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37th PARLIAMENT, 3rd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Wednesday, April 21, 2004

1535

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

Mr. Vic Toews (Provencher, CPC)

1540

The Chair

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

1545

The Chair

Hon. Robert Thibault (West Nova, Lib.)

The Chair

1550

Commissioner Giuliano Zaccardelli (Royal Canadian Mounted Police)

The Chair

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

The Chair

Mr. Vic Toews

The Chair

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

1555

The Chair

Mr. Vic Toews

Commr Giuliano Zaccardelli

1600

Mr. Vic Toews

Commr Giuliano Zaccardelli

Mr. Vic Toews

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

Mr. Vic Toews

Commr Giuliano Zaccardelli

Mr. Vic Toews

Commr Giuliano Zaccardelli

Mr. Vic Toews

1605

Commr Giuliano Zaccardelli

Mr. Vic Toews

Commr Giuliano Zaccardelli

Mr. Vic Toews

The Chair

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

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

1610

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

1615

Mr. Odina Desrochers

The Chair

Mrs. Marlene Jennings

Commr Giuliano Zaccardelli

Mrs. Marlene Jennings

Commr Giuliano Zaccardelli

Mrs. Marlene Jennings

1620

Commr Giuliano Zaccardelli

Mrs. Marlene Jennings

Commr Giuliano Zaccardelli

Mrs. Marlene Jennings

Commr Giuliano Zaccardelli

Mrs. Marlene Jennings

Commr Giuliano Zaccardelli

1625

Mrs. Marlene Jennings

Commr Giuliano Zaccardelli

Mrs. Marlene Jennings

The Chair

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

The Chair

Mr. Marcel Proulx (Hull—Aylmer, Lib.)

The Chair

Mr. Marcel Proulx

Commr Giuliano Zaccardelli

The Chair

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

The Chair

Mr. Peter MacKay (Pictou—Antigonish—Guysborough, CPC)

Commr Giuliano Zaccardelli

Mr. Peter MacKay

Commr Giuliano Zaccardelli

1630

Mr. Peter MacKay

The Chair

Mr. Peter MacKay

Commr Giuliano Zaccardelli

Mr. Peter MacKay

The Chair

Mr. Peter MacKay

The Chair

Commr Giuliano Zaccardelli

Mr. Peter MacKay

Commr Giuliano Zaccardelli

Mr. Peter MacKay

The Chair

Mr. Peter MacKay

The Chair

Mr. Peter MacKay

1635

The Chair

Mr. Peter MacKay

The Chair

Mr. Peter MacKay

The Chair

Mr. Peter MacKay

The Chair

Mr. Peter MacKay

The Chair

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

The Chair

Mr. Peter MacKay

Commr Giuliano Zaccardelli

Mr. Peter MacKay

The Chair

Hon. Shawn Murphy (Hillsborough, Lib.)

Commr Giuliano Zaccardelli

1640

Hon. Shawn Murphy

Commr Giuliano Zaccardelli

Hon. Shawn Murphy

Commr Giuliano Zaccardelli

Hon. Shawn Murphy

Commr Giuliano Zaccardelli

Hon. Shawn Murphy

Commr Giuliano Zaccardelli

Hon. Shawn Murphy

Commr Giuliano Zaccardelli

Hon. Shawn Murphy

Commr Giuliano Zaccardelli

Hon. Shawn Murphy

Commr Giuliano Zaccardelli

Hon. Shawn Murphy

Commr Giuliano Zaccardelli

1645

Hon. Shawn Murphy

Commr Giuliano Zaccardelli

Hon. Shawn Murphy

Commr Giuliano Zaccardelli

Hon. Shawn Murphy

Commr Giuliano Zaccardelli

Hon. Shawn Murphy

Commr Giuliano Zaccardelli

Hon. Shawn Murphy

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

The Chair

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

The Chair

Ms. Judy Wasylycia-Leis

Commr Giuliano Zaccardelli

1650

Ms. Judy Wasylycia-Leis

Commr Giuliano Zaccardelli

Ms. Judy Wasylycia-Leis

Commr Giuliano Zaccardelli

Ms. Judy Wasylycia-Leis

Commr Giuliano Zaccardelli

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

Commr Giuliano Zaccardelli

Ms. Judy Wasylycia-Leis

Commr Giuliano Zaccardelli

1655

Ms. Judy Wasylycia-Leis

Commr Giuliano Zaccardelli

Ms. Judy Wasylycia-Leis

Commr Giuliano Zaccardelli

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

Commr Giuliano Zaccardelli

The Chair

Mr. Vic Toews

The Chair

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

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

Commr Giuliano Zaccardelli

1700

Mr. Dennis Mills

Commr Giuliano Zaccardelli

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

Commr Giuliano Zaccardelli

Mr. Dennis Mills

The Chair

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

1705

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

The Chair

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

1710

The Chair

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

Commr Giuliano Zaccardelli

Mr. Odina Desrochers

The Chair

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

1715

Commr Giuliano Zaccardelli

Mrs. Diane Ablonczy

Commr Giuliano Zaccardelli

Mrs. Diane Ablonczy

Commr Giuliano Zaccardelli

Mrs. Diane Ablonczy

The Chair

Mrs. Diane Ablonczy

The Chair

Mrs. Diane Ablonczy

The Chair

Mrs. Diane Ablonczy

The Chair

Mrs. Diane Ablonczy

The Chair

Hon. Joe Jordan (Leeds—Grenville, Lib.)

1720

Commr Giuliano Zaccardelli

Hon. Joe Jordan

Commr Giuliano Zaccardelli

Hon. Joe Jordan

Commr Giuliano Zaccardelli

Hon. Joe Jordan

Commr Giuliano Zaccardelli

Hon. Joe Jordan

Commr Giuliano Zaccardelli

The Chair

Hon. Robert Thibault

1725

Commr Giuliano Zaccardelli

Hon. Robert Thibault

Commr Giuliano Zaccardelli

Hon. Robert Thibault

Commr Giuliano Zaccardelli

Hon. Robert Thibault

Commr Giuliano Zaccardelli

Hon. Robert Thibault

The Chair

Hon. Robert Thibault

Commr Giuliano Zaccardelli

The Chair

1730

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

The Chair

Commr Giuliano Zaccardelli

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

1735

Mrs. Marlene Jennings

The Chair

Hon. Walt Lastewka

The Chair

Mr. Odina Desrochers

The Chair

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

The Chair

CANADA

Standing Committee on Public Accounts

NUMBER 029

3rd SESSION

37th PARLIAMENT

EVIDENCE

Wednesday, April 21, 2004

[Recorded by Electronic Apparatus]

¹ (1535)

[English]

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

Our orders are pursuant to Standing Order 108(3)(g), 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 witness today is from the Royal Canadian Mounted Police, Mr. Giuliano Zaccardelli, the commissioner.

I've had a notice of a point of privilege from Mr. Toews. However, before I get into that, Mr. Toews, I would like to do the standard correspondence and get that out of the way.

From Public Works and Government Services Canada, I received a letter from Mr. I. David Marshall, the deputy minister, addressed to Mr. Jeremy LeBlanc, the clerk.

Dear Mr. LeBlanc:

The purpose of this letter is to provide the Standing Committee with information relevant to the testimony given during the Committee's April 19, 2004 deliberations. In this context, I am pleased to provide the Committee with the following clarifications regarding certain audit activities undertaken by PWGSC.

PWGSC did not formally audit Groupe Everest. A certain number of files from Groupe Everest were reviewed, however, during the Department's QRT (Quick Response Team) exercise. The QRT reviewed 721 sponsorship files, from 1997-1998 to 1999-2000, focusing specifically on 126 files determined to be of primary interest due to their size, nature, complexity and/or profile. For the purpose of this exercise, the QRT verified, where possible, the existence of proposals, invoices and post mortem reports. The Department was able to retain copies of some of these records for information purposes, and these have been added to the Department's information holdings. Attached, for the Committee's information, is a copy of the QRT report.

PWGSC conducted two audit activities in relation to Media IDA Vision. As the Agency of Record (AOR), Media IDA's activities consisted primarily of negotiation and placement of advertising on behalf of the Government of Canada. The AOR was also entitled to a 3% commission on the total value of the sponsorship. In return for this commission, the AOR was required to ensure financial management and provide reporting services for the sponsorship program.

The first audit activity relating to Media IDA Vision was undertaken during the 2000 PWGSC internal audit of sponsorships. This audit reviewed the AOR's sponsorship management control framework and banking procedures, and found the AOR used a sophisticated framework of controls over the processing of financial transactions and sponsorship events. Auditors reported, however, a need for greater segregation of the sponsorship funds held by the AOR on behalf of CCSB and those funds paid as commissions to the AOR for its work on the sponsorship program. In response to this finding, Media IDA Vision was required to keep a segregated bank account for these funds and repay the interest generated on the sponsorship funds held in the previous unsegregated account. Media IDA Vision remitted this amount to the Government of Canada. The Committee was provided a copy of the 2000 audit report on February 16, 2004.

In 2003, PWGSC initiated a special contract audit of Media IDA Vision's compliance with advertising provisions outlined in the Articles of Agreement (the contract) with the Crown. The audit focused on the most material provisions of the Agreement which established the AOR's responsibility to provide required administrative services relating to the purchase, consolidation, and payment of all media space and time. The audit determined that Media IDA Vision had complied with the most material advertising related provisions of the Articles of Agreement. Attached, for your information, is the record of the findings of this special contract audit.

Yours sincerely,

I. David Marshall

That's in two languages, and there is the background report dealing with the Consulting and Audit Canada-Media/IDA Vision Inc. agency of record audit findings. It's all there in both official languages. That is tabled and available for distribution.

Now, Mr. Toews, you gave me notice that you had a point of privilege.

Mr. Vic Toews (Provencher, CPC): I was concerned today when I read in The Globe and Mailan article entitled, “Mounties tell MPs to slow up ad probe”. My concern with this specifically arises out of certain comments that purport to be quotes of an in camera meeting yesterday.

The purported quote here is:

“They've asked us for a month to complete their investigation,” an MP said of yesterday's meeting with the RCMP. “The goal of the meeting was to ensure that the work of the inquiry does not disrupt their work.”

I know you gave us very specific instructions as to what could be said properly arising out of that meeting. Without confirming whether in fact that was said at the meeting, I'm very concerned that it certainly goes out of the bounds of what I understood we were entitled to communicate to anyone on this particular issue.

My concern about this is not only that my privileges as a member have been breached, but that this appears to me to be very deliberate. One of the consequences of this kind of a breach is to in fact shut down this inquiry. The inference from this particular article--and I'll read another paragraph from this--is that a witness who has appeared here has appeared over the objections of the RCMP.

This isn't a direct quote, but I'm quoting this from The Globe and Mail article:

One source said the inquiry had insisted on calling specific witnesses even after being told that their appearance could affect the RCMP probe.

I'm very concerned about that, that there's somehow the inference that we're at cross-purposes with the RCMP. My understanding, Mr. Chair, is that no witness has appeared here over the objections of the RCMP. I'm not aware of any witness who has appeared here over the objections of the RCMP.

So what this article and this source attempt to do is to suggest that there's some kind of conflict between the very legitimate RCMP criminal investigation and the investigation by this inquiry in terms of its parliamentary responsibilities. I don't want this now to be used as the basis for members in this committee perhaps or members in the House saying, well, you know, we have to shut down this inquiry because it's at cross-purposes.

I feel that my privileges as a member here have been breached, and I don't know what you can do about this. We have the Commissioner of the RCMP here. Perhaps you can ask the commissioner whether any witness has appeared here before us to give testimony over the objections of the RCMP. If there is a witness who has appeared here over the objections of the RCMP, I want to know, because I'm certainly not aware of that.

¹ (1540)

The Chair: Madam Jennings, followed by Mr. Thibault.

[Translation]

Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you very much, Mr. Chairman. I'd like to thank Mr. Toews for raising this question of privilege. I too feel that my rights as a parliamentarian have been violated as a result of the disclosure of the information, statements and comments in this article. I'll take it a step further. As the Chair and our legal counsel have stated repeatedly, we are masters of our own destiny. We are not governed by the same standards, laws, procedure and rules that apply to other jurisdictions, for example, to administrative tribunals or criminal courts. We set our own rules. We're chastized because we may decide to hear or call a witness who could well be a key witness in a criminal investigation. I'm sorry, but in my view, if we feel that the testimony that an individual or witness can provide is crucial to our fulfilling our mandate, then we should not be thinking in terms of a future criminal investigation, even one conducted by our own law enforcement organization, the RCMP.

Mr. Toews is suggesting that you put a question to the Commissioner. I'd like you to put this question to him: does this information come from the RCMP? I fail to see what benefit it would be to opposition or to government members on this committee to disclose this information. I'd like to know if this information comes from the RCMP.

¹ (1545)

The Chair: You have the floor, Mr. Thibault.

[English]

Hon. Robert Thibault (West Nova, Lib.): Mr. Chair, I share the two previous speakers' preoccupation. I think this is very serious. I remember what I read in the article this morning. It specifically said that a member of Parliament stated.... It indicated that it was an interview with a member of Parliament.

I think that any member of Parliament present who would have given an interview yesterday to that effect should withdraw from this committee in the interest of the work of this committee.

We all agreed to that yesterday. We all agreed specifically on how we were going to speak of the meeting yesterday and that we would not take any action that would limit, contradict, or contravene the work of the RCMP. But at no time did we talk about what the work of this committee would do.

For a lot of the information in that article, we didn't agree to that or never said it should be said. Is it accurate or inaccurate? I won't even get into that question. I think it's very important that we keep in camera information in camera.

As I've mentioned a number of times, Mr. Chairman, I'm afraid when people submit information to this committee by a letter, an affidavit, or any other means, other than a public appearance, because what gets out there with regard to their statement is more or less factual, and it's very dangerous.

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

I too am extremely distressed by the article on the front page of one of the major newspapers and in other newspapers. I believe it was on television as well. We did agree yesterday that we would have an in camera meeting, and that was to have a discussion with a senior member of the RCMP to ensure that we didn't step on their investigation and they did not step on ours. We respect their responsibility, which is the criminal investigation. As they conduct their criminal investigation, the people who are being investigated have rights and privileges; that is standard procedure in this country. At the same time, we are a democratic institution, as I have said, the Parliament of Canada, asking the government to account for the stewardship of the money we have voted to them on behalf of the taxpayers of Canada with the stipulation that they account for what they have done with the funds.

They are parallel types of investigations. They are not the same investigation, but they do come together, because we're talking to the same people. Therefore, we must be cognizant of their rights, the RCMP's obligations and our obligations. That was why we had a discussion yesterday morning. That was the line we were going to be talking about, and how we went from there was not to be discussed with the media. As Mr. Thibault said, we cannot even confirm or deny what some member has gone within a matter of minutes or hours and talked to the media about.

We have the commissioner here, in a rather difficult situation, to explain the role of the RCMP in this particular issue. We're concerned because perhaps they haven't held themselves to the highest ethical professional standard, but what does this say about our professional ethical standards when we conduct this investigation? As I've said many times, it's surely incumbent upon us to follow the rules when we're investigating why the rules were broken.

I do appreciate Mr. Thibault's statement that whoever made the leak--and they know who they are--should voluntarily withdraw from this committee. I think it's only appropriate.

It's fortuitous, Commissioner, that you are here today. Normally, we would not have the privilege of asking you. Normally, the chair or the Speaker rules without any input from outsiders, but you're here, so I'm going to ask you a couple of questions that were put forth.

Are you aware that we have interviewed any witness you would prefer we hadn't talked to ?

¹ (1550)

Commissioner Giuliano Zaccardelli (Royal Canadian Mounted Police): Mr. Chairman, before I answer, do you wish that I swear in?

The Chair: Yes.

[Translation]

Commr Giuliano Zaccardelli: I swear that the testimony I am about to give is the truth, the whole truth and nothing but the truth, so help me God.

[English]

The evidence I shall give on this examination shall be the truth, the whole truth, and nothing but the truth, so help me God.

The Chair: Let me ask the question again. Are you aware that this committee has interviewed a witness the RCMP has asked we not speak to?

Commr Giuliano Zaccardelli: I have no information of any cross-purposes between the work of this committee and the RCMP's investigation.

The Chair: Thank you.

You've read the papers today, I'm sure, like all of us. Did that information come from the RCMP?

Commr Giuliano Zaccardelli: Absolutely not, Mr. Chair.

The Chair: On your point of privilege, Mr. Toews, here is Beauchesne's, 6th edition, section 57, regarding in camera proceedings:

The House has in the past regarded the publication of the proceedings or the reports of committees sitting in camera to be a breach of privilege. Unless, however, a specific charge is made against an individual allegedly responsible, the Speaker has refused to find a prima facie case.

So unless you are prepared to identify a particular MP, I am going--

Mr. Vic Toews: I'll leave it at that then, Mr. Chair.

The Chair: So I will rule your point of privilege out of order. We will not proceed with that.

This is not specifically for you, Commissioner. I read this for everybody, so you're not singled out:

...the refusal to answer questions or failure to reply truthfully may give rise to a 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.

You are appearing before us as an individual today. Did you discuss the matter or have any meetings with any employees of the Government of Canada or any members of this committee in preparation of your report before coming to this committee?

Commr Giuliano Zaccardelli: I reviewed certain documents and had discussions with certain members of my staff in preparation for this committee hearing. I have not discussed this with anyone on the committee.

The Chair: And you weren't coached in any way to answer any questions in a certain way?

Commr Giuliano Zaccardelli: Absolutely not.

The Chair: Has legal advice been provided or paid for by the authorization of any official of the Treasury Board Secretariat or the Department of Public Works and Government Services Canada or any other governmental department or agency? You are here as the Commissioner of the RCMP. I would imagine that any legal advice you had would have been provided by your own departmental resources at the Department of Justice, so if you say yes, that's perfectly acceptable.

Commr Giuliano Zaccardelli: Yes. I didn't ask for specific advice, but I did talk to some of our lawyers internally.

The Chair: Okay. I actually tabled in the House just a few minutes ago a report asking that all public servants be paid for out of the public purse.

Do you have an opening statement, Commissioner?

Commr Giuliano Zaccardelli: Yes, I do have a short opening statement.

The Chair: Okay, the floor is yours.

Commr Giuliano Zaccardelli: Thank you, Mr. Chairman.

[Translation]

Thank you for inviting me to address the committee today.

¹ (1555)

[English]

First, I would like to commend the Office of the Auditor General for its thorough report on the Government of Canada's sponsorship program. The Royal Canadian Mounted Police has been cooperating fully with the Office of the Auditor General and will continue to do so in the future. I have read the Auditor General's report, and I agree with the content and the recommendations as they pertain to the Royal Canadian Mounted Police.

As you're aware, Public Works and Government Services Canada contributed to the RCMP's 125th anniversary celebration through its sponsorship program. The opportunity afforded by the RCMP's 125th anniversary was to celebrate the historical relationship the RCMP enjoys with the communities we serve. The sponsorship program provided funding not available from other sources and the additional branding with the Canada wordmark.

[Translation]

This initiative was another way of expressing our community-based policing philosophy. When concerns were raised involving management of the RCMP funding, the RCMP conducted an internal audit as well as administrative reviews.

[English]

Our internal audit and reviews identified a number of administrative errors involving the funding for the 125th anniversary activities. In response, we took immediate and appropriate corrective measures. These corrective measures were put in place in the spirit of continuous improvement. The RCMP implemented controls to ensure that policies, procedures, and regulations are clearly understood, monitored, and enforced within the RCMP. Sponsorship guidelines have been developed and were made available to all managers and staff in January 2003. Internal audits are conducted on an ongoing basis within the RCMP to ensure that all policies, procedures, and regulations are strictly adhered to by the RCMP.

[Translation]

The RCMP held more than 700 events in the course of its 125th Anniversary celebrations, many of which took place in the province of Quebec. These events helped the RCMP make positive connections and communicate with the people across the country in which we serve.

[English]

Our 125th anniversary initiatives also supported the larger objectives of the federal government's sponsorship program. Funding was used to organize events and improve relations with communities across Canada. Funds were used to raise money for various charities. Also, the event enabled us to raise the profile of the RCMP throughout Canada.

The RCMP is an organization based on certain values: professionalism, compassion, respect, honesty, and integrity. At the core of our values is accountability, including financial accountability. The RCMP has always been and will continue to be accountable for its actions.

[Translation]

We are a transparent organization and will cooperate fully with the committee. We will answer all questions you may have.

Thank you.

[English]

The Chair: Thank you very much, Commissioner.

I have one announcement before we start. I believe bells are supposed to ring at 5:30, with voting at 5:45. That could go on for an hour, as there are quite a number of votes, I understand, so we will be wrapping up shortly after 5:30.

Mr. Toews, eight minutes.

Mr. Vic Toews: Thank you, Mr. Chairman, and thank you, Commissioner.

In the Auditor General's report, chapter 3, page 19, she states that of the $3 million from the sponsorship program the RCMP received $1.704 million through Gosselin, Lafleur, and Media/IDA Vision.

These agencies retained a total of $244,380 in commission fees for transferring funds from CCSB to the RCMP. The balance...went...to pay for production work....

My concern is with the $1.704 million of the sponsorship funds received by the RCMP. There was only one agreement signed between the RCMP and the ad agency representing the Government of Canada, and that was for $800,000. We've got $1.7 million, but only $800,000 in a written agreement. What is the policy of the RCMP on the necessity of written contracts for goods, services, or otherwise?

Commr Giuliano Zaccardelli: The policy is to have signed agreements. That was one of the issues picked up in our internal audit, and a year later it was also picked up by the Auditor General. That has been corrected. At the time that was the way the program was managed. The moneys were divided: $200,000 came in in Ottawa, and after the $200,000 was provided to headquarters, there was a recognition that there was a need to have an agreement signed, and consequently you have the $800,000 agreement signed.

º (1600)

Mr. Vic Toews: I'm just looking at the issue, though. This is much more than administrative error. I can see it when you're dealing with nickels and dollars and a few thousand dollars, but we're dealing with almost $1 million that simply wasn't justified by any written contract. I think, Mr. Commissioner, with all due respect, to characterize this as an administrative error is underrating a very serious problem. I'd like to see the policy of the RCMP as it existed at the time these contracts were entered into and as it is now. For example, are any contracts now entered into for goods, services, or otherwise that are done on a verbal basis by the RCMP?

Commr Giuliano Zaccardelli: There are none. When we applied, we applied as an agency of government to another agency, and those were the rules we were led to believe were in existence at the time. We applied and we received the money. Every cent we had was spent on events related to enhancing the image of the RCMP and promoting the wordmark Canada.

Mr. Vic Toews: So when the RCMP pays out under contract for goods, services, or otherwise, it is now policy that it be done on a written contract. Would that also include honorariums?

Commr Giuliano Zaccardelli: I'm not sure how we pay out honorariums. I would have to check on the policy. It is clearly articulated and recorded according to the Financial Administration Act.

The Chair: If you want to bring forward some of the assistants you have with you, if they are more knowledgeable on specific details, Commissioner, you may invite them to come forward.

Commr Giuliano Zaccardelli: Mr. Chair, I would prefer to have my comptroller here, who is not here at this time. He would be the one to speak to that policy.

Mr. Vic Toews: Sometimes, I understand, honorariums are paid in quite sizeable amounts on a daily basis, and I want to ensure that the RCMP also has those honorariums and other contracts covered by this written policy. Once we deal with administrative errors the size of $1 million, we also look at some of the smaller issues to make sure those contracts, whether they're for goods, services, or honorariums, are covered by the written policy.

Commr Giuliano Zaccardelli: We did not order the goods; the goods were provided to us. So the provision of the goods that are the subject of the $800,000 or whatever was a matter between Public Works and the agencies that provided it. We did not go out and order the goods. We asked for certain things and they were given to us. We didn't actually enter into contracts ourselves to get the goods. It's very important to make this distinction here.

Mr. Vic Toews: But we heard from Mr. LeFrançois from VIA Rail that he co-guaranteed a loan of $40,000 with a member of the RCMP. Is that correct?

Commr Giuliano Zaccardelli: I have no knowledge of that, and I have no knowledge that it is related to the $1.7 million.

Mr. Vic Toews: Perhaps you could check into that and get back to us.

Finally, what I'm concerned about, as was the Auditor General, is what added value to the government from this sponsorship program was really received, given that the RCMP was already required to display the Canada wordmark under the Treasury Board policy on the federal identity program. The Auditor General is saying we didn't really receive any documented evidence of any additional visibility in return for the money spent. Could you comment on the Auditor General's statement?

º (1605)

Commr Giuliano Zaccardelli: I'm very much aware of the Auditor General's comments in that area, but it's important to remember that with the $1.7 million we received we put on over 700 events throughout Canada. A lot of those events would not have taken place otherwise. Therefore, the RCMP would not have been promoted and the wordmark would not have been promoted. We would not have been able to put on those events without assistance from the sponsorship funds. What was the value? I understand that's an issue, but we would not have been able to hold those events, which demonstrated what we were doing, connecting with the communities, and showing the Canadian wordmark.

Mr. Vic Toews: Has the RCMP given that explanation to the Auditor General before, during, or after her audit?

Commr Giuliano Zaccardelli: We have given all the information to the Auditor General, and the Auditor General has been very pleased, and once certain errors were identified, she was complimentary on how quickly we responded and dealt with those issues. We have provided all of that information.

Mr. Vic Toews: Okay.

So if you could get some of the materials and answers I have requested, I would appreciate that.

Thank you.

The Chair: Thank you, Mr. Toews.

The clerk will perhaps write you a letter, Commissioner, on the request from Mr. Toews, so you have in writing what the obligations are.

Monsieur Desrochers.

[Translation]

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

Thank you, Commissioner. In your opening remarks, you stated that there was no funding available from other sources to finance the 125th Anniversary celebrations. Is that correct?

Commr Giuliano Zaccardelli: That is correct, Mr. Desrochers. I wasn't the Commissioner at the time, but according to the information I reviewed, the Commissioner at the time issued instructions not to use internal funds for the 125th Anniversary celebrations. Therefore, since we did want to organize some celebratory events, we looked elsewhere for funding opportunities. We received some funding from other organizations, but we did explore this option.

Mr. Odina Desrochers: Did you seek some funding from the Solicitor General, from Heritage Canada or from the Prime Minister's Office?

Commr Giuliano Zaccardelli: No, we did not request funding from other federal organizations.

Mr. Odina Desrochers: Who put you in touch with Mr. Guité?

Commr Giuliano Zaccardelli: According to the file I reviewed, Mr. Guité was in touch with the Commander of C Division responsible for Quebec, Deputy Commissioner Odilon Emond. Apparently, the two met.

Mr. Odina Desrochers: And were any communication firms involved in this file?

Commr Giuliano Zaccardelli: No. The initial meeting was between Commander Emond and Mr. Guité. Further to this meeting, Commander Emond advised RCMP Headquarters. Subsequent meetings took place and Mr. Guité and other individuals were asked how we should go about applying for some Sponsorship Program funding.

Mr. Odina Desrochers: If I understand what you're saying then, the RCMP took the initiative.

Commr Giuliano Zaccardelli: Correct, but as I was saying, a meeting took place in Quebec. Did Commissioner Emond call Mr. Guité, or did Mr. Guité contact Commissioner Emond? I really don't know. The fact remains that further to their meeting in Quebec, steps were taken to find out how we could access these funds.

Mr. Odina Desrochers: Mr. Chairman, I obtained the following document under Access to Information provisions. It is dated November 20, 1997 and comes from Lafleur Communication Marketing. The following is noted in the letter:

The Government of Canada intends to participate in the partnership program “125th Anniversary of the RCMP (Québec)” for fiscal year 1998/1999.

J.C. Guité

Executive Director

At that time, did you know that an advertising firm was acting as an intermediary between the RCMP and Public Works Canada?

Commr Giuliano Zaccardelli: Absolutely.

Mr. Odina Desrochers: You were aware of that fact. Why then did you tell me that the RCMP took the initiative, not Lafleur Communication?

º (1610)

Commr Giuliano Zaccardelli: As I've already stated, the initial meeting was between the Commander and Mr. Guité. Once we had contacted Mr. Guité and his department, he told us what steps to take and explained to us that the department did not have the necessary resources to do everything we wanted. done. He suggested that we get in touch with two agencies: Lafleur, which was supposed to handle work in Quebec, and Gosselin, which covered the rest of the country. That's how these two firms became involved.

Mr. Odina Desrochers: Who recommended these two firms to the RCMP?

Commr Giuliano Zaccardelli: Mr. Guité and his department.

Mr. Odina Desrochers: Are you acquainted with Mr. Gagliano?

Commr Giuliano Zaccardelli: No.

Mr. Odina Desrochers: You don't know him?

Commr Giuliano Zaccardelli: I'm familiar with his name. We met once in conjunction with some event held here in the National Capital Region. I also met him on one other occasion when he was ambassador. He was back here in Canada and I was making a presentation on the subject of organized crime. He attended the presentation along with a number of other ambassadors. We exchanged greetings.

Mr. Odina Desrochers: You said that Lafleur Communication and Gosselin were involved in this file. Furthermore, according to what you said, Mr. Guité was the point man. However, who told you to contact Chuck Guité? Who instructed Commissioner Emond to arrange a meeting with Chuck Guité? Who arranged that?

Commr Giuliano Zaccardelli: As I said before, according to the information I reviewed, Mr. Guité was initially contacted after we received a letter at Headquarters about a meeting in Quebec between Commander Odilon Emond and Mr. Guité. I can't say for certain how the meeting between Commander Emond and Mr. Guité came about.

Mr. Odina Desrochers: So then, there was no political interference.

Commr Giuliano Zaccardelli: Not to my knowledge.

Mr. Odina Desrochers: In any case, Lafleur Communication billed you [Editor's note: inaudible].

Commissioner, I have here a sample of questions and answers for the official spokespersons of the RCMP 125th Anniversary celebrations. Question Q.3) asks the following:

What was the extent of the federal government's financial involvement as well as that of corporate partners?

The response from RCMP representatives to this question should be “Approximately $500,000”.

However, on page 19 of the AG's report, we read that the federal government freed up $1.5 million, which the RCMP received through Lafleur.

Lafleur retained $967,750 in commission fees and the RCMP received over $500,000. How do you explain the figures quoted in the guide for your spokespersons, whereas the exact figure quoted by the federal government was $1,577,250?

Commr Giuliano Zaccardelli: The answer is very simple. The reference is to $500,000... I don't have the exact figures, but the total amount was divided in two, more or less. Some of the funds were earmarked for Quebec, and some for the rest of the country. I believe $500,000 or $600,000 went to Quebec. Lafleur was the firm responsible for working with us in Quebec. The remainder, that is $1.1 million, was intended for the rest of Canada. That's how we arrived at a total figure of $1.6 or $1.7 million.

Mr. Odina Desrochers: Nevertheless, the guide clearly states the following:

Q.3) What was the extent of the federal government's financial involvement as well as that of corporate partners?

Approximately $500,000

Are we to understand then that Lafleur Communication was trying to get the RCMP spokesperson to say that the federal government was contributing $1,557,250, but that ultimately, the money was coming from Lafleur? If we calculate the amount of money that went directly to the RCMP, namely $500,00 plus what Lafleur gave, we arrive at the sum of $1.5 million. That's what I don't quite understand.

Commr Giuliano Zaccardelli: I think the figures are very clear. The AG's report is also very clear. We requested some funding. The government awarded us $1.6 or $1.7 million, and we split this amount in two. We received either $500,000 or $600,000 which was to be used in Quebec. We were advised to use Lafleur Communication in Quebec. The remaining funds were for events elsewhere in the country and the department advised us to use Gosselin. It's that simple.

º (1615)

Mr. Odina Desrochers: Is my time up, Mr. Chairman?

The Chair: It is, Mr. Desrochers.

You have eight minutes Mrs. Jennings.

Mrs. Marlene Jennings: Thank you, Mr. Chairman. Commissioner, could you explain to us why you decided to set up a non-governmental bank account to handle these funds?

Commr Giuliano Zaccardelli: By all means. This decision was made by C Division in Quebec. I'm not sure whether the person who decided to set up this bank account was the commander or a finance service employee in Montreal.

However, I can tell you that there was a very good reason at the time for setting up this bank account. It was to ensure a clear split between the funds allocated to the RCMP for this program and other types of budget funds. We wanted no confusion to arise between the $500,000 or $600,000 allocated and the funds available for our other operations. That was the reason. Of course the rules weren't followed, but that was the reason. That's the best answer we've been able to come up with thus far.

There were valid reasons for setting up this account, but we made a mistake.

Mrs. Marlene Jennings: Therefore, you don't know who gave the direction to set up this bank account and to proceed in this manner. It may have been Commander Emond, but it may also have been one of his subordinates. In whose name was the account? Who had signing authority over the account? Why were the bank statements and cancelled cheques destroyed? If they were not destroyed, where are they and can they be provided to the committee?

Commr Giuliano Zaccardelli: I can't say who was responsible exactly for setting up this bank account. To the best of my knowledge at this time, it wasn't the Commander. I can understand that. Occasionally finance group employees in a particular province are authorized to open these types of bank accounts. That's the best answer I can give you. I could try and find out exactly who the person was.

To answer your question as to why certain documents were destroyed, this matter came up during the course of our internal audit. The error stems from the fact that according to RCMP regulations, documents pertaining to sponsorship issues must be kept for two years. Financial records must remain on file for seven years. We were informed that the documents in question were destroyed because employees believed they were sponsorship papers, not financial records. That's where the mistake was made.

Mrs. Marlene Jennings: The problem, Commissioner Zaccardelli, is this: two substantial sums were forwarded to RCMP C Division (Quebec) by these firms, one totalling $530,000 and the other totalling $1,174,000. I can't imagine C Division receiving a cheque for half a million dollars without the commander having any knowledge of the transaction. I can't imagine the commander or senior officers not administering this money, not issuing clear instructions and not understanding the Financial Administration Act, or in other words, not realizing that the funds should be deposited in a corporate account. Furthermore, we have to wonder if the RCMP should even have been eligible for Sponsorship Program funding, but we have to assume that it was.

The money flowed in and people seemed unaware of the provisions of the Financial Administration Act. They are paid big salaries to manage and you're telling me that they are unfamiliar with the fundamentals of this legislation and its basic accountability provisions. It is, after all, the public's money that we are talking about.

I'd like to know what steps you took as Commissioner to call these employees to task for their actions and to sanction them.

º (1620)

Commr Giuliano Zaccardelli: As I said, I admit that mistakes were made. The commander at the time is now retired and I think you could call him and other employees in to testify. I'm certain you'll ask them these same questions. I can't answer for them. I can only try to explain to you what happened.

As I said, we conducted an audit and since then, we have established within the RCMP an audit service that is staffed by professional auditors, not by RCMP members. We have set up a professional service. We hired civilians from the private sector and I'm extremely proud of their work. Treasury Board often holds us up as an example when referring to audit groups.

We organized training sessions. We hired Treasury Board personnel to assist us. I'm proud of what we've accomplished. I can't condone past errors. However, I can tell you that every last penny was spent for the good of the program, as per the government's wishes.

Mrs. Marlene Jennings: That's not entirely true, since some of the money was used to purchase horses. That expenditure should have come out of the RCMP operating budget. Some of the funds were used improperly.

Commr Giuliano Zaccardelli: I'd like to respond to the question about the horses...

Mrs. Marlene Jennings: Commissioner, I applaud your efforts to make changes, but I must ask you once again what happened to the employees who appeared to be unaware of the provisions of the Financial Administration Act and who were responsible for administering the funds paid to the RCMP for its 125th Anniversary celebrations. They're paid to know such things, it's their responsibility and part of their job. How did you deal with these individuals? Did you send them on a training or refresher course?

Commr Giuliano Zaccardelli: You're right. The two persons in charge of these two programs—in Quebec as well as at headquarters—were retired when these errors came to light. Again, I have to say that we took steps to ensure that the same thing doesn't happen again.

It's all very important to remember that when we asked those working for the agency at the time, persons like Chuck Guité, whether there would be a problem if we used some of the money to buy horses, we were giving the green light to proceed. We were not properly advised, but...

Mrs. Marlene Jennings: Who gave you the green light to proceed?

Commr Giuliano Zaccardelli: Mr. Guité, according to my sources.

º (1625)

Mrs. Marlene Jennings: Really!

Commr Giuliano Zaccardelli: According to the information I received, we received a verbal authorization.

Mrs. Marlene Jennings: Well then, if Mr. ...

[English]

The Chair: I just have to say that you're not the first person who's talked about verbal authorization from Mr. Guité. He seemed to hand that out to everybody.

Commr Giuliano Zaccardelli: I'd just like to be as clear as I possibly can with my information.

The Chair: One question, Commissioner. I think Ms. Jennings asked you about the name of the bank account, and you went on to say that it shouldn't have been done, but whose name was the bank account in? Do you know?

Commr Giuliano Zaccardelli: I don't know the names. Two people, two managers in the RCMP, would have had to co-sign for that account.

The Chair: Mr. LeFrançois, the president of VIA Rail, told us that he co-signed a loan on that bank account, for $40,000, together with someone else. Was it one of these two members that you're talking about who co-signed a loan of $40,000, or guaranteed a loan for $40,000?

Commr Giuliano Zaccardelli: Mr. Chair, I have no knowledge whatsoever of that, and I would be highly surprised if he had anything to do with the account. The account may have been inappropriately opened, and I will check on that, but I have absolutely no knowledge of that.

The Chair: We will send you the testimony of Mr. LeFrançois--

Mr. Marcel Proulx (Hull—Aylmer, Lib.): I have a point of order, Mr. Chair.

We could check the blues or whatever, but if my memory serves me right, what Mr. LeFrançois had said was not in regard to these activities but rather for a fundraising ball.

The Chair: Which I thought was the 125th anniversary of the RCMP--

Mr. Marcel Proulx: Yes, but it doesn't mean it's the same bank account.

Commr Giuliano Zaccardelli: The ball was totally separate. It was part of the festivities, but the ball had nothing to do with.... There were other sponsors who were part of helping us celebrate and having the ball as part of our 125th anniversary.

The Chair: Okay. On that point, then, we will review Mr. LeFrançois' testimony and send it to you. You can let us know if it was within the rules of the RCMP or not.

Ms. Wasylycia-Leis, please, eight minutes.

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): With the permission of the committee, perhaps I would be allowed to catch my breath after coming here from the finance committee. I would like to defer to Peter MacKay and do my eight minutes after him.

The Chair: You're doing double duty, double speed, in which case you'd need four minutes. But since you're here, we'll let you get eight minutes.

All right, Mr. MacKay?

Mr. Peter MacKay (Pictou—Antigonish—Guysborough, CPC): Yes, that's fine.

Thank you, Mr. Commissioner, for your presence here.

I want to go back to an issue raised by Ms. Jennings. With respect to this issue, you would have to grant that it's more than a mistake when the Financial Administration Act and the Treasury Board guidelines have been broken, which is what the Auditor General has said.

The other difficulty I have with it is that in response to questions from Mr. Toews, you basically said there was a resulting 700 events conducted by the RCMP aided by the sponsorship program. However, this is what the Auditor General stated:

We do not believe that Parliament appropriated funds to PWGSC with the intent that they be used to purchase horses for the RCMP. Given that they were, however, we can see no reason why CCSB did not transfer the funds directly to the RCMP and save the $244,380 in commissions.

So I guess first my question is on the merits of buying these horses, one of which I understand has now died, and how this is separate from the events you have described here that were aided by the sponsorship program. This was clearly unrelated to sponsorship and should have come out of the operational budget of the RCMP. Would you not agree?

Commr Giuliano Zaccardelli: Mr. Chair, these horses were purchased out of the sponsorship money. At the time, there was a huge demand for us to use the Musical Ride to have events throughout the country. As you know, as great as the Musical Ride is, we can't have it everywhere. So there was great pressure to have more horses and so on.

The idea was, can we buy a few horses? So we called the department, CCSB, and we said, “Look, there is this huge pressure. Is it possible to buy horses?” We were told, albeit verbally, to go ahead and do it. So we bought those horses--

Mr. Peter MacKay: If I could just interrupt you, who told you that it was okay to bend the rules? Who told the department? Who told the RCMP?

Commr Giuliano Zaccardelli: Nobody told us to bend the rules. My understanding is that a senior officer in Ottawa inquired, and he was told verbally, “Go ahead and do it.” And those--

º (1630)

Mr. Peter MacKay: Could you find out who did that, please? Would you undertake to find out where that came from?

The Chair: Mr. MacKay, are you asking for the officer in the RCMP who did the inquiring or the person who--

Mr. Peter MacKay: I'm asking for both, if he could point out the individuals involved.

Commr Giuliano Zaccardelli: In discussions with me, Assistant Commissioner Dawson Hovey, who's now retired, gave me the information that he verbally contacted Mr. Guité and so on.

But those horses were used throughout the province of Quebec and other parts of Canada to, again, promote the RCMP, to promote the wordmark, and to promote Canada. So they were used as per the sponsorship said we would do.

Mr. Peter MacKay: Mr. Commissioner, with respect, you may disagree that it was bending the rules, but clearly the Auditor General has said that it not only bent the rules; she talks in her earlier report about breaking every rule in the book. And in this case you're talking Financial Administration Act and Treasury Board guidelines. That is a perception problem for the RCMP itself, just as it's a perception problem now to be investigating the sponsorship scandal itself.

I want to ask you a question, though, specifically about Mr. Gagliano. You referenced the fact that he was invited to an international money laundering conference. Was he specifically invited, for some reason?

More importantly, Mr. Gagliano was denied entrance into cabinet in 1993 because of concerns raised by the RCMP. What were those concerns, and were they later alleviated when he was put in cabinet in 1994?

The Chair: Order.

Just a second here. Let me just think about that.

Mr. Peter MacKay: Why is it irrelevant? He's a central figure in this.

The Chair: Well, let's answer the question about the conference he attended.

Commr Giuliano Zaccardelli: I'm sorry, Mr. MacKay, if I may have misled you or you may have misunderstood me. I was invited to an External Affairs meeting or a conference where they brought back a number of their ambassadors from overseas. They asked me to speak about organized crime. So it was in that context that at the DFAIT offices I met Mr. Gagliano. I simply shook hands, as I shook hands with all of the other ambassadors, and I did my presentation on organized crime.

Mr. Peter MacKay: So he wasn't invited by the RCMP.

Commr Giuliano Zaccardelli: No, no. I was invited to speak to them, Mr. MacKay.

Mr. Peter MacKay: All right.

With respect to his entrance into cabinet, the RCMP raised concerns in 1993--

The Chair: Mr. MacKay, we're dealing with the sponsorship program, chapters 3, 4, and 5 of the Auditor General's report. I'm a little reluctant to go down to the issue of RCMP giving security clearance to cabinet ministers.

Mr. Gagliano was a cabinet minister and he had the responsibilities around that. He testified here about his time as a cabinet minister.

I'm not sure it's germane to the investigation to ask the RCMP to divulge an issue. They're here about their involvement in the Auditor General's report.

Mr. Peter MacKay: Well, Mr. Chair--

The Chair: Just a second.

We have a difficult issue here--and I meant to caution everybody before--in terms of asking the RCMP questions about their involvement as reported in the Auditor General's report and keeping that separate from the RCMP's job to investigate the sponsorship scandal and continuing on their job as the police force of Canada. As we know, parliamentarians do not get involved in the work of police forces. We have to maintain that separation.

So as far as maintaining that separation is concerned, I'm going to rule that question regarding Mr. Gagliano's approval or otherwise, or the recommendation by the RCMP on going into cabinet, as out of order.

Mr. Peter MacKay: Respectfully, Mr. Chair, first of all, the RCMP commissioner is tantamount to a deputy minister, and I have not, in any way, asked this witness, the commissioner, a question that impugns the RCMP's integrity to conduct their investigation into the sponsorship scandal. In fact, quite the contrary; I've asked a question that bears directly on the veracity of testimony of another witness, namely Mr. Gagliano. It goes to the ethical standard of an individual who was appointed to cabinet and the questions raised by the RCMP at the time that obviously impacted on the decision of whether Mr. Gagliano would be accepted into cabinet.

So I would like to know, and I think Canadians and this commission should know, why in fact the RCMP raised those questions and concerns, and if in fact those concerns were later met that led to Mr. Gagliano's entrance into cabinet. It does bear directly on Mr. Gagliano--his operations within cabinet, his testimony before this committee.

º (1635)

The Chair: I'm just going to stand by where I stood, Mr. MacKay. Mr. Gagliano was admitted to the cabinet by the Prime Minister of the day, who made his decision based on the facts presented to him and the political resumé...or the political reasons that he decided who was going to sit in his cabinet. The issue we're dealing with here is the relationship of Public Works with various people involved in government. The RCMP were mentioned in the report by the Auditor General, and that's why they're here today. They're not here to divulge anything about anybody who happened to be mentioned in the sponsorship issue. Therefore, I'm still going to rule that question out of order.

You may continue. We didn't quite stop the clock. I'll give you one minute left.

Mr. Peter MacKay: Thank you, Mr. Chair.

Mr. Commissioner, with respect to the review that is underway currently, is that review nearing completion, and will you be prepared to table with this committee the findings of that review and any of the supporting documents?

The Chair: Mr. MacKay, is this the review regarding the review of--

Mr. Peter MacKay: The review of the sponsorship program, specifically.

The Chair: Now, when you say “the review of the sponsorship program”, they are conducting an investigation, which is their business, into the sponsorship program. They have been mentioned in the Auditor General's report, and as I said, this is a fine line that we have to walk.

I understand the Sûreté du Québec is actually conducting a review of your participation in this as well.

Is that the report you're talking about? Because you're talking about a report on the RCMP's involvement in the issues mentioned.

Mr. Peter MacKay: No, I wouldn't expect that this witness would be able to table that. I'm specifically referring to the administrative review by the RCMP of the sponsorship program in terms of the 125th anniversary. That's the review that's under way, as I understand it.

The Chair: So their review of the issues where they feel they've broken their own rules.

Mr. Peter MacKay: No. Maybe this witness can clarify it.

My understanding is that there is a review currently being undertaken of the sponsorship program and how it pertained to the 125th anniversary celebrations. That's the review. It's an internal review, or an audit.

The Chair: Yes, that's correct. The Auditor General does say in her report:

Subsequently, as the internal audit had recommended, the RCMP started an administrative review of the sponsorship of its 125th anniversary celebrations.

So that's your own internal investigation. Will that be available, and when?

Commr Giuliano Zaccardelli: We completed our review almost a year before the Auditor General came in. We did that on our own and we concluded that on our own.

The Chair: Yes, you're right, because it goes on to say, “Our audit revealed a number of anomalies”, and it goes on to quote them.

Can you send a copy of that to us? Is that possible, Commissioner?

Commr Giuliano Zaccardelli: Yes.

The Chair: Okay, thank you.

Your final question, Mr. MacKay.

Mr. Peter MacKay: Mr. Commissioner, with respect to this contract, this sponsorship program, money that went for the purposes of buying horses, money that went for these 700 events that were aided by the sponsorship, did you personally feel, or are you aware of anyone within the force who felt, that political pressure from ministers, members of Parliament, or senior officials within the PMO or PCO was being brought to bear in relation to sponsorship programming?

Commr Giuliano Zaccardelli: I personally was not involved in any issue related to this program when it was ongoing, and I have absolutely no knowledge of any pressure or any attempt to influence this at all.

Mr. Peter MacKay: Thank you, Mr. Commissioner.

Thank you, Mr. Chair.

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

Mr. Murphy, please.

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

Commissioner Zaccardelli, a person of your stature and position in life would know hanky-panky when you saw it. So with the 125th anniversary of the Royal Canadian Mounted Police and the government funding that came through the sponsorship program, did you see anything you would classify as being fraudulent or close to being fraudulent?

Commr Giuliano Zaccardelli: Absolutely not. This was an attempt by the RCMP to celebrate their 125th anniversary. We wanted to engage the public right across this country at the grassroots level, and we had a number of initiatives. It was brought to our attention that the government had a program that might be available to us, that we could use to enhance our endeavours, and we simply applied for that. And in spite of some of the mistakes we made, we are extremely proud of what we did in Quebec and the rest of the country, so I make no apologies for that. There was absolutely no attempt to defraud or to misuse. Even with that bank account, I know the people, and they feel bad, but they were trying to be holier than the Pope, if I can say that, by separating those moneys. That's how much they cared about making sure there was no crossing over.

º (1640)

Hon. Shawn Murphy: Commissioner, in your review of the files, did you come across any instances where money went missing?

Commr Giuliano Zaccardelli: Absolutely not.

Hon. Shawn Murphy: I have a question about the involvement of the Lafleur group and the Gosselin group. You've testified that the Lafleur group handled the Quebec events and the Gosselin group handled the non-Quebec events. In the figures that were disclosed in the Auditor General's report the RCMP received directly $1,704,000. Is it your evidence that this money was all used for these 700 events?

Commr Giuliano Zaccardelli: That is correct, sir.

Hon. Shawn Murphy: There were also production costs of $1,081,900. Who supervised and managed these so-called production costs?

Commr Giuliano Zaccardelli: These were the agencies, because they were supposed to be experts in promotion material, media issues, and so on. We're obviously not experts in this. We were told, here is the money and these are the companies that will produce, for example, posters, all kinds of things you need, pins to sell, commercial issues, and so on. We were directed to deal with these two companies, because we were told the department did not have the human resources to do that work, so that's what we accepted.

Hon. Shawn Murphy: Does the RCMP have its own separate marketing department?

Commr Giuliano Zaccardelli: We have a media office, but we're clearly not professionals. That's not our main job. We're police officers.

Hon. Shawn Murphy: So these 700 events for the 125th anniversary amounted to something, it's fair to say, you'd never done before.

Commr Giuliano Zaccardelli: No, and we never will again, I guess.

Hon. Shawn Murphy: Do I understand your testimony to say that Lafleur and Gosselin were involved in most of these events?

Commr Giuliano Zaccardelli: Yes. I must say, though, the companies worked with us, spent a lot of time with us, and were helpful in giving us advice.

Hon. Shawn Murphy: With the $1,081,910 for production costs, I know the documentation is not as clear as I would like to see it for verification purposes and is not what you expect from the Government of Canada. Did you at any time try to verify that the $1,081,910, as disclosed in the Auditor General's report, was actually spent in the production of these events?

Commr Giuliano Zaccardelli: To the best of our knowledge, it was, but remember that while we requested certain things, the agreements were between Public Works, not us, and these advertising agencies. So it goes back to a question that was raised before. We required certain things, but the agreements weren't between us and the agencies; they were between the agencies and Public Works, and they would provide the materials we needed. There are a couple of cases where, again, the commanding officer in C division saw certain figures and questioned the costs or the commission that was being taken by the agencies. He raised those matters, but we had no dealings regarding them. That was between the agency and the government department.

Hon. Shawn Murphy: Let's assume for a minute that the $1,081,910 was spent on actual production costs. How were Lafleur and Gosselin being paid in this deal?

Commr Giuliano Zaccardelli: As the Auditor General reported, they received almost $250,000 in commissions. But again, we didn't pay that. That was agreed upon. That was taken, I assume, at some point off the top or whatever and paid to them by the government. We got the final product. If, for example, we needed 100,000 posters, they delivered 100,000 posters for us.

º (1645)

Hon. Shawn Murphy: Were you reasonably satisfied with the work of Gosselin and Lafleur?

Commr Giuliano Zaccardelli: All indications from everybody I've talked to are that they worked very hard and provided us with a lot of advice and good service.

Hon. Shawn Murphy: I know hindsight is 20/20 vision, and by taking money from another government source, as you admit, you did violate the Financial Administration Act, but if you hadn't got this money, did the RCMP have much of a budget to go forward with these 700 events?

Commr Giuliano Zaccardelli: As I said, Commissioner Murray at the time gave very clear instructions. Again we're going back to 1997-1998, a time when fiscal constraint was a lot tighter than it is right now. He gave instructions that we were not to use operational moneys. We did have other sponsors, but we clearly wouldn't have been able to hold as many of the events as we were able to with the help of this money.

Hon. Shawn Murphy: So your evidence is that there were other non-government sponsors helping you out along the way too.

Commr Giuliano Zaccardelli: Yes.

Hon. Shawn Murphy: They just wanted to be affiliated with the RCMP as it celebrated its 125th anniversary.

Commr Giuliano Zaccardelli: The ball in Montreal is a perfect example of that. We had other departments and other people who helped. Again, that ball raised money for a charity. We had sponsors for that.

Hon. Shawn Murphy: When this 125th anniversary was completed and all 700 events concluded, did the RCMP conduct a post-mortem or debriefing on the cumulative event?

Commr Giuliano Zaccardelli: In hindsight, and the Auditor General has highlighted this, we probably could have done a better job of that. We didn't do as good a job of looking at whether we got maximum value, whether we could have done things better. There was some examination, but it was lacking in depth.

The Chair: Thank you, Mr. Murphy.

Following up on Mr. Murphy's comments, I'll quote from the Auditor General:

We found that both the RCMP and CCSB purchased similar goods from Lafleur. We informed the RCMP and PWGSC of this matter and asked them to confirm with their supplier that double payments were not made.

Do you know if the RCMP followed up to confirm if double payments were made to Lafleur?

Commr Giuliano Zaccardelli: Mr. Chair, we're aware of that. It is the subject of a criminal investigation, so I can't say anything further on that.

The Chair: Then we'll leave it right there.

Monsieur Desrochers.

[Translation]

Mr. Odina Desrochers: I thought Judy was up.

[English]

The Chair: No, I said she was going to be after Mr. Mills. Do you want to switch with Madam Wasylycia-Leis?

[Translation]

Mr. Odina Desrochers: I'm always ready, I can jump in right away, but...

[English]

The Chair: Okay, Madam Wasylycia-Leis, eight minutes.

Ms. Judy Wasylycia-Leis: Thank you very much, Mr. Chairperson, and thank you, Mr. Zaccardelli.

I want to ask you about the overall sense of what went wrong here. It's something I've asked the heads of crown corporations who are in the same jam. Didn't something bother you when you saw this unusual arrangement, the way in which the government was suggesting the money flow and the sponsorship activities be conducted? Was there anything that triggered any questions in your mind or those of staff with the RCMP?

Commr Giuliano Zaccardelli: I wasn't there at the time. Again, all the information I have suggests no red flags went up. The RCMP was involved in certain celebrations. We found out that this program was available, we contacted the people in the program, and they said, yes, there are some good ideas that we would like to support. They said, we don't have the resources, but we have engaged certain agencies, which sounded perfectly normal. Even today it sounds perfectly normal to me. As you know, a lot of times there are certain things the government can't do, so we hire people. I hire consultants at times to help me understand certain issues and move certain programs ahead. We all do that in government. So having agencies work with us or be an intermediary was not unusual.

º (1650)

Ms. Judy Wasylycia-Leis: But something must have made you nervous, I would think. You did an audit before the Auditor General came in, right?

Commr Giuliano Zaccardelli: Yes.

Ms. Judy Wasylycia-Leis: So what triggered that audit?

Commr Giuliano Zaccardelli: Ours was an internal audit of how we had managed this. Certain information came to our attention suggesting that maybe we had not managed it as well as we should have. So our focus was to make sure we identified those shortcomings on our part and took the necessary measures to correct them. I gave some information in respect of one question about the commanding officer in C division being concerned at one point about the commission that was being paid relative to a product that was given to us. But again, what agencies are paid as commissions is not within the expertise we have. So we raised the question, but it didn't go any further.

Ms. Judy Wasylycia-Leis: You've expressed a great deal of concern over what happened and have been very cooperative with us here today, unlike some other witnesses we've had. Are you, though, now that you look back on this whole file, at all concerned that it would appear you were participating in a scheme that included money-for-nothing contracts?

Commr Giuliano Zaccardelli: I'm very much aware of the reports, and that bothers me. The thing that bothers me the most, of course, is the fact that we made some mistakes. I don't like making mistakes, and I don't like our people making mistakes, and when we find out about them, we take the corrective actions that are necessary. I'm very satisfied, as I said, that we've done that.

Further, the perception that the RCMP was part of some scheme is absolutely false and untrue, and I would like to put that on the record. Also, Mr. Chair, I think you may have alluded to the fact that the SQ is investigating the RCMP. The RCMP is not being investigated. What we turned over to the SQ was in the interest of transparency and making sure there's no perception of our being involved in a conflict of interest. We have asked them to undertake a small portion of the overall investigation concerning these two agencies we dealt with. They are not investigating us, as has been reported in some media quarters.

Ms. Judy Wasylycia-Leis: Fair enough. Looking back, though, do you get any sense of being used by someone in government in respect of this whole sponsorship file, just looking at the way in which it was set up for money to flow from government through all these ad agencies, which seem to take a cut--

The Chair: I think you said, did you feel you were used? Is that what you said?

Ms. Judy Wasylycia-Leis: Yes.

The Chair: I'm not going to allow that question.

Ms. Judy Wasylycia-Leis: Okay. Sorry.

Do you feel you were a victim? Were you a victim of a larger scheme where you had no knowledge or control?

Commr Giuliano Zaccardelli: Mr. Chair, I am very proud that with $1.6 million, we put on 700 events throughout this country. That is something that is not matched by a lot of people. We made some mistakes, but I am very proud, as Commissioner of the RCMP, to have seen that. We did not participate in any scheme, and I don't want to use the word that was--

Ms. Judy Wasylycia-Leis: My intent wasn't to question the integrity of the RCMP or the quality of the programs you provide. My question is, looking back, do you have concerns when you now see how the money flowed and that money went through agencies that it would appear took a cut for not providing any additional service or product, and then the remainder flowed on to you? Does that, now that you know this or you see it in the Auditor General's report, cause you concern, a feeling that maybe you were part of something over which you had no control and would never have wanted to be part of?

Commr Giuliano Zaccardelli: I can't speak for the other department, but we feel the two agencies we dealt with worked with us, struggled with us, helped us. I've been told that by everybody who dealt with them. They worked very hard to promote the RCMP celebrations, and also the broader government program. Were they paid an excessive amount? I am not a judge of what agencies should be paid, but we were well served by those agencies in the products and the amount of time and effort they put into helping us.

º (1655)

Ms. Judy Wasylycia-Leis: I have to ask you a question for which I don't have solid evidence, but it is based on information passed on to us. Pardon me if it's out of left field or another field. It was suggested to us that the RCMP commissioner's plane was partly paid for from sponsorship funds. Could you comment on that?

Commr Giuliano Zaccardelli: Absolutely not. That plane--

Ms. Judy Wasylycia-Leis: I qualified it at the beginning. You heard me.

Commr Giuliano Zaccardelli: This has come up many times. That plane was bought because it's required for operations. I was made aware of it. I did not influence it in any way, and not one cent came from the sponsorship money. The plane was bought years after the sponsorship program.

The Chair: Ms. Wasylycia-Leis, I said at the beginning that we're dealing with chapters 2, 3, and 4 of the Auditor General's report. I know we're dealing with the sponsorship issue, but this is going off on wild hearsay questions. Perhaps you should not go down that line again. Okay? Thank you.

Ms. Judy Wasylycia-Leis: Thank you, Mr. Chairperson. I appreciate that. I qualified my question, so that it was understood that--

The Chair: I would just say--

Ms. Judy Wasylycia-Leis: Right, and I think, given the mood out there, it's useful to have it clarified--

The Chair: No more questions based on hearsay.

Ms. Judy Wasylycia-Leis: --and I appreciate the answer of the commissioner.

I asked earlier about the perception of money-for-nothing contracts. This was somewhat reinforced by the Auditor General's findings about the fact that the visibility for the RCMP was already provided for separately from the actual sponsorship of the 125th anniversary. She suggests in fact that wittingly or not, some of this money meant for specific activities was whittled off and put against operational sources. I know you've been asked that already, but outside the horses, were sponsorship funds designated for any other programs or ongoing operations of the RCMP?

Commr Giuliano Zaccardelli: No. The only other things, of course, that go with the horses are the trailers, because we had to move the horses around. There was no other money used anywhere else.

The Chair: Thank you very much, Ms. Wasylycia-Leis.

Mr. Toews.

Mr. Vic Toews: On a point of order, I note that you took some exception to Ms. Wasylycia-Leis' question. I don't agree with your ruling, but I'm going to respect it. The other comment I heard is that there should be no more questions based on hearsay. I don't recall many questions in this committee being asked on anything but hearsay. Very few questions are actually asked on direct evidence. All I'm suggesting, in a very brief intervention, is that perhaps you weren't so strict in the comment about hearsay.

The Chair: If you start your remarks with hearsay and go off on a fishing expedition, the two together, I think, are a bit too much. That's why I said Ms. Wasylycia-Leis shouldn't go there.

Did you have a point of order too, Mr. Mills?

Mr. Dennis Mills (Toronto—Danforth, Lib.): I just wanted a clarification. I wrote down what you said, as I thought this might be the quote of the day: “No more questions based on hearsay.” Just exactly what did you mean?

The Chair: I'm glad you gave emphasis to that.

Mr. Dennis Mills: This would be a famous first for you, Mr. Chair. We're going to have to redesign the committee approach here.

The Chair: I think I gave my interpretation to Mr. Toews, so there we are.

Mr. Mills, you are next.

Mr. Dennis Mills: Oh good. Thank you. Boy, you're being good to me today, Mr. Chair.

Commissioner, with 700 events, did this involve two teams, or was this the same team for the Musical Ride?

Commr Giuliano Zaccardelli: We had a national committee, and in each province and territory we had a committee that looked after events in that province or territory.

» (1700)

Mr. Dennis Mills: No, Commissioner, I meant the Musical Ride per se. Were there two teams of horses?

Commr Giuliano Zaccardelli: There's only one Musical Ride, 32 horses.

Mr. Dennis Mills: So this worked out at approximately $20,000 per event over the period of time.

I remember vividly when the Musical Ride--

The Chair: We had an agreement that we're going to focus on questions now; we're not going to go off on some long statements.

Mr. Dennis Mills: This is going to be very short.

The Chair: Okay.

Mr. Dennis Mills: Mr. Chairman, you've always said two things. This is a committee of accountability, but it's also a committee that has to be responsible in addressing whether the taxpayer got value for money. I happen to think the Musical Ride is one of the most respected symbols in our country. My question to the commissioner was going to be the following--

The Chair: Mr. Mills, in response to that, the commissioner has already put that on the record, and we all agree with the commissioner. If you're going to ask questions of the commissioner regarding the issues raised in the Auditor General's report, that's fine. If you want to do an advertisement for the RCMP Musical Ride, perhaps the House of Commons is the place for doing that. We have some work to do here.

You may proceed with your question.

Mr. Dennis Mills: Mr. Commissioner, did your officials ever track the sort of impact the Musical Ride had in these various communities across Canada? I want to be very specific, because the experience I had with Bala, Ontario, with the television, the radio, was that the impact was quite profound. I want to know if you did that for every event.

Commr Giuliano Zaccardelli: Mr. Mills, the Musical Ride has to be seen separately from the 700 events, because the Musical Ride every year travels throughout Canada. They perform all the time. We don't do scientific tracking of the impact of the Musical Ride, but you only have to look at the members of the community who show up and the children who show up, and you see it in their faces, in their eyes. There is no impact similar to seeing the Musical Ride, from what I've seen in this country.

Mr. Dennis Mills: I agree.

I am finished, Mr. Chair. Thank you.

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

Monsieur Desrochers.

[Translation]

Mr. Odina Desrochers: Your turn is up, Mr. Mills!

Commissioner, I started off by reminding you that you received confirmation in a very short letter from Lafleur Communication. We know that at the time, Mr. Guité wasn't being especially loquacious.

I have another document in my possession dated July 2, 1998 and signed by Pierre Droz. Did Mr. Droz work for you?

Commr Giuliano Zaccardelli: Yes, he's still with Montreal Division.

Mr. Odina Desrochers: Here's what the letter says:

Please find enclosed an invoice in the amount of $500,000, which represents the sum awarded by Public Works Government Services Canada to promote the RCMP's 125th Anniversary in Quebec.

This letter was sent to Media/IDA Vision Inc. which oversaw all payments to firms.

To date, although we have yet to receive any payments, virtually all of the $500,000 has been committed. Consequently, the RCMP has had to pay for its activities out of its own budget, which it can no longer continue to do as of this day.

Therefore, I hereby request that a cheque be issued as soon as possible to cover the total amount awarded.

Were you aware of the fact the Canadian government funds were slow in getting to the 125th Anniversary committee?

Commr Giuliano Zaccardelli: As I said, Mr. Desrochers, I wasn't there at the time. I can only comment on the information I've received. In light of Superintendent Droz's letter, I can understand that there may have been a brief delay, but the fact remains that we received between $500,000 and $600,000 for events in Quebec. The remainder was to be spent in the rest of the country. We received the funds. Was payment of the funds delayed? I can't comment directly on this letter.

» (1705)

Mr. Odina Desrochers: This means that the RCMP was paying for these activities while it awaited the promised funding.

Commr Giuliano Zaccardelli: No. There was no...

Mr. Odina Desrochers: That's what your Mr. Droz said: “Consequently, the RCMP has had to pay for these activities...”. The RCMP was forced to pick up the tab while it waited to receive a cheque.

Commr Giuliano Zaccardelli: According to my sources, not a single penny of RCMP money was used. It's possible that... The invoice was paid, but with money received from the government.

Mr. Odina Desrochers: Let me reread this excerpt to you, Commissioner:

To date, although we have yet to receive any payments, virtually all of the $500,000 promised has been committed. Consequently, the RCMP has had to pay for these activities...

This $500,000 had to be posted somewhere in the RCMP's books. Mr. Droz himself was complaining to Media/IDA Vision that the funds were slow in coming and that the RCMP was being forced to dip into its own funds to pay for its 125th Anniversary celebrations.

Commr Giuliano Zaccardelli: I can't comment because I don't have the letter to which you're referring. I assume that Mr. Droz is available to testify, but I would point out that the Auditor General made no mention of this matter. Therefore, I can't give you a direct answer to your question. As I said, based on the information I received when I reviewed the files, we used Sponsorship Program funds, that is a total of $500,000 or $600,000 in Quebec and the rest in other parts of the country.

[English]

The Chair: Mr. Desrochers, you're quoting from some documents that neither the committee nor the commissioner have. We adopted a policy a week or so ago whereby you will have to give copies to the clerks, who will make them available to the steering committee, and then we'll make them public, because of what happened once before. A number of other pieces of information that were not germane to this investigation were included in a document that was brought forth, I believe, by Mr. MacKay. This way, we can make these documents public and distribute the parts that are germane to this particular investigation.

Are you able to give us copies of these documents when you're finished?

Were these documents received from the RCMP or from the Department of Public Works?

[Translation]

Mr. Odina Desrochers: The first document to which I referred... I hope you're not going to cut me off, because I'm sharing some information here.

The Chair: Go ahead.

Mr. Odina Desrochers: The first document I have is Mr. Guité's reply to Lafleur Communication. The second document is Mr. Droz's letter to Media/IDA Vision in which he says he hasn't received any funds yet. The other document is the protocol drafted by Lafleur Communication for the RCMP 125th Anniversary spokespersons. These are the documents currently in my possession.

[English]

The Chair: I don't know that it's appropriate to ask the commissioner questions regarding documents that weren't prepared by the RCMP or within the domain of the RCMP, because we cannot expect him to know the contents. So if, Commissioner, you want to decline on these questions, you may do so.

[Translation]

Mr. Odina Desrochers: On a point of order, Mr. Chairman. You yourself have brought with you and tabled to meetings of the Public Accounts Committee documents obtained under Access to Information. Therefore, I don't understand why now you're asking me to table my documents in advance and to have them translated in both languages. How do you expect me to do my research?

[English]

The Chair: Nobody's stopping you getting the access to information documents and tabling them with this committee. All I'm saying is, how can you ask the commissioner to respond to letters that didn't even emanate from the RCMP? It seems rather strange that we would ask him these questions if he doesn't even have copies of them to look at even now. It seems to me the commissioner would want to pass on answering any questions pertaining to communications from Mr. Guité to Lafleur or whoever, because Mr. Guité did not work for the RCMP.

[Translation]

Mr. Odina Desrochers: Mr. Chairman, the letter comes from the RCMP. It is dated July 2, 1998 and is signed by Inspector Pierre Droz, 125th Anniversary Committee.

» (1710)

[English]

The Chair: That was my point, Mr. Desrochers. I said, with documents that did not come from the RCMP, Mr. Zaccardelli may wish to pass. If they are from the RCMP, perhaps he would have to take it under advisement, if he doesn't know the answer.

[Translation]

Commr Giuliano Zaccardelli: Regarding Inspector Droz's letter to which you've alluded, I haven't seen this letter and it was written some time ago. Therefore, I'd at least appreciate an opportunity to view this letter for the first time. However, as I said, to my knowledge, RCMP funds were not used for these events.

Mr. Odina Desrochers: I'm asking the question, Mr. Chairman, because when Mr. Claude Boulay testified before the committee, there was some question of his earning interest on money that had yet to be paid out. Therefore, I'm wondering what happened between November 20, 1997, the day on which Mr. Guité agreed to provide some program funding, and July 2, 1998, at which time Media/IDA Vision had yet to pay out any money. Mr. Boulay was asked some questions this week, specifically whether he had earned any interest on these funds and where that money might be, and Mr. Droz was concerned as well. That's why I decided to obtain these documents.

How much time do I have remaining, Mr. Chairman?

[English]

The Chair: Three minutes.

[Translation]

Mr. Odina Desrochers: Commissioner, as a result of a letter from your Deputy Commissioner, Mr. Emond, VIA Rail apparently picked up the tab for a special train that was made available to a dozen or so senior RCMP officers, some of whom were accompanied by their spouses, to travel between Quebec City and Montreal on June 12, 1998. They had attended a gala dinner at the Quebec Citadelle and were returning to Montreal to attend a regimental ball hosted by the Prime Minister of Canada, Jean Chrétien.

How was the RCMP able to make these kinds of arrangements with VIA Rail?

Commr Giuliano Zaccardelli: As you mentioned, we organized a ball in Montreal and VIA Rail was one of the event sponsors. Part of VIA's work as a sponsor was to supply tickets for the trip from Quebec City to Montreal, since the ball was being held in Montreal. All senior RCMP officers had gathered for a conference in Quebec City. According to our research, three members used the tickets provided, and according to RCMP and Treasury Board guidelines, there wasn't a problem with their accepting these tickets to travel by train from Quebec City to Montreal, because this came under VIA's sponsorship of the event.

Mr. Odina Desrochers: Were these officers on duty when they took part?

Commr Giuliano Zaccardelli: They were on duty in Quebec City. When the conference wrapped up, they travelled to Montreal to attend the ball.

Mr. Odina Desrochers: Pursuant to section 54 of the RCMP's Code of Conduct, “a member shall not accept [...] special privilege in the performance of the member's duties...”

Why then did certain RCMP officers benefit from VIA Rail's sponsorship initiative?

Commr Giuliano Zaccardelli: As I said, these train tickets were part of VIA's contribution as a sponsor of the event. I belive they contributed $15,000 or $20,000 toward the cost of the ball. A total of 50 or 60 members were in Quebec City and three used train tickets to travel from Quebec City to Montreal.

Mr. Odina Desrochers: Three out of how many?

Commr Giuliano Zaccardelli: I think there were 50 or 60 members in Quebec City. I'm not certain of the exact number of RCMP senior officers.

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

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

[English]

Ms. Ablonczy, four minutes.

Mrs. Diane Ablonczy (Calgary—Nose Hill, CPC): Commissioner, I appreciate the fact that you inherited this--I'm sure you appreciate it too--but I just think it would be helpful to recap what we understand the Auditor General raised in her report.

The Auditor General said that of $3 million that went to assist the RCMP with their 125th anniversary, the RCMP actually received less than two-thirds of that. She said that of the $1.7 million that the RCMP did get, there was a contract for only $800,000 of that. She said that the RCMP already displays the Canada wordmark, and there was no evidence that the $1.7 million provided any additional visibility. She said that the Financial Administration Act was breached by the RCMP in their handling of this $1.7 million. She said that documents were missing and incomplete. She said that there was an illegal, or at least unauthorized, bank account set up to receive part of the money, and that, strangely, bank records relating to that account were destroyed. She said that there was possible double payment, which you've indicated is being investigated. She said that the RCMP used sponsorship money for their own operations and for capital purchases, and that there were no post-mortem documents to show value for money for this $1.7 million to assist with the 125th anniversary celebration.

So given what we know from the report, which you came here to help us with, I'm a little mystified by your testimony, to be honest with you, because you kind of refer to all of these things that I've just laid out as, and I'll quote you, “administrative errors”. Well, okay....

Then you talk about corrective measures, but you gloss over the problems under administrative errors. And not “you”, but this is your testimony.

And then you say, under “corrective measures”, that:

The RCMP implemented controls to ensure that policies, procedures and regulations are clearly understood, monitored and enforced within the RCMP.

Surely you're not telling the committee that this wasn't done before, that before this problem came to light, these administrative errors with the 125th anniversary, you didn't have “controls to ensure that policies, procedures and regulations are clearly understood, monitored and enforced”.

What changed?

» (1715)

Commr Giuliano Zaccardelli: Well, you're absolutely right, and I don't disagree with anything you've said, but the reality is that in these instances that you've highlighted, and that the Auditor General has highlighted as well, we were found wanting. We did not meet the test, and when we found out about that, we took corrective measures.

I hope that in no way did I give the impression that I am minimizing the seriousness of these issues. They are serious. However, they were identified. They weren't identified first by the Auditor General. We identified them in the RCMP, and we took the necessary measures to try to ensure that this wouldn't repeat itself. In an organization of 23,000 people, unfortunately things don't always get done 100%. You have to have the procedures and policies in place to ensure that it happens.

As I did mention, we have created a new internal audit. We've totally professionalized that. We've brought in people from the outside. We've participated with the Treasury Board in modern stewardship policies. We are a pilot project. And we've been cited by the Treasury Board for that. We have done training right throughout the country.

On balance, then, I think we have done more to try to correct this than some people would have expected. I am not minimizing what took place, but--

Mrs. Diane Ablonczy: I'm sorry, my time is so short, and I do appreciate all of that--

Commr Giuliano Zaccardelli: As well, the Auditor General cited us for the initiative and praised us for the work we did.

Mrs. Diane Ablonczy: I know, but here's my problem. If one of my staff had taken money coming into my office and put it into a rogue bank account, I would have gotten right to the bottom of that. You've told us--

Commr Giuliano Zaccardelli: Mr. Chair, I totally disagree with using the word “rogue” account. That implies an illegality that I refuse to accept.

Mrs. Diane Ablonczy: Do you mean it's normal for members--

The Chair: Okay, we're not going to get into a debate here.

Mrs. Diane Ablonczy: Mr. Chairman--

The Chair: We're not going to get into a debate back and forth.

Mrs. Diane Ablonczy: Why not? That's what we're here for, surely.

The Chair: First of all, you say your time is up...but the commissioner took exception to a word you used. We're not getting into a back-and-forth debate about the word and the concept; we're here to pose questions and get responses.

Mrs. Diane Ablonczy: Then might I just say, Mr. Chairman, that whatever we call this bank account, it certainly was not an authorized bank account.

The Chair: You're absolutely correct, and--

Mrs. Diane Ablonczy: The commissioner said he doesn't know who opened the account and he'll try to find out. I mean, at this late date, he doesn't know?

The Chair: Well, that's on the record. The commissioner didn't know.

Mr. Jordan, four minutes.

Hon. Joe Jordan (Leeds—Grenville, Lib.): Thank you, Mr. Chair.

Mr. Commissioner, apart from the normal operating budget that the RCMP gets, or the supplementary allocations for operations that you may come back for, how common is it for the RCMP to receive moneys from other government departments or agencies?

» (1720)

Commr Giuliano Zaccardelli: We don't receive moneys from any government departments to...certainly for such things as sponsorship events and so on. But if, for example, we were working with Canada Immigration on certain issues, we might work together on a joint Treasury Board submission. So they would help us. In some rare cases they may transfer moneys to us if we were doing work with them to assist them in something that we jointly were working on.

Hon. Joe Jordan: My question is this. I guess the thing that bothers me here is that if the CCSB had said to the RCMP, “We're going to participate in the 125th for x dollars, and here are a couple of agencies that you should use to help you do this”--and you've already stated that you thought you got good value for money on the production and the support--then I don't think we'd be having this discussion. And this isn't necessarily your fault.

What I keep coming back to is the commission, the $244,000 that these agencies got--in addition to the production work, which I'm assuming they made margins on--for simply taking the money from CCSB and giving it to you.

Now, I take it from your testimony that this certainly wasn't a decision the RCMP made, but you did answer a question earlier by saying that work was received but you didn't order the goods. Were you referring to the $200,000 that CCSB paid Lafleur for materials, or were you referring to the $65,000 that the RCMP paid Lafleur for goods?

Commr Giuliano Zaccardelli: No, I was referring to most or all of the production work. That was the $1 million, or whatever amount. That was not.... You know, we wanted that, but that was done between the agency and CCSB. We did not get as involved in that. We required certain things, and the agency was the one that we were told...we'll look after getting that for you.

Hon. Joe Jordan: Can you just give me an example of what types of things we're talking about?

Commr Giuliano Zaccardelli: Getting posters produced, getting pins produced, getting media time, for example, and certain other products that we would use at certain events, and so on. They would do that, because we don't have the means or the expertise to do that.

Hon. Joe Jordan: In terms of the flow of this money, then, did the RCMP get an invoice from these marketing agencies, or was this money paid directly from CCSB?

Commr Giuliano Zaccardelli: I stand to be corrected, but my understanding is that when we authorize it, we would receive the invoices and then we would verify that we got those goods and so on and we would send it back to the agency to look after.

Hon. Joe Jordan: So in terms of the amount of money that was approved, based on the submission the RCMP made to CCSB, what was the amount of money in that original document, and does that reconcile with the amount of money you got?

Commr Giuliano Zaccardelli: It reconciles. First, $200,000 was given to us, and then we realized that we should have an agreement. So an agreement was signed for $800,000. That was in headquarters. But in Quebec, that $500,000 to $600,000 never became the subject of an agreement.

And that's an error. In hindsight, if we had another situation like that, I guarantee you it would never be done this way. That's one of the major lessons learned.

The Chair: Thank you, Mr. Jordan.

Monsieur Thibault, s'il vous plaît, quatre minutes.

[Translation]

Hon. Robert Thibault: Thank you, Mr. Chairman.

Commissioner Zaccardelli, thank you very much for coming here today to assist us in our investigation. You've already acknowledged that a mistake was made, not because of the way in which the funds were used, but rather because of the way in which the funds came to you in the first place and the fact that a separate bank account was opened, in violation of the provisions of the Financial Administration Act. Thank you for that admission.

As far as we're concerned, the issue is not how you used these funds. Nor are we questioning the validity of events to promote the RCMP. All Canadians are, I believe, rightly proud of this institution. The problem, as we see it, is that public monies were transferred from Treasury Board to agencies such as yours and a third party received a commission merely for handling this transaction. Services were often contracted from communication firms and in many cases, services were provided—services for which they probably were initially entitled to be paid a commission. However, there are a number of ethical considerations to ponder.

As for the legality of these transactions, I won't ask you any questions about that. We know you're investigating this affair to see if anything illegal was done and I trust that you will do your job and that, hopefully, we'll have some answers fairly soon.

I have several questions for you. The first relates to a comment you made earlier. I hope you can clarify what you said because people may have been found it rather confusing. You stated that a separate account was set up in order to separate sponsorship funds from the RCMP's general operating funds. You indicated that the practice of setting up a separate account was against the rules. Earlier, you mentioned that two officers had signing authority over this account, as per the rules.

I for one I'm a little confused. First, you say that the account was against regulations and then you say that two officers must have signing authority, as per the regulations. Could you clarify your statement please?

» (1725)

Commr Giuliano Zaccardelli: As I said, the mistake was in setting up this bank account in the first place, but according to the rules, two officers must sign off on cheques. They complied with that rule, but the initial mistake made was setting up this bank account, in violation of Treasury Board and RCMP guidelines. The account was subsequently managed properly, but its purpose, to separate the funds to ensure that...

Hon. Robert Thibault: The question is, which rules applied: those of the bank or those of the RCMP?

Commr Giuliano Zaccardelli: They followed RCMP rules.

Hon. Robert Thibault: Therefore, under certain circumstances, it might be possible to set up a separate account?

Commr Giuliano Zaccardelli: Yes, but authorization is needed. The mistake was in failing to obtain that authorization. Under certain circumstances, a request can be made to set up this kind of account, but no such request was made or any authorization given. That's where the mistake was made.

Hon. Robert Thibault: Thank you.

I have another question concerning a comment you made, one that I find troubling. You stated that some of the funds were apparently used to carry out fundraising activities. If the federal government, through Treasury Board, had wanted to contribute to charitable activities, however laudable, it could have made a direct donation. Giving money to the RCMP through the Sponsorship Program is a rather roundabout way of carrying out a fundraising activity for another organization.

Commr Giuliano Zaccardelli: Perhaps I didn't explain the situation clearly. We did not use the funding we received to make charitable contributions. The ball was organized in conjunction with the 125th Anniversary celebrations. The $10,000 or $20,000 that wasn't spent was turned over to a charitable organization, but the money for the ball came from another source.

Hon. Robert Thibault: In answer to a question, I believe you stated that...

[English]

The Chair: Last question.

Hon. Robert Thibault: That's it? Okay.

You indicated in your testimony, or perhaps in response to a question, that among the uses of those funds were promotional activities and so on. You said that some of those were fundraising activities. Was the ball in Montreal the only fundraising activity, or were there others?

Commr Giuliano Zaccardelli: The ball was one event. There's also the Musical Ride. If we have an event and sponsorship money was used to put on some of that event, we may ask people who attend to contribute to a charity. So by having the event, we are able to get people to contribute to a charity. Indirectly, that would allow for contributions to charity. We do that all the time. We put on the performance for free, and then we ask people to contribute to a charity. So the community benefits from that.

The Chair: Merci beaucoup, M. Thibault.

The bells are going to ring in a little while. Rather than start another round, I'll ask some questions.

Commissioner Zaccardelli, do you have rules that say this is an official event of the RCMP; therefore, the funds will be handled through the consolidated revenue fund? Those that have the RCMP imprimatur on them but are not official events will be handled as a private function. Do you have clear guidelines on that?

» (1730)

Commr Giuliano Zaccardelli: There are very clear guidelines, and they come right from Treasury Board and the Financial Administration Act. Funds that we get from the government have to be handled according to those rules.

The Chair: The 125th anniversary celebration was an official RCMP function. The money came from the government out of the consolidated revenue fund. The ball in Montreal was the RCMP ball, but it was a private function. Therefore, the proceeds were not deposited in the consolidated revenue fund, nor were the bills paid from it. Do you have a clear line as to what side of the fence things fall on?

Commr Giuliano Zaccardelli: If it has nothing to do with official operation business, it doesn't get put into the consolidated revenue fund.

The Chair: But it was the RCMP ball. I would have thought the RCMP were officially putting it on, even though I had to buy a ticket. Is there a clear policy guideline as to which side of the fence these things fall on?

Commr Giuliano Zaccardelli: Absolutely. We have very clear policies on how to deal with sponsorships and these issues. This was as a result of what we learned in connection with this issue.

The Chair: As a result of what happened.

Commr Giuliano Zaccardelli: We clarified them and made sure everybody understood them.

The Chair: Going back to the RCMP ball, which was mentioned in the report, I said to Mr. LeFrançois, “You guaranteed an advance from a bank to get the money going to get the ball arranged. If you guaranteed it, the loan would have been in somebody else's name. Whose name was it in?” He said, “It was Odilon Émond.” I said, “Who is he?” He said, “He was the chief of the RCMP for the province of Quebec.”

Is there a conflict of interest here, with officers of the RCMP having a bank account that has been guaranteed by someone in the private sector for a function that has the imprimatur of the RCMP on it even though it may not be an official function? Is there a conflict of interest here that has to be addressed?

Commr Giuliano Zaccardelli: I'm not a lawyer. We have to be careful here. Perception is everything. We are much more conscientious and careful when we're dealing with these issues now than we were before.

The Chair: It's more than perception, Commissioner. He could have come back and said, “I did you a favour.” Then it can lead on from there. You have to be very careful of these things.

Commr Giuliano Zaccardelli: That's very true. But we have thousands of events throughout the country every year. These issues do come up. We hold a golf tournament in Montreal. It raises $105,000 for handicapped children. Obviously, we're very conscious of that.

The Chair: I'm just saying that the chief of the RCMP of Quebec was in a compromised position.

Mr. Dennis Mills: Mr. Chair, a point of clarification.

The Chair: Do it quickly, Mr. Mills. I have yet to hear from Ms. Jennings, and I have a letter to read.

Mr. Mills.

Mr. Dennis Mills: I wonder if it would be possible for the clerk to get a list of the 700 events that the Musical Ride participated in over the period described by the Auditor General where there was no visibility.

The Chair: Okay.

Ms. Jennings, you have a notice of motion.

» (1735)

Mrs. Marlene Jennings: Yes, I do. It is that pursuant to Standing Order 108(3)(g), 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 Standing Committee on Public Accounts on February 10, 2004, this committee call the Auditor General of Canada to appear on Wednesday, April 28, 2004, the Honourable Alfonso Gagliano to appear on Thursday, April 29, 2004, and Mr. Ranald Quail to appear on Friday, April 30, 2004.

Mr. Chair, given that it appears we will have the current Minister of Public Works, the Honourable Stephen Owen, the current Deputy Minister of Public Works, Mr. David Marshall, and representatives of the quick response team appearing on Tuesday, April 27, I think, with all the testimony we've heard since the appearance of the three individuals I mention in my motion, this committee is in a position to hear from them again, and we may wish to call them again at a later date.

The Chair: Thank you very much. That's a notice of motion, and we'll leave it right there. I thought we were going to send these things off to the steering committee.

Before we go, I have a letter to read from the Auditor General of Canada, dated April 21, 2004. It's addressed to me as the chair.

In response to the request for production of certain information, I am enclosing documents from our working papers of the audit of three contracts awarded to Groupaction, which was reported on May 6, 2002.

During my testimony before the Public Accounts Committee in 2002 on this matter, I indicated that I had a letter from Mr. Guité to the effect that he would sign minutes of a meeting with my staff, if a particular deletion was made. Although he never actually signed the altered minutes, we proceeded on the basis of his communication, interpreting it as an agreement with the remainder of the minutes. Our audit report did not include any information with which Mr. Guité, in our opinion, had disagreed.

As I mentioned to you in my letter of February 19, 2004, as a matter of principle, we do not disclose information from our audit files. Auditors have a duty, analogous to that of a trust relationship, to maintain the confidentiality of information obtained from their clients. It is preferable, as a general rule, for Committees to obtain documents directly from departments. However, in view of the fact that the document requested was prepared by my staff, is not available in any department, and that Mr. Guité himself has made an issue of the interpretation we placed on his reply to the minutes of the meeting, I believe that the material should be placed before the committee. Accordingly, I enclose the minutes of our interview of Mr. Guité on April 22, 2002 and his reply dated April 25, 2002.

Copies went to the clerks. That is tabled, it's a public document, but I only have one copy. Copies will be ready for members in a few minutes.

Hon. Walt Lastewka: Did you say he did not sign off?

The Chair: If you recall, Mr. Guité said he didn't sign off on the interview because he had a problem. There is a copy of the letter addressed to Mr. Minto, and I will read it. I've got all of this in two languages, by the way.

I can't remember having said the statement on top of page 7 or it may have been misunderstood. As a senior public servant, I may have bent the rules but I don't think the FAA or contracting regulations are an inconvenience.

Once this is deleted, I can sign the minutes.

That's what he said. It goes on to say the minutes were never actually signed, because the Auditor General took that as an authorization of the minutes.

I'm not going to get into a debate about that. These are just the public documents.

Monsieur Desrochers, what have you got for us?

[Translation]

Mr. Odina Desrochers: It will only take 30 seconds, Mr. Chairman.

Will Mr. Guité be subject to the same conditions as other officials when he testifies before the committee tomorrow? Have we settled the matter of the oath? If he does as he did in 2002, he'll use it to shield himself. Exactly what rules will apply tomorrow?

[English]

The Chair: We can raise that, but he will be sworn in tomorrow morning. As you know, cabinet ministers are relieved of their oath, and I would expect that Mr. Guité is on the same basis. That's the way it is.

Mr. Forseth, have you got something?

Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, CPC): I asked the Auditor General about this before, and she talked about access to the working files--I think it was in answer to my question. The answer I accepted as satisfactory at the time has been repeated there. It is the desire to get materials from primary sources first, but she made a commitment to this committee that if, for some reason, they were unavailable, she would make them available. I want to remind you also that in the ultimate push to shove, there is no privilege and that if we really wanted to, we could get the documents. We must reassert the authority of the committee to do so.

The Chair: Yes, and no one is disputing that.

The meeting is adjourned.