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37th PARLIAMENT, 1st SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Thursday, June 13, 2002

1135

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

Mr. Proctor

The Chair

Mr. Ghislain Lebel (Chambly)

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

The Chair

Mr. Odina Desrochers

The Chair

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

The Chair

Mr. Ranald Quail (Former Deputy Minister of Public Works and Government Services, Privy Council Office)

1140

The Chair

1145

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

The Chair

Mr. Ranald Quail

Mr. Philip Mayfield

Mr. Ranald Quail

Mr. Philip Mayfield

Mr. Ranald Quail

Mr. Philip Mayfield

Mr. Ranald Quail

1150

Mr. Philip Mayfield

Mr. Ranald Quail

Mr. Philip Mayfield

Mr. Ranald Quail

Mr. Philip Mayfield

Mr. Ranald Quail

Mr. Philip Mayfield

Mr. Ranald Quail

Mr. Philip Mayfield

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Ghislain Lebel

Mr. Ranald Quail

Mr. Ghislain Lebel

Mr. Ranald Quail

Mr. Ghislain Lebel

Mr. Ranald Quail

Mr. Ghislain Lebel

Mr. Ranald Quail

The Chair

Mr. Ghislain Lebel

Mr. Ranald Quail

Mr. Ghislain Lebel

Mr. Ranald Quail

The Chair

Mr. Ghislain Lebel

Mr. Ranald Quail

Mr. Ghislain Lebel

Mr. Ranald Quail

Mr. Ghislain Lebel

1155

Mr. Ghislain Lebel

The Chair

Ms. Phinney

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

The Chair

Mr. Shawn Murphy

Mr. Ranald Quail

Mr. Shawn Murphy

1200

Mr. Ranald Quail

The Chair

Mr. Proctor

Mr. Ranald Quail

Mr. Dick Proctor

Mr. Ranald Quail

The Chair

Mr. Dick Proctor

Mr. Ranald Quail

Mr. Dick Proctor

Mr. Ranald Quail

Mr. Dick Proctor

Mr. Ranald Quail

Mr. Dick Proctor

Mr. Ranald Quail

The Chair

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

Mr. Ranald Quail

Mr. John Bryden

Mr. Ranald Quail

Mr. John Bryden

Mr. Ranald Quail

Mr. John Bryden

1205

Mr. Ranald Quail

Mr. John Bryden

Mr. Ranald Quail

Mr. John Bryden

Mr. Ranald Quail

Mr. John Bryden

Mr. Ranald Quail

Mr. John Bryden

Mr. Ranald Quail

Mr. John Bryden

Mr. Ranald Quail

The Chair

Mr. Greg Thompson (New Brunswick Southwest, PC)

Mr. Ranald Quail

Mr. Greg Thompson

1210

Mr. Ranald Quail

Mr. Greg Thompson

Mr. Ranald Quail

Mr. Greg Thompson

Mr. Ranald Quail

Mr. Greg Thompson

Mr. Ranald Quail

Mr. Greg Thompson

Mr. Ranald Quail

Mr. Greg Thompson

Mr. Ranald Quail

Mr. Greg Thompson

Mr. Ranald Quail

Mr. Greg Thompson

Mr. Ranald Quail

Mr. Greg Thompson

The Chair

Ms. Beth Phinney

Mr. Ranald Quail

Ms. Beth Phinney

Mr. Ranald Quail

Ms. Beth Phinney

Mr. Ranald Quail

1215

Ms. Beth Phinney

Mr. Ranald Quail

Ms. Beth Phinney

Mr. Ranald Quail

Ms. Beth Phinney

Mr. Ranald Quail

Ms. Beth Phinney

Mr. Shahid Minto

Ms. Beth Phinney

Mr. Shahid Minto

Ms. Beth Phinney

Mr. Ranald Quail

Ms. Beth Phinney

The Chair

Mr. Ranald Quail

The Chair

1220

Mr. Ranald Quail

Ms. Val Meredith

Mr. Ranald Quail

Ms. Val Meredith

Mr. Ranald Quail

Ms. Val Meredith

Mr. Ranald Quail

Ms. Val Meredith

Mr. Ranald Quail

Ms. Val Meredith

Mr. Ranald Quail

Ms. Val Meredith

Mr. Ranald Quail

The Chair

Mr. Odina Desrochers

The Chair

1225

Mr. Ghislain Lebel

Mr. Ranald Quail

Mr. Ghislain Lebel

Mr. Ranald Quail

Mr. Ghislain Lebel

Mr. Ranald Quail

Mr. Ghislain Lebel

Mr. Ranald Quail

Mr. Ghislain Lebel

Mr. Ranald Quail

Mr. Ghislain Lebel

Mr. Ranald Quail

The Chair

Ms. Sophia Leung (Vancouver Kingsway, Lib.)

Mr. Ranald Quail

Ms. Sophia Leung

Mr. Ranald Quail

Ms. Sophia Leung

Mr. Ranald Quail

1230

Ms. Sophia Leung

Mr. Ranald Quail

The Chair

Mr. Alex Shepherd (Durham, Lib.)

Mr. Ranald Quail

Mr. Alex Shepherd

Mr. Ranald Quail

Mr. Alex Shepherd

Mr. Ranald Quail

Mr. Alex Shepherd

Mr. Ranald Quail

Mr. Alex Shepherd

Mr. Ranald Quail

Mr. Alex Shepherd

Mr. Ranald Quail

The Chair

Mr. Solberg

Mr. Ranald Quail

Mr. Monte Solberg

Mr. Ranald Quail

Mr. Monte Solberg

Mr. Ranald Quail

Mr. Monte Solberg

Mr. Ranald Quail

Mr. Monte Solberg

Mr. Ranald Quail

1235

The Chair

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

Mr. Ranald Quail

The Chair

Mr. Mac Harb (Ottawa Centre, Lib.)

Mr. Ranald Quail

1240

The Chair

Mr. Philip Mayfield

Mr. Ranald Quail

The Chair

Mr. John Bryden

Mr. Ranald Quail

The Chair

Mr. Ghislain Lebel

Mr. Ranald Quail

The Chair

Mr. Shawn Murphy

Mr. Ranald Quail

1245

Mr. Shahid Minto

The Chair

Mr. Dick Proctor

Mr. Ranald Quail

The Chair

Mr. Greg Thompson

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Ms. Beth Phinney

The Chair

1250

The Clerk of the Committee

The Chair

Mr. Rob Walsh

The Chair

Mr. Rob Walsh

The Chair

1255

Ms. Beth Phinney

The Chair

Mr. Alex Shepherd

The Chair

Mr. Rob Walsh

Mr. Alex Shepherd

The Chair

Mr. Shawn Murphy

Mr. Rob Walsh

The Chair

Mr. Ghislain Lebel

The Chair

Mr. John Bryden

The Chair

Mr. Alex Shepherd

Mr. Rob Walsh

The Chair

Mr. Rob Walsh

The Chair

Mr. Harb

1300

The Chair

Mr. Harb

The Chair

Mr. Harb

The Chair

Mr. Harb

Mr. Rob Walsh

The Chair

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

The Chair

Ms. Beth Phinney

The Chair

Mr. John Bryden

1305

The Chair

Mr. Rob Walsh

The Chair

Mr. Dick Proctor

The Chair

Mr. Ghislain Lebel

The Chair

Mr. Alex Shepherd

The Chair

CANADA

Standing Committee on Public Accounts

NUMBER 061

1st SESSION

37th PARLIAMENT

EVIDENCE

Thursday, June 13, 2002

[Recorded by Electronic Apparatus]

Á (1135)

[English]

The Chair (Mr. John Williams (St. Albert, Canadian Alliance)): Good morning, everybody. Pursuant to Standing Order 108(3)(e), we continue consideration of the report of the Auditor General of Canada dated May 8, 2002, on Groupaction Communications.

Our witnesses today are, from the Office of the Auditor General, Mr. Shahid Minto, Assistant Auditor General--I understand that is because the Auditor General herself was unable to appear this morning--and, from the Privy Council Office, Mr. Ranald Quail, former deputy minister of Public Works and Government Services. After we deal with Mr. Quail and Mr. Minto, we will discuss future witnesses for the committee.

Mr. Dick Proctor (Palliser, NDP): Mr. Chair, before we get to hear our witnesses, I would like to move that this committee report to Parliament on the refusal of Mr. Charles Guité to appear before the Standing Committee on Public Accounts and further request that the Speaker find him in contempt of this Parliament; and that the committee further request that Parliament exercise its authority and command his appearance as a witness before the Standing Committee on Public Accounts.

The Chair: I'm not going to accept your motion at this point in time, Mr. Proctor, because the committee has not been advised of the situation regarding Mr. Guité, and we have item B on future witnesses. So you will have to hold the motion until we get to that point and the clerk advises the committee what the situation is with the witnesses.

Mr. Lebel.

[Translation]

Mr. Ghislain Lebel (Chambly): Mr. Chair, allow me to say that I completely disagree with what you have just said. First, this committee does not require any 48 hour notice of submittal of motion. Second, I submitted two motions with the Clerk of the Committee before the meeting and I would like to debate these now. Both motions are very important. One even deals with the same subject as what was raised by Mr. Proctor, namely Mr. Guité's appearance before this Committee, and the second requests that the Committee continue to meet during the summer.

Mr. Odina Desrochers (Lotbinière—L'Érable, BQ): Mr. Chair, I understand why my two colleagues are insisting on debating future witnesses right away, because we have had fast ones pulled on us before: once the witnesses are heard, the Liberals leave the room, and we lose quorum. It's unfortunate, but we don't want to...

We have already lost quorum, Mr. Bryden, and I am not sure that you will stay here. I have difficulty trusting the members across the floor.

[English]

The Chair: Mr. Desrochers, I rule that out of order. We have a quorum at the moment. It is part of the business. We will hear from Mr. Quail first. We're already 35 minutes late starting. If we're going to eat up all our time on procedural problems, we'll never be able to ask Mr. Quail anything.

Final point, Mr. Desrochers.

[Translation]

Mr. Odina Desrochers: Mr. Chair, I hope that the Liberals will keep their word and that they will attend for our discussions regarding future meetings and witnesses. This concerns all members who are present this morning.

[English]

The Chair: We will have quorum, I would expect.

We're going to move to the witnesses. I don't suppose you have an opening statement, Mr. Minto.

Mr. Shahid Minto (Assistant Auditor General, Office of the Auditor General): No.

The Chair: That's what I thought.

Mr. Quail, do you have an opening statement?

Mr. Ranald Quail (Former Deputy Minister of Public Works and Government Services, Privy Council Office): Yes, thank you, Mr. Chairman.

As you've requested, I'm appearing today to discuss the findings of the Auditor General's report and the three contracts awarded to Groupaction while I was the Deputy Minister of Public Works and Government Services Canada. These contracts fall within the scope of the sponsorship initiative, and I'd like to provide you with a summary of the actions taken by the department related to the sponsorship initiative during my time as the deputy minister.

[Translation]

This initiative was set up in 1997 to inform Canadians on programs and services offered by the federal government within the context of community and cultural events and activities. It fell under the Communications Coordination Services Branch of PWGSC.

The report that was submitted in the spring by the Auditor General regarding the three contracts awarded to Groupaction indicated that there were serious problems in the way they were managed. This audit did not have the same scope as the internal audit conducted by my former Minister in the spring of 2000, a little over two years ago, but it did come to similar conclusions regarding the management process.

Á (1140)

[English]

Early in 2000 there was a series of events and concerns in the media related to government practices in the grants and contributions program. While the sponsorship initiative is not a grants and contributions program, it is of a similar nature, and I took immediate steps to order an audit, which was completed in August 2000. While the three Groupaction contracts were not part of the files reviewed, the internal audit revealed some major problems in administrative and management practices and controls. The internal audit did not conclude that there was any dishonesty, fraud, or criminal behaviour or intent. An action plan to correct the serious deficiencies identified was developed and corrective measures were immediately taken.

Both the audit and the action plan were posted on the Internet on October 11, 2000. Some of the corrective measures taken as part of the action plan were as follows. A working session was held with sponsorship communications agencies in September 2000 to inform them of all the administrative quality control and contractual requirements. An internal review committee of senior PWGSC officials was struck to ensure that all sponsorship procurements, solicitations, and awards were done in accordance with relevant TB contracting and financial policy directives and procedures. Departmental officials met with TB officials to ensure that all the activities associated with the sponsorship initiative action plan would be compliant with the Financial Administrative Act and the Treasury Board Secretariat guidelines and policies. Measures were taken and actively reviewed to ensure that the files were appropriately documented and that appropriate controls were in place for approval of all payments. Finally, new guidelines were established to support decision-making and approval processes, such as the better documentation of the files and a verification of documentation prior to the approval of payments.

I understand from the testimony of the current deputy at Public Works and Government Services last week before this committee that the findings of a follow-up review done this spring showed that corrective measures with respect to the documentation had been taken, and no further recommendations for action were made.

I accept that it was my responsibility to ensure proper administration of programs within my department. To do that in a department as large as Public Works and Government Services, I'd established a strong governance framework, and this framework set out the institutional and management arrangements to find out how the department was governed, as well as the ethical principles that guided the people who worked there. Some of the elements of this framework included a strong executive committee, a committee structure, a well-developed risk management framework, and an internal audit function established in 1993, as well as an ethics and development program that began in 1997. The established presence of an internal audit function allowed, I believe, for an expeditious and independent review of the relevant files, with an articulation of clear findings and recommendations for change. This was instrumental in developing a plan to correct the deficiencies identified.

Given the information that has come to light, I certainly agree that additional work is required in the sponsorship area. However, given the information I had at the time, my primary concern was to take the measures required to solve the serious deficiencies noted in the internal audit report. This work was just about completed when I left the department in April, 2001.

Thank you, Mr. Chairman.

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

I omitted to say at the beginning, and I will say it now, the role of this committee is to investigate maladministration within the departments of government. As we're all aware, there is a criminal investigation going on at this time, and we have to ensure that we do not compromise that criminal investigation. Therefore, as in the previous meeting and in all subsequent meetings we have on this issue, I will ask Mr. Walsh, the law clerk, to briefly review the fine line we have to walk to ensure that we don't compromise the criminal investigation.

Mr. Walsh.

Á (1145)

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

That fine line to which you refer was described by me in some manner at the previous meeting. For members of the committee who were not there, I'll repeat it now. Basically, it is that evidence presented today--and I don't mean at all to suggest that this might be anticipated from either of these witnesses--that might be relevant to a matter under investigation by the police may, by virtue of being presented in these proceedings, compromise the ability of the RCMP in any investigation to use the same facts in support of any proceedings they think need to be launched, inasmuch as the RCMP will have to show that the evidence they are presenting was obtained independently and that they did not rely on the testimony provided at these proceedings. To the extent that this may be a burden for the RCMP in presenting the results of their investigation, there is a potential that the RCMP investigation might be compromised by testimony provided here today.

The Chair: Thank you very much, Mr. Walsh. Because we're running half an hour late, rather than going through a traditional round, I'm suggesting that in order for everybody to have a chance to speak, we go four minutes per member, followed by a second round of two minutes per member, and hopefully, we can get round it all. Then at the end we will have time for the future business of the committee.

Mr. Mayfield.

Mr. Philip Mayfield (Cariboo—Chilcotin, Canadian Alliance): Thank you very much, Mr. Chair. Because of the short time, my questions are going to be brief, and I'll ask you to be brief too.

Mr. Quail, why did you decide to order an internal audit into the communications coordination branch?

Mr. Ranald Quail: As I noted in my opening statement, early in 2000 there were ongoing discussions in review of the grants and contributions programs in the departments, and in particular in HRDC. While this particular program is not a grants and contributions program, it seemed to me that it would be appropriate, that because it had some similarities to a grants and contributions program, it warranted a review to ensure that the management practices and guidelines were being followed.

Mr. Philip Mayfield: Were Mr. Guité and Mr. Tremblay members of your department when you were the deputy minister?

Mr. Ranald Quail: Yes.

Mr. Philip Mayfield: With regard to the actions of Mr. Guité and Mr. Tremblay, what was the reporting structure within the department for the communications coordination branch and the Canada Information Office?

Mr. Ranald Quail: The reporting relationship did change during the tenure. Before 1997 the reporting responsibility for Mr. Guité was to an ADM of government operational services. In 1997 there was a reorganization of the branch and we formed the communications coordination services branch, the CCSB. It was created within the department in response to some concerns about the effectiveness of our communications. Mr. Guité then reported directly, as the executive director, to the deputy, me.

Mr. Philip Mayfield: And Mr. Tremblay?

Mr. Ranald Quail: Mr. Tremblay at that point was not in the department. He joined the department, I believe, in February 1999. He started off by reporting to Mr. Guité, who in turn reported to me.

Á (1150)

Mr. Philip Mayfield: Did they in all instances report directly to you, or were you bypassed, did they report to anyone other than you?

Mr. Ranald Quail: They reported to me, but that doesn't mean they didn't have discussions with all kinds of people.

Mr. Philip Mayfield: Did they report to the minister and his staff?

Mr. Ranald Quail: No, but they would have had discussions with the minister and his staff.

Mr. Philip Mayfield: Do you know who ordered Mr. Guité and Mr. Tremblay to report in such fashion?

Mr. Ranald Quail: It's not a question of reporting. To me, it's a question of being able to carry out your functions, of interrelationship on an ongoing basis between ministers' offices and members of the department. Not every discussion takes place between the minister and the minister's staff and the deputy.

Mr. Philip Mayfield: Did you ever sense that there was political pressure on you or your staff to act in any way that would have contravened the Financial Administration Act?

Mr. Ranald Quail: No, I never received political direction to that effect.

Mr. Philip Mayfield: How often did you raise concerns with the minister about possible breaches or not adhering to the Financial Administration Act?

Mr. Ranald Quail: I didn't raise any concerns at any time with the minister about breaches to the Financial Administration Act.

The Chair: Was there any sense that the Financial Administration Act was not being adhered to?

Mr. Ranald Quail: Not at all.

The Chair: Thank you, Mr. Mayfield.

Mr. Lebel.

[Translation]

Mr. Ghislain Lebel: Thank you Mr. Chair.

Mr. Quail, you say that you ordered an internal investigation, but that it did not deal with the same files as those addressed by Mr. Minto and the Auditor General. Is that correct?

Mr. Ranald Quail: That is correct, Mr. Chair.

Mr. Ghislain Lebel: So when you found anomalies, it wasn't with the three Groupaction files that are currently on the table.

Mr. Ranald Quail: No, it wasn't.

Mr. Ghislain Lebel: That means, therefore, that there are more than three.

Mr. Ranald Quail: I could not make that conclusion, Mr. Chair.

Mr. Ghislain Lebel: If you say that it's not the same three Groupaction files, that it's three other files, how many are there?

Mr. Ranald Quail: In the department's audit, we reviewed 585 files, I believe.

Mr. Ghislain Lebel: How many of these were truly problems?

Mr. Ranald Quail: Mr. Chair, you have a copy of the report. I could read the report, but that would take time. The internal report refers to the problem they have.

[English]

The Chair: It would take more than four minutes, I think, Mr.Quail.

[Translation]

Mr. Ghislain Lebel: OK, Mr. Quail, let's talk about the report.

In the last three lines of the presentation, on page 3, it states:

The distribution agency acted as if it owned the interest that accrued in the bank account, and used it at will. In fact, no guideline or provision in the contract dealt with how interest was to be managed.

How much money did you put into the account so that the distribution agency could conduct its work?

[English]

Mr. Ranald Quail: Mr. Chairman, I'm sorry, I don't know which report he's reading from. If he could identify the report, I'd be happy to try to pursue--

[Translation]

Mr. Ghislain Lebel: In your audit report conducted by Sponsorship Management at the Communications Coordination Services Branch dated 2000-08-31. That's the report you ordered.

Mr. Ranald Quail: Yes.

[English]

The Chair: Mr. Lebel, what's the number of the page?

[Translation]

Mr. Ghislain Lebel: It's on page 3, at the end.

[English]

Mr. Ranald Quail: In a grand sense, in the sponsorship program in 1996-1997 my recollection is that we spent $17 million. In 1997-1998 we spent $46 million. In 1998-1999 we spent $57 million. In 1999-2000 we spent $47 million. And I believe in 2000-2001 we spent $40 million.

[Translation]

Mr. Ghislain Lebel: OK. So all that money was given to Media IDA vision for redistribution because it's the distribution agency. Is that what you are telling me?

Mr. Ranald Quail: That's what I said, it's that its the

[English]

expenditures of the sponsorship program.

[Translation]

Mr. Chair, I am in no position to say that each dollar was only for IDA Vision. I could not say that, but overall...

Mr. Ghislain Lebel: But dollars did go to Media IDA Vision.

Mr. Ranald Quail: Yes.

Mr. Ghislain Lebel: The money in the account, who pocketed it? Who got the interest that was paid on the money in the account?

Á (1155)

[English]

Mr. Ranald Quail: The 80% advance payments were in the bank accounts of the IDA Vision. They kept track of them, and I guess the interest went to them. I can't confirm that.

[Translation]

Mr. Ghislain Lebel: OK.

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

[English]

Ms. Phinney.

Ms. Beth Phinney (Hamilton Mountain, Lib.): Mr. Chairman, I'll let Mr. Murphy go ahead. I'll wait until the next round.

The Chair: Okay. Mr. Murphy.

Mr. Shawn Murphy (Hillsborough, Lib.): Thank you very much, Mr. Chairman.

Mr. Quail, I just have a few questions on the whole issue of general accountability in government. I want to preface my remarks by saying, generally speaking, things are done properly and the taxpayers of Canada are served by an excellent civil service, but now and then things go terribly wrong, and that is exactly what has happened in the sponsorship file. I believe the taxpayers of Canada are looking for a properly managed department, with clear objectives, public service values and ethics, a well-trained staff, all procedures being followed, the necessary checks and balances, and of course, sound risk management. It seems to me that none of these elements are present when you read the report of the Auditor General.

I believe the taxpayers now want the answer to four questions. First, who was responsible? Second, is the necessary corrective action being taken? Third, if any funds or government goods have been misappropriated, is action being taken to recover them? And fourth, are the people who are responsible for the file being held to account?

It seems to me, Mr. Quail, that as the deputy, you were responsible. I heard your evidence on the corrective action. That was supported by Madam Cochrane. I believe you're quite correct, corrective action has been taken. I'm disappointed in the procedures being followed by the government to collect the money from Groupaction.

But my question to you is on the whole accountability. I have about five questions, and I'll just go over them.

The Chair: Do you want to take them one at a time, Mr. Murphy?

Mr. Shawn Murphy: I'll just go over them.

Do you accept responsibility for this situation? Have you or has anyone under you been disciplined as a result of this problem? Has there been any action taken or recommended by you to recover government funds? That's it. I have some other questions on the internal audit, but we may not get to them.

Mr. Ranald Quail: As I said in my opening statement, I was responsible for the department from 1996 to 1999. I was responsible, therefore, for the management of the department. As I mentioned, it is not an excuse, but it is a fact that it is a large department. It was and continues to be. We put into place what I believed was a good governance framework. We had a strong set of DM directives. The government framework set out the requirements for how we were going to be organized, the kinds of responsibilities. We did talk about the fact that we were organized on the basis of delegated authority--you have to delegate authority in order to deliver in a large department--and that it would be delegated to the appropriate managerial level. We would have checks and balances, we would have a strong audit committee. We did have a strong committee.

The question could be asked, then, why did it take so long to have the audit committee find and go to this particular objective? It's a fair question. Again, I would argue that in a large department, whenever the audit committee met--and it met regularly and developed annual plans--you looked at it on the basis of risk management and materiality, and you considered what you were looking for. I'm not denying that $40 million is a huge amount of money. Relative to the rest of the expenditures in the department, you had to look at it in totality. In looking at it in totality, this was not on the radar screen, and it did not pop up as part of our annual review.

Mr. Shawn Murphy: One of the questions I asked you, sir, was whether anyone in the Department of Public Works has been disciplined as a result of this situation.

Â (1200)

Mr. Ranald Quail: Let me answer the question in two ways. First, we developed an action plan. That was the immediate response as a result of the audit plan, I think a 37-point action plan. It was put onto the net, and it was followed and reported in a transparent way. The people who were there delivered on the action plan, including the acting executive director.

The Chair: Thank you, Mr. Murphy.

Mr. Proctor.

Mr. Dick Proctor: Thank you very much, Mr. Chair.

Mr. Quail, you indicated that the reporting relationship had changed in 1997 with regard to Monsieur Guité. Who was the associate deputy minister he reported to prior to the change, do you recall?

Mr. Ranald Quail: It wasn't an associate deputy. Technically, it was an assistant deputy minister. It was the assistant deputy minister of government operational services. His name is Mr. Jim Stobbe.

Mr. Dick Proctor: Thank you.

You indicated in your opening remarks that you never received any indication of political pressure at any time. Were you aware, as the deputy minister, of people in this area being moved out or moved around in an abnormal ratio?

Mr. Ranald Quail: I don't understand the question, Mr. Chairman.

The Chair: Could you explain your question, Mr. Proctor, please?

Mr. Dick Proctor: There are indications that some people were uncomfortable with what they perceived to be going on in this section of your department, even if you and the minister were not available. So my question is, were you, as the deputy minister, aware that there were some folks moving in and out of that section of your department at a rate that would be abnormally high?

Mr. Ranald Quail: No, that wasn't on my radar screen.

Mr. Dick Proctor: Thank you.

Could you tell us in a few sentences what the role of the communications coordination services branch was? What were they charged to do?

Mr. Ranald Quail: I'm sure it was set out in the internal audit. It was formed by amalgamating entities that were already in the department, from the Treasury Board and from the former Communications Canada group. The mandate was to coordinate communication activities across the Government of Canada; promote the clear, consistent, and coherent delivery of the government's message; advise on effective means of obtaining the public's view and informing the public about the Government of Canada's policies, programs, and services; and enable public access to Government of Canada information electronic services.

Mr. Dick Proctor: Thank you.

With the moneys for this sponsorship program, I didn't get them all down, but it was a big jump, it seemed to me, after 1997. I think you talked about $17 million, then it was $46 million, $47 million, and numbers of that range. What percentage of those millions of dollars went to the province of Quebec?

Mr. Ranald Quail: I don't know, but it would be a matter of record. The department can make that available.

Mr. Dick Proctor: Would it be fair to say it would be 90%, or more?

Mr. Ranald Quail: The honourable member may have the figures right in front of him. If he has a source that says that's what the expenditures were from the accounts of Canada, then that's what they were.

The Chair: Thank you.

We're going to turn to Mr. Bryden next, and Mr. Thompson after that.

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

One of the things that strikes me about this situation is the lack of documentation. Was there a system in place, or anything in place, that could have detected that documents weren't being created to cover this contracting out that was existing in the department?

Mr. Ranald Quail: I don't think so.

Mr. John Bryden: Let me pursue it a little further. Was this one of the corrective measures, to try to make sure documents are created that will leave an audit trail?

Mr. Ranald Quail: That was part of the action plan.

Mr. John Bryden: Would all these documents, both the ones that were present and the ones that were missing from the file that the Auditor General had such difficulty with, normally have been accessible under the Access to Information Act?

Mr. Ranald Quail: Probably, pursuant to the rules.

Mr. John Bryden: Might I conclude, then, that one of the major failures here is the failure to keep the basic documentation that's necessary to support the types of financial transactions we're talking about?

Â (1205)

Mr. Ranald Quail: I would certainly have expected that we would have more documentation, yes.

Mr. John Bryden: The documents in the audit you did would indicate that the executive director, from time to time, was invited by the people who got the sponsorship contracts to go to functions and to bring his friends. Is this acceptable behaviour for officials in your department, or any other government department? I can see bringing the politicians to a sponsorship event. I fail to see the utility, if you'll forgive me, of bringing bureaucrats to a sponsorship event.

Mr. Ranald Quail: I would see nothing wrong with someone from the branch, be it the executive director, the acting executive director, or somebody else, going to the event to see what it looked like for what you bought. I see nothing wrong with that at all. I'm not going to comment on the rest, because I don't have the specific facts. I wouldn't expect that we had a large entourage go.

Mr. John Bryden: As the responsible minister, the boss, shall we say, of the executive directors who are under question by the Auditor General, in retrospect, is there any way you feel that you might have been able to detect their failure to behave responsibly on their files? This is a question of hierarchical management. How the heck do you determine when you do have management problems directly below you?

Mr. Ranald Quail: I go back to the fact that we did have in place a governance framework. I relied heavily on the governance framework. I certainly relied heavily on it for the way I operated personally in the department. I relied heavily on the committee structure we had in place, with senior ADMs, to deal with business issues. We had a business board. We had regular executive committee meetings. Religiously, I believe, we followed the audit and evaluation schedule. We tried to do that through risk management.

Mr. John Bryden: A key thing, perhaps, is that you trusted these subordinates, isn't it?

Mr. Ranald Quail: Absolutely.

Mr. John Bryden: Is there a failure somewhere in the system that did not permit you to detect that these subordinates, or at least one of these subordinates, perhaps had a record of not performing properly, of not performing his duties in a responsible fashion? Is there a way of determining that? In other words, do you have an assessment check on somebody who comes into that area directly below you?

Mr. Ranald Quail: If you're asking questions on performance management, whether or not there's a plan laid out and objectives for people, how they propose to obtain their objectives, and then reviewing that on an annual basis--

Mr. John Bryden: No. How do you determine if somebody who comes into a position of great responsibility, who you have to trust, doesn't have a previous history of abuse of their job, a history of ignoring the guidelines? How do you determine that? Is there any signal or alarm bell that permits you, as senior manager, to determine that?

Mr. Ranald Quail: I'm not sure what I can say to answer that question--not that I don't want to answer it. You have audit and review committees, you have business plans, you have performance appraisal times, things of that nature, and you could have people send you brown envelopes--that happens. We had a method inside the department for dealing with those, because we did get them, and we took action on what came onto the table.

The Chair: Thank you very much.

Mr. Thompson.

Mr. Greg Thompson (New Brunswick Southwest, PC): Thank you, Mr. Chairman.

First, is there anything with your oath to your previous department that restricts some of your testimony today in regard to information that might be forthcoming? In other words, would it be advantageous for the committee to have you sworn as a witness, Mr. Quail?

Mr. Ranald Quail: I don't think that would make any particular difference to me.

Mr. Greg Thompson: That's fine.

Â (1210)

Mr. Ranald Quail: I'd like to make one comment, though. I'm quite prepared to attempt to answer all the questions. I would, however, exercise privilege if somebody asked me about the exact advice I gave my minister.

Mr. Greg Thompson: Okay, fair enough.

One of the questions you didn't answer was the one put forward by Mr. Murphy on how much disciplinary action was taken against employees. Was there any taken, yes or no?

Mr. Ranald Quail: I did not take any disciplinary action.

Mr. Greg Thompson: Okay. That was the testimony given by the present deputy minister a week ago at this committee as well.

To get back to the missing documents, you're saying there was no malice, no criminal behaviour you could identify within the department, just sloppy management, to sum up your words--and maybe that's being unfair. I think Janice Cochrane, the present deputy minister, used the term extraordinarily poor management practices, but said there was, again, no evidence of wrongdoing. But how could you make that statement, given that there are key documents missing, as identified by the Auditor General?

Mr. Ranald Quail: You can look at this on two sides of the coin. I'm relying on the documentation I got from the audit. The audit did not conclude--

Mr. Greg Thompson: I don't want to cut you off, but there are key documents missing, is that correct? Yes or no.

Mr. Ranald Quail: That's what the audit said.

Mr. Greg Thompson: If there are key documents missing, my point is, how can witnesses sit here and make the statements they have made, the previous deputy minister, and last week the deputy minister, not identifying what documents are missing, leaving it up to the Auditor General to go in and do a search, and possibly the RCMP?

Mr. Ranald Quail: My response is that the internal audit did not conclude that there was any dishonesty, fraud, or criminal behaviour or intent. I'm relying on the results of the internal audit.

Mr. Greg Thompson: That's premised, of course, on documents that are missing. So with the internal audit and procedures uncovering, if you will, wrongdoing and sloppy management, what procedure was taken to determine whether or not documents were shredded? We've seen this happen in other government departments when activities were going on that wouldn't be considered proper. What did you do as deputy minister? What procedures were used to ensure that documents weren't shredded or didn't leave the department in a briefcase, half-ton truck, or whatever? How did you deal with that?

Mr. Ranald Quail: I can only go back to saying I relied on the internal audit to reach my conclusions. I would also say that it never entered my mind that they were shredding documents.

Mr. Greg Thompson: That's in the past tense, Mr. Quail. In hindsight, would that be one of the questions you might consider, whether or not documents were shredded? If there are documents missing, they've gone missing somewhere. Are they shredded or have they left the building?

Mr. Ranald Quail: I'm not sure I would come to the conclusion that they've gone missing. I came to the conclusion, in reading the internal audit, and to some degree the Auditor General's report, that they were never there.

Mr. Greg Thompson: But you never did anything within the department to examine that, is that correct?

Mr. Ranald Quail: The answer is that at the time of the internal audit my immediate step was the 37-point action plan.

Mr. Greg Thompson: That did not include looking for documents.

The Chair: Mr. Thompson, that's fine.

Ms. Phinney.

Ms. Beth Phinney: Thank you, Mr. Chairman.

Mr. Quail, how long have you worked for the federal civil service--if you can reveal your secret?

Mr. Ranald Quail: Over 40 years.

Ms. Beth Phinney: You're currently chairing the task force on modernization of human resources management for the public service?

Mr. Ranald Quail: That's correct.

Ms. Beth Phinney: After were you appointed deputy minister for Public Works, how long did you work there?

Mr. Ranald Quail: I was appointed in February 1993 to be the deputy minister of Public Works. Then there was the reorganization of government departments in June 1993. We amalgamated a whole group of departments, and I became the first deputy of the Department of Public Works and Government Services.

Â (1215)

Ms. Beth Phinney: Since you've been in there for a long time, you must be aware of how people are picked, who does your internal audits. Could you explain what the qualifications were for people who did the internal audits for that department?

Mr. Ranald Quail: I'm not sure I can answer your question in the kind of detail I might like, such as the kinds of qualifications.

Ms. Beth Phinney: Would they have to be chartered accountants, qualified auditors? Could they be just people who liked doing mathematics and just applied to have the job? Would there be some qualifications for this job? Could I apply for this job?

Mr. Ranald Quail: There would definitely be qualifications. My problem is that I can't recite them to you off the top of my head. There would definitely be a minimum level of qualifications for each one of the positions inside the audit and review branch.

Ms. Beth Phinney: Did you depend totally on these people to give you correct information? It seems these were the people who let you down. This is a general question too. Would this be the situation in every department in the Canadian government, that the deputy minister wouldn't know the qualifications of the auditors?

Mr. Ranald Quail: I don't really believe, in fairness, the audit people let me down. I think the audit people were well qualified. I don't have the exact answer to the question.

Ms. Beth Phinney: They did not notice that the forms weren't being filled out. They did not notice that there were irregularities. Mr. Minto, could you answer that? What are the qualifications for people who do internal audits in the departments for the Canadian government?

Mr. Shahid Minto: If I could talk particularly about the Department of Public Works and Government Services, we've always had the greatest respect for the internal audit function in this department. Let me be very frank with you. In many orders we have relied on their work. With what we did on Groupaction in the report, their work was most helpful. We have always been impressed by the calibre of people there, especially the director of that function.

Ms. Beth Phinney: When you were looking at Groupaction, Mr. Minto, it was after the fact. You still haven't answered the question on the qualifications. If they were so helpful and so good after the fact, why weren't they that good before the fact? Why didn't they notice these irregularities?

Mr. Shahid Minto: With due respect, the internal audit report brought out a lot of irregularities. We have to understand the difference between the role of the auditor and that of the manager. The auditor's role is to bring out and mention the irregularities. Then the managers have to take over and fix things. The audit report is a very frank report that talks in great detail about a lot of irregularities. Were there more that they hadn't put in? Perhaps. But I think that's one of the toughest audit reports I've seen in the Government of Canada.

Ms. Beth Phinney: Mr. Quail, if that audit report was so tough, can you explain why nobody was moved out of their job or suspended or fired as a result?

Mr. Ranald Quail: I agree with my colleague Mr. Minto. I thought it was a good report. I have to say that. My reaction immediately was to put in place an action plan to improve and fix the problem.

Further, on the question of discipline, there were two executive directors. One had retired and there was a new one in place, so that it never crossed my mind to consider going back against the former executive director. The new executive director had taken steps, and the audit report does mention that there had been a start at improving the situation when he came in. He did recommend a 37-point action plan. That action plan was reviewed by a senior group of ADMs in the department. It was discussed with officials from the Treasury Board Secretariat, and it was accepted. He went about it and did a very forceful job in implementing it.

Ms. Beth Phinney: You are talking about Pierre Tremblay now. I just want it clear. You're saying, “he...he...he”.

The Chair: I understand that Mr. Guité had retired and was followed by Mr. Tremblay. These are the people you are referring to.

Mr. Ranald Quail: Yes, Mr. Chairman.

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

Ms. Meredith.

Â (1220)

Ms. Val Meredith (South Surrey—White Rock—Langley, Canadian Alliance): Thank you, Mr. Chair.

I want to clarify something that came up a bit earlier. You were asked if there was any political interference with the Groupaction file, and your response was, no. I would like to ask you if there was any interference or influence in the selection of the short list, if you will, of companies that qualified. The Auditor General pointed out that government files on the three contracts are so poorly documented that many key questions remain unanswered on the selection of the contractor and the basis for establishing the price and scope of the work in the contracts. Was there any influence from the minister's office or other ministers' offices on what companies would be used for the sponsorship file?

Mr. Ranald Quail: Not on me.

Ms. Val Meredith: How does the department normally select the companies for a short list? I understand there are 10 or 12 on the preferred contract list. How are they picked?

Mr. Ranald Quail: The way in which the agency of record and the communications agencies were selected is set out in detail in the internal audit. I can go over the key points, if you wish, but they are set out there, and they also note the deficiencies in the way that was handled. A fairly detailed process was followed, but it wasn't as detailed as one would require pursuant to the guidelines.

Ms. Val Meredith: There is a process in place that is very detailed. The fact that the process was not followed, or there was no indication that it was followed, didn't cause the internal auditors a concern?

Mr. Ranald Quail: They did raise it.

Ms. Val Meredith: That's fine, thank you.

Mr. Ranald Quail: For the record, I would just say the sponsorship process was set out on page 6 of the internal audit, and the agency of record process was set out on page 8.

Ms. Val Meredith: I want to go back to this whole issue of review of your employees. I would assume that even at management level, there would be performance appraisals, performance reviews done. Were they done on a yearly basis for the managers in your department?

Mr. Ranald Quail: Normally, yes.

Ms. Val Meredith: Who would do the performance review? Who would do it and who would review it?

Mr. Ranald Quail: At the start of the year, normally, managers who would report to me would set out some goals and objectives they would hope to achieve, and that would be accepted or modified on the basis of any discussions. At the end of the year the individuals would come back and provide their advice and their views on how they had done against the goals that had been agreed to at the start of the year. Normally, for the people at the executive level who reported to me, it would be between me and them, and then, of course, it would cascade down from them. All the performance appraisals would then be reviewed by the committee we had set up for HR management at the executive level.

Ms. Val Meredith: So how would you deal with an employee who was not meeting the grade at a management level, where they were either not following the regulations, the parameters under which they had been hired, or they failed to meet their goals and objectives? How would you have handled that?

Mr. Ranald Quail: We'd have looked at the circumstances surrounding the case and taken appropriate decisions. That's about what would have happened.

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

Monsieur Desrochers.

[Translation]

Mr. Odina Desrochers: I am giving my time to Mr. Lebel.

[English]

The Chair: A number of people still would like to speak and all parties have had one or two speakers. Therefore, I think we're now going to move on to the two-minute round I talked about earlier.

Monsieur Lebel.

Â (1225)

[Translation]

Mr. Ghislain Lebel: Mr. Quail, were you involved in allotting sponsorships? Were you involved in choosing the sponsored parties, and the amounts they were given, and the type of preferred event? Were you involved at that level?

Mr. Ranald Quail: No.

Mr. Ghislain Lebel: When you produced the report that I referred to earlier, had you spoken about it to members of the Prime Minister's circle, people close to the Prime Minister?

[English]

Mr. Ranald Quail: Did I have meetings when the audit was finished and we were preparing to release the audit and the communications plan? I definitely did. We had discussions with the PCO, and there was a subsequent meeting with the PCO and PMO.

[Translation]

Mr. Ghislain Lebel: So on what date did you meet with these people?

[English]

Mr. Ranald Quail: I don't know. It's a matter of record. It was around the end of September or early October.

Mr. Ghislain Lebel: The year 2000?

Mr. Ranald Quail: Yes.

[Translation]

Mr. Ghislain Lebel: The communications firm automatically gets 12 percent. Don't you find 12 percent to be somewhat excessive? The distribution agency gets 3 percent. This means $30,000 for writing a one million dollar cheque. Don't you find that somewhat high?

[English]

Mr. Ranald Quail: The role of the agency of record,

[Translation]

its the 3 percent.

[English]

We had them in place because we expected them to help us in the management and the financial controls on the particular events dealing with the sponsorship programs.

[Translation]

Mr. Ghislain Lebel: Did they do their job in issuing a cheque for an event that had been cancelled?

[English]

Mr. Ranald Quail: I'm not in a position to respond on individual files, I'm sorry. I'm just not there. I'm not in the department any more.

The Chair: Merci beaucoup, monsieur Lebel.

Now we'll go to Ms. Leung.

Ms. Sophia Leung (Vancouver Kingsway, Lib.): Thank you, Mr. Chair.

Following your internal audit, you developed an action plan, as you say. Did you really review carefully what you had accomplished or where you had failed, especially on the sponsorship? Did you do anything at all?

Mr. Ranald Quail: Yes. There's a 37-point action plan, and it was reviewed extremely carefully, because, as Mr. Shahid Minto pointed out, this wasn't exactly a complimentary audit. All the points are set out, all the actions are identified as to who is going to do the work, when it's going to be accomplished, and what the status is as of April 1, 2000. That was put in place. It was reviewed by a committee of senior officials in the department, so that we could challenge the action plan, and it was followed through. I can go through some of the points, if you wish.

Ms. Sophia Leung: So you did not discover any problem in your files, especially with sponsorship?

Mr. Ranald Quail: We had the audit. It was a very tough audit. The problems we identified, the lack of documentation, the need for more oversight, the need for a better way, for more clarification on the way we go out for tender for the communications agencies we talked about earlier, were all addressed. The way in which it was to be done was reviewed. Then we went back out for communications agencies.

Ms. Sophia Leung: This is all in theory. In practice, you did not. Who is really in charge of the sponsorship files? Does that come to you?

Mr. Ranald Quail: The day-to-day management of the sponsorship program is part of the communications service, CCSB. They're responsible for the administration and management.

Â (1230)

Ms. Sophia Leung: Who is in charge of that branch?

Mr. Ranald Quail: At the end the executive director was Mr. Pierre Tremblay.

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

Mr. Shepherd.

Mr. Alex Shepherd (Durham, Lib.): Mr. Quail, I have a need for clarification in your opening remarks. I thought what you said was that after the audit had been undertaken and you put your plan in place, the department met with people who were receiving sponsorship funding.

Mr. Ranald Quail: That's correct. That was part of the action plan. That was one of the first items we wanted to take care of. We were doing business with them.

Mr. Alex Shepherd: Was Groupaction part of that?

Mr. Ranald Quail: I don't know.

Mr. Alex Shepherd: You said the 37-point plan had been executed. I presume they had been invited and they went through that process.

Mr. Ranald Quail: I assume they were one. I'm just not sure about all the people who were there. Was there a meeting? Did we call them in? Did we explain to them the shortcomings? Did the executive director explain to them what we expected in the future? Did he outline how we're going to go forward? Did he confirm that later in a letter to the group? Yes.

Mr. Alex Shepherd: Could you find that out and tell us, the committee, whether Groupaction attended?

Mr. Ranald Quail: Certainly the department can. I'm not there any more.

Mr. Alex Shepherd: Do you have the results of the audit? All I can see is that the Auditor General has simply confirmed what you already knew, that there were moneys missing here. At that meeting was there an attempt to confront these organizations and suggest that they return the money?

Mr. Ranald Quail: I do not believe so. I was not at the meeting. Under the action plan, a working session was held with sponsorship communications agencies in September 2000 to inform them of all administrative, quality control, and contractual requirements.

Mr. Alex Shepherd: Even though you had concluded somewhere along the line that there had been money paid out of the department, there was no documentation, and there were no reports in the file.

Mr. Ranald Quail: I believe that information came later, after September 2000.

The Chair: Thank you, Mr. Shepherd.

Mr. Solberg.

Mr. Monte Solberg (Medicine Hat, Canadian Alliance): Thank you very much, Mr. Chairman.

My question is, were Mr. Guité and Mr. Tremblay in a position to receive bonuses for their work?

Mr. Ranald Quail: The way in which performance bonuses, performance pay, or pay at risk works has evolved over the years. I suspect that there was a period when we still had salaries frozen. I don't have those dates. Whenever the freeze came off on salaries, we did move back in, and it continues to be so with a different arrangement, pay at risk and performance pay.

Mr. Monte Solberg: In other words, they probably got a bonus.

Mr. Ranald Quail: Probably, but I'm not going down that road, it's privacy information. The way in which the department paid out performance bonuses, how many executives got performance pay and how many didn't, that information is available.

Mr. Monte Solberg: Thank you.

Have you ever disciplined anyone for sloppy work?

Mr. Ranald Quail: Yes.

Mr. Monte Solberg: Why in the world would Guité and Tremblay not be disciplined for their work?

Mr. Ranald Quail: As I explained earlier, Mr. Guité had retired and Mr. Tremblay took over as the acting executive director. The results of the audit were tied to an action plan that would fix the problem.

Mr. Monte Solberg: Right, but that doesn't get to my question, which is why he wasn't disciplined. I understand that you had an action plan, but if there isn't some accountability built into the action plan, if discipline isn't part of the action plan, how in the world do you ensure that people will abide by it, if there's no downside for them, if there are no consequences?

Mr. Ranald Quail: I can assure you that as a result of the audit, there was a lot of oversight put into the action plan to make sure it was going to happen. There was no doubt about that. That does not answer your question, I understand that, but I do not want to leave on the table that there was not action, oversight, or scrutiny relative to putting in the action plan.

Â (1235)

The Chair: Thank you, Mr. Solberg.

Ms. Jennings.

[Translation]

Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you, Mr. Chair. I have four questions.

The first question deals with the exact date that the internal audit was conducted. I don't want the date that the audit took place, but the date on which it was decided to conduct an internal audit.

My second question deals with the exact date that Mr. Guité decided to retire, not the day on which he retired, nor the date that his retirement became effective, but the date on which he informed his superiors that he decided to retire on a certain date.

Third, who was involved in the action plan that was produced as a result of the internal audit? You refer to Mr. Tremblay as the Director General. Was he one of the people who was involved in producing the 37 point action plan?

Fourth, during the implementation of the new programs, normally, as part of the implementation, and startup, there are elements leading to evaluations after three months, six months, one year, two years, etc., to verify whether the objectives have been reached and what adjustments need to be made. In developing this sponsorship program, was there an internal audit factor? The fact that objectives are not met can sometimes be due to improper management, not respecting management policies, etc., and not the program itself. So, was internal audit part of this sponsorship program as soon as it was established?

Those are my questions.

[English]

Mr. Ranald Quail: In February 2000 the internal audit of the sponsorship program was ordered by myself. Phase one of the audit was conducted between March and May 2000, a partial audit of 276 out of the total of 580 files, and we got the key findings, which are a matter of record in the document. That was the first question.

I have no recollection of the exact time Mr. Guité indicated to me that he was planning on taking his retirement. I don't know if that would be on the files in the department.

The Chair: Thank you very much.

We're running short of time. Mr. Harb wanted to speak, and then I'm going to take two questions from the government side and maybe three or four very brief questions, one from the party on this side. Then we'll wrap up, because we do have other business as well.

Mr. Harb.

Mr. Mac Harb (Ottawa Centre, Lib.): I wanted to find out whether or not a proper delegation of authority to the managers of these sponsorship programs was effected.

Mr. Ranald Quail: Delegation of authority was certainly a point raised in the Auditor General's report, and from my point of view, we do have a proper financial delegation from the minister and to the position of the executive director through, and that was in place. There is no doubt from the findings of the Auditor General that the signing card for Mr. Guité could not be found. I have no recollection whether I signed it or not. I signed a few in my time, I suppose, but it is also a matter of record that with Mr. Tremblay, it was properly signed. There are three steps, and the Auditor General lays them out in her report, in the way delegation takes place, and as I recall, there was no question about the first step, which is the major documentation that sorts out that the delegation comes from the minister and how we have that delegation into the department relative to deputies, assistant deputy ministers, executive directors, director generals, etc. It was laid out relative to position, as opposed to an individual.

Â (1240)

The Chair: Thank you very much.

Mr. Mayfield.

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

Mr. Quail, in a previous meeting I spoke with Ms. Cochrane, who was a champion of ethics, in that vein, and as we were talking about this situation, she said she believed there were no ethical or legal breaches, that these were administrative problems. But as we look at the Financial Administration Act and listen to the Auditor General say every rule in the book was broken, how can we believe that people who are knowledgeable about this act have done nothing wrong, but just sort of let things slip? It seems so serious in the words of the Auditor General, and yet it's being glossed over by the people from Public Works.

Mr. Ranald Quail: I'd like to make two comments. First, I feel very strongly that it was and is a great department and delivers a valuable service to this country. I spent almost ten years of my life there. There are 14,000 people there at this time, and they deliver quality service. We have checks and balances in place, I argue, that say the department is working. We have audits, both from ourselves internally and from the Auditor General, saying we had a problem in one place. We moved to fix that problem. Count me neutral on this issue. I don't wish to have the department tainted in total by the fact that we've got a bad audit and we have a tough situation.

The Chair: Mr. Bryden.

Mr. John Bryden: I follow on that directly. You had a person reporting directly to you who was breaking all the rules, you trusted that person, and that's where the problem was, wasn't it? A system built on trust failed, but only in this instance.

Mr. Ranald Quail: I did build it on a delegated authority, and I expected people to behave.

The Chair: Mr. Lebel.

[Translation]

Mr. Ghislain Lebel: Mr. Quail, the audit report on sponsorship management, the internal report we're talking about and which is currently available on the Internet, is this the initial report that you submitted to the Prime Minister's Office when you met with his officials on September 20, 2000, or was this report modified, embellished and glossed up for presentation to the public? This is the basis of my question.

Mr. Ranald Quail: There were no changes to the report after I received it and started having discussions with other individuals for briefing purposes.

[English]

The Chair: Mr. Murphy.

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

Mr. Minto, we have evidence here that Public Works is a good department, but I think everyone agrees that the sponsorship program went terribly off the rails. Mr. Bryden talked about the trust in the person running it, but the Canadian taxpayers and we, as parliamentarians, would expect that the systems be there, the controls, the checks, the balances, so that could not happen. Why did the system fail us so terribly?

Mr. Ranald Quail: At the end of the day it's a question of risk management. You aren't going to audit 100%. You hope you have in place a risk management framework that'll pick these things up, and in this case, obviously, it didn't pick it up soon enough.

Â (1245)

Mr. Shahid Minto: In paragraph 75 of our report we did point out that these findings are even more troublesome because they happened in the Department of Public Works, which has the responsibility of enforcing contract rules with other departments. This was an audit of three contracts, and one of the reasons the Auditor General decided to go to a wider audit was to explore the very question you raised.

The Chair: Mr. Proctor.

Mr. Dick Proctor: Thank you.

There were 580 cases, over 200 were investigated, and none of them appears to have involved Groupaction or Everest. Is there a reason that occurred?

Mr. Ranald Quail: I can't answer that question specifically, but I don't think I could agree with the comment. I do think Groupaction and other sponsorship agencies were among the 580 files.

The Chair: Mr. Thompson.

Mr. Greg Thompson: Thank you, Mr. Chairman.

In your opening statement, Mr. Quail, you said you set up training programs for your staff following the internal audit, implying, of course, that they needed training, didn't know what they were doing, which conflicts with what the Auditor General told us about how well trained they were. She testified to that. Could you comment on that, please?

Mr. Ranald Quail: The training I was talking about concerned the points that were picked up in the internal audit, I think on page 12 or 13. They note that there were two positions of a clerical and an administrative nature that provided support to the acting executive director, and the finding was--and I agreed--that these people were not properly trained to understand their job and we should give them some more training.

The Chair: Thank you very much.

I have a couple of questions of my own. Mr. Quail, the Canada Information Office was first under the management of a Mr. Roger Collet. Where did the idea of the Canada Information Office come from? Did it come from the top downwards to say we need this, or did some ideas come up from the bottom? Who suggested that we needed this separate Canada Information Office? We understand from Ms. Cochrane, who gave evidence last week, that it had a very flat organizational chart, that all the financial decisions were made by the executive director.

Mr. Ranald Quail: I don't know where the Canada Information Office came from. What I do know is that when I went to the department, we had a section called advertising and public opinion research, and it was in there that we did the work on the sponsorships.

The Chair: Did you advise the minister that this was a politically explosive issue when the audit came down?

Mr. Ranald Quail: Did I talk to the minister about the audit? Absolutely.

The Chair: My question was, did you advise him that it was politically explosive?

Mr. Ranald Quail: No. I took him through the audit in a very careful way, setting out the findings in the review. I also talked to him about how we were going to handle it and how we were putting an action plan in place to correct the deficiencies.

The Chair: Mr. Quail, we do appreciate your coming here today. Thank you very much.

Ms. Phinney.

Ms. Beth Phinney: Mr. Chair, I would move that the next part of the meeting be in camera.

The Chair: There's a motion on the table that we have the meeting in camera. Is there discussion? I don't think we need too much discussion. We don't have too much time for discussion.

(Motion negatived)

The Chair: Okay, we're continuing in public, and we're now discussing future witnesses. The clerk, as you know, has been in contact with Mr. Guité and Mr. Tremblay, who this committee requested appear before it. I would ask the clerk to give us a response.

Â (1250)

The Clerk of the Committee: On June 4, when the committee had adopted the two motions to invite the five witnesses, I contacted the Department of Public Works, and we set up the meeting with the Deputy Minister of Public Works, the executive director of Communication Canada, and the Auditor General, which took place two days later. That evening Mr. Tremblay was informed of the decision of the committee by the parliamentary relations officers from the Department of Public Works. The following day I tried to contact Mr. Guité. I finally contacted him and spoke to him on June 6, at which point I informed him of the intentions of the committee and gave him the date of June 13 for a possible meeting. Mr. Guité informed me that he wished to seek legal counsel, which he apparently did on Friday, June 7. He contacted me on Tuesday morning of this week informing me that on the advice of legal counsel, he would not accept the invitation to appear before the committee. I spoke with Mr. Tremblay that same day, who was during that day seeking legal advice. I spoke to Mr. Tremblay again on Wednesday morning of this week, and he was with his legal counsel at the time. They phoned me back about half an hour later and informed me that Mr. Tremblay was willing to appear before the committee, it was just a matter of finding the appropriate time, as he requested that he be accompanied by his legal counsel.

The Chair: So Mr. Tremblay has agreed to appear before the public accounts committee, provided he can bring his counsel, which the law clerk advises is perfectly within his rights. Mr. Guité has declined the invitation to come before the meeting.

I'd now like to ask the law clerk to tell us what our options are.

Mr. Rob Walsh: Mr. Guité, being a private citizen, is not in the same position as a witness who is still a public servant. It's open to the committee, as I believe the clerk can confirm, to choose to issue a summons to Mr. Guité. That's done by resolution of the committee. The appropriate letter, I suppose from the chair, reflecting the resolution of the committee would have to be served upon Mr. Guité, specifying the time and place, and you would certainly await his arrival. Should he did not attend at that time, it is open to the committee to take a number of steps, but on the procedural level, the recourse is to report the matter to the House, with or without recommendations as to the steps the House ought to take with respect to Mr. Guité.

The Chair: But the committee can issue a summons at this point in time if they so desire?

Mr. Rob Walsh: That's correct.

The Chair: My understanding is that if we want to continue to bring Mr. Guité in, the next step is to issue a summons. The clerk has given me what he tells me is a standard motion to be moved by someone that Mr. Guité be summoned to appear before the committee, specifying a date and time.

Â (1255)

Ms. Beth Phinney: I so move.

The Chair: So lets leave it at 3:30, Tuesday, June 18, 2002.

Mr. Shepherd.

Mr. Alex Shepherd: I seek a point of clarification. You talked about the timeframe to issue the summons and so forth. What is that timeframe? And if the summons is received and, for whatever reason, the House is not in session, what is the status of the summons? Can he be called in the fall?

The Chair: I'll ask the law clerk to answer these two questions.

Mr. Rob Walsh: The summons would be as to a time of day, a date on the calendar, and a place specifically described, so that there can be no doubt that the witness knew where it was he was to report to and the direction of the summons of the committee. Should the House adjourn for the summer, it remains in session until a prorogation, and so the summons would continue to be in effect. If, between now and the date of the summons, the House adjourns for the summer, the summons is still valid, and if the committee assembles, as it's entitled to do, at that time and place, you would be expecting to see the witness appear before you.

Mr. Alex Shepherd: How important is it to affix a date? If she puts a date on the summons saying it must be Tuesday and--

The Chair: I think the law clerk did say that a summons has to have a specific time, date, and location.

Mr. Shawn Murphy: But I don't think the motion has to, Mr. Chairman.

Mr. Rob Walsh: You can make a motion delegating to the chair the specification of the date and the time.

The Chair: Okay, I'm going to clarify Ms. Phinney's motion. The motion now just reads that Charles Guité be summoned to appear before the committee, and the time, date, and location will be settled by the clerk and the chair.

An hon. member: I second that motion, Mr. Chair.

The Chair: Okay.

Mr. Lebel.

[Translation]

Mr. Ghislain Lebel: Mr. Chair, I submitted a motion at the start of today's meeting. In fact, I submitted two. One dealt with the same subject as presented by Ms. Phinney, and therefore, I will put it aside. We now hear that Mr. Tremblay may accept to appear, but we will need to set up a date. Since I thought this would happen, I submitted a second motion.

That the Standing Committee on Public Accounts continue its review of the report by the Minister of Public Works and Government Services Canada regarding three contracts awarded to Groupaction during the summer period, even if the House has adjourned.

[English]

The Chair: Thank you very much, Monsieur Lebel. We have a motion on the floor that specifically states that the committee can continue to meet after the House recesses for the summer.

We are dealing with the motion for calling Monsieur Guité.

Mr. John Bryden: A brief observation, Mr. Chairman, is that I think you should carefully consider whether it's appropriate to have these two witnesses in the same session.

The Chair: I was going to come to that question after we'd decided if we are going to hear from Mr. Guité.

Mr. Shepherd.

Mr. Alex Shepherd: I have one more point of clarification. What is a normal timeframe? Can you give somebody a summons two seconds before they're supposed to appear? What is the difference between presenting the summons and the appearance date? Is there some kind of convention that they must have 24 hours, 48 hours?

Mr. Rob Walsh: I don't believe there's any convention as such, Mr. Chairman, but I think one ought to be reasonable. If the witness were served in London, England, you might allow more time than if the witness were standing out in the corridor. It's what's reasonable in the circumstances.

The Chair: Can you advise the committee what you think would be reasonable?

Mr. Rob Walsh: I don't know the whereabouts of this witness at the moment.

The Chair: Okay. The chair and the clerk will take reasonableness into consideration when we're trying to set a date.

So the motion is that Charles Guité be summoned to appear before the committee at a time, date and location to be set by the clerk and the chair in consultation with the law clerk.

Mr. Harb.

Mr. Mac Harb: Did Mr. Guité give an answer as to why his counsel said no? Is there any possibility for us to ask him for a written reply, so that committee members will see before us something signed by him or his legal counsel as to why he decided not to come before the committee?

· (1300)

The Chair: I don't think that's relevant, Mr. Harb.

Mr. Mac Harb: Well, it's part of the process, isn't it?

The Chair: No, it's our decision whether he comes.

Mr. Mac Harb: We had a telephone conversation, Mr. Chair, between our clerk and the attorney or the individual in question. At least for some members of this committee who want to see the facts and the other issues that go along with them, I think it would only be fair to ask our clerk whether or not it's possible for him to communicate with his legal counsel, so we can have something documented to look at.

The Chair: Mr. Harb, the clerk has been in contact with Mr. Guité. Mr. Guité advises us that he consulted his legal counsel, he has given us a response. I'm going to now call the question. If you feel that we have to wait for that, we can vote the motion down.

Mr. Mac Harb: Can I ask legal counsel whether or not that is sufficient, a verbal discussion between two individuals? I'd just like to hear that.

Mr. Rob Walsh: At the time of the conversation between the clerk of this committee and Mr. Guité Mr. Guité was not under any legal obligation to attend before this committee, as he had not yet been summoned. Accordingly, his response, whether through counsel or directly, was a matter of mere incidence. Once a summons is issued, however, the situation may change.

The Chair: Mr. Desrochers.

[Translation]

Mr. Odina Desrochers: I would simply like one clarification. You have given us a date, but we're on a tight schedule, given the summer recess. Is June 18 at 3:30 p.m. still the date and time for Mr. Guité to appear, or is it up to your discretion and that of the Clerk.

[English]

The Chair: The timing is left to the discretion of the chair and the clerk in consultation with the law clerk. We will also take into consideration members' commitments and so on. Therefore, you could expect some consultation.

[Translation]

Mr. Odina Desrochers: I would have another suggestion, for you, Mr. Chair. Given that we have been informed that...

[English]

The Chair: No, we're not into suggestions, we're into the motion.

[Translation]

Mr. Odina Desrochers: I request a recorded vote on this motion.

[English]

The Chair: Are we ready for the question? The motion is--I'll actually read it once more--that Charles Guité be summoned to appear before this committee at a time, date, and location determined by the chair and the clerk in consultation with the law clerk. The clerk will record the vote.

(Motion agreed to: yeas 14; nays 2)

The Chair: Ms. Phinney.

Ms. Beth Phinney: Mr. Tremblay has already said he will come. Isn't it already scheduled for Tuesday?

The Chair: There are two issues we're going to deal with. First, shall we deal with them in camera? Second, shall we deal with them together or separately?

Mr. Bryden.

Mr. John Bryden: In discussing whether we bring people in camera or not, because it does touch on areas of legality, perhaps that's a portion of this committee hearing that should be in camera.

· (1305)

The Chair: Let's deal with whether we hear them together or separately. What is the wish of the committee?

Some hon. members: Separately.

The Chair: Is that agreed?

Mr. Walsh.

Mr. Rob Walsh: Perhaps I misunderstand the point here, but it strikes me that separately and in camera are connected. If you're going to hear them separately, but not in camera, you have effectively perhaps undermined the purpose of hearing them separately. If the sessions are in public, but they're separate, then the second of the two would have the benefit of hearing the testimony of the first, if that's your concern. The two issues aren't entirely unrelated.

The Chair: In camera separately, is that the wish of the committee?

Some hon. members: Yes.

The Chair: In camera and separately. I'll just take that as given.

Mr. Proctor.

Mr. Dick Proctor: What about other witnesses, Mr. Chair?

The Chair: It was decided when we settled on five that once we'd heard from the five, we'd decide whether we should have more. So that decision is still premature.

Mr. Lebel.

[Translation]

Mr. Ghislain Lebel: Mr. Chair, I would like my motion to be voted in case it is necessary, if Mr. Tremblay informs us that he cannot meet with us before June 26. In order to have him appear here, I would like a vote on my motion that is on the table, even if you don't like it. We'll see.

[English]

The Chair: As I said, monsieur Lebel, the meeting will be called with all the members, even if the House is recessed, because we have to give Monsieur Guité a reasonable amount of time. It may continue into the summer, it may not, we'll see how it goes. I think it could very well be that the meeting will be in the summertime, which addresses your motion.

Mr. Alex Shepherd: I have a point of clarification. Mr. Tremblay is coming with his lawyer. What role or function does his lawyer have in our committee? Does he sit at the table? Does he simply sit as a reference point? Is he allowed to intervene? What is his role here?

The Chair: His role is to advise his client. He is not there to speak on behalf of his client.

The meeting is adjourned.