Public Accounts Committee on March 21st, 2024

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Thank you for clarifying that.

Mr. Yeo has said that DND stated there was no conflict of interest and he also said that he resigned. Given that Mr. Yeo's testimony has changed several times, help us and Canadians understand what is accurate. What was the process that DND took during that time of Mr. Yeo's resignation?

[Bill Matthews]

Thank you.

In terms of no conflicts, we are not at all clear on what statement Mr. Yeo is referring to. There was no such statement.

On the process involving Mr. Yeo's employment, he started in September 2023. That's important, because he was still on probation when we found out, a few weeks back, that he had other business activities. As soon as we became aware of those, we suspended him with pay that same day and started work to look into the circumstances around his hiring and whether there was any undisclosed conflict of interest.

In all likelihood, we were moving to terminate his employment while he was under probation. To do that properly, you have to interview the employee and hear their side of the story, which I think is good due process. That interview was set up for a Wednesday. Mr. Yeo submitted his resignation the night before and declined to come to that interview.

I expect we would have proceeded to termination. He resigned before that happened.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Are there any investigations that are ongoing?

[Bill Matthews]

There are a few pieces to this one.

Number one, there is an investigation through the Public Service Commission on the staffing itself, with a look at some other HR files in order to see whether there are systemic issues. We're also confirming whether, on any of the contracted work to Dalian, the goods and services were indeed received. So far, the answer is yes, they were.

We also want to make sure we properly understand any business relationships between Dalian and other companies. Because we've ceased to do business with Dalian and some of the other affiliated companies, we want to make sure we properly understand that we have a complete list. That work is ongoing as well.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

You mentioned in your opening statement that “we have evidence that Mr. Yeo carried on in his role with Dalian after joining the public service.” Can you describe that evidence?

[Bill Matthews]

The most obvious, Mr. Chair, is his signature on contracts with Dalian after he started his employment with the public service. That's the first part. I believe that during his testimony earlier this week, Mr. Yeo indicated it was an automated signature used by somebody else, but we know Dalian continued to receive contracts.

Mr. Yeo, in his testimony, indicated that he wished he'd been quicker in terms of putting his business interests into a blind trust while at Dalian. However, the important point for me, Mr. Chair, is that he had obligations as an employee. I don't care what he did with his Dalian business; he didn't fulfill his obligation to declare a conflict of interest. As an employee, that was his obligation. He did not meet it. To me, that was cause to pursue termination.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

When I hire even the most junior staff, they have to go through a security clearance. I don't understand how the security clearance could miss this.

Was there something missing in the database, in terms of the hiring process? I know you mentioned this before, but I still find it hard to believe that it didn't pick up that he was a contractor. When you sign contracts, your name is on there and you have to submit it. As a prospective employee or one on probation, your name is on the DND contract.

[Bill Matthews]

Right.

There are a couple of points here, Mr. Chair.

One, let's differentiate between reference checks and security checks. We are looking into whether the reference check was properly done. Maybe it should have revealed some of his business activities. That work is ongoing through the Public Service Commission.

The security check may very well have been aware of Mr. Yeo's other business activities. However, they're not looking for conflict of interest when they're doing security checks; they are looking for security risks. He was asked during this meeting whether the two should be cross-referenced or if they are cross-referenced. They are not.

The other piece, I would say, Mr. Chair, is that National Defence is a massive organization. Even within our contracting group and our HR group, there are project teams that deal with files that don't touch each other. Therefore, it is entirely possible that Dalian was getting contracts through National Defence that his day-to-day co-workers would not see. The fact that they wouldn't see this work makes sense.

[The Chair, Conservative, John Williamson]

Thank you very much.

Ms. Sinclair‑Desgagné, you have the floor for two and a half minutes.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

I don't have a lot of time left, Mr. Matthews, but I would like you to give me some information on the steps followed to check that there's no conflict of interest when the Department of National Defence hires someone.

[Bill Matthews]

The most important thing is the offer of employment letter. The future employee must confirm whether or not there is a conflict of interest. Mr. Yeo signed it without confirming that there was one.

It's possible during reference checks that some of these things might come up, but the obligation to declare is on the employee.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Very well.

In fact, you rely explicitly and exclusively on the word of the person being hired. The Department of National Defence, despite the sensitive nature of the files it manages, does not do any research on potential conflicts of interest.

It would seem that Mr. David Yeo has a brother who also works at the Department of National Defence, Mr. Christopher Yeo. On his LinkedIn page, he wrote that he's an assistant safety manager, or investigator, or officer; in short, some title like that.

Don’t you think that there is a potential conflict of interest, knowing that this person, Mr. Christopher Yeo, had a position at the Department of National Defence, while his brother was getting a lot of contracts from that same department?

At least, don't you think that there is the perception of a conflict of interest?

[Bill Matthews]

If there is a family member working for the same department, that is a concern, since there were problems with Mr. Yeo and ethics.

I am not aware of any link between contracting and any family relations who work in the department. Based on this question, I'm happy to go back and make sure that there are no links. I'm looking at Mr. Crosby to see if he's aware of any.

No, he's not.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

We would appreciate it.

Once again, this might be an undetected conflict of interest. Above all, we need to do more follow-up and research with the Department of National Defence to target potential cases of conflicts of interest. It's important to do so in the department that ensures the safety of Quebecers and Canadians.

[The Chair, Conservative, John Williamson]

Thank you very much.

Mr. Desjarlais, you have the floor for two and half minutes.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

I now want to turn to some of the contracts and understand the ministry's understanding of the existing indigenous procurement strategy and whether or not you audit or comply with that strategy.

Are you aware of the procurement strategy for indigenous businesses?

[Bill Matthews]

Yes, I'm aware of the strategy for indigenous procurement.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Do you know what percentage of required work needs to be done by indigenous businesses under that policy?

[Bill Matthews]

I believe the goal, Mr. Chair, is 5%.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Do know that of the 5% of the global strategy, which is the number you're citing, how much individual contract work must be done by contractors or subcontractors of a given task authorization? Do you know that number?

[Bill Matthews]

I cannot give you that number, Mr. Chair. I'm not sure if my colleague, Troy, can.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Does anyone in your ministry know?

[Bill Matthews]

We do have people who are monitoring our compliance with the strategy. I'm happy to provide further information to the committee on how we're doing.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Mr. Matthews, you came to this committee knowing that we were going to ask about procurement in your ministry, and one of the greatest issues is David Yeo, someone who applied through this strategy. Are you aware of that?

[Bill Matthews]

I'm aware that Mr. Yeo applied through this strategy.