PACC Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Thursday, October 2, 2003

¿

0905

The Chair (Mr. John Williams (St. Albert, Canadian Alliance))

Ms. Sheila Fraser (Auditor General of Canada, Office of the Auditor General of Canada)

¿

0910

The Chair

Mr. Robert Marleau (Interim Privacy Commissioner, Office of the Privacy Commissioner of Canada)

¿

0915

The Chair

Mr. Philip Mayfield (Cariboo—Chilcotin, Canadian Alliance)

¿

0920

Mr. Robert Marleau

Mr. Philip Mayfield

Mr. Robert Marleau

Mr. Philip Mayfield

Mr. Robert Marleau

Mr. Philip Mayfield

Mr. Robert Marleau

Mr. Philip Mayfield

Mr. Robert Marleau

Mr. Philip Mayfield

Mr. Robert Marleau

Mr. Philip Mayfield

Mr. Robert Marleau

¿

0925

Mr. Philip Mayfield

Mr. Robert Marleau

Mr. Philip Mayfield

The Chair

Mr. Philip Mayfield

Mr. Robert Marleau

Mr. Philip Mayfield

The Chair

Mr. Robert Lanctôt (Châteauguay, BQ)

¿

0930

Ms. Sheila Fraser

Mr. Robert Lanctôt

Ms. Sheila Fraser

¿

0935

The Chair

Ms. Beth Phinney (Hamilton Mountain, Lib.)

Ms. Sheila Fraser

The Chair

Mr. Gerald Keddy (South Shore, PC)

¿

0940

Ms. Sheila Fraser

Mr. Gerald Keddy

Ms. Sheila Fraser

Mr. Gerald Keddy

Ms. Sheila Fraser

Mr. Gerald Keddy

Ms. Sheila Fraser

Mr. Gerald Keddy

The Chair

Ms. Beth Phinney

¿

0945

The Chair

Mr. Gerald Keddy

Ms. Sheila Fraser

Mr. Gerald Keddy

The Chair

Mr. Gerald Keddy

The Chair

Ms. Sheila Fraser

The Chair

Mr. Pat Martin (Winnipeg Centre, NDP)

Ms. Sheila Fraser

Mr. Pat Martin

Ms. Sheila Fraser

Mr. Pat Martin

¿

0950

Ms. Sheila Fraser

Mr. Pat Martin

Ms. Sheila Fraser

Mr. Pat Martin

Mr. Robert Marleau

Mr. Pat Martin

Mr. Robert Marleau

Mr. Pat Martin

Mr. Robert Marleau

Mr. Pat Martin

Mr. Robert Marleau

¿

0955

Mr. Pat Martin

The Chair

Ms. Sheila Fraser

The Chair

Mr. John Bryden (Ancaster—Dundas—Flamborough—Aldershot)

Ms. Sheila Fraser

Mr. John Bryden

Ms. Sheila Fraser

Mr. John Bryden

Mr. Robert Marleau

Mr. John Bryden

Ms. Sheila Fraser

Mr. John Bryden

Ms. Sheila Fraser

À

1000

The Chair

Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Canadian Alliance)

The Chair

Mr. Paul Forseth

Ms. Sheila Fraser

The Chair

Mr. Robert Marleau

Mr. Paul Forseth

The Chair

Mr. Alex Shepherd (Durham, Lib.)

À

1005

Ms. Sheila Fraser

Mr. Alex Shepherd

Ms. Sheila Fraser

Mr. Alex Shepherd

Ms. Sheila Fraser

Mr. Alex Shepherd

Mr. Robert Marleau

À

1010

The Chair

Ms. Judy Sgro (York West, Lib.)

The Chair

Ms. Judy Sgro

Ms. Sheila Fraser

Ms. Judy Sgro

Ms. Sheila Fraser

Ms. Judy Sgro

The Chair

Mr. Christian Jobin (Lévis-et-Chutes-de-la-Chaudière, Lib.)

À

1015

Ms. Sheila Fraser

Mr. Christian Jobin

Mr. Robert Marleau

Mr. Christian Jobin

The Chair

Mr. Philip Mayfield

À

1020

Ms. Sheila Fraser

Mr. Robert Marleau

Mr. Philip Mayfield

Mr. Robert Marleau

Mr. Philip Mayfield

The Chair

Mr. Derek Lee (Scarborough—Rouge River, Lib.)

À

1025

The Chair

Ms. Sheila Fraser

Mr. Derek Lee

Ms. Sheila Fraser

The Chair

Mr. Robert Lanctôt

À

1030

Ms. Sheila Fraser

The Chair

Mr. Robert Marleau

The Chair

Mr. Pat Martin

Mr. Robert Marleau

Mr. Pat Martin

Mr. Robert Marleau

À

1035

Mr. Pat Martin

The Chair

Ms. Sheila Fraser

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

Mr. Robert Marleau

The Chair

À

1040

Mr. Robert Marleau

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

Mr. Paul Forseth

À

1045

Ms. Sheila Fraser

The Chair

Mr. Paul Forseth

Ms. Sheila Fraser

The Chair

Mr. Odina Desrochers (Lotbinière—L'Érable, BQ)

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

The Chair

À

1050

Mr. John Bryden

Ms. Sheila Fraser

Mr. John Bryden

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

Mr. Christian Jobin

Ms. Sheila Fraser

Mr. Christian Jobin

The Chair

Ms. Judy Sgro

Ms. Sheila Fraser

Ms. Judy Sgro

Ms. Sheila Fraser

The Chair

---

CANADA

Standing Committee on Public Accounts

---

NUMBER 039

l

2nd SESSION

l

37th PARLIAMENT

---

EVIDENCE

Thursday, October 2, 2003

[Recorded by Electronic Apparatus]

¿  (0905)  

[English]

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

    Before I start I would just like to mention that we have some visitors in the room. We have a delegation from Trinidad and Tobago: the Honourable Dr. Linda Baboolal, Senator and President of the Senate of the Parliament of the Republicof Trinidad and Tobago; accompanied by Senator Ramesh Deosaran. We welcome them here.

    Some hon. members: Hear, hear!

    The Chair: The order of the day, pursuant to Standing Order 108(3)(e), is a special report of the Auditor General of Canada, an audit of the financial management and administration of the Privacy Commissioner of Canada, of September 2003.

    Our witnesses from the Office of the Auditor General of Canada are Ms. Sheila Fraser, the Auditor General of Canada; Mr. Hugh McRoberts, Assistant Auditor General; and Ms. Kathryn Elliott, principal of the office.

    From the Office of the Privacy Commissioner of Canada, we have Mr. Robert Marleau, the interim Privacy Commissioner.

    We expect that this hearing will wrap up at around 10:30 or shortly thereafter. After that, pursuant to Standing Order 81(5), we will deal with supplementary estimates (A) 2003-2004, vote 20a of the Auditor General, under Finance, referred to the committee on September 23, 2003. At that carriage we will have the appropriate motions, and then we will have an in camera meeting to deal with future business.

    Without further ado, Ms. Fraser, would you like to make your opening statement.

[Translation]

    Ms. Sheila Fraser (Auditor General of Canada, Office of the Auditor General of Canada): Thank you, Mr. Chairman.

    I am pleased to have the opportunity today to brief members of the committee on the results of our audit of the Office of the Privy Commissioner of Canada. As you mentioned, I am accompanied today by Mr. Hugh McRoberts, Assistant Auditor General, as well as Ms. Kathryn Elliott, Principal responsible for the audit work on human resources management issues. Others who contributed to this report are also available should the committee need to go into greater detail.

[English]

    As I mentioned on Tuesday, I am both outraged and saddened by what we found--outraged because of the environment of fear and arbitrariness that led to the major failure of the controls over human resources management, financial management, contracting, and travel and hospitality expenditures; and saddened by the treatment of employees.

    The human cost has been significant. I am also concerned that an even greater harm may be done if this case is generalized to all the employees of the Office of the Privacy Commissioner and to the entire public service. This would be wrong and a great disservice to the thousands of honest and dedicated men and women across this country who faithfully serve Canadians.

    The former Privacy Commissioner abdicated his responsibilities as a deputy head for ensuring the proper administration of the office. He and some of his executives turned a blind eye to breaches of law, policy, guidelines, and basic management principles.

    We found that the former commissioner repeatedly abused his discretion, in that he often failed to exercise sound and reasonable judgment. For example, he spent public money on travel and hospitality unreasonably and extravagantly, without regard to prudence and probity. We found little value to the Office of the Privacy Commissioner and to taxpayers for expenditures on hospitality and international travel. We also found that the former commissioner abused his discretion in the areas of job classification and compensation.

[Translation]

    Significant financial and human costs were incurred as a result of a poisoned work environment. The internal governance mechanisms in the Office of the Privacy Commissioner and oversight mechanisms of central agencies, the Treasury Board Secretariat and the Public Service Commission, were insufficient or, in the case of central agencies, not used to either prevent abuse and wrongdoing or deal with them when they occurred. Few employees reported the abuse and wrongdoing because they believed that they had no way to express their concerns without fear of reprisal.

    In our view, these conditions have seriously impaired the ability of the Office of the Privacy Commissioner to function. A great deal of rebuilding is needed to restore its management capabilities. The present situation is cause for concern, given that parliamentarians provided the Office of the Privacy Commissioner with powers in an area of critical importance, namely assisting Parliament in protecting and preserving the privacy rights of Canadians.

    The situation is particularly serious because, as an officer of Parliament, the former Privacy Commissioner and his executives owed a special degree of care in the management of the office.

    Our report contains a number of recommendations, several of them related to recovering money that was improperly spent. I have referred certain matters identified during the audit to the Royal Canadian Mounted Police.

¿  (0910)  

[English]

    It is now important that the Office of the Privacy Commissioner and central agencies of government take corrective action. Sanctions should be applied and restitution made, where appropriate.

    Looking ahead, the committee may wish to discuss with the interim commissioner his plans to improve the management capability in his office and the timeframe in which he proposes to do so.

    The committee may wish to ask Treasury Board Secretariat what it is doing to help the Office of the Privacy Commissioner and how the secretariat will monitor progress. Also, for the broader public service, how does the secretariat plan to implement active monitoring to ensure that problems are detected and resolved expeditiously? I am referring to problems in financial management, in contracting, in classification, and in the application of policies like the ones for performance awards, as well as other areas.

    The Office of the Privacy Commissioner is not a separate employer like my office, and therefore it has been delegated authority for staffing from the Public Service Commission and certain other personnel management powers from the Treasury Board. Thus, both the secretariat and the Public Service Commission have responsibilities for oversight and monitoring human resources management in the Office of the Privacy Commissioner.

    The committee could ask the Public Service Commission how it intends to help the Office of the Privacy Commissioner improve its practices in human resource management. Also, for the whole of the public service, the committee may wish to ask the Public Service Commission how it intends to monitor the use of discretion in staffing to ensure that abuses can be detected and acted on decisively and how it might adjust its own role in executive staffing.

[Translation]

    Finally, the committee may wish to ask the Privy Council Office how it intends to ensure that Governor in Council appointments have a thorough understanding of all that is involved in the exercise of their responsibilities as deputy heads.

    It is important we all learn from these failures and ensure that they never reoccur.

    In closing, I would like to thank the Interim Privacy Commissioner and his staff for their full cooperation during our audit. I also want to extend a sincere note of appreciation to my staff for their dedication in completing this difficult audit in such a short period of time.

    Mr. Chairman, we would be pleased to answer members' questions. Thank you.

[English]

    The Chair: Thank you very much, Ms. Fraser.

    Now we'll turn to Mr. Marleau for his opening statement, please.

[Translation]

    Mr. Robert Marleau (Interim Privacy Commissioner, Office of the Privacy Commissioner of Canada):

    Thank you, Mr. Chairman and good morning, members of Parliament.

    I appreciate the opportunity to appear before this committee to discuss the issues raised in the report of the Auditor General. As Interim Privacy Commissioner, I fully acknowledge the findings, conclusions and recommendations made in the reports of both the OAG and the PSC. They reveal a major breakdown of external governance and internal control processes.

    There are also serious allegations of misuse and abuse of public funds which will require further probing by the RCMP, the PSC and CCRA.

[English]

    As Ms. Fraser put it, there has also been an enormous cost, a human cost. Many employees experienced personal and professional hardships under the previous regime.

    As I outlined in my response published in the OAG's report, I'm committed to addressing past wrongdoings. I intend to act decisively and to seek redress based on consultation with the OAG, the Treasury Board, and the PSC. A key priority will be to develop institutional safeguards to prevent a leadership and management deficit of such magnitude from occurring in the future.

¿  (0915)  

[Translation]

    I arrived at the Office of the Privy Council on July 2, 2003. I did not wait until the release of the reports of the OAG and the PSC to make some important changes. For example, I immediately took steps to secure financial controls by retaining contracted financial expertise for the duration of the audit. I also retained expertise in human resources.

    Finally, I recommended the recent Governor in Council appointments of two assistant privacy commissioners.

[English]

    More measures are currently underway or being contemplated, such as a strategy for recovering public funds and assets that may have wrongly been appropriated—some money has already been recovered—remediating staff classification, compensation, remuneration issues; developing a learning strategy to support executive leadership, staff training, and organizational training; appointing an external disclosure senior officer who would focus on internal disclosure of wrongdoing in the workplace; creating an independent external advisory board to address governance challenges and provide advice on strategy and vision.

    These and other measures will help to bring the OPC back on track, because it is not the core business of OPC that is unhealthy; it is the rest that requires attention.

    On arrival at OPC I set three goals. The first was to regain the confidence of Parliament. I think we have made very good progress here with appearances before two other parliamentary committees, one on the national ID card issue and another on the annual report, which we tabled on time earlier this month.

    The second goal was to regain the trust of our stakeholders—Canadians, business associations, government departments, the privacy community. We've renewed a dialogue with these groups.

    The third goal was to focus on rebuilding the confidence of the staff. This is now an area where we will focus a great deal of our attention.

[Translation]

    I have been impressed by the staff's knowledge of, commitment to and passion for the cause of privacy, despite the abuses, despite the lack of management and resources. This period can be viewed as a passage from the Middle Age to the age of reason and, eventually to the modern era. I see this as a time of renaissance for the OPC. I intend to use the audit reports as a roadmap for the future and I am confident that the OPC will ultimately emerge as a more effective organization which centres on values and ethics, and upholds the principles of the public service while, at the same time, protecting and defending the privacy rights of Canadians.

[English]

    In closing, Mr. Chairman, I commend the courage of the staff.

    I'll be happy to take your questions.

    The Chair: Thank you, Mr. Marleau.

    Mr. Mayfield, first round, you have eight minutes, please.

    Mr. Philip Mayfield (Cariboo—Chilcotin, Canadian Alliance): Thank you, Mr. Chairman.

    Thank you, Mrs. Fraser and Mr. Marleau. You have served Parliament well for many years, and I'm pleased to see you here performing the same service again.

    In reading the report of the Auditor General, it occurs to me that we're not dealing with a system that failed, but we are dealing with ethical and moral issues where people deliberately subverted the system. These are loathsome things we are talking about today.

    From my reading of the Auditor General's report, I can't help getting a certain picture. Mr. Radwanski came to the office of privacy commissioner and then things started to break down. Employees in key positions who previously knew the rules of running an effective agency all seemed to have suffered some sort of collective amnesia.

    It's clear that Mr. Radwanski could not have broken all the rules by himself, and now we are in a situation of “he said, she said”. The former commissioner obviously had a lot of help, either by direct participation or passivity to what was going on, both inside the agency and from other government departments. Yes, there were exceptions, but the report we have before us repeatedly mentions situations like this on page 5:

all senior executives failed to discharge their obligations under the Financial Administration Act to report instances of financial wrongdoing and to deal with harassment in the workplace.

    These are very strong words.

    There are two big issues here. The first is the treatment of taxpayers' money and the second is the treatment of personnel. It seems clear that in several cases fraud and abuse were committed to serve a political master.

    Then you, sir, arrive on the scene and suddenly people begin to remember again how a department is supposed to be run. I want to ask Mr. Marleau, how many senior executives who did not discharge their responsibilities as cited on page 5 were disciplined for their action?

¿  (0920)  

    Mr. Robert Marleau: Thank you, Mr. Mayfield.

    The answer to your question is that I've begun disciplinary action in several cases. Two disciplinary actions have taken place, and those cases in terms of discipline are closed. Two senior executives involved in the cash-out of leave have made full restitution and discipline has taken place.

    I've begun the process in the case of two others, and because there is a process I must respect and go through, and they have a right to due process, I won't comment any further. But I have begun those discussions and the process.

    Mr. Philip Mayfield: I've heard that some of these people have been sidelined off into other departments, other areas. It seems that where there is a deliberate breach of trust, where people sign statements knowingly that were false to enrich themselves, this goes beyond simply being moved from one department to another. Has anyone actually been fired?

    Mr. Robert Marleau: I can confirm to you, Mr. Mayfield, that no one has been moved to another department or agency of the government. There are three individuals who are on special leave and one is suspended on leave with pay as the process takes it course.

    Both the PSC audit and the Auditor General's audit made a recommendation to me that discipline should be exercised up to and including dismissal. The process has begun. The individuals have to be heard, and the outcomes are yet to be determined.

    Mr. Philip Mayfield: Who will make that determination, sir?

    Mr. Robert Marleau: I will, sir.

    Mr. Philip Mayfield: Are there any of the senior executives still with the agency? In the Auditor General's report it states quite clearly that everyone was involved at the senior level.

    Mr. Robert Marleau: One senior executive, the chief of staff and adviser to the former commissioner, resigned his position effective July 31, so he's no longer with us.

    Mr. Philip Mayfield: He's the last one who was there. Is that what you're saying, Mr. Marleau?

    Mr. Robert Marleau: He resigned, took his pension on July 31. Three officers are currently on leave, not in the office.

    Mr. Philip Mayfield: With pay?

    Mr. Robert Marleau: With pay. On that last point, we have to appreciate that the Royal Canadian Mounted Police will be beginning an investigation, for which some of these executives will have to be available to them. We're currently maintaining an employer-employee relationship with them to facilitate that exercise.

    Mr. Philip Mayfield: You mentioned that one person was gone at the end of July with a pension. Does that mean that his relationship with the office is severed and that there is no comeback on him, or are there still avenues of discipline for his breaches?

    Mr. Robert Marleau: I don't think we'll be able to discipline a former public servant, but some of the benefits that are accrued to him, such as severance pay, have not yet been paid, pending the outcome of the audit. Not knowing how many and how far individuals were involved, I took that action in withholding that benefit on his retirement.

¿  (0925)  

    Mr. Philip Mayfield: What outrages me, sir, is that people who commit fraud can simply walk away with a pension. Now, I cannot say, I do not know, that this person committed fraud, but certainly that's what Mrs. Fraser is pointing at, as she explains in her report.

    People who commit fraud are charged. People who commit fraud and convicted go to jail. Why are people who worked for the government given a suit of asbestos so that they don't suffer the same consequences for illegal actions as other Canadians? This outrages me.

    Mr. Robert Marleau: I can understand your reaction, Mr. Mayfield. I had to bottle my outrage for two months, as we went through the process.

    If I may say, though, the RCMP will make the determination and recommendation to the crown prosecutors as to whether charges should be laid. That's outside my reach. The Public Service Commission is investigating a particular appointment case for fraud specifically, and they will make recommendations.

    The disciplinary process as provided by Treasury Board has steps that have to be gone through. And dare I say, sir, that too many steps, too many rules, too many policies were overlooked. I will try to stick to the line of the Treasury Board policy and discipline and ultimately make the decision as required.

    Mr. Philip Mayfield: I would like to touch briefly on the area of harassment that Mrs. Fraser finds so saddening.

    The Chair: You have 30 seconds.

    Mr. Philip Mayfield: I have 30 seconds, all right.

    I'd like to know if any personnel who had the courage to step forward and sacrificed their jobs have been reinstated. There were people who were hurting badly. Did anyone leave as a result of this, and have they been returned to their jobs?

    Mr. Robert Marleau: I'm aware of several individuals who chose to leave the office during the tenure of the former commissioner. So far, I've only had one indication from an individual who might be interested in returning. However, we must again look at the whole picture in terms of why they may have left, and why they want to come back, and where they are now. It's not just a question of reappointment by the commissioner.

    I'll certainly entertain discussions with the Public Service Commission on those points.

    Mr. Philip Mayfield: I would certainly like to think the people who had the courage, the backbone, to stand up to this kind of illegal and abusive activity would not be punished, but would in fact have the opportunity to be recognized for their courage

    The Chair: Thank you, Mr. Mayfield.

    Monsieur Lanctôt, s'il vous plaît, huit minutes.

[Translation]

    Mr. Robert Lanctôt (Châteauguay, BQ): Thank you, Mr. Chairman.

    Mr. Marleau, as a follow-up to the recommendations, I presume you will look at the managers who acted in an unacceptable manner and I hope that the Office will really look into it this time. I think you have enough facts, with everything the Auditor General has uncovered, as well as the potential police investigations.

    I would like to look at this from a more interesting perspective. We have to go over three points. The first is the appointment of the former commissioner. How could someone who acted as though he had supreme authority right from the beginning, be appointed? As the Auditor General's report states, right after his appointment, he acted as if everything was permitted and as if he could do all sorts of extravagant things. How could we let it go that far?

    I hope the Auditor General's report is not yet completed. Why? Because we also have to know whether there were other appointments of people who thought they were above everyone else, that they were not accountable to anyone and could do whatever they liked, not only at the Office of the Privacy Commissioner, but also in other government offices. As you know, I also fear we are legalizing favouritism with Bill C-25, which is already a reality. Staffing, over classification and recruitment problems have already been noted. I think there are many flaws in the system.

    Shouldn't the Senate be apprised of this and asked to not pass Bill C-25 as it currently stands, which seems to open the door wide open to favouritism? Will the investigation go any further? Nothing in the report indicates the root of the problem this appointment represents. Furthermore, you have not really conducted any tax investigation.

    There was much talk of this in the press. We saw he had filed for bankruptcy and that matters had to be settled for him to get his position. How can something like that be ignored for such an important position? How can all that be disregarded and not have any follow-up plan, a sort of initial supervision to show him what had to be done, since it was clear there could be problems with this Mr. Radwanski? How could anyone let it go this far? Will you continue and even interrogate either the Privy Council Office or the Prime Minister's Advisor, Mr. Goldenberg? How can someone like that be appointed?

¿  (0930)  

    Ms. Sheila Fraser: Thank you, Mr. Chairman.

    First of all, I would like to respond to your comments with respect to Bill C-25. This bill pertains to public service employees. In this instance, however, you're talking about somebody who is appointed by the Governor in Council. We must not mix these two things up. The lesson to be learned from all of this is that we need to have an appointment monitoring and audit mechanism that is much more stringent than what we currently have. If the role of the Public Service Commission is clarified through Bill C-25 and it is given a much more rigorous monitoring role than it currently has today, I think this will do a lot to help whenever a situation similar to this one crops up.

    As for Mr. Radwanski's appointment per se, I can tell you that it was the Prime Minister's Office that put forward his candidacy. There are several appointments that are made without using any particular process. I can tell you about the rules that need to be followed in appointing the Auditor General, but as far as I know, this appointment was made without any research or interview being done. The Privy Council Office then simply took the required steps to appoint Mr. Radwanski. We did, of course, look into his training as well as that of most of the individuals appointed to similar positions and we deemed that his training was inadequate. We do not intend to go any further. I think that if the committee wants to go further, it should call the people responsible for this appointment to appear.

    Mr. Robert Lanctôt: And now for my second point. When we asked the President of the Treasury Board some questions, she spoke about the recommendations made in your report, but she did not appear to have noticed that it also contained certain observations. Your report states that the President of the Treasury Board was advised in October 2002. Could you tell us just exactly what she was advised of, what the Treasury Board was made aware of in October 2002 and what was the scope of this information? Moreover, could you tell us whether or not the Treasury Board usually took action when it was apprised of similar information in other cases?

    Ms. Sheila Fraser: We pointed out in the report that the Treasury Board Secretariat was aware of the request for an additional $73,000 for certain personnel costs. Such a request is generally made only when the expenditures are about to exceed the amount authorized by Parliament. Consequently, the Secretariat had an indication that the Office of the Privacy Commissioner was probably exceeding the amounts that had been voted on. In addition, the Secretariat had also received a lot of information about performance bonuses. All organizations must provide information and the Office's reports clearly showed that all senior managers, or the executives, had received the highest bonuses allowed. Naturally, we did not verify this matter with the president, but I would suppose that she knew about these things.

    With a bit of hindsight, we can see that there were indications pointing to financial management problems in the commissioner's office. In my opinion, given that the commissioner was an officer of Parliament, perhaps there was some measure of reluctance to exercise any control. In addition, this was a small agency with a budget of only $11 million. Perhaps none of this was drawn to the attention of anyone, not even the senior officials of the Secretariat. These questions should be put to the Secretariat.

¿  (0935)  

[English]

    The Chair: Merci beaucoup, monsieur Lanctôt.

    Ms. Phinney, please, for eight minutes.

    Ms. Beth Phinney (Hamilton Mountain, Lib.): I will ask my questions for Madam Fraser all at once, and will ask her to use up my time with her answers.

    I'd like you to clarify some statements made recently by the former Privacy Commissioner about the amount of time that you or your staff spent with him before the report was written, and the amount of time that you and/or your staff spent with him after the report was written. And I'd ask if you could clarify your position on any other allegations that he has made over the last few days.

    Ms. Sheila Fraser: Thank you, Mr. Chair.

    Essentially, the former commissioner has made what I would call three allegations.

    The first allegation is that we have gone beyond our mandate in conducting this audit. I think the committee can judge for themselves. I think it's quite clear that we have stayed within our mandate and essentially responded to questions raised by the government operations committee.

    The second allegation is that we are not reporting facts, that somehow this is a fiction of the Office of the Auditor General. I can assure you that all of the facts have been validated. In fact, we give great detail in this report so that people can understand why we arrive at our conclusions. Finally, given the sensitivity of this report, it has been scrutinized by several lawyers to ensure that all of the facts and statements in it can be justified.

    The last allegation is that we did not give him sufficient time to respond, or that we met him too late in the process. My officials met with him for the first time on September 12. I think the committee has to understand that we needed to do a certain amount of auditing work in order to understand the questions we needed to ask him, and the transactions we wanted to get explanations from him on. When we had a final draft of the report, as is our practice, we met with him again before the report was published. Two of my officials met with him on September 26 to allow him to read the report, and to give us any other information that would change any of our conclusions or statements in the report.

    The first time we met with him, on September 12, it went for the whole day, from nine in the morning till five in the afternoon. On Friday, September 26, my staff met with him from nine in the morning till 3:30 in the afternoon.

    The Chair: Mr. Keddy, please, for eight minutes.

    Mr. Gerald Keddy (South Shore, PC): Thank you, Mr. Chairman.

    I'd like to thank our panel for appearing, particularly Ms. Fraser. It's always a pleasure to have you here.

    It's a pretty difficult issue we're dealing with here today. Along with many other members of the committee, I sat through a lot of the in-camera hearings. I'd have to say, at the very least, that the evidence we heard was shocking and certainly disturbing. It's quite a rats' nest for you or anyone else to attempt to work through.

    My concern here is twofold: first of all, I think we should be very clear that the majority of Canada's public service doesn't operate like this. I'm not sure that message is getting out. I have a very real fear that we're going to tar the entire civil service with the same brush, which is simply not fair. In order not to do that, and I'm sure the chairman would agree, we need to see that the full force of the law is going to be applied and that people will be held responsible. I think it's extremely important to follow the chain of command. Who was responsible? When were they responsible? When did the next person on the next step in the ladder become aware of it?

    From my brief reading of your report, I'm not certain that's occurred. So I have a couple of questions about the Treasury Board Secretariat, just for my own information.

    When this first came to the Treasury Board Secretariat...maybe not the first increase in funds, but the multiple increases in funds, such as the instance of the $15,000 and the sole-sourcing of the $25,000 contracts, did it go anywhere else up the line that you're aware of? And have you inquired?

¿  (0940)  

    Ms. Sheila Fraser: I would just like to say that I agree entirely with Mr. Keddy that this should not be generalized to the entire public service. I think this is really an extreme case, which is not typical of how people work or treat their colleagues in the public service. I think there would be a great harm done if it was.

    As to the payments you mention, the $15,000 and the sole-sourcing contracts, etc., those would not have come to the attention of the Treasury Board Secretariat. The only way the secretariat might have had some indication is that every agency and department has to file a report on contracting activity. If somebody had done an analysis of that over time, they might have realized that there were almost no contracts over $25,000, and very little being done competitively. But somebody would have had to really analyse that report; and as we note, no report was furnished in one year. So that could have triggered something in an analyst's mind.

    But I think we have to realize the context in which these people are working. This office spent about $11 million a year per budget. There are many departments that spend more than that in a day, so a lot of attention wasn't given to smaller agencies. I think that explains some of the lack of oversight.

    Mr. Gerald Keddy: I appreciate that. Eleven million dollars is still a large sum, compared to the amount of money most Canadians think in.

    The reality is if any department doesn't submit an annual statement, it should send up a flag. So whoever was responsible for the Treasury Board at that time should have, somewhere, when they were reading over their accounts, seen a flag.

    The other matter is parallel to this, and that is the issue with the Public Service Commission. When this came before the Public Service Commission.... We know it was reported early on and that it was ignored. I don't understand how that happens. I don't understand--and anyone can answer here--how something gets reported to the Public Service Commission and doesn't go straight through to the Prime Minister's Office or the Privy Council Office, and in particular, to the people who are responsible within the Prime Minister's Office to observe the Public Service Commission and the other boards out there.

    Ms. Sheila Fraser: I would agree with you. While I believe our report.... We are, in fact, more critical of the Public Service Commission than we are of the Treasury Board Secretariat. The Public Service Commission became aware of problems and did an audit in 2001 that revealed many of the same problems we noted in our report, which they note in their report, which was issued on Monday.

    So they were aware of the problems. What we criticize them for is that they didn't act more decisively to deal with those. They could have removed the delegation for staffing almost immediately when they saw these problems. It was only--

    Mr. Gerald Keddy: I have one quick question, if I can interrupt. I'm sorry to interrupt, but I know I'm running out of time here.

    I guess my question is whether, in your research, Mr. Goldenberg's office was informed, as he was working directly for the Prime Minister. And when would he have been informed?

    Ms. Sheila Fraser: I am not aware that he was informed. I think you have to appreciate that, as an officer of Parliament--

    Mr. Gerald Keddy: I do.

    Ms. Sheila Fraser: Government really does respect and is very cautious about our independence. So I think that's one of the reasons.

    But, to my knowledge, we have not found anywhere that the Prime Minister's Office, or even the Privy Council Office, was aware.

    Mr. Gerald Keddy: I appreciate that.

    When this scandal started to break.... I may understand the first time that it didn't follow all the way up the line, but after the second time or the third time.... I would have a very difficult time believing that Mr. Goldenberg and the Prime Minister's Office didn't know what was going on here long before we started our investigation in this committee. It just doesn't make any sense, and it would be irresponsible to think that way.

    The Chair: Do you have a point of order, Ms. Phinney?

    Ms. Beth Phinney: The Auditor General just said she has no evidence at all that it did go in that direction, and the member is suggesting that he can't believe that. Is he making some allegations about the integrity of the Auditor General?

¿  (0945)  

    The Chair: No, I think the Auditor General expects Mr. Keddy to refute the allegations.

    You have one minute left, Mr. Keddy. I'm sure the Auditor General will respond that this is the situation.

    Mr. Gerald Keddy: Absolutely.

    Ms. Sheila Fraser: All I can say, Mr. Chair, is we found no evidence that any of this was ever reported to the Prime Minister's Office. Quite frankly, I would not be surprised if it never went to the Prime Minister's Office, given the size of the office and the fact that it was an officer of Parliament, and government was very much hands off, in many ways, of officers of Parliament.

    Mr. Gerald Keddy: Thank you.

    Do I have more time?

    The Chair: You have about one minute, Mr. Keddy.

    Mr. Gerald Keddy: I guess the other issue I'd like to touch upon, since I do have some more time, is the sole-sourcing of the contracts and the RCMP investigations that are ongoing. Is it going to be the role of the RCMP to investigate?

    Obviously, we can't investigate every sole-sourced contract, but certainly we can look at them all and decide which ones seem to be the most important to investigate, in particular, sole-sourced contracts to members of the Privacy Commissioner's own family. Now, I have a great deal of difficulty with that. As members of Parliament, we're not allowed to hire members of our own family.

    The Chair: That was a long question. We have the one minute only, so we'll get a very brief response, Mr. Keddy, or you're out of time.

    Ms. Sheila Fraser: Thank you, Mr. Chair.

    All I can say is we have referred the results of our audit to the RCMP. There are certain specific payments that we believe are in contravention of the Financial Administration Act, which we have specifically referred to them.

    The decision to conduct an investigation and the scope of that investigation is entirely up to them.

    The Chair: Thank you.

    Mr. Martin, please. You have eight minutes.

    Mr. Pat Martin (Winnipeg Centre, NDP): Thank you, Mr. Chair.

    Thank you, Ms. Fraser, for being here. I want to start by saying as well that I, like other members, have nothing but praise and admiration for the role you've played and for the dignity that you and your officers have shown in this really dark underbelly. It's a nasty piece of work you've brought dignity to. We thank you very much.

    I want your views on this; I don't know if you can answer concretely. One of the most irritating things to Canadians is the fact that 24 hours before Mr. Radwanski was hired he was forgiven for I think it was $540,000 worth of back taxes that he owed. I know the current Privacy Commissioner, Mr. Marleau, is trying to recoup, trying to make the Canadian public whole in terms of what we've lost, what people may have taken by means of fraud or whatever. Is there any way, in your view, that we can recoup some of these forgiven taxes, given that he started a $210,000-a-year job 24 hours after his taxes were forgiven?

    To you first, Ms. Fraser.

    Ms. Sheila Fraser: Obviously, you can appreciate that I can't discuss specifics of individual tax cases. I will tell you, too, that we have not specifically looked at Mr. Radwanski's case and the proceedings that led up to that reduction of taxes.

    What I can tell you--and I really don't know the specifics of this case--is I believe it followed the bankruptcy route, and there was a trustee in bankruptcy, a proposal made and all of that. Now, I'm not a lawyer. I would suspect a lawyer would say if there was any false information given during that process, that might nullify it. But I'm really not an expert and I wouldn't know--

    Mr. Pat Martin: What you might be able to speak to is the due diligence process that went into the hiring of Mr. Radwanski or the research into his background. What does it say about a person's values if they pay all of their bills except the bills they owe to the Government of Canada, and then the Government of Canada appoints him an officer of Parliament?

    Ms. Sheila Fraser: Well, I agree. I think that goes to, as Mr. Lanctôt mentioned earlier, the whole nomination process, what sort of vetting goes on for people who are being considered for these positions. That might be something a parliamentary committee would want to take up.

    Mr. Pat Martin: Certainly, as opposition MPs, that's what we would like to do.

    I have a second question.

    We have information, and I guess it's still being verified, that the very day Radwanski was testifying before our government operations committee, he closed a deal on a condo in Ottawa. He's paid $1,200 a month to offset his rent while he's keeping a second residence. We can't use our travel allowance to pay a mortgage; we can use it to pay rent only. We understand he got 100% financing to buy a condo the very day he was testifying.

    In your research, did you find he was using his travel allowance or his rent allowance to pay a mortgage for a property that he now owns in his name? Did that come up?

¿  (0950)  

    Ms. Sheila Fraser: Mr. Chair, we are not aware of what purpose.... It was a straight allowance that was given to him--$1,200 a month.

    Mr. Pat Martin: Without the same rules that we are bound by.

    Ms. Sheila Fraser: My understanding is it was not a reimbursement of specific expenses, but a monthly allowance that was given.

    Mr. Pat Martin: So he could buy a piece of property, pay the mortgage with his government allowance, and own the property at the end of the day. Okay, I understand.

    The last thing I'd ask is to Mr. Marleau.

    I come from a labour relations background, and where I come from, there are three grounds for automatic discharge that you would never win in arbitration; those are violence to your employer, gross insubordination to your employer, or theft. Now, if anybody I represented as a union representative got caught stealing or punched their boss in the nose or simply wouldn't do what they were told--gross insubordination--they'd be fired, and nothing I could do as a union leader would help them.

    Can't you fire the people who have clearly stolen money from us now? Instead of having them sitting at home collecting full pay on special leave, I would rather pay the money to a lawyer to fight a wrongful dismissal suit and have the satisfaction that there are consequences to stealing money from the Canadian people. Can't you just fire them now?

    Mr. Robert Marleau: In the approach to discipline I have embarked on, I am attempting to stay within the bounds of the Treasury Board policy on how the progressive steps have to be gone through.

    Mr. Pat Martin: But you don't need progressive discipline in the instance of gross insubordination, theft, or violence. You can bypass those progressive discipline steps with no written warning.

    Mr. Robert Marleau: I did not use the words “progressive discipline”; I said progressive steps the policy provides for. You give notice, have an interview, and have a short investigation--and it will be short because we have a lot of information. You confront the individuals with the allegations, give them an opportunity to respond, and have a finding. Then you have disciplinary action taken. That's the process I've embarked on.

    In the context of those who may be charged with theft or fraud, that determination will be made somewhere else. I'm loath to make that determination myself. I will dispense discipline for administrative reasons, mismanagement reasons, and maladministration reasons, but I cannot substitute myself in forming an opinion in criminal law for a process that will take place in parallel concurrently.

    Mr. Pat Martin: But you don't need to meet that test. As the new manager of that office, you can make a management decision to fire somebody and let the chips fall where they may. Canadians want swift justice here. This is an extraordinary case, and maybe it calls for extraordinary measures, like fast-tracking the process you outlined, and simply, for all the world to see, firing these people now. Maybe it will cost us to fight a court case if they have the temerity to appeal after all this.

    Mr. Robert Marleau: I certainly have a role model I could follow for swift justice in my predecessor--

    Mr. Pat Martin: Touché. I didn't say frontier justice; I said swift justice.

    Mr. Robert Marleau: But all I can do is assure you that the process has begun. There are advantages to keeping an employer-employee relationship going when you're in the process of negotiating or attempting restitution, and encouraging cooperation with the police force or the PSC in their investigations. I've taken that into consideration as well.

¿  (0955)  

    Mr. Pat Martin: I understand. In my view, we could still seek restitution from somebody we fired, as well as somebody who was sitting at home collecting full salary on special leave. That irritates a lot of people.

    The Chair: Thank you.

    Ms. Fraser has something to add.

    Ms. Sheila Fraser: There is one element that Mr. Marleau didn't mention. We also asked that Mr. Marleau not take any action until our audit had become public. We needed those people, obviously, to be available to us for questioning, in order to understand some of the transactions. It would have very much disrupted our process if they had been sanctioned before the end of this.

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

    Now we'll move on to round two. Mr. Bryden, four minutes, please.

    Mr. John Bryden (Ancaster—Dundas—Flamborough—Aldershot): Thank you, Mr. Chairman.

    Ms. Fraser, Mr. Radwanski's downfall was triggered by a request of the government operations committee for certain expense accounts and other documents that were provided. It was discovered that these documents had been altered or were incomplete. One document had been absolutely falsified, and that led to the whistle-blowing and everything that ensued.

    Had you done a routine spot audit of the privacy commissioner's office, would you have detected any of that?

    Ms. Sheila Fraser: Yes, we obviously would have noted the lack of documentation and justification. As we note in our report, I think there were over a hundred travel claims for which there was no justification. So if an audit had been done, we would have noted that.

    Mr. John Bryden: Would you have noted the falsified document?

    Ms. Sheila Fraser: I doubt that we would have noted the falsified document, because it was a letter that was provided to the committee. We would not have done an audit of correspondence, or we would not have been searching for that sort of thing. We would have looked more at the financial aspects, and perhaps some of the human resources practices.

    Mr. John Bryden: I don't think we should lose sight of the fact that all of this was started as a result of Mr. Radwanski being asked about being under the Access to Information Act. These documents, when they were publicly revealed, prompted the whistle-blowing. Because they were tabled, people noted that the expense accounts were incomplete. While I appreciate you might have seen irregularities, I don't see how you would have noted the fact that Mr. Radwanski was not disclosing or was hiding certain expense accounts, and so on.

    Let me ask the acting privacy commissioner, who is now familiar with privacy and access to information, the question I put to Mr. Radwanski on March 18 at the government operations committee. That question was: The access to information commissioner and his predecessors have repeatedly recommended that officers of Parliament come under the Access to Information Act. As an officer of Parliament, would you be agreeable that the Privacy Commissioner come under the Access to Information Act?

    Mr. Robert Marleau: I have no hesitation in answering that question in the affirmative. I would have no difficulty. I can't speak for my successor, but a reasonable successor would have no difficulty in accepting more transparency and being subject to the Access to Information Act, albeit with some exemption and protection for the privacy files and some of the elements we deal with in the context of investigations. But for the administration of the office and for all matters not related to privacy files, I would have no difficulty with that.

    Mr. John Bryden: Let me ask the same question of the other officer of Parliament present in the room.

    Ms. Sheila Fraser: We have already gone on record as saying we believe the Office of the Auditor General should be subject to access to information for administrative matters. We would obviously want protection to be applied to audit files. The office has always voluntarily complied with any access to information requests.

    Mr. John Bryden: Finally, particularly to the Auditor General, there are a number of other small agencies in government that aren't covered by the Access to Information Act. Consequently, there's not a routine disclosure of things like expense accounts and documentation. Could it be that some of these small agencies, because of this lack of transparency, might have problems similar to those that have been discovered in the Privacy Commissioner's office?

    Ms. Sheila Fraser: As I've noted, we all have to learn from this case. One of the lessons we have learned is that certainly from an audit perspective, we have not done enough work, we believe, on small agencies. If we discuss the supplementary estimates a little later, you will see that we are going to do more and more frequent audits of small agencies. I also believe transparency and disclosure can avoid many of the abuses we saw in this case.

À  (1000)  

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

    Mr. Forseth, four minutes.

    Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Canadian Alliance): Thank you.

    I'd like an observation or comment more about where we go from here from both officials at the desk today. It's no secret, the whole world knows, that Mr. Radwanski's main credentials for appointment were his Liberal credentials. Because we're here today, we understand that the whole appointment process was very flawed. You've talked today about the independence of an officer of Parliament, about government not interfering and so on, but we discovered that this commissioner twice renegotiated his own compensation secretly with the Privy Council Office. Is this not wrong? Was this not a direct violation of the apparent or supposed independence?

    I wonder if you would agree that to be truly officers of Parliament, all five of these officers should be nominated, screened, hired, maintained in tenure, and held accountable by Parliament, without any involvement whatsoever of the government. Parliament is not the government at all, and if we're saying they are truly independent, then let's make them independent in fact, on paper, and in every way, not just announcing to the world that they are independent and then finding out that the Privacy Commissioner is renegotiating his own personal compensation and is beholden to the Prime Minister's Office.

    The Chair: Is that to Ms. Fraser?

    Mr. Paul Forseth: To both.

    Ms. Sheila Fraser: I think this case obviously leads to questions about the nomination process, the oversight, and the accountability of officers of Parliament. I would agree with Mr. Forseth that it was inappropriate for an officer of Parliament to be renegotiating remuneration during his term. There should have been an agreement at the very beginning of the term, and it should not have been changed at all. That is, I hope, one of the positive things that can come out of this case, that there be more clarity about the roles of officers of Parliament and their accountability.

    The Chair: Mr. Marleau.

    Mr. Robert Marleau: I know this matter is also before another committee of the House and would not want in any way to colour their deliberations with my procedural thinking on this matter, but I will maybe share with Mr. Forseth my own personal experience.

    When asked if I would step forward and accept this small challenge, as I thought it might be, I insisted that there be not only the usual consultations with all parties of the House, but also full consultation with the government operations committee. It made sense to me that in light of the fact that they'd already expressed concern about a nomination process, they be consulted. Of course, the government House leader agreed to do that and did so.

    Certainly with the way the short list is brought together, Parliament should have at least a window on that, a contribution to it possibly. Parliament should concur with the process that's put in place for the selection to be made. Already the committee has the power to review the candidate under the existing Standing Orders.

    Mr. Paul Forseth: I guess I'm asking a policy question that goes somewhat beyond your mandate. We're not likely to get the changes I'm suggesting from the current or any future Liberal government, because that's a somewhat different idea of the structure of basic government itself. I was hoping we would be prepared to be forward-looking, and when we say to the public we have independence, we truly have independence in all aspects.

    The Chair: I take that as a statement.

    Mr. Shepherd, four minutes.

    Mr. Alex Shepherd (Durham, Lib.): Thank you very much.

    Once again, thank you for your professionalism on this case.

    I've been on this file from day one, and the thing that bothers me--and Mr. Bryden was alluding to it--is that this whole thing came to light really by accident. In some ways we have to thank the former Privacy Commissioner, because he's proven that this can happen. The real issue isn't that it happened; the issue is that it can happen. I'm very concerned, once you have that evidence on the table, that it's not continuing to happen and it won't continue to happen. I read your recommendations and so forth, but the reality is that there are no checks and balances in the system. We see people around here saying it was only an $11 million budget, so we didn't get around to looking at it. An $11 million company in the private sector would have external auditors. There would be somebody auditing those financial statements on an annual basis.

    You're looking for some more resources so that you can undertake these functions, and it seems to me an obvious recommendation that these agencies must be audited every year. Their statements must be publicly disclosed.

À  (1005)  

    Ms. Sheila Fraser: The officers of Parliament have all agreed to produce financial statements in their departmental performance reports. We have agreed to audit them, starting next year. Given the mandate we were under this summer, it was very difficult for us to audit them, but officers of Parliament have all agreed to produce financial statements, and we have agreed to audit them.

    I must admit, I don't know how many other small agencies there are. I suspect there are dozens and dozens, because there are a lot of tribunals and various organizations. This is something we are going to look at in our strategy for small agencies. It's something the Treasury Board Secretariat, of course, has to look at too. I think there's also a role for internal audit of departments in this, because I don't think it's appropriate that it only be the external auditor that engages in this kind of oversight. I think we need to work through this, and if the committee is interested, we can certainly come back with how we think this should be addressed.

    Mr. Alex Shepherd: What is the likely timeline? You say you're going to audit all these agencies, but realistically, is that from day one, starting from the fiscal year ending 2004?

    Ms. Sheila Fraser: Our first audits would be on the financial statements as at March 31, 2004. There are some officers of Parliament who have also indicated to us that they would like us to do a broader audit, not just on financial statements. We will be talking to them about the timing for that and how we would do that. Those would be published in our regular value-for-money reports.

    Mr. Alex Shepherd: Do you have the resources to do that?

    Ms. Sheila Fraser: We can discuss that this afternoon--

    Some hon. members: Oh, oh.

    Ms. Sheila Fraser: --or a little later in this hearing. We have asked for additional funds. Presuming we have parliamentary approval, we will be using some of those moneys to do more audits of small agencies.

    Mr. Alex Shepherd: Mr. Marleau, one of the issues we saw with the former Privacy Commissioner was a kind of empire building, split off from the Information Commissioner. Is all that necessary? Can we go back to consolidating those two offices? There would be only one officer reporting back to Parliament. There's been a lot of debate about that, and I'd be interested in your views.

    Mr. Robert Marleau: Mr. Chair, I know you're pressed for time, so I'll be brief. Those are two separate questions, and I'll deal with the last one first.

    I've gone on record before the government operations committee and written to the chair, the minister, and the deputy minister of Treasury Board that I believe privacy issues in Canada now warrant, and what lies ahead certainly warrants, an autonomous and independent privacy commissioner, that to put the functions under one individual would not serve the cause of privacy protection in Canada.

    PIPEDA, the new act, which will now apply to the entire private sector starting January 1, 2004, will apply to mom-and-pop video shops, to Radio Shack franchisees. The scope of that legislation is such that you will need an ombudsman as someone who can enter a client-business relationship and leave it with still a relationship behind. So in my short tenure there, I've made that evaluation, that I think you need a privacy commissioner.

    As to whether the two offices could be reintegrated, I'm open on that so long as the resources are there to serve both adequately. It's always hard to serve two masters in any organization. In an ideal world, or the perfect world, I suppose, all of the offices of Parliament should be in the same building with core services serving them, except for legal, perhaps--and auditing, of course. Maybe the Auditor General should have special status.

    All is possible in the realm of public administration if you have the right resources. The problem with individual small agencies is the lack of depth. By the time you put the issues of classification and personnel management, can you really reach down and have the quality, the depth, and the experience to staff the demands of these organizations?

À  (1010)  

    The Chair: Thank you, Mr. Marleau.

    Ms. Sgro, please, four minutes.

    Ms. Judy Sgro (York West, Lib.): Thank you very much.

    We're getting to see far too much of each other as time goes on.

    I have a question for the Auditor General in particular, or for Mr. Marleau, I guess.

    When the fellow who was authorizing the financial expenses came before the committee in one of our sessions in government operations, he indicated, when questioned, that on some of the expenses he went back to the individuals in that department and told them they did not meet Treasury Board guidelines and so on and so forth. He was in turn told, “Do what you're told.” The individual went back and processed these applications for refunds and expenses.

    Who controls the controller who controls everything else? I guess that's where I'm going with this. He clearly attempted to do his job but was told to do what he was there to do. How do we protect those people who sense they're being told to do things that are contrary to the guidelines?

    So it's this whole control issue. I think we have all kinds of controllers, but who controls other people who are supposed to be...? Who's overseeing all of this at the end of the day? You say it's a small organization, and for that reason it doesn't get enough scrutiny. But we need to have confidence.

    We can't have you running around having to audit everybody. We need to have confidence that the controls are in place, as they certainly are with our MOBs here. There are seven people in our department who do it.

    The Chair: Who is that question addressed to?

    Ms. Judy Sgro: I think to the Auditor General, probably.

    Ms. Sheila Fraser: Thank you, Mr. Chair.

    The directors of finance report currently to the deputy heads, but they are required, under Treasury Board policies, to report any instance of wrongdoing or of not being in compliance with policies to the comptroller general. So there should have been a reporting. It's not enough that somebody is told, “Just do it”, and then they do it. There is a requirement on them to report to the comptroller general.

    I think this case obviously can raise questions about the relationship between the Treasury Board Secretariat and the directors of finance and the kind of oversight.... Again, they talk about this active monitoring, but how in practice does it actually work? I think that's something that should be explored.

    Ms. Judy Sgro: How do we strengthen those links between finance and these various areas that are hands-off or free-standing?

    Ms. Sheila Fraser: I think that would be a really good question to explore with the Treasury Board Secretariat. Certainly at a minimum, the Treasury Board Secretariat has to be involved in the appointment of these people. They have to give them training. They have to have much closer ties with them. They have to have an ongoing relationship with them. I don't think you can just send out policies and guidebooks. You have to build that relationship. It has to be clear that there is an accountability of those directors of finance to the comptroller general.

    Ms. Judy Sgro: Thank you.

    The Chair: Thank you very much, Ms. Sgro.

    Monsieur Jobin, s'il vous plaît. Quatre minutes.

[Translation]

    Mr. Christian Jobin (Lévis-et-Chutes-de-la-Chaudière, Lib.): Ms. Fraser, you have mentioned on several occasions that the $11 million budget was not very significant in the eyes of Treasury Board, considering the billions of dollars that are spent by the government. Perhaps it would be appropriate to establish materiality levels for each organization, so that a $134,000 amount would be considered significant in an $11 million budget as compared to a $1 billion.

    Couldn't Treasury Board work on the basis of materiality levels, for each organization, so that alarm bells can go off in situations such as the one we have just experienced in the Office of the Privacy Commissioner?

À  (1015)  

    Ms. Sheila Fraser: I think that Mr. Jobin asked a very good question. We have to re-examine the entire risk management framework and the definition of risk in monitoring practices. It is important to note that the Treasury Board Secretariat did not receive the information initially indicating that there was a $234,000 deficit. The financial statements had been falsified. So, it was only after we had found it as a result of the audit and after Mr. Marleau had requested remedial action that the $234,000 amount appeared. In addition, the information that is provided to Treasury Board must be reliable.

    Mr. Christian Jobin: My second question is for Mr. Marleau. Knowing that every federal organization has to submit its financial statements on an annual basis and that such financial statements are incorporated into the public accounts, that they must comply with general principles recognized by the Receiver General of Canada and Treasury Board, and knowing that your financial director falsified the financial statements and that you determined earlier that the individual had to remain in his position in order to pursue the investigation, how can you have confidence in the current financial director? Have you met him? Have you had a frank discussion with this individual and established exactly how you will work with him?

    Mr. Robert Marleau: Thank you, Mr. Jobin.

    The individual in particular is still in his position. As I indicated earlier, I have begun disciplinary procedures. I had conversations with him throughout the course of the summer. It must be acknowledged that the individual had only been there for nine months and found himself in a climate harassment and in an unprecedented situation for a young public servant. Yes, he did make an error in judgment but he was not the one who signed off on the financial statements that were submitted to me. I have to see where he fits in the hierarchy. As the Auditor General said, the financial director usually reports directly to the deputy head.

    When I arrived, there were two levels between the financial director and the deputy head. So, to a certain extent, the responsibility was shared by four individuals, if we include the deputy head. I am taking that into account in this individual's case. Disciplinary action will be taken against him—the process is underway—, but I do not believe that this individual is fundamentally dishonest. He will have to undergo some rehabilitation, but he is not the person who is responsible. I eliminated the position of executive director and created the position of comptroller, who will report directly to the deputy head. In addition, because of abuses in human resources matters, where there were still three levels separating the director from the deputy head, the new director of human resources will report directly to the commissioner. She, along with the two deputy commissioners and the commissioner, will constitute a human resources committee. No human resources decisions will be made unless this committee has been apprised of the matter.

    Mr. Christian Jobin: Thank you, Mr. Marleau.

[English]

    The Chair: Thank you.

    As you know, we're going to be wrapping up early. I would like to hear from Mr. Mayfield, followed by Mr. Lee, followed by Mr. Lanctôt and Mr. Martin. I think that will be the end of the questioners. Of course, Mr. Murphy had indicated that if he returns, he would like to speak, so we'll try to get him on as well.

    Mr. Mayfield, four minutes, please.

    Mr. Philip Mayfield: Thank you very much, Mr. Chairman.

    I'd like to make a brief comment concerning your comment, Mr. Marleau, that Parliament should at least have a window on the selection of commissioners. It would seem to me that this is not a government committee, this is a parliamentary committee, and I would think that Parliament should have more than a window, namely a full and meaningful part in the selection of parliamentary officers.

    But the issue I want to raise with you, Mr. Marleau and Ms. Fraser, has to do with the other side of this, and that is the harassment issue. I think we have to look at that. I realize that perhaps you're not in a position now to explain too much beyond what you know, but I would like this committee to know what you do know. I would like to know if the catalogue of incidents of harassment in the Auditor General's report is complete; I think the committee should have a full understanding of that. But more importantly, perhaps, I would like to know what those people who suffered this abuse did on their own behalf and on behalf of their colleagues, given that they still found no redress.

    Could you comment on that as fully as possible, please, perhaps beginning with you, Ms. Fraser? And then I'd certainly like a full statement from you, Mr. Marleau.

À  (1020)  

    Ms. Sheila Fraser: Mr. Chair, we have indicated in the report that there was one former director of human resources who went to the Public Service Commission. Beyond that, I'm not really aware that anybody formally made complaints to anyone. Mr. Marleau might have more information on that.

    Mr. Robert Marleau: Mr. Mayfield, I have to say that it is the most astounding context of harassment I've ever come across. In the context to sort of qualify it, many first-time public servants working in my office believe that this is the way it is in the public service. The Stockholm syndrome applies: once you've been kidnapped, you start to identify with your kidnappers.

    Nevertheless, these people did concentrate and try to survive and do their jobs. The human costs are great. They're coming to me more and more with specific cases, people who were banished from the commissioner's floor because he didn't like the way they looked. There was discrimination for every reason you can imagine, some beyond the human rights code. It was really a terrible context. Many managers tried to protect people at their own expense, and it's a very complex situation when you get to that level.

    What I have done is, first, to get the staff to acknowledge that they were being abused; it's a little bit like the spousal abuse syndrome after a while. It is being acknowledged and many are coming forward. I've hired some consultants who will help them through this process. When I met with them last week and we shared the elements of the report with them, the consultants were present. There were workshops going on with them the first part of the week. There's a lot of healing that has to be done.

    I've engaged the union in a relationship to deal with that as a first priority. There will be harassment training for all staff, not just managers but all staff. The first thing people need to know is what their rights are. They've never been told that.

    Mr. Philip Mayfield: Mr. Marleau, what I would like to know is this. Usually when the words “abuse” and “harassment” come up, a whole legal category kicks in. Now, people knew this was going on. There were at least elements of this in the press. Why was nothing done? Why did no one recognize that this was something that at least needed investigation? Is there any explanation for that?

    Mr. Robert Marleau: I did a joint study with the Treasury Board on the whole disclosure issue in my first weeks in office in order to try to learn what went on from the staff themselves. Two issues came out of that study. First, the fear factor was tremendous, the fear of reprisals with no protection. Now, 48% responded in the study--which is very high, and I commend the staff for doing that--and 95% of the respondents cited three reasons. First, they did not trust management; second, they believed management was powerless; and third, they believed management would do nothing about it.

    Mr. Philip Mayfield: And not even their unions--

    The Chair: Thank you, Mr. Mayfield.

    Mr. Lee.

    Mr. Derek Lee (Scarborough—Rouge River, Lib.): Thank you, Mr. Chairman.

    This rather large file has gotten huge. It began originally, from Parliament's point of view, with the alteration of a letter that was presented to Parliament, and now we have two parliamentary committees, the Auditor General, the Public Service Commission, the RCMP, and who knows who else involved. The case is going to be instructive to the public once we get by the hand-wringing, of which there is a lot at the moment.

    I want to ask about one area. One of the hot buttons in this file is the alleged overspending in the area of hospitality and travel, which became apparent to the government operations committee. We were pretty quick to spot that one, and it's spoken to in the report of that committee.

    But what appeared to me to be absent was any kind of benchmark another public servant out there now could use, whether a public servant doing monitoring and auditing or a public servant actually doing the spending or authorizing the spending for hospitality and travel. I realize that there are Treasury Board guidelines, but is there a benchmark or a mechanism someone looking at this, someone spending, travelling, or monitoring spending and travel, someone in any of those categories, could use as a better benchmark in order to know when one is going outside the envelope, going over the top? How do you judge when you're spending too much or when the agency is spending too much in that one area of hospitality, recognizing at the same time that spending money on a lunch will allow two, three, or four people to add an extra hour or two to their workday? There's value for that in most cases. Is there a benchmark or mechanism we can resort to or create here?

À  (1025)  

    The Chair: Ms. Fraser.

    Ms. Sheila Fraser: I think, Mr. Chair, that the benchmark has to be the Treasury Board guidelines, because those are applied throughout the public service. Obviously, deputy heads have discretion in using them.

    I know Mr. Bryden will be happy to hear me say this, that I think the best way is just to post all these expenses, make them transparent. If people are not comfortable showing publicly what they have spent on travel and hospitality, that to me is the first sign there is something wrong. I think this should just be posted. We should know who people are meeting with and why.

    Obviously, there may be cases where there has to be some confidentiality, but why people are taking trips, what the business purpose is, should be disclosed. I think that transparency is one of the best mechanisms for us to judge whether things are reasonable.

    Mr. Derek Lee: So it's disclosure and common sense.

    Ms. Sheila Fraser: That's right.

    The Chair: Thank you, Mr. Lee.

[Translation]

    Mr. Lanctôt, please go ahead, you have four minutes.

    Mr. Robert Lanctôt: Mr. Chairman, in light of the fact that the auditor, in her testimony and in her report, deems that Mr. Radwanski does not have the requisite skills, and since it appears that Eddie Goldenberg, the Prime Minister advisor, is the only one able to testify as to the qualifications of Mr. Radwanski and his appointment, I would like to immediately inform the committee that either one of my colleagues or I, as part of future business, will be requesting that Mr. Goldenberg testify before the committee in order to review and clarify this whole matter.

    Secondly, in the report prepared by the Public Service Commission of Canada, we read that two complaints had been filed, that the Commission had been aware of them since 2001 or 2002, but that no inquiry had followed. The Commission took absolutely no action whatsoever. The report also states that the Commission does not have the requisite funding resulting in Mr. Serson assuming that they may well be other problems in other offices or elsewhere, due to a lack of funding in his office. But this is not just about a lack of funding, he was aware of the problem. I know that this pertained to an officer of Parliament. I know that it is not up to the auditor general to check into this matter. But I do believe that Canadians and Quebeckers are entitled to know whether partiality exists in the staffing and recruiting system, whether or not there is any favouritism and whether or not this system is transparent.

    I will say again that this problem is only going to get worse because, with Bill C-25, you are about to legalize favouritism. You are putting all of the authority in the hands of managers and deputy ministers. We have seen what this can do with officers of Parliament, who are senior officials as well.

    I think that we need to clarify the situation, and we will certainly have questions for both Mr. Serson and the Public Service Commission of Canada. How can we tell all citizens today that this doesn't exist elsewhere, that this problem occurred only in the office of the privacy commissioner? In my opinion, it is as if all these people, who are senior officials, felt that they were above the rest and not obligated to obey Treasury Board standards and laws on staffing and recruiting. What can we do?

À  (1030)  

    Ms. Sheila Fraser: Far for me to want to defend the government, but I believe that I clearly stated that we must not generalize on a basis of this case. In particular, I am thinking of the harm it would do to the people and especially the deputy ministers who work very hard, who have a high sense of ethics, if we were to presume that everyone works the same way that the former commissioner did. I feel that it is really unfair to say that.

    Earlier, I indicated that Bill C-25 did contain some mechanisms and that the Public Service Commission of Canada plays an auditing role. It did conduct an inquiry in 2001, but it did not follow up on the results of its audit in a decisive fashion. I think that it would be appropriate to ask the Commission what lessons it has learned from this specific case and what action it intends to take in the future to strengthen its auditing capacity. The Commission should also be questioned as to which measures it could take further to cases where there has been a violation.

[English]

    The Chair: Could we have a brief statement from Mr. Marleau?

[Translation]

    Mr. Robert Marleau: As for what the Public Service Commission of Canada has done with respect to this matter, my delegated authority was suspended the day of my appointment, when I came in to this position, and I believe that it had to be done. It was done a bit late, but this had to happen.

    Regardless of what the Public Service Commission of Canada could have done, I'm going to support the statement made the auditor general. I have worked for Parliament for 32 years. I was the highest official of Parliament for 13 years. And for the past six months, I have been a senior official of Parliament. Every morning, I come into the office with my integrity. Every evening, I go back home with my integrity, and it is very difficult to legislate something like that.

[English]

    The Chair: Merci, Monsieur Lanctôt.

    Mr. Martin, please.

    Mr. Pat Martin: Thank you, Mr. Chair.

    One of the things I appreciate very much is the emphasis both of you have put on the plight of the staff and the well-being of the staff. The picture both of you have painted is that of an absolute nightmare of a workplace, one reigned over by an absolute horror of a man.

    As a former union rep, I'm shaking with anger as I speak here, though I don't know how I would have acted differently. What saddened me most is that those individuals who did have the courage to come forward eventually felt they had to bring their lawyers with them to the government operations committee to look after their protection because they didn't feel they would be safe without their own legal counsel. How sad is that?

    My question is simply this. We're about to explore the idea of whistle-blowing protection once again, unfortunately for the umpteenth time during the short time I've been a member of Parliament. Would you agree that it's overdue to put in place real, concrete, legitimate whistle-blowing protection, by legislation if necessary and sooner rather than later? How do you feel about whistle-blowing protection now, with our experience in this disaster, the Radwanski affair?

    Mr. Robert Marleau: Mr. Martin, I totally concur with you that it is an unprecedented work environment I found. But I also want to commend the Office of the Auditor General and their staff for la délicatesse they showed throughout this audit. They knew many of the people were fragile and did an admirable job in the circumstances.

    On whistle-blowing, I'd like to maybe put the emphasis on the protection side. Your first whistle-blowers in this case should be the comptroller, the director of finance, or the director of human resources. Maybe you should look at what kind of protection they might warrant when they exercise the trust they've been given corporately by the public service in their roles. I would think that just looking at individual whistle-blowers is not good enough. We have to look at how these people fit into the public service structure and might need protection when they exercise their duties.

    Mr. Pat Martin: Should that be through legislation, though, Mr. Marleau?

    Mr. Robert Marleau: Legislation certainly focuses the attention of those they engage with on those kinds of issues.

    As for whistle-blowers, as you grow up and you play in the sandbox, you learn not to rat on your friends; that's the kind of thing we all grow up with. But there are legitimate issues and certainly legitimate whistle-blowers, and we've done a very bad job in all of North America, I believe, on whistle-blowing and the consequences for whistle-blowers. I would suggest that you look at the protection side very carefully as well as the means whereby whistle-blowers can come forward.

À  (1035)  

    Mr. Pat Martin: Could I hear from the Auditor General on the same issue?

    The Chair: Ms. Fraser.

    Ms. Sheila Fraser: I agree that this case certainly raises a lot of questions about, as a minimum, the perception people have that they cannot come forward and disclose wrongdoing. But to be quite honest, I don't know if people would have come forward even if there had been whistle-blowing legislation in place, given the climate of intimidation there was in this office. I wonder, if that had been available, would people have come forward? I don't think we should think this was only due to a lack of protection. I think these people were seriously intimidated, and I'm not sure legislative protection would have changed that.

    The Chair: Thank you, Mr. Martin.

    Mr. Murphy, you have four minutes maximum.

    Mr. Shawn Murphy (Hillsborough, Lib.): Thank you, Mr. Chair.

    One of the biggest issues that really has to be explored is the total lack of governance, oversight, and checks and balances in the system of independent agencies. This has been talked about, and I don't have time to get into it right now.

    But there is one issue that I would like to pursue with you, Mr. Marleau, and that is discipline. We've gone through a bit of that in this committee with the Groupaction file. I guess I was somewhat appalled that the last time we had them before the committee, there really wasn't any discipline. It seems to me that the higher you are in the food chain the less likely you are to be disciplined. In fact, this committee found that the career of the deputy minister under whom the Groupaction situation happened wasn't hurt a bit.

    You seem to be protecting the staff. And I don't suggest for a minute that the lower staff.....You've described the intimidation, you've described the fear, but in paragraph 111 of the Auditor General's report, it says that the director of financial services, the chief of staff, and the executive director “knowingly omitted about $243,000 of accounts payable at year end. The false financial statements were submitted in June 2003.” That to me just reeks of fraud, and it begs the question of what disciplinary action you are contemplating for those three people.

    My first question is are they still working with the Office of the Privacy Commissioner? My second question is why are they still working there? And if they are, what disciplinary action are you contemplating? My fourth question is are any of these people--and specifically the director of financial services--members of a professional accounting governing body, like the Institute of Chartered Accountants or the CGA? Has the appropriate complaint been lodged?

    I just want to follow up on that.

    Mr. Robert Marleau: The answer to your question, sir, is that the director of finance is still in the office. I answered that earlier. Disciplinary action or a disciplinary process has begun there. He is a member of the CGA. I've sought the advice of the lawyers who are advising me on this as to the requirement to inform the CGA, the professional association, about this. There is no requirement that they be informed, but it is a matter I'm considering as part of the disciplinary process.

    As I said, the executive director who submitted the erroneous finances to me is no longer in the office. He's involved in a series of issues, including the RCMP investigation.

    Mr. Shawn Murphy: I realize that.

    Mr. Robert Marleau: About as far as I will go is to say that in the disciplinary process I have begun, we are in active discussions about his future. There are lawyers on both sides of the table, so I don't want to get into specifics. But disciplinary action has begun in all of the cases, two are closed as files, and they will continue apace in the next couple of weeks.

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

    I have one simple question to you, Mr. Marleau. Given the poisonous atmosphere in that office, did it taint in any way the reports of the Privacy Commissioner to Parliament?

À  (1040)  

    Mr. Robert Marleau: Sir, I tabled the report for 2002-2003 in September. I wrote the preface and the forward. I was completely satisfied that the content of that report had been accurately and professionally prepared by the staff. Despite the fact it wasn't my report and that it was under the watch of the former commissioner, the report, in my view, is a valuable, valid report to Parliament on the activities of the office for that year.

    The Chair: Thank you very much.

    Mr. Marleau, you're excused.

    The Auditor General is not excused, as we're going to deal with her supplementary estimates.

    We'll just move right along. The Auditor General's supplementary estimates have been circulated to all members, and a summary of the OAG's submission to the Treasury Board.

    Do you want to speak to your supplementary estimates, Ms. Fraser?

    Ms. Sheila Fraser: Yes. Thank you, Mr. Chair.

    In August 2003, my office received approval from the Treasury Board to request new funding of $3.6 million for 2003-2004, and those are included in supplementary estimates (A), vote 20a.

    We've prepared a handout, which I believe has been given to you, that shows our funding requirements for 2003-2004 and 2004-2005. Those were presented in our submission to the Treasury Board.

    This new funding will address a number of funding pressures. Over the past three years, we have been appointed as the auditor of ten entities to do new audit work, mainly financial audits. As shown in the document before you, the financial requirement to do these new audits is estimated at $750,000 this year.

    Another $500,000 is required for the additional work we have to do at the Canada Customs and Revenue Agency because of the implementation of the accrual of tax revenues. That is the second item.

    The implementation of the financial information strategy, also known as FIS, and modern comptrollership in departments and agencies has led to a significant increase in work needed to assess the effectiveness of controls in the various systems. We have developed a plan that will provide audit coverage of all new FIS systems and about 75 major legacy systems, including those at the Canada Customs and Revenue Agency. The cost of this additional work is estimated to be $875,000.

[Translation]

    We have also requested an additional $600 000 to cover the increased travel and communications costs incurred in order to conduct our audits. Finally, the requirements pertaining to government initiatives have increased our administrative costs by approximately 875 000 $.

    When we set our budget for 2003-2004, we limited our planned expenditures for the value-for-money audits to the moneys available to us after completing all of the accounting audits and mandatory special reviews. This new funding will enable us to increase the money that we earmarked for value-for-money audits. For example, as we said last Tuesday and as we discussed today, I announced that we would be setting up a permanent auditing team which would be mandated to look at the activities of small entities such as, for example, the office of the privacy commissioner. In the past, I did not audit these entities on a regular basis for a variety of reasons, a lack of funds being the primary one.

    I would be pleased to answer any questions that committee members may have.

[English]

    The Chair: Thank you, Ms. Fraser.

    Do you feel that these amounts are appropriate and that you're getting the adequate resources you need?

    Ms. Sheila Fraser: Yes, sir.

    The Chair: Are there any questions? I hope they're brief.

    Mr. Forseth.

    Mr. Paul Forseth: Thank you.

    You recently told me that the audit of the Privacy Commissioner's office that you undertook cost $800,000. Is that absorbable in the overall budget, or was that an extra one-off that has required special funding?

    I would assume that it's difficult for you to predict what unusual other circumstances may come up when another committee of Parliament says we have another situation you're going to have to go at. Using this $800,000, which wasn't particularly predicted, on this Privacy Commissioner, I'm wondering how we may predict budget planning in the future and whether you have a mechanism for coming back for further money.

À  (1045)  

    Ms. Sheila Fraser: When these special audits or unusual circumstances arise, we have to reprioritize our work. Of course, some of our value-for-money work that was scheduled for next year has now been delayed in the schedule.

    The difficulty we have in responding to requests is that even though we get the cash, we don't have the people to do it. To try to hire the people, to bring them in to do the work, is often very difficult. So really, in most cases we have to defer work, delay work, in order to free up staff to be able to work on the special assignments.

    The Chair: That's all your questions, Mr. Forseth?

    Mr. Paul Forseth: Around the example of doing the audit of the Privacy Commissioner, this whole issue of leadership by example, I take it that you put your own costs, and so on, on the website. Can you add some additional comments about that whole issue of transparency?

    These questions have been asked: How do we provide the discipline for these organizations to live within the budgets and have good budget planning? Your example was, I think I heard you say before, not more regulations but just transparency. Perhaps you could talk about that in respect of your own budget.

    Ms. Sheila Fraser: Thank you, Mr. Chair.

    Certainly travel and hospitality expenses, which tend to garner a lot of attention, should be disclosed. We have put all of my travel and hospitality expenses on our website. We will be posting those of the commissioner of the environment shortly, in the next week or two.

    We will see going forward if we think there are other people.... There are not very many other people who have very extensive travel budgets, except for trave, of course, related to audits. We do have a large travel budget, given a lot of the work that we do in the north and throughout the country. So there is a pretty significant travel budget in the office.

    If there is a need for more information, we would be certainly glad to disclose that. I have absolutely no problem disclosing any of the administrative information that the committee might want to see.

[Translation]

    The Chair: Mr. Desrochers, please.

    Mr. Odina Desrochers (Lotbinière—L'Érable, BQ): Thank you, Mr. Chairman.

    My question is very simple, Ms. Fraser. When you receive a mandate, such as the one you received over the past few months pertaining to Groupaction and the commissioner office, does the requisite money come from your budget or does the government provide you with additional money when they ask you to do a special study? If the answer is that the money comes from your own operational envelop, do these special requests prevent you from carrying out your regularly schedule work?

    Ms. Sheila Fraser: Yes. This is indeed the case when we have requests for special inquiries. In most cases, we have to take the money from our current budget. What actually happens is that we have to postpone, defer or even simply cancel other work because we have to assign resources to carry out the new tasks.

    The difficulty, as I explained, is that even if we were given the money immediately, we do not necessarily have the human resources, the people with the required skills. We have to take them from one job and assign them to another. So that is the reality that we are living with. As you can see, we are now asking for additional funding, but this money is required to do the mandatory financial audits that we have to do. Consequently, we have had to reduce the number of value-for-money audits that we could have done, in order to focus on this work.

    Mr. Odina Desrochers: Have you already asked Treasury Board whether or not you could submit a bill for these special tasks?

    Ms. Sheila Fraser: We have never discussed this matter. I think that I have mentioned on another occasion that I came from a world where we billed and I never want to go back there. But I do believe that there should be some... In any case, I think that we have reached an agreement with the Treasury Board Secretariat and Treasury Board with respect to funding that I feel is appropriate. Obviously, if we continue receiving a lot of special requests, we're going to have the review our funding process.

    Mr. Odina Desrochers: Thank you very much. Thank you, Mr. Chairman.

[English]

    The Chair: Merci.

    I just want to remind people we want to do an in camera meeting as well.

    Mr. Bryden, Mr. Mayfield, Mr. Jobin, Ms. Sgro, one question each.

    Mr. Bryden.

À  (1050)  

    Mr. John Bryden: Just as a point of clarification, following up on the small agencies, I note here in your report that you're the annual auditor for certain agencies listed here. Was the Privacy Commissioner's office required to have an annual audit? You obviously weren't the body that did it.

    My question is this. What are the rules for auditing or doing external audits of an agency like the Privacy Commission, and how many other agencies are out there, government agencies like the Privacy Commission that aren't subject to an annual audit and are subject to whatever other audit there is? Can you give us a picture of that?

    Ms. Sheila Fraser: For officers of Parliament, the only office that has an annual financial audit is our office. That is done by an external auditor from the private sector.

    As I mentioned, all the other officers of Parliament have agreed to produce financial statements in their departmental performance report next year, and we will audit all of those.

    There's no easy explanation as to why some are audited and why some aren't. Many are not. I would say dozens do not have an audit done, do not produce audited financial statements. They only produce the information that goes up into the summary of financial statements of the Government of Canada. Should the committee wish, we could try to provide you with a list of that.

    Mr. John Bryden: Thank you. That's exactly what we would like.

    Mr. Philip Mayfield: I would like to ask Mrs. Fraser whether the environment budget is included in this budget here.

    Ms. Sheila Fraser: Yes, it is.

    Mr. Philip Mayfield: How would it be included, just very briefly?

    Ms. Sheila Fraser: It is included at various aspects. It would be included in our value-for-money work. There's a special line item for statutory responsibilities that the commissioner does. But the commissioner is really integrated within the Office of the Auditor General.

    The Chair: Thank you very much.

    I take it you'll provide a list of all the agencies to us.

    Ms. Sheila Fraser: Yes.

    The Chair: Thank you.

    Monsieur Jobin, s'il vous plaît.

[Translation]

    Mr. Christian Jobin: Madam auditor general, you said when tabling the report on the Office of the Privacy Commissioner, that in the future your audits would be focussing on small entities.

    Does the budget that you tabled with us today allow you to audit small entities in an appropriate manner, to reassure the government that each one is operating properly?

    Ms. Sheila Fraser: I would like to start with these amounts. We will develop a methodology and strategy. I would like to perhaps test them out first and we will see. If ever we discover that we need to increase the number and frequency, I will come back to request additional funds.

    Mr. Christian Jobin: Thank you.

[English]

    The Chair: Ms. Sgro.

    Ms. Judy Sgro: I have a question, Ms. Fraser. I think I can answer my own question, but I want you to answer it.

    You've mentioned that the officers of Parliament are being asked to include an audited statement within their performance reports next year. Why is it that we have never really looked at the whole thing and simply said that any agency, board, or commission, and so on and so forth, does not require an audit statement automatically?

    Secondly, could you give the committee a list of the projects you have ongoing in your department, when you talk about the value-for-money audits and the other issues that are important, that we want to see done also, so that we can have an appreciation for what you have in front of you--as well as answering that other question?

    Ms. Sheila Fraser: As to why some have an annual financial audit and others don't, I must tell you that there appears to be no particular reason. I think it was the way the enabling legislation was set up, if there was a requirement or not.

    Some have voluntarily asked for some. For instance, OSFI, the Office of the Superintendent of Financial Institutions, requested that we do an annual audit of their financial statements, and they publish them in their performance report. That is voluntary on their part.

    For the offices of Parliament, it is strictly voluntary. There is no requirement that they do that.

    I'm trying to think of the second part of your question.

    Ms. Judy Sgro: It was just to give us a list of your--

    Ms. Sheila Fraser: I would be very pleased to give that to you. We usually do that when we go through our performance report, but I would be quite glad to give you the list of audits that we have planned. We have them planned definitely until about 2005-06. So we'd be glad to furnish that.

    The Chair: Thank you, all.

    Now, of course, we're into the financial information strategy and accrual accounting, and there is something to audit, so that's good.

    Now we'll proceed to the questions.

FINANCE

Auditor General

ç	Vote 20a--Auditor General--Program expenditures...............$3,299,000

    (Vote 20a agreed to)

    The Chair: Shall I report vote 20a, under Finance, Auditor General, as carried, to the House?

    Some hon. members: Agreed.

    The Chair: Thank you, all.

    This public meeting is now adjourned. I would ask everyone to stay. We're now going to move in camera.

    [Proceedings continue in camera]