Transport Committee on May 9th, 2023

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Chahal.

Next,

Mr. Barsalou‑Duval, you have the floor for two and a half minutes.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair.

Mr. Cory, on February 6, 2023, you were called to testify before the Standing Committee on Government Operations and Estimates, where you stated that the Canada Infrastructure Bank awarded three contracts to McKinsey, totalling $1.43 million.

Were the contracts between McKinsey and the Canada Infrastructure Bank subject to a call for tenders?

[Ehren Cory]

Thank you for the question.

I will start answering it, and then turn it over to Mr. Duguay.

The first two contracts were both procured at a time when the CIB was, as I mentioned earlier, one employee. I say that only as context. They were both procured under the procurement rules of the time, which allowed for invitational procurement. The acting CIO at the time and the board chair, in my understanding—again, not from being involved but only from the documents that have been submitted to OGGO—I see that they—

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

I would just like a clarification. You said that when the first two contracts were awarded, the bank had the equivalent of one employee.

Is that correct?

[Ehren Cory]

That's exactly my understanding. Frédéric can clarify.

[Frédéric Duguay]

I'd like to clarify what Mr. Cory said.

At the time, essentially, the chair of the board of directors was serving in both that role and the role of interim president and CEO, because the first president and CEO of the infrastructure bank didn't take up his duties until June 2018. In December 2017, one of the board members stepped down voluntarily to implement the bank's startup activities.

[Ehren Cory]

So you could say that there were one or two employees.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

That said, there was no call for tenders.

[Ehren Cory]

There was an invitational process where they went out and spoke to a number of consulting firms. That is my understanding of the materials. You may have a chance to speak with them at some point, I understand, and talk to them about this. From what I understand, to the member's question, they spoke to a number of firms about their credentials, about how they would approach the work, and they hired McKinsey.

There was not an RFP process, and a formal bidding process. It was invitational, and it was based on discussions with a few different firms.

[The Chair, Liberal, Peter Schiefke]

Your time is unfortunately up, Mr. Barsalou‑Duval.

Next we have Mr. Bachrach.

Mr. Bachrach, the floor is yours. You have two and a half minutes.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

I'd like to ask a couple of questions about conflict of interest.

I wonder, Mr. Cory, if it would be reasonable for the public to perceive there being a conflict if a person was on the advisory council responsible for informing the development of the Canada Infrastructure Bank and heading up a proponent that was coming to the bank looking for an investment in, say, a public transit project. Is it reasonable for the public? Do you understand why the public might perceive a conflict there?

[Ehren Cory]

Being in public institution—and as I mentioned in response to a previous question, I've now spent more than a decade in and leading public sector institutions—procurement fairness and diligence in procurement are always fairness, both actual and perceived. Both are incredibly important. We take that super seriously.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

To be clear, was Michael Sabia on both the advisory council and heading up the pension fund that was seeking an investment in the REM project in Montreal at the same time? Was it subsequent to that? In 2017, was he still on the advisory council?

[Ehren Cory]

I actually don't know—

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Maybe we can ask him, he's going to arrive here.

I understand that council members were required to sign a document pledging to act only in the public interest. From the document it says that “members are reminded that they should avoid any real, apparent or perceived conflict of interest.”

Would Michael Sabia, as a member of the advisory council, have signed that document?

[Ehren Cory]

I'm sorry, to answer the member's question, I have no knowledge of that.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Okay. I look forward to asking him that question.

What policies does the CIB currently have to avoid perceived conflict between the advisory council, the bank's board, and proponents who come to the bank looking for investments? What firewalls are in place?

[Ehren Cory]

I'll ask Mr. Duguay to speak to this.

I will only say that, one, board members are all Governor in Council appointments and are all governed by the Government of Canada's conflict of interest policy. Moreover, all of our employees sign a code of conduct, which includes conflict of interest policies, both real and perceived. They attest to it annually, and we take that very seriously.

Maybe Mr. Duguay can add a few words.

[Frédéric Duguay]

The only thing I would say, Mr. Chair, as stated by Mr. Cory, is that all of our directors are subject to the Conflict of Interest Act, so they are subject to those duties.

At the CIB we take the management of conflicts with respect to any personal relationships or professional affiliations any director may have very seriously. We provide a project list in advance of every board meeting for directors to proactively identify any projects or any counterparties they are associated with in respect to any project so that they can declare a conflict. If a conflict is declared, no materials are provided to directors—

[The Chair, Liberal, Peter Schiefke]

Thank you.

[Frédéric Duguay]

—and they recuse themselves from discussion and voting.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Duguay.

Thank you, Mr. Bachrach.

Next we have Mr. Muys.

Mr. Muys, the floor is yours. You have five minutes.

[Dan Muys, Conservative, Flamborough—Glanbrook, ON]

Thank you, Mr. Chair.

Thank you to the witnesses and feel free for those who are working virtually to chime into any of these questions because it seems most discussions are happening in the room.

Can you describe the internal audit processes that you have at the CIB for these sorts of contracts?

[Ehren Cory]

Sure.

We do have an internal audit function, which Mr. Duguay leads on our behalf, so I will definitely have him comment in a moment.

To answer your question, there are two things. One, we have financial auditors. So our financial statements are audited and we have third party review of all of our financials. Two, we also have an internal audit function, a third party that conduct audits of our practices, including our procurement policy, just to give one example. They would come in and conduct an audit and make sure that it has all of the appropriate controls, and make sure that it addresses the question of the previous member about conflict of interest and that it meets generally accepted best practices.

[Frédéric Duguay]

The only thing I would add to what Mr. Cory said is that the internal auditors on an annual basis develop a risk-based audit plan that is informed and approved by the finance and audit committee of the board. That risk-based audit plan is informed by the highest areas of risk with respect to not only governance but also compliance. Compliance with policies, including procurement, is included as part of that annual audit plan.