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View Leon Benoit Profile
CPC (AB)
Good afternoon, everyone.
Today we have witnesses to deal with the issue brought forward by a motion on Monday, October 31. The committee passed a motion at that time calling on Mr. Dingwall and the minister responsible for Technology Partnerships Canada, Minister Emerson, and Bioniche Life Sciences and Democracy Watch to appear at the earliest possible date in order to re-examine Mr. Dingwall's committee testimony from Wednesday, October 19, 2005, and information surrounding that. In particular, there is confusion, at least, and conflicting statements between what the industry minister, Bioniche Life Sciences, and Mr. Dingwall have publicly stated in relation to the rules governing TPC grants awarded to Bioniche and the moneys recovered by the Government of Canada. It's our committee's responsibility to straighten this matter out. We're here today to deal with that and other questions surrounding this issue.
Yes, on a point of order, Madam Marleau.
View Diane Marleau Profile
Lib. (ON)
I'm wondering what happens with the supplementary estimates and the people we were supposed to meet with on Wednesday to deal with those estimates. The meeting was cancelled, and I thought we were going to have a meeting on Thursday. I then put forward a motion saying that the main purpose of our committee is really to do work on the estimates, and we haven't done that, Mr. Chair. We had some meetings scheduled and they just didn't occur. I was wondering, because it is our first order of business, whether we couldn't deal with that question before we hear from our invitees.
View Leon Benoit Profile
CPC (AB)
Madam Marleau, we have the witnesses here ready to testify. We will deal with your motion towards the end of the meeting. I have allocated some time for that.
In terms of the meeting being cancelled, I was told the votes would take about an hour and a half. With the bells and everything, that would have meant that we'd be at the very end of the meeting time by the time we were through with voting. Now, that didn't happen. It's hard to predict sometimes exactly what will happen, especially when we're going into an election period. That was my call, and it turned out that we would probably have had an hour with the witnesses. Maybe it wasn't the right call, looking at it in hindsight.
View Diane Marleau Profile
Lib. (ON)
I want to go back to that, because I think it's important that people understand what's going to happen if these estimates are not passed.
View Leon Benoit Profile
CPC (AB)
When we deal with the motion, Madam Marleau, you'll have your chance to make these points when you present your motion, and I look forward to that.
View Diane Marleau Profile
Lib. (ON)
I was under the impression that the estimates took precedence over other matters before the committee.
View Leon Benoit Profile
CPC (AB)
It's up to the committee to decide the business of the committee. We had a meeting scheduled for the supplementary estimates and the performance reports, as you know. That meeting, unfortunately, was put off, but we had this meeting scheduled and we will go ahead with this meeting. We'll start as soon as I have finished a couple more opening comments with the witnesses making their statements. We will go to that now.
I want to remind people that the mandate of the government operations and estimates committee is to review the effectiveness of government operations as well as expenditure plans of central departments and agencies, commissions, foundations, as well as selected crown corporations and organizations. One of those crown corporations is the Royal Canadian Mint. Mr. Dingwall is former president of the Mint, and that's why this business is before the committee. It's actually a follow-up committee from a previous meeting.
Mr. Dingwall had agreed to be here, but we received at letter from him at 2:50 and he has backed out. You have a copy of the letter. We can deal with that at the end of this meeting, as well, because I think we should deal with that.
The second witness is Mr. Graeme McRae, president and CEO, Bioniche Life Sciences. We have also Mr. Tom Wright, executive director of Technology Partnerships Canada, and Mr. Duff Conacher, chairperson of Democracy Watch. Thank you all very much for being here.
We will now go to five-minute statements or less from all of you.
We have a point of order.
View Odina Desrochers Profile
BQ (QC)
Mr. Chairman, like most of my colleagues, I'm very disappointed to see that Mr. Dingwall is not here. Do you know if we will be able to see him at another hearing? Did he categorically refuse? Will he come back? We would have liked to ask him a few questions regarding the Royal Canadian Mint. In addition, many people are interested in learning more about his severance package. I want to make it known that I am dissatisfied. The lack of courage demonstrated by Mr. Dingwall by addressing us through a lawyer's letter is entirely inappropriate.
View Leon Benoit Profile
CPC (AB)
It clearly in no way is appropriate. It is inappropriate, you're absolutely correct. But we will deal with that issue at the end of this meeting, and the committee can decide what, if anything, we'd like to do about that. But I would be bothered if this committee chose to let it go.
It may be up to the next committee to deal with it after the election and in a new Parliament, and they certainly can at that time. They can reach back to this Parliament and do what they see as appropriate.
I would like to again welcome all of you here today.
Starting with Mr. McRae, if you'd like to make a five-minute statement at the start of the meeting, just go ahead. We'll then go to Mr. Wright, and then to Mr. Conacher. If you need a little bit more time than that, just let me know and I'll see what I can do, especially Mr. McRae, I would say, as he is giving this information on the program.
Graeme McRae
View Graeme McRae Profile
Graeme McRae
2005-11-28 15:40
Thank you very much.
Good afternoon, honourable members of the committee. My name is Graeme McRae and I am president and CEO of Bioniche Life Sciences, a small Canadian company headquartered in Belleville, Ontario. We research, develop, manufacture, and market products for animal health, human health, and food safety.
The company has operated in Canada for more than 26 years. We're currently headquartered in Belleville, and have facilities in Montreal. We also have facilities in the United States, the Republic of Ireland, and Australia.
I would first like to provide you with a brief description of our business and the projects TPC has funded, then talk about our situation with TPC and Mr. Dingwall.
Bioniche is a unique Canadian biotech company, in that we market our products globally, and we generate revenues of more than $48 million per year. Our research and development expenses are currently a little over $15 million per year.
In animal health, our research focuses on developing alternatives to antibiotics by using proprietary technologies. This is increasingly important as we encounter more and more bacteria resistant to antibiotic therapy. Our work with the proprietary technology has already resulted in the development of one product for horses.
Our research focus in humans is on treating cancer. We have a Canadian-developed proprietary technology that we call mycobacterial cell wall-DNA complex--MCC--with which we are now planning a final pivotal phase three clinical trial in patients with superficial bladder cancer. This will be a global trial.
This technology has successfully completed phase two in bladder cancer and phase one in prostate cancer patients. MCC is showing great promise in the treatment of many other cancers in the preclinical research laboratory setting.
In food safety, we've made a significant investment in the development of vaccines for animals, which will prevent animal diseases from infecting humans. The first vaccine in this pipeline is a cattle vaccine against the E. coli 0157:H7 bacterium, the same bacterial strain that infected people in Walkerton, Ontario, through their water supply, costing seven lives and causing long-term health problems that will end up potentially costing the health care system in Canada hundreds of millions of dollars.
This bacterium is now endemic in the cattle industry globally and continues to affect individuals through meat with hamburger disease, produce, water, and contact with farm animals.
The bladder cancer technology and the E. coli 0157:H7 vaccine are tremendous examples of made-in-Canada technologies, which, with the help of Technology Partnerships Canada funding, will continue to be Canadian developed. We would not have been able to accomplish what we have while remaining in Canada without funding from programs such as TPC.
Bioniche received approval for two repayable loans in 2001 from TPC for a total of $17.2 million in support of these two key projects, of which $8,186,000 has been advanced to date, representing approximately 24% of the total amount of $32 million Bioniche has spent on these projects since 2001.
When the company initially decided to pursue TPC funding, we were inexperienced in how to obtain this type of funding, and it was suggested we use a lobbyist to assist us. We employed Walding International in this capacity, with Mr. David Dingwall as our principal contact.
We entered into an agreement with Mr. Dingwall for his services, which contained a success fee, in that a portion of his set fee-for-service would be paid only when Bioniche successfully obtained moneys under the TPC program. This is a standard practice in our industry and was important to Bioniche, given our limited resources at that time. We were unaware that this practice was not permitted under the rules of the TPC program.
When we entered into the agreements with TPC, we learned from our legal counsel that success or contingency fees were not permitted by TPC. At that time we notified Mr. Dingwall of our discovery. We verbally agreed with Mr. Dingwall, prior to signing the TPC agreements, to restructure our arrangement with him and eliminate the agreement to pay him on successfully obtaining TPC moneys. We agreed instead to pay him a monthly retainer for his services.
We subsequently amended our written contract with Mr. Dingwall to reflect this revised agreement, and we thought this was sufficient to comply with TPC rules. In fact, Bioniche had paid approximately 75% of Mr. Dingwall's total fee and had invested approximately $4 million in the research projects prior to receiving any funds from TPC.
Several months ago we were approached by Industry Canada, which was conducting an audit of the TPC program. At that point, funding from TPC to our project was put on hold pending the completion of the audit. We cooperated fully with the audit and were surprised to learn on September 23 that the audit concluded we had breached the terms of our contract with TPC.
We immediately sought to rectify this situation by meeting with Industry Canada and discussing options for resolution.
While we disagreed with the conclusions of the audit, we accepted responsibility for the findings and reached a settlement with Industry Canada. We agreed to pay to the government an amount equal to the portion of the consultants fees that were in dispute, plus costs of the audit, for a total of $463,974.71, plus interest. This put us back in good standing under our TPC contracts, something that was of critical importance to us, since TPC funding had been frozen through the period of the audit, while Bioniche had continued to fund its research projects.
Bioniche acted in good faith when we amended the payment terms in our contract with Mr. Dingwall, upon learning of the discrepancy with TPC rules, and we fully believe we had rectified the situation. We have now taken the required action to put the company back into good standing with TPC, and we wish to move forward with TPC funding and further develop our technologies in Canada.
Thank you very much, Mr. Chairman.
View Leon Benoit Profile
CPC (AB)
Thank you very much, Mr. McRae.
Now we will have Mr. Wright make a statement, if he has a statement to make.
Tom Wright
View Tom Wright Profile
Tom Wright
2005-11-28 15:47
It's just a brief statement, Mr. Chairman.
Good afternoon. My name is Tom Wright and I am the Executive Director of Technology Partnerships Canada, a position that I've held since 2004. I would like to thank you for inviting me to appear before your committee today and to talk to you about the results of our audit of the lobbyists.
This afternoon, I will put the discussion into context by describing the steps taken to date in dealing with the issue of lobbyists. To this end, I believe it is important to point out that TPC provides the government with the means to give strategic assistance to research and development projects in the private sector under the shared risk formula.
We established partnerships with businesses that are developing high risk technology projects. We also gained research and development abilities and increased the number of core mandates for Canada.
Taken at an overall level, TPC generates important benefits in terms of company competitiveness, employment, and wealth creation. In fact, a formative evaluation of the program in 2003 was able to confirm many of the benefits associated with the program.
With regard to the lobbyist issue at TPC, it's important to note a few things. At the outset, it was through TPC's routine audits of funding recipients that in February 2004 we uncovered evidence of potential breaches of the contractual provisions relating to the payment of contingency fees. We immediately invited the department's audit and evaluation branch, as well as legal counsel, to review the situation. The audit and evaluation branch engaged outside auditors for the initial forensic audit and for a follow-up compliance audit of some 47 companies. The department has informed the offices of the Auditor General and the Comptroller General of the issue that we're managing, and the department has continued to keep them informed. The department has acted quickly to investigate these issues, and it has been diligent and rigorous in identifying non-compliant companies and in working with these companies to rectify their events of default.
On September 22, 2005, our minister released a status report that discussed the initial forensic audit of four companies conducted by Kroll Lindquist Avey, and the interim report on the subsequent compliance audits of the 47 companies being conducted by Raymond Chabot Grant Thornton. I'd like to assure the committee that the minister has made it clear to us that the results of this compliance audit are to be made public, consistent with the access and privacy laws, just as we did with the Kroll forensic audit.
In closing, on September 20, the minister announced that the government will be launching a new transformative technology program. The new program will be open to all sectors and all technologies, with improved access for SMEs. As some of you may have heard, we've engaged the services of Arthur Kroeger to advise us on the design of this new program. His advice on best practices related to transparency, governance, and accountability—elements the minister has directed us to pay particular attention to—will be invaluable in guiding the design of the new program.
Mr. Chairman, I'll stop there.
View Leon Benoit Profile
CPC (AB)
Thank you very much, Mr. Wright, for your concise statement.
For up to five minutes, we go to Mr. Conacher, from Democracy Watch.
Duff Conacher
View Duff Conacher Profile
Duff Conacher
2005-11-28 15:50
Thank you very much for the invitation to present on this issue today.
I'm going to speak first on Democracy Watch's analysis of the regulatory system on lobbying's failure to prevent and penalize this past illegal lobbying, and then also speak about proposals that have been put forward to strengthen the enforcement system by the federal parties.
The problem the committee has still is that it has not heard from two key people. Assuming that there will be an election, hopefully post-election this committee or another committee will subpoena former ethics counsellor Howard Wilson and former registrar of lobbyists Diane Champagne-Paul, and hold them accountable for failing to catch and prevent these illegal lobbying activities.
View Leon Benoit Profile
CPC (AB)
We have a point of order from Mr. Szabo.
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