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EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, February 13, 1997

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[English]

The Chairman: I'll call the meeting to order. I see a quorum.

Today our subcommittee is pleased to have with us representatives of the Auditor General of Canada. Mr. David Rattray, assistant auditor general, is here today. The committee is reviewing the subject matter of the recent Auditor General's report, chapter 27, November 1996, referring to the Canadian intelligence community - control and accountability. Mr. Rattray is here today to review that with us.

Mr. Rattray, you have a statement. Perhaps you might wish to introduce your colleagues.

Mr. David Rattray (Assistant Auditor General, Office of the Auditor General of Canada): Yes, I do, Mr. Chairman. Thank you.

On behalf of the Auditor General of Canada, Mr. Denis Desautels, I would like to thank the committee for this opportunity to discuss chapter 27 of the November 1996 report.

I have with me today Mr. Henno Moenting, audit principal, who led the team that conducted the recent audit of control and accountability arrangements in the Canadian intelligence community.

With us also this afternoon, but not at the table, is Mr. Ron Wolchuk. He and Rona Shaffran, who is unable to be here with us today, both played key roles in this audit.

[Translation]

The primary role of the Office of the Auditor General of Canada is to serve Parliament. I mention this to underline the independent nature of our audits and examinations. Our objective is to provide Parliament with objective information, advice and assurance. Pursuant to the Standing Orders of the House of Commons, our reports are referred to the Public Accounts committee, but welcome requests for information from other parliamentary committees and sub-committees such as this one.

Today we are here to provide you with the results of our assessment of control and accountability arrangements in the Canadian intelligence community as reported in our November 1996 report.

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[English]

There are three points I would like to raise in our discussion today. First, we will not be able to introduce new material that goes beyond what we reported in November 1996. Although we would be pleased to elaborate to the extent possible on these matters raised in the report that was tabled in the House, we cannot, for example, provide additional cases to support a point or discuss subjects that are not contained in our public report.

Second, some of the observations are based on information that may be classified. Our ability to respond therefore may be limited in such cases.

Finally, we generally focus our audits on the implementation of policies and programs. We do not express opinions on political issues that may be associated with them.

I will now ask Mr. Henno Moenting to give you an overview of the audit, including what we did as well as a summary of the observations and conclusions we reported.

Mr. Henno Moenting (Principal, Audit Operations, Office of the Auditor General of Canada): We set out to do two main things in this audit: first, to provide an overview of Canada's intelligence community and of the role of intelligence, including both security intelligence and foreign intelligence, in the government; and secondly, to determine and inform Parliament about the nature, extent, and functioning of the control and accountability arrangements in the community. We chose to focus on control and accountability because of its importance in this community and its interest to Parliament and the public. We believe this audit reinforces the mission of the office to provide objective information, advice, and assurance to Parliament and to promote accountability and best practices in government.

[Translation]

It is important to emphasize that we did not audit the operational activities of the intelligence community, although we had access to some information on such activities where we needed to see how controls were actually implemented in practice. Neither did we assess, in this audit, the quality of financial management and financial control or try to determine the value obtained for the resources committed to intelligence activities.

We carried out the audit in those agencies and units that collect, analyze and disseminate intelligence, as well as those that coordinate or review their operations. The intelligence community, as we defined it for the purposes of this audit, is set out in Exhibit 27.2 (page 27-9) of the report.

[English]

This audit was the first of its kind in Canada, and to the best of our knowledge in the world. It was a complex audit to plan and conduct, given the sensitivity of the subject matter and the security arrangements that had to be put in place. The work demanded a high level of care and discipline, as well as sufficient time to gain mutual confidence. This facilitated access to the people and documents we needed to complete our work. As the Auditor General noted in a news release on November 26, 1996, this audit is itself a sign of progress in accountability for this sensitive area of government operations.

For the purposes of this audit we defined Canada's intelligence community as including a number of organizations that collect, analyse, and disseminate security intelligence and foreign intelligence, as well as organizations that coordinate and review their activities. We estimate that this community spent some $440 million in 1995-96, which reflects a decrease of about 13% over the past five years in constant dollar terms. We also point out that a number of other departments and agencies, for example the RCMP, Citizenship and Immigration Canada, and Revenue Canada (Customs), which are not part of the intelligence community as we defined it, nevertheless have close links with it.

Whereas the Canadian Security Intelligence Service has primary responsibility for collecting, analysing, and reporting security intelligence, Canada's foreign intelligence needs are met from a variety of sources, including signals intelligence from the Communications Security Establishment and foreign intelligence collected in Canada by the Canadian Security Intelligence Service at the request of the Minister of Foreign Affairs or the Minister of National Defence. Unlike most of our allies and competitors, Canada does not have an agency dedicated to gathering foreign intelligence abroad.

Our audit confirmed that the environment within which the intelligence community operates has become more complex and volatile since the end of the Cold War. In our view the increased complexity and rapid change highlight the need for coordination and clear direction as well as need for a control and accountability regime that focuses on compliance with law and policy and the community's performance.

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We concluded that through a combination of external and internal mechanisms, substantial arrangements for control and accountability are in place. Furthermore, steps taken in recent years have strengthened these arrangements. The recent appointment of a commissioner for the Communications Security Establishment and government direction to the community through national priorities approved by ministers provide ready examples of such steps.

Parliament's role has been more actively exercised with respect to the security intelligence side than the foreign intelligence components of the community. We note, however, that several other bodies external to the government provide scrutiny in review. In addition to the Security Intelligence Review Committee and the commissioner for the Communications Security Establishment, which are dedicated to this task, such other bodies include, for example, the Privacy Commissioner, the Canadian Human Rights Commission, and indeed, this office.

In terms of government control and accountability, we noted that the government sets priorities to provide direction and coordinates the community's activities through the Privy Council Office. Second, we concluded that ministerial control and accountability for CSIS is active, regular, and well supported, and procedures exist to provide for ministerial control and accountability in significant and sensitive areas of foreign intelligence activity. In the key intelligence agencies we found clear plans, policies, and procedures to guide operational activities. Finally, we noted that the Department of Justice exercises an important legal control and advisory role.

Despite the control and accountability arrangements already in place, however, we concluded there is no reason to be complacent, given the nature of intelligence functions and the challenges ahead for the community. We point to a number of opportunities to improve the arrangements.

First is strengthening leadership and coordination through, among other things, greater scrutiny of community budgets and expenditures in relation to national intelligence priorities, and seeking a wider scope of contribution to the community's intelligence products.

Second is enhancing the national priorities process through, for example, more timely approvals, clearer tasking and systematic assessment of intelligence collection against approved priorities.

Third is integrating the measurement and monitoring of community-wide performance with government priority-setting and resource management.

Fourth is establishing broad ministerial directives and internal reviews relating to intelligence functions within the Department of National Defence and th Department of Foreign Affairs and International Trade.

Fifth is considering the advantages of a legislative framework for the Communications Security Establishment.

Sixth is taking action to improve relations between the Security Intelligence Review Committee and members of this subcommittee.

Seventh is improving the measurement and assessment of performance in CSIS as well as the CSE.

Mr. Rattray: The formal response of the intelligence community to our audit, which is included with our report, notes among other things that it found our observations valuable and constructive. The response also indicates that at least some of the suggestions we make coincide with the intelligence community's own objectives.

I would like to point out that it is the normal practice of this office to follow up on its audits after two years. Accordingly, we plan to report to Parliament in late 1998 on the results of our follow-up work on this audit.

I hope this brief explanation of our audit and our audit findings on the control and accountability arrangements in Canada's intelligence community has been helpful to the subcommittee.

We would be pleased now to answer any questions relating to this audit.

The Chairman: Thank you both for your opening statements.

Before moving to questions, on behalf of parliamentarians and Parliament I should congratulate the Auditor General for completing what I gather is the first audit of this nature. That is a landmark. It is reassuring to Parliament that mechanisms put in place are doing the job on behalf of Canadian taxpayers. Thank you for that, and congratulations.

I'll now go to questions. We'll continue with our ten-minute format.

[Translation]

Mr. Langlois.

Mr. Langlois (Bellechasse): Perhaps I will make a few editorial comments, Mr. Chairman. Up to 3:15 this afternoon, I had decided not to come, but then I realized there would probably not be quorum to hear witnesses. So I came out of respect for our witnesses and for you as well, Mr. Chairman, recognizing that since the beginning of this Parliament, you have spent a lot of energy trying to forge a trusting relationship with the Security Intelligence Review Committee and with CSIS itself.

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That being said, my comments will be rather editorial in their nature. As was mentioned in Exhibit 27.62 of the Auditor General's report, some parliamentarians were very disappointed with SIRC's attitude towards them, myself included.

When they appeared before us, the witnesses from SIRC were generally hostile towards us and felt they were not accountable to Parliament or to the committee. In fact, we got very few answers from them. The witnesses basically watched the clock to see when their ten minutes were up.

When you talk about deteriorating relationships, I don't think ours could be any worse. A new chair was appointed to SIRC, Ms Gauthier. I think that is merely a technical change. Ms Gauthier has a much more congenial approach to public relations than Mr. Courtois did, but I don't think that has made any fundamental change. We have not gotten anymore answers than before.

We did, however, manage to get an answer to a question I asked Ms Gauthier, while the other SIRC representatives stayed mum. I had asked whether any action had been taken following the destruction or changes made to the matter Mr. Manning, leader of the Reform Party, had contested. Ms Gauthier answered that, as far as she knew, no disciplinary measures had been taken. Up to that point, the review committee had always maintained that there had been no tampering with the Preston Manning file. So that was a major confession. As for the rest, we just got very general answers.

We could not even get the original documents or unexpurgated versions of them that we needed, despite official orders from the chair. The witnesses were so evasive that it makes you wonder whether SIRC is not subordinate to CSIS. I really wonder whether CSIS isn't controlling SIRC and giving it the information it wants, knowing full well that those people work part time.

Those are my main questions. I hope the questions raised by the Chair, Mr. Lee, especially the ones on the Communications Security Establishment, will be answered. Obviously, we will have to wait for the next Parliament. I do not expect there will be any more progress on this during the 35th Parliament.

I would nonetheless like to ask you whether you have had problems getting CSIS documents. Did they send you complete documents, or could you only get expurgated, censored or tampered documents? Did you sense any reluctance on their part during your inquiry? Did they respond immediately? What type of relationship has the Office of the Auditor General managed to establish with CSIS or SIRC?

[English]

Mr. Rattray: Mr. Chairman, I would say that in the case of any information we were seeking in order to conduct our audit we received what we asked for. We had established protocols for seeking information that was necessary to pursue the matters we carried out in our audit and we received quite full cooperation in what we asked for.

[Translation]

Mr. Langlois: On what do you base the statement made in paragraph 27.62? I will quote it so that it appears in the minutes.

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Is that statement based solely on the minutes or on newspaper reports? What led you to believe there was an obvious lack of cooperation between the Sub-Committee on National Security and the Security Intelligence Review Committee?

[English]

Mr. Moenting: Mr. Chairman, essentially we were going on the public record in making that observation. We looked at the minutes of the public hearings that were held and at the committee's report as well. I guess we were struck by both the content and the tone of the discussions, and that led us to this observation. So it was the public record.

[Translation]

Mr. Langlois: Of all the documents you reviewed, were there any that had been sent by the review committee or by the Auditor General's Office, or were they only documents sent to the legislative branch of the Canadian government?

[English]

Mr. Moenting: I'm sorry, but I don't quite understand the question in relation to this particular observation. Which documents are you referring to?

[Translation]

Mr. Langlois: I am talking about documents in general. Let me rephrase my question. Witnesses from the Security Intelligence Review Committee led us to believe that they had a ``privileged'' relationship with the Solicitor General and that they would often give us relevant documents after striking out the parts which they felt affected national security. It is quite upsetting that parliamentarians would have no say in whether something affects national security or not.

So SIRC feels it has a privileged relationship with the Solicitor General and other more public relationships, as in the case of the sale of Arctic Power, with the Sub-Committee on National Security. Have you ever had figures or were you able to check the data that had not been transmitted to the Solicitor General or to the Prime Minister's office?

[English]

Mr. Moenting: No, we didn't see that.

For example, when we looked at the work that SIRC, CSIS, and the Solicitor General's office were doing, we asked for the documents that we thought would help us do the work we were doing in relation to the control and accountability arrangements as they affected those functions. Those documents were made available to us in an unedited form, but we're not aware of any privileged relationships in any of this.

[Translation]

Mr. Langlois: Especially in the case of the Communications Security Establishment - where the legislative framework is very poorly defined, to say the least, since you have to go back to orders in council from the 1940s to find the legal basis for the service - , did the lack of legal framework for the Communications Security Establishment cause you any problems during your investigations and inquiries?

[English]

Mr. Moenting: No, that wasn't a particular difficulty for us in our investigations, although we did conclude that the Communications Security Establishment does have functions that are very sensitive and that are very important in the national interest. They spend considerable sums of money, and we believe that Parliament should have the opportunity to debate what it is they do, what their purposes are, and what their functions are. We believe that it's time to consider whether or not a legislative framework would be helpful for an agency of that type. We've made that suggestion, but in doing our work we didn't find a lack of one a particular hindrance to what we were looking at.

[Translation]

Mr. Langlois: Were the documents or information you needed on the CSE provided to you by the Defence department or by the Privy Council Office? Who gave them to you?

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[English]

Mr. Moenting: We received them from the Communications Security Establishment. We had a secure office established there. We had facilities where we could store documents securely. Those that we asked for were made available to us from the Communications Security Establishment. We referred to them, used them, and then, at the end of the audit, gave them back.

[Translation]

Mr. Langlois: Have you ever had any personal dealings with Judge Bisson, who has been appointed Public Relations Officer for the CSE? Have you had to deal with Judge Bisson, who is called the Public Relations Officer? There is probably another term that should be used. Am I right, Mr. Rosen? The commissioner? Fine.

[English]

Mr. Moenting: Yes, commissioner.

We were concluding our audit when the commissioner was appointed. Before we reported we met with the commissioner, really to brief him on what we had been doing. At that stage he was new in the post. He hadn't really started to set up his office or do the work yet, so it was more in the nature of a courtesy call and to let him know what we were up to and that we would be reporting shortly. That was our only meeting with him.

The Chairman: Thank you, Mr. Langlois.

[Translation]

Mr. Langlois: Thank you. We will also probably have the privilege of a courtesy visit.

Mr. Chairman, I will have no further questions for the second round. However, out of respect for you, I felt obliged to attend this meeting.

[English]

The Chairman: Thank you.

Mr. Gallaway.

Mr. Gallaway (Sarnia - Lambton): Thank you, Mr. Chairman.

I'm trying to find a line and I can't see it in here, but I heard you say that since the end of the Cold War the collection of intelligence information has become more complex. What do you base that on?

Mr. Moenting: The place in the report where we deal with it is around paragraphs 27.32 and 27.31.

What has happened since the end of the Cold War is that there are many more targets for intelligence. They're changing much more rapidly. There isn't the stability, if you like, the focus of attention that there was during the Cold War. There are many more issues now: weapons of mass destruction, transnational crime, economic espionage, and so on - all of these are coming to the fore, if you like. There have been significant changes in technology that affect how well secrets can be kept, and affect as well how secrets can be obtained, I suppose. So these are added complexities.

On top of that you have, generally speaking, a restriction in budgets, which makes it more difficult, perhaps. You have also a globalization of issues and...

Mr. Gallaway: You've made the observation that over a five-year period, in terms of constant dollars, the money expended by CSIS has decreased by 13%, I believe it was. I don't know what the average is, but in terms of other departmental budgets that have evaporated to the extent of 40% in one year or a couple of years, do you think the decrease in budgetary allocations to the intelligence - to CSIS in this case - has in fact impaired its ability to do its statutory job?

Mr. Moenting: Mr. Chairman, the 13% applies to the community as a whole -

Mr. Gallaway: All right.

Mr. Moenting: - which includes CSIS and the CSE and other parties.

We really are not in a position, based on the audit work we did, to comment on that. All departments have been facing budgetary restrictions and all have had to adapt to it in their own way, so we're not in a position to say what...

Mr. Gallaway: When did this audit begin?

Mr. Moenting: I guess the first discussions about the possibility of doing an audit in this community began in late 1993. During 1994 we assembled a team. We arranged for the security protocols and the security clearances for the members of the team. We first began work formally in 1995. That's when we went into the agencies and departments involved in this.

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First we did a preliminary survey. That's our typical way of carrying out an order, to get an understanding of what we're looking at to see what it is we should audit and how when we get to the audit part itself. We completed the preliminary survey in 1995. We went on with the examination in 1996 and reported it in November.

Mr. Gallaway: I'm not exactly certain what triggers the Office of the Auditor General actually to start. I'm assuming every audit has a formal beginning and a formal end. We've seen the formal end. If in fact there was discussion or talk about an audit in 1993 and the end product was produced in 1996, is that the average time it takes to do an audit, or is this one more complex? Was there a problem with this one?

Mr. Rattray: The audit discussions first started in 1993, but it was a matter of looking at this as a subject matter which... As the report points out, it was the first time a national audit office had looked at a security intelligence community. It took us some time to think our way through it in terms of the reportability of possible findings, the accessing of information, the security clearance of staff and whether or not we could line up the right talent in-house as they came off other audits that were under way at the time. So we started this one much slower than others and it wasn't until several months later that in fact we cleared all routes to go in and do a full accountability-and-control audit of the entire community.

Earlier discussions within our own office, for example in 1993, centred on whether or not we would do a community-wide S-and-I audit or we would do individual agencies. Within our own shop we were trying to define what would be the most appropriate piece of work which would best serve Parliament. These discussions occurred into 1993 and we concluded that doing an audit of the community and focusing on accountability and control would perhaps be the best way to enter this subject matter.

It took a while. It was far more difficult than some of the other ministry or agency audits we have done.

Mr. Gallaway: Mr. Rattray, were you involved in 1993 when the discussions kicked off?

Mr. Rattray: Yes, I was.

Mr. Gallaway: In your opinion - I'm only asking for your opinion - was there resistance to an audit from within the community?

Mr. Rattray: Caution was put forward at that time about our not having done an audit of this nature before, clearly trying to establish what an audit constituted, how it would be approached, and perhaps how we would deal with some of the matters we later worked our way through in terms of secure clearance at an appropriate level for all staff, working out a protocol for handling secure documents, working on site arrangements, and so on. I wouldn't say it was more than a caution or a nervousness, perhaps, by the community and our own office as we entered into this kind of an audit.

Mr. Gallaway: You've referred to various terms which have limited meaning to me: ``accountability-and-control audit'', ``S and I audit'', etc. I don't know what heading this falls under, but are you satisfied this particular overview of the operations by the Office of the Auditor General met the standards that would apply to any other audit carried out by the Auditor General in any other, shall I suggest, more open department or branch of the government?

Mr. Rattray: Absolutely. There's no doubt in my mind that they do meet the standards. Not only do they meet the standards we would set for openness or transparency but they also meet or have to meet the auditing standards set down by our office and by the Institute of Chartered Accountants, which we adhere to. As for auditing approach, standards, planning of the work, evidence, staffing, report clearance, all of that we found met professional standards for auditors. We feel this audit, as reported to Parliament, certainly met our own quality standards for the material that was put forward.

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Mr. Gallaway: You've indicated that you will re-embark in 1998.

Mr. Rattray: It's the normal process, Mr. Chairman. Two years after any audit we conclude, such as this one, we return to see progress that has been made against the observations and recommendations, and we report through the Auditor General's report to Parliament on the status of change or implementation plans after two years. We'll likely be looking at November 1998 or December 1998, whenever that date is selected for reporting to Parliament.

Mr. Gallaway: One of the points you make is in paragraph 17, at the first bullet point:

I want to ask you about that little three-word phrase, ``national intelligence priorities''. As we know, CSIS has a statutory framework. At the same time, I'd like to know who measures the national intelligence priorities.

Do you, from the Office of the Auditor General, determine whether money expended by CSIS on a particular endeavour is a good return on investment, if I can be so crass as to say that? For example, if CSIS were to spend a considerable number of dollars to track somebody who went to Germany, is there some way for you to measure that expenditure against the risks that person may pose? Do you get into anything of that nature?

Mr. Moenting: If I may answer that, first of all, in this particular audit we certainly didn't look at specific operations in that way at all, nor do I think we would look at specific operations of that sort, whether it be in this community or indeed in any other department or agency.

Generally speaking, when it comes to evaluating the effectiveness of some particular policy program or course of action, we expect the government to do it. We expect that to be a piece of work that departments would be responsible for themselves. We urge them to do it and we would observe if they were not doing it. We would make some observations to that effect. We might even in some instances show them that it can be done.

In this particular instance, we did point out that there is more scope for performance measurement, not only at the community level, but also within the specific departments and agencies.

Mr. Gallaway: In the course of carrying out your audit, then, I'm assuming that you had discussions with members of SIRC.

Mr. Moenting: Yes, that is correct.

Mr. Gallaway: And I suppose one could liken us to being in a convoy: we're in the vehicle behind and SIRC's in the lead car. Do you think SIRC is obtaining that kind of information - that is, information as to whether the activities of CSIS in fact have some merit in terms of moneys spent? Did you examine that component?

Mr. Moenting: No, we didn't examine that component, Mr. Chairman, but I believe it would be true to say that the Security Intelligence Review Committee is more concerned with compliance with law and policy than with the achievement of ``value for money'', if you like, at this time. That's where its resources are devoted.

Mr. Gallaway: Once again, in paragraph 17 of your presentation today, at the second-last bullet point, you talk about taking action to improve relations between SIRC and members of this subcommittee. That's an interesting recommendation. Do you have anything more specific?

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Mr. Moenting: We make a few more specific suggestions, I guess. But generally speaking, we identify problems to be solved in our audits and leave it to others to find ways to solve them.

Perhaps a useful first step is to seek some shared view, vision, and purpose of respective roles and responsibilities, and how they should relate to each other. An example would be some shared view of such issues as access to classified information or what SIRC's reporting responsibilities are vis-à-vis the subcommittee and the Solicitor General. It's really looking for a shared purpose and a commonly understood sense of roles and responsibilities.

Mr. Gallaway: As I understand the chain of bodies and individuals that interact with the intelligence community, we have the Prime Minister, the Privy Council Office, SIRC, and cabinet. To the best of your knowledge, the SIRC group is simply determining whether CSIS - I'm talking about CSIS specifically - is complying with the law as laid down. In other words, when it opens a file it does so in a proper fashion and there's some basis for doing so. I believe there are certificates granted, and there's an inspector's office.

SIRC is there as the civilian - if I can call it that - control on CSIS, but it's only there to determine whether the letter of the law is being complied with, and this committee is in the car behind it. We're talking about $440 million. Who knows, other than the director of CSIS, whether this money is being well spent? Who gets to see the big picture?

Mr. Moenting: I guess that's a fair question, and I'm not sure whether there is a straightforward answer. At the present time, the performance of the intelligence community, not just CSIS but the other components of it, is judged by those who receive the information it produces. This includes a variety of departments and agencies across government. But it is not put together. There isn't one summary view of that, so the knowledge tends to be scattered.

It comes together best at the level of the Privy Council Office. We believe there is scope there to bring it together more explicitly, to actually have a look at the performance that is achieved in relation, for example, to the national priorities that are set in relation to the budgets that are allocated.

Mr. Gallaway: Do you have any reason to believe the Privy Council Office is doing any of these things?

Mr. Moenting: We're optimistic, based on the response we received and published with the report, that our suggestions coincide with its objectives. I guess we'll see in a couple of years.

Mr. Gallaway: You mean at the time of your next audit. I'm just firing away here.

The Chairman: Your chairman has a couple of questions. If you want to wrap up a line of questioning, I'd be happy to see you do that.

Mr. Gallaway: I have one more very brief question. In paragraph 13 you talked about your audit confirming that the environment within which the intelligence community operates has become more complex. You say:

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What law are you referring to? I've read a lot to ask you a very simple question. What law are you referring to in ``compliance with law''?

Mr. Moenting: I guess in the most general sense the law of the land. In specific instances perhaps the CSIS act. It depends on what law applies in any particular operation. It's the law in a very general sense.

Mr. Gallaway: Fine. Thank you.

The Chairman: I have two or three areas I would like to address. You indicated earlier that you began this audit in about 1993. I had understood before that the Auditor General was commencing to do an audit back around 1990. Am I incorrect on that, or are you familiar with what might have been going on in about 1990?

Mr. Rattray: At that time we could have been looking at it as a potential subject matter, but it would have been looked at in combination with other matters at the same time. I know we were thinking of the RCMP as part of the portfolio, and the Correctional Service and the Parole Board. I think it was part of that package where we were trying to decide which portion of the community we would look at. In fact we started with the RCMP. We went on to the Parole Board and the Correctional Service and have done this as part of a larger grouping of like audits, as I would classify them.

The Chairman: I was just fishing to determine, if in fact there had been a desire to commence in about 1990, whether the delay might have been caused by the reluctance of the intelligence community to respond. But as far as you know, that's not the case.

Mr. Rattray: We had conversations with many people in the community about possibly starting audits and when would be appropriate times, given their priorities. We talked to the RCMP, the Parole Board, the Correctional Service. You look to see where they are in their own changes, reviews, strategic planning, and so on. At that point the discussion led us to start with the RCMP.

The Chairman: In your audit function now, you have chosen to focus on an area of activity we can call ``security and intelligence''. It involves security intelligence plus foreign intelligence. You have chosen that out of the air, so to speak. You have focused on it. In a way Parliament - I think our colleagues here and in the predecessor committees - had the same challenge of how to focus on this area, which very much deals with both expenditures of large amounts of money and the rights and liberties of Canadians at the same time. Parliament ended up with what at the moment is manifested by this subcommittee, which is generally the same target as you have adopted in your work. Can you tell me how the Auditor General arrived at this target of CSIS, CSE, and PCO? Did you simply adopt a template that seemed to be out there?

Mr. Moenting: When we did our preliminary survey we cast our net a bit wider than that. We did some work in the RCMP. We did work in Customs and Excise. We did work in Citizenship and Immigration. We looked at really who was in the business of gathering foreign intelligence and security intelligence. Nearly every department gathers intelligence of one kind or another.

We had to draw the lines somewhere. I guess in some respects they were drawn arbitrarily, but they were drawn around departments that were significant contributors of foreign intelligence and security intelligence. Those which we left out but which might have been considered to be in turned out to be more significant users of intelligence than contributors of intelligence.

It was not so much of a template. We started bigger and we scoped it down and had to settle on something.

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The Chairman: The justice committee, as it was in the last Parliament and as this Parliament has continued it, has chosen a mandate that involves CSIS, the Solicitor General, the former security offences branch of the RCMP, and any intelligence agency with which there is a memorandum of understanding. It is that connection that enables or permits us to look a little bit beyond the Solicitor General's portfolio itself or the justice minister's portfolio.

We've made an attempt to put that big money spending and the big risk to rights and liberties under one roof. That, I think, is the basis for this committee's mandate. Having done your audit, do you have any views on whether putting that under one roof, as we have done here and as you possibly have done in your audit, is an appropriate umbrella for Parliament?

Mr. Rattray: My own observation on that is that I don't have anything contrary to say to it. I think it's one option. It certainly seems to be appropriate. I don't have anything I would counter that with or suggest an alternative at this point.

The Chairman: You've made some recommendations about the parliamentary perspective on this. I'll throw a monkey wrench in and say the intelligence gathering that's done by Customs and Excise, or Revenue Canada, or Immigration, or even the Department of National Defence, or for that matter CSE, is all in other ministers' portfolios, other parts of government. Maybe we ought to just stick to our own pigeon hole here, which is CSIS.

Would you have a view as to whether or not we should go beyond CSIS, as we have done? Maybe you don't have a view on that. Do you see anything inappropriate in what we have done?

Mr. Moenting: I certainly don't see that we have a view on that, based on the audit work we did. We point out that Parliament has dealt more regularly with the security intelligence side, to a large measure by virtue of the work of this committee but to some extent as well because of the arrangement set up by the CSIS Act itself, than it has with the foreign intelligence components of the community. There was nothing we did, though, that would lead us to suggest that Parliament should deal with this community in one way or another. I really don't think we're competent to tell Parliament how to act in this area, based on the work we did.

The Chairman: Well, you give good advice.

In the course of your work, to your knowledge did you have access to documents that would be classed as cabinet documents?

Mr. Moenting: Regularly in the office we have a procedure for having access to cabinet documents in all areas. We had access to all the documents we needed, including cabinet documents.

The Chairman: That's good.

There are two items in your submission here today. You've referred to strengthening leadership and coordination through greater scrutiny of community budgets. What mechanism in government should be giving that scrutiny? Do you believe the scrutiny should invoke parliamentary scrutiny as well?

Mr. Moenting: In making that observation, we weren't referring to parliamentary scrutiny. In relation to parliamentary scrutiny, we point out that Parliament in fact receives very little information on the budgets in this area. That's simply a matter of fact. We didn't go on from there.

What we're talking about here is the central coordination machinery in the community, which is centred in PCO. We believe there is an opportunity there to look at who's spending what to what end.

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The Chairman: It's beyond all doubt that the taxpayers have an interest in who is spending their money and how, and they elect Parliament to do precisely that. We haven't found a convenient mechanism yet that would allow parliamentarians to review or scrutinize with precision the budgets of the intelligence agencies.

There's been a little bit of give and take and some movement over time, but it is probably not of a standard that would allow a taxpayer to say ``At least our elected MPs have a window...they can at least ferret out or keep an eye on the potential craziness that's out there.''

And I'm not saying that there's any craziness in spending out there, but do you think Parliament could or should do more in that regard?

Mr. Rattray: I would like to perhaps just go back to the role that this office plays with respect to one point. We have in fact looked at certain operations in the past. If I just single out CSIS, for example, we've provided reports to Parliament in terms of spending and value for money, the economy or efficiency issues.

Several years ago, in the early 1990s, we looked at the immigration program across government. Part of that program involved screening activities conducted by CSIS, and we in fact reported to Parliament.

This past year we looked at the construction of the CSIS headquarters building, which was also the subject of a report to Parliament in terms of the money expended. That's public. What we've reported is there for Parliament to look at.

So in a way we have been doing pieces, I'd say, of the community. There is certainly scope there, as we have seen when we have looked at various expenditures and reported accordingly.

As far as Parliament goes, we try to serve Parliament's interest through our function. I don't think it would be my part to go beyond that to say Parliament should do such and such, because I think that would probably be inappropriate on the part of an officer.

In addition to the value-for-money work we have done, we do carry out financial work. Each year we certify the financial statements of Canada, and part of that, of course, is the money expended through many of the entities described in the S and I. So we provide a financial opinion to Parliament through our report.

The Chairman: Do you have any questions at this point, Mr. Gallaway?

Mr. Gallaway: There's one I'd like to pursue, if for no other reason than to get something on the public record.

You have identified the area of the relationship between SIRC and this subcommittee as an area that could usefully have some tender loving care. Have you, in your cross-government audit experience mechanisms, encountered procedures and protocols that might assist us, that might provide an example of how this parliamentary function here could better interface with the delegated scrutiny function that SIRC carries on for Parliament?

Mr. Moenting: From our point of view, I think one way of looking at it is to look at our relationship with the public accounts committee as a model, if you like. In some ways, we deal with the public accounts committee in the same way that SIRC interacts with you. I think that relationship would be characterized as mutually supportive for the most part, with a fairly clear understanding of what our role is and what the role of the public accounts committee is and so on. That's the only one that springs to mind readily as a model.

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The Chairman: One of the factors that impairs the relationship is what is perhaps one of the vital elements of Parliament itself, political partisanship. I understand the public accounts committee operates without a lot of partisanship. That is my understanding, although I have not served on the committee. Is that your experience - that not a lot of party partisanship is reflected on the floor of that committee?

Mr. Rattray: I would say, Mr. Chairman, in probably fifteen years or more of my own direct involvement and of observing others in the Auditor General's office, that is quite true.

The Chairman: That is an item future members of this committee might wish to take note of.

This may be difficult to answer too. In your discussions with SIRC, did anything come up you felt it might be useful for this subcommittee to know in relation to that issue of how one could better address the things this subcommittee and SIRC have in common? I'm looking for a simple answer: more meetings, less meetings, different types of meetings, different personalities.

Mr. Moenting: No, Mr. Chairman, we didn't really address that issue in any significant way in our dealings with SIRC. What we looked at was SIRC's work, the range and nature of its work in relation to CSIS, how it reported it, and so on. We didn't discuss in any depth its relationship with the committee.

The Chairman: On the issue of the rights and liberties of Canadians, did you come across in your audit an obvious interest in this issue from other sources of scrutiny, whether PCO, other parliamentary committees, justice department, or whatever? Are other sources out there which would pursue that focus, or could pursue it, in a better way, which this committee believes it should?

Mr. Moenting: Within the government itself I guess there are bodies such as the inspector general of CSIS, which dedicates a good part of its effort to doing just that in relation to CSIS. The commissioner of CSE will certainly be looking at compliance with the law, and that will certainly look also at the issue of rights and freedoms. The privacy commissioner, the human rights commissioner, dare I say ourselves...but that's about it. I can't think of anything else.

The Chairman: I was going to ask you if you were going to discourage this committee from keeping that as one of its two major focuses, but maybe I should put it another way. Do you believe we should continue with that focus? Are we being efficient? Are we properly using parliamentary resources here in focusing on that? Please do an audit of us.

Mr. Rattray: I notice, Mr. Chairman, we've passed this one back and forth.

I think that's for the subcommittee and the steering committee of the subcommittee to decide. You might, in looking at roles at terms of your operations, look at the matter with respect to some of the bodies Mr. Moenting just mentioned. It may be interesting to have a relationship there which you would be comfortable with and they would be comfortable with in terms of both your work programs and your major thrusts of scrutiny.

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The Chairman: This committee takes an interest in CSE, although it is a National Defence-funded mechanism, PCO-directed, Foreign Affairs-cliented, DND-funded, and this subcommittee scrutinized, if I can put it that way, primarily because of the MOU that exists between it and CSIS. They are two brothers or sisters out there in the field.

You have suggested that Parliament should consider a legislative mandate for the CSE. Have you seen any model in this country or elsewhere in your work that might suit? You may wish to suggest the CSIS Act, for example, is a good model or some other instrument or protocol would be good. Could you give us some insight into whether there's another model out there we might look to for guidance?

Mr. Moenting: In terms of the specifics of the legislation that might be in place, I don't think we're in a position to speak to that. Certainly the United Kingdon, for example, has an act in place now with regard to the government communications headquarters. I think that's a place where one might start, at least.

The Chairman: I think that's a good suggestion.

I have one little tag-on item, although it may be dealt with by Judge Bisson, the CSE commissioner. There were indications over the last few years that the absence of a solid employer-employee relations system at CSE was not helping CSE and there might be ways to improve it, although it's not a matter the subcommittee has looked at in any depth. I didn't detect in your audit that was an issue or that it turned up. Can you confirm that?

Mr. Moenting: I can confirm it's an issue we didn't look at in CSE. It didn't turn up.

The Chairman: Okay. Our research assistant has reminded me about an issue that is always out there. I referred earlier to the coordination the PCO and you have identified - the coordinating role PCO plays in mandating, tasking, and coordinating the analysis and maybe even directing where the product will go. I understand the PCO continues to work on this function. It's always an issue and there are always adaptations and updating going on. Are you of the view, as a result of your audit, that at the present time the coordination PCO does in the security and intelligence area is adequate?

Mr. Moenting: We believe the coordination is good and it has been improving in recent years. The community has started to work more effectively as a community as a result, in large measure, of the role played by PCO in coordination. There are a number of ways that can be strengthened, and we point to all of the ways we identified in the report. We believe more can be done. It's being done quite well now.

The Chairman: That's reassuring.

I want to thank you and your colleagues very much for completing the work you've done and for appearing here today to allow the public record to show what's been accomplished to date.

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I look forward to your future endeavours in following up on this audit. I'm hopeful that this is the beginning of a long and happy relationship between this subcommittee and the branch of the Auditor General's office that's here today.

Mr. Rattray: Thank you, Mr. Chairman.

Mr. Moenting: Thank you, Mr. Chairman.

The Chairman: We stand adjourned to the call of the chair.

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