again, I think that's a question that should be put to the government. We will keep the wheels on it and keep safeguarding the assets for the Canadian public, pending a decision by the Government of Canada.

I would note, though, that Air Canada was a crown corporation that competed in the private sector for a period of time, and it did that to maintain routes into isolated communities. We're in the same kind of situation.