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37th PARLIAMENT, 3rd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Tuesday, May 4, 2004

1545

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

Mr. Guy McKenzie (As Individual)

The Chair

Mr. Guy McKenzie

The Chair

Mr. Guy McKenzie

The Chair

Mr. Guy McKenzie

1550

The Chair

Mr. Guy McKenzie

1555

1600

The Chair

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

The Chair

The Clerk of the Committee

1605

Mr. Dennis Mills

The Clerk

Mr. Dennis Mills

The Chair

Mr. Jason Kenney (Calgary Southeast, CPC)

Mr. Guy McKenzie

Mr. Jason Kenney

Mr. Guy McKenzie

Mr. Jason Kenney

Mr. Guy McKenzie

Mr. Jason Kenney

Mr. Guy McKenzie

Mr. Jason Kenney

Mr. Guy McKenzie

Mr. Jason Kenney

Mr. Guy McKenzie

Mr. Jason Kenney

Mr. Guy McKenzie

Mr. Jason Kenney

Mr. Guy McKenzie

Mr. Jason Kenney

Mr. Guy McKenzie

Mr. Jason Kenney

Mr. Guy McKenzie

Mr. Jason Kenney

Mr. Guy McKenzie

1610

Mr. Jason Kenney

Mr. Guy McKenzie

Mr. Jason Kenney

Mr. Guy McKenzie

Mr. Jason Kenney

Mr. Guy McKenzie

The Chair

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

Mr. Guy McKenzie

Mr. Odina Desrochers

Mr. Guy McKenzie

1615

Mr. Odina Desrochers

Mr. Guy McKenzie

Mr. Odina Desrochers

Mr. Guy McKenzie

Mr. Odina Desrochers

Mr. Guy McKenzie

Mr. Odina Desrochers

Mr. Guy McKenzie

Mr. Odina Desrochers

Mr. Guy McKenzie

Mr. Odina Desrochers

Mr. Guy McKenzie

Mr. Odina Desrochers

Mr. Guy McKenzie

Mr. Odina Desrochers

Mr. Guy McKenzie

Mr. Odina Desrochers

Mr. Guy McKenzie

Mr. Odina Desrochers

Mr. Guy McKenzie

Mr. Odina Desrochers

Mr. Guy McKenzie

1620

Mr. Odina Desrochers

Mr. Guy McKenzie

Mr. Odina Desrochers

Mr. Guy McKenzie

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

Mr. Guy McKenzie

Mr. Odina Desrochers

The Chair

Hon. Robert Thibault (West Nova, Lib.)

Mr. Guy McKenzie

Hon. Robert Thibault

Mr. Guy McKenzie

Hon. Robert Thibault

Mr. Guy McKenzie

Hon. Robert Thibault

Mr. Guy McKenzie

Hon. Robert Thibault

1625

Mr. Guy McKenzie

Hon. Robert Thibault

Mr. Guy McKenzie

Hon. Robert Thibault

Mr. Guy McKenzie

Hon. Robert Thibault

Mr. Guy McKenzie

Hon. Robert Thibault

Mr. Guy McKenzie

Hon. Robert Thibault

Mr. Guy McKenzie

Hon. Robert Thibault

Mr. Guy McKenzie

Hon. Robert Thibault

Mr. Guy McKenzie

Hon. Robert Thibault

Mr. Guy McKenzie

Hon. Robert Thibault

Mr. Guy McKenzie

Hon. Robert Thibault

Mr. Guy McKenzie

Hon. Robert Thibault

Mr. Guy McKenzie

1630

Hon. Robert Thibault

Mr. Guy McKenzie

Hon. Robert Thibault

The Chair

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

The Chair

Mrs. Diane Ablonczy

The Chair

Mrs. Diane Ablonczy

Mr. Guy McKenzie

Mrs. Diane Ablonczy

Mr. Guy McKenzie

Mrs. Diane Ablonczy

Mr. Guy McKenzie

Mrs. Diane Ablonczy

1635

Mr. Guy McKenzie

Mrs. Diane Ablonczy

Mr. Guy McKenzie

Mrs. Diane Ablonczy

Mr. Guy McKenzie

Mrs. Diane Ablonczy

Mr. Guy McKenzie

Mrs. Diane Ablonczy

Mr. Guy McKenzie

Mrs. Diane Ablonczy

Mr. Guy McKenzie

Mrs. Diane Ablonczy

Mr. Guy McKenzie

Mrs. Diane Ablonczy

Mr. Guy McKenzie

Mrs. Diane Ablonczy

Mr. Guy McKenzie

Mrs. Diane Ablonczy

Mr. Guy McKenzie

Mrs. Diane Ablonczy

The Chair

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

Mr. Guy McKenzie

1640

Mrs. Marlene Jennings

Mr. Guy McKenzie

Mrs. Marlene Jennings

Mr. Guy McKenzie

The Chair

Hon. Shawn Murphy (Hillsborough, Lib.)

1645

Mr. Guy McKenzie

Hon. Shawn Murphy

Mr. Guy McKenzie

Hon. Shawn Murphy

Mr. Guy McKenzie

Hon. Shawn Murphy

Mr. Guy McKenzie

The Chair

Hon. Shawn Murphy

The Chair

Hon. Shawn Murphy

The Chair

Hon. Shawn Murphy

The Chair

Mr. Peter MacKay (Pictou—Antigonish—Guysborough, CPC)

Mr. Guy McKenzie

1650

Mr. Peter MacKay

Mr. Guy McKenzie

Mr. Peter MacKay

Mr. Guy McKenzie

Mr. Peter MacKay

Mr. Guy McKenzie

Mr. Peter MacKay

Mr. Guy McKenzie

Mr. Peter MacKay

Mr. Guy McKenzie

Mr. Peter MacKay

Mr. Guy McKenzie

Mr. Peter MacKay

Mr. Guy McKenzie

Mr. Peter MacKay

Mr. Guy McKenzie

1655

The Chair

Mr. Dennis Mills

Mr. Guy McKenzie

Mr. Dennis Mills

Mr. Guy McKenzie

Mr. Dennis Mills

Mr. Guy McKenzie

Mr. Dennis Mills

Mr. Guy McKenzie

Mr. Dennis Mills

Mr. Guy McKenzie

Mr. Dennis Mills

Mr. Guy McKenzie

Mr. Dennis Mills

Mr. Guy McKenzie

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

1700

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mrs. Marlene Jennings

The Chair

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

Mr. Guy McKenzie

Ms. Judy Wasylycia-Leis

Mr. Guy McKenzie

Ms. Judy Wasylycia-Leis

Mr. Guy McKenzie

Ms. Judy Wasylycia-Leis

Mr. Guy McKenzie

Ms. Judy Wasylycia-Leis

Mr. Guy McKenzie

Ms. Judy Wasylycia-Leis

Mr. Guy McKenzie

Ms. Judy Wasylycia-Leis

Mr. Guy McKenzie

1705

Ms. Judy Wasylycia-Leis

Mr. Guy McKenzie

The Chair

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

Mr. Guy McKenzie

Hon. Walt Lastewka

Mr. Guy McKenzie

Hon. Walt Lastewka

Mr. Guy McKenzie

Hon. Walt Lastewka

Mr. Guy McKenzie

Hon. Walt Lastewka

Mr. Guy McKenzie

Hon. Walt Lastewka

Mr. Guy McKenzie

Hon. Walt Lastewka

Mr. Guy McKenzie

Hon. Walt Lastewka

Mr. Guy McKenzie

1710

Hon. Walt Lastewka

Mr. Guy McKenzie

Hon. Walt Lastewka

Mr. Guy McKenzie

Hon. Walt Lastewka

Mr. Guy McKenzie

Hon. Walt Lastewka

Mr. Guy McKenzie

Hon. Walt Lastewka

Mr. Guy McKenzie

Hon. Walt Lastewka

Mr. Guy McKenzie

Hon. Walt Lastewka

The Chair

Mr. Guy McKenzie

The Chair

Mr. Guy McKenzie

The Chair

1715

Mr. Guy McKenzie

The Chair

Mr. Guy McKenzie

The Chair

Mr. Guy McKenzie

The Chair

Hon. Robert Thibault

The Chair

Hon. Walt Lastewka

The Chair

Hon. Walt Lastewka

Mr. Guy McKenzie

The Chair

Mr. Guy McKenzie

The Chair

Mr. Guy McKenzie

The Chair

Mr. Guy McKenzie

The Chair

Mr. Guy McKenzie

The Chair

Mr. Guy McKenzie

The Chair

1720

Mr. Rob Walsh (Law Clerk and Parliamentary Counsel, House of Commons)

The Chair

Mr. Gregory Tardi (Senior Legal Counsel, Legal Services, House of Commons)

The Chair

Mr. Rob Walsh

The Chair

Mr. Rob Walsh

The Chair

Hon. Robert Thibault

The Chair

Mr. Rob Walsh

Hon. Robert Thibault

Mr. Rob Walsh

The Chair

Ms. Beth Phinney (Hamilton Mountain, Lib.)

The Chair

1725

Mr. Odina Desrochers

The Chair

Hon. Robert Thibault

The Chair

Hon. Robert Thibault

The Chair

Hon. Robert Thibault

The Chair

Mr. Rob Walsh

The Chair

Mr. Rob Walsh

The Chair

Hon. Robert Thibault

1730

The Chair

Mr. Jason Kenney

The Chair

Mr. Jason Kenney

The Chair

Hon. Shawn Murphy

The Chair

Mr. Rob Walsh

The Chair

Mr. Jason Kenney

The Chair

Hon. Shawn Murphy

The Chair

Mrs. Marlene Jennings

1735

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

Mr. Dennis Mills

The Chair

Mr. Rob Walsh

The Chair

Mr. Rob Walsh

The Chair

Mr. Rob Walsh

The Chair

Mr. Rob Walsh

1740

The Chair

Mr. Rob Walsh

The Chair

Mr. Rob Walsh

The Chair

Hon. Robert Thibault

Mr. Rob Walsh

The Chair

Mr. Rob Walsh

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

1745

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Diane Ablonczy

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Diane Ablonczy

Hon. Robert Thibault

The Chair

Hon. Robert Thibault

The Chair

Mrs. Diane Ablonczy

The Chair

Hon. Robert Thibault

The Chair

Hon. Robert Thibault

The Chair

1750

Mrs. Diane Ablonczy

The Chair

Mrs. Diane Ablonczy

The Chair

Hon. Robert Thibault

Mrs. Diane Ablonczy

The Chair

Ms. Beth Phinney

The Chair

Hon. Walt Lastewka

The Chair

Hon. Walt Lastewka

The Chair

Hon. Walt Lastewka

The Chair

Hon. Walt Lastewka

The Chair

Hon. Walt Lastewka

The Chair

Hon. Walt Lastewka

The Chair

Hon. Walt Lastewka

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

1755

The Chair

CANADA

Standing Committee on Public Accounts

NUMBER 041

3rd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, May 4, 2004

[Recorded by Electronic Apparatus]

¹ (1545)

[English]

The Chair (Mr. John Williams (St. Albert, CPC)): I call the meeting to order.

The orders today, pursuant to Standing Order 108(3)(g), are chapter 3, “The Sponsorship Program”, chapter 4, “Advertising Activities”, and chapter 5, “Management of Public Opinion Research”, of the November 2003 report of the Auditor General of Canada, referred to the committee on February 10, 2004.

Our witness this afternoon is Mr. Guy McKenzie, and if we wrap up around five o'clock we're going to go in camera for some committee business to plan some future business, and so on. That's all under control.

Before we introduce Mr. McKenzie, I'm going to introduce some visitors we have here. They're all the way from Ireland, and of course we have some Irish members on the committee. We welcome them here. Let me read out their names. We have Mr. Derek Dignam, the principal clerk of the Committee of Public Accounts, Mr. John Perry, and Mr. John Dennehy, who is the chairman; and Mr. Seán Ardagh, the chairman of the Committee on Justice, Equality, Defence and Women's Rights.

How does a gentleman get to be in charge of a committee on women's rights? We'll have to check that out tomorrow.

As I mentioned to you yesterday, we are having lunch with the delegation tomorrow in the parliamentary restaurant.

Also, we have a former member of Parliament, Mr. Jim Edwards, from Edmonton, who is visiting. Mr. Edwards was the President of the Treasury Board in times past, and--

An hon. member: Maybe he should be a witness.

The Chair: Yes, maybe a witness. That would be a good idea.

Now, Mr. McKenzie, do you want to take the oath, please?

[Translation]

Mr. Guy McKenzie (As Individual): Mr. Chairman, I swear that in my testimony before you I will tell the truth, the whole truth and nothing but the truth, so help me God.

[English]

The Chair: Thank you very much, Mr. McKenzie. We again thank you also for being accommodating to the witness schedule of the committee. We do appreciate that.

There are a couple of points. First of all, from House of Commons Procedure and Practice, Marleau and Montpetit, page 862, I read this for everybody; you're not being singled out here:

...the refusal to answer questions or failure to reply truthfully may give rise to a charge of contempt of the House, whether the witness has been sworn in or not. In addition, witnesses who lie under oath may be charged with perjury.

Also, Mr. McKenzie, a question: You are appearing before us as an individual this afternoon; did you discuss or have any meetings with employees of the Government of Canada or any members of this committee in preparing your report before coming to this meeting?

Mr. Guy McKenzie: I checked my facts and figures with a few of my former employees--namely, the assistant deputy minister and the director general responsible for the sponsorship program. As well, I asked for the cooperation of Justice Canada, not to be coached but to have access to the lawyer who used to be delegated to our department, in order, again, to check my facts and figures.

So those are the people with whom I checked my facts and figures.

The Chair: Thank you very much.

And another question: Has legal advice been provided or paid for by the authorization of any official in the Treasury Board Secretariat, the Department of Public Works and Government Services, or any other government department or agency?

Mr. Guy McKenzie: Not at all. I'm here on my own.

The Chair: You're here on your own.

I believe you have an opening statement. The floor is yours.

Mr. Guy McKenzie: Mr. Chair and members of the committee, thank you for the opportunity to be here again today to talk about Communication Canada.

I know many of you are particularly interested in the history and the operation of the sponsorship program, and I will be pleased to share my experiences with you. However, perhaps I should take a few moments to tell you a little bit about Communication Canada. In September 2001, by an order in council, we were created by merging two distinct organizations--CCSB, the Communications Coordination Services Branch of Public Works, and the Canada Information Office. I was appointed deputy head of Communication Canada. I had previously been appointed executive director of the Canada Information Office in June of the same year, 2001.

Our mandate never changed. It was to improve communications between the Government of Canada and its citizens. To achieve this, the government's key corporate communications activities were put under our umbrella--the Canada Gazette, fairs and exhibits, sponsorship, government publishing and depository services, electronic media monitoring, public opinion research, access channels such as 1-800 O-Canada and the website, the coordination of government advertising, and a few other things. These activities were now under one roof in order to be better coordinated and to reach out to Canadians with a comprehensive marketing toolbox.

In accordance with the Public Service Rearrangement and Transfer of Duties Act, Communication Canada inherited all the functions and programs of the CCSB with the exception of the procurement function for communications services, which remained at Public Works. This was not an omission. Communications activities were to remain separate from communications procurement. This was clearly stated in the September 1, 2001, press release announcing the creation of Communication Canada.

In summary, and I think this is important to mention, Communication Canada was created after most of the events referred to by the Auditor General in her report.

¹ (1550)

The Chair: Mr. McKenzie, I notice that this is a fairly lengthy report. We can always append it to the record. Is it possible for you to give us a summary of what you have in this report, rather than read the whole thing?

Mr. Guy McKenzie: I'll try to skip a few lines.

Basically, the first challenge was to design the organization. You may remember that when I came here in 2002 with Madame Cochrane, we talked about that. I was already working on that one. This is that robust structure that allowed us to basically be as accountable as we were.

We also equipped ourselves with a human resources group, as well as IMIT. As I said, the Department of Justice allowed us a DLSU, a “departmental legal service unit”. I thank them for that, because we kept them very busy.

We then articulated a financial management framework and controlled checks and balances with a proper financial management framework. The delegation of authority under sections 32, 33, and 34 of the Financial Administration Act was clearly understood, and we created adequate corporate oversight. We kept that separate, and all procurement stayed with Public Works, as I said before.

In order for our employees to be ready to face the challenges, we gave 125 training sessions to our staff for the Financial Administration Act, TB procurement, and other policies of different kinds.

We received the financial authority from Public Works on April 1, 2002. As the AG said in her paragraph 3.114:

Compliance with the Financial Administration Act improved considerably under Communication Canada. The required certifications under sections 32, 33, and 34 of the FAA were signed off properly.

It is at that period that Communication Canada started to identify and address the problems facing the sponsorship program. First, for the administration of the unit, we filled the assistant deputy minister position. We created the position of director general. We also created the position of director of the sponsorship program. We moved from a flat organization, referring to 2002, to what I can call another kind of structure.

The accountability framework was the second challenge we addressed right after the structure. We kept a very separate oversight and challenge function by corporate services over what we can call the program area. Lucky for us, the fall of the 2001, like any fall, was low activity in terms of sponsorship, and we had a bit of time ahead of us.

It is during the winter of 2001-02 that the structure we created for controls and checks and balances provided the senior manager and myself with some indication that more improvement was needed. As referred to in the AG's report under paragraph 3.106, Communication Canada made a number of changes aimed at strengthening the implementation of the program, most notably creating the new management structure I just referred to and the program framework and new guidelines, effective in February 2002 and revised in May 2002, before the events involving Groupaction.

The most important thing to signal to you as parliamentarians, I think, is that some activities were totally considered not eligible any more, such as advertising, video, film, TV series, radio campaigns, book publishing, or capital infrastructure. In a nutshell, we focussed on what we refer to as sponsorship.

The new framework was approved by Minister Boudria on February 25, 2002. The growing concern over the three reports of Groupaction arrived then, and it was in March 2002 that we briefed Mr. Boudria. He referred the matter to the Auditor General. She reported her findings on May 8 and referred the matter to the RCMP.

On May 23, 2002, the then Prime Minister gave to Minister Goodale and to Minister Robillard the mandate to review sponsorship, advertising, and public opinion research, three of the activities we're responsible for.

On May 27, Minister Goodale imposed a moratorium on all activity related to sponsorship. In order not to penalize the hundreds of cultural, sporting, and community events, the decision was taken by the then-government to create an interim sponsorship program, and we finalized the framework to manage that program within the five weeks of the moratorium. We announced it July 3, 2002.

¹ (1555)

Basically, as I want to show in my presentation, the most important thing here was we were moving from a farming-out delivery mechanism to an in-house delivery mechanism. It was the employees of Communication Canada who looked after the file now, not a communications agency, and we even had to hire quite a number of temporary staff to create a SWAT team. Even some other groups of my organization at the time participated to support their colleagues.

Communications agencies were then eliminated completely as intermediaries. The level of detail that was then required far exceeded any previous tender, and we have a few articles in newspapers where the private sector complained about that change.

At the same time that we were implementing the interim program, we were also designing the new program that we know now. The new program used grants and contribution formulae, as opposed to the previous contract-based processes. The goal of the new program was then fully aligned with our departmental mission, which was to inform about programs and services offered by the Government of Canada.

The use of communications agencies as intermediaries was then eliminated for good. A solid management framework, controls, and adequate corporate oversight were also introduced with the full support of our colleagues from central agencies.

The new program was approved by the ministers of Treasury Board December 12, announced publicly December 17, and after that we went around the country for promotional activities from coast to coast to coast, with meetings with all major organizations representing events organizers. The program came into effect April 1, 2003. That led to improvement, and again, if I may quote paragraph 3.2 of the Auditor General's report:

Since Communications Canada's creation in 2001, there have been significant improvements in the program's management, including better documentation and more rigorous enforcement of contract requirements.

She also said, in paragraph 3.108, that her people “found enough documentation to understand the rationale behind decisions to sponsor specific events. Unlike the earlier sample we audited, all of these files contained the appropriate visibility plans and post-mortem reports.”

[Translation]

During the course of the year, we also turned our attention to the second and third mandates, namely the Government of Canada's advertising and the public opinion research activities. In both cases, we held consultations all across the country with the organizers, the advertising companies, the governments and the agencies involved.

Changes to the government's advertising practices were announced on April 28, 2003. They included measures such as a Canadian content requirement of 80% replacing the 100% Canadian ownership rule, and different audit levels for campaigns up to $75,000, from $75,000 to $750,000 and of more than $750,000. We also moved away from commission-based remuneration towards a remuneration system based on hourly rates and fees. This is consistent with private industry practices. We then eliminated appendix Q from the Treasury Board contracting policy on January 1, 2003.

I will skip over the part dealing with the retention of an agency of record to act as essential buyer, a system strongly recommended by the industry. In this regard, a bidding process under the auspices of Public Works Canada is nearing its conclusion. Furthermore, Communication Canada published its first public report on government advertising in 2003.

The Auditor General did not undertake to audit our new practices or did not have time to do so. She nevertheless indicated in paragraph 4.87 of her report that the measures we introduced would address the weaknesses she had identified in her audit.

Similarly, in other words through public consultations, we carried out a reform in public opinion research, consulted with the industry and at the end of this consultation, obtained unanimous agreement on our proposals. In this area, we still had the syndicated studies to do, but the decision to disband Communication Canada interrupted this work, which will be undertaken by other organizations.

º (1600)

[English]

I will conclude, Mr. Chair, by saying that we approached our challenges as diligently as possible and made it a corporate philosophy to continuously improve our program. Obviously, it takes time to establish a new organization while revamping and reviewing ongoing programs. We also ensured that the four different ministers who were responsible for Communication Canada during our short existence were properly supported while delivering our day-to-day mandate with a relatively small team.

As a team, we're quite proud of what we accomplished. We achieved a lot in a little less than three years, including implementation of what the Auditor General referred to as significant improvement to the sponsorship program. I would like to take this opportunity to thank all my former employees of Communication Canada for their dedicated, hard work.

[Translation]

I would like to take this opportunity to thank all my former employees of Communication Canada for their dedicated, hard work.

[English]

Also, I would like to thank, on their behalf, the Auditor General for her good words when she referred to Communication Canada. Her positive comments were extremely well received by my former staff on different occasions.

I hope I succeeded in illustrating in short order what we have been about, and we have been about much more than the sponsorship program. I think we built a solid organization and practices that will remain for years to come in order to serve Canadians.

Thank you for your attention. I will be glad to respond to your questions.

The Chair: Thank you, Mr. McKenzie.

The full text of Mr. McKenzie's remarks will be deposited with the clerk and is available upon request.

Mr. Mills, on a point of clarification, please.

Mr. Dennis Mills (Toronto—Danforth, Lib.): Mr. Chair, I was pulling out remarks or certain questions and answers that have happened in the committee since it started, and I discovered last week that the posting of our hearings on the Internet is about two weeks behind. I think we really should deal with this.

The Chair: The clerk advises me he will comment on this issue.

The Clerk of the Committee: Thank you, Mr. Chairman.

Mr. Mills is right that it takes about two weeks for the translated and edited version of the transcripts of the committee hearings to go up on the website. That is normal. As a matter of fact it's a bit quicker than it is for most committees. Usually it's about three weeks before it goes up.

The blues, however, which is the unedited, untranslated version, are available usually within a couple of hours of the meeting finishing, which is much quicker than for any other committee, and all those blues are available on the internal network of the House of Commons and are sent around to a long distribution list after every meeting.

º (1605)

Mr. Dennis Mills: They are not available to the general public as blues.

The Clerk: The blues can be sent out upon request if someone asks for them. We have a list of about 50 people who are getting them now. If anyone wants them, they can contact the clerk's office.

Mr. Dennis Mills: Whatever you can do to speed it up...because there has been a lot of interest in this committee in the last few days. Last week Mr. Guité's testimony still wasn't posted.

The Chair: It does take a little time to get everything out in two official languages and fully correct and so on.

Mr. Kenney, you have eight minutes, please.

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

Mr. McKenzie, you are currently in the public service.

Mr. Guy McKenzie: I am, sir.

Mr. Jason Kenney: In what position?

Mr. Guy McKenzie: I have, for now, been appointed senior adviser to the Privy Council Office.

Mr. Jason Kenney: I see. You have been in the public service for how long?

Mr. Guy McKenzie: I would say twenty-some years. I'm not sure if it's 22 or 23 years. It has been my career.

Mr. Jason Kenney: Were you involved in any of the discussions that led to the creation of Communication Canada out of the former CCSB and CIO?

Mr. Guy McKenzie: When I arrived at CIO, it was June 11, 2001. There was no discussion at the time, and then the decision was made to proceed with the amalgamation of the two organizations.

Mr. Jason Kenney: Was that decision in part precipitated or caused by concerns about the operation of the sponsorship program prior to that date?

Mr. Guy McKenzie: I would really admit that I don't know that, honestly. I remember that when I took over on September 1 the creation of Communication Canada, I was briefed by Mr. Norman Steinberg about the 2000 internal audit, but it was not put in the context of any reason for justifying the creation of Communication Canada. What appeared in the press release, and I believe that was the fact at the time, was there was a will for concentrating the different communication tools to create an apparatus that would coordinate communications for the Government of Canada across the different departments and organizations of the crown.

Mr. Jason Kenney: When you were at the CIO, am I correct in believing that Mr. Pierre Tremblay was still the executive director of the sponsorship program?

Mr. Guy McKenzie: Yes, sir, you're right to believe that.

Mr. Jason Kenney: Did you have many dealings directly with Mr. Tremblay and the CCSB?

Mr. Guy McKenzie: Not at all. Mr. Tremblay arrived with the program of CCSB on September 1 and left the organization on November 16 of the same year.

Mr. Jason Kenney: Was Alfonso Gagliano your minister during part of this time?

Mr. Guy McKenzie: Yes, sir, Mr. Gagliano was my minister.

Mr. Jason Kenney: Did you have any direct dealings with him with respect to the sponsorship program in any way?

Mr. Guy McKenzie: Sponsorship was not the main preoccupation, I must admit. When we received it on September 1, you must realize the organization we had to put together. As I stated also in my testimony, we hired an expert in the machinery of government to create the right organization and so forth. I was concentrating much more on the creation of Communication Canada than on anything else.

My goal was, first, to address the structure around the delivery mechanism for anything to do with sponsorship or any other thing. Because, if you remember, the 2000 internal audit referred to the fact that it was a flat organization, and we also had that comment here in 2002 by Madam Corcoran, the Deputy Minister of Public Works at one point. So my fall was really dedicated to creating a new organization.

Mr. Jason Kenney: Was it apparent to you from what you learned and heard on the job that Pierre Tremblay, and before him Mr. Guité, had an extraordinary, special, direct reporting relationship to the minister—that they did not follow the normal reporting lines through the deputy?

Mr. Guy McKenzie: I wasn't there. Certainly under my management I was not defending, if I may use that expression, any of my assistant deputy ministers to be in interaction with the minister's office--not at all, quite the contrary. It happened, but certainly I had the information and I was aware of what was going on in my department.

Mr. Jason Kenney: After the creation of Communication Canada, did you immediately gain access to the files of the sponsorship program?

Mr. Guy McKenzie: Having access to the files through my employees, I would say yes. But soon after, if you put yourself into the series of events I just mentioned in my testimony, from the fall of 2001 to the spring of 2002, not too many months go by and then the Groupaction arrived and the story, and the government decided that anything to be done before September 1 would be handled under the auspices of Public Works and anything to be done after that date would be handled by us, for a simple administrative reason—we did not have the workforce to handle the entire spectrum and we were not there at the time.

So our colleagues at Public Works were of great help, but any time we needed access to the files, we had access.

º (1610)

Mr. Jason Kenney: In terms of access to CCSB files, was it your experience that these files were incomplete? Mr. Guité has testified to us that when he left CCSB everything was in order, the files were robust, and that somehow some mysterious midnight shredder destroyed documents. What was the state of the files when you inherited the position?

Mr. Guy McKenzie: Mr. Chair, since we were following up on the internal audit of Public Works, the first deficiency that was, I would say, highlighted in the 2000 internal audit from Public Works was really to address the contents of the file. The work was already started under Public Works. When we received it, we kept in the same vein of providing the necessary information in the files.

Mr. Jason Kenney: One thing I find very interesting from your testimony, your opening statement, is you say that when you set about creating more robust checks and balances in the new Communication Canada, one of the things you did was, “The practice of using communications agencies as intermediaries was immediately eliminated”.

Some people here on this committee have suggested that these communications agencies were providing important, valuable services and that essentially they were indispensable to the process. But in your judgment, I guess, these were not indispensable. You were able to do the work in-house.

Is it fair to say that you don't feel those communication agencies were adding much value, that you could more efficiently provide the service in-house?

Mr. Guy McKenzie: I think that one way or the other it could work, with the right oversight mechanism. I am going to give you a few numbers, which are quite illustrative, I think, and speak for themselves.

To compare, when we received the file, for a budget of $42 million the indication I had at the time was the team was fewer than six people, while when we do it internally—this last year—the expense has decreased to $14 million, which is quite a significant decrease, but we had 40 people to administer it. Those numbers were also reflected, if I may refer you to the AG's report, following paragraph 3.7. She indicated quite clearly how the number of events and the money dropped from 2001-02 to 2002-03, and it dropped even further in 2003-04, but the number of people we had increased.

The point I'm making in my testimony about farming out versus doing it in-house is that—

Mr. Jason Kenney: I have one last related question, sir.

You say that as part of the cleanup, “the government also moved away from commission-based remuneration towards a remuneration system based on hourly rates and fees. This is consistent with private industry practices.”

Are you telling us that the practice of commissions being paid to these ad firms for the sponsorship program was inconsistent with private industry practice?

Mr. Guy McKenzie: Mr. Chair, I think it is important here to put it into context. We're out of sponsorship--in the comments I just heard from the gentleman--and we are into advertising. When we did our extensive consultation across the country, we were told that the new way of doing business for communications-related activity is based on an hourly regime right now, so we decided to go with that kind of advice.

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

Monsieur Desrochers, s'il vous plaît.

[Translation]

Mr. Odina Desrochers (Lotbinière—L'Érable, BQ): Thank you very much, Mr. Chairman.

At the beginning of your presentation, Mr. McKenzie, did I hear you say that you consulted the Justice Department before coming here?

Mr. Guy McKenzie: Yes.

Mr. Odina Desrochers: It was legal advice you were seeking?

Mr. Guy McKenzie: No, not at all. Mr. Chairman, this is what I needed to know. I consulted the lawyer who had worked for us, who was still with the Justice Department, just as I consulted two other employees who had worked there as well. There are certain legal matters involved in my testimony, such as the titles of acts and other such things. I myself am a member of the legal profession, but I do not practice every day. I consulted her with regard to what we call facts and particulars, period.

º (1615)

Mr. Odina Desrochers: In your opening statement, when you talked about Communication Canada having been created on September 1, 2001, you stated that Public Works and Government Services Canada remained responsible for purchasing. What was it responsible for, the choice of the agencies, the choice of the contracts?

Mr. Guy McKenzie: Everything that related to the purchases per say was voluntarily separated from the management of the program. A policy decision, as we say, was made at that time. Once again, this decision was based upon the good internal audit that had been done at Public Works. We wished to create this separation for the same reason that we created a separation between the management relating to sections 32 and 34 and that relating to section 33. It is for the same reasons of efficiency and transparency that we wanted to establish the same distinction between the management of a program and the purchases related to it.

Mr. Odina Desrochers: You also state, Mr. McKenzie, that Communication Canada was created through the fusion of CCSB and the Canada Information Office. In the case of the Canada in theMillennium series, from 1998 to 2000, we have been told of an amount of 1.2 million dollars flowing from the CIO to BCE Média and finally landing at L'Information essentielle. Were you informed of this?

Mr. Guy McKenzie: In all honesty, I am not trying to avoid the question, but I was not informed. That did not happen during the time I was there.

Mr. Odina Desrochers: It was not during your time there.

Mr. Guy McKenzie: I read that in the report, but not...

Mr. Odina Desrochers: And you did not attempt to get more details about the situation given the fact that you were coming here this afternoon and that this involved the CIO? You did not do that either?

Mr. Guy McKenzie: No. Honestly, I limited myself once again... I am sorry. If you want to have information, we will give it to you because we gave it to the Auditor General when she came, but I was called this morning and I came here with the same frame of mind: I always tell myself that as of September 1, 2001, it was me, and that before that, it was not necessarily me. I regret not having a precise answer to your question.

Mr. Odina Desrochers: In any event, Mr. McKenzie, we thank you for your cooperation. We had a few problems juggling with the witnesses and we thank you for being here today.

Have your ever worked on ensuring the visibility of the ministers involved in the Sponsorship Program?

Mr. Guy McKenzie: The visibility of the ministers?

Mr. Odina Desrochers: Were certain ministers more interested than others in participating in the events?

Mr. Guy McKenzie: We always had the reverse problem. In the case of all of the activities I was involved in within various government departments, it was always difficult to have the Crown represented by ministers. There were however always some lined up at the door. No, we did not really concentrate on that issue.

Mr. Odina Desrochers: There therefore was no difference between Mr. Boudria, Mr. Gagliano and Mr. Goodale?

Mr. Guy McKenzie: No. From what I remember, they did not participate very much in that type of event.

Mr. Odina Desrochers: Does Hansel and Gretel ring a bell?

Mr. Guy McKenzie: Yes.

Mr. Odina Desrochers: Could you tell us exactly what that project consisted in?

Mr. Guy McKenzie: Yes, I am trying to remember. Hansel andGretel goes back quite a bit. I did not participate in the day-to-day administration of the program. I would have difficulty telling you what it was about. If I am not mistaken, it took place around Christmas time. What was your question, sir?

Mr. Odina Desrochers: Hansel and Gretel is a project that I saw somewhere. It was related to your organization, was it not?

Mr. Guy McKenzie: Yes. I vaguely remember that it was a show that we contributed to. I do not remember too much about it, because it was at the very beginning. That goes back quite some time, sir.

Mr. Odina Desrochers: Is it true that when you saw the report, you thought that there had been quite a bit of exaggeration with the visibility of the word “Canada“ on site at the event, and that it was a little bit embarrassing, somewhat like in Nagano?

Mr. Guy McKenzie: I had very little involvement with the communications agencies. On the few occasions where I had to meet with them--I was not a communications expert--, we discussed the profile to give or not to give to the events. At times, it was uneven, and there was work to be done in that area. This was one of the things that required work.

You stated, with regard to the recommendations you received and the measures you took, that it was much less expensive to work with department staff than to call upon the agencies. How do you explain that?

Mr. Guy McKenzie: I will attempt to give you a few numbers from memory. There is however someone here with me in charge of doing the follow-up in order that I be able to concentrate on the questions. If you wish, we could supply the numbers to you later.

As a rule, when the system entailed working with outside communications agencies, the average commission was around 15%. However, according to the last numbers I saw--I did not deal with the daily management of the program but rather, for example, with audit operations--, the average for the last year was around 16 or 17%.

But there is a reason for that. The system was put in place quickly and there had been start-up costs, which are inherent to all programs. Furthermore, I earlier drew your attention--and I believe it is worth repeating--to the fact that when the amounts spent went from 42 to $13.5 million, the number of events had gone from 501 to 778.

The follow-up is very rigorous. It is possible that it is equivalent today. Furthermore, according to our projections, if the program had continued, the costs would have continued to drop once the initial costs had been absorbed.

º (1620)

Mr. Odina Desrochers: In some testimony we were told that the choice of the events was made at the Prime Minister's office or at the minister's office. After your assumption of duties, who controlled the choice of events?

Mr. Guy McKenzie: I did not experience that. It was really the civil servants. I had deliberately recruited an assistant deputy minister who knew these contribution agreements inside out. He had criteria for evaluation purposes. I skipped over them in my presentation, but you will find them outlined in the written text. They were applied in the context of the analysis. The analysts received the files and compared comparable things. As a matter of fact, even the Auditor General speaks of this in her report.

Mr. Odina Desrochers: I would like to ask a final question, Mr. Chairman.

Was the reaction of the event and festival organizers more positive than in the case of the work carried out by the advertising agencies?

Mr. Guy McKenzie: Yes. I heard some people say that they enjoyed working with the in-house people because there was no longer an intermediary and they could come and obtain information directly.

I however also saw newspaper articles that at times gave us a good laugh. They said that we were a little bit too demanding and that we had become too official-minded. So in the end, two very different things were being said about us.

Mr. Odina Desrochers: But your way of doing things was fairer and more objective.

[English]

The Chair: That's time, Mr. Desrochers.

[Translation]

Mr. Odina Desrochers: I am already out of time, Mr. Chairman?

[English]

The Chair: Actually you racked up eight minutes and 15 seconds.

[Translation]

Mr. Odina Desrochers: I am asking the witness if it was fairer and more objective.

Mr. Guy McKenzie: I would have to compare that with had been done previously. I was not there. I believe that a proper analysis was done.

Mr. Odina Desrochers: Thank you.

The Chair: Mr. Thibault, you have eight minutes.

Hon. Robert Thibault (West Nova, Lib.): Thank you, Mr. Chairman.

Good afternoon, Mr. McKenzie and welcome to the committee.

You joined Communication Canada in September 2001, correct?

Mr. Guy McKenzie: Yes, Mr. Chairman.

Hon. Robert Thibault: Where had you been before that?

Mr. Guy McKenzie: I had, since June 11 of the same year, been at the Canada Information Office, and before that I was with Treasury Board.

Hon. Robert Thibault: At Treasury Board, did you work in the same field, namely that of communications?

Mr. Guy McKenzie: No, not at all.

Mr. Chairman, you will remember that when I was with Treasury Board, I appeared before you. I was at the time in charge of Y2K. Then, in my second position at Treasury Board, I was responsible for negotiating the infrastructure file with the provinces.

Hon. Robert Thibault: Thank you.

I believe that my interaction with you began in January 2002. You had already considerably moved forward with the reorganization. The department you were with at the time had nothing to do with the testimony we have heard relating to the sponsorships. This is set out in the documents presented to the committee.

When you joined Communication Canada and set up the new department or the new division, were you at the deputy minister level?

Mr. Guy McKenzie: Yes, absolutely. I was not called a deputy minister. I was Executive Director, but I had three assistant deputy ministers who reported to me as well as a director general of Corporate Services. It is for this reason that we sought the services of a machinery of government expert to help us establish the proper governmental structure, the one we needed.

Hon. Robert Thibault: As deputy minister, to whom did you report?

º (1625)

Mr. Guy McKenzie: As deputy minister, I reported to Mr. Gagliano. I worked under four different ministers.

Hon. Robert Thibault: You had three assistant deputy ministers and there were directors for different sectors.

Mr. Guy McKenzie: Yes.

Hon. Robert Thibault: Did any of these deputy ministers or directors have a direct relationship with the minister or with the minister's office?

Mr. Guy McKenzie: It is possible that some of my assistant deputy ministers had a relationship with the deputy minister, as can occur in any department. That is not impossible.

Hon. Robert Thibault: Could that have happened without your having knowledge of it?

Mr. Guy McKenzie: No. In our organization, if one of my assistant deputy ministers had, for one reason or another, to meet with people in the minister's office, similarly to what goes on in all departments, there was a way to inform me of it. We talked about it. We had a management committee that met every week with the assistant deputy ministers and the directors general, and we had an executive committee with the assistant deputy ministers and the director general for Finance and Administration. We had regular exchanges about what we were doing.

Hon. Robert Thibault: What relations were there with MP offices, with the members themselves or with the other ministers, other than the minister of Public Works? Did one go through the minister's office or communicate directly with you or with your staff?

Mr. Guy McKenzie: As far as members of Parliament are concerned, the matter is simple. We always worked in the same way. Members were referred to the minister's office. It is the minister and his office that took care of them. As for the other ministers, if it was a matter relating to our organization, we got together with the minister's office to deal with the issues that required attention on the part of the government.

Hon. Robert Thibault: Always through the minister's office?

Mr. Guy McKenzie: We always worked with the minister's office. In the case of members of Parliament, we referred them to the minister's office. We then took measures if required and did the necessary follow-up, but it was always through the minister's office.

Hon. Robert Thibault: In 2002, the Auditor General did an assessment of your shop. Did she discover any weaknesses?

Mr. Guy McKenzie: One always finds weaknesses, and it is all the better. The Auditor General, when she came to visit us, found certain things. She made recommendations to us and this was a positive thing because that is how one can improve.

Hon. Robert Thibault: I imagine that when this audit was done, it was not a first for you in your career. I imagine that before the publication of the final report, you had the opportunity to respond to the recommendations she planned on making or to give your opinion on her findings.

Mr. Guy McKenzie: Mr. Chairman, the Auditor General came to our offices, but I must explain that as far as Communication Canada is concerned, eight audits were carried out. I could name them for you, but I know that the clock is ticking. Eight reviews or audits were done, either by the Auditor General, through the internal audit mechanism or by Consulting and Audit Canada. It is clear that each time we improved. We were not afraid of these audits. On the contrary, we considered them to be a management tool on the road to improvement.

Hon. Robert Thibault: Before publishing her recommendations and findings, did the Auditor General always give you the opportunity to respond, to voice your opinion?

Mr. Guy McKenzie: Yes, we had regular exchanges with the Auditor General. When I came here in 2002, someone asked me if I was going to cooperate and I answered that I certainly would. There was good cooperation, on both sides.

Hon. Robert Thibault: Thank you.

You stated in your presentation that you no longer called upon communications agencies. I would like some clarification here. Communications agencies sometimes play multiple roles. On the sponsorship side, you no longer called upon them. But on the advertising side, did communications agencies continue to play a role?

Mr. Guy McKenzie: Absolutely, Mr. Chairman. The question is an interesting one, because this is a distinction that must be made. We had decided to no longer use communications agencies for the sponsorship file. We had decided to do the work in-house and it had been a government decision, a policy decision. However, for advertising campaigns, we will always have to call upon experts in the field, and those experts are the communications firms.

Hon. Robert Thibault: Do you remunerate them on an hourly basis or on a percentage basis?

Mr. Guy McKenzie: The government's new policy, that we applied in the context of the public tendering process, requires that they be remunerated at an hourly rate.

Hon. Robert Thibault: You spent three years in the communications field and you must know something about it. If a communications agency has a contract with the federal government or with a private company and negotiates the purchase of air time, lines or whatever, will it not be granted a discount by the TV station or the newspaper?

Mr. Guy McKenzie: That always depends on the contract initially signed with the agency. If, as is the case with any contract, the terms and conditions are clear and the agency is allowed to make purchases over a certain number of years or a certain period of time and to make bulk buys, it is obvious that it will be able to negotiate the rates. What matters are the control mechanisms we have to follow the work done.

º (1630)

Hon. Robert Thibault: You are no longer there, but from what I understand, the government now goes through an agency of record that works with the other agencies.

Mr. Guy McKenzie: As I said in my opening statement, the selection of the agency of record for media purchases is at present moving forward through a publicly advertised tender call. It was posted on MERX and the winning communication and coordination agency will eventually be announced.

Hon. Robert Thibault: Thank you very much, Mr. McKenzie.

[English]

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

Now we have about eight people left on the list to speak. Ms. Wasylycia-Leis I expect to come back. If we go eight minutes on the second round, then four and four, that will take us to about 5:30. There are a couple of things, not much, to cover off in the steering committee, but I'd like to cover off a couple of things.

Is there consensus that we go to four minutes for the second round, or would we rather stay with eight minutes?

Mrs. Ablonczy, what's your feeling? You're next.

Mrs. Diane Ablonczy (Calgary—Nose Hill, CPC): I'm always crying about not enough time, but I certainly would defer to the need for the chair's agenda to be met. So I would be prepared.

The Chair: I have seven names here, plus Mrs. Wasylycia-Leis. I know she's coming back. That's eight times four, that's 32 minutes. That would take us till about ten minutes after five o'clock, at a four-minute round. By the time we change, and so on, and since Mr. McKenzie is here to tell us how the problem was resolved, not to tell us his participation in a problem that was brought to our attention, I think we'll go on four minutes.

Why don't I make it five minutes from here on in, and everybody will get five minutes?

Five minutes, Mrs. Ablonczy.

Mrs. Diane Ablonczy: The wisdom of Solomon, Mr. Chairman.

The Chair: The wisdom of Solomon, split it down the middle.

Mrs. Diane Ablonczy: Mr. McKenzie, you testified a little earlier to the committee that you participated in the decision to merge CCSB and CIO and Communication Canada. Can you tell us the rationale that was discussed for that move?

Mr. Guy McKenzie: The rationale that I can recall at the time was really a policy decision to put together, under the same roof, the different parts of the Government of Canada's apparatus for dealing with communications. If you think about it for a second, Mr. Chair, the Canada Information Office had something to do with some advertising activity, as well as other communications activity, and the then CCSB as well. So it made sense, at one point, to regroup that under one roof.

Mrs. Diane Ablonczy: You talked about, in your evidence before us, the use of communications agencies as intermediaries. That was eliminated for good, and only not-for-profit organizations became eligible for funding. Tell us why that change was made.

Mr. Guy McKenzie: I will refer to my notes, because I think it's important to put it—

Mrs. Diane Ablonczy: Page 6.

Mr. Guy McKenzie: Merci.

We eliminated a few activities that were not eligible any more for sponsorship, as well as a few different kinds of organizations. If I refer to page 11—sorry, I don't have the same pagination because I have a bigger font—advertising, video production, television series, radio campaigns, book publishing, and capital infrastructure were eliminated from eligibility for sponsorship programming. Basically, we focused much more on community-based events related to cultural, sports, or other activities at the community level. We were dealing only with non-profit organizations in that domain.

Mrs. Diane Ablonczy: This change was not because you wanted to correct any problems, but because the nature of your work had changed. Is that what you're telling us?

º (1635)

Mr. Guy McKenzie: What we realized as the winter of 2001-02 was evolving was that some of the activities in the sponsorship program were not really of a sponsorship nature. They were much more of an advertising nature or something related to the advertising world. My assistant deputy minister approached me and we approached the minister and this is what we signed with Mr. Boudria on February 2002, which was a clear distinction between what would be from then on advertising and what would be a real sponsorship.

Mrs. Diane Ablonczy: Let me ask you directly: do you believe that the use of communications agencies as intermediaries for the conduit of funds is appropriate?

Mr. Guy McKenzie: For the what, Madam? I missed the word.

Mrs. Diane Ablonczy: The conduit of funds.

Mr. Guy McKenzie: We were dealing directly with the agencies. We were dealing directly with the clients, and we found that very workable. We eliminated the intermediaries.

Mrs. Diane Ablonczy: That wasn't my question.

Mr. Guy McKenzie: Okay, could you repeat it?

Mrs. Diane Ablonczy: My question was, is the use of communications agencies as intermediaries for conduit of funds appropriate?

Mr. Guy McKenzie: I'm sorry, for what kind of organization, if you could be precise? I understand the question to be whether it is appropriate to have an intermediary to move money around, but from whom to whom?

Mrs. Diane Ablonczy: You have read the Auditor General's report, I assume.

Mr. Guy McKenzie: Yes. When you deal with an organization, you can do it directly. When you deal with a non-profit organization or a crown corporation, you can--

Mrs. Diane Ablonczy: Is that a yes or a no?

Mr. Guy McKenzie: I think we can deal directly. The legal framework is there so that the department can move money directly.

Mrs. Diane Ablonczy: I wish you wouldn't avoid a direct question. These are important questions.

I will move on, only noting that you refused to answer the question.

Mr. Guy McKenzie: No, I don't refuse to answer.

Mrs. Diane Ablonczy: You said that there would now be a focus on promotion of government programs and services, as opposed to merely displaying a wordmark.

Mr. Guy McKenzie: Yes.

Mrs. Diane Ablonczy: Can you tell us why that change was made?

Mr. Guy McKenzie: That was clear. When we administered any of the programs, it was not only to put out the wordmark. We were there to promote programs and services to the Canadian people. The wordmark could be there. It was not against the wordmark, but it was not simply a matter of showing the Canada flag or showing the wordmark. We had to find a way to communicate about programs and services to the clientele that was there, whether it was youth, whether it was elders, or whether it was sports activities or whatever. We had different segmentations of clientele, and we were always doing our best to move information to the citizens.

Mrs. Diane Ablonczy: With respect, Mr. Chairman, my question was why, and I did not get an answer to that either.

The Chair: Thank you, Mrs. Ablonczy. Maybe we'll come back to that one later on.

Madam Jennings, please, for five minutes.

[Translation]

Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you, Mr. Chairman.

Good afternoon, Mr. McKenzie.

I remember you from when you were in charge of Y2K. You did a good job.

You mentioned that there is a new policy governing the types of activities that fulfill the requirements for funding eligibility. You mentioned a few activities that as of February 2002 no longer meet these conditions and you said that this had been revised in May 2002. Some of these activities that no longer qualified were advertising, the production of videos, films or television series, radio campaigns, etc.

You explained that these were marketing activities rather than sponsorship activities. Could you explain for us the difference between these two categories of activities?

Mr. Guy McKenzie: That is a good question, Mr. Chairman. We discussed this with people from the industry. The difference is slim, but it nevertheless exists. Communication and advertising activities entail the promotion of programs and services. This can take the form of advertising, of an ad or of government support for a TV campaign. When we talk of sponsorships, it is much more at the community level. We work with organizations that are not necessarily involved in marketing and advertising. We communicate the programs and services to Canadian clients, to Canadian citizens through an organization that works closely with them. The nuance is slim, but it is there. We had vehicles as well as the budget for what was called the Citizens' Information Initiative, or CII, Initiative d'information des citoyens, in French. We clearly established the difference between a true advertising campaign and a sponsorship.

º (1640)

Mrs. Marlene Jennings: Could you supply us with this documentation?

Mr. Guy McKenzie: Absolutely. If my memory serves me right, the program that we changed on February 25, 2002 was at the time signed by minister Boudria and myself. Some other changes were made and I will make sure that this is forwarded to you. As a matter of fact, the Auditor General even mentions this in her report.

Mrs. Marlene Jennings: Thank you very much.

The reason why I ask you this question is very simple. We have heard some witnesses who have challenged some of the Auditor General's conclusions. The Crown corporation claimed that it had not followed its own internal rules relating to sponsorship activities because it viewed the activities in question as marketing activities, whereas the Auditor General criticized it for not having followed its own rules pertaining to sponsorship activities. This is why I believe it is important for the committee to understand the difference between the two.

I will ask you another question. Communication Canada was created in September 2001 and was in place until March 31, 2004. During the life of Communication Canada, how many sponsorship files did you process? How many did you process under the old rules or the non-rules? How many did you process according to the rules you put in place? How much money was paid out to advertising companies? You did not eliminate them right away. It took you some time to decide that the files would be dealt with in-house rather than outside.

We know that in 2001-2002, there were 501 events and the disbursement of $42 million and that in 2002-2003, there were 476 events and expenditures of $20.5 million. I would like to know what happened during the years Communication Canada was in existence.

Mr. Guy McKenzie: Mr. Chairman, there were three different managements of the Sponsorship Program. In the beginning, obviously, we continued on under the same system, until it was changed. In the spring of 2002, Mr. Goodale imposed a moratorium. We had an interim program. We then had an on-going program. I can give you the numbers you are missing right away. In 2003-2004, we spent $13.5 million for 778 events. That is the number I have today.

I must however point out that the program is gradually being closed down. So as to not prejudice event organizers, it will perhaps remain in place until August or September, because there are still some active files. The total of 778 that I gave you is a pretty solid number. If the total turned out to be different, we would supply the details to you.

[English]

The Chair: Merci, Madame Jennings.

Mr. Murphy, please, five minutes.

Hon. Shawn Murphy (Hillsborough, Lib.): Thank you very much, Mr. Chairman.

Mr. McKenzie, I have a couple of general questions. A lot of the testimony you've given today really relates to the clean-up of the problem. It's pretty well conceded in this committee that in the latter part of 2000-2001 the problems that were associated with the sponsorship program were rectified, and from then on it was administered with a fair degree of rigour. In fact from the people I've dealt with, the biggest complaint I ever had was that it was dealt with with too much rigour.

You're a career civil servant, a very competent person. You've had a lot of experience in communications. You've testified here before on the Groupaction thing, two years ago, in 2001. I just want to ask you a couple of general questions on this whole murky arrangement between ad agencies and government, which we've seen for quite a number of years.

We have evidence before this committee that the way of the Conservatives was it used to be political. They had two political staffers on board in the department who reported directly to Senator Lowell Murray. That was changed in 1993. They took the political staffers out, but I don't think they changed the culture much. And when they increased the budget, of course, they created all sorts of other problems with the sponsorship program.

Obviously you've testified to Madam Jennings that you've read the report, and you've been involved in the situation for quite some time now. Perhaps I'll ask you to step back three steps from the whole thing. Can you give this committee, in your view, in your opinion, what are the two or three factors out there that contributed to the department operating on its own, outside of normal government controls, checks, and balances, and why the department, under the direction of Chuck Guité, was allowed to continue to operate in the manner it did?

º (1645)

Mr. Guy McKenzie: Commenting about the past, it's always—

Hon. Shawn Murphy: Don't be shy.

Mr. Guy McKenzie: —difficult for anyone appearing in front of you, because we were not there. But certainly what we did after September 1 is the flat organization was changed. I wanted to have an ADM, a DG, and a director, not simply to create a bureaucracy, but to have the accountability that goes with it. You have the expertise that goes with it and the necessary checks and balances also through another apparatus, which is the involvement of finance and administration people. But it is totally separated from the people who are managing the program in such a way that when you manage 32 and 34 under one side of the equation, which is the program, you don't mix that up with 33. Because it's not always bad intentions; it's simply the fact that a program administrator sometimes wants to go and accommodate an event and they get inflamed, and the people who are doing the checks and balances in financial administration are cheap.

Furthermore, I think that regular audits.... I remind you, Mr. Chair, we were a bit over-audited. In three years, eight audits or reviews were way too much. It was really demanding, but the climate was such at the time. But ongoing evaluation and audit in any administration also helps you having your checks and balances and corrects any mistakes that may humanly happen.

Hon. Shawn Murphy: Mr. McKenzie, in answering my question you've described what you did. I congratulate you on that, and I think you did a good job. You separated the functions. You did the correct organizational chart with the correct people and you underwent audits.

But my question to you, and I'll ask it again, is from your experience—and you're an experienced person and I have confidence in you—what are the two or three factors that contributed to this department being established in the way it was, back in 1994, 1995, 1996, 1997, and what were the factors that contributed to it being allowed to operate in the manner it did?

Mr. Guy McKenzie: I would--

Hon. Shawn Murphy: I'm looking for your views, your opinion.

Mr. Guy McKenzie: I don't know. I cannot tell you. I have no idea. If you're asking why was it administered the way it seems to be and so forth, I cannot see why it was allowed to happen that way. I don't know. I simply don't know.

I've done it differently myself, but I don't know why it happened that way at the time.

The Chair: Shawn, ten seconds.

Hon. Shawn Murphy: Ten seconds.

The Chair: Is that it?

Hon. Shawn Murphy: That's it, yes, ten seconds.

The Chair: Okay.

Hon. Shawn Murphy: I was going to give it to Dennis, but he didn't want it.

The Chair: Mr. MacKay, five minutes.

Mr. Peter MacKay (Pictou—Antigonish—Guysborough, CPC): Thank you, Mr. Chair.

Mr. McKenzie, you were the clean-up guy. You came into Communication Canada to sort out some of this. When you first looked at some of the files--and you're in a privileged position, because you saw those files at a time when much of this was happening, or shortly after--what was the state of those files? Was there more than invoices? Were there work reports? Were there post-mortems? Were the files complete, to the best of your knowledge?

Mr. Guy McKenzie: To be complete, according to our standards, a file has to start with an application from the organization that wants to receive support from the government, a proper exchange of correspondence in order to keep a paper trail, and a good analysis of such a proposal, with a set of rules and regulations that is as objective and unbiased as possible, so as to have everybody on the same level playing field. After that you go into an agreement with the events organizer.

What is important in the way you document all this is to have a paper trail. We're not playing with private sector money, we're dealing with public funds, and I think it's important to be able to trace the history right from the beginning to the closing of the file, which goes eventually to a post-mortem to pay the money where you're sure you have received value for money, and you sign under section 34 of the Financial Administration Act.

º (1650)

Mr. Peter MacKay: Mr. McKenzie, we all agree that's how it should work and that's what should happen--that's a no-brainer. My question is, was that the state of the files when you looked at them?

Mr. Guy McKenzie: They were very thin.

Mr. Peter MacKay: So you would agree with the Auditor General's assessment generally: the files you looked at were not up to par, they did not meet the standard you just described.

Mr. Guy McKenzie: You heard one of my ministers saying a few times publicly that you don't defend the undefendable. The files contained a few pieces, but not all the pieces.

Mr. Peter MacKay: And we heard Mr. Guité say that was deliberate, it was to keep the separatists from getting access through the access to information process or through any sort of disclosure that might be made under normal rules of disclosure.

Mr. McKenzie, you also had a unique experience, in that you had four ministers during your time as head of Communication Canada. To the best of your knowledge and your assessment of that period, did any of those ministers comply with this rule of disclosure, or was this just a pattern of non-compliance?

Mr. Guy McKenzie: With the new management framework we put forward in 2002, we decided to put everything on the website. I learned with Y2K that the best way to address a question is by providing all the information. So we put on the complete list of initiatives and so forth very quickly. We changed, and we became extremely transparent at one point, even more so, as I said in my testimony. When we arrived with the new program, we deliberately went across the country from coast to coast to coast to advertise it, to make it known to event organizers, to tell them, there is a sponsorship program, and if you want to use it, it's there for citizens.

Mr. Peter MacKay: I take it from that answer that you felt you had to do something because there was no compliance and you had to improve upon the system and go to extraordinary lengths to bring the standard up.

Mr. Guy McKenzie: We took the audit report of 2000, which had already started to bring about improvements from Public Works, and we kept on to what I state today.

Mr. Peter MacKay: All right.

Mr. McKenzie, did you ever have occasion to meet with this special cabinet committee on government communications? Did you ever present to them?

Mr. Guy McKenzie: Absolutely.

Mr. Peter MacKay: What was your relationship with the ministers at that meeting? And do you know a Mario Lague?

Mr. Guy McKenzie: Of course. Mario is not only someone I know, he is a colleague of mine. Mario was the secretary of that committee.

Mr. Peter MacKay: And what was the nature of the presentation you made when you went to the cabinet committee on communications?

Mr. Guy McKenzie: For instance, in 2002 or 2003 we presented the advertising plan we had for the coming year. On another occasion we presented “Listening to Canadians”, which was a survey that was also on the web, was public. Those were the kinds of presentations we were making. For fairs and exhibits also, we were presenting to ministers the plan for the year ahead to receive their assent and so forth.

Mr. Peter MacKay: These improvements you've made now, Mr. McKenzie, the mechanisms that were put in place by you and your team, would they now rule out the type of abuse--and that's my word--we feel was exhibited by Mr. Guité and others in flouting the rules and the normal practices? I guess my question ultimately is, is what you've put in place comfort for Canadians that this could not happen again?

Mr. Guy McKenzie: My only answer is that there is real hope. However, I remember--and I don't want to waste your time here--the AG's comments. At one point she referred to the improvement we put in place, but it's always subject to implementation.

º (1655)

The Chair: Thank you, Mr. MacKay.

Mr. Mills, five minutes.

Mr. Dennis Mills: Thank you very much, Mr. Chair.

Mr. McKenzie, did you run the Y2K program for Treasury Board?

Mr. Guy McKenzie: “Run” is a big word. We were many thousands of people, and I was just one of them, but I was very much involved.

Mr. Dennis Mills: You knew everything that was going on in respect of the communications responsibilities?

Mr. Guy McKenzie: I was the coordinator for Treasury Board.

Mr. Dennis Mills: Okay.

You've seen the list the Auditor General tabled with us last week of the 53 projects she reviewed for her sample.

Mr. Guy McKenzie: I'm not sure exactly, but keep going. If I need clarification, I will ask you for it.

Mr. Dennis Mills: The Auditor General tabled last week further information regarding files referred to in paragraphs 3.60 and 3.69 of chapter 3. The committee asked for a list of the 53 files examined in our sample and to indicate in which cases documentation was lacking. The Y2K third ad, on production and media, is one of the clouded experiences. The report says at 3.60 there was “no assessment of the project's merits” and little evidence that the government had obtained the visibility it had paid for. In other words, it failed on both counts.

If you were the client in Treasury Board, would there not have been some kind of evaluation of the service this particular organization did on behalf of the Y2K program?

Mr. Guy McKenzie: It's far away in my memory again, but my work at Treasury Board at the time--you remember I came in front of you a few times--was to make sure first that the departments were compliant with Y2K, and to make sure at one point the different utilities and we were working hand-in-hand. The mandate even went beyond at one point, and we included what I call the international community, with the UN and what have you. I don't have a precise recollection of any communication activities. I'm not sure if we were really.... I was responsible for my unit only.

Mr. Dennis Mills: Here's the point, Mr. Chair and colleagues, I'm having difficulty with. Mr. McKenzie's reputation precedes him, but here's an example. The Y2K program had incredible administration and observance from the Treasury Board itself, but the Auditor General has said it's sort of clouded on both counts. Is there some way we could get to the bottom of why that happened with the communications of the Y2K, with no assessments of the project's merits and no evidence that the government obtained the visibility it paid for? Doesn't that seem an odd sort of judgment of the quality of the work?

Mr. Guy McKenzie: I cannot really comment. I have no recollection of that. My work was much more on compliance with Y2K, not necessarily the communications.

Mr. Dennis Mills: So you didn't have any communications knowledge?

Mr. Guy McKenzie: I'm not saying that. I don't have the knowledge for answering that. We can follow up with Treasury Board.

Mr. Dennis Mills: Fair enough. But this does surprise you?

Mr. Guy McKenzie: I cannot comment, because I'm not sure.

Mr. Dennis Mills: Okay, Mr. Chair, I really don't have any other questions.

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

On that issue of Y2K--

Mr. Dennis Mills: Excuse me, Mr. Chair, I didn't realize. Do I still have some time left?

The Chair: Yes, you have almost a minute.

Mr. Dennis Mills: Then I would give it to anyone on the team who wants it.

The Chair: Can we just add it to Mr. Lastewka's time?

» (1700)

Mr. Dennis Mills: Sure.

The Chair: On that Y2K thing, I think it's actually two separate issues. Mr. McKenzie was very much involved in ensuring that the Government of Canada didn't fall down, making sure its equipment was Y2K-compatible. At the same time, the Government of Canada had a job to convince Canadians to participate in Y2K, to make sure they were up to speed. I think Mr. McKenzie was more involved in ensuring that the government met its requirements, and not involved in ensuring that society at large made the transition.

Mr. Dennis Mills: Mr. Chair, I'm agreeing with you, and that's why I referred to you, but we all know the rigour Treasury Board demands in analysing whatever interaction anyone has with them. I find it quite ironic that the Treasury Board relationship on the Y2K third ad, production and media, according to the Auditor General, has failed on both counts.

The Chair: These are the questions we don't have the answers for, Mr. Mills.

We're now going to go to Ms. Wasylycia-Leis, and we'll add one minute on to Mr. Lastewka.

Mrs. Jennings.

Mrs. Marlene Jennings: On the point Mr. Mills is raising, if memory serves me correctly from when I sat on the industry committee, it was Industry Canada that carried out communications activities to encourage the private sector and other governmental sectors, not federal governmental sectors, but provincial, municipal, and that, to become Y2K-ready. So that may be a report of communications activities of the federal government handled through Industry.

The Chair: We're already there, yes.

We're going to go to Ms. Wasylycia-Leis for five minutes, and then we'll go for six minutes to Mr. Lastewka, adding on Mr. Mills' time.

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

I apologize. I had to run out to speak on the budget bill, so I may repeat some areas that have already been raised.

Have you been asked already about Mr. Roger Collet in any sense?

Mr. Guy McKenzie: No.

Ms. Judy Wasylycia-Leis: I want to know if you knew him, if you had any contact with him.

Mr. Guy McKenzie: I knew Mr. Collet for years. He was a colleague of ours for many years.

Ms. Judy Wasylycia-Leis: He's often mentioned as one of the key people we should talk to, as being one of a close group of individuals who really had control over this whole area. He is mentioned along with Mr. Chuck Guité and Jean Pelletier. In fact, it's been told to us, but we've never been able to verify it, that those three would meet regularly to plan events and so on and dealings concerning the sponsorship file. Did you ever get any sense of that at all?

Mr. Guy McKenzie: I don't know that. The only thing I know is that Mr. Collet was the first head of the first incarnation of the Canada Information Office, before Mr. Marc Lafrenière.

Ms. Judy Wasylycia-Leis: Yes, he was the head of CIO in 1996.

Mr. Guy McKenzie: Right.

Ms. Judy Wasylycia-Leis: Would it be useful for our committee to hear from Mr. Roger Collet?

Mr. Guy McKenzie: I think it would be interesting for the committee to hear from whoever can bring light to the issue you are contemplating.

Ms. Judy Wasylycia-Leis: I wanted to ask about the agency selection process, to find out what you knew about it when you took over this assignment. We've heard a bit about the problems with the agency selection process with the sponsorship files and the fact that there were four or five firms that got most of the work and seemed to have connections with the Liberal Party by giving donations and so on. I've never been able to figure out if there was an agency selection process in CIO. When you arrived, what was in place for both CCSB and CIO in relation to the agency selection process?

Mr. Guy McKenzie: I was focusing more on sponsorship here today. If I remember well, when I took over CCSB on September 1, they had just proceeded with a new selection of agency, I think in May of the same year. So we received that state of evolution, along with the implementation plan of the Public Works audit for CIO. The selection process I don't remember. I will check and come back to you. I will get the information for you.

Ms. Judy Wasylycia-Leis: It's one of the big concerns of the Auditor General that there wasn't an objective, transparent process in place that was fair for anyone who wanted to compete. Did you get a sense of that at all when you arrived in respect of CCSB or CIO?

Mr. Guy McKenzie: Not at all. As I said, for CCSB my recollection is a bit clearer. There was a selection process in May of 2001, if I remember well, and we were created September 1. For CIO, I must admit, I don't remember, but we'll get the information as to whether a selection process was made and when it was made.

» (1705)

Ms. Judy Wasylycia-Leis: When you arrived, the whole issue of the agency of record would have been on your plate. Media/IDA Vision was a company formed by Mr. Boulay as part of Groupe Everest just prior to the putting out of bids for an agency of record. We learned through the process of these hearings that there were problems with the contract. When we raised it with Mr. Gagliano, he said there were problems, but they couldn't break the contract, or they would have been sued by Media/IDA Vision. Can you tell us anything about that chapter? I understand Media/IDA Vision still has the contract and there is a new process about to begin.

Mr. Guy McKenzie: I have a note here telling me that on August 31, 2000, four agencies were selected for the then CIO. However, I don't want to guess on an answer here, and I don't want to avoid your question, so I can come back with more detail. But I'm led to believe, if I have such a date and such information about the agencies, that there was a selection process.

To come back to the AOR, Mr. Chair, Media/IDA Vision was the AOR for the Government of Canada. At one point their contract expired, and this is when the decision was made to go back with the new public tendering, which is in process right now. A new agency, not excluding that one, will be selected in a new process, I imagine.

There was also an internal audit...or not an internal, but an audit done by Public Works concerning Media IDA/Vision. There is an audit and a report on that. It could be interesting for you to read.

The Chair: Thank you, Ms. Wasylycia-Leis.

Mr. Lastewka, six minutes, please.

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

Mr. McKenzie, I want to just go through a sequence of events. You mentioned that prior to September 2001--I'm on page 4--the sponsorship program was run by the separate CCSB at Public Works. Then you talked about strengthening the accountability and management framework. I take it that was as a result of some internal audits that had been brought forward to be corrected.

Was this part of the 37-point program at this time? Were you responsible for implementing the 37-point program?

Mr. Guy McKenzie: Mr. Chair, to be precise on that, I was not responsible for implementing it. Public Works already had started a pretty good job of putting together an action plan and remediating on the lack of documents, irregularities in the files, and so forth. When I arrived on the scene on September 1, of course we kept at it, and kept going on their good initiative.

Hon. Walt Lastewka: So prior to 2001, the 37-point program had been put into play, and you were there to finish off the implementation.

You talked here about the new ADM team, and about how you had been very clear on the definition of objectives, priorities, and so forth. Who was your deputy minister at that time?

Mr. Guy McKenzie: Which time, to be precise?

Hon. Walt Lastewka: In 2002.

Mr. Guy McKenzie: I was.

Hon. Walt Lastewka: You were the deputy minister.

Mr. Guy McKenzie: Yes...of Public Works or Communication Canada?

Hon. Walt Lastewka: Of Public Works.

Mr. Guy McKenzie: Okay. If I remember correctly, it was Madam Cochrane.

Hon. Walt Lastewka: And you were the ADM.

Mr. Guy McKenzie: No, I was the deputy head of Communication Canada.

Hon. Walt Lastewka: Okay.

Mr. Guy McKenzie: It was a separate entity, but we were in the same portfolio. Madam Cochrane was the Public Works deputy minister and I was the Communication Canada deputy head. My title was executive director.

Hon. Walt Lastewka: What kind of direction did you get from the minister at that time? As well, was the PMO involved with any of your new programs and new events?

Mr. Guy McKenzie: Up until September, we were dealing with Mr. Gagliano. After that it was Mr. Boudria. We started the work. My relationship with the minister was direct, since I was the deputy head. We started really understanding the need for improvement in the program around, I would say, January 2002.

» (1710)

Hon. Walt Lastewka: What kind of communication did you have with the PMO, specifically Mr. Pelletier?

Mr. Guy McKenzie: Mr. Pelletier was not at PMO, if I remember well, at that time.

Was he? I don't think so.

Hon. Walt Lastewka: Yes, he'd just left.

Did you have any communication with the PMO?

Mr. Guy McKenzie: It happened sporadically, when we had an event. I remember a few times when the Prime Minister had an interest in meeting some people--because we had some outreach program, which had nothing to do with communication--of that nature, but nothing more.

Hon. Walt Lastewka: So it was mainly for getting elected persons to an event, a matter of schedules.

Mr. Guy McKenzie: Yes, it was more related to schedules.

Hon. Walt Lastewka: Not to picking of events, or...?

Mr. Guy McKenzie: No, no, it was more related to scheduling and not necessarily to sponsorships.

Hon. Walt Lastewka: All right.

I read the AG's remarks concerning the fact that some of the 37-point program had been put into effect, I take it, and the fact that you had taken a different viewpoint on the selection of projects and the accountability of projects. The AG made a comment concerning the 25 projects that were implemented from September 21 to March of 2003. She found that these files were managed better.

Were there still some problems in the files that the AG wanted corrected? And what were they?

Mr. Guy McKenzie: There will always be, Mr. Chair. If you look at the AG standard, that is exactly why we have an audit function. Whether it be an internal audit, an audit by the Auditor General herself, or a review, it's there to find out what exactly we're not complying with. The issue is always a matter of whether it's small or big. Obviously, any auditor who comes into an organization will always have a few recommendations to make.

Hon. Walt Lastewka: Were there any comments made by the Auditor General--I don't have her comments on that specific area--on the new procedure that you had put into place?

Mr. Guy McKenzie: I must admit, Mr. Chair, that following the interim program--preparing for what I can refer to as the “permanent” program--shut down March 31 of this year, we were inspired a lot by the AG's comments and her analysis in order to make it as robust and airtight as possible. The HRMAF and HRBAF not only worked with Treasury Board; they were elaborated on with the support of Treasury Board Secretariat. So we were working hand-in-hand with Treasury Board to have as robust a program as possible, yes.

Hon. Walt Lastewka: Thank you, Mr. Chair.

The Chair: Thank you, Mr. Lastewka.

I have just a couple of questions and then I will wrap this up.

Mr. McKenzie, when you took over at CCSB, according to the charts supplied by Public Works way back at the beginning, you followed on behind Mr. Pierre Tremblay. With your reputation and your capacity for being able to bring things back into line, no doubt you checked to find out what was going on. You mentioned to Mr. MacKay that the files were thin, but you no doubt checked with all the people and asked, what is the current process; who has been doing what; what authorities are coming from where?

What involvement did you find in the minister's office, from Mr. Gagliano's office, in the approval of individual sponsorship files when you took over in September 2001?

Mr. Guy McKenzie: In September 2001 it was an active period to do a lot of things, not necessarily sponsorship, because fall is always a low season for sponsorship. The big season is the summer. So most of the money was already effected, and the events were ongoing.

The Chair: Yes, but you would have checked that. When you got to the office, the first thing you would have said is, okay, how does this place work?

Mr. Guy McKenzie: Yes.

The Chair: They would have told you that during the last six months, or the summer, or whatever, this is how the system works--this minister's office does this, somebody else does that, and so on.

What was the normal involvement of the minister's office in individual sponsorship files as the regular way of doing business prior to your arriving at the office? You would have checked that out to make the changes to say we're not going to do it that way, we're going to do it this way. What was “that way”?

» (1715)

Mr. Guy McKenzie: The “that way” that I personally discussed with the minister at the time was to change the organization. It was to put in place an organization--

The Chair: I know what you did. I want to know what you found.

Mr. Guy McKenzie: What I found was a thin, flat organization.

The Chair: I know. Ms. Cochrane told us that years ago. She told us that she couldn't explain why. Actually, that was going to be my next question.

I want to know what you found in terms of the minister's office's involvement in the approval of files. What was his normal involvement in the files?

Mr. Guy McKenzie: I don't think there was any particular involvement that would raise my attention at the time, Mr. Chair. I don't think so. My concern was much more at the administrative level. That's where I myself was uncomfortable.

The Chair: But the administration was taking files from approval all the way through to the post-mortem and the closure. When you got there, no doubt you would have asked, what is the normal process? And then you would have said what you were going to be doing from there on in. I want to know what you found as far as the minister's office's involvement in the processing of files.

Mr. Thibault.

Hon. Robert Thibault: On a point of order, Mr. Chair, in my view--this might help you with your question--I think he's testified already that the 37-point program was already well in application. Mr. Tremblay had replaced Mr. Guité, so the big errors we saw in Mr. Guité's time would have been long passed.

The Chair: But Mr. Tremblay came from Mr. Gagliano's office prior to going there, and I just want to know what was still there.

Hon. Walt Lastewka: Mr. Chairman, I asked that question along the line of how much the 37-point program was--

The Chair: I didn't ask about the 37-point program. I asked about the minister's office's involvement in the approval of plans.

Hon. Walt Lastewka: Yes, and I did that.

Mr. Guy McKenzie: From what I recall, Mr. Chair, they were not that involved. I think at the beginning there was a fluctuation period whereby Mr. Tremblay was still there. I arrived, and after that we had an ADM come on board and so forth. The preoccupation was to put in place the plan from the internal audit. I would not say that the involvement of the minister or his people was any different from that of any other minister. They kept themselves informed, from what I remember, but no more.

The Chair: In the report you gave us earlier on, you said:

The government also moved away from commission-based remuneration towards a remuneration system based on hourly rates and fees. This is consistent with private industry practices.

I presume, when you say private industry practices, you're talking about the advertising agencies. But we have been led to believe through all the weeks we have been here that a 15% commission was the norm. Are you telling us that private industry practice was not a 15% commission, but an hourly based rate and fee?

Mr. Guy McKenzie: Since I have a legal background and not a communications background, I did not know the answer to that. So we went around the country and consulted on everything that could have any kind of involvement in advertising or sponsorship. We talked to the private industry in advertising, but also to insurance companies, brewers, car companies, and so forth, in order to know what their practices were.

The Chair: Their practices with advertising agencies?

Mr. Guy McKenzie: Advertising or any other thing. We learned from there, and we were told, as also by the ICA, which is based in Toronto--I don't remember what the acronym stands for, but these are people dealing with the advertising community--that an hourly base provided a better formula than a commission.

The Chair: Not only a better formula, but one consistent with private practice. So the government was taken for a ride all these years, thinking that a 15% commission was the norm, when if they'd gone and checked with the private sector on how they dealt with advertising agencies, they would have found that an hourly based fee was the way industry actually worked. Is that right?

Mr. Guy McKenzie: The policy decision we took in 2000--

The Chair: I didn't ask about a policy decision, I said the private sector was working on a hourly fee basis, while the government was maintaining, as we've heard in the last two months, that a 15% fee was the way the agencies worked.

Mr. Guy McKenzie: I cannot comment extensively, but the really strong advice we received was that we should move to an hourly based rate.

The Chair: And you have?

Mr. Guy McKenzie: And we did.

The Chair: Okay.

We're going to wrap it up there, because we want to bring in the law clerk. We're going to suspend for a couple of minutes until we move in camera. We'll cover off a few things and wrap up in about ten minutes.

Do we need to go in camera, Mr. Walsh?

He says we don't have to go in camera, so we'll just thank our witness for coming along this afternoon, and we will just continue. There are a couple of things Mr. Walsh would like to address.

We now have in the witness chair Mr. Walsh, the Law Clerk of the House of Commons. Mr. Walsh, are you ready?

» (1720)

Mr. Rob Walsh (Law Clerk and Parliamentary Counsel, House of Commons): Yes, I am.

The Chair: And he's joined by Mr. Greg Tardi, whose title is...?

Mr. Gregory Tardi (Senior Legal Counsel, Legal Services, House of Commons): Mr. Chairman, I'm senior legal counsel.

The Chair: Thank you.

Mr. Walsh.

Mr. Rob Walsh: Mr. Chair, there were two items distributed to committee members earlier today from me. One was entitled “Summary of proposed testimony of Alain Richard”. The other relates to the Kroll report. Which of these two do you wish to deal with first?

The Chair: We'll take the first one, on Mr. Richard.

Mr. Rob Walsh: All right.

The document setting out what Mr. Richard--

The Chair: Mr. Walsh, one moment, please.

Mr. Thibault.

Hon. Robert Thibault: I was just wondering if we know where we're going. This is testimony that has not been presented. It is potential testimony, and we're in open session.

The Chair: Mr. Walsh said that was quite okay.

Mr. Rob Walsh: I was about to explain, Mr. Thibault, that this is not a sworn statement. This is not a testimony or evidence in its own right. This is simply a summary done by counsel in my office after meeting with Mr. Richard for the better part of the day to discern from Mr. Richard what it would be that he would speak to, and with particular attention to what would be relevant and what would not be relevant.

Basically, there are two parts to it. The first part is by way of background, where Mr. Richard would speak from his knowledge, direct or indirect, about the relationship between campaigns and advertising contracts, and about how, as you can see from the document, advertising agencies have subsidiaries through which they manage to generate considerable markups, and according to Mr. Richard, markups on markups.

The second part of the document or the testimony would relate to particular incidents: one relating to political contributions by employees; another to the minister's office--Minister Gagliano, in particular; the third relating to a vehicle, the red Mustang, and Mr. Guité; and the fourth regarding the Visibilité Canada program.

As Mr. Thibault has pointed out, this document is a summary by a third party, counsel in my office. Obviously, if the committee would prefer to have this in the form of a sworn statement, that could be done. The sworn statement might be all of this or just some of this, depending on what the committee thought was relevant, or none of it.

Hon. Robert Thibault: Mr. Chair, I'll bring it back to my original point of concern. When we discussed this, we said we had a system for witnesses who figured they had something to contribute and wanted to do that. So we protect them by having a system before they come forward. But we never said--and this is my concern--that we would have testimony by anybody without having a chance to question the witness. If we accept this in any form as testimony or as evidence--

Mr. Rob Walsh: No, Mr. Chairman, this is not evidence, and this is not proposed as evidence. This is merely a memo from staff, as it were, regarding what this person, if called, would testify. This document is not evidence.

The Chair: Ms. Phinney.

Ms. Beth Phinney (Hamilton Mountain, Lib.): I'll ask Mr. Walsh, through you, Mr. Chairman, whether the person who has made these statements is aware that you are doing this and bringing this to this meeting, and why we're going like this.

As Mr. Thibault just suggested, we should follow the same rules for everybody.

The Chair: Let me give you a little bit of background. This is from Mr. Alain Richard. You may recall that there were some articles in the media several weeks ago. The subcommittee on witnesses did actually meet with Mr. Richard. At that point in time it was agreed that he would then meet with Mr. Walsh, and Mr. Walsh would then bring the information forward, and here it is today.

As Mr. Walsh was just saying, because Mr. Richard has agreed to this, Mr. Walsh--and I asked him, as you saw, was it appropriate that this be held in camera--said no, it was not required to be in camera. So Mr. Walsh has made that point quite clear.

Much of what I've heard so far is nothing new that's not on the public record from other areas.

You're either going to say that the people--the law clerks, the clerks, and KPMG--are going to make the decisions, or you're going to bring motions in here and say we'll hear from this person and that person, and so on and so forth, but you can't have it both ways.

We've been trying to have it both ways, and we're trying to keep the committee fully informed, or you can let the clerks and the researchers do the work for you. The choice is the committee's, but I have decided as your chair to keep you informed.

[Translation]

Mr. Desrochers, please.

» (1725)

Mr. Odina Desrochers: I received the document and I read it. Have all committee members read it? If we wish to protect Mr. Richard's statements, we might ask members what they think about it. As for me, there is no added value, there is not very much that is new.

Mr. Chairman, you take initiatives. We too can take initiatives. You took the initiative of asking Mr. Walsh to make a report. That does not bother me, because Mr. Richard repeatedly peddled to the media what we have here in this document. What worries me, is that there could be another witness who was questioned by Mr. Walsh and in whose case you would take the same initiative, that of asking that be divulged something that the witness has not been informed of. You must understand my desire to express certain reservations with regard to your decision.

[English]

The Chair: Well, I'm trying to keep the committee informed. If you'd let Mr. Walsh make his presentation, you could perhaps understand that he is going to be asking whether you want Mr. Richard here, or whether you want an affidavit from Mr. Richard.

This is not evidence presented to this committee. This is only information from the law clerk saying he has talked to a witness who has agreed to make this information public, and it's here. But it is not evidence before the committee. It's not his affidavit. He hasn't been questioned in public.

Mr. Thibault.

Hon. Robert Thibault: I understand that, and I think you're heading in the right direction. My one concern is the fact that we're in an open session.

The Chair: We agree with that. That's why I confirmed with Mr. Walsh if he was okay with presenting this in public. He said yes.

Hon. Robert Thibault: My concern is that we might at one point have to get into a discussion on exactly why we are at this step.

The Chair: The step we are at here, Mr. Thibault—

Hon. Robert Thibault: But I don't think we should say why we are here in an open session.

The Chair: In my opinion, do we want Mr. Walsh to ask Mr. Richard to put this evidence in an affidavit, which would then be evidence before us, or should we say we don't want anything more and just pass it on to somebody else?

We just want a kind of yes or no, that's all. Is that right, Mr. Walsh?

Mr. Rob Walsh: That's correct.

The Chair: We don't have to get into a debate about this. This is what Mr. Richard has to say, by and large. There is nothing much here that we don't already know, and Mr. Walsh is putting that forward.

Let's hear what Mr. Walsh has to say. Then we'll have the question, and then we can move on.

Mr. Walsh.

Mr. Rob Walsh: I don't have much more to add to what I've already said. The document is for the committee to consider relative to whether this person should be called as a witness, or whether his testimony should be taken in another form or not taken at all.

The Chair: My preference, if you want my recommendation, is we not call him as a witness. It is entirely up to the committee. If you ask the law clerk to put an affidavit and we request an affidavit, it would come here and be evidence before the committee. That's all.

Are there any comments? Do you want to defer to the chair?

Mr. Thibault.

Hon. Robert Thibault: I am of the same mind, that if something is going to be testimony to the committee and evidence in our decision, then they have to appear. They have to be asked questions by all sides so we have a full understanding. So in this case, based on what we've heard so far, and seeing in this document that there is no change, we should not call Mr. Richard.

» (1730)

The Chair: The motion is that we do not call Mr. Richard. Is there any debate on that?

Mr. Kenney.

Mr. Jason Kenney: I would just ask you to reconsider whether a motion can be an order not to call somebody. I would be prepared to move that he be called.

The Chair: Yes, it may be better to put it in the positive.

Mr. Jason Kenney: I don't understand what the concern is. I gather there have been some questions raised about this witness, but it seems to me that the summary we have here raises some very interesting issues. My principal preoccupation has been the conduct of the advertising agencies and where the money went. This seems to be evidence that directly addresses that critical issue. We've had no other witnesses that were really very helpful in that regard. So unless I'm missing something very obvious, I can't understand why we wouldn't call this witness and have a chance to cross-examine him. If it's problematic, then we can use our good judgment, as we always have--as will the media and the public--to sort out useful testimony from useless testimony. I think we can use our judgment.

The Chair: Mr. Murphy.

Hon. Shawn Murphy: I more or less agree with Mr. Kenney. I guess I think the best way to do it would be to call him and let him appear.

I'm not on the steering committee, but I understand there's some reluctance on your part to allow him to come before the committee.

The Chair: You may recall that there were some discussions in the media about Mr. Richard. I won't highlight them, but he asked that he be able to bring his dog here to appear with him at the same time.

Mr. Walsh.

Mr. Rob Walsh: Mr. Richard, if I recall correctly, to me personally challenged that representation as not being one that he had made.

The Chair: Okay, well that was in the media. There were some concerns about whether this would become an advertisement for Mr. Richard. That was a concern we had about bringing him here. I'm not saying it would be that way, but we had some serious concerns about bringing him as a witness to the public meeting. That's why we can do it with an affidavit, if that's the committee's wish, or we can just leave it alone.

Mr. Jason Kenney: I have a motion on the floor.

The Chair: Yes, Mr. Kenney has a motion on the floor. There are some concerns about bringing Mr. Richard as a witness.

Mr. Murphy.

Hon. Shawn Murphy: I might have the same concerns, but I think it's up to the clerks to control the matter and caution the witness that this is not a circus, that he's to stick to the issues, give his testimony, not bring his dogs, and perform in a....

The Chair: Okay.

Madam Jennings.

Mrs. Marlene Jennings: Yes, from reading this synopsis or summary of proposed testimony, I think there's information that Mr. Richard has that would definitely appear to be pertinent to this committee's review of the Auditor General's report.

For instance, on the issue of advertising being vertically integrated, allowing for internal markups, we've already had testimony on that. This would be testimony from someone from within a firm who would be able to corroborate. And the issue of the red Mustang is a little piece, but it's obviously pertinent.

My sole concern is having had Mr. Richard call me on my cell phone while he was in Paris--some journalist had given him my cell phone number--and making all kinds of wild claims. He also, by the way, denied the issue of the dogs, etc. I'm concerned that he may be uncontrollable. So I'm sort of hesitating. It's between an affidavit or in camera.

It's clear, whether it's an affidavit or whether it's in camera, it's going to get leaked. The opposition has leaked every single thing we've done in camera and they've put their own spin on it, like--

» (1735)

The Chair: Madam Jennings.

Mrs. Marlene Jennings: --like KPMG's appearance before us.

The Chair: Madam Jennings, you took issue with Mrs. Ablonczy this afternoon on that issue. Now you've done exactly that, what you took issue with Mrs. Ablonczy on. So I would ask you to refrain from these kinds of comments.

Mrs. Marlene Jennings: However, as I said, I am in conflict over which one is better. I think Mr. Richard does in fact have pertinent information. The question is, in terms of this committee's work, in terms of the credibility of this committee, which is the best way to get it? Is it in camera or is it by affidavit?

The Chair: Okay, there are four simple issues. First of all, because we don't have notice of motion, I'm going to ask to waive the notice. If that's agreed, then I'm going to take a straw vote--full testimony, affidavit, nothing. Then we'll try to come to a conclusion.

Sorry, I meant full evidence, in camera, affidavit, or nothing--those are the four ways.

Mr. Dennis Mills: I like your first idea.

The Chair: This is not a vote.

The first one is, are we unanimously agreed to deal with this issue right now?

Some hon. members: Agreed.

The Chair: Okay, now I'm going to take a straw vote. This is not a formal vote. We'll just see what the committee's feelings are. The first one is full testimony; the second one is in-camera testimony; the third one is an affidavit; the fourth one is we don't hear from him at all.

Who is in favour of the first one, full testimony? That's eight.

Who is in favour of in camera--simple testimony in camera? Vote only once.

Who is in favour of an affidavit? One.

Who is in favour of not hearing from him at all? One.

We have some consensus. So let me put the motion, which was, I believe, Mr. Kenney's motion, that we invite Mr. Richard to appear before the committee.

(Motion agreed to)

The Chair: Did you have a point of order, Mr. Walsh? I want to wrap this up.

Mr. Rob Walsh: Just as a small point of information, although he's a resident of the Montreal area, Mr. Richard might be available on relatively short notice, if we were looking for a witness to occupy a space on this week's agenda.

The Chair: I think we're okay at this point in time.

There was another quick issue that you wanted to deal with.

Mr. Rob Walsh: The other issue relates to the two-volume Kroll report, the report of February 4, 2003, and the report of June 26, 2003, relating to, in the first case, 45 contracts and in the second case 91 contracts. I distributed these documents this morning in both languages, which set out a summary. Greg Tardi, who is here with me today, went through a rather close examination of the two documents and I went through them later, not so closely. The two of us have come to appreciate the content of the two reports as set out in these documents.

Perhaps you might have some questions of Mr. Tardi in a moment, but let me just add that, with regard to the other question, which was the main reason why we looked at these reports--and that was whether in fact the Department of Public Works and Government Services was justified in withholding disclosure of this report to the committee based on its obligations under the Privacy Act--we don't share that view.

In our view, as I believe has happened with other documents where the department has provided a document to the committee and said it was doing so under the provisions of the privacy code, which provides an exception to the privacy requirements--that is to say, public interest--I would have thought that this would fall within the same exceptions. I can only suggest to the committee that maybe Mr. Marshall, or someone on his behalf, ought to communicate with the committee or perhaps appear before it to explain why he feels this report cannot be made available to the committee in the public interest, given that the nature of the committee's inquiries and the content of this report are on all fours with each other.

The Chair: Before I go to questions, can you just tell us basically what the report contains?

Mr. Rob Walsh: The first of the reports, from February 4, 2003, deals with 45 sponsorship events, and finds that 44 of the 45 events were in non-compliance with section 34 of the--

The Chair: But there were no particular names and so on we would want--

Mr. Rob Walsh: All right, on the privacy issue, Mr. Chairman, the names mentioned are those of federal public servants. In the case of each contract the report sets out the number of the contract, the subject matter, and the responsible officer or employee--and a name is put there. In many, if not the vast majority of them, the name is Guité. In others, it's Mario Parent. These are names known to the committee in other testimony, if not from actually having testified before the committee. A couple of names from contracts that relate to the gun control program are not immediately recognizable.

I would make the submission that they are federal public servants and they are there in respect of their public functions. These are not privacy matters of a kind that ought to be withheld from public disclosure. I would suggest it is proper to disclose them to this committee.

» (1740)

The Chair: Okay, the law clerk is recommending, now that we have the reports.... Do we have the reports, Mr. Walsh?

Mr. Rob Walsh: I had them.

The Chair: Does the committee have them?

Mr. Rob Walsh: No. I had them on the basis of looking at them.

The Chair: Okay. We will ask the Department of Public Works and Government Services to supply these reports and we'll make them public.

Are there any questions on that?

Hon. Robert Thibault: I have just one question for the clerk.

When they read the summary of findings, there is nothing new. It supports what the Auditor General has said, which I think is agreed to be factual by the committee.

If there is a risk of it having a negative influence on other proceedings, and it's not going to add more to this one, then I would be of a different mind. I'd accept this summary document as factual because what we see here doesn't prejudice any other proceedings, but it does contribute to and back up what the Auditor General and other people have said. Perhaps this is as much as we need.

Mr. Rob Walsh: Mr. Chairman, if the report itself has evidence that might be relevant to other proceedings, whether the judicial inquiry or the RCMP investigation, then presumably the judicial inquiry or the RCMP investigation can obtain copies of the report from the department. So in my view, it's neither here nor there whether the report comes to this committee relative to those other proceedings.

With regard to the nature of the report, yes, it's basically a more detailed analysis of 136 contracts. The document we've given you today is not to be taken as a substitute for the report. It is what you might call a quick summary or characterization of the contents. It's up to the committee as to whether it feels it needs to go beyond these documents to see the actual report itself, but basically it has more details on specific contracts and how they were handled. If you want more details, perhaps Greg can give them to you.

The Chair: It seems to me to be just a listing of the contracts by name with the employee in the Government of Canada who was responsible for the file, the amount of the contract, I presume, and maybe the date of inception and the date of completion--these types of things.

Mr. Rob Walsh: And where the non-compliance was.

The Chair: And where the non-compliance was.

So I think we should make that a public document.

Are we agreed on that?

Some hon. members: Agreed.

The Chair: Okay, we will ask the Department of Public Works to bring that forward, and if Mr. Marshall has any concerns, he'll be here to speak for himself.

There is no further business before this meeting.

Madam Jennings, do you have something?

Mrs. Marlene Jennings: I have a question to Mrs. Ablonczy, through you.

Mrs. Ablonczy, both in the House of Commons during question period and as quoted in the paper, is saying that the Liberal majority blocked having witnesses who could testify to money laundering. I'm not aware of us having blocked any witness who was able to bring information about money laundering. That's one point.

Secondly, if she has that information, if she has witnesses that she thinks will be able to substantiate money laundering, then I would suggest that she bring the names forward and that evidence.

I'm quite concerned. It says right here:

Every time it gets close to hearing from a candid witness, the Liberals use their control of the committee to switch the witness list. Why are the Liberals using their controlling vote to block certain evidence?

An hon. member: Isn't this a point of motion?

The Chair: It's a point of order.

Mrs. Marlene Jennings: It's a point of order.

May I finish?

The Chair: Order, please. Order.

Mrs. Marlene Jennings: May I finish? It's a point of privilege.

The Chair: Well, you didn't start off that way, Madam Jennings.

Mrs. Marlene Jennings: Well, I apologize. I misspoke. It's a point of privilege.

The Chair: You didn't misspeak; you just didn't say that. So you're saying it's a point of privilege now. Okay.

Mrs. Marlene Jennings: May I finish?

» (1745)

The Chair: Please.

Mrs. Marlene Jennings: Thank you.

It's a point of privilege. We had an in camera meeting in which the calling of a person as a witness was discussed. It was decided that we would call another witness and would decide at the end of the first witness whether or not we would call the witness. To my knowledge, the person in question had no information about money laundering.

So I would like Mrs. Ablonczy to tell us who she is talking about when she begins by saying that it was a “dirty little secret of the sponsorship program”, that it was used for money laundering, and that the Liberals use their controlling vote to block certain evidence, to not hear from a candid witness. I would like to know who that person is.

The Chair: Okay.

Mrs. Marlene Jennings: It obviously wasn't the person we decided we would wait until tomorrow--

The Chair: If you would just let me ask Mrs. Ablonczy, Mrs. Jennings....

Mrs. Ablonczy, do you have any response?

Mrs. Diane Ablonczy: Yes, I'd be quite happy to respond to that.

I find it very odd that this member, who has just finished arguing against bringing a person who is talking about misuse of funds by advertising agencies forward to this committee, voted against it--

Mrs. Marlene Jennings: I voted in favour.

The Chair: Madam Jennings, let her speak.

Mrs. Marlene Jennings: I'll be able to--

The Chair: Of course, you will.

Madam Ablonczy, you have the floor.

Mrs. Marlene Jennings: I apologize for interrupting Mrs. Ablonczy, through the chair.

The Chair: You have the floor, Madam Ablonczy.

Mrs. Diane Ablonczy: I heard Madam Jennings arguing against this person coming forward. She referred to the in camera meeting today where a witness who would be giving some candid evidence was prevented from coming forward by the Liberal majority. All of the opposition voted to have this individual come forward, and this member, who just spoke and raised a point of privilege, has brought at least three motions forward completely changing the witness list that has been put together by our parliamentary staff, including our forensic auditor.

Hon. Robert Thibault: No.

The Chair: We'll hear you after she is finished.

Hon. Robert Thibault: It's something she is saying.

The Chair: After she is finished we will listen to you.

Madam Ablonczy, you have the floor.

Mrs. Diane Ablonczy: So I believe the Canadian public is entitled to know that we have real concerns, when we see manipulation of the witnesses by the Liberal majority on the committee against the wishes of the opposition members. That is why I raised the question in the House.

As you know, Mr. Chairman, the minister, who first responded to the question, challenged the facts that I brought forward, although they were in a report of his own department, the use of the word “money laundering”. I think it's a very serious issue, and when I see the flow of witnesses being interfered with by the Liberal majority, I get very concerned, and I have no problem bringing that forward.

The Chair: Mr. Thibault.

Hon. Robert Thibault: I need direction from the chair. Madam Ablonczy, in her point of privilege--

The Chair: She was responding to Madam Jennings.

Hon. Robert Thibault: --mentioned the voting of members of the committee in an in camera session. Is information from in camera sessions public, the votes of individuals, the discussions of individuals? Is that public or is it in camera?

The Chair: I got from Madam Ablonczy's remarks that she was talking about the motions we have dealt with in this committee over the last two or three weeks. I refer back to the minutes of proceedings on Tuesday, April 6, 2004, when it was agreed that “pursuant to committee agreement on scheduling witnesses in the following order, by category of importance, in relation to the study, we call and schedule the following persons to appear before the committee in the following order. If desired witnesses cannot be scheduled in order of importance, that a further category of expert witnesses be used to draw on to replace those witnesses.” There are about two pages of names attached to that. The committee agreed back on April 6 that we would follow that line.

I think Madam Ablonczy's point had nothing to do with any in camera votes, but concerned the fact that we could not stick to this list because Madam Jennings is always introducing another list that supercedes the one we agreed to. Am I correct, Madam Ablonczy?

» (1750)

Mrs. Diane Ablonczy: Mr. Chairman, my colleague raises a good point about references to in camera proceedings. I did refer to that in response to Madam Jennings, who herself had mentioned today's in camera proceedings. Because that was part of her point of privilege, I then, in my response, also referred to today's in camera proceedings. If that was improper, I sincerely apologize to the committee, but it was in response to Madam Jennings raising it in her question to me.

The Chair: Was it in response to this motion we adopted back on April 6 that kept being superceded by other motions?

Mrs. Diane Ablonczy: That was part of my response, but I also referred to today's vote.

The Chair: Mr. Thibault, are you satisfied?

Hon. Robert Thibault: I'm satisfied. I accept Mrs. Ablonczy's word. I think we should all be careful about making in camera information public.

Mrs. Diane Ablonczy: That's a very good point.

The Chair: I did not think Mrs. Ablonczy was referring to in camera proceedings at all when she made these public comments Madam Jennings raised.

Ms. Phinney, Mr. Lastewka, and we'll cut it off there.

Ms. Beth Phinney: I don't know what our honourable member considers democracy, but I would think that if the majority votes one way and the minority votes another way, that is not manipulation. I think that's one of the problems, the use of words. That's not manipulation, that's democracy. It's a free vote.

The Chair: Mr. Lastewka.

Hon. Walt Lastewka: Mr. Chairman, I'm going to give you my summation one more time. I go back to the Toronto Star write-up, which in detail on March 26 brought very clearly to my attention that there were problems with Mr. Quail, Mr. Guité, the minister's office, and the PMO no different from what the Auditor General--

The Chair: Is this a point of privilege?

Hon. Walt Lastewka: Yes, it is, and I'll get to it. The problem we've had with this committee is that a number of us have been wanting to get certain things, including Mr. Guité's release of information, which the opposition did not want. Mr. Chairman, if you remember correctly, you didn't want it.

The Chair: On the advice of the House of Commons clerk.

Hon. Walt Lastewka: Right. But the committee prevailed.

The Chair: Yes.

Hon. Walt Lastewka: We had Mr. Guité here for two days. I heard the opposition say many times he would never be here. I've never heard an apology, especially from Mr. Toews, who--

The Chair: What does this have to do with the privilege, Mr. Lastewka?

Hon. Walt Lastewka: There are accusations from the opposition--

The Chair: No, we're dealing with Madam Jennings' point of privilege. We're not dealing with her response; we're dealing with her point of privilege. Because a point of privilege was laid against Mrs. Ablonczy, she was entitled to respond. You can't get a debate on Mrs. Ablonczy's response. You can deal with the point of privilege raised by Madam Jennings, and that's it.

Hon. Walt Lastewka: I'll leave it for Mrs. Jennings, but I disagree with you, Mr. Chair.

The Chair: That's the way we deal with privilege.

Hon. Walt Lastewka: I think you're incorrect.

The Chair: Closing comment, Madam Jennings.

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

I believe my parliamentary privileges were violated by Mrs. Ablonczy's statement in the House of Commons immediately after we had an in camera meeting and rendered a decision. I do not accept her explanation that she was referring to motions prior to today, as you so nicely coached her to say on the record.

The Chair: If you're going to throw political statements around and start involving the chair--

Mrs. Marlene Jennings: May I finish? You can then respond. I apologize for interrupting Mrs. Ablonczy. I have listened carefully.

The Chair: You are giving a summation of your own point of privilege.

Mrs. Marlene Jennings: Yes, I am

The Chair: Okay, keep your remarks to that point you raised and nothing else.

Mrs. Marlene Jennings: My point of privilege was that my parliamentary rights and privileges were violated by Mrs. Ablonczy's questions and statements in the House of Commons. I've already explained what her statements were. I do not accept her explanation, which I believe you fed to her. That is my summary statement.

» (1755)

The Chair: I'm not going to hear any more.

You read parts of this into the record, Madam Jennings. I'll just quote what you've given to me. This is Mrs. Ablonczy speaking, I take it at question period today:

Mr. Speaker, there are witnesses prepared to expose the dirty little secret of the sponsorship program and how it was used for what the Treasury Board called money laundering.

The Ottawa Sun quoted an ad executive: “We do it all the time. You know, dry cleaning--we pick up the expense and charge it to you (the government).”

Every time it gets close to hearing from a candid witness, the Liberals use their control of the committee to switch the witness list.

Why are the Liberals using their controlling vote to block certain evidence?

There was a response by Mr. Alcock, followed by Mrs. Ablonczy again:

Mr. Speaker, it was the Treasury Board, in its January report, that specifically discussed money laundering, using those very words. Does the minister read his own department's reports?

What happened was that senior political figures would buy luxuries on an agency credit card and this would get charged back to the government as advertising. The Auditor General, in her report, also referred to the hiding of the true source of funds.

Why are the Liberals so eager to avoid any discussion of a connection between the ad scam and money laundering?

Madam Jennings, I see nothing there that refers to our discussion in camera this morning. As we know, the Treasury Board, in their documents submitted to us a month ago and the report to cabinet, did refer to it as a money-laundering situation. That is old news; it's on the public record.

It seems to me that we're having a debate about the facts. There's nothing here that, in my opinion, specifically refers to discussion this morning, because we didn't discuss this issue this morning. You have said your privileges were violated, but you haven't exactly stated how your privileges were violated.

As I said, this has nothing to do with the meeting that was held this morning. It appears to be a debate over facts, not about the rules or the procedure. There are different interpretations of the event, but what rule has been broken? How were your privileges violated? Since that is not clear, it doesn't seem to me that you have a matter of privilege, Madam Jennings.

That being it, the meeting is adjourned.