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37th PARLIAMENT, 3rd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Tuesday, May 11, 2004

0910

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

Mr. Richard Neville (As Individual)

The Chair

Mr. Richard Neville

The Chair

Mr. Richard Neville

The Chair

Mr. Richard Neville

The Chair

Mr. Richard Neville

The Chair

Mr. Richard Neville

0915

0920

0925

The Chair

Mr. Richard Neville

The Chair

Mr. Richard Neville

The Chair

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

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

0930

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

The Chair

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

Mr. Richard Neville

Mr. Peter MacKay

The Chair

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

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

0935

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

0940

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

The Chair

Mr. Peter MacKay

The Chair

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

The Chair

Hon. Walt Lastewka

The Chair

Hon. Walt Lastewka

The Chair

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

Mr. Richard Neville

0945

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

0950

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

Mr. Richard Neville

Mrs. Marlene Jennings

The Chair

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

Mr. Richard Neville

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

0955

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

Ms. Judy Wasylycia-Leis

Mr. Richard Neville

The Chair

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

1000

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

The Chair

Hon. Walt Lastewka

The Chair

1005

Hon. Walt Lastewka

The Chair

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

The Chair

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

The Chair

Mr. Richard Neville

The Chair

Mr. Richard Neville

The Chair

Mrs. Diane Ablonczy

Mr. Richard Neville

The Chair

Mrs. Diane Ablonczy

The Chair

Ms. Beth Phinney (Hamilton Mountain, Lib.)

The Chair

Ms. Beth Phinney

The Chair

Ms. Beth Phinney

The Chair

Ms. Beth Phinney

The Chair

Mr. Richard Neville

The Chair

Mr. Richard Neville

The Chair

1010

Mr. Richard Neville

The Chair

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

The Chair

Mr. Richard Neville

The Chair

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

1015

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

The Chair

Mr. Richard Neville

The Chair

Mr. Richard Neville

The Chair

Mr. Alan Tonks (York South—Weston, Lib.)

Mr. Richard Neville

Mr. Alan Tonks

Mr. Richard Neville

Mr. Alan Tonks

Mr. Richard Neville

Mr. Alan Tonks

Mr. Richard Neville

Mr. Alan Tonks

1020

Mr. Richard Neville

Mr. Alan Tonks

Mr. Richard Neville

Mr. Alan Tonks

Mr. Richard Neville

Mr. Alan Tonks

Mr. Richard Neville

Mr. Alan Tonks

Mr. Richard Neville

Mr. Alan Tonks

Mr. Richard Neville

Mr. Alan Tonks

Mr. Richard Neville

1025

Mr. Alan Tonks

Mr. Richard Neville

The Chair

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

1030

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

The Chair

Mr. Richard Neville

The Chair

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

Mr. Richard Neville

Mr. Odina Desrochers

The Chair

Hon. Walt Lastewka

1035

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

Hon. Walt Lastewka

1040

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

Hon. Walt Lastewka

Mr. Richard Neville

The Chair

Mr. Leon Benoit (Lakeland, CPC)

Mr. Richard Neville

Mr. Leon Benoit

Mr. Richard Neville

Mr. Leon Benoit

Mr. Richard Neville

Mr. Leon Benoit

Mr. Richard Neville

Mr. Leon Benoit

Mr. Richard Neville

Mr. Leon Benoit

Mr. Richard Neville

Mr. Leon Benoit

Mr. Richard Neville

1045

Mr. Leon Benoit

Mr. Richard Neville

Mr. Leon Benoit

The Chair

Mr. Richard Neville

Hon. Shawn Murphy (Hillsborough, Lib.)

Mr. Richard Neville

Mr. Leon Benoit

Mr. Richard Neville

Mr. Leon Benoit

Mr. Richard Neville

Mr. Leon Benoit

Mr. Richard Neville

Mr. Leon Benoit

Mr. Richard Neville

Mr. Leon Benoit

Mr. Richard Neville

Mr. Leon Benoit

Mr. Richard Neville

Mr. Leon Benoit

Mr. Richard Neville

Mr. Leon Benoit

Mr. Richard Neville

The Chair

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

1050

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

The Chair

Mr. Richard Neville

The Chair

Mr. Richard Neville

The Chair

Mr. Richard Neville

The Chair

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

The Chair

1055

Mr. Richard Neville

The Chair

Hon. Joe Jordan (Leeds—Grenville, Lib.)

Mr. Richard Neville

Hon. Joe Jordan

Mr. Richard Neville

Hon. Joe Jordan

Mr. Richard Neville

Hon. Joe Jordan

Mr. Richard Neville

Hon. Joe Jordan

Mr. Richard Neville

1100

The Chair

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

Mr. Richard Neville

Mrs. Diane Ablonczy

1105

Mr. Richard Neville

The Chair

Ms. Beth Phinney

Mr. Richard Neville

Ms. Beth Phinney

Mr. Richard Neville

Ms. Beth Phinney

The Chair

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

The Chair

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

1110

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

Hon. Shawn Murphy

Mr. Richard Neville

The Chair

Mr. Jason Kenney (Calgary Southeast, CPC)

The Chair

Mr. Jason Kenney

The Chair

Mrs. Diane Ablonczy

The Chair

Mrs. Diane Ablonczy

The Chair

Mrs. Diane Ablonczy

The Chair

Hon. Joe Jordan

The Chair

Mr. Jason Kenney

The Chair

Mr. Jason Kenney

1135

The Chair

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

The Chair

1140

Hon. Shawn Murphy

The Chair

Mrs. Diane Ablonczy

The Chair

Mrs. Diane Ablonczy

Mr. Rob Walsh

The Chair

Mrs. Marlene Jennings

Mr. Rob Walsh

1145

Mrs. Marlene Jennings

Mr. Rob Walsh

Mrs. Marlene Jennings

The Chair

Mr. Jason Kenney

The Chair

Mr. Odina Desrochers

Mr. Rob Walsh

Mr. Odina Desrochers

Mr. Rob Walsh

Mr. Odina Desrochers

Mr. Rob Walsh

Mr. Odina Desrochers

Mr. Rob Walsh

1150

Mr. Odina Desrochers

Mr. Rob Walsh

Mr. Odina Desrochers

The Chair

Hon. Joe Jordan

Mr. Rob Walsh

The Chair

Hon. Shawn Murphy

The Chair

Hon. Shawn Murphy

The Chair

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

The Chair

Mr. Jason Kenney

The Chair

1155

Hon. Shawn Murphy

1200

The Chair

Mr. Jason Kenney

1205

1210

1215

1220

1225

1230

The Chair

1235

Hon. Shawn Murphy

The Chair

Hon. Shawn Murphy

The Chair

Mr. Michel Guimond (Beauport—Montmorency—Côte-de-Beaupré—Île-d'Orléans)

1240

1245

1250

1255

The Chair

Mr. Michel Guimond

The Chair

CANADA

Standing Committee on Public Accounts

NUMBER 045

3rd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, May 11, 2004

[Recorded by Electronic Apparatus]

¿ (0910)

[English]

The Chair (Mr. John Williams (St. Albert, CPC)): Good morning, everybody.

The orders of the day are, pursuant to Standing Order 108(3)(g), 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 morning from nine to eleven, as an individual, is Mr. Richard Neville. From eleven to one is to be determined.

My normal practice is that I will table documents, hear from witnesses, deal with motions. One motion is that we hear from Mr. Richard by affidavit, and he was supposed to be a witness later on today, so that would therefore likely be moot. I don't expect he'll be here at eleven o'clock, so we might actually wrap this up fairly early today.

On the tabling of documents, I have a letter here from the Clerk of the Privy Council and Secretary to the Cabinet, dated May 5, 2004, addressed to Mr. Jeremy LeBlanc, co-clerk of the committee.

Dear Mr. LeBlanc:

I am writing further to your letter of March 31, 2004, concerning the motion of the Standing Committee on Public Accounts requesting that the Government provides the names of recipients and all documentation (including authorizations) pertaining to the funds spent from the National Unity Fund from 1996 to 2004.

You will find enclosed a list of the names of recipients of funds spent from the National Unity Fund and a brief description of the projects. This information is also available on the Treasury Board Secretary's website at www.tbs-sct.gc.ca.

Further documentation on programs referred to in 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, including authorizations, relating to the motion will be forwarded once the review is completed.

I trust this is satisfactory.

Yours sincerely,

with a copy to Elizabeth Kingston.

I presume it's in two languages, am I correct? It is in two languages, and that document is tabled and made public.

That's the only thing.

Mr. Neville, would you like to take the oath, please?

Mr. Richard Neville (As Individual): Yes, Mr. Chair.

The evidence I shall give on this examination shall be the truth, the whole truth, and nothing but the truth, so help me God.

The Chair: Thank you very much.

There are some statements and questions for you before we start. I will 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.

That comes from the House of Commons Procedure and Practice, Marleau and Montpetit, page 862.

And a question to you: You are appearing before us as an individual this morning?

Mr. Richard Neville: Correct.

The Chair: Did you discuss or have any meetings with any employees of the Government of Canada or any members of this committee in preparation of your report and testimony before coming forward at this meeting?

Mr. Richard Neville: I verified my facts and was provided with documentation from employees of Public Works and Government Services Canada and the Treasury Board Secretariat, and I would like to take this opportunity, Mr. Chair, to thank them. They were very helpful in providing me with the request that I did make.

The Chair: Thank you very much.

And finally--and this may not be appropriate, but I'll ask it, anyway--has legal advice been provided or paid for by the authorization of any official in the Treasury Board Secretariat or the Department of Public Works and Government Services or in any other government department or agency?

Mr. Richard Neville: No, it has not, Mr. Chair.

The Chair: Okay. Now, you have an opening statement, I understand?

Mr. Richard Neville: Yes, I do.

The Chair: The floor is yours.

Mr. Richard Neville: Thank you.

Good morning, Mr. Chair and members of this committee.

Ironically, it has been approximately one year since I was last before this committee as the Deputy Comptroller General for Canada, defending the government's interests with respect to sound financial management. Mr. Chair, what a difference a year makes. Although my text says that, I could also add what a difference a day makes.

Mr. Chair, as you are aware, as well as several other members in this room today, on numerous occasions over the last five years I have been asked to attend meetings of the Standing Committee on Public Accounts to present the government's views on its annual public accounts and on the content of the Government of Canada's annual consolidated financial statements, and to respond to specific observations raised by the Auditor General of Canada in her various reports. I trust that over the last five years you are well aware of my full cooperation in responding to questions and providing additional documentation as required. Mr. Chair, it is my intention to do the same today.

That being said, Mr. Chair, please let me bring everyone in this room back to June 25, 1993. Why June 25, 1993, Mr. Chair? Because that was the day the government announced a major reorganization of government departments. It was early in the morning that the Prime Minister announced that five large government organizations would now become one of the largest departments in government--that is, Public Works and Government Services Canada, or as we commonly refer to it, PWGSC.

The five large government organizations that were integrated into PWGSC were, at the time, Public Works Canada, approximately 7,700 full-time employees; Supply and Services Canada, approximately 9,400 full-time employees; Consulting and Audit Canada, approximately 400 full-time employees; the Translation Bureau, approximately 1,500 full-time employees; and Canada Communications Services, approximately 1,100 employees. Overall, Mr. Chair, 20,000 employees were integrated into one department that day.

At that moment in time, just prior to the announcement, I was the assistant deputy minister, finance administration, for the Department of Supply and Services Canada--commonly referred to as DSS--and its senior financial officer. That same afternoon, a meeting was called by the new deputy minister of PWGSC, who was, prior to that day, the deputy minister at Public Works Canada, whom I had never met before. Here he announced to the 17 assistant deputy ministers in the room--and the 17 were made up in large part by the two larger departments, six assistant deputy ministers from Public Works Canada and six assistant deputy ministers from DSS, approximately--that on instructions from the government, there would only be five assistant deputy ministers who would make up the management committee of the new PWGSC department. Over the summer he would decide on those five assistant deputy ministers who would remain.

Need I say more, Mr. Chair? That focuses the mind.

In late summer 1993, I was chosen as one of the five assistant deputy ministers and confirmed to be the new assistant deputy minister of corporate services and the new senior financial officer for PWGSC. It was then incumbent upon me to start choosing from the two or three individuals filling each of the positions reporting to me. As a result of the integration, Mr. Chair, there were two directors general of finance, there were two directors general of administration, there were two individuals responsible for security, and so on and so forth.

To the best of my knowledge, the attached organization chart, appendix A, depicts my organization in the fall of 1993. If you would now please turn to my last page of my opening remarks, identified as appendix A, this is the Public Works and Government Services Canada organization as I recall it in the fall of 1993. I must say that over the weekend I was provided with additional information that leads me to state that there were even more positions reporting to me at that point in time, but this reflects the essence of the organization then.

There was one minister, there was one deputy minister, there were a number of assistant deputy ministers--I was the assistant deputy minister of corporate services--and I had one financial adviser to help me with the finances of the branch. I had one human resources adviser to help me with the integration of the entities into the new branch.

¿ (0915)

I had one executive assistant responsible for my daily schedule, and I had the president of the Contract Settlement Board. This was a group that interacted with the private sector to deal with its issues when transacting with the central core purchasing group of PWGSC. We thought at the time that it was best to have this group separate from the contracting group, so we put it under the ADM of corporate services.

On the next line, Mr. Chair, you'll see that there are seven boxes. Six of those are at director general level or the equivalent. I'll come back to the seventh box in a moment. Of those six director generals, one of them was for departmental and industrial security, with approximately 30 full-time employees; another was a corporate secretary, who handled the minister's office correspondence, the minister's office staff, and all corporate secretary issues for PWGSC, and who had 30 full-time employees; and another a director general of administrative systems, with 60 employees, responsible for all of the various systems within the department.

And there were also five regional financial advisers from across the country. This is the seventh box that I mentioned. For all intents and purposes, I was functionally responsible for all of the financial administrative staff in the regions. There were five regions at that time within Public Works and Government Services Canada.

There was also a director general of finance, with 220 full-time employees; a director general of administration, with 400 full-time employees; and a director general of strategic policy, with 15 full-time employees.

Mr. Chair, that approximates the 800 employees who were reporting to me, excluding the regions. If you add in the functional responsibility for those in the regions, it would be in excess of 1,000 employees, Mr. Chair.

That brings me to the next line, where you see the director of APORS.

Before I touch on that, I would add that each one of the director general positions would probably have had between four and six directors reporting to them. I have just chosen to show you the one who is pertinent to this morning's discussion, the director of APORS, the advertising and public opinion research sector, who reported to a director general.

Based on the information available, the budget for APORS at that time was approximately $2.1 million and 14 FTEs. So it was 14 full-time employees and $2.1 million. The advertising budget was actually in the departments; so the money would have been in the Department of National Defence for recruiting, in Health Canada for health programs, in Industry Canada for tourism, etc. So that was the budget that APORS had at that point in time.

As you can see, that was for the fall of 1993. It stayed that way—i.e., reporting directly to the director general of administration—until January 3, 1995. On January 3, 1995, the position was reclassified to an EX-2 level, and it reported directly to me as a director general position. Because it was reclassified to a director general position, it moved to the line above. And from January 3, 1995, until June 30, 1995—which was when I left PWGSC—it reported directly to me, and afterwards it continued to report to my successor at the assistant deputy minister level.

¿ (0920)

[Translation]

Mr. Chair, now turning specifically to the Advertising and Public Opinion Research Sector. It was clear in my mind, right from the beginning of January 1995, that Mr. Guité reported directly to me. The announcement from the deputy minister, the official departmental organization charts, the job description and the approved performance reviews confirm that fact.

Mr. Chair, please note that during 1994 and the beginning of 1995, until I left PWGSC in June 1995 to go to the Treasury Board Secretariat as the assistant comptroller general, I was very much involved day-to-day in integrating my own Corporate Services Branch and more importantly assisting the deputy minister in integrating the five major organizations into one new department with over 20,000 employees and starting to take the steps to reduce our overall budget by $350 million and 6,000 of our total employee base which represented approximately 30 per cent of our workforce at that time. This was a real challenge, Mr. Chair.

[English]

That being said, Mr. Chair, I do recall instructing Mr. Guité to ensure that the proper documentation was to be available in all files for which he was accountable--please do not forget that I was the senior financial officer of that department at that point in time--and he assured me that it would be. I do not recall any complaints emanating from client departments, advertising firms, or public opinion research firms with which Mr. Guité did business. I do recall that on a very few occasions colleagues at the assistant deputy minister level, mainly other senior financial officers, would call for some specific information relating to a contract within their department, and Mr. Guité was always able to provide me with the answer for me to respond to their queries. I do not recall ever receiving a second phone call from the same assistant deputy minister on the same issue about the advertising and public opinion research sector. I do not recall ever being contacted by officials from PMO or PCO or ministers or their staff from other departments with respect to APORS files.

With respect to contracting, not only for advertising and public opinion research, but for all the government's goods and services, I have always believed that the best results for the Government of Canada and for all Canadians are achieved when competitiveness is at the heart of the contracting process. Time and again this has proven to be the case. Therefore, the policy changes that were announced in 1994 went a long way to making the system more open and transparent and in line with the overall contracting policy of the Government of Canada. To the best of my knowledge, Mr. Chair, during my tenure at PWGSC this was carried out in accordance with the new regulations.

¿ (0925)

[Translation]

Mr. Chair, that concludes my opening remarks. I will be more than pleased to answer any questions either you or members of this committee may have.

Thank you.

[English]

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

Before we move, I'm looking at your appendix A, where you have “Director General, Administration” and underneath that “Director, APORS”, and that, I take it, was Mr. Guité.

Mr. Richard Neville: That is correct, Mr. Chair.

The Chair: You said that from January 1995 he was basically added to the director general line and was reporting directly to you.

Mr. Richard Neville: Correct, until June 30, 1995, when I left the department.

The Chair: Okay.

Mr. MacKay, eight minutes.

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

Thank you, Mr. Neville.

So that we're clear on this, you served under Ministers Dingwall, Marleau, and Gagliano, is that correct?

Mr. Richard Neville: No, that's not correct, sir. I served only under Minister Dingwall.

Mr. Peter MacKay: I want to go back to a statement you've just read into the record, where you talked about instructing Mr. Guité to ensure that there was proper documentation. Mr. Guité worked directly under you and reported to you?

Mr. Richard Neville: Mr. Guité reported to the director general, administration, until January 3, 1995, after which he reported directly to me, until June 30.

Mr. Peter MacKay: How long was he reporting to you, sir?

Mr. Richard Neville: Through the director general, administration?

Mr. Peter MacKay: Yes.

Mr. Richard Neville: From the day I arrived at the Department of Supply and Services, November 1992. He was reporting to a director general even before I arrived there.

Mr. Peter MacKay: So from that period till when?

Mr. Richard Neville: Specifically, it would be from November 1992 till the day I left Public Works and Government Services, which was June 30, 1995.

Mr. Peter MacKay: So for approximately three and a half years he was reporting through the director general to you?

Mr. Richard Neville: Two and a half years.

Mr. Peter MacKay: You said that during that time, on one occasion only did you raise concerns with him about there being proper documentation in the files, and he assured you that was happening.

Mr. Richard Neville: To be very precise, I wouldn't have had that kind of discussion with him while he was reporting to the director general, administration. I would have had that discussion with him when he was reporting directly to me.

Mr. Peter MacKay: All right. And what brought about the need to have this discussion?

Mr. Richard Neville: I was the senior financial officer of the department. I am very concerned that people who are reporting to me do things properly.

Mr. Peter MacKay: Yes, you should be.

You go on to say you recall these complaints emanating from clients. You do recall this discussion. You went on to say--and correct me if I'm wrong here--you've always believed in the need for competitiveness at the heart of the contracting process, openness and transparency in the line of overall contracting. You believe this was carried out in accordance with the new regulations. How can you square that, Mr. Neville, with the findings of the Auditor General, who completely contradicts what you've told us here today? She talks about widespread non-compliance. She talks about public servants breaking the rules in selecting communication agencies. She talks about severe shortcomings with respect to documentation. In fact, she found files where there were no documents at all. How can you possibly square that with what you're telling us today?

Mr. Richard Neville: Mr. Chair, I believe the timing is completely off in the comments that were just raised. The Office of the Auditor General and the report dealt with a period from, I believe, 1996-97 on. I was there until June 30, 1995.

Mr. Peter MacKay: I see. So it all happened after you were gone; there was none of that going on during your watch.

Mr. Richard Neville: Mr. Chair, I can only state what was recorded by the Office of the Auditor General.

Mr. Peter MacKay: Well, that's convenient. That seems to be a growing trend we've seen before this committee: it was nobody's fault; nobody seemed to have any idea this was going on, even though it was directly under their watch. You've added your name to a long list of witnesses with that story.

Mr. Richard Neville: Mr. Chair, let me add, though I thought I made it quite clear, that he reported to me for that period. I'm accountable for the period January 3 through June 30. As a matter of fact, one could also say I was accountable right from the period I arrived in the department, so I am quite specific in saying he reported to me. I'll take accountability for that period of time, Mr. Chair.

Mr. Peter MacKay: How do you reconcile the 1996 audits and the internal audit work that was done, where similar problems were outlined, Mr. Neville?

Mr. Richard Neville: I wasn't aware of the 1996 audit. Nobody contacted me on any period of that audit during the audit.

¿ (0930)

Mr. Peter MacKay: Nobody contacted you, but that did happen during the time you were there. The 1996 audit would have covered the time in which you had been working in that capacity.

Mr. Richard Neville: It would have covered one year during the period I was there.

Mr. Peter MacKay: Just the one year.

Now, when were you first made aware of any irregularities? Were you ever made aware or contacted directly about irregularities with respect to advertising contracts or sponsorship activities during your time?

Mr. Richard Neville: It would have been much later on, when Public Works and Government Services Canada were starting to do their audit. There was a regular contact between PWGSC and Treasury Board Secretariat.

Mr. Peter MacKay: So it was much after the fact. This would have been after you had moved over toTreasury Board and followed Mr. Dingwall?

Mr. Richard Neville: I'm sorry?

Mr. Peter MacKay: You went to the Treasury Board—or I should say, the Mint—with Mr. Dingwall.

Mr. Richard Neville: That's very recent. I was at the Treasury Board Secretariat from 1995 until June 2003.

Mr. Peter MacKay: When these were brought to your attention, what did you do about it? Did you do anything?

Mr. Richard Neville: We certainly were involved. I could spend quite some time going over that. That's in relation to what the Treasury Board Secretariat did to assist the department in carrying out their audits.

I believe Mr. Judd was very eloquent in explaining the support the Treasury Board Secretariat provided to the department. I believe the previous deputy minister of Public Works and Government Services Canada also referred to that support.

Mr. Peter MacKay: Are you familiar with a Mr. Harder from Treasury Board?

Mr. Richard Neville: Yes.

Mr. Peter MacKay: When Mr. Harder came before this committee he stated, in clarifying the role of the Treasury Board:

The board's role is to ensure that there is an understanding of the rules and the guidelines and that there are appropriate frameworks in place. It is the responsibility of departments to administer in accordance with the Treasury Board.

Would you agree?Would you agree it was the department's responsibility to ensure they were acting in accordance with the policy of the Treasury Board?

Mr. Richard Neville: First and foremost it was a departmental responsibility. The Treasury Board Secretariat has overall framework and policy direction and responsibilities as well.

Mr. Peter MacKay: Let me ask you something, Mr. Neville. What if the Treasury Board was doing something wrong, and what if people at the Treasury Board were aware there were wrongdoings? Whose responsibility would it be then to report? Where's the onus to report?

Mr. Richard Neville: Again it comes back to the departments' responsibility first and foremost. They are the ones who have that responsibility, and there you have obviously a Treasury Board Secretariat role of providing support and ensuring that the overall policies are followed and the frameworks are administered.

Mr. Peter MacKay: Do you recall the Prime Minister, Paul Martin, then in his capacity as finance minister, being present at the Treasury Board meetings as vice-president of the Treasury Board?

Mr. Richard Neville: I attended certain Treasury Board meetings and recall Mr. Martin being at one or two meetings.

Mr. Peter MacKay: At those one or two meetings, did he ever raise concerns? Did you every raise concerns to him about how things were operating at the Treasury Board?

Mr. Richard Neville: Mr. Chair, I believe there's an order in council that talks about cabinet confidence, and I believe it goes back to 1996.

The Chair: You are correct. We have not had that released at this point in time, Mr. Neville.

Mr. Peter MacKay: Isn't that convenient, Mr. Chair?

Mr. Richard Neville: Well, no, as a matter of fact—I'm sorry—now that I think about it, it does cover the period we're discussing.

I don't recall Mr. Martin raising those issues at those meetings. They were specific to Treasury Board submissions of the day.

Mr. Peter MacKay: I see. And were you familiar with the 1996 Ernst & Young audit?

Mr. Richard Neville: No.

Mr. Peter MacKay: You weren't familiar with that.

Do you recall a 1994 internal audit that uncovered $24 million in illegal financial transactions involving up to 30 departments and agencies, including the RCMP?

Mr. Richard Neville: No.

Mr. Peter MacKay: Thank you, Mr. Chair.

The Chair: Thank you, Mr. MacKay.

[Translation]

Mr. Desrochers, you have eight minutes.

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

Mr. Neville, good day to you. We know each other well.

Mr. Richard Neville: We know each other well.

Mr. Odina Desrochers: You said, Mr. Neville, that on June 25th 1993, there were major changes. The Conservatives were in power at that time.

Mr. Richard Neville: Yes, that's right. June 25th, 1993, that's right.

Mr. Odina Desrochers: The Liberals took power the 25th of October 1993.

Mr. Richard Neville: That's right.

Mr. Odina Desrochers: Have you noticed a change of behaviour between the Conservative minister and the new minister, Mr. Dingwall, when he assumed his duties?

Mr. Richard Neville: Let's say that after a few months, we definitely saw a change of culture in the sense that he wanted tendering to be more open, more transparent and the contracting process to be considerably more up-to-date, in that context.

¿ (0935)

Mr. Odina Desrochers: Was action taken along those lines, Mr. Neville?

Mr. Richard Neville: As I remember, definitely.

Mr. Odina Desrochers: Including the outfit led by Mr. Chuck Guité?

Mr. Richard Neville: Yes.

Mr. Odina Desrochers: One of the major witnesses heard during the course of our proceedings was Mr. Ron Quail. Describe to us Mr. Quail as an individual.

Mr. Richard Neville: Mr. Quail was an outstanding deputy minister when I worked with him. He was very devoted, very professional. He valued and cared for his employees. He had a huge task ahead of him, that is integrating five very different organizations while making sure that day-to-day work continued to be performed. That was achieved in outstanding fashion. We were also faced with the challenge of reducing our budgets and, in to that end, to reduce the workforce, which of course is never an easy task.

Mr. Odina Desrochers: Someone with leadership?

Mr. Richard Neville: Definitely, first rate.

Mr. Odina Desrochers: With enough leadership possibly to confront the minister occasionally on some issues?

Mr. Richard Neville: When it had to be done, he would.

Mr. Odina Desrochers: Mr. Cutler told us that in November 1994 there was a change in attitude in Mr. Guité's area. Have you been informed of that?

Mr. Richard Neville: No.

Mr. Odina Desrochers: You did not speak with Mr. Cutler at that time?

Mr. Richard Neville: I never spoke with Mr. Cutler on that topic, at all.

Mr. Odina Desrochers: When did you become aware of Mr. Cutler's case? Only through the proceedings of this committee or had you heard of it beforehand?

Mr. Richard Neville: Only through the proceedings that took place here.

Mr. Odina Desrochers: Good. So you did not see a change of behaviour in the area under Mr. Guité as you left in January 1995, as you said.

Mr. Richard Neville: No. I left in June 1995.

Mr. Odina Desrochers: Was Mr. Dingwall still Minister of Public Works?

Mr. Richard Neville: Yes. When I left, Mr. Dingwall was the minister in charge.

Mr. Odina Desrochers: Did you realize that Mr. Dingwall had a privileged relationship with Mr. Guité, or did he always use the same channel to speak to Mr. Guité, in other words through the deputy minister or through you? Who was Mr. Dingwall's chief of staff at that time?

Mr. Richard Neville: If I remember well, Mr. Kinsella was chief of staff.

Mr. Odina Desrochers: For certain contracts, would Mr. Kinsella speak directly to you or directly to Mr. Guité?

Mr. Richard Neville: I had many contacts with Mr. Kinsella. As assistant deputy minister, Coroporate Services, not a week went by, I think during which we did not speak to each other for one reason or another. Occasionally, we broached that subject. It is also possible that Mr. Guité and Mr. Kinsella had discussions. Of course, he was the expert as far as advertising and public opinion research were concerned.

Mr. Odina Desrochers: Then Mr. Kinsella spoke directly with Mr. Guité. Have you heard, at that time, that he was--?

Mr. Richard Neville: I think he was speaking directly to Mr. Guité.

Mr. Odina Desrochers: You think so?

Mr. Richard Neville: Yes. I cannot be sure.

Mr. Odina Desrochers: Have you heard it said, at that time, that advertising agencies could be more involved in the event selection process or anything else?

Mr. Richard Neville: No, not at all.

Mr. Odina Desrochers: So to your knowledge, when you were in your position, until June 1995--

Mr. Richard Neville: That's right.

Mr. Odina Desrochers: --you never saw anything improper in Mr. Guité's area?

Mr. Richard Neville: No. Listen, I was the senior financial officer of the department. Given my background, there was no way I could have accepted something like that. So, no.

¿ (0940)

Mr. Odina Desrochers: Mr. Neville, for some time now we've been trying to find someone to shoulder the responsibility for this admistrative mess. Some committee members and some experts even suggested that making deputy ministers more accountable would make it possible to avoid the kind of lack of involvement that some people would charge Mr. Quail with. I'm still going back to the issue of Mr. Quail's leadership.

Would things have been different, according to you, if Mr. Quail had been more accountable for decisions made in this area?

Mr. Richard Neville: During the time I was there, Mr. Quail was very involved in each and every decision that were made. He was the deputy minister and he was working very closely with the minister. We were integrating five major organizations and many decisions had to be made on any number of levels : operational, human resources, financially. I was there, I attended those meetings and he took a leadership role with the minister.

Mr. Odina Desrochers: Since there have been many contradictions here, Mr. Neville, I'm only trying to understand the dynamics that went on.

Mr. Richard Neville: In 1993, 1994 and 1995, Mr. Quail displayed 100 per cent leadership with the minister and to defend the department.

Mr. Odina Desrochers: In your opinion, Mr. Quail never noticed that Mr. Kinsella was directly in contact with Mr. Guité?

Mr. Richard Neville: Let's say I'm not sure that relationship existed in 1995.

Mr. Odina Desrochers: I have one last question, Mr. Neville. You worked under the Conservative Party with the minister of Public Works of the day. Then, you had Mr. Dingwall. Yes, you say that Mr. Dingwall and Mr. Quail mentioned the principles of transparency, but did you feel some political direction maybe a few months after the Parti québécois was elected in September 1994? Was anything said about the fact that perhaps the Canadian government should get more visibility in Quebec?

Mr. Richard Neville: No, I'm not aware of any such discussions. The discussions I was involved in had to do with the management of department, its integration and the cuts that had to be made in order to achieve our new objectives.

Mr. Odina Desrochers: Thank you very much.

[English]

The Chair: Merci, Monsieur Desrochers.

Point of order, Mr. MacKay.

Mr. Peter MacKay: In my last question to this witness, I asked him specifically about a 1994 internal audit investigation that uncovered $24 million in illegal financial transactions involving 30 departments and agencies, including the RCMP. This witness said he didn't recall that. Yet there was an article written on September 11, 1994, that specifically spoke of this internal investigation uncovering $24 million in illegal financial transactions:

Richard Neville, the assistant deputy minister of finance for the Department of Government Services, confirmed...that the investigation has already prompted his department to seize financial control....

Mr. Chair, this witness has directly contradicted himself by speaking to the press about this, and telling us that he knew nothing about it just a few short moments ago. It totally brings this entire committee into disrepute when we can't rely on the veracity of a senior bureaucrat coming before this committee to give testimony.

The Chair: Thank you, Mr. MacKay. You have that on the record. It's not a point of order. I'm not going to ask Mr. Neville to respond to that at this time.

I'm going to go to Madam Jennings.

Hon. Walt Lastewka (St. Catharines, Lib.): It's not a point of order.

The Chair: Order, please.

Do you want to speak, Mr. Lastewka?

Hon. Walt Lastewka: I didn't think it was a point of order.

The Chair: I said it wasn't a point of order.

Hon. Walt Lastewka: After he was finished ranting--

The Chair: You have to hear it before you can determine that. I don't read people's minds. That's the way it is.

Madam Jennings.

[Translation]

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

Thank you, Mr. Neville. In your statement you mentioned that the best results occur when contracts are let out through calls for tender. You state :

Time and time again this has proven to be the case. Therefore, the policy changes that were announced went a long way to making the systems more open and transparent and in line with the overall contracting policy of the Canadian government.

That's at the bottom of page 6 and page 7 of the French version of your statement.

When did that policy change happen, and what was the policy before that?

Mr. Richard Neville: There are many ways to answer that question, Ms. Jennings.

Before working for Public Works and Government Services, I was a regional general director for western Canada as well as for Quebec. In that context, I was responsible for the contracting process. Many a time I saw that where there was competitiveness, the government got a better price. So, in that context, I've always believed that we could get far more positive results for the government with competitiveness.

In 1994, new guidelines were issued concerning advertising and public opinion polling. That opened the process to make it more competitive and gave the federal government more bang for the buck.

¿ (0945)

Mrs. Marlene Jennings: How was the pre-1994 policy less transparent and less open than the new policy that came out in 1994?

Mr. Richard Neville: In 1994 there was a rather major change.

Mrs. Marlene Jennings: I know about the change. I'm asking how the old policy was less open and less transparent.

Mr. Richard Neville: Yes, but I'd just like to briefly make a point as an aside. In 1994, it became mandatory for contracts over $30,000 to be put out to tender. Before that, if I'm not mistaken, the lists of bidders were predetermined by political agents and names had to be chosen from those lists.

Mrs. Marlene Jennings: So, before 1994, there was a direct, political direction to determine which companies would be getting the contracts.

Mr. Richard Neville: If I'm not mistaken, that's how it worked.

Mrs. Marlene Jennings: Perfect.

You also mentioned that on June 25, 1993, the government of the day announced an in-depth reorganization of its departments and you're talking about five large government organizations that were integrated into Public Works and Government Services Canada. You list the five

You were an assistant deputy minister at Supply and Services Canada.

Mr. Richard Neville: Yes. That was one of the five organizations that was integrated as of 25 June, 1993.

Mrs. Marlene Jennings: This political involvement you've mentioned, did it exist at Supply and Services Canada or in one of the other five organizations?

Mr. Richard Neville: It was at Supply and Services Canada.

Mrs. Marlene Jennings: That's where it was.

Mr. Richard Neville: Yes, since at least 1990, I think.

Mrs. Marlene Jennings: Was that agency or department accountable to a minister?

Mr. Richard Neville: Beg your pardon?

Mrs. Marlene Jennings: Who was responsible for Supply and Services Canada?

Mr. Richard Neville: It was a minister.

Mrs. Marlene Jennings: Which one?

Mr. Richard Neville: If memory serves, it was minister Paul Dick, but I could be wrong. However, if I'm not mistaken, it was him.

Mrs. Marlene Jennings: Fine, that's good.

As there was political involvement in the contracting process, did that sort of put the breaks on how the public service managed, controlled, monitored and got involved in the management?

Mr. Richard Neville: I'm not well aware enough of the situation to answer that question. Sincerely, I'm not really aware.

Mrs. Marlene Jennings: After the reorganization, you were chosen by the new Deputy Minister of Public Works to be an assistant deputy minister.

Mr. Richard Neville: Yes, of Corporate Services.

Mrs. Marlene Jennings: And during that short period, the section managed by Mr. Guité was accountable to you through a director general. Once Mr. Guité and his position were both reclassified EX-1, I think--

Mr. Richard Neville: Yes, from EX-1 to EX-2.

Mrs. Marlene Jennings: That's it. Mr. Guité was directly accountable to you but only between January 1995 and June 1995 when you left the Public Works Department.

Mr. Richard Neville: That's it.

Mrs. Marlene Jennings: So would I be right in thinking that the new policy on contracting out which, according to your own statements, was more open, more transparent and more competitive, was in force at that time?

Mr. Richard Neville: Yes, I'd say that it was that way from mid-1994 on, if memory serves.

¿ (0950)

Mrs. Marlene Jennings: So if someone were to tell us that there was a departmental decision at the time to ignore that new policy, what would your answer be?

Mr. Richard Neville: Could you repeat the question, please?

Mrs. Marlene Jennings: We heard evidence to the effect that, once that new policy came into force, someone said he was going to ask the minister to ignore the policy.

Mr. Richard Neville: I'm not at all aware of that request.

Mrs. Marlene Jennings: Perfect.

Mr. Neville, when you were the assistant deputy minister responsible for Mr. Guité's section, was there an internal audit in that sector?

Mr. Richard Neville: No, there was never any audit during that period. I'm talking about the period I was there.

Mrs. Marlene Jennings: Yes, I mean during the time you were there. So, when Mr. MacKay talks about an audit of several departments, that program or that section were not included?

Mr. Richard Neville: I just want to clarify my comment. I don't remember that audit at all. I would like to see the documents, but I don't remember it at all.

Mrs. Marlene Jennings: To your knowledge--

[English]

The Chair: Merci, Madame Jennings.

Ms. Wasylycia-Leis, please, for eight minutes.

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Thank you, Mr. Chairperson, and thank you, Mr. Neville, for your presence here today.

As you can tell, we're anxious to try to understand what happened, given what the Auditor General has reported.

I want to begin by asking you about developments that happened during your period of time as the chief financial officer of Public Works and Government Services Canada.

Mr. Richard Neville: The term is “senior financial officer,” just to correct the record. In the private sector, the term “chief financial officer” is used, but in government we use “senior financial officer”. It means basically the same thing.

Ms. Judy Wasylycia-Leis: While you were senior financial officer in Public Works and Government Services Canada, Mr. Chuck Guité had sought and won approval for a change that we believe is central to this whole episode, which was the coming together of once-separate functions pertaining to contracting or negotiation of contracts and the selection of agencies.

Mr. Richard Neville: Yes.

Ms. Judy Wasylycia-Leis: Were you aware of that change in policy?

Mr. Richard Neville: I was aware that they worked together in the same organization. Hindsight is 20/20, but at that point in time, there didn't seem to be an issue. There wasn't that much that went on in terms of contracting--I believe that statement was made--so we didn't see an issue at the time.

Hindsight is 20/20, though.

Ms. Judy Wasylycia-Leis: Right, but aren't we talking about APORS? We're talking about a huge area of government contracting and we're talking about a fundamental shift in the way in which this whole area was administered. So instead of having one person or one office that looked after selection of agencies, separate from one office, and one person who looked after negotiation of contracts, we have the merging of the two into one function. That didn't strike you as odd at the time?

Mr. Richard Neville: No, sorry, let's make sure we're crystal clear on that. I don't recall the two functions being merged. I recall it as them being together under one entity. When that happened, I can't recall, but I remember them being under one. So the contracting--

Ms. Judy Wasylycia-Leis: But isn't that the same thing, under one entity, reporting to one person? It's the same problem, as opposed to providing separate functions as a check and balance in this whole system.

Mr. Richard Neville: As I said, there didn't seem to be a problem at the time, so we didn't change it. Hindsight is 20/20.

Ms. Judy Wasylycia-Leis: But we're talking about a department that has a huge volume of work, many contracts, millions and millions of dollars--

Mr. Richard Neville: Yes.

Ms. Judy Wasylycia-Leis: --and you're saying it wasn't much money and you didn't take note of the fact that this merging of these functions was a change in policy and therefore something that should be questioned?

Mr. Richard Neville: No. His budget at the time, his direct budget, was approximately $2 million; that's his direct budget. The budget, the large millions of dollars, which is approximately, give or take, $120 million to $140 million, although that was reduced significantly subsequently, was in the departments themselves--i.e., with DND, which had responsibility for doing recruiting.... It was those kinds of departments--Health, as I mentioned earlier, with health programs, and I mentioned Industry in terms of tourism. APORS was responsible for the contracting, but the money was actually in those departments.

¿ (0955)

Ms. Judy Wasylycia-Leis: Someone like Allan Cutler, who was working on the front lines, noticed something suspicious happening. You didn't notice anything funny at all?

Mr. Richard Neville: No.

Ms. Judy Wasylycia-Leis: Not a thing?

Mr. Richard Neville: Not a thing. If I did I would have done something about it.

Ms. Judy Wasylycia-Leis: Then could you help us understand why, when this whole system grew and got to the point where in fact all that was required for approval was an invoice, a contract, and a certification that services were provided--this was all that was required to allow the flow of money--you were not concerned that there were no checks and balances?

Mr. Richard Neville: There are controls and balances in place. We did have our finance section separate from the operations, and they had to go through a process to approve a payment. Obviously it required a section 34 certification. It was probably 27 then, but it's section 34 today, and there are a number of steps that are required in order to comply with section 34. There are the account verification regulations. So unless those steps had been each followed, there wouldn't have been a payment that would have been made.

Ms. Judy Wasylycia-Leis: Wasn't it disturbing to know that in fact it was one person, in one office, who was really looking after all of it? Chuck Guité told us that he followed the books, he did it by the books, he did everything properly: he submitted an invoice, he submitted a copy of the contract, he submitted certification that the work was done, and he oversaw all those three components. One person doing it all, and it was good enough, no question whether or not services were provided.

Mr. Richard Neville: We're back into 1995, and I'm not sure it was exactly the way you stated.

Ms. Judy Wasylycia-Leis: Chuck Guité said it was that way. He said he would have played by the books.

Mr. Richard Neville: In 1995 I don't recall that was exactly the way it was done, but if it wasn't, I get back to the fact there was the documentation in order for finance to make the payment, and they wouldn't have made the payment if the documentation wasn't there.

Ms. Judy Wasylycia-Leis: But you're the senior financial officer, you're the person who's supposed to be checking to see that in fact these contracts are real, that the services were provided. And you have one person who's working all ends and in charge of everything and you didn't ask questions.

Was there no buzz around, was there no talk?

Mr. Richard Neville: There was no issue at the time. At the time there was no issue. There would have been documentation in order for the payments to be made, and there were no audits that had been carried out that showed there was a problem in that area.

There was no reason to believe that we had an issue in 1995, based on the information I had at the time. And if there had been, I would have taken action.

Ms. Judy Wasylycia-Leis: So you were the senior financial officer in Public Works and then moved over to Treasury Board at the time--

Mr. Richard Neville: Treasury Board Secretariat.

Ms. Judy Wasylycia-Leis: --Treasury Board Secretariat, at the very time that there was another interesting change in policy under the appendix Q with the elimination of reporting requirements in terms of--

Mr. Richard Neville: If I could respond, Mr. Chair--

Ms. Judy Wasylycia-Leis: Could you explain that?

Mr. Richard Neville: Yes. The changes to appendix Q were put in in 1994. They made it mandatory for PWGSC to collect information in terms of advertising and public opinion research across government and to provide that to the Treasury Board--there were other changes as well--and to increase competitiveness, that was the intent, to show that it was increased in competitiveness.

It later became clear that there was an increase in competitiveness. Therefore, the only thing that was changed in 1996, I believe, was to have the reporting from PWGSC to the Treasury Board ceased, no longer required, but there was still a requirement for that information to be collected and retained by PWGSC.

The Chair: Thank you very much, Ms. Wasylycia-Leis. My apologies, but the clock has run out.

Ms. Ablonczy, please, eight minutes.

Mrs. Diane Ablonczy (Calgary—Nose Hill, CPC): Mr. Neville, you've served in a position of chief financial officer, you've served in a position of assistant comptroller general. I take it, sir, that you have a good head for figures or numbers.

À (1000)

Mr. Richard Neville: I'm supposed to. I'm a professional accountant.

Mrs. Diane Ablonczy: Would it also be true that you would have a pretty good mind for details?

Mr. Richard Neville: Yes. I'm meticulous.

Mrs. Diane Ablonczy: I refer you to a memorandum dated December 16, 1994. You were earlier talking with my colleague, Judy Wasylycia-Leis, about public opinion research, and this memorandum refers to an Earnscliffe contract. It was a memo; you were copied on it. It was by Chuck Guité. It said:

The above contract is to be issued for one year with no option to renew. These instructions have been given to me by the Minister's Office. Should you wish to issue a contract that contradicts these directives, I recommend that you contact the Minister's Office for direction.

Do you recall that contract, that memo?

Mr. Richard Neville: No, but I'd like to see the documentation. Maybe it would refresh my memory, but I don't recall it.

Mrs. Diane Ablonczy: This memo talks about the minister's office giving direction. Do you recall other occasions when you received direction from the minister's office with respect to public opinion research contracts?

Mr. Richard Neville: No, I don't recall ever receiving direction from the minister's office with respect to APORS.

Mrs. Diane Ablonczy: You never recalled that?

Mr. Richard Neville: No.

Mrs. Diane Ablonczy: Not once?

Mr. Richard Neville: Not once.

Mrs. Diane Ablonczy: Even though you were copied on a memo that clearly gives such direction.

Mr. Richard Neville: I'd like to see the memo, but I don't recall it.

The Chair: We'll get a copy of it, Mr. Neville, as soon as we can get it copied.

You could make that available to me, Ms. Ablonczy, and....

Hon. Walt Lastewka: [Inaudible—Editor].

The Chair: I can give it to the witness. I only have it in one language, so I cannot distribute it. We'll have copies at the back table if anybody wants to pick them up.

À (1005)

Hon. Walt Lastewka: Thank you.

The Chair: Okay.

Madam Ablonczy, Mr. Neville has a copy of the memo you have referred to, and I would hope that other copies are available on the back table for others who may wish to read them. Continue, please, Madam Ablonczy.

Mrs. Diane Ablonczy: Mr. Neville, what can you tell the committee about this contract?

Mr. Richard Neville: I don't ever recall seeing it—categorically, unequivocally.

Mrs. Diane Ablonczy: Mr. Neville, you also testified under oath that you have no recollection of a 1994 internal government investigation.

Mr. Richard Neville: I don't recall that investigation, and I do believe that I have a good memory, so I really don't recall it. I'm sorry, but I just don't recall it. I'd like to be able to assist.

Mrs. Diane Ablonczy: Let me give you a few more details, Mr. Neville.

Mr. Richard Neville: Could you provide me with a copy of the report, please?

Mrs. Diane Ablonczy: It uncovered about $24 million in illegal financial transactions.

The Chair: Ms. Ablonczy, are you quoting newspaper articles or are you quoting from the report itself?

Mrs. Diane Ablonczy: I'm quoting from a question that I've written.

Mr. Richard Neville: But where's this document? And are we talking of within PWGSC?

Mrs. Diane Ablonczy: I have newspaper articles.

The Chair: Okay, you're quoting from newspaper articles...and we don't have copies for Mr. Neville.

Mr. Richard Neville: Mr. Chair, I'd like to see the report.

The Chair: Well, yes, you're certainly entitled to get a copy of the newspaper article.

Let's suspend for a couple of minutes until we get those, because it's hard to ask someone to respond to something when you have the paper in front of you and he doesn't.

Mr. Richard Neville: Mr. Chair, I'd also like to point out that this memorandum—I think it's the first time I've ever seen it—is an appendix C, implying that it's an appendix to another document. It's not appendix A or B, but it's appendix C. I really don't understand why one would have appendix C, unless it's a piece of a document related to some research that was done, and they added an appendix C.

I ask the question, why would appendix C be on a memorandum? It implies that it is less than the original document.

The Chair: That I don't know, Mr. Neville.

Madam Ablonczy, if you're going to be quoting from some other documents, perhaps we could photocopy them all.

Mrs. Diane Ablonczy: Mr. Chairman, the germane point is that Mr. Neville's name is on this; he was copied with this memo. I simply asked if he could give us any information about it; that's all I have done.

Mr. Richard Neville: It's a fair question, in my opinion. Fair question. I don't remember.

With respect to the other point you raised, can you just share with me a couple of words from the newspaper article? Can you read me a sentence or two, so that I can try to put it in context?

The Chair: Ms. Ablonczy, if you pass it over to me, I will read it to him.

Mrs. Diane Ablonczy: Well, no, I'm happy to read it.

The Chair: Pass it over to me.

Madam Phinney.

Ms. Beth Phinney (Hamilton Mountain, Lib.): I don't know if this is a question or a point of order, but just because one writes a letter and puts “cc” at the bottom, it doesn't mean the other person ever received it or that it was ever even sent to that other person. So with this document that Mr. Neville has been handed by Ms. Ablonczy, there's no proof that he or his office ever received it--or, as I say, that it was ever sent.

The Chair: Well, this is very true; but at the same time, there's no proof to the contrary either. It is dealing with an issue that perhaps Madam Ablonczy felt Mr. Neville should have been apprised of.

Let me just quote some parts of it.

Ms. Beth Phinney: What if he didn't receive it?

The Chair: Well, how do we know he didn't receive it? That's the point.

Ms. Beth Phinney: Well, you can't presume that he did.

The Chair: Revenue Canada used to have this policy that if it was in the mail, it was deemed to have been delivered.

Ms. Beth Phinney: How do you know that it was in the mail?

The Chair: Moving back to the issue that Madam Ablonczy raised, let me read you some of the article.

Mr. Richard Neville: Sure, please do, Mr. Chair.

The Chair: It's dated, I believe, September 11, 1994, and it appeared in the Edmonton Journal and also in the Ottawa Citizen, I believe. It says that

An internal government investigation has uncovered about $24 million in illegal financial transactions over the past year involving up to 30 federal departments and agencies, including the RCMP.

Mr. Richard Neville: Mr. Chair, I'm sorry, but now it's becoming a little clearer. It was not specifically directed to Public Works and Government Services Canada, but it was an—

The Chair: Okay, let me just continue:

And despite repeated warnings from top financial officials, many government departments and agencies have effectively hidden a total of $61 million since 1992 by purchasing non-existent goods and services from the Canada Communication Group.

Richard Neville, assistant deputy minister of finance for the Department of Government Services, confirmed that the investigation has already prompted his department to seize financial control of CCG, one of the largest quasi-independent federal agencies which handles most of the government's printing operations.

And then the next paragraph says:

In a letter to all deputy ministers dated Aug. 30, Neville says the transactions contravene “the Financial Administration Act and the principles of parliamentary control over expenditures.”

That's the audit Madam Ablonczy is referring to.

By your expression, I think that you now remember a little bit of something about it.

À (1010)

Mr. Richard Neville: Not much. This issue was government-wide and had some impact on PWGSC. We would have taken action, but I don't remember any more about that. It's not something that's fresh in my mind.

The Chair: Okay.

Madam Ablonczy.

Mrs. Diane Ablonczy: Mr. Neville, you're telling the committee that from a time when you were the assistant comptroller general for Public Works, this problem of an investigation uncovering $24 million in illegal financial transactions, which prompted your department, according to you, as quoted in the newspaper, to seize financial control of CCSG and also prompted you personally to write a letter to all deputy ministers, somehow doesn't ring a bell with you at all.

Mr. Richard Neville: I apologize. I'm trying to be cooperative. You have refreshed my memory by showing me the document itself. It had nothing to do with APORS, but I will certainly now be more specific as to what it was about.

Back then there was another organization within the department, except that it was on a revolving fund. For those of you who are not familiar with a revolving fund, think of it as having its own funding mechanism, its own bank account.

Mrs. Diane Ablonczy: Mr. Neville, I'm not particularly interested in all the details from back then.

Mr. Richard Neville: But it's important that I just give you a sense, because it does tie into this.

This entity was receiving money from departments at the end of the year--

Mrs. Diane Ablonczy: I know what was happening, because it's in the news report that I have.

Mr. Richard Neville: And we did take action.

Mrs. Diane Ablonczy: My surprise is, Mr. Neville, that such a huge scandal--

Mr. Richard Neville: It's the way it was portrayed.

Mrs. Diane Ablonczy: --such an inappropriate series of transactions would have escaped your memory, when you were clearly a key player.

Then it says that “Supply and Services, responsible for Canada Communication, claimed it had all been a 'misunderstanding', and promised steps would be taken 'to ensure it does not occur again'. But the practice continued.” And eight months after the Auditor General reported on this, there was more than $37 million in a slush fund at Canada Communications. Then it says, “Three months later, Neville issued what he now describes as a 'firm cease-and-desist' order...”.

So this was a long series of problems, of which you were at the centre, and yet you testified under oath to this committee that you had no recollection of this at all, and you with a mind for details.

Mr. Richard Neville: Based on the way you expressed it initially, I certainly could not recall that incident. It wasn't exactly portrayed the way I saw it until it was put in front of me as a document. Now that I see it, I remember about it, but not the way it was expressed initially.

The Chair: I think, Mr. Neville, we'll accept now that your memory has been jogged and you're able to speak about it.

Mr. Richard Neville: Based on the document, Mr. Chair.

The Chair: That's correct. We'll accept that as an explanation.

Mrs. Diane Ablonczy: Mr. Neville, at the time when you advocated seizing financial control of CCSG, what did you recommend to Minister Dingwall?

Mr. Richard Neville: I recommended removal of all signing authority, that control be taken over by corporate services, and some managerial action with respect to the individual concerned.

Mrs. Diane Ablonczy: So you remember that.

Mr. Richard Neville: I remember this incident clearly now that I see this document. It was very pertinent at the time--outside APORS, by the way; I wasn't going over that part of it. I was involved personally with the deputy minister and the minister on numerous occasions dealing with this issue and resolving it. I recall it now.

À (1015)

Mrs. Diane Ablonczy: But you didn't remember when it was framed as a 1994 internal government investigation that covered $24 million.

Mr. Richard Neville: No. Those kinds of words didn't resonate well with me. Had you said CCG, had you said funds were squirrelled away at year-end, that certainly would have triggered my memory.

Mr. Chair, I am trying to be as cooperative as I can with this committee.

Mrs. Diane Ablonczy: Well, Mr. Chairman, as I recall, the witness gave an answer before the sentence was hardly out of my colleague's mouth.

The Chair: I think we're going to leave the matter there, Madam Ablonczy. Unfortunately, your time has expired.

As I said, I accept Mr. Neville's explanation, and we'll just leave the matter there.

But when we're talking about CCG, Mr. Neville, we do know, but we don't have total clarification, that Mr. Guité was working for St. Joseph Corporation, I think it was, that became the private sector company that acquired CCG. Do you know if Mr. Guité was working for CCG at that time?

Mr. Richard Neville: No, I don't believe he was.

The Chair: You don't believe he was?

Mr. Richard Neville: No, he was working for the Department of Supply and Services, reporting to the director general, administration, from 1990 on.

The Chair: We're still trying to get clarification as to whether he was on a secondment, or whatever, to St. Joseph Corporation, which was the private sector company that bought Canada Communication Group.

Mr. Tonks, please.

Mr. Alan Tonks (York South—Weston, Lib.): Thank you, Mr. Chairman.

Mr. Neville, I just want a clarification. In 1992, you were the senior financial official at government services?

Mr. Richard Neville: In 1992 I arrived back. I had a posting, leaving Ottawa to go to Calgary, then to Montreal, and I was back in Ottawa in November 1992.

Mr. Alan Tonks: So when you arrived back, you became part of that moment in history when this article alludes to this process of establishing a partially phoney $2.5 million contract with CCG.

Mr. Richard Neville: Mr. Chair, going back to this incident, I was responsible for putting in play the control measures to remedy the situation. I'm very familiar with this situation now that I see what it is. So yes, I was instrumental in identifying the problem and dealing with it in terms of immediate action and long-term solutions.

Mr. Alan Tonks: So in 1992, who was the minister in charge of the Department of Public Works at that time?

Mr. Richard Neville: In 1992 it was not the Department of Public Works and Government Services; it was, in this context, the Department of Supply and Services.

If my memory serves me right, as I answered earlier, I believe the minister was Minister Paul Dick.

Mr. Alan Tonks: Minister Paul Dick?

Mr. Richard Neville: I stand to be corrected, but I believe that was the minister.

Mr. Alan Tonks: Okay.

According to this article, when the Liberals came into power in 1993, Dingwall ordered a full investigation of CCG. Is that where you, in answer to a question, gave the advice that all signing authority should be transferred to corporate services?

À (1020)

Mr. Richard Neville: Correct.

It became an issue. We had given a warning. They hadn't taken the warning. They continued doing it. There was a discussion between individuals as to whether that's how it happened, but that's my recollection. And finally, the deputy minister made the decision to remove the delegation.

Mr. Alan Tonks: Okay.

I guess, Mr. Chairman, the problem the committee has is that when you discover a culture of that sort and you go through it.... The committee has found it very hard to wrestle with that period from 1993, 1994, 1995, when Mr. Cutler and others have said that the machinery of government was rearranged such that the checks and balances between contract issuing and the actual signing of invoices--at least the paying of bills based on invoices--was, according to Mr. Cutler, completely skewed in favour of Mr. Guité being totally able to, I guess, manipulate the process. The committee has found it difficult, since there was an audit that was going on during those times.

I know you had left in 1995, but why would you as senior official not be aware, having been part of that culture and doing something about it, and yet nobody in the upper level of the hierarchy of responsibility stepped in and did anything?

Mr. Richard Neville: Mr. Chair, it's a very valid question, but one would have to go back to that time, when we were there.

There were no red flags. There were no audits that had been carried out. There was no indication, and we were very busy with other issues as important in terms of the government's agenda of managing an integration of five large entities.

Mr. Chair, again, hindsight's 20/20, but at that point in time we did not have the information that we have today.

Mr. Alan Tonks: Mr. Neville, I will go to Mr. Cutler's testimony.

He was transferred out in November 1994, out of the accountability loop. You said “I do recall instructing Mr. Guité to ensure that the proper documentation was to be available in all files...for which he was accountable, and he assured me that it would be.” What happened, and when did it happen that this came to your attention as being a major problem with Mr. Guité?

Mr. Richard Neville: It was not that it came to my attention that it was a major problem. If it would have been a major problem, I would have dealt with it. I just had a meeting with him, as I did with any new staff. I went over a lot of issues. I said “You have a very sensitive responsibility in terms of documentation. Make sure that it's clean.”

I wanted to ensure that we did not have any future problems in that area, and as a senior financial officer I want to re-emphasize that with you.

Mr. Alan Tonks: So there was no particular event that occurred. There were no complaints coming in. You just decided, with all of the things you were so busily engaged in, that you would draw that to his attention. Did you draw that to everyone's attention who was a director?

Mr. Richard Neville: Directors general? No, not directors, but at directors general, yes.

And again, just going back to Mrs. Ablonczy's comment, where there was a requirement to take action, I took action. That has been my managerial style over the years. I will take action where it's deemed appropriate, and this document proves that I did that.

Had I been aware of issues in APORS, I would have dealt...accordingly.

Mr. Alan Tonks: All right.

Mr. Neville, through the chair, I'd like to follow up on the question of appendix Q. You went to Treasury Board Secretariat in June 1995.

Mr. Richard Neville: Correct.

Mr. Alan Tonks: And in September 1996, that's a full year now, according to Mr. Harder, who was the Secretary to the Treasury Board, “Treasury Board approved the cancellation of appendix Q's reporting requirements...”.

And he goes on to say, “As the documents indicate, the secretariat concluded that”--just as you have said--“because of the high level of competition of public opinion research and advertising contracts, the reporting requirement should be removed...”. But it goes to say, “PWGSC, however, would continue to monitor its contracts for these services and ensure that high levels of competition continue, and that no one company dominates the market.”

Mr. Richard Neville: Correct.

Mr. Alan Tonks: Are you satisfied that this is in fact what happened?

Mr. Richard Neville: Absolutely.

À (1025)

Mr. Alan Tonks: But we have been told that only five firms, in fact, did actually control subsequent.... When the sponsorship program was implemented, it was five firms that actually controlled the--

Mr. Richard Neville: I am referring back to the period that I can recall, which was 1995, and I saw the reports coming in in 1996, if memory serves me rightly, and the competition was going up, which was the original objective.

Therefore, the decision was made to no longer require PWGSC to send that information to the Treasury Board Secretariat but to retain Public Works and Government Services Canada with the responsibility of collecting that, in case that had to be reviewed at some future point in time.

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

Monsieur Desrochers, s'il vous plaît, huit minutes.

[Translation]

Mr. Odina Desrochers: Thank you, Mr. Chairman.

Coming back to the reorganization in June, 1993, about the tendering of contracts, you said that political agents were in charge of selecting the contractors. Is that how things worked with the Conservatives?

Mr. Richard Neville: If memory serves, it was before the new government's mandate. So it was during the former government and that changed when the liberal government came to power towards the end of 1993.

Mr. Odina Desrochers: As of when was Mr. Guité accountable to you?

Mr. Richard Neville: From 3 January to 30 June, 1995. Before that, he was one of the directors accountable to a director general. There were several.

Mr. Odina Desrochers: Who, in cabinet, decided that Mr. Guité would be directly accountable to you, as you said before, rather than to another director? Who made that organizational change?

Mr. Richard Neville: When I arrived, he answered directly to a director general. Towards the end of 1994, we looked at his responsibilities and we add several new ones. We also increased his budget, in terms of resources and funding. We then went to meet with the people at Human Resources and asked them to review the position. They did so and subsequently advised us that for now on he would be classified at the EX-2 level. We then went to see the deputy minister for his approval and he gave it. So we reclassified the position to the EX-2 level and gave him the title of director general. From that time on, he reported directly to me.

Mr. Odina Desrochers: Fine.

Mr. Neville, in your statement, you said: “I do recall instructing Mr. Guité”.

Were these verbal or written instructions?

Mr. Richard Neville: Verbal.

Mr. Odina Desrochers: You never sent anything written to Mr. Guité?

Mr. Richard Neville: I had no reason to do so. When I meet my new employees, that's part of what I require of them.

Mr. Odina Desrochers: Concerning the files, what kind of information were you asking Mr. Guité for, when he was working with you?

Mr. Richard Neville: It didn't necessarily concern the files as such. He was part of my management committee and we met on a weekly basis. Going by a process that I still use today, every two weeks I would meet the employees reporting directly to me and we would discuss matters of interest to us.

Mr. Odina Desrochers: What kind of manager are you? Do you control things closely or do you like to delegate?

Mr. Richard Neville: I think my colleagues would say that I'm very responsible and really very demanding in managing my files. In that area I control things rather closely. I think it goes with the title.

Mr. Odina Desrochers: Did you know that Mr. Guité worked in a very political way at a time where the conservative government was in power? In his case, did you implement a special follow-up since from that time on he would have to follow the new guidelines requiring calls for tenders to a much greater degree?

Mr. Richard Neville: No.

Mr. Odina Desrochers: You didn't bother supervising Mr. Guité, even though you knew he had a different way of working?

Mr. Richard Neville: I had no reason for doing so at the time. No request had been made and no red flag had been raised. You have to remember the context of the period between 1993 and 1995. We didn't have the problems that were raised later.

À (1030)

Mr. Odina Desrochers: I'm coming back to that because we're trying to understand Mr. Guité's behaviour.

I can imagine Mr. Guité working with the decision makers and becoming a good performer. Then, he reports to you and has to follow new rules.

At some point, didn't he appear to you to be bothered by these new rules? Was he adjusting easily to the new situation?

Mr. Richard Neville: Yes. If memory serves, he was open to the new regulations. He believed it was better for the government as a whole and that the performance was better in terms of results. It was very positive.

Mr. Odina Desrochers: We were also told that when the Liberals came in, it was felt that the Prime Minister's Office had a tendency to interfere.

To your knowledge, was that the case?

Mr. Richard Neville: No, not at all. Never.

Mr. Odina Desrochers: We were told about a certain Jean Carle who spoke with Mr. Kinsella. As far as you're concerned, you never heard about that?

Mr. Richard Neville: No.

Mr. Odina Desrochers: In your view, when you were there, the program did work normally?

Mr. Richard Neville: Yes.

Mr. Odina Desrochers: There were no irregularities?

Mr. Richard Neville: In 1993, in 1994 and in early 1995, there were no irregularities.

Mr. Odina Desrochers: Even though there was a change in government?

Mr. Richard Neville: There were policy changes in terms of guidelines, but for us it was more open and more transparent. That's how I wanted things to work. I was very happy about the decisions that were made, and that was the way we should be managing.

Mr. Odina Desrochers: How do you explain that Mr. Cutler stated that in November 1994 he noticed that the sector was being managed more and more by Mr. Guité and that he had direct access to the minister? You were not aware of that either?

Mr. Richard Neville: No.

Mr. Odina Desrochers: You've also told us, Mr. Neville, that as a manager you control things very closely.

Mr. Richard Neville: Yes, that is the case.

Mr. Odina Desrochers: Fine. When Mr. Cutler saw that Mr. Guité was taking initiatives and going directly to the minister, you were not aware of that.

Mr. Richard Neville: You have to put things back into their context. Was I aware? No, except that, of course, I had heard talk about it but there was no situation where I absolutely wanted to get involved. The only time that happened was what was described here, during a meeting with--

[English]

The Chair: Mr. Neville, I'm going to interrupt you. You said you were not aware of it, but you knew about it.

Mr. Richard Neville: No, sorry. If we can go back to the question referring to Mr. Cutler, first of all, I don't know Mr. Cutler, except maybe I have been introduced to him.

The Chair: Yes, but the question was on the relationship Mr. Guité had with the ministers. You said you weren't aware of it, but you knew about it.

Mr. Richard Neville: Let's be more precise. With respect to the relationship between Mr. Guité and the minister, I'm only aware of one situation where there would have been a meeting, and it was at the request of the minister. Mr. Guité did share with me beforehand what issue was going to be discussed, and he shared with me afterwards the results.

I will say that I subsequently raised it with the chief of staff or the executive director to the minister. I dealt with that individual quite frequently and shared my views. I also discussed it with the deputy minister. I'm not aware of having a similar situation repeat itself afterwards while I was there.

[Translation]

Mr. Odina Desrochers: Mr. Neville, you know Mr. Dingwall well.

Mr. Richard Neville: I know Mr. Dingwall very well.

Mr. Odina Desrochers: We were told that at the time his executive assistant, Mr. Kinsella, contacted Mr. Guité. Did you know Mr. Dingwall before he was a minister?

Mr. Richard Neville: No. I met him the first time the day he was appointed minister. That's the first time I met him.

Mr. Odina Desrochers: So there were no confidential communications between you and Mr. Dingwall at that point.

Mr. Richard Neville: No, but we started working together rather closely to reorganize the department.

Mr. Odina Desrochers: With Mr. Quail or with Mr. Dingwall?

Mr. Richard Neville: With Mr. Quail, of course, and both of us, together, with the minister's office and Mr. Dingwall.

Mr. Odina Desrochers: At the outset--

Mr. Chairman, you intervened. I would like to know if you gave me my allotted time.

[English]

The Chair: Yes, the clock was stopped while Mr. Neville and I were talking. Then it was started again when you asked your first question, after I passed the floor back to you.

Now we will go to Mr. Lastewka for eight minutes.

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

Mr. Neville, I want to ask a few questions along the lines of organization and reorganization. As pointed out in the news item, the special operating agency started in 1991. You mentioned that Paul Dick was the minister in charge then.

À (1035)

Mr. Richard Neville: That's correct, to the best of my recollection. I didn't do my homework on that.

Hon. Walt Lastewka: Then there was another reorganization in June 1993.

Mr. Richard Neville: That's correct. I referred to that this morning.

Hon. Walt Lastewka: Was that on the five departments?

Mr. Richard Neville: That was the major integration--

Hon. Walt Lastewka: Could you explain to me the attention given to the internal audit system while this reorganization was being conducted? What efforts were made on the internal audit system?

Mr. Richard Neville: I could answer that in two ways, but I'll ask for clarification. Do you mean within the department, or within the government as a whole?

Hon. Walt Lastewka: I mean within the Department of Public Works and Government Services, where all this reorganization was going on.

Mr. Richard Neville: Internal audit was always considered by the deputy minister to be an important issue, an important file that had to be managed. However, reductions in our base also had to be taken as part of the program review exercise. So there was a reduction, if my memory serves me right, in the resources of internal audit. They were then--based on my memory--reinstituted over time.

So internal audit had a significant role. Its impact may have decreased because of the reintegration. The focus of management--and I was part of management--may have been on other issues for a period of time.

Hon. Walt Lastewka: You know, it's very natural when you're doing a reorganization of any department to look very clearly at the levels of responsibility and authority, and the important item is the internal audit, that it does not get put aside. So I'm trying to find out, was the internal audit...? I'm getting the impression that the internal audit system in the new reorganization was kind of left to the side, because there were more important items on the platter, as they say.

Mr. Richard Neville: Mr. Chair, I think in all fairness that probably is the correct interpretation. It's not that it was intentionally left aside; it was just a question of the priorities of the day. But we soon got back to it, and I think we put it back to where it was.

If I could, the same thing happened across government, Mr. Chair. I'd like to share some numbers. Prior to program review there were 800 internal auditors across government. As a result of program review that was reduced to 250 auditors. Treasury Board ministers approved a change in the internal audit policy and agreed to additional funding, $60 million split between program evaluation and internal audit. So the share that went to internal audit increased the internal audit capacity to...we're trying to get back to 650 today.

Hon. Walt Lastewka: But are you telling me that for a number of years the internal audit system operated at 250 government-wide?

Mr. Richard Neville: Yes, government-wide. There was a period of time when the internal audit function within the federal government went down from 800 to 250 professionals.

Hon. Walt Lastewka: What period of time are you talking about?

Mr. Richard Neville: From 1995 through 2001, give or take.

Hon. Walt Lastewka: So was it readjusted in 2000, 2001?

Mr. Richard Neville: On April 1, 2001--or just before that--we went to the Treasury Board and asked for approval of the changes in the policy for additional funding, and it was granted. So the changes would have been effective April 1, 2001.

Hon. Walt Lastewka: You've cleared up something I've been really concerned with, and it gets to the point that we did a lot of reorganization starting in 1991, 1993, 1994, and the audit system was let loose, if I may say that.

Did this contribute to the fact that, when we get to the sponsorship group under Mr. Guité, it was left outside the internal audit system for a number of years? How would that happen in a department?

À (1040)

Mr. Richard Neville: Well, I wasn't there during that period, but I would like to remind members that it was an internal audit function within PWGSC that carried out the audit in 2000 and made the recommendations that it did.

Hon. Walt Lastewka: After we put on additional internal auditors?

Mr. Richard Neville: No, there was a push internally. I did say that based on my recollection, the internal audit capability within PWGSC was given special impetus by the deputy minister of the day.

Hon. Walt Lastewka: You mentioned that you're a detailer, and I can understand that--some of us are. But I have a hard time understanding...because on an item you used the same language as Mr. Quail. Mr. Quail told us that he had instructed Mr. Guité to make sure the files were proper, that they were complete. Yet when we go back and read the Auditor General's report, the report makes it very clear that the vision and plan for an event or a sponsorship contract was not there, the planning was not there, the implementation of government-end services was not there, and the final reports and wrap-up reports for many of the files were not found.

You too gave instruction to Mr. Guité. I think you said you instructed Mr. Guité “to ensure that the proper documentation was to be available in all files...for which he was accountable, and he assured me that it would be”.

Mr. Richard Neville: That's correct. I have no qualms about that.

Hon. Walt Lastewka: But there seems to be no follow-up to see that what he said is what was done.

Mr. Richard Neville: I understand that.

Hon. Walt Lastewka: And Mr. Quail said the same thing.

Mr. Richard Neville: I'm not surprised that Mr. Quail would have said exactly that to Mr. Guité, when Mr. Guité reported to him directly.

Hon. Walt Lastewka: What is missing there? You both said the same thing, and we find out it was not done.

Mr. Richard Neville: I wish I had the answer, Mr. Chair.

Hon. Walt Lastewka: Do you think this is part of our major problem, that we instruct people to do things and they come back to us with words like yes, everything is okay, and yes, it will be done, but in reality it's not done?

Mr. Richard Neville: I think that's part of the answer, Mr. Chair. I've thought about it a lot, and that is part of the answer to the question.

Hon. Walt Lastewka: Both you and Mr. Quail were concerned about detail, yet there was no internal audit to double-check it or some other mechanism to double-check that the paperwork trail, as the Auditor General explained--

Mr. Richard Neville: In all fairness, specifically with the internal audit I'm familiar with in this case, there is a detailed audit plan that covers all the functions of the department, and over time you do audit each and every function. If in the interim there's no reason to do an audit and there are no red flags, you won't take that initiative.

The Chair: Thank you, Mr. Lastewka.

We're now on to round three, so this is four minutes, Mr. Benoit.

Mr. Leon Benoit (Lakeland, CPC): Thank you, Mr. Chair, and good morning, Mr. Neville.

Under questioning from Mr. Desrochers you said you only met on two occasions with the executive assistant to the minister.

Mr. Richard Neville: No. I'm sorry if I left that impression. I met the chief of staff or executive director to the minister on numerous occasions. I would think there certainly wouldn't have been a week that went by when we didn't discuss issues, but more than likely it was on several occasions during the week on a lot of issues, since I was the ADM, corporate services.

Mr. Leon Benoit: So you met with him on two occasions when he was meeting with Mr. Guité?

Mr. Richard Neville: No. Sorry, I didn't say that at all; sorry again if I left you with that impression. I said I raised with the executive director or chief of staff the issue that there was a meeting of two on one, I believe, and that it wasn't my preference for how to do business. He took note of that, and I'm not aware of any subsequent meetings of that nature while I was there.

Mr. Leon Benoit: So the two meetings you mentioned, why do you single those out?

Mr. Richard Neville: I keep referring to just one meeting.

Mr. Leon Benoit: Well, you said you met before--

Mr. Richard Neville: Oh, with Mr. Guité?

Mr. Leon Benoit: Yes.

Mr. Richard Neville: That's before he met with the minister and the chief of staff and then after he met; in other words--

Mr. Leon Benoit: Oh, so you actually met with Mr. Guité on those occasions.

Mr. Richard Neville: Yes.

Mr. Leon Benoit: What was discussed?

Mr. Richard Neville: It was the issue of what to do with the political appointees. We had an issue where their contract was coming due in a few months: do we terminate it now, or do we let them stay and work out the balance of their contract?

À (1045)

Mr. Leon Benoit: Which contract was that?

Mr. Richard Neville: These were contracts that were for the political appointees under the previous regime.

Mr. Leon Benoit: Could you just elaborate a little bit on what--

The Chair: I think basically what Mr. Neville is talking about is that people on the political staff of ministers have the right to claim a position within the public service without a competitive bid. Therefore, what he is talking about is the previous staff.

Am I correct in saying that?

Mr. Richard Neville: No. I'm referring to political appointees, as I understand it, who were part of APORS in the previous regime. They were the ones who selected the companies that would be on the list.

Hon. Shawn Murphy (Hillsborough, Lib.): These were the Conservative political appointees?

Mr. Richard Neville: Correct.

Mr. Leon Benoit: What was the decision made at that meeting?

Mr. Richard Neville: My understanding is that the minister made the decision to let the contracts run but that the individuals should not continue working.

Mr. Leon Benoit: Who filled in for them, and what does “let the contracts run” mean? Just explain that to me a little bit, exactly what--

Mr. Richard Neville: I believe there were a couple of months left on the contracts, not six or seven but more like two or three.

Mr. Leon Benoit: So after that they would be finished.

Mr. Richard Neville: Correct.

Mr. Leon Benoit: Who were they replaced with?

Mr. Richard Neville: They were not replaced.

Mr. Leon Benoit: They weren't at all, with anyone?

Mr. Richard Neville: No. There was no longer that regime.

Mr. Leon Benoit: Let's go back to the issue of the internal auditors from 1995 to 2001. You are saying they were reduced from 800 to 250.

Mr. Richard Neville: This is government-wide.

Mr. Leon Benoit: Yes, government-wide.

Did this have any real impact that you saw? Was that a problem?

Mr. Richard Neville: We certainly thought it was an issue from the Treasury Board Secretariat's perspective. That's why we revamped the internal audit policy and that's why we went for additional funding. It's not easy to get additional funding, but we did so, and we were, through the support of the Secretary of the Treasury Board and Comptroller General, able to recommend to the Treasury Board that additional funding be provided. They did accept that.

Mr. Leon Benoit: So what was the government's reason for reducing the number of internal auditors?

Mr. Richard Neville: Because that was part of program review. It's not that it was specifically highlighted as being a requirement to reduce internal audit. I'm sure that's not what the intent was, but when you have to reduce the public service by approximately 25% to 30% in terms of its workforce and reduce the deficit, the decision taken by a lot of departments--I stress, the decision taken by a lot of departments--was to reduce entities such as internal audit, program evaluation, etc.

The Chair: Thank you, Mr. Benoit.

Mr. Murphy, please, four minutes.

Hon. Shawn Murphy: Thank you very much, Mr. Chairman.

Mr. Neville, I want to follow up on the line of questioning advanced by Mr. Benoit, and that is the Conservative political appointments within the bureaucracy. These people, they worked right in the bureaucracy?

Mr. Richard Neville: Yes. I wasn't there, but my understanding was they were part of the bureaucracy, under contract, and they determined the list from which the advertising firms were chosen.

Hon. Shawn Murphy: Do you recall who these people were?

Mr. Richard Neville: No, I don't recall who they were at all. It's probably a matter of public record, though, Mr. Chair.

Hon. Shawn Murphy: Would these political appointments be by the minister of the day, or the Prime Minister's Office? Do you recall how these political appointees would be appointed?

Mr. Richard Neville: Mr. Chair, I have no idea.

Hon. Shawn Murphy: We've also heard the testimony that the political appointees would pick the advertising agencies. Do you know what criteria they used to pick the advertising agencies?

Mr. Richard Neville: Not at all, Mr. Chair. This is well before my period.

Hon. Shawn Murphy: Then they reported to Senator Lowell Murray?

Mr. Richard Neville: I'm not familiar, Mr. Chair, with that. There's some documentation on that, I believe, but I don't have it.

Hon. Shawn Murphy: But you will agree with me, this would be a very strange way to operate in a government setting.

Mr. Richard Neville: Mr. Chair, I'm not really very well aware of how that operated.

Hon. Shawn Murphy: When did you come? You came after 1993?

Mr. Richard Neville: I came in November 1992.

À (1050)

Hon. Shawn Murphy: November 1992. So you would have been operating under this regime.

Mr. Richard Neville: I was aware of it, but I wasn't thoroughly familiar with it. It was the way it was when I arrived.

Hon. Shawn Murphy: But it was changed in 1993.

Mr. Richard Neville: It was changed early in 1993.

Hon. Shawn Murphy: These political appointees who were there, under the new regime you didn't have any need for them any more and their contract was just allowed to terminate.

Mr. Richard Neville: Correct. That part, I recall. That was the discussion: what do you do for the two or three months remaining?

Hon. Shawn Murphy: Mr. Chairman, perhaps we could ask the clerk to get the names of these political appointees and when their term expired.

The Chair: You're talking about the people who terminated early in 1993. Were they designated political appointees, Mr. Neville? Do you know if they had a designation like that?

Mr. Richard Neville: What do you mean by “designation”?

The Chair: We're talking about political appointees who were under contract. Were they people who were eligible to apply for a job within the civil service, had they done so? “Exempt staff”, I think that's the terminology.

Mr. Richard Neville: I have absolutely no idea, Mr. Chair. All I can share with you is my recollection that there were two or three of them. They were under contract--I remember that clearly--and the issue was whether we cancel the contracts with a few months to go, or do we let the contracts run to the end.

The Chair: But you've no real definition of “political appointee”?

Mr. Richard Neville: No.

The Chair: We'll try to endeavour, but we're not going to guarantee success, Mr. Murphy.

Hon. Shawn Murphy: Thank you very much, Mr. Chairman.

Mr. Neville, I want to ask you a general question, as a senior person in government for a long time, in the senior ranks, and this is with respect to--and there was an article in the media this morning--discipline in the public service.

It disturbs me to no end to sit back here on May 11, 2004, and be told that there was absolutely no one involved in the sponsorship issue in any way, shape, or form disciplined by the public service. How does this happen? You were involved in the thing. Can you give us some general explanation as to how this can take place?

Mr. Richard Neville: I don't think I'm at liberty to discuss that file. I think you'd have to deal with the individuals concerned, specifically with the human resources section of the Treasury Board Secretariat.

Hon. Shawn Murphy: My question to you was a general question. You're a senior person, you must have occasion to discipline somebody who works for you.

Mr. Richard Neville: Yes. Where I have deemed that it was appropriate to apply disciplinary measures, I've done so, on numerous occasions. That's a matter of record. I believe discipline is part of a manager's responsibility, and where it's required it should be appropriately applied.

Hon. Shawn Murphy: You've been involved in internal audits and financial administration, you've spent your career in the public service, a distinguished career. We made a recommendation in the last report we did, which I think we should replicate whenever we write this report, that the internal audit function ought to be taken over by your department, Treasury Board. Do you agree with that?

Mr. Richard Neville: As a point of clarification, I'm no longer with the Treasury Board Secretariat.

With respect to that specific recommendation, I had views, which I shared with the secretary and comptroller general of the Treasury Board while I was there. At the time I did not think that was the appropriate action to take, but you should allow internal audit to be managed by the deputy of the department, so there's no dual accountability for that organization. Internal audit is and should be always a management tool, and it should be at the discretion of the deputy minister as to how it is best used in that particular department. So I believe internal audit should remain with the deputy minister concerned.

Hon. Shawn Murphy: But don't you see an inherent conflict of interest when the deputy--

The Chair: Thank you very much, Mr. Murphy, but I'll continue in that same vein.

Mr. Neville, I share Mr. Murphy's point of view that there has to be a certain amount of accountability, and criticizing the boss is usually what is called a career-limiting move. Therefore, to have internal audit at the Treasury Board, with people seconded to departments, so they move around with a reasonable degree of frequency, would be an advantage as far as a management tool goes. That way they do not become co-opted into the department and whatever the culture may be. In the private sector, internal audit is usually fast-tracked to senior management, but it's certainly not that way in the public service. If you want the sharpest and brightest people to move up to the top, this gives them great experience. At the same time, it removes them from being beholden to the people they're criticizing or writing reports on.

À (1055)

Mr. Richard Neville: Mr. Chair, I agree with a lot of what you said about allowing individuals to move within the organization, and going through internal audit is an excellent way of getting an overview of the entire organization.

With respect to the first point you raised, that it's hard to comment on your supervisor, there are mechanisms in play that allow the director of internal audit to go directly to the Treasury Board Secretariat should there be a problem of that nature. However, Mr. Chair, I think the overriding factor that should be considered in that debate is the accountability the deputy minister has to manage the department concerned. Internal audit is a tool of management, and the deputy minister should have full responsibility over the internal audit function.

The Chair: Mr. Jordan, four minutes.

Hon. Joe Jordan (Leeds—Grenville, Lib.): Thank you, Mr. Chair.

Mr. Neville, you mentioned at one point in your testimony today that you had thought deeply about how this was allowed to happen. We had testimony from two gentlemen who were part of the quick response team, and I thought for the first time they had actually explained part of it. It's going to take some time, if we can ever put it all together, but they listed three factors. You touched on one of them today. The first was that this was an environment of program review and that the balance point between risk and benefit was changing. In some cases decisions were made to cut internal audit functions at the expense of programs.

Mr. Richard Neville: I agree with that.

Hon. Joe Jordan: The second point they made is that there was a culture, they felt, being created within the civil service that focused more on innovation than regulation. It was a sort of entrepreneurial notion within the monolith.

Mr. Richard Neville: At that period in time, yes.

Hon. Joe Jordan: Third, they referred to a number of large information technology projects that were trying to automate systems, and perhaps, rather than revisiting the system in light of a new technology, we were just speeding up manual systems, and there were problems not unlike those industries face when they do that. This isn't my question, but is that a fair assessment? Do you think those factors would have influenced the environment that gave birth to this thing?

Mr. Richard Neville: I agree fully with those three observations.

Hon. Joe Jordan: Okay.

Now, you seem to have added one observation today, if I heard your testimony correctly, that in 1993 there was this amalgamation of a number of different departments into one big entity, bringing the number of people at Public Works to 20,000, and that may have influenced what went on at a micro level.

Mr. Richard Neville: Absolutely.

Hon. Joe Jordan: Here's where I get excited, because I'm going to advance my own theory, for which, up until now, I haven't had a lot of buy-in, although I'm heartened by Mr. Benoit's--and others touched on this.

Prior to 1993--we heard testimony on this, and we just discussed it--there were political people right in the bureaucracy of APORS. Is it conceivable that the professional civil servants, the people who are supposed to sort of hold the politicians accountable from regime to regime...? The analogy I use in my own mind is that it's not unlike working in a factory, if any of you have ever done that, where the boss's son works. So here you had a department that had political staff in it, and to me that would certainly send signals throughout the public service that they are going to do things a little differently, that they have a pipeline through to the political side, that over time it's probably not worth worrying too much about what's going on over there, because they have their own back channels and they'll answer to their own masters.

My theory is that when the Liberals came in with the best intentions and said this doesn't make sense, so take the political staff out of there--and Mr. Benoit asked you this--they weren't replaced with anybody.

I guess my theory suggests that perhaps Mr. Guité filled that vacuum.

Mr. Richard Neville: If I may, Mr. Chair, in the summer of 1994 new policies and guidelines were specifically issued that were quite stringent, that allowed for more competition. They even required submissions of over $30,000 to be competed for. That certainly did change the culture, I think, and that's why I said it was, to me, more open and transparent. It was because of those changes.

Á (1100)

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

Madam Ablonczy, four minutes.

Mrs. Diane Ablonczy: Thank you.

Mr. Neville, recent Treasury Board documents refer to money laundering in reference to the Auditor General's most recent report. Now, this occurred, of course, during the time you were assistant secretary and deputy comptroller general. Were you aware of these activities?

Mr. Richard Neville: Not at the time.

Mrs. Diane Ablonczy: So you were deputy comptroller general and you were not aware of these activities.

Mr. Richard Neville: I was not aware of the money-laundering activities at that time. I do not believe anybody at the Treasury Board Secretariat was.

Mrs. Diane Ablonczy: When were you first made aware of irregularities in advertising and sponsorship activities?

Mr. Richard Neville: Going back to the 2000 audit, dealing with that would have been the first time I was aware of some irregularities.

Mrs. Diane Ablonczy: So even though you were at Public Works during the time covered by the 1996 audits, both the internal one and the Ernst & Young one, you didn't take note of them?

Mr. Richard Neville: The first time I found out about the 1996 audit was through the deliberations of this committee. Now, my understanding is that Public Works and Government Services in 1996 sent an executive summary--an executive summary--to the Treasury Board Secretariat, to an internal audit group, which I was responsible for, in that sense, and it was put on the website. But there weren't concerns per se. An audit plan went with it, and my understanding was that....

So I wasn't aware of that audit until deliberations here revealed that.

Mrs. Diane Ablonczy: Even though there were serious irregularities uncovered by the two 1996 audits, you, in your capacity as deputy comptroller general, took no particular notice of them?

Mr. Richard Neville: Well, you know, you could phrase it that way, but let me put it in a different perspective. Based on the executive summary of 1996, which I was not aware of, based on the fact that it was a management plan, I understood that management within PWGSC was satisfied with the steps taken, and it didn't surface as an issue. A lot of the audits that were happening elsewhere in government had higher visibility to them; hence, we were dealing with those issues. But certainly the 1996 audit never came across my radar screen while I was at Treasury Board Secretariat.

Mrs. Diane Ablonczy: Mr. Neville, the Auditor General found the government broke all the normal rules in order to select Groupe Everest and Groupaction for its advertising and sponsorship activities. Did you ever do anything about this?

Mr. Richard Neville: Well, we worked directly with PWGSC on numerous files to try to deal with the issue, so specifically with those there was the collaboration that went on as soon as the information was identified.

If I could, I'll just take a moment or two to find my notes.

In May 2002--this is following up on the AG's report on the three Groupaction contacts--senior officials at TBS were briefed on the expected findings of the Auditor General with respect to the review of the three Groupaction contracts in light of the seriousness of the issue, prior to the report's tabling. Following the tabling of the Auditor General's report in the House of Commons, in light of the clear breaches of the Financial Administration Act, my office personally wrote to the Office of the Auditor General to organize a more detailed briefing on the chapter in collaboration with Communication Canada and PWGSC to determine the requirements for any further work to be undertaken.

We also briefed the President of the Treasury Board on the Auditor General's report on these contracts. Also, PWGSC informed--

Mrs. Diane Ablonczy: Sorry, my time is nearly up.

But this is after the fact. My question is, did you notice anything untoward when the problem was happening?

Mr. Richard Neville: No. We reacted when PWGSC informed us.

Mrs. Diane Ablonczy: So you didn't know this was going on at all?

Á (1105)

Mr. Richard Neville: No--that's correct.

The Chair: Thank you very much, Ms. Ablonczy.

Ms. Phinney, please, for four minutes.

Ms. Beth Phinney: Thank you, Mr. Chairman.

I'm just going to ask a short question so I can share my time with Mr. Murphy.

Mr. Neville, I have a question about an occasion after you left. I realize you left in June 1995, but I'm just wondering if you might know about this and if you thought it was a good idea. David Myer told the committee there was an independent financial officer inside CCSB who reported to the financial services branch in PWGSC.

Mr. Richard Neville: I'm not familiar with that at all.

Ms. Beth Phinney: Did the idea of that happening, having an internal auditor, not start during your time?

Mr. Richard Neville: No.

Ms. Beth Phinney: Thank you.

The Chair: Mr. Murphy.

Hon. Shawn Murphy: Mr. Neville, I just want to follow up a little more on the 1994 audit. It appears from the media articles that it was in 1992....

Mr. Richard Neville: It started in 1992. I now recall that vividly, based on the documents I have in front of me.

Hon. Shawn Murphy: This involved departments working with the Canada Communication Group. As everyone in this room is aware, if a department has money available at the end of the year that is not spent, it's to be returned to the public treasury.

Mr. Richard Neville: Correct. It should be lapsed. The right terminology is that it “lapses”.

Hon. Shawn Murphy: In this case, what they were doing was entering into what I would classify as bogus contracts with CCG--which in effect was another government agency--to hide the money so it wouldn't have to lapse. Is that correct?

Mr. Richard Neville: I would probably have used different wording, Mr. Chair, but for the sake of expediency, that's a good synopsis.

Hon. Shawn Murphy: Were you aware of it at the time?

Mr. Richard Neville: I recall distinctly now--again, thanks to Ms. Ablonczy making this document available--the sequence of events. I sent a letter to the executive director advising him to discontinue that practice, and I was assured it had been. A year later the same incident occurred. I raised it with the individual concerned. He did not share the point of view I had as to its illegitimacy, and as a result we went to the deputy minister, had a number of discussions, raised it to the ministerial level through the chief of staff and executive director, and finally dealt with the matter expediently, I would say.

Hon. Shawn Murphy: Who was the executive director of CCG at the time?

Mr. Richard Neville: Mr. Chair, do I have to answer that question?

The Chair: Yes.

Mr. Richard Neville: Mr. Norman Manchevsky.

Hon. Shawn Murphy: Charles Guité wasn't involved in this department at all?

Mr. Richard Neville: No. That is what threw me at first. I was focused on APORS, and I thought this was specifically related to APORS.

Hon. Shawn Murphy: To summarize, this was basically a scheme that was in violation of the Financial Administration Act, allowing the departments, instead of returning money to the treasury, to keep it for next year's budget.

Mr. Richard Neville: Correct. In other words, they would be getting services in printing that they wouldn't have to pay for from the next year's funds, because they had prepaid the year before.

Hon. Shawn Murphy: Mr. Neville, I have another general question here, and I would like you to try to answer it. We have another disturbing set of circumstances in this particular file, the promotion of Charles Guité. When he answered to you, was he an EX-1?

Mr. Richard Neville: He was an EX-1 from 1990 to January 2, 1995; on January 3, 1995, the position was reclassified as an EX-2

Hon. Shawn Murphy: But you were gone by that point?

Mr. Richard Neville: No, I was still there until June 30, 1995. I was responsible for recommending his reclassification from EX-1 to EX-2, based on a number of factors. For the information of this committee, there were additional responsibilities added to his job description. One of them dealt with a client service unit that was being set up to help departments to better manage their advertising and public opinion research programs. There was a new operations and support group established, which was doing media gathering and analysis. There was a responsibility now given to APORS, to the executive director and eventually the director general, to implement policy and operational frameworks. There was a new reporting requirement to Treasury Board that had to be met. The resources had been increased from 14 full-time equivalents, $2.1 million, to 22 FTEs, $4.1 million. As being now a director general, he was reporting to me.

Á (1110)

Hon. Shawn Murphy: So you're saying the promotion from an EX-1 to an EX-2 was above-board.

Mr. Richard Neville: Oh, yes.

Hon. Shawn Murphy: The sinister part here, which I really can't accept, is that after you left--we're not blaming you--over the next two or three years he got himself promoted from an EX-2 to an EX-3, and then, right after, he got himself promoted from an EX-3 to an EX-4. Do you smell any hanky-panky here?

Mr. Richard Neville: I'm sure the decisions that were taken at that time were appropriate under the circumstances.

Hon. Shawn Murphy: I'm not so sure--that's the problem. Do you have any reason to say you're so sure these decisions were appropriate?

Mr. Richard Neville: I know the individuals concerned.

Hon. Shawn Murphy: The individual who is concerned is Mr. Guité.

Mr. Richard Neville: No, I know the individuals who made the recommendations.

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

That brings us to the end of our four rounds

I have a notice of motion, and then we'll break for about 15 minutes before we reconvene. We have some motions to deal with, and since we do not have another witness scheduled, that will be adjourned until a later time.

Notice of motion, Mr. Kenney.

Mr. Jason Kenney (Calgary Southeast, CPC): Mr. Chair, I'd like to give notice of a motion that the committee meet on the following dates: Monday, May 17, 2004, from 11 a.m. to 1 p.m. and 2:30 p.m. to 5:30 p.m.; Tuesday, May 18; Wednesday, May 19; and Thursday, May 20, from 9 a.m. to 1 p.m. and from 2:30 p.m. to 5:30 p.m.; and Friday, May 21, from 9 a.m. to 1 p.m.; and that all such meetings be for the purpose of hearing witnesses who have not yet testified, with the schedule of witnesses to be arranged by the clerks in consultation with KPMG.

The Chair: Can you give me Monday and Tuesday again, Mr. Kenney?

Mr. Jason Kenney: I'll give you a copy of the motion. I just have to make a written amendment....

Okay.

Mr. Chair, given that if this motion were to pass it would require the clerk several days to fill up the witness schedule for next week, I would seek unanimous consent to waive the 48 hours' notice of motion so that the motion can be considered today, perhaps at a later time so that members have a chance to look at it.

The Chair: Well, there seems to be no unanimous consent, so perhaps you can try again, Mr. Kenney, after we've dealt with the other motions that will be discussed after we reconvene.

Mr. Neville, we thank you very much for coming forward this morning. You are excused.

The meeting is suspended for 15 minutes. We'll reconvene at 11:30 to deal with the motions.

Á (1114)

Á (1131)

The Chair: Okay, resuming, I have four motions, ladies and gentlemen. I'll just read the four. This is the order in which we'll deal with them. The first is a motion by Mr. Jordan dealing with Mr. Alain Richard, followed by the motion by Mr. Murphy dealing with going in camera, and followed by two motions by Mr. Toews. And Mr. Kenney said he would wish to ask for unanimous consent, so that will be last.

Mrs. Ablonczy, you have a notice of motion. Do you wish to give that now or later? Why don't you give it now?

Mrs. Diane Ablonczy: Okay. My motion, Mr. Chair, is that in relation to the study of chapters 3, 4, and 5 of the November 2003 report of the Auditor General regarding the sponsorship matter, this committee request that Joanne Bouvier appear before the committee to provide evidence on Thursday, May 13, 2004, or such earlier time as the committee may otherwise determine.

The Chair: That is a motion that's already.... That's not a notice of motion. We have that motion.

Mrs. Diane Ablonczy: Okay, sorry.

The Chair: I thought you had it....

Mrs. Diane Ablonczy: I read the wrong one.

My motion is that in relation to the study of chapters 3, 4, and 5 of the November 2003 report of the Auditor General regarding the sponsorship matter, this committee request that Jean-Marc Bard appear further before the committee at the earliest possible date following the testimony of Joanne Bouvier.

The Chair: Okay, that's notice of motion. That's received. That will be up on Thursday.

Okay, moving to Mr. Jordan's motion that notwithstanding the motion adopted by the committee on Tuesday, May 4, 2004, the committee receive evidence from Mr. Alain Richard by way of affidavit, Mr. Jordan, speak to your motion.

Hon. Joe Jordan: This just stems from discussions we had last week, Mr. Chair. I think there was a general feeling that there were elements of Mr. Richard's testimony that were pertinent, and perhaps it might be prudent to do an affidavit, and then if the committee decides later on that he should come before the committee, it has that option.

The Chair: Okay, further discussion? Are we ready for the question?

Mr. Jason Kenney: Debate.

The Chair: Debate, Mr. Kenney?

Mr. Jason Kenney: Yes. It's an outrage that I might want to comment on a motion.

Mr. Chair, it's peculiar for us as a committee to seek to undo motions that we pass. This is a matter we've considered at some length, both in camera with the steering committee, with the witness subcommittee, and last week with the whole committee.

A vote was passed where there were, interestingly, divisions on both sides. This was not a straight party-line vote. It was one of the few times that a motion was passed with some members on both sides voting for and against. It was nice to see some independent thought on both sides on this question.

I would just like to say that I understand there are concerns about this particular witness, but it seems to me that there is a consensus. When we hear evidence we need an opportunity to cross-examine witnesses to test the veracity of what they have to say. Indeed, if we are concerned about the credibility of the witness, prospectively there is no better way to test that than under cross-examination.

Finally, I don't want to put words into Mr. Walsh's mouth, but I believe our law clerk has advised us that this witness could provide relevant testimony that is substantiated with documentation that I think is hugely relevant to our inquiry--that is to say, an explanation of how the ad agencies operated financially.

So I would just like to speak against this motion, in favour of the original one that was passed last week.

Á (1135)

The Chair: Okay.

Further debate? No further debate. I call the question on the rescinding motion by Mr. Jordan.

(Motion agreed to) [See Minutes of Proceedings]

The Chair: The next motion is by Mr. Murphy.

I'm going to state, Mr. Murphy, that we should have had dates in there, but your motion is dated May 6. It says:

That this Committee spend the allotted time on Tuesday afternoon, Wednesday afternoon and Thursday of next week to meet in camera and discuss the issues with the Research staff, KPMG and the Law Clerk; synthesize the evidence and attempt to prepare and table an interim report on the evidence adduced to date, and any conclusions that can be drawn from such evidences.

Furthermore, that the Research staff be prepared to speak to this issue on Tuesday afternoon.

Now, before we go to you, Mr. Murphy, the law clerk has asked that he address some issues regarding this motion. So we'll go to him first and then we'll turn to you, Mr. Murphy.

Mr. Rob Walsh (Law Clerk and Parliamentary Counsel, House of Commons): Mr. Chairman, it wasn't with regard to Mr. Murphy's motion in particular that I spoke to you earlier with the suggestion that it might be appropriate for the committee to take a few moments this morning to consider the change in circumstances for the committee arising from the events of yesterday. Charges have been laid against two individuals, one of whom has testified before this committee, the other of whom has not testified, although the committee has attempted to have that person appear before it for purposes of testifying.

I'm talking about the sub judice convention, a convention of the House of Commons with respect to debates, discussions, or comments on matters that are before the courts or under judicial consideration. Being before the courts is considered to begin with the laying of charges. Those individuals are now the subject of criminal charges and criminal proceedings in the courts, and the sub judice convention of the House would require that members of Parliament in the House or here at committee not discuss or comment on the matters that are before the court.

Let me first say that this convention is a voluntary rule or practice that the House takes upon itself, and has done so for a number of years. It is not a legal rule that is required of the House. It is something the House, in its good judgment, thinks is appropriate, presumably out of deference not only to the legal proceeding, but also out of deference to the rights of the individuals, who are themselves of course entitled to be presumed innocent until the courts should find otherwise.

Accordingly, Mr. Chairman, as the subject matter of those charges.... and I have not had occasion yet to read them, but I think it's fair to say that the subject matter of those charges relates to the matters that are the subject of this committee's inquiry, and arguably it ought to be the case that the sub judice convention should apply. The problem for the committee, in my view, is to determine to what extent application of that rule presents a constraint upon it in its discussions, deliberations, or any actions it might take.

I won't say any more at this point, Mr. Chairman. I simply wanted to point out to committee members initially that, in my view, that rule is there. It's a convention. It's a voluntary rule, and it's one that I'm sure all members accept as appropriate where there are persons who are subject to charges before the courts.

The Chair: Mr. Murphy.

Á (1140)

Hon. Shawn Murphy: Are we back to my motion?

The Chair: Speaking to your motion now, and then Diane, Marlene, and Jason.

Mrs. Diane Ablonczy: Sorry, I had a question for the law clerk.

The Chair: Oh, okay. Madame Ablonczy.

Mrs. Diane Ablonczy: My question is the following. The arrests yesterday, as I understand it, were pursuant to matters arising out of the Auditor General's 2002 report. This committee is studying the Auditor General's 2003 report, chapters 3, 4, and 5. It's a different report. So I'm wondering what the situation would be when these charges are referable to events not under the study of this committee.

Mr. Rob Walsh: Mr. Chairman, the question Ms. Ablonczy raises is very germane to the issue that now arises with application of this convention. How wide is its application?

The problem, if I may say, is that while the charges appear to relate to earlier contracts, I believe there are some aspects of the charges that relate to, for example, the gun control program--and there's another matter that I just for the moment can't recall, but which I think is within the subject matter of these charges.

For the moment, Mr. Chairman, I can't with any confidence tell you what these charges relate to, as I have not seen them. I only have public reports. Nonetheless, the issue for the committee is whether you take what I would characterize as a narrow view of the application of the rule and say “Well, if the charges don't relate to chapters 3, 4, and 5 of the Auditor General's report, then there's no problem”, or whether you take a broader approach and say “Well, it's all the same genre of subject matter”. This view sees it as all of a piece, as it were, and any comments regarding contracts covered by chapters 3, 4, and 5 of a kind that go to questions of criminal conduct, or other kinds of unethical or inappropriate or unlawful conduct, would have the effect of bleeding over and being taken as a comment upon the merits or demerits of the charges currently before the court involving these individuals.

Mr. Chairman, I can't say with any confidence where the line ought to be drawn. The member raises a fair question. Where is the line past whichsub judice convention stops applying? And which side of that line do you want to err on, the side in favour of the individuals who are subject to charges or the side in favour of the parliamentary proceeding, giving its interests priority?

The Chair: Madam Jennings, Mr. Kenney, and Mr. Desrochers.

Mrs. Marlene Jennings: I have two questions for Mr. Walsh.

First, how long has this convention existed and what are the grounds or the reasons behind it, the doctrine that's been developed over time for it?

Second, in bringing this convention to the attention of members of this committee--the fact that it's voluntary and that the committee, in its wisdom, may wish to keep it in mind with regard to how it goes forward in its work, to interpret it or apply it narrowly or on a much wider scope--given your long-time experience with the House of Commons....

I don't wish to imply that you're old--cameras don't lie, you're not old--but I would ask for your considered opinion and ask how you would advise this committee to apply this convention. Should it be done narrowly or widely?

Mr. Rob Walsh: Mr. Chairman, in response to the earlier question, I consulted, before coming to the meeting this morning, the Marleau and Montpetit text at page 428. It doesn't give an indication of how long this convention has been applied by the House, but I expect it's been longer than perhaps anyone, even those who've been here longer than I have, can remember.

The Marleau and Montpetit text says:

Over the years, a practice has developed in the House whereby Members are expected to refrain from discussing matters before the courts or under judicial consideration in order to protect those involved in a court action or judicial inquiry against any undue influence through the discussion of the case.

The text goes on to talk about when the chair has to intervene, typically at question period:

...the Chair has the duty to balance the legitimate right of the House with the rights and interests of the ordinary citizen undergoing the trial.

So where is that balance? I appreciate that you've asked me that. I don't know that I'm competent to make that judgment. Certainly it's one that the committee itself is entitled to make. But let me just offer that you do have a continuing mandate, as a parliamentary committee, to pursue this matter.

As I said to the committee when you started your proceeding--and I was searching for a distinction between what this committee would be doing and what a judicial inquiry would be doing, having in mind as well that we had reason to understand there were RCMP investigations going on that could result, and now have resulted, in charges--the role of this committee, in my view, was that it was a parliamentary committee seeking ministerial accountability. And this could well include deputy ministerial accountability. You can translate that into issues relating to machinery of government, administrative issues, and the question of the interplay between the political level and the bureaucratic level.

As I think I said in my presentation to the committee back when this proceeding began, that wouldn't include, or wouldn't necessarily include, going into who said what to whom, where, and who did and who didn't sign what document. That kind of detail might be properly the subject of the judicial inquiry, or indeed an RCMP investigation, if there's any basis to assume or to suppose there's criminal wrongdoing.

But this committee, as a parliamentary committee, has, in my view, a mandate from the people of Canada to call the government to account as a matter of ministerial accountability. In going forward, it still has to remember the sub judice convention and not cause this discussion about ministerial accountability to unnecessarily bring into public discussion matters or comments that reflect directly on the matters that are before the courts.

Á (1145)

Mrs. Marlene Jennings: Just one clarification. The quote from Marleau and Montpetit didn't just talk about the courts, it also mentioned judicial inquiry. Or did I mishear?

Mr. Rob Walsh: That's correct, it did mention judicial inquiry as well.

Mrs. Marlene Jennings: Thank you.

Well, that gives me clarity.

The Chair: Mr. Kenney.

Mr. Jason Kenney: I have no questions for the clerk, Mr. Chair. I was going to speak to the motion.

The Chair: Mr. Desrochers, questions for the law clerk?

[Translation]

Mr. Odina Desrochers: I have a very direct question concerning the statement, Mr. Walsh. Does that mean we can't mention Mr. Guité's name in our report? Does that mean that everything that was said about Mr. Guité has to be withdrawn from our report?

Mr. Rob Walsh: I don't think so. We could mention Mr. Guité's name but without saying if he's guilty of an offence, of a criminal act or things that really come under the judicial process, accusations against Mr. Guité. That's the matter that is protected by the rule, not Mr. Guité himself. The goal here is really to offer protection to Mr. Guité and Mr. Brault as accused persons.

Mr. Odina Desrochers: I believe the two people pleaded not guilty yesterday. So they are only under suspicion.

Mr. Rob Walsh: They are innocent until proven—

Mr. Odina Desrochers: So why should we not mention the name of Mr. Guité if the law still considers him as being not guilty?

Mr. Rob Walsh: I have just said that we can mention Mr. Guité. We can talk about of Mr. Guité, Mr. Brault and all the others that may be under investigation by the police. This rule is there to avoid comments suggesting that Mr. Guité or Mr. Brault are guilty of things that are the subject matter of the judicial process.

Mr. Odina Desrochers: One last question, Mr. Chairman. Could that prevent us from drawing conclusions about the many contradictions we've heard in the evidence about Mr. Guité as no comment nor any word must incriminate him in any way?

Mr. Rob Walsh: We have to avoid those words that incriminate or suggest a guilt on Mr. Guité's part. That really restricts the committee, that's true, because the subject matter of this investigation covers almost the same ground as the charges.

Á (1150)

Mr. Odina Desrochers: We're already having problems agreeing on the broad outline of a report. I just want to clarify certain things, Mr. Chairman, because it's not clear. Does that mean that we are going to take Mr. Guité's evidence, take out whatever concerns the 2002 report and say that those things were said within the context of the 2002 investigation and that we might use Mr. Guité for any other situation in the 2003 report?

Mr. Rob Walsh: It's a matter of finding a balance between the two interests, the interest of justice and those of Mr. Guité as a citizen who is innocent.

Mr. Odina Desrochers: Thank you.

[English]

The Chair: Mr. Jordan, please.

Hon. Joe Jordan: Mr. Chair, part of my question was answered by my colleague's questions. I was going to ask if this extends to potential--I don't want to prejudge motions--recommendations, and I guess what I'm hearing is it would.

My colleague Ms. Ablonczy talked about what the balance is, and I was wondering, if the committee were in camera, could it have discussions periodically about where the balance line is? Because normally drafting reports would be in camera. Does that give the committee some cover in terms of trying...? To me, it seems like it would be a bit of a moving target, it would be issue-specific, and there may be cases where you'd have to go a little bit too far in order to know where to come back to.

Does that convention apply to just public...? If we were in camera, would we be free to have more detailed discussions and try to find that point?

Mr. Rob Walsh: Mr. Chairman, in my view, clearly the convention is meant to deal with the incidence of public comment of a kind that could prejudice the interests of the individual or the proceedings in the courts. So I would think that if the committee went in camera, virtually all of that constraint might be removed. But then you have the question of what you can put in a report that will become public, and certainly you would continue to have the constraint relative to any comments made outside the in-camera meeting.

The Chair: Okay. Are we finished with questions to Mr. Walsh?

Now that we have that background, Mr. Murphy, speak to your motion.

Hon. Shawn Murphy: Thank you very much, Mr. Chairman.

Mr. Chairman, because we do have a witness scheduled for this afternoon, and I don't want to interrupt that, before I make my motion I would seek the committee's consent to make a friendly amendment and word the motion “allotted time on Wednesday afternoon and Thursday”--and of course it's this week, not next week, so we can go ahead and put this on this afternoon's schedule. Is that--

The Chair: So you're dropping that we move in camera this afternoon. We'd start tomorrow afternoon.

Hon. Shawn Murphy: Yes, tomorrow and Thursday.

The Chair: Okay, tomorrow and Thursday.

Are we agreed to that amendment?

An hon. member: Agreed.

The Chair: We have Mr. Boudria, the former minister of Public Works, for this afternoon.

[Translation]

Mr. Odina Desrochers: Mr. Murphy, why are you changing your position?

[English]

The Chair: No, no--yes, well, this is part of the debate. Mr. Murphy has made a proposal.... I guess if you were speaking to that amendment, yes.

Speaking to the amendment, Monsieur Desrochers, your question, please.

[Translation]

Mr. Odina Desrochers: Listen, I was ready. I only asked Mr. Murphy why he was changing his work plan, period.

[English]

The Chair: Before we get into that, Mr. Murphy, the clerk has advised me I need consent from the committee for you to change a motion. Then, if the consent is granted, you can answer the question. Does Mr. Murphy have the consent to amend his own motion?

Mr. Kenney has a point of order.

Mr. Jason Kenney: My point of order relates to the wording of the motion: it's unclear; it's ambiguous. It says “That this Committee spend the allotted time on Tuesday afternoon, Wednesday afternoon and Thursday of next week...”. If he means next week, then I guess he's presuming the acceptance of my motion to sit next week.

Perhaps he'd just like to specify the date so there is clarity on this.

The Chair: Yes, I mentioned that earlier. The motion is dated May 6; therefore, while the dates are not clear, they are determinable.

But does the committee grant Mr. Murphy the unanimous consent to amend his motion?

An hon. member: No.

The Chair: Mr. Murphy, your motion is as it stands, and Mr. Desrochers, your question is therefore out of order.

Mr. Murphy, you may speak to your motion.

Á (1155)

Hon. Shawn Murphy: Thank you very much, Mr. Chairman, for that.

I just want to say a few words on my motion. I'm just looking back, Mr. Chairman and members of the committee, and we've met now, I believe, for three months. We've met four days a week, we've met during the three break weeks, and we've had close to forty meetings. It's my belief and my position that, with the exception of a couple of ad agencies we've been unable to bring before the committee, we've heard from most of the relevant witnesses.

Yes, we can hear from more witnesses, and yes, I believe we should hear from more witnesses. I want to state clearly to all members of the committee that this is not a motion to in any way, shape, or form shut down the committee.

It's also not a motion that we write a report. I would have preferred to take perhaps four, five, or six hours on Wednesday and Thursday to discuss it among ourselves and get everyone's views around the table to determine whether or not the collective will is there to write a report. I do not see anything sinister or untoward in that motion, and I would ask people to consider it.

Mr. Chairman, I don't share my colleague Mr. Mills' view that this has been the greatest time in my life, but I have found it very interesting from a government operations point of view. It is a very serious issue, Mr. Chairman, extremely so.

It is unfortunate that the hearings are taking place on the eve, as most people think, of a federal election and that politics is entering into the discussion. I say that, but I don't attribute any blame to anyone around the table. That, ladies and gentlemen, is a fact of life, and there's nothing I or anyone else can do about it.

Mr. Chairman, I believe we have an opportunity to write a good report, and I believe, if the report is accepted and acted upon, it will change fundamentally the principles of perhaps not so much ministerial accountability as deputy minister and bureaucratic accountability in this Ottawa. I urge my colleagues to seize this opportunity.

Mr. Chairman, I would hope that no other committee in the history of this Parliament sees the embarrassing spectacle of a deputy minister coming before it and, on matters of very serious financial impropriety, testifying under oath before a committee that he wasn't in the loop. I hope that never happens again in the history of Canadian democracy.

Mr. Chairman, I point out what's been pointed out many times and has been just very elaborately related to us by the law clerk--and I agree with everything he said--that this is an issue of ministerial and deputy ministerial accountability and the machinery of government.

We are not a judicial body; we are a committee of Parliament. We are the public accounts committee. We are to hold ministers, deputy ministers, and other public servants accountable for the proper expenditure of Canadian taxpayers' money. This means, Mr. Chairman, that funds have to be properly approved by Parliament, that money has to be spent according to the estimates and within the financial framework, and that the rules and regulations, including the Financial Administration Act, have to be properly followed. As everyone has heard over the last few months, that was not done in this particular case.

I should point out too that the whole issue of ministerial accountability, deputy ministerial accountability, and the machinery of government are probably not an interesting issue to the media and others. I believe and it's my position that it is the issue we're looking at.

In the hallways we hear the words, “we don't know who's responsible”. Well, I beg to differ; we do know who's responsible. The person responsible is the minister of the day. I know that's another issue, Mr. Chairman; I urge that we look at whether or not the previous minister.... As you know, under our Westminster system, the questions are asked to the minister of the day. I have a real problem with that.

Â (1200)

No one in this room is suggesting that Minister Owen is in any way responsible for the issues of the sponsorship problem. We know who the minister was.

We also have in government an elaborate system of checks, balances, and controls to determine how money is spent. In this system those balances, checks, and controls were not working, and the person who was responsible--clearly responsible--for implementing those checks and balances was the deputy minister, Mr. Quail.

I agree with and found interesting the position of Dr. Franks the other day, and I support 100% that we should make it part of our recommendation that the deputy minister be clearly accountable to Parliament for the financial administration--not the policy issues--of his department during his or her tenure. And in this case the deputy, embarrassingly, clearly did not meet those tests of responsibility.

If we go forward with my motion, as the first step I urge members of the committee...and I know a lot of the members of the committee were not on it, but in the previous committee, which you chaired Mr. Chair, where we reviewed this in detail--we had a very serious issue two years ago--I thought we wrote a good report. I don't think it got the attention it deserved from government. We made a number of recommendations dealing with the internal audit, dealing with this whole section in the Public Service Act where political people can be transferred into government. I think we should go much further in our next recommendation and say that this should be abolished immediately. I think it's a serious issue; it has a lot of media attention. In our last audit I believe some of our recommendations were brushed aside. I don't think they can be brushed aside when we go forward with this report, Mr. Chair.

The whole area I've raised here this morning, when we have a situation like this, discipline in the public service.... It's totally lacking. I've asked the question on a number of occasions, and I have not seen anyone come forward to say there's been any attempt to discipline anyone in connection with this problem. In fact, I haven't heard of anyone who didn't get performance pay on the sponsorship issue.

Again, I repeat my earlier comment. It's somewhat unfortunate that politics has entered the debate, and in the last couple of days I see the rhetoric being elevated to whole new levels. They're accusing the judge of being affiliated with the Liberal Party. Mr. Martin's on TV now. I'm sorry, Judy. You've been shunted aside in the whole thing. He's making statements that just bring a whole new rhetoric. People are attacking, criticizing, and ridiculing the RCMP for laying charges.

Mr. Chair, unfortunately, when we continue doing that and we raise it to this level, I don't think it's the RCMP that are being ridiculed. I think the bottom line is it's us, this committee, who are subject to ridicule.

So again, the motion is part of the record. I would ask that all members of the committee consider the motion. I'm not in any way, shape, or form trying to shut the committee down; I'll keep going. But I ask that we take two or three meetings, talk about it, and see if the collective will is there to write a report.

Thank you very much, Mr. Chair.

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

I have Mr. Kenney, Monsieur Desrochers, and Mr. MacKay.

Mr. Jason Kenney: Thank you, Mr. Chairman.

Perhaps Mr. Murphy would be willing to consider another amendment to his motion to simply call on the research staff to update the synthesis of evidence he furnished us with on April 8.

For those who haven't been following this closely, Mr. Chairman, they may not be aware that a month ago the Library of Parliament research staff, who have been ably assisting us, did a superbly professional job in furnishing us with a fairly comprehensive synthesis of the evidence heard from the outset of these hearings to April 8—excuse me, it's April 2. I'm looking at the April 8 version of the document here. Since then, we've heard from 19 witnesses.

I would certainly have no objection, and I can't imagine any member would, in encouraging our research staff to update this document as a working document, which continues to synthesize the evidence we've heard. Essentially, in his speech Mr. Murphy suggested that we look at a synthesis of the evidence.

Mr. Chairman, I have to say quite frankly that I doubt Mr. Murphy would accept it, because his motion says “synthesize the evidence and attempt to prepareand table an interim report on the evidence adduced to date, and any conclusions that canbe drawn from such evidence”. He's talking about tabling such a motion.

Now, Mr. Chairman, let's be honest. We owe ourselves and we owe Canadians nothing but honesty in this matter, which is all about dishonesty in government. I don't think Mr. Murphy, with all due respect, as a diligent member of this committee, is exactly completely forthcoming about the context of his motion. The context of his motion, as we all know, is that the worst-kept secret in Ottawa is the intention of the Prime Minister to dissolve Parliament some time next week in order to drop a writ, which means this committee would cease functioning.

If a Liberal majority votes down my motion to sit next week and hear more witnesses, it will mean, with the acceptance of today's motion, we will hear no more witnesses, effectively, if the Prime Minister calls an election. If the Liberals vote against my motion for hearings next week, if the Prime Minister does what he apparently plans to do and calls an election late next week, then we will have finished our work.

I think Mr. Murphy knows that, notwithstanding his disavowals today. On May 3, on CBC Newsworld, he said “I certainly get the impression the committee is winding down the whole investigation.” In The Globe and Mail last week, he said “Issuing an interim report will make it easier to call a spring election.” It's the context in which Mr. Murphy presents us with this motion today.

That is why it is utterly reasonable for the opposition and for Canadians to conclude that this interim report is not about the committee doing diligence to get answers on what happened to the missing millions, and who was ultimately responsible for this scam; rather, it's about the government's election timetable. In order to appear to wrap up this process with some semblance of order, the government needs to be able to say a report has been tabled and the committee has concluded its work, at least in some respect.

Mr. Chairman, I don't believe that my colleagues opposite, for whom I have considerable regard, believe any more than I do that this committee is coming to the end of the process. They sat here, along with me, last week and heard expert advisers, the forensic auditors at KPMG, present us with a comprehensive assessment of the state of our inquiry. In the assessment, KPMG helpfully identified the so far unanswered questions and what still needs to be done by this committee.

I'd like to remind my colleagues about some of those unanswered questions. They said, with respect to ministerial responsibility, there were inconsistencies among the ministers and Mr. Guité. They asked why the structure was set up and allowed to continue. What was the difference between input versus interference, political input versus political interference? What was the role of the Federal-Provincial Relations Office in the PCO?

Â (1205)

They say that with respect to ministerial responsibility, the following things need to be done:

(a) We must resolve the inconsistencies; we need to review documents; we need to interview ministerial staff and sponsorship program staff.

(b) We must understand the evolution, review documents, and interview assistant deputy ministers and deputy ministers.

(c) We must seek input; we must pursue this question of political input versus interference and seek expert advice on definitions and compare them with the actual practice.

(d) We must interview Federal-Provincial Relations Office officials.

KPMG advised us just last week with respect to the audit process about the following unanswered questions:

(a) Why did the activity continue after earlier audits?

(b) Government files and processes were inadequate; they ask why.

(d) The question of value for money.

(e) Why did the audit process not focus on why this happened?

They identified issues that need to be addressed with respect to the audit process: we need to understand the evolution; we need to review documents and interview ADMs and deputy ministers; we need to look into inadequate government files and reconcile inconsistencies with ad agencies; to interview lower-level ad agency employees—a critical thing we have not yet begun to do. KPMG said we must review the agency selection process, presumably in far greater depth than we have. Finally, we must pursue again this critical question of value for money. We must review the QRT database, consider the $100 million figure in the Auditor General's report, etc.

With respect to the question of advertising firms, KPMG identified inconsistencies with the audit findings and again raised the value-for-money question. They said what needs to be done with respect to advertising firms is to review and understand corporate relationships, to do an interview of ad agency personnel to understand what happened, to review documents, to benchmark industry expertise, to review the QRT database, to review results of surveys sent out by Public Works and Government Services Canada.

With respect to crown corporations, they said unanswered questions are: disagreement with the audit findings; we must understand the funds transfer process.

What needs to be done? They said there is a disagreement with the audit findings. We have to interview the Office of the Auditor General; we have to consider interviewing lower-level personnel; we must reconcile the testimony of Guité with that from ad agencies and crown corporations.

With respect to the sponsorship branch itself, KPMG says we must reconcile the inconsistency between the testimony of Guité and that of ministers; we must reconcile the inconsistency and disagreement with audit findings; we must pursue, once more, the question of political input versus interference.

With respect to what needs to be done on the CCSB, they say we must again review documentation, interview ministerial staff, interview CCSB staff, look into inconsistency with audit findings, interview lower-level ad agency and government staff and confirm what the relationship was, and seek expert advice on what is appropriate.

That's just one very brief summary from the expert forensic auditors we've hired to assist us in this process, highlighting only some of the unanswered questions, which is why I believe this motion is entirely premature.

No member of this committee can honestly say we have any reasonable answer to the question of exactly how this program was set up and why, to what extent there was political interference—which, according to the present Prime Minister, was clearly the case. We have no clear evidence about how much and whether money was stolen, which was a public statement of the former Prime Minister, Mr. Chrétien. And most importantly, we have no clear answer to the question of where the money went.

Mr. Chairman, we as a committee have collaboratively worked on drawing up a list of prospective witnesses to date. Yes, we have had hearings for some ten weeks, but I would point out that the judicial inquiry plans to begin holding hearings in September of this year and not to issue its final report until December of 2005, a 14-month period. I would not hope this committee would take that long to examine these matters, but clearly it's going to take longer than the ten weeks we have been working to hear, for instance, from the some 90 witnesses on the prospective witness list from whom we have not yet heard, beginning, for instance, with former minister Boudria, the former Minister of Public Works.

Â (1210)

If this motion passes this morning, we will never hear from Don Boudria, the Minister of Public Works immediately following Mr. Gagliano. He inherited the department; he inherited the sponsorship program. I don't know whether he was given instructions to clean it up. What I do know is that Mr. Boudria had a very close working relationship with Claude Boulay, and that raises all sorts of reasonable questions, which we should want to put. We do know that Mr. Boudria disclaimed any personal knowledge of, or any relationship with, Charles Guité; but Mr. Guité testified, effectively, that Mr. Boudria was very, very familiar with him and his activities. But we won't hear from Don Boudria if this motion is passed.

We won't hear from Art Eggleton, who was President of the Treasury Board for three years during this program's operation. If we are, indeed, pursuing the question of ministerial responsibility, we might want to know what the presidents of the Treasury Board knew during this period, when they knew it, and what they did about it. We won't hear from Marcel Masse, who was the President of Treasury Board for two and a half years, the critical years during this process. We won't hear his testimony about what he knew as Treasury Board president, including the audits that were received, the internal audits, and the external audits. We won't hear from the Honourable Lucienne Robillard, who was President of the Treasury Board for another three and a half years. She's on the prospective witness list, but if this motion is passed and an election is called, we'll never hear from her in this regard.

We won't hear from ministers such as Anne McLellan or Andy Scott, who were sitting on the cabinet communications committee, chaired by Alfonso Gagliano, which met and discussed issues related to the sponsorship program. We won't hear from David Anderson, who was also on the ad hoc communications committee, and whose constituency office intervened to ensure that constituents received favourable attention from this program, and whose constituency staff said to the media that this sponsorship program was “a secret slush fund”.

We will not have an opportunity, if this motion passes and an election is called, to hear from Denis Coderre, whose name has come up at virtually every one of these meetings, who apparently was a frequent caller to the sponsorship office and who communicated frequently with the senior managers of that office, who of course had a relationship with several senior ad agency personnel.

We won't hear from the industry professionals that Dennis Mills wanted us to interview, such as people from the Advertising Standards Association of Canada. We won't hear from the Institute of Communications and Advertising. We won't hear from the association of Quebec advertising agencies, who Liberals had asked be put on the witness list, should this motion pass and a whitewash report be tabled in the House.

We'll never hear at this committee from Robert Scully, the president of L'Information essentielle, who was a key player in the Rocket Richard series that was highlighted so clearly by the Auditor General. Nor will we hear from Claudette Théorêt, who was the senior staffer at L'Information essentielle, about the financial transactions between the various crown corporations and the CCSB.

We won't hear from the various experts on ministerial accountability, which Mr. Murphy says is a key issue. I agree with him. And the Liberals have added to the prospective witness list a dozen leading academic and former political experts, like Professor Donald Savoie, from the University of Moncton, probably the leading expert in this field in Canada; like John Roberts, former Liberal cabinet minister; and like David Zussman, professor at Carleton and a leading adviser to the government on these questions. They won't testify and we won't have the benefit of their expertise.

If this motion passes, we won't hear from key ministerial staff on our witness list, such as: Steve VanderWal, special assistant to David Anderson; and Tony Chang, Minister Anderson's constituency assistant, who told Jamie Kelley, a constituent in Victoria, that they could help him access money from a “secret slush fund”, which turned out to be the CCSB. We won't have heard from Mario Laguë, the Prime Minister's communications director, who was the secretary to the cabinet communications committee chaired by Alfonso Gagliano, and who attended meetings to sanitize the publication of audit reports on the sponsorship program.

Â (1215)

We won't hear from Bruce Hartley, the gatekeeper to former Prime Minister Chrétien, on what information passed his desk with respect to the program. We won't hear from Carl Littler, whose name is cited in the retail debt strategy memos that were brought to us by Allan Cutler. We won't hear from Terrie O'Leary, former executive assistant to the current Prime Minister, who was deeply involved in seeking a sole-source contract for Earnscliffe and pushed that Groupe Everest receive government advertising contracts. We will never hear from her.

Warren Kinsella is a key witness, and we won't have heard from him, Mr. Chair. We can't draw any conclusions from testimony from him that we haven't heard. He's the former executive assistant to David Dingwall. Mr. Guité has said that he had meetings with Warren Kinsella. I mean, we've probably had over a dozen witnesses testify to the central role of Warren Kinsella in the office of David Dingwall, on the knowledge he had. Mr. Kinsella came up even in Allan Cutler's testimony.

And there's Jean Carle, Mr. Chair. I'm advised by the clerks that they've been trying to contact Mr. Carle to arrange possible testimony this week. Again, Mr. Carle was an absolutely key player. Not only was he the right-hand man to Jean Chrétien, but Jean Pelletier himself, former chief of staff to the former Prime Minister, said that Jean Carle attended meetings, including meeting with Chuck Guité about the sponsorship program. Here is one of the two key links between Guité, the sponsorship program, and the top level of the Prime Minister's Office. We haven't heard from him, and we won't if this motion passes and an election is called.

Nor will we have heard from Pierre Lesieur, who was special assistant for Quebec to Alfonso Gagliano, who worked directly with Jean-Marc Bard and Pierre Tremblay in that office. He was responsible for political files in Quebec and clearly would be a source of very pertinent testimony.

Nor will we have heard from Albano Gidaro, who was legislative assistant to Alfonso Gagliano as Minister of Public Works, who had a long-standing relationship with former Minister Gagliano and could shed light on the very peculiar workings of that office.

We won't have heard from Elly Alboim, one of the principals at Earnscliffe, who of course benefited from sole-source contracts that bent the rules, whose name was raised by Allan Cutler, the chief whistle-blower, etc.

We won't have heard from Jacques Hudon from Groupaction. He was a registered lobbyist, Mr. Chair, for Groupaction, hired by Jean Brault, a man now under criminal charges. It also happens that he was a former speechwriter to the current Prime Minister, Mr. Martin. I can't imagine why we wouldn't want to hear his testimony.

We won't have heard from Senator David Smith, a man I have a lot of regard for. Now, he was a lobbyist for the former Canada Communication Group and attempted to extend the privilege of administrative arrangement provided to that company to provide a monopoly over most federal printing contracts.

We won't have heard from a number of key players in the Liberal Party of Canada in Quebec who could testify about the fundraising activities of the party as they relate to the ad agencies. We know there have been criminal convictions of former officials involved in the Liberal Party of Canada in Quebec with respect to influence peddling, and it would be extremely relevant to hear from such people as Raymond Garneau, Daniel Dezain, Stephen LeDrew, Senator Paul Massicotte, Buryl Wiseman, Giuseppe Morselli, and Françoise Patry, just as an example of key players in the Parti libéral du Canada au Québec who could testify about what they knew and whether there was any mutual back-scratching going on between the ad agencies and the Liberal Party.

Mr. Chair, it is a key question whether money found its way back into the Liberal Party. It's not just a partisan point. I know the Prime Minister has said he wants to get to the bottom of that question, which is why the Liberal Party of Canada in Quebec has appointed its own forensic auditor to pursue these critical issues.

If this motion passes and an election is called, we won't have heard from Pierre Brodeur, former political assistant to Alfonso Gagliano, who worked in the office and would have interesting light to shed.

Â (1220)

Mr. Chairman, what about Vincenzo Gagliano, son of Alfonso Gagliano, who obtained printing contracts from Groupaction and Groupe Everest? There have been very interesting questions raised about whether he was given preferential treatment and what happened to the money he received from those contracts.

We won't have heard, if this motion passes, from Senator Wilfred Moore, chair of the Bluenose II Preservation Trust, who can give us a full accounting of the very questionable Bluenose sponsorship program.

We won't have heard from Roger Collet, former head of the Canada Information Office established by former Minister Copps, which eventually became the CCSB; he's a critical witness.

We have asked--I think members opposite have asked--that the prospective witness list include a certified fraud examiner or money-laundering expert from the RCMP who could help us to deepen the knowledge we gained last week from KPMG on the nature of money-laundering transactions and how they're executed.

And of course, Mr. Chairman, we will not have heard from the Right Honourable Jean Chrétien about what he knew and when he knew it. We heard from his chief of staff that he, the chief of staff, had regular and ongoing meetings with Chuck Guité. We've heard from every senior witness that such a relationship between the chief of staff to the Prime Minister and a mid-level bureaucrat was extremely unusual. We've heard that Jean Chrétien made the visibility of the federal government of Canada one of his top priorities. We've heard him boast about how in the 1980 referendum he bought up all the billboard space in Quebec for the Government of Canada, a tactic eerily reminiscent of what Mr. Guité testified to.

Mr. Chairman, I do not believe this committee's work will be complete until we hear directly from Mr. Chrétien under oath about what he knew, what instructions he gave, and what advice he received from Jean Pelletier and from Jean Carle. Mr. Pelletier said he heard rumours about potential fraud in the program; we'd like to know if Jean Chrétien heard similar rumours.

We will not, if this motion passes and if an election is called, have an opportunity to hear for a second time from Mr. Gagliano, David Dingwall, and Diane Marleau, all of whom are former Liberal ministers responsible for Public Works. All of their testimony has been contradicted by other witnesses appearing before us, most spectacularly that of Mr. Gagliano. David Dingwall, for instance, testified that he basically didn't know who Chuck Guité was, and we've heard from at least three witnesses that Mr. Dingwall in fact had met with Mr. Guité with some degree of frequency. Mr. Guité claims he never had the discussion with Madam Marleau where she told him he wasn't welcome to report directly to her. These are central questions.

You can see, Mr. Chairman, I've just gone through a small selection of the list of prospective witnesses yet to be called. There are more than twice as many witnesses from whom we have not yet heard as witnesses from whom we have already heard. In that respect we are roughly a third of the way through this inquiry in terms of the number of witnesses on the witness list.

I haven't even gone through the witnesses from crown corporations we've not yet heard from. I understand from the clerks that they were trying to arrange witnesses this week from VIA Rail and from the BDC. We haven't heard from Jon Grant, a very interesting whistle-blower at Canada Lands. We haven't heard other witnesses who were involved in the RCMP's 125th celebration, an issue raised in the Auditor General's report.

Mr. Chairman, Mr. Murphy wants us to do a report based on incomplete documentary evidence. He says we have a lot of paper; indeed we do. But this committee has still at least nine outstanding requests for documentation where no response has been received. Just as one example, we passed a motion on March 23 that the committee request the names of all assistants and policy advisers to the Minister of Public Works and Government Services, etc.--not received. On March 23 the committee requested that a copy of the daily agendas of former deputy minister Quail, former minister Gagliano, and Charles Guité from November 1993 to December 2003 be forwarded to the committee's counsel for his review, etc. These are the kinds of critical documents we could use to test the veracity of oral evidence at this committee but have not yet received.

Â (1225)

Mr. Murphy says this interim report will be all about being forthcoming with Canadians. If that's the case, Mr. Chairman, then why did he and his Liberal colleagues vote against my motion of last week? It was that the committee request copies of any notes taken by the Clerk of the Privy Council during meetings with the Prime Minister pertaining to items raised in the Auditor General's report and that we allow those documents to go to the law clerk for review. Why did they vote against the release of Mr. Gagliano's diaries and other notes, which we could use to test the veracity of his testimony?

Mr. Chairman, I could go on; I won't. I could go on and on and on about the evidence we have not yet heard, the witnesses who have not yet appeared, and the questions that have not yet been answered. But this is the bottom line, Mr. Chairman: Canadians aren't stupid. What they've seen in this inquiry to date is the shameful example of senior politicians and senior public officials abusing the public trust, misspending public money, and refusing to accept responsibility. We've seen witnesses coming and misleading this committee and acting, I believe, in contempt of Parliament. De facto if not de jure perjury has been committed before this committee, in my humble opinion.

Yet we haven't heard from over ninety witnesses, there are outstanding documents, and we have our expert forensic auditors saying there are all these questions that have yet to be answered. We have a very useful summary of evidence from our research clerk that could be updated. But instead, what's going to happen here is, it's all done, Mr. Chairman; they have the numbers lined up here. As Mr. Mills said last time, we have the numbers. They certainly do. They will pass this motion and this committee will go in camera, into secret. Instead of hearing from Don Boudria today, Jean Carle later this week, and other witnesses, they will produce a report that will essentially say there are a lot of unanswered questions, that ministerial responsibility is an important issue, that Ran Quail was a terrible deputy minister, that Alfonso Gagliano deserved some of the blame, and that we should point the finger at Chuck Guité. They'll slam that report into the House of Commons on a Friday to clear the way for Mr. Martin, as Mr. Murphy said, to call an election. Mr. Murphy said that the tabling of an interim report would make it easier to call an election.

Mr. Chairman, I hope I'm wrong. I hope my colleagues opposite are as interested in getting to the bottom of this as Canadians are. I hope they believe what the Prime Minister himself said in February, that he wants to get to the bottom of this before going to the polls, and I hope they'll vote against this motion. I hope they'll accept my motion later on today for us to meet Monday, Tuesday, Wednesday, Thursday, and Friday of next week so we can continue hearing from witnesses.

After all, Mr. Chairman, yesterday the Deputy Prime Minister said this interim report was just for informational purposes, a summary of evidence, and she hoped the committee would continue its proceedings diligently and expeditiously.

I was on a radio program this morning with Madam Jennings, who said she looked forward to the committee continuing its work. I take her at her word, and I anticipate her support for my motion to continue our hearings during the break next week, Mr. Chairman.

But if I'm wrong, if they vote against that motion and they vote in favour of Mr. Murphy's motion, then Canadians will know what is happening here, that Prime Minister Martin and the Liberal caucus do not want us to get to the bottom of this, one of the biggest scams in Canadian political history, before going to an election. That's what this motion represents, Mr. Chairman.

Â (1230)

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

I think it's my job to see if there is any kind of harmony or consensus in the meeting. I think what I heard from Mr. Murphy and what I heard from Mr. Kenney is that there may be.

This requires unanimous consent. I haven't discussed this in any way, shape, or form with Mr. Kenney, but Mr. Kenney, let me see whether there is consensus here.

Is there unanimous consent to break this down perhaps into two situations? One is, we hear from our researchers and KPMG, as Mr. Murphy said, and then at a later time, having heard from them, we go back in public and discuss whether we wish to do a report. That seems to be somewhere in the middle, but to change the motion would require unanimous consent. Therefore, does everybody understand what I'm proposing?

Is that unanimous consent, or not?

Okay, let me explain it again.

Mr. Murphy, in his opening statement, said he wanted to have the committee take stock with the researchers and KPMG and then, if they felt it prudent, move forward and prepare an interim report. I'm summarizing Mr. Murphy's statement, and I apologize if I got it wrong, but I thought that was what he was saying. Mr. Kenney was saying, at the same time, discussions with the researchers and KPMG just to take stock might perhaps be acceptable, but the report would be a problem.

Therefore, I thought perhaps we might want to break the idea into two parts. One is we take stock with our researchers and with KPMG. After having done that, we would move back into the public arena to discuss whether or not we wish to issue a report. That would become a two-part process, rather than a one-part process.

There's no debate on this. This requires unanimous consent for a proposal I've put forward. So I'm going to ask: Is there unanimous consent for that proposal to break Mr. Murphy's motion into two?

Â (1235)

Hon. Shawn Murphy: Can I speak to that?

The Chair: Yes, I'll allow you, since you're the mover, Mr. Murphy.

Hon. Shawn Murphy: Mr. Chairman, my motion—and I think you had it basically right—was a two-step process, but I see it all as part of one continuum. We would go into a meeting, talk to KPMG, talk to the clerk, talk to our researchers, and determine, based upon everything we hear, whether or not the collective will is there to write a report. I don't see how we can break that down into two. It's all part of one continuum, one discussion. We may decide.... I don't know what the collective will is.

We went through this before. We thought, back about six weeks ago, I believe, that we had enough evidence to write an interim report. We went in camera and we had a good discussion. I think we took a day and went around the table and got the views and opinions of every member of the committee. We decided at that time we hadn't heard enough evidence to write an interim report. In fact, at that time we had not heard from Mr. Guité.

At that time we asked the clerk to prepare and publish a synopsis of the evidence, which I thought had been done now again. That was done, and after having it discussed by the members of the committee, we collectively decided—I think it was unanimous—that's what we would do.

In this case, I'm not under any preconceived notions whether this committee will issue a report, and if it does, what form or shape the report will take. I don't know. But I think we owe it to ourselves, we owe it to the committee, and we owe it to the Canadian people to have these discussions. I don't see anything sinister or untoward with that process. I see it all as part of one process; I don't see how we can break it down.

The Chair: So you're saying do not break it down into two. It's your motion; therefore, I think it's appropriate you speak on it. Therefore, the motion as tabled stands.

For the debate I have Mr. Guimond, Mr. MacKay, Mr. Desrochers, Mr. Lastewka.

[Translation]

Mr. Michel Guimond (Beauport—Montmorency—Côte-de-Beaupré—Île-d'Orléans): Thank you, Mr. Chair.

I am happy to speak to the government motion submitted by Mr. Murphy. To begin with, I would like to take this opportunity to thank my colleague Mr. Desrochers from Lotbinière—L'Érable for his contribution to the work of the committee.

I would also like to say that we, of the Bloc Québécois, will not be in a position to vote in favour of the motion. Let me tell you why.

As early as February 2004, Prime Minister Martin promised to go to the bottom of the sponsorship scandal. I refer you to three excerpts of statements that he made in the media. First, he made a commitment to find those responsible. Later, he said that as Prime Minister of Canada he assumed the responsibility of going to the bottom of this case. Finally, he said that his government would take the necessary action to find out everything about what happened.

Mr. Chair, fellow committee members, I will submit that we of the Bloc Québécois feel that we do not have all the evidence necessary to fully understand what really happened. I will submit, Mr. Chair and fellow committee members, that those who have been heard in this committee were responsible only for carrying out the will of the government. I could repeat in my presentation all the pieces of evidence that we have heard, but there is a thread or better yet a common denominator : all of them represented the executive arm of the government.

On February 12, 2004, Paul Martin himself stated there had to be political direction in the sponsorship scandal, and I quote him : “It's impossible to believe there was no political direction.” These are the very words of Prime Minister Martin.

Today, given the evidence that we have heard in this committee, do we feel we are in a position to get to the source of that political direction? Are we in a position to know more about the political direction, given what we have heard?

In his opening statement of last April 22nd, Mr. Charles Guité testified that he was getting his orders from ministers, from the Prime Minister's Office and the Privy Council Office. Among other things, you will remember he said in his statement that when he realized that the former Minister for Public Works, Diane Marleau, did not understand how things were done, that she did not understand the system or how things should be done, he—a director-level civil servant—initiated a phone call to Jean Pelletier, Chief of Staff to Prime Minister Jean Chrétien, to tell him he had to meet him and speak to him because the minister would not play the game. Since she did not understand the system or the program, they had to meet.

Charles Guité met Jean Pelletier and basically the discussion... Jean Pelletier probably told him that he was right, not to make a fuss, not to go through the assistant deputy minister or the deputy minister, and especially not through the minister, but that they would speak to each other, both of them, and get a better understanding this way.

And that is not political direction? We're talking about the Prime Minister's Chief of Staff!

Â (1240)

We know the words that came out of the horse's mouth but we would like to know a little more about whoever told him to behave that way. It certainly cannot be one of the House pages—and I do not want to cast aspersions on pages here—reporting to the Speaker of the House who said : “Listen, Chuck, we'll tell you how things should be done”. Who told this to Jean Pelletier? When you check who was above Jean Pelletier, who do you find? You find the then Prime Minister, Jean Chrétien.

This is the reason why we, for one, would have liked to hear Jean Chrétien. I think it is legitimate and I do not understand why members of the Liberal majority across the floor do not share our concerns or expectations. I have no doubt that they, too, want to know what happened. They must have been upset when they learned that Guité was getting his marching orders directly from Jean Pelletier, the Prime Minister's Chief of Staff.

I am quoting here in full a question asked of Mr. Guité when he appeared on April 22nd :

Did the PMO and ministers provide input and decisions with respect to specific events that were sponsored and in the allocation of specific firms?

Mr. Guité's answer : “Absolutely.”

There. We would like Mr. Chrétien together with his ministers to appear before us just to know a little bit more about that.

In our view, the arrest of Charles Guité and Jean Brault will change absolutely nothing. Of course, the Liberal majority across is quite happy to have guilty parties pulled out of a cowboy hat and have them paraded with handcuffs, cowboy boots and spurs. Now, that is satisfying! For the Liberals, this means putting the lid on the pot. Now elections can be called since what happened is known.

I'm sorry, but if you on your side know what happened, we don't. Should you have privileged information, we'll swear you in and hear you. As to this political direction, we know nothing.

I'm talking here about the real guilty parties, those who built the system. In Quebec, it's called the “gimmick”. We're not talking about a couple of employees who took 50 bucks from the coffee house till, but of $250 million, 100 million of which went to agencies. It can be nothing else than a gimmick, a scam, a set up.

Former Prime Minister Chrétien, Jean Pelletier and the political staff of his office designed that program. Paul Martin, as Finance Minister from 1993 to 2002 provided the fuel, in other words, he made the program run financially. Using the unity fund, he transferred $34 million to the program during its first two years.

Â (1245)

Prime Minister Martin, who was Minister of Finance from 1993 to 2002, told us that he knew nothing about this. That means that he was providing the money, but he had no role in the rest of it. We must not let people take us for idiots. Prime Minister Martin knew very well what the money was being used for that was pumped into the Canadian unity reserve.

We would like him to testify before us and swear an oath on the Bible, so that we could hear from him what he knew, when he was Minister of Finance during the first two years of the program, about what the $34 million went toward that was pumped into the program.

After all, Alfonso Gagliano, who appeared before the committee, was the Liberal Party of Canada's chief organizer in Quebec during the 1997 election. Denis Coderre and the political members of his office were regularly involved in the administration of the Sponsorship Program. We would like Denis Coderre to come before us to say whether he knows anything and has something useful to tell us.

Mr. Chair, it is our view that the committee could still hear witnesses this week to shed light on the political direction. When I use that phrase, it is not something that I am inventing, since Prime Minister Martin himself said that there was surely political direction.

The committee has not heard from the main political people involved. We have not heard from Jean Chrétien or Paul Martin. There are two Jean Chrétien loyalists who have not appeared before the committee, and I think that we would have found it interesting to hear from them. We have not heard from Jean Carle or Warren Kinsella, David Dingwall's former chief of staff. The Liberals do not want them to have to testify, because they are concerned that they will implicate Paul Martin, who was in the know from the outset.

There are other people in charge of Crown corporations who were singled out by the Auditor General and who have not been heard. The Old Port of Montreal Corporation bought a huge screen at a cost of $1.5 million. That purchase could have gone through the government's procurement system but instead went through the sponsorship program where companies could get a slice of the pie. Lafleur Communication received $1.5 million for buying a screen for the Old Port of Montreal. Was that commission justified? Why was it given? It would have been helpful to hear from representatives of the Old Port of Montreal. Moreover, we did not hear from representatives of the Canada Lands Company. That would probably have been enlightening.

The main executives of the communication firms have not been heard from to this point, when the Liberals are preparing to bring down the guillotine. Among other people, we have not heard Jean Brault, from Groupaction, who appeared in court yesterday. We would have liked to hear from Jean Lafleur of Lafleur Communication, Jean Lambert of Groupaction, as well as Charles Guité's successor. As you will recall, he was one of the main players. You heard the testimony of Huguette Tremblay and Ms. Roy. We would have liked to have Pierre Tremblay appear but he did not. I am convinced that Pierre Tremblay could have helped us understand what the Prime Minister meant when he said that there was certainly political direction involved.

We would have liked to hear from the former Privy Council clerks, Mel Cappe and Jocelyne Bourgon, as well as a minister who was very involved and whose name I mentioned earlier, Denis Coderre.

In our opinion, Mr. Chairman, the voters in Canada and Quebec deserve to have as much information as possible before going to the ballot boxes. It would seem, after all, that an election campaign is imminent.

Â (1250)

To begin with, I can tell you that the Bloc Québécois is not opposed to an election being called. We are ready to go to the people, but what bothers us is that Prime Minister Martin had promised to shed light on the whole sponsorship scandal before an election was called.

If, as rumour would have it, the election is called on May 23rd and our report has been botched, as we say—do you really think that Canadians and Quebeckers will be able to say that light has really been shed on the sponsorship scandal before the election? Absolutely not, Mr. Chairman.

Our view is simply that witnesses could be heard this week, especially because, as I mentioned earlier, we are talking about over $100 million here that was paid out to communication firms friendly to the Liberal Party of Canada.

Quebeckers want to know where that money went. They want to know why it was not invested in health or education, and why seasonal workers—consider the little announcement this morning aimed at buying boats before the election—have not benefited. People need guarantees that the money channelled through the sponsorship program did not go indirectly into the Liberal coffers.

As for Jean Lapierre, the main Quebec Lieutenant for the Liberal Party of Canada and the most popular Liberal candidate in Ontario, I am sure that all the Ontario MPs across the table from us will be inviting him to campaign in their ridings. I am sure that Ontario MPs will be proud to show that Jean Lapierre was talked into making a return to politics. I hope that you do invite him. We will certainly invite him, and there are people that will be eager to meet him. People are waiting to meet Jean Lapierre, alias Mr. Clean, Mr. Spic & Span, who stated in Le Journal de Montréal on March 4th, 2004, that they would not be using dirty money in their campaign.

It takes a lot of nerve to say something like that! They must think we are pretty stupid if they imagine that we believe this money did not go through the coffers of the Liberal Party of Canada! I am sure that the sponsorship firms did not put $100 million in their own pockets. They pocketed some, but not that much.

The idea was to put the money into trusts, which, by the way, have been criticized by Jean-Pierre Kingsley, the Chief Electoral Officer. When the new Election Financing Act came into force, Mr. Kingsley had no idea what happened to that money.

Tony Ianno, a Toronto area MP, had $550,000 in his trust, whereas the spending limit is around $72,000 or $74,000. Ianno had $550,000 in a trust, and Kingsley told us that he did not know where that money went and how it had been channeled.

Mr. Chairman, according to the Bloc Québécois's hypothesis the $100 million was channeled into trusts of every one of the Liberal candidates across from us. That money was used in the 2000 election and will be used in the 2004 election.

Quebeckers want to know who created the sponsorship program. Quebeckers want to know who refuse to correct the situation, despite two troubling reports on how that program was being run. Quebeckers want to know how Charles Guité was allowed to break all the rules with impunity in order to win the 1995 referendum, and continued his work until he retired in 1999. Quebeckers want to know what activities were funded from the National Unity Reserve. Finally, Quebeckers want to know when the current Prime Minister first knew that the Sponsorship Program had problems. The only way to find out would be to have him testify before the committee under oath.

Â (1255)

Quebeckers want to know why Paul Martin did nothing considering he received a letter from the National Policy Chair of the Liberal Party of Canada, Mr. AkaashMaharaj, in February 2002, to warn him of rumours to the effect that funds paid to communication agencies were allegedly used to fund the Liberal Party of Canada.

Quebeckers want to know why Paul Martin, Vice-President of the Treasury Board, the man who signed the cheques, was unaware. He was signing with his eyes closed. He signed off hundreds of millions of dollars, but he did not know. Does anyone believe that? Walk down the street. Let's move the committee to Sparks Street and let's ask if anyone believe that Paul Martin was unaware of the sponsorship scandal, that money was being diverted for the benefit of communication agencies friendly to the Liberal Party. I challenge you to find anyone.

On weekends, when we go back to our ridings, people tell us to hang on, that no one will succeed in buying their votes with a report that would put the lid on it and that everything is honky dory and that we should put up with this. We're not a bunch of morons, Mr. Chair. People are not mistaken. We must put our trust in the people.

[English]

The Chair: Monsieur Guimond--

[Translation]

Mr. Michel Guimond: I have a lot more to say, Mr. Chair. You know that, under our rules, you cannot interrupt me.

[English]

The Chair: Well, I am going to interrupt you, because it's one o'clock.

We will reconvene at 3:30 and we will commence with Mr. Guimond.

It's a new meeting at 3:30, so this meeting is adjourned.