Skip to main content
EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 7, 1995

.1536

[Translation]

The Chairman: Good day. Welcome to everyone. Today, pursuant to clause 108(3)(d) of the Standing Orders, we will be looking at chapter 6 of the May 1995 Report of the Auditor General on federal transportation subsidies and more specifically at the Atlantic region freight assistance program.

We have with us the Chairman of the National Transportation Agency, Mr. Gilles Rivard.Mr. Rivard, I'll be giving you the floor. Could you introduce the people with you today?

Also, from the Auditor General's Office, we have Mr. Hugh McRoberts who will be able to answer your further questions.

Mr. Rivard, you have the floor.

[English]

Mr. Gilles Rivard (Chairman, National Transportation Agency): Bonjour. I thank you for the opportunity to appear before the public accounts committee today. I have a few opening remarks but they will be brief.

First I would like to introduce the two staff members who accompany me today. Mr. Doug Rimmer is the director general of the marine, trucking and regional offices, and is the official directly responsible for the demonstration of the program that is the subject of this meeting. Mr. Ron Ashley is senior legal counsel at the agency.

[Translation]

On June 6, members of the Public Accounts Committee had the opportunity to discuss with officials from Transport Canada, the Office of the Auditor General and the National Transportation Agency, chapter 6 of the Auditor General's quarterly report to Parliament which dealt with transportation subsidies.

[English]

Specifically, the discussion was with respect to the Atlantic region freight assistance program, established pursuant to the Atlantic Region Freight Assistance Act and the Maritime Freight Rates Act.

On June 22 the public accounts committee issued a report with respect to the matter, and requested that the government provide an official response to the committee.

While our colleagues at Transport Canada are taking the lead role with respect to the official government's response, I, as chairman of the National Transportation Agency, wrote to your committee on July 5 providing specific information requested in your report with respect to the agency's administration of the Atlantic region freight assistance program.

In particular, I advised the committee that I had taken action to address the two recommendations contained in the Auditor General's report. These recommendations were aimed at what the Auditor General called the special risk inherent in a winding-up situation.

The recommendations called for the agency to institute a special process to look for situations where carriers had submitted claims containing either bills for movement that did not actually take place or freight charges based on excessive or unreasonable rates.

.1540

[Translation]

These were the risks identified by the Auditor General and as I have just stated above, I directed NTA staff to take suitable action to address those risks.

At the same time, I also sought clarification from the Agency legal counsel on the Agency's authority to assess or question the freight rates charged by carriers for the movements contained in their subsidy claims. As you are aware, the NTA's historical position with respect to its authority to review freight rates has been that it lacks any such authority. This position is clearly set out in my letter to the committee of July 5 and was based on successive legal opinions over several years from NTA counsel. However, as you are also no doubt aware, the Minister of Transport wrote to me on May 11 and stated that Transport Canada legal counsel were of the view that such authority did exist.

[English]

In the face of this range of legal opinions, I chose a course of action that would maximize our ability to protect public funds. I directed the NTA staff to implement the rate and activity review process. I still think this is the safest means of protecting public funds.

Should the NTA decide to reject subsidies claimed on the basis of excessive rates, the carrier involved would be free to challenge the NTA's decision or authority and could do so before the courts. A court decision in this area would provide absolutely definitive direction on the matter.

My letter to the committee of July 5 provided you with an overview of our new rate and activity process, which was fully operational as of July 6.

[Translation]

To date, we have identified some 2500 subsidy claims which will be subject to the new process. This represent roughly 30% of claims received so we are taking this very seriously. Of those 2500, we have completed our work on 600 or so and the rest are in progress.

[English]

The NTA has not yet found any evidence of falsified bills nor of claims based on excessive or unreasonable rates.

I must emphasize, Mr. Chairman, that the rate and activity review process is a new process that is in addition to the regular comprehensive verification and audit process the NTA has had in place for many years. We do not just accept claims and pay whatever is claimed. Depending on the type of claim and the carrier's claim record, we subject claims to varying degrees of scrutiny, up to and including on-site visits to the carrier's office to review its records.

[Translation]

In 1994, these various audit checks resulted in the NTA rejecting subsidy claims in the amount of $2.01 million dollars. On total program spending of around $100 million, this demonstrates our effectiveness in reviewing claims.

Mr. Chairman, that concludes my opening remarks. I hope they have provided the committee with a useful indication of the NTA's commitment to respond to the risks identified by the Auditor General. We have taken them very seriously and are working diligently to ensure that only legitimate subsidy claims are paid.

.1545

The Chairman: Thank you, Mr. Rivard. We'll now open the floor to questioning.

Mr. Fillion.

Mr. Fillion (Chicoutimi): On page 1 of your statement, Mr. Rivard, you say:

You also say that you took action to address the two recommendations contained in the Auditor General's report.

Has this action borne any fruit within the context of the program as a whole? Today, three or four months after you took that action, can you tell us if any progress has been made?

Mr. Rivard: I have with me today Mr. Doug Rimmer, our Director General in charge of this program. I'll give him the floor so that and he can answer your questions.

[English]

Mr. Doug Rimmer (Director General, Marine, Trucking and Regional Offices, National Transportation Agency): As the chairman indicated in his opening remarks, we have completed our review of some 600 claims. To date we have not yet found any claims on which members of the agency have felt the rates were excessive and wished to deny the subsidy. Nor have we found any claims that we believe were based on falsified bills, bills for which movements do not take place.

I don't think that invalidates the test. The Auditor General identified the potential risk. The intent of the program and our new verification process is to make sure this risk doesn't materialize. Carriers know we are in the process of doing these checks. We made them aware of that, as the committee indeed had recommended we do. As with other audit programs in the government, deterrence is a large part of the intent of the audit program, and it may well be that in this case it is working. But the results the agency has found so far are as I've just recited to you, sir.

I should say that under our regular audit program, which the chairman also referred to, in 1994 we denied subsidy claims of over $2 million, and so far in 1995 we have denied subsidies of over $1.3 million. We do have a very active verification process, which does ensure that where we find claims not in conformity with the regulations, we do not pay.

[Translation]

Mr. Fillion: Mr. Chairman, in view of that answer, I have some questions about legal opinions. The NTA and the Department of Transport are of differing opinions and your lawyers have opposite views on how this should be done. Doesn't this divergence lead to believe that you're not trying too hard to find people with problems in the area of those subsidies? Don't you simply then limit your research to looking at bills to see whether there was any transportation done? For example, do distances and labour match up?

I get the impression it's to your advantage not to go too far because you're saying that your legal opinions are contrary to those from the Ministry of Transport. Therefore, in the opinion of the Agency, the carrier will always be able to challenge your decision. So because you're afraid of having your decisions questioned, you'd rather not go too far in examining each one of the cases.

Mr. Rivard: First of all, I'd like to say that I myself am a lawyer and that I came on board as chairman of the National Transportation Agency in 1993. Before that, I chaired the National Transportation Law Review Commission and we were the ones who asked the Ministry of Transport to proceed with an audit of the program.

.1550

That being said, whenever you take over a new job, you check out some of the aspects. At one point, I questioned on the subsidies paid out in the Maritimes, east of Quebec City, including the four Maritime provinces.

My lawyers told me we didn't have jurisdiction to examine the rates charged by the different carriers. This is the result of the 1988 deregulation of trucking. If you're saying that it's not in our interest to question the claims, I would tell you that I did exactly the opposite because despite the advice of my lawyers, I ordered things to proceed according to the recommendations of the committee and the minister.

You do understand that it's not up to me to judge what was done over the last 25 or 30 years or even over the last seven years. I gave orders to my lawyers and to the Agency to proceed on my recommendations and I don't have to tell you that some controversy is still arising because of the differing opinions.

The National Transportation Agency consulted Canada's Justice Department's expert in the area of administrative law and their senior counsel sent us a draft opinion.

This draft opinion is similar to the position taken by the National Transportation Agency some years ago to the effect that we did not have jurisdiction in the area of rate justification. I know that this is a draft opinion and that there are different stages in all this, but I would be very happy to send the definitive opinion that the Justice Department is to send us on this subject.

As for your question, the answer is that notwithstanding the opinions of our National Transportation Agency's lawyers, I ordered the Agency to act in accordance with the instructions received not only from the minister but also the committee.

Mr. Fillion: Mr. Rivard, do you admit that you took this position after the evaluation made by the Auditor General and also the discussions that went on here, in the Public Accounts Committee?

What prevented you from acting? You can't say that in managing a program like this one, there are no questionable cases. There are and it can be confirmed. Why didn't you do anything before the Auditor General examined your case or made recommendations?

Mr. Rivard: The only thing for which I can be criticized, sir, is for not following my lawyers' advice.

Mr. Fillion: I'm asking questions here, Mr. Chairman, I'm not criticizing.

Mr. Rivard: No, that's all right.

Mr. Fillion: I'm not criticizing anyone at all. I'm criticizing neither the Agency not the Department of Transport. I'm simply trying to clarify a situation that obviously exists. So my question is why you waited until the Auditor General looked into the problem to try to take some corrective action.

.1555

The program has existed for some 30 years after all. In 30 years, there must have been some doubtful cases at some point. What was done to correct this and to protect public funds?

Mr. Rivard: In all humility, I must say that I will not assume any blame for that. I don't think I have to take criticism for former program administrators.

As I said earlier, I chaired the National Transportation Act Review Commission. Our report recommended that the Minister of Transport make a detailed evaluation of the program, and that is what the department did. When we were told about this, we were asked to cooperate in a full program review. We provided the staff the Department of Transport needed to help it carry out this task.

When I heard that the National Transportation Agency in Moncton was keeping records almost manually, I immediately asked for a report. When I found our information about the administration of the program was inadequate I straight away requested that the whole thing be transferred to a computer system. I even signed a contract with a company for the setting up of a computer system, so that we could get a number of details about the goods transported, the distances covered and the prices charged.

We'd almost finished installing the system when it was announced that the program would be abolished. So we halted the work at that point.

That being said, since I assumed my position, I have been working diligently and have found that our bookkeeping practices were somewhat archaic. Actually, they were not archaic, but we were not using modern methods. I awarded a contract so that we could find out what was going on in this area.

Mr. Fillion: How long have you held your position?

Mr. Rivard: I arrived in May, 1993.

The Chairman: You may come back later, Mr. Fillion.

[English]

Mr. Williams.

Mr. Williams (St. Albert): Thank you, Mr. Chairman.

I would like to thank the witnesses for coming along this afternoon. I have a serious concern about the drain on the public purse by this particular program, as pointed out by the witnesses at the last meeting and by the chapter in the Auditor General's report.

I feel the National Transportation Agency should have been much more vigorous in defending the taxpayers' money and the public purse. They seem to have taken the attitude that their responsibility, their role, is to write the cheques without any checking as to the reasonableness of the amount of money they were paying out.

I was interested in Mr. Rimmer's statement that of 600 audits he has taken in the last few months, he hasn't found one instance of overpayment.

My questions are: a) were you auditing situations where they were non-arm's-length transactions, or something close to being non-arm's-length transactions; and b) have you compared the current rates being submitted with the rates they were charging in the past?

.1600

Mr. Rimmer: Mr. Williams, the special audit program we devised and are using, which is in addition to our regular audit program, deals specifically with the risks identified in the Auditor General's report. At the chairman's direction, that program was provided to the Auditor General's office for comments and suggestions. We also hired a forensic accountant to give us comments and suggestions. Those comments were incorporated into the program.

The program does exactly as you suggest, sir. For particularly the affiliated carriers, it compares their claims with claims they have submitted in the past. It compares the rates they have charged since January 1, 1995, with rates they have charged in the past. Where we see an increase, we conduct a further review.

That can comprise a number of different aspects, depending on the nature of what we find. Where we see an increase in the number of movements, where we're looking perhaps for false bills, as I alluded to earlier, we also conduct some additional audit work where we see an increase.

So we're doing very much what you said, sir, and the results to date are as I've explained.

Mr. Williams: I wasn't so much concerned about an increase; I was thinking more about a decrease if your audit has not revealed any irregularities. I take a look at the Auditor General's report, and in exhibit 6.14 I see that somewhere between 25% and 30% of the subsidies paid out to large carriers are doing business on a non-arm's-length basis. When I look at exhibit 6.15, I find out that their billings are significantly higher than non-arm's length.

Therefore, if you didn't find any discrepancy, either your audit style is wrong or you are looking for the wrong thing. Are these people still charging more than the competitive rates?

Mr. Rimmer: What we are looking for, sir, are the risks the Auditor General -

Mr. Williams: No, my question was, are you finding that non-arm's-length transactions are significantly more expensive than competitive-rate transactions?

Mr. Rimmer: The comparison we're looking at, as suggested by the Auditor General, attempts to identify whether those carriers have sought to increase their rates during the wind-up of the program. That is what we're looking at. We're looking for instances where the carriers involved, in most cases affiliated carriers...we have focused on those, but we're doing some non-affiliated carriers as well. We're looking for instances of rate increases and comparing those with their previous levels of rates.

Mr. Williams: But I think you're missing the point, Mr. Rimmer. I'm trying to say that the Auditor General has pointed out that these rates were artificially high before, and if you're comparing today's claims with, say, last year's, which were artificially high, you may find no change.

My question was, are you checking non-arm's-length carriers' claims against competitive industry and finding a difference?

Mr. Rimmer: We are not making that specific test, sir, no.

Mr. Williams: And why not?

Mr. Rimmer: Because the risks the Auditor General identified in his report related to those carriers and whether they would be claiming an increase in their rates or increasing their rates during the wind-up of the program, where they would be changing their behaviour, basically. That's what we're reviewing, sir.

Mr. Williams: It boggles my mind, Mr. Rimmer.

My question to the chairman is that you're only now looking at reasonableness, and I understand you're now withholding payment if you find unreasonable claims, saying that people can take you to court because you don't feel.... There is some debate as to whether you do or do not have the authority to pay based on the size of the claim submitted.

Now that you have taken the advice of this committee, you're withholding these, but now, according to your director, I find out that you haven't found any yet. Is this correct?

Mr. Rivard: I've been informed of one case where we are holding moneys. I'll ask Mr. Rimmer to talk about that.

Mr. Rimmer: Certainly there are a number of cases we're currently reviewing and are therefore withholding payment on until we've completed our audit process.

But the test that the members are undertaking, sir, is that we are looking for instances where the carriers have changed their behaviour, as I said. The determination we make is whether or not that rate is reasonable, not whether the increase was reasonable. But when we come to make the determination, then we are assessing whether the rate itself is reasonable.

.1605

Mr. Williams: I think the National Transportation Agency is grossly remiss, if I'm understanding this correctly. The Auditor General has clearly stated and pointed out in his report that non-arm's-length transactions were significantly more expensive than competitive rates, and it seems to me your audit process is not even checking that comparison to find out if we are still paying more than we should for non-arm's-length transactions. I find it quite beyond my comprehension, when it's so clearly spelled out in the Auditor General's report, that you wouldn't look at that particular point, and I ask the chairman why.

Mr. Rivard: We go back again to the interpretation of our policy, our power - legal business. Notwithstanding that, I have given instructions to abide by your two recommendations and the department recommendation.

When I came to the agency I asked about the program. My staff told me that whenever there has been fraud committed, ``fraud'' in the commercial sense, or a change of tariff, they have rejected those claims. As far as I'm concerned, I gave instructions to proceed exactly as you have recommended. Consequently, I expect the increase of non-arm's-length carriers.... I don't see how it could be contested.

Mr. Williams: If I may, Mr. Chairman, there are two points here. One, when it was clearly pointed out by the Auditor General that there was an anomaly in the amount of money being charged by non-arm's-length transactions compared with the competitive rates, there was a 40% difference.

I will acknowledge that there is debate about whether or not you had the authority to withhold payment, but I think you were duty-bound, as an agent of the Crown, as an agency that is spending $100 million or more on this particular program, to either a) withhold the money, or b) to inform the Department of Transport that there was a serious problem. Neither of these has been done. Well, perhaps it's being done now, but as your policy has changed since the public accounts committee picked this up, we now find that the audit procedures are still not designed to pick up the very point that has caused the problem.

You're therefore still writing cheques and missing the whole point and paying out extra taxpayers' money to non-arm's-length transactions, because you're measuring last year's charge to this year's charge and finding no difference when you should be measuring this year's charge with the competitive rates. You will find, according to this chart, a 40% difference.

That, according to the Auditor General, is unreasonable and unjustifiable, and your position as the chairman of the National Transportation Agency, spending taxpayers' money, is to stop that and be accountable for the money. This is why - I'm making a rough calculation - $10 million a year are going straight into the pockets of large carriers, non-arm's-length carriers, compliments of the Canadian taxpayer. I want to know why.

Mr. Rimmer: Mr. Williams, sir, I'd like to make a few comments with respect to the Auditor General's table. Perhaps Mr. McRoberts can correct me if I misunderstand this table.

As I understand that table, it compares two indexes. The indexes start at 100; one goes up to 140 and the other goes up to 108. I'm not sure it's accurate, sir, to conclude therefore that the rates charged by one are 40% higher. If the indexes were not starting at the same point -

Mr. Williams: They did.

.1610

Mr. Rimmer: Well, they were both at 100, but that doesn't mean the rates were all equal. And, sir, what you're comparing is rates for some specific affiliated carriers against a very broad index of trucking prices in Atlantic Canada, which could change for a variety of reasons.

I'm not suggesting, sir, that these indexes are wrong. I'm quite prepared just to agree with the numbers. But I'm not certain I would share your interpretation of those numbers that means affiliated carriers are charging 40% more.

Mr. Williams: Let's ask the representative from the Auditor General's department.

The Chairman: Time is almost up, Mr. Williams.

Mr. Williams: Yes, but I would hope we could just finish this point, Mr. Chairman.

Mr. Hugh McRoberts (Principal, Audit Operations Branch, Office of the Auditor General of Canada): The table, Mr. Chairman, shows a relative increase rather than an absolute increase, and that is correct. What it shows is a comparison of selected carriers versus a general index. Beginning at a base of 100 and without a judgment as to whether or not the rates are higher or lower at that base time, it shows the relative rate of increase in rates over time rather than the absolute difference between them.

In terms of the findings on difference of rates, there we refer to the analysis done by the Department of Transport in their information paper. They were able to reach some conclusions based on their analysis as to absolute differences in rates amongst non-arm's-length carriers.

The Chairman: Mr. Shepherd.

Mr. Shepherd (Durham): Thank you very much.

The first comment I would like to make is that in my mind this audit sampling system of yours is designed not to find any problems, is it.

Mr. Rimmer: I would certainly not agree with that contention, sir.

Mr. Shepherd: What is it supposed to be detecting? How does it work? The question here is one of unreasonable rates. How do you determine that?

Mr. Rimmer: Those are determined by the agency members on cases that are put before them and in which we've seen an increase in rates. The members then determine whether or not the overall level, and not the increase, is reasonable.

Mr. Shepherd: You wouldn't have any idea whether or not they were reasonable because you have never compared them with a competitive environment.

Mr. Rimmer: I think the ability to make that comparison, sir, is extremely difficult. I have seen the claims of a competitive trucker, five bills submitted.... The movements took place within a week of each other, with the same product moved to roughly the same destination in the same geographical region, and there was a 50% difference in the prices charged. Would you be comfortable saying that the lower one is okay and the upper one is excessive, sir? This is a very dynamic market. To compare in a very global sense, as this does, a large number of rates for a whole host of commodities moving under very different terms and conditions is extremely difficult.

If you're flying at full fare when you fly in a plane, sir, you're paying three or four times more than someone else on that plane who is going from the same origin to the same destination at the same time. He's probably eating the same meal and you're paying three or four times more. Does that mean one of those rates is excessive and the other is not?

Mr. Shepherd: I don't think it's analogous to air travel. We're talking about ground travel and the bottom line is that your fixed costs are the same. It's a truck, it's a driver, it's gas, it's distance. That's a very simple comparison, but you haven't done any of that.

Mr. Rimmer: I would not agree, sir, that it's a very simple comparison. You have rates that are set as the result of a long-term contract. You have other rates that are set because somebody needs a truck today and is willing to pay whatever it takes to get that truck today. A variety of different market conditions affect rates, and it would be extremely difficult - I believe the testimony of the Transport Canada officials when they were here last time was that they, too, felt this way - if not well nigh impossible, I believe, to conduct that kind of rate comparison in any sort of meaningful way. For analytical purposes you can do various things, but when it comes to denying somebody a payment by saying you believe this rate here is excessive, I think that's a very different test.

Mr. Shepherd: Well, it's done all the time. The CRTC rolls back excessive rates. It's not unusual.

You said, Mr. Rivard, that you had one account that you were holding and you.... We'll see if I'm comparing apples with oranges. You're saying that in your test sample they're all successful. There's no problem. Are you arguing the same point? Are you saying there's one or are you saying there are none? What are you saying?

.1615

Mr. Rimmer: I think we're agreeing with each other. What we said is that we have identified 2,500 claims and have finished 600. That is, we're satisfied with 600 and we have paid those claims. The other 1,900 are being held until we have put them through our process, until members are satisfied, and until they have agreed to make the payment, because it is they who make the final payment. So as Mr. Rivard said, in a sense there are certainly more than one. There are 1,900 on hold.

Mr. Shepherd: But you specifically mentioned one you are having trouble with, that you thought was erroneous. Wasn't that your testimony?

Mr. Rivard: During the course of last week I was informed there was one particular case. There was an overpayment of a claim in the past few months and we are withholding payment of the current claim right now.

Mr. Shepherd: Is this part of this sampling device?

Mr. Rivard: I don't know.

Mr. Rimmer: Those claims were part of this process. This carrier is one who is affected by this process.

Mr. Shepherd: So when you make the statement that there has been no problem, that's wrong. Is that correct?

Mr. Rimmer: No, sir. The problems with the carrier Mr. Rivard cited are not the kinds of risks identified by the Auditor General and that we are specifically addressing in the rate and activity review process. They are problems that we caught as a result of normal audit verifications done on that carrier, as well as through the rate and activity review process.

Mr. Shepherd: The statistics seem to indicate there is at least a 2% error - we revoke their claims. Based on the statistics of 1994, there were $2 million based on $100 million. So just simple logic would indicate, wouldn't it, that out of 2,500, or even 600, you would have 12 rejects?

Mr. Rimmer: Yes, but there are two separate tests we are doing here. There is a regular audit verification process, which is the type that has generated in excess of $2 million a year in rejections, but we've added to it. We've added the specific tests recommended by the Auditor General and we've added those to 2,500 of our claims, the claims that are most at risk for some kind of abuse in the wind-up of the program. It is in this additional work we are doing that we have not yet found a claim on which members were prepared to deny a subsidy based on the specific new tests we've introduced. We are adjusting some of those claims anyway as part of our normal audit of them.

Mr. Shepherd: But by the evidence you are giving here, your additional test is a waste of time, isn't it.

Mr. Rimmer: I wouldn't reach that conclusion, sir. Neither the Auditor General's report - and again I would remind members of this - nor the Transport Canada paper identified specific instances of abuse. They said there was a potential risk, a potential incentive that they thought the circumstances would allow for, but they didn't say, ``We looked at claims and we found one you shouldn't have paid''. So there is a risk here and we are attempting to address that risk. So far it has not materialized. We have not found situations where we have had to deny subsidy.

As I mentioned earlier, in audit programs across the government, be it Revenue Canada's or be it ours, there is a large deterrence factor that is one of the major components of an audit program. Perhaps that is what is happening here. Carriers are aware we are reviewing these claims, so we have not found the specific kinds of abuse or problems that the Auditor General identified. On an ongoing basis and through our review of all the claims, we are certainly finding claims for which have to deny subsidy for whatever reason. As I said, so far we have denied over $1.3 million in subsidy in 1995.

Mr. Shepherd: Would you like to comment on basically the design of this auditing methodology and whether it meets the parameters anticipated by the Auditor General's report?

Mr. McRoberts: I think it would be premature to do so at this point, Mr. Chairman. We have not done any additional audit work since we completed the chapter. Normally we do not. We leave it to the agency or the department audited to deal with the problems and to take corrective action before we recommence our audit work. So I haven't really had the opportunity to audit these procedures and to determine how well they work.

.1620

The chairman has correctly stated that a very early draft of the procedures was sent to us. We reviewed it and offered some comments to the agency. However, as that is a letter to the agency, I think it would be appropriate to ask them for those comments at this point.

Mr. Shepherd: They used the definition of unreasonable as being an increase over previous years' rates. Is that a fair definition to use? That's how they're quantifying whether they're going to audit or otherwise restrict payment. Unreasonableness seems to be depending directly on whether the rate has gone up, which really has nothing to do with your original findings.

Mr. McRoberts: We were particularly concerned, as we indicated in our recommendation 6.157, about increases, but we were concerned as well about the basic issue of reasonableness. So I think we were concerned about the desirability of assessing both elements.

Mr. Shepherd: Would you state that there is no concept...based on what we've heard to date of a concept of reasonableness, where we're looking at comparative competitive rates? There seems to be no attempt to try to do that.

Mr. McRoberts: At this point, without looking at what the agency has done, Mr. Chairman, it would really be unfair of me to comment. I think there are many ways one could make the comparison. Without looking in detail at how they have attempted to do that, I think it would be unfair, to them and to you, for me to comment at this time.

[Translation]

Mr. Fillion: Do you think that the measures you introduced as of July 5 will improve the program, Mr. Rivard? Will there be any savings? Are they adequate?

Mr. Rivard: First, we've told the industry that its claims would be scrutinized. According to our data so far, I think these measures will result in savings. I don't need to tell you that initially, I was eager to hear the reaction, particularly in light of the Auditor General's recommendations. The Minister of Transport also hopes that the program will be wound up properly, not with an avalanche of claims.

From what I understand, savings have been made compared to earlier years.

Mr. Fillion: So you are saying that between now and the end of the program, because of the measures you have introduced, no additional money will be spent.

Mr. Rivard: If we compare the claims over the same period, I think I can say that without fear of error. However, you must remember that some of our claims go back several months. This has somewhat upset our forecast expenditures. I think Mr. Rimmer could better explain the current situation.

Mr. Fillion: Could you tell me the exact amount of claims currently pending? How much do these claims amount to?

.1625

[English]

Mr. Rimmer: As I indicated earlier, we've identified about 2,500 claims that we're going to put through this new process. Of those, about 1,900 are still outstanding. I don't have the specific dollar amount for those claims, but it certainly would be in the order of $10 million in those 2,000 claims.

[Translation]

Mr. Fillion: Are there any cases that are now challenged in court? If so, what percentage do they represent? Has anyone ever challenged the entire program, from the time it was implemented until now?

Mr. Rivard: In my opinion, this has never happened.

[English]

Mr. Ron Ashley (Counsel, National Transportation Agency): That's not absolutely correct. There's one case for $100,000 that's currently before the Federal Court of Appeal in respect of a denial of payment to an affiliated carrier.

[Translation]

Mr. Fillion: One case, for $100,000?

[English]

Mr. Ashley: Yes, sir.

[Translation]

Mr. Fillion: This is the only case which is currently before the courts?

[English]

Mr. Ashley: At this point in time -

[Translation]

Mr. Fillion: They aren't any others?

[English]

Mr. Ashley: Not to my knowledge, sir.

[Translation]

Mr. Fillion: And you do not foresee any other cases that may arise during the final years of the program? I know that this is a difficult question to answer.

Mr. Rivard: I'm not telling you that there will not be anymore cases. I'm saying that, notwithstanding the legal opinions from various sections, we are going to refuse unreasonable claims, which do not comply with the spirit of the program, and go before the courts. It will be up to the claimant to take the initiative. Quite simply, we will not pay. If the claimant feels that he has a claim, he will institute legal proceedings against us.

[English]

Mr. Williams: If we correctly understand the audit that is in place now, which Mr. Rimmer explained to us, Mr. Rivard, I think we have a serious accountability problem within the agency and within this program. As my colleague, Mr. Shepherd, has pointed out, there doesn't seem any real attempt to follow the problems identified in the Auditor General's report, to realize and identify the fact that non-arm's-length carriers are charging more - and it looks like consistently more - than the competitive rates of charge.

There seems to be a problem with reasonableness. Mr. Rimmer has already told us that one trucker, one week, five shipments, same circumstances - five different rates.

Obviously some degree of negotiation goes on in the competitive environment. I can understand that. I also understand that the program was designed when rates were regulated and were fixed. Now that they are competitive, they are subject to the vagaries of the marketplace. Perhaps we should have moved that subsidy from a percentage to a flat rate, but we didn't.

This is why I feel the National Transportation Agency had the responsibility to say that reasonableness is paramount, and if you felt you did not have the legal authority, you should have informed the Department of Transport that you needed these powers. Why wasn't that done?

Mr. Rivard: I think, sir, it was already done in previous years.

To answer your question, as I told you before, we did receive a draft opinion from the expert in administrative law. I will forward to you his final opinion, but the final lines of the opinion read as follows:

.1630

So in principle, sir, I agree it should have been done many years ago when the trucking industry was deregulated, but legally -

Mr. Williams: I'm not a lawyer. You have a legal opinion and the Department of Transportation has a different point of view. The Atlantic Region Freight Assistance Act states that the Governor in Council may authorize payment of assistance and so on, which means there has to be an element of decision-making on behalf of the National Transportation Agency. It's given the power to decide whether this is a valid claim, because it says they may pay out the money - not shall, but may.

This whole area of reasonableness or unreasonableness has been brought to light through the study. I realize you came on board in 1993. The study was commenced in 1992, according to the assistant deputy minister.

I'm critical of the fact this didn't come to light before, but now that it has come to light, there seems to have been no effort on behalf of the agency to cut back on payments to non-arm's-length shippers. Statistically it has been proven, according to the data provided, that their claims are 30% to 40% higher than the competitive industry's. That to me seems unreasonable. Why wasn't the whistle blown? Why wasn't something done to stop it?

Mr. Rivard: Sir, as I told you before, I definitely gave instructions to proceed with the installation of a detailed computer system that would give us all the data.

Mr. Williams: But based on the testimony of Mr. Rimmer, it would seem with this audit process, even though you presumably have a computerized system now in place, he has set up the wrong parameters engaging on the wrong style, and therefore he's not catching anybody. If he hasn't caught anybody out of 600, we don't expect he's going to find many out of the next 1,900, if any.

Mr. Rimmer: The computer system the chairman spoke of was not completed due to the termination of the program. It was on the verge of completion when the program was terminated. In order for it to have functioned effectively, it would have required the carriers to have submitted their claims electronically so they could be entered into the system and analysis could be performed on them.

Carriers were certainly willing to do that. In fact they were eager to do that. However, there was a cost to them with that. While the program was ongoing it was a worthwhile investment for them, but on the termination of the program they were not willing to proceed with it, and therefore there was not the ability to use the system as we had hoped to do to collect the kind of information you refer to.

Mr. Shepherd: Where do we stand with this right now? Do you know how many claims you have in inventory that haven't yet been paid out, in dollar value?

Mr. Rimmer: Not in dollar value, sir. The 1,900 I referred to are going through the special audit process in addition to the regular audit. I would estimate we have not yet paid several hundred that are going through just the regular audit process. I would say it's under 2,500 claims.

Mr. Shepherd: Is that normal? It's the half-year we're dealing with here. Is that from the cut-off of the program?

Mr. Rimmer: Yes, basically.

Mr. Shepherd: We're paying out $100 million a year, so we have $50 million worth of claims. Is that a reasonable estimate?

Mr. Rimmer: Over the course of this year, we have received something under $50 million; it's $40 million and some. From January 1, 1995, to the September 1 cut-off date for filing of claims, we probably received in the order of $65 million to $70 million in claims, many of which have gone through our process and have been reviewed. We have adjusted them where necessary and paid them, adjusted or not. These were not claims that were identified as being high-risk for the kind of concerns the Auditor General had.

.1635

Mr. Shepherd: Do you know roughly how much you still have to pay out?

Mr. Rimmer: It would be $10 million to $15 million, sir.

Mr. Shepherd: You were saying, Mr. Rivard, that because of this studious process claims somehow got reduced, or people weren't so quick to default or defile the government or whatever. That doesn't appear to be true on a quantitative basis. The volume of claims seems to be just the same as it was last year.

Mr. Rivard: I have to rely on what my senior staff members tell me. They tell me that the claims that were submitted just before the lines comprise claims dating back prior to the last fiscal year.

Mr. Shepherd: The majority of these claims are still from carriers dealing at non-arm's-length. Is that a fair statement?

Mr. Rimmer: Of those that are left, yes, because those are the ones we have have been reviewing and that we have held.

For the special audit test we are doing we have identified some 150 or so carriers, out of the 2,500 active carriers we have, as the particular affiliated carriers we are going to focus on. In addition to those, we are randomly sampling all of the others to make sure they aren't taking advantage of the wind-up of the program in the way the Auditor General was concerned about.

We're testing both groups, but we're focusing particularly on those 150 affiliated carriers on the list. We have about 1,900 claims from them and other carriers that we have still not yet processed. A large portion of those certainly would be from carriers with some kind of affiliation.

Mr. Shepherd: When the Department of Transport reviewed this it named carriers in that report, if I recall. As a matter of fact, you could trace their ownership mainly back to Irving and McCain. Are they the same carriers we're talking about?

Mr. Rimmer: To my knowledge, there are three or four carriers associated with each of those conglomerates, because they have various subsidiaries. So out of the 150 carriers I just mentioned,3 or 4 would be associated with the Irvings and 3 or 4 with Day & Ross - or McCain, rather.

Mr. Shepherd: That study done by the Department of Transport was actually able to trace, in their own minds, right into the financial statements of some of these carriers, where their profits were higher, on a percentage basis, than any other carrier due to their ability to receive these funds.

Mr. Rimmer: My recollection of the Transport Canada information paper is that was true with respect to smaller carriers but it was not particularly true with respect to large carriers. I'm quoting from memory and I could be wrong, but that was my recollection of that study, sir.

Mr. Shepherd: Does that tell you anything about the reasonableness of the rates?

Mr. Rimmer: No, I don't believe it does.

Mr. Shepherd: It doesn't? It's just magic that they happen to have this relationship, that they receive these grants, that their profits were 2%, 3% or 20% higher than anybody who dealt in a competitive environment?

Mr. Rimmer: With due respect, I don't think the Transport Canada paper made those kinds of assertions.

Mr. Shepherd: Wait a minute now. We have the Auditor General making these assertions, and now we have Transport Canada making these assertions. It seems we have a bunch of people who think these rates are unreasonable.

Mr. Rimmer: No, sir, I think what you have is what the Auditor General identified - some evidence that would suggest there is a risk here, and there is a risk worth testing for.

The Auditor General audited our program for close to a year. I'm sure in their usual way they did a thorough job. Mr. McRoberts and I had many helpful discussions. They did not show me a single claim where they said I should not have paid that claim because the rate was excessive. The Transport Canada paper, by the assistant deputy minister's own admission, did not attempt to do that. There is a suggestion, there is some evidence, that points to a risk, and we have attempted to address that risk as it was identified.

I don't believe any evidence has suggested this particular claim is excessive or based on an excessive rate.

.1640

Mr. Shepherd: This program is terminated. Have you taken the time and effort to go out and check those carriers for what rates they're now charging in the private sector? This means whether or not the rates actually went down after this program ended. Have you done that? Yes or no?

Mr. Rimmer: No, sir, I have not.

Mr. Shepherd: No. So there's been no check about reasonableness. This whole statement of yours about the reasonableness of rates is kind of a joke, isn't it? We haven't really done anything about it.

Mr. Rimmer: No, we don't really monitor them for reasonableness. Our whole test on reasonableness is based on what they charged last year, not what they're charging in the private sector.

The particular risk identified by the Auditor General was that carriers might be behaving in a certain way and taking advantage of the wind-up of the program. Those are the risks that were identified and that we have addressed.

Mr. Shepherd: Okay, what can we do? Do you think it would be reasonable - say you have some claims you haven't processed yet - to go back to see what those carriers are now charging in the private sector?

Mr. Rimmer: Sir, if they're market-based carriers, then the Auditor General is confident that what they're charging is based on market rates. If it's an affiliated carrier, why would they change their rates simply because the program has ended? If they're affiliated and, as Mr. McRoberts suggests, they have the ability to drop everything into one consolidated pool at the end and it all works out in the wash, why would they have to change their rate structure?

The Chairman: Mr. Shepherd, you can come back after.

[Translation]

Mr. Fillion: Mr. Rivard, in July 1995, you established a new procedure by which it is now up to the clients to determine whether or not their subsidy applications are justified. This is your principle.

Does the fact that you succeeded in establishing a new procedure mean that the Canadian Government has, since the deregulation in 1988, awarded excessive subsidies? Could you give us your opinion on that matter?

Mr. Rivard: I cannot tell you whether or not the Canadian Government awarded excessive subsidies since 1988. I think that Mrs. Moya Greene the Assistant Deputy Minister with the Department of Transport, described the entire system very well. I can't do a better job than she did. She provided you with the background of the subsidies, which go back to 1927.

I am not in a position to say anything whatsoever about excessive payments that the government may have made since 1988. However, one thing is clear. If I had been there in 1988, it seems to me that the official rates published at that time by the various provincial boards would have enabled us to shed more light on the matter. This is perhaps an unjustified opinion on my part, however, in 1988, I was not there.

Mr. Fillion: It is always difficult to go back in time. Is there a mechanism at the National Transportation Agency which would enable us to do some auditing up until that point? Is there a mechanism that would enable us to compare what was done since 1988 and what has been done since you arrived?

It seems to me that if we were to come up with the necessary resources, regardless of what they may be, we could check this information.

Mr. Rivard: In Moncton, there were more than 42 employees. Since the cancellation of the program, we have been facilitating the transfer of employees whenever they express a desire to be transferred to another position within the Public Service.

.1645

Nevertheless, we are going to look into everything that has been done since January 1995. The National Transportation Agency will make a decision once it has heard from the lawyers about what has happened from January until now.

Mr. Fillion: You will be going back in time. You could go back to the year where deregulation took place.

Mr. Rivard: Deregulation occurred in 1988, and nothing is forcing a company to maintain...

Mr. Fillion: In this case, go back as far as it is legally possible to do.

Mr. Rivard: No time limitations have been placed on the government. Hence, we are dealing with five years. Be that as it may, we have given instructions that claims made between January and now are to be scrutinized.

Mr. Fillion: When do you think that you will be able to provide the committee with the results of your research? Do you intend to table the results with the committee so that we can provide follow up?

Mr. Rivard: Yes. You requested that we submit a report both to the committee and to the Auditor General.

Mr. Fillion: When are you planning to submit this report to us?

Mr. Rivard: We will completing our auditing and compilation work at the end of March. You will have a detailed report by June 30th at the latest.

[English]

The Chairman: Mr. Williams.

Mr. Williams: I'm looking at the Auditor General's report, paragraph 6.152. Towards the end of this particular paragraph it says:

Mr. Rimmer, are you aware of the name of that particular shipper?

Mr. Rimmer: No, sir. I'm certainly aware of the study, but I'm not aware of the particular shipper involved.

Mr. Williams: Have you read the Auditor General's report?

Mr. Rimmer: I certainly have.

Mr. Williams: You never thought you should ask who this particular shipper was?

Mr. Rimmer: I can find out. It is named in the report and I have read the report. It is just not in my memory, sir.

Mr. Williams: So you did actually know who this was?

Mr. Rimmer: Certainly.

Mr. Williams: Then it goes on to say:

In this particular instance, where they're paying their affiliated carrier 200% more than its non-affiliated carriers of the same product and so on and so forth, haven't you withheld payment and said this seems to be unreasonable?

Mr. Rimmer: Not in that instance, sir.

I'm trying to recollect the precise manner in which that study was done. It was essentially done reviewing historical data, so it was done after the fact. The comparison wasn't known at the time that the study was -

Mr. Williams: Are you keeping a very close eye on this particular shipper and its affiliated company?

Mr. Rimmer: Because they are affiliated I believe they are a part of the rate and activity review process. So the answer to that would be yes.

Mr. Williams: Are they part of the 600 you've processed or the 1,900 you still have to process?

Mr. Rimmer: That would depend, sir. They could be in either group. There are carriers who are in both groups and we have processed some but not all of their claims.

Mr. Williams: But you don't know? I'm talking about this particular shipper. It says they did identify one case, so there's one shipper we're talking about here and you know his name or you did know his name and you did look at the case. When we brought out this problem of unreasonableness in this particular situation, this one particular carrier whom you know, who is paying his affiliated twice as much and getting twice as much subsidy by using his affiliate, you aren't examining his particular claims with a microscope to ensure that they are reasonable?

.1650

Mr. Rimmer: We are putting that carrier through the same kinds of tests as I outlined to you earlier.

Mr. Williams: What have you found?

Mr. Rimmer: I've told you what we found with respect to all of the claims.

Mr. Williams: Absolutely not one of them was unreasonable?

Mr. Rimmer: The agency has not yet made a determination that a claim is unreasonable.

Mr. Williams: I thought you said the first 600 were all found to be reasonable.

Mr. Rimmer: No, what we said was that in those 600 cases we have not found a rate that we determined to be unreasonable.

Mr. Williams: Okay, so they are reasonable. If they are not unreasonable, then they are reasonable.

Mr. Rimmer: If you wish.

Mr. Williams: I do wish.

Mr. Rimmer: But the point I would make, sir, is that the Auditor General refers to one movement amongst the whole range of commodities shipped by that carrier. There was one instance where there was a 200% difference. As I recall that study, there were also instances where we found truckers where the affiliated rate, the rate between the affiliated pair, was less.

Mr. Williams: I'm not worried about -

Mr. Rimmer: So this was depending on market conditions and a whole host of factors that were not available to us in the information on which we based the study.

So you get a 200% increase. You could have decreases in other situations.

Mr. Williams: I'm saying that your responsibility to the taxpayer and the public purse is to pay out only where it is justified, and if these claims are unreasonable then it's your responsibility, and your duty, either to withhold the payment or to make sure that you have the authority to withhold the payment. That's specific.

I'm looking at this quote. A shipper was paying - I presume on an ongoing basis by the sound of it, it didn't say one case - 200% more to its affiliates than to the competitive environment.

You tell me that you know the name of that carrier. My question is, is that carrier part of the600 whom you now find to be reasonable, or, in your terminology, not unreasonable? Is he part of the 600 that you have approved as being legitimate?

Mr. Rimmer: Sir, we have a number of carriers, as I mentioned, a hundred -

Mr. Williams: I'm talking about this carrier.

Mr. Rimmer: What I'm trying to say, sir, is that not all of that carrier's claims would necessarily be either in the 600 or in the 1,900.

Mr. Williams: I asked if he is in the 600.

Mr. Rimmer: Perhaps some of their claims are, perhaps not.

Mr. Williams: You don't know.

Mr. Rimmer: Not with respect to that carrier, no. The carrier is caught up in the entire process. So in the 2,500 we have all of the claims that carrier has submitted since January 1, 1995.

Mr. Williams: And you're going to test that carrier's claims based on the claims that he submitted in 1994, and if they were 200% high in 1994, and 200% high in 1995, you're going to say it's a reasonable claim, and approve it. Is that right?

Mr. Rimmer: We're going to apply the test that has been approved.

Mr. Williams: Are you going to apply that test?

Mr. Rimmer: The test, first of all, looks for an indication of whether or not the carrier has increased its rates during the wind-up of the program. If so, then we attempt to identify whether or not the rate itself is reasonable - not the increase, but the rate itself.

Mr. Rivard: In answer to your question, sir, my instruction will be not to pay it, period.

Mr. Williams: Thank you very much, Mr. Rivard.

Mr. Rivard: I'm a taxpayer, and we have a fiduciary duty not to pay public funds without just cause.

Mr. Williams: That's right.

Mr. Rivard: Consequently, if this is brought to my attention, then my decision will be that we don't pay. That's it.

Mr. Williams: Are you going to make any retroactive decisions, to go back and take a look at the past?

Mr. Rivard: Your colleague asked me that. I'll take your comments under advisement. I cannot make a decision right now without the advice of my senior staff, but I'll tell you something. Notwithstanding what has been done, even before I arrived - and maybe when I get out of here I'll be reproached - my position is that if there's something that is not correct and is not legitimate...and if I have the power to do it, I will do it.

.1655

Mr. Williams: And if you don't have the power you will seek the power from the Department of Transport, if you feel you need the power.

Mr. Rivard: I read you my concluding paragraph.

Mr. Williams: That's why I'm saying -

Mr. Rivard: Consequently, would the government modify a non-existent law to give me the power? I don't know. But I will discuss this with my legal advisers.

Mr. Williams: If you find you do not have the power will you advise the Department of Transportation and the public accounts committee?

Mr. Rivard: I certainly will inform the public accounts committee.

Mr. Williams: Thank you.

Mr. Rivard: As a matter of fact, as I said, I will send you the formal opinion of the chief legal adviser of administrative law of the Department of Justice on that aspect.

Mr. Williams: Thank you.

The Chairman: Mr. Telegdi.

Mr. Telegdi (Waterloo): Mr. Chairman, part of the point I was going to raise has been raised. I must say I'm amazed, particularly on the point Mr. Williams raised, that it wouldn't be something you would have a very definitive answer on and would have investigated prior to coming to this committee.

I do wish to yield my time to Mr. Shepherd, who wants to conclude a line of argument.

Mr. Shepherd: Mr. Rivard, I thank you very much for your intervention. What I think you're saying is that this particular carrier, at 200%...that you did not subscribe to the testing methodology that's now in place, which basically is to say that if it's not an increase, therefore it's acceptable. So you now, in your own mind, have stated that you're willing to look at those areas where they may be unreasonable based on private market precepts. Is that correct?

Mr. Rivard: Sir, what I said is that if we had claims that were 200% higher than a competitor's, something would be wrong if I ordered such a claim to be paid. Consequently, we'll see that someone will take the risk. As I said before, if it is brought to my attention that the claim has increased by 200% I would say we don't pay and we shall go to court, that's it.

Mr. Shepherd: But the only way it's going to be brought to your attention is if you have an audit methodology that goes out and establishes that. Your own agency established this particular one. You have to have an audit testing system that actually goes and looks for that concept of reasonableness. Do you agree?

Mr. Rivard: Sir, if we had the power, I agree.

Mr. Shepherd: Well, you have played that legal game back and forth a couple of times here. You first of all said you don't have the power but even though you don't know if you have the power, you're going to impose what you believe to be correct. So I'm assuming that you're going to continue -

Mr. Rivard: No. Do you know what? I'm saying that if I was actively practising law, my answer would be, no, we don't pay. But I'm bringing forward in my job the principles I had in the active practice of law.

Mr. Shepherd: The principles of common law. Sure; we'd like to respect the law, too.

Would not one of those tests be, say in this particular carrier, that after the program is over...drops their rates by 200% on their own internal trade, because there is no benefit to doing that any more, your argument being that there would be no reason for them to change rates if they were affiliated. I suspect a lot of widely held companies like that actually create profit centres within their own organization because it tells them which ones are making profits in the market place and which are not.

.1700

There therefore would be an incentive for some of those carriers if there was an artificial charge going through here after the programmers already reduced their rates. It seems to me that you're duty-bound to go and look at that aspect before you make any more payments. Is that a reasonable approach?

Mr. Rivard: If you asked me that question, the answer would be that I would do my utmost, after consulting with my senior staff, to comply with your request.

Mr. Shepherd: Let me ask you another question. If we only have $10 million of these claims left and we find within this process that there has been any kind of overpayment, are you prepared to go back over those claims that you paid out from January 1 with the same philosophy, which is to claim back on them?

Mr. Rivard: The answer is yes.

Mr. Shepherd: All right.

[Translation]

The Chair: Mr. Rivard, Mr. Ashley, Mr. Rimmer and Mr. McRoberts, I would like to thank you for answering our questions.

[English]

Last question.

Mr. Williams: I thought we were going for a little while yet, Mr. Chairman.

Mr. Ashley, we haven't heard from you today.

Mr. Rivard: Maybe he should have answered some of those questions instead of me.

Some hon. members: Oh, oh.

Mr. Williams: I'm looking at your testimony of June 6. I'll just quote to give you what it says. As for what will happen in the future and so on, the court will determine that. I presume the chairman is Mr. Rivard:

We are now finding that there does not appear to have been any real aggressive stance by the chairman or by this particular program management. I feel that we now have perhaps paid out even more money on unreasonable claims.

Had you talked to the chairman before you made that statement that he advised you he was going to be extraordinarily aggressive?

Mr. Ashley: No, sir, I hadn't, but I've had a series of dealings with Mr. Rivard over the years and I am familiar with his attention to taxpayers' money in respect of subsidy programs for which he is responsible.

Mr. Williams: Mr. Rivard, I think the members on both sides of the committee here have been quite disappointed by what we have heard regarding the administration of this particular program in light of the points brought out by the Auditor General in his report and by the evaluation by the Department of Transportation. I don't think there has been an appreciation by that particular program in dealing with the points that have been brought out by the Auditor General and the Department of Transportation.

I feel that the taxpayers' money has to be protected first and always. I would expect that you would also advise of us of the actions that you're taking regarding the accountability and management of this particular program and how you're going to handle it as the chairman of the agency.

I don't want to see any other agency coming before this committee saying that they haven't addressed the issues that have been on the table for quite some time as a result of the Auditor General's report, which your agency was aware of before it became a public document. The administration, as I say, from the testimony we hear today, still has not grasped the significance of the report and the fact that we think, and you agree, that perhaps you have the authority to deal with unreasonable claims and settle them in the court and the taxpayer will be protected.

.1705

Mr. Rivard: Excuse me, with all due respect, sir, right now I have every reason to believe we have no jurisdiction to decide on the reasonableness of the claims. As I said before, this is a problem.

Notwithstanding the problems we have as to the implementation of our powers, I have given instructions, according to your recommendations, to follow your recommendations, and if it happens that we feel some claims are unjustified, we shall deny them, not based on legal opinion but based on my judgment. If the claimant claims he has a right to that claim, well, let's go; let him sue us.

Mr. Williams: Mr. Rivard, I'd also like you to take a look at the management of these programs, because I feel there are some serious questions of judgment in the way the program has been administered, and I would appreciate, as a member of this committee, hearing from you at a later date as to the actions you have taken.

Mr. Rivard: Yes, sir.

[Translation]

The Chair: Thank you for coming and for answering our questions.

During tomorrow's meeting, in addition to asking you to approve the report on the Office of the Superintendent of Financial Institutions, we will be giving you the last page of the draft report on sciences and technology, which was not adopted during a previous meeting.

The meeting is adjourned.

;