:
I will officially call the meeting to order.
Welcome to meeting number 50 of the House of Commons Standing Committee on Finance. This is panel number one of three today.
We are meeting on government spending, the WE Charity and the Canada student service grant.
Today's meeting, the main part, is taking place by video conference, and the proceedings will be made available via the House of Commons website.
I'd like to welcome our two witnesses for this panel. First, by teleconference, is the . Welcome, Minister, all the way from Delta, B.C., I gather.
From the Department of Employment and Social Development, we have Benoît Robidoux, associate deputy minister.
Welcome to you both.
Minister, if you could keep your opening comments fairly tight, certainly no more than 10 minutes, that would be helpful. Then we'll go to questions. The question round will start with Mr. Poilievre, and then Ms. Dzerowicz, Mr. Fortin and Mr. Julian.
Minister, welcome, and thank you for being here.
:
I'm hopeful, for the third time, that my participation today can be helpful.
I'll begin by noting that while I am the lead minister for ESDC and responsible for a number of the emergency support measures for students, the was responsible for the CSSG. Both our mandate letters touch on support for young Canadians. In the case of the Minister of Diversity and Inclusion and Youth, she was charged with leading the development of a signature national youth service program within the Canada Service Corps. This was to allow youth to gain skills and leadership experience while making a meaningful difference in their communities.
From that point on, ESDC officials reported directly to with respect to the Canada Service Corps. While we share officials, I've not been involved in Minister Chagger's files during the pandemic, nor has she been involved in mine.
Within our cabinet there are five ministers with responsibilities under the ESDC portfolio. Authorities and responsibilities have been assigned. Given the legal structure of the department, this has meant specific orders in council and delegations of authorities to my cabinet colleagues.
In this time of pandemic, the pace and breadth of decision-making has been beyond compare. As Minister of Employment, I've been at the centre of our pandemic response. For months, our cabinet COVID committee met day after day to plan and implement our emergency response. Cabinet was also meeting regularly for many hours at a time.
Let me be clear: These were not normal times, and continue to be not normal. On any given day, we were making decisions that ranged from border closures to PPE distribution to whether we should be sending our military into our long-term care facilities. My own responsibilities included the CERB, Canada summer jobs, temporary foreign workers, disability support and various student measures.
Specifically with respect to young people and students, we heard very clearly that they were facing a summer without many job prospects and the real possibility that they may not be able to afford to go back to school in the fall. They needed income support, increased student loans and grants, and jobs. They also wanted opportunities to help out in their communities.
We wanted to help. We began on March 18 by announcing a six-month moratorium on Canada student loan payments. On April 8 we announced changes to the Canada summer job program to allow for additional employers to come on board and to maximize the opportunities for both students and employers through flexibilities in the program. On April 22 we announced a $9-billion package of student measures that included direct income support to students, job creation, service opportunities, enhancements to the Canada student loan and grant program, and more.
A number of ministers were leading these various initiatives. I had responsibility for the Canada student loan program, the CESB and youth employment. The was the lead on the support through the NRC, Mitacs, post-secondary student fellowships and research councils. The was the leader on the distinctions-based support for first nation, Métis and Inuit students. The was responsible for international students. The was responsible for the Canada student service grant, for the “I Want to Help” portal and for the Canada Service Corps.
After the April 22 announcement, we rolled up our sleeves and set about delivering on the measures within our respective portfolios. There were many details to be worked out and further decisions to be made. For my part, I was focused on the student loans and employment and benefit measures. This was a big piece of work, and it included new legislation and regulatory changes.
I had no involvement in the fleshing out of the details related to the CSSG. While I knew the CSSG program parameters, I first learned that WE Charity was being recommended to deliver the CSSG on May 5 as I was preparing for the COVID cabinet committee meeting that same day when the proposal was being discussed. I understood the purpose of the CSSG to be to provide young people with meaningful opportunities to serve in their communities and to assist the non-profit sector with some much-needed capacity. I saw how the CSSG had the potential to interact well with the other student measures we announced.
Given the speed, scope and scale of the program, I agreed with the recommendation to have a third party deliver the CSSG. As the minister for ESDC, I knew just how stretched the public service was and what their workload could or couldn't handle. At ESDC it's common to fund non-governmental organizations to deliver government programs and to help individuals access government programs. This is particularly so when wraparound, ongoing support is provided directly to individuals.
Take the Canada summer jobs program, for example, which, it has been suggested, could have delivered the CSSG. The Canada summer jobs program is a very successful job creation program. Every year we set objectives, assess jobs against those objectives, fund the opportunities that best meet those objectives and advertise these jobs. ESDC doesn't work with individuals to apply for these jobs or succeed in these jobs. Public servants do not onboard, train or mentor the young people who get these jobs.
The organization that would deliver the CSSG program would be tasked with the screening, onboarding, training and mentoring of young Canadians during these important summer months. They would also track volunteer hours and distribute grants.
Following the COVID cabinet committee meeting on May 5, I can confirm that the CSSG proposal was scheduled to be on the cabinet agenda on May 8, but was taken off. I was not involved in any discussions about why this was pulled from the agenda and the 's request for more due diligence, as this wasn't my file.
As you can appreciate, I can't share the content of the May 22 cabinet discussions about the CSSG and WE due to cabinet confidentiality. As you know, cabinet decided to proceed with the recommendation to enter into a contribution agreement with WE to deliver the CSSG.
What I will say is that at the time of the cabinet discussion, I knew the Prime Minister and Sophie Grégoire Trudeau had previously appeared at WE events, and I considered this to be a well-known fact. They had both been advocates for youth leadership and youth empowerment for years. I had no prior knowledge of Margaret or Alexandre Trudeau's association with WE, nor did I know about 's daughters' involvement with WE.
Personally, I have spoken at one WE charity event, which was in November of 2016 in Vancouver. I spoke to thousands of young people about the power of inclusion and the everyday choices they can make to ensure that no one is left out, in particular people with disabilities. I was not paid for this appearance and claimed no expenses.
I will conclude by stating again that the CSSG was intended to be an innovative way to provide supports for students, non-profits and communities, and Canada needs bold ideas and innovative solutions more than ever. While WE Charity is no longer delivering the program, we remain as committed as ever to supporting young Canadians.
Thank you.
:
Thank you so much, Mr. Chair.
I want to say a huge thank you to you, Minister Qualtrough, as well as Associate Deputy Minister Benoît Robidoux, for joining us today. In addition, Minister, I just want to say a huge thanks to you for your extraordinary work and leadership in supporting Canadians over these last few months as Canada is trying to find its way through this unprecedented pandemic.
Since the lockdown, our federal government has put out 70 emergency programs at a cost of over $200 billion. In your opening remarks, you mentioned that on April 22, we announced a $9-billion program. It included four key programs. One of them was the Canada student service grant, but there were three other big programs that you were in charge of: the Canada emergency student benefit, the creation of up to an additional 116,000 jobs, and adjustments to the Canada student loans and grants program. I know that students were also able to stack up these programs as well.
I'm mentioning all of this because I think there might be some confusion in the public that if we're not offering the Canada student service grant, there's no support out there for students. Indeed there is support. The Canada student service grant was only up to $900 million, and all the student support is $9 billion.
My question to you, Minister, is this. Can you give us a sense of the success of the other programs, particularly the three that you oversaw, and how they have supported and benefited students?
:
Thank you for the question.
Let me give you some quick numbers on the emergency student benefit support.
We've helped 682,722 unique applicants, so 682,000 young people have accessed the CESB. We've had 1.8 million applications. Of those, 1.5 million were at the $1,250-per-month mark, and 303,000 were at the $2,000-per-month mark. We've paid out about $2.5 billion under this program alone. We have created tens of thousands of jobs.
Let me speak directly to that, because I didn't do as good a job yesterday as I could have at the other committee at explaining how these measures are a comprehensive package and how, indeed, they are stackable.
In other words, students have access to a number of the measures. A student who can receive the CESB, which is $1,250 or $2,000 a month, can also get a larger Canada student loan when they go back to school in the fall, and that same student may have their existing student loan payment put on hold because of the moratorium. Additionally, that student can earn up to $1,000 per month and still get the CESB. Finally, under the CSSG, they could have accumulated volunteer hours, earning a grant of up to $5,000 in the fall.
It's important to appreciate that a student receiving the CSSG would have also been able to access the CESB, so a student earning $5,000 over four months through the CESB, or $8,000 if they had dependents or a disability, could have earned an additional $5,000 through the CSSG. They could have received either $10,000 or $13,000 between the two, plus additional allowable earnings of $4,000.
I think that's what maybe is being missed here. This was a comprehensive package. A student could access the CESB, but then, instead of staying home, could go and volunteer and earn volunteer-hour credits towards the CSSG.
What we'd heard from student groups was that they wanted comprehensive measures, a package, and that's what we delivered to them, but I think we tend to speak about them in isolation, as if they don't relate to each other. Perhaps we need to do a better job of really explaining how stackable they are.
:
I've tried to be as clear as possible on this point. I firmly believe these two programs have different objectives and are delivered in very different ways.
The first one, the Canada summer jobs program, absolutely can be and is successfully delivered by the public service. It makes sense. We're in the business of providing this kind of program. Remember that at the same time there were massive public service breadth issues, bandwidth issues. We had been asking them to do so very much at that time, and they were doing it. They were doing the CERB, they were developing the CESB, and they were preparing for the seniors benefit. I could go on and on about my department alone.
The CSSG was different. It was about supporting students. It was about recognizing that non-profits were stretched, and as much as one can say that a non-profit had capacity, many of them didn't. Many of them said it's not as simple as giving us money for people. They said they didn't have the capacity to train people, to oversee them, and as many jobs as we created, there were not going to be enough jobs.
As I said, we thought that with the student benefit we could provide an opportunity to volunteer, but we needed a third party to deliver that program, as we do through YESS, the youth employment and skills strategy program. We regularly fund third party organizations through the YESS program on a much smaller scale to help young people find jobs. We were looking for a third party to help young people connect with volunteer opportunities and to support them through the entire experience, right through to providing them with a grant.
:
First of all, let me state again that I offer no excuse for this. However, there is a context, and the context, as you said, is the incredible pace of where we were mid-March to mid-April, going into May and even now.
Our COVID committee was meeting every day, sometimes twice a day. Cabinet was meeting weekly. Think of the CERB. We announced a different form of benefit for workers on a Wednesday, and on a Thursday we realized it was going to be too complicated. We corrected our course, and within one week we figured out a way to deliver it, figured out a way to legislate it and then legislated it so we could deliver it three weeks later. Any given day was about PPE, borders, temporary foreign workers, long-term care and the CERB. I can tell you we announced these measures on the 22nd, and I think on the 23rd at four o'clock in the morning I was on a G20 employment ministers' call.
Listen, these are the jobs. We do them, and we have to do them well. Again, it's not an excuse, but there is a context here. I think Canadians are very sensitive to an understanding of this context.
We have always said that we weren't striving for perfect, but I really believe we've delivered. I really believe that Canadians have gotten through this in no small part because of the support we've given them. Again, it hasn't been perfect; we've had to correct our course. But we know this, and we're always ready to correct our course. That's one of the freedoms in this: if you try something and it doesn't work, you can try something else and help somebody. Somebody wasn't included in the first group of people you tried to help, so you figure out how to include them. This was so quick.
Thank you for asking that question.
:
Okay. Obviously I feel like this is a big question, but let me see.... If there's an idea of a possible program or solution to an identified issue, it goes through.... It's hard to describe. I apologize, but there are so many ways that things get started. The public service could propose something. We might at cabinet decide something, and the public service goes away and develops it further.
We've been delivering in three ways in this pandemic: directly to individuals, through provinces, and through third parties. Those have been our go-to ways of getting money to organizations and Canadians. Depending on the goal or objective of what we're trying to achieve, one of the three becomes the way we deliver it.
I personally have been obsessed with making sure that things are deliverable. We didn't have time for an idea that couldn't be delivered, so if someone came to me with a proposed solution that we couldn't deliver, it wasn't a proposed solution as far as I was concerned.
We really focused on whether we could do this through an existing system directly to people. Would it be better to partner with the provinces and give the money to them to deliver, or should we use a third party intermediary on the ground to deliver it? Is that the most efficient way, given what we want to achieve?
Really, that was the framing for me as we looked to address these really complicated issues that were coming at us fast and furious.
:
Thank you so much, Mr. Chair.
Good afternoon to all members of the finance committee. Thank you for inviting me today to speak to Canadians, and thank you for all your important work, especially during these difficult times.
Over the past few months, Canadians have been facing the crisis of our generation.
[Translation]
When the COVID-19 pandemic hit, our government made the decision that we would do everything we could to help businesses and all Canadians through this crisis.
[English]
From the very beginning, our team knew that the only way we would be able to deliver supports to respond to the real needs of Canadians was to listen and to respond as quickly as we could.
Over the past several months, my team and I connected with thousands and thousands of people—small business owners, entrepreneurs, industry leaders, financial institutions, chambers of commerce, boards of trade, not-for-profits and more—through calls, virtual meetings and correspondence every single day. In fact, from March 11 to July 15, my office and departmental officials hosted a daily call every morning to listen, to answer questions and to get direct feedback from business owners and organizations across the country. At times, over a thousand businesses called in to speak with us, and these calls continue to be held twice a week.
It was by listening that we were able to deliver the single largest economic support package for Canadians in our history and adjust our supports in direct response to what we heard to help them get through this pandemic. Whether it was the 75% wage subsidy supporting over three million Canadian jobs, the wide range of lending supports, including the $40,000 CEBA loan, which is helping over 700,000 business owners with cash flow, keeping costs low by allowing businesses to defer GST, HST and customs duties, or stepping up to reduce rent for small business tenants by 75%, we listened to Canadians to ensure the emergency support we delivered would help them through this crisis and put them in a better position for economic recovery.
This isn't a new approach for us. Listening is at the heart of how my team and I work to serve Canadians. In my role as the minister, as well as the member of Parliament for Markham—Thornhill, my team and I have an open door policy.
I continue to speak with and listen to thousands of Canadians for their feedback and ideas and potential solutions from every sector and every region across this country, and as many as my schedule will allow. As the member of Parliament for Markham—Thornhill, I've also met with many constituents and businesses from our communities to hear directly from them about their successes, their challenges and their experiences.
I want to take this opportunity to be transparent with respect to the interactions my team and I have had with the WE Charity in recent months.
It was in my capacity as the member of Parliament for Markham—Thornhill that WE Charity, as an organization that had its roots in Thornhill, first reached out to my riding office in December of 2018 to see if I could attend an event with young people. Due to scheduling issues, this event never took place.
[Translation]
In the fall of 2019, when I was re-elected as the member of Parliament for Markham-Thornhill, WE Charity sent a congratulatory email to my office.
[English]
In December 2019, after I was appointed in my expanded mandate as the Minister of Small Business, Export Promotion and International Trade, WE Charity sent another congratulatory email and offered dates for a meeting in the new year to discuss their work.
In January 2020 my chief of staff met with Sofia Marquez, director of government and stakeholder relations for the WE Charity. This was an introductory meeting requested by Sofia to discuss WE Charity's work.
Following that meeting, an introductory call between me and Craig Kielburger was scheduled for April 7. This meeting was scheduled on February 21.
We had a 30-minute phone conversation, along with a few WE Charity staff, where Mr. Kielburger and his team talked about their work, with a focus on empowering young people in Markham—Thornhill. Mr. Kielburger also mentioned a proposal for a potential social entrepreneurship program at the very end of the call and I invited him to share that proposal with my office. I did not have knowledge of this proposal before that call.
On April 9 Mr. Kielburger's team shared a document with my chief of staff and me and attached a document titled WE social entrepreneurship “Concept Paper”. Mr. Kielburger noted in his email that this was a concept paper and that they would follow up with a more detailed proposal shortly. This was unrelated to the youth service program. On April 15 my office responded to their email that we would look into this.
On April 22 my office received an updated proposal from Mr. Kielburger. After analysis by my department and a review by my office, we concluded that we would not move forward with the social entrepreneurship proposal, because it likely wouldn't directly fit under my portfolio and there were better ways to support young entrepreneurs amid COVID-19, including our April 17 announcement to invest $20 million to help young entrepreneurs under the existing Futurpreneur program. My team informed the WE Charity of our reasons for not supporting the social entrepreneurship program on April 30.
For context, on April 5 the Canada student services grant program was presented to the cabinet committee on COVID-19, which I am a part of. This proposal was separate from the social entrepreneurship proposal that my office had received.
One month after informing WE Charity of our decision not to move forward on their social entrepreneurship proposal, Ms. Marquez reached out again to my staff on June 2, asking to speak further, as she indicated that they were considering revisions to it. My chief of staff communicated to my policy team that we needed to be clear with WE that we were not moving forward with their social entrepreneurship proposal. On June 18 my office clearly communicated to Ms. Marquez over the phone that we would not be moving forward with their proposal for a social entrepreneurship program, and this was acknowledged.
[Translation]
The communication that I had with WE Charity was solely about a proposal for young entrepreneurs.
[English]
To be clear, neither I nor anyone on my team spoke with the WE Charity about the youth service program or the Canada student services grant.
Over the past few months, I've continued to do exactly what Canadians expect: to listen to Canadians; to be open to new ideas and solutions; and to do our due diligence with any ideas and proposals we receive, including seeking and receiving the public service's input, analysis and recommendations. Our aim continues to be to do the very best possible job to help our businesses and all Canadians succeed. Right now, that means ensuring that they are well supported through this crisis and have the tools that they need to rebuild and to recover from COVID-19.
Mr. Chair, committee members and Canadians, thank you for your attention. I am here, in all transparency, to answer any questions that you might have. Thank you.
:
Let me put it into the context of this time period during COVID-19. During COVID-19, it was really important that we were providing supports to help Canada's small businesses and entrepreneurs throughout the country. As I said earlier, my department and my staff had a daily call with businesses from all across the country, including groups that represented businesses. At times, there were literally over a thousand businesses on that morning call.
There were proposals, there were suggestions and there were ideas that would come through. In fact, because of the urgency and the time compression, we were literally working as just one team. There was no such thing as a political team or a departmental team. We just worked together, listening to businesses and hearing from them. We were also hearing from members of Parliament from all sides of the House about solutions that might be had. It just came into our department, and we were listening, on the one hand, to what the needs of businesses were, and then seeing, on the other hand, if there were solutions or ideas or programs that might actually work to help businesses.
The process simply was that should there be ideas that came in, or solutions, our department would look at them, they would vet them, they would do the analysis and then they would make a recommendation to me. We would, of course, engage in conversations with Finance, because this was also a time when it was really important to see how we might be able to take an idea forward. The CEBA loan is a perfect example. We knew we had to get that liquidity out to businesses, but they were delivered by Canada's banks. Then you'll know, of course, that we also had to make changes. They are delivered through the credit unions as well.
So it really came in, and we responded by looking through to be sure that there were solutions that met the needs of businesses; if so, there was an analysis done, and a recommendation.
Thank you, Minister, for being here.
I want to raise a question that I raised with . It's an important issue, and that's why I'm repeating it. There is a myth—a mistake, a falsehood, call it what you will—that continues to be peddled by the opposition that has created a perception among the Canadian public, which is that hundreds of millions of dollars were going to be pocketed by WE from the federal government for the purposes of administering and building the Canada student service grant.
On July 28, Craig Kielburger testified to the finance committee. He said the following in his opening statement:
As per the contribution agreement, WE Charity would only be reimbursed for its costs to build and administer the program. To be clear, there was no financial benefit for the charity. WE Charity would not have received any financial gain from the CSSG program....
Minister, does that align with your understanding of all this, that it was a reimbursement, up to a maximum of $43.5 million, for WE from the federal government?
:
We will reconvene and call the meeting to order.
Welcome to meeting number 50 of the House of Commons Standing Committee on Finance and panel number three of the day. We are meeting on government spending, WE Charity and the Canada student service grant. The meeting is being carried on the House of Commons website.
Our guest for this panel is Marc Tassé, senior adviser at the Canadian Centre of Excellence for Anti-Corruption, at the University of Ottawa.
Welcome, Mr. Tassé. I expect you have a few opening remarks. Then we'll go to a series of questions for about an hour.
Just to give MPs a heads-up on the lineup for questions, starting off will be Mr. Morantz, who will be followed by Mr. Fragiskatos, Mr. Fortin and Mr. Julian.
Mr. Tassé, the floor is yours. Welcome. Thank you for coming.
:
Mr. Chair, members of the committee, thank you for inviting me to speak at this hearing.
I am a chartered professional accountant and a forensic accounting specialist. Over the course of my career, I have investigated various cases related to allegations of corruption, fraud, financial misconduct and conflicts of interest. I also teach at the University of Ottawa's Faculty of Law and in the executive MBA program at the Telfer School of Management in the areas of corporate ethics and corruption.
In these times of crisis, the worst and best human behaviours are noticeable. As a result of the declaration of a state of health emergency, the abolition of certain internal control procedures for awarding contracts makes the federal government vulnerable to corruption, embezzlement, undue influence and fraud.
With the introduction of tens of billions of dollars in new federal aid programs, oversight and accountability are becoming unavoidable paradigms. Thus, alternative measures must be put in place to compensate for the revocation of certain internal compliance controls.
While rapid action is needed in times of crisis, maintaining an adequate level of due diligence at the supply chain level is essential to prevent corruption, fraud and other unethical practices. The reputation of the government and the credibility of programs depend on it.
It is important that the flow of money and the contracts associated with it be very transparent. This means making the information accessible to the general public. It is also important to always document the considerations that led to a single-source contract with a company or an organization.
To mitigate the impact of the risks of non-integrity and corruption, it is important to take a holistic approach in six stages.
First, integrity. Senior officials must ensure that the various players in the procurement process demonstrate integrity and adhere to standards of ethics, honesty, professionalism and righteousness. The issue is fairness, non-discrimination and compliance in the public procurement process.
Second, transparency. There must be full transparency in public procurement to promote accountability, ensure access to information and, above all, level the playing field so that small and medium-sized enterprises can compete on an equal footing.
Third, access. Access to public procurement by potential companies of all sizes is important to ensure the best value for money through fair competition. It is essential that companies that violate integrity and engage in corruption be punished and excluded. The deterrent effect is paramount.
Fourth, monitoring. With respect to the public procurement cycle, it is essential that it be monitored and overseen to support accountability and promote integrity. It is important that the effectiveness of the supply cycle can be measured by a system for analyzing the risks of the process and its environment. This will allow the government to gain insight into new and emerging risks or alarm indicators that will allow it to improve its monitoring and oversight system.
Fifth are controls. Internal controls are firewalls and they avoid dangerous shortcuts. Whether we are talking about financial controls, internal audits or management controls, they must be carried out to ensure that legal, administrative and financial procedures are followed. More than ever, in times of pandemic and anti-corruption, we need harmonized internal control practices to ensure consistency in the application of procurement rules and standards across the public sector.
The sixth and final stage is due diligence. With respect to the pre-examination of the financial situation and governance structure of contracting entities, senior officials must conduct appropriate diligence that includes identification and verification of four key factors: the true shareholders, the governance structure, the legal structure of related organizations and, lastly, a detailed review of financial statements and other financial reports.
Moreover, in public contracts, the most basic caution requires that there be comprehensive justification and documentation of the decision-making process recommending the award of a non-tender contract.
When it comes to awarding a sole-source contract to an entity, it is crucial that some questions are specifically answered. Does the entity have impeccable probity? Does the entity have the technical skills? Does the entity have the human resources to carry out the mandate properly? Does the entity have a transparent legal structure? Does the entity have a stable governance structure? Does the entity have the financial stability to complete the contract?
Were audits of the entity's officers carried out prior to the award of the contract? Was the contract awarded in an emergency context? Were apparent, potential and actual conflict of interest issues assessed prior to the award of the contract? Is the contract guided by due diligence with respect to the department's interests? Is the contract typical of the relationship between a department and an entity? Does the contract include a clause relating to the ongoing monitoring of the ethics and compliance program of the entity under consideration to be retained? Does the contract include anti-corruption clauses? Lastly, was there a legal validation of the contract prior to its award?
These questions must be answered.
In closing, in this time of a global pandemic where wrongdoing can lead to reputationally damaging administrative or judicial action, the government must set an example and strengthen its reputation for integrity. The government and senior officials need to be more vigilant and strengthen structures to reduce the risk of favouritism and clientelism in awarding contracts.
Although emergency exemptions may be permitted to award sole-source contracts, they must be necessary and non-selective as they provide possible bypass routes for deviant actors.
Canada has an efficient, rules-based procurement system. We must simply use it properly and follow the rules.
Thank you, Professor Tassé, for being here today. I found your opening statement just bang on. I think you've covered all of the right points. I wish I had more time so that I could go through them all with you.
I want to start with conflict of interest. You talked about how, essentially, because of the pandemic, the procurement rules that would normally apply did not apply. For reasons of speed, the government felt it was necessary to get these programs out the door. Wouldn't that be all the more reason for politicians in positions of authority, having a fiduciary duty, to make sure they were not in conflict with the Conflict of Interest Act?
For example, the recognized, in his testimony, that there were potential conflicts, but he chose not to recuse himself from discussion, decision, debate or even a vote in cabinet. The , we also know, has had similar problems, and he later came out and apologized.
What do you make of the fact that they did not recuse themselves in this case?
:
Thank you for clarifying.
Once you agree that procedures are in place to ensure that the company has the necessary technical skills, you must also consider whether it has the necessary financial capacity.
Right now, many companies are going through a very difficult time financially. It is therefore important at this juncture to ask whether the company has undergone any major changes since the beginning of the COVID-19 pandemic, whether its financial structure has weakened and whether internal company controls have changed. In fact, we are seeing more and more companies lean toward resorting to non-traditional external financing.
Unfortunately, some studies show that criminal organizations tend to be the source of some of this kind of emergency funding. Abroad, and, these days, a little more in Canada, it seems that organized crime has infiltrated businesses that were quite legitimate and is using them to launder some money from non-legitimate activities.
The important thing is to find out whether a change of control or shareholders has taken place. Often, we deal with suppliers we have known and trusted for a very long time. However, even if they are the same people, it is important to ask them specifically whether or not they have sold shares or whether the shareholders have changed substantially.
I want to say a huge thanks to Mr. Tassé. Thanks so much for being here with us. Your expertise is very impressive.
I will say to you that I think the comments you made are very important, but to what Mr. Fragiskatos mentioned, we were making fast and furious decisions during a pandemic. So when you were talking about sole-source contracts....
The reason I'm trying to clarify a few things is that any of the general public who are listening right now could be confused—there are so many details—and I want to make sure we're clear. The public service deliberately decided not to go the sole-source contract route because we didn't have time to do so. They were trying to implement a program, a volunteer service program, in a very short period of time, so they decided to do a contribution agreement.
Mr. Shugart, the Clerk of the Privy Council, has indicated the following:
[T]he contribution agreement in this case was typical of relationships between a government department and an entity. They are guided by principles of audit and of due diligence with respect to the interest of the Crown. This contribution agreement will bear scrutiny as typical of the mechanisms that have been approved by the Treasury Board and that have been used in the government for a very long time.
We've heard through many hours of testimony that there were lots of checkpoints and measurements before we actually paid into this contribution agreement. So we deliberately did it. It was not because we wanted to award a particular company; it was because of the situation that was at hand.
Do you have any experience with Government of Canada contribution agreements? Have you actually studied them? Do you have any comments on that?
:
I actually have had the opportunity to study a few of them.
During a pandemic, it is always very important to consider what additional procedures you plan to adopt. These depend on a company's organizational structure and financial status.
You said earlier that normal procedures had been followed. One must be careful, however: in times of crisis, not only are normal procedures needed, but perhaps enhanced procedures are as well.
There is a concept called enhanced due diligence; meaning that certain important factors need to be confirmed. Some risks are inherent to a company, and the two major ones in times of crisis are very often the company's financial capacity and its organizational structure.
So this must be emphasized in the contracts. If a contract is awarded very quickly, these questions must be asked: whether the company is financially capable of carrying out the work, whether it has the organizational structure needed, and whether the agreement protects the government.
I want to start with the issue of the various entities that were involved in the contribution agreement. Specifically, I'll touch on the issue that Monsieur Fortin put forward. He made the suggestion, I believe, that there was gross negligence at play. For what it's worth, I've published on the issue of gross negligence in the atmosphere of the Alberta energy sector, and this ain't it.
The issue I want to flag with you and get your thoughts on is really the role of the WE Charity Foundation. From testimony we heard on the public record before this committee, the reason that the structure of the agreement was as it was, involving the foundation, was specifically due to the fact that the civil service asked WE Charity to bear the liability for the administration of the Canada student service grant. WE Charity responded by saying that they were not willing to take that risk entirely on themselves unless they could set up a foundation through which the contract would be delivered, specifically to avoid liability. You can imagine that if a student gets injured or something during one of these placements, who will they be trying to recoup their losses from?
After they made that proposal in response to the civil service, the civil service accepted it and then made the recommendation to the cabinet that the contract ought to proceed in that manner, with full knowledge of the structure that had been agreed to by the parties. Given the nature of the conversations and deliberations that would have taken place, and the advice of the civil service with full information, would you have had a problem with that kind of structure or arrangement to deliver a program such as the Canada student service grant?
For what it's worth, members of this committee had the benefit of hearing live testimony, for which you of course were not present. We may be operating with an information asymmetry in today's hearing as well, which I appreciate.
The second question, which I know you have an opinion on because you started to answer it, touches on the due diligence that maybe should have taken place in advance of a contract award. One of the features that we heard was built into the contribution agreement—again, from the testimony by different ministers and the Clerk of the Privy Council as well—was that certain funds were to be released and flowed through to the entity delivering the program only when certain key performance indicators were met. This builds on my colleague Ms. Dzerowicz's line of questioning.
Despite the fact that you may have reservations about what level of due diligence could have or should have taken place, which you'll need to see documents for, I'm curious to know if you think that a feature of a contribution agreement that allows money to be released only once key performance indicators are met offers an additional layer of protection that could prevent abuses by a company that had a different arrangement, such as a true sole-source contract, say, through which it had an upfront cheque. Whether they performed or not, they could abscond with the money.
Do you think the requirement for certain key performance indicators to be met actually provides a level of protection for taxpayers' dollars in this instance?