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37th PARLIAMENT, 3rd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Wednesday, May 5, 2004

1535

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

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

The Chair

Mr. Odina Desrochers

The Chair

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

The Chair

1540

Hon. Robert Thibault (West Nova, Lib.)

The Chair

Mrs. Marlene Jennings

The Chair

1545

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

The Chair

1550

Mr. Ranald Quail (As Individual)

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Vic Toews (Provencher, CPC)

Mr. Ranald Quail

Mr. Vic Toews

1555

Mr. Ranald Quail

Mr. Vic Toews

Mr. Ranald Quail

Mr. Vic Toews

Mr. Ranald Quail

Mr. Vic Toews

1600

Mr. Ranald Quail

Mr. Vic Toews

Mr. Ranald Quail

Mr. Vic Toews

Mr. Ranald Quail

Mr. Vic Toews

Mr. Ranald Quail

Mr. Vic Toews

Mr. Ranald Quail

The Chair

Hon. Robert Thibault

The Chair

Mr. Ranald Quail

Mr. Vic Toews

Mr. Ranald Quail

Mr. Vic Toews

Mr. Ranald Quail

The Chair

1605

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

1610

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Odina Desrochers

1615

Mr. Ranald Quail

Mr. Odina Desrochers

Mr. Ranald Quail

Mr. Odina Desrochers

Mr. Ranald Quail

Mr. Odina Desrochers

Mr. Ranald Quail

The Chair

Mr. Odina Desrochers

The Chair

Mr. Ranald Quail

1620

Mr. Odina Desrochers

Mr. Ranald Quail

Mr. Odina Desrochers

Mr. Ranald Quail

Mr. Odina Desrochers

The Chair

Hon. Walt Lastewka (St. Catharines, Lib.)

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

1625

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

Hon. Walt Lastewka

Mr. Ranald Quail

1630

Hon. Walt Lastewka

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

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

Mr. Ranald Quail

1635

Ms. Judy Wasylycia-Leis

Mr. Ranald Quail

Ms. Judy Wasylycia-Leis

Mr. Ranald Quail

Ms. Judy Wasylycia-Leis

Mr. Ranald Quail

1640

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Jason Kenney (Calgary Southeast, CPC)

Hon. Robert Thibault

The Chair

Hon. Robert Thibault

The Chair

1645

Mr. Ranald Quail

The Chair

Mr. Jason Kenney

Mr. Ranald Quail

Mr. Jason Kenney

Mr. Ranald Quail

Mr. Jason Kenney

Mr. Ranald Quail

Mr. Jason Kenney

Mr. Ranald Quail

Mr. Jason Kenney

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

Mr. Jason Kenney

Mr. Ranald Quail

Mr. Jason Kenney

Mr. Ranald Quail

Mr. Jason Kenney

Mr. Ranald Quail

Mr. Jason Kenney

Mr. Ranald Quail

Mr. Jason Kenney

Mr. Ranald Quail

Mr. Jason Kenney

1650

Mr. Ranald Quail

Mr. Jason Kenney

Mr. Ranald Quail

Mr. Jason Kenney

Mr. Ranald Quail

Mr. Jason Kenney

Mr. Ranald Quail

The Chair

Mrs. Marlene Jennings

Mr. Ranald Quail

Mrs. Marlene Jennings

Mr. Ranald Quail

Mrs. Marlene Jennings

Mr. Ranald Quail

Mrs. Marlene Jennings

Mr. Ranald Quail

Mrs. Marlene Jennings

Mr. Ranald Quail

Mrs. Marlene Jennings

Mr. Ranald Quail

1655

Mrs. Marlene Jennings

Mr. Ranald Quail

Mrs. Marlene Jennings

Mr. Ranald Quail

Mrs. Marlene Jennings

Mr. Ranald Quail

The Chair

Mr. Odina Desrochers

1700

The Chair

Hon. Shawn Murphy (Hillsborough, Lib.)

The Chair

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

Mr. Ranald Quail

Mr. Odina Desrochers

Mr. Ranald Quail

Mr. Odina Desrochers

Mr. Ranald Quail

Mr. Odina Desrochers

Mr. Ranald Quail

1705

Mr. Odina Desrochers

The Chair

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

Mr. Ranald Quail

Mr. Dennis Mills

Mr. Ranald Quail

The Chair

Mr. Dennis Mills

Mr. Ranald Quail

1710

Mr. Dennis Mills

Mr. Ranald Quail

Mr. Dennis Mills

The Chair

Ms. Beth Phinney (Hamilton Mountain, Lib.)

Mr. Ranald Quail

Ms. Beth Phinney

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

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

Mr. Ranald Quail

Mrs. Diane Ablonczy

Mr. Ranald Quail

Mrs. Diane Ablonczy

Mr. Ranald Quail

1715

Mrs. Diane Ablonczy

Mr. Ranald Quail

Mrs. Diane Ablonczy

Mr. Ranald Quail

Mrs. Diane Ablonczy

Mr. Ranald Quail

Mrs. Diane Ablonczy

Mr. Ranald Quail

Mrs. Diane Ablonczy

Mr. Ranald Quail

The Chair

Hon. Shawn Murphy

1720

Mr. Ranald Quail

Hon. Shawn Murphy

Mr. Ranald Quail

Hon. Shawn Murphy

Mr. Ranald Quail

Hon. Shawn Murphy

Mr. Ranald Quail

Hon. Shawn Murphy

Mr. Ranald Quail

The Chair

1725

Hon. Joe Jordan

Mr. Ranald Quail

Hon. Joe Jordan

Mr. Ranald Quail

Hon. Joe Jordan

Mr. Ranald Quail

Hon. Joe Jordan

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Ms. Judy Wasylycia-Leis

1730

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Ranald Quail

The Chair

Mr. Jason Kenney

The Chair

Mr. Jason Kenney

The Chair

Mr. Jason Kenney

The Chair

Hon. Joe Jordan

The Chair

1735

The Chair

CANADA

Standing Committee on Public Accounts

NUMBER 042

3rd SESSION

37th PARLIAMENT

EVIDENCE

Wednesday, May 5, 2004

[Recorded by Electronic Apparatus]

¹ (1535)

[English]

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

Our orders today 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 this afternoon, as an individual, is Mr. Ranald Quail.

However, before we move to you, Mr. Quail, we have a point of privilege; I have a notice from Mr. Jordan that he would like to speak; I have correspondence that I want to introduce; and we'll deal with motions at the end of the day, after we've heard from Mr. Quail.

First of all, we have a point of privilege from Monsieur Desrochers, s'il vous plaît.

[Translation]

Mr. Odina Desrochers (Lotbinière—L'Érable, BQ): Mr. Chairman, I wish to raise a question of parliamentary privilege with regard to an article in today's edition of Le Soleil. The title of the article is as follows:

Closure invoked at the Public Accounts Committee; the Liberals put an end to the committee's proceedings after hearing testimony from Gagliano's former Chief of Staff.

The member who deliberately seized control of the committee's agenda is widely quoted in this article. For example, the following is noted in the third paragraph:

The Vice-Chair of the committee, MP Marlene Jennings, admitted to several reporters yesterday that she would even have shut down the committee a month earlier, had it been up to her.

Mr. Chairman, Mrs. Jennings' admission confirms that the committee's proceedings are in shambles.

The fifth paragraph says this:

All that's left for us, according to Mrs. Jennings, is to hear from experts on the question of ministerial responsibility. But apparently, my colleagues (in opposition) need more time to absorb everything they've heard.

I know that our perception of the committee's work is quite different from that of the Liberal majority.

And the article continues:

According to Mrs. Jennings , from day one, the opposition has been trying to tie the Prime Minister to the scandal. This might explain the desire to cut short the committee's proceedings and draft an interim report, which won't be unanimous.

I for one believe that the opposition's job is to try and establish some links, whether of a political, administrative or parliamentary nature. Let me continue.

The article then goes on to say this in the next-to-last paragraph:

Furthermore, we know that some communications firms were awarded contracts and paid commissions that seem unjustified, and that the RCMP is investigating a limited number of contracts out of the 1,900 sponsorship files in total. According to Mrs. Jennings, this leaves the Liberals with enough information to move on to the next stage.

I'd like Mrs. Jennings to tell us where she got her information, given that when they testified last week, RCMP officials told us that the investigation of certain files was pending. We weren't given any exact figures.

Finally, the article says this:

The committee doesn't plan to recall Mrs. Fraser, as it was scheduled to do tomorrow, said Mrs. Jennings, because she answered all of the questions put to her at Monday's meeting and thus has terminated the debate on the validity of her report.

As it happens, Mr. Chairman, I received a notice today from the clerks that Mrs. Fraser is scheduled to appear tomorrow morning from 9 a.m. to 11 a.m., along with several other witnesses appearing as individuals, and that furthermore, Mr. Bard will be testifying as an individual tomorrow afternoon.

I understand quite clearly where Mrs. Jennings is coming from. Her comments reflect her party's electioneering and are indicative of the outrageous, arrogant, complacent and partisan views and behaviour of the Liberal majority, all of which are anti-democratic. As for the democratic deficit, Mr. Chairman, we'll come back to that another time.

[English]

The Chair: Monsieur Desrochers, I thought you were directing your point of privilege against one particular member. To then disparage every member is not appropriate. If you have a specific point of privilege against a specific member, please say so, but do not castigate or disparage other members of this committee.

Continue on, please.

[Translation]

Mr. Odina Desrochers: Fine then.

Mrs. Jennings' actions reflect her extreme arrogance, smugness and partisanship. Her election-minded views are anti-democratic, and this has become the trademark of the Liberals in the House and on this committee.

Let me wrap up, Mr. Chairman.

Because of this kind of behaviour, for the past three weeks, the media, parliamentarians and the public have seen that things aren't working here. It's clear from this morning's article that Mrs. Jennings, who speaks regularly with the PMO's representative, has a hidden agenda. One has to be blind not to see that she has seized control of these proceedings and that the Liberals want to shut us down to avoid further embarrassment over this scandal.

[English]

The Chair: Ms. Jennings, do you wish to respond?

Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): I'd prefer to hear what my colleagues have to say about this before I respond.

The Chair: No, the allegation, I believe, is made against you. I think it's up to you to respond. I'm not going to give you the wind-up of debate position.

This is not a debate. We have an allegation. Do you wish to respond? We normally ask the person who the allegations are against to respond and give his or her side of the facts. It's now your opportunity.

¹ (1540)

Hon. Robert Thibault (West Nova, Lib.): On a point of order before you do that, I request a ruling from the chair. Before you ask a member of any party or any member of the committee to respond on a question of privilege, you should have a reasonable assurance that a de facto question of privilege has been raised.

I listened to the member. I didn't hear a question of privilege. I didn't hear, in any way, how his privileges could be affected even if the article he cited was 100% correct. I wouldn't see how the opinions of one member could affect his privileges.

The Chair: You may be correct, and I haven't given a ruling at this point in time, Mr. Thibault, but I feel that in this particular House and committee, when someone makes an allegation of privilege against another member, that member has the right to respond. I'm offering Madam Jennings the right to respond. I'm not going to go around in debate. There is an allegation, a response, and then I will rule--if you wish to respond; you don't have to.

[Translation]

Mrs. Marlene Jennings: Yes.

First of all, I don't think this is a question of privilege because even if all of the facts reported in this newspaper article were accurate, I fail to see how the parliamentary privileges and rights of my colleague Mr. Desrochers, or of any other colleague on this committee, were breached, affected or diminished in any way. That's the first point I want to make.

Secondly, I expressed my personal opinion. I've made no secret of my views over the past several weeks, over the past six weeks, I would say, from the moment I tabled a motion, which was unanimously adopted by all committee members, calling on our research officer, Mr. O'Neal, to prepare a draft interim report for the committee. All committee members, including those in opposition, endorsed this motion. Therefore, I never tried to hide my views.

At some point, both opposition and government members alike on the committee agreed with me that it was at least time for an interim draft report. Subsequently, opposition and government members gave the matter some thought and had a change of heart. It was decided that the committee should continue its investigation. A broad majority of committee members—and it wasn't unanimous because I didn't share this view—agreed to quash my motion for a draft interim report.

Thirdly, regarding the number of files that the RCMP is investigating, this subject has been the focus of many questions over the past several months during Question Period. At certain times, the Minister of Public Works has stated that x number of files had been referred to the RCMP. If memory serves me well, the most recent figure quoted in the House in response to one or more opposition questions was somewhere between 13 and 18 files. That is the source of my information. The figures were disclosed in a public forum, further to questions put by the opposition to the government during Question Period.

Furthermore, whether or not the facts reported are accurate, it's still basically my personal opinion. Therefore, I fail to see how the parliamentary privileges of this Bloc MP or of any other member, whether from the Liberal or some other party, were affected by this article and by the allegations put forward.

[English]

The Chair: Thank you, Ms. Jennings.

As I said, I'm not going to enter into any debate. I'm going to quote from Marleau and Montpetit, page 129:

The role of the Chair...is to determine whether the matter raised does in fact touch on privilege and is not a point of order, a grievance or a matter of debate. If the Chair is of the opinion that the Member's interjection deals with a point of order, a grievance or a matter of debate, or that the incident is within the powers of the committee to deal with, then the Chair will rule accordingly, giving reasons.

I have listened to Mr. Desrochers and to the response by Ms. Jennings.

I think it behooves all of us to remember that we are involved in a serious investigation, and it's important that we obtain the facts and deliver them to Canadians and to Parliament. Partisan comments by anybody are not helpful. I think we all have been involved in partisan comments to a greater or lesser degree. I think we should all be careful when we're making these comments that are prejudicial to the future of the committee or whatever the score may be.

As we all know, a committee is the master of its own destiny. When a person makes predictions in the media as to what they think the committee will or will not do, that is their personal opinion. As I said, partisanship can sometimes affect the work of this committee, which is an investigation into chapters 3, 4, and 5 of the Auditor General's report.

My opinion is that what Mr. Desrochers has raised is a matter of debate; it is not a matter of privilege. The matter will rest there.

Mr. Jordan, you said you wished to be recognized.

¹ (1545)

Hon. Joe Jordan (Leeds—Grenville, Lib.): Mr. Chair, I don't know what this is, so I'm going to refer to it as a notice to potentially bring in a motion or perhaps rescind a motion.

I just wanted to give a 20-second explanation. Yesterday we were going to go in camera, but we didn't go in camera. We discussed the potential appearance of a witness, and certain elements of their testimony were brought forward. I was under the impression that was not in the public domain. I now realize that all those facts were already in the public domain. Now that it is in the public domain, perhaps we need to question the witness. Having had some discussions, I'm going to suggest that we have our legal counsel take a sworn affidavit from Mr. Richard, as opposed to having him appear here as a witness. Maybe down the road it would be appropriate. From the discussions I've had, I think this is something we may want to consider.

The Chair: I deal with motions at the end of the meetings, not at the beginning. I will see if there is unanimous consent to revisit the issue and if a motion to rescind is in order, and if so, carried.

As to documentation, tabling of documents, I have a letter from the Clerk of the Privy Council and Secretary to the Cabinet, dated May 3, 2004, addressed to Mr. Jeremy LeBlanc, co-clerk of the House of Commons Standing Committee on Public Accounts.

Dear Mr. LeBlanc:

This letter is in response to motions of the Standing Committee on Public Accounts, dated March 23 and 29, 2004.

On March 23, 2004 the Standing Committee on Public Accounts requested all documents setting out the mandate given to The Honourable Alfonso Gagliano in his capacity as Minister of Public Works and Government Services, including all “Instruments of Advice”, notes, memoranda and other similar or related instruments within the mandate of the Committee. No documents have been identified that are relevant to the mandate of the Standing Committee to inquire into certain activities referred to in Chapters 3, 4 and 5 of the Report of the Auditor General of Canada of November 2003 on the sponsorship program, advertising activities and the management of public opinion research of the Government of Canada.

The Standing Committee's motion of March 29, 2004 requested that the government provide the curriculum vitae for Ministers of Public Works from 1993 to 2004. The Privy Council Office does not maintain a repository of the curriculum vitae of Ministers, as up-to-date versions are generally available from other sources. It does prepare short biographical notes that are attached to the Prime Minister's press releases when there are changes to the Ministry. These notes, based on information in sources such as the Canadian Parliamentary Handbookand theCanadian Parliamentary Guide,are issued only when Ministers are first sworn as Privy Councillors, and not for any subsequent changes in portfolio. You will find attached biographical notes prepared for the six Ministers of Public Works and Government Services since 1993.

Please be assured of the Privy Council Office's continuing commitment to provide documentation to the Standing Committee on Public Accounts, consistent with its mandate.

Yours sincerely,

Alex Himelfarb

This document is also tabled and is distributed to the members.

I also have a document here, called A Strong Foundation: Report of the Task Force on Public Service Value and Ethics, by Mr. John C. Tait, QC, chair. This deals with the issue raised by Mr. Jordan yesterday. It is available in both languages and is being distributed, and we'll discuss this later on in the meeting. Is that correct?

I understand that this is in response to the questions Mr. Murphy raised yesterday. I understand it has been distributed in both official languages, so that document is tabled and available for the public.

Mr. Quail, first of all, we now swear in witnesses, so I will ask you to take the oath, please.

¹ (1550)

Mr. Ranald Quail (As Individual): 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: Thank you very much.

Of course, we don't have to ask you to swear in, Mr. Hunter, because you are the counsel for Mr. Quail and we do not address questions to you. You cannot speak to the committee, but if you wish to consult with your client or if he wishes to consult with you, you may do so at any time during the meeting.

Mr. Quail, I read this for everybody. I may have read it to you the last time you were here:

...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 comes from the House of Commons Procedure and Practice, Marleau and Montpetit, page 862.

And now, a couple of questions to you.

First, you're appearing before us as an individual today. Did you discuss or have any meetings with any employees of the Government of Canada, or former employees, and so on, or any members of this committee in preparation of your report before coming to this meeting?

Mr. Ranald Quail: No, but I did get some documents from them, copies of documents that have been tabled here at the committee.

The Chair: Okay, so it's in the public record, and we've already had these.

Mr. Ranald Quail: That's right.

The Chair: Also, 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, or any other government department or agency? In essence, is the government paying for your legal fees?

Mr. Ranald Quail: It's under discussion.

The Chair: Very good.

Do you have an opening statement?

Mr. Ranald Quail: It's very brief, Mr. Chairman.

The Chair: Okay, the floor is yours.

Mr. Ranald Quail: Good afternoon, ladies and gentlemen, members of the committee, and Mr. Chair.

I was the Deputy Minister of Public Works and Government Services from July 1993, when it was first put together, until April 1, 2001. I retired from the public service last summer.

As you may recall, I appeared before this committee on June 13, 2002, in response to the Auditor General's report on Groupaction. At the invitation of the committee, I appeared to respond to the Auditor General's 2003 report on chapters 3, 4, and 5 on March 1, 2004. On both of these appearances, as well as today, I've appeared voluntarily. My testimony from my two other earlier appearances is a matter of record, and I'm here today to answer your questions.

Thank you.

The Chair: Thank you, Mr. Quail.

Mr. Toews, please. You have eight minutes.

Mr. Vic Toews (Provencher, CPC): Thank you very much.

Thank you for returning, Mr. Quail, to answer some questions.

In the interim we've heard testimony from individuals who previously reported to you--Mr. Allan Cutler, Huguette Tremblay, and of course, Mr. Guité. I don't know if you know all those individuals personally. Could you tell us if you do know them personally, all three of them?

Mr. Ranald Quail: I think I met Mr. Cutler on only one occasion. He came to my office when he had moved back to the department and was part of a group that did a briefing--I don't know what on; I don't recall.

Huguette Tremblay and I have met. I don't really know her, in that sense; I met her and I knew where she worked.

Chuck Guité I knew from my experiences, especially when he got to be executive director of CCSB and he reported to me.

Mr. Vic Toews: Thank you.

What we've heard from these three witnesses--and I'm summarizing it, I think accurately--is that essentially the program operated outside of the rules, as Huguette Tremblay stated in testimony to us, that it was even difficult to break the rules because there were no rules in place.

What was clear also from the testimony is that there was a direct relationship between the executive director and the minister, both Ministers Gagliano and Dingwall. I think Mr. Gagliano's and Mr. Dingwall's testimony as to how many times they met with the executive director has been contradicted, and I think other evidence indicates that they may well have met with the executive director on a much more frequent basis than they were first prepared to admit. But certainly Mr. Guité admitted as much in corroborating the testimony of Mr. Cutler and Huguette Tremblay in respect of the numbers of meetings.

The picture that has been drawn for us is that here we have a group operating very directly under the control of the minister, and you seem to have been bypassed. I think that was the gist of your testimony when you came here earlier.

But there were audits done, which you are of course familiar with, back in 1996. My concern is that when these audits were done, did you ever raise the concern of the relationship between the executive director and the minister with the Privy Council Office?

¹ (1555)

Mr. Ranald Quail: I think it's important that we establish the timing if we want to get into the audits, but in terms of talking to the Privy Council Office, I certainly had no hesitation to talk to the Privy Council Office. But to some degree I'd have to say, talk to them about what?

Mr. Vic Toews: Did you ever discuss the relationship between the executive director and the minister, specifically?

Mr. Ranald Quail: They were aware of the fact that Mr. Guité met with Mr. Pelletier; they were aware that they met with my minister, particularly Minister Gagliano. You're aware of the testimony of Ms. Marleau, so we don't have to go into that.

How do I know they know that? Well, whenever we developed the Treasury Board submissions, you know that the Treasury Board submissions were signed by the Prime Minister and by the minister.

My contact with respect to the liaison would be through the Privy Council Office. My main liaison with respect to a lot of the files that I dealt with was sponsorship...was with the deputy clerk, Mr. Bilodeau.

Mr. Vic Toews: Okay. I understand that on March 29 of this year Mr. Norm Steinberg testified that in 1997 you instructed him to send his staff to sit down with Mr. Guité and explain his obligations as a director of the CCSB. Why was this done? Was this taken in response to the 1996 Ernst & Young internal audit?

Mr. Ranald Quail: In my own mind at the time...and I'd like to be able today in the discussion maybe to have a discussion when we answer questions that reflect the events of the day and not really hindsight in 2004, with the glare of now three subsequent audits. The reason I put together the document was that I had asked Mr. Steinberg.... And there is a document dated December 18, 1997, and I believe everyone here has it because that's how I got it. The reason for the note was to get my approval as to how we were going to apply audit and review to the new group called CCSB.

I wanted it clear. I wanted the instructions set out. The very first item did talk about audit and review. The second item talked about contract pre-award review, third-party review, CITT files, contract dispute resolution, and fraud awareness investigation.

Mr. Vic Toews: All right. That was an agreement, then, that you would have signed with Mr. Guité, or an understanding that you would have arrived at with Mr. Guité?

º (1600)

Mr. Ranald Quail: What I did was.... It was a clear instruction and an agreement between me and the auditor, and then I put a covering letter on it and sent it to Mr. Guité, saying, here are the rules of engagement; this is what I expect, because you're now a branch unto yourself, and would you please meet with Mr. Steinberg's people.

Mr. Vic Toews: All right, so you made it clear to him then that he was operating, or that branch was operating, as a branch unto itself. Was there any mention of reporting relationships in the agreement itself?

Mr. Ranald Quail: There didn't have to be any mention of reporting relationships, because whenever it was established as a branch, it was clear that he was going to report to me.

Mr. Vic Toews: But did he report to you?

Mr. Ranald Quail: He reported to me.... Do you want to get into “in the loop, out of the loop”?

Mr. Vic Toews: Well, I think that would be helpful, yes.

Mr. Ranald Quail: Okay, that's fine. I did try to get ready to have some discussion on the issues. One of them is “in the loop”, so if you want to talk about it, I can talk about it.

Mr. Vic Toews: I think it's very important, because if there is no setting out of the reporting relationship in that agreement—and I think your point earlier was that there was a direct relationship between the executive director and the minister—what was in fact then the nature of that relationship that kept you out of the loop or in the loop on certain things?

Mr. Ranald Quail: I guess in order to discuss it, in my own mind because I've reflected on it, I would talk about it in the context of maybe three loops.

The first loop is the one about the implementation of the program. The implementation of the program was the decision by the government on the political side that they wanted to improve the communications between the government and the people of the country. They took that decision, and they took it presumably in a number of areas. One of them was that they wanted to get into the business of sponsorship.

I wasn't involved in that decision.

The Chair: There is a point of order here. Just one moment please.

Hon. Robert Thibault: Mr. Quail, I heard you suggest to Mr. Toews that maybe he was short on time. I think we all agree to give him the time necessary to explain the loop thing.

The Chair: That's right. I always allow the witness to finish answering the question, so Mr. Toews wasn't going to be able to ask any more. But if Mr. Quail was to give all three loops, I would not interrupt.

Okay, Mr. Quail, please proceed.

Mr. Ranald Quail: I'll start back just quickly. We have the establishment of the program. The AG did raise that. How it did get established is not clear. In my view, it got established because the government decided that they wished to improve the communications to the people of the country. That was their decision.

Secondly, they decided that as part of that they wanted to get into the sponsorship program, I'm assuming, and that one of the vehicles for delivering that would be through PWGSC and through CCSB. As for APORS, at that time we were just getting into it.

Mr. Vic Toews: Right.

Mr. Ranald Quail: There's what I call the first loop. I wasn't involved in the first loop. It seems to me that's a perfectly legitimate direction. The government of the day can decide, and we serve.

If there needs to be any kind of expression that they were serious about this, all we need to do is look at the Treasury Board submissions, the first one in 1996-97 and the subsequent submissions, which have been tabled. Those are a matter of record, and I can go through those.

This was the period of time when we in the department were still struggling to find the savings, and we were dealing with the demands that had been placed on us as a result of the amalgamation. There were program reviews one and two. We were going through this particular exercise in a real fashion. In the end, we reduced our workforce by 6,000 people and returned about $350 million. It was a very difficult time.

At the same time, they were prepared to make available to us, through the Treasury Board submissions, the amount of money needed to get this program started. So this was real money. It was new money. To me, it was an indication that they were really serious.

We're going to deal with the 1996 audit later, so maybe I'll just wait for that to come along.

Mr. Vic Toews: Have you dealt with the three loops?

Mr. Ranald Quail: I'm just at loop one. I'm going to close it off for a minute.

The Chair: What about loop two?

º (1605)

Mr. Ranald Quail: I talked about the issue with regard to the implementation of the program inside of the department and that it was obvious we had a group that dealt with advertising. We had a set of regulations, or appendix Q and appendix D, that they dealt with. They were the people who would carry out the sponsorship program, and the responsibility was clearly theirs.

We get into the event selection now, which we can call a separate loop. I think this is the part you were asking about.

An hon. member: — [Inaudible—Editor]—

Mr. Ranald Quail: Well, I'm going to open loop two.

The Chair: Let Mr. Quail tell his story without interference from the committee. The chair is the one who is supposed to provide the direction, not the committee members.

Mr. Quail, the floor is yours.

Mr. Ranald Quail: Thank you.

Loop one is the one where we establish the program--I'm finished.

Loop two, in my mind, would be a loop that talks about the event selection. That's the part where the minister and the executive director had a lot of discussions, where the executive director and Mr. Pelletier had some discussions, and I assume the event director had others, and you've heard from him.

Loop three is the one that I was going to deal with, which talks about establishing the responsibility for the APORS and, subsequently, the CCSB organization.

On event three, we have a situation where we had TB submissions developed. The TB submissions were the driving force inside the department. The TB submissions were, I thought, reasonably clear. We developed them inside the department. Yes, they were drafted in Mr. Guité's shop. Then they went through the department, up to me, and were forwarded to the minister for signature.

In those submissions, if you recall, we talked about: “In carrying out its contracting function, A&PORS ensures that the creative services, media buys, sponsorships, promotions and any other marketing initiatives initiated within departments conform with established Treasury Board policy and guidelines and that any communications services including advertising and public opinion research, are competitive as required and subsequently that appropriate contracts are issued”.

It's in the submission. The submission was drafted by Mr. Guité. It was put up, and that starts to establish the rules of engagement and the way in which you would expect that this program would be followed.

In addition, there was some discussion in the submission and also in the backgrounder that went to the Treasury Board that's part of the deliverables that were given to the committee. It talks about event determination: “The events are determined on the basis of audience, visibility, timing and potential impact on the government's programs used at such events. Appendix A provides a list of venues that have already been used this fiscal year...”, blah, blah, blah. It sets out the list of events: Grand Prix Molson du Canada, the Molson Indy in Toronto and Vancouver, Fête de la Francophonie, and so on. That totals about $18 million for that particular submission.

So, to me, that is one of the avenues that sets the framework under which one would expect, and I expected, Mr. Guité to live.

I would also refer back, then, to the December 18, 1997, memorandum. In that particular one, we got considerations advising and alerting and giving notice that the auditors were going to come at some point. In there it says, “CCSB falls within PWGSC's governance framework.” There is a governance framework. I don't know if it has been tabled, but we did have one.

“The DMO requires assurances regarding adequacy of management framework, operational compliance with policies and procedures, and results achievements”. That was under considerations. Then there were some requirements that were talked about.

Under contract pre-award review, it talks about requirements. It talks about considerations and requirements, and it talks about: “For the Audit and Review Board to review contract submissions, CCSB must establish its standards. The Audit and Review Board recommends an approach for both APORS and the new part that's coming in from”--let's call it the Queen's Printer--“the residual, contracting that will be consistent with the supply operations branch standards”.

And it goes on. So we've established the requirements and the expectations.

Inside the management framework in the department, we had a set of directives, and certainly we had a set of “how do you do contracting”. As you've noted, following the setting up of that particular directive, I wrote to Mr. Guité and asked that he meet with Steinberg's people, and that was done.

So I would call that loop three, the establishment of the framework under which I expected the CCSB to be operating relative to the sponsorship program, and really relative to the whole new branch, because the branch went from 20 people to about 200--quite a change.

º (1610)

So we go back down to loop two, which is the event selection, and the discussions between Mr. Guité and the minister, and Mr. Guité and Mr. Pelletier. Certainly, I was aware that the discussions were taking place, and perhaps as a result of some of the testimony, I'm a bit more aware of how many were taking place.

Notwithstanding that, I thought the meetings between Minister Gagliano and Mr. Guité, and Mr. Pelletier and Mr. Guité, on the development of the list for the TB submissions and the event determination would be based on what I've talked about being in the submissions. I'd have to say that while you can say that it was unusual, you can say it's not usual.... I mean, what prevents it? Am I going to start to complain on the basis that my pride is hurt? There was no indication that there was anything being done that was incorrect. That was never suggested--never.

From my point of view, they went ahead and did it, and if they wanted to do it, well, that was fine. The event selection list would be put together. We would at some point see the event selection list because the event selection list would go into the submissions, and six or seven submissions were prepared, all of which were driven by event selections that drove money--I don't have enough money.

So at that time I would see those lists, and my main concern would be a couple-fold when I saw the list. If I saw the list before or in the interim between the submissions, I would be worried about how much money we had spent--don't overspend the budget--how much was left; what the demands were; and what you would foresee relative to what was coming in the future, from the point of view that we might have to find money inside the department, which is a great concern when you're in a downsizing mode. We would have those kinds of discussions.

Now, was it different? Yes, it was different. Was it wrong? I don't know why you'd say it was wrong, personally. If I had thought it was wrong, I would have raised a lot more concern.

The PCO knew. How PCO knew about this issue was because of their part in the signing of the Treasury Board submissions. In order to get a signature on a submission, you have to have a discussion with somebody in PCO, who works with somebody in PMO, to go to the Prime Minister and get it signed.

So in actual fact, we did have discussions. Those discussions took place, and the discussions would have taken place on the basis of available money, available pressures, and things of that nature.

I can go some more into talking to the PCO, if you wish, Mr. Chair.

The Chair: Later, I think.

Mr. Ranald Quail: I hope I didn't confuse, but there was the initial loop--let's call it the admin-management loop--and there was the loop dealing with the interrelationship between Chuck and these people in question.

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

Before we move on, I have two points.

One, you mentioned CITT files. What is CITT?

Mr. Ranald Quail: It's the one that deals with investigations if there's a question on trade, the Canadian International Trade Tribunal.

The Chair: You also mentioned TB submissions. Maybe we could stay away from acronyms, because the public at large may say, “TB, that sounds pretty serious to me”.

Mr. Ranald Quail: It is pretty serious.

The Chair: Thank you.

Monsieur Desrochers, s'il vous plaît, huit minutes.

[Translation]

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

Mr. Quail, this is your third appearance before the Standing Committee on Public Accounts in conjunction with this investigation. Undoubtedly you're one of the three most popular witnesses, along with Mr. Guité and Mr. Gagliano, to have appeared since we began our work.

We were taken aback when Mr. Gagliano began his testimony by saying that he had no say in the selection of his deputy minister.

Was that in fact the case?

º (1615)

[English]

Mr. Ranald Quail: That's correct. The deputy ministers are appointed essentially by the Prime Minister on the advice and recommendation of the clerk.

[Translation]

Mr. Odina Desrochers: Were you on good terms with Mr. Gagliano?

[English]

Mr. Ranald Quail: I had a very professional relationship with Mr. Gagliano.

[Translation]

Mr. Odina Desrochers: You mentioned in your explanations, with your three small boxes—I'm using terms that may help to enlighten you—that you were annoyed by the fact that certain decisions were made even before you had the opportunity to voice your preference.

You spoke of lists of events that were brought directly to Mr. Guité's attention and to the fact that you learned of decisions once they had already been made.

Could you give us some specific examples?

[English]

Mr. Ranald Quail: Mr. Chairman, I don't think I said I was annoyed. I think I said that my pride could be a bit hurt that I wasn't always there. But I wasn't annoyed. I understood what was taking place. There was always the opportunity, if you wanted to look at it like that, that the list would be put together and you would have to have a discussion at some point on the bottom line.

[Translation]

Mr. Odina Desrochers: Mr. Quail, I'd like to clarify a matter that has resulted in some confusion since the start of these proceedings. On the one hand, Mr. Gagliano told the committee that he met with Mr. Guité three or four times a year. You've told us, on the other hand, that Mr. Gagliano had a direct relationship with Mr. Guité.

I would imagine that relations between a deputy minister and a minister are of a very professional nature. Mr. Gagliano was supposed to keep you apprised of certain facts and of certain files, given that, according to the line structure, Mr. Guité reported to your office.

It is in fact true that Mr. Guité reported directly to you, Mr. Quail?

[English]

Mr. Ranald Quail: That was, to some degree, Mr. Chair, what I was talking about in my response or explanation of the three loops.

There's no doubt that Mr. Guité, at the end of the day, reported to me. That was the formal relationship. That's what was said in the Treasury Board submissions and what was said, for instance, in the job description. But the job description also talked about the responsibility of the individual in those positions to be able to, and have a responsibility to, have conversations, have liaison, work in relationships with PCO, with PMO, with Treasury Board, because those are all people who have issues dealing with communications. So in that sense, there were some openings. And it was clear. It was clear in the job description when he was an EX-1, which was tabled; it was clear in the job description when he was an EX-2, an EX-3, and an EX-4.

In terms of having that on the table, there is, I think, transparency that to some degree this was part of his responsibility in order to be able to deliver the work that he was supposed to do.

If you would like, Mr. Chairman, I can talk a bit more about meetings with Mr. Gagliano, but I'm not sure that's what Monsieur Desrochers....

The Chair: Mr. Desrochers, do you want Mr. Quail to talk about these meetings with Mr. Gagliano?

[Translation]

Mr. Odina Desrochers: Yes, as long as it relates to the Auditor General.

[English]

The Chair: Okay. Yes, within the context of the Auditor General's report, within the confines of the questions that you have posed in your eight minutes.

Mr. Quail, please proceed.

Mr. Ranald Quail: Well, I'll do it quickly. I can do it in more detail, if you wish.

My working relationship with Minister Gagliano was that we would meet, when the House sat and the minister was in town, probably twice a week. We'd meet on Monday morning, and Monday morning would be for a couple of things: one, the week ahead—not surprising—and secondly, at that particular time we would also, on the previous Friday, have provided briefing notes to the minister with respect to issues that were coming up at cabinet and whether or not there were any particular issues that he might want to talk about. We'd go through what was coming up on cabinet and we'd go through whatever else he might have on his list. Of course I'd have a list as well, so that I could be ready to try to answer his questions. The issues that we dealt with could go anywhere from Argentia, on the east coast, because of...I don't know, to the west coast, when we would deal with things like Nanoose, and all of the issues in between.

That was a Monday meeting. It would last, depending on the minister's schedule, half an hour, maybe a little longer, maybe an hour.

On Thursdays we would normally meet, especially if there were Treasury Board meetings. At those particular meetings, what I would do is go through the Treasury Board book. He was on the Treasury Board. I would have had a chance to go through and look at the Treasury Board books, and then I would meet with the minister and talk to him about all of the things that were going to be taking place. Of course, we had a lot of submissions from our department that would go to Treasury Board because of all the contract talks.

That would normally be Thursday's meeting. We would also then discuss any issues, again, that would have come up from Monday till then. We could have talked about, on occasion, sponsorship. We could have talked about where the 2000 audit was. Those would come up.

º (1620)

[Translation]

Mr. Odina Desrochers: When you discussed sponsorships, did you talk about the list of events, the budget or the list of firms retained?

[English]

Mr. Ranald Quail: We usually talked about money and the need for money and the pressures that were on the system. On occasion we would talk about where we could find money. Was there any money we could find inside the department? Were there priorities that we could push aside? That would be part of the discussion. Especially when we were looking at pressures on the system, we would talk about events. We never talked about the agencies.

[Translation]

Mr. Odina Desrochers: Mr. Quail, you stated that some pressure was put on you. Were you in fact experiencing some political pressure to select certain events? Did MPs or ministers ever contact you in relation to a file, or was everything handled by Mr. Guité, or by Mr. Gagliano, as the case may be?

[English]

Mr. Ranald Quail: It's not political interference to have a discussion about priorities and pressures in the department relative to funding, point number one.

Point number two, I never got any calls from members. I never got any calls from anybody on sponsorship. The only people I talked about sponsorship to were the minister, PCO, and Mr. Guité, or in his absence, if I had a question or I needed to know something, I would call the office.

[Translation]

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

[English]

The Chair: Thank you, Monsieur Desrochers.

Mr. Lastewka, please, eight minutes.

Hon. Walt Lastewka (St. Catharines, Lib.): Thank you, Mr. Chairman.

Mr. Quail, I want to go over a number of items again. Earlier in your testimony you said you weren't involved in the original submission, but then you cleared that up and said that you were involved. Is that correct? You were involved with the original submission with Mr. Guité and the minister.

Mr. Ranald Quail: In the 1996 submission, the first one?

Hon. Walt Lastewka: Yes.

Mr. Ranald Quail: Yes.

Hon. Walt Lastewka: So you were involved from the first submission of the sponsorship program?

Mr. Ranald Quail: Yes.

Hon. Walt Lastewka: Who else, other than Mr. Guité and your minister, were involved?

Mr. Ranald Quail: I don't know the sign-off list in the department. I'm sorry, Mr. Chairman. When submissions go through the department, they get prepared in a certain area, then get reviewed. They'd come up, and I'd sign them off and recommend them to the minister.

Hon. Walt Lastewka: You were involved in the sign-offs within the department and getting it approved by Treasury Board and signed off by the Prime Minister. Correct?

Mr. Ranald Quail: Correct. Basically, the way it would work is that the next step after the department would be over to PCO. Then they would look after it there, and then from there to the Treasury—

Hon. Walt Lastewka: Would it come back to you as deputy minister?

Mr. Ranald Quail: No, it would probably go to the Treasury Board directly.

Hon. Walt Lastewka: Then would it go to you from Treasury Board and then to Mr. Guité?

Mr. Ranald Quail: After approval?

Hon. Walt Lastewka: Yes.

Mr. Ranald Quail: It would come back into the department. There would be an approval letter and there would be a delegation and it would go to Mr. Guité.

Hon. Walt Lastewka: There would be clear rules of engagement on how the program was to be implemented, because that was part of the original submission, as you talked about earlier.

Mr. Ranald Quail: That's right. I mean, we set it out in the submission.

º (1625)

Hon. Walt Lastewka: Was there any place in the submission that said that you could break the rules?

Mr. Ranald Quail: There was never any discussion with me or with the minister.

Hon. Walt Lastewka: Did you ever have any discussion with Mr. Guité that he would do things orally and that he would do things that would have the least amount of paperwork trail or detail?

Mr. Ranald Quail: No.

Hon. Walt Lastewka: Were you aware that he was not presenting in his sponsorship programs, as the AG has pointed out...that there was no proposal; there was a lack of implementation and delivery, a lack of how the goods and services were to be handed out for the event, a lack of financial evaluation, and a lack of wrap-up? Were you involved in any of that? Did you see any of the sponsorship events as far as files were concerned?

Mr. Ranald Quail: No, I did not, and I would just say that when I was, I called the 2000 audit. Right? The 2000 audit came on the initiation of me--

Hon. Walt Lastewka: Wasn't there some type of internal audit done earlier?

Mr. Ranald Quail: Are we talking about the 1996 audit?

Hon. Walt Lastewka: Yes.

Mr. Ranald Quail: I can talk about the 1996 audit, if you wish, but--

Hon. Walt Lastewka: Okay, tell me why it wasn't implemented in the department.

Mr. Ranald Quail: The 1996 audit...I mean, we know the background, and I'd like to talk about the 1996 audit, if I could.

Hon. Walt Lastewka: I'd like you to be to the point, because I don't want to run out of time.

Mr. Ranald Quail: Okay.

We're now looking at the 1996 audit in the full glare of the headlights of three subsequent audits, and it's 2004. In order to have a discussion on the 1996 audit, you have to look at it in the context of the world in which you lived in 1996. Sure, I can have a view on the 1996 audit in the headlights, but I don't think that's the correct way to have a discussion on the handling of the 1996 audit in 1997, when the audit was finished.

I'll give you a very brief summation. First we had a preliminary review, because we had the letter from the union. The preliminary review we always have before we engage in a full audit and spend the money. It isn't an audit, so there's only one audit in 1996, not two. We had the audit, we had the findings, we had a general assessment. I did focus on the general assessment, I did focus on the issue that there was no personal gain, and we took the audit to the audit and review committee. We had a game plan, and it was accepted by the audit committee, and I expected that the managers responsible for implementation would implement it. Initially, that would have been Mr. Stobbe, but we had to transfer in that same period to CCG, and it became the responsibility of Mr. Guité.

Hon. Walt Lastewka: So we know now that with the 1996 audit and all its evaluations, items that were to be implemented were not necessarily implemented the way it was agreed.

What kind of follow-up is there with the deputy minister when there's an internal audit?

Mr. Ranald Quail: I start with the assumption that the person who undertakes to do the work that's in the remedial plan associated with the audit will do it. I take that as a given, I expect it, and I think that's a reasonable way to proceed, on a basis of trust. Following that we got overtaken, in that CCSB was a driver, because we had residual from the sale of the Queen's Printer, and we formed CCSB. I had no indication that it was not being carried out, and I don't have any recollection from that time of anyone coming to me about follow-up.

Hon. Walt Lastewka: You said earlier, when the program came back as approved and Mr. Guité got his orders to implement, everybody understood what was taking place. That could mean a lot of things. What did you mean when you said Mr. Guité understood what was taking place?

Mr. Ranald Quail: Can you tell me a bit more of what I said in the context?

Hon. Walt Lastewka: You used the word “understand”.

Mr. Ranald Quail: But can I have the context, please?

Hon. Walt Lastewka: It was when we were talking about the program--Mr. Toews--when it was delivered back to the department to implement.

Mr. Ranald Quail: I'm sorry, you'll have to give me a bit more of the context. Try me one more time.

º (1630)

Hon. Walt Lastewka: No, we'll skip it.

As a deputy minister, I think you said, you did not go to the Privy Council when things were being implemented within Mr. Guité's realm. He was having this relationship with the minister and the Prime Minister's Office. He was reporting to you, but he was off running the department the way he thought it was to be run. What was your reasoning behind just letting that flow, without being on top of it? Isn't it suspicious that things like that would happen? You mentioned that you didn't have hurt feelings, but when the minister is working with the executive director like that, isn't it very important that you should be in the loop?

Mr. Ranald Quail: I don't see any particular problem if the minister wishes to work with the executive director on that particular issue. My concern would have been one of money, making sure we did not overspend and I had an opportunity to come back into the issue at some time to look at it from a financial point of view.

Further, there was no indication that there was anything wrong. If there had been an indication of something wrong, we would have put in an audit sooner. We put the audit in in 2000 to have a look at the situation, and you know from my earlier testimony that because of that parallelism between HRDC and grants, although this isn't a grant, it seemed to me that it would be prudent to have a look at what we were doing in the sponsorship program. That's how we got started.

The Chair: You said you were aware of problems in the CCSB--I think this is the testimony you gave two years ago--as there was the HRDC issue that prompted you to order the auditors out. That was your previous testimony.

Mr. Ranald Quail: That's correct.

The Chair: Ms. Wasylycia-Leis, eight minutes.

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

I'd like you to look at the problem we've got as things now seem, based on the Auditor General's report, not as they seemed then, when you were in the middle of it. We now have a very clear document to corroborate other evidence that there were clear problems in the administration of the sponsorship file. We could go through the long list of matters about improper selection of ad agencies, improper invoicing, improper advance payments, double payments--the list goes on and on. I think there's general agreement at our committee that there was a problem with a huge amount of money for which taxpayers may not have got service. We've all agreed that we're not going to use the word “stolen”, but we still all have concerns about what happened. So it comes down to who knew what when.

Mr. Quail, I think there's a real danger that you'll end up getting blamed for something if we don't get some clear answers. So did you know, generally, what was going on over this entire decade, and if you did, why did you choose to be silent? Were there influences on you to be silent? If you didn't know, what can you tell us about another whole operation between Mr. Guité's office and perhaps the minister's office and the Prime Minister's Office?

Mr. Ranald Quail: I don't know quite how to deal with the question. We did the audit in 2000. I explained why we initiated the audit. As a result of that, we took strong action to fix the problem. That's one issue. If I had found anything and was concerned or somebody had raised an issue with me before that, we'd have called an earlier audit. There were no indications.

I had the discussion earlier on how the program started, in my view, how I managed the program, and what I expected from the people in the third loop, and we had the discussion with respect to the interface between the minister and Mr. Guité and Mr. Guité and the Prime Minister's Office. I've explained my view of why, though it was not normal, it wasn't abnormal. Ministers have a right to talk to people. The other side of that coin is that you've got an intransigent bureaucracy.

º (1635)

Ms. Judy Wasylycia-Leis: I certainly agree that ministers have a right to talk to other people, to other civil servants, but ministers don't have a right to authorize improper, unethical, possibly corrupt activities. Before those Liberals get all excited, let me simply say that this is the essence of our committee and what we're trying to get at.

So my questions have to do with what you knew when. Obviously, this had been going on for some time. Why didn't you get earlier indications? Further, when you did get indications and embarked upon the 2000 audit, why was that audit not taken seriously? Why was the minister involved in questioning whether he should take police action or not? What happened, and what can you tell us about the root causes of this episode?

Mr. Ranald Quail: Well, there are a couple of points. First of all, I have absolutely no indication, Mr. Chairman, of the minister talking about breaking the rules--none.

Second, I tried to explain it to the best of my ability and set out my expectations relative to following the rules to implement the program.

Third, with respect to the discussions with the minister, we had, I would say, extensive discussions--for a discussion between the minister and me--in terms of where we were on the 2000 audit. I talked about how we met twice a week when he was in town or the House was sitting, etc., and that we did raise the issue about where it stands. We did talk about it.

Fourth, it was a serious issue. There's no doubt in my mind that it was a serious issue. I don't think there was any doubt in the minister's mind that it was a serious issue. I know there was previous discussion about--I forget the exact thing--a significant administrative problem versus a serious management problem. I think that's not a very useful discussion, and part of it could be simply in the translation. I believe the minister thought it was serious. I thought it was serious, and obviously Mr. Steinberg thought it was serious.

I'm not sure I got all your questions. Can you help me?

Ms. Judy Wasylycia-Leis: Let me ask some specific questions.

I hear what you're saying. I hear you believe that the problems were identified, although I don't think you've really addressed the significance of the problem as documented by the Auditor General. It doesn't seem to me that you've given it the emphasis that is required, given the fact that we have such a litany of wrongdoings over a long period of time.

So I guess we're all still grappling with who organized it. It would seem to be an organized attempt. Where did the direction come from? If you didn't know about it, why didn't you? Who was calling the shots?

Let me ask you just a few specific questions.

You would have been responsible for departmental decisions on staffing.

Mr. Ranald Quail: Correct.

Ms. Judy Wasylycia-Leis: I'd like to know if you could tell us about the hiring process of Mr. Guité at the EX-4 level. Were there any irregularities to note? Are you aware of any other departmental employee who rose as quickly to the EX-4 level? Could you tell us just a bit about how Chuck Guité got into that position so quickly?

Mr. Ranald Quail: On the issue of Mr. Guité's--quote--“rapid rise up the chain”, he was an EX-1 in February 1991. He was reclassified to an EX-2 in January 1995. Then, as I pointed out earlier, we had the integration of APORS, a small group of, by that time, about 22 people. With the sale of the residual from the Queen's Printer, the group went to 200--much larger, significant responsibilities.

The job gets reviewed. It goes through the normal process we had in terms of job classification. The delegated authority for classification up to the EX-3 level is in the department. It gets thoroughly reviewed by the classification specialists and gets out at a classification of EX-3. Mr. Guité is put into the job at EX-3. He has now responsibility for the 200 people, he's expected to carry out the responsibilities, and there's a framework in place.

It's not long afterwards that I set out the note that we talked about earlier, from Mr. Steinberg, about how we're going to go about doing the audit, etc.

For one to move to the EX-4, you don't have the delegated authority for that in the department, and there were discussions between the minister and me. There were also, as I think I said before, discussions where Chuck talked to the minister about wanting to be considered for moving to the EX-4, and he spoke to me in the same way.

Two points, or one point in particular. The only thing that had happened of significance between the EX-3 and the EX-4 was the fact that the minister had been given additional responsibilities to be chairman of the cabinet committee on communications. There were responsibilities associated with the CCSB, providing support to that particular chair, and that was worked into the job description. The job description was duly prepared, reviewed internally by our own people in the classification section of the branch on human resources, and it was forwarded to the minister saying, well, Minister, let's see whether or not in fact this will stand the test of an EX-4 classification.

It went to board, it was reviewed, and they agreed it was an EX-4.

º (1640)

The Chair: Which board?

Mr. Ranald Quail: Treasury Board.

And on the basis of that, we didn't develop the submission in absentia. I know what people have said, that, yes, when it goes to the board, the board looks at the job, it doesn't look at the person. But we didn't develop it in a vacuum that says, Mr. Guité is here, we're going to look at his job, and this is not because we're going to look at putting Guité into the job. Those things went in lockstep. It got classified....

Treasury Board didn't look at the individual, I agree with that. Treasury Board looked at the job. When it came back, Mr. Guité was put into an acting EX-4. He stayed in that acting until he retired.

That's the story.

The Chair: When you talk about the Treasury Board, Mr. Quail, are you talking the Treasury Board Secretariat or the Treasury Board, the group of ministers?

Mr. Ranald Quail: I don't know intimately the workings inside the Treasury Board. We would have sent it to the Treasury Board, the Treasury Board would go to the Treasury Board Secretariat, and they would take it, through whichever way they take it, to the Treasury Board.

The Chair: But Mr. Gagliano sat on the Treasury Board, you said.

Mr. Ranald Quail: Yes, sir.

The Chair: Okay.

Mr. Kenney, please.

Mr. Jason Kenney (Calgary Southeast, CPC): Thank you.

Mr. Quail--

Hon. Robert Thibault: Mr. Chair, can I get Mr. Quail's answer to your question?

The Chair: There's the Treasury Board Secretariat, which is the bureaucratic--

Hon. Robert Thibault: No, I understand, but I'm not sure whether he ended his answer by saying either that it was Treasury Board or that he didn't know if it was the board or the secretariat that gave the recommendation.

The Chair: I think his comment was that he just sent it over there, and he wasn't aware of the intricate interaction between the two. As far as he was concerned, it was the board.

But let's get it for the record.

º (1645)

Mr. Ranald Quail: For the record, I believe it has a Treasury Board minute, which means that Treasury Board saw it.

I mean, you have the document, so you can check.

The Chair: Yes.

I pointed out that Mr. Gagliano was on the board. Therefore, he may have pushed it through. We do not know.

Mr. Kenney, please....

Mr. Mills and Mr. Toews, we're not going to have discussion across the floor. We're going to hear from Mr. Kenney now.

We have seven more people, we have votes tonight, the bells will ring at 5:30, and we have some motions to deal with. I think we should wrap up around 5:20 because of the votes; we can't go over our time. I did the math, and I think we have to restrict the seven more people on the list to five minutes each. And that would be it for the day. That'll take us through.

Mr. Kenney, five minutes, please.

Mr. Jason Kenney: Thank you, Mr. Chairman.

Mr. Quail, to the best of your knowledge, how often did Mr. Guité meet with former Minister Dingwall while Minister Dingwall was your minister?

Mr. Ranald Quail: Really, Mr. Chair, I can't...I'm not helpful.

I can't tell you, Mr. Kenney.

Mr. Jason Kenney: Do you have any idea if Mr. Guité met with Mr. Dingwall during his tenure as Minister of Public Works?

Mr. Ranald Quail: Oh, I think Mr. Guité would have met with Mr. Kinsella and Mr. Dingwall, but other than that, I can't say.

Mind you, Mr.--

Mr. Jason Kenney: Did you say “Minister” Kinsella? He was chief of staff. He believed he was a minister, I'm sure, but....

Mr. Ranald Quail: I'm not going there.

He would have met...or it would seem to me that he could have met, anyway, with Minister Dingwall and the chief of staff, Mr. Kinsella. But I am in no position to talk about frequency.

If I could also say—

Mr. Jason Kenney: Just a minute. Do you have any certain knowledge of their having met at all?

Mr. Ranald Quail: No, I don't have any certain knowledge.

Mr. Jason Kenney: But you believe it's probable, possible, likely...

Mr. Ranald Quail: I think there could have been some meetings.

Let me also just interject one point. At that point, Mr. Guité was reporting to Mr. Neville. It seems to me there's a possibility that you may be meeting Mr. Neville, and--

The Chair: What position was Mr. Neville in at that time?

Mr. Ranald Quail: He was the assistant deputy minister of corporate services.

There could have been meetings with Mr. Neville and Mr. Guité in the two—

Mr. Jason Kenney: Okay. The reason I ask is that we have a contradiction here. Mr. Dingwall claimed that he never set eyes on Mr. Guité. Mr. Guité claimed that sometimes he was in Mr. Dingwall's office as often as twice a week.

As you probably know from press reports, since you last testified we've heard evidence that Mr. Guité met with Mr. Gagliano as often as a couple of times a week. Is that, to the best of your knowledge, plausible, or likely?

Mr. Ranald Quail: Personally, I think that's too often, a couple of times a week. But I did not have access to the minister's schedule.

Mr. Jason Kenney: Did you know that Mr. Guité was meeting on a fairly regular basis with Jean Pelletier, chief of staff to the Prime Minister?

Mr. Ranald Quail: I knew that he was meeting with Mr. Pelletier, yes, but I did not know how frequently.

Mr. Jason Kenney: Did you find that at all peculiar, that a mid-level bureaucrat in your department would be meeting regularly with the chief of staff to the Prime Minister?

Mr. Ranald Quail: As I said earlier, it's not usual. I don't know of any other occasions inside the department when I was there that this was happening. It did not happen with me.

Mr. Jason Kenney: Mr. Quail, both Mr. Pelletier and Mr. Gagliano testified that beginning in 2000, I believe, they began hearing what Mr. Gagliano characterized as street rumours about problems, potential fraud, in the conduct of the sponsorship program. Did you ever hear any rumours?

Mr. Ranald Quail: No.

Mr. Jason Kenney: Mr. Gagliano testified that it was he who initiated the internal audit consequent to conversations he had with Mr. Pelletier. Is that accurate, or was it you who launched that internal audit?

Mr. Ranald Quail: I think I indicated before that I was the one who initiated the audit. I discussed it with Mr. Gagliano before it started, and I also discussed it with PCO before it started. So they were both aware of that.

Mr. Jason Kenney: Mr. Quail, I'm just a little unclear on something. I think you've been asked this question, but I want to revisit it.

Did you ever express any concern, verbally or in writing, about the management of the sponsorship program to the Clerk of the Privy Council or to any other senior official in the Privy Council?

º (1650)

Mr. Ranald Quail: In writing, I did not.

Mr. Jason Kenney: Verbally?

Mr. Ranald Quail: I had a lot of discussions with PCO. As I mentioned earlier, my contact was the deputy clerk. That's who I worked with. We talked about requirements for money, sources of funding, how we were going to find them.

Mr. Jason Kenney: You didn't discuss mismanagement of the program with them?

Mr. Ranald Quail: I didn't discuss it, because I didn't have any indication of mismanagement.

Mr. Jason Kenney: Okay.

Mr. Quail, as you probably know well, there was a protracted struggle between Mr. Kinsella and Mr. Dingwall and people in former Minister Martin's office over sole-source contracts for Earnscliffe and certain other communications firms. Were you aware of that conflict, and can you help us shed any light on what has been characterized as political pressure coming from the former finance minister's office to secure contracts for Earnscliffe?

Mr. Ranald Quail: I can't really shed any light on that for the committee.

The Chair: Thank you, Mr. Kenney.

Ms. Jennings, five minutes.

[Translation]

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

Thank you very much for being here today, Mr. Quail. You've stated that the internal audit as well as the external audit conducted by Ernst & Young in 1996 should not be reviewed on the basis of the information that came to light in subsequent audits. In your opinion, we have to look at these events in context, when they first took place. I fully agree with your position.

According to these two audit reports, the group headed up by Mr. Guité had no expertise in supply management. Some contract irregularities were identified and it was recommended that this responsibility be taken away from Mr. Guité's service and moved to the unit normally responsible for such matters at Public Works.

Further to the recommendations of Ernst & Young, Public Works announced that it would initiate administrative procedures to carry out this transition. However, no action was ever taken.

You stated that further to the very first memo concerning funding to create the Sponsorship Program and in the process, increase the Canadian government's visibility—a memo signed by Mr. Chrétien and Ms. Marleau—a decision was made

[English]

in the first loop that the vehicle to deliver would be Public Works and Government Services Canada, and you were not in that loop. Is that correct?

Mr. Ranald Quail: That's right.

Mrs. Marlene Jennings: So you weren't in the loop that determined that the vehicle for the sponsorship would be Public Works. Then within Public Works a decision was made that it would be what was then called APORS that would get that money and manage and develop the program. You say that was also in the first loop, so you weren't there.

Mr. Ranald Quail: No, I didn't say in the first loop.

Mrs. Marlene Jennings: So it's in the second loop.

Mr. Ranald Quail: Well, it's--

Mrs. Marlene Jennings: To use your terminology. Then the implementation of the program was going to be through APORS, headed by Chuck Guité. Is that correct?

Mr. Ranald Quail: That's correct.

Mrs. Marlene Jennings: And that was in the second loop.

Mr. Ranald Quail: That was actually in the Treasury Board submission.

Mrs. Marlene Jennings: It was in the Treasury Board submission. Although you were involved, you had to see it before it went on, you were not actually party to developing it, from what you explained.

Mr. Ranald Quail: I wasn't party to developing the idea that we were going to improve communications by way of sponsorship, and I was not involved in the decision to do that over at the department. I was involved after that, as I explained earlier, with the Treasury Board submissions, how they got developed. And the input to the Treasury Board submission towards developing the list that drove the financial requirement and the bottom line would have taken place in discussions, as we know.

º (1655)

Mrs. Marlene Jennings: So to summarize, you were in the loop for the submission to Treasury Board, with all the rules and regulations, etc., that were detailed in the memorandum to Treasury Board, but you were also in the loop for the decision that it would be driven by APORS, headed by Mr. Guité?

Mr. Ranald Quail: Sure. As I mentioned--

Mrs. Marlene Jennings: The chair will let you go over my time, but I want to get the question in.

Mr. Quail, knowing that your department had already acknowledged that the expertise for approvisionnement, as we call it, did not reside in Chuck Guité's group, that there were irregularities, notwithstanding all the framework for financial management, contracting, the whole bit, why would you trust that it was going to happen, when they didn't even have the expertise, according to Ernst & Young, unless new people were brought on board who had that expertise? That's my question.

Mr. Ranald Quail: There are a couple of points. First, with respect to 1996, as I said earlier, I consider there to be only one audit, not two. We can argue over what we mean, but I consider there to be one audit.

Mrs. Marlene Jennings: I'm fine with that.

Mr. Ranald Quail: The first one was an assessment of whether we should go on with number two.

Second, my look at the audit went to the general assessment; that was my focus. I was briefed on the audit. As I said earlier, we did take it to the audit and review committee. My assessment of it was that we found no instances where non-compliance might have led to situations of personal gain or benefit, and we have the other three in advance of that. The language in the audit doesn't set off all the alarm bells that the audit of 2000 did or the Auditor General's, which she took on afterwards. Yes, it was serious, but it didn't set off a lot of alarm bells.

We did review it, we did look at the recommendation. I would note that even the language in the recommendation said “it may be more beneficial to all parties to incorporate”; it didn't say “you shall.” That's an example of the kind of red light that was on or not on, however you want to put it. It's true, however, that in the response to the recommendation, we did say we would look at its being transferred into the supply operations branch, the procurement portion. At the audit and review committee, which I chair, we looked at it and accepted it. The normal course of action was that the people who were audited should put it into place. I expected it to go into place. Initially, that would have been Mr. Stobbe, but because of the CCSB changeover, it would have fallen to Mr. Guité. It was for Mr. Guité to put it into place and for him to follow up on it.

He did have options, it seems to me. He could have done nothing, he could have put it inside his branch--he now had a fairly significant branch with CCSB--and he could have divided it. In his presentation, David Myer talked to that issue. He gave half of it away and didn't give the other half away.

That's the reality of what happened. From my point of view, I'd set out the guidelines, we had a modus operandi, and I expected this to be carried out.

The Chair: Thank you.

Monsieur Desrochers, cinq minutes.

[Translation]

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

In recent weeks, criticism has been levelled at a number of contracts awarded either by the Department of Finance or on its behalf since 1993. It has been reported that contracts were awarded to Earnscliffe, that some contracts, despite the large sums of money involved, were awarded without tender and that others awarded by the Department of Finance should have been handled by Public Works.

First of all, I'd like to know if you were aware of the preferential treatment enjoyed by Earnscliffe.

» (1700)

[English]

The Chair: On a point of order, Mr. Murphy.

Hon. Shawn Murphy (Hillsborough, Lib.): Everyone's accusing us of trying to shut it down, but half the questions that come out of this room have not been related at all to chapters 3, 4, and 5. He's going down the line of asking questions that are titillating--maybe it's sensationalism, I don't know--about questions that were issued in the last six months to some advertising company. Then he'll complain that we're trying to shut it down. I don't understand it, Mr. Chairman. There's no relevance whatsoever.

The Chair: What is the relevance, Mr. Desrochers, to the issue at hand of your questions, please?

[Translation]

Mr. Odina Desrochers: Strictly on the basis of our investigation of chapters 3, 4 and 5, we're trying to uncover any political ties. The actions of certain politicians may have led to the creation of the Sponsorship Program. In any event, I think the question is relevant. We've already discussed Earnscliffe. This firm has been the subject of numerous questions during Question Period and the committee has heard from a number of witnesses who were involved in this affair.

[English]

The Chair: The fact that it's in question period does not bring it automatically before this committee. Question period is wide ranging, but not this committee. We're dealing with chapters 3, 4, and 5 and the sponsorship program.

[Translation]

Mr. Odina Desrochers: It bothers me, Mr. Chairman, especially when you express some personal views, for example, on Mr. Chrétien's appearance before this committee. We could also admonish you for the way you're conducting business from the chair.

[English]

The Chair: The chair does not appreciate being admonished, but I will let this go. You may address your questions to Mr. Quail on the chapters we're dealing with. The issue raised by Mr. Murphy was that of relevance. I asked you to address that. I gave you some latitude. If you want to--

[Translation]

Mr. Odina Desrochers: This committee is turning into a real circus.

[English]

The Chair: If you want to get into an argument with the chair, the chair will just shut you down and move on. That's the way it will be.

Monsieur Desrochers.

[Translation]

Mr. Odina Desrochers: Given the way in which you're chairing these proceedings, Mr. Chairman, it's turning into a circus.

Mr. Quail, who ordered the study in 2000? Was it you, or was it Mr. Gagliano? Could you clarify that for me?

[English]

Mr. Ranald Quail: I initiated the study. I did discuss it with the minister and PCO before I initiated it. They were in agreement that we should go ahead.

[Translation]

Mr. Odina Desrochers: Then how do you explain the fact that Mr. Gagliano claims that he was the one who ordered the study? Who is telling the truth?

[English]

Mr. Ranald Quail: I think subsequently in his testimony he also acknowledged that I had initiated it, that I had discussed it with him ahead of time, and that he had agreed.

[Translation]

Mr. Odina Desrochers: It's no simple matter understanding the relationship between yourself and Mr. Gagliano, because the committee has heard many contradictory statements. We're trying to get to the bottom of things. You claim that your pride was somewhat wounded, that you were troubled by the fact that you weren't informed of some things until the very last minute.

Mr. Quail, did any other public servants under your authority enjoy as many privileges as Mr. Guité, or was he the exception?

[English]

Mr. Ranald Quail: He was probably the exception. That's not to say there weren't other meetings between the minister and people in the department at which I was not present. It's just not correct to say that. We're talking about the extent of the discussions and the issues that were discussed.

[Translation]

Mr. Odina Desrochers: Mr. Quail, did you have any say in the salary to be paid to Mr. Guité and in the reclassification of his position from the EX-1 to the EX-4 level? Did you take the initiative on this, or was it Mr. Gagliano who asked you to give Mr. Guité preferential treatment, in terms of his salary?

Let me ask you again: did any other public servants in your department enjoy as many benefits or move up as quickly through the ranks?

[English]

Mr. Ranald Quail: I don't necessarily agree with the premise that it was rapid promotion from when he was an SM or an EX-1 to an EX-4. I do agree that the promotion from EX-3 to the EX-4 was in a short period of time. I explained earlier how that came about. I explained earlier the discussions that I had with the minister on that and that the basis for looking at it was the additional responsibilities the branch would have in supporting the minister in his role as the chairman of the cabinet committee on communications. Did I have discussions with the minister? Yes, I did. Was the minister supportive of having a look at the job in light of the new issues? Yes, he was. We drafted the submission. I recommended the submission for his signature for it to be sent to the Treasury Board.

» (1705)

[Translation]

Mr. Odina Desrochers: I have nothing further, Mr. Chairman.

[English]

The Chair: Merci beaucoup, monsieur Desrochers.

Mr. Mills, five minutes.

Mr. Dennis Mills (Toronto—Danforth, Lib.): Thank you very much, Mr. Chair.

Mr. Quail, could you please describe for us and for Canadians how you get a cheque out of the Department of Public Works? What is the process? There's this perception out there that it's very easy to get a cheque out of the Department of Public Works. Mr. Guité described a process whereby there had to be a cheque requisition and the requisition had to have a number attached to it for the project. Could you talk to us a little about how the process works in the department you managed?

Mr. Ranald Quail: It's not easy, that much I can say. My problem is that I don't have all the specific steps in my mind; I didn't really prepare that. The department could prepare a flow chart that would talk about how that would be done, Mr. Mills. I would explain to Canadians that I want to do it properly, because it's not easy.

Mr. Dennis Mills: Fair enough.

Then I would ask the clerk to get a formal description of how a cheque gets processed at Public Works. I think we need to know.

Mr. Ranald Quail: You might want to put parameters around it, because many kinds of cheques get processed there. There'd be a process for goods and services, presumably, inside the department, which is what you're asking for, I think.

The Chair: Mr. Mills, we will ask for that.

Mr. Dennis Mills: Thank you.

My next question has to do with Mr. Guité's performance. I, for one, believe in due process here. You've described the environment at the time, where we nearly lost the country, by less than a percentage point, and we had a lot of pressure; a lot of things happening quickly. Mistakes, obviously, might have been made; we're waiting to see the results of that. But the fact remains that this man received a bonus every year he was in that job. Presumably, because he reported to you, you would have had to ratify that bonus. How does that work? What would be the basis of your making that judgment?

Mr. Ranald Quail: I have a couple of points of clarification. First of all, there was no performance pay, nor were there bonuses, because they were suspended, from 1990-91 to 1995-96. There were a fair number of years in that period where we just froze it.

In the period when Mr. Guité would have been reporting to one of the assistant deputy ministers, Mr. Stobbe, the preparation of the job performance review would be done by the individual. It would then be sent to the boss. They would review it against a set of, hopefully, pre-agreed objectives and goals. There'd be a discussion as to whether or not they had met those goals, and a decision would be made as a result of that. Inside the department we would roll up executive performance and review it across the board, so that we'd have an indication of who was getting what at the executive level, and on that basis, decisions would be made. During the time he reported to me, I would have also taken into consideration any comments that I had from outside, in particular from the minister's office. I had no complaints.

» (1710)

Mr. Dennis Mills: Is all this on Mr. Guité's file, on his move up these various EX positions?

Mr. Ranald Quail: I would assume it is.

Mr. Dennis Mills: Thank you very much, Mr. Quail, and thank you, Mr. Chair, for giving me the time.

The Chair: Okay, thank you.

Do you have a point of order, Ms. Phinney?

Ms. Beth Phinney (Hamilton Mountain, Lib.): A point of clarification.

When a performance report is done on you, or when there is a review, do you do the initial write-up yourself--that I'm just great, and therefore I deserve it?

Mr. Ranald Quail: There would be a number of criteria, and you would have to respond to the criteria.

Ms. Beth Phinney: You mean that you, the person—

Mr. Ranald Quail: You, tell me why you did it? Underneath these headings, what were your achievements?

The Chair: So it starts off, Mr. Quail, with a letter going to the employee saying, you're being measured under these criteria; please respond, and tell us what you think on how well you're doing. There will be an assessment of that and a decision made.

Is that how it works?

Mr. Ranald Quail: Yes, but also over the period of time after 1995-96, we also started to tighten up the way it was done, so that goals would be set in advance.

The Chair: Yes. We had the Strong commission, and so on and so forth. That came in about 1999 or thereabouts, I believe.

Mr. Ranald Quail: But you would have some goals, and you would have to report against the goals.

The Chair: Madam Ablonczy, for five minutes, please.

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

Mr. Quail, the Financial Administration Act assigns specific responsibilities to deputy ministers with respect to financial management. I take it that you would be entirely familiar with those responsibilities. Is that correct?

Mr. Ranald Quail: I'm familiar with the responsibilities, yes.

Let me put it.... Yes, yes.

Mrs. Diane Ablonczy: I'm sorry?

Mr. Ranald Quail: Yes.

Mrs. Diane Ablonczy: Do you believe you fulfilled those responsibilities with respect to the sponsorship program?

Mr. Ranald Quail: I accept, Mr. Chairman, that it was my responsibility, in support of the minister, to ensure that there was proper administration of programs within the department.

In a department the size of Public Works, you can only do that by way of a management structure. We had a strong framework. The framework set out the institutional and management arrangements that defined how the department was governed. We certainly had, I thought, discussions on ethics and how the department should work. We had strong executive committees. We had developed a risk management framework. We had a strong and functioning internal audit. We had properly delegated financial arrangements.

I think, at the end of the day, the audit function worked. We found the problem that we did in the year 2000. That was an independent review.

» (1715)

Mrs. Diane Ablonczy: Sorry, Mr. Quail, but because of a lack of time.... The fact of the matter is that in 1996 there was an internal audit, followed by an Ernst & Young audit showing some very serious problems with the department or division under Mr. Chuck Guité. It was four years later, in 2002, when you say that you called for a further audit. In the meantime, according to the Auditor General, every rule in the book was broken.

So I ask you again, do you believe you fulfilled your responsibilities under the Financial Administration Act with respect to financial management of the sponsorship program?

Mr. Ranald Quail: First of all, there was only one audit in 1996, in my view.

Number two, the audit that was written back at that time did not portray, in my view, the kinds of results that the internal audit of 2000 did—the audit that I had asked for. The audit back in 1996 talked about a couple of points. It said, “With a few exceptions, the overall policies and procedures governing APORS were assessed as being appropriate”. It found that there were “no instances where non-compliance might have led to situations of personal gain or benefit”. I took action with respect to the 1996 audit. We took it through the process, we assigned the responsibilities, there were undertakings, and I expected them to be done.

Do I think that I did my best and fulfilled my responsibilities as the deputy? Yes, I do.

Mrs. Diane Ablonczy: Mr. Quail, who assessed your performance with respect to carrying out those responsibilities when you were deputy minister?

Mr. Ranald Quail: The clerk.

Mrs. Diane Ablonczy: And what was their assessment during that time?

Mr. Ranald Quail: By year? I don't know.

Outside of the period where everything was frozen, was I successful, and did I get some performance pay? Yes, I did.

Mrs. Diane Ablonczy: So the Clerk of the Privy Council's assessment was that you had performed your responsibilities under the Financial Administration Act to the satisfaction of the government. Is that what you're saying?

Mr. Ranald Quail: I'm saying that they assessed my performance and that I did receive performance pay during those years.

Mrs. Diane Ablonczy: I have one last question, Mr. Quail.

You're probably aware that an acquaintance of yours, Norman Spector, last month wrote an article in which he said that he and you would get together and talk about the fact that you were no match for Mr. Dingwall's heavy-handed tactics. I think the committee would be interested to have you elaborate on the heavy-handed tactics that you experienced from Minister Dingwall.

Mr. Ranald Quail: First of all, it's Mr. Spector's view of what the discussion said, and it's his opinion that he's written in that particular article. And I'll leave it there.

On occasion, did I have discussions with Minister Dingwall? Yes, I did. I consider that the relationship with Dingwall was professional. Did we on occasion have serious discussions about the way in which we should proceed on certain files? Yes, we did. I don't know what more I can say.

Look, first of all, I can't deal with those.... You're going to ask me what file, and it's outside of the audit, and it's outside of the release of privilege. So did we have discussions? Yes. Were lots of them good discussions? Yes. Were lots of them tough discussions? Absolutely.

The Chair: Let's leave it there.

Mr. Murphy, please, five minutes.

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

I want to talk to you, Mr. Quail, about the whole issue of deputy minister accountability. You've described it here this afternoon, and it seems to me that you've taken the position that you've done, it seems, absolutely nothing wrong in discharging your duties as deputy minister, and you accept no responsibility for any of the issues raised by the report of the Auditor General.

But looking at it from the outside, I think there are a number of issues. There was the responsibility, under the Financial Administration Act, for establishing some procedures and maintaining records, which appears to me not to have been done. On the report of the 1996 Ernst & Young audit, where the recommendation was made to separate the procurement from the administration, the department said they would do it, but they didn't do it. You have the situation of Mr. Guité with a direct reporting relationship to the minister, and in some instances directly to the Prime Minister's Office.

Another issue that hasn't been mentioned this afternoon is the issue of Guité applying to the Prime Minister's Office for increased funding, which should have raised all kinds of bells and whistles. Then there are the four increases that Guité got during this period of time.

Now, I'm not going to get into a debate with you, but I think a lot of the people will look at that and say you failed the taxpayers of Canada. And I know that's not your position. But in terms of accountability, Mr. Quail, I'm just going to borrow a quote here. You're probably familiar with the report of the Task Force on Public Service Values and Ethics. This quote refers to deputy ministers:

On the one hand...public servants were to give to the government of the day... their professionalism, discretion, neutrality, non-partisanship, impartiality, and loyalty. On the other hand, public servants could supposedly expect at least two things in return: anonymity and security of tenure. Anonymity meant that public servants would not be publicly accountable or answerable for the actions of the government...

What I'm suggesting to you is that if you were accountable to Parliament, not from a policy point of view but from the administrative point of view, you wouldn't have allowed that reporting arrangement to continue the way it was. I'm suggesting to you that you wouldn't have allowed it. You would have been more vigilant in responding to the recommendations made by Ernst & Young when they completed the 1996 audit. You would have been extremely vigilant insofar as the compliance requirements of the Financial Administration Act.

So I want your comments on accountability. Do you, after having had a distinguished career as a deputy minister, think that deputy ministers should be accountable to Parliament? That has been suggested by Lambert, McGrath, and a number of different academics over the years.

» (1720)

Mr. Ranald Quail: I'm not sure I do. I think you should look at it. It's a very serious step. I think there might be other areas you could look at in terms of having deputy ministers more accountable and more answerable without taking the step of having them report to Parliament. I mean, you could have more accountability in reporting to this committee, or the government operations committee, or a committee, but I personally would not be in the camp of direct reporting to Parliament; now you'd have two streams going up.

You could have accountability, and you could increase the accountability. Indeed, I would argue that some of the newer guidelines coming out are in fact talking about that in terms of coming and being accountable to committees. In the older days, in terms of accountability to committees, you answered to committees, you were respectful to committees, and you went if the minister said it was okay. But I think you could improve in that particular area.

So I don't know if I'd go the extra step. I'd want some really hard thought to go into that, Mr. Murphy.

Hon. Shawn Murphy: But put yourself in our shoes for a second, Mr. Quail. You have the situation where we're dealing with a very serious report, and we're trying to do our best. We've worked very hard for the last three months. We have a minister who sat in the seat that Mr. Hunter's in, and he basically took the report and said, I had absolutely nothing to do with this; I was too busy to run my department. Then we bring in the deputy, who says, I was really out of the loop, so don't look at me for any answers on this report.

What are we to do? You answer the question. What are we to do?

Mr. Ranald Quail: Well, Mr. Chairman, my only point is that I tried to explain the way in which the system worked. I didn't say I was--

Hon. Shawn Murphy: The system didn't work. That's the....

Mr. Ranald Quail: Did work, I'm sorry.

Hon. Shawn Murphy: Well....

Mr. Ranald Quail: Well, no, but I mean, in terms of in the loop and out of the loop, I was quite specific, Mr. Chairman and Mr. Murphy, about the parts about being out of the loop. They were at the front end when you drove the demand and the initial decision that you were going to improve communications. Then there was getting on it and implementing it.

On the implementation, there were two parts to it. There was the part about the discussions between Guité, the executive director, and the people we've talked about, and there was the implementation inside the department.

Inside the department, we put the management framework in place. I've explained the other issues that we had in place. You have to assume, in a department of any size, that you put a management framework in place and that people will follow the management framework.

Hon. Shawn Murphy: Just a quick question. In your opinion, should the minister be held to account for any of the problems identified by Sheila Fraser?

Mr. Ranald Quail: The standards with respect to the responsibility of ministers are in my view fairly clear. The minister is responsible to the House of Commons, and he's accountable to the House of Commons and the Prime Minister, to report. The deputy is responsible to support the minister and to be accountable to the minister in terms of that responsibility.

His accountability to the House of Commons deals with his responsibility as a minister in the global sense, and his responsibility for administering his department pursuant to the act to which he has--

The Chair: Thank you, Mr. Quail.

Mr. Jordan, I'm only going to give you a couple of minutes, because we're going to run out of time here. I'll try to give you maybe three or four minutes.

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Hon. Joe Jordan: Fortunately, Mr. Chair, I'm a middle child, and I accept those kinds of things readily.

Mr. Quail, a couple of quick things. Mr. Mario Parent, who worked for CCSB, left and worked for Gosselin Communications. On the surface, that would appear to be perhaps in contravention of the post-employment guidelines. Under the policy, as I read it...and I guess the onus was on Mr. Parent, but if he felt there was a potential conflict, he was supposed to send a confidential memo to the deputy minister. To the best of your recollection, did that take place?

Mr. Ranald Quail: No, it did not.

I would make just one point of clarification, though. I don't know Mr. Parent, really, and I don't know his level, but from my reading of those guidelines, I think they apply only to the SM level. So it might not have applied; I don't know.

Hon. Joe Jordan: Okay.

Mr. Quail, were you connected at all, either in terms of association...or were you the deputy minister prior to 1993, when APORS essentially performed what essentially morphed into CCSB?

Mr. Ranald Quail: No.

Hon. Joe Jordan: Were you aware that prior to November 1993, it was common practice to have political staff in the APORS office?

Mr. Ranald Quail: No. When the departments were amalgamated, I was the deputy at Public Works. APORS was over at Supply and Services. Before that I was at Transport.

Hon. Joe Jordan: We had two representatives from the quick response team here, and they were asked, in terms of their knowledge of this file--which I think was considerable in the details--how this was allowed to happen. I'm just going to go over briefly what they said, and I'd like your comments.

They made essentially four points. One was that this was taking place in the environment of program review, which meant things were simultaneously being changed and cut, and money was being reprofiled. I guess the inference was that there were costs associated with some of the oversight, and it was decided, on a risk-reward basis, that they would draw some of that back.

A culture was being created where they were looking for entrepreneurial spirit within the public service--perhaps for innovation at the expense of regulation.

They were implementing large information technology systems and processes that were far more complex than just speeding up the way they used to do it manually. They were causing revisits, fundamentally, of how things were done.

Finally--and we touched on this earlier in your testimony today--within CCSB there was no segregation between the granting of contracts and the approval of invoices that led to cheques being cut. Both of those functions existed with Mr. Guité, and one of the fundamental processes of oversight was essentially eliminated because they weren't segregated.

Is that a fair assessment of the atmosphere and the environment?

Mr. Ranald Quail: From my own personal point of view, on top of two years of program review we also had the savings we had to put in place as a result of the amalgamation. One could argue that was three years of program review. It was an intense period. It took up an enormous amount of time.

In our department we started with about 19,500 people. We took out over 6,000 people. We took out $350 million. It was an immense job that was done by all of the senior people, and it did take away from time to look at other things. That's not an excuse; it's a fact.

There was a people problem associated with that. We had an absolute focus on trying to--

The Chair: Try to wrap up.

Mr. Ranald Quail: Okay, sorry.

We tried not to lay off any people. We succeeded in that. So that's true.

Service was a key issue for a common service organization--service to the people of the country, the Receiver General, other government departments, and the minister. That was a big situation.

We had Y2K in there. That was big for us, because we ran a lot of big systems. So there we are.

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

Point of clarification.

Ms. Judy Wasylycia-Leis: It's very important for us just to get a quick clarification on the 1996 audit that talked about procurement being put back in the normal process. The deputy minister, management, said it should be done and would be done.

When you were here last--

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The Chair: No. You can ask the question to me and I'll get the--

Ms. Judy Wasylycia-Leis: Sorry. When Mr. Quail was here last, he said it didn't happen because the minister wished to have it this way. So I just think it's important for us to clarify what he said last time versus what we're hearing today and try to figure out an answer to that question.

The Chair: You said last time around it was the minister who wanted to keep it that way, Mr. Quail. Is that still your testimony?

Mr. Ranald Quail: Yes, I still think.... The reason I said that was that in the development of CCSB, that was not an easy issue to develop. We went forward and had some extensive discussions with Minister Gagliano. I think I also testified that I cannot say we tabled the 1996 audit, but I do say we would have reviewed all of the requirements and functions in CCSB.

The Chair: Okay, thank you.

You met with Mr. Gagliano twice a week, and Mr. Guité reported to you. Did Mr. Gagliano ever tell you about the amount of his involvement in the sponsorship program? How often did you talk to Mr. Guité about his performance and how he was managing his program?

Mr. Ranald Quail: When Mr. Guité reported to me.... First of all, to answer your first question, I don't recall any discussion.

The Chair: He never indicated to you the amount of his involvement in the program.

Mr. Ranald Quail: Well, the amount.... He and I discussed the program.

The Chair: He didn't tell you, I'm right in there; I know everything that's going on?

Mr. Ranald Quail: No. He did not.

Sorry, the second question...or are we finished?

The Chair: How often did you check with Mr. Guité: How are you doing, Mr. Guité? Is everything under control? Are you managing your department okay?

Mr. Ranald Quail: When he started to report to me, we had a structure and an executive committee. He was a member of the executive committee. He could be there to participate in the executive committee. We didn't talk about sponsorship much. I tried to meet with all of the 13 people who reported to me on a monthly basis.

The Chair: Okay, thank you.

We have three motions to deal with. One is Mr. Kenney's motion. We'll deal with that first because it's first. Mr. Jordan gave us notice earlier, and if there's agreement we'll deal with that. Then I have an administrative motion I have to deal with as well.

Mr. Kenney, your motion is:

That the Committee request copies of any notes taken by the Clerk of the Privy Councilduring meetings with the Prime Minister pertaining to items raised in Chapters 3, 4 and 5of the November 2003 Report of the Auditor General of Canada, and that such notes bereviewed by the Committee's law clerk to advise the Committee on their relevance to theCommittee's enquiry.

Do you want to speak very briefly to your motion? I think it's fairly self-explanatory.

Mr. Jason Kenney: Yes, I'm in favour of my motion.

Mr. Chairman, I'm just reading the latest CP story.

The Chair: We're not going to the latest CP story; we're actually on the motion.

Mr. Jason Kenney: It says, “sex kitten and cat fight in the House of Commons”.

My motion is that the committee request copies of any—

The Chair: I know, I just read the motion.

Mr. Jason Kenney: All right. It's self-explanatory.

The Chair: That's what I thought.

(Motion negatived: nays 9; yeas 6)

The Chair: Mr. Jordan, you have a motion you'd like to read.

Hon. Joe Jordan: I move that, notwithstanding the motion adopted by the committee on Tuesday, May 4, 2004, the committee receive evidence from Mr. Alain Richard by way of affidavit.

The Chair: There is no unanimous consent to deal with that at this time.

The third one I have is administrative. It's important that we follow the rules as we investigate an issue where the rules were not followed. The comptroller's office would like authorization from this committee that, if requested, reasonable travel, accommodation and living expenses be reimbursed to counsel accompanying witnesses before this committee during its study of chapters 3, 4, and 5 of the November 2003 report of the Auditor General of Canada.

(Motion agreed to)

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The Chair: The meeting is adjourned.