Public Accounts Committee on Dec. 2nd, 2024

[The Chair, Conservative, John Williamson]

Mr. McCauley, we are well over our time.

I'm moving on to Mr. Erskine-Smith, please.

You have the floor for six minutes.

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

Thanks very much.

It's interesting to listen to colleagues. If you were to take them seriously, we might have forgotten that COVID even happened.

I read with interest your findings, specifically in relation to a not insignificant sum that went to ineligible businesses. That should not have happened. You rightly made note that there was too much control given up. At the same time, when you were reflecting on the rollout, the fast rollout—and speed was a necessity in a crisis we faced—did you expect perfection?

[Karen Hogan]

I think, as I've mentioned in all my other reports on COVID relief programs, what the government did to quickly roll out funding to support businesses and individuals followed international best practices. You would expect limited prepayment controls with the expectation that more significant work would be done after the funds had been disbursed.

You rightly identify that $49.1 billion in loans was quickly disbursed to almost 900,000 businesses across the country. Most waited less than a month to receive that funding. When you recognize that the objective in early 2020 was to help support these businesses cover expenses they just couldn't defer, that was a success. What wasn't a success—

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

I want to get to the...especially in relation to partial disagreement, because I note from your opening remarks that it is a source of frustration.

I do want to say, though, that the $49.1 billion that was rolled out and the $45.6 billion that went to recipients who were deemed eligible on your assessment, in the words of the opposition leader, were “big, fat government programs”, and we should have just been cutting red tape and cutting taxes for small businesses that had no customers. I can think of many small businesses in my riding that would not exist today if it weren't for a program like this.

I do worry that a program like this gets politicized such that people say that it shouldn't have happened and that it should never have existed. I just heard allegations of corruption before we even got into it, as if this were worse than ArriveCAN.

I want to get to your frustration, because on my reading of it, I was a bit confused. EDC says it has partially agreed, and then Finance agreed with your assessment. What do you make of that?

[Karen Hogan]

The recommendation you're speaking about is the one we provided to Export Development Canada in order to follow up and to confirm whether the $1.5 billion that we identified as having potentially gone to ineligible recipients was accurate. The information that we were able to look at clearly indicated that these businesses were not eligible, but an additional follow-up could happen with those businesses to confirm it. EDC partially agrees because it believes that it needs to do a cost-benefit analysis and follow-up on whether there were viable recovery options. Also, its view is that it doesn't have the mandate by the government to do that kind of work.

This is where I raise the uniqueness of this program, where a program was given to a Crown corporation that's meant to be at arm's length from the government, but it was delivering something that the public service would normally have delivered. That is why the accountability and the oversight by the Department of Finance and Global Affairs Canada is so key. However, there was so much confusion over what their roles were that it led to what I would call an "accountability void". When that happened, no one was keeping an eye on the costs. This program could have been delivered for less money, if there were less reliance on one sole vendor through non-competitive contracts.

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

Let's pull those pieces apart, though, because there's the vendor issue, but let's get to that second.

First, in relation to recouping loan forgiveness from ineligible small businesses, obviously, where it makes sense to do so and where they are obviously ineligible and where they're doing their own audits, as you say, you have identified businesses.... For EDC, you would go do the work, line by line, to assess whether these were truly ineligible. If they were ineligible, then what would be your process for getting the money back?

EDC said, in response to your report, that it “agrees to work with Finance Canada to consider appropriate post-funding actions, including examining legal implications and options to recoup loan forgiveness from ineligible recipients”. Finance has said: “Agreed. The Department agrees to work with [EDC] to consider appropriate follow-up actions, including examining legal implications and options to recoup loan forgiveness from ineligible recipients”.

What more are you looking for from EDC and from Finance in relation to recouping loans from ineligible recipients? What commitment do you want to see from them? Finance said it agrees, and EDC said it partially agrees, but on that particular piece, it says it will “consider appropriate post-funding actions”. Presumably, we should haul them in front of us and we should ask them what those actions would be.

[Karen Hogan]

If you keep reading Export Development Canada's response, you'll see further on that they say, “EDC will only undertake this work if the examination of post-funding actions identifies viable recovery options and EDC receives revised policy direction from the Government of Canada.”

They currently believe they do not have the direction to do this.

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

I understand, but one would imagine that they are not going to pursue non-viable recovery options, so that is a bit of a moot point.

On the latter point of revised policy direction, though, you have the Department of Finance Canada agreeing with your assessment. Presumably, they would be speaking on behalf of the Government of Canada in that regard.

My take-away from all of this is that we should have officials from Finance and EDC and put the question to them—somewhat pointedly, perhaps—to find out what their plan is to recoup ineligible expenses.

[Karen Hogan]

I agree. I always encourage the public accounts committee to bring in the department so they can hear about their responses and actions.

I am concerned about the reluctance to want to collect funds, and it's very similar to a response to our first work on the CERB and CEWS, when there was a reluctance to identify ineligible recipients of money. I would expect that when public funds go to a business or an individual that is ineligible, the government will take action to recover those funds. If it doesn't want to, it should just be transparent with everyone about that.

Right now, there's just a reluctance to even identify whether businesses were truly ineligible.

[The Chair, Conservative, John Williamson]

Thank you very much. That is the time.

Ms. Sinclair‑Desgagné, you have the floor for six minutes.

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

Thank you, Mr. Chair.

I again thank the Auditor General and her team for these many very interesting reports.

It won't surprise you, but my first questions will be about the report on the Canada Emergency Business Account. I asked the president of Export Development Canada, or EDC, about this almost a year ago, in February 2024, and we now know that the information she gave me was completely wrong. Ms. Lavery was off by $150 million regarding the value of contracts awarded to Accenture and the number of calls the company was receiving. She said it was receiving 10,000 calls a day, whereas your report shows that this was probably not the case. When we study the report, we see what was reported to EDC by Accenture. However, I fully understand that there are limits to what you can do in your studies and that you didn't go and check for yourselves what was going on in the call centres.

The ArriveCAN case shocked people because, as you summed it up in one sentence, it's the worst bookkeeping you've ever seen. Now, if we look at Accenture's bookkeeping and summarize the EDC situation a bit, we see that Accenture was awarded contracts totalling $313 million, of which $209 million has already been disbursed. In several cases, you'll have noted that Accenture's people wrote the contract and determined its parameters and price. They even helped the government with procurement and awarded a contract to themselves or one of their subsidiaries. I would in fact like a little clarification on this. What was the value of this contract? Was it $36 million?

[Karen Hogan]

I think it was $23 million or $28 million. We'll check it out and get back to you a little later.

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

It's a small number that can be pulled out pretty quickly, when you consider that they awarded themselves tens of millions of dollars.

Then, regarding the call centre, that was probably the easiest information to gather. We know how many calls were received and how long the agents worked. We know their working hours. However, in some cases, 14 hours of work per day per agent were billed, even though the call centre was only open for 9 hours a day. What's more, the cost to taxpayers rose from $31 to $589 per call, without any explanation. We don't know why prices went up. Was a call in 2023 worth so much more than a call in 2021? I don't think so.

In addition, it's also important to point out that the government has placed all responsibility for data collection in the hands of Accenture. This means that, at the moment, the companies' data, even though it theoretically belongs to the government, according to the contracts, is in the hands of a private third party.

Can you confirm that the government has no concrete plans, with a timetable, to repatriate the data of around 900,000 companies over which Accenture has control?

[Karen Hogan]

I'll answer that question while answering the first one too.

The contract for the loan accounting software is worth $36 million, including $7 million for licensing fees. It is important to recognize that the systems used to manage the program are proprietary to Accenture. Under the terms of the contract, this creates a dependency for Export Development Canada that will continue until at least 2028.

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

All this was caused by the emergency arising from the COVID‑19 pandemic, wasn't it?

[Karen Hogan]

In the beginning, it was because of the urgency. I would have expected that, as the program progressed, there would have been a change to ensure, as you mentioned, that the information and the work would come back to the federal government.

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

Exactly.

[Karen Hogan]

At the moment, even in this contract, there are some very important provisions missing, as you mentioned, to make sure that the information comes back to the federal government.

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

In your report, we see that the dependency is accentuated by the fact that the data is in the hands of Accenture. What's more, although we raised the risk arising from the fact that there was only one company, it was the Department of Finance that hesitated a little and didn't shoulder its responsibilities so that there could be a public call for tenders.

In the end, we simply let Accenture define the conditions, set the prices and continue to absorb public funds. At the end of the day, we don't know much about what Accenture did, because, as you said, EDC didn't even bother to check whether what it was paying for was actually related to the services that were offered.

Is that correct?

[Karen Hogan]

I think there were some fundamental monitoring mechanisms missing in terms of contract management.

In fact, several invoices were paid without questioning the charges or requesting supporting documentation, such as employee time sheets.

We mentioned some call centre invoices where too many hours were billed in one day. When we asked EDC about this, they turned to Accenture, who informed them that this represented other work that was acceptable under the contract.

In my opinion, however, this type of questioning and contract management should have been done prior to our audit.

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

So these questions were asked by EDC during your audit.

[Karen Hogan]

Absolutely, yes.

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

These questions would therefore not have been asked at the time.

[Karen Hogan]

EDC had not noticed that the hours billed exceeded the opening hours of the call centre.

[The Chair, Conservative, John Williamson]

Thank you very much.

Next is Mr. Cannings.

You have the floor for six minutes, please.