Mr. Speaker, the Government of Canada has recently taken steps to recover a $350,000 contingency or success fee paid by Shire Biochem Inc. to Wallding International Inc. in November 2001.
This fee was paid in breach of a contract provision prohibiting contingency fees under the contract between Public Works and Government Services Canada and Shire Biochem Inc. to provide seasonal flu and pandemic vaccine, when required, over a 10 year period. The contract provides that no contingency fee would be paid, directly or indirectly, by the contractor, Shire Biochem Inc. It further stipulates that if the contractor defaults on this term, the minister may recover the contingency fee from the contractor.
The contract states:
The Contractor certifies that it has not directly or indirectly paid or agreed to pay any covenants that it will not directly or indirectly pay a contingency fee for the solicitation, negotiation or obtaining of this contract to any person other than an employee acting in the normal course of the employee's duties.
All accounts and records pertaining to payments of fees or other compensation for the solicitation, obtaining or negotiation of the Contract shall be subject to the Accounts and Audit provision of the Contract.
If the Contractor certifies falsely under this section or is in default of the obligations contained therein, the Minister may either terminate this Contract for default or recover from the Contractor by way of reduction to the Contract Price or otherwise the full amount of the contingency fee.
In this section:
"contingency fee" means any payment or other compensation that is contingent upon or is calculated upon the basis of a degree of success in soliciting or obtaining a Government Contract or negotiating the whole or any part of its terms;
Wallding International Inc., a registered lobbying firm, was engaged by BioChem Vaccines Inc. to provide “--strategic advice in developing a strategy and action plan for BioChem Vaccines Inc. to be granted a long-term contract valued at approximately $100-$240 million with Public Works and Government Services Canada”.
According to lobbyist registration 7795767-11397-1, Wallding International was retained to lobby Health Canada, Industry Canada, the Privy Council Office, the Department of Public Works and Government Services and the Federal Office of Regional Development Quebec.
The registration indicated that the lobbyist's payment was not contingent on the success of the undertaking.
A routine compliance audit and review of related documents undertaken by Deloitte & Touche for Industry Canada uncovered evidence that suggested a contingency fee in the amount of $350,000 had been paid to Wallding International Inc. in November 2001.
Following a thorough investigation by Public Works and Government Services Canada's Oversight Branch, it was determined that the contingency fee should be recovered and that the file should be referred to the Office of the Commissioner of Lobbying to ensure that all regulations regarding disclosure of success fees were followed.
This government introduced the Federal Accountability Act in 2006, and as a result, the payment of success fees for contracts is now illegal and public office-holders are banned from lobbying after leaving office for a minimum of five years.