PACC Committee Meeting

37th PARLIAMENT, 1st SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Tuesday, June 4, 2002

¹

1540

Mr. Alex Shepherd (Durham, Lib.)

The Chair

The Chair

The Chair

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

¹

1545

Mr. Shawn Murphy (Hillsborough, Lib.)

The Chair

RAdm. Walsh

The Chair

Mr. Rob Walsh

¹

1550

The Chair

Mr. Rob Walsh

¹

1555

The Chair

Mr. Harb

The Chair

Mr. Shawn Murphy

Mr. Rob Walsh

The Chair

Mr. John Finlay (Oxford, Lib.)

The Chair

Mr. John Finlay

Mr. Philip Mayfield

Mr. Rob Walsh

Mr. Philip Mayfield

Mr. Rob Walsh

º

1600

The Chair

Mr. Mac Harb

The Chair

Mr. Pat Martin (Winnipeg Centre, NDP)

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

The Chair

Mr. John Bryden

The Chair

Mr. Mac Harb

º

1605

The Chair

Mr. Shawn Murphy

The Chair

Mr. Greg Thompson (New Brunswick Southwest, PC)

The Chair

Mr. Pat Martin

Mr. Greg Thompson

The Chair

Mr. Greg Thompson

The Chair

Mr. Greg Thompson

The Chair

º

1610

Mr. Philip Mayfield

The Chair

Mr. Alex Shepherd

The Chair

Mr. Alex Shepherd

The Chair

Mr. Rob Walsh

The Chair

Mr. Shawn Murphy

The Chair

Ms. Phinney

The Chair

Ms. Meredith

º

1615

The Chair

Mr. Pat Martin

The Chair

Mr. Pat Martin

The Chair

Mr. Philip Mayfield

The Chair

Ms. Beth Phinney

Mr. John Bryden

The Chair

Mr. Ghislain Lebel

º

1620

The Chair

Mr. Pat Martin

Ms. Beth Phinney

The Chair

Mr. John Bryden

The Chair

Mr. Ghislain Lebel

The Chair

Mr. Ghislain Lebel

The Chair

º

1625

The Chair

Mr. Philip Mayfield

The Chair

Ms. Beth Phinney

The Chair

Mr. John Bryden

The Chair

Mr. Philip Mayfield

Mr. John Bryden

The Chair

Mr. Shawn Murphy

º

1630

The Chair

Mr. Greg Thompson

The Chair

Mr. Greg Thompson

The Chair

Mr. Greg Thompson

The Chair

The Chair

º

1640

Mr. Philip Mayfield

The Chair

Ms. Val Meredith

The Chair

Mr. Richard Fadden (Deputy Clerk, Counsel and Security and Intelligence Coordinator, Privy Council Office)

Ms. Val Meredith

Ms. Kathy Milsom (President and Chief Executive Officer, Canada Lands Company Ltd.)

Ms. Val Meredith

Ms. Kathy Milsom

Ms. Val Meredith

Ms. Kathy Milsom

Ms. Val Meredith

º

1645

Mr. Tony Genco (Acting President, Parc Downsview Park Inc.)

Ms. Val Meredith

Mr. Tony Genco

Ms. Val Meredith

Mr. Tony Genco

Ms. Val Meredith

The Chair

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

The Chair

Mr. Shawn Murphy

The Chair

Mr. Richard Fadden

The Chair

Ms. Kathy Milsom

The Chair

Mr. Shahid Minto (Assistant Auditor General, Office of the Auditor General)

º

1650

Mr. Shawn Murphy

Mr. Shahid Minto

Mr. Shawn Murphy

Mr. Shahid Minto

Mr. Shawn Murphy

Mr. Shahid Minto

Mr. Shawn Murphy

Mr. Shahid Minto

The Chair

Mr. Ghislain Lebel

Ms. Kathy Milsom

Mr. Ghislain Lebel

Ms. Kathy Milsom

Mr. Ghislain Lebel

Ms. Kathy Milsom

Mr. Ghislain Lebel

º

1655

Mr. Harb

The Chair

Mr. Ghislain Lebel

The Chair

Mr. Ghislain Lebel

Ms. Kathy Milsom

The Chair

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Kathy Milsom

Mr. Philip Mayfield

Ms. Kathy Milsom

Mr. Philip Mayfield

Ms. Kathy Milsom

Mr. Philip Mayfield

Ms. Kathy Milsom

Mr. Philip Mayfield

Ms. Kathy Milsom

Mr. Philip Mayfield

Ms. Kathy Milsom

»

1700

Mr. Philip Mayfield

Ms. Kathy Milsom

Mr. Philip Mayfield

Mr. Tony Genco

Mr. Philip Mayfield

Mr. Tony Genco

Mr. Philip Mayfield

Mr. Tony Genco

The Chair

Mr. Richard Fadden

The Chair

Ms. Sheila Fraser

The Chair

Mr. John Bryden

The Chair

»

1705

Mr. Richard Fadden

Ms. Sheila Fraser

Mr. John Bryden

Mr. Richard Fadden

Mr. John Bryden

Ms. Kathy Milsom

Mr. John Bryden

Mr. Richard Fadden

Mr. John Bryden

Ms. Kathy Milsom

»

1710

The Chair

Mr. Ghislain Lebel

Ms. Kathy Milsom

Mr. Ghislain Lebel

Ms. Kathy Milsom

Mr. Ghislain Lebel

Mr. Tony Genco

Mr. Ghislain Lebel

Mme Sheila Fraser

Mr. Ghislain Lebel

»

1715

Mme Sheila Fraser

Mr. Ghislain Lebel

The Chair

Mr. Harb

Mr. Tony Genco

Mr. Harb

Ms. Kathy Milsom

»

1720

The Chair

Ms. Sheila Fraser

Mr. Paul Forseth

Ms. Sheila Fraser

Mr. Tony Genco

»

1725

The Chair

Mr. Robert Bertrand (Pontiac—Gatineau—Labelle, Lib.)

Mr. Tony Genco

Mr. Robert Bertrand

Mr. Tony Genco

Mr. Robert Bertrand

Mr. Tony Genco

Mr. Robert Bertrand

Mr. Tony Genco

Mr. Robert Bertrand

Mr. Tony Genco

Mr. Robert Bertrand

Mr. Tony Genco

The Chair

Mr. Richard Fadden

»

1730

The Chair

Ms. Sheila Fraser

The Chair

Ms. Kathy Milsom

The Chair

Mr. Tony Genco

The Chair

Mr. Tony Genco

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

---

CANADA

Standing Committee on Public Accounts

---

NUMBER 058

l

1st SESSION

l

37th PARLIAMENT

---

EVIDENCE

Tuesday, June 4, 2002

[Recorded by Electronic Apparatus]

¹  (1540)  

[English]

    The Chair (Mr. John Williams (St. Albert, Canadian Alliance)): Okay, everybody, our order of the day is adoption of the eighth report of the Subcommittee on Agenda and Procedure and consideration of chapter 13, “Other Audit Observations”, the section on Parc Downsview Park Inc., of the December 2001 report of the Auditor General of Canada. As you may recall, after what transpired about six weeks ago, the meeting never did happen, so we're now going to have it again. I will introduce the witnesses for that at the appropriate time.

    To deal with the eighth report of the subcommittee that met this morning, Tuesday, June 4, 2002, there were basically three items, and I'll take the first one first. We received a letter from Richard Neville, the Deputy Comptroller General, concerning waivers of ex gratia payments that are required to be published in the public accounts reports. They're seeking a waiver for ex gratia payments for people who are getting compensation or payment by virtue of the first nations residential schools. He's asking for a carte blanche waiver with no time limit. It was agreed at the subcommittee that we would give the waiver for one year and would review it annually. We also agreed at the subcommittee that provided the total amount paid and the number of recipients was recorded in the public accounts, we would grant the request. That is a recommendation of the subcommittee. All those in favour of the recommendation?

    Some hon. members: Agreed.

    Mr. Alex Shepherd (Durham, Lib.): I would object to that. Anybody could simply make a petition here and get a hearing. I don't think that's the function of our committee. We have a very busy agenda, we have other things to do.

    The Chair: Mr. Mayfield.

    Mr. Philip Mayfield (Cariboo—Chilcotin, Canadian Alliance): Mr. Chair, I would agree with Mr. Shepherd. We've had the hearing, we've come to our conclusions, and we have a busy schedule as it is. As Mr. Shepherd suggests, we're not interested in establishing any new precedent in calling a meeting for everyone who may decide to write us a letter. I regret that they weren't here before, but that's the way it happened this time. So I would oppose that.

    The Chair: Any further discussion?

    Are you in favour of providing the Customs Excise Union with an opportunity to appear before the committee, which will also mean we bring back CCRA?

    Some hon. members: No.

    The Chair: I was an accountant in my former life, so the motion is definitely defeated.

    The third item concerns the witnesses for what I would call the Groupaction report of the Auditor General of Canada. This morning we first heard from the law clerk of the House of Commons and legal counsel to the House of Commons, Mr. Rob Walsh, and it was agreed at the subcommittee that he would give us about a ten-minute presentation on the legalities of the issue of calling witnesses where we do know there is a police investigation. We don't know who's under investigation, but we do know the RCMP have confirmed that there is a police investigation, so there are some sensitivities involved. We heard from Mr. Walsh this morning, and we agreed that the whole committee would hear from him.

    Mr. Walsh.

    Mr. Rob Walsh (Law Clerk and Parliamentary Counsel, Legal Services, House of Commons): Thank you, Mr. Chair.

    I spoke to the steering committee, as you say, this morning--

¹  (1545)  

    Mr. Shawn Murphy (Hillsborough, Lib.): On a point of order, does Mr. Walsh have a written legal opinion?

    The Chair: He doesn't have a written opinion, he is here to give a verbal.... What are you going to give us, Mr. Walsh?

    Mr. Rob Walsh: I'm going to present the statement I put together in the last hour hastily to meet the request of the steering committee that I appear here at 3:30 and summarize what I said this morning. I would be pleased to have a copy of this made available to members after this meeting, but I have not had the opportunity, Mr. Chair, to put it in the form of a document for distribution. I'm not entirely sure what I'm about to say does accurately summarize what I said this morning, but it might come close.

    The Chair: He is, as I said, law clerk of the House of Commons. He's here to advise us, and we will now hear his pearls of wisdom.

    Mr. Walsh.

    Mr. Rob Walsh: Mr. Chairman, I don't want to suggest that what I'm about to say constitutes pearls of any kind, but here it is.

    As I say, I spoke to your steering committee this morning and I was asked to summarize what I said. In my view, there is no law that prevents this committee from launching an inquiry, regardless of the nature of the subject matter of the inquiry or what may be happening elsewhere in relation to the same subject matter. In my opinion, there is no limitation in law constraining the House of Commons or a standing committee of the House in the exercise of their powers. Members of Parliament, when sitting as the House of Commons or as one of the standing committees, are meant to serve the public interest, broadly defined, and are permitted by law to do whatever they feel necessary and appropriate in fulfilling that duty.

[Translation]

    The Committee members will think, once they hear these statements, that I should stop here, as a lawyer: no rule of law, no legal problem, no problem. I would be neglecting my duty, however, as a legal expert, if I did not go further.

    In my opinion, there are two elements that the Committee members could accept as legitimate constraints in exercising their parliamentary powers: the first one is the principle of responsible government, which is the cornerstone of any governmental parliamentary system; the second is justice in its broader sense, as well as when it is more narrowly defined. I don't want to imply that one is more important than the other, but I think that both elements should be considered.

[English]

    In my view, fundamental to the parliamentary system of government is this notice of responsible government, which, simply put, is that the government is responsible or accountable to the elected House and must enjoy the confidence of that House if it is to continue in office. This gives the elected House the power to dispose of the government by a vote of non-confidence, but also gives the House responsibility for exercising ongoing scrutiny of government action, what is sometimes called parliamentary oversight. It is in this context and only in this context, in my view, that the unlimited powers of committees are to be exercised.

    The Auditor General, for example, has considerable powers vested in her, and it is expected that she will only use them for purposes of her assigned mandate. The same principle, in my view, should apply here, except that the mandate of parliamentary committees is much broader and, second, the committee can be both judge and jury about the propriety of its action. The principle of responsible government arises when one considers the powers of a parliamentary committee to summon public servants to testify in respect of matters internal to the government.

    In my view, it is the responsible minister who is obliged to respond to inquiries by a House committee, though the minister might send the departmental official in his or her place. To exercise its powers to compel testimony from a public servant, where that public servant is not authorized by the minister to testify on behalf of the minister, is, again, I stress, in my view, to misuse the powers of the committee, inasmuch as it goes beyond the principle of responsible government, where it is only the minister who is accountable to Parliament, not the public service as such. The committee's power to summon witnesses applies, however, and the public servant might properly be found in contempt of the committee proceedings were he or she not to attend. But once there, the public servant might be justified in declining to answer questions pertaining to internal government business without the authorization of the responsible minister. The committee might object to the public servant's refusal to answer its questions and cite the public servant for contempt in a report to the House. The House has the power to decide the matter as it sees fit.

    There is parliamentary law to support the proposition that the House could imprison the public servant for any period of time, not extending beyond the end of the parliamentary session. In my view, with the advent of the Charter of Rights and Freedoms, it is not realistic in Canada to consider this power any longer available to the House. I don't mean to suggest, Mr. Chairman, that any member of this committee ever thought such power would be exercised, but I think one ought to acknowledge that.

    This brings me to the second matter for consideration, principles of fundamental justice. Each of us needs only to imagine being the object of a police investigation--I'm sure this is purely a matter of imagination--or at the wrong end of a lawsuit to soon realize the importance of justice and the principles of justice underlying the law and our legal process, whether in respect of police investigations, a civil action in the courts, or even an administrative action taken against us by a branch of government. If any such action were to be taken against any one of us, we would immediately think of our legal rights and the steps we might take against that process to defeat it. If a wrong has been done to a loved one, however, we would want everything possible done to advance the legal process to see that justice is done, with less regard, perhaps, for the legal rights of the person charged with the wrongdoing. So it is a matter of balancing competing interests, the interests of the individual citizen and being treated fairly, consistent with the fundamental principles of justice underlying our legal system, on the one hand, and the interests of the country and good government in bringing to justice persons responsible for any unlawful actions.

    There are, however, more than two competing interests here. There's also a third and larger interest, and this is the public interest found in our parliamentary system of government, and it recognizes part of our constitutional law, that its elected representatives be at liberty to act in the public interest as they see fit. This would include, in my view, the freedom to inquire into whatever matters they might think warrant enquiry and to use the full authority of the House or a committee of the House, as the case may be, to do so.

    The bottom line, Mr. Chairman, is that this committee must make the call. However you decide, it remains the case, in my opinion, that this committee has full authority and unlimited powers to inquire into the policies and actions of the government as it sees fit. The difficult question is how this committee should do this, having in mind the principle of responsible government and the competing interests of justice I've discussed. Only this committee, subject to any instruction that might come from the House, can answer this question.

¹  (1550)  

    Finally, Mr. Chairman, I note that courts of law and officers such as the Auditor General, and parliamentary committees as well, each have their roles and functions. In my view, a parliamentary committee should try to avoid doing the work that is constitutionally assigned elsewhere, though it remains open for a parliamentary committee to do so where it feels there is an overriding public interest that only an inquiry by a parliamentary committee can adequately serve.

    That concludes my statement, and I trust it represents a summary of what was said this morning, Mr. Chairman.

    The Chair: There's one point I'd like you to elaborate on, Mr. Walsh, and that is the availability of what is said at committee in a court of law.

    Mr. Rob Walsh: It is quite clear that no court of law in any proceeding can question on parliamentary proceedings, whether in the House or in a committee. What that means is that what may be said at a committee, or indeed what's said in the House, cannot itself be presented in a court of law and form part of the evidence before the court. I think your question has in mind discussions this morning regarding the possible use that might be made of testimony by witnesses appearing before this committee. You may find a witness invoking the Canada Evidence Act. That act doesn't apply to parliamentary proceedings as such, but it applies perhaps beyond the limits of its own language, insofar as much of what it's about is in section 13 of the charter. It is understandable that citizens might well be concerned about the use made of evidence given here. It is the case that parliamentary privilege, however, is available to those witnesses. It's not something the witness can invoke as such, it's a privilege that pertains to committee members, as to the House and members of Parliament. But it is the case that anything said in a parliamentary proceeding, including a committee proceeding, is protected by privilege and, as I said earlier, is not available to be questioned in a court of law and cannot be presented as evidence.

    What is of some concern, discussed this morning relative to a possible police investigation on matters that are at the same time being considered by this committee, is that were the police to have evidence that, in the judgment of the police and crown counsel, supported a charge being brought, an individual or individuals being brought to justice, but they could not establish that the evidence they had was obtained independently of any testimony before this committee, they could have difficulty where the argument is made that their evidence is derivative from protected testimony. It is not just the testimony that's protected, it's evidence that's derived from it. That is to say, if testimony before this committee were instrumental in enabling the investigating authority to find other evidence or in giving the investigating authority an appreciation of the evidence that wouldn't otherwise be available to them, this would be what's called derivative evidence. The police may not be able to use that evidence, depending on how the judge considers the matter. One could argue that any subsequent investigation or any evidence developed by a subsequent investigation, where much the same material was covered as in a committee hearing, could put in jeopardy the prospects for any successful prosecution.

    Having said that, Mr. Chairman, I hasten to add that I do not have in mind any persons possibly at all falling within that category. I don't mean to suggest that any person this committee is contemplating as a witness in any way has anything to be concerned about.

¹  (1555)  

    The Chair: Thank you, Mr. Walsh.

    We did have a significant discussion with Mr. Walsh in the steering committee this morning, so I'm not going to get into a long discussion with the legal counsel. I don't really want to summarize what he said, because this is the opinion of our law clerk and it's not for me, as a chair who has not in any way, shape, or form had any training in law, to summarize what he has said. But you have heard what he has to say.

    If there's agreement, I'd like to continue with the subcommittee's report.

    Mr. Harb.

    Mr. Mac Harb (Ottawa Centre, Lib.): Before that I think it would be wise to find out if any of our colleagues have questions for the counsel, particularly those who were not at the meeting.

    The Chair: Okay. I will allow the people who were not at the meeting this morning to ask some brief questions, and those who were at the meeting this morning will not ask questions, because we had an hour and a half discussion this morning.

    Mr. Murphy.

    Mr. Shawn Murphy: Thank you very much, Mr. Chairman.

    First of all, Mr. Walsh, as you know, we're members of the public accounts committee, and it's our duty and our job to deal with public money and account to government. I agree with your advice that's it's not our job to go off in other areas we're not supposed to be off in, but based upon the research you've done on the case, do you have a recommendation for us? We're talking about calling two former civil servants who might be--we don't know--the subject of a criminal investigation. Assuming we wish to call them, which I think it's our duty to, do you have a recommendation whether or not we should call them based on everything you said?

    Mr. Rob Walsh: To answer that question might be to presume upon the discretion of this committee, which only it can exercise.

    The Chair: We are enlightened, thank you.

    Mr. Finlay, and then Mr. Mayfield.

    Mr. John Finlay (Oxford, Lib.): Mr. Chair, I appreciate what you said, and thank you very much, Mr. Walsh.

    I want to know what is the state of the motion that we were--

    The Chair: I'll deal with that right after.

    Mr. John Finlay: Oh, you will. Okay. Thank you.

    The Chair: Mr. Mayfield.

    Mr. Philip Mayfield: I would like to ask something like the same question that was first asked, Mr. Walsh. Is there any reason you, as a legal counsellor, are aware of we may not call former employees of the departments?

    Mr. Rob Walsh: Are you consciously referring to former employees by design or are you talking about civil servants generally?

    Mr. Philip Mayfield: I'm talking about former civil servants.

    Mr. Rob Walsh: It gets a bit tricky with former civil servants. I don't want to be here giving advice of a kind they may think they can take advantage of or use for their benefit. I don't know what the firm answer is with respect to the position of a former civil servant. In the case of a current civil servant it seems to me, as I said in my statement, there is a ministerial authorization that may come into play and stand between the committee and the existing public servant. With a former public servant, I'm not sure if it's the case, but I wouldn't be surprised if it is the case, that they have a continuing obligation to respect confidentiality in matters they learned while in the public service. That may, regarding the former public servant and his former department, be a constraint. I just don't know, Mr. Mayfield, for sure, so I'm reluctant to make a comment with any certainty as to what the position of a former civil servant is in this context.

º  (1600)  

    The Chair: Thank you.

    There being no further desire to ask questions, I'm going to move to the motion Mr. Bryden made last week. The motion was that this committee request the appearance of officials suggested by the Auditor General in her testimony in the Groupaction investigation. After debate it was agreed that the motion be allowed to stand until the next meeting of the committee. I'm quoting Ms. Sheila Fraser, the Auditor General:

Normally, in reviewing one of our audit reports, the committee would call before it the current officials of the department, so that the committee might want to consider requesting that the current Deputy Minister of Public Works and the executive director of Communication Canada appear as witnesses. Given the fact that neither of them was there at the time that these two contracts were let, the committee might want to consider asking the two former executive directors that we have made reference to in this report to come forward.

    So that is Mr. Bryden's motion, that we call the witnesses suggested by the Auditor General. The Auditor General, in her testimony, said the current Deputy Minister of Public Works, the executive director of Communications Canada, and the two former executive directors.

    Mr. Harb.

    Mr. Mac Harb: Can we split it into two?

    The Chair: We'll split it into two.

    The current Deputy Minister of Public Works is Ms. Janice Cochrane, the current executive director of Communication Canada is Mr. Guy Mc Kenzie.

    Mr. Martin.

    Mr. Pat Martin (Winnipeg Centre, NDP): Can I ask why we're splitting this motion into two parts.

    Mr. John Bryden (Ancaster—Dundas—Flamborough—Aldershot, Lib.): I don't understand what we're splitting it into.

    The Chair: There are two recommendations here. One concerns the current deputy minister and the current executive director. She also said we may want to consider asking the two former executive directors.

    Mr. John Bryden: Mr. Chairman, if I may, I think one deals with the motion, and then, after the motion has passed, if it does pass, we can decide how to fulfil the contents of the motion, and the Auditor General has given us a direction.

    The Chair: You are correct, Mr. Bryden. Your motion stands, and the four names will be considered in one. I think you all now have a list: Janice Cochrane, the Deputy Minister of Public Works, Guy Mc Kenzie, the director of Communication Canada, Charles Guité, former director of Public Works, and Pierre Tremblay, former director of Public Works. These, I believe, are the four names, Mr. Bryden.

    Mr. Harb.

    Mr. Mac Harb: Mr. Chair, we just have heard from Mr. Walsh about the challenges that will face this committee in the event that we proceed with this issue and invite people to appear before this committee. I would suggest that it has been the tradition of this committee, when the Auditor General has made her report in the past, to invite the deputy minister, as well as officials, from the department. I would like to see us proceed as we normally would do, and that's why I suggested we split the motion into two portions. So we will support having the deputy minister appear before the committee with officials from the department, but to venture out into new territories, where we don't know what the implication might be, I think would be highly unwise. So we will vote against it, unless it is divided.

º  (1605)  

    The Chair: No, no. We have Mr. Bryden's motion, we have the recommendation of the Auditor General, these names are before the committee. I'm now going to call the vote.

    All those in favour of calling the four people who I have named?

    (Motion agreed to)

    The Chair: I'm now going to go through the witnesses who were discussed this morning. In addition to these four people, the following people were suggested as witnesses. There was no agreement at the steering committee, it was not unanimous, so the decision would be made by this full committee.

    There is Mr. Ran Quail, a senior advisor to the PCO. Those in favour of calling him?

    Mr. Shawn Murphy: On a point of order, I don't understand, these names never came before us before.

    If I could just continue, Janice Cochrane, the deputy, I assume is going to come with people to assist her. We're asked to vote on a situation.... Norm Steinberg I've never heard of before in my life. Daniel Boudria I've heard of in a different context. I didn't know he worked with--

    The Chair: Let me just back up here a little, Mr. Murphy. Maybe I did move a bit too fast.

    Normally, the steering committee works through unanimous recommendations. These witnesses were proposed this morning by some members of the steering committee. There was not unanimity. I should have asked those who suggested these witnesses be called to speak on why the names were put forward. We have to go through this, and I hope we will do it quite quickly.

    Who proposed the name of Mr. Ran Quail?

    Mr. Thompson.

    Mr. Greg Thompson (New Brunswick Southwest, PC): I believe Mr. Martin and I both did. If Mr. Martin agrees, he can go through Mr. Quail, and I'll go through Janice Cochrane, if that would be of assistance here.

    The Chair: To keep this formal, you move that we bring in Ran Quail as a witness. Now speak to that motion.

    Mr. Martin.

    Mr. Pat Martin: Mr. Quail is currently a senior advisor to the PCO, but he was a Deputy Minister of Public Works when the Groupaction file came down and when the internal budget was done in March, when a lot of these facts were revealed, the Auditor General's first volley at Groupaction. It's very pertinent, very relevant, and very timely that he should be included. He was one of the key figures at the time all this became the issue it is today.

    Mr. Greg Thompson: In addition to that, Mr. Chairman, this gentleman, Mr. Quail, is known as a straight shooter.

    The Chair: That's not the point. The point is, what's the relevance of him as a witness?

    Mr. Greg Thompson: He'll come in and, to the best of his ability, tell it as it is.

    The Chair: We expect that.

    Mr. Greg Thompson: Also, he can testify to the checks and balances that were in place during that time.

    The Chair: His position was Deputy Minister of Public Works at the time Groupaction contracts were let, and that's all we need to know.

    Mr. Mayfield.

º  (1610)  

    Mr. Philip Mayfield: I want to speak more generally, Mr. Chairman. It seems to me that the committee is in agreement that we want to hear from anyone who has relevant evidence. I'm far from one who wants to bring people here and abuse them. If they have information that is relevant to our meeting, I think we should invite them. If they come and they don't have the information we want, that might be a waste of their time and ours. Inasmuch as the individual we're talking about now was involved, I think it would irresponsible, in seeking to get all the relevant information, if he were not included on our list. I have no other information about how he conducts himself at committee meetings.

    The Chair: Mr. Shepherd, Mr. Murphy, Ms. Phinney.

    Mr. Alex Shepherd: I'm still feeling somewhat uncomfortable with the evidence that was given here today by Mr. Walsh. I don't know if we heard that. As I heard it, he was giving us a cautionary note regarding subsequent police investigations, that our role in this process may well hinder--he didn't say obstruct--future investigations in a court of law. I just wonder if we've taken that to heart.

    The Chair: We discussed that in detail in the steering committee, Mr. Shepherd. We discussed hearing the testimony in camera because of that particular issue. If it's in camera, it reduces the availability of the information in the public domain.

    Mr. Alex Shepherd: There's a question about timing. The reality is, you want to continue an investigation at the same time as, possibly, a court action is being undertaken. Whether it would be more appropriate for the committee to wait until the court has done its investigatory work seems to be an issue.

    The Chair: Mr. Walsh, could you explain? A police investigation is ongoing, it is not before the courts. Am I correct, Mr. Walsh?

    Mr. Rob Walsh: I only have as much knowledge as I read in the papers. I don't believe any charges have been laid against any persons. I hear reports that there is an investigation under way, but I have no professional knowledge, as it were, that such is the case. I read the papers, like the rest of the committee members, and there is an investigation, if those reports are true.

    The Chair: But there are no charges at this time.

    Mr. Murphy.

    Mr. Shawn Murphy: Mr. Chairman, there's a point here I want to make. This committee has a duty to investigate a possible misuse of public funds. Ms. Fraser appeared before us. We asked Ms. Fraser--she's the one who did the very thorough investigation--who she would recommend we hear from. Her answer was, the deputy minister, the director general of Communication Canada, and the former civil servants. On that basis, I supported the previous motion. Now we've got a whole list of other people. By the way, I consider Ms. Fraser a straight shooter. If we hear these witnesses and there are gaps in the information, we can call more witnesses. Giving us a list of ten witnesses looks like a witch hunt. We have to get the four witnesses in. That'll fill up two hours. If there are gaps, it's certainly up to us, as a committee, to call further witnesses. I don't see any point in going through this list.

    The Chair: Ms. Phinney.

    Ms. Beth Phinney (Hamilton Mountain, Lib.): I was going to say pretty much the same thing. Our customary thing at this committee is to have the Auditor General and the deputy minister, we don't usually go any further. We've even just said for one party, these people in the union, that even though the other side gave its point of view, we're not going to let the union give its point of view. Here we're talking about calling ten more people to explain what four people may already explain. I'd like to make a motion that we wait to decide if we're going to hear more people until we have heard from the four we've already voted to hear from.

    The Chair: We have a motion on the table.

    Ms. Meredith.

    Ms. Val Meredith (South Surrey—White Rock—Langley, Canadian Alliance): Ran Quail was the Deputy Minister of PWGSC, and I think he falls into the same category as Pierre Tremblay and Charles Guité. He was in a responsible position for the department. He was deputy minister at the time this happened, and I think he should be brought into that list. The others I'm not concerned about at this point, but I think this Ran Quail should be brought in.

º  (1615)  

    The Chair: Mr. Martin, we seem to have some kind of an agreement on this issue.

    Mr. Pat Martin: Not to push that level of good will, but I would ask you just to entertain one other individual.

    The Chair: No, we're talking about Mr. Quail.

    Mr. Pat Martin: I don't want to see it capped off with Mr. Quail.

    The Chair: All those in favour of Mr. Quail?

    Mr. Lebel.

[Translation]

    Mr. Ghislain Lebel (Chambly, BQ): Mr. Chairman, one moment, please. Can we have a recorded vote on this?

[English]

    The Chair: We've had a request that we have a roll call on the vote. The clerk reminds me that I hold the record of having requested the largest number of recorded votes ever in a committee.

    Mr. Mayfield.

    Mr. Philip Mayfield: I would like to know the title of Mr. Guy Mc Kenzie. He's listed as Communication Canada. He's already been approved.

    The Chair: Okay, but let's get the roll call on the vote for Mr. Quail.

    (Motion agreed to: yeas 11; nays 5)

    The Chair: Now we're dealing with Ms. Phinney's motion. We've had one motion to have four and a second motion to add one more, so now we're up to five.

    Ms. Beth Phinney: I forget what my motion is now.

    Mr. John Bryden: That this be the number of witnesses we have at this time.

    The Chair: That we defer the consideration of other witnesses until we've heard these five.

    Mr. Lebel.

[Translation]

    Mr. Ghislain Lebel: Mr. Chairman, I will have my colleagues note that no matter how thin, there are always two sides to any coin. We are presented with the government side, that is, public servants, but these public servants have dealt with private sector interests. If they are concerned and mindful of natural law, justice and public interest, how can they object to an audit of one of the two parties to the contract? To get the other party's version, we have to find out about it here.

    We submitted a motion asking for the Groupaction people to appear. Mr. Chairman, with all respect, you must propose the names of the Groupaction people to this Committee, and the members will vote against the motion if they do not agree. I have no problems with this.

º  (1620)  

[English]

    The Chair: Mr. Lebel, the clerk advises me that your list of witnesses was tabled before the steering committee, it was not tabled before this, the main committee. Ms. Phinney's motion does not preclude bringing these witnesses in at a further meeting, but we are not going to have 15 witnesses for a two-hour meeting. We will have to break it down into a series of meetings, because it would be impossible for us to deal with 15 witnesses in two hours. We already have five, and it wouldn't surprise me if that represents at least two meetings. Ms. Phinney's motion says that after we have heard from these, we will entertain your motion.

    I go to Mr. Martin next.

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

    Speaking to the motion, I'd like to argue that the list is incomplete. Even though I don't disagree that we might want to cap off the list at a reasonable number today, I'd argue that the list is incomplete until we entertain Norm Steinberg, who was the director general of audits and ethics in Public Works at the time of the internal study in March 2000. Surely, there's no more appropriate person. I'd even be willing to trade Norm Steinberg for Ran Quail, frankly, because I think it's incomplete until we do that. So I'd ask, in the spirit of goodwill that I think is growing in the room, whether we could put it up to six and cap it off with Norm Steinberg. I'd like to amend the motion to that effect.

    Ms. Beth Phinney: No, I think I'd rather leave it the way it is now. If we want Mr. Steinberg, we can decide that later.

    The Chair: I don't know that I'm going to take an informal suggestion that you amend the motion and an informal “No, I won't.” I think we'll consider that an amendment to your motion, Ms. Phinney, that we deal with Norm Steinberg prior to cutting off the list.

    Mr. Bryden.

    Mr. John Bryden: I would think any one of these other witnesses we've called might, on a suggestion from the chairman, bring Mr. Steinberg. We don't need to have every witness as somebody who sits at the end of the table. I think there could be a very informal suggestion from the chairman that Mr. Quail or Janice Cochrane or whoever consider bringing these other people, and they'd be available for consultation with the principal witnesses. I don't think we have to make it complete.

    The Chair: Monsieur Lebel.

[Translation]

    Mr. Ghislain Lebel: Mr. Chairman, this is a joke! We are debating a motion submitted by Mr. Martin on May 23. On that day, I presented a motion that called a group of witnesses that I wanted to be heard. You rejected my motion by telling me that it was included in Mr. Martin's request. Today, I want to debate this and you tell me that I didn't submit the request. There is something wrong with the procedure.

[English]

    The Chair: The clerk advises me that it wasn't tabled before the committee, there was no motion.

[Translation]

    Mr. Ghislain Lebel: Yes, sir, this motion was submitted before the Committee. You rejected it, stating that it was included in Mr. Martin's motion. Today, you split the motion, and my motion is not included in his! This is a joke. The Liberals are really taking us for a ride.

[English]

    The Chair: The clerk advises me that the names were not tabled before the main committee, and it was discussed at the steering committee, so I'm going to have to rule that out of order, Mr. Lebel.

    We have Ms. Phinney's motion to cut the list off at five, we have Mr. Martin's amendment that we cut it off after six, adding Mr. Norm Steinberg. I'm going to ask the question on the amendment to Ms. Phinney's motion as proposed by Mr. Martin, that we add Mr. Norm Steinberg.

    (Amendment negatived: nays 9; yeas 7)

º  (1625)  

    The Chair: Now we'll move to Ms. Phinney's main motion, which is that we cut the list off at the five already determined. Of course, after we've heard from these five, we will decide if we want to hear from more.

    (Motion agreed to: yeas 10; nays 6)

    Mr. Philip Mayfield: Mr. Chair, I want a clear understanding that Ms. Phinney's motion suggests that these will be available for further consideration, if we so choose, at a later date. Is that correct?

    The Chair: You're absolutely correct. Right, Ms. Phinney?

    Ms. Beth Phinney: Yes. There can be 50,000 others if they want.

    The Chair: Now we know which witnesses are coming before the committee, I will discuss with the steering committee whether these meetings should be held in camera, one or more of them. I will get direction from the steering committee.

    I also want to point out, as I mentioned to the steering committee this morning, that our mandate is what happened, what went wrong, why it happened, what has changed, and what recommendations we, as a committee, want to make. We're going to stay with our role as a parliamentary committee, which focuses on the accountability of the civil service as to what happened and what went wrong. We are not getting into complementing or replacing any criminal investigation that is taking place. We must, as Mr. Walsh pointed out, remember our specific role as a parliamentary committee.

    Mr. Bryden.

    Mr. John Bryden: I was just wondering if I can get a sense of whether the other members of the committee are in agreement with the program you've just described. Is that generally agreed upon?

    The Chair: Yes, and I will work with the clerk to try to arrange these meetings and so on.

    Mr. Philip Mayfield: Mr. Bryden, are you saying this is a committee doing committee business and we're not reaching beyond that?

    Mr. John Bryden: I'm glad you intervened. The chairman pointed out that this is a parliamentary committee examining an issue involving Parliament within the mandate of this committee, which is to examine government administration. He phrased it, I might say, much better than I just did. But I did want to get a sense from other members, because Mr. Walsh's testimony was very important, in my view. He described parameters, suggesting that it wouldn't be becoming of this committee to go outside the civil service in an investigation, as the chairman points out. The investigation of things that may be undertaken by the police and do not pertain to parliamentary Hill business is not the business of this committee.

    The Chair: We're not into the business of investigating criminality, we're into investigating maladministration.

    Mr. Murphy.

    Mr. Shawn Murphy: Mr. Chairman, could you ask Mr. Walsh to put his comments into a report or letter and circulate it to the committee?

º  (1630)  

    The Chair: I'm sure he will. In fact, he has them there. Also, I can assure you that when we're having this, Mr. Walsh will join me at this end of the table to advise the chair, the clerk, and the committee.

    The report of the steering committee has now been dealt with. We will now move to the second order of business today, which is the Downsview Park Inc. investigation.

    Mr. Greg Thompson: On a point of order, before we move to that, Mr. Chairman, I thought we were going to have a debate on whether those meetings would be in camera or open.

    The Chair: No, I said I would talk with the steering committee about it. You're on the steering committee. I will get your input.

    Mr. Greg Thompson: I don't think, Mr. Chairman, that's the role of the steering committee.

    The Chair: Mr. Thompson, you must understand that the role of the steering committee is to advise the main committee. If there's no consensus on the steering committee, it is decided here at the main committee.

    Mr. Greg Thompson: Why don't you show some leadership?

    The Chair: I am.

    Mr. Greg Thompson: Bring it to the committee, and we'll deal with it openly and publicly.

    The Chair: We need to have a health break. We will have a two-minute health break as the witnesses come forward.

º  (1632)  

---

º  (1639)  

    The Chair: We will now resume with consideration of chapter 13, “Other Audit Observations”, the section on Parc Downsview Park Inc., of the December 2001 report of the Auditor General of Canada.

    Our witnesses today from the Office of the Auditor General are Ms. Sheila Fraser, the Auditor General of Canada, Mr. Shahid Minto, Assistant Auditor General, and Ms. Louise Bertrand, director. From the Privy Council Office we have Mr. Richard Fadden, deputy clerk, counsel, and security and intelligence coordinator. From Canada Lands Company Ltd. we have Kathy Milsom, president and chief executive officer. From Parc Downsview Park Inc. we have Tony Genco, acting president.

    The opening statements, I believe we are all agreed, will be tabled with the committee, deposited with the clerk, and form part of the minutes of the proceedings of the meeting and be published. Therefore, we can move straight into our normal round of questions.

º  (1640)  

    Mr. Philip Mayfield: Is the switch on, Mr. Chair? The committee's record will be on record this time?

    The Chair: For the record, we have confirmation that we are broadcasting, we are taping, we will publish.

    As one more thing, because of the time, can we dispense with the eight-minute opening round and just go four minutes per member? Is that agreed?

    Some hon. members: Agreed.

    The Chair: Ms. Meredith.

    Ms. Val Meredith: Thank you, Mr. Chair.

    Because I only have four minutes, I'm going to take my six questions and cut them down to three. The Auditor General was concerned that Parliament did not formally approve the transfer of this military base to Parc Downsview Park. What I'd like to know is whether or not Canada Lands Corporation still believes Canada should not have anything to say about where the government lands are transferred. The question is directed at whoever makes the decisions as to where these government lands are given away.

    The Chair: Mr. Fadden.

    Mr. Richard Fadden (Deputy Clerk, Counsel and Security and Intelligence Coordinator, Privy Council Office): I will give it a try.

    As I tried to explain at our last meeting, statutes passed by Parliament authorized the executive to make this transfer. Therefore, the government is of the view that the transfer took place appropriately. The parliamentary process was respected, because it was mentioned in the budget. There were all sorts of opportunities for Parliament to be informed and to question officials. In any event, our bottom line is that in compliance with the statute, the transfer was made lawfully and was appropriate.

    Ms. Val Meredith: So you believe this is still the process?

    Second, the Government of Canada owns considerable land across the country that used to be military bases. How is Canada Lands Corporation dealing with the fact that there are aboriginal land claims outstanding? Does this come into play, and if so, why was the land that was given to Parc Downsview Park not part of this land claims inventory?

    Ms. Kathy Milsom (President and Chief Executive Officer, Canada Lands Company Ltd.): Canada Lands respects the government's policy with respect to first nations, and before a property even comes to Canada Lands, there is a process the government has whereby it circulates that land to determine whether there are other department uses for it or there are any claims with respect to first nations. By the time Treasury Board approval is granted for the transfer, those issues have already been addressed.

    Ms. Val Meredith: So you're telling me this Downsview Park will not be available for any future aboriginal first nations land claims?

    Ms. Kathy Milsom: Before the department that has custody of the site at the present time is able to facilitate transfer to Canada Lands, it has to go through a process to ascertain that there are no outstanding claims with respect to the site.

    Ms. Val Meredith: Would that also apply to the Chilliwack military base, so it is now not available for aboriginal land claims because it has gone through the Canada Lands Corporation?

    Ms. Kathy Milsom: Parcel A of Chilliwack has been transferred to Canada Lands. We now hold title of it, effective December 14 of last year. The same process was followed, and the interests of the first nations were respected in that regard. There is a nation that was engaged in the discussions, and there is one band of that particular nation that, despite the rulings of the highest level of courts, has decided to try to pursue civil action with respect to the transfer, but again, the Department of National Defence, before it actually transferred the property, made sure it went through the appropriate process.

    Ms. Val Meredith: How much money has the defence department put into this urban park, and why did it put any into it?

º  (1645)  

    Mr. Tony Genco (Acting President, Parc Downsview Park Inc.): The Department of National Defence still has ongoing activities on the site. It's in the process of consolidating its operational requirements on the site. We mange the site, by way of a management agreement, on its behalf, and there are some costs related to the management of the site and certain decommissioning costs that it is undertaking as per the normal course of events. That's basically it.

    Ms. Val Meredith: How much?

    Mr. Tony Genco: You mean dollars?

    Ms. Val Meredith: Yes, millions of dollars, thousands of dollars?

    Mr. Tony Genco: Millions of dollars, for sure. I don't have the specific figure at the ready, but I can get it, from the beginning of the process.

    Ms. Val Meredith: Would you provide that for the committee, please?

    Thank you.

    The Chair: The Auditor General had a comment.

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

    I would just like to remind the committee that in our audit observation we raised the issue of a payment of $2 million out of National Defence's budget that we did not think was an appropriate charge to that budget. At our previous meeting I think the government agreed with that and indicated it was looking at how it could be corrected.

    The Chair: Thank you.

    Mr. Murphy.

    Mr. Shawn Murphy: Thank you very much, Mr. Chairman.

    I have a question for both Mr. Fadden and Ms. Milsom that goes to this whole transfer. We have a situation where 640 acres of property in the Toronto area was transferred, for no consideration, to the people in Toronto, I suppose for perpetuity, in trust. It's my understanding that the mandate of the Canada Lands Corporation is to acquire, develop, and dispose of strategic properties. As Ms. Milsom knows, there's a property in my riding that I've been trying for a number of years to acquire as a park, a civic facility, with the understanding it would be paid for. But these 640 acres were transferred, with a large sum of money, for no consideration. Mr. Fadden, and your department, and Ms. Milsom, are you both comfortable with this whole arrangement?

    My second question is to you, Ms. Milsom. Does this really meet with your company's mandate?

    The Chair: Mr. Fadden.

    Mr. Richard Fadden: The land was transferred from the Department of Defence to Canada Lands in return for a promissory note. At the last meeting of the committee some concern was expressed about the length of the promissory note, but it was in keeping with government policy, although I think I admitted at the time that it was rather extraordinary. In most cases the promissory note is valid for a period roughly the same as that required to dispose of the property at issue. There was consideration given. It's a normal business practice within the government to transfer lands and properties in this fashion, and we think it is appropriate, given the length of time it will take Canada Lands to fully develop Parc Downsview.

    The Chair: Ms. Milsom.

    Ms. Kathy Milsom: I'll just add that the only parcel that has been transferred to date is block H. With the main portion, the portion that will be used for the park development, the title issue has yet to be resolved, which is one of the issues Parc Downsview Park is continuing to work at with the Department of National Defence.

    With respect to our mandate, Canada Lands, the parent company, has three active subsidiaries, two of them being Parc Downsview Park Inc. and CLC, the primary real estate subsidiaries. The parent itself is a shell company. It doesn't have assets other than the shares of the subsidiaries. The two subsidiaries, however, do seem to have a variance with respect to their core mandate. Canada Lands CLC has a commercial mandate, whereby we have to create financial value, optimize the value on behalf of the government, and return the financial value in the form of distributions to the government. When Downsview Park was created as a subsidiary, it was recognized that it has a social mandate with respect to the development of the park. The commercial ventures they undertake within the site--and perhaps Mr. Genco can speak to it as well, if you wish--are intended to finance the development of the park, so that the organization of the park development is, in fact, self-sustaining.

    The Chair: Mr. Minto had a point he wanted to raise.

    Mr. Shahid Minto (Assistant Auditor General, Office of the Auditor General): Thank you, Mr. Chairman.

    I just wanted to clarify the issue about the promissory note. I'd like to draw the attention of the committee to paragraph 51 of chapter 13. Essentially, Downsview Park acquired 32 acres from DND in exchange for a promissory note of $19 million. The note bears no interest, is unsecured, and is subordinated to future indebtedness of Downsview Park. Downsview Park then proceeded to sell the land and put the moneys in its own bank account instead of sending it back to the CRF. In fact, it's financing its ongoing operations out of that money. I just wanted to point out that in its March 2000 statements Downsview Park did not show this as a liability, but as equity from the Government of Canada. It seemed there was almost no intention of returning this in the near future.

º  (1650)  

    Mr. Shawn Murphy: What is the due date?

    Mr. Shahid Minto: The due date, sir, is 2050. It's a 49-year promissory note.

    Mr. Shawn Murphy: With no interest.

    Mr. Shahid Minto: No interest, and subordinated to all the other debt.

    Mr. Shawn Murphy: Has anyone in your department estimated a present-day value of that note, a discounted value?

    Mr. Shahid Minto: We did, but the issue became that as far as the corporation was concerned, this was not debt, but equity. So it has been put in as equity arising from a promissory note in the financial statements of the corporation.

    Mr. Shawn Murphy: Is this a normal transaction seen on government books?

    Mr. Shahid Minto: It is a normal transaction for Canada Lands to give out promissory notes, but the promissory notes are paid back as soon as they sell the land.

    The Chair: Thank you, Mr. Murphy.

[Translation]

    Mr. Lebel, please.

    Mr. Ghislain Lebel: Ms. Milsom, unfortunately, we did not record this the other day, but I thought I understood, when another question that you asked the Chairman of our Committee was being answered, that political pressure was put on you in the performance of your duties, and you did not give in. Have the members of the Committee understood this?

[English]

    Ms. Kathy Milsom: I've been with Canada Lands since August 2000. My response, if I can try to restate it, is that since that time the former minister's staff has expressed interest in certain files Canada Lands was engaged in. What I can say to you without a doubt is that the company has conducted all its actions, open to the highest standards of public scrutiny, in a transparent, open, and fair manner.

[Translation]

    Mr. Ghislain Lebel: What former minister are you talking about?

[English]

    Ms. Kathy Milsom: Minister Gagliano and his staff. We had until very recently, until January, reported to Minister Gagliano.

[Translation]

    Mr. Ghislain Lebel: What kind of interest did he express?

[English]

    Ms. Kathy Milsom: Most of our dealings would have been with the staff of his office. They would express interest, for example, in the process we were using to dispose of certain parcels of land, and on occasion they would refer us to certain individuals we might wish to meet with respect to whether or not they could provide any particular expertise to the company.

[Translation]

    Mr. Ghislain Lebel: Who in the Minister's office were you referring to?

º  (1655)  

[English]

    Mr. Mac Harb: On a point of order, Mr. Chair, we have gone through a series of debates. I just want to make sure my colleagues know the purpose of our being here, and that's to reconstruct the minutes. With all due respect, I want to provide some leeway, but at the same time, we have to be focusing on the subject of reconstructing the minutes from a previous meeting. I would suggest that we put a stop to this line of questioning at this point.

    The Chair: We all agreed, Mr. Harb, that it's impossible to reconstruct the minutes, because we can never hold the meeting exactly as it was held before. That is an absolute impossibility. We do have the CEO of Canada Lands in front of us. We're dealing with a subsidiary of Canada Lands, Downsview Park Inc. Therefore, I think the line of questioning is legitimate, although one, of course, is careful when naming names. I would think that's the important thing to remember.

[Translation]

    Mr. Lebel, please.

    Mr. Ghislain Lebel: I hope you will take into account the fact that he has taken one and a half minutes of my time. Of course, that's his strategy. I want my time back.

[English]

    The Chair: You have your time back, Mr. Lebel. The clerk stopped the clock.

[Translation]

    Mr. Ghislain Lebel: Ms. Milsom, you say the people in the Minister's office suggested that you consult certain experts in the field. I presume that these are real estate experts. To satisfy the member opposite me, can you tell us if we are talking about the land at Downsview Park? Can you tell us who these people are from the Minister's office who were making suggestions to you, in good faith I presume? Who did these people suggest to you? You say that you were advised to consult experts in a similar field.

[English]

    Ms. Kathy Milsom: In the spirit of good governance, one of the things the company has done is ensure that we have a clear line of communication with our shareholder--the shareholder being represented by the Minister of Public Works at that time. We made sure we respected the appropriate communication channels. In other words, the management team reports to me, I report to the board, the board, through the chair, reports to the minister.

    The other thing we did to make sure we had clarity of communication within the organization is that at the employee level we directed any contact that came through the minister's office to two people, myself and our vice-president for public and government affairs. As you can appreciate, there were many occasions when we had discussions with various staff in the minister's office to ensure that they were briefed on items they might be asked about in the House. They expressed quite often quite legitimate interests with respect to properties we were acting on, to ensure that they could discharge their own responsibilities as the shareholder's representatives for Canada Lands.

    The Chair: Merci beaucoup, monsieur Lebel. We will return to you after we've heard from the others.

    Mr. Mayfield.

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

    Ms. Fraser, were you were aware of the details that provoked the discussion between Mr. Lebel and Ms. Milsom during the course of your audit?

    Ms. Sheila Fraser: No, sir. We would look at the documentation surrounding transactions within the corporation, but discussions such as this would not necessarily form part of that documentation. There could be notes on file, and if there are, we would have looked at them when we did our normal audits.

    Mr. Philip Mayfield: What was the purpose of these referrals, Ms. Milsom?

    Ms. Kathy Milsom: I would expect that it's a matter of a constituent or somebody having interest in the company contacting the minister's office, whereupon it would be referred to us. But let me reiterate, please, that the company, in the time I have been there, has respected all the policies we have in place with respect to both procurement and sales of properties. Those policies require us to go through a fair and transparent process. So although on occasion we would review the credentials of a particular firm, we would always act in the best interests of the corporation and in the best interests of the Government of Canada.

    Mr. Philip Mayfield: There's a difference between doing business and having a consultation. Was there any business done with these individuals, or were these just consultations?

    Ms. Kathy Milsom: What we would generally do is receive a referral and consider the firm. If it's qualified, we will in the future, when we were going through a competitive process, add it to the list of considered firms. But there is not a specific individual we chose to do business with on the referral of anybody.

    Mr. Philip Mayfield: Did these in every instance apply under the rules for everyone else?

    Ms. Kathy Milsom: We in all instances abided by the rules we had in place for procurement, which require us to go through competitive processes.

    Mr. Philip Mayfield: In every instance it went through the competitive process?

    Ms. Kathy Milsom: In every instance we complied with our policy with respect to procurement. The procurement policy has certain exemptions, but those would not be ones we would use to do business with somebody we didn't think met--

    Mr. Philip Mayfield: But I asked if in every instance it went through the competitive process.

    Ms. Kathy Milsom: In every instance where our policy required us to go through a competitive process we did.

    Mr. Philip Mayfield: So it was all under $25,000.

    Ms. Kathy Milsom: Our policy is not the same as the government's policy. In fact, our policy is one the Auditor General, I believe, does have a look at, and they have had no issues with it. We have developed our own policy, first, to make sure we can discharge our mandate to the best of our ability to maximize value. In other words, in all instances we're picking consultants or service providers who provide best value, both financially and in the quality of the services. Second, recognizing that we're not a private sector firm, we're a crown corporation, we do have a requirement for transparency, competition, and openness.

»  (1700)  

    Mr. Philip Mayfield: I want to change the focus here a little. The park was established, I believe, with the presumption that it would be qualified to receive tax-deductible donations, and yet it turned out it wasn't a qualified donee. Is that correct?

    Ms. Kathy Milsom: That is one of the structural issues, yes.

    Mr. Philip Mayfield: Does that mean you will have to establish another organization to receive the tax-deductible donations, and then perhaps have those tax-deductible donations slid over to the corporation? Is that the way it's intended to work?

    Mr. Tony Genco: The principle behind the corporation was that there would be a foundation or some type of trust set up. Unfortunately, the way it is structured right now, being a non-agent commercial crown, it is not a qualified donee. We have provided some advice to the government with respect to ways in which that can be addressed, and we know that advice is being considered. At this point we haven't formally set up a foundation, for precisely this reason. There is a special purpose account that the government has.

    Mr. Philip Mayfield: Was this business arrangement approved by Parliament?

    Mr. Tony Genco: To the extent to which I understand Parliament was--

    Mr. Philip Mayfield: So Parliament is fully knowledgeable about this arrangement, where your corporation is not a qualified donee, someone else is going to collect the donations and give them to you? This roundabout thing is something Parliament gave its approval to?

    Mr. Tony Genco: The means for getting to the foundation funding haven't been determined. We know there's an issue. The budget, I guess, announced the corporation. Beyond that, I don't know of any other knowledge Parliament would have had about the set-up and structure of Downsview Park.

    The Chair: Mr. Fadden.

    Mr. Richard Fadden: To try to be helpful, I don't think Parliament would be informed or have its approval sought in detail. These various transactions would take place in compliance with the Income Tax Act, regulated by CCRA and the Department of Finance, to which Parliament has delegated a fair bit of authority. To be honest, I do not think these would have been drawn to the specific attention of Parliament.

    The Chair: Ms. Fraser.

    Ms. Sheila Fraser: Mr. Chair, I'd just like to clarify what exactly Parliament was told in the budget, as much has been made of Parliament being informed. This is the document from the February 1994 budget that pertains to the Department of National Defence, and out of 18 pages there is one bullet that relates to this project, under a section that is entitled, I think, “Rationalization of Bases”: “The existing DND-owned lands associated with the Downsview site will be held in perpetuity and in trust primarily as a unique urban recreational green space for the enjoyment of future generations.” There is no mention of money, there is no mention of costs. So we would argue that Parliament did not receive sufficient information about the costs, even if all the transactions, as we stated in our note, were legal.

    The Chair: Thank you very much.

    Mr. Bryden.

    Mr. John Bryden: To pick up on that point, it would appear that the initial financing has come from National Defence. I have a lot of difficulty with that, because, as I understand it, National Defence is strapped for cash for its soldiers and for equipment and all that kind of thing. So I'm not sure where the rationale comes to have National Defence finance an urban park.

    The Chair: Mr. Fadden.

»  (1705)  

    Mr. Richard Fadden: I think that's a fair point, and in fact, the underlying rationale for this entire operation was to transfer from the Department of Finance responsibility for creating the park. The defence department did, for example, charge some $2 million to DND vote 1. I think I suggested at the time of the last meeting that at a very minimum, there is some doubt as to whether this was an appropriate charge. I understand that further charges of this fashion have been stopped, and Treasury Board officials and others are looking at how they're going to dispose of the $2 million.

    We should be clear now, though, that the Department of Defence is not spending any of its money on the further development of this park. What moneys are being applied are being applied by my two colleagues, moneys they acquire in one fashion or another.

    Ms. Sheila Fraser: I'd just add that the park is being financed from the sale of that land, which money would in normal circumstances have gone back to CRF, and then would have been voted out. The issue we're raising is that Parliament has never expressly approved the funds that are going to this park.

    Mr. John Bryden: This is the point I'd like to get to. Who makes that kind of decision? It's a rather odd decision to finance a park from the DND vote. Where does that decision emanate from? Was the defence minister, for example, a party to the decision? Was it the Privy Council Office? Who actually initiates such a decision?

    Mr. Richard Fadden: I don't know the detailed answer to your question, but you have to appreciate that the $19 million transfer to which the Auditor General was referring was approved by the Governor in Council. It was published in the Canada Gazette. There's no doubt about that. As to the $2 million charged against vote 1, I rather doubt that the minister knew about it at the time, but I honestly don't know.

    Mr. John Bryden: I understand from the response to the audit reports that the development of Parc Downsview was seen to be done in an open and transparent manner. I believe that's what the presentation has been. If you feel that the development of PDP has been done in an open and transparent manner, are Canada Lands Company Ltd. and Downsview Park Inc. covered under the Access to Information Act?

    Ms. Kathy Milsom: Canada Lands Company, the parent, is covered by the act. Canada Lands CLC, the subsidiary, is not, and Downsview Park is not.

    Mr. John Bryden: I would make an observation, and in a somewhat vexed fashion. If one submits that the development of Parc Downsview was done in an open and transparent manner, and neither Parc Downsview nor Canada Lands Company Ltd., which conducted the transfer, are covered under the Access to Information Act, how can such a transfer be conducted in an open and transparent manner, if I can't get the documents?

    Mr. Richard Fadden: You have available to you the summary of the corporate plans that are tabled in Parliament. You have the results of the Auditor General's inquiry.

    Second, on a broader point, Parliament itself has recognized in the way it has constructed the Access to Information Act that certain entities created either by the crown or the government are not to be subject to the act, because of the fundamental principle that they're to operate somewhat at arm's length. It's much the same with the Human Rights Act, the Privacy Act, the Official Languages Act, and any number of acts. I don't mean to be disrespectful, but I do submit that Parliament did make these basic decisions at one point that when institutions left the inner fold of the government, not all statutes were to apply.

    Mr. John Bryden: Yes, but with due respect, if one is going to claim that this transfer was done in an open and transparent manner, and I cannot get the documents, it is not good enough just to have a corporate report. If you're saying to me this was conducted in an open and transparent manner, then I need to see the documents. With all respect to the Auditor General, it's not good enough just to have her say so either. What Parliament may or may not do with the access to information is one question, but I do submit that perhaps your response has gone a little too far in suggesting transparency where there is little.

    Ms. Kathy Milsom: If I may clarify my comments, one of the reasons Canada Lands CLC, the real estate subsidiary, is not covered by the act is that we do operate as a commercial crown corporation and we work in the private sector environment, where we're selling our properties or acquiring our services. It is, in fact, a sound rationale that if private sector companies interested in acquiring our sites or wanting to do business with us could get information they would not be able to get from comparable private sector companies, we would be at a disadvantage and would not be able to optimize the value we create. We simply couldn't operate in that environment.

    Having said that, though, when I say open and transparent, I talk about our actions. Even though Canada Lands CLC, the real estate subsidiary, is not covered by the act, if we conduct a competitive selection process or take a piece of property to market through a competitor process, we do provide debriefings to the proponents who are unsuccessful. So we do stand behind the decisions we make and the processes we follow.

»  (1710)  

    The Chair: Thank you very much.

[Translation]

    Mr. Lebel, please.

    Mr. Ghislain Lebel: Ms. Milsom, I would like to come back to your earlier statements. You say that the Minister's office suggested the names of individuals who are competent in real estate. Is that what you said?

[English]

    Ms. Kathy Milsom: No. By way of clarification, one example I can think of is a pass-through referral that was made to our company to consider a particular firm, but there was no representation with respect to confidence or not. It was up to us as a company, and what we did as a company is give courtesy to the individual, consider the firm, but certainly not give any special treatment to any individuals.

[Translation]

    Mr. Ghislain Lebel: I am not accusing you of anything, but it happens that these people were very competent and very interesting, and they conducted business with you afterward.

[English]

    Ms. Kathy Milsom: I'm not aware of any individuals referred to our company during my time who we subsequently did business with.

[Translation]

    Mr. Ghislain Lebel: Mr. Genco, were you also subjected to pressure from the Minister's office?

[English]

    Mr. Tony Genco: Absolutely not. No pressure has ever been exercised on me or anyone I know in the company through political means with respect to hiring.

[Translation]

    Mr. Ghislain Lebel: Ms. Fraser, we have a 49-year promissory note for 19 million dollars for the sale of 32 acres. Perhaps we didn't sell all 32 acres, but just one part. At what price?

    Mr. Minto tells us that we didn't use this money to reduce the debt on the 19 million dollar note, but that we put it aside. I thought that we would use it to develop the park, because the goal is to develop a park. Ms. Fraser, I presume that you do not find this to be correct, because it was not authorized by Parliament.

    Mme Sheila Fraser: Mr. Chairman, even though all the transactions were perfectly legal and that we had the necessary approvals, Parliament did not expressly approve creating the park, which will cost an estimated 100 million dollars.

    There was a first transaction which led to 19 million dollars being left with the company, but the total estimated costs are 100 million dollars. We would have preferred that Parliament specifically authorize this project.

    Mr. Ghislain Lebel: If I understand you correctly, Ms. Fraser, in your mind, there is a danger that we are accomplishing indirectly what Parliament or the Act prohibits directly. There is not only Downsview Park. The problem is that in the future, Crown Corporations may multiply freely to escape Parliament's jurisdiction.

»  (1715)  

    Mme Sheila Fraser: I wouldn't go so far, but I would have preferred that Parliament have the opportunity to discuss and authorize explicitly this 100 million dollar project, which is nevertheless quite major. There were quite a series of transactions that led to Parliament being somewhat excluded from the decision.

    Mr. Ghislain Lebel: Thank you. I have no further questions.

[English]

    The Chair: Thank you, Mr. Lebel.

    Mr. Harb.

    Mr. Mac Harb: I have two questions, one to Mr. Genco and the other to Ms. Milsom.

    The project is now fully operational. At what stage are you, and what's in the plans for the future for Downsview?

    Mr. Tony Genco: We're very much in the early stages of the evolution of the site. We have made some improvements to the site using some of the moneys we've raised through our business plan. We have a number of tenancies, including TV and production studios, on the site. We have Grocery Gateway.com, a company that again helps us raise a significant amount of revenue to fund our operations. Those operations include the development of the sense of park on the site. We have a variety of events and activities. We invite people to come to the site. I actually grew up in the neighbourhood myself. I remember the big barbed wire fences and the “No Trespassing” signs. I can tell you, there is certainly a new dynamism there and people are coming to the site and enjoying our activities and the events we have from time to time. We are trying to create that spirit and that sense of park in these early stages of the evolution.

    One of the biggest challenges we have is that we are still working out the issues for the long-term lease between the Department of National Defence and our corporation. We're hoping to resolve those issues in due course. Subsequent to that we can begin the process. The Department of National Defence has its activities in transition to about 70 acres on the site, and it's taken, by its own admission, a little more time than it would have liked to do that. As a consequence, we're waiting for that transition to complete itself. In a parallel process, we are continuing dialogue with the Department of National Defence about the long-term lease and working out some of the issues related to it. Once those issues are resolved, we can get some certainty with respect to the actual land and how it's coming over to us. Then we can begin the process of actually creating the wealth to build the park.

    Mr. Mac Harb: I have then a question for the president of Canada Lands. With strategic development of properties, as well as National Defence, is there a project you have put your hand on with National Defence where you have done anything strategic the crown has benefited from? Have you added any value? Could you give us some examples, if you have any, of properties you have acquired from National Defence where you have done something that added value to the crown?

    Ms. Kathy Milsom: The company measures value in a number of respects. We've returned nearly a quarter of a billion dollars in distributions to the government. Incidentally, we don't fund Downsview Park, they're self-financing. So the moneys we generate don't go there, we return them to the government. We also measure the value we create in terms of how we can also support the social policy objectives of the government with affordable housing, job creation, private sector investment, about $4.7 billion that we have now stimulated through our efforts. We've created 38,000 people-years of construction labour. There are many statistics I could quote.

    A specific example of a DND site transferred to Canada Lands is CFB Calgary. This site has been tremendously successful, not only from a financial performance perspective, but in creating a great deal of wealth that we have returned to the government. We have used it as an opportunity to, again, support many social policy objectives of the government. We leave legacies on the sites. In this instance we also donated 65 affordable housing units to the City of Calgary, along with a portion of the site these houses are now situated on, which the City of Calgary is using for portable housing purposes. This has been extremely well received by the city. I might add also that even though we're getting into more of a social agenda there, it also enhances the financial bottom line, because through the goodwill we generated with the city, we were able to get development approvals with respect to another portion of the site, which enhanced our financial bottom line probably by about $10 million.

    This project, incidentally, has also won multiple awards across Canada. It's internationally recognized for being one of the best developments, certainly in Canada, certainly in North America. We even won the Developer of the Year award last year from the Homebuilders Association.

    So we always seek to create the optimum value, not only for the shareholder, the Government of Canada, but also for the communities where we work.

»  (1720)  

    The Chair: Mr. Forseth.

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

    Often we evaluate these kind of activities by benchmark comparisons. Obviously, we had DND property with a number of stated goals. Now you've described some of the other activities you've been doing, where there is a standard as to how these things are developed. In my riding we had a large piece of DND property that had veterans' housing on it. It went through a long process, and now the city has a park, the school board has a school, the veterans' housing has a brand new place, and all around the outside lots have been sold off and the most beautiful housing in the city is there. It's redeemed a piece of property that didn't look very good. I think CMHC was somehow involved in it. That was a long process of 15 or 18 years from the time they decided they were going to go down that road. And this is repeated across the country, so there's some kind of standard as to how these things are done. You take government property, you sell it off, then part of that pays for an internal public good, and that's the general character here.

    But somehow this particular project is seen as the exception, somehow it hasn't fitted into that normal mode of doing things. So I wanted to hear, perhaps from the Auditor General and others, what's so special about how this project is seen as having gone off the rails in comparison with the accepted standard of the kinds of projects that have been going on across the country.

    Ms. Sheila Fraser: One of the major differences is that this is not a commercial project, unlike other ones Canada Lands would generally do. It is an urban park, which in and of itself, I think, gives it an unusual connotation. Other than that, there was a separate corporation established, it is a project of $100 million, and the financing is not totally clear for how this is going to go ahead. So there are several issues in how it was put together that result in difficulty for the corporation, as well as the way Parliament did not give explicit approval to the creation of that park with costs of $100 million.

    Mr. Paul Forseth: When we're talking about an urban park, let's be specific. What does that mean? With the project I have in my riding, we actually now have a public park that belongs to the newest Mr. Parks board. We have a school that belongs to the school board, I suppose, and is owned by the city, indirectly. We've got a brand new veterans housing building, which is actually owned by the private sector now; the veterans are allowed to live in there until they die, but eventually, those apartments become for-profit. So the whole project has gone into the private sector in a way, yet there's a lot of public good as well. It's a real unusual mixture.

    I'm trying to look at evaluating what is here in comparison with other projects for benchmarks. If something is wrong with this particular project, what needs to be fixed to make it conventional, you might say?

    Ms. Sheila Fraser: Perhaps the corporation could better explain the difference between these two projects.

    Mr. Tony Genco: The fact that it is in the City of Toronto and the Greater Toronto Area makes it urban. We are trying to create, by the definition prescribed through the budget document, a unique urban recreational green space for the enjoyment of future generations--a short form for that is a park. The land is being held by Her Majesty, through us, still owned by the Department of National Defence, so still owned by the federal government. And so we are a federal entity within an urban environment creating a unique urban recreational green space for the enjoyment of future generations.

»  (1725)  

    The Chair: Thank you, Mr. Genco.

    Monsieur Bertrand.

    Mr. Robert Bertrand (Pontiac—Gatineau—Labelle, Lib.): Thank you very much, Mr. Chair.

    If I understand it correctly, right now the park owns 32 acres, or is in control of 32 acres.

    Mr. Tony Genco: The park owned 32 acres.

    Mr. Robert Bertrand: And sold them off.

    Mr. Tony Genco: That's correct.

    Mr. Robert Bertrand: Out of a possible 640 acres that is still owned, if I understand it correctly, by DND.

    Mr. Tony Genco: The Department of National Defence has 640 acres on that property. It still owns all those 640 acres, and about 60 or so of those acres are still going to be used by the Department of National Defence for operational purposes.

    Mr. Robert Bertrand: In the next land transfer to the park how many acres of the 640 will be involved?

    Mr. Tony Genco: This is part of the discussion we're having with the department, how we phase the various portions, the next steps of the transfer of the land that's remaining. The Department of National Defence is very close to having moved into its new operational facility, and we have continued a dialogue with them on what the appropriate next steps are, but we're not certain how many of those acres are coming in. In fact, one of the things we're looking to do is just establish a schedule with the Department of National Defence as to what will be coming to us over the course of the next number of years.

    Mr. Robert Bertrand: Can you give me a ballpark figure? Are we talking about another 32 acres, another 100 acres?

    Mr. Tony Genco: There are a couple of scenarios. One would have the park lands themselves, the approximately 320 acres the park is going to be on, coming over to us next. We're still waiting to talk to the Department of National Defence about what happens to get those 320 acres over to us. There's another scenario that has some of the commercial lands coming over to us next, depending on what we find in the way of a market for that particular property. Remember, we are attempting to be self-financing. We need the means to achieve the ends, and we're supposed to find those means within ourselves. To run and maintain the park requires constant funding that we're going to have to develop for ourselves. These are two points we are looking to try to work out with the Department of National Defence, to find out what's the most appropriate way to actually facilitate the transfer. Ultimately, we hope to get all the property in our hands.

    Mr. Robert Bertrand: Is there going to be money attached to the land coming from DND in the next land transfer? Are you aware of moneys being transferred to the park, for instance, by DND in the next transfer of land?

    Mr. Tony Genco: No. Up until now the Department of National Defence has paid for costs, it hasn't paid us money to run our park.

    Mr. Robert Bertrand: Are there any moneys for costs in the next land transfer coming from DND?

    Mr. Tony Genco: Again, it's subject to further discussion. There are still some natural decommissioning costs, some environmental issues, demolition costs, and we're still talking about all those issues.

    The Chair: Thank you.

    I have three simple questions. On the $19 million of revenue from the sale of the property that under normal conditions would be automatically returned to the consolidated revenue fund, did Downsview Park Inc. receive parliamentary approval to keep the money to facilitate its development business, and why was it not returned to the consolidated revenue fund?

    Mr. Richard Fadden: The issuance of promissory notes and the conditions that are attached to them is a matter for the Governor-in-Council, not for Parliament. So in direct answer to your question, parliamentary approval is neither sought nor given.

»  (1730)  

    The Chair: Do you have any comment, Ms. Fraser?

    Ms. Sheila Fraser: The issue we were raising was that we would have preferred to see, not necessarily for the $19 million, but for the overall project of $100 million, explicit approval of the cost of the project and the methods of financing.

    The Chair: My second question is to Ms. Milsom. You laid out the clear hierarchy of communication with the Department of Public Works and gave a clear statement that Canada Lands has done nothing unethical or illegal, but I really wanted to ask this clearly and get a simple answer. Were you ever asked by the Department of Public Works to do something you considered to be unethical or illegal?

    Ms. Kathy Milsom: No.

    The Chair: And Mr. Genco, I have one question for you. You were senior advisor to the former Minister of Defence, then you got this job as CEO of Downsview Park. Were you aware of this opening, so you applied for it, was it drawn to your attention that you should apply for it, or was the job just given to you?

    Mr. Tony Genco: I worked for Minister Eggleton from November 1993 to December 1999. I enjoyed my time working with him. It was time for me--

    The Chair: I asked how you became aware of the job. Did you see an advertisement?

    Mr. Tony Genco: I was approached by the previous CEO of the corporation and was hired to do some of the work related to community activities, community affairs, special events, and so on. The previous CEO subsequently left, and the board of directors asked me to look after the corporation on an interim basis until they could decide what their next steps would be with respect to a new CEO.

    The Chair: Okay.

    We're now going to move to closing remarks. Ms. Fraser.

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

    The issue I would have liked to bring up is that we have reported this matter twice to Parliament. I know at the previous hearing we had a bit of discussion and there was a motion. I presume that the motion stands?

    The Chair: I forgot to bring that up. The motion was a fairly loose and open directive to you to continue to investigate things you thought were appropriate for investigation, including Downsview Park, if you felt it needed to be investigated and reported to Parliament. We indicated that you should continue to do what you think is appropriate. I would think that statement stands.

    Ms. Sheila Fraser: Thank you, sir.

    The Chair: To the best of our recollection, the motion was moved by Mr. Ritz that the Auditor General continue to advise Parliament and this committee on Parc Downsview Park Inc. or any other similar programs, at the discretion of the Auditor General. I think that motion still stands.

    I'm sorry to interrupt.

    Ms. Sheila Fraser: Thank you.

    I was just saying we appreciate the hearing--again. The issue of parliamentary control I think is a very important one, and I think there has been some indication by government that they are willing to look at this issue as well. We are hopeful that it can be resolved.

    The Chair: Thank you.

    This meeting stands adjourned.