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37th PARLIAMENT, 3rd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Wednesday, April 7, 2004

0910

The Chair (Mr. John Williams (St. Albert, CPC))

Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.)

The Chair

Mr. Vic Toews (Provencher, CPC)

0915

The Chair

Mr. Dennis Mills (Toronto—Danforth, Lib.)

The Chair

Mr. Vic Toews

The Chair

Mr. Vic Toews

The Chair

Mr. Vic Toews

The Chair

Mr. Marc LeFrançois (As Individual)

The Chair

0920

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

0925

0930

0935

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

0940

The Chair

Mr. Alan Tonks (York South—Weston, Lib.)

The Chair

Mr. Alan Tonks

The Chair

Mr. Vic Toews

Mr. Marc LeFrançois

Mr. Vic Toews

Mr. Marc LeFrançois

Mr. Vic Toews

0945

Mr. Marc LeFrançois

Mr. Vic Toews

Mr. Marc LeFrançois

Mr. Vic Toews

Mr. Marc LeFrançois

The Chair

0950

Mr. Marc LeFrançois

The Chair

Mr. Rob Walsh (Law Clerk and Parliamentary Counsel, House of Commons)

The Chair

Mr. Mario Laframboise (Argenteuil—Papineau—Mirabel)

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

0955

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

The Chair

Mrs. Marlene Jennings

1000

Mr. Marc LeFrançois

Mrs. Marlene Jennings

1005

Mr. Marc LeFrançois

Mrs. Marlene Jennings

The Chair

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP)

1010

Mr. Marc LeFrançois

Ms. Judy Wasylycia-Leis

Mr. Marc LeFrançois

Ms. Judy Wasylycia-Leis

Mr. Marc LeFrançois

The Chair

1015

Mr. Marc LeFrançois

Ms. Judy Wasylycia-Leis

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Jason Kenney (Calgary Southeast, CPC)

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

1020

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

1025

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

Mr. Marc LeFrançois

1030

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Mario Laframboise

1035

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

1040

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

The Chair

Hon. Robert Thibault (West Nova, Lib.)

1045

Mr. Marc LeFrançois

Hon. Robert Thibault

1050

Mr. Marc LeFrançois

Hon. Robert Thibault

Mr. Marc LeFrançois

Hon. Robert Thibault

Mr. Marc LeFrançois

Hon. Robert Thibault

The Chair

1100

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

1105

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

The Chair

Mr. Dominic LeBlanc (Beauséjour—Petitcodiac, Lib.)

Mr. Marc LeFrançois

Mr. Dominic LeBlanc

1110

Mr. Marc LeFrançois

Mr. Dominic LeBlanc

Mr. Marc LeFrançois

Mr. Dominic LeBlanc

Mr. Marc LeFrançois

Mr. Dominic LeBlanc

Mr. Marc LeFrançois

Mr. Dominic LeBlanc

The Chair

Hon. Joe Jordan (Leeds—Grenville, Lib.)

Mr. Marc LeFrançois

Hon. Joe Jordan

Mr. Marc LeFrançois

Hon. Joe Jordan

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Hon. Joe Jordan

Mr. Marc LeFrançois

Hon. Joe Jordan

1115

Mr. Marc LeFrançois

Hon. Joe Jordan

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Vic Toews

1120

Mr. Vic Toews

Mr. Marc LeFrançois

Mr. Vic Toews

Mr. Marc LeFrançois

Mr. Vic Toews

Mr. Marc LeFrançois

1125

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marcel Proulx (Hull—Aylmer)

Mr. Marc LeFrançois

Mr. Marcel Proulx

Mr. Marc LeFrançois

Mr. Marcel Proulx

Mr. Marc LeFrançois

Mr. Marcel Proulx

Mr. Marc LeFrançois

Mr. Marcel Proulx

Mr. Marc LeFrançois

Mr. Marcel Proulx

Mr. Marc LeFrançois

1130

Mr. Marcel Proulx

The Chair

Mr. Jason Kenney

Mr. Marcel Proulx

Mr. Jason Kenney

Mr. Marcel Proulx

Mr. Jason Kenney

Mr. Marcel Proulx

The Chair

Mr. Marcel Proulx

The Chair

Mr. Marcel Proulx

Mr. Marc LeFrançois

The Chair

Mr. Marcel Proulx

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

1135

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Alan Tonks

The Chair

Mr. Alan Tonks

Mr. Marc LeFrançois

Mr. Alan Tonks

Mr. Marc LeFrançois

Mr. Alan Tonks

1140

Mr. Marc LeFrançois

Mr. Alan Tonks

Mr. Marc LeFrançois

Mr. Alan Tonks

Mr. Marc LeFrançois

Mr. Alan Tonks

The Chair

Mr. Alan Tonks

The Chair

Mr. Alan Tonks

The Chair

Mr. Marc LeFrançois

1145

The Chair

Mr. Jason Kenney

Mr. Marc LeFrançois

The Chair

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

1150

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

1155

The Chair

Mr. Marc LeFrançois

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

Mr. Marc LeFrançois

The Chair

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

The Chair

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

1200

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

The Chair

Mrs. Marlene Jennings

1205

Mr. Marc LeFrançois

Mrs. Marlene Jennings

Mr. Marc LeFrançois

Mrs. Marlene Jennings

Mr. Marc LeFrançois

Mrs. Marlene Jennings

Mr. Marc LeFrançois

1210

The Chair

Mr. Marc LeFrançois

The Chair

Mrs. Marlene Jennings

Mr. Marc LeFrançois

Mrs. Marlene Jennings

1215

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

1220

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

Mr. Dennis Mills

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

1225

Mr. Marc LeFrançois

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

Ms. Judy Wasylycia-Leis

Mr. Marc LeFrançois

Ms. Judy Wasylycia-Leis

Mr. Marc LeFrançois

Ms. Judy Wasylycia-Leis

Mr. Marc LeFrançois

1230

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Ms. Judy Wasylycia-Leis

Mr. Marc LeFrançois

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

Mr. Marc LeFrançois

The Chair

Mr. Vic Toews

Mr. Dennis Mills

Mr. Vic Toews

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Vic Toews

The Chair

Mr. Vic Toews

Mr. Marc LeFrançois

1410

Mr. Vic Toews

Mr. Marc LeFrançois

Mr. Vic Toews

Mr. Marc LeFrançois

Mr. Vic Toews

Mr. Marc LeFrançois

Mr. Vic Toews

Mr. Marc LeFrançois

Mr. Vic Toews

Mr. Marc LeFrançois

Mr. Vic Toews

1415

Mr. Marc LeFrançois

Mr. Vic Toews

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

Mr. Vic Toews

Mr. Marc LeFrançois

Mr. Vic Toews

Mr. Marc LeFrançois

Mr. Vic Toews

The Chair

Mr. Vic Toews

The Chair

Mr. Marc LeFrançois

Le président

Mr. Mario Laframboise

The Chair

Hon. Robert Thibault

Mr. Marc LeFrançois

Hon. Robert Thibault

Mr. Marc LeFrançois

Hon. Robert Thibault

Mr. Marc LeFrançois

1420

Hon. Robert Thibault

Mr. Marc LeFrançois

Hon. Robert Thibault

Mr. Marc LeFrançois

Hon. Robert Thibault

The Chair

Hon. Robert Thibault

Mr. Marc LeFrançois

1425

Hon. Robert Thibault

Mr. Marc LeFrançois

Hon. Robert Thibault

The Chair

Mrs. Marlene Jennings

The Chair

1430

Mr. Rob Walsh

The Chair

Mr. Rob Walsh

The Chair

Mr. Rob Walsh

The Chair

Mr. Rob Walsh

1435

The Chair

Hon. Robert Thibault

The Chair

Mr. Rob Walsh

The Chair

Mr. Marc LeFrançois

1440

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

1445

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

The Chair

Mr. Mario Laframboise

The Chair

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

1450

Mr. Marc LeFrançois

Mr. Mario Laframboise

Mr. Marc LeFrançois

The Chair

Hon. Joe Jordan

1455

Mr. Marc LeFrançois

Hon. Joe Jordan

Mr. Marc LeFrançois

Hon. Joe Jordan

Mr. Marc LeFrançois

The Chair

Hon. Joe Jordan

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

1500

Mr. Marc LeFrançois

The Chair

Mr. Jason Kenney

The Chair

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

1505

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

Mr. Jason Kenney

Mr. Marc LeFrançois

M. Jason Kenney

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

Mr. Marc LeFrançois

Mr. Dennis Mills

Mr. Marc LeFrançois

Mr. Dennis Mills

Mr. Marc LeFrançois

Mr. Dennis Mills

Mr. Marc LeFrançois

Mr. Dennis Mills

1510

The Chair

Mr. Marcel Proulx

Mr. Marc LeFrançois

Mr. Marcel Proulx

Mr. Marc LeFrançois

Mr. Marcel Proulx

Mr. Marc LeFrançois

Mr. Marcel Proulx

Mr. Marc LeFrançois

Mr. Marcel Proulx

Mr. Marc LeFrançois

Mr. Marcel Proulx

1515

Mr. Marc LeFrançois

Mr. Marcel Proulx

Mr. Marc LeFrançois

Mr. Marcel Proulx

Mr. Marc LeFrançois

Mr. Marcel Proulx

The Chair

Mr. Marcel Proulx

Mr. Marc LeFrançois

The Chair

Mr. Mario Laframboise

Mr. Marc LeFrançois

Mr. Mario Laframboise

The Chair

Mr. Marc LeFrançois

1520

The Chair

Ms. Judy Wasylycia-Leis

Mr. Marc LeFrançois

Ms. Judy Wasylycia-Leis

Mr. Marc LeFrançois

Ms. Judy Wasylycia-Leis

1525

The Chair

Ms. Judy Wasylycia-Leis

Mr. Marc LeFrançois

Ms. Judy Wasylycia-Leis

The Chair

Hon. Walt Lastewka (St. Catharines, Lib.)

The Chair

Mrs. Marlene Jennings

1530

Mr. Marc LeFrançois

Mrs. Marlene Jennings

Mr. Marc LeFrançois

Mrs. Marlene Jennings

Mr. Marc LeFrançois

Mrs. Marlene Jennings

Mr. Marc LeFrançois

Mrs. Marlene Jennings

Mr. Marc LeFrançois

Mrs. Marlene Jennings

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

Mr. Dennis Mills

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

1535

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Mr. Marc LeFrançois

The Chair

Hon. Robert Thibault

The Chair

Mr. Marc LeFrançois

The Chair

CANADA

Standing Committee on Public Accounts

NUMBER 022

3rd SESSION

37th PARLIAMENT

EVIDENCE

Wednesday, April 7, 2004

[Recorded by Electronic Apparatus]

¿ (0910)

[English]

The Chair (Mr. John Williams (St. Albert, CPC)): Good morning, everybody.

The orders of the day, pursuant to Standing Order 108(3)(g), are chapter 3, “The Sponsorship Program”, chapter 4, “Advertising Activities”, and chapter 5, “Management of the Public Service Research”, of the November 2003 report of the Auditor General of Canada, referred to the committee on February 10, 2004.

Our witness today, as an individual, is Mr. Marc LeFrançois.

Madam Jennings wants to say something.

[Translation]

Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you very much, Mr. Chair.

As we discussed just before the meeting started, we're going to invite representatives of the advertising and communications companies that obtained contracts through the Sponsorship Program.

This committee sent a request to the Department of Public Works for details on the $100 million amount. On that point, the Auditor General said in her report that there were few details and that she therefore could not determine whether the government had received value for money. In response to that request, Public Works provided us, two and a half weeks ago, with a document providing a breakdown of the production budget for the period from 1997 to 2000. The department provided us with the names of the agencies and the amounts received by those agencies for each. I'll give you an example.

In 1997-1998, the Gosselin Agency received $822,919.70 in fees, $247,937.27 for internal production, $72,719.90 for travelling expenses, $1,368,734.73 for subcontracted production costs, $105,890.75 for commissions on production work and $800,976.58 for other expenses, for a total of $2,627,178.93.

I'm requesting the committee's unanimous consent so that, when the clerks send invitations to Gosselin, Everest, Lafleur, Palmer Jarvis, Vickers, Compass, Coffin, Groupaction, Publicité Martin—I think I've named them all—they provide them with this sheet and ask them to provide us with details, in both official languages, on these amounts by class of event.

[English]

The Chair: Madam Jennings is asking that when we invite these agencies to come forward, they bring to us at that time details of individual contracts and the breakdown that's given here. I think that's an appropriate point.

Mr. Toews.

Mr. Vic Toews (Provencher, CPC): Thank you.

I certainly want to have a full airing of the contracts and the involvement. We heard from the KPMG auditor the other day; he was basically indicating he was putting forward a proposal in terms of what he felt was the best way to bring forward the evidence. This is obviously something that should be dealt with by the steering committee.

The problem with bringing a number of heads of advertising companies here without the proper foundation puts us in the position of nodding and agreeing when the heads give their testimony. It doesn't give us the background information with which we can properly cross-examine them and verify the accuracy of the statements.

I think this is something the steering committee should undertake, and I think Madam Jennings' proposal, in its proper context, would be a good thing to do.

¿ (0915)

The Chair: Mr. Mills.

Mr. Dennis Mills (Toronto—Danforth, Lib.): I have a point of clarification, Mr. Chair. Maybe Mr. Toews wasn't here, but we have already requested--and we were very specific--that the chief financial officer of each of these corporations that received this money come with the background for this money.

As you know, in any major corporation most of the chief financial officers are chartered accountants, and these people are bound by their...as you, being a chartered accountant, would know. They would be bringing forth this information in a way that essentially has the quality and substance of something that could be subject to an audit at any given time.

The Chair: Well, that's in a perfect world, Mr. Mills.

Mr. Toews.

Mr. Vic Toews: I have a point of clarification. I appreciate that having the officers of those particular companies come forward is perhaps something that may well be necessary and prudent. The problem I have is that I simply don't want to be put into the position where those who are defending themselves are the only ones bringing forward evidence. What the auditor from KPMG has indicated is that he wants to bring that evidence forward in its proper context so we have independent evidence against which to weigh those kinds of comments.

I don't have the resources to spend countless hours verifying the testimony, especially when I have only eight minutes for questioning, so I think what KPMG is asking for is a very reasonable approach. It allows us to move forward in an expeditious manner in order to independently verify the comments that will be made by these agencies. Whether they are professionals or not, they have a vested interest in advancing a particular point of view.

The Chair: It was my intention that we have a very short steering committee meeting this afternoon at the end of this public meeting, and we'll bring it up at that point in time.

We can bring in our forensic auditors from KPMG, but I fully agree with the sentiments expressed to the effect that we need the background as well. That will be discussed later this afternoon.

For those on the steering committee, take notice: there will be one shortly after the adjournment of this particular meeting.

Now we'll go to the witness. Welcome, Mr. LeFrançois.

We have some statements I have to say first before you start; I read this for all our witnesses:

...the refusal to answer questions or failure to reply truthfully may give rise to a charge of contempt of the House, whether the witness has been sworn in or not. In addition, witnesses who lie under oath may be charged with perjury.

That is from House of Commons Procedure and Practice, Marleau and Montpetit, at page 862.

Mr. Toews.

Mr. Vic Toews: Mr. Chair, just on that issue, I note that a person who doesn't give evidence in a forthright manner--and I'm not speaking about any particular witness here--can be charged with contempt, but it's only where someone is actually under oath that perjury can be charged. That's what you're reading.

The Chair: That's correct.

Mr. Vic Toews: I'm a little concerned about that. Some members of the media brought this to my attention, and it had always been my assumption that if there were mistruths being stated here, the person would be subject to a criminal charge of perjury. As I understand it now, where there is no oath taken, there can be no charge of perjury.

I'm not saying it for this particular witness, and we'll let it go for this morning. But I think the steering committee needs to look at that particular issue to determine that. If perjury cannot be charged unless they're under oath, I think that in the future witnesses should be put under oath.

The Chair: We'll bring that up at the steering committee meeting. Mr. Walsh can perhaps give us some direction on that this afternoon.

Mr. LeFrançois, you're appearing before us this morning as an individual. Did you have any discussions or meetings with any employees of the Government of Canada, any members of this committee, any former members of the government, or anybody dealing with this particular issue in the preparation of your report before coming to this meeting?

[Translation]

Mr. Marc LeFrançois (As Individual): No, Mr. Chair.

The Chair: Thank you.

[English]

Has legal advice been provided or paid for by the authorization of any official in the Treasury Board Secretariat, the Department of Public Works and Government Services, or any other government department or agency?

¿ (0920)

[Translation]

Mr. Marc LeFrançois: No.

[English]

The Chair: Mr. LeFrançois, you have an opening statement to make, which has been distributed in both official languages. I now turn the floor over to you.

Mr. Marc LeFrançois: Thank you, Mr. Chair.

Ladies and gentlemen, I am here this morning because I have judged that it is my duty to appear before this committee.

[Translation]

Mr. Chair, ladies and gentlemen, I am here this morning because I have judged that it is my duty to appear before this committee.

On February 6, 1993, at the request of the Prime Minister of Canada, Mr. Brian Mulroney, I accepted the position of chairman of the board of VIA Rail Canada. I was confirmed in this position by the Prime Minister of Canada, Jean Chrétien. Subsequently, I was nominated president and chief executive officer in September 2001 by the same government, following a recruitment process led by a firm which specializes in management recruitment.

The past eleven (11) years with this extraordinary organization VIA Rail, have allowed me to contribute to the development of a private sector management style, as it should be in all corporations. I succeeded in modifying substantially the administrative structure of the company. In discharging my responsibilities at VIA Rail, I have always acted in an ethical fashion, and ensured that I was surrounded by honest, dedicated and competent people.

During the period that I have been chairman, VIA has drawn great pride in its governance. Governance is more than a structure. It relies on the dynamism of the board of directors and the audit committee of the Board, on employee attitudes, on the presence of an effective internal audit function, on the oversight of the external auditors and the existence of effective control systems. In fact, VIA is subject, externally, to rigorous examination and strict surveillance from the two Houses of Parliament, the Treasury Board, and the Minister of Transport.

VIA participated in various sponsorship projects over many years, but two (2) were the subject of negative comments by the Auditor General in her report on the Government of Canada Sponsorship Program dated November 2003. These negative comments are in sharp contrast to the clear audit opinions that VIA Rail received for the years 1998, 1999 and 2000 from VIA Rail's external auditors at the time, Mr. Denis Desautels, the Auditor General of Canada, and the firm Raymond Chabot Grant Thornton.

All the information concerning expenditures on the Maurice Richard Series and the VIA Magazine were made available to the auditors. Specifically, you will find in Appendix A a document entitled “Financial Review - December 1999 ” in which the money due from the Government of Canada was specifically identified.

From the perspective of VIA, the expenditures and the projects were properly identified, analyzed and accepted by the external auditors and the Auditor General in the years in question. Equally important, the Auditor General conducted her five (5) year review of VIA Rail and reported to Parliament in 2003. No negative comments on the two (2) projects were made. Indeed, VIA Rail received high praise for its stewardship of its resources. While the Sponsorship Program was expressly excluded because it was the subject of a separate review, the Auditor General is obliged to raise any matter known to her related to VIA Rail that might represent financial wrongdoing or be a misrepresentation of the financial condition of the corporation. She raised no issues whatsoever.

The central reason that the Auditor General did not make negative comments in the report for the years 1999 and 2000 and in the five (5) year review in 2003 appears obvious to me (see Attachment A). Viewed from the perspective of VIA Rail, both the Maurice Richard Series and the VIA Magazine project had the following characteristics: VIA Rail received full value for all monies spent; the monies spent were part of VIA's mandate and encouraged by a department of government, the Department of Public Works; the process by which monies were spent was not improper and no commissions were paid knowingly by VIA Rail for services rendered to it.

¿ (0925)

The negative comments about the two (2) transactions could only be made in a much broader context about which VIA Rail had no knowledge. This proposition is self-evident and is further confirmed by the “clear” audit opinions rendered for the years 1999, 2000 and 2003. The Sponsorship Program of the Government of Canada was not the responsibility of VIA Rail. VIA Rail did indeed receive heightened public visibility as a result of the program. Given that this is much sought after value for the company, we valued our participation in the Sponsorship Program.

As you know, VIA Rail interacts with numerous departments and agencies of government on a daily basis. Its operating budgets, capital budgets, operating expenditures and capital expenditures are all reviewed and approved by the Department of Transport and Finance, the Minister of Finance, Treasury Board, and both Houses of Parliament. Receiving funds from the Government of Canada in support of the government's priorities is a common occurrence. The receipt of sponsorship funds directly or indirectly in aid of government policy was in the ordinary course of business.

I have given you the presentation I made to the Minister of Transport, the Hon. Tony Valeri, along with attached affidavits. Once you have reviewed it, I believe you will be satisfied that I, along with VIA Rail staff, have conducted the affairs of the company honestly, openly and faithfully in accordance with the directions of the Government of Canada.

Let me deal with one further point: the Auditor General has used a highly negative term, “fictitious invoice”, in her report. The dictionary definition of fictitious is “imaginary, unreal, counterfeit, not genuine”. VIA Rail did not issue any invoice which was fictitious. The actual invoice issued by VIA Rail is attached to my affidavit. It is real and accurate.

In VIA Rail's view, the Auditor General is bound by law and decency by the following: “efforts should be made to avoid language that is so equivocal that it appears to be a finding of civil or criminal liability”. I am referring to Canada vs. Krever Commission in 1997.

Judging by recent press reports, the Auditor General was unacceptably inaccurate and vague in the use of such pejorative language. VIA Rail did not participate in any imaginary, unreal, counterfeit or not genuine transactions and did not deliver any fictitious documents.

Indeed, as is shown in my affidavit, all of the documents produced reflect transactions initiated by the Department of Public Works, are fully transparent and show proper accounting and stewardship of assets. The use of the word “fictitious” was strongly opposed by myself and by VIA Rail's audit committee of the board of directors, including two members who are chartered accountants and one of whom is Chair of the Audit and Finance Committee. Their letters on the issue are attached to my affidavit as Tab 6.

VIA Rail did not participate in a process to hide the true nature and scope of the transactions.

¿ (0930)

The expenditures were part of VIA Rail's mandate authorized by government and reviewed by its auditors. These transactions were openly transparent on the books of the company. I have to point out that VIA Rail received less than ½ of 1% of the $250 million of the Government of Canada sponsorship funds.

On February 24, 2004, I was informed by the Government of Canada that I was suspended from my duties as president and chief executive officer of the corporation, without remuneration, until further notice. I was also informed that I had three and a half working days to demonstrate that I should not be dismissed as a result of activities that had occurred five (5) years previously. At the time of the transactions in question, I occupied the position of chairman of the board and not president and chief executive officer.

With the support of my colleagues at VIA Rail, and assisted by legal counsel, and especially by John Campion from Toronto who played an active role in the production of the letter given to the Minister, we prepared a complete file which demonstrates, without any doubt, the integrity and the transparency of all our transactions.

The Auditor General has raised the issue of the lack of a written contract on the Maurice Richard Series. For me, the substance always prevails over the form. A written contract is always preferable to a verbal agreement, but the court has ruled a long time ago that a verbal agreement is as legal as a written contract. I am a business man and, all my life I have concluded transactions over a handshake. A verbal agreement between people that respect each other is as valid as a written contract.

At the beginning of 2001 when concerns were raised on contracting practices throughout the government, I occupied both the positions of chairman of the board and president and chief executive officer. At that time, I put in place procedures to reinforce existing contracting practices and to ensure that all regulations were followed. I refer you to Appendix C for the details.

As for the circumstances of my dismissal, I would like to make the following comment: I was educated and have lived my life believing in the principles of natural justice. I have always earned the confidence of the people I have dealt with during my university, private and public management career.

When I accepted this public assignment, I did not need to work, but I had the firm belief that I could contribute positively to a corporation that belongs to all Canadians.

I always believed that a decision-maker should hear both parties before proceeding. Arguments from both sides should be reviewed and weighed before a decision is finally made. Even though, it would appear in retrospect, I had already been judged and condemned, I went to Hamilton on March 4, 2004 to meet with the Hon. Tony Valeri, Minister of Transport, with the objective of discussing the information transmitted to him on March 1, 2004. The meeting turned out to be a monologue on my part as the Minister had no questions to ask of me.

From that moment on, I had no communication with my employer. It is following a phone call from Toronto the next morning at 6:30 a.m. that I learned of my dismissal announced on the front page of the Globe & Mail.

As a Canadian who believes that I have certain rights, I was profoundly disappointed by the lack of effort to even simulate a fair process. The decision to terminate me was rendered in record time.

¿ (0935)

In summary, I am still convinced that as the manager of a Crown corporation, I did not have the right to question the Government of Canada on the process chosen to promote Canada in the province of Quebec. As for the corporation I was heading, VIA Rail has benefited considerably from the visibility which has resulted in Canadians knowing more about the excellent service that VIA has to offer. This is a good and sound company to which I am profoundly attached. I have acted properly and I am proud of what I have accomplished at VIA. The decisions I have made respected the rules in place and protected VIA's interests. The corporation did not participate in any illegal, fictitious or doubtful activities.

Furthermore, I must point out that VIA's board of directors, at its meeting of February 17, 2004, voted its full confidence and support to me, as the president and chief executive officer, and to the executive team, in the Sponsorship Program and in conducting the affairs of the corporation.

The Auditor General's report has embarrassed the proud employees of VIA Rail Canada. The company, and its management, have been unfairly criticized by the media. My reputation has been destroyed. I did not deserve to be dismissed, and particularly not in such a cavalier fashion. There remained only six months to complete my contract. I could have assured a harmonious transition for my successor, without the negative impact on the corporation and on the morale of its employees.

This terminates my prepared statement, Mr. Chair.

[English]

The Chair: Thank you very much, Mr. LeFrançois.

Before we go to questions, I have one quick question.

You no doubt have read chapters 3, 4, and 5 of the Auditor General's report, and one of the issues there dealt with some transactions regarding the 125th anniversary celebrations of the RCMP. I have heard, and I'd like it verified, that you were the chairman of the 125th anniversary celebrations in Montreal for the RCMP. What was your role in the 125th anniversary celebrations?

[Translation]

Mr. Marc LeFrançois: Mr. Chair, VIA Rail itself did not have a new role to play in that.

[English]

The Chair: No, I'm not talking about VIA, sir. You're here as an individual. I'm talking about you as a person. Were you involved in the 125th anniversary celebrations of the RCMP? Did you have a role to play in that?

[Translation]

Mr. Marc LeFrançois: Not directly, Mr. Chair. I attended a ball for the 125th anniversary of the RCMP, which was held in Montreal and attended by senior RCMP officials, as well as the Prime Minister of Canada and the who's who of Montreal, the Ottawa area, Quebec City, and so on. At the request of a member of the RCMP, I agreed to act as honorary chair and to help them organize the event. That's what I did and I'm pleased to have done it, Mr. Chair.

[English]

The Chair: That's the only role you had?

[Translation]

Mr. Marc LeFrançois: That's the only role. Perhaps I should tell you that the RCMP people so wanted to ensure the event's integrity that they asked me if I would agree to personally endorse a separate bank account to ensure that no RCMP money would be used for the activity. Being an entrepreneur by nature, I was so convinced that it would be a major success that I personally endorsed a bank account with a member of the RCMP. The activities produced a surplus, which was donated to a cause dear to the RCMP, children.

¿ (0940)

[English]

The Chair: Do you have a point of order, Mr. Tonks?

Mr. Alan Tonks (York South—Weston, Lib.): Mr. Chairman, I note from the testimony and from the correspondence that has been passed out that there's reference to appendices that should be attached to the letter. I don't see any copy of those appendices, and I wonder, Mr. Chairman, if you could endeavour to get those for us.

The Chair: We are trying to copy them and have them distributed at the earliest opportunity, hopefully this morning. We're aware of that issue.

Mr. Alan Tonks: Good. Thank you.

The Chair: Mr. Toews, eight minutes, please.

Mr. Vic Toews: Thank you.

I appreciate you coming here, Mr. LeFrançois, and I also want to just confirm that you're here as an individual and not on behalf of VIA Rail.

Mr. Marc LeFrançois: Absolutely. I don't have anything to do with VIA Rail any more.

Mr. Vic Toews: All right.

I just found that it might have been a little confusing in your presentation, because at page 3 of that presentation you make a statement, “In VIA Rail's view, the Auditor General is bound by law and decency”. So it appears to me that you're advancing a position on behalf of VIA Rail here rather than as an individual.

[Translation]

Mr. Marc LeFrançois: I must tell you that I've forwarded the complete file to you, the one I submitted to Minister Valeri, and that my introduction this morning is based, as I said, on the documents prepared by Me Campion.

[English]

Mr. Vic Toews: So then when you're saying “In VIA Rail's view”, in fact we can assume that this is your view that you're also advancing.

¿ (0945)

Mr. Marc LeFrançois: Absolutely.

Mr. Vic Toews: All right. Thank you.

I note your comments here, and I find them a little disturbing, not in the sense of the legality but sometimes the practical difficulty that you're raising. I refer specifically to page 4 of your presentation, where you indicate that the Auditor General has raised the issue of the lack of a written contract on the Maurice Richard series. You say, “For me, the substance always prevails over theform.” You continue, “A written contract is always preferable to a verbal agreement, but the courthas ruled a long time ago that a verbal agreement is as legal as a writtencontract.” You go on to state that you're a businessman and you've conducted business with handshakes.

I have no doubt about the legality of those types of agreements. Those verbal agreements, in most cases, are enforceable in a court of law. I guess the concern and the issue I have with that statement is not the validity of the contract, but rather transparency and accountability when we're dealing with not our own money, but public money, taxpayers' money. So that's why in acts like the Financial Administration Act and the various guidelines and rules that follow from acts like that there is a concern that transactions are documented. I think that's what the Auditor General is pointing at in a certain context here, that there isn't sufficient paperwork for a person coming in from the outside, an independent auditor, to determine whether moneys have been properly expended.

We've seen those types of concerns raised by the Auditor General in other contexts--with the gun registry, for example, where she indicated that she basically ran out of paper at $850 million.

So it's not an issue of whether the money was validly spent; it's just how do we confirm that it was validly spent?

I'd like you to address that, because you were a very influential and powerful man in VIA, and if your opinion is that we can simply do these things verbally and they're legal, what does that say about some of the accounting practices and rules that we have in place to ensure that money is being properly spent? And if there is no paperwork, how do we ever track money as parliamentarians?

The Auditor General has indicated that Parliament has been misled in terms of the appropriation. The same thing was said in respect of the gun registry, that Parliament was misled. Isn't one of the ways to ensure there is no misleading is that there is in fact paperwork, regardless of the validity of a verbal contract?

[Translation]

Mr. Marc LeFrançois: Sir, you've clearly demonstrated the reason why I generally don't give interviews. You've taken a small part of what I said and you forgot the part that followed right after it, where it's clearly stated that we have established policies at VIA Rail according to which we have to have signed contracts. Normally, all contracts are signed, but obviously, when an administrative error occurs and we discover that a contract has not been signed, we don't kill the person, but rather we first try to understand why the contract was not signed.

Look at my affidavit on the Maurice Richard Series. As chairman of the board, I took it for granted that the rules, which are clear and precise at VIA Rail, would be followed and that there would be a signed contract. When I saw that the contract had not been signed in that case, I found a draft contract at the office. I believe that was in May 2002 or something like that. I refused to sign the contract because I normally don't sign contracts retroactively. I simply told my staff: “The project is over. Why would I sign the contract? To put it on file?” That's not the way I manage a business. If you don't have a signed contract, you didn't sign it, and that's all.

I subsequently changed procedures at VIA Rail. We reinforced them. We even developed a system to prevent the issuing of any cheque if it was not in relation to a duly signed contract that had been verified by our legal department and that had been signed by the persons responsible; furthermore, the person or line of activity that must perform the work must have the contract in hand to ensure that the service described in the contract is indeed provided.

It has no longer been possible for this to happen at VIA Rail since 2002.

I'm pleased that you asked me that question.

[English]

Mr. Vic Toews: That is a good point, because I was concerned that just in making your outline, essentially your brief presentation, there would be somehow the impression that verbal contracts were all right, and this is one of the problems we're trying to deal with here, the lack of paperwork on file. I'm glad to see that in this respect you're not faulting the Auditor General in her concerns raised about the lack of paperwork in so many of these files and the inability then to trace in fact where money went.

In respect of this retroactive contract you were asked to sign, could you elaborate a little bit on that?

Mr. Marc LeFrançois: Yes, very easily.

We found in the files a contract from Robert Guy Scully, l'information essentielle, to VIA Rail Canada, and that contract was dated 2002.... I don't really remember the date. But I said no, you never signed the contract. And what I'm talking about happened before the Auditor General came to make that inquiry. I said no, we don't have a contract. Let's face the facts: we don't have a contract. But we have enough evidence that services have been delivered as per the agreement.

We put in writing that we apologize for that and we admitted our fault. But I was not going to kill the person in the administration who lost the contract somewhere.

The Chair: Thank you very much, Mr. Toews.

Before we proceed, it has come to the chair's attention, Mr. LeFrançois, that you have actually filed a lawsuit regarding the nature of the termination of your employment with VIA Rail. Am I correct in saying that?

¿ (0950)

Mr. Marc LeFrançois: Yes.

The Chair: Therefore, on that basis, I would caution all the committee members that because that matter of the termination of his employment with VIA Rail is now before the courts we will not allow any questions on that particular issue surrounding the nature and the reason for the termination of his employment.

So these questions will be ruled out of order. The witness is not to respond to these questions, and if we require any further advice, our law clerk is right here.

Do we need any further advice at this point in time, Mr. Walsh?

Mr. Rob Walsh (Law Clerk and Parliamentary Counsel, House of Commons): No, Mr. Chairman.

The Chair: We're fine.

Okay, so will everybody please bear that in mind?

Monsieur Laframboise, s'il vous plaît.

[Translation]

Mr. Mario Laframboise (Argenteuil—Papineau—Mirabel): Thank you very much.

Mr. Marc LeFrançois: Absolutely.

Mr. Mario Laframboise: Are you trying to tell us that you didn't learn about that until 2002?

Mr. Marc LeFrançois: Yes.

Mr. Mario Laframboise: So, before that, you thought there was a written contract.

Mr. Marc LeFrançois: Well, normally, that's the procedure at VIA Rail. The rules are very clear, and there must be a contract in accordance with corporate policy.

Mr. Mario Laframboise: But who signed the contracts?

Mr. Marc LeFrançois: Normally, it's the president and chief executive officer.

Mr. Mario Laframboise: That's you?

Mr. Marc LeFrançois: Well, it's not me. I was chairman of the board at the time. However, I can tell you...

Mr. Mario Laframboise: In 1999?

Mr. Marc LeFrançois: Yes. I became president and chief executive officer in September 2001. I was acting president and chief executive officer at the end of December 2000, when the president and chief executive officer left the corporation, around December 9 or 10, 2000.

Mr. Mario Laframboise: Who talked about negotiations on a potential investment in Essential Information? How was contact made?

Mr. Marc LeFrançois: I was directly contacted by Robert Guy Scully, who was the co-producer of the series. As you must know, people very frequently contact the chairman of the board or the president and chief executive officer in an attempt to sell what they have to sell. They're normally referred directly to the marketing department.

I don't think they contact the marketing people directly because they don't know them. They know the chairman because that's public...

Mr. Mario Laframboise:

^ç	On page 12, the Auditor General states:

VIA Rail told us that it initially had turned down the request by L'Information essentielle.

So that request was turned down. Was it you who turned it down the first time?

Mr. Marc LeFrançois: Absolutely, but it's not really a rejection. Here's what I told the staff of the Auditor General's Office. There are some 800 employees in that office. When Robert Guy Scully came to present the project to me, we obviously talked about the Maurice Richard Series. Since everyone knows this great Canadian, we didn't need to talk about it for very long. We knew that it would be a truly interesting project for all Canadians.

When he came to see me in October or November 1998, I told Mr. Scully that his project was extremely interesting, but that we had already approved VIA Rail's budgets for the following year, that is to say 1999. So I told him that his project was excellent, but that I wouldn't submit it to the marketing department because its budget estimates had already been prepared and there was already an established plan.

Mr. Mario Laframboise: So you told him you had no money.

Mr. Marc LeFrançois: In fact, I did have money, but not for that activity.

Mr. Mario Laframboise: But you found some later because money came from the federal government.

Mr. Marc LeFrançois: If you can say that.

Mr. Mario Laframboise: Who offered you federal government money?

Mr. Marc LeFrançois: It was Mr. Guité.

¿ (0955)

Mr. Mario Laframboise: Mr. Guité offered you the money. Did he call you directly to tell you that he had money for you, or did you contact him?

Mr. Marc LeFrançois: He contacted me. I suppose Mr. Scully should have gone to see Mr. Guité to tell him that he had contacted VIA Rail and that, contrary to what he had told them, we weren't putting $1 million into that.

Mr. Mario Laframboise: So after that, the money came, and you advanced the money while waiting for the government's money to come. Is that it?

Mr. Marc LeFrançois: No, not at all. You have to be careful here. I have a sworn affidavit on each step of what happened in the case of the Maurice Richard Series precisely in order to prevent errors of interpretation. Everything I said in the sworn affidavit was told in full to the Office of the Auditor General.

When Mr. Guité telephoned me, he simply told me that, if I decided to go ahead, they would be co-participants with us to the tune of $750,000. We're talking about a project that would be carried out later. So that you can understand, I'll cite a simple example. If, for example, you want to buy a series of tickets to go and see the Ottawa Senators, you have a choice between two things: you can buy a season's ticket and get the seat you want, or you can buy a ticket for a single game and get the seat that's left. The thing is to decide where you want to sit when you do something.

Mr. Mario Laframboise: However, you told me earlier that you didn't have any money. Mr. Guité confirmed for you that the federal government would pay. You authorized that expenditure on an oral promise of revenue, a handshake, as you say. Failing proof to the contrary, I must believe you when you say that that's how things happened. Did you submit that request to your board of directors? It was $750,000 that you were investing.

Mr. Marc LeFrançois: There were specific rules at the time when I was in my position, and there still are today. Those rules must allow a chairman of the board to have enough power to make these kinds of operating decisions. Sometimes I find it hard to understand why, for example, anyone wants to involve the directors of corporations, whether they're public or private, in the day-to-day operations of a business. That's not their role. Their role is to analyze the budgets submitted. Once the budget is approved, it's up to the managers in place to execute. If the managers don't do their work as they should normally do it, the board discharges its responsibility and replaces them.

If every person who occupies a position similar to the one I held has to consult the board of directors or ask it questions on day-to-day business operations, there's a problem. In that case, you should give the members of that board a job.

Mr. Mario Laframboise: What was your operating budget? There's an item in your financial statements called “marketing and sales”. That's not advertising. In the Standing Committee on Transport, your manager of administrative services explained to me that the marketing and sales budget included a portion of the advertising budget. Do you know approximately what percentage of the advertising budget is included in the marketing sales budget?

Mr. Marc LeFrançois: That represents approximately $12 million.

Mr. Mario Laframboise: That's correct. You incurred an expenditure of $750,000 out of that $12 million. We're talking about 6.5 percent of your company's entire advertising budget. Did you do that without the express permission of your board of directors?

Mr. Marc LeFrançois: Absolutely. I did it following discussions and analyses with people who knew their business, people from the marketing department, who have been in their positions for many years. If you look at VIA Rail's advertising across the country, I believe you can see that this business knows how to do things.

Mr. Mario Laframboise: I'll come back to that later.

The Chair: Thank you very much.

Mrs. Jennings, you have eight minutes.

Mrs. Marlene Jennings: Thank you, Mr. Chair. Mr. LeFrançois, thank you for your statement and for being here today.

You directed a number of criticisms at the Auditor General of Canada on the basis of audits previously conducted in 1999 and 2000. You are clearly not pleased by the Auditor General's November 2003 report, which was presented in Parliament this past February.

I spoke about that in order to clarify the context, but I want to come back to the issue of the Maurice Richard Series. Do you deny that VIA Rail paid $910,000 for the Sponsorship Program and was refunded $750,000 by the Sponsorship Program by using Lafleur Communication Marketing, I believe? You even said the following in your affidavit, at point 34:

À (1000)

[English]

“After receiving this amount, the $910,000 receivable was dealt with as follows: one payment of $750,000 was declared received and the remaining $160,000 was applied against the advertising budget.”

[Translation]

In actual fact, according to your statement, what VIA Rail received for that series was worth $160,000. The other amount of $750,000, which VIA Rail, on your approval, allocated to Essential Information then was reimbursed in another fiscal year by Lafleur Communication Marketing, which received the money from the Sponsorship Program, was a transaction the purpose of which was to send Essential Information $750,000 so that it could subsequently be reimbursed out of public funds.

That's what happened. That's what your statement means. Doesn't that violate the Financial Administration Act?

Mr. Marc LeFrançois: Mrs. Jennings, I'm going to clarify two points.

First, in my introduction, I informed the people concerned in writing that I was not pleased with the Auditor General's report. Second, there are two important messages in my introduction. I encourage the general public to be careful and not to judge VIA Rail on the basis of two and a half or three pages of the Auditor General's report. I encourage people to judge the company in the manner in which it should be judged.

The Auditor General herself has judged VIA Rail and given it the highest mark it can be given in the context of an audit. She even congratulated it. That's the first point I wanted to make.

When I say you have to look at the Auditor General's report, that's in the much broader context of things that were completely unknown to us. I agree with you about the facts: they are real.

Mrs. Marlene Jennings: As I understand it, you're encouraging people to judge VIA Rail not on the basis of a single file, but rather on the basis of all of its work and files. I'm not at all opposed to that. In fact, I would encourage Canadians to do the same. However, in this file, the role of the Auditor General was, as the government had requested her to do, to conduct an audit of the entire Sponsorship Program, to reveal, on the evidence, what she was able to observe and to issue her findings.

Unfortunately for VIA Rail, some of its files which were directly related to the sponsorships were the subject of that audit. It revealed irregularities that might go so far as to constitute a violation of the Financial Administration Act and the Canada Corporations Act.

You yourself say that an oral contract is as valid as a written contract. As a jurist, I must say you are right. Of course, in the case of an oral contract where the conditions of that contract are disputed in court, it is harder to prove their validity than in the cause of a written contract. But here, my problem isn't the fact that the contract wasn't written. It's that VIA Rail acted as a conduit for federal monies from a program that were transmitted to Essential Information. But that is not your role. So I wonder how you, who are an educated person with considerable experience in business and within VIA Rail—if I'm not mistaken, you held the position of chairman of the board of directors—agreed to allow cheques to be issued to Essential Information at the request, according to what you say, of the director general, Chuck Guité—I think it was him—on the pretext that he had no more money in his budget and he had asked you to advance him some, giving you assurances in return that he would repay you. He knew that that was not your role.

À (1005)

Mr. Marc LeFrançois: Mrs. Jennings, I invite you to read carefully the affidavit that I've submitted. What you've just repeated is a story that was written backwards based on true facts. It must be understood that transactions such as these are conducted regularly. We're talking about activities that took place. The first official activity took place on October 25, 1999. It was subsequently broadcast on Radio-Canada on November 14 and 21, 1999 and on TQS on January 7 and 8, 2002. However, I can examine all our rules as much as I want—and God knows we have a lot of them—but I still say we didn't break any of them. This was an exercise that was part of the normal course of activities of the business.

You tell me that rules were violated. I don't want to speak for Public Works Canada, but here we're talking about activities that took place. The first took place on October 25, 1999.

[English]

Mrs. Marlene Jennings: Do I have any time left? Put me down again.

The Chair: I know that Madam Jennings will want to pursue that line, because I didn't think that was a satisfactory answer, Mr. LeFrançois. Saying that those verbal agreements, checks, and so on are all within the rules doesn't seem to fit with me.

Ms. Wasylycia-Leis may want to pick that up, or something else. Madam Wasylycia-Leis, for eight minutes please.

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Thank you, Mr. Chairperson.

[Translation]

Thank you, Mr. LeFrançois, for agreeing to testify.

[English]

I want to pursue what Madam Jennings began and to tell you that we haven't had time to read all your affidavits. We will; we just got them.

Your job today is to explain what would seem to be some very unusual transactions that caused the Auditor General great concern, and which causes us great concern and Canadians enormous concern. I know that perhaps the best defence is sometimes an offensive, but going after the Auditor General I don't think is that helpful to what we have to do as parliamentarians.

I should also say, we are not going after VIA Rail. We are going after some dubious transactions, a couple of them involving VIA Rail. So we need to really hear from you why you, on behalf of VIA, actually agreed to a very unorthodox financing arrangement—very unorthodox, as Marlene Jennings said, in terms of having the Government of Canada come to you through Public Works and transfer money to you, so that you can then transfer money to an agency, which eventually gets to a project.

Why would you have agreed to that in the first place? It doesn't make sense, unless this is an established way of doing business in Ottawa over the years.

À (1010)

[Translation]

Mr. Marc LeFrançois: I'm simply trying to ensure that my explanations are clear. I'm not at all attacking the Auditor General's report. I'm simply saying that it must be read as it is written.

She raises a lot of questions. However, who am I to tell the Government of Canada what to do? I don't believe that's my role. Your committee has managed to unearth a lot of information that no one had. It appears that the Government of Canada decided—I want to use the right terms—that Canadian propaganda would be spread across Canada, and mainly in Quebec, to advertising agencies because it appears it didn't have the staff to do so.

However, it's not up to me to debate that decision.

[English]

Ms. Judy Wasylycia-Leis: Fair enough, except VIA is a crown corporation. VIA is not another department of government that takes orders from a minister or a deputy minister.

Why would you in fact have agreed to this very peculiar arrangement?

And if you were concerned about supporting the Maurice Richard series, why didn't VIA do it on its own directly and properly?

[Translation]

Mr. Marc LeFrançois: There are two points to what you said.

If they're listening, the VIA people will definitely be pleased at what you've just said, that the corporation shouldn't have to take orders.

During the period when I served, I raised this very point in the first meeting I had with the Honourable Tony Valeri. The telephone calls from everyone had to stop within VIA Rail. First, as you know, VIA Rail is not governed by an act. It is a corporation that was established by Order in Council. VIA Rail is in a way an extension of the Department of Transport and is administered as such, unless its head really has character. That's what I believe I have.

I'm speaking to you from experience because I had the honour to serve four prime ministers over a brief period of time. I worked with seven ministers of Transport and at least five deputy ministers from that department.

You refer to the Maurice Richard Series. VIA Rail frequently enters into joint ventures or associations with partners for specific projects. The corporation took the lead on the file. We knew we had a partner that would pay its share when the time came to do so. I want to emphasize that the first official activity took place on October 25, 1999.

I don't understand. A moment ago, Mrs. Jennings said that... I don't want to confuse various exercises. I know that we at VIA Rail complied with our own rules and policies. If the government did something else, I can't answer for what it did.

[English]

Ms. Judy Wasylycia-Leis: Are you saying, Mr. LeFrançois, that in fact government saw VIA as its personal department, and you felt pressure that you couldn't avoid in terms of something that would appear to be quite suspicious—in effect, that might in fact be seen, at first flush, as a form of money laundering or a way to disguise funding? Did you feel that kind of pressure so that you just couldn't say no?

Mr. Marc LeFrançois: What I would like to say is the following. It is not crown corporations that have decided to use the government; it is the opposite. It is the government that has decided to use its own crown corporations.

What do I say? I don't have anything to discuss with that.

The Chair: You were the chairman of the board, Mr. LeFrançois.

À (1015)

Mr. Marc LeFrançois: Yes, I was. And that thing made sense to us. That was an excellent event where VIA Rail got a lot of visibility. For a corporation like VIA Rail, more visibility means more people know about the services we are offering to Canadians, more revenues, and less taxpayer money to run that corporation.

Ms. Judy Wasylycia-Leis: But in the end we ended up probably paying a lot more because of this funny scheme going on with money going from government to an agency to you to another agency to the final program—everybody having a take. So it ended up costing us probably a lot more.

I would like to ask you this. There's nothing wrong with a partnership between government and a crown corporation, but then a couple of conditions have to be met. One, from the government's point of view, it needs to go through Treasury Board and be well documented and authorized, and that didn't appear to be the case. Two, from your point of view, as head of VIA, it would go to your board for proper authorization and documentation and a paper trail. That didn't happen. Why?

[Translation]

Mr. Marc LeFrançois: First, I don't agree with what you say at all. I don't see what a board of directors does in the day-to-day administration of a business. I made sure that VIA Rail's rules would be complied with, and the rules were followed in those files.

As to the government's comments, I have no comment to make on how the government should operate. I have no say in that.

[English]

The Chair: Thank you very much, Mrs. Wasylycia-Leis.

But following your rules, Mr. LeFrançois, do your rules say verbal contracts are quite okay? Do VIA Rail rules say that?

[Translation]

Mr. Marc LeFrançois: No, the oral contracts...

[English]

The Chair: So you were not following the rules, all of the rules.

[Translation]

Mr. Marc LeFrançois: Mr. Chair, it is correct that the contract was not signed when it should have been signed in accordance with corporate policy.

[English]

The Chair: We're trying to investigate where the rules were broken, why they were broken, and who broke them. This blanket statement that “we're following the rules” isn't why we are here today, Mr. LeFrançois. We're here to find out who broke the rules and why they were broken.

Mr. Kenney, please, eight minutes.

Mr. Jason Kenney (Calgary Southeast, CPC): Thank you, Mr. Chairman.

Thank you very much, Mr. LeFrançois, for joining us today.

First of all, I'd like to establish why it is that you moved from being chairman to president and chief executive officer of VIA Rail when Jean Pelletier joined your organization as chairman. How did that transpire?

[Translation]

Mr. Marc LeFrançois: It was at the end of my term as chairman of the board of directors, and as I said a moment ago, starting in December 2000, they asked me to fill the two positions, which I did. They then looked for a president and chief executive officer, and they hired a head hunter, the name of which I don't remember, which had a lot of candidates; I don't know how many. They asked me to apply for the position, which I did. In the end, they offered me the position, which I turned down in 1993. The passion I had for the business led me to accept the position for a three-year term instead of the normal five-year term.

[English]

Mr. Jason Kenney: There has been speculation, as you know, that the Prime Minister's Office, at the time, essentially forced you out in order to make room for Mr. Pelletier to become chairman. Is that accurate?

Mr. Marc LeFrançois: No, it's not accurate.

Mr. Jason Kenney: All right. Mr. LeFrançois, could you please describe the nature of your relationship with Jean Lafleur of Lafleur Communications?

Mr. Marc LeFrançois: Yes.

[Translation]

I met Mr. Lafleur in the context of VIA Rail Canada's operations. I didn't know Mr. Lafleur, and I had never seen him. The company did business with a communications firm called Publicité Martin, which had an association with Lafleur Communication Marketing. That's where I met Jean Lafleur.

À (1020)

[English]

Mr. Jason Kenney: When was that? What year was it, roughly?

Mr. Marc LeFrançois: It was at the end of 1993 or the beginning of 1994, somewhere around there.

Mr. Jason Kenney: Have you travelled abroad with Mr. Lafleur to Europe, for instance?

Mr. Marc LeFrançois: To where?

Mr. Jason Kenney: Europe.

Mr. Marc LeFrançois: Yes, once—twice.

Mr. Jason Kenney: Where did you go with Mr. Lafleur in Europe?

Mr. Marc LeFrançois: We made a trip to London. He came with us to look at the.... We were the whole management there.

Mr. Jason Kenney: I'm sorry, could you repeat that?

[Translation]

Mr. Marc LeFrançois: Most of the members of the executive board were there. We went to see the new trains for sale, the ones that had been built by Alstom, in Birmingham. Mr. Lafleur was on the trip. Was that at the invitation of the marketing department or the president at the time? I couldn't tell you, but I know he went there.

[English]

Mr. Jason Kenney: Speaking of Alstom train equipment, VIA has Alstom train equipment. Is that correct?

Mr. Marc LeFrançois: Yes.

Mr. Jason Kenney: Did you let a contract without tender to Bombardier for the refurbishment of Alstom equipment at VIA Rail?

Mr. Marc LeFrançois: Yes, we did, but let me explain. When we negotiated the purchase of those cars with Alstom, I even met with the president of Alstom to look at the possibility that they would finish the work that they had to do on the cars.

[Translation]

When Alstom told me it was unable to complete construction of those cars and that it didn't have the necessary facilities in Montreal, whatever the newspaper say based on the information given to them, what I did was very simple: I met the Auditor General's representative; I came here, to Ottawa, met the Privy Council people to get some advice, to determine whether my view on matters was the right one; I spoke with the front office and ultimately made the decision to let the contract to Bombardier without tender, after negotiating with the two firms.

For the negotiation, since I felt that, except for me—I don't mean this pretentiously—no one had the necessary experience to negotiate contracts of that kind, I had people recommended to me and we ultimately hired a former deputy minister of National Defence who helped us negotiate the contract.

[English]

Mr. Jason Kenney: All right, thank you.

Now, you said that--

The Chair: Mr. Kenney, can I ask Mr. LeFrançois to give names as well as titles? I think the committee would appreciate that.

Mr. Marc LeFrançois: Yes. His name was John McLure.

The Chair: Okay.

Sorry, Mr. Kenney.

Mr. Jason Kenney: Why is it that Jean Lafleur would have travelled with your executive team to England to look at trains?

Mr. Marc LeFrançois: I suppose it was just on the look of the cars, the way the seats were being installed, on the marketing side. Or he came on his own. I don't--

Mr. Jason Kenney: Or he came on his own?

Mr. Marc LeFrançois: Yes, he probably came on his own.

Mr. Jason Kenney: Did VIA pay for his expenses?

Mr. Marc LeFrançois: I don't believe so, no. But that I will have to ask people to check.

Mr. Jason Kenney: You testified that you travelled to two places in Europe with Mr. Lafleur. Where was the other place?

Mr. Marc LeFrançois: In Italy.

Mr. Jason Kenney: And Mr. Gagliano was on that trip?

Mr. Marc LeFrançois: Yes, he was.

Mr. Jason Kenney: What was the purpose of that trip?

Mr. Marc LeFrançois: That was a business trip similar to what the Prime Minister was doing in some countries.

An hon. member: Team Canada.

Mr. Marc LeFrançois: Yes, Team Canada.

I had been invited to go on that trip, so I went. I met with the manufacturers of the trains there, the corporation called Breda, which is government-owned. I met with engineering firms that are developing the high-speed rail or higher-speed rail. I looked at their operations because they operate fast trains with freight or slower trains.

À (1025)

Mr. Jason Kenney: And why was Mr. Lafleur on this trip?

Mr. Marc LeFrançois: I don't know. I don't have anything to do with that. I'm not aware of why he was there.

Mr. Jason Kenney: Well, you travelled with him. Presumably you spoke to him and asked him why he was on this trip.

Mr. Marc LeFrançois: He was there.

No, I never ask people questions.

Mr. Jason Kenney: You never ask questions?

Mr. Marc LeFrançois: I mind my own business.

Mr. Jason Kenney: Would you characterize Mr. Lafleur as a friend as well as somebody with whom you had an ongoing professional relationship?

Mr. Marc LeFrançois: This is a question you should ask Mr. Lafleur.

Mr. Jason Kenney: Well, a relationship means that both parties are engaged in it. Presumably you can tell us whether or not you regard yourselves as having had a friendship.

[Translation]

Mr. Marc LeFrançois: Yes, Mr. Lafleur is a good friend, a person I know well and whose talents I appreciated when he did work for VIA Rail Canada. If you look at the image the business projected in 1993-1994 and the one it projects today, you'll see there's been an enormous change. Mr. Lafleur contributed a great deal to that.

[English]

Mr. Jason Kenney: Since 1993 Lafleur Communications has been the agency of record for VIA Rail. Is that correct?

Mr. Marc LeFrançois: In 1993-94.

Mr. Jason Kenney: Has it been the only ad agency that VIA Rail has used in that period?

Mr. Marc LeFrançois: Yes, it was in the past, but it is not any more. Mr. Lafleur I believe sold his company in 2002 or 2001, and VIA Rail went to it for a proposal in 2003. The whole system has now changed.

The Chair: Okay. Thank you very much, Mr. Kenney.

Mr. Mills, please, eight minutes.

Mr. Dennis Mills: Thank you very much, Mr. Chair.

Mr. Chair, I want to begin again by quoting you. We are a committee of accountability--

The Chair: That's correct.

Mr. Dennis Mills: --and we are a committee that has a responsibility to verify where the taxpayer received value for their money and where they didn't.

The Chair: I don't think you can quote me on that one. I didn't say we had to verify where the taxpayers' money went.

Mr. Dennis Mills: Well, that's my understanding of what the public accounts committee is all about, so if that's a bit of a mischaracterization, then I accept that.

First of all, Mr. LeFrançois, I want to say that Easter week last year I had the great experience of spending a week with my wife on the Canadian, going from Toronto to Prince Rupert, and your team and your people did a fantastic job. I much prefer where I was last year this week to where I am this Easter week.

Second, I also want to acknowledge your marketing team in Toronto, because we have a function in my riding on the Danforth called “Taste of the Danforth”. We have over a million people from all over the world, not just North America, who come to that event every summer. VIA Rail was a $40,000 sponsor of that event, and my constituents, my community, appreciated that support by your marketing team in Toronto.

I also have to mention--and I'd be remiss if I didn't say this--and acknowledge the work your team accomplished on very short notice in getting the Rolling Stones and all the other artists from downtown Toronto to Downsview Park last summer when it was the only way we could get them there. Again, that was another example of what I thought was great marketing support for a national cause.

This leads me to my question on impact studies. My experience with firms--where they do sponsorship, where they put their logo, where they do contra advertising--is that there's a system of evaluating whether or not that brings value for the corporation's balance sheet. Did your marketing team have a formula for measuring value taxpayers would receive when you got involved in marketing projects and special events or, for that matter, when you spent advertising dollars?

[Translation]

Mr. Marc LeFrançois: Mr. Mills, I hope some VIA Rail people heard your kind words about their professionalism. They'll be pleased to hear them. Personally, I'm happy because I spent many years at the company and, as I said in my introduction, I'm attached to it. They are competent, honest and serious-minded people.

My answer to your question is yes. If you look at the documents I've provided in my affidavit, you'll see that, for each sponsorship, there was a feasibility pre-assessment, follow-up to the activity and an evaluation after the activity. In the case of the Sponsorship Program which you have to examine, if I may, I invite you to attend a private meeting in which it is explained to you what a sponsorship is as opposed to a subsidy. If the idea is simply to send a cheque so that VIA's name is placed somewhere, we don't do those kinds of sponsorships at VIA. I don't think that's what the VIA Rail people are looking for. At least that wasn't the case when I was there.

For a sponsorship to be truly valid from a marketing standpoint, considerable effort has to be made to achieve maximum visibility. You have to combine the strength of our people, who are there and who ensure that visibility is achieved, with the producer of the event in question.

That's what we had to do in the case you refer to. You must have seen VIA Rail employees taking part in the event, ensuring that people were there and ensuring that the advertising was fully and completely done so that the money invested generated returns to the business which moreover is the sole purpose of sponsorships.

À (1030)

[English]

Mr. Dennis Mills: Thank you very much, Mr. LeFrançois.

How much more time do I have?

The Chair: You have two and a half minutes.

Mr. Dennis Mills: Thank you, Mr. Chair. Over the last two months, you've sensitized me to being very strict with time.

I think Mr. LeFrançois is making a very important point for all of us as committee members. I think it's important that when we're doing an evaluation, we also get the impact of some of these sponsorships. A lot of these events, colleagues, have actually brought economic benefit. In other words, it's not just trading dollars. In many cases, there has been a positive economic return. I quote a journalist in the National Post this morning who said that $100 million was syphoned off to Quebec ad agencies. We know the facts are that of the $100 million, it was only $60 million. But that's a separate point. The point is that there is real value for many of these events, and when we are getting the information and getting to the bottom of verifying whether or not there was value for taxpayers, we have to bring into account the positive side of some of these events. It may be that many of them didn't bring us any value as suggested, but we also have to look at the whole picture.

Thank you very much.

The Chair: Thank you, Mr. Mills.

I think some of your comments are directed toward me and the committee as well as to our witness.

We do respect very much the staff of VIA Rail. I travelled to Montreal from Ottawa. The lady who was the conductor on the train checked everybody's name as they got on the train, and throughout the entire journey she addressed everybody by their name. The service was truly first-class. Therefore, I would like to go on the record on behalf of the committee as saying that this investigation isn't about the staff of VIA Rail who were providing the service to Canadians, and they do that very well. We're talking here about issues raised by the Auditor General with regard to the management of some contracts that is questionable, and that is why we have this investigation. We are not in any way, shape, or form attacking the very competent and great staff of VIA Rail.

Monsieur Laframboise, for eight minutes.

[Translation]

Mr. Mario Laframboise: Thank you very much, Mr. Chair.

You told us that you had first refused to invest in the matter regarding Essential Information and Robert Guy Scully. Subsequently, after the phone call from Mr. Guité, you agreed to approve the file. You said that you had spoken to Mr. Guité in November 1998. How much money did he promise you for that?

À (1035)

Mr. Marc LeFrançois: It was $750,000. The verbal agreement reached was this: “If you handle this file, I'll take a $750,000 share, and you'll take $250,000.” You must clearly understand the reason why I refused. Ultimately, I didn't refuse. I refused to forward to the advertising or marketing department a project that would have significantly eaten into its budget. I simply told Mr. Scully that it was an excellent project, but that it would be too costly and that our budgets were already established.

Mr. Mario Laframboise: That's fine, but you say he talked to you about $750,000. However, in 1999, you entered the amount of $910,000 as receivable “from the federal government” because it ultimately cost more than anticipated. Why did you ask your department to enter the full $910,000? Had there been any other negotiations according to which the government was to pay you the difference between the amounts?

Mr. Marc LeFrançois: No, but there you're raising the disadvantages there may be when you don't have a very clear written contract. I was only the chairman of the board, and the financial statements and all that were controlled by the president and chief executive officer. The real point is that there was supposed to be a $1 million sponsorship. That's what Robert Guy Scully requested. Mr. Guité phoned me to tell me that he would pay $750,000, and when we negotiated with Mr. Scully later on, we negotiated $910,000 instead of $1 million. That's why VIA Rail's contribution to the project was $160,000 and that of the Government of Canada, Public Works, was $750,000.

Mr. Mario Laframboise: Nevertheless, it was entered in the financial statements that $910,000 was receivable from the federal government. I can understand why the Auditor General finds that this procedure may not be consistent with generally accepted accounting principles. One can see that.

Mr. Marc LeFrançois: You're right: it was written that expenses of $910,000 had been paid in advance. However, it was written in the footnote to the financial statements that an amount of $910,000 was receivable from an agency of the Government of Canada, whereas the figure should have been $750,000. That was an error of interpretation made when the information was exchanged.

Mr. Mario Laframboise: I find the Auditor General is right on this point. The fact remains that the amounts were paid to Mr. Scully's company before you had the money. A little earlier, you told me that you didn't need to consult the board of directors. Is it common not to need to consult the board of directors to authorize an expenditure when the money hasn't come in?

Mr. Marc LeFrançois: No, pardon me. The money for 1999 was in fact there. The budgets had been duly approved by the board of directors. We had the money. I didn't need to wait to receive the cheque from Public Works Canada. We didn't need cash. The decision to proceed was made by the marketing department. If you read my affidavit carefully, you'll see that I had sought assurances from the vice-president of marketing that, in the event the $750,000 was not reimbursed to us by the Government of Canada, she nevertheless wanted to proceed with the transaction. I've written in a sworn document what she told me. So the marketing department decided to go ahead with the project, and we had the necessary money.

Mr. Mario Laframboise: So you needed their authorization to commit funds that you didn't yet to have. They gave you their consent.

However, the Auditor General's report states, again at page 13:

VIA Rail was unable to provide us with a business case or any other analysis...

You told us a little earlier that, when VIA Rail commits funds, a business case is necessary. However, in this case, the marketing department approved the project without doing a business case. Is that what you're telling us?

À (1040)

Mr. Marc LeFrançois: No, that's not at all what I said, far from it. The market department is more responsible than that. Moreover, VIA Rail's report card is public and is published every year. You need only consult it.

With regard to VIA Rail's marketing department, a clear distinction must be drawn between an accountant's work and that of a business executive. The Auditor General said that she had been unable to find piles of documents in the filing cabinets for a single project, and she concluded from that that we didn't have those documents. No, we didn't have them. We're talking about a five-year-old file.

However, I can tell you that I consulted my agendas. In 1998 and 1999, there were nine meetings with Mr. Scully. I can't tell you whether each of those meetings focused specifically on the Maurice Richard Series project, but there were nine meetings. I can also tell you that the marketing department people met Mr. Scully on numerous occasions and analyzed the file. We're talking here about a media event and an assessment of the number of television hours. Do you need piles of files to evaluate that? I imagine so when it comes to people who don't have the necessary experience and qualifications, but I don't think that people who have the qualifications, like our people at VIA Rail, need that.

Mr. Mario Laframboise: Mr. LeFrançois, you'll understand, on the one hand, that, when the Auditor General tells us that VIA Rail was unable to submit a business case to her, I have to believe her. It's all well and good to talk to me about the experience of the people who work for you, but there was no analysis, there was none. That means that senior management decided to go ahead in this file without a business case. I'm not telling you that the result wasn't achieved. I'm simply telling you that the rules you had established were not followed. It's the Auditor General who says so, and you've said nothing today that reassures me on this point.

Mr. Marc LeFrançois: I'm not here to reassure you, Mr. Laframboise. I'm here to answer your questions to the best of my knowledge. If my answers don't satisfy you... Documents are here. I submit to you what happened. If that doesn't reassure you, it will be the same thing for a number of files, and for any business. Businesses that spend their time working up files to back the decisions they make are headed I don't know where.

VIA Rail is a commercial business. Its role is an operational one. Our report card proves that our people are competent. Our people have saved taxpayers hundreds of millions of dollars every year. They've improved the company's service to an outstanding degree. The people who work in this business are proud and dedicated people who work with passion. They can read this kind of document.

What the Auditor General says is true. They were unable to find the file. That doesn't trouble me that much. She's right.

Mr. Mario Laframboise: It's not that they didn't find it. They said they were unable to provide it.

The Chair: Thank you very much, Mr. Laframboise.

[English]

You've gone a little over time there.

[Translation]

Mr. Thibault, please. You have eight minutes.

[English]

Hon. Robert Thibault (West Nova, Lib.): Merci, Monsieur le Président.

The chairman made a statement a few minutes ago. I don't argue with the statement; I'd just say we have different ways of expressing, perhaps, the same thing as to what our role is. I don't view my role as necessarily discovering who broke the rules in the manner of assessing guilt. The courts will do that. The public inquiry, the judicial inquiry, will do some of that. The RCMP will do that.

What I'm interested in is what happened, what were the conditions that created this--the “who did it” in those terms--and how do we prevent this from happening in the future?

[Translation]

Mr. LeFrançois, you weren't in the government, but you ultimately played a certain role in this matter. We find your name and that of your agency in the Auditor General's report.

I've read the report and listened to your testimony and your answers to the questions by committee members this morning. In the Acadian region of Baie-Sainte-Marie, there is an expression we often use: beware of the rat.

It seems to me that if the government had seen that everything was fine and in order and if it had wanted to fund this sponsorship project through the Department of Public Works, it would have done so. However, according to your testimony, the government suddenly asked an individual, or company, to make a presentation to you to see whether your agency would be a sponsor. You said that it was too costly for a single project. The answer was therefore no.

I assume it subsequently called back a representative of the Department of Public Works, who said that, no, it was no go, and that there was too much money. According to your testimony, you then received a phone call from Mr. Guité, who informed you that they had the money. VIA Rail thus ultimately paid $160,000. It can be said that it paid Lafleur Communications the $112,000 commission and a few dollars more, approximately $40,000.

Didn't you feel any concern when matters went that way? Didn't you wonder why the Department of Public Works wasn't sponsoring the project and wasn't sponsoring it directly?

À (1045)

Mr. Marc LeFrançois: Mr. Thibault, first, I can tell you that VIA Rail never paid the slightest commission to any agency whatever in any of these files.

Second, I want to point out that the VIA Rail people never saw or knew that there was a contract between the Government of Canada and the advertising agency in question. I have submitted documents dating back a few years to you. At my request, they were sent to me because I wanted to know what had happened in this file. In a 2002 document which is included in your documents, the vice-president of marketing explained to me what work had been done by the advertising agency and specified—and she had checked—that we had never paid a cent for that.

For that reason, I say that the Auditor General's report must be read on the basis of the way in which she conducted her investigation. As she has said on a number of occasions, she excluded the contractors because she had not seen them. Consequently, she was unable to see the other side of the story. In addition, she had enormous trouble finding information. She found nothing that had been approved by Parliament. That's what I read in the report.

Then they went there and found that a lot of supporting documents were missing, and she made a report to that effect. She asks a lot more questions than she makes statements. The Auditor General never said, in any case or in any way, that Marc LeFrançois had committed fraud or falsified documents, as I heard a Bloc québécois member—not you, Mr. Laframboise—say on the LCN network.

I had lost my last relative that day. I remember spending the entire weekend crying. I couldn't believe that elected people, who represent our people, could say such things when that wasn't at all what had been written in the Auditor General's report. That's why I was quite abrupt this morning about the Auditor General's report. I wanted to wake people up and tell them to stop tarnishing reputations. They shouldn't do it.

If people have made mistakes, I believe we all agree they should be punished. If some have stolen, the RCMP can investigate. That's moreover what it is currently doing. In addition, there's your committee, which, I must say, is providing considerable clarification. There are often meetings that I “zap”, but others I find very interesting. I've learned a lot of things about the Sponsorship Program. This has been very positive with regard to other VIA Rail activities at the time I was there.

I hope I haven't used up your time.

Hon. Robert Thibault: It's mine, but your answer was relevant.

I must now ask you another question, Mr. LeFrançois.

You said that VIA Rail used written contracts, that it nevertheless acknowledged the legality of verbal contracts, even though they are not the norm, and that that rule had been violated within VIA Rail. You also said in your testimony that verbal contracts were legitimate between people who respect each other.

I assume that the people who respect each other in this case were Mr. Guité and yourself.

À (1050)

Mr. Marc LeFrançois: Absolutely.

Hon. Robert Thibault: Did you have any contact with Mr. Gagliano with regard to the sponsorships of this project?

Mr. Marc LeFrançois: Only once, and that was in early 2000. He phoned me to ask me whether it was true that he owed us $750,000. I answered that it was, and he asked me to explain why, which I did. He then told me that my explanation coincided exactly with the version of the facts his officials had given him. Thus the promise was made and kept: I received my cheque, as agreed, on March 30, 2000.

Hon. Robert Thibault: Did Mr. Gagliano make any comments to encourage you to take part in the program?

Mr. Marc LeFrançois: No, not in the least.

Hon. Robert Thibault: Thank you, Mr. Chair.

The Chair: Thank you very much, Mr. Thibault.

[English]

We're going to have a five-minute health break at this time. The meeting is suspended for five minutes.

Á (1100)

The Chair: Let's get started. We have enough people at the table. We're now back in session.

We're now on round three, so it's four minutes.

Mr. Kenney, you have four minutes.

Mr. Dennis Mills: I have a point of clarification.

The Chair: Mr. Mills, on a point of clarification.

Mr. Dennis Mills: When these documents come to us from witnesses or government members, do we make sure the media get copies of them as well? There's been so much inaccurate reporting on some of this stuff over the last few weeks, I'm just wondering if we're making sure the documents are distributed to everyone.

The Chair: A daily package is prepared for the media on everything that is tabled here, and of course the testimony is here--

Mr. Dennis Mills: So Mr. LeFrançois' testimony is made public for the media?

The Chair: Well, as I mentioned this morning, we didn't get enough packages for everybody. We started this morning to make a number of copies--20 or 30--one for every member of the committee and some for the press gallery as well, so that the documentation gets into the public domain as quickly as it possibly can.

Mr. Dennis Mills: Okay, great. Thank you. I appreciate that.

The Chair: Mr. Kenney, please, four minutes.

Mr. Jason Kenney: Mr. LeFrançois, I want to come back to your relationship, both professional and personal, with Jean Lafleur of Lafleur Communications. Just to recap, I understand that Lafleur Communications was the agency of record for VIA Rail from 1993 to 2000.

Mr. Marc LeFrançois: Yes.

Mr. Jason Kenney: And you've also described him as a “good friend”?

Mr. Marc LeFrançois: Yes.

Mr. Jason Kenney: And you travelled to Italy with him.

I want to pursue this again, because you explained why you were there, but I don't understand why your agent of record was on that trip. You've described him as a good friend. He was obviously working closely with you, yet you have no idea why he was on that trip. Quite frankly, that's not credible.

Would you care to at least speculate on why he was on this trip?

Mr. Marc LeFrançois: Even if it's not credible--it might not be credible for you--I'm just telling you what I know. I'm telling you what I believe. I never invited Mr. Lafleur to come on that trip, so you will have to ask Mr. Lafleur who invited him to go.

Mr. Jason Kenney: You have no idea? How many people were on this trip to Italy--you, Alfonso Gagliano, Mr. Lafleur...?

Mr. Marc LeFrançois: First of all, my schedule was too tight. I made only part of the trip, so I arrived later and I paid for my expenses.

Mr. Jason Kenney: You paid for your expenses?

Mr. Marc LeFrançois: Yes.

Mr. Jason Kenney: Did you stay at a property owned by Mr. Lafleur?

Mr. Marc LeFrançois: No.

Mr. Jason Kenney: You didn't.

Did you travel to Paris at all with Mr. Lafleur?

Á (1105)

Mr. Marc LeFrançois: It is possible.

Mr. Jason Kenney: It's possible.

You recall having gone to London and to Italy with him, but you don't recall for sure whether you went to France with him?

Mr. Marc LeFrançois: To be honest with you, no. I'm sorry, but I don't remember.

Mr. Jason Kenney: I see.

Mr. Marc LeFrançois: I would have answered no, but I don't want to make any mistakes.

Mr. Jason Kenney: Did VIA Rail pay for any of Mr. Lafleur's expenses on any of these trips?

Mr. Marc LeFrançois: I can assure you, never.

Mr. Jason Kenney: All right.

Did you attend a lunch at Mr. Lafleur's home at Saint-Adolphe d'Howard following the Liberal congress in November 1999?

Mr. Marc LeFrançois: Yes.

As Mr. Pelletier said, it's funny that people are interested in my private life like this, but if you are, I'll give you an explanation that is contrary to what I read in the press.

First of all, all my relatives, all my friends, know that I don't drink wine. I drink diet Pepsi--

Mr. Jason Kenney: Well, I can understand, sir, why you would want to say that, given that champagne cristal Louis Roederer and La Fleur-Pétrus premier grand cru were served at that event, both of which are wines in the range of $5,000 a bottle.

Was that lunch also attended by André Ouellet, Jean Lapierre, Jean Carle, and Martin Cauchon?

Mr. Marc LeFrançois: I believe so, yes.

Mr. Jason Kenney: That was following the Liberal congress. Did you attend that Liberal congress?

Mr. Marc LeFrançois: No. During the Liberal congress.... I do remember that Mr. Chrétien was making his speech that Sunday, and I believe he made the invitations to those people based on that activity.

Mr. Jason Kenney: This lunch happened on November 28, 1999, and a few days later, according to the Auditor General, the sponsorship branch entered into the contract with Lafleur Communications for $862,000 in which it received a 15% commission of $112,000 for adding the value of a 49¢ postage stamp.

Did you have any communication with people at the CCSB about this $112,000 commission for 49¢ in added value?

Mr. Marc LeFrançois: Not at all.

The Chair: Thank you, Mr. Kenney.

Mr. LeBlanc, quatre minutes.

Mr. Dominic LeBlanc (Beauséjour—Petitcodiac, Lib.): Thank you, Mr. Chairman.

Thank you, Mr. LeFrançois, for your testimony today.

I'd like to follow up on a line of questioning that my colleague Mr. Mills asked, principally with respect to value for money for the Canadian taxpayer. One of the things that I think this committee can contribute to this discussion, to this issue, is an analysis of the money that was spent—it was taxpayers' money in the context of sponsorship—and what value was brought to Canada and to Canadians for those expenditures.

Could you enlighten us on some of the discussions that you, as senior management at VIA, or perhaps your board at the time, would have had around the decision to contribute money to, for example, the Maurice Richard series, or VIA magazine, or other sponsorship activities that VIA was undertaking?

Do you believe that the taxpayers got value for the money that was spent by VIA and by the sponsorship program in those particular activities?

Mr. Marc LeFrançois: Absolutely. The taxpayers, including myself, by the way, got real value for money. When I was in VIA Rail Canada, I don't remember having seen one sponsorship that was not adding value to the corporation.

It's very well known that VIA Rail is always dragging for money to improve its services, to buy new equipment that will have to come. I do believe, personally, that the corporation needs money.

I don't see, and I've never seen, within the corporation, managers investing money in sponsorship without making sure that they will have a good return.

Mr. Dominic LeBlanc: Do you believe, in the case of the two particular projects that are being questioned,

[Translation]

that the Government of Canada received value for its investment in those sponsorships?

Á (1110)

Mr. Marc LeFrançois: Absolutely. In the Nielson report of which I believe I made copies, it's estimated that VIA Rail received more than $4 million for the investment it made. VIA Rail invested $160,000, and you have to add to that the $750,000 from the Government of Canada. VIA Rail is a corporation wholly owned by the government, thus a corporation that belongs to us all, even though it is administered differently. I read somewhere, but I'm not a marketing specialist, that the return was more than $4 million. That report is public.

Mr. Dominic LeBlanc: Who prepared that report, Mr. LeFrançois? The Nielson group?

Mr. Marc LeFrançois: The Nielson group.

Mr. Dominic LeBlanc: Are they specialists in this kind of evaluation?

Mr. Marc LeFrançois: That's all they do. They really are specialists.

Mr. Dominic LeBlanc: So, according to Nielson, as a result of an investment of less than $1 million, Canadian taxpayers received value nearly four times the invested amount?

Mr. Marc LeFrançois: Absolutely. I have the report here. I can't read that. What does it mean? The media people know it. Here it states: “Impression spectators, total: more than 70 million; impression spectators, extent: nearly 100 million.” I'm not talking about dollars, or at least, I don't think so. “Impression show, density: more than 45 million.” Internal people told me it was evaluated at more than $4 million.

Mr. Dominic LeBlanc: Thank you very much.

The Chair: Thank you very much, Mr. LeBlanc.

[English]

Mr. Jordan, please, four minutes.

Hon. Joe Jordan (Leeds—Grenville, Lib.): Thank you, Mr. Chair.

Mr. LeFrançois, you testified that VIA Rail, I believe you said, did not pay any commissions on those files in question. Is that correct?

Mr. Marc LeFrançois: I did, yes.

Hon. Joe Jordan: In 2000, based on an arrangement with Communications Coordination Services Branch, as it pertained to the magazine, according to the Auditor General, there was around $205,000 that was still owed to VIA from CCSB. You were instructed to get that money from Lafleur Communications, which in itself, to me, seems a little strange, but they also took a commission off the top. If you didn't pay that commission, who did? They ended up getting over $30,000 to pass that money from CCSB to VIA Rail.

Mr. Marc LeFrançois: It is well written in the affidavit of Mrs. Sirsly on the VIA magazine. In item 6, you have the letter that was sent to Mrs. Sirsly from Pierre Tremblay, so I believe this has been fed directly by Public Works.

Hon. Joe Jordan: My question is this. In the record keeping at VIA, you were owed $205,000, you got $174,246. How did your accountant reconcile that $30,754? Was that written off?

Mr. Marc LeFrançois: No. If you read carefully what has been written by Public Works and Government Services,

[Translation]

you'll see that it states:

Please note that the financial contribution of the Government of Canada in this matter is as follows:

We're talking about $174,246 to VIA Rail and $30,754 to the agencies.

[English]

The Chair: Monsieur LeFrançois, could you tell us exactly where you were quoting from there?

Mr. Marc LeFrançois: From the VIA magazine affidavit.

The Chair: The VIA magazine affidavit, yes.

Mr. Marc LeFrançois: Item 6.

The Chair: Tab 6, okay.

Hon. Joe Jordan: What you're saying is—and I think we're talking about semantics here—when figures were listed, they were grossed up to incorporate commissions in them.

Mr. Marc LeFrançois: Excuse me, I don't understand your question.

Hon. Joe Jordan: The numbers that are being discussed in terms of the magazine—the $500,000 a year from VIA, the $500,000 a year from CCSB—you're telling me that those numbers were grossed up to include the commissions that were going to be paid. Therefore, it wasn't a direct payment from VIA. It was assumed that there were going to be commissions taken off that.

Á (1115)

Mr. Marc LeFrançois: No. I do believe that in the magazine there were no commissions being paid. As far as VIA Rail is concerned, what we did is we bought advertising in that magazine for $500,000 per year. If you look at the report of the Auditor General—what does she say in there—that satellite publishing is receiving.... The deal was, and I found that out from the committee here, that

[Translation]

Cabinet decided to invest $500,000 a year in VIA Magazine to buy advertising. I can tell you that there was Health Canada and Attractions Canada advertising in the monthly magazines that were produced. The government made a commitment to pay an amount, not to us, but to the business that published the magazine. With that amount, it bought advertising, and, according to the information I have, it paid the same price as anyone else.

[English]

Hon. Joe Jordan: Yes, I'm sensitive to that. Certainly the appearance of how this money is moving around from one department to another, even though there are transfer guidelines at Treasury Board that should have been followed, seems to flag to me that this is not a random sequence of events.

I'm going to put my name back on the list, but I just want to add one more thing. The last statements I have from VIA—1999—suggest to me that the Canadian taxpayer is contributing about half a million dollars a day for this corporation. I'm just wondering why you're involved in these activities. They may be legitimate and they may be giving the Government of Canada value. I don't know whether they're giving VIA value if you look at the contributions from the tax treasury. Why aren't we focusing on trying to reduce the amount of taxpayers' money that goes into the corporation—in a sense, run the railroad, not engage in these other activities, even though they may be very valuable activities for the Government of Canada?

The Chair: Mr. LeFrançois.

Mr. Marc LeFrançois: You're asking a good question.

[Translation]

If we simply run the railroad, as I saw a number of years ago, the subsidy... I don't need to go back a few centuries. Roughly 15 years ago, taxpayers were paying $1 billion a year to run the railroad, as you say, but no one knew that the trains were running. If we did what you say, I don't know how many passengers there would be on the trains. It's a commercial product, a service that has to be sold, and people who take the train do it because they're aware of the train. From what I saw of its operations, VIA Rail transports an enormous number of tourists, Europeans, Japanese and Americans, across our country. VIA Rail provides travellers with an important service. If the business doesn't make its products known, there won't be anybody on the trains.

The Chair: Thank you very much.

[English]

Mr. Toews, please. Four minutes.

Mr. Vic Toews: Thank you.

I also want to focus on this issue of value for money. There is something that has troubled me as a result of your testimony here today. This, in my opinion, goes much beyond the channeling of money through opaque means. I think we can all admit that a lot of these transactions weren't particularly transparent. Let's say there are opaque means, but it's much more than simply the $100 million going to various agencies.

What I'm concerned about is why crown corporations are involved in what appear to me to be political matters rather than the strict business matters they were originally set up to accomplish. You indicated earlier in your testimony that the government chooses the crowns, and I think that was in respect of a specific sponsorship program, the Maurice Richard series, I think it was, in that context, but whatever.

My concern is that if the independence of these crown corporations seems to be breaking down because we're using them for political purposes, what is your responsibility as a chair or CEO of the corporation to say you think this is outside of your mandate? You've indicated that perhaps you've begrudgingly taken the responsibility because the government has chosen you for that purpose.

Can you talk a little bit about that relationship and this concern I have that maybe the crowns aren't being used for the purposes they should have been used for, and it's gotten you into a bit of a jackpot?

A voice: Jackpot?

Á (1120)

Mr. Vic Toews: A tight spot. I'm not suggesting that anyone hit the jackpot here.

Mr. Marc LeFrançois: What I have to say on this....

[Translation]

During the period when I was there, VIA Rail of course made political decisions, such as the decision to offer train service in the Gaspé Peninsula, for example. That's a political decision, and that's normal. It was a service that the government decided to offer the people of Gaspé. There's also train service to Prince Rupert. It's all a political decision. Here you have to watch how you define politics. Listening to the proceedings of your committee, I wondered what a minister's role was. If he gets involved, it's an intervention, and if he doesn't get involved, he's not doing his work. Thank God I'm not a minister.

VIA Rail is an institution that belongs to us all and that is conducted by the government. VIA Rail performs the mandate that the government decides to give it. We have never viewed that as political intervention, but as a way for VIA Rail to achieve greater visibility, to make its products better known and, consequently, to transport more people on our trains and to reduce the operating subsidy that the government has to give VIA Rail.

[English]

Mr. Vic Toews: But are you saying that all of the transactions that you were asked to conduct on behalf of the Government of Canada were legitimately within the scope of the business operations of VIA?

Mr. Marc LeFrançois: Absolutely. That's a good question. Let me give you an example. I have seen, in the release of the cabinet meetings--

Mr. Vic Toews: I want to hear from that, but if they're all legitimately within the scope of VIA, why did we go through all these machinations in terms of getting the money to you? Why wasn't it just done directly, if you could do that together? If it's legitimate, why the opaque methods?

Mr. Marc LeFrançois: I cannot answer that question because the decisions are not being made by me and I don't have the right to make those decisions.

[Translation]

You are elected representatives, and you represent us. You all know that, in 2002, the government decided to stop doing business with agencies. Everyone knows that. When it terminated the Sponsorship Program in December 2003, did you ask how many public servants were working on the communications and sponsorships files?

I remember that, on December 12 or 13, I was seated beside the deputy minister of communications. He told me that some way had to be found to lay off or transfer 1,000 civil servants. That immediately set a bell ringing in my mind. One thousand civil servants represents $170 million a year. So I said to myself: Wow! I'm simply trying to be rational. I don't know what they were doing in addition to sponsorships, but a sponsorship program was terminated and they were forced to transfer 1,000 civil servants. That's what I heard from the deputy minister.

Á (1125)

[English]

The Chair: Thank you very much, Mr. Toews.

I just want one clarification on your testimony, Mr. LeFrançois. When you're talking about political decisions and the government wanting rail in Gaspé, I presume they always communicated those decisions to you in writing. Always?

Mr. Marc LeFrançois: Normally, yes, but—

The Chair: Normally?

Mr. Marc LeFrançois: Yes, but the government has not decided to add too many things to their services in rail transportation; there have been many years in which the government did not implement new services.

The Chair: No, my point was that if the government decided to have some political participation in the decisions, saying they want to have service in the Gaspé, to use your example, they would communicate those decisions in writing to you, as the CEO of VIA Rail: We as the government have decided that you as a crown corporation will provide this service, or discontinue this service, or expand this service, or whatever they decided. Would it would always be in writing? Always in writing?

[Translation]

Mr. Marc LeFrançois: Absolutely. It has to be approved by the Department of Finance and the Treasury Board. There's an entire process that has to be followed, as there is for the votes associated with it.

[English]

The Chair: Thank you very much.

[Translation]

Mr. Proulx, you have four minutes.

Mr. Marcel Proulx (Hull—Aylmer): Hello, Mr. LeFrançois. Welcome to the committee. I would like to join with the committee Chair in congratulating VIA Rail employees because we always receive excellent service. I'm going to ask you my questions quickly because four minutes passe quickly.

Mr. LeFrançois, I read your affidavit on the Maurice Richard Series. I would like to ask you a few questions. If I correctly understood, you were approached by Mr. Scully. You felt you didn't have enough money at that time. However, when you spoke to Mr. Guité and he said he would pay $750,000 of the total bill, things began to look a lot better. Your marketing director suggested that you seize the opportunity.

I would like to know whether you wondered at the time whether Mr. Guité was doing you a favour by absorbing $750,000, or whether you were doing him a favour by agreeing to be the vehicle. You agreed to pay $750,000, which came from him, plus $160,000 from VIA, to secure a commission of approximately $112,500 for a communications company. Did you ask Mr. Guité why he was asking you to finance that, whereas he theoretically could have done it directly?

Mr. Marc LeFrançois: First, I firmly believe it was a favour done for all Canadians.

Mr. Marcel Proulx: With Canadians' money!

Mr. Marc LeFrançois: It was done with Canadians' money, but everything is done with Canadians' money. If there isn't any money from Canadians, there are no Canadians.

Mr. Marcel Proulx: The money switches from the left pocket to the right. No favours are being done.

Mr. Marc LeFrançois: Yes, but that's life. It's you who were talking about favours.

We saw that as a way of having a stronger public presence.

^ç	In your affidavit, you say, at point 11:

A few days later, I asked the vice-president, marketing if the project would still be a good deal even if VIA was not reimbursed.

Did you doubt that Mr. Guité would pay you the $750,000?

Mr. Marc LeFrançois: I wouldn't say I doubted it. I would say it's...

Mr. Marcel Proulx: You wanted to be prudent.

Mr. Marc LeFrançois: That's the normal way to manage any business. You assess its risks and make sure you consider the risks that may arise when decisions are made.

Mr. Marcel Proulx: Mr. LeFrançois, I find it hard to understand, not to say believe, how, in a business as enormous as VIA, the $910,000 was transferred to accounts receivable under the heading “Unbilled Revenue”, whereas you were expecting $750,000 to be reimbursed by Mr. Guité.

Obviously there was no contract. I see no reference to a letter or written commitment, and you confirmed that fact. Did you speak to someone at VIA about the fact that Mr. Guité would transfer $750,000 to you?

Mr. Marc LeFrançois: I was raised in a family of entrepreneurs, who all had family businesses. So there's nothing hidden in my management style. Everyone was obviously aware of that. You have a copy of the written papers, the documents.

Á (1130)

Mr. Marcel Proulx: Then how is it...?

[English]

The Chair: On a point of order, Mr. Kenney, please.

Mr. Jason Kenney: I hope Monsieur Proulx will receive this as a helpful point of order, but he's referring to Mr. Guité giving this money or this promise. In fact, he had left the CCSB at that point, so it would be Mr. Tremblay who was running the program at the time.

Mr. Marcel Proulx: No. It's my time, but with respect to the point of order, Mr. LeFrançois says in paragraph 6 of his affidavit on the Maurice Richard series that he had a phone conversation with Mr. Guité. Is that not so?

Mr. Jason Kenney: It started with Guité and ended with Tremblay.

Mr. Marcel Proulx: Yes, so I'm talking about the time when he was dealing with Mr. Guité.

Mr. Jason Kenney: That's just for clarity.

Mr. Marcel Proulx: Thank you. I appreciate your--

The Chair: We will start the clock now, but your time is almost up, Mr. Proulx.

[Translation]

Mr. Marcel Proulx: It was said that the full amount had been stated under the accounts receivable heading. And it was you--and I acknowledge that it's so much the better for you--who had to realize, as you explain in paragraph 23, that the amount receivable should be limited to $750,000.

How is it that your chartered accountants and your entire administration section, since you had informed others that there would be a reimbursement of $750,000, not $910,000, made the mistake of entering the full amount of $910,000? I find that hard to understand, Mr. LeFrançois.

[English]

The Chair: Mr. LeFrançois.

[Translation]

Mr. Marcel Proulx: Can you explain that to me, please?

Mr. Marc LeFrançois: Yes, with pleasure. First it was an error of communication of no importance. That we had $750,000 in accounts receivable from the Government of Canada and $160,000 in services receivable or prepaid expenses... In fact, you have to see when the services were delivered.

That changes nothing on the balance sheet. It's simply an error of communication. If you look at VIA Rail's balance sheets, you'll see hundreds of millions of dollars reported each year.

[English]

The Chair: We will have to leave it at that.

Mr. Marcel Proulx: Am I out of time, Mr. Chair?

The Chair: Well, I would like to get this cleared up myself.

Please explain how this is just a little bit of miscommunication, Mr. LeFrançois.

Let me just give you the question I have in my mind at the moment. You receive a telephone call from Mr. Guité, and he says, “Mr. LeFrançois, can you write a cheque for $910,000”--or whatever it is? And when you went down to the accounting department and said you wanted a cheque for $910,000, did they say, “Is there a contract? Which contract do I apply this to?” What was the conversation between you and your accounting department to get them to write a cheque? What did you tell them? What did they charge this to?

This is so we can get this miscommunication cleared up.

[Translation]

Mr. Marc LeFrançois: First, I had no communication with the accounting department. At that time, I was chairman of the board, and, as I remember, I never communicated with accounting.

[English]

The Chair: So what caused them to write this cheque?

[Translation]

Mr. Marc LeFrançois: Simply, in reading the documentation, I remember very clearly that someone from the marketing department had asked me whether we were going to be reimbursed in full by the Government of Canada. My answer was yes, but I didn't refer to a cheque.

[English]

The Chair: No, you're missing my point. You received a call from Mr. Guité to write the cheque.

Mr. Marc LeFrançois: No.

The Chair: No?

Mr. Marc LeFrançois: No. I received a call from Mr. Guité explaining to me that this was an excellent deal for VIA Rail, and he said we should participate. When I explained to Mr. Guité why I didn't want to transmit the file to the marketing department, he said, “If you go ahead, I will participate for $750,000”. Then I transferred the file to Ms. Christena Keon Sirsly in the marketing department. They met with Robert Guy Scully, they made the analysis, and they made the recommendation that we should go ahead.

The Chair: Where is all this documentation?

Mr. Marc LeFrançois: There was no documentation. That's the problem.

The Chair: They made all the analyses. You had the discussion. You gave the file to the marketing department, but there was no paper in the file. The decision was made.

Á (1135)

Mr. Marc LeFrançois: Yes, she was with me, with her team, when we discussed the participation of the Government of Canada for 75% or $750,000.

The Chair: You had the discussion with the marketing department. There's no paper created and you all make the decision this is a good idea. How was the decision communicated to the accounting department that they would write this cheque with no paperwork? Is that the normal thing for the executive officers to say--do what you're told, no paper? Is that a normal transaction?

Mr. Marc LeFrançois: No. I'm not an accountant. As I said, I never had direct communication with them, but based on the papers I have seen, there were some papers that had been sent to the accounting department and to the external auditor. This is where the misunderstanding came about: when I saw it was $910,000, I said no, the government would reimburse only $750,000. But at the end of the day, when you look at the financial statements, this is not material.

The Chair: I'm trying to understand the paper trail or lack thereof. How did the decision-making go from your office, down through the marketing department, down to the accounting department, and the information has all taken place with no paper trail? Did nobody say that this isn't how we do business? Did nobody say that?

Mr. Marc LeFrançois: I cannot answer that question. I was not the CEO. I take full responsibility for what happened, but I cannot give you that answer, because if we had discovered that there was no contract at that time.... Normally, a contract is negotiated, is signed, and then filed, but people don't work every day with contracts. It's there to make sure that the goods will be delivered and that each party knows about their obligations.

The Chair: Mr. Guité calls you and says this is a good idea and he recommends it and you agree with Mr. Guité. You call in your marketing department. You say that Mr. Guité says it's a good idea. The marketing department analysed it, you say, and agreed with Mr. Guité's recommendation that it was a good idea. Is that correct?

Mr. Marc LeFrançois: Sure, they made an analysis.

The Chair: You didn't say let's sign a contract. You just left it there.

Mr. Marc LeFrançois: Normally, according to the rules and policies of the corporation, each contract has to be signed, but this is the responsibility of the chief executive officer, and I was the chairman. So in my testimony I said very clearly that I took into consideration that the process would be followed, but it was not followed.

The Chair: I think we'll just have to get the marketing department in to get their side of the story.

Next is Mr. Tonks.

Mr. Alan Tonks: Thank you, Mr. Chairman. I was just going to tell you that I thought your four minutes was up. Thank you.

The Chair: I was only getting some clarification for Mr. Proulx. That was a point of clarification.

Mr. Alan Tonks: I appreciate that. I didn't know that procedurally we had such things.

Anyway, Mr. Chairman, I'd like to proceed with respect to the line of questioning Mr. Toews was involved in.

If there was value added to VIA Rail, if the concept of the sponsorship program locked into some of the strategic objectives of VIA Rail, why was it involved in such an--as Mr. Toews said--opaque procedure, and I would say a very elaborate procedure?

I'd like to relate some questions the Auditor General raised in testimony before this committee. Mr. Campbell, who is the Assistant Auditor General, said that the representative of L'information essentielle told them that he was instructed to contact VIA Rail and Canada Post for portions of these funds, and those portions of the funds would be for the Maurice Richard television series.

Were you the individual at VIA Rail who was contacted by L'information essentielle?

[Translation]

Mr. Marc LeFrançois: Yes, Robert Guy Scully contacted me.

[English]

Mr. Alan Tonks: Mr. Scully contacted you.

Mr. Campbell, the Assistant Auditor General, goes on to say that the remainder of the funds would be transferred to a number of communications agencies. Were you aware of that?

Mr. Marc LeFrançois: Absolutely not.

Mr. Alan Tonks: So you don't feel that you were part of what has been described. There's value added that you can authenticate, but there are also commissions and so on that can't be--at least to the Auditor General's satisfaction. So you weren't aware of a money-laundering type of operation of this nature.

Á (1140)

Mr. Marc LeFrançois: Absolutely not.

Mr. Alan Tonks: All right.

Then Mr. Minto, also an Assistant Auditor General, said:

...we have some specific concerns about the actions of the two crown corporations, VIA Rail and Canada Post...advanced almost $1 million to a private sector company based upon a verbal agreement with the executive director of CCSB.

I take it that meant Mr. Guité and yourself.

The money was not in the Public Works funds and didn't go through the appropriations. Were you aware that PWGSC did not have the money?

Mr. Marc LeFrançois: Absolutely not.

Mr. Alan Tonks: All right.

I think the committee and the Canadian public want to understand how and why this happened. Mr. Minto said:

What surprised us...was the process used to reimburse VIA Rail by CCSB, because VIA Rail had already paid L'Information essentielle this money. It required the issuance of a fictitious contract....

I think this is important, because your concept is that because you had value added and the authorization through your board, and so on, it met the sponsorship program. You don't think you were in a fictitious elaborate scheme to hoodwink the public or anybody else.

He goes on to say that it required the issuance of a fictitious contract and fictitious invoice by VIA Rail “and the involvement of a communications agency, which received $112,500”--and I think this is important, Mr. Chairman--“for simply moving money between the two government entities. VIA Rail did not report this transaction to its board or audit committee.”

Is it true, Mr. LeFrançois, that you didn't report it through to your audit committee? I guess I'd ask why.

Mr. Marc LeFrançois: It is absolutely true.

[Translation]

We never had the impression that those transactions had to be reported to the audit committee. However, we reported them to the Auditor General and to our external auditor, which is Raymond Chabot Grant Thornton. If you go to Attachment A of this binder here, you'll see that I have appended a letter. I would have preferred a higher quality copy. I requested copies from my old office, but was turned down. I managed to find this in the documents I had and I managed to get this copy.

There's a letter here from Raymond Chabot Grant Thornton in which the whole process is explained and which confirms that there was access to all this information as of 1999 and 2000. We gave it to them. In addition, further on, in the Financial Review, you have evidence that we submitted that to our auditors and to the Auditor General. There were meetings, we discussed this, and it was accepted. There was nothing abnormal or illegal.

Now let's come back to the Auditor General. It also mentions, because you have to read...

[English]

Mr. Alan Tonks: May I interrupt? I have one last question. I appreciate that, and I'm sorry to interrupt you, Mr. LeFrançois.

The Chair: I'm giving you a good deal of latitude.

Mr. Alan Tonks: I appreciate that.

The Chair: I'm in a good mood today.

Mr. Alan Tonks: Since we gave you that latitude, I appreciate that.

Mr. LeFrançois, in light of the fact that Lafleur Communications was the agency of advertising record, if VIA saw that the sponsorship program met all of the criteria, and so on, why did you not just use Lafleur Communications, make an application through the CCSB to access the fund, and only pay the one bill to Lafleur for its percentage, according to the contract VIA had with Lafleur?

The Chair: Okay, you've heard the question. What's your answer?

[Translation]

Mr. Marc LeFrançois: It's difficult to answer a question like that. I unfortunately don't have the English, but the Auditor General used the expression “it would appear that”.

Those are claims. There are things that must be discovered. The Auditor General produced a report that contains more questions than answers. She proves facts. I imagine that, since the contract between the communications firm and Public Works Canada is fictitious, in the Auditor General's view, she concludes that VIA Rail's invoice is therefore fictitious. I imagine that's it.

If this entire affair, based on facts I don't deny, is a fraud, which is what the Auditor General is talking about when she uses the expression “it would appear that”, then I would be obliged to conclude that we were the victims of a system of which we were not aware and on which we had no kind of information. However, I'll wait for you to continue your work, and I hope we'll find out.

If you summon the agencies, Mr. Guité and so on...

Á (1145)

[English]

The Chair: We're trying very hard, Mr. LeFrançois.

Mr. Kenney, for four minutes.

Mr. Jason Kenney: Mr. LeFrançois, you're making it sound as though you had authority as chairman but not responsibility, that the responsibility somehow resided with the CEO. I don't think your testimony is helping to clarify things in this respect.

I'd like to go back to this question. I don't think I got a direct answer. You attended this lunch on November 28, 1999, at Jean Lafleur's chateau in Saint-Adolphe. I want you to confirm that present at that lunch were the following people: André Ouellet, Jean Lapierre, Jean Carle, and Martin Cauchon. Is that correct?

Mr. Marc LeFrançois: And some other people.

The Chair: By the way, we're starting round two, and you have eight minutes, Mr. Kenney.

Mr. Jason Kenney: This was concurrent with the Liberal congress. Were you a delegate at the Liberal congress or just an observer?

Mr. Marc LeFrançois: No, sir.

Mr. Jason Kenney: Did you ever discuss matters related to sponsorship with Jean Carle there or at any other time?

Mr. Marc LeFrançois: No, I never did.

Mr. Jason Kenney: Did you attend lunches or meet with Charles Guité and Jean Carle separately from this particular lunch?

Mr. Marc LeFrançois: Not that I remember.

Mr. Jason Kenney: You don't recall ever having lunch with Charles Guité, Jean Carle, and Jean Lafleur.

Mr. Marc LeFrançois: With Guité, yes, I did. I had breakfast with Mr. Guité. Did I have dinner with him? I don't remember. I met with Mr. Guité when he was in Montreal. I do remember that I went to his office once. I could not believe that he was handling so much business with a small office and very few people.

Mr. Jason Kenney: He was very efficient.

Monsieur LeFrançois, you've testified that you had this one call with Mr. Guité during which you discussed VIA Rail's participation in this peculiar financing scheme for the Maurice Richard series and that you met with him several times in Montreal. Would you please characterize for us the frequency of your contact with Mr. Guité?

[Translation]

Mr. Marc LeFrançois: I looked at my agenda. I was able to find the dates of my nine meetings with Robert Guy Scully. However, Mr. Guité was like a shooting star. When he came to Montreal, he had to see a lot of people. He must not have had fixed meetings because I couldn't trace the dates of my meetings with him. I expected that question because you've put it to nearly everyone. That's why I tried to trace all that. I traced only one trip to Ottawa. I went to see him, but I don't remember on what subject.

[English]

Mr. Jason Kenney: Mr. Guité left in 1999. These transactions were completed at the end of 1999 and 2000 when Pierre Tremblay had taken over at CCSB. Did you have ongoing contact with Pierre Tremblay as well?

[Translation]

Mr. Marc LeFrançois: Yes.

[English]

Mr. Jason Kenney: How frequently would you have met or spoken with him?

Mr. Marc LeFrançois: I would say that maybe I met Mr. Tremblay three times.

Mr. Jason Kenney: I see.

Did you have contact with Jean-Marc Bard, the Quebec desk representative of Mr. Gagliano's ministerial office and then later his executive assistant?

Mr. Marc LeFrançois: On the sponsorship program?

Mr. Jason Kenney: Yes.

Mr. Marc LeFrançois: No.

Á (1150)

Mr. Jason Kenney: On other issues?

Mr. Marc LeFrançois: I do remember that I was about 12 years old when I met Mr. Bard. So I've known that guy for a long time.

Mr. Jason Kenney: All right.

Did VIA Rail have a box at the Bell Centre in Montreal?

[Translation]

Mr. Marc LeFrançois: We used to have one, but no more because the contract was signed for five years, the period you have to commit to. If my memory serves me, we had 25 percent of the box.

[English]

Mr. Jason Kenney: Twenty-five percent of the box. In other words, you were sharing a box with other sponsors?

[Translation]

Mr. Marc LeFrançois: Yes, because a lot of boxes at the Molson Centre are shared by a number of companies. Forty hockey games a year is a lot.

[English]

Mr. Jason Kenney: I'd like to ask you if VIA Rail paid directly for the sponsorship of this 25% of a box, or whether your sponsorship went through Lafleur Communications.

[Translation]

Mr. Marc LeFrançois: I'd have to check. We must have paid directly, but that would have to be checked.

[English]

Mr. Jason Kenney: The reason I raise this question is because Monsieur Beaudoin, formerly of the Business Development Bank, has testified that he was approached by Jean Carle to do the same thing with BDC sponsoring a box. Monsieur Beaudoin thought it was not a good use of a crown corporation's money and was approached apparently by Monsieur Jean Lafleur, who said “We'll do the dry cleaning for you and give you a contract for which you can pay us, and then we'll arrange the sponsorship so there's no direct connection.”

So you don't believe you had a similar relationship with Lafleur Communications for your sponsorship.

Mr. Marc LeFrançois: On that one, I can give you the answer now. It is absolutely impossible that things like that have been done at VIA Rail, and I'll make sure I will ask the question--if they want to answer me, because I don't have connections any more with VIA Rail.

Mr. Jason Kenney: Well, sir, you say it's impossible, but the reason you're here is because it not only was possible, but things like that did happen with respect to the Maurice Richard series.

[Translation]

Mr. Marc LeFrançois: I don't agree with that.

[English]

Mr. Jason Kenney: Mr. LeFrançois, when you were chairman or CEO, did you ever ask or suggest to executives or employees of VIA Rail that they donate financial contributions to a political party?

[Translation]

Mr. Marc LeFrançois: No, not that I remember.

[English]

Mr. Jason Kenney: If you were to learn that there's a former employee who is under the impression that you asked the executives to donate to the Liberal Party in the fall of 2000, would you say that is correct or incorrect?

Mr. Marc LeFrançois: Honestly, I don't remember.

Mr. Jason Kenney: You don't remember.

Did you ever ask VIA executives to attend partisan fundraising events in Montreal, say, at the Marriott Hotel in 2000?

Mr. Marc LeFrançois: That could be possible.

Mr. Jason Kenney: That could be possible.

Mr. Marc LeFrançois: Yes.

Mr. Jason Kenney: Did you ever ask VIA executives or their families to attend other partisan events, Liberal Party events, in the Montreal area?

Mr. Marc LeFrançois: To attend...?

Mr. Jason Kenney: To attend Liberal Party events in the Montreal area, apart from that fundraiser?

Mr. Marc LeFrançois: Yes, it's possible.

Mr. Jason Kenney: It's possible.

You seem to have some problems recollecting certain things. Either you say things are possible or you've forgotten. Would that be a yes or a no?

Mr. Marc LeFrançois: It's possible. That means it's probably yes.

But that has no relation to political activities. Our people have to know people. They have to bring people aboard the trains. If they stay in their office, they won't--

Mr. Jason Kenney: All right. My time is up.

The Chair: I'm sorry about that, Mr. Kenney.

There are a couple of things. You mentioned in an earlier intervention, Mr. LeFrançois, that you had tried to get photocopying from VIA Rail, since you're no longer in their employ, and you were unable to obtain that. Is that correct?

Mr. Marc LeFrançois: This is the information I received yesterday.

The Chair: So do you feel that you would have preferred to have more information from VIA Rail in order for you to prepare to be here today?

Mr. Marc LeFrançois: No. I have all the necessary information, but if you need any more information.... And to me it's normal. I cannot give you any more information. I am not there any more, and those people don't have to give me that information.

Á (1155)

The Chair: That's true, but the committee would like to get everything the committee wants. And if the committee felt there was some information that was not available because you could not obtain it directly, then I think perhaps the committee might be able to obtain it for themselves.

But you're saying you don't need any additional information to lay before us at this time.

Mr. Marc LeFrançois: No. I said it took me a lot more time, but finally I found out what I needed.

Mr. Dennis Mills: I have a point of clarification, Mr. Chair. This letter that Mr. Laframboise said--

The Chair: I think you said it was in the package.

Mr. Dennis Mills: Is it in the package?

Mr. Marc LeFrançois: Yes, it is in the package.

The Chair: Mr. Laframboise, eight minutes, please.

[Translation]

Mr. Mario Laframboise: Thank you, Mr. Chair.

Again in the matter of the Maurice Richard Series, Essential Information and Robert Guy Scully's production company, on August 31, 1999, when VIA Rail received the two new invoices for $130,000 each, did the department contact you to say that they had received the new invoices?

Mr. Marc LeFrançois: No, I believe the invoices were addressed to me directly.

Mr. Mario Laframboise: So it was you who received them?

Mr. Marc LeFrançois: I think so. We'll look into it. They must have come to my office. Did I see them? I don't know. Were they sent to my office, and not directly to the persons responsible? I imagine so. It's signed by Christena Keon Sirsly.

Mr. Mario Laframboise: So you received them.

[English]

The Chair: Mr. LeFrançois, which tab are you referring to in your document, please?

Mr. Marc LeFrançois: Tab 2.

[Translation]

Mr. Mario Laframboise: So you received them. Do you remember making a phone call to say that you had received the new invoices and that you had not received the money from the federal government? Did you contact anyone?

Mr. Marc LeFrançois: No.

Mr. Mario Laframboise: No one?

Mr. Marc LeFrançois: No one.

Mr. Mario Laframboise: That means that someone reminded you that you had not received the money from the federal government. When was that done? In October when the auditors... You say in your affidavit that the $910,000 had to be entered in accounts receivable in October. Surely there was someone in accounting... When VIA's financial statements were prepared starting in October 1999, the invoices paid were recorded as “Unbilled Revenue”. Did the people who prepared that in October contact you?

Mr. Marc LeFrançois: Yes, they had to ask Diane Langevin to do it because it was she who sent the written information to the accounting department. That was in February 2000.

Mr. Mario Laframboise: In February 2000, you had a meeting with your auditors. In October, it was no doubt brought to your attention that the $910,000 had to be recorded because it was entered in the financial statements in October.

Mr. Marc LeFrançois: No, I don't remember having any conversations. They had to discuss it with the marketing department.

Mr. Mario Laframboise: From the moment the second invoice was sent, on October 31, no one called you to tell you that the money had not come in, that the federal money had not come in?

Mr. Marc LeFrançois: No. At that point, I knew that the money would come in by the end of the year. Even if I had called again and again, that wouldn't have done much.

Mr. Mario Laframboise: No one contacted you when the auditors were getting ready to enter the $910,000? No one told you that the $910,000 was going to be entered and that the money had not yet come in?

Mr. Marc LeFrançois: It was on that point that I said a moment ago that there was probably an error of communication. When Diane Langevin asked me whether the Government of Canada was going to give us all the money it had promised, she must have understood $910,00 instead of $750,000.

Mr. Mario Laframboise: So you remember that she referred to it.

Mr. Marc LeFrançois: Absolutely.

Mr. Mario Laframboise: Did you contact someone in the government? Mr. Guité was gone at that point.

Mr. Marc LeFrançois: No, I believe he left...

Mr. Mario Laframboise: He left in August 1999.

Mr. Marc LeFrançois: He left in August 1999. So I must have called Mr. Tremblay.

Mr. Mario Laframboise: You called Mr. Tremblay. Did you ask him whether the money was probably coming?

Mr. Marc LeFrançois: That's correct, but he was aware of the file. What I don't understand is that there was never any file at Public Works and he was aware that he owed us $750,000.

Mr. Mario Laframboise: Between the time Mr. Guité left and Mr. Tremblay arrived, you contacted no one at the political level? You didn't call any politicians to say that you were owed money and to ask whether someone was going to handle that?

Mr. Marc LeFrançois: I'm 64 years old. I've done business with the federal and provincial governments all my life. No politician is going to resolve administrative matters. I've learned that. If you want to waste your time, do that.

Mr. Mario Laframboise: Is it up to you to determine whether we're wasting our time?

Mr. Marc LeFrançois: I'm not talking about you, but about a business person who has to go after an administrative cheque. That person is better off going to see the deputy minister or the assistant deputy minister.

Mr. Mario Laframboise: So in October, your internal services told you that an amount of $910,000 would be recorded. You held discussions and possibly talked about that with Mr. Tremblay.

On November 28, you had breakfast in Saint-Adolphe-d'Howard--a very beautiful place, Mr. LeFrançois, in my riding--with friends, including the president of Canada Post as well as Mr. Lafleur and Mr. Cauchon. So you took the opportunity to mention to them that a sum of money related to the file was supposed to come in, but that you had not yet received it, your auditors having told you that they were going to record it under accounts receivable. You didn't take the opportunity to talk to them about that?

Â (1200)

Mr. Marc LeFrançois: Talk about it with whom?

Mr. Mario Laframboise: With those who were with you, the minister, Mr. Cauchon.

Mr. Marc LeFrançois: What do André Ouellet, Mr. Cauchon and Jean Lapierre have to do with this matter?

Mr. Mario Laframboise: And Mr. Lafleur?

Mr. Marc LeFrançois: Mr. Lafleur has nothing to do with it. First, I don't believe that I was aware at that point of the fact that I would be repaid by Mr. Lafleur.

Mr. Mario Laframboise: I find it curious that you had a meeting on November 28--a friendly little luncheon attended by Mr. Lafleur--and that, in December 1999, the Communications Coordination Services Branch signed a contract with Lafleur Communications worth $862,500, retained $112,500 and sent you $750,000.

In short, you had a little meal with Mr. Lafleur on November 28, and he didn't talk to you about that. No one talked to you about it, and Mr. Cauchon was present. You didn't talk about that at all?

Mr. Marc LeFrançois: Not at all.

Mr. Mario Laframboise: At all?

Mr. Marc LeFrançois: If you want me sworn, go get a Bible and I'll swear on it. Then you can question the others.

Mr. Mario Laframboise: So you say that you spoke about it to no one and that, in December, they decided to pay you. You also stated that Mr. Gagliano phoned you shortly afterward.

Mr. Marc LeFrançois: No, they paid us in March.

Mr. Mario Laframboise: The word was nevertheless given in December 1999. The auditor states that, in December 1999, Lafleur Communications received the mandate and it was that business that was supposed to issue the cheque, and it paid itself its commission.

So you received the money in March, but it nevertheless remains that, just before December, on November 28, you ate... And you say you're ready to swear that it was never discussed, with Mr. Lafleur, Mr. Cauchon or anyone else.

Mr. Marc LeFrançois: Never.

Mr. Mario Laframboise: Let's say there was probably a peculiar alignment of the planets.

Mr. Marc LeFrançois: Many things in life are a matter of happenstance.

Mr. Mario Laframboise: Yes.

According to the statement you made under oath, Mr. Gagliano called you once. Is that correct?

Mr. Marc LeFrançois: Yes, once.

Mr. Mario Laframboise: You don't say the date.

Mr. Marc LeFrançois: No, because I don't know it. If I had had it, I would have been pleased to state it.

Mr. Mario Laframboise: Was it in January or in February?

Mr. Marc LeFrançois: I imagine it was January or February, since I received my cheque in March. Before being sworn, we checked all the details. I made this affidavit to the best of my knowledge. I can assure you that, before writing my affidavit, I even asked my secretary--I was still at VIA Rail and still had access to my secretary, even though I was suspended--whether it was possible to obtain a complete list of telephone calls in order to trace dates.

Mr. Mario Laframboise: Earlier I heard you answer a question concerning VIA Rail's possible contributions to the Liberal Party of Canada. Did you personally...

Mr. Marc LeFrançois: No, never. I never said that VIA Rail contributed to the Liberal Party of Canada, since that was never the case.

Mr. Mario Laframboise: I didn't say that you had contributed, but that I had heard you answer a question concerning the requests.

Mr. Marc LeFrançois: Pardon me.

Mr. Mario Laframboise: Have you previously contributed personally to the Liberal Party of Canada?

Mr. Marc LeFrançois: Yes, I have contributed to the Liberal Party of Canada and even to the Conservative Party. I do my duty as a citizen. Fortunately, under the new act, that will no longer be necessary, since they will get their money directly from Parliament.

Mr. Mario Laframboise: So when you have contributions...

The Chair: Thank you very much, Mr. Laframboise.

Mrs. Jennings, please. You have eight minutes.

Mrs. Marlene Jennings: Thank you, Mr. Chair. Thank you, Mr. LeFrançois.

As a number of my colleagues have done, I want to talk to you about the television series on Maurice Richard. I still find it hard to understand why a federal Crown corporation acted as a lender for a federal department that managed a program. That's what VIA Rail ultimately did.

Those responsible for the Sponsorship Program decided to become a sponsor for the federal government in the context of the Maurice Richard Series, and, before VIA Rail was even informed, they decided that that Crown corporation would become a partner. According to your own affidavit, which you submitted to us, it also seems to have been decided that Canada Post would also become a sponsor, without that Crown corporation being informed of the fact. That's the first thing.

Second, according to your own statement and the documents you have provided to us, VIA Rail in fact contributed $160,000 for the sponsorship. However, you borrowed money from the Sponsorship Program and sent it to Essential Information Inc. on the basis of a verbal agreement under which the Sponsorship Program would reimburse VIA Rail for that loan. That's what was done. It was a loan that VIA Rail made to a federal department, the Public Works Department, which managed a program. You lent $750,000 after entering into a verbal agreement under which you would be reimbursed, and it was a no-interest loan.

In tab 3 of your appendix, entitled Maurice Richard Series affidavit, there is a letter from VIA Rail to “Norma Alepian, Raymond Chabot Grant Thornton Re Receivable in the amount of $910,000 - Maurice Richard Series”. The letter is dated February 10, 2000. In the second paragraph, it states:

VIA Rail was one of the major partners in developing and broadcasting the television series “The Maurice Rocket Richard Story”. VIA Rail Canada's involvement represented a total payment of $910,000 for value in return (visibility).

It then states that the appropriate invoices were sent for that sponsorship, and so on.

In fact, however, it's not true that VIA Rail was a sponsor to the tune of $910,000. VIA Rail's sponsorship amounted to $160,000. The remainder, $750,000, was a federal government sponsorship under the Sponsorship Program, and VIA Rail simply advanced the money out of its own operating funds and was reimbursed by the federal government, that is by the Sponsorship Program.

So even this letter, which was sent to the external auditor, was not entirely accurate because you yourself and VIA Rail state in the documents you provided to us that “$160,000 was charged to the advertising budget”. So you received $160,000 worth of advertising.

Â (1205)

Mr. Marc LeFrançois: Is that a question you're asking me?

Mrs. Marlene Jennings: Yes. Do you agree that it was a loan that VIA Rail made?

Mr. Marc LeFrançois: No, I absolutely do not agree. I'm going to explain to you why.

Mrs. Marlene Jennings: I'd like that.

Mr. Marc LeFrançois: We were major partners: that was written in 2000. I don't know whether I am entitled to do so, but I would like to answer your question by asking you another.

Mrs. Marlene Jennings: One moment, please. I'll add one little thing, and then you can give your explanation.

According to the Auditor General's report, Essential Information received $4,755,218 in sponsorships, including $2,970,218 from the Sponsorship Program, $160,000 from VIA Rail and $1,625,000 from Canada Post. Is that correct?

Mr. Marc LeFrançois: You'd have to ask the Auditor General if that's correct. What you've just read is exactly what I read in the report, and I have no reason to believe it's not correct. They wrote their report on the basis of the facts they found. I can't answer your question because I don't agree with the statements you make. You interpret that as a loan, which is exactly what the Auditor General did. But in actual fact, that's not what we did.

I'd like to answer your question, but I'll be able to answer it if you can tell me how I should interpret the fact that the Government of Canada offered a sponsorship for some activity and decided that all the visibility from the sponsorship should go to VIA Rail Canada, which has happened on a number of occasions.

Â (1210)

[English]

The Chair: Mr. LeFrançois, we don't normally have questions from the witnesses to the committee, but if you want to ask that one again, I may be able to answer it for you. Otherwise, we'll just have to continue without the answer. What was your question?

Mr. Marc LeFrançois: What I was saying is that we are talking about interpretation. She is saying that we made a loan to Public Works, which we don't have the sense that we did. On the other hand, I said that in order to really answer your question I will have to know how we interpret the fact that when Public Works has decided to give a sponsorship to an event somewhere, they have the right to have their agent, whichever is the firm, give the full visibility to VIA Rail. In our books we have zero. In the government books they have the total amount, but the plus value is 100% for VIA Rail. So we have zero in our books....

The Chair: The answer to your question, Mr. LeFrançois, is of course that when the Government of Canada, Public Works, decides to sponsor an event, under the normal processes of the contract—setting it all out, here are the terms, here is the cost, this is the value, this is what we expect in return—if it is on behalf of a crown corporation, then the crown corporation will get the benefit if it's all laid out in the contract.

That's the normal way that the Government of Canada does business, and I would have thought it was also the normal way VIA Rail would have been doing business as well. That's why you're here, because the normal processes all fell apart and it didn't happen. So you're going to have to explain to us and to Madam Jennings why you are participating in these things without the normal documentation in place, both by the Government of Canada and by VIA Rail, because I would have thought, as a chair of VIA Rail, that if the Government of Canada hadn't come up with the documentation, you would have said no deal.

Madam Jennings, please.

[Translation]

Mrs. Marlene Jennings: Honestly, Mr. LeFrançois, I'm trying to understand. For the government and programs that are provided or managed by various departments, there is the Financial Administration Act, Treasury Board policies and so on. Where they have financial relations with federal Crown corporations, they must have contracts according to the Treasury Board. I imagine that those same kinds of rules must apply to the Crown corporation, but I may be mistaken.

Mr. Marc LeFrançois: No, that's roughly the way it is.

Mrs. Marlene Jennings: I'm trying to understand. With regard to the Maurice Richard Series, the first possibility is that VIA Rail received advertising worth $910,000, but that VIA Rail paid only $160,000 out of its advertising budget and that all the rest was paid by the Sponsorship Program. In that case, there should have been a signed contract between the Sponsorship Program, the Department of Public Works, VIA Rail and so on. The other possibility is that VIA Rail received advertising worth $160,000, the amount that it in fact paid, and that the remaining $750,000 worth of advertising was paid for by the Sponsorship Program, that is to say the federal government. Either it was written “Public Works and Government Services” and there was a little flag with a maple leaf, or it wasn't. Which of those two possibilities is the right one?

Â (1215)

Mr. Marc LeFrançois: If I understand your question correctly, I'll answer that VIA Rail received $910,000 worth of visibility. It received more than that in intrinsic value. In addition to that, I remember seeing the Canada logo on television virtually everywhere in the credits.

I repeat, the decision to use the Crown corporations was not ours. That wasn't even discussed with us, but we were pleased to get the visibility. It had a value that was easy for our marketing people to determine, but it wasn't easy for people like me who were not aware of that.

There were a number of projects. When you released the minutes of the Cabinet meetings, I saw a $1.3 million project for students to travel from one place to another. That was previously proposed to us, and we turned it down because we had determined that it was not a good thing financially for VIA Rail. We searched and found those documents, and VIA Rail turned it down because we were asked to allow people to travel free of charge. We refused as we could not afford to implement the program.

[English]

The Chair: Thank you very much.

We're going to hear from Madam Wasylycia-Leis, and then we'll break for lunch.

But before we start with Madam Wasylycia-Leis, to follow up again on Madam Jennings, you said earlier, Mr. LeFrançois, that when the Government of Canada communicated a political decision to you, it was always in writing. To quote from the Raymond Chabot Grant Thornton letter of February 24, 2004, it says that you, as chairman of the board, authorized a cheque for $650,000. You authorized a payment of that money. You were suggesting before that you weren't involved in the payments, but it says here that you were involved in approving the payment “on behalf of the Government of Canada”. Your bank account must be better than the bank account of the Government of Canada's, because you're writing cheques on their behalf.

Now, we have another story that you give to Madam Jennings that this is value received, that this is for advertising, that VIA Rail got a benefit from this, and that it was a legitimate expenditure. You say that you always get political advice and direction in correspondence from the Government of Canada, but in this case you didn't. Now you're saying, according to this letter, that you authorized a payment of $650,000 on behalf of the Government of Canada. And you tell Madam Jennings on the same issue that this was for value received because it was advertised.

Which story is it?

Mr. Marc LeFrançois: With all due respect, Mr. President, we were discussing the addition of services to VIA Rail or the cancellation of services. Those decisions have to be taken by Parliament; they have to be taken by the politicians. That is the reason why they were elected. Now you're talking about one factual decision on day-to-day operations, which has nothing to do with politics.

As I said earlier, I would prefer that you stay with what I said, and to talk about the same kind of people.

The Chair: So there are different kinds of politics: there are big decisions and small decisions.

Mr. Marc LeFrançois: No, no, no, that is not what I'm saying. What I'm saying is that, regarding the operations of the corporation, we received many calls from civil servants at Transport Canada, not to me, but to people in execution, telling them to do this and to do that, and they did it.

We were dealing with Mr. Guité. I always believed that he had the benediction of the government, that he was doing what he was being told to do. If he had made one deal—and only one—then I would have said okay, we've got big problems. But that program went on for how many years?

The Chair: Were you aware that there were many, many deals? How many deals was VIA Rail involved in?

Â (1220)

Mr. Marc LeFrançois: Everybody was aware; we were promoting Canada all over the place. That does not come from the air. So we knew that there was a program; it was no secret to anybody.

Now, if you are asking me how did they work, I have no idea.

The Chair: But Mr. Guité talked to you, and he told you how it worked, obviously.

Mr. Marc LeFrançois: I asked questions, okay, because VIA Rail, being all over the place...we had many advertising firms that wanted to get some work. We said, “We don't have anything to do with that. We do not decide any of those things. You see VIA Rail, we announce VIA Rail, but we don't pay for that. They are giving us the visibility.”

So I asked the question, how does it work? And he explained to me about what I said earlier--and maybe I missed explaining this properly--that the Government of Canada did not have the people to deliver that program and a decision had been made to deliver that program through agencies.

This was logical to me, because if you were asking me, for example, to tell you where I should be to promote Canada, I wouldn't know. And the Government of Canada had not had any visibility in the province of Quebec for many years.

So who knows the best about which activities should be used to promote Canada? It's through those agencies, and the selection had been made following a competitive bid. This is the information we had.

Mr. Dennis Mills: On a point of clarification, Mr. Chair, relevant to the remarks that Mr. LeFrançois just mentioned, in his package here there's a letter dated June 13, which--

The Chair: Which package, which tab?

Mr. Dennis Mills: I don't remember which tab it is, but it's a memorandum to Mr. LeFrançois from Christena Keon Sirsly, where she goes into very specific detail describing the process. So I would like to bring it to your attention.

The Chair: Okay, well, that's not a clarification, that's additional information. Thank you very much, Mr. Mills.

Madam Wasylycia-Leis, eight minutes, please.

Ms. Judy Wasylycia-Leis: Thank you, Mr. Chairperson.

Somehow it's hard to accept that last explanation, Mr. LeFrançois, that VIA Rail was in fact dependent on the government of the day and on a particular department to help determine the role it could play in terms of the future of this country.

VIA Rail is a crown corporation. It is independent politically. It is of a significant size with all of the departments of a government, with the ability in other circumstances to determine how to advertise, how to get a message out, and how to act in the best interests of this country.

You could have developed a justifiable rationale for legitimate participation in the whole pursuit of national unity and in and around the referendum without resorting to these very questionable tactics that certainly do not appear to be ethical by any stretch of the imagination. So I guess it's not a question; it's disbelief that you can even come here and say that.

Now, as did Marlene Jennings, I'm having a hard time understanding as well how VIA Rail could have participated in this scandalous operation--and I don't think you can interpret it in any other way. If you look at the chart on page 10, the facts are the facts.

There's a stench about the Maurice Richard series of something very rotten. So the question is, how did VIA end up participating? We're talking about money-for-nothing contracts, a pure money-laundering scheme. We're not talking about anything but. And Dennis Mills, for once, can't justify this by saying they're production costs.

The Chair: Ms. Wasylycia-Leis, we'll have no conversations across the floor.

Ms. Judy Wasylycia-Leis: All right. It's just that he's groaning and moaning across the way, so--

Mr. Dennis Mills: Well, I care about due process.

The Chair: Okay, but you're directing your questions....

Okay, Mr. Mills, thank you.

Ms. Judy Wasylycia-Leis: Thank you, Mr. Chairperson.

The Chair: Ms. Wasylycia-Leis, will you focus on the witness, please?

Ms. Judy Wasylycia-Leis: This isn't about judging. This is about--

The Chair: This is about asking questions of the witness.

Ms. Judy Wasylycia-Leis: I am asking questions, and the facts show that in fact money went from the government to Liberal ad agencies that had almost half a million dollars for just flowing the money to the production company that put on the Maurice Richard series, and VIA Rail is right there in the middle of this bizarre scheme.

Why did you participate in a money-for-nothing contract?

Â (1225)

Mr. Marc LeFrançois: Excuse me, Mr. Chairman, I am willing to answer any question, but I'm not willing to be asked to answer ones like those.

First of all, take the time to read the documentation that I provided to you this morning. You have the report from the Auditor General and--

Ms. Judy Wasylycia-Leis: Okay, then answer the question--

The Chair: No, Ms. Wasylycia-Leis, stop for a minute.

Ms. Judy Wasylycia-Leis: Is there a problem with the Auditor General's--

The Chair: Ms. Wasylycia-Leis, stop for a minute.

Mr. LeFrançois, you delivered this documentation, three big, strong, thick binders of information to us. We've all been sitting here this morning, including yourself. Therefore, it is not appropriate to expect us to have absorbed all of this information before Madam Wasylycia-Leis asks questions.

She has, as you can tell, read and absorbed the Auditor General's report, because it has been in the public domain for some number of weeks. She is asking you questions based on that information and on your knowledge of the transactions.

Would you please just answer the questions?

Mr. Marc LeFrançois: Yes. Mr. Chair, I hear what you're saying.

In my opening remarks, I believe that I made a clear explanation. She is asking me questions about things I did not know anything about.

The Chair: If that is your answer, then just say so.

Mr. Marc LeFrançois: You have a report. What about if I tell you that the Auditor General knows, and knew for a long time, that Lafleur Communications Marketing never got $112,000 in fees. I gave them the proof. They had all the documents. They have the amount of the cheque that we received. They have the amount of the cheque that the government gave to Lafleur. When we subtracted one from the other, in the contract, he was supposed to receive $112,000 or something like that.

The Chair: Are you making the statement that they knew this information?

Mr. Marc LeFrançois: I gave them the information and I have the written documentation on that.

The Chair: Was it $110,000 that you said?

Mr. Marc LeFrançois: Instead of $112,000, it is something like $60,000, $58,000, or $61,000, or something like that. I based my calculations on the amount of the cheque that the agency received based on the contract, minus the amount of money that we received from them. The difference between them gives the fee.

In the contract, it was supposed to be $112,000, but there was an error made, I believe, in our favour or in favour of the government.

Ms. Judy Wasylycia-Leis: Okay. Whatever the amount, money did go from the government to CCSB, through ad agencies that did get money—we can dispute whether it is $450,000 or not—in order to transfer that money to L'information essentielle for the production of the Maurice Richard series.

Whatever the amount, it is a bizarre way to go, and you're in the middle of it. Why? In hindsight, would you do it again this way?

Mr. Marc LeFrançois: No.

Ms. Judy Wasylycia-Leis: Okay.

Mr. Marc LeFrançois: No, not after I now know what was going on, but I did not know at that time. I had no clue of what was going on. I was informed by the Auditor General on how that thing came out.

Ms. Judy Wasylycia-Leis: We're having a hard time figuring out whether you're an innocent victim in this whole scandalous development, whether you were an active participant, whether you were duped, or whether you were pressured.

If we assume that something is wrong, and you've agreed that, with hindsight, you wouldn't do it again, perhaps you think that something was wrong. How did you end up in this? Were you pressured, or were you a willing participant in this kind of a scheme?

Mr. Marc LeFrançois: No, I believe that I answered that question. When I got the call from Mr. Guité, we all believed that was an excellent deal for VIA Rail Canada. We were getting value for money.

We were getting a lot of visibility to make sure that more Canadians knew about our services, and that would give us, at the end of the day, more customers onboard our trains. That was the rationale we were looking at.

I was not aware of any of those things. I was aware that the government had a sponsorship program being delivered by agencies that had won contracts. That is all I knew, because I asked the question.

The Auditor General wrote that Lafleur got a contract without any work at all. I do believe that the question should be asked of Lafleur, but I have here a written document because I asked the question. I got the thing on June 13, 2002.

I cannot fabricate documentation. It was well written that Lafleur did a lot of work, and we gave the evidence that we had, within our corporation, about the work that Lafleur did.

Â (1230)

The Chair: Mr. LeFrançois, can you tell us which document you're quoting from there?

Mr. Marc LeFrançois: The same document he was talking about, which is a memorandum that was sent to me.

The Chair: Which tab number? Tab 4?

First of all, are you quoting from the series Maurice Richard, the VIA magazine affidavit, or the Index des annexes à la lettre de M. Marc LeFrançois?

Mr. Marc LeFrançois: I will try to find out. I could come back to you after lunch.

The Chair: Okay. We'll get the reference right after lunch. We'll make that the first point of order.

You have 45 seconds left, Madam Wasylycia-Leis.

Ms. Judy Wasylycia-Leis: If you believe that, and you'll come back to us with evidence after lunch, then I would suggest to you that you were duped, you were fooled into believing something that wasn't the case. In fact, we're talking about the government sponsoring the production of the Maurice Richard series. Anything along the way laundered through these agencies that you were a part of doesn't contribute to the product, and except for maybe a little mention of the Canada wordmark, there was no value for money. So where is the value for money in terms of what Lafleur did actually contribute and how it contributed to this product?

Mr. Marc LeFrançois: I do believe this is a question that should be addressed to Mr. Guité or Mr. Tremblay. I have never seen that contract in my life and I'm not aware of what you're talking about.

Ms. Judy Wasylycia-Leis: You just said that this was a good project, it got value for money, that Lafleur did us a service.

The Chair: Thank you, Ms. Wasylycia-Leis.

Ms. Judy Wasylycia-Leis: So how, on what basis, and where did we get value for money?

Mr. Marc LeFrançois: I am referring here to the file. First of all, we are talking about things that happened five years ago. The first time we heard about the fact that there might be some problems, I asked the question. I'm just giving you—if we don't find it, we'll make photocopies—a report that was given to me on June 13, 2002, telling me what really happened in that file. You'll have the document because he had it and I will find out where it is.

We know for sure that at VIA Rail we received value for money. That is for sure, no doubt about that.

The Chair: Thank you very much, Monsieur LeFrançois.

Before we break, Mr. Toews has a brief point of order.

Mr. Vic Toews: I'm certain this was done to assist the witness, but Mr. Mills handed the witness a document while the witness was testifying. I would just like to know whether Mr. Mills could share the same document, so we know what document is being referred to the witness.

Mr. Dennis Mills: Mr. Chair, I'd be happy to—

Mr. Vic Toews: Just identify it.

Mr. Dennis Mills: —not only give you the document, but take advantage of all my underlinings. Would you like me to read it into the record?

The Chair: No, I don't want you to read it into the record.

Mr. Dennis Mills: If Mr. Toews would like me to, I'd be happy to.

The Chair: No, no.

Mr. Vic Toews: I'm not suggesting that he's coaching the witness in any way with his underlined document, but I think Canadians would like to hear this.

The Chair: Mr. Mills, I'm not going to let you read it into record. If you give a copy to the clerk, we'll photocopy it and distribute it after lunch.

Thank you very much.

We're adjourned until two o'clock.

Â (1234)

¸ (1407)

The Chair: We're back in session, ladies and gentlemen. We're continuing with the witness, Mr. LeFrançois.

Mr. Toews, you have the floor for eight minutes.

Mr. Vic Toews: Thank you, Mr. Chair.

I know the witness must be getting a little tired--it's a tiring process--but please bear with us for a few more hours, maybe.

In any event, Mr. LeFrançois, you indicated that until 2001 you were the chairman of the board of VIA Rail. In your affidavit regarding the Maurice Richard series, you indicate that you were contacted by one Robert Scully, one of the co-producers of the Maurice Richard series. In fact, Mr. Scully basically pitched his program to you and said that the Department of Public Works had assured him that VIA would contribute $1 million to this project.

You go on in your affidavit to say that you received a phone call from the executive director of the communication coordination services branch of Public Works, and you spoke of the project again. He indicated that you had refused the funding of the Maurice Richard series basically because VIA's marketing budget had already been placed for the year.

Now, I find it a little odd that you, as the chairman of the board, would be contacted by Mr. Scully for this. You indicated earlier that you were the chairman of the board and weren't involved in the direct contracting of sponsorship matters. Why would Mr. Scully contact you rather than, let's say, the CEO or the director of marketing, or the vice-president or president of marketing?

[Translation]

Mr. Marc LeFrançois: To get a real answer to that question, you should put it to Mr. Scully. I've seen the same thing happen on a number of other occasions. It is common practice for people to contact the people they know, whether it be the chairman of the board or the president.

To know whether Mr. Scully spoke to the president at that time, Mr. Morrison, I would have had to put the question to him before he left the company. What I'm sure of, however, is that he contacted me and that I followed up on that meeting.

¸ (1410)

[English]

Mr. Vic Toews: I find it odd that you would engage yourself in a conversation about this unique opportunity, as Mr. Scully pitched it to you. Why wouldn't you have said “Look, I'm the chairman of the board; it's not my function to approve contracts and to run the operations of VIA on a day-to-day basis”? Why didn't you simply say to him, “I can direct your inquiry to the president of marketing or the CEO”, and allow him to deal with it?

I'll indicate why I have this concern. You get into a discussion in your affidavit on whether or not VIA was getting value for its money. Isn't this something that should be determined at the marketing or the CEO level, and then, if necessary, brought to the board for approval, the board of which you were the chairperson?

[Translation]

Mr. Marc LeFrançois: What you say corresponds quite closely with what actually happened. The following meeting was held in the presence of the vice-president for marketing, Christena Keon Sirsly.

[English]

Mr. Vic Toews: But that's just the point. You went to the vice-president of marketing, and then you met again with Mr. Scully, rather than saying to Mr. Scully, “Deal with the vice-president of marketing. He's the one who knows about the budget. He's the one who will determine whether VIA is getting value for money.”

I find it a little odd that the procedure involved you directly in the day-to-day operations of VIA, when in fact you should have been supervising these contracts, and perhaps been asked for your approval once everything had been done at that administrative level.

[Translation]

Mr. Marc LeFrançois: In practice, that's roughly what happened. Mr. Scully met the marketing people to present the project to them and so on.

[English]

Mr. Vic Toews: Did the vice-president go to the president to get the contract approved?

[Translation]

Mr. Marc LeFrançois: I couldn't answer you. The reason why I didn't talk about that at all in my affidavit is that I don't know. What I know for certain is that the president at the time was involved in the development of that program.

[English]

Mr. Vic Toews: You can see the difficulty I'm having. It's that first of all Mr. Scully phones you up and says the Department of Public Works has said VIA is going to give $1 million to the project. Did you give that assurance that VIA would give the $1 million to the project?

[Translation]

Mr. Marc LeFrançois: No. What I can answer you, and I remember that very clearly, is that I told Mr. Scully that he could tell him whatever he wanted, it was not up to them to go and direct VIA Rail's marketing department. I very clearly remember telling Mr. Scully that.

[English]

Mr. Vic Toews: Who had assured him that VIA would contribute the $1 million?

[Translation]

Mr. Marc LeFrançois: I can't answer that, except by repeating what's written in the Auditor General's report. I see in the report that Mr. Scully said that Mr. Guité had made him a promise. I even see an amount of $7.5 million. But those are things I am not at all aware of.

[English]

Mr. Vic Toews: So Mr. Scully phones you up and says the Department of Public Works says VIA will contribute $1 million. You didn't ask, well, it didn't come from us, so who would have given him that assurance? Wouldn't you have even asked that when someone was committing $1 million? Did you simply say, I don't know who did it, and proceed anyway?

¸ (1415)

[Translation]

Mr. Marc LeFrançois: No, that's not what I said. When he came to see me, I simply told him that, if someone had told him that VIA Rail would invest $1 million in that activity, he would have to go and see the person who had told him that. The people here, internally...

[English]

Mr. Vic Toews: Who was that person?

[Translation]

Mr. Marc LeFrançois: I can't answer. I'm forced to refer you to the Auditor General's report, according to which it was Mr. Scully who told the auditor that he had been told that.

[English]

The Chair: Now, you can't answer or you don't have the information--which...

Mr. Marc LeFrançois: I don't have the answer, aside from what I read in the report.

Mr. Vic Toews: If I could, I'll just finish this up, then. You mean you had a conversation about $1 million, Mr. Scully assured you Public Works had said VIA was going to put it up, and you never asked who gave that assurance to Mr. Scully?

[Translation]

Mr. Marc LeFrançois: Pardon me, I didn't understand your question. He told me that it was Mr. Guité who had told him, and I simply answered that...

[English]

Mr. Vic Toews: Oh? So Mr. Guité had assured Mr. Scully that the $1 million would come from VIA.

[Translation]

Mr. Marc LeFrançois: That's what he told me. That's what Mr. Scully told me.

[English]

Mr. Vic Toews: That, to me, makes a little more sense, then, because I couldn't--

The Chair: You're out of time too.

Mr. Vic Toews: Thank you.

The Chair: Thank you, Mr. Toews.

It does seem that Mr. Guité could speak on behalf of VIA Rail and spend their money, and I'm sure that was your next question.

So what was it? How was Mr. Guité able to make a commitment on behalf of VIA Rail?

[Translation]

Mr. Marc LeFrançois: You should ask Mr. Guité. I simply told Mr. Scully that it was not up to Mr. Guité to decide what VIA Rail was doing. That's all I know.

Le président: Mr. Laframboise, please, you have eight minutes.

Mr. Mario Laframboise: Thank you, Mr. Chair.

[English]

The Chair: Oh, no. My apologies. The next one is Mr. Thibault, and then it's monsieur Laframboise.

Mr. Thibault, s'il vous plaît.

[Translation]

Hon. Robert Thibault: I'd like to come back to this question once again.

[English]

The question that I think is interesting is the question of why initial contact would have been through the chair rather than through the marketing department. Did you have a previous relationship with Mr. Scully such that he would have been comfortable discussing such matters with you more than if he had gone to see the president or the vice-president of marketing?

[Translation]

Mr. Marc LeFrançois: I suppose he didn't know the president. He knew me; that's for sure. I know a lot of people because I'm involved in things around the Montreal area.

I imagine he must not have known the vice-president for marketing. So he came to see me, which was not unusual. If you knew the number of people who come to see me to make submissions concerning business they want to do with the company...

Hon. Robert Thibault: But they don't all go through the chairman of the board.

Mr. Marc LeFrançois: I've sent many away and I've introduced others to the persons concerned. But that will never change. I've been in administration for at least 30 years. It's always been like that, and I think it will always be like that.

Hon. Robert Thibault: There's another point that disturbs me. Thank you for providing us with the affidavit because it gives us a lot of information. The public currently doesn't have access to that. We may be asking you questions the answers to which are already in the information you've given us, but I think it's important that everyone understand.

There's nevertheless something I find quite odd. A verbal agreement was purportedly reached with a government official, and the amount, let's say $750,000 net, was to go back to VIA Rail, and, without your knowledge, other amounts of money went to the communications company to pay its expenses.

In seeing a government official enter into a verbal agreement such as that, weren't you concerned that he might be exceeding his personal limits as an official? An official usually has certain limits. He can enter into a contract and then has to go to the assistant deputy minister, to the deputy minister, to the minister or to the Treasury Board and so on, depending on standards and limits. Didn't three-quarters of a million dollars seem to you to be a large amount for an individual, particularly for a verbal agreement?

Mr. Marc LeFrançois: I would say no. As a prudent administrator, as I believe I am, I asked the marketing department whether it would recommend the project, even though it was not contributing or was not really a partner with us in the program. It's clearly explained in the affidavit. I asked that question directly, and the answer was that, yes, it was an excellent activity and that VIA Rail should be involved in it.

They knew that because they were marketing specialists. They already knew the impact that a program like that would have. That's why I asked questions.

To be honest, I would say that, no, that didn't seem disturbing to me.

¸ (1420)

Hon. Robert Thibault: My next question concerns your role as chairman of the board as opposed to that of director or president and director of the company. When the time came to issue the cheque to pay Mr. Scully's company, the notation “President & C.E.O.” appeared on the cheque issue request form, but it was you who signed the cheque request and who made the recommendation to the Finance Department that the cheque be issued. Why did that request go through the office of the chairman of the board and not that of the company's CEO?

Mr. Marc LeFrançois: Two reasons. First, because the amount exceeded $300,000. According to corporate regulations, it has to be the chairman. Second, normally, I always ask that the president sign before I sign myself, but Mr. Morrison was not present.

Hon. Robert Thibault: He was absent.

Other witnesses who have come here have referred to a war mentality that existed in Quebec at that time. Of course, they weren't just talking about Quebec in reference to these sponsorships, but they were talking about a certain struggle, about the role played by the Quebec government and its institutions such as Loto-Québec and Hydro-Québec, which were promoting Quebec. Attempts were being made to promote Canada as well within the province of Quebec. So it seems to me that it would have been completely normal for an agency or institution such as VIA Rail, which is Canadian, to play a role in that area, since the railroads have represented Canada for a long time.

Were your discussions with Mr. Guité business discussions strictly concerning VIA Rail, or did you feel you were playing a role in supporting federalism in Quebec, in promoting Canada, in that entire battle that was playing out?

Mr. Marc LeFrançois: I'd say they were first and foremost business discussions, because we had a business to carry on with relatively limited budgets. I find it entirely normal for a Crown corporation to head in the direction the government decides to go, but, first and foremost, you have to be responsible for its administration.

[English]

Hon. Robert Thibault: How much time do I have left, Mr. Chair?

The Chair: You have a minute and a half.

Hon. Robert Thibault: I have a final couple of points. In a previous question from Mr. Toews, or to myself, about the way you were accounting for this money you mentioned that you would have taken that decision on a risk basis, and that even if you didn't recover $750,000 from the Department of Public Works and Government Services, the value was still there. But in your accounting, if my memory serves me right, you always had it as an accounts receivable or a receivable for work not yet billed, never as a grant or never as a loan, where it might have been considered as one of the other two. Could you explain the reasoning for that?

[Translation]

Mr. Marc LeFrançois: Yes. First and foremost, we knew that it wasn't a grant. The Government of Canada was participating in the project with us. I had been promised that, if I committed to the project, the government would contribute 75%.

So we took on the project. The work was done. As I said this morning, the first official activity took place on October 25, 1999, the second, on Radio-Canada on November 14, 1999, and so on. The product was delivered. Once our work was done, I told them it was time they paid me the contribution they had promised.

¸ (1425)

Hon. Robert Thibault: Do the names of the two partners, the Government of Canada and VIA Rail, appear in the credits as program sponsors?

Mr. Marc LeFrançois: Absolutely. We gave the Auditor General all the proof of that. Moreover, they still have all the documents. We gave them the cassettes, and so on.

During the summer of 2002, there was talk of this project in the newspapers, at the same time as the three reports that everybody read, and so on. Here I have the file that was handed over to the Royal Canadian Mounted Police. So the information you have there can't contradict what I previously said in 2002, and, in 2002, I couldn't know that there would be this investigation today.

Hon. Robert Thibault: Thank you very much.

[English]

Thank you, Mr. Chair.

[Translation]

The Chair: Thank you very much, Mr. Thibault.

[English]

Before we go to monsieur Laframboise, there are two things. We have distributed the memo that Mr. Mills was quoting from before we broke for lunch. A copy has been given to everybody. And I'm sure everybody is wondering what these very large packages are. You are required to read them all before you're back here next week. There's a test.

Mrs. Marlene Jennings: Which will be administered to all members, including the chair and vice-chairs.

The Chair: That's right. Anything less than 80% does not qualify.

The point is that this is a letter from the Clerk of the Privy Council. If you give me a minute, I think it's appropriate that I read this letter into the record. I'm not going to read all of the documents, but this is a covering letter addressed to me as the chair, dated April 6, 2004.

Dear Mr. Williams:

I acknowledge receipt of three motions passed by your Committee on March 11, 2004, which were received by the Privy Council Office on March 16, 2004. This letter provides the Government of Canada's response to these motions.

The first motion requests the production of Cabinet documents dating back to January 1, 1994. As you know, Order in Council P.C. 2004-119 has been issued to permit the disclosure of relevant Cabinet confidences created between July 1996 and February 20, 2004.

Order in Council P.C. 2004-119 was issued for the specific purpose of facilitating your Committee's inquiry of the matters described in Chapters 3, 4, and 5 of the November 2003 Report of the Auditor General.

As you know, the decision to disclose relevant Cabinet confidences is an unprecedented step in proceedings of this kind because their protection is essential to good government. It is a legal protection recognized by statute and recently confirmed by the Supreme Court of Canada. However, in the spirit of co-operation and as a result of your Committee's specific request for Cabinet documents dating back to January 1, 1994, I have directed my officials to identify Cabinet documents (if any) that relate to the government's sponsorship program and advertising activities for the period January 1994 to June 1996. If documents relevant to your inquiry are identified, a separate Order in Council will be required for their release, and this will necessitate the approval of the former Prime Minister.

Your Committee's request includes disclosure of additional documents for the period July 1996 to February 20, 2004, consistent with the existing Order in Council. These are enclosed and I bring to your attention the following points with respect to these Cabinet documents:

--As requested by your Committee, the documents include those generated by or provided to Cabinet committees, including ad hoc committees of Cabinet;

--In various instances, the Committee may already have in its possession portions of these documents requested; however, additional information is being provided pursuant to your Committee's motion of March 11, 2004;

--In some instances, excerpts of the documents are provided in order to protect the portions that pertain to matters outside the scope of your Committee's motion and the Order in Council;

--We have provided inserts of translated text where portions of the Cabinet documents exist in only one official language.

The second motion requests that all members of the Privy Council and all public office holders who appear before your Committee be released from their oath of secrecy in matters relating to your Committee's investigation. As you know, Order in Council P.C. 2004-119 permits disclosure to your Committee, upon request, of Cabinet confidences described in the same Order in Council.

In addition, the Government of Canada authorizes any former or current public servant who appears before your Committee to disclose any relevant information that would otherwise be protected solely by reason of their oath of secrecy. It should be noted, however, that this does not include information that is protected pursuant to statute or common law, for example information the disclosure of which may be injurious to national security, international relations or national defence.

The third motion requests that government departments and Crown corporations produce documents requested by your Committee in their entirety, notwithstanding the Privacy Act or the Personal Information and Protection of Electronic Documents Act. The motion further requests that any documents which are disclosed and contain information subject to those statutes be accompanied by a covering letter identifying the potential exemptions.

The Executive branch of government does not have the legal authority to alter the privacy protections afforded by statutes passed by Parliament. However, the Privacy Act provides a discretionary authority to disclose documents that contain personal information. This discretion lies with the head of every government institution subject to the Privacy Act. It would be inappropriate for me or any other government official to fetter this discretionary power conferred by Parliament. Steps will be taken to remind the appropriate heads of government institutions that they are at liberty to exercise their legal and discretionary powers to release personal information, if the public interest in disclosure clearly outweighs the privacy interest and notification is given to the Privacy Commissioner.

¸ (1430)

I trust the foregoing is satisfactory. In closing, I would like to assure you of the Government's continued cooperation with your Committee in its fulfillment of this very important mandate.

Yours sincerely,

Alex Himelfarb

These documents are tabled, Mr. Walsh?

Mr. Rob Walsh: With respect to the penultimate paragraph of the letter pertaining to the Privacy Act and the discretionary authority of the heads of every government institution, would it be appropriate, should it be the case that a document is partially withheld or obscured for purposes of privacy protection, that the request be made through the Clerk of the Privy Council to the heads of the relevant government institutions that the committee be so advised of that action?

The Chair: Yes, I think it's appropriate that we request that if they are providing documents and some are withheld by virtue of the Privacy Act and the Personal Information Protection and Electronic Documents Act that they indicate that some have been withheld. I think that's only appropriate. It did say here that in their discretion, they could override these acts, but if they decide not to override these acts, I think it's appropriate that they tell us they are in fact doing so.

I take it none of the documents being tabled today contain specific information that is covered by the Privacy Act and the Personal Information Protection and Electronic Documents Act. Am I correct in saying that?

Mr. Rob Walsh: Well, Mr. Chairman, I certainly have not had an opportunity to peruse the documents.

The Chair: Okay.

Has anybody perused these documents to ensure there's nothing in here that is covered by the Privacy Act or the Personal Information Protection and Electronic Documents Act? There's nothing in the covering letter indicating that there are some that would require this committee to release the information or review the information?

Mr. Rob Walsh: We can do that, Mr. Chairman, but I would suppose that since the Clerk of the Privy Council has not advised the committee that among the documents there are documents that should not be publicly disclosed for those reasons, one might assume there are no such documents in this bundle of documents. I would expect the Clerk of the Privy Council would have advised the committee if that had been the case.

The Chair: Okay, assuming.... Assuming is a bad thing to do, but as far as we're aware, no one is saying there's information here that is covered by the Privacy Act or the electronic documents act; therefore, these documents are tabled and public.

Mr. Rob Walsh: Mr. Chairman, one other thing for the record is that Mr. Himelfarb, the Clerk of the Privy Council, correctly points out at the bottom of page 2 of his letter the third motion of the committee, which was made for the production of certain documents notwithstanding the Privacy Act or the Personal Information and Protection of Electronic Documents Act. If memory serves, the committee passed this motion with that wording on the understanding that it did not consider itself governed by the Privacy Act or the Personal Information Protection and Electronic Documents Act, although at the same time, I think the committee is prepared at all times to be reasonable and to not needlessly cause private information to be made public.

Accordingly, I would recommend to the committee that the message go back that any documents withheld for reasons of the Privacy Act or the Personal Information Protection and Electronic Documents Act may want review by me as law clerk and legal counsel to the committee to see whether in fact we are agreed that the documents are properly withheld or partially obscured.

¸ (1435)

The Chair: Yes, I think that's agreed, Mr. Walsh.

I'm going to also read a letter from Mr. Marshall, which I have received in both official languages, dated April 7 and addressed to Mr. Jeremy LeBlanc, the clerk of the Standing Committee on Public Accounts.

Dear Mr. LeBlanc:

I'm writing to--

You'd better give a copy to interpretation.

Hon. Robert Thibault: Could I ask the law clerk, through you, did the letter that you read take care of the problem that was raised here yesterday and the motion raised by Mr. Kenney? Has that problem been disposed of?

The Chair: It didn't deal with the retroactivity. It dealt with the production of documents from the original order in council, Order in Council P.C. 2004-119, which was from July 1996 to February 2004.

Mr. Rob Walsh: Mr. Chairman, if I understood Mr. Thibault's point, on page 2 of the letter from Mr. Himelfarb, he does talk about providing documents dating back to January 1, 1994.

I thought the amendment we sought to the order in council went back to December 1, 1993. I'm not sure why he chose the date January 1, 1994.

The Chair: It says here, and again I will quote: “However, in the spirit of co-operation and as a result of your Committee's specific request for Cabinet documents dating back to January 1, 1994,”--which I think, as you point out, is perhaps the wrong year, as we're talking about 1993--he's directed his officials to get these documents. So these are not provided, but we may have a discrepancy of one year there.

I'm going to read into the record the letter from Mr. David Marshall, Deputy Minister of the Department of Public Works and Government Services, addressed to Mr. LeBlanc:

I am writing to update you on the Government's response to the Standing Committee's February 19th, 2004 motions requesting provision of specific information and contractual documents related to the financial transactions described in Chapter 3 (Sponsorship), Chapter 4 (Advertising) and Chapter 5 (Public Opinion Research) of the Auditor General's November Report.

As you are aware, on March 1, 2004, I provided the Standing Committee with contractual documents relevant to Chapter 3 (Sponsorship) of the report. I also provided a table listing key approval stages and the individuals who provided those authorities. As well, for referral to the Sub-Committee on the Protection of Witnesses and Testimony, I provided a table listing the titles and employment status, past and present, of the signatories. Additional information, in relation to Chapter 3, was provided to the Committee on March 11, 2004.

As I indicated in my letter of February 24, a similar process has been undertaken to provide the Committee with information relevant to Chapter 4 (Advertising). Under cover of this letter, I am pleased to provide the Committee with 40 copies of the contractual documents relating to the specific advertising activities described in Chapter 4 of the report. Also attached is a table listing approval stages and signatories relevant to these contractual documents. This table has been shared with the Auditor General's office, and confirmation has been received that it is consistent with their information. As you will note, these documents are in bilingual format.

A section of the table, which has been shaded, denotes information relevant to client departments and agencies. The remaining areas of the table capture authorities exercised by PWGSC officials, which have been verified. I have also communicated with client departments, requesting that they provide the Standing Committee with information relevant to their individual advertising activities. Attached, for your information, are copies of this communication.

Also attached, for referral to the Sub-Committee on the Protection of Witnesses and Testimony, is a table listing the employment status (past and present), titles, groups and levels of individuals undertaking highlighted authorities on behalf of Public Works and Government Services Canada, or other agencies that have since been integrated into the Department. As well, I am providing a corrected version of a similar list, related to Chapter 3, provided to you on March 1, 2004.

With respect to Chapter 5 (Public Opinion Research), the findings of the Auditor General were not related to communication agencies, and for this reason, there are no contractual documents which would fall within the scope of the motion adopted by the Committee. However, should the Standing Committee wish to review the other information relevant to Chapter 5, I would be pleased to undertake their provision.

I trust this will be satisfactory to the Committee.

It is signed by David Marshall.

We have all these documents, together with letters addressed to the various ministries requesting that they cooperate in accordance with the letter that I just read. Those documents are now tabled and public.

I think that concludes the tabling of documents.

[Translation]

Mr. Laframboise, you have eight minutes, please.

[English]

My apologies for the interruption there, Mr. LeFrançois.

Mr. Marc LeFrançois: No problem.

¸ (1440)

[Translation]

Mr. Mario Laframboise: Mr. LeFrançois, on what date did you learn that no written contract had been signed between VIA Rail and Mr. Scully's company?

Mr. Marc LeFrançois: Some time in 2002.

Mr. Mario Laframboise: Some time in 2002: that's what I thought.

You filed tabled documents with us. I would like us to go to the invoice of August 31, 1999, in fact to the two invoices addressed to you as chairman. You told us a moment ago why they were addressed to you. There is a remittance slip signed by Diane Langevin. Does Diane Langevin work at your office?

Mr. Marc LeFrançois: Yes.

Mr. Mario Laframboise: The notation on the remittance slip reads: “Verbal Agreement--Sponsorship of TV Serie Maurice Richard (English version)--Year 2000”. So, on the remittance slip, Ms. Langevin states that it's a verbal contract with the company, and you weren't aware of that?

Mr. Marc LeFrançois: No.

Mr. Mario Laframboise: Ms. Langevin, who is your right-hand woman, was aware of it, and you weren't?

¸ (1445)

Mr. Marc LeFrançois: You have to be careful here because we're going back a number of years. Ms. Langevin is a person who worked in the marketing department, as you can see: “Sr. Specialist, Advertising & Prom.”. Unfortunately, my assistant died--I don't remember the exact date--and I asked Ms. Sirsly if Ms. Langevin could do part of her work. That's how that happened. Ms. Langevin worked for Christena Keon Sirsly.

Mr. Mario Laframboise: Yes, but she was well aware that it was a verbal contract, whereas you tell us that you weren't aware there was a verbal contract. We wrote it on the remittance slip on September 23, 1999, and you say you didn't learn that until 2002.

Mr. Marc LeFrançois: I didn't learn until 2002 that the contract had never been signed.

Mr. Mario Laframboise: Perfect.

You tell us that, when you began the internal audits of the financial statements in 1999, the $910,000 in accounts receivable from the Government of Canada had been entered in the financial statements. You had learned about that and you called Mr. Tremblay--that's what you told me earlier--probably to settle that, and I understand you.

You told us that you had dined with Mr. Lafleur, a dinner also attended by the president of Canada Post. You told me earlier that that was irrelevant, except that Canada Post nevertheless also paid for the Maurice Richard Series. So I assumed that you might have spoken about it, in view of the fact that Canada Post had already paid, but you tell me no.

Don't you find that things happen in life, particularly since, in November 1999, you had your dinner and, in December 1999, Lafleur Communications was given a mandate to pay you? You received the cheque in March. You mentioned to me that Mr. Gagliano had phoned you. You also mentioned that in your affidavit.

I'll read you the statement that Mr. Gagliano made before this committee in response to my colleague. He said:

Mr. Desrochers, I can tell you that I never discussed sponsorships with the officers of the Crown corporations. It's as simple as that.

So he said he had never spoken with the officers of the Crown corporations. Lastly, you tell us that what he said is not true.

Mr. Marc LeFrançois: I'm telling you nothing about what Mr. Gagliano told you. I've given you a sworn affidavit on what happened.

On television, when I watched you to see how things went, I heard that you would recall Mr. Gagliano. So ask him that question. I can't answer for him.

^ç	You seem to be telling us that you never received instructions from the federal Department of Public Works. However, in your application--because you filed suit against the Attorney General of Canada and VIA Rail--you state in paragraph 11:

VIA Rail's participation in putting in place the Maurice Richard Series had been expressly required by the federal Department of Public Works.

That's in the statement you filed.

Mr. Marc LeFrançois: And that's what I'm saying too.

Mr. Mario Laframboise: So it was the Department of Public Works that asked you to do that?

Mr. Marc LeFrançois: Absolutely.

Mr. Mario Laframboise: It wasn't Mr. Gagliano himself?

Mr. Marc LeFrançois: No, it was Mr. Guité who phoned me. Everything's written in my affidavit.

Mr. Mario Laframboise: In his testimony, Mr. Guité stated that, in the context of the 1995 referendum, he called media people in Montreal to ask them what was available. Reference was made to $8 million spent to buy billboard space. He added that those people had been surprised, but he had reserved all the available outdoor billboard space to the tune of $8 million. I think the program was called Attractions Canada. There was another one for health. All of Quebec was covered in that way. Did VIA Rail take part in the Attractions Canada program?

Mr. Marc LeFrançois: Not at all. I was even shocked when I heard that.

Mr. Mario Laframboise: You say that even though we tell you we have a letter signed by Mr. Guité stating that VIA Rail took part in the Attractions Canada program, a letter dated May 25, 1999, addressed to Mr. Desrochers, lawyer, specifically stating who was part of the Attractions Canada program. VIA Rail's name appears in it.

Mr. Marc LeFrançois: We must be talking about different things. You're telling me things I'm hearing for the first time.

Mr. Mario Laframboise: This is the first time you've heard about this!

Mr. Marc LeFrançois: It's the first time I've heard about it.

Mr. Mario Laframboise: I suppose if we wanted to know more, we should ask VIA Rail if you took part in the Attractions Canada program.

Mr. Marc LeFrançois: I imagine so...

[English]

The Chair: Mr. Laframboise, you're making reference to a letter. Has that letter been tabled at committee? Which letter are you referring to?

[Translation]

Mr. Mario Laframboise: No, but we can table it.

[English]

The Chair: You will table the letter. If we could receive it today, that would be good. You can give it to the clerk.

[Translation]

Mr. Mario Laframboise: Let's come back to the 1995 billboard rental program. Had VIA Rail previously taken part in billboard rentals in the context of this operation which was launched by the federal government?

Mr. Marc LeFrançois: The vice-president from marketing, Ms. Sirsly, will come and testify. You can ask her. For my part, this is the first time I've heard about it. I don't mean I'm hearing about it for the first time today because I've seen it in the newspapers and on television, but I wasn't aware of the fact that VIA Rail had taken part in billboard rentals.

Mr. Mario Laframboise: Without talking about billboard rentals, did you take part in the Attractions Canada program?

¸ (1450)

Mr. Marc LeFrançois: I don't know what you're talking about.

Mr. Mario Laframboise: That means that your answer is no. You didn't take part in the Attractions Canada program, even though Mr. Guité mentioned in a letter...

Mr. Marc LeFrançois: I'm telling you that I'm not personally aware of it.

[English]

The Chair: Unfortunately, we have run out of time.

We now have to move to Mr. Jordan for eight minutes.

Hon. Joe Jordan: Thank you, Mr. Chair.

Mr. LeFrançois, if I understand your testimony correctly, you engaged in a telephone conversation with Mr. Guité sometime in 1999. The proposal was put to you that if VIA Rail were to pay L'Information essentielle $910,000, CCSB would pay you back and VIA would get some exposure as part of this television series, and you felt that was worth doing. Even if they never came up with the $910,000, you felt it was still a good project to invest in.

From your frame of reference, that explanation is plausible. You pick up the phone and somebody's offering you a deal that on paper is an incredible value because of the production costs of that series. You're going to have the VIA name at the end of the film and it's going to get lots of exposure. I accept that from your frame of reference it looks like a good deal.

If you expand the frame of reference, though, and look at what the Auditor General has documented in her chart on page 10--I don't know if you have this in front of you--you'll see it essentially shows the money from CCSB went through six advertising and communications firms. In five of those cases it went directly to L'Information essentielle, along with Canada Post sending money directly to L'Information essentielle. Why the money was channeled that way, we don't know--and I don't expect you to know.

But the fact that VIA Rail is in one of those streams.... And again, from your perspective, it was an incredibly good deal; I'm not arguing that. But if we look at the dates the money flowed through those channels, it becomes clear to me--and I'm getting onto speculative ground here--the role VIA played in this was essentially that of a bridge financing firm. You were able to supply the money in a fiscal year when CCSB didn't have the money, and they paid you back in a subsequent fiscal year. In the absence of any other explanation, I conclude that you essentially undertook a bridge financing role for this government department, and it may have been good value for VIA.

The problem I have is that the verbal contract, any way you slice it, is putting at risk taxpayers' money. If it was your business and you wanted to enter into verbal contracts, that would be fine, but at the end of the day, this one did not work out. You didn't get repaid $910,000; you got repaid $750,000.

Your accountants listed the $910,000 as a receivable, which, under anybody's definition of generally accepted accounting practices, means you had a realistic expectation you were going to get that $910,000. In fact, your auditors should have sent and received a confirmation of the receivable from the Government of Canada.

Now, they may not have done so when they audited your books because they may have assumed, in a frightening way, the government was good for it. But the decision for VIA Rail to allocate and invest $160,000 was not made as a result of a management decision to invest in this. This was a backfill because you were left with a discrepancy between what you'd paid and what you got once the CCSB had put that money through Lafleur and they had taken their cut. So we have a $160,000 discrepancy.

I'm not arguing that it may not very well have been worth it. What I'm arguing about is that you say it's a matter of interpretation. To me, the timing doesn't fit, because you would have either had to write that off because we didn't have any contract and the $910,000 that was promised wasn't delivered...or at the time, did Mr. Guité suggest to you that $910,000 included a $160,000 investment from VIA, or were you under the expectation that it meant $910,000?

¸ (1455)

[Translation]

Mr. Marc LeFrançois: I don't really know what to answer. For some answers, I must refer you to an accountant. I'm not an accountant. Concerning the...

[English]

Hon. Joe Jordan: Could I stop you there and ask you one direct question?

When you spoke to Mr. Guité on the phone about the $910,000 that VIA was going to pay and then be repaid, did he indicate that the $910,000 that VIA was going to pay included $160,000 that wouldn't be repaid because that was going to be a VIA investment? Or did you understand that you were going to get all $910,000 of that back?

[Translation]

Mr. Marc LeFrançois: I thought I was quite clear. I repeat that, in the conversation I had with Mr. Guité, there was never any talk about $910,000. The discussion concerned the fact that Mr. Scully, or Essential Information, wanted to obtain a $1 million sponsorship. Mr. Guité told me that, if VIA Rail agreed to take part in the project, he would be able to contribute an amount equivalent to 75% of costs, which meant $750,000.

[English]

Hon. Joe Jordan: Okay. That's fine.

What I'm asking you then—

Mr. Marc LeFrançois: Excuse me, may I finish my answer?

The Chair: Yes, but you're kind of veering off from Mr. Jordan's question. You both would like to speak, so....

Hon. Joe Jordan: I'm not cutting off the speaker. I've got what I need from his answer to me, but I don't think he quite understood what I was asking.

If it was implied in those discussions that something close to $1 million was going to go to VIA, money was going to be paid back from CCSB, and VIA was going to make an investment, why did you list the $910,000 as accounts receivable on the books of the company you headed?

If VIA was making an investment, that should have been carved out of that number, $750,000 should have been in the accounts receivable, and it should have been reflected in advertising expense, which I guess is what they ended up going with. The timing of this doesn't fit. In the words of your auditor, the balance of $160,000 was expensed as advertising. Then they went on to say, “As VIA was a partner in this promotion, it was reasonable for them to have...”. It may be reasonable, but the problem I have is that this was a decision made after the fact. For all intents and purposes, CCSB was spending VIA money. This was not pre-approved. This was not a decision that was arrived at through any kind of logical management process. This was a deficit that was left as a result of a verbal contract, which I agree is binding unless you have a problem with it and you have to try to enforce it. I don't know what we would have done had we had a problem.

Would you not agree that even though VIA's part in this was relatively minor, that particular transaction was very unusual? For VIA to go back and justify that deficit as an advertising expense after the fact kind of pushes the limit of what would be acceptable under normal accounting and auditing practices.

The Chair: Mr. LeFrançois.

[Translation]

Mr. Marc LeFrançois: Mr. Chair, I listened to what he said. I said exactly what happened. He can ask VIA Rail's accountants. I can't...

[English]

The Chair: I think you're saying he thought this was a very unusual and abnormal transaction that was pushing the limits. Do you agree with that?

Mr. Marc LeFrançois: No. That is what he's saying.

The Chair: Is that what you say, or what somebody else says?

Do you personally not believe it was an abnormal transaction pushing the very limits of accounting terminology--assigning the distribution of the expenditures?

¹ (1500)

[Translation]

Mr. Marc LeFrançois: I'm not an accountant, but I don't agree with what he says. It wasn't abnormal. It wasn't an abnormal transaction.

[English]

The Chair: Okay. Thank you very much.

I have on the list Mr. Kenney, Mr. Mills, Mr. Proulx, and Mr. Lastewka. There seems to be some indication that we should stop at that point. The chair and Mr. Laframboise wanted some more, and of course our friend from Winnipeg. We're going to cut it off there. The chair will have a few remarks as well.

Mr. Kenney is next, for four minutes. We're now into the third round. We'll see what happens in the fourth round.

Mr. Jason Kenney: Would you start my clock there?

The Chair: Yes.

Mr. Jason Kenney: Mr. LeFrançois, at point 25 of your affidavit, you say that you spoke on the telephone with Alfonso Gagliano regarding sponsorships, which, as Mr. Laframboise points out, contradicts his testimony.

Why, sir, would you speak to the Minister of Public Works about VIA business? Did you ever speak to your minister, the minister responsible for VIA Rail, who was the Minister of Transport, David Collenette, at the time?

[Translation]

Mr. Marc LeFrançois: I often spoke to Mr. Collenette because he was my minister.

Mr. Jason Kenney: About this subject?

Mr. Marc LeFrançois: No, no, not about this subject. He should ask Mr. Gagliano why he phoned me to verify what his officials had told him. That's a call that I received. I remember it and it's written down there.

[English]

Mr. Jason Kenney: Earlier you had testified that during your tenure at VIA, you had a one-quarter share in a box at the Bell Canada Centre in Montreal. Do you know which other sponsors shared that space with VIA?

[Translation]

Mr. Marc LeFrançois: We could get that exact information. I know that, at the start, there was Lafleur Communications and there was us.

[English]

Mr. Jason Kenney: You shared the space with Lafleur Communications?

[Translation]

Mr. Marc LeFrançois: Yes.

[English]

Mr. Jason Kenney: That's very interesting, because earlier I asked you if you had worked out an arrangement with Lafleur Communications to sponsor the box. You testified that no, it wasn't the case at all.

[Translation]

Mr. Marc LeFrançois: No, no. At that point, I had misunderstood your question because you previously gave information. We'd have to get the information from VIA Rail. Payment for the box was made directly by VIA Rail. We would have to check to see whether it went to the Montreal Canadiens. Those are documents that may be available.

[English]

Mr. Jason Kenney: Okay. Let me be very clear about this, then. I think it's an important issue.

Are you telling me that one-quarter of the cost of the box was paid directly by VIA Rail and three-quarters of the cost of the box was paid for by Lafleur Communications?

[Translation]

Mr. Marc LeFrançois: No, I can't say how much Lafleur Communications paid; I can say how much VIA Rail Canada paid.

[English]

Mr. Jason Kenney: You were responsible for one-quarter and you know that Lafleur was another partner. Were there any other partners in this box?

[Translation]

Mr. Marc LeFrançois: I believe so, but we'd have to request the information.

[English]

Mr. Jason Kenney: To whom? Who do I ask?

[Translation]

Mr. Marc LeFrançois: VIA Rail Canada. If I were still there, I would...

[English]

Mr. Jason Kenney: Well, sir, you were the chairman then. They don't have the box any more. They had the box while you were the chairman. If I ask the current executives, they're going to tell me that they don't have a box.

[Translation]

Mr. Marc LeFrançois: No, but if you ask them to give you the information, as it's entered in the books, they'll give it to you.

[English]

Mr. Jason Kenney: All right.

Did Lafleur Communications have a sign? Did they receive visibility at the Bell Canada Centre for their share, or was it only VIA Rail that received the visibility? Do you know?

[Translation]

Mr. Marc LeFrançois: I didn't see the name of...

¹ (1505)

[English]

Mr. Jason Kenney: All right. Well, quite frankly, Mr. LeFrançois, this sounds to me very suspiciously like what Mr. Beaudoin spoke of in media reports, which was Lafleur Communications acting as a “dry cleaner” for crown corporations to legitimize the large cost of an executive privilege for their executives at the Bell Canada Centre.

How can you deny this? This is clearly what was happening.

[Translation]

Mr. Marc LeFrançois: How can I answer those assertions? I'm telling you that it's very easy to find out from VIA Rail what the arrangements were.

[English]

Mr. Jason Kenney: Well, sir, I'll have to say that in your answer to my earlier question, quite honestly, you were less than forthcoming about the role of Lafleur in sharing this box.

Let me ask you this. Did you ever directly discuss with Jean Lafleur their role in the complex financial arrangement for the sponsorship of the Maurice Richard series by VIA Rail? Did you ever discuss this matter or communicate with Mr. Lafleur, or anybody else at Lafleur Communications, about this matter?

[Translation]

Mr. Marc LeFrançois: Never.

[English]

Mr. Jason Kenney: You socialized with them. He was your agency of record. He got $100,000 out of this deal for a postage stamp. You shared a box with him, and you went to hockey games with him. You attended luncheons at his chalet, where he served several thousands of dollars worth of wine, but you never discussed this business deal where he got $100,000 for a 47¢ postage stamp?

[Translation]

Mr. Marc LeFrançois: Pardon me if I smile. I'm simply going to tell you that one of my best friends, someone I see regularly, is Mr. Martin's first secretary. And yet people know how I was dismissed. So I don't understand how your theory can stand. I have friends on the Bloc québécois, and they are good friends; sometimes I eat with them. I also have friends among the Conservatives.

Is what you're talking about here, cronyism...

M. Jason Kenney: You're not asking the questions here.

[English]

The Chair: Thank you, Mr. Kenney.

Merci, monsieur LeFrançois.

Mr. Mills, four minutes, please.

Mr. Dennis Mills: Thank you very much, Mr. Chair.

I just have to take 30 seconds to say that when I went back to my office during the lunch break, I had a couple of e-mails from people who criticized me for being too polite to the witnesses over the last few days. The world is upside down, you know. They want me to be a little tougher, like Mr. Kenney, and a little more assertive.

The Chair: I hope you're not going to attack the witnesses from here on in.

Mr. Dennis Mills: I want to read from your testimony this morning:

For me, the substance always prevails over the form. A written contract is always preferable to a verbal agreement, but the court ruled a long time ago that a verbal agreement is as legal as a written contract. I am a businessman, and all my life I have concluded transactions over a handshake. A verbal agreement between people who respect each other is as valid as a written contract.

I have to say, Mr. Chair and colleagues, that I have done the same thing many times over in my business career, so this did not come as a huge surprise to me. But what is my obsession—and I say this to Canadians—is getting to the point where we provide value for money.

Now, Mr. LeFrançois, do you know the amount of money you spend annually on advertising? What was your annual advertising budget for newspapers, television, and radio?

Mr. Marc LeFrançois: I would say

[Translation]

about $4 million. I know that the overall budget is $12 million. We have national and regional programs, but, to get the real answer, you should ask Ms. Sirsly the question.

[English]

Mr. Dennis Mills: You mentioned earlier that for the Maurice Richard television series—which I presume had other sponsors than just VIA Rail—you had Nielsen do the evaluation, and that you received four times the amount of the investment back on that particular project.

[Translation]

Mr. Marc LeFrançois: That's the information I got: I was told we had received more than $4 million worth of visibility.

[English]

Mr. Dennis Mills: Is it your practice, or the practice of VIA Rail, that your advertising in general has an evaluation process to it, so that you can test-check that your advertising agency is giving you value for money on an annual basis?

[Translation]

Mr. Marc LeFrançois: I can assure you that, when I left VIA Rail, there was a pre-evaluation, follow-up and a post-evaluation for each of the projects.

[English]

Mr. Dennis Mills: Is that available for the public to see?

[Translation]

Mr. Marc LeFrançois: You should ask VIA Rail.

[English]

Mr. Dennis Mills: Thank you very much.

This is very important, Mr. Chair and colleagues, because I believe that all advertising agencies, when they send us a bill, should have to go through the same process. I just want to make the point that this crown corporation has tested value for money on their advertising contracts.

I hope that when the advertising agencies and their chief financial officers come before us, they can produce that same type of evaluation.

Thank you, Mr. Chair.

¹ (1510)

The Chair: Thank you very much, Mr. Mills.

Yes, we do hope that it all has been according to the rules—but of course if it has not been, that's why we're here.

Monsieur Proulx.

Mr. Marcel Proulx: Thank you, Mr. Chair.

[Translation]

Hello again, Mr. LeFrançois.

You briefly told us in your testimony this morning that you often met Mr. Guité or that it was perhaps Mr. Guité who often went to meet you for lunch when he was in Montreal.

Am I to understand that the Maurice Richard television series project is the only sponsorship event, to your knowledge, that VIA Rail has had with the Department of Public Works through Mr. Guité, or were there others?

Mr. Marc LeFrançois: There were others. I refer you here to...

Mr. Marcel Proulx: That's fine. So that means that you met Mr. Guité regularly to discuss all kinds of files, and not just the Maurice Richard program.

Mr. Marc LeFrançois: I was trying to get as much as possible because the more visibility we had...

Mr. Marcel Proulx: Perfect, I understand. This morning, before lunch, you referred to a calculation you had made by taking the amount of the cheque that Public Works Canada had paid to Lafleur Communications and subtracting the amount that Lafleur Communications had paid to VIA Rail. That gave you a commission of less than $112,000 or $125,000 mentioned by the Auditor General in her documents. Can you explain to us your exact calculation?

Mr. Marc LeFrançois: Yes, that's in fact what I said. First of all, when this project was mentioned in the newspapers in 2002, the amount of the cheque paid to Lafleur Communications was also mentioned. The copy of the cheque that we received as payment...

Mr. Marcel Proulx: Excuse me. That's just hearsay. You're assuming that the amount reported in the media was correct. You don't know.

Mr. Marc LeFrançois: That's the amount that was reported, and the Auditor General knew the actual amount of the cheque. When I met Mr. Minto and his colleagues, I asked them how it could be said that the commission was $112,000, whereas, according to my calculations, it was roughly only $60,000.

Mr. Marcel Proulx: That's good. This morning, you referred to that when you told us about the fictitious invoices. You didn't agree with the terms used by the Auditor General. On page 13 of the Auditor General's report, reference is made to the issuing of a fictitious invoice to a communications agency, Lafleur Communications, which had not signed a contract. Do you agree with that?

Mr. Marc LeFrançois: Yes.

Mr. Marcel Proulx: At tab 5 of the document accompanying the affidavit on the Maurice Richard Series, there is a photocopy of the invoice to Lafleur Communications marketing stating the amount of $750,000 for the sponsorship of The Maurice “Rocket” Richard Story television series, plus taxes, for a total or more than $862,000. Do you agree with that?

¹ (1515)

Mr. Marc LeFrançois: All right.

Mr. Marcel Proulx: I assume that this invoice is what is meant when the Auditor General refers to a fictitious invoice.

Mr. Marc LeFrançois: That's correct.

Mr. Marcel Proulx: That did involve a verbal agreement between Mr. Guité and you, and it was in fact the Government of Canada that paid you the money. Why do you think that shouldn't be called a fictitious invoice?

Mr. Marc LeFrançois: I don't understand how you can call that a fictitious invoice and claim that we tried to camouflage transactions and other things. You can't be more transparent than we were at VIA Rail. We submitted to you the letter from Raymond Chabot Grant Thornton, who were among VIA Rail's external auditors.

Mr. Marcel Proulx: We'll come back to that. It seems to me that, instead of issuing an invoice, when someone was coming to bring you a cheque, as Ms. McGraw emphasized moreover, VIA Rail could have issued a receipt stating: “Received from Lafleur Communications a cheque in the amount of...”. VIA Rail didn't sell any services to Lafleur Communications, as far as I know.

The Chair: Your question period is up.

[English]

You're over your time.

[Translation]

Mr. Marcel Proulx: I've already asked my question.

Mr. Marc LeFrançois: I understood it, Mr. Proulx. Moreover, it's a good question, and I could give you a twofold response.

I put that question to the controller myself. Reference was made to the computer system. The computer system couldn't produce a receipt. It receives money, and there must be a corresponding piece of paper.

Furthermore, Lafleur Communications, and all the other agencies, if my information is correct, acted for and on behalf of the Government of Canada. Lafleur Communications therefore received services for and on behalf of the Government of Canada. That's how the government decided to implement its Sponsorship Program, that is to say by subcontracting to agencies. That's what we were told.

You can look at all the other contracts that were signed with Gosselin Communications or the five or six firms that had been selected. I even saw contracts where they represented themselves as official representatives of the Government of Canada.

Those documents must be somewhere since they're public.

The Chair: Thank you very much, Mr. Proulx.

[English]

We'll now have two minutes from Mr. Laframboise and two minutes from Ms. Wasylycia-Leis. I think there will be a couple of interventions from the government side and the chair, and that will wrap it up for today.

Mr. Laframboise, for two minutes.

[Translation]

Mr. Mario Laframboise: Thank you, Mr. Chair.

I have one very clear question. In the introduction of the document you presented to us, you state:

Judging by recent press reports, the Auditor General was unacceptably inaccurate and vague in the use of such pejorative language.

That's what you said regarding the Auditor General. You even said that you had been tough with her.

When I look at the analysis the Auditor General conducted... I asked you questions about the rules followed with regard to the business case. You answered that the auditor had not found the documents. I'll read you what the auditor said: “VIA Rail was unable to present a business case...” . Her objective was not to go and find it. She requested the business case from VIA Rail, and you were unable to give it to her. That's what the Auditor General asked of you.

Reference is made to the verbal contract. Earlier I mentioned to you the contract and the invoice, in the tab that you filed with us, which stated that, on September 24, 1999, Ms. Langevin, from your offices, said that it was indicated on the remittance slip that it was a verbal contract. You told us that you know that it was a verbal contract in 2002.

However, in your statement today, you say:

I am a businessman and, all my life I have concluded transactions over a handshake. A verbal agreement between people that respect each other is as valid as a written contract.

I think it was a verbal contract, and you know very well that it was a verbal contract. I don't have any problem with that. You say yourself that a verbal contract is as valid as a written contract. However, you've just told us that perhaps you didn't know and that that shouldn't have been done. I think that you know it and that you did it. The proof is that even your officials who prepare the remittance slips said that there was a verbal contract. That's a fact.

With regard to the whole budget and this entire payment saga, you said in your statements that no one would come and tell you who directs VIA Rail's marketing budget, and that's true because you said no to Robert Guy Scully at the outset. Later on, of course, it was a political order that was given to you, a political order that was settled by Mr. Gagliano.

That said, do you maintain that the Auditor General “was unacceptably inaccurate and vague in the use of such pejorative language”?

Mr. Marc LeFrançois: Thee more times, according to what you've just said.

Mr. Mario Laframboise: Perfect. That's good.

The Chair: Thank you very much.

[English]

I was just going to put on the record.... Oh, were you going to respond?

[Translation]

Mr. Marc LeFrançois: Mr. Chair, so as to be sure we understand each other clearly, because there was a lot of talk earlier about verbal contracts and legality, I would like everyone here to be aware that, in the big binder, in Attachment “C” regarding corrective measures, item 3d) states:

d) The requirement that all sponsorships, irrespective of size, be covered by a specific contract between VIA Rail and the promoter of the event being sponsored;

The existing policy was strengthened so as to have control in order to ensure that contracts are signed and that there are no further situations of this kind.

Life's like that: when you don't do things, after...

¹ (1520)

[English]

The Chair: Life is like that.

Mr. Proulx asked me to put this on the record. Mr. LeFrançois had referred to the audit as perhaps suggesting that everything was under control and above board. Referring to la série Maurice Richard affidavit at tab 4, in the auditor's report dated February 9, 2000, it says:

We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence....

...in our opinion, the transactions of the Corporation that have come to our notice....

Management is obliged to divulge to auditors all things they have concerns about. It's not for auditors to examine every transaction and detail. They are to satisfy themselves on a reasonable basis that what they find is a clear statement of the facts. If there are transactions that have not been disclosed to them, of course that causes a problem. They use standard audit procedures. We can't expect them to look at every transaction. We'd never be able to afford the auditor.

Ms. Wasylycia-Leis, for two minutes.

Ms. Judy Wasylycia-Leis: Thank you, Mr. Chairperson.

I'm just wondering if there's any way to explain how and why Mr. Chuck Guité would have singled you or VIA Rail out in terms of executing part of this plan--this questionable plan, in my view.

You know that before the Liberals came into power in 1993, Mr. Guité was involved with Brian Mulroney and worked in the bureaucracy. We know from press reports that you were appointed to VIA Rail back in 1985 by Brian Mulroney.

Did you and Mr. Guité know each other back in that period of time?

Mr. Marc LeFrançois: No, absolutely not. I met Mr. Guité for the first time

[Translation]

around 1997 or 1998.

[English]

Ms. Judy Wasylycia-Leis: Could you tell us if there is any relationship between what has happened with the sponsorship file and the questions around it and reports about previous dealings that you had in terms of an unusual decision to issue VIA advertising work to Martin Publicité, which was a Conservative ad agency at the time? Is it possible that you were seen as someone who could get the job done when it was necessary, that someone in the Liberal government from 1993 to just recently saw you as an easy mark, and that along with Mr. Guité, you became a tool for the government in terms of executing this plan?

Mr. Marc LeFrançois: Mr. Chairman, to me those remarks are not a question, they are just insulting.

[Translation]

I have my record. If you want to consult it, there it is. I submitted it to you this morning. I don't belive you're entitled to ask that kind of question. I know you were a minister in the provincial government, since you've said it so often. I listened to you, but I don't think you're entitled to make those kinds of remarks and I don't accept them.

[English]

Ms. Judy Wasylycia-Leis: Well, if I have been offensive to you in any way, let me apologize.

I'm referring to media reports of your being involved in an unusual decision to issue advertising to a Conservative ad firm back in 1995. We seem to be dealing with something similar.

¹ (1525)

The Chair: Your question?

Ms. Judy Wasylycia-Leis: I'm asking if there's any relationship here and if you are seen as someone who can get the job done. I don't think that's.... These are facts, and I'm asking a straightforward question.

[Translation]

Mr. Marc LeFrançois: Mr. Chair, I'd like to answer that question. Ms. Sirsly, whom I met in 1985, will be coming to testify here, for your information. If you had a Bible, I would be prepared to swear on it.

A committee was charged with selecting the advertising agencies you referred to. In the discussions, I lost, because I had recommended another firm. This wasn't my choice, contrary to what the media reported. You could put the question to M. Sirsly, when she comes and testifies here. If you have a Bible, you can get it out and I'll swear on it. Do you believe everything the newspapers say? I don't know what they've said about you to date.

[English]

Ms. Judy Wasylycia-Leis: That's why I'm asking.

The Chair: Thank you very much, Ms. Wasylycia-Leis.

Mr. Lastewka, please, two minutes.

Hon. Walt Lastewka (St. Catharines, Lib.): Thank you, Mr. Chairman.

I want to disagree with your last statement, when you made your remarks. I want to take just a few minutes--two minutes, no more.

It's my understanding, Mr. LeFrançois, that you met with Guité, that there were invoices, there were items put under accounts receivable. I find it very interesting that the Auditor General of Canada would audit the books...and I understand in one of your presentations here it says the items “...have, in all significant respects, been in accordance with Part X of the Financial Administration Act and the regulations, the Canada Business Corporations Act and the articles and the by-laws of the Corporation.” This is signed by the Auditor General of Canada and includes some background papers, including an asterisk showing in the accounting, “Include Marketing unbilled revenue to Government agencies ($910k...).”.

It seems to me, Mr. Chair, that we have one Auditor General saying something up to and including December 31, 1999--I think the audit was completed in February 2000--and then the witness has talked about fictitious invoices and so forth that were noted in the present Auditor General's report. I'm sorry, I should have mentioned it was the previous Auditor General and then the present Auditor General. So the conflict I run into is that we have one Auditor General saying one thing, that the books are in order, and the other Auditor General is saying something else.

I'm sure we're going to have the Auditor General back at some time in order to clarify some questions.

I just wanted to get that on the record, Mr. Chair. The rest of my time goes to Ms. Jennings.

The Chair: All right.

Ms. Jennings.

Mrs. Marlene Jennings: Just to add on, in the same document,

[Translation]

Tab 6 of your affidavit contains a letter dated March 1, 2004 to Marc LeFrançois signed by Marlene M. McGraw, Chair of VIA Rail's Audit and Finance Committee. The third point of her letter states:

¹ (1530)

[English]

The $910,000 was advanced and set up as a recoverable amount on the December 31, 1999 financial statements. Both of Via's external auditors, Raymond Chabot Grant Thornton and the office of the Auditor General, reviewed the supporting documents for this receivable during the audit of the December 31, 1999 financial statements. It is my understanding that the issue of a verbal versus written contract was discussed with management but no other concerns regarding this receivable were identified. Further, no issues were raised by the auditors with respect to this receivable during their report to the audit committee and as such, it is reasonable to conclude that the external auditors (both Raymond Chabot Grant Thornton and the office of the Auditor General) did not consider this receivable as anything but valid.

[Translation]

You received that letter from the chair of VIA Rail's Audit and Finance Committee.

Mr. Marc LeFrançois: Indeed, I asked that that be written down because, when a meeting was held between the Auditor General, Ms. Fraser, and that committee, the two accountants on the audit committee objected to the use of the word she had chosen.

In addition, that's why I gave you the letter from Raymond Chabot Grant Thornton confirming that, contrary to what the chair said earlier, the managers provided all the detailed information concerning this file and that they accepted it.

Mrs. Marlene Jennings: Did that in fact take place in 1999?

Mr. Marc LeFrançois: It was indeed in 1999. You have the letter from Raymond Chabot Grant Thornton.

Mrs. Marlene Jennings: That's perfect.

Mr. Marc LeFrançois: We were transparent in an exemplary manner.

Mrs. Marlene Jennings: I would like to ask you a second question. In response to a question from Mr. Laframboise on your relations with people who are in politics or who operate in the private sector, but who are known as Liberal Party sympathizers, you mentioned that you had lots of friends. Do you have friends who are known as members of the Bloc and the Parti québécois?

Mr. Marc LeFrançois: I have lots of friends in that party as well.

Mrs. Marlene Jennings: When you say Conservatives, do you mean the former Conservative Party?

Mr. Marc LeFrançois: Absolutely.

Mrs. Marlene Jennings: Do you have friends in the new Conservative Party?

Mr. Marc LeFrançois: For the moment, I don't know of any, but I'm going to make sure I have some because they are pleasant people.

[English]

The Chair: Thank you very much, Madam Jennings.

Mr. LeFrançois, on the box that VIA had, you had a 25% share in the box, but you can't buy a 25% share. You have to buy the whole thing, because you can't get one quarter of a box. So normally when these things happen you have an arrangement: I'll buy 25% and somebody else buys a certain percentage, and maybe half a dozen people end up buying the whole box.

What arrangement did VIA Rail make with whom on buying the box?

[Translation]

Mr. Marc LeFrançois: Mr. Chair, I don't know where your information comes from, but I am sorry to have to contradict you. You can buy three, five, or 10 shares. You can buy what you want. You can call the Molson Centre tomorrow. If you want four shares, they'll be pleased to sell them to you. However, you can't decide who your partners will be. It's the Molson Centre that decides that.

[English]

Mr. Dennis Mills: Mr. Chair, that same practice happens at the Air Canada Centre in Toronto. I would say a quarter of the boxes have multiple partnerships.

The Chair: All right.

The other question that has not been touched on today, Mr. LeFrançois, is your involvement in the 125th anniversary of the RCMP. You started off this morning by saying you were the honorary chair of a dinner in Montreal, and then you went on to talk about the fact that you were signing cheques and so on, and of course the RCMP have got themselves in a little bit of hot water, because that was not the appropriate way in which things were handled. Were you one of the signatures on that bank account with signing authority?

Mr. Marc LeFrançois: For the ball in Montreal, no. Maybe I was, but I never signed a cheque, because the administration

[Translation]

was the RCMP's responsibility.

[English]

The Chair: You mentioned this morning that you were signing cheques or endorsing cheques.

[Translation]

Mr. Marc LeFrançois: No, I said this morning, Mr. Chair, that I personally endorsed a line of credit for the ball's preparations.

[English]

The Chair: You guaranteed an advance from a bank to get the money going to get the ball arranged. If you guaranteed it, the loan would have been in somebody else's name. Whose name was it in?

[Translation]

Mr. Marc LeFrançois: It was Odilon Émond.

[English]

The Chair: Who is he?

Mr. Marc LeFrançois: He was the chief of the RCMP for the province of Quebec.

The Chair: He borrowed money in his own name, guaranteed by you, for this 125th anniversary celebration.

[Translation]

Mr. Marc LeFrançois: I don't know the details, but I remember that he asked me to endorse it personally, which was a requirement of the bank's. I don't remember whether it represented $25,000 or $40,000.

[English]

The Chair: At the loan office, it wasn't in the name of the RCMP, because I wouldn't think they would need a guarantee. Do you believe it was in the name of the chief of the RCMP?

¹ (1535)

[Translation]

Mr. Marc LeFrançois: I don't believe so, but it might simply have been in the name of the activity in question, the RCMP's 125th anniversary ball. That was a detail I didn't pay any attention to.

[English]

The Chair: Are you aware whether someone else guaranteed it along with yourself, or were you the sole guarantor?

[Translation]

Mr. Marc LeFrançois: No, there was also Mr. Émond, who was the RCMP boss for Quebec.

[English]

The Chair: So he guaranteed the loan as well.

Mr. Marc LeFrançois: Yes.

The Chair: Was it just the two people?

Mr. Marc LeFrançois: Just the two people.

The Chair: Was the loan all paid off, and were you released from your guarantee?

[Translation]

Mr. Marc LeFrançois: Yes. It wasn't necessarily a loan, but a guarantee on the line of credit.

[English]

The Chair: I appreciate that.

[Translation]

Mr. Marc LeFrançois: That activity generated a surplus, and that money was given to the organization that the RCMP supports for the province of Quebec, the Foundation for Research into Children's Diseases.

[English]

The Chair: Have you any idea of how much was paid to that charity?

[Translation]

Mr. Marc LeFrançois: No, it was announced publicly, but I don't remember.

[English]

The Chair: Were you in any way, shape, or form involved in being the honorary chairman of or supporting financially or just by your name golf tournaments and other events sponsored by the RCMP?

[Translation]

Mr. Marc LeFrançois: I took part in maybe two or three RCMP tournaments. I bought my ticket, like everyone, and I went and played golf. I got tired of doing it, Mr. Chair, because I'm not a golfer. A few years ago, I started saying no to everyone because everyone organizes golf tournaments to raise funds.

[English]

The Chair: Were you paid an honorarium for these events, including the ball in Montreal?

Mr. Marc LeFrançois: No.

The Chair: Are you aware of anybody who was paid an honorarium for that, for what would normally be considered a voluntary service?

[Translation]

Mr. Marc LeFrançois: I'd be very surprised if anyone was paid for an activity of that kind.

[English]

The Chair: I think we'd all feel that way. I just wanted to make sure that nobody was getting any money.

Ladies and gentlemen, we've come to the end of our day.

There will be a steering committee meeting in Room 112 North at four o'clock or shortly thereafter.

Monsieur Thibault.

Hon. Robert Thibault: Yesterday we gave the witness the opportunity to make some closing remarks.

The Chair: I will do that.

Mr. LeFrançois, do you have any closing comments you want to say to the committee?

[Translation]

Mr. Marc LeFrançois: The only thing I'd like to say is that I was pleased to meet those I did not know, but I had no fun here today. I hope I answered all your questions.

I heard the comments of certain people: at the start, we had no credibility; we were told you didn't believe us. I acted here with a great deal of frankness, and I brought you as many documents as possible. I apologize for not sending the documents earlier, but I had read in the newspapers—I don't remember which ones—that you, Mr. Chair, would ask the minister to forward to you the complete file which I had submitted to him. As they are subject to access to information, I concluded that you already had all these documents. I nevertheless brought some this morning to ensure that everyone had them. If I had known you didn't have them, as I observed, you would have received them on Monday, not all of them, but most of them. I apologize, and I wish you good luck. I hope you'll shed light on this entire matter because, as a Canadian, I'm getting exactly the same impression as most people. We've heard terrible things which are not acceptable to anyone, and I therefore acknowledge that the Prime Minister has a right to shed light on that.

Thank you.

[English]

The Chair: Thank you very much.

This meeting is adjourned.