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View Kelly McCauley Profile
I call this meeting to order.
Welcome, everyone, to meeting 47 of the House of Commons Standing Committee on Government Operations and Estimates, a.k.a. the mighty OGGO.
Pursuant to Standing Order 106(4), the committee is meeting to consider the request by four members of the committee to undertake a study of contracts awarded to McKinsey & Company.
Today’s meeting is taking place in a hybrid format, pursuant to the House order of Thursday, June 23, 2022. Members are attending in person in the room and remotely using the Zoom application.
I see Ms. Kusie has her hand up already, but before we get started, I want to make a couple of notes.
First of all, we have a brand new clerk. I want to recognize the great work that Paul Cardegna did with us in the past.
Thank you, Paul. I know you are probably watching.
We have a brand new clerk. She is not in the room today. She is doing Zoom, because she is under the weather. She is Aimée Belmore, and she'll be joining us at her very first official meeting.
Welcome, Aimée, to the only committee that matters.
Also today, we're welcoming back Mr. Green, an OGGO alumnus who is filling in for Mr. Johns, who is out of the country.
With that, we will get started.
Ms. Kusie, I notice you have your hand up.
View Stephanie Kusie Profile
Yes. Thank you very much, Mr. Chair.
I'd like to welcome our new clerk, Ms. Aimée Belmore. I hope that she will feel better as quickly as possible.
I want to thank the committee for coming here today. First of all, I want to thank my opposition counterparts from both the Bloc and the New Democratic Party, who recognized the urgency of having this meeting.
I know—as does everyone on this committee—that we were working on having an outsourcing study, as it were. I recognize I'm still relatively new to the committee, but we were going along with that outsourcing study, and I think it was going along very well. It was providing us with lots of good information about the role of consulting firms within government. However, as everyone on this call is aware, we received new information over the winter break.
I'm sure you're all aware that on January 4, CBC published an article showing that the current government has spent over 30 times more on government contracts with McKinsey—which of course is the company whose relationship with the government we're here to discuss today—than the previous administration. At least, that's what we thought until January 17. The Globe and Mail published an article stating that the actual value of government contracts with McKinsey since 2015—since this government has been in power—amounts to $101.4 million. That's much higher than what had been reported.
In addition to that, the media stated that the government's connections with McKinsey have landed the firm a significant number of sole-sourced contracts. Of the valued $101.4 million in 23 different government contracts, only three out of the 23 were open-sourced. The other 20 were sole-sourced.
Coming from a public service background at Global Affairs, I recognize how completely unacceptable that is in terms of government standards, and this is all happening at a time when Canadians are struggling.
In the words of my leader, Pierre Poilievre, Canadians are currently struggling to cope with 40-year high inflation, and 1.5 million Canadians visited a food bank in a single month. That's just shameful. The cost of a mortgage payment is now a bigger portion of a paycheque than ever before, and some Canadians are going to food banks asking for help with medically assisted dying, because they can't afford to live.
This waste is happening at a time when Canadians are struggling.
I want to take a minute to talk about our public service. It is a public service that I proudly served in for close to 15 years. We have a shadow government in place because of these consulting firms, which are not only creating a lack of agency within public servants and demoralizing the public service, but also creating incredible waste. We can see—from our studies here at OGGO, within the media and from the public servants who have appeared at this committee—that they are not even sure what they are doing or what the objectives are of their divisions and departments. As a result of that, these expensive consultants are being brought in as part of an effort to fix it, but guess what? Studies are showing that they're not fixing it.
I would even estimate that we are spending three times what is necessary for high morale and a highly functioning public service.
Again, my leader addressed this last week when he said that we want to move work internally, to the public service. We want a well-recruited, well-trained, high-retention public service, but these consultants are getting in the way of that. We have a situation in which we have significant expenditures with this single company in addition to many others, but the focus here is McKinsey. We have a shadow government operating, and we have Canadians who simply can't afford it at this time. They simply can't afford it.
There's more, though. We have to wonder: Whose idea was this? Whose idea was it to start this relationship with McKinsey? Well, guess what? Their former lead, Dominic Barton, is the former global managing partner for McKinsey, and led a 30-year career with the firm. While he was working with McKinsey, he was closely connected with the Liberal government. He served as the economic adviser to Justin Trudeau prior to his retirement from the company in 2018. Shortly after he retired from McKinsey, he was then appointed by Prime Minister Justin Trudeau to serve as Canada's ambassador to China. Let me tell you, having gone through the foreign service, I know that is a plum post and not easy to get.
It's evident where the idea to bring in McKinsey came from. It came from the very top. Guess what? I'm not the only one who sees it. The individuals who signed that letter to ask for this meeting today aren't the only ones who see it. The media sees this as well. I am going to quote Bob Fife, the Ottawa bureau chief of The Globe and Mail, who made comments on CTV's Question Period this past Sunday. These are the words out of Mr. Fife's mouth: “They got these contracts...because Dominic Barton's a buddy of the Prime Minister.” Those are Bob Fife's words, not mine. He goes on to say more—that this “is what it looks like”, and that Dominic Barton “advised him on the Infrastructure Bank, which [also], by the way, has been a flop.”
It's no secret where these ideas are coming from. They're coming from the top. They're coming from the top and they're permeating all throughout government. We're seeing more and more media stories where more departments within the Canadian government are implementing McKinsey as part of what should be solutions, but, as we're seeing, are not. We're seeing this in defence. We're seeing this in immigration. We're seeing this in health. We're seeing this in different agencies under industry. This is not a single-department issue. This is coming from the top, with its tentacles permeating throughout government.
It's very clear where this is coming from—who had this idea in the first place to bring McKinsey in—but it is not only that McKinsey has been brought in at the top and at this magnitude. Why would the Prime Minister decide to work with a company that has such a questionable ethical background? McKinsey was under fire this past year over its contracts with the Government of France and campaign financing for President Emmanuel Macron. Spending on contracts with McKinsey more than doubled in the president's first term. They are under investigation for false campaign financing for Macron's 2017 campaign. Supposedly, some McKinsey consultants were working as unpaid volunteers for the campaign. Prosecutors are investigating whether this entailed a hidden campaign expense and if the firm enjoyed special access and treatment afterwards when winning lucrative contracts with the government.
In the U.S. they've also recently faced massive criticisms. Although it was Purdue Pharma, an American pharmaceutical company, that pleaded guilty to criminal charges in 2019 over its role in the OxyContin and opioid crisis, it was McKinsey & Company that developed a strategy involving driving sales of addictive painkillers, even as public outrage grew over widespread doses. McKinsey advised the company to turbocharge OxyContin sales and counter efforts by drug enforcement agents to reduce opioid use, and were part of a team that looked at how to counter the emotional messages from mothers with teenagers who overdosed on the drug. It was shameful.
A partner at the McKinsey consulting firm was also criminally charged in the United States with insider trading ahead of Goldman Sachs's agreement to buy fintech lender GreenSky, Inc., for $2.24 billion. Puneet Dikshit, an executive with McKinsey, exploited information he gained about his client Goldman Sachs's pending takeover to buy profitable call options in GreenSky.
He had a leading role advising Goldman on the deal after learning that a deal was imminent, and bought 2,500 call options in two days before the announcement. He ultimately netted about $450,000. He was sentenced to 24 months in prison for two counts of securities fraud.
It's worse than that, though. It is more significant than that. The engines for many of the missiles fired in the Ukraine war with Russia were manufactured by a massive Russian stakeholder enterprise called Rostec. Rostec and executives for that company hired the global consulting giant McKinsey & Company in recent years for advice. This was at the same time the firm was carrying out sensitive national security contracts for the defence department and the U.S. intelligence community.
This one is very public and possibly the mostly disgraceful. In 2018 a McKinsey & Company retreat in China took place only seven kilometres from an internment camp holding thousands of ethnic Uighurs. This was just a week after a United Nations committee had denounced the mass detentions and urged China to stop.
In August 2018, the VEB Bank, which is owned by the Russian state and known to be intertwined with Russian intelligence and to be under United States sanctions, hired McKinsey to develop its business strategy. In 2015, McKinsey published an interim report on the public reception of new policies in Saudi Arabia. In the report, they demonstrated that negative sentiment far outweighed positive reactions on social media and that three people were driving the conversation on Twitter: the writer, Khalid al-Alkami; Mr. Abdulaziz, a dissident living in Canada; and an anonymous user who went by Ahmad.
After the report was issued, Mr. al-Alkami was arrested; Mr. Abdulaziz had two of his brothers imprisoned by Saudi government officials, and the anonymous account was shut down. The Gupta family, a wealthy family from India with business ties in South Africa, has strategically placed corrupted individuals in various South African government utilities and infrastructure sectors. It is alleged that McKinsey was complicit in this corruption by using the Guptas to obtain consulting [Technical difficulty—Editor] conversation on Twitter.
I'm sorry. I am down to the last one.
Trillian was paid a commission for facilitating the business for McKinsey. [Technical difficulty—Editor] South Africa's national prosecuting authority concluded in early 2018 that the payments to McKinsey and its local business partner, Trillian, were illegal and involved crimes of fraud, theft, corruption and money laundering.
Mr. Chair, this idea came from the very top, from the Prime Minister, and I would also suspect from his two closest advisers, to have this corporation permeate the government. Why are they choosing to get into bed with a company that is not only ethically corrupt but possibly also criminally corrupt in many nations?
All these examples of ethical violations that I am giving today, Mr. Chair, are from after 2015. The government has had time to be aware of these ethical violations, but it has decided to not only continue the relationship but even deepen it and have it develop.
We've talked about the sole source, the shadow government and the amount of money that was spent, despite the state of Canadians. We've talked about whose idea this was, why it is permeating government and why the Prime Minister and his government would continue to work with such an ethically bankrupt company.
The final question, Mr. Chair, is who is pulling the strings and who is really in charge of Canada? Canadians go to the ballot box in the hope that they will elect a democratically functioning government, a government that will consider their interests and act in the interests of Canadians, those who brought them to power.
However, the initial CBC article from January 4, 2023, which indicated that the Department of Immigration, Refugees and Citizenship Canada actually had a contract with McKinsey & Company, indicated that two public servants explained that many policy decisions were actually made by McKinsey rather than by public servants.
They also said these policy decisions were made without public interest as their top priority. The sources in the CBC article also expressed significant concerns over McKinsey's impact on the decision to increase immigration targets. Immigration targets have a profound effect on every single aspect of our country, such as our housing situation and our health care situation. It's not the government that is determining these, Mr. Chair. It's McKinsey, as is evidenced by this article.
McKinsey's global head, Dominic Barton, chaired the advisory council on economic growth in 2016, which recommended immigration targets of 455,000 permanent immigrants per year. Isn't that funny? Isn't that just the number we just saw the Minister of Immigration brag about in the last month? Despite concerns by the minister at the time, the recommendations were implemented by IRCC.
Again, this government is not calling the shots. It is having the shots called by a third party source, by an external source, and who knows where that third party source is getting its ideas from, Mr. Chair?
As a result of all these different pieces that show how McKinsey's relationship with and the implications for this government are so wrong on so many levels, as I have just communicated, we, the members of the opposition, have come here today with a motion that we are going to now present to the committee.
I will read it into the record in English:
That the committee undertake a study, pursuant to Standing Orders 108(3)(c)(iii) and (ix), regarding government consulting contracts awarded to McKinsey & Company by the Government of Canada, or any Crown corporation, since November 2015, examining their effectiveness, management and operation, including the value and service received by the government, provided that
(a) the Committee schedule meetings to receive witness testimony, (i) the President of the Treasury Board, the Minister of Public Services and Procurement and the Deputy Prime Minister and Minister of Finance, the Minister of National Defence, the Minister of Immigration, Refugees and Citizenship, the Minister of Health and the Minister of Public Safety each be invited to appear for at least two hours, and (ii) the parties each provide to the clerk of the committee, as soon as possible, their preliminary list of other witnesses who the chair shall schedule in a manner fair to all parties;
(b) the committee report forthwith to the House that it recommends that the Auditor General be called upon to conduct, as soon as possible, a performance and value for money audit of the contracts awarded to McKinsey & Company since November 2015 by any department, agency or Crown corporation;
(c) the committee order each department, agency or Crown corporation which entered into a contract (including a memorandum of understanding or other agreement) with McKinsey & Company since November 2015, to provide the clerk of the committee in both official languages and within three weeks of the adoption of this order, and notwithstanding any non-disclosure agreements which might be applicable, copies of (i) requests for tenders or other procurement requests related to contracts awarded to McKinsey & Company, (ii) tenders, bids, proposals or other applications received in respect of those procurement requests, (iii) contracts entered into, including any amendments thereto, (iv) all correspondence and electronic communications including emails, text messages, message app communications, and handwritten notes pertaining to these contracts, (v) statements of work performed by McKinsey & Company under each contract, (vi) all work product provided by McKinsey & Company under each contract, (vii) invoices provided by McKinsey & Company, and (viii) records of all payments made to McKinsey & Company, (ix) the hourly and/or daily rates McKinsey & Company charged for each employee working on all respective contracts the company has received since November 2015, and (x) the names of project managers and/or project authorities from McKinsey & Company on all respective contracts and projects the company received since November 2015;
(d) the committee order McKinsey & Company to provide to the clerk of the committee within three weeks of the adoption of this order, and notwithstanding any non-disclosure agreements which might be applicable, with respect to each contract entered into with a department, agency or Crown corporation of the Government of Canada since November 2015, copies of (i) all records referred to in paragraph (c), (ii) all records concerning the details and descriptions of work performed under each contract, (iii) time sheets documenting work done for each respective contract, (iv) the hourly and/or daily rates McKinsey & Company charged to the government or Crown corporation for each respective contract awarded to it since 2015, (v) the names of project managers and/or project authorities from McKinsey & Company assigned to each project from a contract with the government or Crown corporation since November 2015, and (vi) all records concerning subcontracts issued by McKinsey & Company in relation to each contract, including tenders, contracts or memoranda of understanding (including any amendments thereto), invoices, payments and evaluations, (vii) all correspondence and electronic communications including emails, text messages, message app communications and handwritten notes pertaining to these contracts, and (viii) the complete client list of all organizations McKinsey & Company has worked with since November 2015;
(e) evidence and documents received as part of this study be also considered in the committee's study on the outsourcing of contracts.
Mr. Chair, before I conclude, I will say that I really stood by the words of my leader when he called this out last week. I was just as pleased to see the Prime Minister's public response that he is willing to get to the bottom of this. In fact, the two ministers—Minister Fortier and Minister Jaczek, for whom I have much respect—have been charged with this and will take responsibility to work with us in an effort to get to the bottom of this.
I'll say, Mr. Chair, I'm very concerned that we're going to see another task force or study from these two ministers. I don't want to see that, Mr. Chair. We saw that with the recent whistleblowing legislation. Despite the report and recommendations of this committee seven years ago—which were not implemented by the Trudeau government—it wasn't until a private member's bill from the Bloc came forward that the government decided to do something, although it was something ineffectual.
In my opinion, Mr. Chair, that won't fly. We need them to be accountable to this committee, because Canadians are looking for transparency. Canadians want answers and they deserve answers.
Given the willingness of the Prime Minister and those ministers to co-operate, I absolutely expect that the members of the government on this committee will be pleased to work with us in tandem to get to the bottom of this. I think we're all looking forward to this and to these questions, which will be responded to as a result of what I have brought forward here today.
As I have already said, Canadians are asking questions. They are struggling with the highest inflation rate 40 years. In just one month, 1.5 million Canadians had to use food banks. Today, a mortgage payment represents the most significant chunk from their paycheck. Some Canadians even go to food banks to get medication as well, because they do not have the means to survive. It is a real shame.
As per the leader of my party, M. Pierre Poilievre, while Canadians suffer, the Liberals' friends are content. It is a good time to be a friend of the Liberal government, but it is a very difficult time for Canadians.
Why did we spend so much? Who came up with this idea? Who is controlling all this?
Mr. Chair, in conclusion, I will say that Canadians want answers relative to what I have brought forward here today. Canadians are struggling, and this government is driving up the cost of living. Meanwhile, Liberals and their connected friends have never had it so good.
Why did they spend so much? Whose idea was this? Who's pulling the strings?
Thank you very much, Mr. Chair.
View Kelly McCauley Profile
That's great. Thanks, Ms. Kusie.
The motion is in order. We will now go to debate.
Mr. Jowhari, you had your hand up first.
View Majid Jowhari Profile
Lib. (ON)
Thank you, Mr. Chair.
As this is the very first time.... Despite a number of attempts on our side to reach out to the chair and the clerk to request a copy of the motion in both official languages in sufficient time for us to be able to have a read of it and get a better understanding of the intent, the scope and the timelines, the fact is that we did not get any response. This is despite the fact that two different members of the committee reached out three times, on three different occasions.
I would ask the chair's and the committee members' indulgence for our side to take about a 20-minute recess to review this motion.
Most of you now have a copy of it. I understand that some of the members had a copy yesterday, as early as three o'clock. We did not, so we didn't have the opportunity to be able to read the motion in more detail and reflect on it.
If you grant us about 20 minutes, we can come back and start the conversation to ensure that Canadians get the answers they require.
Thank you.
View Kelly McCauley Profile
Thank you, sir.
Why don't we start with a 15-minute suspension and see from there?
We are suspended for 15 minutes.
View Kelly McCauley Profile
We are back from suspension and we are back in our meeting.
Mr. Barrett, you're first up.
View Michael Barrett Profile
Thanks, Chair.
While our colleagues get situated, I think there's an issue with a word missing from the English version. It's a grammatical issue, but it then creates a problem with the French version.
In subparagraph (d)(viii), where it says “the complete client of all organizations McKinsey & Company has worked with since November 2015”, it should include the word “list”. It should then read as follows: “the complete client list of all organizations McKinsey & Company has worked with since November 2015”.
It's a grammatical error. Unless there's a proposal that this section be struck, I would look to see if we could adopt that amendment and the translated result on just a show of hands.
View Kelly McCauley Profile
Actually, when Ms. Kusie read it into the record, she did read it as client “list”. I took that as the official one, but I think we can all agree just to change that one word and then we can go to Mr. Housefather, who is next up.
I will accept that as approval. Thanks.
Go ahead, Mr. Housefather.
View Anthony Housefather Profile
Lib. (QC)
Thank you very much, Mr. Chair.
Thank you to members of the committee for giving us a chance to have a bit of a break to discuss the motion that we had not seen, even though we had asked for it on Monday and again on Tuesday. I'm hoping, in the context of the study, that we will all work together across party lines co-operatively. That would include sharing things like the motion in advance. That didn't happen in this case, and I'm a bit disappointed.
I want to say, just as a precursor, though, that I think this committee has a really important.... The chair has mentioned many times that this is the mighty OGGO and how this committee is very important—and it is. It's very important that parliamentarians have an oversight role over government. This committee has a very important oversight role, and the study on McKinsey is an important part of our oversight role in the context of our study on outsourcing, which is a much broader question: What should be done by the public service, and where is it reasonable?
In some contexts, it is reasonable to give contracts outside. We can use this as part of that overall study to look at that specific issue and come up with recommendations that hopefully this government and all future governments may take into consideration and adopt with respect to when we outsource and when we don't.
I also agree with what Ms. Kusie said, that there's another question we could look at that would be a policy question: When should a company's actions abroad that become in the public domain—where we know there are settlement agreements and we know there are allegations going on in other countries—lead to us having an internal discussion about whether that company's standing offer should be cancelled or suspended and whether or not our current policies go deeply enough into researching what is happening with companies that may be on our list abroad?
There are a lot of policy issues here that we can work on together. I'm not of the mind that there's anything inherently wrong in terms of how the government engaged McKinsey or what occurred in respect of any of these contracts, but I'm happy to engage in the discussion and look through them all, so that we can all, with our own clear heads and based on the information we receive, find out. The goal here is to ensure that Canadians are well informed.
I have a couple of amendments, Mr. Chair. I'll make them separately, one by one, so that there's no confusion.
View Kelly McCauley Profile
Mr. Housefather, speak a bit slower. I don't write as fast as you speak. Thanks.
View Anthony Housefather Profile
Lib. (QC)
I will speak very slowly.
The first amendment, Mr. Chair, would be to change the dates. I would replace all places where it states “November 2015” with “January 1, 2011”. I would also replace all references to “2015” with “2011”.
In some places there's a month and a year, and in some places there's just a year. In all the places where there's just a year, I would change it to “2011”. In all the places where there's a month and a year, I would change it to “January 1, 2011”.
I would just like to repeat it in French: replace all the instances of "2015" with "2011", and replace every instance of "November 2015" with "January 1st, 2011".
View Kelly McCauley Profile
We have that, Mr. Housefather.
Go ahead.
View Anthony Housefather Profile
Lib. (QC)
This is basically to give us an overview. We've been talking about the contrast between how McKinsey dealt with the previous government and how it dealt with this government. I think it would be useful to also have one term of the previous government to see what the contracts were and the assorted information that's being requested on McKinsey going back the four previous years. I don't think it would be much more work to deliver this information in addition to what's already been requested, which is pretty voluminous.
View Kelly McCauley Profile
We've noted that down.
Do you have other amendments, Mr. Housefather?
View Anthony Housefather Profile
Lib. (QC)
I do, Mr. Chair, but I don't want to confuse unnecessarily by making them part of one amendment. Should I go to the next after we've dealt with this one, or would you rather I give you all of them right away?
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