Public Accounts Committee on Nov. 6th, 2024

[Arianne Reza]

I don't think we have figures that go back nine years. We can try to come back with an answer. We can tell you that from what we've seen in our referrals to the RCMP, we're at $4.5 million and counting.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

That's in specific referrals to the RCMP, but we've talked about so many other practices that are fraudulent. Do you have a ballpark sense of how much has been lost as a result of misrepresentation and the breaking of various kinds of rules?

[Catherine Poulin]

Thank you for the question.

I do not have such information.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Perhaps you could try to come back to the committee with that. I'll move on.

The arrive scam contractor, GC Strategies, has gotten a lot of attention. Dalian has gotten comparatively less, even though Dalian is also a two-person company involved in the contract. They also appear to have done no actual work on the app.

Dalian had been identified by the government as an indigenous company. They operated in a joint venture with Coradix, which allowed Coradix, a larger, non-indigenous company, to get contracts under the indigenous set-aside. Dalian has now, though, been removed from the indigenous business list.

Can our officials advise as to why Dalian was removed from the indigenous business list? Were they never indigenous? Did they cease to be indigenous? What happened there?

[Arianne Reza]

I believe this was raised at OGGO with my colleague, Gina Wilson. She answered the question, as they are the owner of the indigenous business directory, and they are best placed to answer those questions of indigeneity. What I took from the testimony was that they no longer met the corporation structure.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

The testimony we heard from Indigenous Services officials was this:

We noted that Globe and Mail interviews with Dalian referred to changes in his corporation. That affected the “51% owned and controlled” scenario. That was part of the reason we had to remove his business from the directory.

Is The Globe and Mail your usual source for information about who is and is not considered to be eligible for certain procurement programs?

[Arianne Reza]

In the case of the indigenous service list or indigenous business list, our source of authority on indigeneity and whether or not they can be on the list is ISC. We get our procurement for—

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

I guess what I'm asking is more general.

What was shocking to me about that testimony was that it was like officials telling us, “Well, we pick up The Globe and Mail; we read it, and that's our source for information for deciding eligibility for these procurement programs.”

It seems to me that the government should have a way of getting information to verify procurement requirements, rather than hoping that a shady contractor will make the mistake of revealing information to the newspaper. Does this strike you as a flaw in the system?

[Arianne Reza]

Well, I can describe, if you permit, some of the work that we do before we do business with a vendor, from a procurement perspective, if that's reasonable. We do—

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Well, I guess I'm just looking for information about the sources of information for this kind of verification.

[Dominic Laporte]

What we can do also is that oftentimes they're going to be referred to ISC. Our procurement officers, in the course of their business dealings, are going to be proactively referring contracts for post-award audits to ISC, and ISC will undertake those audits.

Also, in the case of Dalian, it's interesting to note that the reason they got suspended at first was also, irrespective of the IBD, that they found themselves in a conflict of interest situation, so—

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

You know what? I agree there were other problems, but they were taken off that list.

I'll just say that on indigenous procurement, very clearly, we have the sort of Spider-Man meme happening, where procurement officials are pointing at ISC, and ISC is pointing back at procurement. I asked a question in the House about this, and it was your minister, the procurement minister, who responded to it. I wonder if this is why indigenous leaders are telling us that the program is such a mess. It's because you have ministers' departments pointing at each other and not getting it done.

On this point, I want to ask the Auditor General this, quickly. You've been asked by indigenous leaders to investigate abuses of the indigenous procurement program, abuses that indigenous leaders say are rampant. Can you give us an update on your plans and prospective timelines around investigating the indigenous procurement program?

[Karen Hogan]

We have begun the work on indigenous procurement, and we're looking at either the fall of 2025 or the spring of 2026 to make that report public. I think it will depend on access to information and timing, but it's in the works. It has begun.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Is there any way you can get that out by, say, August 2025? Indigenous leaders say that a majority of these contracts are problematic, and I think it's the sort of thing that Canadians might want to see before having to make any major decisions—

[Karen Hogan]

I don't think I have the parliamentary calendar committed to memory, but I do not believe that Parliament sits in August, and Parliament needs to be sitting for me to be able to provide reports.

[The Chair, Conservative, John Williamson]

Thank you. That is the time.

Up next is Mr. Erskine-Smith.

You have the floor for five minutes, please.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks so much, Chair.

Auditor General, you testified previously on ArriveCAN. I was not here when you testified, and I know that there have been many, many meetings on ArriveCAN at this committee, but it strikes me as odd that, from what I can glean from the evidence and testimony after all those meetings, we still don't know—at least, I still don't know, but maybe someone knows—who is ultimately responsible for having approved.... Where does culpability lie here, on an individual basis?

We've got Cameron MacDonald and Antonio Utano on the one hand. There have been allegations against Minh Doan. In all the reviews you've done.... I mean, can you give us a read from your perspective, given that you've done a deeper dive than we have?

[Karen Hogan]

I think I would start off by a general statement, and then I'll give you a bit more detail, but when so much goes wrong, every layer of management has to take some responsibility for the significant weaknesses that we found, whether it be in procurement, contract management, project management, budget management or record-keeping.

There are many layers of management that need to take responsibility here, but when it comes to who actually decided that GC Strategies was the right vendor, it's a question that we were not able to answer. I can tell you, though, that there was a contract requisition—the document that indicates that a contract should be issued—that was signed by the executive director over at CBSA.

I think every public servant needs to know that when they exercise their delegated responsibility, signing their name to something comes with accountability and responsibility: If you feel that you're being pressured or you're not at ease with signing that document, then you should raise that with your supervisors. There are mechanisms in place. You shouldn't sign something that you're uncomfortable signing, but in this case the executive director signed the contract requisition.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

To follow up on that, I think you're right that the buck has to stop somewhere. If someone's putting their name to something and ultimately approving something, certainly, there is responsibility.

When it comes to the potential for intentional deceit here, when you have individuals who are potentially taking kickbacks and potentially framing a requisition to cater to a particular vendor, that may.... In this case, we have Cameron MacDonald and Antonio Utano on the one hand, where there does appear to be a closer relationship with Kristian Firth and GC Strategies.

What can you say about that?

[Karen Hogan]

When we did this audit, we didn't uncover evidence of criminality, but we did speak with the RCMP. The RCMP was already investigating a different allegation that involved the same branch at the CBSA, similar vendors and similar individuals. We've had that conversation, and I leave the decision to the RCMP to determine intent, collusion or fraud.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

That's fair.

My last question is in relation to something closer to home and with respect to your role. You've issued recommendations. The government's acted or is acting on those recommendations. In your view today, in terms of your assessment, are you comfortable with where the government is? Would you have criticisms in terms of how it has responded? How would you grade its response?

[Karen Hogan]

I'll keep it limited to contracting, because there are so many audits and recommendations that we issued. When it comes to ArriveCAN—and I will also bring in the work that we did on professional services contracts—we saw the departments in question act during our audit. They provided clarification, for example, on the use of national master standing offers while we were doing our work, so there was a swift reaction.

I have said throughout these two audits that I don't believe more rules are needed but that the existing rules need to be better applied. I'm very happy to see that training is happening and that individuals are taking it. Hopefully, they will apply it.

I still believe the government needs to take a step back. Over the course of so many decades of my office issuing audits and internal audits, or the procurement ombud doing work, we always add recommendations that seem to add more layers of rules.

It's time to step back and ask, “Do we have too many rules?” Rules have been overtaken by events. Should we simplify, perhaps, some of the complexity of the rules, so that everyone can understand them and apply them better?

I'm not exactly sure why all of these situations are happening. Is it for speed to move around the rules? Are there too many rules? What exactly it is needs to be ironed out, but taking swift action is always something we're pleased to see.

[The Chair, Conservative, John Williamson]

Thank you very much.

Beginning our third round, Mr. Brock, you have the floor for five minutes.

[Larry Brock, Conservative, Brantford—Brant, ON]

Madame Poulin, the collective jaws of all concerned taxpayers hit the floor in your response to my colleague, Mr. McCauley, about the Government of Canada working with fraudsters to pay back what in my view are illegally obtained taxpayer funds. I'm going to do a deeper dive on this.

How did you distinguish between working with potential fraudsters and those individuals whom you referred directly to the RCMP? What was the metric by which you determined you would work with them on a civil basis versus a criminal basis?

[Catherine Poulin]

Thank you for the question.

It is important to note that the investigations targeted subcontractors. The fraud and the elements of criminality that were uncovered are in relation to the actions of those individuals. There was no evidence of criminality related to main contractors.