I call the meeting to order. Good afternoon, colleagues.
Now that I've had a couple of months of experience, I think that if you begin your sound check with “She sells seashells down by the seashore”, you'll probably get the best result, because apparently the “s” sound is the most difficult.
Merry Christmas. Bonne année. We're all hoping for a better 2021.
I apologize. I ran into some colleagues, and apparently I'm the grinch who stole Christmas, because all the other committees have adjourned for today.
Let's have an efficient meeting and one where we will be collegial in the Christmas spirit.
We have a little business to clear up at the end of the meeting. I don't know if we'll need to go in camera, but we will if we need to. For now we're going to continue on with our two panels.
Our first witness is Simon Kennedy. He's the deputy minister for Innovation, Science and Economic Development Canada.
Mr. Kennedy, I think you've already been informed that you have have up to seven minutes for your opening remarks. I think you know the drill. Then we will have questions and answers.
Thank you very much, Mr. Chair. I'll just pull up my opening remarks. I'll be very brief here.
Thank you very much for the opportunity to appear before you today. It is my pleasure to appear before this committee as it studies issues of conflicts of interest and the Lobbying Act in relation to pandemic spending.
Just as all departments have been called on to protect Canadians and our economy during this extraordinary time, Innovation, Science and Economic Development Canada, ISED, has been hard at work, doing its part to help deliver a strong, immediate and effective response.
The integrity and commitment displayed within ISED as we develop and implement pandemic programming has been exemplary.
For example, the government's call to action to Canadian industry attracted more than 6,600 companies, all offering their expertise and capacity to help combat COVID-19. I believe the ministry that I'm in charge of moved swiftly to work with these companies. In fact, in a very short period we went from sourcing barely any of our personal protective equipment domestically, for example, to sourcing approximately 40% of the total value of COVID-19-related PPE contracts in Canada.
This is a significant pivot by Canadian industry, and we were very proud to help facilitate that by shifting the focus, for example, of our business innovation programming to concentrate directly on COVID-19. I'm talking here about programs such as the strategic innovation fund, the innovation superclusters, Innovative Solutions Canada and the National Research Council's industrial research assistance program. With all hands on deck, we aimed to expedite the evaluation and approval of projects so that they could get off the ground quickly to address the most urgent issues.
Without a doubt, the groundwork that we laid in previously establishing collaborative innovation programs really set us up to respond quickly and successfully. Of course, the best way to end this pandemic is with a safe and effective vaccine and related medical countermeasures, and so, Mr. Chair, we solicited the participation of industry and identified medical experts to lead independent task forces for vaccines and therapeutics respectively. In doing so, we gained insight into very technical subject matter and received invaluable advice as the government moved to fund related projects in a timely manner.
I'd like to commend my own staff for their action in securing access to needed supplies and working with colleagues in other ministries to secure access to vaccine candidates for Canadians.
Mr. Chair, in all of these instances, Innovation, Science and Economic Development Canada and its officials acted with transparency, extending assistance and offering solutions to the greatest challenge any of us have faced in our lifetime.
I can say with confidence that it has been—
I'll be brief, but it's directly relevant to your question.
One of the things we did in responding to the pandemic was to have a call to action for Canadian industries and companies that wished to help out. In that call, almost 200 digital service firms and software firms, large and small companies, large multinationals, and SMEs, stepped forward and made offers to provide assistance pro bono. Palantir was one of these large companies that stepped forward.
We actually met with more than 60. In fact, there were so many offers that I actually designated a couple of staff to just follow up with each of the groups that came to us. For example, when I was initially contacted by Palantir, I passed it off to this group that I had created. We were actually meeting with many firms, and not just software companies, but manufacturing operations and other organizations, and even distilleries that wanted to make hand sanitizers.
The attitude was “leave no stone unturned”. If companies were coming and saying they thought they could offer something, we certainly were willing to hear them out. That's what we did with Palantir. I and my staff attended a meeting with some of the staff from Palantir to assess their offer.
I would say that ISED's role is one that involves extensive engagement with industry. In addition to working directly with firms, for example, to help them with the development of technology to support their business plans, we also have to engage with firms regularly to better understand Canadian industry, so that, for example, if there's a crisis or if something happens, we will have knowledgeable civil servants who know the companies, know the management teams and have a sense of the financial strengths and capabilities of the firms. That's important information that the government might need.
In the case of the pandemic, as an example, we were able to bring some of that expertise to bear in a couple of ways. One is that we have a variety of programs to assist industry, not just in my ministry specifically but in the broader portfolio, the ISED portfolio. We have the industrial research assistance program, which I think many members would know about, that is run by the National Research Council. We have the strategic innovation fund, which is run by my organization. We have Innovative Solutions Canada. We have a whole host of programming that supports business.
A lot of that programming had to be adjusted rapidly and pivoted because of the pandemic, for a couple of reasons. For example, there are firms that receive repayable contributions. We make a significant contribution to them to develop a new business line or a new technology, but then if that's successful, they will repay the Crown. They will repay the taxpayer over time. We may have had to adjust the schedule of repayments, because some of those firms are facing serious financial issues.
The bottom line may be—I know you may wish to ask other questions—we actually deal with business as a matter of routine day in and day out across a wide range of areas. I personally speak to a lot of business people and receive solicitations and requests literally daily, and that's just part of our—
Good morning, Deputy Minister. It is a pleasure to have you here this Friday.
Let me explain what my next questions are about. By way of context, I will tell you that I am a newly elected official, and that I have done my homework, of course. I have learned a lot about rules and laws as a member of the Standing Committee on Access to Information, Privacy and Ethics.
There are a lot of constraints in life. We must be extremely vigilant, in times of pandemic as well as in any other emergency situation.
For example, I used to tell my children that even in an emergency, there has to be a good reason for choosing to cross the street when the traffic light is red. Otherwise, you're in danger of having an accident.
I have no doubt about your professionalism, but it is important for me to shed some light on certain aspects. My questions are aimed at increasing my knowledge.
From what I understand, you knew that Mr. MacNaughton was a former public office holder. Is that correct?
Mr. Kennedy, thank you for being here today.
I am familiar with Innovation, Science and Economic Development Canada, for whom I have been fortunate enough to make about 500 announcements in my lifetime. During the pandemic, ISED helped companies increase their productivity to help the cause as a result of the 's appeal. In addition, Canada was purchasing inputs, masks and disinfectants from abroad.
Yesterday, I asked a question in the House because CBC reported this week that Canada bought 570 million dollars' worth of disinfectant from abroad. Only $100 million has been allocated to Canadian companies that produce disinfectants and can produce more.
Let me give an example. In my riding, a small business that was already producing agricultural disinfectant changed its recipe slightly and had to register its new product with Health Canada before it could sell its disinfectant to the public. That took some time. The owner invested in his business to increase its production capacity, hoping to secure contracts with the Government of Canada. In the end, he did not get any contracts.
During that time, disinfectants worth $250 million were purchased from a Chinese auto parts factory that changed everything in two weeks and had a recipe that was never approved by Health Canada. These products arrived in Canada in a container filled to capacity and invaded the disinfectant market. We don't know if this disinfectant is good or not, whereas here we have Canadian-produced, Health Canada-licensed disinfectant that cannot be sold to Canadians through Public Services and Procurement Canada.
Mr. Kennedy, can you tell us if disinfectants imported into Canada are registered and approved to the same standards as those produced in Canada?
Mr. Chair, I've been a part of many of them.
I feel very privileged to have the role I have. I feel like I'm doing important work on behalf of the government and on behalf of Canadians, so you will never hear me complaining, and I think that's true of many of my colleagues. I want to preface this by saying, because I don't want it to sound like a complaint, that I'm very grateful to have the role I have.
However, it is very true that in the early days of the pandemic, it was a seven-day-a-week affair, with very late evenings and very long hours, more or less continuously, for weeks at a time. For a lot of my colleagues and for me, that kind of intensity continues. We're very happy to be able to do our roles.
I would say that “panic” is maybe not the right word, but certainly there was a profound sense of leaving no stone unturned, of real urgency and, certainly in the early days, a really profound sense of not quite knowing what was going to happen next. Maybe many Canadians would die, and it was on us to make sure we did everything we could to support the government in making sure that didn't happen—
Well, I'll use the example of the strategic innovation fund, but it would apply to other programming.
If we're going to partner and perhaps make an investment in a company, then we want to have a sense of the risk that's being presented for the taxpayer. The risk can come in a number of different ways. There can be financial risk, managerial risk and technology risk. It isn't just financial.
One of the things that we would examine in the strategic innovation fund, for example, would be whether the company has the financial wherewithal to do it. Are they going to be able to raise the funding? Maybe the taxpayer money is going to go in, but they're going to raise money from other sources. Are they able to do it? Do they have enough cash in the bank so that they're not going to run out of money halfway through the project?
There are those sorts of things. There's a financial due diligence that's done, but it isn't the only kind of risk that's looked at. Can the company can partner well with others? Can they handle technology transfer if they need to do technology transfer? Also, is the technology a very high risk? Maybe it's a good idea, but the likelihood of it going belly up is high.
We would examine many of those facets in the SIF program, as an example, but financial assessment certainly would be one of them, yes.
Good afternoon, distinguished members of the Standing Committee on Access to Information, Privacy and Ethics.
First, I want to make it clear that I'm not an ethicist or an ethics expert. I'll leave it to much more qualified individuals to shed the proper light on this matter. I don't claim to have a thorough understanding of the rules for awarding public contracts at the federal level. However, I believe that my experience in various fields could help you with your work.
I was the assistant chief prosecutor of Quebec's commission of inquiry on the awarding and management of contracts in the construction industry, also known as the Charbonneau commission. The commission lasted almost three years. It was chaired by the Honourable Justice Charbonneau of the Superior Court. I was also the first inspector general of the City of Montreal, with a mandate to promote integrity and to prevent and combat any fraudulent practices in the awarding and fulfillment of City of Montreal contracts. Lastly, I was president and chief executive officer of the Autorité des marchés publics, an organization created as a result of the landmark recommendation of the Charbonneau commission. The mission of this organization is to oversee all public contracts in Quebec.
In Canada, both at the federal level and in all Canadian provinces, the awarding of public contracts is strictly regulated by various laws or regulations. The principles underlying the enforcement of these rules are to ensure the best product or service at the best price for all Canadians; to guarantee freedom of competition; and to give equal opportunity to all individuals who want to obtain a government contract. These goals have been enshrined in our legal system for a long time. They're often reiterated by courts across Canada.
To meet these goals for awarding a public contract for a certain amount, such as $100,000 in Quebec, a public call for tenders is mandatory, unless there are exceptional circumstances. The public call for tenders basically aims, for a public contracting authority, to simultaneously reach all the interested parties that can enter into a contract and that have the skills and expertise required to fulfill a public contract. The purpose is to encourage more competition. However, the various pieces of legislation regarding government contracts in Canada state that a contract may be entered into because of an emergency or another exceptional situation.
No one is calling into question the exceptional global situation that we've been facing since the end of last winter. No one is disputing the urgent need for our leaders to take action. They must invest massive amounts of money to help Canadians deal with the disastrous effects of the pandemic, particularly on the economic front. However, the urgency must not become a reason to circumvent the mandatory rules governing public contracts. The urgency shouldn't also contribute to a lax approach to monitoring and overseeing taxpayer dollars.
As a former inspector general of the City of Montreal, and also as a Canadian taxpayer, I'm very concerned about the safeguards in place to prevent price gouging, possible fraud and waste. I also wonder whether we've obtained the best products and services at the best price from those companies or organizations that have dealt with or that continue to deal with the government by mutual agreement, citing the urgency of the situation.
As a starting point for discussion, we could draw inspiration from the work of some inspectors general offices in the United States. By the way, I'm a certified and trained inspector general. I'm also a member of the board of directors of the Association of Inspectors General in the United States. I'm the only Canadian member of the board. I'll also be a member of the executive until the end of December.
These offices have live integrity monitoring and oversight programs. We know that hurricanes and other natural disasters are common in the United States. In the event of a massive influx of federal or state money following a natural disaster, integrity monitoring is always carried out to prevent price gouging, waste and possible fraud. I can tell you more about these integrity monitoring programs, if you have any questions.
Once again, I would like to thank you for inviting me to appear before the committee today. I hope to be able to contribute in some small way to the work of this committee.
Thank you for the opportunity to speak to the committee today.
My name is Mark Blumberg, and I'm a lawyer at a small firm in Toronto that has 10 lawyers. We focus exclusively on non-profits, charities and philanthropy.
I'm going to talk today about the scandal involving the Canada student service grant and WE Charity, and the fact that it isn't, unfortunately, over. These comments are a point in time, and the saga is continuing.
There's a lot we don't know about the scandal. Having various committees and the House of Commons looking at these issues in the past was helpful, but it was quite inefficient. Also, there are a lot of complicated issues at play, such as charity compliance issues. I would say that in my opinion, these committees are not ideally equipped to deal with these types of investigations. That's why I've suggested in the past that a public inquiry be launched into this particular scandal, and then the various committees could go back to focusing on their regular work in these difficult COVID times.
There are essentially three somewhat interlinked components to the scandal.
First, the design of the CSSG program itself was problematic. Then there's the federal government's decision-making process. I'm not an expert in conflicts of interest, but it appears to be conflicted.
Then there were many concerns about the choice of WE Charity to deliver this particular program. This is not just about a $543-million program; it's about the federal government—during COVID, when the charity sector was under tremendous strain, as it continues to be—giving almost nothing to the charity sector. Certainly it was almost nothing when one thinks of the tens of billions being spent, and then the government proposes to give $543 million to one organization that has a checkered past. In a sense, it's a contrast in the way this one charity was treated, with a $543-million grant, compared with how the federal government dealt with the rest of the charity sector, which has largely been silence and providing absolutely nothing to most charities. That's one major facet.
Another big issue is this. Was there tremendous influence by the finance department on Employment and Social Development Canada, ESDC, or did ESDC think that the WE Charity was a great charity and uniquely able to deliver this program?
If it's the first case—the pressure from finance—then Mr. Morneau has resigned, and perhaps that influence will stop. That's a particular circumstance.
If it's the second—the possibility that ESDC actually thought WE Charity was a great charity—then it's a much more serious issue. It would really call into question the capacity of ESDC to undertake due diligence on charities and its decision-making. If this is really an ESDC decision, as many Liberals have claimed, then significant changes may be needed at ESDC, or tens of billions in funds could be equally poorly allocated over the next few years. Assuming the finance department was not pressuring ESDC, how ESDC could have gotten this so wrong is mind-boggling. That is one of the many reasons I think a public inquiry into the CSSG WE scandal is worthwhile.
Many compliance issues have been raised by the whole WE Charity scandal, including—but not limited to—using multiple corporations, some of which are Canadian registered charities, and a lack of clarity among the different corporations; treatment of employees during employment and post-employment; reporting and transparency; lobbying of government officials without registering; partisan activities; social enterprise and business activities; government grant-making processes and fairness; owning large amounts of real estate; corporate sponsorship and access to children; compensation of founders; governance; and having founders involved in the charity for a long period of time. These are some of the many issues that have been floating around over the last few months.
Trust in the charity sector is vital. Public trust is like oxygen: You only really notice a problem when it's in short supply. Will Canadians trust charities less because of the WE Charity scandal? Will they think the problems of WE Charity are reflective of the broader charity sector and trust the sector less?
WE Charity was quite a unique organization, but it wasn't completely unique. Therefore, its indiscretions may affect the reputation of the charity sector. It may take years to see the full impact of the scandal, but we are already seeing significant declines in public trust of charities, despite huge gains in public trust at the beginning of COVID for the heroic work done by some in the charity sector in response to COVID. The biggest concern for the charity sector is that the WE Charity scandal will hurt the reputation of the sector, undercut donations and undercut government funding.
Transparency is vital for maintaining public trust. We are concerned that there's not nearly enough transparency in the Canadian charity sector. Over the last 10 years, the CRA, for various reasons, including maybe pressure from certain special interest groups, has actually been reducing the amount of information they publicly collect and provide about charities. Other countries, meanwhile, have been increasing transparency on charities.
Having inadequate transparency on registered charities in Canada means that there's not enough information on WE Charity available and very little on ME to WE, the for-profit arm. It's hard to understand the full picture when you can only see half the story.
I've submitted to the finance committee 10 recommendations for improving the regulation of charities in Canada. I'll just mention three ideas that I'm going to bring to this committee.
Currently, if the CRA is aware that a charity is involved in very problematic activities, they are not allowed to disclose that information—not to the public or even to members of Parliament. The federal government should amend the confidentiality provisions of the Income Tax Act, section 241, to allow the CRA, at its discretion, to disclose serious non-compliance of registered charities.
Second, with registered charities there is some public information available from the public portion of the T3010, but when it comes to non-profits that are not charities, which is 80,000 to 100,000 organizations, the CRA discloses nothing, and there is very little information available on many groups. We have proposed that non-profits—as many already do, and certainly the bigger ones—file the form called the T1044 every year. They're filed with the CRA, where they are input into a database by the CRA. These should be disclosed. It's no extra effort or burden for either those non-profits or the CRA, but it would give us at least a little bit of an idea about that other part of the non-profit sector.
We've also proposed that the federal government provide funding to the Charities Directorate to increase the amount of information collected and distributed on charities.
Those are three proposals out of the 10 that we had made. We essentially want to balance the regulatory approach to charities appropriately to their importance and to the tax subsidy provided to charities.
The WE Charity scandal raised a number of very important questions about the regulation of registered charities. Either regulation of the charity sector will be enhanced or the reputation of the sector and public trust in the sector may decline.
I've publicly provided detailed comments on—
Thank you very much, Mr. Chairman and members of the committee. My name is Jeramie Scott, and I am senior counsel at the Electronic Privacy Information Center, also known as EPIC.
EPIC is a public interest research centre in Washington, D.C. It was established in 1994 to focus public attention on emerging privacy and civil liberties issues and to protect privacy, freedom of expression and democratic values in the information age.
As part of EPIC's open government work, EPIC makes frequent use of the Freedom of Information Act to obtain information from the United States government about surveillance programs. Public disclosure of this information improves government oversight and accountability. It also helps ensure the public is fully informed about the activities of the government.
EPIC routinely files lawsuits to force disclosure of agency records, and it is my understanding that the committee is interested in EPIC's Freedom of Information Act lawsuits related to the U.S. government's use of Palantir software.
EPIC has litigated two Freedom of Information Act cases that might be of interest to the committee. The first was a case against U.S. Customs and Border Protection to obtain records related to the analytical framework for intelligence, which is used to assign risk assessments to travellers.
The more recent lawsuit was against U.S. Immigration and Customs Enforcement, and it sought records pertaining to systems built on Palantir software. That system is the Falcon system, and the Falcon systems are built on Palantir's Gotham platform, a proprietary software product that allows users to search, visualize and analyze complex datasets. Falcon serves as Immigration and Customs Enforcement's primary data storage and analysis system.
The Falcon system pulls data from several government databases and contains numerous categories of sensitive information, including biographical information like dates of birth, places of birth and social security numbers, and financial data such as bank account numbers and transaction numbers. The Falcon systems also contain data from commercial databases and open-source information publicly available on the Internet, including information from social media sites.
According to the documents obtained by EPIC through the Freedom of Information Act, Falcon systems also contain call record data and GPS data, and, through the use of Palantir software, the Falcon systems are capable of linking together this and other data through social network analysis. The Falcon system uses the massive amount of data it contains and analyzes that data with Palantir's software to locate undocumented immigrants to apprehend and deport. Reports indicate that the Falcon system was used in a raid last year in Mississippi that resulted in 680 arrests. The raid was one of the largest in U.S. history. It terrorized the immigrant community in Mississippi and separated hundreds of individuals from their families.
There is an ongoing campaign against tech companies like Palantir that provide the technical tools for ICE to conduct raids like the one that occurred in Mississippi.
Palantir is also linked to the United States Customs and Border Protection's analytical framework for intelligence. It was the documents obtained by EPIC that confirmed Palantir's involvement in Customs and Border Protection's analytical framework for intelligence system. This system uses information from federal, state and local law enforcement databases as well as commercial databases. This information is often sensitive personal information and includes biographical information, personal associations, travel itineraries, immigration records, and home and work addresses. The information is used to generate risk assessments of travellers and to generate intelligence reports. The capabilities of the analytical framework for intelligence include the ability to perform geospatial, link, and temporal analysis of the data.
In addition to Palantir's controversial work with the U.S. government and particularly Immigration and Customs Enforcement, Palantir has been scrutinized for the predictive policing service the company has provided to various law enforcement agencies within the United States. Palantir's predictive policing services include identifying potential offenders and their networks.
Palantir compiles a target list of likely offenders and victims based on an analysis of mass datasets from a variety of sources, including social media, criminal databases, probation and parole information, jailhouse phone calls, automated licence plate reader systems and law enforcement case management systems, among other sources.
Palantir's predictive policing product performs social network analysis to build webs of social connections to identify potential offenders or victims without prior police contacts.
These tools sweep in vast numbers of people who do not have a strong connection to any criminal activity.
A couple of years ago, Palantir's work in predictive policing was scrutinized after it was revealed that the company had been secretly using the city of New Orleans to test its predictive policing technology. Palantir had a pro bono relationship with the New Orleans police that was only known to the mayor and the city attorney. The city council members were unaware of the program until it was made public by news reporting. After the story broke about Palantir's work in New Orleans, the city ended the partnership.
In almost every case, Palantir has sought to implement predictive policing without community knowledge or consent. In general, Palantir has tried to keep secret its capabilities and how the company's services are used by government entities.
With that, I would be happy to answer any questions the committee may have.
The first inkling I had that there was a big problem with WE Charity—and it was very public—was a 2010 Globe and Mail article. It was about two pages in The Globe and Mail. It was very long. I still remember reading it on an airplane a long time ago, and there were lots of questions that came out of it.
From about 2010, then, I think it would have been pretty clear to people. Anyone in the charity sector who's ever spoken to three people who worked at WE would have some interesting stories to tell you. WE was just very much unlike any other group I've ever seen.
Then also Canadaland, which is a news podcast sort of site, did some extensive coverage around 2018-2019 on a number of issues that were very public and very much out there. I would say that even for a $500,000 grant, one would easily have been able to pick up these many issues if one wanted to pick them up.
I don't know if that answers your question, but I would say that there definitely could be some huge improvements. On the one hand, I sort of hope that it was inappropriate pressure by the finance minister, because I'm a big believer in government and governmental action and I think the government in general has done a lot of good things during COVID. I would prefer that it not be a problem of ESDC really thinking this was a great charity, because if it did think that it was a great charity, uniquely able to do this and all that, then I think there have probably got to be some changes there.
I'm not hoping that's the right answer, but I unfortunately don't know and I think that's why we need a public inquiry to actually look deep into these issues, because it involves not just this money but lots of other money. The charity sector, the non-profit sector and many parts of society are very reliant on ESDC, and we want to make sure there's great decision-making going on there.
One issue is the $543 million. That was very problematic for many people in the charity sector, but the claim made that this was the only organization that could handle this was phenomenal and angered many people, because it is just incredibly ridiculous. It's demeaning to the charity sector. The charity sector has huge capacities in people, expertise and other things, so for something like to be said was just offensive to the charity sector.
On the plus side, did cancel the program very quickly, which I want to give him credit for, and the money that was given was brought back. However, there are a lot issues, including detailed information on 30,000 or 40,000 people, including some who might be minors. I don't know what happened to that information and to other very detailed information WE has been collecting over the years. I would be certainly a little worried about that, if this is a committee tasked with privacy, because it could involve hundreds of thousands of youth and young adults in this country.
In terms of the decision-making, the actual decision-making and the conflict issue is a big issue in Ottawa. Within the charity sector, the biggest concern was that this program was very poorly constructed. That's an ESDC issue and not a WE issue. Second was the choice of WE. The exact details of what the cabinet did are of less interest to the charity sector, I would think, but certainly so little has been done for the charity sector, yet so much money was going to be given to WE. It was a $60-million organization getting $543 million to spend on all this stuff.
While the charity sector usually gets 12% overhead costs with government grants, this was much higher overhead, potentially, depending on how the framework worked out in terms of the number of people involved and things like that.
I would certainly not see this as a good situation, and hopefully we'll get more answers in the future.
Thank you for the question and for your kind words, Ms. Lattanzio.
Yes indeed, the federal government could learn a lot from what is going in Quebec. That scandal is now behind us, but it wasn't so long ago.
To motivate myself and to prepare for the meeting today, I reviewed the report by the honourable Justice Gomery, which was released in 2005 following the sponsorship scandal. Some things have changed in the federal government; we have goodwill and good laws, but no continuous oversight. You can have the best laws in the world, but if no one is watching over the process, issues of waste or fraud can arise.
Through the Office of the Inspector General or, now, the Autorité des marchés publics in Quebec, it is possible to ensure that, when over-the-counter contracts are awarded, a neutral and independent body provides continuous oversight. A similar body, which could be appointed by the House of Commons, would be able to raise a red flag in record time to indicate an issue and that the contract should not have been awarded by mutual consent.
Mr. Blumberg stated that, after the Autorité des marchés publics was established, amendments were made to Quebec's Act Respecting Contracting by Public Bodies. He is absolutely right. Now, to award a contract by mutual consent, the electronic tendering system must send a notice of intent. The notice indicates that a charity or business is about to be awarded a contract worth such and such an amount by mutual consent, and that is why no tendering process is taking place. This public request for proposals allows people who are interested and able to provide a service to the government in a tight 15-day timeframe.
Let me go back to the example of WE Charity. I know it was urgent, but was granting scholarships to students so urgent that no survey or call for interest was necessary? From now on in Quebec, due to the amendments made to the Act Respecting Contracting by Public Bodies, these must be done. Otherwise, a complaint could be filed with the Autorité des marchés publics, which has the power to cancel any contract in violation of the rules. I believe that the federal government could learn from this approach.
Sure. In the WE Charity scandal, I could criticize the government and the opposition parties for how they're dealing with it, but I'm not totally shocked that each is dealing with it that way. There are some partisan Liberals who have told me a hundred times that there is no scandal, nothing was wrong and there's absolutely no issue here, so if you don't register off and you have 65 meetings, it's no issue. I've heard that from Liberals and I find it shocking.
I find some of the commentary by some of the opposition at times is not correct or is partisan. As it comes across to me, some of it doesn't make a lot of sense, but some of it is very good.
I think both sides, in the way this has been handled.... In fairness, these are politicians handling a very complicated, difficult story. That's why I think it would be better to put it to a public inquiry so that someone can really look at these issues closely and come to a determination.
As I said, I probably know about 20% of the story, based on watching this very closely for many years and certainly for the last six months. There is so much information that unless there is a public inquiry, we probably won't be able to find it out.
There was an earlier question about whether it was sort of an accident that WE had these different structures. I think you can't say it was an accident. You don't accidentally have a charity. However, what I find very weird is that.... It's very clear from the public record why, for example, the WE Charity Foundation was set up, because we have a copy of the charity application, which says it was being set up to be a real estate holding company. When people are saying that's incorrect or something, I'm scratching my head, because this is a document that WE provided to the Canada Revenue Agency.
Good afternoon, gentlemen.
I don't know if you heard what I said earlier. I was explaining that I am new here and that I have learned a lot. You just said out loud what we are silently thinking or perceiving, given the 20% or so of the story available to us. I had a series of very specific questions, but you have answered almost all of them.
People say that there is partisanship on both sides and that it's a political game. Please! We are managing a pandemic that by far transcends those excuses, whether it suits us or not.
I want to get your opinion. Are we looking at the way we do things and realizing that we really missed the boat in 2020 when it came to protecting public funds and privacy? What countries should we looking to as models on these issues? Why not take the opportunity now to review the integrity process rather than dragging things out and filibustering?
Christmas is here and not a moment too soon, because I am totally discouraged. My children have no faith in the government and are asking me to step in and show people that it is possible to have that faith. I need your help and I would like to hear what each of you has to say about it. I apologize for being so intense.
Mr. Gallant, do you have any comments?
I am going to answer you by quoting what Justice Gomery wrote in 2005. I find it sad that here we are 15 years later, and in much the same place. In his preface, Justice Gomery wrote:
The Report that follows chronicles a depressing story of multiple failures to plan a government program appropriately and to control waste—the story of greed, venality and misconduct both in government and advertising and communications agencies, all of which contributed to the loss and misuse of huge amounts of money at the expense of Canadian taxpayers. They are outraged and have valid reasons for their anger.
I feel like we are in the same movie. It is easy to blame the pandemic. As I said in my opening remarks, the rules are made to be loosened, and we can understand that in certain situations. Yes, the urgency was there, but in varying degrees. We can say that the masks were urgent, but was it urgent to award a contract to a charity that was not even able to provide services to francophone Canadians? The plan was to use a Quebec organization for that. Did the government absolutely need to enter into it over the counter, without looking any further, as Mr. Blumberg said earlier, without looking at whether other organizations would have been able to provide the services at a lower cost?
Quebec is no better than any other province. It has lived through scandals. You are a member from Quebec, so you know that. At some stage, we had to stop beating ourselves up. The public inquiry shone a light on what was going on, but we also decided to establish monitoring agencies to make sure it never happened again.
A lot of good things have been done since the Gomery Commission. I have checked that out myself. However, we often think that, if we run into a problem, we will turn it over to the police. That's what I cannot stand.
I am a former Crown prosecutor—
Yes. Certainly we've seen the footage of the caged children. It's been very, very frightening for us on this side of the border. I want to thank you for that.
I'm going to move now to Mr. Blumberg. I was interested when you said that you've studied the Kielburger organization for some time and you figure you have about a 20% picture of how they operate. I've been on committees for 16 years, and I haven't found almost anything as difficult as this.
They have multiple corporate entities, shell corporations and organizations in Canada, the United States and Kenya, and it's all focused on the charity work they say they do. It's Kenya and the children.
Here's a company, Kiel Initiatives Ltd. We found it in their filings. They sold water in Kenya under the ME to WE label. We later found out that they were banned in Kenya. My daughter, who worked in Africa, said, “You have to really do something, Dad, to get banned in Kenya.” The Kielburger group was running this water company, yet still being a charity. Is that something that would raise alarm bells with these multiple holdings, real estate organizations and side deals that they're running?
On this in particular, and certainly the scope of it, I haven't seen anything like it either.
What I would say is that from a legal point of view, it may be legally appropriate that the two of them were not registered under the Lobbyists Registration Act, but what I would say is that for the WE organization, WE Charity, there's no question in my mind that they should have been.
Even in their testimony, they said that it wasn't like a substantial part of what they're doing, but that's not the test. The test is this: Is it one-fifth of an FTE, basically, even on a monthly basis, working on it? There is no question. They said it took a handful of people to basically do this $543-million proposal, and certainly for other groups it takes them six months and hundreds and hundreds of hours—thousands sometimes—to put this stuff together. I think there's no question that they should have been, whether....
Exactly who should have been registered is one issue. The other thing that's going to be a big issue for the commissioner is that if there isn't any impact and basically they just get to say, well, we filed these 65-plus reports, and then there are no other consequences, it's going to completely undercut the whole lobbyist registry system for charities. I think a lot of charities are going to say that they can pretty much meet with the government 60 times before anyone's really going to really say anything, and then if they get caught, they'll just file these things.
I mean, I've heard of—
I would not know whether there was something of that sort. What I would know is this: There are many charities that have tremendous capacity and, in fact, what WE was doing was subcontracting much of the work to others anyway. There are lots of charities in Canada that could have done the job of pulling something together and subcontracting it.
Essentially, when you say to a young person who is in university, “You could get $5,000 by filling in a form”, you don't really need to have an extensive network to get 40,000 people to apply. On Twitter and a few other things, it gets out there, and before you know it, within days you'll have 40,000 people. You might have 400,000 people applying for the program.
I don't think they needed some of the skills that we did have, and they weren't doing rock concerts or anything like that. There were other skills needed that weren't there, whether it was the French language skills or some of the governance issues or things like that, but I can't comment on that. I am just concerned with the information they collected. I don't know what's happened to it. I don't know what's happened with that. They've talked about WE shutting down, but then I see other indications that they are still fundraising and doing things, so I'm really more confused than anything else.
Yes. First of all, let's remember that they applied for charity status around 2019, long before COVID, CSSG and everything else. Why you might not want to have real estate in your operating company is for liability reasons. If there is a problem, you want to put it sometimes into a holding company. It is very commonly done with for-profit companies when you think of how they operate with holding companies, operating companies, maybe multiple operating companies and things like that.
There is nothing wrong with that, and they said to CRA that this was going to be a holding company that was going to hold about $40 million worth of assets. Then they flipped it around and switched it around, which is fine too, and they changed the objects. I don't know if they got CRA approval. I just don't know, but they changed things so that it has broader purposes to be able to do other things. This was done in June of this year, and then it was being used for that.
That, I don't think, is untoward. What is weird is how they denied that it was ever a real estate holding company when it is so clear that it was, but then it was changed. What was more, shall we say, unusual, was that the government would agree to this. It's not that we would create a shell company.
If I were going to ask someone to pay me $100 million, it would be nice to say that I was going to set up a shell company so that WE Charity doesn't have any liability, but I have never.... I wouldn't say never. I can't recall a time when I've seen a government department give any amount of significant money to a shell. There could be good reason to do it, but I'm just not seeing it here, and I don't understand why they did it.
Thanks very much, Mr. Chair.
It's not easy to surprise me, since I've been in politics since 2015, but here we are talking about the WE Charity scandal on the last day of Parliament in December, and I'm a little surprised.
I was maybe the first one to criticize publicly, as far as our Liberal Party goes, but there is some reason for criticism in terms of how this rolled out. The obviously acknowledged that there was good reason for criticism, as the program was cancelled. I personally thought the Canada summer jobs program was one way of going, but of course this was a different conception of the program. The government saw a way of engaging young people in a more serious way, whereas I took a more employer-centred view.
I first want to get some of the facts straight in my head, because I have not been part of the proceedings.
Mr. Blumberg, when you say it was a grant of $543 million, you're not in fact saying that WE Charity was to receive $543 million. You recognize, in fact, that most of that was going to go to the students, right?
I understand what you are saying about the need to continue the oversight and to always keep the need for integrity in mind. In a few weeks, we are going to be receiving the report from the commissioner, who is currently following our meeting. So you should know that all your comments are very useful, especially when you constantly bring up the need for a public inquiry or say that we have to change our entire thinking, although we may not go so far as to question the finances of one party.
In Quebec, as we very well know, this has been reduced in order to avoid the perception of a conflict of interest. Conflict of interest can apply to gifts or to benefits. A benefit may also not materialize until later. Just now, I was listening to Mr. Scott, who had a lot to say. I did not let him speak.
When you offer something for free, you are expecting something in return. Actually, with technology, as we know very well, if you are not buying a product, you are the product. If you have not seen the Netflix film called The Social Dilemma, I recommend that you watch it. I watched it with my children and they asked me where we were all heading. That's why control measures are an absolute necessity.
I now have the names of countries, I have proposals. I really have everything I need to tell all my colleagues that this is urgent. We understand that there are many factors that we are not able to prove and we are still in the process of finding out who is right and who is wrong.
Let me give you the floor, Mr. Blumberg, because I don't believe you had finished just now when we were talking about countries. You were saying that Canada is far from the top of the class in terms of doing things well.
Right. In terms of charity transparency, if you take a look at a site in America called GuideStar, you will see that GuideStar has the Form 990s for each of the American 501(c)(3)s that have to file there. You can see that sometimes it's 100 pages, 200 pages of material. It's a lot of material. There are lots of questions.
Our Canadian charity return is about nine pages, and most charities are filling in about two or three pages' worth of stuff, which is very little. In the end, I think that I'm doing it because I think that it's good for the charity sector to have more questions. I'll give you an example: There are no questions on volunteering, which is very important.
The T3010 gives too much preference to financial aspects. It makes big charities, in terms of budgets, look big, but a little charity with $100,000 and 1,000 volunteers can be a very important charity. I think that it'll be a fairer form if we ask more questions, even if they're voluntary questions or they're done on alternate years or whatever to keep the burden in check. The amount of time it takes to put in the Form 990, I understand, is about 10 times longer than it takes to put in the T3010.
Before I move the motion, I have spoken to Michael and also briefly with Charlie. I have not had a chance to speak with my Bloc colleague.
In relation to Bill , I'm not going to move any motion on Bill C-11. I just hope that we have a common understanding. As we head into the new year, I hope to be a more permanent member of the ETHI committee when Bill C-11 will ultimately be referred to us.
Just so that we take advantage of January as much as we reasonably can, there needs to be a broad consensus that we'll work off-line to develop a work plan and witness list. We can then hit the ground running in a collaborative way when we get back. I just want to put that out there, and I hope there is broad consensus for that.
Specifically, you all have noticed, and I think we have all read, the horrifying stories in relation to the failure of Pornhub and MindGeek to take down illegal content in a timely way, and that has seriously damaged lives. Women's testimony in media reporting has indicated very clearly that they have not been able to come back to living a normal life because of the damage of those videos and the images that have been shared.
As I provided notice, I move:
That the committee call representatives of Pornhub / Mindgeek, namely Feras Antoon and David Tassillo, to explain the company's failure to prohibit rape videos and other illegal content from its site, and what steps it has taken and plans to take to protect the reputation and privacy of young people and other individuals who have never provided their consent.
I thank my colleague for stepping forward with this motion. I had been looking at this issue as something that we maybe would have looked at under Bill in terms of privacy rights.
The shocking news that we've seen—and shocking news internationally that has come out—is that Canada is home to a company that has been accused of hosting child pornography, revenge porn and non-consensual acts that have destroyed lives. It is something our committee needs to take very seriously. I think we need to bring in the owners of Pornhub.
I think we need to find a way to allow some of the survivors of this horrific abuse to speak to us if they're willing. If that's the case—and we don't have to debate that now—perhaps we could provide a safe forum where they could testify if they don't want to testify in public, so that they could provide that testimony to us. We should make that offer so that we know what the real-life impacts are.
Another issue that concerns me, a broader issue that Mr. Erskine-Smith and I dealt with to some degree in the last Parliament, is the safe harbour provisions. The safe harbour provisions allow large tech giants to be legally absolved from some content that is extremely destructive. In the past, we dealt with content that was extremist, racist and violent, content that has led to people being hurt and killed in other jurisdictions, but under the safe harbour provisions, you have to go after the person who posted it, which is not always easy.
If we had no safe harbour provisions for sites that post sexual violence and attacks on children and they were liable, that content would be down immediately, and it wouldn't get up there to begin with.
I think our committee can look at this issue. I don't think it needs to be a big study. I think we need a study that reports to Parliament. We could do this in a couple of meetings. Urgency is important. We need to vote on it today so that we're ready in February to deal with it. I would like to suggest two meetings and then a report. We could have more meetings if needed.
This is the kind of thing that our committee needs to be able to report on to Parliament with recommendations that we can move on very quickly.
As for Mr. Erskine-Smith's other suggestion about January, I certainly am very interested in talking about witnesses for Bill , because I think this is going to be a very important study. I'll make myself available as long as we're not.... Maybe more informally, as a subcommittee, we could just talk through some of this and find a way to get ourselves oriented for February.
Those are my comments. However, I'm definitely ready to vote on this motion now.
Thanks very much, Mr. Chair.
Welcome, Mr. Erskine-Smith. I only had the opportunity to be on a committee briefly for a few appearances during the justice committee last year. I'm looking forward to it.
We have to take meaningful action to protect victims of child abuse and sex trafficking. When these abuses are documented on video and then put online, they're there forever. Once they're online, as we saw with reports in The New York Times, there's no getting them down.
It's very concerning that we have the distinction of being home to this organization. Certainly, they should come and appear before committee. Conservative members are prepared to support the motion and to move swiftly to a vote.
With respect to preparations for looking at government legislation, I'm definitely open to assisting with an informal working group to get witnesses and a timetable worked out and presented to the committee. We can circle back on that off-line.
I have done my homework, I have familiarized myself with the motion. As I understand it, it replaces Mr. Dong's motion. We are probably all tired. Some bits really escaped me. By the way, my thanks to the interpreters.
So we are going to vote on this today in preparation for when we return. That is the bit that I did not understand. I did read the motion and I had time to listen to you.
I am always very wary, particularly with the whole matter of videos aimed at young people. That really concerns me.
We just must not forget the reason why we are meeting today. Life goes on and clearly, we have to deal with what drops into our plate. However, it would be worthwhile for everyone to be able to read everything we just heard at the committee. It contains a lot of good material for our structure.
I hear it said that the current situation is much the same as it was 10 or 15 years ago. Canada is actually far behind in terms of protecting personal information. That has consequences on international trade.
Perhaps this is not the case for you, but it affects me enormously. It is urgent for us to act. We must have transparency and we must make sure that people are protected. This is part of that protection.
I am ready to vote, keeping in mind that we have a lot of work to do. I am ready to work, and work even harder, because people deserve us to make everything better and to provide them with the very best.
Thank you, Ms. Gaudreau.
I hope this translates okay, but thanks for setting the bar high for us. It's a high standard.
Going back to Mr. Angus's comment, I was thinking exactly that, and if you'll give me that latitude in this motion, we'll reach out. A couple of the young ladies, I believe, have been public in their statements. We'll reach out to them, and to me it would be advantageous to have their testimony first, because then we'd have sworn testimony before the committee that we could refer to when we get the characters from Pornhub and MindGeek before us. If you will give me that latitude, I'll work on that for the two meetings Mr. Angus suggested.
Is there a consensus around that? I see there is.
There's one last thing. I think we have unanimous consent as well in regard to the motion. Is that clear as well, colleagues?
Okay. I think that might be our first unanimous vote.
Thank you very much, colleagues—