Public Accounts Committee on Nov. 2nd, 2023

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Exactly.

Throughout the course of this work, and I have seen this in other audits as well, should there be additional evidence, would the auditing team be willing to take that into consideration as well?

[Andrew Hayes]

Absolutely. If there is a delay, or if things look like we're going to need more time, we will, as always, inform the committee about that.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

My last series of questions is a summary in relation to Innovation, Science and Economic Development being the ministry responsible in some ways for the operations at SDTC. You mentioned to my previous questions that much of your work would be in relation to the study of the actual contribution agreement, and that limits within that contribution agreement could prescribe limits to your scope in understanding abuses, particularly claims of abuse related to HR management.

What other restrictions do you think you can face in the scope in relation to the contribution agreement?

[Andrew Hayes]

At this point in time, related to the matters that were covered in the report from RCGT, we don't see any obvious limitations. If something comes up, obviously we would be transparent about that.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

All right.

I think that's nearly my time. I want to thank you again.

[The Chair, Conservative, John Williamson]

You still have 30 seconds, Mr. Desjarlais, by my clock.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

I'll give it to you, Chair, since you never have the opportunity to ask even one question.

[The Chair, Conservative, John Williamson]

I appreciate that. I do have the chair's discretion, which I rarely use.

I am pleased with the questions we're hearing today, so I will turn it over to Mr. Brock.

I'm not adding his time to yours, Mr. Brock. You have five minutes, sir.

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

Thank you, Chair.

Good morning, Mr. Hayes. Thank you for your attendance.

At the heart of this Liberal scandal is the payment under Minister Champagne's department of at least $40 million to companies that did not meet the funding criteria. I say “at least” $40 million, because some of the media reports seem to indicate that it's probably the bare minimum. We're talking about other tens of millions of dollars that went to new funding streams and new companies being created under funding agreements that did not accord with the original funding agreement with the federal government.

In my view, that raises criminality. I know that the original report from RCGT put restrictions that this is in no way an admission of any liability, civil or criminal. I know that no police agency has taken this on on their own, so I'm going to turn to you, sir. I know that part of your department... There is a mandate to turn matters over to the police where you discover criminality. I'd like to ask you specifically what that threshold is. What is that legal threshold or administrative threshold where you believe the police need to investigate?

I'll give you an example. When police investigate any crime, from shoplifting to homicide, their governing doctrine is, “Do we have evidence of probable and reasonable grounds to charge someone or to arrest someone?” That is distinct from the prosecutor's threshold, which is proof beyond a reasonable doubt before anyone can be convicted.

What is the threshold, legal or administrative, within your department?

[Andrew Hayes]

Typically, in these kinds of situations, when we're auditing a program and matters that come to our attention raise questions about wrongdoing, we will follow the trail as far as we can. We'll gather as much information as we can. We will make a determination at some point in time, once we hit a sufficient amount of evidence of wrongdoing, to turn it over to law enforcement.

Now, historically, that's happened in a number of cases. The sponsorship scandal might have been one of them. I'm not entirely sure, but there were definitely examples in which—for example, with the correctional investigator and his conduct—we turned matters over to the RCMP. There were other files in which we turned over potential fraud.

We are not in the business of determining mens rea. The guilty mind is not our area of expertise. We gather facts. When we feel that there is a risk that there might be criminality, and it's not the level of reasonable doubt and not the level of sufficient grounds to proceed with an investigation, we turn it over to the RCMP. We allow them to determine whether they're going to seek a production order or a warrant. They do their thing.

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

What that tells me, sir, is that the Auditor General's mandate has an extremely low-threshold standard. It's not a mens rea standard. It's not a police standard. It's not a prosecution standard. If you uncover, in your belief, some evidence—whether it's a bit or a multitude of evidence—that could constitute criminality, you're going to refer it to the police.

[Andrew Hayes]

I would qualify that by saying that the Auditor General Act gives the Auditor General the authority to inform senior public officials about matters discovered in her audit.

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

I'll stop you right there, sir, because of shortness of time.

I identified, just in reviewing the material from RCGT, two potential criminal charges this government could be facing, as well as the company in question, SDTC—that is, government fraud, pursuant to section 121 of the Criminal Code, and fraud, pursuant to section 380 of the Criminal Code.

Subsection 380(1) of the Criminal Code says:

Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security...is guilty of an indictable offence

[The Chair, Conservative, John Williamson]

That is your time, I'm afraid, Mr. Brock.

Turning to you, Ms. Khalid, you have the floor for five minutes, as well.

[Iqra Khalid, Liberal, Mississauga—Erin Mills, ON]

Thank you very much, Mr. Chair, and thank you, Mr. Hayes, for being here today.

I'll continue on from Mr. Brock's questioning.

I've read articles about SDTC being established since 2001. Is this wrongdoing from that time? What is the time frame you're looking at?

[Andrew Hayes]

At this point, we have allegations that are more recent than that.

We did an audit in 2017. The findings are available. We didn't identify problems at that point in time. At this stage of the game, I think we would be looking at a scope after 2017. However, if, while doing that work, we find something of concern from before, we will look backwards.

[Iqra Khalid, Liberal, Mississauga—Erin Mills, ON]

How prevalent are issues like these within our departments?

[Andrew Hayes]

I don't know whether I'm able to comment on those sorts of things.

We get allegations like this. We look at them carefully. Sometimes the departments have taken action already. Sometimes they're just control problems. Sometimes they're approval problems. In this case, with RCGT preparing a report.... Questions were left with that report. We determined that this was one we needed to look at.

[Iqra Khalid, Liberal, Mississauga—Erin Mills, ON]

Thanks.

I realize that the minister for ISED launched a fact-finding expedition as soon as this became public knowledge, or as soon as he became aware of it.

I also wonder, how common that is? Has such an action been taken before?

[Andrew Hayes]

What I would say is that, in departments, Crown corporations, etc., there's often an internal audit shop. At times, when you want something independent to be done, you contract out to get an objective, independent view. That happens, I would say, regularly.

In this case, it's a bit different, because Sustainable Development Technology Canada is a foundation at arm's length, so the minister's launching the fact-finding exercise was important. We were watching carefully and were very interested when that report was presented. I believe the minister considered other options—another audit—but we're getting in there, as well. The minister may or may not have another audit done.

We're going to get to the bottom of the things we want to look at.

[Iqra Khalid, Liberal, Mississauga—Erin Mills, ON]

When you talk about arm's length, does the cabinet, any minister or the Prime Minister have any say in how these funds are allocated, or in the actions of the individuals we're talking about here?

[Andrew Hayes]

I don't know the answer to that question. That's something we would look at during our audit—whether there was direction, influence or otherwise. I'm hoping that would come out when we audit, but I don't yet know how this works on a structural level. We will talk about the accountability relationship for this organization when we present our report.

[Iqra Khalid, Liberal, Mississauga—Erin Mills, ON]

Are there any loopholes or any broken pieces of the system that you want to highlight for us today?

[Andrew Hayes]

Well, I think the reason this is a big audit for us to do is that conflict of interest—particularly when it relates to funding decisions from government organizations—is always important. The ability to engage and trust government with funding programs, whether it's the COVID-19 benefit programs that we've already audited or other audits that we have done in the past.... The importance here is transparency and public trust. At this point, I think that's the best way I can answer that question.

[Iqra Khalid, Liberal, Mississauga—Erin Mills, ON]

How do other countries deal with issues like this?