Public Accounts Committee on Sept. 5th, 2024

[The Chair, Conservative, John Williamson]

Good morning, everyone.

I call this meeting to order.

Welcome to meeting number 137 of the House of Commons Standing Committee on Public Accounts.

Today’s meeting is taking place in a hybrid format, pursuant to the Standing Orders. Members are attending in person in the room and remotely using the Zoom application.

I would like to ask all members and other in-person participants to consult the cards on the table for guidelines to prevent audio feedback incidents.

Please keep in mind the preventive measures in place to protect the health and safety of all participants, including interpreters.

Use only the approved, black earpiece. Please keep your earpiece away from the microphones at all times. When you're not using the earpiece, place it face-down on the sticker, either to your left or to your right.

I would remind you that all comments should be addressed through the chair.

Pursuant to Standing Order 108(3)g), the committee resumed consideration of Report 6, “Sustainable Development Technology Canada”, of the 2024 Reports 5 to 7 of the Auditor General of Canada, referred to the committee on Tuesday, June 4, 2024.

I'd like to welcome our witnesses from the Privy Council Office: Donnalyn McClymont, deputy secretary to the cabinet, senior personnel and public service renewal, whom I thank for coming in today, and Rima Hamoui, assistant secretary to the cabinet, senior personnel. I thank her for coming in today as well.

Collectively, you have five minutes for an opening presentation.

I'll turn things over to you. Go ahead, please, whenever you're ready.

[Donnalyn McClymont, Deputy Secretary to the Cabinet, Senior Personnel and Public Service Renewal, Privy Council Office]

Thank you very much, Chair and honourable members.

Good morning.

I would like to begin by acknowledging that the territories on which we are gathered are part of the unceded traditional territories of the Algonquin Anishinabe people.

In the context of this committee's study of the Auditor General's report on Sustainable Development Technology Canada, my colleague Rima and I are pleased to be here today to provide information regarding the role of the senior personnel secretariat on Governor in Council appointees, including at SDTC.

Governor in Council appointments are made by the Governor General of Canada on the advice of cabinet and on the recommendation of the minister responsible.

Governor in Council appointees include heads and members of commissions, boards, agencies, administrative tribunals and Crown corporations, as well as deputy ministers and associate deputy ministers, who lead federal public service departments. These appointees play important roles in carrying out the mandates of these organizations.

Since 2016, the government has used open, transparent and merit-based selection processes to assist ministers in making recommendations for these appointments. This approach aims to support the selection of highly qualified candidates who meet the qualifications, knowledge and experience criteria of a position and reflect Canada's diversity.

The selection processes are application-based. Positions are advertised through notices of opportunity on the Privy Council website. Outreach is conducted to attract qualified candidates. Applications are assessed against the advertised criteria for the position. Following interviews, a list of qualified candidates is provided to the responsible minister. The minister then recommends a candidate to cabinet. A security review and a background check are undertaken by security partners prior to cabinet approval. The appointment is then made via an order in council, and the Privy Council Office provides the necessary support for this process.

As you've heard in your study, under the SDTC's enabling legislation, seven of the 15 board of director positions, including the chair, are appointed by the Governor in Council, with the other eight positions being appointed by the board itself.

Currently, the board has a chair and two directors all appointed by the GIC, effective June 3, 2024. They will manage the transfer of SDTC programming to the National Research Council, and I know that colleagues from ISED, SDTC and the NRC have all been before the committee to explain this transition.

All GIC appointees, including the SDTC board members appointed by the GIC, must abide by the terms and conditions of their employment. This includes complying with the Conflict of Interest Act and following the government's ethical and political activity guidelines for all public office holders.

As GIC appointees are chosen based on their qualifications, it is not uncommon for appointees to have experience or linkages within the organization's particular field of interest. This is considered an asset, and in some cases, like with SDTC, it's actually a requirement for the appointment itself set out in the statute. However, as the committee has discussed, this can create potential conflicts of interest.

GIC appointees are responsible for ensuring that they comply with the Conflict of Interest Act throughout their tenure and that they seek the necessary advice from the Conflict of Interest and Ethics Commissioner as required. The commissioner is responsible for interpreting, administering and adjudicating the act, including providing advice on compliance and determining whether an appointee is in contravention of the act.

For our part, the PCO ensures that candidates well understand their obligations under the act and that they will be in a position throughout their tenure to meet those statutory obligations. Candidates are informed of these obligations at multiple points over the course of the selection and appointment processes.

Before being recommended for appointment, candidates are asked whether they have or think they have a conflict of interest with respect to the position. If a candidate identifies a conflict to us, we ask that they consult directly with the commissioner on this matter. The commissioner will then provide confidential advice and direction tailored to the candidate's individual circumstances.

Following their appointment, the appointee and their organization must implement whatever measures are recommended by the commissioner to ensure compliance. This could include a conflict of interest screen or recusals from certain decisions. The commissioner and his office oversee compliance and take necessary corrective action.

Thank you for your attention.

We would be pleased to answer your questions.

[The Chair, Conservative, John Williamson]

Thank you very much.

I'll now begin the first round consisting of four members who each have six minutes.

Mr. Perkins, I understand that you're leading us off. You have the floor for six minutes.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair.

Thank you, witnesses. It's always a pleasure to see witnesses who have a strong family connection to the beautiful south shore of Nova Scotia that I represent, so thank you for being here.

As you've no doubt been following the hearings on the controversy around the conflicts of interest of the board directors and the chair for more than the last year, you'll be aware, perhaps, that the former minister responsible for the appointment of the chair in question, Annette Verschuren, former minister Bains, appeared before the industry committee. He said nine times that he received the short list of candidates—two candidates—from the PCO, and he basically claimed he had nothing to do with it. He said that there was a committee of PCO, PMO and some departmental officials.

So, who in the PCO and who in the PMO told him to interview the two shortlisted candidates given to him, one of whom was Ms. Verschuren?

[Donnalyn McClymont]

Mr. Chair, as the honourable member has advised, the role of the PCO is, as I mentioned in my opening remarks, to provide recommendations to the responsible minister. In this case, as the honourable member has mentioned, it would have been Minister Bains at the time. After a full assessment process, he would have been provided by the PCO, as I described in our opening remarks, with suitable candidates who would have been eligible for the position.

I will admit that once we hand that over to our colleagues in the Prime Minister's Office—or to the minister, I should say—we don't have a line of sight into what kinds of conversations happen or what kinds of further engagement ministers may or may not have with candidates.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

When you hand it off to the Prime Minister's Office, would that be to the appointment secretariat in the Prime Minister's Office?

[Donnalyn McClymont]

I apologize, Mr. Chair. I made a little faux pas.

We provided a formal letter of advice to the minister. It contained names of qualified candidates. At that point, it was up to the minister, working with his office, to determine the choice of candidate he would recommend to cabinet.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Right, but that wasn't my question.

My question was who in PMO was involved in that process with regard to Ms. Verschuren's appointment, of the two candidates.

[Donnalyn McClymont]

Mr. Chair, the Prime Minister's Office obviously works closely with us. Its staff are members of the selection process. I couldn't speak to what kind of engagement they have with the minister's office or the minister.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

It would be fair to say that whoever heads the PMO appointment secretariat would have been involved. Who was that?

[Donnalyn McClymont]

Back at that time, Mr. Chair, the individual who was responsible for the PMO secretariat would have been a woman by the name of Hilary Leftick, who I think moved on in 2020.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you.

Now, for the Ethics Commissioner's report, the Ethics Commissioner interviewed Ms. Verschuren. Essentially, the first time she heard of this was when the minister's office phoned her to ask if she would be the chair. My knowledge, based on the testimony of the former president, Ms. Lawrence, is she was told that the chair at the time, Jim Balsillie, had to be out, and that they were replacing him with someone else. They gave him about seven days' notice that he was out.

It's pretty clear to me that Ms. Verschuren didn't apply. Is that true?

Was she approached, but she hadn't actually applied in the transparent process that Minister Bains outlined here, which was a case of “you apply and then you get it”? Was she actually approached to apply?

[Donnalyn McClymont]

Mr. Chair, I will be a bit cautious about the level of detail I'm able to give on individuals in order to protect their personal information.

Much of what is known about Ms. Verschuren's application and her tenure is in the Ethics Commissioner's report, so we can rely on that to some extent—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Okay. You can't say that.

I have limited time, so I apologize for interrupting.

Ms. Lawrence was told by the powers that be that they were choosing Ms. Verschuren after she objected to her conflict of interest—they put that through the system through ADM Noseworthy—and that they would manage the conflicts.

Ms. Verschuren had companies that she had a conflict with, which had already received about $12 million from the green slush fund before she was appointed. While she was the chair of the board, her stated conflict of interest companies received almost $36 million.

I'm curious. Who in the PCO or PMO told ADM Noseworthy, the deputy minister of the day or Minister Bains that it was okay to have the first chair in the history of SDTC appointed with conflicts? No other chair had had conflicts.

[Donnalyn McClymont]

Mr. Chair, to respond to the honourable member's question, I would say that as the Ethics Commissioner noted in his report, at the time of her application, Ms. Verschuren was advised by the Privy Council Office to speak directly with the commissioner, given the nature of the conflicts. That's very clearly laid out in the commissioner's report.

It was the commissioner who felt there were ways to mitigate the conflicts she had. It was on that basis that the advice was provided at the time that she was in good standing from a legislative perspective to hold the role.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

It is the policy, then, of this Prime Minister's Office that appointing people with known conflicts of interest and whose companies have a financial interest in the company they're being appointed to—the Crown agency, with taxpayers' money.... That conflict is okay with this Prime Minister's Office. It's basically breaking what appears to be not only the word and intent of the Conflict of Interest Act, but the SDTC act, which say that not only the real conflict, but the appearance of conflict cannot happen; you cannot personally benefit from being on these boards.

When—

[The Chair, Conservative, John Williamson]

Thank you, Mr. Perkins. Your time is up. I will allow an answer.

Go ahead, please, Ms. McClymont.

[Donnalyn McClymont]

Mr. Chair, I would argue that the basic premise of the Conflict of Interest Act, which I think Parliament passed back in the 1990s, is to ensure that members of Parliament and people across the country who want to serve the country have ways to do so that can mitigate potential conflicts. For all intents and purposes, from our perspective, at the time of the appointment—and the Conflict of Interest Commissioner has underscored this—there were ways to do that here. I think part of the question is whether that process was totally respected.

[The Chair, Conservative, John Williamson]

Thank you very much.

Ms. Yip, you have the floor for six minutes, please.

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

Thank you, Chair.

Thank you to the witnesses for coming today.

For the benefit of Canadians, could you tell us what the roles and responsibilities are at the Privy Council Office?

[Donnalyn McClymont]

Thank you for the question, Mr. Chair.

This past week was my 21st anniversary at the Privy Council Office. I've served in a number of roles over the years. The Privy Council Office is essentially the Prime Minister's department. We are the bureaucratic arm that works across government. We support the Clerk of the Privy Council, the most senior public servant, in his three roles as head of the public service, secretary to the cabinet and deputy to the Prime Minister.

Insofar as it concerns the appointments process, we provide, as I said, non-partisan public service advice to the Prime Minister and to ministers on the appointment of heads of agencies, Crown corporations and deputy ministers across the enterprise, if you will, or across the entire public service.

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

Thank you. Congratulations on your 21 years. That's quite some time there.

As you might know, Mr. Andrew Hayes appeared before this committee in November last year in his capacity as deputy auditor general. He spoke briefly about first referring the complaints from the whistle-blowers to the Privy Council before. I believe your office referred it to ISED.

What did you or your office make of the whistle-blowers' complaints when they were first referred?

[Donnalyn McClymont]

Mr. Chair, the timeline that the honourable member describes is quite accurate. In early February of 2023, we received a call from the Auditor General's office that they had individuals citing concerns with SDTC. We offered to hear out their concerns in the capacity, I would say, of the appointment side of the House, where we deal with complaints from time to time about Governor in Council appointees. It was in that capacity that we were willing to hear out the complainants and to understand their issues.

Over the course of the first two weeks of February, we had those conversations with the complainants. When we understood that the issues were far broader than just Governor in Council appointees, we referred the issue immediately to our colleagues at ISED, as referenced. As the committee well knows, the course of action that ISED quickly took, to undertake fact-finding, was undertaken.

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

How did you come to the decision to refer the matter over to ISED?

[Donnalyn McClymont]

Generally speaking, we work in partnership with departments when there are any issues. As you can imagine, we are a very small organization. We technically don't have line responsibility. Ultimately, ministers are responsible and accountable for their portfolios and the GICs and their portfolio agencies. That's very clearly laid out in the government's open and accountable government.

We wanted to understand a little bit more about the nature of the problem. I think, in fairness to the complainants, they had been looking for a hearing of their issues. We wanted to make sure that we were directing them to the right spot. As I said, once we understood that the issues were about not just HR management but governance and probity, we then referred that very quickly to our colleagues at ISED.

There was also a matter of confidentiality that we wanted to respect. I think the complainants had some concern, and have been public about that, over reprisals. We wanted to handle it quite judiciously in terms of making sure they had a proper hearing of the issues they were raising, if that's helpful.