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37th PARLIAMENT, 3rd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Thursday, March 11, 2004

0915

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

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

The Chair

Mr. Dennis Mills

The Chair

Ms. Beth Phinney (Hamilton Mountain, Lib.)

The Chair

Ms. Beth Phinney

The Chair

Mr. Dennis Mills

0920

The Chair

Mr. Dennis Mills

The Chair

Mr. Vic Toews (Provencher, CPC)

The Chair

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

The Chair

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

The Chair

0925

Ms. Beth Phinney

The Chair

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

The Chair

Mr. Dennis Mills

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

0930

Ms. Beth Phinney

The Chair

Ms. Beth Phinney

The Chair

Mr. Vic Toews

The Chair

Mr. Vic Toews

The Chair

Mr. Vic Toews

The Chair

0935

Mrs. Marlene Jennings

The Chair

Mr. Vic Toews

The Chair

Mrs. Diane Ablonczy (Calgary—Nose Hill, CPC)

The Chair

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

0940

The Chair

The Clerk of the Committee

The Chair

Ms. Beth Phinney

The Chair

The Clerk

The Chair

The Clerk

0945

The Chair

Mrs. Marlene Jennings

0950

The Chair

Mrs. Marlene Jennings

The Chair

Mr. Vic Toews

The Chair

Mr. Vic Toews

The Chair

Mrs. Marlene Jennings

The Chair

Mr. Vic Toews

The Chair

Mrs. Marlene Jennings

0955

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Jeremy LeBlanc (Committee Clerk)

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

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

1000

The Chair

1005

The Chair

Mr. David Rattray (Assistant Auditor General, Office of the Auditor General of Canada)

The Chair

Ms. Sheila Fraser

The Chair

Mr. Vic Toews

The Chair

Mr. Allan Cutler (As Individual)

The Chair

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

1010

The Chair

Mr. Rob Walsh

The Chair

Mr. Vic Toews

Mr. Rob Walsh

Mr. Vic Toews

The Chair

Mr. Rob Walsh

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

1015

The Chair

Mr. Alan Tonks

The Chair

Mr. Rob Walsh

Mr. Alan Tonks

The Chair

Mr. Allan Cutler

1020

The Chair

Mr. Allan Cutler

1025

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

1030

The Chair

1035

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

1040

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

The Chair

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

1045

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

1050

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

The Chair

Hon. Shawn Murphy (Hillsborough, Lib.)

Mr. Allan Cutler

Hon. Shawn Murphy

Mr. Allan Cutler

Hon. Shawn Murphy

Mr. Allan Cutler

1055

Hon. Shawn Murphy

Mr. Allan Cutler

Hon. Shawn Murphy

Mr. Allan Cutler

Hon. Shawn Murphy

Mr. Allan Cutler

Hon. Shawn Murphy

Mr. Allan Cutler

Hon. Shawn Murphy

Mr. Allan Cutler

Hon. Shawn Murphy

Mr. Allan Cutler

Hon. Shawn Murphy

Mr. Allan Cutler

Hon. Shawn Murphy

Mr. Allan Cutler

Hon. Shawn Murphy

Mr. Allan Cutler

Hon. Shawn Murphy

Mr. Allan Cutler

Hon. Shawn Murphy

1100

Mr. Allan Cutler

Hon. Shawn Murphy

Mr. Allan Cutler

Hon. Shawn Murphy

The Chair

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

1105

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

The Chair

Mr. Vic Toews

1110

Mr. Allan Cutler

Mr. Vic Toews

The Chair

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

The Chair

Mr. Odina Desrochers

1115

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

The Vice-Chair (Mrs. Marlene Jennings)

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

The Vice-Chair (Mrs. Marlene Jennings)

Ms. Beth Phinney

1120

Mr. Allan Cutler

Ms. Beth Phinney

Mr. Allan Cutler

Ms. Beth Phinney

The Chair

Ms. Beth Phinney

The Chair

Ms. Beth Phinney

Mr. Allan Cutler

Ms. Beth Phinney

Mr. Allan Cutler

Ms. Beth Phinney

Mr. Allan Cutler

Ms. Beth Phinney

Mr. Allan Cutler

Ms. Beth Phinney

Mr. Allan Cutler

Ms. Beth Phinney

Mr. Allan Cutler

The Chair

Mr. Rob Walsh

Ms. Beth Phinney

Mr. Rob Walsh

Ms. Beth Phinney

Mr. Rob Walsh

Ms. Beth Phinney

The Chair

Ms. Beth Phinney

The Chair

Mr. Dennis Mills

Mr. Allan Cutler

Mr. Dennis Mills

Mr. Allan Cutler

1125

Mr. Dennis Mills

Mr. Allan Cutler

Mr. Dennis Mills

Mr. Allan Cutler

Mr. Dennis Mills

Mr. Allan Cutler

Mr. Dennis Mills

Mr. Allan Cutler

Mr. Dennis Mills

Mr. Allan Cutler

Mr. Dennis Mills

Mr. Allan Cutler

Mr. Dennis Mills

The Chair

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

1130

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

The Chair

Mrs. Diane Ablonczy

The Chair

Mrs. Marlene Jennings

1135

Mr. Allan Cutler

Mrs. Marlene Jennings

Mr. Allan Cutler

Mrs. Marlene Jennings

Mr. Allan Cutler

Mrs. Marlene Jennings

Mr. Allan Cutler

Mrs. Marlene Jennings

Mr. Allan Cutler

1140

The Chair

Mr. Allan Cutler

Mrs. Marlene Jennings

Mr. Allan Cutler

The Chair

Mr. Alan Tonks

Mr. Allan Cutler

Mr. Alan Tonks

Mr. Allan Cutler

Mr. Alan Tonks

Mr. Allan Cutler

Mr. Alan Tonks

The Chair

1145

Mr. Allan Cutler

The Chair

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

1150

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Hon. Shawn Murphy

The Chair

Hon. Shawn Murphy

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Vic Toews

The Chair

Mr. Vic Toews

1155

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

Mr. Allan Cutler

Mr. Vic Toews

The Chair

Mr. Odina Desrochers

1200

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

Mr. Odina Desrochers

Mr. Allan Cutler

The Chair

Mrs. Marlene Jennings

Mr. Allan Cutler

1205

Mrs. Marlene Jennings

Mr. Allan Cutler

Mrs. Marlene Jennings

Mr. Allan Cutler

Mrs. Marlene Jennings

Mr. Allan Cutler

Mrs. Marlene Jennings

Mr. Allan Cutler

The Chair

1220

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

1225

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Allan Cutler

The Chair

Mr. Alan Tonks

1230

Mr. Allan Cutler

Mr. Alan Tonks

Mr. Allan Cutler

Mr. Alan Tonks

Mr. Allan Cutler

Mr. Alan Tonks

Mr. Allan Cutler

Mr. Alan Tonks

The Vice-Chair (Mrs. Marlene Jennings)

Ms. Judy Wasylycia-Leis

The Vice-Chair (Mrs. Marlene Jennings)

Ms. Judy Wasylycia-Leis

1235

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

Mr. Allan Cutler

Ms. Judy Wasylycia-Leis

The Vice-Chair (Mrs. Marlene Jennings)

Ms. Judy Wasylycia-Leis

The Vice-Chair (Mrs. Marlene Jennings)

Mr. Allan Cutler

The Vice-Chair (Mrs. Marlene Jennings)

Hon. Shawn Murphy

1240

Mr. Allan Cutler

Hon. Shawn Murphy

Mr. Allan Cutler

Hon. Shawn Murphy

The Vice-Chair (Mrs. Marlene Jennings)

Mr. Allan Cutler

The Vice-Chair (Mrs. Marlene Jennings)

Mr. Allan Cutler

The Vice-Chair (Mrs. Marlene Jennings)

Mr. Allan Cutler

The Vice-Chair (Mrs. Marlene Jennings)

Mr. Allan Cutler

1245

The Vice-Chair (Mrs. Marlene Jennings)

Mr. Allan Cutler

The Vice-Chair (Mrs. Marlene Jennings)

Mr. Allan Cutler

The Vice-Chair (Mrs. Marlene Jennings)

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

1250

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

Mrs. Diane Ablonczy

Mr. Allan Cutler

The Chair

Mr. Dennis Mills

Mr. Allan Cutler

Mr. Dennis Mills

Mr. Allan Cutler

1255

Mr. Dennis Mills

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

CANADA

Standing Committee on Public Accounts

NUMBER 009

3rd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, March 11, 2004

[Recorded by Electronic Apparatus]

¿ (0915)

[English]

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

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

Our witnesses this morning are, as an individual, Mr. Allan Cutler--

Mr. Dennis Mills (Toronto—Danforth, Lib.): I have a point of order, Mr. Chair.

The Chair: Very well, Mr. Mills, but we have a number of routine matters. Do you want to jump ahead of the routine business?

Mr. Dennis Mills: No, that's fine. I just want to make sure I'm on the radar screen.

The Chair: Then I'll put you on at the end of our routine business.

The first is tabling of documents. Some of this goes back to the previous Parliament. I'd just like to put on the record what we have received. It is not germane to the investigation that is currently going on.

We have a letter dated February 25, 2004, and the government response to the 20th report of the previous session; a letter dated February 26, 2004, and the government response to the 21st report of the previous session; a letter dated December 12, 2003, from Health Canada regarding its contract management framework action plan and the October 2003 update; a letter dated March 4, 2004, from the Privy Council Office and recent cabinet documents.

This letter reads:

Dear Mr. Williams,

I am writing further to my letter of February 24, 2004, regarding the documents submitted to the Standing Committee on Public Accounts in reply to its motion requesting all Cabinet documents pertaining to the Sponsorship Program, including those surrounding its creation.

In my earlier letter, I assured you that any additional Cabinet documents identified as relevant to the motion would be forwarded to the Committee without delay. Attached you will find documents that have been identified as relevant following further search. These documents were also reviewed to ensure that they fall within the provisions of Order in Council P.C. 2004-119 regarding the release of Cabinet confidences to the Committee.

As was the case with the documents forwarded to the Committee on February 24, 2004, there are instances in the attached package where only excerpts of documents are provided. This is necessary to protect the portions of the Cabinet documents in question that relate to matters other than the sponsorship program. To assist Committee members, we have again included inserts of translated text where portions of the Cabinet documents are in one official language.

It is signed for Alex Himelfarb, the Clerk of the Privy Council.

So these documents are here, and they are now public and available for distribution.

The next one is a longer letter from Public Works and Government Services addressed to the clerk, dated March 10, 2004. It says:

Dear Mr. Fournier,

The purpose of this letter is to bring to the attention of the Committee background information and documentation which have been requested in the context of the Committee's proceedings on Chapters 3, 4 and 5 of the November 2003 Report of the Auditor General.

Additional contractual documents relating to sponsorship events

You will recall that on March 1st, we provided to your Committee contractual documents--

Ms. Beth Phinney (Hamilton Mountain, Lib.): Could we have it before you read it?

The Chair: Could you get these letters out right away? I'm now talking about the letter from Public Works.

Why don't we distribute all the documents?

Ms. Beth Phinney: That's a good idea.

The Chair: We'll just wait a couple of minutes to do that.

Mr. Mills, you have a point of order. Why don't we deal with your point of order while these documents are being distributed.

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

I know you have been under a lot of pressure over the past few weeks and a lot of mail has been coming through your clerk to your office, but I want to make special reference today to a letter that came to you from the Bluenose II Preservation Trust. This is an organization that believes passionately it should have an opportunity to come before our committee, so that the possibility of further negative aspersions on the whole Bluenose experience can be minimized. So often we've had to go out asking for witnesses to come before us, and here is a case where an organization that not only has national presence but is a national treasure wants an opportunity to come and explain where it stands and what happened to it, so that in no way, shape, or form its reputation can be smeared.

¿ (0920)

The Chair: Thank you, Mr. Mills.

The motion is your suggestion that we hear from the Bluenose Trust, and I believe it is on the agenda of the subcommittee regarding witnesses. This afternoon it will be discussed.

I understand Mr. Gerald Keddy--

Mr. Dennis Mills: Is there any possibility that we could have an opportunity today to hear from the chairman of the Bluenose Trust while he is here in Ottawa? Could he appear?

The Chair: No, we're not going to just jump around. I appreciate that the chairman is here and I appreciate his position not only as chair of the Bluenose Trust but also within the Parliament of Canada, but as a committee we cannot just jump around wherever, so it will be discussed this afternoon. Mr. Keddy, from the South Shore, also asked that same question, that the Bluenose Trust be able to come forward and speak.

Mr. Toews.

Mr. Vic Toews (Provencher, CPC): In support of your comments, Mr. Chair, I also noted that one of our NDP colleagues in the House two days ago made reference to a $2-million grant, I believe it was to the Pan Am pool in Winnipeg, and it appeared that of the $2 million that had been sent there, only $400,000 showed up. It seems to be a similar kind of situation.

So what I would suggest we do is put together those kinds of experiences so that we aren't jumping around. The Bluenose is a serious issue, the Pan Am pool is a serious issue. There may well be other experiences like that, and I think we should package them together.

I don't know if my colleagues from the NDP have any comments on that, but that would be my proposal.

The Chair: Mr. Desrochers, Mrs. Jennings, Ms. Phinney, Ms. Wasylycia-Leis.

[Translation]

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

I understand that for a few weeks now we have been seeing a media explosion concerning the many files having to do with the Sponsorship Program. However, we must remember that priority must be given to the Auditor General's report and to the cases mentioned in it. Mr. Chairman, I think that we must give priority to those cases quoted in the Auditor General's report, and if--

[English]

The Chair: We'll deal with all these things at the steering committee.

Madam Jennings.

[Translation]

Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Along the same lines as Mr. Desrochers, because of the media coverage and of the fact that there are a lot of cases brought to light, I suggest that we publicly invite all organizers or people responsible for events who got money through the Sponsorship Program to appear before us. If they think, in light of the Auditor General's report, that perhaps the money that was approved was not sent to them in totality, then they should draw up a description and send us a written mini-report explaining what event was sponsored, what organization was involved, how they found out they would be getting a sponsorship, in short, they should send us a summary of what happened. Even though we may then judge that we do not have to hear them personally, that will allow us to still include that kind of information in a possible report. I think we could start with that and then decide whether we have to hear them in person or not.

[English]

The Chair: I like that idea. I think perhaps we should ask Public Works to write to everybody for whom they approved a contract, setting out the issues you've just raised, Madam Jennings, and saying, “We approved x number of dollars. How much did you receive?” If Public Works do that and forward that to this committee, then we can see the egregious examples. Perhaps that would be the Bluenose and maybe the Pan Am Games in Winnipeg. Unfortunately, we may not bring forward the smaller ones if there are too many. But why don't we think about a motion to have Public Works do that?

Ms. Phinney is next.

¿ (0925)

Ms. Beth Phinney: I don't want to comment on that point particularly, but for groups such as the Bluenose Trust and others like that who are interested in appearing, could we just let them know when our next steering committee is and tell them that's where we do this, for those who don't know, and that's how we run the meeting? Then they'll know we'll be looking at it, not six weeks from now but in a couple of days.

The Chair: The next meeting is this afternoon, after question period, and I expect we will be having a meeting about once a week until we develop a list of witnesses. I don't expect that a list of witnesses, as they are approved, will necessarily be made a public list until the witnesses show up. We will be having regular meetings. If anybody wishes to be considered as a witness, please contact the clerk, and he will ensure that the issue is brought forward.

Madam Wasylycia-Leis.

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

I'd like to thank Vic Toews for opening up this issue.

To clarify, the purpose of my colleague Pat Martin's question in the House was with respect to sponsorship of the Pan Am Games, and I think it is a useful suggestion by Madam Jennings for the steering committee this afternoon to pursue.

Further to that, I would like to either give notice of a motion or ask that as a committee we make this requirement: that the public works department provide this committee with all sponsorship grants from the point of origin, on a constituency-by-constituency basis. I raise that because it's relevant to our discussions and it's where we've had some difficulty getting information.

The Chair: Mr. Mills and then Madam Jennings.

Mr. Dennis Mills: I want to pick up on Madam Jennings' point. I think this is a terrific idea that you're supporting, but I think also in the letters to those various events we should ask whether or not the event could break out not just the amount of money, but also where the money went and whether or not they felt there was value for that money. As the Auditor General said in front of us three weeks ago when I asked Ms. Fraser about this whole area of the $100 million, it was divided into three components. There were the commissions, there were production costs on the federal presence at these events, and in some cases there were actual management charges and fees that went to some of these smaller events that didn't have the capacity to manage.

The Chair: I appreciate all these points. We are not a committee of management, we are a committee of accountability, and therefore I think Ms. Jennings has a motion that she would like to put on the floor.

Mrs. Marlene Jennings: Yes. I ask unanimous consent of all members of the committee that the chair, on behalf of the committee, write a letter to Public Works requesting that Public Works invite, in writing, all parties who received a sponsorship grant from the time of its inception to write to the public accounts committee--or to Public Works, which will then forward it to us--a description of their event, when they first learned of the sponsorship program, how they went about applying for the grant, the amount of money that was approved each year or, I should say, the amount of money they actually received each year for their event. The public works department would then have to do the work of verifying how much money they actually approved, not how much went to the event. We know now of cases where an event received $200,000, but according to Public Works, they approved, say, $400,000. That will enable us to establish that discrepancy.

So I would ask that the committee request that Public Works do this.

The Chair: Would you accept an amendment from Ms. Wasylycia-Leis that they break it down on a constituency basis?

Mrs. Marlene Jennings: Yes.

The Chair: Okay. You have heard the terms of the motion, that we ask Public Works and Government Services Canada to contact everybody who received a sponsorship program along the lines that Madam Jennings said: how much was approved and sent, how much did they receive, for what kind of program, did they do that each fiscal year?

Madam Phinney, please.

¿ (0930)

Ms. Beth Phinney: I think we should suggest that this is urgent.

The Chair: We will.

Ms. Beth Phinney: We could get it a year from now.

The Chair: We will insist that it's urgent; we'll not suggest it.

Mr. Toews.

Mr. Vic Toews: I agree with the motion that has been put by Madam Jennings. I have one point, though. The response should not only come to Public Works; the response should come here.

The Chair: This is on our behalf. They're going to do the work and report to us.

Mr. Vic Toews: But the response from the organizations comes directly here. They can send the letter to Public Works. I want to see a copy of the letter that those organizations send to Public Works.

The Chair: With a carbon copy to the clerk.

Mr. Vic Toews: Thank you.

The Chair: First of all, are we prepared to hear the motion? Are we in favour of waiving the 48-hour rule? That's agreed.

(Motion agreed to)

The Chair: We'll go back to the documents that have been distributed.

On March 10, 2004, a letter was sent to the clerk, Mr. Fournier, from the Deputy Minister of Public Works and Government Services, Mr. Marshall. It said:

Additional contractual documents relating to sponsorship events

You will recall that on March 1st, we provided to your Committee contractual documents relating to the specific sponsorship events described by the Auditor General in Chapter 3 of her Report along with a table identifying the key approval stages relating to these contracts. It has come to our attention that eight additional contracts relating to the major sponsorship events described in Chapter 3 should have been in this tabling. As well, a request was made by you on behalf of the Chair of the Committee regarding the contract referred to in paragraph 3.68.

You will find enclosed 40 copies of these contractual documents as well as the table, in both official languages, of the key approval stages. Sensitive commercial information on the contractual documents has been specifically identified with a reference to subsection 20(1) of the Access to Information Act. I ask that the Committee take this into consideration.

Information on production costs versus commissions and fees paid to communication agencies

During my appearance on February 26, 2004, questions were raised in relation to the observation made by the Auditor General that, out of the total $250 million spent on the sponsorship program, $100 million were paid in commissions and fees. More specifically, I was asked for the breakdown between production costs, commissions and fees paid to communications agencies. My response was based on a chart that summarized this information. As this matter is of interest to the Committee, I am taking this opportunity to provide you with 40 copies, in both official languages, of this chart.

Information relating to 1996 complaint filed by PWGSC employee

During the Committee's meeting on March 1, 2004, the Chair indicated that the Committee wished to receive a copy of the letter which had been sent from the union and which triggered the 1996 audit. Copies of the correspondence are attached. Please note that portions of the documents have been severed as they constitute information which would allow for the identification of individuals and could be considered personal information pursuant to the Privacy Act. These documents were produced at the time in English only and have not been translated. Please note that these documents have been provided to the Committee with the consent of the employee.

Contracts awarded to Groupe Everest and Media IDA Vision

Attached are 40 copies, in bilingual format, of a list of contracts awarded by Public Works and Government Services Canada to Media IDA Vision Inc. since the tabling of the Auditor General's Report on February 10, 2004. No contracts were awarded to Groupe Everest during that period. This information was requested at the February 26th hearings.

Job descriptions for the positions held by the Executive Director of the Communications Coordination Services Branch (CCSB)

During the Committee's meeting on March 1, 2004, a request was made that the Committee be provided with the various job descriptions of the positions held by the former Executive Director of CCSB. In regard to this request, you will find attached 40 copies in both official languages of the job descriptions for the EX 01, EX 02, EX 03 and EX 04 positions held by Mr. Guité. Also included in this package are the records, in English only, supporting the recommendation to reclassify the position to the EX-04 level.

I trust that this will be satisfactory to the Committee.

It was signed by Mr. David Marshall.

There are two points coming out of here. On the first page you will note they say:

Sensitive commercial information on the contractual documents has been specifically identified with a reference to subsection 20(1) of the Access to Information Act. I ask that the Committee take this into consideration.

Are we going to let these documents go, or are we going to have the law clerk peruse them first as to the sensitive information?

¿ (0935)

Mrs. Marlene Jennings: I would suggest that we have our law clerk peruse them, as we've done in the past.

The Chair: Do you have anything to say, Mr. Walsh?

Mr. Toews.

Mr. Vic Toews: I agree that we should have him peruse those documents and provide us with a report as to any objections to the release of that information and specifically what companies this information relates to.

The Chair: Then I'll ask the clerk to gather up these particular documents and take them back until such time as the law clerk has had time to review them, and that way we will protect the sensitivity. We're referring to the sponsorship additional contracts, March 11.

Ms. Ablonczy.

Mrs. Diane Ablonczy (Calgary—Nose Hill, CPC): I understand the committee will have a forensic auditor at its disposal. When I see all these documents, I realize how helpful that will be. Could you tell us the ETA of this forensic auditor?

The Chair: Soon. It has to go through a bidding process, of course. We're not going to break the rules as we investigate how the rules were broken. So it must go out for public tender. Then there has to be a selection process. Hopefully, within a week or so that person will be on board. But I can't give you a date. I don't have a date.

Mr. Tonks.

Mr. Alan Tonks (York South—Weston, Lib.): Mr. Chairman, I'm not sure this is a point of order. Mr. Cutler is going to be appearing before us today. We had asked Mr. Marshall if he would make available copies of the letter Mr. Cutler wrote in 1996 that, to use the language, “triggered” the audit. We have a copy of Mr. Cutler's letter to the Professional Institute, and we have a copy of the letter from the institute to Mr. Jim Stobbe, the assistant deputy minister. When the Auditor General indicated she was not going to name particular individuals, she referenced the Privacy Act. The Privacy Act has again been cited with regard to this correspondence. But it was my understanding that we were going to adopt a mechanism whereby, if we were going to release documents, we would deal with whether it was a matter under the Privacy Act.

The reason I raise this, Mr. Chairman, is that those names are extremely important in terms of our investigation. I'm wondering if we could get clarification from our law clerk, before Mr. Cutler speaks, as to whether during Mr. Cutler's presentation we could ask him for names that are referenced. We aren't governed by the Privacy Act in session to the same extent as the Auditor General or the correspondence is.

¿ (0940)

The Chair: I'll give the law clerk a little time to think on that as we go through the rest of the routine business, Mr. Tonks, but as you know, no one can refuse to answer a question put to them by a committee of the House of Commons. We would therefore accept responsibility for the answer, and if we ask him to name names, he likely will name names. We should be judicious in what we're asking for, but Mr. Walsh will talk about that later.

Next is the second report of the Subcommittee on the Protection of Witnesses and Testimony of the Standing Committee on Public Accounts. The committee met on Tuesday, March 2, and Tuesday, March 9, and agreed to make the following recommendations.

The first is that in the report to the House recommended by the subcommittee in its first report, the committee include a recommendation that a mediation process be established involving the Public Service Commission and the Public Service Integrity Officer to resolve matters relating to employees who suffered any loss as a consequence of having reported instances of wrongdoing with regard to the sponsorship program, and that the instances judged to have merit be reported to the House.

The second is that the law clerk draft a the letter to be given to witnesses who appear before the committee, advising them of the committee's report to the House respecting the protection of witnesses.

The third is that if requested, reasonable travel, accommodation, and living expenses, as well as reasonable child care expenses, be reimbursed to witnesses who appear before the subcommittee, and that these expenses be charged to the budget of the committee.

The fourth is that Mr. Allan Cutler appear before the committee on Thursday, March 11, 2004.

Are we agreed to adopt this report?

Some hon. members: Agreed.

The Chair: We've got last week's report also from the Subcommittee on the Protection of Witnesses. They met on Thursday, February 26.

I read all this last week.

The Clerk of the Committee: Yes, you read it last week. We just want to adopt it. We couldn't adopt it last week.

The Chair: Okay.

We discussed a number of issues, including a brown envelope, and that the committee present a report to the House indicating that the committee agrees with the President of the Treasury Board that whistle-blowing legislation be applied retroactively to witnesses appearing before this committee in relation to its study of chapters 3, 4, and 5 of the November 2003 Report of the Auditor General of Canada, and that the report indicate that there be no administrative sanction for anyone below the level of director general who broke the Financial Administration Act in regard to the sponsorship program provided that they received no benefit whatsoever.

Second is that Joseph Charles Guité and Pierre Tremblay be requested to appear before the committee in March 2004.

Third is that the committee meeting with the Honourable Alfonso Gagliano be held on March 17, 18, or 19 from 9 a.m. until 11 a.m., 11:30 a.m. to 1 p.m., 2:30 p.m. to 4 p.m., with the possibility of continuing with the witness on the next sitting day.

That is respectfully submitted. All agreed?

Some hon. members: Agreed.

The Chair: Ms. Phinney, then Mr. Desrochers.

Ms. Beth Phinney: Since this was probably not written first thing this morning, do we have confirmation of dates that would tighten up the third?

The Chair: I asked the clerk to give us an update on these witnesses. I'll just do that right now.

Mr. Clerk.

The Clerk: Mr. Gagliano's lawyers have confirmed that they are ready, and Mr. Gagliano will be here on the Thursday, which was our first date preference.

The Chair: March 18.

The Clerk: March 18, from 9 a.m. until 4 p.m., with the breaks indicated. Also, he will make himself available on the next day, the Friday, if required. So that can be confirmed.

As to Mr. Guité, as of yesterday I had no knowledge of how to reach him. I now know that he has a lawyer in town, so at least we'll be able to communicate through the lawyer. That's a start. We even called a few places in Arizona where we found a Guité, and there was no service for that number. I wasn't with the committee when the lawyer was involved the first time, and nobody brought to my attention that he had a lawyer in town. We now have a conduit to Mr. Guité. He will be receiving the information and the request as of today, before I leave the office, I promise.

I've spoken to Pierre Tremblay, and I was referred to his lawyer. I have documentation here, which I can provide to the members of the steering committee, indicating that on the advice of three doctors, Mr. Tremblay is on sick leave until the end of this month and should not be appearing before any committee for the next few weeks. But he is offering to come at the earliest opportunity. I will provide that documentation to members of the subcommittee.

¿ (0945)

The Chair: We'll discuss that at the steering committee. That's the latest information.

We adopted a motion that we present the report to the House, and that draft report is right here; it has been circulated. It says at the top “Draft Report”, with a recommendation at the bottom and a second recommendation on the back side. This report is in line with the recommendation of the steering committee, which has been adopted in principle in the report, and the address has now been drafted. If we can get through it, I'll present it tomorrow at routine proceedings.

On 17 February 2004, when he appeared before the Committee, President of Treasury Board, the Hon. Reg Alcock, discussed several concerns with regard to the treatment of public service witnesses appearing before the Committee in conjunction with its review of Chapters 3 (The Sponsorship Program), 4 (Advertising Activities), and 5 (Management of Public Opinion Research) of the November 2003 Report of the Auditor General of Canada.

Mr. Alcock announced that the Government will introduce legislation that would offer protection against administrative sanction for public servants who report instances of wrongdoing in the workplace. Until such legislation becomes law, the Minister pointed out, the Committee needed “to craft a process ... so that the public servants who come forward can be satisfied that they will receive protection.” In the interim, Mr. Alcock made it clear that he would undertake to use the authorities of his office “to ensure that no public servant suffers any penalty or loss of position or loss of advancement as a result of coming forward to testify” before the Committee and guaranteed that this would be so.

The Minister expressed his intention that legislation, when enacted, would provide retroactive protection to public service witnesses coming before the Committee. The Committee fully supports this intention with regard to its examination of Chapters 3, 4, and 5 of the Auditor General's November 2003 Report.

The Committee recommends that:

Recommendation 1

That there be no administrative sanction levied against any federal employees below the level of Director General (or equivalent) who broke the Financial Administration Act, provided they received no personal benefit of any kind as a consequence.

In addition, the Committee recommends:

Recommendation 2

That a mediation process involving the Public Service Commission and the Public Service Integrity Officer be established to resolve matters relating to federal employees past or present who have allegedly suffered monetary loss or career damage as a consequence of having reported instances of wrongdoing with regard to the Sponsorship Program; and that the instances that have been judged to have merit be reported to the House.

That is the report. Is there any discussion?

Madam Jennings, you move the adoption.

(Motion agreed to)

The Chair: A motion from Mr. Desrochers has been circulated in both official languages. It says:

I, Odina Desrochers, MP for Lotbinière--L'Érable and a permanent member of the Public Accounts Committee, submit the following notice of motion:

That the Public Accounts Committee obtain the minutes of the June 10, 2002 meeting of the Cabinet Committee on Government Communications regarding the future of the sponsorship program, which was attended by seven Ministers.

That was submitted to the clerk on March 9, and Madam Jennings and Mr. Toews, I think, want to talk to this.

Madam Jennings.

Mrs. Marlene Jennings: I believe that if you asked Mr. Desrochers and the other members of the committee, there would be unanimous consent to waive the 48-hour notice on a motion I provided to the clerk that covers the matter. We would deal with my motion rather than Mr. Desrochers' motion.

¿ (0950)

The Chair: I think yours expands on Mr. Desrochers, so it's Mr. Desrochers' plus an addition.

Mrs. Marlene Jennings: Yes, and I believe there would also be unanimous consent to amend the motion I have prepared, which would then read:

I propose that the Standing Committee on Public Accounts obtain copies of the minutes and all the records from all meetings of any Cabinet Committee, including ad hoc committees, wherein the Communications and Sponsorship Activities/Programs were discussed between January 1, 1994, and February 10, 2004.

The Chair: Okay, with unanimous consent. Mr. Toews.

Mr. Vic Toews: I had an opportunity to discuss this with Madam Jennings, and my concern was that in her original motion there was no reference to the ad hoc committee. She has suggested that amendment, and I would support it.

In terms of clarification, then, I realize the parameters of the date are from January 1, 1994, through February 10, 2004. But within that, I want to specifically receive the confirmation that this would include the additional cabinet document referred to by the Prime Minister in the House during question period on March 10, 2004, in reference to a Globe and Mail article regarding the appearance of Groupaction before a cabinet committee in 1998 to discuss a specific advertising contract.

So I want that confirmation.

The Chair: Okay. When we write the letter, we will include Madam Jennings' reference to all ad hoc meetings, especially that particular one.

Mr. Vic Toews: That was my first concern. The second concern--and I have two additional concerns--is that in addition to the documents I just referred to that were referred to by the Prime Minister on March 10, the production of documents does not simply mean documents that were produced by the ad hoc committee on government communications but also any documents considered by it or within its possession. So it's not simply the minutes, it's not simply documents that they created; it's also documents that they received, had in their possession, and otherwise.

The Chair: Madam Jennings, are you happy with this?

Mrs. Marlene Jennings: Yes, but then I would suggest that instead of the amendment where I say “obtain copies of the minutes and all the records”, we put clarification, perhaps in parentheses: “documents generated by the Committee and any and all documents considered by said Committee”.

I believe that would then cover documents of the type Mr. Toews is talking about.

The Chair: Do you accept that?

Mr. Vic Toews: So that's in respect to the ad hoc committee on government communications, and I would make a similar request in respect of the cabinet committee itself, which was formed in or about 2001. The ad hoc committee, of course, came about in 1998. The actual formal committee came about in 2001. So if that same condition applies to that, that's acceptable, Mr. Chair.

The Chair: Okay, if that's acceptable, Madam Jennings, then move it.

Mrs. Marlene Jennings: Okay. The motion would read:

I propose that the Standing Committee on Public Accounts obtain copies of the minutes and all records (including all documents created and generated by said committee and any and all documents considered by said committee) from all meetings of any Cabinet Committee, including ad hoc committees, wherein the Communications and Sponsorship Activities/Programs were discussed between January 1, 1994, and February 10, 2004.

That would then include the specific motion that Monsieur Desrochers had tabled before the committee and it would include any ad hoc committee of cabinet.

¿ (0955)

The Chair: Are you fine with that, Monsieur Desrochers? Okay.

Are you prepared to put the question? Is there unanimous consent that we can put the question?

Some hon. members: Agreed.

(Motion agreed to)

The Chair: There's one final piece of business, which will be at the end of the meeting, and that is that the Auditor General will be coming forward to present a peer review report, which is not part of this investigation but something we need to get done.

You wanted that at the end of the meeting, is that correct, Madam Fraser? Or do you want it now? You prefer it now.

Okay, we'll take a couple of minutes and we'll shift gears again. We'll bring Madam Fraser and Mr. Rattray forward from the Auditor General's office.

Mr. Mills.

Mr. Dennis Mills: On a point of clarification, we have this document, Sponsorship Program—Expenditures and events sponsored. This a breakout of the moneys that went to the 1,986 events across Canada. Is this now a public document? Okay.

What was the source of this?

The Chair: You got me, Mr. Mills.

Mr. Dennis Mills: This is a critical document.

The Chair: I think I have the answer. We have the assistant clerk here this morning as well.

Jeremy, do you want to tell us where this came from?

Mr. Jeremy LeBlanc (Committee Clerk): The document Mr. Mills is referring to is one of the documents that was sent by PWGSC, so it's referred to in the letter by Mr. Marshall. It is public.

Mr. Dennis Mills: If I understand this document correctly, it says $150 million was given directly to the 1,986 events. The 12% and 3%, which is approximately $20 million, are the commissions. Production would be the production costs of almost $84 million related to the events. Is that how this translates?

The Chair: If you start at the right-hand side, a total of $254 million or $255 million was spent. Of that money, $83 million was spent on production, $4 million was spent on a 3% commission, $16 million was spent on a 12% commission, and $150 million would have flowed through.

Mr. Dennis Mills: To the organization.

The Chair: That would seem to be...and as you can see, there's a discrepancy of approximately $100 million.

Mr. Dennis Mills: Where would the $100-million discrepancy be?

The Chair: The discrepancy is that there was $16 million and $4 million paid in commissions, which is $20 million, and $83 million was paid in production costs with questionable value.

Mr. Dennis Mills: So the questionable value is on the production costs. Is that what you're saying?

The Chair: Well, I hate to open up the debate--

Mr. Dennis Mills: Okay, I'll ask one last question. I wonder if we should get Advertising Standards Canada in here to really.... A lot of us are not experts on whether or not these fees are industry standards.

The Chair: Okay, Mr. Mills. I think the Auditor General did actually pronounce on what she thought was value for money on some of these commissions. I think we will take this up at the steering committee. We're not going to debate it here because we're not sure what we're debating.

Okay, I've decided we're going to shift gears. Let me ask Ms. Fraser to explain what--

An hon. member: Let's finish what we started--

The Chair: Order!

As I said, we are going to shift gears and deal with some other routine business. But it's not routine either, so I'll ask Ms. Fraser to tell us all about it.

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

I would like to say how much we appreciate the committee taking time from a very busy hearing schedule to permit us the opportunity to table today a copy of the February 2004 peer review report on the Office of the Auditor General. Accompanying me today is Dave Rattray, assistant auditor general, who had the responsibility for arranging the external review and for providing leadership throughout the process.

This external review of our value-for-money audit practice by an international team of peers is a first for a national audit office. It was undertaken, in part, in response to a question that is often asked: who audits the Auditor General?

In February 2003 we asked members of the international audit community if they would be interested in participating in a review of our office's value-for-money audit practice. The peer review of our office was carried out over the course of a year by a team led by the United Kingdom's National Audit Office, with representatives from the national audit offices of Norway, the Netherlands, and France. The General Accounting Office of the United States participated as an observer.

The purpose of the review was to assess the extent to which the office's value-for-money audit practice is designed to reflect recognized standards of professional practice and is operating effectively to meet the office's objective of producing independent, objective, and supportable information that Parliament can rely on to examine the government's performance and hold it to account.

The results of the peer review are very positive. I am pleased that the report concluded that the office's value-for-money audit practice was suitably designed and operating effectively to achieve our objectives. The report also identified a number of good practices in the office's VFM process and quality management framework. As might be expected from any audit, the review identified potential opportunities to enhance the quality of the office's value-for-money audit policies and practices. As we committed, we have made these opportunities for improvement public, and they form part of the report. We will address these in the next few months. I'm also tabling a copy of the office's action plan for addressing the suggestions made in the peer review report.

À (1000)

[Translation]

I would like to give you a few details on how the examination was conducted. To prepare, the office did an in-depth evaluation and an update of its quality management framework, and, in December 2002, published a revised version of the Value for Money Audit Manual. In February, the members of the peer group met to finalize the details of the work, more specifically the direction, the participants, its objectives, its extent and criteria. In May, they signed a memorandum of agreement with the office on peer review.

The review was carried out between June and November last year and the report was finalized last February. After their tabling in committee, the report and the action plan will be put up on our website. I think it may be possible for the public accounts committee to table the report in the House of Commons, and I hope they will be able to do so.

In conclusion, I would like to point out how pleased we are with the results of this review. All participants acquired valuable experience. The review opened the way to practical exchanges with our international colleagues. We have high hopes that it will help all national audit offices to improve their practices. We have come to an agreement with an international task force of audit services bureaus that will be doing an external review of audit practices and value-for-money audits in other countries. In fact, my office is in charge of the peer review of the US General Accounting Office. The first stages of that review are already underway.

[English]

I would also like to note that I would be pleased to appear before the committee with Caroline Mawhood, the lead reviewer from the National Audit Office of the United Kingdom, should committee members wish to have a hearing on this report later this year. Perhaps this could be combined with our hearing on our report on plans and priorities that is expected to be tabled later this spring.

That concludes our remarks, Mr. Chair. I do thank the committee for taking the time to receive us today. We will be pleased to respond to questions now or at some later date should you wish.

The Chair: Thank you very much, Madam Fraser. I compliment you and your office for getting an excellent report from your peers. So we do now have the answer to who audits the auditor. That's been a puzzling question for generations, and the answer is now here.

The report will now be public, as Madam Fraser has asked, because she is an officer of Parliament and not an officer of this committee or any other committee. I will table the report in the House. Is that agreed?

Some hon. members: Agreed.

À (1005)

The Chair: I have one final point before you leave.

Also with Ms. Fraser we have Mr. David Rattray, the assistant auditor general, who is retiring soon. I do want to recognize that he has been with the Office of the Auditor General for over 30 years and that this will likely be his last appearance before the public accounts committee. He has been assistant auditor general for 16 years and has testified before this committee for about 25 years. Over the years, he has uncovered many things; he has reported to Parliament many things.

On behalf of this committee, and on behalf of the Parliament of Canada and, indeed, of all the citizen of Canada, we thank you, Mr. Rattray, for the contribution you've made to the public service in this country. It is much appreciated. Thank you, Mr. Rattray.

Some hon. members: Hear, hear!

Mr. David Rattray (Assistant Auditor General, Office of the Auditor General of Canada): Thank you, Mr. Chairman.

The Chair: Okay, you are excused.

Ms. Sheila Fraser: Thank you.

The Chair: Now we will ask Mr. Cutler to come forward.

We'll have the clerk, Mr. Mills, and Mr. Toews.

Mr. Vic Toews: On a point of order, we are postponing any questioning of the auditor on this peer review for a subsequent hearing, are we?

The Chair: [Inaudible—Editor]...and then you can ask questions.

The Chair: Mr. Cutler, we thank you very much for coming forward today. We know that many years ago when you started the process that has led to your being here today, it was not your intention to come before us. It is difficult sometimes for people to speak in the glare of the public eye, and we thank you very much for bearing with the process and for coming forward.

Do you have counsel here today as well?

Mr. Allan Cutler (As Individual): Yes.

The Chair: You may also come forward and sit at the table, sir.

We will address our questions to Mr. Cutler. You cannot speak to the committee, sir, but you can advise your client as to how he may answer the questions. But we will not address questions to you.

Before we start, Mr. Walsh had a comment that he wished to make.

Mr. Rob Walsh (Law Clerk and Parliamentary Counsel, House of Commons): Mr. Chair, it pertains to the points raised earlier with regard to some documentation before this committee.

First of all, with regard to the contractual documentation received today from the Deputy Minister of Public Works, Mr. Marshall points out in his covering letter that some information has been noted as being covered, in his view, by subsection 20(1) of the Access to Information Act—something that was done in the previous package, where there was a notation. It was my view then...and the committee accepted distribution of that material at that time, notwithstanding the notation of subsection 20(1). The same point is made by Mr. Marshall in his letter now. However, on perusal of the documents enclosed with that letter, there appears to have been an oversight, as I am unable to find any information marked with reference to subsection 20(1)—although much of a similar kind of information is in these documents, and it was allowed on the previous occasion by the committee, and I would recommend that it be allowed on this occasion as well.

À (1010)

The Chair: To be released.

Mr. Rob Walsh: To be released.

The other question relates to these two letters, a letter from Mr. Cutler to the Professional Institute of the Public Service and the response, portions of which have been obliterated, according to Mr. Marshall, pursuant to the Privacy Act. I think he meant to say, pursuant to the Access to Information Act, with reference to the definition of personal information found in the Privacy Act. However, both these letters are contained in documentation to be provided by this witness in full, without deletions, and I personally feel, as Mr. Tonks said earlier, that the Privacy Act and the Access to Information Act do not apply, that in these circumstances these two documents ought to be made available in the course of this witness's testimony, in the usual manner.

The Chair: Mr. Toews.

Mr. Vic Toews: Just for clarification, then, to the clerk through you, Mr. Chair, that means there is no requirement that there be any deletion of names. The witness is entitled to name individuals in accordance with questions asked of him.

Mr. Rob Walsh: Mr. Chairman, we have discussed this on earlier occasions. There is no legal requirement--Mr. Toews is asking about legal requirements--certainly, that the witness withhold names in the course of his testimony. It is the case, however, Mr. Chairman, that committee members sometimes try not to unnecessarily identify persons who are of no direct relevance to the matters being discussed, so that innocent third parties are not needlessly given public identification. I don't know that in this case that is the case, but there is certainly no legal requirement that this committee or this witness, in the course of these proceedings, consider themselves governed by the Access to Information Act or the Privacy Act.

Mr. Vic Toews: The second issue I have in respect to the testimony is this. Usually when testimony is given under compulsion in a court or otherwise, there is a provision for protection of the witness, for the use of that testimony in subsequent proceedings. I don't know whether his counsel is concerned about that issue and I don't know if the witness is seeking that type of protection at this hearing, but I would certainly have no objection to extending that protection to the witness by proceeding as though this testimony were under compulsion. I just want to afford this witness every possible protection in terms of his then being able to be as forthright as he chooses to be with the committee.

The Chair: I'm not sure there is a difference between being here under compulsion and being here voluntarily, but Mr. Walsh can perhaps elaborate.

Mr. Rob Walsh: I think there might be some relevance to the witness that for the record it might show that he in fact is not here under any subpoena, although now that he has voluntarily presented himself, he is obliged to answer all questions and to do so truthfully, as I expect he intends to do. But it is the case, Mr. Chairman, that any testimony provided in these proceedings, albeit in public, is protected and privileged and not available for use in any other proceedings of any kind at all.

The Chair: As I mentioned at a previous meeting, I make a point of reading this for all witnesses who appear before the committee and this investigation:

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

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

Now we have an opening statement and, in addition to that, a synopsis of evidence in one official language. Mr. Cutler will be reading an opening statement, so the opening statement is not an issue concerning one official language, but I think we need a directive that the synopsis of evidence be translated.

Madam Jennings.

Mrs. Marlene Jennings: I would ask for unanimous consent of members of the committee that the documents that Mr. Cutler will be presenting to the committee today be accepted and distributed notwithstanding that they are published or written in only one of the two official languages--

The Chair: And that they be translated later on?

Mrs. Marlene Jennings: --and that a translation be requested, and as soon as available, the translated copy be distributed to members.

À (1015)

The Chair: Okay.

Mr. Tonks.

Mr. Alan Tonks: Thanks, Mr. Chairman.

Mr. Chairman, I don't wish to delay the proceedings, but I think it's important to say this before Mr. Cutler makes his statement.

Mr. Walsh had said that it was the intent of the committee that we didn't want to put a cloud over people's heads unnecessarily, and we take that very responsibly. But, Mr. Chairman, we're trying to establish whether there was a pattern of behaviour, first of all, that was retaliatory against individuals, a pattern of behaviour that started as early as 1995 and was then continued through the correspondence that has been provided. Those names that have been deleted, in fact, are individuals who participated in that pattern of behaviour, so it would be my feeling--and I hope the committee agrees--that the correspondence, notwithstanding that the names have been deleted.... Could Mr. Walsh clarify that the correspondence, when it's distributed, should have the names of the individuals?

The Chair: I think I'm correct in saying that if we instruct that the names be in there, we can reattach the names and distribute it.

Is that correct, Mr. Walsh?

Mr. Rob Walsh: That would be correct, Mr. Chairman.

As I mentioned earlier, Mr. Tonks, I anticipate that in this witness's testimony and the synopsis now about to be distributed to you, you'll find those letters in there, full and complete, with no deletions.

Mr. Alan Tonks: Okay. Fine.

The Chair: There was a motion by Mrs. Jennings that we distribute the information in one language and that it be translated. Is that agreed?

(Motion agreed to)

The Chair: I will now turn to Mr. Cutler for his opening statement, sir. Again, I thank you for coming forward.

Mr. Allan Cutler: Thank you. Good morning, Mr. Chairman and members of the committee.

I have worked in the Public Service of Canada in the field of contracting and procurement for more than 29 years. My entire career has been at PWGSC and the Department of Supply and Services.

I began working the field of advertisement procurement in the mid-1980s. From the mid-1980s until late 1994, there were two separate groups involved in advertising. One group, which was known as the advertising management group, was involved in selecting advertising agencies and in monitoring government advertising campaigns for quality and effectiveness. The other group, which I headed, was involved in the negotiation of individual contracts with agencies selected by the advertising management group.

Typically, my group would negotiate price and the terms of the contracts. In this arrangement, there was very little contact between the advertising management group and my group. Once the advertising management group had selected an agency, all contracting issues and details with respect to those individual contracts were handled by my group. In negotiating contracts with advertising agencies, my primary objective was to protect the Crown's interest by adhering to the government's established rules, regulations, and policies.

I believe this structure worked well. There was no friction between the advertising management group, which selected individual advertising agencies, and my group, which was responsible for negotiating and concluding contracts with the selected agencies.

Sometime around 1990, Chuck Guité became head of the advertising management group. In 1994, Mr. Guité began interfering in the contracting process by authorizing agencies to carry out work without a pre-existing contract. This lead to a meeting on November 17, 1994, between Mr. Guité and the advertising contracting group--my group--at PWGSC, including me. My notes from the meeting are at tab 2 of the document book.

At this meeting. Mr. Guité told us that the normal rules and regulations should not apply to advertising. He said he would talk to the minister to have them changed.

I should point out that the Pierre Tremblay who is referenced in that meeting is not the same Pierre Tremblay who was the executive director of CCSB.

À (1020)

The Chair: That's a very important thing to point out. This is why names cannot be bandied around at will in a public domain, because Pierre Tremblay and Pierre Tremblay is like John Williams and John Williams. The NDP candidate in my riding was John Williams.

Some hon. members: Oh, oh!

The Chair: My apologies for interrupting, Mr. Cutler.

Mr. Allan Cutler: That's fair.

A week later, I was informed that I and two other employees who worked for me would move to Mr. Guité's section and report to him immediately. At this point in time, Mr. Guité's responsibilities were expanded to include not only the selection of advertising agencies, but also the negotiation and awarding of contracts to selected agencies. At this time, he also became responsible for procurement of public opinion research services. As part of this change, I was physically relocated to Mr. Guité's group, which operated from an office that was completely separate from other PWGSC offices.

Very shortly after my transfer, I became concerned about the contracting practices within Mr. Guité's group, which by this time was known as APORS. I became concerned that contracts were regularly being backdated; commissions were paid for services apparently not performed; there appeared to be improper advance payments; in circumstances where ministerial, Treasury Board, or legal authorizations were required, they were not sought; and contracts were issued without prior financial authorization.

I was expected to issue contracts on terms provided by Mr. Guité. I was no longer expected to negotiate prices with advertising agencies or to insist on the established government contracting practices.

When I raised concerns about carrying out these instructions, Mr. Guité became upset. It quickly became apparent to me that my employment was in jeopardy. In order to have a record of what was happening, I began to maintain a log of events and situations on my computer. I have provided an unedited copy of that log at tab 4 of the document book. It covers the period from February 1995 through February 1996 and provides details of some of the significant contracting irregularities I observed. When it was possible to do so, I also attempted to keep copies of the relevant documents.

In March 1995, my reporting relationship was changed. Initially I reported to Mr. Guité. In March 1995 I was instructed to report to Mario Parent, who in turn reported to Mr. Guité.

On many occasions, I was asked to prepare and award contracts in circumstances that I considered questionable or improper. I adopted the practice of preparing the contract approval documents and the contracts as instructed, but returning them to Mr. Parent for appropriate signature.

In April 1996, matters came to a head when I once again refused to sign an approval authority and contract. Mr. Parent indicated that there would be a price to be paid for my refusal. Following this, I sought the assistance of my union, the Professional Institute of the Public Service. On my behalf, the institute wrote to Jim Stobbe,the assistant deputy minister for the government operations services branch. In 1995, Mr. Stobbe replaced Rick Neville as Mr. Guité's immediate supervisor.

The union's letter to Mr. Stobbe, dated February 13, 1996--

À (1025)

The Chair: Was it May 13 or February 13?

Mr. Allan Cutler: May 13.

The Chair: Okay. You said February 13.

Mr. Allan Cutler: Oh, excuse me. I'll have to watch my dates a bit more closely.

So the union's letter is at tab 7 of the document book. The letter to Mr. Stobbe indicated in general terms my concerns about the integrity of the contracting process and my concerns about my own employment situation.

As a result of the letter to Mr. Stobbe, I was asked to bring my concerns to the audit and review branch within the department. I agreed to do so, and I was interviewed on two occasions by an internal auditor from the audit and review branch. I provided the internal audit with documents, as requested.

At that time, I was not informed of the results of this internal audit. My union subsequently made a request under access to information, and I am now aware that the audit and review branch concluded that my allegations were well-founded. A copy of the report by the internal auditor was subsequently obtained under access to information. It is found at tab 8 of the document book.

I also became aware that this report was provided by the director general of the audit and review branch to Mr. Stobbe on June 19, 1996. That document is at tab 9 of the document book. It confirmed that there were serious irregularities in the APORS group.

This was an extremely stressful period for me. I was left in Mr. Guité's section, and he and Mr. Parent were now well aware that I had raised these concerns within the department.

On June 11, 1996, I was instructed to attend a meeting in Mr. Guité's office. Mr. Guité informed me that my position was to be declared surplus. Immediately after this meeting, I was excluded from access to the files. Subsequently, in July 1996, the Professional Institute filed a grievance on my behalf in an effort to protect my employment. In August 1996, with the union's assistance, I was finally moved out of Mr. Guité's section and given a temporary secondment to another part of the department.

As a result of the audit and review branch report in June 1996, an audit of APORS was conducted by an outside auditor. Because my employment situation was so precarious and because of what I had been through, I elected to have no involvement in the outside audit.

Eventually, in February 1998, a settlement of my grievance was arrived at through discussions with the assistant deputy minister of the human resources branch, Michel Cardinal. As part of the resolution, I received a letter from Mr. Cardinal indicating that steps had been taken to ensure that there would be no reoccurrence of the contracting irregularities I had identified. Unfortunately, it appears this did not happen.

I was not employed in Mr. Guité's group when the sponsorship program started in 1997. However, I believe that many of the problems identified in the sponsorship program had originated earlier. In this connection, I will provide you with four examples that are typical. I have provided additional information to the clerk.

First, as early as March 1995, Mr. Guité had acquired the authority to authorize advertising and advertising-related expenditures on behalf of PWGSC. The earliest example of which I am aware is found at tab 17. This an amendment to an existing contract with Groupe Everest. It clearly indicates that Mr. Guité himself now had the authority to authorize expenditures. This development meant that Mr. Guité was now in a position to authorize the expenditure, select the agency, approve the terms of the contract, confirm that the work was performed, and authorize payment.

À (1030)

The second example is found at tab 18 of the document book. As these documents indicate, sponsorship of events funded by APORS began as early as May 1996. These contract documents show Mr. Guité as project authority. He authorized a total of $645,000 for sponsorship of seven special events. The contract was assigned to Lafleur Communications by Mr. Guité. Again, Mr. Guité authorized the expenditure, selected the agency, approved the contract, and authorized final payment.

The third example. As early as January 1996, it appears that Mr. Guité was permitting advertising agencies to earn commissions for acting as a conduit for funds. An example of this is found at tab 19 of the document book. In this case, a company called Pinnacle Advertising had carried out a direct mail campaign for the government in 1995. The department requested that a contract be issued to Pinnacle for work that had already started. Rather than issue a contract to Pinnacle, Mr. Guité instructed that an existing contract with Groupe Everest be increased by $909,000 so that Groupe Everest could subcontract with Pinnacle. On such a subcontract Groupe Everest was entitled to a 17.65% commission.

By way of final example, tab 20 of the document book deals with a $3.4 million contract for the purchase of Canadian flags from Lafleur Communications. Mr. Guité authorized the expenditure and was identified as the project authority. The contract was described as being for “advertising-related services”. The contract had a three-day term and was subject to the standard commission rate of 17.65%, payable to Lafleur. Moreover, the contract was then amended to permit immediate payment on submission of an invoice, a practice that is highly unusual in government procurement.

I would like to say in conclusion that the past eight years have been extremely difficult and sometimes stressful for my family and me. I hope no other public servant ever has to face a similar circumstance. I feel relieved that I have now been able to bring these matters to your attention, and quite frankly, I considered it my duty as a public servant to do so.

Mr. Chairman, it's my hope that this committee, in its report, will encourage Parliament to pass legislation to protect public servants who find themselves in similar circumstances.

Thank you.

The Chair: Thank you very much, Mr. Cutler. We appreciate your forthrightness and your candid presentation this morning. We are aware of the letter your daughter wrote to the newspapers and of the effect it has had on your family. I think it's appropriate that I apologize on behalf of the Government of Canada for the stress you have suffered over the years. We thank you again for coming forward.

Now we're going to have some questions. We're going to start with Mrs. Ablonczy, please, for eight minutes.

À (1035)

Mrs. Diane Ablonczy: Thank you, Mr. Chairman.

Thank you, Mr. Cutler. I can only hope, along with you, that there are not many civil servants who have undergone the abuse and harassment you've been forced to endure simply for trying to do the right thing and carrying out your public trust. Unfortunately, you're not the first we've heard of who has been treated this way, and we want to put a stop to it.

When the former Deputy Minister of Public Works, Mr. Quail, appeared before this committee on March 1, he said the following:

I am not aware of any actions taken that were attempts to fire him,

--that being you, Mr. Cutler--

absolutely not. ...

I don't have to repeat that we took steps when we received the material on behalf of Mr. Cutler, represented by PIPS, and we carried out complete investigations. The results of those investigations, and the undertakings given to me by APORS, are just a matter of record.

Mr. Cutler, would you agree with Mr. Quail's assessment?

Mr. Allan Cutler: I'm not exactly certain what you mean. In hindsight it appears there were no changes, but I was not privy to the exact circumstances. I was no longer in that area.

Mrs. Diane Ablonczy: When the internal audit found that your allegations of impropriety within the contracting process were valid, then an outside audit was done. Is that correct?

Mr. Allan Cutler: Yes.

Mrs. Diane Ablonczy: What is your assessment of the scope of that audit? Was it satisfactory? Was the department fully informed after that audit of the true nature of what was happening in this program?

Mr. Allan Cutler: My assessment of the audit is that the audit was well done for what was done. The scope was limited, in my assessment, in everything that was actually there. There were also some errors in the report, I believe, and they are errors of.... The easiest thing is to actually point one out to you.

In 6.3.3 and 6.3.4 of the report--this is just one instance I'm aware of--

Mr. Vic Toews: What document is this?

Mr. Allan Cutler: Tab 14. That is the final report of the APORS audit. I won't go through everything in the audit, but I'll use 6.3.3 and 6.3.4 as an example.

There is a statement there that in at least 14 instances, the request for authority form could not be found in the file. I am an extremely professional buyer. I've been trained well by a number of highly qualified individuals over the years, and I know my job. Those forms were in the files when I left that area. Every file had a request for approval form.

There's another piece that is totally silent in this particular audit--and I'll turn you to tab 19 and my note dated January 26, 1996. All these notes where I was giving advice were in each file when I left that place. So I would assume there was some cleaning of the files before the auditors arrived, because there's no address at any time on any advice that had been given to them on any file.

À (1040)

Mrs. Diane Ablonczy: Are you telling us, Mr. Cutler, that documents on the file were destroyed or removed?

Mr. Allan Cutler: I am telling you that I don't know, but it would be highly unusual for an audit to overlook the fact that there was written advice on a file that had informed management of the proper procedures.

Mrs. Diane Ablonczy: What should have been done with this audit? What would have been the proper scope, in your view?

Mr. Allan Cutler: There are two things, potentially. First, I would have expanded it to more of a forensic audit on everything that was going on. Second, the audit took place months after the allegations. I was locked out of the files. The audit took place sometime, to the best of my knowledge, in September or October, after I had gone, and by that time, six months had passed. There's an important timeliness in there.

Mrs. Diane Ablonczy: Mr. Cutler, you told us on page 3 of your submission to us that around the time you and two other employees were moved directly into Mr. Guité's section and were reporting directly to him, his responsibilities were expanded to include basically being the fox in the henhouse.

Mr. Allan Cutler: Your words.

Mrs. Diane Ablonczy: Who would have provided him with that authority?

Mr. Allan Cutler: I cannot tell you who provided him with the authority. I can tell you that we were now reporting to a different ADM up a different chain of command. There must have been a reasonably high level of approval for us to move from one ADM to another ADM. But I'm not aware of who actually gave the approval.

Mrs. Diane Ablonczy: When you say “reasonably high level”, how high?

Mr. Allan Cutler: It has to go up to the common link between the two organizations. They can't just transfer between themselves because they feel like it. They have to have approval from the next level up.

Mrs. Diane Ablonczy: In your material you gave us some examples. You mentioned that you were called in and told that you were going to be made surplus. But this was before the results of the audit were provided to Mr. Stobbe--this is on page six--on June 19. But it was on June 11 that you were told you were going to be toast. Do you have any idea why you would be threatened basically with firing when the allegations you had made were still being checked out and had not yet been reported to the assistant deputy minister?

Mr. Allan Cutler: All I can really state is that the union said it was a remarkable coincidence.

Mrs. Diane Ablonczy: Remarkable indeed.

The Chair: Thank you very much, Mrs. Ablonczy.

[Translation]

Mr. Desrochers, you have eight minutes.

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

Mr. Cutler, thank you for being here. Your document clearly shows that what the Auditor General is stating concerning the years 1997 to 2002 actually started in 1994. Is that so?

[English]

Mr. Allan Cutler: Yes, that's correct.

[Translation]

Mr. Odina Desrochers: You are telling us that Mr. Guité took over in 1990 and in 1994 you started noticing irregularities. Is that also correct?

[English]

Mr. Allan Cutler: He came in approximately in 1990. I'm not actually certain of the date, but it was in 1994 when the irregularities started, yes--when they became noticeable, you might say.

À (1045)

[Translation]

Mr. Odina Desrochers: Relying on your memory, Mr. Cutler, could you tell us whether Mr. Guité had that kind of power before 1994, or if Mr. Guité actually began wielding the power you noticed in 1994? Before that, had you seen anything of the kind?

[English]

Mr. Allan Cutler: I'm sorry. That's a difficult one to answer, because Mr. Guité was separate at that time, and whether he had power within the department I really don't know. I just know that there was a change that started.

[Translation]

Mr. Odina Desrochers: In 1994? Was it in 1994 that he got the power to make all the decisions, attributions, take action, and take care of the billing?

[English]

Mr. Allan Cutler: There was a major shift in 1994, yes. As to why and how it happened, I am not aware.

[Translation]

Mr. Odina Desrochers: Who authorized this change of status for Mr. Guité? We saw the organization chart that was tabled here by the Department of Public Works. A whole series of ministers was mentioned on it. To your knowledge, were there orders from the minister, or, as you are saying, were things done among deputy ministers, and you did not know who had given all that power to Mr. Guité?

[English]

Mr. Allan Cutler: The only thing I'm aware of is that at the meeting with Mr. Guité, he said he was going to the minister to get the approval, and that's the only piece of knowledge I have on it. That's part of my documented...and that's the only time the subject came up.

[Translation]

Mr. Odina Desrochers: And who was the minister at that time?

[English]

Mr. Allan Cutler: I believe it was Minister Dingwall.

[Translation]

Mr. Odina Desrochers: To your knowledge, did Mr. Dingwall ever come to the Department of Public Works to meet Mr. Guité personally?

[English]

Mr. Allan Cutler: Not to my knowledge. I only know what Mr. Guité said.

[Translation]

Mr. Odina Desrochers: Mr. Cutler, you of course mentioned the report. When you noticed that there were irregularities, did you forward any complaints to the deputy minister or the minister to tell them that improprieties were being committed in one of the services in his department?

[English]

Mr. Allan Cutler: No. There is an established protocol of how to proceed. You have to also realize that now, in a new organization with a new chain of command, I do not know my ADM. I do not know the chain of command above Mr. Guité. I don't know the individuals and I haven't had any dealings with them.

In order to rectify a situation, you also have to build a case and have very solid evidence before you can do anything. There is an established protocol, and one of the protocols is that you can get the backing of your union, which is the way I elected to go. My perception at that time was that I was isolated and that I needed somebody on my side, and they were.

[Translation]

Mr. Odina Desrochers: Mr. Cutler, coming back to the internal audit report that was drawn up: do you think that is what led to setting up the Sponsorship Program after that, in view of the fact that the internal audit report already implied that things were not working the way they should in Mr. Guité's section? Was it not easier for the government, at that time, to set up another program to try to minimize the effects of the internal audit report?

[English]

Mr. Allan Cutler: The internal audit, as I read it, recommended that the contracting be split off once again from Mr. Guité's organization, unless I'm mistaken in what I read, and I was not privy to the actual decisions made. Again, I was in another area, in a totally different thing, and had no involvement with advertising after the fact of 1996. I didn't see the audit until 1998.

[Translation]

Mr. Odina Desrochers: Mr. Cutler, you were there from 1994 to 1996, when Mr. Guité was in the job. Did you notice if Mr. Guité gave out more contracts, especially a few months or a few weeks before the referendum campaign? You know that he openly stated that they were at war and had to act. Did you hear any of that? And you, personally, based on the documents you had, did you feel that there was political direction given in order to have more contracts given out to promote Canadian visibility in Quebec?

À (1050)

[English]

Mr. Allan Cutler: I was not a close confidant of Mr. Guité's. No, I did not hear him say the word. From about the time he reorganized, he and I had very few words directly with each other, and if things increased, I honestly did not notice an increase and I did not keep statistics that showed an increase. You may be right, but I do not know.

[Translation]

Mr. Odina Desrochers: One last question, Mr. Cutler. When you were in your position with the previous government, were those contracts given to other agencies or was it an everyday occurrence for Mr. Guité to send business to the Quebec agencies? I recognized the names in the Auditor General's report: Lafleur, Everest. Did the name of Polygone also show up in your contracts at any point?

[English]

Mr. Allan Cutler: You're talking about the previous Conservative government?

[Translation]

Mr. Odina Desrochers: Yes.

[English]

Mr. Allan Cutler: It had been a known practice for a lot of years that the advertising agencies selected were advertising agencies that were generally conveying the message the government in power wanted to convey. When the Conservatives were in power, there were different agencies; when the Liberals came into power, there were different agencies. None of the industry had a problem with this practice. You want to put your best foot forward.

[Translation]

Mr. Odina Desrochers: I would like to put one last question. Mr. Cutler, from 1994 on, the national visibility and unity program became stronger and stronger. From that time on, were Quebec agencies the only ones getting contracts or were there other Canadian agencies enjoying the largesse being dispensed by Mr. Guité?

[English]

Mr. Allan Cutler: There were a number of other agencies. They were assigned to a number of different departments, and they were across the country.

Were Quebec firms in the majority? I honestly don't know.

[Translation]

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

[English]

Mr. Murphy, please, you have eight minutes.

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

First of all, Mr. Cutler, I want to thank you very much for the thoroughness of your records. It certainly will assist this committee greatly in its deliberations and hopefully coming to recommendations and solutions.

Mr. Cutler, perhaps you can help me. You've given us a very elaborate, detailed, thorough analysis of the problems you experienced, which led to the letter to the union, which of course led to the internal audit completed by Ernst & Young. When I read the audit...and I know there are instances where things can be corrected and improvements can be made, and it does identify problems, but it generally is not that unfavourable.

I will just read from it. The audit determined that “contract activities generally follow the prescribed contracting policies”. The contracting process “was in compliance with prescribed policies”. “With a few exceptions, the overall policies and procedures governing APORS were assessed as being appropriate”. And of course, they “found no instances” where personal gain was made.

Would you have any way of squaring the circle here?

Mr. Allan Cutler: I would have a slightly different assessment, from my viewpoint, on what I knew of the procurement files. However, for what they did, what they had to work with, and what they were asked to do, their audit is probably a good audit by a good firm. It may just be that they were not asked to do enough.

Hon. Shawn Murphy: I see. You're suggesting that they may have been given too refined a scope in their audit.

Mr. Allan Cutler: That may be it. It also may be an issue, as I mentioned before, of timeliness. I brought this to attention months before the audit actually took place.

Hon. Shawn Murphy: You're suggesting that by the time they got in there to do their investigation, the agency may have cleaned up its act, to a certain extent.

Mr. Allan Cutler: I was the one locked out from the files.

À (1055)

Hon. Shawn Murphy: But you don't have a problem with the audit, from what they were given...?

Mr. Allan Cutler: Auditors are only as good as what they're asked to audit. This is a reputable firm that's known.

Hon. Shawn Murphy: I realize that.

My next question, Mr. Cutler, is on a concern that I've had from day one in this file. I'm not denying that in this case there's political hanky-panky somewhere along the line, but you would expect the architecture of government to be there to stop this behaviour from happening. In this case it wasn't, or it didn't appear to be.

The ultimate person responsible, of course, is the clerk, but the deputy minister was there to see that this didn't happen. Did you have any dealings or communications with Mr. Quail, who I understand was the deputy minister during this whole piece?

Mr. Allan Cutler: Not at that time. The dealings I had with Mr. Quail ended up being on a different contract file years later. I never had any contact with him at that time.

Hon. Shawn Murphy: Were you aware of whether or not he had any dealings in this file at all?

Mr. Allan Cutler: No, except that in the final grievance, Michel Cardinal signed off as the delegate of the deputy minister. Other than that, no, I don't have any direct knowledge of that.

Hon. Shawn Murphy: You've presented a very disturbing situation in your particular department. You've worked in the Department of Public Works and Government Services for 29 years, and of course you had other colleagues. Was this behaviour seen in other departments within Public Works?

Mr. Allan Cutler: I want to make it very clear that I deal with a large number of highly qualified, highly ethical procurement individuals. This, to me, is an aberration in my department. It is not, in any way, shape, or form, the norm.

Hon. Shawn Murphy: Your evidence is that, as far as you're aware, the Department of Public Works and Government Services, with their 14,000 employees, is basically run well, except that this was a very serious issue confined within a small department.

Mr. Allan Cutler: I would agree with that assessment, to my knowledge.

Hon. Shawn Murphy: In any of your past, when you've chronicled this problem...and I haven't had a chance to read the whole thing. Mr. Desrochers may have asked you the question, but I'll rephrase it. Do you have any evidence of any political involvement in any of these problems that you've so well documented?

Mr. Allan Cutler: I'm not certain exactly what you mean by “political involvement”.

Hon. Shawn Murphy: Do you have any evidence of politicians being involved in the files? You've been at meetings with politicians.

Mr. Allan Cutler: No, I have no information on that at all.

Hon. Shawn Murphy: I refer you, Mr. Cutler, to a letter dated September 16. Your documents aren't numbered, but it was dated September 16, 1994, and there is a letter from Alan Winberg to the deputy minister, Mr. Quail. In the fourth paragraph, Mr. Cutler, it says:

The Prime Minister has asked Treasury Board ministers to review the advertising and polling expenditures of departments two or three times a year to ensure that expenditures are contained and that contracts for advertising and polling have been awarded on a fair and competitive basis.

That, to me, is a very clear instruction that this review was to take place two or three times a year. As far as you're aware, was this review ever done?

Mr. Allan Cutler: I have no knowledge of that.

Hon. Shawn Murphy: You're not aware that it was or wasn't done?

Mr. Allan Cutler: I honestly do not know whether it was or wasn't done. I was not on that side where I would have been compiling information for that purpose.

Hon. Shawn Murphy: Are you aware of any instances in your past, in your lengthy involvement in this file, where the parties--Mr. Guité, Mr. Tremblay, Mr. Parent--received any personal gain from their involvement with the advertising companies in question?

Mr. Allan Cutler: No. I was involved in the contracting side and I was not involved in the receipt of the invoice and authorization for payment side, so I have no knowledge about that. In terms of their receiving anything, I really do not have any knowledge about that at all.

Hon. Shawn Murphy: Do I take it from your chronology that when you read the whole thing...? It appears to me--and you can correct me if I'm wrong here--that the real culprit in this whole mess is Mr. Guité.

Á (1100)

Mr. Allan Cutler: I would prefer not to comment, but I certainly think he was the controlling influence as far as I was concerned.

Hon. Shawn Murphy: You are not aware of whether or not Mr. Guité was controlled by someone higher up?

Mr. Allan Cutler: No, I am not aware of that.

Hon. Shawn Murphy: I have no further questions, Mr. Chair.

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

Now we go to Ms. Wasylycia-Leis for eight minutes, please.

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

First, let me say I think this is a fairly historic day, a dramatic development for all Canadians.

As you've heard from all committee members, we really appreciate your coming forward, Mr. Cutler, and being so frank with your experience and with the meticulous way in which you've collected the information over the years.

My first question to you is, what made you take what I would consider to be this rather brave stand? Why did you come forward? What motivated you?

Mr. Allan Cutler: I did not think I had a choice. It comes with the territory. I'm a public servant and I have a duty as a public servant. It's as simple as that.

Ms. Judy Wasylycia-Leis: I appreciate that answer.

You mentioned in your opening remarks that you worked with a number of individuals who were also treated without regard. Would it be fair to say that others you worked with were aware of these irregularities that were happening at this time?

Mr. Allan Cutler: In terms of the people involved in advertising, they would be aware of the situation since they were controlling the directions that were being given to me. Of the three of us, one was a clerical employee and she would have been aware of them to some extent, but she was in a position where you really have to follow orders. As for the other buyer who reported to me, I made a decision that she would do nothing but public opinion research, so she never knew in depth about the advertising.

Now, of course there is some knowledge shared between people throughout an office; that always happens. But generally speaking, I was the only one who was in the contracting who had this knowledge. I decided that I would protect the other two.

Ms. Judy Wasylycia-Leis: In other words, you were looking out for your co-workers. You were worried about the fact that there was little protection if they knew too much.

Mr. Allan Cutler: I was their manager. It's my job to look out for them.

Ms. Judy Wasylycia-Leis: Yes, okay.

Is it fair to say that if there had been whistle-blower legislation all these years others would have come forward like you have, despite the fact that we didn't have protections in place? We still don't, and you have still taken the risk.

Mr. Allan Cutler: It would make a difference in a number of other cases, yes. I'm certain of that.

Ms. Judy Wasylycia-Leis: Thank you.

I wanted to ask a few questions about your testimony. You talked earlier, in response to Diane Ablonczy, about the issue of some material having perhaps been discarded or removed from the records as a way of explaining why the audit was sanitized, as it were--those are my words. Could it be that in fact the auditors themselves were involved in some form of collusion, complicity, and cover-up, which may account for the less than meticulous representation of the records as you provided them?

Mr. Allan Cutler: I was not involved in the audit or with the audit. However, the firm is known to me by reputation, and I would find that very difficult to believe.

Ms. Judy Wasylycia-Leis: I appreciate that answer.

Let me ask the question in terms of the director general of audits of Public Works at the time, who in fact is the author of the letter that went to Mr. Stobbe; that's under tab 9. He oversaw the overall audit process, the internal audit in the department. Is there any chance that individual was less than vigilant about the facts that you had presented to officials as part of the audit?

Á (1105)

Mr. Allan Cutler: At the time when everything was happening, I may have wondered that. What I was not in receipt of and in knowledge of were his actual letters to Mr. Stobbe, which strongly, to my way of thinking, validated the situation I was in. There is no doubt in my mind that he confirmed that what I had was valid. I would not find, based on his memos here, that he would be involved in that type of situation.

Ms. Judy Wasylycia-Leis: With respect to that letter, I agree with you, it's a strong description of the situation to the assistant deputy minister. Is it not normal process and practice for such correspondence to get to the deputy minister?

You may not be able to answer that, but would you not assume that kind of major development within a department would then be communicated from the assistant deputy minister to the deputy minister, and maybe to the minister? Let's start with to the deputy minister.

Mr. Allan Cutler: You're asking for an assumption?

Ms. Judy Wasylycia-Leis: Yes.

Mr. Allan Cutler: I would assume so. Do I have knowledge of that? No.

Ms. Judy Wasylycia-Leis: Did you have any contact with the parallel organization to your own? I think it's the CIO, the communication information office. Did you have any contact at all between your group and that group?

Mr. Allan Cutler: Not to my knowledge. I'm not certain that the group wasn't set up until 1997, after my time. I do not recall any linkage of that nature.

Ms. Judy Wasylycia-Leis: Does the name Roger Collet ring a bell at all?

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: Okay.

You indicated that you assumed this went to the deputy minister, who was Mr. Ran Quail at the time. In your opening remarks, you also referenced the fact that when you raised your original concerns, Mr. Guité said that he would talk to the minister about changing the rules. The minister at that time was Mr. David Dingwall.

Do you have any evidence or any knowledge whether that kind of exchange, any exchange, happened around this whole issue between Mr. Guité and Mr. Dingwall?

Mr. Allan Cutler: No. I have no knowledge of that at all.

Ms. Judy Wasylycia-Leis: Was there anyone else in this whole area who tried to also register concerns, as you did, with their superior?

Mr. Allan Cutler: To my knowledge, no. I'm not aware of anyone else who tried to raise the issue.

Ms. Judy Wasylycia-Leis: I know my time is almost up. Let me just end by asking you if you have any regrets about speaking up.

Mr. Allan Cutler: Regrets? No. I'd do it again. I have to do it.

Ms. Judy Wasylycia-Leis: I see from your daughter's letter to the editor that your family is behind you all the way in support of your efforts.

I'll wrap up with this last question. Would it be fair to say that as a committee we should be working very hard to ensure that whistle-blower legislation is in place as soon as possible, and that it's retroactive, and that some redress be offered you, even though your motives for doing it were obviously without any motive at all?

Mr. Allan Cutler: Yes. That would be nice. I'm human.

The Chair: That was a very difficult question there, Ms. Wasylycia-Leis.

Mr. Toews, please. Now we're on to round two, so it's four minutes.

Mr. Vic Toews: Thank you for attending here, Mr. Cutler.

Your testimony here today has been that from the mid-1980s until late 1994 there were essentially two groups: one that was the advertising management group, which selected; the other group, which you headed up, that set out the legal terms, following the regulations and policies put into place. Is that correct? Okay.

This was up until late 1994. You had this meeting on November 17, 1994, when essentially these two separate functions collapsed into one function under Mr. Guité. Is that correct?

Á (1110)

Mr. Allan Cutler: [Inaudible—Editor].

Mr. Vic Toews: All right. So, well in advance of the referendum in Quebec—indeed, a year ahead of the referendum in Quebec—we have the collapse of this watchdog function into one function under Mr. Guité. Is that correct?

The Chair: The microphone isn't working so well, and we're not picking up Mr. Cutler's answers. For the first questions—the last one and the one before—we didn't get the answers on the record, Mr. Toews. We'll give you a little extra because of this.

Mr. Vic Toews: Essentially, what I indicated is that in November 1994, around November 17, we have the collapse of this watchdog function that in fact you carried out, in terms of making sure that all the legal requirements were met in the contract. Is that correct?

Mr. Allan Cutler: Yes, but my responsibility was more than just legal. I was responsible for all the rules, regulations, and policies that governed my part of the process. That is more than just legal.

Mr. Vic Toews: That's right. That separate function was collapsed into the one pot, so to speak, and all under Mr. Guité.

Mr. Allan Cutler: Yes, that's correct.

Mr. Vic Toews: This was a year ahead of the referendum in Quebec. The referendum in Quebec occurred in October 1995. We're talking about November 1994.

Mr. Allan Cutler: That's correct.

Mr. Vic Toews: All right.

So you have this meeting. Mr. Guité told you at the meeting—and I think you've summarized it very accurately, or it has been summarized in document 2, about the advertising and public opinion research meeting.... You have Mr. Guité saying at that time he would talk to the minister to have the rules changed, when you expressed concern about the fact that these rules were no longer being followed. Is that correct?

Mr. Allan Cutler: That's correct.

Mr. Vic Toews: Indeed, during the course of this document, document number 2, there are a number of references to the minister. On page 2 of it: “Pierre stated”—and that is Pierre Tremblay, the other Pierre Tremblay.

Mr. Allan Cutler: The other Pierre Tremblay. I want to be very clear: I reported to the other Pierre Tremblay.

Mr. Vic Toews: This is not the notorious Pierre Tremblay.

Mr. Allan Cutler: I never met the notorious—

Mr. Vic Toews: I say “notorious” in the sense of “well-known”.

Mr. Allan Cutler: I never met the other Pierre Tremblay.

Mr. Vic Toews: Chuck Guité—you mention Chuck again—stated that he's going to discuss this advertising with the minister “today” to get the problem rectified.

Did you follow up with Mr. Guité about his conversations with the minister on this issue?

Mr. Allan Cutler: No, it was not my position to do so. The other Mr. Tremblay and my director at that time, Madame St-Pierre, would be the ones who would link in that respect. I was the person responsible for making certain the process worked.

Mr. Vic Toews: Okay. So you never had the opportunity to verify, nor was it raised again, to your knowledge, that the minister was somehow going to be brought into this discussion?

Mr. Allan Cutler: No. The next thing I knew was when I was told that I would be reporting to Mr. Guité.

Mr. Vic Toews: All right.

Now, in respect of the transfer of your responsibilities from one ADM to another assistant deputy minister, you indicated that had to be done through the next common link, which would be the deputy minister, would it not?

Mr. Allan Cutler: Normally that would be the case, yes. You have a chain of command within the bureaucracy.

Mr. Vic Toews: That's normally. And what we heard from Mr. Quail earlier was that Mr. Guité had a very direct relationship with the minister. Do you have any knowledge of that?

Mr. Allan Cutler: Other than the one time when he made these statements, no, I haven't.

Mr. Vic Toews: Thank you.

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

[Translation]

Mr. Desrochers, you have four minutes, please.

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

Mr. Cutler, I consider there is a barrier from 1990 to 1994. You know that in 1994 the Prime Minister was Jean Chrétien. From what you remember, while Mr. Guité was doing just about the same kind of work under the previous government, did you ever hear any statements like “ If that is a no go, I will go talk directly to the minister”, or was that the first time, to your knowledge, that you saw that Mr. Guité had the privilege of contacting a minister directly?

Á (1115)

[English]

Mr. Allan Cutler: At that particular meeting—I'll go back to the minutes that I wrote of that meeting—I took him at his word. You're asking did I believe him? Yes, I believed what he had said.

[Translation]

Mr. Odina Desrochers: Mr. Cutler, apart from the threat of demoting you or having you declared redundant, were you threatened with any other kind of measures because you did not seem to want to cooperate in Mr. Guité's racket?

[English]

Mr. Allan Cutler: I don't know what you mean by “other such threats”.

[Translation]

Mr. Odina Desrochers: Were the threats you received strictly limited to your work, or was there anything else? That is what I would like to know.

[English]

Mr. Allan Cutler: Other than at least one time a comment being made that I could forget about there being anything doing with the department, generally speaking it was a threat of firing. That's enough.

[Translation]

Mr. Odina Desrochers: In that case, were there grounds to fire you, or were these threats made strictly as a means to pressure you into doing what he wanted?

[English]

Mr. Allan Cutler: At that particular time it was already too late to have me play along. I'd already done the reporting. In the words of the union, it was a “remarkable coincidence”.

[Translation]

Mr. Odina Desrochers: Mr. Cutler, who was your successor? When you were dismissed from your position, who replaced you? Somebody replaced Mr. Guité when he left. Do you know the name of the person who succeeded you?

[English]

Mr. Allan Cutler: To the best of my knowledge, I was not replaced; Mr. Parent assumed my duties. But that may be incorrect. I'm going by what I was told by a couple of people who were still in the office.

[Translation]

Mr. Odina Desrochers: Oh, so the circle tightened.

The Vice-Chair (Mrs. Marlene Jennings): May I remind you that you still have one minute, Mr. Desrochers.

[English]

Mr. Allan Cutler: In a manner of speaking, yes.

[Translation]

Mr. Odina Desrochers: You said that you were isolated. Was this section always isolated from the rest of the Department of Public Works, or did this initially begin when the Liberal government was elected in 1994?

[English]

Mr. Allan Cutler: The advertising management group that was the predecessor had always had separate premises from PWGSC. It was never co-located with the normal government operations. At that time it did not have the contracting functions. It was separate when I moved there. They had to make room for me to move in.

The Vice-Chair (Mrs. Marlene Jennings): Merci, Mr. Desrochers.

Ms. Phinney.

Ms. Beth Phinney: I would like to continue the questioning with something from page three of the remarks you made this morning.

When Mr. Guité's responsibilities were expanded and he became responsible for the procurement, you say that “as part of this change I was physically relocated”. Just following on the questions of Mr. Desrochers, we've been talking about the fact that there was the department here, and on the side--as Madam Jennings has talked about it--was a little box. Is that how you would describe where Mr. Guité was working, as a little box on the side that was not part of Public Works and was just sort of sitting over here? Could you answer that part first? Is that how you would picture it?

Á (1120)

Mr. Allan Cutler: I would think that's a fair assessment.

Ms. Beth Phinney: There was one big box for the department and this little box on the side. Then if Mr. Guité is in that little box, how many of you were in that work area with him, approximately, once you went there?

Mr. Allan Cutler: It was divided into two groups. One group would be advertising-focused, and that would be seven or eight employees, I think. The other would be public opinion research, which was isolated and separate--and functioned very separately--and that would be about six or seven employees. Then there were the three of us who were responsible then for the procurement.

I may have the numbers wrong, but that seems to be about right.

Ms. Beth Phinney: Thank you. That's close enough.

Mr. Chair, do we have those names?

The Chair: I'm not sure that we do.

Ms. Beth Phinney: We've asked for them a number of times. The Auditor General mentioned those people. We've been saying there were between 14 and 16 people.

The Chair: The names have been given to the subcommittee by Public Works. The subcommittee will decide who is coming forward.

Ms. Beth Phinney: Okay, thank you very much.

Was Madam Saint Pierre moved over with you, or were you moved by yourself?

Mr. Allan Cutler: I was moved by myself with two other people and--

Ms. Beth Phinney: That made the three?

Mr. Allan Cutler: --the three of us, but Madam Saint Pierre stayed where she was.

Ms. Beth Phinney: Okay. Could you tell us, when you worked in that section with somewhere between 15 and 20 people, who did you think Mr. Guité went to? The department is here and this little box is over here. Who did Mr. Guité go to when he had any questions?

Mr. Allan Cutler: The truth of the matter is I don't know.

It may help you if I describe how the office was structured.

Ms. Beth Phinney: I have another question, so could you do it in about 30 seconds?

Mr. Allan Cutler: Okay, that's fine.

Suffice to say that this office was structured in such a way that I never saw him coming and going and I spoke almost nothing to him, so I didn't have a clue what was going on on that side.

Ms. Beth Phinney: Do you think that was deliberate?

Mr. Allan Cutler: Maybe, or maybe it was just the structure of the office.

Ms. Beth Phinney: That was very clever on Mr. Guité's part.

I want to talk a little bit about the internal audit. We had conversations earlier with the head of the Treasury Board, and I think the questioning led to the idea that right now the internal auditors are hired by the deputy minister, are accountable to the deputy minister, might be there for 15, 20, 30 years, and would therefore feel some kind of loyalty to the deputy minister.

Do you think it would be better if the internal auditors were not permanent employees of a department but maybe worked like the lawyers do in the House of Commons? They work for Justice and are assigned—I don't know if it's by the year or for two years. Should internal auditors go out to different departments each year and not be in one department and hired by one department, and therefore maybe create a loyalty to one department?

Mr. Allan Cutler: It may be a valid idea. I would have to know a lot more about the details to make an honest assessment of that.

The Chair: I have to interject, Ms. Phinney. Mr. Walsh would like to make a comment.

Mr. Rob Walsh: Forgive my hurried intervention, but I thought I heard Ms. Phinney say that the House of Commons lawyers are assigned out, like Department of Justice lawyers. We are not Department of Justice counsel, and we have nothing to do with the Department of Justice. We are lawyers of the House of Commons, and we work exclusively for the House of Commons and its committees.

I know you didn't mean to say that, Ms. Phinney, but it came across that way on the record, and I just wanted to make it clear.

Ms. Beth Phinney: But do all the lawyers work for 20 years in each department? Are they hired by the department?

Mr. Rob Walsh: The lawyers I have in my office are hired--

Ms. Beth Phinney: No, not in your office.

Mr. Rob Walsh: I'm only clarifying our office.

The Department of Justice has lawyers who are assigned to various departments of government, that's true, but the House of Commons lawyers have nothing to do with the Department of Justice.

Ms. Beth Phinney: No, I think that's what I said. You were probably talking or something. I said that, I think.

The Chair: I think we have a little miscommunication there.

Are we all satisfied on that issue?

Ms. Beth Phinney: Yes.

The Chair: The House of Commons is the House of Commons, and the Department of Justice is the Department of Justice.

Thank you, Ms. Phinney.

Mr. Mills, please, four minutes.

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

Mr. Cutler, thank you for being here.

When did you start this function of contracting for the advertising management group?

Mr. Allan Cutler: Somewhere around 1984 or 1985.

Mr. Dennis Mills: So from 1984 to 1994 you essentially did all advertising contracts for the Government of Canada.

Mr. Allan Cutler: My section did. I moved in and out of that portfolio a few times, but I was essentially in that area at all times. That is, it was a mandated service to be bought centrally.

Á (1125)

Mr. Dennis Mills: I realize that the advertising management group designated the various agencies for various government contracts, and you negotiated the fees. Generally speaking, were those fees consistent? Was there kind of a general standard? You weren't negotiating against the industry standard on those contracts, were you?

Mr. Allan Cutler: No. There was a standard industry practice for certain services that the commission rate would be 17.65%.

Mr. Dennis Mills: Fair enough.

Now, I want to go to your letter dated April 22, 1996. I think this was the basis of the letter you sent to Michel Gingras of the Professional Institute of the Public Service. I want to deal with just one of the issues that caused you difficulty in terms of not wanting to sign contracts. These are your words:

1. No financial Authority

There was no financial authority received from the client at the time the contract was dated. In fact, the requisition was signed by the client on March 28, 1996 but only received by the Advertising and Public Opinion Research Sector on April 1, 1996. I was told to date the contract March 15, 1996.

Now, I've been around here for a long time, and I've always thought that in a lot of governments--across Canada, not just in this government--since April 1 is the beginning of the new fiscal year, government departments try to put into the previous fiscal year any ongoing programs or projects rather than let the money lapse.

Is that something that bothered you?

Mr. Allan Cutler: It's been a long-standing practice, but generally, the normal practice is that they get financial authorization before a contract is placed. It may be that the contracting process, which I'm on the end of, has to try to work itself extremely quickly to make up lost time.

Mr. Dennis Mills: But there was a three-day difference there that you seemed to be disturbed about, that they didn't--

Mr. Allan Cutler: I'm disturbed at any time when a contract is booked and there is no financial authorization for booking it.

Mr. Dennis Mills: I'm not condoning the process, but would you not agree--you've been around 30 years--that the convention that seems to happen in government is that if a department is going to need some money for the following fiscal year, rather than have it lapse they try to book some of it in the previous fiscal year?

Mr. Allan Cutler: That would be fair to state. They do try to book it in the previous fiscal year. But they try to book it appropriately in almost all cases.

Mr. Dennis Mills: And what was inappropriate, in this specific example, to give you reason not to want to sign?

Mr. Allan Cutler: One of the simple reasons is that it was March 28 and I was being told to backdate it to March 15 to allow for the work to have started on March 15. In other words, the contract has already been sent out.

Mr. Dennis Mills: Is that the first time in your 30 years in government you had seen that?

Mr. Allan Cutler: It wasn't the first time, but there are rectification procedures within government to correct these situations.

Mr. Dennis Mills: Thank you very much.

Is that my four minutes, Mr. Chair?

The Chair: I'm afraid that's your four minutes, Mr. Mills.

Mrs. Ablonczy, please, four minutes.

Mrs. Diane Ablonczy: Mr. Cutler, your evidence before the committee, on page 2, is that Mr. Guité became head of the advertising management group in 1990, and it was only in 1994 that he began interfering with the work you had to do, which was to protect the public interest by making sure the rules were followed. Do you know what triggered his move toward interfering with your work, when he hadn't done anything to interfere for the previous four years?

Mr. Allan Cutler: No. There was a change. I do not know what caused the change.

Mrs. Diane Ablonczy: Your evidence is that the change happened in 1994. Your evidence also is that in March 1995 Mr. Guité was given even more authority, basically to do whatever he wanted. Part of the explanation the public has heard for this whole sponsorship program is that it was in response to the referendum in Quebec. The referendum in Quebec took place in October 1995. Mr. Guité's expanded authority to break the rules happened several months before that. You, of course, must have heard the same explanation we did about the change and not having to follow the rules for advertising contracts. Can you explain why changes that were supposedly in response to the referendum actually happened several months before the referendum?

Á (1130)

Mr. Allan Cutler: I was not aware of it as a change in response to the referendum. I was aware of it as a change I now had to live with.

Mrs. Diane Ablonczy: So you weren't aware of any political reason being given for that.

Mr. Allan Cutler: I was not at a level where I was involved with the reason for the change. I was just notified that it had now changed.

Mrs. Diane Ablonczy: According to your testimony, you have been a career civil servant for close to 30 years, which I think speaks for your toughness. So you must have some pretty solid knowledge of how the system works. There was the change in 1994, when Mr. Guité began interfering with the contract process, and the change in 1995, when, according to your testimony, he was given extremely expanded authority. He could authorize advertising expenditures on behalf of the whole Department of Public Works. This is the important question for Canadians. With your 30-year knowledge of the system, Mr. Cutler, could Mr. Guité have assumed that authority without being given leave to assume that authority by somebody in elected office, someone at the Prime Minister's Office level or the cabinet level? Is it possible that a civil servant could assume that kind of authority without someone in an elected office authorizing that?

Mr. Allan Cutler: I would say yes. The key element there is that someone had to authorize it, and it had to be someone at a higher level than Mr. Guité. Mr. Guité would not just be able to do it without some authorization of the change. Who authorized the change? My authority to contract on behalf of the minister does not come to me directly from the minister. It comes through channels to me. It's a delegation by the minister, and it comes through the levels of my superiors. Then I have the right to contract on behalf of the minister and to sign things on behalf of the minister.

The Chair: Thank you very much, Mrs. Ablonczy.

Mrs. Diane Ablonczy: I have one more question.

The Chair: I know you have one more question, and I know Madam Jennings has many more questions, and it's Madam Jennings' turn.

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

Thank you very much, Mr. Cutler, for coming before us and for providing us with this information, which I deem to be crucial. I have just a couple of questions.

Our copy does not have numbered tabs, so I'll go by the third yellow sheet, where it's marked “urgent”, stamped and dated November 8, 1994. It says “Public Works and Government Services Canada, Assistant Deputy Minister, Supply Operations Service”. It's addressed to someone and it says “Would you please review and provide comments, directly to”-- somebody--“for this development of a consolidated SOSB response, by Nov. 10.”

When one looks all the way through it, it's actually the contracting guidelines for communications, public opinion research, and advertising. At the very end it has the name of “R.A. Quail”. So these were the guidelines under which APORD and APORS, when they were operating separately, were to carry out their duties of placing ads, selecting ad companies, negotiating contracts, approving contracts, signing contracts, approving payment of invoices, etc. It's all here.

Á (1135)

Mr. Allan Cutler: This was in response to a new Treasury Board policy that had come out.

Mrs. Marlene Jennings: Which we then see at the end dated September 16, 1994, which was already referred to, in which it says “On June 23 , 1994”--and the letter is addressed to Mr. Ranald Quail, Deputy Minister, Public Works--“Treasury Board ministers adopted new policies and guidelines for the awarding of contracts for government advertising”, and it goes on. It makes very clear that the Prime Minister has asked Treasury Board ministers to review the advertising and polling expenditures of departments two or three times a year to ensure that the expenditures are contained and that contracts for advertising and polling have been awarded on a fair and competitive basis.

Are you aware, following September 16, 1994, of any audit or reviews that were conducted from that date to the date of the internal audit that came about as a result of your complaint? Are you aware of any reviews that were conducted by Treasury Board or by Public Works in order to ensure that the Prime Minister's request was adhered to?

Mr. Allan Cutler: In a word, no.

Mrs. Marlene Jennings: Now, I want to go to the next yellow tab, which is dated February 2, 1995. It's actually the first page of your handwritten notes. I find it interesting that it becomes clear in reading this that you're already, in February 1995, being threatened. The last paragraph, which is dated February 2, 1995, says:

I had better continue these notes more often. Chuck just told me that I had a job if I 'pulled up my socks a bit'. This, in spite of the fact that I have worked continuously unpaid overtime. December--records not kept; January--more than 30 hours; February--more than 19 hours. History seems to be repeating itself (remember 8/9 years ago). This doesn't seem to count. Chuck told me he does not need a PG-5 to supervise procurement. With this I agree. The group is too small, and in fact, I have been extremely active....

It's almost as though right from the beginning you're being told that you're overqualified for the job, toe the line, keep your mouth shut, or I have the means in which to shift you out. Was that how you interpreted what you were told on February 28, 1995, by Mr. Guité?

Mr. Allan Cutler: I think it's fair to say that Mr. Guité and I did not see eye to eye and that I did perceive Mr. Guité as having the power to put me out of a job.

Mrs. Marlene Jennings: Okay. I have one last question.

If we go further along, this is dated September 26, and then it gives a series of numbers. It's referring to Lafleur Communications, which negotiated rates directly with Health Canada. In fact, those rates were reduced from what Lafleur charged Public Works. Would you explain what that is all about, please?

Mr. Allan Cutler: I remember the background on this one because it was a real anomaly.

Mrs. Marlene Jennings: Thank you.

Mr. Allan Cutler: What happened was that we were told what rates to put on the contracts, so we used those rates. Health Canada took on the role I used to have, and they negotiated reduced rates with Lafleur. Then they passed the information on and said Lafleur was in agreement--and they were--and these were the rates to pay them. So we did amend the contracts to put in these new rates.

Á (1140)

The Chair: That was reduced rates?

Mr. Allan Cutler: Reduced rates.

Then, from my notes, there was a decision made to make certain that it only applied to Health Canada.

Mrs. Marlene Jennings: Made by whom?

Mr. Allan Cutler: I believe it was Mr. Guité or Mr. Parent. It's in my notes there. It reflects the fact that they obtained a letter that this was a special case only. That way, Lafleur would earn more, obviously.

The Chair: Thank you very much.

Mr. Tonks, please, for four minutes.

Mr. Alan Tonks: Thank you, Mr. Chairman.

Thank you for appearing, Mr. Cutler.

You had indicated in one of your tabs here that in a meeting you had with Mr. Guité--it's one of the first documents that you provided, and I'm quoting from it:

In order for advertising to deviate from normal government contract policy, we would need written direction from higher levels.

That was Pierre Tremblay saying that. He stated that “we will not resist any decisions made by our minister”.

Your notes then say:

Chuck stated that he is going to discuss the advertising with the Minister today to get the problem rectified.

Did you ever have any formal notification back from the minister that their usual contract processes could be detracted from to the extent that you have illustrated?

Mr. Allan Cutler: No.

I should qualify that I was not at the level that would have received such notification.

Mr. Alan Tonks: Okay, so you wouldn't be aware of that.

Mr. Allan Cutler: That's right.

Mr. Alan Tonks: You have indicated that between that period, 1994 to 1996, the APORS group--the advertising, public opinion, and research sector--in fact had a very contained approval process. The checks and balances with respect to the competitive process, and then that leading through to the administrative processes, were combined. You were shunted out of that.

Mr. Marshall has indicated that the same thing happened, not only with the APORS group from 1994 to 1996, but under the CCSB the same thing happened, the same circumvention, the same lack of accountability.

As to my question, I've looked at the auditors' and the internal audit report. You're a professional person. It seems to me that the audit was systems-oriented. It was very much a technical approach taken by a professional, Ernst.... And I'm talking about the internal audit and the external audit.

In your professional opinion, why do you think, even after a professional audit that I would have thought had gone through some form of internal due diligence, the same thing happened under the CCSB as had been going through the APORS group right up to 2001? Why would that happen when you had an internal audit and you had a value-for-money regime in place that hopefully the taxpayer could have had confidence in?

Mr. Allan Cutler: It would take a management decision to keep it or to split it. That's all I can really state on it. I believe it should have been split, as it was in the past. I'm outside the loop at this point in time. I'm sitting in another area.

I was somewhat surprised to learn myself that it had not been split, because certain indications in here were that it was going to be split. In fact, I think one of the responses from APORS to the audit, which again I had in 1998, was that as soon as convenient they would do it.

Mr. Alan Tonks: All right. We see the systemic breakdown and the loop that Mr. Marshall had referred to that was so clear in his mind that was not in fact followed. So we see an internal systemic breakdown. Can you say for the period from 1994 to 1996...? And I understand the backdating issues and these are technical accounting issues and very important, I'm assured of that. Did you ever, at any point, think there was any direct fraud or that there was not value for money, that it was going to the administration of the contracts?

The Chair: Your answer, Mr. Cutler.

Á (1145)

Mr. Allan Cutler: Okay, in terms of a direct fraud, I'm not certain of the legal definition of “fraud”. Certainly I was aware of payments being made for no work being done, and I've documented that.

The Chair: Well, fraud and payment for no work being done, I'm sure there's some kind of similarity here.

Ms. Wasylycia-Leis, please, four minutes.

Ms. Judy Wasylycia-Leis: Thank you.

Mr. Cutler, did the Honourable David Dingwall ever contact you about any of your concerns?

Mr. Allan Cutler: To the best of my knowledge, I never spoke with the gentleman, ever.

Ms. Judy Wasylycia-Leis: Did the Honourable Diane Marleau ever contact you?

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: What about Mr. Alfonso Gagliano?

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: Mr. Don Boudria?

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: Mr. Ralph Goodale, the minister after Don Boudria for the Department of Public Works?

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: What about the present minister, Mr. Steve Owen?

Mr. Allan Cutler: No. I haven't talked to any of those gentlemen.

Ms. Judy Wasylycia-Leis: So no ministers have ever contacted you to find out more about the concerns that you revealed early on in the process.

Did Mr. Ran Quail ever contact you directly for more details?

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: Did Ms. Cochrane?

Mr. Allan Cutler: She was aware of the situation. In 2002 I requested permission to take my information to the Auditor General, and at that time, through her offices, they gave me the right to hire a lawyer to protect against criminal prosecution, which is not what I had asked for at all, but it had to be approved by her. She may not have been aware of the details, but she would have been aware that I was involved at that time.

Ms. Judy Wasylycia-Leis: Did the present deputy, Mr. David Marshall, ever contact you?

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: Yet it's clear from his testimony that he knew all about you. And in fact it would appear that although there's no evidence that the information you provided to PIPS went on to Mr. Stobbe, you don't have any evidence that it ever went anywhere. It would be clear from all the records that were available to Mr. Marshall that your name was front and centre.

So clearly documents went to the highest levels, to the deputy minister, and in fact that's how we learned about you. It was Mr. David Marshall who indicated at this committee that in researching the material for the 1996 audit, it became clear that a staff member within Mr. Guité's group had raised concerns about how advertising issues were managed.

There are some clear records that go way back. So it's not as if the deputy minister didn't know or couldn't have known. So I come back to this. Did anyone contact you when this issue heated up in the summer of 2000, in August, September, October? There were news reports about Alfonso Gagliano being under fire for awarding contracts to advertising companies when in fact there was a little public works department announcement about the 2000 internal audit. Did anyone contact you then?

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: In terms of bureaucrats above you, or ministers, or members of the government....?

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: Did anyone contact you in the spring of 2002?

Mr. Allan Cutler: No. I made the initiative. Nobody contacted me.

Ms. Judy Wasylycia-Leis: No one contacted you.

Did anyone contact you in the fall of 2003?

Mr. Allan Cutler: In relation to...?

Ms. Judy Wasylycia-Leis: Well, in relation to Parliament discussing these issues.

Mr. Allan Cutler: No. I was interested in observing that the audit covered 1997 onwards.

Ms. Judy Wasylycia-Leis: Did anyone contact you in November of 2003, once the audit was revealed to the cabinet?

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: Did anyone contact you on or after December 12, after the new government was struck?

Mr. Allan Cutler: No. The only contact I had recently, just before I came this way, was with a departmental lawyer who wanted to discuss--this goes back about one week ago--if I would appear and under what circumstances would I appear.

Ms. Judy Wasylycia-Leis: But did any minister in the present government come forward on or before or after February 10, when the Auditor General made her report public, to say “Okay, let's go over what you knew: how did this happen so we can be grounded in the facts”?

Á (1150)

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: No one came forward.

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: No one came forward, even though your name is plastered all over internal documents that the deputy minister knew about and that the ministers would have had to have known.

Mr. Chair, let me just say, let's remember the timing here as well. We're talking not about the end of a term in office; we're talking about the beginning. We're talking about a year after the Liberals formed the government in 1993. You would think there would be an interest on the part of bureaucrats and deputy ministers to ensure that their political masters were well informed, and it would appear that information was forthcoming. Yet this government chose to ignore it. And to this day there has been no contact with the key witness, no contact with the only whistle-blower who has had the courage to come forward.

The Chair: Well, you certainly have it on the record, Ms. Wasylycia-Leis, that nobody contacted Mr. Cutler, with one exception that does concern me.

You said a week ago you were contacted by a departmental lawyer. On what basis did he contact you? Did he intimidate you? Did he ask you what you were going to say? On what basis did he come to talk to you?

Mr. Allan Cutler: He said a request had come in for my name to be going up the ladder and do it and he asked me under what circumstances I would come. I told him quite frankly I was not prepared to discuss what I would say with the department--I had been through that once already--and that what I would like from the department was a guarantee that there would be no reprisals in any way, shape, or form.

It may be fine for Mr. Alcock to say there won't be anything, but I haven't seen that in writing. There were departmental guidelines at the time I came forward that were not honoured, in my opinion.

Oh, I did get the letter from the department giving me that guarantee.

The Chair: Okay, so they were actually trying to find out what you were trying to say today. Is that correct?

Mr. Allan Cutler: They may or may not have been. I didn't give them a chance.

The Chair: I think it's a fishing expedition, by the sounds of it, that they were on.

It bothers me that when we make a request on this particular issue where we've dealt with the fact that the President of the Treasury Board has made a clear statement that no one will suffer sanction for coming forth to this committee, the department would then send a lawyer to someone we have asked to come forward, and ask, “What are you going to say?”

Mr. Murphy.

Hon. Shawn Murphy: Well, I just read this to be normal procedure that someone would contact him, just that he's coming forward, and then he asked for a guarantee and they followed up--the witness just said--a day later with the guarantee.

I'm sorry, but I think, Mr. Chairman, you're way out of bounds here in making that statement and that allegation.

The Chair: Well, I will--

Hon. Shawn Murphy: I'd ask you to reconsider the statement.

The Chair: I think that what we want to say--

Mr. Allan Cutler: Mr. Chairman, may I say something?

The Chair: Yes, Mr. Cutler.

Mr. Allan Cutler: I did not regard it as intimidation.

The Chair: That's good.

I do think that we may want to just advise departments that we do not expect them to send lawyers down to talk to witnesses when we call them to appear before the committee under any circumstances.

Mr. Vic Toews: Mr. Chair, if I could just address that point, I think if any department is going to be contacting any witness, or anyone from the government is going to be contacting any witness, that they advise this committee before they do so, that they tell us of their intention to do so.

I appreciate that the witness indicates he didn't feel intimidated, and I take his assessment of that; but I am very concerned that this kind of contact would be made...and for what reason. We need to know, in all circumstances, when these contacts are being made, that the department will advise us of the intention and indeed what in fact they're going to be asking and why.

The Chair: Mr. Cutler is here as an individual this morning; he is not here to testify on behalf of the department. Anyway, I think that matter is at rest.

Mr. Toews, for four minutes.

Mr. Vic Toews: I'll leave that other issue alone. It was an interesting issue, and I'm sure others will follow up on that particular point.

I'm following up on my colleague Mrs. Ablonczy's questioning on who would have authorized the changes in the way the contracts were authorized. That is, there was basically a collapse of these safeguards in November 1994, the collapse of your separate function, if I can put it that way. I'm puzzled about the authorization for these changes. Now, the usual chain of command, I would assume.... I come from a public service background as well. Mr. Guité was a director, and a director would usually go to an assistant deputy minister, the assistant deputy minister would go to the deputy minister, and the deputy minister would go to the minister. Is that not the usual chain of command?

Á (1155)

Mr. Allan Cutler: I would agree.

Mr. Vic Toews: And you've been certainly around the public service for thirty years or so; that's the usual practice. I think of my own experience as a public servant, and that is the usual practice.

Now, what I find very disturbing in your document number 2, the “Synopsis of Evidence”, “Advertising and Public Opinion Research Meeting”, is that there are numerous references by Mr. Guité to the minister. It says “He will talk to the Minister to have these changed”, in reference to the rules. It goes on to say “Chuck stated that the Minister could remove the responsibility for advertising contracting...”. On the second page it says “Pierre stated that we will not resist any decisions made by our Minister, and will respect these decisions.” This is Pierre Tremblay. “Chuck stated he is going to discuss advertising with the Minister today to get the problem rectified.” “Chuck invited Pierre to be an observer in a competitive advertising selection process....”

What I find very unusual is we have a director in a government department saying, I'm going to talk to the minister today. To me that suggests something not only far beyond the usual chain of command but a direct access to the minister usually not seen in the context of the public service. Could you give us your assessment of that, and also your reaction when these kinds of statements were being made?

Mr. Allan Cutler: I would agree with your assessment; it is highly unusual. My reaction? I'm looking back now ten years on this particular issue, but the easiest way to put it is as surprise. I would not have thought this was the way protocol worked. I am, as you said, a career civil servant. We work under very rigid hierarchies and there is an established chain of command.

Mr. Vic Toews: When Mr. Guité said he was going to talk to the minister “today” to address this issue, what was the response of other people at the meeting?

Mr. Allan Cutler: I honestly barely remember the meeting, and I don't recall what the response of other people was. All I can tell you is I believed him.

Mr. Vic Toews: You believed him. There was no question in your mind that he was going to see the minister “today” to get this issue resolved as he indicated.

Mr. Allan Cutler: I may disagree with Mr. Guité on many things, but I never called him a liar.

Mr. Vic Toews: Now, what we heard from Ran Quail, your deputy minister, was that there was a very direct relationship between the head of that group, Mr. Guité, and the minister. Certainly what we've seen in your document here suggests there was a very direct relationship between a director in a branch and a minister. Would you agree, then, with that assessment?

Mr. Allan Cutler: I would agree.

Mr. Vic Toews: Again, there was no explanation as to why that relationship existed. Did you discuss it with your colleagues ever?

Mr. Allan Cutler: I am certain it was discussed with my colleagues. I do not recall discussing it, but there's no way we would have had this type of meeting and not had some discussion over coffee or from one office to another, saying, did you hear this? I honestly don't remember any of those discussions, but I'd guarantee you we had some of them.

Mr. Vic Toews: Thank you.

The Chair: Thank you, Mr. Toews.

[Translation]

Mr. Desrochers, you have four minutes.

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

Mr. Cutler, I am still on page 2, where it says that in the course of a meeting held on November 17, 1994, you realized that Mr. Guité was beginning to interfere in the awarding of contracts process. I want to know whether you became aware of this situation before November 17, 1994.

Â (1200)

[English]

Mr. Allan Cutler: In actual fact, as I think I said in the evidence, it had happened just recently before, and I believe in the information I provided there is an actual incident referred to, which is not in the tabs, but it was just around November when things really started up.

[Translation]

Mr. Odina Desrochers: Mr. Cutler, I cannot help but remind you that things were happening in Quebec at that time, since the Parti Québécois had been elected in September 1994 and the premier of the day had clearly indicated that there would be a referendum campaign one year after the election. I find it an astounding coincidence that the irregularities associated with Mr. Guité, which began in October or November of 1994, happened at the same time as the Quebec government announced it would launch a referendum campaign. What do you think of that?

[English]

Mr. Allan Cutler: I am really not aware of it, but I will make a personal statement: It's in the interests of all Canadians to have Quebec as part of us.

An hon. member: Hear, hear.

[Translation]

Mr. Odina Desrochers: Mr. Cutler, we live in a democratic country, and Quebec still has not swallowed what the federal government did to it during the 1995 referendum. That is democracy! Chuck Guité told the Standing Committee on Public Accounts that the separatists had to be beaten, that we were at war, but it seems that the advertising agencies owned by close friends of Jean Chrétien's inner circle were the only ones to have intervened. Do you not find this coincidence rather strange?

[English]

Mr. Allan Cutler: I can only tell you the facts as I know them.

[Translation]

Mr. Odina Desrochers: Mr. Cutler, when you told Mr. Guité that there were abnormal things going on, how did he react? Did Mr. Guité seem embarrassed, rather aggressive or perhaps annoyed to hear you make such statements? How often did you go to see Mr. Guité? How many contracts did you show Mr. Guité which you told him were flawed? How did he react, what was his mood when this happened?

[English]

Mr. Allan Cutler: He was not embarrassed. I did not have to ask him how many contracts had been awarded. I was in charge of the contracts. I knew every single contract that had been awarded and under what circumstances they had been awarded. I can tell you he did not seem to be disturbed, but as of March 1995, the chain of command shifted, so I no longer dealt with him on a direct basis and really talked to him hardly at all after that.

[Translation]

Mr. Odina Desrochers: Mr. Cutler, if Mr. Guité did not seem to be disturbed, that is because he surely had protection from the highest levels. He knew that what he was doing was wrong. Had he not been protected, it seems to me he would have been rather nervous upon learning the things you had to say and upon seeing the documents you showed him.

[English]

Mr. Allan Cutler: That's an interpretation. I honestly don't know the situation behind him and what backing he did or did not have.

[Translation]

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

Mrs. Jennings, you have four minutes.

[English]

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

I have just a clarification, Mr. Cutler. When you were questioned by Mr. Toews, he read out paragraphs of your personal notes of a November 17, 1994, meeting in which you report that “Chuck stated that the minister could remove the responsibility...” and “Chuck stated that he is going to discuss the advertising with the Minister today...”. The minister at that time was who? Was it David Dingwall? Was it Diane Marleau? Who was the minister?

Mr. Allan Cutler: To my understanding, it was David Dingwall.

Â (1205)

Mrs. Marlene Jennings: Thank you. I think that's an important clarification.

Now I want to go to the issue of the internal audit that followed, which was a direct consequence of your formal complaint about illegal activities, violations of Treasury Board rules and guidelines, the Financial Administration Act, etc.

If we look at the document, which is dated June 7, 1996, and entitled “Allegations of Possible Contract Manipulation, Advertising and Public Opinion Research”, and we go to the verso side of the page, the findings, it states: “Allegations made in relation to the contracting practises of the Advertising and Public Opinion Research Sector are founded”.

This report would have gone to whom, in your knowledge?

Mr. Allan Cutler: It was prepared for, I would assume, Mr. Steinberg.

I would make the assumption that it would be reported upwards. I'm not aware of who his command is.

Mrs. Marlene Jennings: If we go immediately following the next tab, there's a memorandum from Mr. N. Steinberg, to Mr. J. Stobbe, assistant deputy minister, Government Operational Services Branch, dated June 19, 1996, of which the subject is allegations of possible contract manipulations, etc. It states, in the very last paragraph, “...steps are being taken to prepare a scope and terms of reference for a contracted audit through the standing offer process and the matter has been referred to the appropriate Directorate within the Audit and Review Branch”.

Were you ever made aware of the term the “scope and terms of reference” for that contracted audit, which ultimately led to the Ernst & Young 1996 audit?

Mr. Allan Cutler: No. I was not involved in that at all.

Mrs. Marlene Jennings: Given your earlier testimony, and given your own personal knowledge of what was happening within that branch at the time, do you think it would be of interest to this committee to obtain the exact scope and terms of reference, which were given to Ernst & Young for the audit they conducted in 1996 and which covered, supposedly, all contracts issued by that sector from 1994 to 1996, I believe?

Mr. Allan Cutler: In their report they cover what their audit scope and work was to be. I do not know if you would benefit by asking for more. In their audit scope, they say what the period is, what they're auditing, and what they're doing.

Mrs. Marlene Jennings: Under the audit scope, it says “Both advertising and research contracting processes were subject to review and audit. The audit approach was modified as appropriate for the two processes.” I don't know what that means. Do you?

Mr. Allan Cutler: Yes, I do, as a matter of fact. Public opinion research was allowed to continue for the most part under the normal contracting rules and regulations and policies, even though it had been transferred to Mr. Guité's authority.

The advertising was in a different situation. They were operated very distinctly and very separately.

The Chair: Thank you very much, Madam Jennings.

Before we move on, we're going to take a five-minute health break.

I would ask any members to please refrain from going to scrums, and so on. We will reconvene in five minutes.

Â (1209)

Â (1219)

Â (1220)

The Chair: I am going to reconvene, if we are ready. We're back in session.

I'm going to ask a few questions myself, as everybody has spoken at least once.

Mr. Cutler, you have before you a copy of the two diagrams presented to us by Mr. Marshall, the deputy minister. One is “Typical Procurement Process, PWGSC Control Framework”, and the other is “CCSB Procurement Process, Outside Normal [PWGSC] Controls”. It shows the process right from the very beginning of the requirement definition, when the government decides to launch a new program, to acquire those goods or services; and then the procurement strategy, the solicitation, the evaluation, negotiation, contract approval, contract award, contract administration, contract payment requisition. It's a very quick diagram showing us how the normal process works.

I think you were more or less in there around the evaluation and negotiation areas, where you actually would have come into the score. You were not involved in requirement definition. Were you involved in procurement strategy?

Mr. Allan Cutler: In relation to advertising?

The Chair: Yes, where you worked—

Mr. Allan Cutler: No.

The Chair: So you actually came in around the evaluation, negotiation, contract approval, contract award area, which is where you were working.

Mr. Allan Cutler: Yes.

The Chair: We've heard that there were about a dozen or 15 people working on this sponsorship program, and we have those names—but that is by the way. Was the contract approval, contract award, contract administration, contract payment, and payment requisition totally contained within these 15 people, or did the checks and balances require you to refer to outside lawyers, for example, to vet the contract? Were you required to report to anybody outside this group of 15 people, or was it totally and completely a self-contained unit?

Mr. Allan Cutler: If you're talking about the requirement of the reporting relationship, yes, we were required to report outside at different points.

The Chair: At what points?

Mr. Allan Cutler: Legal in certain circumstances, and cost analysts in other instances.

We would maybe have the issue that we should be sending it up to the minister for signature or to another level; or in some cases even, it should be going for Treasury Board approval. So there were a number of instances when it was supposed to have gone outside the area. Now, did it go outside the area...?

The Chair: So the standard process was that there were no totally self-contained units. In order to maintain the checks and balances and separation of responsibilities, you were all interrelated with other segments of Public Works. Is that correct?

Mr. Allan Cutler: No.

The Chair: No?

Mr. Allan Cutler: What I'm describing is what should have been the case.

The Chair: Yes, I'm talking about what should have been the case. In the normal process, what should happen is that there should not be a self-contained unit. Am I correct?

Mr. Allan Cutler: I agree. There should not be a self-contained unit.

The Chair: There should not be, because you're interdependent. You have to refer under certain circumstances to other units within Public Works to maintain the separation of powers, the separation of duties, and to ensure integrity in the system.

Mr. Allan Cutler: Yes.

The Chair: We know from the deputy minister's submission that it did become a self-contained unit. Have you any comments as to how that became a self-contained unit, so that all of the required references to other units within the department were able to be cut off?

Mr. Allan Cutler: No. All I can tell you, as I was responsible for the contracting, is that I would identify what should be the case all the time.

The Chair: And you were told, “Don't do that,” but you continued to identify the proper process?

Mr. Allan Cutler: In all cases, I identified the proper process or proper protocols: who it should go to; should there be legal; and should there be cost analysts. In the case of an award where it is a back-dated issue, there are established protocols to go to legal to arrange confirming orders within the department.

The Chair: You knew all these processes, but you were prevented from fulfilling these requirements. How were you prevented from fulfilling these requirements?

Â (1225)

Mr. Allan Cutler: Essentially, I was overruled.

The Chair: By...?

Mr. Allan Cutler: By Mr. Parent and Mr. Guité—or I was ignored, whichever way you want to put it.

The Chair: When you filled out your standard or proper processes form, “We must do this; we must do that; we must do this; we have to check with the lawyers; we have to check with whomever,” you were told, “Don't do that.” Is that what you were told?

Mr. Allan Cutler: They would sign it, instead of me, in which case I'm out of it.

Was I told not to do it? What I was told was to prepare the documents.

The Chair: For outside--

Mr. Allan Cutler: For their signatures, in which case it didn't go outside.

The Chair: So it just came back as being all signed, sealed, and delivered, and you could see that was within the self-contained sponsorship unit. Therefore, the normal interaction with other units wasn't there, which allowed the system to go right off the rails.

Mr. Allan Cutler: I would agree.

The Chair: You have no knowledge as to who was directing this, other than the fact that Mr. Guité was doing it?

Mr. Allan Cutler: That's true.

The Chair: You have no knowledge if he was receiving direction or consulting others.

Mr. Allan Cutler: I don't have that knowledge, no.

The Chair: Would other units within Public Works that are doing contracting under a director general have been in fear of their careers if they had been doing what Mr. Guité did? You were in fear of your career.

Mr. Allan Cutler: I think the question is hypothetical. Would they be in fear? I would say I don't think they'd have done it.

The Chair: Okay.

Mr. Allan Cutler: I just don't think it would have happened.

The Chair: Was there any discussion within your unit as to the findings of the internal audit that was conducted, followed up by the audit by Ernst & Young?

Mr. Allan Cutler: I do not know. I was not there at the time. I was already removed from that situation.

The Chair: Well, you've certainly demonstrated the fact that Mr. Guité was able to assume a great deal of power. It went undetected for a long time, yet it was detected and that detection failed to trigger a reaction.

You have no comment on that?

Mr. Allan Cutler: I did my job as was required. I reported internally. I had to rely on the fact that it had been corrected. I was not knowledgeable about the results of the audit and any actions actually taken for many years, until quite a few years later.

The Chair: Now, these 17.65% commissions to advertising agencies, you said that seemed to be a standard amount. You said it applied to the previous administration as well as the one that came in October 1993. Was that 17.65% commission routinely paid because the government had determined it needed to be that kind of commission because there were required expenditures by the advertising agency, a record that they were required to do a significant amount of work?

You know, on a $1 million contract, that's $176,000. Were they required to do a significant amount of work, or was this just something in the industry, that there was a great deal of largesse obtainable from a federal government contract?

Mr. Allan Cutler: They were required to work for their money. The 17.65% was based on work performed, and there was a definition of what they had to do in terms of doing the work for this money. This was a long-standing practice that existed before my time of entering this particular area.

The Chair: As a contracting officer within the advertising agency area, you felt that under normal circumstances, 17.65% was a reasonable commission?

Mr. Allan Cutler: When you consider markup, administration, G and A, and everything, it is not an abnormally large amount to earn for working.

The Chair: But it wasn't--

Mr. Allan Cutler: It includes profit as well.

The Chair: Of course.

But because of the work they were expected to do in the administration of the contracts as an advertising agency, a record to engage others to ensure that the work was done, to do the follow-up to ensure that there was value for money and so on, you felt that was okay because that was the way the process worked?

Mr. Allan Cutler: That was the way the process worked.

The Chair: Okay.

Mr. Tonks, for four minutes.

Mr. Alan Tonks: Thank you, Mr. Chairman.

Mr. Cutler, Mr. Marshall--and I'm going to quote part of his disposition--said that:

...in summation, I would like to say that no system is foolproof. As the Auditor General has pointed out, controls and procedures did exist to ensure good administration had they been followed. Yet in the case of Sponsorship they were not followed and a few individuals who were put in positions of power took advantage of that.

Would you agree with Mr. Marshall on that, from your experience?

Â (1230)

Mr. Allan Cutler: In my experience, it was a highly unusual situation, yes, in terms of whether they were put in power.

Mr. Alan Tonks: Mr. Harder, who is the Secretary of the Treasury Board, indicated that internal audits normally didn't go before the Treasury Board. So we're trying to track why this internal audit that was done by Ernst & Young didn't come up in the system's radar screen, didn't come up on Treasury Board....

Mr. Stobbe, as I understand it, is the assistant deputy minister, government operational service branch. Mr. Stobbe was dealing with the union position as it had been presented on your behalf, and I don't know why the audit would have gone up for action from Mr. Stobbe. We'll have to track that and find out, but where the audit should go, I guess, is where I'm trying to go.

We were told even in terms of changes of administrative classifications that the Public Service Commission would deal with that, unless there was an operational review and a complete change. So the changes that were being made in your department and in terms of the checks and balances wouldn't have gone up to Treasury Board, either. They would go to the Public Service Commission.

So the only thing I have been able to ascertain, on behalf of the committee, is that the only direction that came from Treasury Board and through Treasury Board in terms of deviating from standard operating procedures that have been alluded to was appendix Q and the fact that some direction was given down through the hierarchy and the chain of command.

Now, is there anything that you can tell us that would show how the system should have reacted to the internal audit, to the issues that you raised? Should it have been the deputy minister? We know it wouldn't be Mr. Guité. Who should have responded to the audit?

Mr. Allan Cutler: Mr. Stobbe was Mr. Guité's immediate supervisor. In terms of who should have responded, I really am not in a position to say. There was a finding. There were people who were supposed to make decisions.

Mr. Alan Tonks: During that whole period of time Mr. Quail was the deputy minister. Would it not have been appropriate that Mr. Quail would have been seized with at least the information of the internal audit and that he would have taken some action?

Mr. Allan Cutler: That would seem logical, but I honestly don't know if Mr. Quail was made aware of the situation. Again, you have to realize the level I was operating at did not give me the upper workings of the department.

Mr. Alan Tonks: And you were taken out of the loop in 1996.

Mr. Allan Cutler: That's right.

Mr. Alan Tonks: Thank you.

The Vice-Chair (Mrs. Marlene Jennings): There are forty seconds left if you wish to use it. No?

Ms. Wasylycia-Leis, four minutes.

Ms. Judy Wasylycia-Leis: Could I have your 40 seconds?

The Vice-Chair (Mrs. Marlene Jennings): No, it stays on the Liberal side.

Ms. Judy Wasylycia-Leis: In case I don't get another chance to ask another round of questions, given the time, I do want to thank you, Mr. Cutler, for being here, and for what you've done not only for our parliamentary process, but also for democracy in Canada. I want to say that I think many Canadians will see you as a hero. In fact, I hope somebody decides to make a movie of you, because your story needs to be told over and over again.

I think what you've done today has been very helpful. You've clearly helped us establish that these developments around the sponsorship file occurred well before the national unity scare and the whole referendum, and that this direction was coming from someone who claimed to have direct contact with the minister. So you've helped to clear up for us, I think, some of those questions, in part.

I know that the chair may not appreciate this, but I want to ask a similar question to what I did in my last round, and that is whether or not Mr. Reg Alcock ever contacted you.

Â (1235)

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: Did Paul Martin ever contact you?

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: Did Madam Robillard ever contact you?

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: Did Mr. Peter Harder ever contact you?

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: Did Mr. Jim Judd ever contact you?

Mr. Allan Cutler: No.

Ms. Judy Wasylycia-Leis: Thank you.

The only contact that you've really had throughout this whole episode, in terms of the bureaucracy higher up and cabinet ministers, has been from a lawyer from the Department of Public Works. I know you said earlier that this wasn't a call of intimidation. We're only wondering if perhaps Public Works wasn't calling to see what you were planning to do. Do you think that's what they were doing?

Would it be worth while for us to have that lawyer appear before our committee?

Mr. Allan Cutler: I do not think it would be worth while to have that lawyer appear.

My understanding--I watch the news like a lot of other Canadians--was that the chair had requested that my name be released by the department, and going up the ladder, and whether I would be willing. The lawyer was contacting me in response to a request that had already come out of this committee. That's why I said I did not feel intimidation. That's where I believe the request had come from.

I was expecting the request, to be frank, but I was surprised by who it came from, because I didn't know the individual. Still, I did not feel it was an intimidation in any way, shape, or form.

Ms. Judy Wasylycia-Leis: Fair enough. I appreciate the clarification.

Since you came forward, or since your name came forward, on February 28, in the media, have you had calls from anyone else out there, either on an anonymous basis or otherwise, for other stories to tell and wanting to talk to you about going forward? I'm not asking you to necessarily name names right now, but have you had any people coming forward since your public disclosure?

Mr. Allan Cutler: Yes.

Ms. Judy Wasylycia-Leis: How many?

Mr. Allan Cutler: One. I've had many phone calls of support, but I had one particular phone call from someone who I happened to have known was around at that time. He told me a rather interesting story, but if I do not have to divulge that, I would prefer to keep that confidential. It's a hearsay discussion.

Ms. Judy Wasylycia-Leis: Would that person come forward if he or she were convinced that there is absolute whistle-blower protection in place?

Mr. Allan Cutler: Possibly, if they believed that it would add benefit to the process.

Ms. Judy Wasylycia-Leis: When--

The Vice-Chair (Mrs. Marlene Jennings): That's your time, Ms. Wasylycia-Leis.

Ms. Judy Wasylycia-Leis: I have one quick question on the grievance procedure that you went through, as you mentioned in your speech. Were there witnesses to the grievance process? How widespread was the knowledge of the grievance that you had to go through? Were there any demands placed on you to be quiet?

The Vice-Chair (Mrs. Marlene Jennings): Ms. Wasylycia-Leis.

Mr. Cutler, could you answer Ms. Wasylycia-Leis' question as quickly as possible?

Mr. Allan Cutler: The multiple questions.

Was there pressure put on me to be quiet? Yes. As I understand it, part of the signing off on the agreement was that it was an agreement of confidentiality, which I have respected.

Was my name known throughout the department? I believe it was, from a couple of dropped comments over the years.

I don't know if that answers your question.

The Vice-Chair (Mrs. Marlene Jennings): Thank you.

Mr. Murphy, four minutes.

Hon. Shawn Murphy: Thank you, Madam Chairperson.

I only have a couple of issues, kind of in summary, Mr. Cutler.

I want to thank you also for your testimony and your work, the paper trail that you have given this committee. You've shed more light on this issue than all of the previous witnesses put together. I actually see the fog may be lifting here in this whole episode.

I have a general question for you. When I look at this thing, we have two simultaneous processes going on, both of which broke down. We have a political process that obviously wasn't there. We have the bureaucratic process--which Mr. Harrison explained so well--that wasn't correctly set up.

Once you do that, things break down. You have a dual role there. The train went off the tracks, and of course it's our job to find out why the train went off the tracks, who was driving the train, and how we can make sure the train doesn't go off the tracks again.

You've been involved in this a long time. I'm sure that you've thought about it for many days and nights. Is there any particular instance that you can identify to this committee to hit the nail on the head as to what went wrong with government?

You made the statement, and I agree with you, that this is not indicative of government, it's not indicative of civil servants, and it's certainly not indicative of Public Works and Government Services. In this instance, the train went off the rails.

Are there any parting comments? Because we only have a few minutes left.

Â (1240)

Mr. Allan Cutler: I've thought about it over the years, on and off. I can only say that if there's the will to correct the situation, it will be corrected. As to why the will wasn't there, I don't know, and that's all I can really say about it. I do not have a clue who or what--or where--should have been involved in correcting it.

Hon. Shawn Murphy: My last issue, Mr. Cutler, is on the numbers that were presented to us by Mr. Harrison. The $250 million is broken down into the amount that went to the fence, the 12%, the 3%, and then the production costs. In the way you've explained the commissions in your testimony that's more or less standard, so if there was any hanky-panky it was in the production figures.

Do you have anything to add as to what percentage of that is not bona fide?

Mr. Allan Cutler: To the best of my knowledge, at the time I was there nothing was being done that was not bona fide. I was not aware of any situation of payments for production work that was not being done. My concern, and what I was aware of, was about commissions being paid for work not being done by the firm, which is a different issue, I must point out.

Hon. Shawn Murphy: This is a very serious issue, but all this talk of $100 million is crazy talk...if I can detect the testimony here.

I have no further questions.

The Vice-Chair (Mrs. Marlene Jennings): Thank you.

I'm next, then it's Mrs. Ablonczy.

I'm going to follow on the question Mr. Murphy was asking you, Mr. Cutler. With your knowledge of the area in which you worked, what you saw that was unacceptable and actually violated rules, regulations, etc., was that commissions were being paid for work that was not done. Is that correct?

Mr. Allan Cutler: That is correct. There is a separate issue. The work was done, but it was not necessarily done by the firm--

The Vice-Chair (Mrs. Marlene Jennings): That collected a commission.

Mr. Allan Cutler: And they collected a commission, yes.

The Vice-Chair (Mrs. Marlene Jennings): Exactly.

I'd like to come back to the issue of who might have been aware of the internal audit that was done subsequent to your complaint, and then the Ernst & Young audit subsequent to your complaint, and the internal audit.

I believe you stated you would have assumed that the assistant deputy minister and the deputy minister would have been informed. Is that correct?

Mr. Allan Cutler: I assume that Mr. Stobbe would have been informed, since he was the one who directed me to internal audit. As a result of what they did, he would have been informed in his capacity as assistant deputy minister. It is logical that he may have reported it, but that's a decision of that person.

The Vice-Chair (Mrs. Marlene Jennings): One of the points you made was that the scope of reference for the Ernst & Young audit may have been too narrow. One of the conclusions of that audit was they found no personal benefit to the individuals who they were able to determine committed irregularities, illegalities, etc. But when I read the scope and terms of reference of the Ernst & Young audit, I do not see that they were asked to do a forensic audit, which would have allowed them to track the money all the way and see if any of it came back. Am I correct in that?

Mr. Allan Cutler: I perceive that the audit was on the contracting process, not on the flow of money.

Â (1245)

The Vice-Chair (Mrs. Marlene Jennings): Therefore, with your expertise in procurement, contract negotiation, etc., do you believe the finding that there was no personal benefit to be credible?

Mr. Allan Cutler: It may well be. I was not aware of anybody benefiting personally in that office.

The Vice-Chair (Mrs. Marlene Jennings): I understand that, and I'm not saying anyone did. But if there was no forensic audit, how would one determine if in fact there was any personal benefit? Is that not a question?

Mr. Allan Cutler: It would be a question to ask the auditors.

The Vice-Chair (Mrs. Marlene Jennings): Thank you.

Mrs. Ablonczy, you have four minutes.

Mrs. Diane Ablonczy: Thank you.

Mr. Cutler, on page one of your synopsis of evidence, you refer to the advertising management group, AMG. The AMG, as I understand it, was a panel that chose and shaped the advertising strategy of the government. Is that correct?

Mr. Allan Cutler: Yes. Did you not just say that I reported to them?

Mrs. Diane Ablonczy: No, I said you referred to it in your synopsis.

Mr. Allan Cutler: Oh, I referred to them. Yes, I did, and they were a separate entity, yes.

Mrs. Diane Ablonczy: Do you know what departments were represented on the AMG?

Mr. Allan Cutler: Generally speaking, the AMG traditionally had been a body.... The head was appointed, it was vested in PWGSC, and there was no departmental representation on that body. It was employees of the crown vested in PWGSC.

Mrs. Diane Ablonczy: Were you aware that any other departmental personnel were ever represented on that body?

Mr. Allan Cutler: No.

Mrs. Diane Ablonczy: I refer to a memo dated May 30, 1994, which has been tabled in the House of Commons, from the executive assistant of the finance minister, Paul Martin. In that memo the minister's executive assistant says: “I would also like to ensure that on the AMG panel there is a representative from Finance”.

So from your experience, having a representative from the finance department on the AMG would be unusual.

Mr. Allan Cutler: No. We're talking now about an evolution in process. The traditional AMG function is what I described. The new Treasury Board policy had revised that and started to insist on panels, which came out, I believe, in 1994, and therefore they called it the AMG panel. While I wasn't aware of the workings of the panel, I knew that the panels now existed, maybe not in every case, but they certainly were mandated by Treasury Board under a new policy.

Mrs. Diane Ablonczy: Do you know who the finance department's representative would have been on the panel?

Mr. Allan Cutler: No.

Mrs. Diane Ablonczy: The memo also says the following: “We agree that it makes the most sense for the strategy to be developed by...Groupe Everest in collaboration with the market researchers, rather than another ad agency. In addition, ...Groupe Everest should also serve as project manager/co-ordinator for the public relations firms which are appointed.”

I refer to tab 19 of your brief here, in which you state that you sent a memo in which you had refused to sign a contract to Groupe Everest and you mention a number of reasons why you would not sign the contract to Groupe Everest. Groupe Everest comes up--and these are just two examples--over and over, of course, in the Auditor General's report and in your evidence today.

Was it your experience that Groupe Everest was promoted and preferred as the agency for the activities you were involved in with advertising?

Mr. Allan Cutler: There were a number of firms and agencies that were assigned various contracts. I cannot honestly say that Groupe Everest was preferred over any other one, but Groupe Everest was assigned for this department.

Mrs. Diane Ablonczy: This department being...?

Mr. Allan Cutler: Finance.

Mrs. Diane Ablonczy: Finance, yes.

In your evidence, you say that as part of your settlement of your grievance, which you began in 1996 and which was finally concluded in 1998, you received a letter from the human resources branch of Public Works, I assume, a Mr. Cardinal, which said that there would be no reoccurrence of the contracting irregularities that you had identified. Is that your evidence?

Â (1250)

Mr. Allan Cutler: Yes, that's his letter.

Mrs. Diane Ablonczy: And did you believe that promise by Mr. Cardinal?

Mr. Allan Cutler: Yes, at the time.

Mrs. Diane Ablonczy: Do you now believe that that promise was fulfilled?

Mr. Allan Cutler: With what I now know, no, I don't believe that this happened.

Mrs. Diane Ablonczy: Getting back to Mr. Guité, if there was no direction from anyone outside of the civil service structure--in other words, there was no direction from elected representatives in government--what would be the benefit for Mr. Guité to go AWOL, basically, and just start throwing money around with no proper rules being followed?

Mr. Allan Cutler: I can't answer that question. You'd have to ask Mr. Guité that question. I do not know the answer to it.

Mrs. Diane Ablonczy: I have one last question. If this happened without any minister or anyone in cabinet being at all aware that it happened, then clearly the civil service, at least in this area--and Mr. Cardinal in Public Works, giving promises that weren't kept--was completely out of control, breaking rules and promises, with no accountability. Is this something that in your 30 years in the public service you've come to expect? Would you say that's the way it is, that we have rogue elements within the public service breaking promises and rules, completely unknown to the people who are in charge of departments, ministers, and the cabinet?

Mr. Allan Cutler: No, I would not say that. We're a very ethical public service. Many of my colleagues may not have hit my type of situation, but I believe that if they were to hit it, they'd perform very much the way I would. Generally speaking, when commitments are made in writing, they're honoured.

Mrs. Diane Ablonczy: But that has not been your experience in this case.

Mr. Allan Cutler: In this case, in hindsight, I would agree.

The Chair: Thank you very much, Mrs. Ablonczy.

Mr. Mills, please. You'll be the last intervention. Then we'll deal with a couple of motions by Mrs. Jennings.

Mr. Dennis Mills: Mr. Cutler, I want to go back to the comments you made earlier. You said that in your experience the production costs pretty well were consistent. As you know, there is a perception out there that $100 million went out the back door in a box. We now know from the former deputy minister that the production costs for this entire sponsorship program were approximately $84 million and the total commissions were $19 million. When you were executing contracts and you paid for production costs, did you have backup invoices for those production costs? For example, in 1997-98 we have $20 million in production costs. How would you know whether you should pay the full $19 million rather than $14 million?

Mr. Allan Cutler: The answer is that I wouldn't know. As the contracting end, I was not linked to the payment end at that time. In the past my department had an internal centralized payment system, and every single advertising invoice had been audited by this particular group. It was inside PWGSC. Due to government cutbacks, that got disbanded, and the rights went to other departments. That is the normal practice in most contracting. The people responsible for payment are responsible for that issue.

Mr. Dennis Mills: For example, if we were doing a commercial for Canada savings bonds, in your period of time would they have been required to submit the actual production cost of making that commercial?

Mr. Allan Cutler: They're required to submit proper verification with an invoice.

Â (1255)

Mr. Dennis Mills: Thank you very much.

The Chair: Thank you, Mr. Mills.

I mentioned that would be the final intervention.

Mrs. Jennings has two motions. We'll take the first one, Mrs. Jennings.

Mrs. Marlene Jennings: I move that the public accounts committee request that the Right Honourable Paul Martin, Prime Minister of Canada, authorize that all members of Privy Council and public office holders called to appear before this committee be released from their oath of secrecy and confidentiality in matters directly pursuant to Standing Order 108(3)(g), consideration of chapter 3, The Sponsorship Program; chapter 4, Advertising Activities; and chapter 5, Management of Public Opinion Research, of the November 2003 Report of the Auditor General of Canada, referred to the committee on February 10, 2004.

The Chair: Do we all understand the motion? Is it agreeable that we put the motion to the committee? That's agreed.

(Motion agreed to)

The Chair: Your second motion.

Mrs. Marlene Jennings: I move that this committee request that the Prime Minister--and we can do the full title--and the Clerk of the Privy Council immediately inform all departments and crown corporations that production of any and all documents requested by the public accounts committee be produced in their entirety, notwithstanding the Privacy Act and the Protection of Personal Information Act, and should any part or parts of said documents be subject to said legislation, the department or crown corporation shall so inform the public accounts committee in a separate and covering document.

The Chair: Is that retroactive to cover the documents we've already received?

Mrs. Marlene Jennings: Yes...and that said production be done retroactively.

The Chair: Okay. Is it agreeable that the motion be put to the committee? It's agreeable. We've heard the motion by Madame Jennings.

(Motion agreed to)

The Chair: Before we close, again I would just like to thank you, Mr. Cutler, for coming forward. I'm sure it has been a difficult number of years for you. It has been reported in the media that your career has been sidelined. You suffered in silence and you took it on the chin. From the letter written by your daughter that was in the media, we know it wasn't without consequences to you and your family.

We do hope your appearance here will offer some redress. You also would have heard the report that we approved this morning, which I will table in the House of Commons, that you may be hearing further on the issue, hopefully to your benefit.

Madam Jennings, you have a point.

Mrs. Marlene Jennings: I have one brief comment. The Public Service Commission and the Canadian Centre for Management have annual awards that are given to public servants for excellence in various fields. I think this committee--and this is not a formal motion, I'm putting it out as food for thought--once our work has been completed, may consider that there are individuals who are members of the public service whose names should be put forward for an award.

The Chair: I thank you for that point, Madam Jennings.

What I'm going to suggest, because I don't think it's appropriate for the committee to do that, is that you prepare a submission--and I'm quite sure you'll find a number of supporters among the committee members.

The meeting stands adjourned.